Entergy Corporation today indicated that it expects fourth quarter 2011 as-reported earnings of approximately $0.86 per share and operational earnings of approximately $0.93 per share. Results for fourth quarter 2010 were $1.26 per share on an as-reported basis and $1.30 per share on an operational basis. Entergy also affirmed its previously issued operational earnings guidance for 2012.
As-reported results are prepared in accordance with generally accepted accounting principles and are comprised of operational earnings (described below) and special items. Special items were reflected in both periods arising out of the following:
expenses for outside services in connection with the proposed divestment and subsequent merger of Entergy’s electric transmission business into ITC Holdings Corp. announced on Dec. 5, 2011 and
expenses associated with the previously planned spin-off of the non-utility nuclear business incurred in fourth quarter 2010.
The decrease in fourth quarter 2011 earnings was driven by lower results at Parent & Other, which was partially offset by higher earnings at Utility and Entergy Wholesale Commodities. As indicated below, income tax is cited as a quarter-over-quarter variance explanation in each of the disclosure segments. On an overall company basis, the effective income tax rate in the fourth quarter 2011 exceeded the prior year period.
Parent & Other
Parent & Other’s operational results were lower for the quarter due primarily to an increase in income tax expense.
The increase in Utility fourth quarter 2011 earnings was driven by a decrease in income tax expense. Utility net revenue was not a significant driver quarter-over-quarter, with a negative weather effect essentially offsetting other price and volume variances. Weather was mild in the current quarter compared to cooler-than-normal weather last year.
Entergy Wholesale Commodities
The quarter-over-quarter increase in operational earnings at Entergy Wholesale Commodities was driven by a lower effective income tax rate. Also contributing to the higher results was a reduction in the decommissioning liability to reflect an updated decommissioning study finalized in the fourth quarter of 2011. Partially offsetting these positive items was the absence of a gain on a sale of a plant sold in December 2010 and lower net revenue. EWC’s net revenue declined due primarily to lower pricing associated with the nuclear fleet. Providing a partial offset in net revenue was an increase in nuclear generation due to fewer planned and unplanned outages. The Vermont Yankee nuclear plant had 25 refueling days in the current quarter compared to 43 refueling days at two plants in fourth quarter 2010.
Entergy affirmed previously issued operational earnings guidance for 2012 to be in the range of $5.40 to $6.20 per share. Previously issued as-reported earnings guidance of $5.40 to $6.20 per share for 2012 does not reflect any potential future expenses for the special item noted above in connection with the proposed spin-merge of Entergy’s transmission business. As-reported earnings guidance will be updated to reflect this special item as actual costs are incurred throughout 2012.