Entergy 2006 Annual Report Download - page 107

ENTERGY CORPORATION AND SUBSIDIARIES 2
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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, activity
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):
2006 2005 2004
Operating revenues $134,444 $654,333 $438,203
Pre-tax income (loss) $ (429) $ (68,854) $ 562
Assets and liabilities related to the Competitive Retail Services business’
discontinued operations were as follows (in thousands):
December 31, 2006 2005
Current assets $10,945 $ 89,579
Other property and investments (482) 15,095
Property, plant and equipment – net 89 19,587
Deferred debits and other assets 27,482 20,903
Total assets $38,034 $145,164
Current liabilities $ – $ 26,036
Non-current liabilities – 35,884
Equity 38,034 83,244
Total liabilities and equity $38,034 $145,164
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, 2006, 2005, and 2004, Entergy
derived less than 1% of its revenue from outside of the United States.
As of December 31, 2006 and 2005, Entergy had almost no long-
lived assets located outside of the United States.
NOTE 14. EQUITY METHOD INVESTMENTS
As of December 31, 2006, 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, transmits,
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 18 for further discussion of
the bankruptcy proceeding.
Entergy-Koch, LP 50% partnership Entergy-Koch was in the energy
commodity marketing and trading
business and gas transportation
and storage business until the
fourth quarter of 2004 when these
businesses were sold.
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):
2006 2005 2004
Beginning of year $ 296,784 $231,779 $1,053,328
Deconsolidation of Entergy New
Orleans, effective January 1, 2005 – 154,462 –
Additional investments – – 157,020
Income (loss) from the investments 93,744 985 (78,727)
Other income – – 6,232
Distributions received (163,697) (80,901) (888,260)
Dispositions and other adjustments 2,258 (9,541) (17,814)
End of year $ 229,089 $296,784 $ 231,779
NOTESto CONSOLIDATED FINANCIAL STATEMENTS continued
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