Entergy 2005 Annual Report Download - page 11

As prudent stewards of our shareholders’ money, given
the uncertainty surrounding the future of New Orleans, we
cannot and will not fund Entergy New Orleans’ shortfall
indefinitely. No law or agreement exists that would force
the company to continue to provide service at a loss. We
continue to work with the federal government, and state
and local regulators to resolve the bankruptcy in a manner
that allows its customers to be served by a financially
viable entity as required by the law.
We are also redefining our corporate headquarters.
Previously we had 1,500 employees and multiple functions
operating out of the city of New Orleans. Given the failure
of the levees to withstand Category 3 hurricane strengths
and the time required to reinforce and redo or redesign
and rebuild the levee system, we are assessing the various
alternative locations for critical business continuity
functions in order to lessen the risk posed by any single
event. Like everyone, we learned many lessons from
the events of 2005 and identified many opportunities
to reduce our risks from uncontrollable events. The
reconfiguration of our headquarters is one that we intend
to pursue in 2006.
2005 FINANCIAL RESULTS
The excellent emergency response and operating performance
delivered by our employees in 2005 is reflected in our
financial performance. In spite of the severe impact of the
two hurricanes, as-reported earnings were $898.3 million,
or $4.19 per share, in 2005, compared to $909.5 million, or
$3.93 per share, in 2004. Operational earnings were $943.1
million, or $4.40 per share, compared to $879.5 million, or
$3.80 per share, in the prior year.
While the impact of the hurricanes depressed earnings
at our utility business in 2005, we still saw an overall
improvement in operational earnings – up 16% on a per
share basis over 2004 – primarily from the result of
strong contributions from our competitive businesses
and accretion from our share repurchase program.
Entergy Nuclear delivered excellent results throughout
2005, largely due to higher contract pricing, higher
generation, and lower operating and maintenance expense.
Nuclear operational initiatives were implemented
effectively and efficiently in 2005 despite the huge
distraction of storm restoration – further testimony to the
depth and strength of our nuclear team.
With the passage of the Energy Policy Act of 2005 and
its incentives for new nuclear unit construction and
operation, NuStart – a consortium of industry leaders –
announced it had selected Grand Gulf as one of two sites
to pursue a Construction and Operating License, a COL.
Separately, we are pursuing an Early Site Permit for Grand
Gulf and a COL for our River Bend site. In our point of
view, nuclear remains the only economically viable and
technically proven source for the large scale needs for
clean, affordable power and we plan to preserve our
opportunities to pursue the avenues presented in the new
Energy Policy.
Finally, our non-nuclear wholesale assets business
delivered improved results in 2005 due to the sale of SO2
allowances that were freed up as a result of our strong
environmental programs and leadership. Some of the
generating assets in this business have operating attributes
that produce excess allowances, which we are periodically
able to monetize.
While we had repurchased more than $1.1 billion of
outstanding shares as part of our $1.5 billion share
repurchase program, we halted our repurchase activity
following Hurricane Katrina. Prior to that, we had
expected to complete our repurchase program by the end
of 2006. Instead, our Board of Directors extended the
program ending date into 2008 so that we may continue to
return available cash to our shareholders once our financial
flexibility is restored.
In 2005, we also welcomed three new members to our
Board of Directors – Gary W. Edwards, Stuart L. Levenick,
and W. J. “Billy” Tauzin. Their collective experience spans
a wide range of industries as well as public service and our
While the impact of the hurricanes
depressed earnings from our utilities
in 2005, we still realized an overall
16% increase in operational earnings
on a per share basis versus 2004
due to strong contributions from our
competitive businesses and accretion
from our share repurchase program.
2005
Earnings per share
in dollars
4.19
3.93
2005
2004
As-reported earnings
Operational earnings
3.80
2004
4.40
ENTERGY CORPORATION AND SUBSIDIARIES 2005