Equity

9 Months Ended

Sep. 30, 2018

EQUITY (Entergy Corporation and Entergy Louisiana)

Common Stock

Earnings per Share

The following table presents Entergy’s basic and diluted earnings per share calculations included on the consolidated income statements:



	For the Three Months Ended September 30,
	2018						2017
	(In Millions, Except Per Share Data)
Basic earnings per share	Income		Shares	$/share			Income		Shares	$/share
Net income attributable to Entergy Corporation		$536.4	181.0		$2.96			$398.2	179.6		$2.22
Average dilutive effect of:
Stock options			0.4	(0.01		)			0.2	—
Other equity plans			0.8	(0.01		)			0.7	(0.01		)
Equity forwards			1.5	(0.02		)			—	—
Diluted earnings per share		$536.4	183.7		$2.92			$398.2	180.5		$2.21

The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was approximately 1.1 million for the three months ended September 30, 2018 and approximately 2.5 million for the three months ended September 30, 2017.



	For the Nine Months Ended September 30,
	2018						2017
	(In Millions, Except Per Share Data)
Basic earnings per share	Income		Shares	$/share			Income		Shares	$/share
Net income attributable to Entergy Corporation		$914.6	180.8		$5.06			$890.7	179.5		$4.96
Average dilutive effect of:
Stock options			0.3	(0.01		)			0.2	(0.01		)
Other equity plans			0.7	(0.01		)			0.5	(0.01		)
Equity forwards			0.9	(0.03		)			—	—
Diluted earnings per share		$914.6	182.7		$5.01			$890.7	180.2		$4.94

The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was approximately 1.1 million for the nine months ended September 30, 2018 and approximately 3.3 million for the nine months ended September 30, 2017.

Entergy’s stock options and other equity compensation plans are discussed in Note 5 to the financial statements herein and in Note 12 to the financial statements in the Form 10-K.

Dividends declared per common share were $0.89 for the three months ended September 30, 2018 and $0.87 for the three months ended September 30, 2017. Dividends declared per common share were $2.67 for the nine months ended September 30, 2018 and $2.61 for the nine months ended September 30, 2017.

Equity Forward Sale Agreements

In June 2018, Entergy marketed an equity offering of 15.3 million shares of common stock. In lieu of issuing equity at the time of the offering, Entergy entered into forward sale agreements with various investment banks. No amounts have or will be recorded on Entergy’s balance sheet with respect to the equity offering until settlements of the equity forwards occur. The equity forwards require Entergy to, at its election prior to June 7, 2019, either (i) physically settle the transactions by issuing the total of 15.3 million shares of its common stock to the investment banks in exchange for net proceeds at the then-applicable forward sale price specified by the agreements (initially $74.45 per share) or (ii) net settle the transactions in whole or in part through the delivery or receipt of cash or shares. The forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor and will decrease by other fixed amounts specified in the agreements.

If Entergy elects physical settlement of the forward sale agreements, it expects to use the net proceeds for general corporate purposes, which may include repayment of commercial paper, outstanding loans under Entergy's revolving credit facility, or other debt.

Until settlement of the equity forwards, earnings per share dilution resulting from the agreements, if any, will be determined under the treasury stock method. Share dilution occurs when the average market price of Entergy’s common stock is higher than the average forward sales price. If Entergy had elected to net share settle the forward sale agreements as of September 30, 2018, Entergy would have been required to deliver 1.4 million shares.

Treasury Stock

During the nine months ended September 30, 2018, Entergy Corporation issued 613,662 shares of its previously repurchased common stock to satisfy stock option exercises, vesting of shares of restricted stock, and other stock-based awards. Entergy Corporation did not repurchase any of its common stock during the nine months ended September 30, 2018.

Retained Earnings

On October 26, 2018, Entergy Corporation’s Board of Directors declared a common stock dividend of $0.91 per share, payable on December 3, 2018, to holders of record as of November 8, 2018.

Entergy implemented ASU No. 2016-01 “Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” effective January 1, 2018. The ASU requires investments in equity securities, excluding those accounted for under the equity method or resulting in consolidation of the investee, to be measured at fair value with changes recognized in net income. Entergy implemented this standard using a modified retrospective method, and recorded an adjustment increasing retained earnings and reducing accumulated other comprehensive income by $633 million as of January 1, 2018 for the cumulative effect of the unrealized gains and losses on investments in equity securities held by the decommissioning trust funds that do not meet the criteria for regulatory accounting treatment. See Note 9 to the financial statements herein for further discussion of effects of the new standard.

Entergy implemented ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” effective January 1, 2018. The ASU requires entities to recognize the income tax consequences of intra-entity asset transfers, other than inventory, at the time the transfer occurs. Entergy implemented this standard using a modified retrospective method, and recorded an adjustment decreasing retained earnings by $56 million as of January 1, 2018 for the cumulative effect of recording deferred tax assets on previously-recognized intra-entity asset transfers.

Entergy adopted ASU No. 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” in the first quarter 2018. The ASU allows a one-time reclassification from accumulated other comprehensive income to retained earnings for certain tax effects resulting from the Tax Cuts and Jobs Act that would otherwise be stranded in accumulated other comprehensive income. Entergy’s policy for releasing income tax effects from accumulated other comprehensive income for available-for-sale securities is to use the portfolio approach. Entergy elected to reclassify the $15.5 million of stranded tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act to retained earnings ($32 million decrease) or the regulatory liability for income taxes ($16.5 million increase). Entergy’s reclassification only includes the effect of the change in the federal corporate income tax rate on accumulated other comprehensive income.

Comprehensive Income

Accumulated other comprehensive income (loss) is included in the equity section of the balance sheets of Entergy and Entergy Louisiana. The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the three months ended September 30, 2018 by component:



	Cash flow hedges net unrealized gain (loss)			Pension and other postretirement liabilities			Net unrealized investment gain (loss)			Total Accumulated Other Comprehensive Income (Loss)
	(In Thousands)
Beginning balance, July 1, 2018		($14,874	)		($589,926	)		($8,842	)		($613,642	)
Other comprehensive income (loss) before reclassifications	(40,401		)	—			(7,173		)	(47,574		)
Amounts reclassified from accumulated other comprehensive income (loss)	8,397			15,265			5,428			29,090
Net other comprehensive income (loss) for the period	(32,004		)	15,265			(1,745		)	(18,484		)
Ending balance, September 30, 2018		($46,878	)		($574,661	)		($10,587	)		($632,126	)

The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the three months ended September 30, 2017 by component:



	Cash flow hedges net unrealized gain (loss)			Pension and other postretirement liabilities			Net unrealized investment gain (loss)			Total Accumulated Other Comprehensive Income (Loss)
	(In Thousands)
Beginning balance, July 1, 2017		$23,414			($449,898	)		$479,257			$52,773
Other comprehensive income (loss) before reclassifications	27,884			—			35,630			63,514
Amounts reclassified from accumulated other comprehensive income (loss)	(14,671		)	12,297			(2,235		)	(4,609		)
Net other comprehensive income (loss) for the period	13,213			12,297			33,395			58,905
Ending balance, September 30, 2017		$36,627			($437,601	)		$512,652			$111,678

The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the nine months ended September 30, 2018 by component:



	Cash flow hedges net unrealized gain (loss)			Pension and other postretirement liabilities			Net unrealized investment gain (loss)			Total Accumulated Other Comprehensive Income (Loss)
	(In Thousands)

Ending balance, December 31, 2017		($37,477	)		($531,099	)		$545,045			($23,531	)
Implementation of accounting standards	—			—			(632,617		)	(632,617		)
Beginning balance, January 1, 2018		($37,477	)		($531,099	)		($87,572	)		($656,148	)

Other comprehensive income (loss) before reclassifications	(31,816		)	—			(50,958		)	(82,774		)
Amounts reclassified from accumulated other comprehensive income (loss)	30,171			47,404			13,716			91,291
Net other comprehensive income (loss) for the period	(1,645		)	47,404			(37,242		)	8,517

Reclassification pursuant to ASU 2018-02	(7,756		)	(90,966		)	114,227			15,505

Ending balance, September 30, 2018		($46,878	)		($574,661	)		($10,587	)		($632,126	)

The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the nine months ended September 30, 2017 by component:



	Cash flow hedges net unrealized gain (loss)			Pension and other postretirement liabilities			Net unrealized investment gain (loss)			Foreign currency translation			Total Accumulated Other Comprehensive Income (Loss)
	(In Thousands)
Beginning balance, January 1, 2017		$3,993			($469,446	)		$429,734			$748			($34,971	)
Other comprehensive income (loss) before reclassifications	88,550			—			109,372			(748		)	197,174
Amounts reclassified from accumulated other comprehensive income (loss)	(55,916		)	31,845			(26,454		)	—			(50,525		)
Net other comprehensive income (loss) for the period	32,634			31,845			82,918			(748		)	146,649
Ending balance, September 30, 2017		$36,627			($437,601	)		$512,652			$—			$111,678

The following table presents changes in accumulated other comprehensive income (loss) for Entergy Louisiana for the three months ended September 30, 2018 and 2017:



	Pension and Other Postretirement Liabilities
	2018			2017
	(In Thousands)
Beginning balance, July 1,		($57,451	)		($49,122	)
Amounts reclassified from accumulated other comprehensive income (loss)	(500		)	(370		)
Net other comprehensive income (loss) for the period	(500		)	(370		)

Ending balance, September 30,		($57,951	)		($49,492	)

The following table presents changes in accumulated other comprehensive income (loss) for Entergy Louisiana for the nine months ended September 30, 2018 and 2017:



	Pension and Other Postretirement Liabilities
	2018			2017
	(In Thousands)
Beginning balance, January 1,		($46,400	)		($48,442	)
Amounts reclassified from accumulated other comprehensive income (loss)	(1,502		)	(1,050		)
Net other comprehensive income (loss) for the period	(1,502		)	(1,050		)

Reclassification pursuant to ASU 2018-02	(10,049		)	—

Ending balance, September 30,		($57,951	)		($49,492	)

Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy for the three months ended September 30, 2018 and 2017 are as follows:



	Amounts reclassified from AOCI						Income Statement Location
	2018			2017
	(In Thousands)
Cash flow hedges net unrealized gain (loss)
Power contracts		($10,566	)		$22,756		Competitive business operating revenues
Interest rate swaps	(63		)	(185		)	Miscellaneous - net
Total realized gain (loss) on cash flow hedges	(10,629		)	22,571
	2,232			(7,900		)	Income taxes
Total realized gain (loss) on cash flow hedges (net of tax)		($8,397	)		$14,671

Pension and other postretirement liabilities
Amortization of prior-service credit		$5,425			$6,565		(a)
Amortization of loss	(24,740		)	(21,480		)	(a)
Settlement loss	(76		)	(4,200		)	(a)
Total amortization	(19,391		)	(19,115		)
	4,126			6,818			Income taxes
Total amortization (net of tax)		($15,265	)		($12,297	)

Net unrealized investment gain (loss)
Realized gain (loss)		($8,589	)		$4,382		Interest and investment income
	3,161			(2,147		)	Income taxes
Total realized investment gain (loss) (net of tax)		($5,428	)		$2,235

Total reclassifications for the period (net of tax)		($29,090	)		$4,609


(a)	These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 6 to the financial statements herein for additional details.

Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy for the nine months ended September 30, 2018 and 2017 are as follows:



	Amounts reclassified from AOCI						Income Statement Location
	2018			2017
	(In Thousands)
Cash flow hedges net unrealized gain (loss)
Power contracts		($37,913	)		$86,678		Competitive business operating revenues
Interest rate swaps	(278		)	(654		)	Miscellaneous - net
Total realized gain (loss) on cash flow hedges	(38,191		)	86,024
	8,020			(30,108		)	Income taxes
Total realized gain (loss) on cash flow hedges (net of tax)		($30,171	)		$55,916

Pension and other postretirement liabilities
Amortization of prior-service credit		$16,278			$19,691		(a)
Amortization of loss	(74,503		)	(64,605		)	(a)
Settlement loss	(2,098		)	(5,965		)	(a)
Total amortization	(60,323		)	(50,879		)
	12,919			19,034			Income taxes
Total amortization (net of tax)		($47,404	)		($31,845	)

Net unrealized investment gain (loss)
Realized gain (loss)		($21,703	)		$51,871		Interest and investment income
	7,987			(25,417		)	Income taxes
Total realized investment gain (loss) (net of tax)		($13,716	)		$26,454

Total reclassifications for the period (net of tax)		($91,291	)		$50,525


(a)	These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 6 to the financial statements herein for additional details.

Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy Louisiana for the three months ended September 30, 2018 and 2017 are as follows:



	Amounts reclassified from AOCI						Income Statement Location
	2018			2017
	(In Thousands)
Pension and other postretirement liabilities
Amortization of prior-service credit		$1,934			$1,934		(a)
Amortization of loss	(1,257		)	(1,332		)	(a)
Total amortization	677			602
	(177		)	(232		)	Income taxes
Total amortization (net of tax)	500			370

Total reclassifications for the period (net of tax)		$500			$370


(a)	These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 6 to the financial statements herein for additional details.

Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy Louisiana for the nine months ended September 30, 2018 and 2017 are as follows:



	Amounts reclassified from AOCI						Income Statement Location
	2018			2017
	(In Thousands)
Pension and other postretirement liabilities
Amortization of prior-service credit		$5,802			$5,802		(a)
Amortization of loss	(3,770		)	(3,996		)	(a)
Total amortization	2,032			1,806
	(530		)	(756		)	Income taxes
Total amortization (net of tax)	1,502			1,050

Total reclassifications for the period (net of tax)		$1,502			$1,050


(a)	These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 6 to the financial statements herein for additional details.

Entergy Louisiana [Member]

Equity