Entergy 2005 Annual Report Download - page 96

ENTERGY CORPORATION AND SUBSIDIARIES 2005
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NOTES to CONSOLIDATED FINANCIAL STATEMENTS continuedNOTES to CONSOLIDATED FINANCIAL STATEMENTS continued
In the fourth quarter of 2005, Entergy decided to divest the retail
electric portion of the Competitive Retail Services business operating
in the ERCOT region of Texas. Due to this planned divestiture, activ-
ity from this business is reported as discontinued operations in the
Consolidated Statements of Income. In connection with the planned
sale, an impairment reserve of $39.8 million ($25.8 million net-of-tax)
was recorded for the remaining net book value of the Competitive
Retail Services business’ information technology systems.
Revenues and pre-tax income (loss) related to the Competitive
Retail Services business’ discontinued operations were as follows
(in thousands):
2005 2004 2003
Operating revenues $654,333 $438,203 $162,206
Pre-tax income (loss) $ (68,845) $ 562 $ (21,763)
Assets and liabilities related to the Competitive Retail Services
business’ discontinued operations were as follows (in thousands):
December 31, 2005 2004
Current assets $ 89,579 $ 85,572
Other property and investments 15,095 5,061
Property, plant and equipment – net 19,587 27,867
Deferred debits and other assets 20,903 15,263
Total assets $145,164 $133,763
Current liabilities $ 26,036 $ 32,552
Non-current liabilities 35,884 6,298
Equity 83,244 94,913
Total liabilities and equity $145,164 $133,763
Also, in the fourth quarter of 2004, Entergy recorded a charge of
approximately $55 million ($36 million net-of-tax) as a result of
an impairment of the value of the Warren Power plant. Entergy
concluded that the value of the plant, which is owned in the
non-nuclear wholesale assets business, was impaired. Entergy
reached this conclusion based on valuation studies prepared in
connection with the sale of preferred stock in a subsidiary in the
non-nuclear wholesale assets business.
GEOGRAPHIC AREAS
For the years ended December 31, 2005, 2004, and 2003,
Entergy derived less than 1% of its revenue from outside of the
United States.
As of December 31, 2005 and 2004 Entergy had almost no
long-lived assets located outside of the United States.
NOTE 12. EQUITY METHOD INVESTMENTS
As of December 31, 2005, Entergy owns investments in the
following companies that it accounts for under the equity method
of accounting:
Company Ownership Description
Entergy
New Orleans, Inc.
100% ownership A regulated public utility
of common stock company that generates, trans-
mits, distributes, and sells
electric power to retail and
wholesale customers. As a
result of Entergy New
Orleans’ bankruptcy filing in
September 2005, Entergy
deconsolidated Entergy New
Orleans and reflects Entergy
New Orleans’ financial results
under the equity method of
accounting retroactive to
January 1, 2005. See Note 16
for further discussion of the
bankruptcy proceeding.
Entergy-Koch, LP 50% partnership Engaged in two major busi-
interest nesses: energy commodity
marketing and trading
through Entergy-Koch
Trading, and gas transporta-
tion and storage through
Gulf South Pipeline.
Entergy-Koch sold both of
these businesses in the
fourth quarter of 2004,
and Entergy-Koch is no
longer an operating entity.
RS Cogen LLC 50% member Co-generation project that
interest produces power and steam
on an industrial and
merchant basis in the Lake
Charles, Louisiana area.
Top Deer 50% member Wind-powered electric
generation joint venture.
interest
Following is a reconciliation of Entergy’s investments in equity
affiliates (in thousands):
2005 2004 2003
Beginning of year $231,779 $1,053,328 $ 824,209
Deconsolidation of Entergy New
Orleans, effective January 1, 2005 154,462 – –
Additional investments – 157,020 4,668
Income (loss) from the investments 985 (78,727) 271,647
Other income – 6,232 45,583
Distributions received (80,901) (888,260) (105,142)
Dispositions and other adjustments (9,541) (17,814) 12,363
End of year $296,784 $ 231,779 $1,053,328