-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WzwPPMXuYyOotItSUPgmb8nWGTp4st3DxkH3nrS+fd+yFdWsMzvjqG8SBPipQCWR fWyAYQAyJACdd1a1u2Cp5A== /in/edgar/work/0000065984-00-000130/0000065984-00-000130.txt : 20001114 0000065984-00-000130.hdr.sgml : 20001114 ACCESSION NUMBER: 0000065984-00-000130 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 721229752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11299 FILM NUMBER: 757872 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 504-576-4000 MAIL ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GSU HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY CORP /FL/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH UTILITIES INC DATE OF NAME CHANGE: 19890521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY ARKANSAS INC CENTRAL INDEX KEY: 0000007323 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 710005900 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10764 FILM NUMBER: 757873 BUSINESS ADDRESS: STREET 1: 425 WEST CAPITOL AVE STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72201 BUSINESS PHONE: 501-377-4000 MAIL ADDRESS: STREET 1: P O BOX 551 CITY: LITTLE ROCK STATE: AR ZIP: 72203 FORMER COMPANY: FORMER CONFORMED NAME: ARKANSAS POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY GULF STATES INC CENTRAL INDEX KEY: 0000044570 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 740662730 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-27031 FILM NUMBER: 757874 BUSINESS ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 BUSINESS PHONE: 409-838-6631 MAIL ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 FORMER COMPANY: FORMER CONFORMED NAME: GULF STATES UTILITIES CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY LOUISIANA INC CENTRAL INDEX KEY: 0000060527 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 720245590 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08474 FILM NUMBER: 757875 BUSINESS ADDRESS: STREET 1: 4809 JEFFERSON HGWY CITY: JEFFERSON STATE: LA ZIP: 70121 BUSINESS PHONE: 504-840-2734 MAIL ADDRESS: STREET 1: 4809 JEFFERSON HIGHWAY CITY: JEFFERSON STATE: LA ZIP: 70121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY MISSISSIPPI INC CENTRAL INDEX KEY: 0000066901 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 640205830 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00320 FILM NUMBER: 757876 BUSINESS ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MS ZIP: 39201 BUSINESS PHONE: 601-368-5000 MAIL ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MS ZIP: 39201 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY NEW ORLEANS INC CENTRAL INDEX KEY: 0000071508 STANDARD INDUSTRIAL CLASSIFICATION: [4931 ] IRS NUMBER: 720273040 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05807 FILM NUMBER: 757877 BUSINESS ADDRESS: STREET 1: 1600 PERDIDO ST STREET 2: BLDG 505 CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 504-670-3674 MAIL ADDRESS: STREET 1: 1600 PERDIDO ST STREET 2: BLDG 505 CITY: NEW ORLEANS STATE: LA ZIP: 70112 FORMER COMPANY: FORMER CONFORMED NAME: NEW ORLEANS PUBLIC SERVICE INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEM ENERGY RESOURCES INC CENTRAL INDEX KEY: 0000202584 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 720752777 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09067 FILM NUMBER: 757878 BUSINESS ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 BUSINESS PHONE: 601-368-5000 MAIL ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH ENERGY INC DATE OF NAME CHANGE: 19860803 10-Q 1 0001.txt _________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2000 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address of Principal Executive Identification No. Offices and Telephone Number 1-11299 ENTERGY CORPORATION 72-1229752 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 1-10764 ENTERGY ARKANSAS, INC. 71-0005900 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 1-27031 ENTERGY GULF STATES, INC. 74-0662730 (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 838-6631 1-8474 ENTERGY LOUISIANA, INC. 72-0245590 (a Louisiana corporation) 4809 Jefferson Highway Jefferson, Louisiana 70121 Telephone (504) 840-2734 0-320 ENTERGY MISSISSIPPI, INC. 64-0205830 (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040 (a Louisiana corporation) 1600 Perdido Street, Building 505 New Orleans, Louisiana 70112 Telephone (504) 670-3674 1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777 (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 _________________________________________________________________________ Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Common Stock Outstanding Outstanding at October 31, 2000 Entergy Corporation ($0.01 par value) 219,596,299 Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company reports herein only as to itself and makes no other representations whatsoever as to any other company. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 1999, and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000, filed by the individual registrants with the SEC, and should be read in conjunction therewith. Forward-Looking Information The following constitutes a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that forward-looking statements contained herein with respect to the revenues, earnings, performance, strategies, prospects and other aspects of the business of Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., System Energy Resources, Inc., and their affiliated companies may involve risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, risks and uncertainties relating to: the effects of weather, the performance of generating units and transmission systems, the possession of nuclear materials, fuel prices and availability, the effects of regulatory decisions and changes in law, litigation, capital spending requirements, the onset of competition, advances in technology, changes in accounting standards, corporate restructuring and changes in capital structure, consummation of the business combination with FPL Group, Inc., movements in the markets for electricity and other energy-related commodities, changes in interest rates and in financial and foreign currency markets generally, changes in corporate strategies, and other factors. ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q September 30, 2000 Page Number Definitions 1 Management's Financial Discussion and Analysis - Significant Factors and Known Trends 3 Management's Financial Discussion and Analysis - Liquidity and Capital Resources 10 Results of Operations and Financial Statements: Entergy Corporation and Subsidiaries: Results of Operations 18 Consolidated Statements of Income 25 Consolidated Statements of Cash Flows 26 Consolidated Balance Sheets 28 Consolidated Statements of Retained Earnings and Comprehensive Income 30 Selected Operating Results 31 Entergy Arkansas, Inc.: Results of Operations 32 Income Statements 36 Statements of Cash Flows 37 Balance Sheets 38 Selected Operating Results 40 Entergy Gulf States, Inc.: Results of Operations 41 Income Statements 44 Statements of Cash Flows 45 Balance Sheets 46 Selected Operating Results 48 Entergy Louisiana, Inc.: Results of Operations 49 Income Statements 52 Statements of Cash Flows 53 Balance Sheets 54 Selected Operating Results 56 Entergy Mississippi, Inc.: Results of Operations 57 Income Statements 60 Statements of Cash Flows 61 Balance Sheets 62 Selected Operating Results 64 Entergy New Orleans, Inc.: Results of Operations 65 Income Statements 67 Statements of Cash Flows 69 Balance Sheets 70 Selected Operating Results 72 System Energy Resources, Inc.: Results of Operations 73 Income Statements 74 Statements of Cash Flows 75 Balance Sheets 76 Notes to Financial Statements for Entergy Corporation and Subsidiaries 78 Part II: Item 1. Legal Proceedings 92 Item 4. Submission of Matters to a Vote of Security Holders 93 Item 5. Other Information 94 Item 6. Exhibits and Reports on Form 8-K 94 Signature 97 DEFINITIONS Certain abbreviations or acronyms used in the text are defined below: Abbreviation or Acronym Term AFUDC Allowance for Funds Used During Construction ALJ Administrative Law Judge ANO 1 and 2 Units 1 and 2 of Arkansas Nuclear One Steam Electric Generating Station (nuclear) APSC Arkansas Public Service Commission Board Board of Directors of Entergy Corporation BPS British pounds sterling Cajun Cajun Electric Power Cooperative, Inc. Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof CitiPower CitiPower Pty., an electric distribution company serving Melbourne, Australia and surrounding suburbs, which was acquired by Entergy effective January 5, 1996, and was sold by Entergy effective December 31, 1998 Council Council of the City of New Orleans, Louisiana domestic utility companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively EPA United States Environmental Protection Agency EWG Exempt wholesale generator under PUHCA Entergy Entergy Corporation and its various direct and indirect subsidiaries Entergy Arkansas Entergy Arkansas, Inc., an Arkansas corporation Entergy Corporation Entergy Corporation, a Delaware corporation Entergy Gulf States Entergy Gulf States, Inc., a Texas corporation (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company) Entergy Louisiana Entergy Louisiana, Inc., a Louisiana corporation Entergy Mississippi Entergy Mississippi, Inc., a Mississippi corporation Entergy New Orleans Entergy New Orleans, Inc., a Louisiana corporation FERC Federal Energy Regulatory Commission FUCO Exempt foreign utility company under PUHCA Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 1999 of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy FPL Group FPL Group, Inc., a Florida corporation and parent company of Florida Power & Light Company Grand Gulf 1 Unit No. 1 of the Grand Gulf Nuclear Generation Plant Independence Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power London Electricity London Electricity plc - a regional electric company serving London, England, which was acquired by Entergy effective February 1, 1997, and was sold by Entergy effective December 4, 1998 LPSC Louisiana Public Service Commission Merger The business combination transaction pursuant to which the outstanding shares of FPL Group and the outstanding shares of Entergy Corporation will be converted into the right to receive 1.00 and 0.585 shares, respectively, of a new company Merger Agreement Agreement and Plan of Merger dated July 30, 2000 by and between FPL Group, Entergy Corporation, WCB Holding Corporation, Ranger Acquisition Corporation and Ring Acquisition Corporation MPSC Mississippi Public Service Commission MW Megawatt(s) Abbreviation or Acronym Term NRC Nuclear Regulatory Commission Pilgrim Pilgrim Nuclear Station, 670 MW facility located in Plymouth, Massachusetts purchased in July 1999 from Boston Edison by Entergy's non-utility nuclear power business PUCT Public Utility Commission of Texas PUHCA Public Utility Holding Company Act of 1935, as amended River Bend River Bend Nuclear Generation Plant SEC Securities and Exchange Commission SFAS Statement of Financial Accounting Standards as promulgated by the Financial Accounting Standards Board System Agreement Agreement, effective January 1, 1983, as modified, among the domestic utility companies relating to the sharing of generating capacity and other power resources System Energy System Energy Resources, Inc., an Arkansas corporation UK The United Kingdom of Great Britain and Northern Ireland Unit Power Sales Agreement Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf 1 Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant White Bluff White Bluff Steam Electric Generating Station, 57% owned by Entergy Arkansas ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a discussion of the increasing competitive pressures facing Entergy and the electric utility industry, as well as market risks and other significant issues affecting Entergy. Set forth below are updates to the information contained therein. Business Combination with FPL Group On July 30, 2000, Entergy Corporation and FPL Group entered into a Merger Agreement providing for a business combination that results in the creation of a new company. Each outstanding share of FPL Group common stock will be converted into the right to receive one share of the new company's common stock, and each outstanding share of Entergy Corporation common stock will be converted into the right to receive 0.585 of a share of the new company's common stock. It is expected that FPL Group's shareholders will own approximately 57% of the common equity of the new company and Entergy's shareholders will own approximately 43%. The initial board of directors of the new company will consist of eight directors designated by FPL Group and seven directors designated by Entergy. The new company will be given a new name that will be agreed upon between the Boards of Directors of FPL and Entergy prior to the consummation of the Merger. The new company will maintain its principal corporate offices and headquarters in Juno Beach, Florida, and will maintain its utility headquarters in New Orleans, Louisiana. The Merger Agreement generally allows Entergy to continue business in the ordinary course consistent with past practice and contains certain restrictions on Entergy's capital activities, including restrictions on the issuance of securities, capital expenditures, dispositions, incurrence or guarantee of indebtedness, and trading or marketing of energy. Entergy generally will be permitted to take actions pursuant to restructuring legislation in the domestic utility companies' jurisdictions of operation and to reorganize its transmission business. Under certain circumstances, if the Merger Agreement is terminated, a termination fee of $215 million may be payable by one of the parties. Both the FPL Group and Entergy Boards of Directors unanimously approved the Merger. The Merger is conditioned upon, among other things, approvals of the shareholders of FPL Group and Entergy and the receipt of required regulatory approvals of various local, state, and federal regulatory agencies and commissions, including the SEC and FERC. Entergy and FPL Group will seek to consummate the Merger by late 2001. The Joint Proxy/Prospectus of Entergy and FPL Group dated November 7, 2000 has been declared effective by the SEC and mailing to the respective shareholders of FPL and Entergy commenced on November 9, 2000. FPL Group and Entergy will each hold a special meeting of its shareholders on December 15, 2000 to consider and vote upon the proposal to approve the Merger. In September 2000, Entergy and FPL Group announced plans to form a joint venture between FPL Energy and Entergy Wholesale Operations (EWO), to be named at a later date. Each company will have a 50% interest in the joint venture and retain their respective ownership of current operating plants and late-stage development projects, along with their current operations personnel. The joint venture will preside over new and early-stage development projects, pursue acquisitions for fossil and nuclear assets, and provide business management, finance, accounting, trading, engineering, and construction management services on assets retained by FPL Energy and EWO and on any new assets jointly acquired or developed by the joint venture. The joint venture is currently in the planning stage. Upon completion of the merger of FPL Group and Entergy, the operations of the joint venture are expected to be combined into one wholly-owned subsidiary. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Domestic Transition to Competition State Regulatory and Legislative Activity Arkansas In April 1999, the Arkansas legislature enacted a law providing for competition in the electric utility industry through retail open access on January 1, 2002. When retail open access is achieved, the generation operations will become a competitive business, but transmission and distribution operations will continue to be regulated. Under the law, the APSC may delay implementation of retail open access, but not beyond June 30, 2003. In October 2000, Entergy joined with the APSC Staff and several other interested parties and recommended to the APSC that retail open access be delayed so that it begins no sooner than October 2003 and no later than October 2005. The recommendation was made in response to a request from the APSC, which is concerned that the current timeline is no longer feasible. The new proposal requires legislative approval because it extends the timeline beyond the terms of the current law. The Arkansas Legislature convenes its next session in January 2001. The implementation of the Arkansas retail open access law through rulemakings and company filings is ongoing. Rulemakings associated with energy service provider licensing rules and affiliate rules have been completed. In June 2000, the APSC declared that billing would become a competitive service at the beginning of retail open access. Entergy Arkansas filed a functional, but not corporate, unbundling plan with the APSC on August 8, 2000. The functional unbundling plan initially establishes separate business units for distribution, generation, and a new retail energy service provider. The plan contemplates the transfer of transmission assets to the Transco discussed in the Form 10-K and herein in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS". The functional unbundling plan is tentative because the regulatory requirements to implement the retail open access law have not been finalized, and changes to the plan are possible. Texas In June 1999, the Texas legislature enacted a law providing for competition in the electric utility industry through retail open access. The law provides for retail open access by most electric utilities, including Entergy Gulf States, on January 1, 2002. When retail open access is achieved, the generation business and a new retail electricity provider function will become competitive businesses, but transmission and distribution operations will continue to be regulated. The new retail electricity provider function will be the primary point of contact with customers for most services beyond initiation of electric service and restoration of service following outages. In January 2000, as required by the Texas restructuring legislation, Entergy Gulf States filed a business separation plan with the PUCT, which was amended in June 2000. The plan provides that, by January 2002, Entergy Gulf States will be divided into a Texas distribution company, a Texas transmission company, a Texas generation company, a Texas retail electricity provider, and a Louisiana company that will encompass distribution, generation, transmission, and retail operations. In July 2000, the PUCT issued an interim order to approve the amended business separation plan. The plan provides that the Louisiana company would retain the liability for all debt obligations of Entergy Gulf States and that the property of the Texas companies would be released from the lien of Entergy Gulf States' mortgage. Each of the Texas companies would assume a portion of Entergy Gulf States' debt obligations, which assumptions would not act to release the Louisiana company's obligations. Each of the Texas companies would also grant a lien on their properties in favor of the Louisiana company to secure its obligations to the Louisiana company in respect of the assumed obligations. In addition, under the plan Entergy Gulf States will refinance or retire the Texas companies' portion of existing debt through 2004. Regulatory approvals ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS from FERC, the SEC, and the LPSC will be required before the business separation plan can be implemented. Remaining business separation issues in Texas will be addressed in the cost unbundling proceeding before the PUCT. The LPSC has opened a docket to identify the changes in corporate structure of Entergy Gulf States, and their potential impact on Louisiana retail ratepayers, resulting from restructuring in Texas and Arkansas. Entergy Gulf States filed testimony in that proceeding in August 2000. The LPSC staff filed testimony in that proceeding in October 2000 criticizing Entergy Gulf States' proposal, particularly the part related to the Texas portion of generation assets being transferred to an unregulated entity. Hearings are scheduled for February 2001. Pursuant to the Texas restructuring legislation, Entergy Gulf States filed its separated business cost data and proposed transmission, distribution, and competition tariffs with the PUCT on March 31, 2000. This filing also included a proposal for a performance-based enhancement to the authorized rate of return on equity. Management does not agree with the arbitrary level of return on equity set by PUCT rules (200 basis points over the cost of a distribution utility's debt) and is seeking a higher return in its separated cost filing. A procedural schedule for the case has been established, calling for a hearing in January 2001. Management cannot predict the outcome of this proceeding. In connection with unbundled cost filings made by all Texas investor owned utilities, the PUCT opened a "generic docket" to determine issues that may be resolved on an industry-wide basis, including incentive mechanisms to enhance the authorized rate of return, before the individual utility hearings begin. The PUCT has ruled against the generic use of incentive returns, and has converted the incentive mechanism portion of the docket into a proceeding on the generic use of capital structures and return on equity. See Note 2 to the financial statements for further information on the March 31, 2000 filing. In October 2000, the Provider of Last Resort (POLR) rule was approved by the PUCT, requiring that such a provider exist in every area of the state and setting up the process by which such a provider will be selected and its services priced. The PUCT will accept bids from parties seeking to become the POLR in each area, with a preference that the POLR not be the incumbent utility in the area. However, depending on the outcome of the bidding process, Entergy Gulf States may be required to provide POLR service in its service territory. This may have a material financial impact on the Entergy Gulf States retail electric provider depending on the terms and prices eventually approved by the PUCT for POLR service. Mississippi In May 2000, after two years of studies and hearings, the MPSC announced that it was suspending its docket studying the opening of the state's retail electricity markets to competition. The MPSC based its decision on its finding that competition could raise the electric rates paid by residential and small commercial customers. The final decision ultimately lies with the Mississippi Legislature, which convenes its 2001 session in January. New Orleans In October 1998, the Council established a procedural schedule to determine if natural gas retail competition is in the public interest. In April 1999, Entergy New Orleans filed a plan that would allow for gas retail open access in New Orleans. The plan outlines the conditions under which Entergy New Orleans could support gas retail open access should the Council find it in the public interest. Hearings were held on retail competition for gas service in November 1999. The advisors to the Council have issued a final report that proposes various pilot programs and finds that retail gas open access is not in the public interest at this time. The Council accepted an offer of settlement from Entergy New Orleans in this matter that allows for a voluntary pilot program for a limited number of large industrial non-jurisdictional gas customers. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Federal Regulatory Activity Proposed System Agreement Amendments See "Part I, Item 1, Competition" in the Form 10-K for a discussion of changes that may result from retail competition and unbundling. In April 2000, the LPSC and the Council filed a complaint with FERC seeking revisions to the System Agreement that they allege are necessary to accommodate the introduction of retail competition in Texas and Arkansas, where Entergy Gulf States and Entergy Arkansas provide utility service, and to protect Entergy's Louisiana customers from any adverse impact that may occur due to the introduction of such retail competition in some jurisdictions but not others. The LPSC and the Council requested that FERC immediately institute a proceeding to permit changes to be adopted prior to January 1, 2002, and requested, among other things, that FERC cap certain of the System Agreement obligations of Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans and fix these companies' access to pool energy at the average level existing for the three years prior to the date that retail access is initiated in Texas and Arkansas. Alternatively, the LPSC and the Council requested that FERC require Entergy to provide wholesale power contracts to these companies to satisfy their energy requirements at costs no higher than would have been incurred if retail competition were not implemented. The LPSC and the Council requested that the relief be made available for at least eight years after implementation of retail competition or the withdrawal of Entergy Arkansas and Entergy Gulf States from the System Agreement, or until retail access is implemented in Louisiana and New Orleans. In addition, among other things, the LPSC and the Council asserted in their complaint that: o unless the requested relief is granted, the restructuring legislation adopted in Texas and Arkansas, to the extent such legislation requires, or has the effect of, altering the rights of parties under the System Agreement, will result in violations of the interstate commerce clause, the due process clause, and the impairment of contracts clause in the U.S. Constitution; and o the failure of the domestic utility companies to honor a right of first refusal with respect to any sale of generating capacity and associated energy under the System Agreement, and any attempt to eliminate such a right of first refusal from the System Agreement, would violate the Federal Power Act and constitute a breach of the System Agreement. In June 2000, Entergy's domestic utility companies filed proposed amendments to the System Agreement with FERC to facilitate the implementation of retail competition in Arkansas and Texas and to provide for continued equalization of costs among the domestic utilities in Louisiana and Mississippi. The amendments provide the following: o cessation of participation in all aspects of the System Agreement, other than those related to transmission equalization, for any jurisdictional division of a domestic utility operating in a jurisdiction that initiates retail open access; o certain sections of the System Agreement will no longer apply to the sales of generating capacity, whether through the sale of the asset or the output thereof, by a domestic utility operating in a jurisdiction that has established a date by which it will implement retail access; and o modification of the service schedule developed to track changes in energy costs resulting from the Entergy-Gulf States Utilities merger to include one final true-up of fuel costs upon cessation of one company's participation in the System Agreement, after which the service schedule will no longer be applicable for any purpose. Entergy believes that the proceedings relating to the proposed amendments serve as a response to the complaint by the LPSC and the Council and anticipates that the proceedings will be consolidated. In response to Entergy's proposal, the LPSC and the Council have requested ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS that FERC dismiss the proposed amendments and proceed with the complaint proceedings. Several other parties have also intervened in the proceeding. In the event that the proceedings relating to the proposed amendments proceed, the LPSC and the Council have asserted that the charges to the domestic utility companies under the Unit Power Sales Agreement need to be reconsidered. Entergy has requested an expedited hearing on the proposed amendments and a final decision from FERC by October 1, 2001. A procedural schedule has been established, with the hearing beginning in February 2001 and an initial decision scheduled by the end of May 2001. Neither the timing, nor the ultimate outcome of these proceedings at FERC, can be predicted at this time. See "Part I, Item 1, RATE MATTERS AND REGULATION" in the Form 10-K for a discussion of the complaint filed by the LPSC seeking to exclude curtailable load from the cost allocation determination under the System Agreement. That proceeding has now been consolidated for hearing with the System Agreement proceeding described above and will be heard by FERC in February 2001. For a discussion of FERC's July 2000 order in the System Energy proposed rate increase proceeding, see Note 2 to the financial statements. Open Access Transmission and Entergy's Transco Proposal See "Open Access Transmission and Entergy's Transco Proposal" in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a discussion of Entergy's proposed Transco. In October 2000, in compliance with FERC Order 2000, Entergy made a filing with FERC that requested: o authorization to establish the Transco; o authorization to transfer the domestic utility companies' transmission assets to the Transco; and o a determination that the partnership arrangement with the Southwest Power Pool (SPP) that the Transco would operate in would qualify as an independent regional transmission organization. The partnership arrangement provides for operations under the oversight of, and within, the SPP regional transmission organization. In return for transferring their transmission assets to the Transco, the domestic utility companies will receive passive ownership interests in the Transco, which will be a limited liability company. The managing member of the Transco will be a separate corporation with an independent board of directors. Entergy intends to file in December 2000 for FERC approval of the transmission tariff for service across the Transco's facilities. Under its planned timeline, Entergy expects to have the necessary regulatory approvals for the Transco by the third quarter of 2001, with the transmission asset transfers occurring before independent Transco operations begin on December 15, 2001. State and Local Rate Regulation The domestic utility companies' retail and wholesale rate matters and other regulatory proceedings are discussed more thoroughly in Note 2 to the financial statements herein and in the Form 10-K. In June 2000, the LPSC approved a settlement between Entergy Gulf States and the LPSC staff to refund $83 million resolving refund issues in Entergy Gulf States' second, third, fourth, and fifth post-Merger earnings reviews filed with the LPSC relating to the period January 1, 1994 through December 31, 1997. This refund, for which adequate reserves had previously been recorded, was made over a three-month period beginning July 2000. In May 2000, Entergy Gulf States filed its seventh ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS required post-Merger earnings analysis with the LPSC. This filing will be subject to review by the LPSC and may result in a change in rates. Entergy Gulf States also is proposing that the allowed return on common equity be increased from 10.95% to 11.60%. A schedule for this proceeding has been established by the LPSC and hearings will begin in March 2001. In May 2000, the LPSC ordered Entergy Louisiana to refund an additional $6.4 million based on its fourth annual performance-based rate plan filed with the LPSC in April 1999 for the 1998 test year. The refund, for which an adequate reserve had previously been recorded, occurred in July 2000. In May 2000, Entergy Louisiana submitted its fifth annual performance-based rate plan filing for the 1999 test year. As a result of this filing, Entergy Louisiana implemented a $24.8 million base rate reduction in August 2000. Entergy Louisiana is proposing to increase prospectively the allowed return on common equity from 10.5% to 11.6%, which, if approved, would reduce the amount of the rate reduction. This filing will be subject to review by the LPSC. A procedural schedule has not yet been established by the LPSC in this proceeding. Continued Application of SFAS 71 and Stranded Cost Exposure See "Continued Application of SFAS 71 and Stranded Cost Exposure" in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a discussion of the potential effects of discontinuation of SFAS 71 for the generation portion of Entergy's business as well as Entergy's exposure to stranded costs. Because management believes that definitive outcomes have not yet been determined regarding the transition to competition in any of Entergy's jurisdictions, the regulated operations of the domestic utility companies and System Energy continue to apply SFAS 71. The restructuring laws enacted in Arkansas and Texas provide an opportunity for the recovery of stranded costs following review and approval by the APSC or the PUCT, respectively. Nearly all of Entergy's exposure to stranded costs involves commitments that were approved by regulators. The actual amount of costs and obligations that will be identified as stranded will be determined in regulatory proceedings. The outcome of the Texas and Arkansas stranded cost proceedings cannot be predicted at this time and will depend upon a number of variables, including the timing of stranded cost determination, the values attributable to certain strandable assets, and the assumptions concerning future market prices for electricity. In June 2000, Entergy Arkansas filed an application to continue the stranded cost mitigation efforts agreed upon in the 1997 settlement agreement approved by the APSC. These mitigation efforts include the funding of a transition cost account with excess earnings to offset future stranded costs and the accelerated amortization of Entergy Arkansas' share of the Grand Gulf purchased power obligation under the Unit Power Sales Agreement. The filing included an updated stranded cost estimate intended to support Entergy Arkansas' recommendation that the mitigation efforts continue. The filing presents an estimated range of stranded costs based upon the comparison of possible generation asset market values to the generation assets' book values and contractual obligations. The range of possible generation asset market values used in the estimate was determined using generation asset sales from other jurisdictions. In rebuttal testimony filed by Entergy Arkansas in November 2000, the estimated stranded costs in Arkansas was updated to a range of $227.8 million to $1.58 billion. Entergy Gulf States included an estimate of its Texas stranded costs in its March 31, 2000 separated costs filing with the PUCT. Using the model established by the PUCT staff, Entergy Gulf States' estimate of Texas stranded costs is $117.2 million. An updated estimate of $119.3 million was filed in August 2000 to reflect recent rulings regarding stranded cost issues in the open "generic docket" at the PUCT. Entergy Gulf States disagrees with certain of the assumptions and estimates included in the PUCT model and believes that the model understates actual stranded costs. The model offsets potential strandable costs against mitigating factors, including the estimated fair value of existing generation plants, to determine an estimated stranded cost figure. The model, however, does not include estimated River Bend decommissioning decommissioning costs, which remain obligations of the regulated utility. The Texas cost filing is discussed more thoroughly in Note 2 to the financial statements. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Market Risks Disclosure In May 2000, to mitigate currency exchange rate risk, Entergy entered into separate foreign currency forward contracts to hedge the U.S. dollar equivalent amounts of its net equity investments to be made in the Saltend and Damhead Creek projects located in the United Kingdom. The forward contracts are in the notional amounts of BPS48 million and BPS36.1 million for Saltend and Damhead Creek, respectively. The forward contract for Saltend matured in July 2000 when the equity investment was made and locked in an average spot rate of $1.48338 to BPS1. The forward contract for Damhead Creek, which was rolled over in October 2000, locked in an average spot rate of $1.45000 to BPS1, and matures in December 2000. The banks obligated on these forward contracts are rated by Standard & Poor's Rating Services at A-1 or above on their short-term obligations. During 2000, Entergy's global power development business entered into 10-year interest rate swap agreements with an average fixed rate of 6.539% for approximately 100% of the debt outstanding under the Damhead Creek bridge and term loan portion of the senior credit facility. The global power development business is exposed to market risks from movements in interest rates for the hedged portion of the debt only in the unlikely event that the counter-parties to the interest rate swap agreements were to default on contractual payments. At September 30, 2000, Entergy's global power development business had interest rate swap agreements outstanding totalling a notional amount of $415.2 million. Under the senior credit facility and the subordinated credit facility, the ability of the global power development business to make distributions of dividends, loans, or advances to Entergy Corporation is restricted by, among other things, the requirement to pay permitted project costs, make debt repayments, and maintain cash reserves. See Note 7 to the financial statements in the Form 10-K for further discussion of the financing of the Damhead Creek project. New Accounting Pronouncement In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," which will be effective for Entergy in 2001. See Note 8 to the financial statements for a discussion of the expected effect of this pronouncement on Entergy. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Cash Flows Operations Net cash flow provided by (used in) operations for Entergy, the domestic utility companies, and System Energy for the nine months ended September 30, 2000 and 1999 was as follows: Company 2000 1999 (In Millions) Entergy $1,174.4 $1,008.7 Entergy Arkansas $202.3 $231.3 Entergy Gulf States $161.8 $215.0 Entergy Louisiana $214.5 $307.5 Entergy Mississippi ($4.2) $103.3 Entergy New Orleans $10.2 $47.3 System Energy $372.2 $126.2 Entergy's consolidated cash flow from operations increased primarily due to its competitive businesses providing $164.7 million to consolidated operating cash flow compared with providing $2.9 million for the nine months ended September 30, 2000 and 1999, respectively. The increase is attributable to the following: o an increase in net income from the operations of Pilgrim resulting in an increase of $36.2 million in operating cash flow; o higher net income achieved by the power marketing and trading business, which resulted in an additional $38.4 million of operating cash flow compared to the same period in 1999; and o net income generated by the global power development business in 2000 compared with a net loss in 1999 resulting in an increase in operating cash flow of $72.0 million. Pilgrim was purchased in July 1999 and provided operating cash flow only for the three months ended September 30, 1999 compared with providing operating cash flow for the nine months ended September 30, 2000. The increase in net income from the global power development business is mainly attributable to liquidated damages received by the Saltend contractor, as discussed below in "RESULTS OF OPERATIONS, Competitive Businesses". ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES The operating cash flows of the domestic utility companies and System Energy were affected by money pool activity for the nine months ended September 30, 2000. The domestic utility companies' operating cash flows decreased, in part, as a result of the use of a portion of the proceeds from debt issuances in 2000 to pay down payables to the money pool as follows: Entergy Arkansas $30.5 million Entergy Gulf States $36.1 million Entergy Louisiana $91.5 million Entergy Mississippi $43.2 million Entergy New Orleans $ 6.7 million System Energy's operating cash flow increased primarily due to payments of $144.5 million received on its money pool receivable from affiliated companies. The money pool is an inter-company funding arrangement designed to reduce the domestic utility companies' and System Energy's dependence on external short-term borrowings. The money pool provides a means by which, on a daily basis, the excess funds of Entergy Corporation, the domestic utility companies, and System Energy may be used by the domestic utility companies or System Energy to fulfill short-term cash requirements. See "Capital Resources" below for a discussion of the limitations on these borrowings. Operating cash flows for the domestic utility companies also were negatively affected by increased use of cash related to deferred fuel costs. Entergy Gulf States' operating cash flow also was negatively affected by refunds of $83 million paid to Louisiana customers during the three months ended September 30, 2000 as a result of earnings reviews settled with the LPSC, as discussed further in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" and Note 2 to the financial statements. Investing Activities Net cash used in investing activities increased for the nine months ended September 30, 2000 due to increased construction expenditures, decreased proceeds from sales of businesses, and decreased net proceeds from maturities of other temporary investments. The increased construction expenditures were primarily due to: o spending on customer service and reliability improvements by the domestic utility companies; o costs incurred for replacement of the steam generators at ANO 2; and o construction of the Saltend and Damhead Creek power plants by Entergy's global power development business. The following items also contributed to the overall increase in cash used: o the maturity of notes receivable in August 1999 when only a portion of the proceeds were reinvested in other temporary investments; and o payments made by Entergy's global power development business in 2000 for turbines. Partially offsetting the overall increase in cash used is the maturity of other temporary investments and proceeds from the sale of the Freestone power project in 2000. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Financing Activities Net cash used in financing activities decreased for the nine months ended September 30, 2000 primarily due to: o a lower amount of long-term debt retirements; o the issuance of debt by the domestic utility companies; o increased borrowings under the credit facilities for the construction of the Saltend and Damhead Creek power projects by Entergy's global power development business; and o a lower amount of repayments on the Entergy Corporation credit facility. Partially offsetting the overall decrease in cash used was the increased repurchase of Entergy Corporation common stock and the redemption of Entergy Gulf States' preference stock in 2000. Business Combination with FPL Group Entergy Corporation and FPL Group entered into the Merger Agreement on July 30, 2000. See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" for a description of the Merger. The Merger Agreement generally allows Entergy to continue business in the ordinary course consistent with past practice and contains certain restrictions on Entergy's activities, including restrictions on the issuance of securities, capital expenditures, dispositions, incurrence or guarantee of indebtedness, and trading or marketing of energy. Entergy does not believe that these covenants will constrain its capital investment plan. Under certain circumstances, if the Merger Agreement is terminated, a termination fee of $215 million may be payable by one of the parties. In addition, under the terms of the Merger Agreement, Entergy will use its commercially reasonable efforts to purchase through open market transactions $430 million of its common stock prior to the closing of the Merger. Capital Resources Entergy's sources of funds to meet its capital requirements include: o internally generated funds; o cash on hand; o debt or preferred stock issuances; o bank financing under new or existing facilities; o short-term borrowings; and o sales of assets. Entergy requires capital resources for: o construction and other capital expenditures; o debt and preferred stock maturities; o common stock repurchases; o capital investments; o funding of subsidiaries; and o dividend and interest payments. Management provides more information on construction expenditures, capital investments, and long-term debt and preferred stock maturities in Notes 5, 6, 7, and 9 to the financial statements in the Form 10-K. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Sources of Capital All of the domestic utility companies have issued debt in 2000. The net proceeds of these issuances have been or will be used for general corporate purposes including capital expenditures, the retirement of short-term indebtedness, and, in the case of Entergy Gulf States, the mandatory redemption of preference stock. The domestic utility companies and System Energy expect to continue refinancing or redeeming higher cost debt and preferred stock prior to maturity, to the extent market conditions and interest and dividend rates are favorable. See Note 4 to the financial statements for details regarding issuances of debt in 2000. All debt and common and preferred stock issuances require prior regulatory approval. Preferred stock and debt issuances are subject to issuance tests set forth in corporate charters, bond indentures, and other agreements. The domestic utility companies may also establish special purpose trusts or limited partnerships as financing subsidiaries for the purpose of issuing preferred securities. Short-term borrowings by the domestic utility companies and System Energy are limited to amounts authorized by the SEC. The current SEC- authorized limit of $1.078 billion for these companies is effective through November 30, 2001. Borrowings from the money pool and external borrowings combined may not exceed the SEC-authorized limit. As of September 30, 2000, only Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans had borrowings outstanding from the money pool, in the amounts of $10.1 million, $6.8 million, and $2.9 million, respectively. Other Entergy subsidiaries have SEC authorization to borrow from Entergy Corporation through the money pool, or from external sources, in an aggregate principal amount up to $265 million. These companies had $117.4 million of outstanding borrowings from the money pool as of September 30, 2000. Some of these borrowings are restricted as to use and are collateralized by certain assets. In May 2000, Entergy Corporation amended its 364-day bank credit facility, increasing the capacity from $250 million to $500 million. Borrowings from this credit facility were used for general corporate purposes, for working capital needs, and to repay the $120 million 364- day term loan discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-K. As of September 30, 2000, Entergy had no borrowings outstanding under the credit facility. Uses of Capital Global Power Development Business Entergy's global power development business is currently constructing two combined-cycle gas turbine merchant power plants, Saltend and Damhead Creek, in the UK. These projects are discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-K. The financing of the construction of these two power plants is discussed in Note 7 to the financial statements in the Form 10-K. Saltend was originally scheduled for commercial operation in January 2000, but is now expected to be completed by the end of 2000. The engineering, procurement, and construction contract with the construction contractor and the turbine manufacturer provides for liquidated damages to be paid to Entergy for lost operating margin and incremental costs. For the nine months ended September 30, 2000, Entergy recorded liquidated damages for lost operating margin of $55.1 million ($38.6 million net of tax). ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES In October 1999, Entergy's global power development business obtained an option to acquire twenty-four GE7FA advanced technology gas turbines, four steam turbines, and eight GE7EA advanced technology gas turbines. The financing of these turbines is discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-K. In the sale of the Freestone power project, Entergy sold the rights to acquire four of the GE7FA turbines and two of the steam turbines. Entergy's global power development business has begun construction of a 300 MW combined-cycle gas turbine merchant power plant in Vicksburg, Mississippi, known as the Warren Power Project. The construction costs are expected to be approximately $150 million. Management expects that commercial operation of the plant will begin in the summer of 2001. Non-Utility Nuclear Business In March 2000, Entergy's non-utility nuclear business signed an agreement, subject to regulatory approvals, to purchase the New York Power Authority's (NYPA) 825 MW James A. FitzPatrick nuclear power plant located near Oswego, New York and NYPA's 980 MW Indian Point 3 nuclear power plant located in Westchester County, New York. In September 2000, approval was obtained from FERC for the purchase of these two nuclear power plants. The NRC is the only regulatory body whose approval of the sale is still pending. Management expects to close the acquisition during the fourth quarter of 2000. Entergy will pay NYPA $50 million in cash at the closing of the purchase, plus seven annual installments of approximately $108 million commencing one year from the date of the closing, and eight annual installments of $20 million commencing eight years from the date of the closing. Entergy currently projects that these installments will be paid primarily from the proceeds of the sale of power from the plants and that Entergy will provide an additional $100 million of funding. Pursuant to the terms of the agreement with NYPA, the installment payments due by Entergy to NYPA must be secured by a letter of credit from an eligible financial institution. This letter of credit may be secured, in whole or in part, by an Entergy guarantee. Subject to certain conditions, Entergy's non-utility nuclear business has agreed to pay NYPA up to $10 million annually for up to 10 years, beginning on the second anniversary date of such acquisition, if Entergy acquires ownership of the Indian Point 2 nuclear power plant located in Westchester County, New York. If Entergy acquires the Nine Mile Point nuclear power plants (referred to in the following paragraph), it will pay NYPA up to $2 million annually for up to 10 years, commencing on the second anniversary date of such acquisition. Entergy will also pay NYPA $2.5 million annually, for up to twenty years if the NRC grants an extension of the current nuclear operating licenses for the acquired plants. These payments would commence on the first anniversary of the expiration of the respective current licenses and would continue throughout the extension period. In December 1999, Entergy's non-utility nuclear business signed an agreement with Rochester Gas and Electric Corporation (RG&E) to lease and operate the Nine Mile Point 1 and 2 nuclear power plants, totaling 1,754 MW, located in Scriba, New York. Nine Mile Point 1 is owned by Niagara Mohawk Power Corporation (NiMo), and Nine Mile Point 2 is co-owned by RG&E, NiMo, New York State Electric & Gas Corporation (NYSEG), Long Island Lighting Company doing business as LIPA, and Central Hudson Gas & Electric Corporation. The lease and operating agreement is subject to RG&E's acquisition of NiMo and NYSEG's ownership interests in the plants under RG&E's right of first refusal and is subject to approval by the New York Public Service Commission (NYPSC). NiMo and NYSEG initiated a proceeding before the NYPSC seeking authorization for the sale of their ownership interests in Nine Mile Point 1 and 2 to a third party. Entergy intervened in the proceedings, but on April 25, 2000, NiMo and NYSEG moved to withdraw the request for authority to transfer their interests in the Nine Mile plants on the grounds that there are multiple parties who wish to acquire them. The NYPSC encouraged the owners of the Nine Mile plants to determine the market value of the plants through an open bid process, which will likely take place during the fourth quarter of 2000. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy expects to participate in the bidding to acquire the Nine Mile plants, or will seek a contract to lease and operate them. In November 2000, Entergy's non-utility nuclear business signed an agreement with Consolidated Edison (Con Edison) for the acquisition of Con Edison's 957 MW Indian Point 2 nuclear power plant (IP2) located in Westchester County, New York. Entergy will pay $600 million in cash at the closing of the purchase and will receive the plant, nuclear fuel, and other assets, including a purchase power agreement (PPA). On the second anniversary of the IP2 acquisition, Entergy's nuclear business will also begin to pay the NYPA $10 million per year for up to 10 years in accordance with the Indian Point 3 purchase agreement. Under the PPA, Con Edison will purchase 100% of IP2's output for an average price of $39/MWh through 2004. Con Edison will also transfer a $430 million decommissioning trust fund, along with the liability to decommission IP2 and Indian Point 1, to Entergy's nuclear business. Management expects to close the acquisition by mid-2001, pending the approvals of the Nuclear Regulatory Commission, the New York Public Service Commission, and other regulatory agencies. Joint Ventures In May 2000, Entergy and Koch Industries, Inc. agreed to form a new joint venture company to be called Entergy-Koch L.P. Entergy will contribute to the venture its power marketing and trading business in the United States and the United Kingdom as well as approximately $350 million in cash. Koch Industries, Inc. will contribute to the venture its 10,000-mile Koch Gateway Pipeline, gas storage facilities including the Bistineau storage facility near Shreveport, Louisiana, and Koch Energy Trading, which markets and trades electricity, gas, weather derivatives and other energy-related commodities and services. The parties will have equal ownership interests in Entergy-Koch L.P., which will be governed by an eight-member board of directors. Entergy will have the right to appoint four members of the board. The venture, which will require prior approval from FERC and from the SEC under PUHCA, is expected to become operational near the end of 2000 or early in 2001. In September 2000, Entergy and The Shaw Group Inc. signed a definitive agreement to form a joint venture that will be named EntergyShaw, L.L.C. EntergyShaw will provide management, engineering, procurement, construction, and commissioning services for electric power plants. EntergyShaw plans to operate in the rapidly growing electric power generation market, including providing services for Entergy's power development plans in North America and Europe. EntergyShaw is developing a market-driven reference plant design that is expected to reduce power plant capital costs significantly, while also reducing construction, commissioning, and operating risks. Entergy and Shaw will each own a 50% interest in the joint venture. Entergy does not expect to make a material capital contribution to this joint venture. Restriction on Uses of Capital Entergy's ability to invest in domestic and foreign generation businesses is subject to the SEC's regulations under PUHCA. These regulations limit the total amount that Entergy may invest in domestic and foreign generation businesses to 50% of consolidated retained earnings at the time an investment is made. In June 2000, the SEC issued an order that allows Entergy's EWG and FUCO investments to increase from 50% to 100% of Entergy's consolidated retained earnings. Entergy's ability to guarantee obligations of its non-utility subsidiaries is also limited by SEC regulations under PUHCA. In August 2000, the SEC issued an order, effective through December 31, 2005, that allows Entergy to issue up to $2 billion of guarantees to its non-utility companies, excluding guarantees outstanding as of that date that were issued under a previous order. Under PUHCA, the SEC imposes a limit equal to 15% of consolidated capitalization on the amount that may be invested in "energy-related" businesses without specific SEC approval. Entergy has made investments in energy-related businesses, including power marketing and trading. Entergy's available capacity to make additional investments at September 30, 2000 was approximately $1.7 billion. Management expects the available capacity to be partially reduced by Entergy's anticipated investment in Entergy-Koch L.P. Other Uses of Capital For the nine months ended September 30, 2000, Entergy Corporation paid $204.7 million in cash dividends on its common stock and received dividend payments and returns on capital totaling $879.0 million from subsidiaries. Declarations of dividends on Entergy's common stock are made at the discretion of the Board. The Board evaluates the level of dividends based upon Entergy's earnings and financial strength. Dividend restrictions are discussed in Note 8 to the financial statements in the Form 10-K. Under the Merger Agreement, Entergy can continue to pay dividends at existing levels with increases permitted up to 5% over the amount of the previous twelve-month period. On October 27, 2000, the ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Board declared a quarterly dividend of $0.315 per share on Entergy's common stock. This dividend represents an increase of 5% from the recent level of Entergy's quarterly common stock dividends. Under the terms of the Merger Agreement, Entergy will use its commercially reasonable efforts to purchase in open market transactions $430 million of its common stock prior to the close of the Merger. As of September 30, 2000, Entergy has repurchased 3.0 million shares for an aggregate amount of $100.2 million after the signing of the Merger Agreement. Prior to the date of the Merger Agreement, Entergy had been repurchasing shares under two Board authorizations. In October 1998, the Board approved a plan for the repurchase of Entergy common stock through December 31, 2001 to fulfill the requirements of various compensation and benefit plans. This stock repurchase plan provides for open market purchases of up to 5 million shares for an aggregate consideration of up to $250 million. In July 1999, the Board approved the commitment of up to an additional $750 million for the repurchase of Entergy common stock through December 31, 2001. Shares were purchased on a discretionary basis. Prior to the date of the Merger Agreement, Entergy had repurchased 25.3 million shares for an aggregate amount of $652.5 million under these two Board authorizations. Entergy may issue shares under its Dividend Reinvestment and Stock Purchase Plan and other compensation and benefit plans. See Note 3 to the financial statements for stock repurchases and issuances made during the nine months ended September 30, 2000. See Notes 4, 5, 6, 7, 9, and 10 to the financial statements in the Form 10-K for further discussion of Entergy's capital and refinancing requirements and available lines of credit. Entergy Corporation and System Energy Pursuant to the Capital Funds Agreement, Entergy Corporation has agreed to supply System Energy with sufficient capital to: o maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt); o permit the continued commercial operation of Grand Gulf 1; o pay in full all System Energy indebtedness for borrowed money when due; and o enable System Energy to make payments on specific System Energy debt, under supplements to the agreement assigning System Energy's rights in the agreement as security for the specific debt. The Capital Funds Agreement and other Grand Gulf 1-related agreements are more thoroughly discussed in Note 9 to the financial statements in the Form 10-K. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Entergy's results of operations are discussed in two business categories, "Domestic Utility Companies and System Energy" and "Competitive Businesses". Domestic Utility Companies and System Energy is Entergy's predominant business segment, contributing 70% and 75% of Entergy's operating revenue for the three and nine months ended September 30, 2000, respectively, and 95% and 85% of its net income for the three and nine months ended September 30, 2000, respectively. Competitive Businesses include the following segments discussed in Note 6 to the financial statements, "Power Marketing and Trading" and "All Other". "All Other" principally includes global power development, non-utility nuclear power, and the parent holding company, Entergy Corporation. The elimination of power marketing and trading mark-to-market profits on intercompany power transactions is also included in "All Other". Net Income Entergy's consolidated net income increased $10.5 million and $82.1 million for the three and nine months ended September 30, 2000, respectively, due to increases in net income from the following: o the domestic utility companies and System Energy increased $15.2 million for the nine months ended September 30, 2000; o the power marketing and trading business increased $24.3 million for the nine months ended September 30, 2000; and o the other competitive businesses and parent company increased $17.1 million and $42.5 million for the three and nine months ended September 30, 2000, respectively. The increase for the nine months ended for the domestic utility companies and System Energy was primarily due to a decrease in reserves recorded in 2000 for potential rate actions, a decrease in interest and other charges at System Energy, and adjustments that decreased deferred fuel expenses. The overall increase was partially offset by increases in other operation and maintenance expenses and depreciation and amortization. The increase from the power marketing and trading business was primarily due to improved trading performance in electricity, increased long-term marketing of electricity, and trading gains in natural gas in the current year compared to trading losses in the prior year due to natural gas prices reaching record levels. The increase in the other competitive businesses and parent company was primarily attributable to the operation of Pilgrim and liquidated damages received from the Saltend contractor as compensation for lost operating margin from the Saltend plant due to construction delays. These increases were partially offset by an increase in income taxes. Pilgrim was purchased in July 1999, therefore, it only contributed to Entergy's net income for three months during the nine months ended September 30, 1999. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Domestic Utility Companies and System Energy Revenues and Sales The changes in electric operating revenues associated with the domestic utility companies for the three and nine months ended September 30, 2000 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($25.7) ($102.2) Rate riders (2.1) (12.8) Fuel cost recovery 305.4 504.1 Sales volume/weather 40.7 65.7 Other revenue (including unbilled) 83.6 100.7 Sales for resale (36.3) (24.1) ------ ------ Total $365.6 $531.4 ====== ====== Base revenues Base revenues decreased for the three and nine months ended September 30, 2000 primarily due to: o rate reductions at Entergy Louisiana; and o provisions for potential rate refunds at Entergy Louisiana. Base revenues also decreased for the nine months ended September 30, 2000 due to the reversal in 1999 of regulatory reserves associated with the accelerated amortization of accounting order deferrals in conjunction with the Texas rate settlement at Entergy Gulf States. The net income effect of this reversal was largely offset by the amortization of rate deferrals in 1999 as discussed below. The decreases were partially offset by reserves recorded in 1999 for actual and potential refunds to Louisiana and Texas retail customers at Entergy Gulf States. Fuel cost recovery The domestic utility companies are allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric rates that are recorded as fuel cost recovery revenues. The difference between revenues collected and current fuel and purchased power costs is recorded as deferred fuel costs on Entergy's financial statements such that these costs generally have no net effect on earnings. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel cost recovery revenues increased for the three and nine months ended September 30, 2000 primarily due to: o a higher fuel factor implemented in September 1999 in Texas for Entergy Gulf States resulting in an increase of $21.9 million and $51.3 million for the three and nine months ended September 30, 2000, respectively; o higher fuel cost recovery revenues of $95.1 million and $148.9 million for the three and nine months ended September 30, 2000, respectively, in the Louisiana jurisdiction at Entergy Gulf States due to higher fuel and purchased power costs as a result of increased market prices; o a fuel surcharge of $33.4 million implemented in January 2000 in Texas for Entergy Gulf States; o an increase in the Entergy Arkansas energy cost recovery rate that became effective in April 2000, in addition to an increased energy cost recovery rate that became effective in April 1999; o higher fuel and purchased power expenses at Entergy Louisiana and Entergy New Orleans due to the increased market price of gas; and o an increase in the energy cost recovery rider at Entergy Mississippi that became effective in January 2000. Sales volume/weather Sales volume increased for the three and nine months ended September 30, 2000 primarily due to the effect of warmer than normal weather as well as increased usage by customers in all jurisdictions, particularly at Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana. Other revenue (including unbilled) Other revenue increased for the three and nine months ended September 30, 2000 primarily due to: o higher fuel prices at Entergy Louisiana included in unbilled revenues; o the effect of a $13.4 million adjustment to third quarter 1999 unbilled revenues that excluded fuel recovery and rate rider revenues from the unbilled balance in accordance with regulatory treatment. This effect was partially offset by the effect of the change in estimate on third quarter 1999 unbilled revenues in other jurisdictions; o the addition of unbilled revenue for wholesale customers to the unbilled balance at Entergy Arkansas and Entergy Gulf States; and o increased volume due to the effect of warmer weather. Sales for resale Sales for resale decreased for the three and nine months ended September 30, 2000 primarily due to increased sales to retail customers resulting in less electricity available for resale at Entergy Louisiana. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased $239.8 million and $462.4 million for the three and nine months ended September 30, 2000, respectively, primarily due to: o an increase in the market prices of purchased power and gas in 2000; o higher priced gas generation and purchased power at Entergy Arkansas due to scheduled maintenance outages for coal plants during 2000; and o increased oil and gas prices and an increase in generation requirements at Entergy Mississippi. Fuel and purchased power expenses also increased for the nine months ended September 30, 2000 primarily due to an adjustment of Entergy Gulf States' Texas jurisdiction deferred fuel balance of $11.5 million as a result of the fuel reconciliation settlement with the PUCT in the first quarter of 2000. These increases were partially offset for the nine months ended September 30, 2000 by a $23.5 million adjustment to the Entergy Arkansas deferred fuel balance for deferred fuel costs that Entergy Arkansas expects to recover in the future. Other operation and maintenance Other operation and maintenance expenses increased $63.6 million for the three months ended September 30, 2000 primarily due to: o increased property insurance expenses of $10.5 million primarily due to changes in storm damage reserve amortization at Entergy Arkansas and Entergy Mississippi in accordance with regulatory treatment; o an increase of $16.9 million in maintenance expense primarily at Entergy Arkansas and Entergy Louisiana; o an increase of $6.9 million due to an increase in legal and contract work for the transition to retail open access at Entergy Arkansas and Entergy Gulf States; o increased nuclear expenses of $16.6 million primarily from increased maintenance outages and the replacement of steam generators at ANO 2; and o increased customer service expenses primarily related to spending on vegetation management. Other operation and maintenance expenses increased $84.0 million for the nine months ended September 30, 2000 primarily due to: o increased property insurance expenses of $19.1 million primarily due to changes in storm damage reserve amortization at Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi in accordance with regulatory treatment; o increased customer service expenses of $18.5 million primarily related to spending on vegetation management at Entergy Arkansas, Entergy Gulf States and Entergy Louisiana; o an increase of $23.6 million in maintenance expenses primarily at Entergy Arkansas, Entergy Louisiana and Entergy Mississippi; o increased nuclear expenses of $17.0 million primarily from increased maintenance outages and the replacement of steam generators at ANO 2; and ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS o an increase of $12.1 million due to an increase in legal and contract work for the transition to retail open access at Entergy Arkansas and Entergy Gulf States. The increase for the nine months ended was partially offset by the following: o a $9.5 million larger nuclear insurance refund in 2000 compared to 1999; and o a decrease in injury and damages claims of $8.6 million. Depreciation and amortization Depreciation and amortization increased $27.0 million and $24.6 million for the three and nine months ended September 30, 2000, respectively, primarily due to: o the review of plant-in-service dates for consistency with regulatory treatment reducing depreciation expense by $17.7 million in August 1999; o net capital additions primarily at Entergy Gulf States, Entergy Arkansas, Entergy Louisiana and Entergy Mississippi; and o higher depreciation associated with the sale and leaseback of Grand Gulf 1. Other regulatory charges - net Other regulatory charges increased $18.8 million and $17.3 million for the three and nine months ended September 30, 2000, respectively, primarily due to a decrease in the deferral of Grand Gulf 1 expenses at Entergy Mississippi associated with the System Energy rate increase. Other regulatory charges also increased for the three months ended September 30, 2000 due to the $17.5 million accrual of estimated excess earnings for 2000 to the transition cost account at Entergy Arkansas. Amortization of rate deferrals Amortization of rate deferrals decreased $82.1 million for the nine months ended September 30, 2000 primarily due to the large reduction in the rate deferral balance in 1999 at Entergy Gulf States resulting from the PUCT's approval in June 1999 of the Texas rate settlement. Other Interest charges Interest charges decreased $21.0 million for the nine months ended September 30, 2000 primarily due to an adjustment in 1999 at System Energy to the interest recorded for the potential refund to customers of its proposed rate increase pending at FERC. System Energy's proposed rate increase is discussed in Note 2 to the financial statements. Competitive Businesses Revenues and Sales Competitive business revenues decreased approximately $173.7 million for the nine months ended September 30, 2000. The decrease was primarily due to a decrease in revenue from the power marketing and trading business resulting from decreased electricity and gas trading volumes. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Partially offsetting the decrease in 2000 was the increase in revenues for the non-utility nuclear business. For the three and nine months ended September 30, 2000, the non-utility nuclear business had increased revenues of $11.3 million and $131.6 million, respectively, primarily from the operation of Pilgrim, which was purchased in July 1999. Although revenues for the power marketing and trading business decreased, the power marketing and trading business had an increase in net income of $24.3 million for the nine months ended September 30, 2000 primarily due to: o decreased purchased power expenses as discussed below; o improved trading performance in electricity o increased long-term marketing of electricity; and o trading gains in natural gas in the current year compared to trading losses in the prior year due to natural gas prices reaching record levels. Expenses Fuel and purchased power expenses Fuel and purchased power expenses decreased $7.4 million and $327.4 million for the three and nine months ended September 30, 2000, respectively. The decrease is primarily attributable to decreased electricity and gas trading volumes from the power marketing and trading business resulting in decreases in fuel and purchased power expenses of $30.4 million and $374.8 million for the three and nine months ended September 30, 2000, respectively. The following partially offset the decreases from the power marketing and trading business: o increased purchases by the global power development business to meet contractual demands; and o increased purchases by the non-utility nuclear business primarily due to the ownership of Pilgrim for all of 2000 compared with only three months during the comparable period in 1999. Other operation and maintenance Other operation and maintenance expenses increased $23.4 million and $51.8 million for the three and nine months ended September 30, 2000, respectively, primarily due to the operation of Pilgrim, partially offset by a decrease in the elimination of mark-to-market profits on intercompany power transactions. Other Other income Other income increased $25.7 million and $42.9 million for the three and nine months ended September 30, 2000, respectively, primarily due to the following: o liquidated damages received from the Saltend contractor as compensation for lost operating margin from the Saltend plant due to construction delays of $22.2 million ($15.6 million net of tax) and $55.1 million ($38.6 million net of tax) for the three and nine months ended, respectively; o an increase of $17.1 million in interest and dividend income for the nine months ended September 30, 2000; and o a $20.5 million ($13.3 million net of tax) gain in June 2000 on the sale of the global power development business' investment in the Freestone project located in Fairfield, Texas. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Partially offsetting these increases were the following 1999 transactions: o a $26.7 million ($17 million net of tax) gain on the sale of Entergy Power Edesur Holdings in June 1999; o a $12.9 million ($8 million net of tax) gain on sale of the Entergy Hyperion Telecommunications in June 1999; o a $12.5 million ($.6 million net of tax) gain on the sale of Entergy Security, Inc. in January 1999; and o a $7.6 million ($4.9 million net of tax) favorable adjustment to the final sale price of CitiPower in January 1999. Interest charges Other interest charges increased $9.8 million and $26.3 million for the three and nine months ended September 30, 2000, respectively, primarily due to: o the accretion of the decommissioning liability associated with Pilgrim of $15 million; and o increased interest expense of $11.8 million related to borrowings on Entergy Corporation's short-term credit facility during the nine months ended September 30, 2000. Income Taxes The effective income tax rates for the three months ended September 30, 2000 and 1999 were 40.4% and 41.6%, respectively. The effective income tax rates for the nine months ended September 30, 2000 and 1999 were 40.0% and 37.2%, respectively. The increase for the nine months ended was primarily due to the recognition in 1999 of deferred tax benefits related to the expected utilization of foreign tax credits resulting in lower income taxes.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Nine Months Ended 2000 1999 2000 1999 (In Thousands, Except Share Data) OPERATING REVENUES Domestic electric $2,385,087 $2,019,513 $5,402,657 $4,871,232 Natural gas 21,815 18,441 96,107 78,321 Steam products - - - 15,550 Competitive businesses 1,024,653 1,026,581 1,882,071 2,055,758 ---------- ---------- ---------- ---------- TOTAL 3,431,555 3,064,535 7,380,835 7,020,861 ---------- ---------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 794,782 584,211 1,756,972 1,478,055 Purchased power 1,158,145 1,139,855 2,030,210 2,190,481 Nuclear refueling outage expenses 18,439 19,594 53,625 56,414 Other operation and maintenance 504,379 417,339 1,332,012 1,195,677 Decommissioning 11,505 11,572 28,611 35,004 Taxes other than income taxes 103,188 93,028 266,346 259,149 Depreciation and amortization 188,967 161,616 545,991 523,165 Other regulatory charges - net 47,816 29,003 27,311 10,033 Amortization of rate deferrals 10,497 10,722 25,776 107,902 ---------- ---------- ---------- ---------- TOTAL 2,837,718 2,466,940 6,066,854 5,855,880 ---------- ---------- ---------- ---------- OPERATING INCOME 593,837 597,595 1,313,981 1,164,981 ---------- ---------- ---------- ---------- OTHER INCOME Allowance for equity funds used during construction 9,163 7,877 24,898 20,636 Gain (loss) on sale of assets (284) 587 21,291 61,888 Miscellaneous - net 53,873 29,077 156,505 89,093 ---------- ---------- ---------- ---------- TOTAL 62,752 37,541 202,694 171,617 ---------- ---------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 121,464 116,615 353,585 359,310 Other interest - net 22,576 12,921 66,227 58,404 Distributions on preferred securities of subsidiary 4,709 4,709 14,128 14,128 Allowance for borrowed funds used during construction (6,776) (6,064) (18,753) (16,469) ---------- ---------- ---------- ---------- TOTAL 141,973 128,181 415,187 415,373 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 514,616 506,955 1,101,488 921,225 Income taxes 207,927 210,797 440,616 342,403 ---------- ---------- ---------- ---------- CONSOLIDATED NET INCOME 306,689 296,158 660,872 578,822 Preferred dividend requirements and other 6,755 9,939 24,886 30,645 ---------- ---------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $299,934 $286,219 $635,986 $548,177 ========== ========== ========== ========== Earnings per average common share: Basic $1.35 $1.16 $2.78 $2.22 Diluted $1.34 $1.16 $2.77 $2.22 Dividends declared per common share $0.30 $0.30 $0.90 $0.90 Average number of common shares outstanding: Basic 222,159,091 246,253,929 228,930,171 246,541,754 Diluted 224,352,165 246,389,119 230,034,859 246,770,002 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Consolidated net income $660,872 $578,822 Noncash items included in net income: Amortization of rate deferrals 25,776 107,902 Reserve for regulatory adjustments (36,756) (13,156) Other regulatory charges - net 27,311 10,033 Depreciation, amortization, and decommissioning 574,602 558,169 Deferred income taxes and investment tax credits (8,074) (180,764) Allowance for equity funds used during construction (24,898) (20,636) Gain on sale of assets - net (21,291) (61,888) Changes in working capital: Receivables (538,840) (383,339) Fuel inventory (26,660) (28,551) Accounts payable 270,152 244,784 Taxes accrued 331,509 391,609 Interest accrued 24,319 (39,348) Deferred fuel (298,340) (169,347) Other working capital accounts 85,145 1,121 Provision for estimated losses and reserves (8,844) (31,995) Changes in other regulatory assets (131) (33,766) Other 138,580 79,082 ---------- ---------- Net cash flow provided by operating activities 1,174,432 1,008,732 ---------- ---------- INVESTING ACTIVITIES Construction/capital expenditures (1,112,075) (792,348) Allowance for equity funds used during construction 24,898 20,636 Nuclear fuel purchases (100,367) (114,764) Proceeds from sale/leaseback of nuclear fuel 96,412 108,938 Proceeds from sale of businesses 61,519 351,082 Investment in other non-regulated/non-utility properties (184,339) (80,864) Proceeds from other temporary investments 299,455 956,356 Purchase of other temporary investments - (468,653) Decommissioning trust contributions and realized change in trust assets (44,799) (45,847) Other 5,149 7,908 ---------- ---------- Net cash flow used in investing activities (954,147) (57,556) ---------- ---------- See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) FINANCING ACTIVITIES Proceeds from the issuance of: Long-term debt 934,479 783,922 Common stock 14,810 13,390 Retirement of long-term debt (145,011) (847,925) Repurchase of common stock (500,644) (129,160) Redemption of preferred and preference stock (156,260) (77,958) Changes in short-term borrowings - net (120,000) (285,500) Dividends paid: Common stock (204,660) (218,042) Preferred stock (23,487) (31,340) ---------- ---------- Net cash flow used in financing activities (200,773) (792,613) ---------- ---------- Effect of exchange rates on cash and cash equivalents (142) 1,340 ---------- ---------- Net increase in cash and cash equivalents 19,370 159,903 Cash and cash equivalents at beginning of period 1,213,719 1,184,495 ---------- ---------- Cash and cash equivalents at end of period $1,233,089 $1,344,398 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $382,313 $447,054 Income taxes $146,664 $155,426 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $38,837 $22,916 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES BALANCE SHEETS ASSETS September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $111,255 $108,198 Temporary cash investments - at cost, which approximates market 1,120,292 1,105,521 Special deposits 1,542 - ----------- ----------- Total cash and cash equivalents 1,233,089 1,213,719 ----------- ----------- Other temporary investments - at cost, which approximates market 21,897 321,351 Notes Receivable 4,166 2,161 Accounts receivable: Customer 543,708 290,331 Allowance for doubtful accounts (9,007) (9,507) Other 373,228 207,898 Accrued unbilled revenues 433,784 298,616 ----------- ----------- Total receivables 1,341,713 787,338 ----------- ----------- Deferred fuel costs 539,000 240,661 Fuel inventory - at average cost 121,079 94,419 Materials and supplies - at average cost 362,807 392,403 Rate deferrals 19,797 30,394 Deferred nuclear refueling outage costs 28,621 58,119 Prepayments and other 77,285 78,567 ----------- ----------- TOTAL 3,749,454 3,219,132 ----------- ----------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 214 214 Decommissioning trust funds 1,354,785 1,246,023 Non-utility property - at cost (less accumulated depreciation) 330,699 317,165 Non-regulated investments 300,691 198,003 Other - at cost (less accumulated depreciation) 22,368 16,714 ----------- ----------- TOTAL 2,008,757 1,778,119 ----------- ----------- UTILITY PLANT Electric 23,672,355 23,163,161 Plant acquisition adjustment 394,731 406,929 Property under capital lease 768,135 768,500 Natural gas 190,895 186,041 Construction work in progress 1,938,654 1,500,617 Nuclear fuel under capital lease 271,021 286,476 Nuclear fuel 81,662 87,693 ----------- ----------- TOTAL UTILITY PLANT 27,317,453 26,399,417 Less - accumulated depreciation and amortization 11,403,267 10,898,661 ----------- ----------- UTILITY PLANT - NET 15,914,186 15,500,756 ----------- ----------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 1,402 16,581 SFAS 109 regulatory asset - net 1,002,350 1,068,006 Unamortized loss on reacquired debt 188,025 198,631 Other regulatory assets 703,639 637,870 Long-term receivables 30,281 32,260 Other 429,009 533,732 ----------- ----------- TOTAL 2,354,706 2,487,080 ----------- ----------- TOTAL ASSETS $24,027,103 $22,985,087 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $406,858 $194,555 Notes payable 1,036 120,715 Accounts payable 866,587 707,678 Customer deposits 168,163 161,909 Taxes accrued 773,641 445,677 Accumulated deferred income taxes 159,730 72,640 Nuclear refueling outage costs 6,854 11,216 Interest accrued 155,748 129,028 Co-owner advances 5,121 7,018 Obligations under capital leases 176,224 178,247 Other 213,668 125,749 ----------- ----------- TOTAL 2,933,630 2,154,432 ----------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 3,188,681 3,310,340 Accumulated deferred investment tax credits 500,229 519,910 Obligations under capital leases 181,825 205,464 FERC settlement - refund obligation 32,471 37,337 Other regulatory liabilities 252,173 199,139 Decommissioning 737,269 703,453 Transition to competition 201,797 157,034 Regulatory reserves 341,551 378,307 Accumulated provisions 292,294 279,425 Other 566,489 535,156 ----------- ----------- TOTAL 6,294,779 6,325,565 ----------- ----------- Long-term debt 7,106,769 6,612,583 Preferred stock with sinking fund 69,650 69,650 Preference stock - 150,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 215,000 215,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 331,240 338,455 Common stock, $.01 par value, authorized 500,000,000 shares; issued 247,172,239 shares in 2000 and 247,082,345 shares in 1999 2,472 2,471 Paid-in capital 4,636,811 4,636,163 Retained earnings 3,216,395 2,786,467 Accumulated other comprehensive income: Cumulative foreign currency translation adjustment (71,081) (68,782) Net unrealized investment gains (losses) 6,588 (5,023) Less - treasury stock, at cost (27,040,581 shares in 2000 and 8,045,434 shares in 1999) 715,150 231,894 ----------- ----------- TOTAL 7,407,275 7,457,857 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $24,027,103 $22,985,087 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF RETAINED EARNINGS AND COMPREHENSIVE INCOME For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended 2000 1999 (In Thousands) RETAINED EARNINGS Retained Earnings - Beginning of period $2,982,495 $2,640,373 Add - Earnings applicable to common stock 299,934 $299,934 286,219 $286,219 Deduct: Dividends declared on common stock 66,835 74,057 Capital stock and other expenses (801) (183) ---------- ---------- Total 66,034 73,874 ---------- ---------- Retained Earnings - End of period $3,216,395 $2,852,718 ========== ========== ACCUMULATED OTHER COMPREHENSIVE INCOME: Balance at beginning of period ($76,086) ($47,697) Foreign currency translation adjustments (1,270) (1,270) (16,994) (16,994) Net unrealized investment gains 12,863 12,863 - - ---------- ---------- Balance at end of period ($64,493) ($64,691) ========== -------- ========== -------- Comprehensive Income $311,527 $269,225 ======== ======== Nine Months Ended 2000 1999 (In Thousands) RETAINED EARNINGS Retained Earnings - Beginning of period $2,786,467 $2,526,888 Add - Earnings applicable to common stock 635,986 $635,986 548,177 $548,177 Deduct: Dividends declared on common stock 206,886 222,077 Capital stock and other expenses (828) 270 ---------- ---------- Total 206,058 222,347 ---------- ---------- Retained Earnings - End of period $3,216,395 $2,852,718 ========== ========== ACCUMULATED OTHER COMPREHENSIVE INCOME: Balance at beginning of period ($73,805) ($46,739) Foreign currency translation adjustments (2,299) (2,299) (17,952) (17,952) Net unrealized investment gains 11,611 11,611 - - ---------- ---------- Balance at end of period ($64,493) ($64,691) ========== -------- ========== -------- Comprehensive Income $645,298 $530,225 ======== ======== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $940.6 $815.3 $125.3 15 Commercial 518.0 450.8 67.2 15 Industrial 598.9 513.9 85.0 17 Governmental 54.4 46.6 7.8 17 -------- -------- ------ Total retail 2,111.9 1,826.6 285.3 16 Sales for resale 115.4 151.7 (36.3) (24) Other 157.8 41.2 116.6 283 -------- -------- ------ Total $2,385.1 $2,019.5 $365.6 18 ======== ======== ====== Billed Electric Energy Sales (GWH): Residential 11,573 11,007 566 5 Commercial 7,578 7,227 351 5 Industrial 11,248 11,297 (49) - Governmental 744 720 24 3 -------- -------- ------ Total retail 31,143 30,251 892 3 Sales for resale 2,290 3,087 (797) (26) -------- -------- ------ Total 33,433 33,338 95 - ======== ======== ====== Nine Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $1,933.7 $1,745.2 $188.5 11 Commercial 1,252.5 1,125.9 126.6 11 Industrial 1,549.4 1,370.1 179.3 13 Governmental 134.5 120.9 13.6 11 -------- -------- ------ Total retail 4,870.1 4,362.1 508.0 12 Sales for resale 291.5 315.6 (24.1) (8) Other 241.0 193.5 47.5 25 -------- -------- ------ Total $5,402.6 $4,871.2 $531.4 11 ======== ======== ====== Billed Electric Energy Sales (GWH): Residential 24,943 24,274 669 3 Commercial 18,738 18,137 601 3 Industrial 32,886 32,340 546 2 Governmental 1,966 1,932 34 2 -------- -------- ------ Total retail 78,533 76,683 1,850 2 Sales for resale 6,880 7,391 (511) (7) -------- -------- ------ Total 85,413 84,074 1,339 2 ======== ======== ======
ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended September 30, 2000 compared to the three months ended September 30, 1999 primarily due to increased operations and maintenance expenses and an accrual to the transition cost account, partially offset by increased electric operating revenues. Net income increased for the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999 primarily due to increased electric operating revenues, partially offset by increased operation and maintenance expenses and an accrual to the transition cost account. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 2000 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($3.7) ($1.4) Rate riders (6.8) (18.9) Fuel cost recovery 22.5 44.2 Sales volume/weather 12.2 15.4 Other revenue (including unbilled) 19.3 46.3 Sales for resale 15.9 69.3 ----- ------ Total $59.4 $154.9 ===== ====== Rate riders Rate rider revenues have no material effect on net income because specific incurred expenses offset them. Rate rider revenues decreased for the three and nine months ended September 30, 2000 as a result of the decreased ANO Decommissioning and Grand Gulf rate riders, both of which became effective in January 2000. The ANO Decommissioning rider allows Entergy Arkansas to recover the decommissioning costs associated with ANO 1 and 2. The Grand Gulf rate rider allows Entergy Arkansas to recover its recoverable share of operating costs for Grand Gulf 1. Fuel cost recovery Entergy Arkansas is allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric rates that are recorded as fuel cost recovery revenues. The difference between revenues collected and current fuel and purchased power costs is recorded as deferred fuel costs on Entergy Arkansas' financial statements such that these costs generally have no net effect on earnings. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel cost recovery revenues increased for the three and nine months ended September 30, 2000 primarily due to an increase in the energy cost recovery rider (ECR) in April 2000. The increase in the ECR allows Entergy Arkansas to recover previously deferred fuel expenses. The increase for the nine months ended was also affected by an increase in the ECR in April 1999 that affected first quarter 2000 revenues. Sales volume/weather Sales volume increased for the three and nine months ended September 30, 2000 primarily due to increased usage by industrial, commercial, and residential customers, as well as the effect of more favorable weather on the residential and commercial sectors. Other revenue (including unbilled) Other revenue increased for the three and nine months ended September 30, 2000 primarily due to the effect of a $13.4 million adjustment to third quarter 1999 unbilled revenues that excluded fuel recovery and rate rider revenues from the unbilled balance in accordance with regulatory treatment. Unbilled revenues also increased due to greater unbilled volume and the addition of unbilled revenue for wholesale customers to the unbilled balance. Sales for resale Sales for resale revenue increased for the three and nine months ended September 30, 2000 primarily due to an increase in sales revenue from associated companies combined with an increase in the market price of electricity. Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased for the three and nine months ended September 30, 2000 primarily due to higher market prices for natural gas as well as an increase in the market price of purchased power and increased purchased power volume. The increased purchased power volume was primarily due to increased demand for electricity and was an offset to decreased nuclear generation due to maintenance, inspection, and refueling outages during the year. The increased fuel and purchased power expenses for the nine months ended September 30, 2000 were partially offset by a $23.5 million adjustment to the deferred fuel balance as a result of the 1999 and 2000 ECR filings. This adjustment reflects deferred fuel costs that Entergy Arkansas expects to recover in the future. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other operation and maintenance Other operation and maintenance expenses increased for the three months ended September 30, 2000 primarily due to: o increased reserves of $4.7 million for property damage and $1.9 million for environmental expenses; o increased nuclear expenses totaling $11.3 million related to maintenance and inspection outages and the steam generator replacement at ANO 2; and o an increase in spending of $4.0 million on vegetation management. Other operation and maintenance expenses increased for the nine months ended September 30, 2000 primarily due to: o an increase in spending of $8.5. million for vegetation management; o an increase in spending of $7.9 million for outside services employed related to legal and contract services for transition work; o increased reserves of $4.6 million for property damage and $2.9 million for environmental expenses; o increased nuclear expenses totaling $13.8. million related to maintenance and inspection outages and the steam generator replacement at ANO 2; and o the capitalization of $1.9 million associated with return-to-service projects for certain fossil plants in June 1999. The increase for the nine months ended was partially offset by a $4.1 million larger nuclear insurance refund in 2000 compared to 1999. Decommissioning Decommissioning expense decreased for the nine months ended September 30, 2000 primarily due to a true-up of the decommissioning liability in June 2000 for previous over-accruals. Depreciation and amortization Depreciation and amortization expenses increased for the three and nine months ended September 30, 2000 primarily due to a review of plant- in-service dates for consistency with regulatory treatment reducing depreciation expense by $3.4 million in August 1999, as well as net capital additions. Other regulatory charges (credits) Other regulatory charges increased for the three months ended September 30, 2000 primarily due to the $17.5 million accrual of estimated excess earnings into the transition cost account for 2000. This increase was partially offset by a smaller over-recovery of Grand Gulf 1 costs in the third quarter of 2000 compared to that in the third quarter of 1999 and by the recording of a regulatory asset for certain transition costs expected to be recovered in a customer transition tariff. The transition cost account is discussed in Note 2 to the financial statements. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other regulatory credits increased slightly for the nine months ended September 30, 2000 primarily due to an increased under-recovery of Grand Gulf 1 costs as a result of the decreased rate rider that became effective in January 2000 as ordered by the APSC. Other regulatory credits also increased due to the recording of a regulatory asset for certain transition costs expected to be recovered in a customer transition tariff. This increase was largely offset by the accrual of estimated excess earnings into the transition cost account for 2000. Other Income taxes The effective income tax rates for the three months ended September 30, 2000 and 1999 were 43.2% and 41.1%, respectively. The increase in the effective tax rates was due to a decreased tax benefit from flow- though items in September 2000 primarily due to changes in reserve accounts. This increase was partially offset by lower pre-tax income for the quarter. The effective income tax rates for the nine months ended September 30, 2000 and 1999 were 41.0% and 36.8%, respectively. The increases in the effective tax rates were due to increased pre-tax income for the nine months ended September 30, 2000 combined with decreased flow-through tax benefits during those periods. These flow-through items include a tax liability on nuclear fuel purchases for 2000 compared with a tax credit on nuclear fuel purchases for 1999.
ENTERGY ARKANSAS, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Nine Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $548,156 $488,801 $1,342,856 $1,187,961 -------- -------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 74,804 52,965 224,660 186,612 Purchased power 179,587 164,295 398,547 362,039 Nuclear refueling outage expenses 6,439 7,599 19,317 23,129 Other operation and maintenance 119,822 91,685 295,330 257,150 Decommissioning 2,595 3,277 1,882 8,054 Taxes other than income taxes 10,664 8,841 28,359 27,355 Depreciation and amortization 42,539 38,190 125,535 120,788 Other regulatory charges (credits) - net 17,789 8,379 (4,381) (3,108) -------- -------- ---------- ---------- TOTAL 454,239 375,231 1,089,249 982,019 -------- -------- ---------- ---------- OPERATING INCOME 93,917 113,570 253,607 205,942 -------- -------- ---------- ---------- OTHER INCOME Allowance for equity funds used during construction 4,416 3,614 11,836 9,458 Miscellaneous - net 963 1,712 3,201 2,455 -------- -------- ---------- ---------- TOTAL 5,379 5,326 15,037 11,913 -------- -------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 21,611 20,042 65,745 60,741 Other interest - net 1,915 1,569 6,323 4,658 Distributions on preferred securities of subsidiary 1,275 1,275 3,825 3,825 Allowance for borrowed funds used during construction (2,888) (2,412) (7,704) (6,290) -------- -------- ---------- ---------- TOTAL 21,913 20,474 68,189 62,934 -------- -------- ---------- ---------- INCOME BEFORE INCOME TAXES 77,383 98,422 200,455 154,921 Income taxes 33,461 40,401 82,242 56,960 -------- -------- ---------- ---------- NET INCOME 43,922 58,021 118,213 97,961 Preferred dividend requirements and other 1,944 2,370 5,832 7,194 -------- -------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $41,978 $55,651 $112,381 $90,767 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $118,213 $97,961 Noncash items included in net income: Other regulatory credits - net (4,381) (3,108) Depreciation, amortization, and decommissioning 127,417 128,842 Deferred income taxes and investment tax credits (3,908) (1,414) Allowance for equity funds used during construction (11,836) (9,458) Changes in working capital: Receivables (65,411) (22,706) Fuel inventory (1,140) (21,843) Accounts payable (25,791) 24,874 Taxes accrued 32,794 36,285 Interest accrued 3,592 (270) Deferred fuel costs (31,672) (7,738) Other working capital accounts 23,207 13,941 Provision for estimated losses and reserves (396) (12,029) Changes in other regulatory assets (4,760) (22,355) Other 46,416 30,324 -------- -------- Net cash flow provided by operating activities 202,344 231,306 -------- -------- INVESTING ACTIVITIES Construction expenditures (250,643) (173,416) Allowance for equity funds used during construction 11,836 9,458 Nuclear fuel purchases (32,938) (32,497) Proceeds from sale/leaseback of nuclear fuel 32,938 32,473 Decommissioning trust contributions and realized change in trust assets (10,367) (12,889) -------- -------- Net cash flow used in investing activities (249,174) (176,871) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 99,389 - Retirement of: Long-term debt - (39,267) Redemption of preferred stock - (2,027) Dividends paid: Common stock (44,600) (78,800) Preferred stock (3,803) (7,212) -------- -------- Net cash flow provided by (used in) financing activities 50,986 (127,306) -------- -------- Net increase (decrease) in cash and cash equivalents 4,156 (72,871) Cash and cash equivalents at beginning of period 6,862 93,105 -------- -------- Cash and cash equivalents at end of period $11,018 $20,234 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $63,290 $61,143 Income taxes $46,455 $16,927 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $13,953 $13,401 See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS ASSETS September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents $11,018 $6,862 Accounts receivable: Customer 128,320 73,357 Allowance for doubtful accounts (1,768) (1,768) Associated companies 22,854 27,073 Other 3,728 5,583 Accrued unbilled revenues 70,122 53,600 ---------- ---------- Total receivables 223,256 157,845 ---------- ---------- Deferred fuel costs 73,292 41,620 Fuel inventory - at average cost 25,624 24,485 Materials and supplies - at average cost 79,496 85,612 Deferred nuclear refueling outage costs 16,996 28,119 Prepayments and other 7,714 6,480 ---------- ---------- TOTAL 437,396 351,023 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 11,215 11,215 Decommissioning trust funds 368,331 344,011 Non-utility property - at cost (less accumulated depreciation 1,460 1,463 Other - at cost (less accumulated depreciation) 3,033 3,033 ---------- ---------- TOTAL 384,039 359,722 ---------- ---------- UTILITY PLANT Electric 5,003,927 4,854,433 Property under capital lease 42,965 44,471 Construction work in progress 359,852 267,091 Nuclear fuel under capital lease 89,663 85,725 Nuclear fuel 7,403 9,449 ---------- ---------- TOTAL UTILITY PLANT 5,503,810 5,261,169 Less - accumulated depreciation and amortization 2,624,996 2,489,584 ---------- ---------- UTILITY PLANT - NET 2,878,814 2,771,585 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 174,224 192,344 Unamortized loss on reacquired debt 45,358 48,193 Other regulatory assets 129,839 106,959 Other 8,167 14,125 ---------- ---------- TOTAL 357,588 361,621 ---------- ---------- TOTAL ASSETS $4,057,837 $3,843,951 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $220 $220 Notes payable 667 667 Accounts payable: Associated companies 49,536 81,958 Other 109,590 102,959 Customer deposits 28,737 26,320 Taxes accrued 71,326 38,532 Accumulated deferred income taxes 53,897 38,649 Interest accrued 25,969 22,378 Co-owner advances 13,944 15,338 Obligations under capital leases 55,325 55,150 Other 21,082 11,598 ---------- ---------- TOTAL 430,293 393,769 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 683,630 713,622 Accumulated deferred investment tax credits 89,543 94,852 Obligations under capital leases 77,303 75,045 Transition to competition 135,736 109,933 Accumulated provisions 42,892 43,288 Other 61,704 51,080 ---------- ---------- TOTAL 1,090,808 1,087,820 ---------- ---------- Long-term debt 1,237,394 1,130,801 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 60,000 60,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 116,350 116,350 Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares in 2000 and 1999 470 470 Paid-in capital 591,127 591,127 Retained earnings 531,395 463,614 ---------- ---------- TOTAL 1,239,342 1,171,561 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,057,837 $3,843,951 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 209.6 $ 198.2 $ 11.4 6 Commercial 99.1 92.3 6.8 7 Industrial 106.4 100.5 5.9 6 Governmental 4.4 4.3 0.1 2 ------- ------- ------ Total retail 419.5 395.3 24.2 6 Sales for resale Associated companies 59.1 42.3 16.8 40 Non-associated companies 65.7 66.6 (0.9) (1) Other 3.9 (15.4) 19.3 125 ------- ------- ------ Total $ 548.2 $ 488.8 $ 59.4 12 ======= ======= ====== Billed Electric Energy Sales (GWH): Residential 2,424 2,317 107 5 Commercial 1,615 1,545 70 5 Industrial 2,020 1,944 76 4 Governmental 70 69 1 1 ------- ------- ------ Total retail 6,129 5,875 254 4 Sales for resale Associated companies 1,216 1,304 (88) (7) Non-associated companies 1,341 1,607 (266) (17) ------- ------- ------ Total 8,686 8,786 (100) (1) ======= ======= ====== Nine Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 439.7 $ 425.8 $ 13.9 3 Commercial 233.5 220.4 13.1 6 Industrial 264.0 251.9 12.1 5 Governmental 11.4 11.2 0.2 2 -------- -------- ------- Total retail 948.6 909.3 39.3 4 Sales for resale Associated companies 197.6 132.6 65.0 49 Non-associated companies 156.6 152.3 4.3 3 Other 40.1 (6.2) 46.3 747 -------- -------- ------- Total $1,342.9 $1,188.0 $ 154.9 13 ======== ======== ======= Billed Electric Energy Sales (GWH): Residential 5,276 5,182 94 2 Commercial 3,851 3,732 119 3 Industrial 5,386 5,244 142 3 Governmental 182 181 1 1 ------- ------- ------ Total retail 14,695 14,339 356 2 Sales for resale Associated companies 5,481 5,575 (94) (2) Non-associated companies 3,832 3,723 109 3 ------- ------- ------ Total 24,008 23,637 371 2 ======= ======= ====== ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and nine months ended September 30, 2000 compared to the three and nine months ended September 30, 1999 due to increased sales volume, other revenues, and sales for resale, partially offset by increased other operation and maintenance expenses. The increase for the three months ended was also partially offset by increased depreciation and amortization expenses. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the three and nine months ended September 30, 2000 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($5.1) ($51.0) Fuel cost recovery 100.4 217.0 Sales volume/weather 10.7 25.5 Other revenue (including unbilled) 16.0 21.0 Sales for resale 17.8 40.4 ------ ------ Total $139.8 $252.9 ====== ====== Base revenues Base revenues decreased for the nine months ended September 30, 2000 primarily due to the reversal in 1999 of regulatory reserves associated with the accelerated amortization of accounting order deferrals in conjunction with the Texas rate settlement. The net income effect in 1999 was largely offset by the amortization of rate deferrals discussed below. These decreases were partially offset by reserves recorded in 1999 for actual and potential refunds to Louisiana and Texas retail customers. Fuel cost recovery Entergy Gulf States is allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric rates that are recorded as fuel cost recovery revenues. The difference between revenues collected and current fuel and purchased power costs is recorded as deferred fuel costs on Entergy Gulf States' financial statements such that these costs generally have no net effect on earnings. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel cost recovery revenues increased for the three and nine months ended September 30, 2000 by $21.9 million and $51.3 million, respectively, primarily due to a higher fuel factor that became effective in September 1999 as well as higher fuel cost recovery revenues of $95.1 million and $148.9 million, respectively, in the Louisiana jurisdiction due to higher fuel and purchased power costs as a result of increased market prices. Fuel cost recovery revenues also increased for the nine months ended September 30, 2000 primarily due to a fuel surcharge of $33.4 million implemented in January 2000 in the Texas jurisdiction. Sales volume/weather Sales volume increased for the three and nine months ended September 30, 2000 primarily due to more favorable weather as well as increased usage in both Louisiana and Texas. Other revenue (including unbilled) Other revenue increased for the three and nine months ended September 30, 2000 primarily due to increased unbilled revenues as a result of warmer weather and increased volume in 2000. Other revenue also increased for the nine months ended September 30, 2000 due to the addition of unbilled revenue for wholesale customers to the unbilled balance and due to the effect of a change in estimate on the third quarter 1999 unbilled revenues. The changed estimate more closely aligned the fuel component of unbilled revenues with regulatory treatment. Sales for resale Sales for resale increased for the three and nine months ended September 30, 2000 primarily due to increased sales from River Bend to affiliated companies in 2000 as a result of increased nuclear generation. Nuclear generation was down in 1999 as a result of a nuclear refueling outage in the second quarter of 1999. Steam operating revenues Steam operating revenues decreased for the nine months ended September 30, 2000 primarily due to a new lease arrangement that began in June 1999 for the Louisiana Station generating facility. Under the terms of this new lease, revenues and expenses are now classified as other income rather than steam operating revenues and other operation and maintenance expenses, respectively, which were the previous classifications. Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased for the three months ended September 30, 2000 primarily due to higher market prices for gas and purchased power. Fuel and purchased power expenses increased for the nine months ended September 30, 2000 primarily due to: o higher market prices for gas and purchased power; and o an adjustment in March 2000 of $11.5 million to the Texas jurisdiction deferred fuel balance as a result of the fuel reconciliation settlement with the PUCT. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other operation and maintenance Other operation and maintenance expenses increased for the three months ended September 30, 2000 primarily due to increased spending on outside services employed related to legal and contract services for transition work of $2.9 million, a reserve for miscellaneous accounts receivable of $2.3 million, and increased spending of $1.0 million on vegetation management. Other operation and maintenance expenses increased for the nine months ended September 30, 2000 primarily due to increased spending on vegetation management of $3.5 million and outside services employed related to legal and contract services for transition work of $6.5 million. Depreciation and amortization Depreciation and amortization expenses increased for the three months ended September 30, 2000 primarily due to a review of plant-in- service dates for consistency with regulatory treatment reducing depreciation expense by $6.7 million in August 1999, as well as depreciation expense related to net capital additions in 2000. Amortization of rate deferrals Amortization of rate deferrals decreased for the nine months ended September 30, 2000 primarily due to the large reduction in the rate deferral balance upon the PUCT's approval in June 1999 of the Texas rate settlement. This settlement increased amortization expense in 1999 but was offset by increased revenues as discussed above. Other Income taxes The effective income tax rates for the three months ended September 30, 2000 and 1999 were 38.2% and 39.1%, respectively. The effective income tax rates for the nine months ended September 30, 2000 and 1999 were 37.0% and 42.1%, respectively. The decrease in the effective income tax rate for the nine months ended September 30, 2000 is primarily due to an increase in flow-through and permanent items partially offset by tax adjustments in June 1999 for River Bend abeyed plant.
ENTERGY GULF STATES, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Nine Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $811,265 $671,457 $1,862,171 $1,609,285 Natural gas 5,887 4,619 24,584 21,603 Steam products - - - 15,550 -------- -------- ---------- ---------- TOTAL 817,152 676,076 1,886,755 1,646,438 -------- -------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 279,411 180,037 639,950 451,301 Purchased power 141,226 163,546 328,506 296,075 Nuclear refueling outage expenses 4,990 5,010 13,573 10,366 Other operation and maintenance 116,480 96,661 313,720 302,718 Decommissioning 1,568 1,362 4,705 6,152 Taxes other than income taxes 35,295 30,611 90,053 86,421 Depreciation and amortization 47,599 40,053 140,977 139,885 Other regulatory credits - net (955) (3,390) (12,746) (15,677) Amortization of rate deferrals 1,402 1,402 4,205 85,795 -------- -------- ---------- ---------- TOTAL 627,016 515,292 1,522,943 1,363,036 -------- -------- ---------- ---------- OPERATING INCOME 190,136 160,784 363,812 283,402 -------- -------- ---------- ---------- OTHER INCOME Allowance for equity funds used during construction 2,189 2,424 5,675 4,741 Gain on sale of assets 549 602 1,595 1,512 Miscellaneous - net 4,910 5,909 8,320 12,462 -------- -------- ---------- ---------- TOTAL 7,648 8,935 15,590 18,715 -------- -------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 39,036 34,117 106,225 103,645 Other interest - net 1,415 3,112 4,524 4,683 Distributions on preferred securities of subsidiary 1,859 1,859 5,578 5,578 Allowance for borrowed funds used during construction (1,973) (2,170) (5,185) (4,305) -------- -------- ---------- ---------- TOTAL 40,337 36,918 111,142 109,601 -------- -------- ---------- ---------- INCOME BEFORE INCOME TAXES 157,447 132,801 268,260 192,516 Income taxes 60,122 51,880 99,363 81,136 -------- -------- ---------- ---------- NET INCOME 97,325 80,921 168,897 111,380 Preferred dividend requirements and other 1,349 4,108 8,668 12,774 -------- -------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $95,976 $76,813 $160,229 $98,606 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $168,897 $111,380 Noncash items included in net income: Amortization of rate deferrals 4,205 85,795 Reserve for regulatory adjustments (82,637) (107,901) Other regulatory credits - net (12,746) (15,677) Depreciation, amortization, and decommissioning 145,682 146,037 Deferred income taxes and investment tax credits 19,866 18,482 Allowance for equity funds used during construction (5,675) (4,741) Gain on sale of assets (1,595) (1,512) Changes in working capital: Receivables (129,735) (72,852) Fuel inventory (2,515) (12,196) Accounts payable 4,179 16,240 Taxes accrued 95,878 81,302 Interest accrued 20,172 7,396 Deferred fuel costs (81,756) (40,647) Other working capital accounts 12,769 (13,133) Provision for estimated losses and reserves (3,195) 5,529 Changes in other regulatory assets (27,392) 1,217 Other 37,427 10,286 -------- -------- Net cash flow provided by operating activities 161,829 215,005 -------- -------- INVESTING ACTIVITIES Construction expenditures (195,304) (122,538) Allowance for equity funds used during construction 5,675 4,741 Nuclear fuel purchases (34,707) (51,980) Proceeds from sale/leaseback of nuclear fuel 34,150 43,009 Decommissioning trust contributions and realized change in trust assets (8,364) (8,162) -------- -------- Net cash flow used in investing activities (198,550) (134,930) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 298,855 122,999 Retirement of: Long-term debt - (47,920) Redemption of preferred and preference stock (156,260) (25,931) Dividends paid: Common stock (73,400) (88,000) Preferred stock (9,540) (12,873) -------- -------- Net cash flow provided by (used in) financing activities 59,655 (51,725) -------- -------- Net increase in cash and cash equivalents 22,934 28,350 Cash and cash equivalents at beginning of period 32,312 115,736 -------- -------- Cash and cash equivalents at end of period $55,246 $144,086 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $91,865 $101,963 Income taxes $7,659 $3,114 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $15,500 $8,540 See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS ASSETS September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $10,932 $8,607 Temporary cash investments - at cost, which approximates market 44,314 23,705 ---------- ---------- Total cash and cash equivalents 55,246 32,312 ---------- ---------- Accounts receivable: Customer 131,755 73,215 Allowance for doubtful accounts (1,828) (1,828) Associated companies 10,382 1,706 Other 24,885 15,030 Accrued unbilled revenues 143,061 90,396 ---------- ---------- Total receivables 308,255 178,519 ---------- ---------- Deferred fuel costs 216,214 134,458 Fuel inventory - at average cost 40,786 38,271 Materials and supplies - at average cost 101,696 112,585 Rate deferrals 5,606 5,606 Prepayments and other 26,249 21,750 ---------- ---------- TOTAL 754,052 523,501 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 258,541 234,677 Non-utility property - at cost (less accumulated depreciation) 193,322 187,759 Other - at cost (less accumulated depreciation) 14,895 13,681 ---------- ---------- TOTAL 466,758 436,117 ---------- ---------- UTILITY PLANT Electric 7,490,461 7,365,407 Property under capital lease 40,872 46,210 Natural gas 54,886 52,473 Construction work in progress 195,221 145,492 Nuclear fuel under capital lease 65,292 70,801 ---------- ---------- TOTAL UTILITY PLANT 7,846,732 7,680,383 Less - accumulated depreciation and amortization 3,686,284 3,551,595 ---------- ---------- UTILITY PLANT - NET 4,160,448 4,128,788 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 1,402 5,606 SFAS 109 regulatory asset - net 391,750 385,405 Unamortized loss on reacquired debt 38,798 40,576 Other regulatory assets 161,205 140,157 Long-term receivables 30,281 32,260 Other 17,959 23,490 ---------- ---------- TOTAL 641,395 627,494 ---------- ---------- TOTAL ASSETS $6,022,653 $5,715,900 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $122,750 $ - Accounts payable: Associated companies 44,226 79,962 Other 154,358 114,444 Customer deposits 36,846 33,360 Taxes accrued 197,676 101,798 Accumulated deferred income taxes 59,770 27,960 Nuclear refueling outage costs 6,854 11,216 Interest accrued 48,743 28,570 Obligations under capital leases 52,131 51,973 Other 22,735 14,557 ---------- ---------- TOTAL 746,089 463,840 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 1,101,255 1,098,882 Accumulated deferred investment tax credits 172,875 178,500 Obligations under capital leases 54,033 65,038 Other regulatory liabilities 1,070 2,967 Decommissioning 141,301 139,194 Transition to competition 66,061 47,101 Regulatory reserves 27,900 110,536 Accumulated provisions 66,200 69,395 Other 116,123 117,804 ---------- ---------- TOTAL 1,746,818 1,829,417 ---------- ---------- Long-term debt 1,809,006 1,631,581 Preferred stock with sinking fund 34,650 34,650 Preference stock - 150,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 85,000 85,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 44,229 51,444 Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares in 2000 and in 1999 114,055 114,055 Paid-in capital 1,153,195 1,153,131 Retained earnings 289,611 202,782 ---------- ---------- TOTAL 1,601,090 1,521,412 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,022,653 $5,715,900 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 237.8 $ 209.9 $ 27.9 13 Commercial 133.1 121.8 11.3 9 Industrial 221.8 197.8 24.0 12 Governmental 7.7 7.2 0.5 7 ------- ------- ------- Total retail 600.4 536.7 63.7 12 Sales for resale Associated companies 63.5 27.0 36.5 135 Non-associated companies 31.7 50.4 (18.7) (37) Other 115.7 57.4 58.3 102 ------- ------- ------- Total $ 811.3 $ 671.5 $ 139.8 21 ======= ======= ======= Billed Electric Energy Sales (GWH): Residential 3,340 3,182 158 5 Commercial 2,290 2,175 115 5 Industrial 4,481 4,555 (74) (2) Governmental 122 112 10 9 ------- ------- ------- Total retail 10,233 10,024 209 2 Sales for resale Associated companies 769 306 463 151 Non-associated companies 698 1,104 (406) (37) ------- ------- ------- Total 11,700 11,434 266 2 ======= ======= ======= Nine Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 534.7 $ 463.3 $ 71.4 15 Commercial 362.3 316.3 46.0 15 Industrial 614.5 524.3 90.2 17 Governmental 23.4 20.5 2.9 14 --------- --------- ------- Total retail 1,534.9 1,324.4 210.5 16 Sales for resale Associated companies 81.9 31.6 50.3 159 Non-associated companies 76.5 86.4 (9.9) (11) Other 168.9 166.9 2.0 1 --------- --------- ------- Total $ 1,862.2 $ 1,609.3 $ 252.9 16 ========= ========= ======= Billed Electric Energy Sales (GWH): Residential 7,274 7,024 250 4 Commercial 5,795 5,558 237 4 Industrial 13,396 13,111 285 2 Governmental 336 314 22 7 --------- --------- ------- Total retail 26,801 26,007 794 3 Sales for resale Associated companies 1,205 476 729 153 Non-associated companies 2,266 2,517 (251) (10) --------- --------- ------- Total 30,272 29,000 1,272 4 ========= ========= ======= ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended September 30, 2000 compared to the three months ended September 30, 1999 primarily due to an increase in sales volume, partially offset by increases in provisions for potential rate refunds, other operation and maintenance expenses, and depreciation and amortization expenses. Net income decreased for the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999 primarily due to a decrease in unbilled revenues and increases in provisions for potential rate refunds, other operation and maintenance expenses, and depreciation and amortization expenses. These decreases were partially offset by an increase in sales volume and lower interest expense on long-term debt. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 2000 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($17.5) ($46.4) Fuel cost recovery 137.0 163.3 Sales volume/weather 10.7 17.5 Other revenue (including unbilled) 28.7 (28.3) Sales for resale (13.7) (23.7) ------ ----- Total $145.2 $82.4 ====== ===== Base revenues Base revenues decreased for the three and nine months ended September 30, 2000 primarily due to accruals for potential rate refunds. The decrease also is attributable to formula rate plan reductions in the residential, commercial, and industrial sectors. Fuel cost recovery Entergy Louisiana is allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric rates that are recorded as fuel cost recovery revenues. The difference between revenues collected and current fuel and purchased power costs is recorded as deferred fuel costs on Entergy Louisiana's financial statements such that these costs generally have no net effect on earnings. Fuel cost recovery revenues increased for the three and nine months ended September 30, 2000 as a result of higher fuel and purchased power expenses primarily due to the increased market price of natural gas. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Sales volume/weather Sales volume increased for the three and nine months ended September 30, 2000 primarily due to increased usage by residential, commercial, and industrial customers, as well as more favorable weather in the residential and commercial sectors. Other revenue (including unbilled) Other revenue increased for the three months ended September 30, 2000 primarily due to higher fuel prices and increased volume in unbilled revenues. Other revenue decreased for the nine months ended September 30, 2000 primarily due to the effect of a change in estimate on the third quarter 1999 unbilled revenues. The changed estimate more closely aligned the fuel component of unbilled revenues with regulatory treatment. Sales for resale Sales for resale decreased for the three and nine months ended September 30, 2000 primarily due to increased sales to retail customers resulting in less electricity available for resale. Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased for the three and nine months ended September 30, 2000 primarily due to an increase in the market price of gas and purchased power. Other operation and maintenance Other operation and maintenance expenses increased for the three months ended September 30, 2000 primarily due to an increase of $4.5 million in maintenance expense at certain fossil plants, and an incentive compensation accrual of $1.7 million. Other operation and maintenance expenses increased for the nine months ended September 30, 2000 primarily due to: o an increase in expenses from maintenance and planned maintenance outages at Waterford 3 and certain fossil plants of $15 million; o an increase in property insurance expenses of $5 million primarily due to changes in storm damage reserves effective August 1999; o an increase in vegetation management costs of $2.7 million; o an increase of $1.6 million in contract work for plant protection services at Waterford 3; and o an increase in environmental reserves of $1.7 million. The overall increase in other operation and maintenance expenses for the nine months ended was partially offset by a decrease in injury and damages claims of $3.6 million and higher nuclear insurance refunds of $1.8 million. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Depreciation and amortization expenses Depreciation and amortization expenses increased for the three and nine months ended September 30, 2000 primarily due to a review of plant- in-service dates for consistency with regulatory treatment reducing depreciation expense by $3.4 million in August 1999, as well as depreciation expense related to net capital additions in 2000. Interest charges Interest on long-term debt decreased for the nine months ended September 30, 2000 primarily due to the refinancing and net redemption of $77 million of long-term debt in 1999, partially offset by the issuance of $150 million of long-term debt in May 2000. Income taxes The effective income tax rates for the three months ended September 30, 2000 and 1999 were 39.5% and 39.4%, respectively. The effective income tax rates for the nine months ended September 30, 2000 and 1999 were 40.2% and 39.8%, respectively.
ENTERGY LOUISIANA, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Nine Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $722,175 $576,956 $1,517,063 $1,434,692 -------- -------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 235,362 112,908 367,301 275,531 Purchased power 160,360 156,391 394,479 340,973 Nuclear refueling outage expenses 3,410 3,481 10,230 12,403 Other operation and maintenance 77,435 72,181 225,608 205,497 Decommissioning 2,606 2,197 7,817 6,590 Taxes other than income taxes 21,173 19,145 55,889 55,815 Depreciation and amortization 42,700 38,601 127,029 120,564 Other regulatory charges - net 240 - 720 - -------- -------- ---------- ---------- TOTAL 543,286 404,904 1,189,073 1,017,373 -------- -------- ---------- ---------- OPERATING INCOME 178,889 172,052 327,990 417,319 -------- -------- ---------- ---------- OTHER INCOME Allowance for equity funds used during construction 1,373 790 3,252 3,282 Miscellaneous - net 2,641 862 3,184 1,442 -------- -------- ---------- ---------- TOTAL 4,014 1,652 6,436 4,724 -------- -------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 25,418 24,728 73,360 78,472 Other interest - net 1,212 1,609 5,158 3,821 Distributions on preferred securities of subsidiary 1,575 1,575 4,725 4,725 Allowance for borrowed funds used during construction (1,046) (631) (2,914) (2,998) -------- -------- ---------- ---------- TOTAL 27,159 27,281 80,329 84,020 -------- -------- ---------- ---------- INCOME BEFORE INCOME TAXES 155,744 146,423 254,097 338,023 Income taxes 61,577 57,744 102,051 134,485 -------- -------- ---------- ---------- NET INCOME 94,167 88,679 152,046 203,538 Preferred dividend requirements and other 2,378 2,378 7,135 7,427 -------- -------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $91,789 $86,301 $144,911 $196,111 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $152,046 $203,538 Noncash items included in net income: Other regulatory charges - net 720 - Depreciation, amortization, and decommissioning 134,846 127,154 Deferred income taxes and investment tax credits (1,395) 25,141 Allowance for equity funds used during (3,252) (3,282) construction Changes in working capital: Receivables (141,381) (107,103) Accounts payable (65,280) 96,470 Taxes accrued 130,070 63,173 Interest accrued 9,015 (28,789) Deferred fuel costs (69,348) (64,836) Other working capital accounts 45,542 (2,438) Provision for estimated losses and reserves 3,378 2,290 Changes in other regulatory assets 16,732 20,033 Other 2,834 (23,864) -------- -------- Net cash flow provided by operating activities 214,527 307,487 -------- -------- INVESTING ACTIVITIES Construction expenditures (135,442) (86,163) Allowance for equity funds used during construction 3,252 3,282 Nuclear fuel purchases (29,317) (11,308) Proceeds from sale/leaseback of nuclear fuel 29,317 11,308 Decommissioning trust contributions and realized change in trust assets (8,700) (8,510) -------- -------- Net cash flow used in investing activities (140,890) (91,391) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 148,754 188,097 Retirement of: Long-term debt (100,000) (252,310) Redemption of preferred stock - (50,000) Dividends paid: Common stock (57,800) (165,400) Preferred stock (7,135) (8,010) -------- -------- Net cash flow used in financing activities (16,181) (287,623) -------- -------- Net increase (decrease) in cash and cash equivalents 57,456 (71,527) Cash and cash equivalents at beginning of period 7,734 83,030 -------- -------- Cash and cash equivalents at end of period $65,190 $11,503 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $ 68,913 $ 111,675 Income taxes $ 9,156 $ 82,454 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $ 4,396 $ 1,987 See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS ASSETS September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $12,658 $7,734 Temporary cash investments - at cost, which approximates market 52,532 - ---------- ---------- Total cash and cash equivalents 65,190 7,734 ---------- ---------- Notes Receivable 1,506 3 Accounts receivable: Customer 152,226 79,335 Allowance for doubtful accounts (1,615) (1,615) Associated companies 26,499 14,601 Other 17,455 10,762 Accrued unbilled revenues 156,100 106,200 ---------- ---------- Total receivables 350,665 209,283 ---------- ---------- Deferred fuel costs 71,510 2,161 Accumulated deferred income taxes - 12,520 Materials and supplies - at average cost 79,839 84,027 Deferred nuclear refueling outage costs 1,128 11,336 Prepayments and other 10,225 6,011 ---------- ---------- TOTAL 580,063 333,075 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 14,230 14,230 Decommissioning trust funds 114,039 100,943 Non-utility property - at cost (less accumulated depreciation) 21,779 21,433 ---------- ---------- TOTAL 150,048 136,606 ---------- ---------- UTILITY PLANT Electric 5,280,994 5,178,808 Property under capital lease 236,272 236,271 Construction work in progress 133,815 108,106 Nuclear fuel under capital lease 59,600 51,930 ---------- ---------- TOTAL UTILITY PLANT 5,710,681 5,575,115 Less - accumulated depreciation and amortization 2,440,407 2,309,815 ---------- ---------- UTILITY PLANT - NET 3,270,274 3,265,300 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 212,583 230,899 Unamortized loss on reacquired debt 34,476 35,856 Other regulatory assets 51,776 50,191 Other 12,918 17,302 ---------- ---------- TOTAL 311,753 334,248 ---------- ---------- TOTAL ASSETS $4,312,138 $4,069,229 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $35,088 $116,388 Accounts payable: Associated companies 43,795 137,869 Other 119,562 90,768 Customer deposits 58,718 61,096 Taxes accrued 155,933 25,863 Accumulated deferred income taxes 5,486 - Interest accrued 29,251 20,236 Obligations under capital leases 28,387 28,387 Other 100,556 59,737 ---------- ---------- TOTAL 576,776 540,344 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 761,035 792,290 Accumulated deferred investment tax credits 118,773 123,155 Obligations under capital leases 31,213 23,543 Accumulated provisions 61,465 58,087 Other 47,350 34,564 ---------- ---------- TOTAL 1,019,836 1,031,639 ---------- ---------- Long-term debt 1,276,632 1,145,463 Preferred stock with sinking fund 35,000 35,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 70,000 70,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 100,500 100,500 Common stock, no par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares in 2000 and 1999 1,088,900 1,088,900 Capital stock expense and other (2,171) (2,171) Retained earnings 146,665 59,554 ---------- ---------- TOTAL 1,333,894 1,246,783 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,312,138 $4,069,229 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 284.1 $ 228.2 $ 55.9 24 Commercial 145.9 116.3 29.6 25 Industrial 219.7 168.4 51.3 30 Governmental 11.6 9.1 2.5 27 ------- ------- ------- Total retail 661.3 522.0 139.3 27 Sales for resale Associated companies 15.0 18.4 (3.4) (18) Non-associated companies 9.3 19.6 (10.3) (53) Other 36.6 17.0 19.6 115 ------- ------- ------- Total $ 722.2 $ 577.0 $ 145.2 25 ======= ======= ======= Billed Electric Energy Sales (GWH): Residential 3,103 2,955 148 5 Commercial 1,650 1,568 82 5 Industrial 3,789 3,802 (13) - Governmental 131 123 8 7 --------- --------- ------ Total retail 8,673 8,448 225 3 Sales for resale Associated companies 152 150 2 1 Non-associated companies 122 195 (73) (37) --------- --------- ------ Total 8,947 8,793 154 2 ========= ========= ====== Nine Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 546.4 $ 485.6 $ 60.8 13 Commercial 324.1 289.4 34.7 12 Industrial 533.2 463.1 70.1 15 Governmental 27.9 25.0 2.9 12 --------- --------- ------ Total retail 1,431.6 1,263.1 168.5 13 Sales for resale Associated companies 15.7 26.3 (10.6) (40) Non-associated companies 30.8 43.9 (13.1) (30) Other 39.0 101.4 (62.4) (62) --------- --------- ------ Total $ 1,517.1 $ 1,434.7 $ 82.4 6 ========= ========= ====== Billed Electric Energy Sales (GWH): Residential 6,775 6,615 160 2 Commercial 4,094 3,986 108 3 Industrial 11,431 11,205 226 2 Governmental 362 354 8 2 --------- --------- ------ Total retail 22,662 22,160 502 2 Sales for resale Associated companies 168 390 (222) (57) Non-associated companies 435 672 (237) (35) --------- --------- ------ Total 23,265 23,222 43 - ========= ========= ====== ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended September 30, 2000 compared to the three months ended September 30, 1999 primarily due to increased other operation and maintenance expenses and increased interest and other charges. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 2000 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues $0.1 ($3.9) Grand Gulf rate rider 4.7 6.1 Fuel cost recovery 19.0 41.3 Sales volume/weather 5.0 6.2 Other revenue (including unbilled) 2.2 19.6 Sales for resale (0.2) (17.2) ----- ----- Total $30.8 $52.1 ===== ===== Rate riders Rate rider revenues have no material effect on net income because specific incurred expenses offset them. Grand Gulf rate rider revenue increased for the three and nine months ended September 30, 2000 as a result of increased recovery of Grand Gulf capacity costs, primarily due to an increase in the amount recovered under the Grand Gulf Accelerated Recovery Tariff (GGART). The GGART is discussed in more detail in Note 2 to the financial statements in the Form 10-K. Fuel cost recovery Entergy Mississippi is allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric rates, recorded as fuel cost recovery revenues. The difference between revenues collected and current fuel and purchased power costs is recorded as deferred fuel costs on Entergy Mississippi's financial statements such that these costs generally have no net effect on earnings. Fuel cost recovery revenues increased for the three and nine months ended September 30, 2000 primarily due to an increase in the energy cost recovery rider (ECR) effective January 2000. The increase in the ECR allows Entergy Mississippi to recover previously deferred fuel expenses. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Sales volume/weather Sales volume increased for the three and nine months ended September 30, 2000 primarily due to increased usage by residential and commercial customers, as well as more favorable weather. Other revenue (including unbilled) Other revenue increased for the nine months ended September 30, 2000 primarily due to the effect of favorable weather in 2000 and the effect of a change in estimate on third quarter 1999 unbilled revenues. The changed estimate more closely aligned the fuel component of unbilled revenues with regulatory treatment. Sales for resale Sales for resale decreased for the nine months ended September 30, 2000 primarily due to a decrease in sales to associated companies as a result of decreased oil generation due to plant outages in early 2000. Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased for the three months ended September 30, 2000 primarily due to increased oil and gas prices and an increase in generation requirements. Fuel and purchased power expenses increased for the nine months ended September 30, 2000 primarily due to increased oil and gas prices, partially offset by a decrease in the price of purchased power. Other operation and maintenance Other operation and maintenance expenses increased for the three and nine months ended September 30, 2000 primarily due to increased plant maintenance of $1.8 million and $5.9 million, respectively, and an increase in property damage expenses of $4.4 million and $10.3 million, respectively, primarily due to a change in storm damage reserve amortization in the third quarter of 1999 in accordance with regulatory treatment. Depreciation and amortization Depreciation and amortization expenses increased for the three and nine months ended September 30, 2000 primarily due to a review of plant- in-service dates for consistency with regulatory treatment reducing depreciation expense by $2.4 million in August 1999, as well as net capital additions. Other regulatory charges (credits) - net Other regulatory charges increased for the three months ended September 30, 2000 primarily due to a decrease in the deferral of Grand Gulf 1 expenses associated with the System Energy rate increase. Other regulatory credits decreased for the nine months ended September 30, 2000 primarily due to a decrease in the deferral of Grand Gulf 1 expenses associated with the System Energy rate increase. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other Other income Other income increased for the nine months ended September 30, 2000 primarily due to an increase in AFUDC as a result of higher construction expenditures and an increase in interest income from the deferral of Grand Gulf 1 expenses. Interest charges Interest on long-term debt increased for the three and nine months ended September 30, 2000 primarily due to the refinancing of $125 million of long-term debt in June 1999 and $30 million of long-term debt in July 1999, reducing 1999 interest expense, combined with the issuance of $120 million of long-term debt in February 2000. Income taxes The effective income tax rates for the three months ended September 30, 2000 and 1999 were 37.2% and 35.4%, respectively. The effective income tax rates for the nine months ended September 30, 2000 and 1999 were 35.6% and 34.8%, respectively.
ENTERGY MISSISSIPPI, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Nine Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $297,966 $267,159 $696,346 $644,239 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 65,656 44,842 140,986 141,617 Purchased power 111,677 111,236 283,544 259,505 Other operation and maintenance 42,390 35,355 121,093 108,268 Taxes other than income taxes 12,906 11,752 34,174 33,496 Depreciation and amortization 12,292 9,166 35,994 31,665 Other regulatory charges (credits) - net 16,750 12,290 2,262 (5,681) -------- -------- -------- -------- TOTAL 261,671 224,641 618,053 568,870 -------- -------- -------- -------- OPERATING INCOME 36,295 42,518 78,293 75,369 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 662 325 1,912 693 Miscellaneous - net 2,246 1,724 6,656 5,215 -------- -------- -------- -------- TOTAL 2,908 2,049 8,568 5,908 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 11,012 8,113 31,026 27,135 Other interest - net 673 849 2,370 2,294 Allowance for borrowed funds used during construction (518) (330) (1,502) (1,026) -------- -------- -------- -------- TOTAL 11,167 8,632 31,894 28,403 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 28,036 35,935 54,967 52,874 Income taxes 10,425 12,724 19,556 18,425 -------- -------- -------- -------- NET INCOME 17,611 23,211 35,411 34,449 Preferred dividend requirements and other 842 842 2,527 2,527 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $16,769 $22,369 $32,884 $31,922 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $35,411 $34,449 Noncash items included in net income: Other regulatory charges (credits) - net 2,262 (5,681) Depreciation and amortization 35,994 31,665 Deferred income taxes and investment tax credits 23,697 15,432 Allowance for equity funds used during construction (1,912) (693) Loss on sale of assets 2 - Changes in working capital: Receivables (30,932) 10,702 Fuel inventory 705 (1,942) Accounts payable (9,520) 31,504 Taxes accrued 18,406 51,337 Interest accrued 3,609 (1,351) Deferred fuel costs (88,172) (37,805) Other working capital accounts 4,021 10,428 Provision for estimated losses and reserves (699) 2,033 Changes in other regulatory assets (17,643) (39,284) Other 20,612 2,526 -------- -------- Net cash flow provided by (used in) operating activities (4,159) 103,320 -------- -------- INVESTING ACTIVITIES Construction expenditures (91,895) (59,151) Allowance for equity funds used during construction 1,912 693 -------- -------- Net cash flow used in investing activities (89,983) (58,458) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 119,057 153,683 Retirement of: Long-term debt - (163,278) Dividends paid: Common stock (18,000) (28,700) Preferred stock (2,527) (2,521) -------- -------- Net cash flow provided by (used in) financing activities 98,530 (40,816) -------- -------- Net increase in cash and cash equivalents 4,388 4,046 Cash and cash equivalents at beginning of period 4,787 2,640 -------- -------- Cash and cash equivalents at end of period $9,175 $6,686 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $28,060 $29,386 Income taxes ($28,748) ($53,785) See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS ASSETS September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents $9,175 $4,787 Accounts receivable: Customer 62,044 35,675 Allowance for doubtful accounts (886) (886) Associated companies 4,090 1,370 Other 134 2,391 Accrued unbilled revenues 32,700 28,600 ---------- ---------- Total receivables 98,082 67,150 ---------- ---------- Deferred fuel costs 136,111 47,939 Fuel inventory - at average cost 3,069 3,774 Materials and supplies - at average cost 17,805 17,068 Prepayments and other 4,981 7,114 ---------- ---------- TOTAL 269,223 147,832 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 5,531 5,531 Non-utility property - at cost (less accumulated depreciation) 6,883 6,965 ---------- ---------- TOTAL 12,414 12,496 ---------- ---------- UTILITY PLANT Electric 1,835,150 1,763,636 Property under capital lease 314 384 Construction work in progress 81,588 66,789 ---------- ---------- TOTAL UTILITY PLANT 1,917,052 1,830,809 Less - accumulated depreciation and amortization 738,064 709,543 ---------- ---------- UTILITY PLANT - NET 1,178,988 1,121,266 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 25,064 24,051 Unamortized loss on reacquired debt 15,421 16,345 Other regulatory assets 148,874 132,243 Other 5,934 5,784 ---------- ---------- TOTAL 195,293 178,423 ---------- ---------- TOTAL ASSETS $1,655,918 $1,460,017 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Accounts payable: Associated companies $53,033 $84,382 Other 54,298 32,470 Customer deposits 25,857 23,303 Taxes accrued 54,373 35,968 Accumulated deferred income taxes 18,659 526 Interest accrued 13,647 10,038 Obligations under capital leases 95 95 Other 2,209 2,137 ---------- ---------- TOTAL 222,171 188,919 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 307,121 298,477 Accumulated deferred investment tax credits 19,783 20,908 Obligations under capital leases 219 290 Accumulated provisions 6,675 7,374 Other 24,464 3,368 ---------- ---------- TOTAL 358,262 330,417 ---------- ---------- Long-term debt 584,386 464,466 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 50,381 50,381 Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares in 2000 199,326 199,326 and 1999 Capital stock expense and other (59) (59) Retained earnings 241,451 226,567 ---------- ---------- TOTAL 491,099 476,215 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,655,918 $1,460,017 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 128.8 $ 114.1 $ 14.7 13 Commercial 84.4 75.3 9.1 12 Industrial 43.4 39.4 4.0 10 Governmental 7.3 6.3 1.0 16 ------- ------- ------ Total retail 263.9 235.1 28.8 12 Sales for resale Associated companies 27.9 23.3 4.6 20 Non-associated companies 7.1 11.9 (4.8) (40) Other (0.9) (3.1) 2.2 71 ------- ------- ------ Total $ 298.0 $ 267.2 $ 30.8 12 ======= ======= ====== Billed Electric Energy Sales (GWH): Residential 1,855 1,745 110 6 Commercial 1,349 1,290 59 5 Industrial 855 853 2 - Governmental 112 103 9 9 ------- ------- ------ Total retail 4,171 3,991 180 5 Sales for resale Associated companies 355 362 (7) (2) Non-associated companies 105 140 (35) (25) ------- ------- ------ Total 4,631 4,493 138 3 ======= ======= ====== Nine Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 268.4 $ 246.6 $ 21.8 9 Commercial 209.1 190.4 18.7 10 Industrial 120.0 112.3 7.7 7 Governmental 19.4 17.9 1.5 8 ------- ------- ------ Total retail 616.9 567.2 49.7 9 Sales for resale Associated companies 40.8 53.6 (12.8) (24) Non-associated companies 20.8 25.2 (4.4) (18) Other 17.8 (1.8) 19.6 1,089 ------- ------- ------ Total $ 696.3 $ 644.2 $ 52.1 8 ======= ======= ====== Billed Electric Energy Sales (GWH): Residential 3,890 3,777 113 3 Commercial 3,275 3,165 110 3 Industrial 2,384 2,394 (10) - Governmental 281 274 7 3 ------- ------- ------ Total retail 9,830 9,610 220 2 Sales for resale Associated companies 561 1,527 (966) (63) Non-associated companies 244 342 (98) (29) ------- ------- ------ Total 10,635 11,479 (844) (7) ======= ======= ====== ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended September 30, 2000 compared to the three months ended September 30, 1999 primarily due to an increase in sales volume. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the three and nine months ended September 30, 2000 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase (In Millions) Base revenues $0.5 $0.5 Fuel cost recovery 26.5 38.3 Sales volume/weather 2.1 1.1 Other revenue (including unbilled) 10.1 8.9 Sales for resale (3.6) 3.2 ----- ----- Total $35.6 $52.0 ===== ===== Fuel cost recovery revenues Entergy New Orleans is allowed to recover certain fuel and purchased power costs through fuel mechanisms included in electric rates, recorded as fuel cost recovery revenues. The difference between revenues collected and current fuel and purchased power costs is recorded as deferred fuel costs on Entergy New Orleans' financial statements such that these costs generally have no net effect on earnings. Fuel cost recovery revenues increased for the three and nine months ended September 30, 2000 due to the increased market price of natural gas. Other revenue (including unbilled) Other revenue increased for the three and nine months ended September 30, 2000 primarily due to the effect of favorable weather and higher fuel and purchased power costs on unbilled revenues. Sales for resale Sales for resale decreased for the three months ended September 30, 2000 primarily due to a decrease in volume combined with a decrease in the average price of energy supplied for resale. Sales for resale increased for the nine months ended September 30, 2000 primarily due to an increase in the average price of electricity supplied for resale, partially offset by a decrease in sales volume. ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Gas operating revenues Gas operating revenues increased for the three and nine months ended September 30, 2000 primarily due to the increased market price of natural gas. Expenses Fuel and purchased power Fuel and purchased power expenses increased for the three and nine months ended September 30, 2000 primarily due to the increased market price of natural gas. Taxes other than income taxes Taxes other than income taxes increased for the three and nine months ended September 30, 2000 primarily due to increased local franchise taxes as a result of higher revenue due to warmer weather. Other regulatory credits Other regulatory credits decreased for the nine months ended September 30, 2000 primarily due to an over-recovery of Grand Gulf 1 related costs in 2000 compared to an under-recovery in 1999 and the amortization of Y2K cost deferrals in 2000. Other Income taxes For the three months ended September 30, 2000 and 1999, the effective income tax rates were 40.7% and 39.1%, respectively. For the nine months ended September 30, 2000 and 1999, the effective income tax rates were 42.2% and 39.9%, respectively.
ENTERGY NEW ORLEANS, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Nine Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $184,933 $149,320 $385,730 $333,765 Natural gas 15,928 13,821 71,523 56,718 -------- -------- -------- -------- TOTAL 200,861 163,141 457,253 390,483 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 60,389 36,179 142,421 87,255 Purchased power 61,197 54,877 135,091 132,793 Other operation and maintenance 20,277 19,956 59,934 60,227 Taxes other than income taxes 14,133 11,540 32,829 29,677 Depreciation and amortization 5,796 4,867 17,306 15,795 Other regulatory credits - net (2,163) (2,221) (5,497) (8,831) Amortization of rate deferrals 9,096 9,321 21,573 22,107 -------- -------- -------- -------- TOTAL 168,725 134,519 403,657 339,023 -------- -------- -------- -------- OPERATING INCOME 32,136 28,622 53,596 51,460 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 312 236 907 659 Miscellaneous - net 1,145 213 2,562 1,185 -------- -------- -------- -------- TOTAL 1,457 449 3,469 1,844 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 3,840 3,319 10,479 9,958 Other interest - net 349 334 1,175 988 Allowance for borrowed funds used during construction (239) (170) (684) (481) -------- -------- -------- -------- TOTAL 3,950 3,483 10,970 10,465 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 29,643 25,588 46,095 42,839 Income taxes 12,050 10,006 19,468 17,098 -------- -------- -------- -------- NET INCOME 17,593 15,582 26,627 25,741 Preferred dividend requirements and other 241 241 724 724 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $17,352 $15,341 $25,903 $25,017 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $26,627 $25,741 Noncash items included in net income: Amortization of rate deferrals 21,573 22,107 Other regulatory credits - net (5,497) (8,831) Depreciation and amortization 17,306 15,795 Deferred income taxes and investment tax credits 4,390 2,094 Allowance for equity funds used during construction (907) (659) Changes in working capital: Receivables (56,406) (22,069) Fuel inventory 1,895 1,194 Accounts payable 13,473 15,739 Taxes accrued 19,588 19,112 Interest accrued (2,377) (2,894) Deferred fuel costs (27,391) (17,573) Other working capital accounts 104 1,586 Provision for estimated losses and reserves (900) (1,678) Changes in other regulatory assets (7,777) (9,679) Other 6,544 7,265 -------- -------- Net cash flow provided by operating activities 10,245 47,250 -------- -------- INVESTING ACTIVITIES Construction expenditures (29,602) (34,823) Allowance for equity funds used during construction 907 659 -------- -------- Net cash flow used in investing activities (28,695) (34,164) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 29,607 - Dividends paid: Common stock (9,500) (24,400) Preferred stock (482) (724) -------- -------- Net cash flow provided by (used in) financing activities 19,625 (25,124) -------- -------- Net increase (decrease) in cash and cash equivalents 1,175 (12,038) Cash and cash equivalents at beginning of period 4,454 17,153 -------- -------- Cash and cash equivalents at end of period $5,629 $5,115 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $13,747 $13,569 Income taxes ($2,368) ($6,301) See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS ASSETS September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents $5,629 $4,454 Accounts receivable: Customer 69,263 28,658 Allowance for doubtful accounts (846) (846) Associated companies 3,763 404 Other 6,685 6,225 Accrued unbilled revenues 31,802 19,820 -------- -------- Total receivables 110,667 54,261 -------- -------- Deferred fuel costs 41,874 14,483 Fuel inventory - at average cost 1,398 3,293 Materials and supplies - at average cost 9,514 10,127 Rate deferrals 14,191 24,788 Prepayments and other 4,420 2,528 -------- -------- TOTAL 187,693 113,934 -------- -------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 3,259 3,259 -------- -------- UTILITY PLANT Electric 558,094 541,525 Natural gas 136,009 133,568 Construction work in progress 39,017 29,780 -------- -------- TOTAL UTILITY PLANT 733,120 704,873 Less - accumulated depreciation and amortization 397,638 382,797 -------- -------- UTILITY PLANT - NET 335,482 322,076 -------- -------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals - 10,974 Unamortized loss on reacquired debt 1,027 1,187 Other regulatory assets 40,816 33,039 Other 744 1,277 -------- -------- TOTAL 42,587 46,477 -------- -------- TOTAL ASSETS $569,021 $485,746 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Accounts payable: Associated companies $29,157 $24,350 Other 36,926 28,261 Customer deposits 18,005 17,830 Taxes accrued 20,017 429 Accumulated deferred income taxes 17,939 10,863 Interest accrued 2,578 4,956 Other 6,973 5,524 -------- -------- TOTAL 131,595 92,213 -------- -------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 38,888 43,878 Accumulated deferred investment tax credits 5,995 6,378 SFAS 109 regulatory liability - net 10,900 7,528 Other regulatory liabilities 695 1,753 Accumulated provisions 7,937 8,836 Other 9,255 7,733 -------- -------- TOTAL 73,670 76,106 -------- -------- Long-term debt 199,008 169,083 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 19,780 19,780 Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares in 2000 and 1999 33,744 33,744 Paid-in capital 36,294 36,294 Retained earnings 74,930 58,526 -------- -------- TOTAL 164,748 148,344 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $569,021 $485,746 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 80.4 $ 65.0 $ 15.4 24 Commercial 55.4 45.2 10.2 23 Industrial 7.6 7.8 (0.2) (3) Governmental 23.4 19.7 3.7 19 ------- ------- ------ Total retail 166.8 137.7 29.1 21 Sales for resale Associated companies 3.9 5.3 (1.4) (26) Non-associated companies 1.7 3.9 (2.2) (56) Other 12.5 2.4 10.1 421 ------- ------- ------ Total $ 184.9 $ 149.3 $ 35.6 24 ======= ======= ====== Billed Electric Energy Sales (GWH): Residential 851 809 42 5 Commercial 676 649 27 4 Industrial 103 144 (41) (28) Governmental 308 312 (4) (1) ------- ------- ------ Total retail 1,938 1,914 24 1 Sales for resale Associated companies 50 83 (33) (40) Non-associated companies 25 41 (16) (39) ------- ------- ------ Total 2,013 2,038 (25) (1) ======= ======= ====== Nine Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 144.6 $ 124.0 $ 20.6 17 Commercial 123.5 109.3 14.2 13 Industrial 17.7 18.6 (0.9) (5) Governmental 52.3 46.3 6.0 13 ------- ------- ------ Total retail 338.1 298.2 39.9 13 Sales for resale Associated companies 17.5 12.0 5.5 46 Non-associated companies 6.1 8.4 (2.3) (27) Other 24.0 15.2 8.8 58 ------- ------- ------ Total $ 385.7 $ 333.8 $ 51.9 16 ======= ======= ====== Billed Electric Energy Sales (GWH): Residential 1,727 1,675 52 3 Commercial 1,723 1,695 28 2 Industrial 289 386 (97) (25) Governmental 805 811 (6) (1) ------- ------- ------ Total retail 4,544 4,567 (23) (1) Sales for resale Associated companies 351 371 (20) (5) Non-associated companies 104 137 (33) (24) ------- ------- ------ Total 4,999 5,075 (76) (1) ======= ======= ====== SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999 primarily due to increased operating revenues and decreased interest charges, partially offset by increases in the effective tax rate and depreciation expense. Revenues Operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt. Operating revenues increased for the nine months ended September 30, 2000 compared to the same period in 1999 due to additional reserves recorded in the first quarter of 1999 for the potential refund of tariffs collected in System Energy's pending rate case before FERC. System Energy's proposed rate increase, which is subject to refund, is discussed in Note 2 to the financial statements. Expenses Depreciation and amortization Depreciation expense increased for the three and nine months ended September 30, 2000 due to higher depreciation associated with the sale and leaseback of a portion of Grand Gulf 1. Other Interest charges Interest on long-term debt decreased for the three and nine months ended September 30, 2000 as a result of the refinancing and redemption of pollution control revenue bonds and the redemption of first mortgage bonds in 1999 and 2000. Other interest - net decreased for the nine months ended September 30, 2000 due to an adjustment in the first quarter of 1999 to record interest on the potential refund of System Energy's proposed rate increase. Income taxes The effective income tax rates for the three months ended September 30, 2000 and 1999 were 47.3% and 45.5%, respectively. The effective income tax rates for the nine months ended September 30, 2000 and 1999 were 47.7% and 42.0%, respectively. The increase was primarily due to higher income and investment tax credits used in 1999 related to Grand Gulf Unit 2.
SYSTEM ENERGY RESOURCES, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 2000 and 1999 (Unaudited) Three Months Ended Nine Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $169,114 $163,801 $485,592 $463,923 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 9,941 11,659 31,482 32,453 Nuclear refueling outage expenses 3,600 3,505 10,504 10,516 Other operation and maintenance 24,892 23,822 63,222 64,814 Decommissioning 4,736 4,736 14,208 14,208 Taxes other than income taxes 7,094 6,721 19,262 20,240 Depreciation and amortization 35,115 28,212 91,046 84,631 Other regulatory charges - net 16,156 13,945 46,952 43,330 -------- -------- -------- -------- TOTAL 101,534 92,600 276,676 270,192 -------- -------- -------- -------- OPERATING INCOME 67,580 71,201 208,916 193,731 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 211 489 1,317 1,802 Miscellaneous - net 5,590 4,244 14,781 12,448 -------- -------- -------- -------- TOTAL 5,801 4,733 16,098 14,250 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 20,420 26,028 67,183 77,127 Other interest - net 8,098 6,139 22,238 38,781 Allowance for borrowed funds used during construction (113) (352) (766) (1,369) -------- -------- -------- -------- TOTAL 28,405 31,815 88,655 114,539 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 44,976 44,119 136,359 93,442 Income taxes 21,267 20,076 65,078 39,217 -------- -------- -------- -------- NET INCOME $23,709 $24,043 $71,281 $54,225 ======== ======== ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $71,281 $54,225 Noncash items included in net income: Reserve for regulatory adjustments 45,881 94,745 Other regulatory charges - net 46,952 43,330 Depreciation, amortization, and decommissioning 105,254 98,839 Deferred income taxes and investment tax credits (56,861) (78,247) Allowance for equity funds used during construction (1,317) (1,802) Changes in working capital: Receivables 154,032 (100,766) Accounts payable (12,045) 14,489 Taxes accrued 11,721 (14,181) Interest accrued (9,899) (13,355) Other working capital accounts 16,486 7,377 Provision for estimated losses and reserves (203) (268) Changes in other regulatory assets 37,386 22,419 Other (36,423) (592) -------- -------- Net cash flow provided by operating activities 372,245 126,213 -------- -------- INVESTING ACTIVITIES Construction expenditures (28,148) (16,441) Allowance for equity funds used during construction 1,317 1,802 Nuclear fuel purchases - (22,148) Proceeds from sale/leaseback of nuclear fuel - 22,148 Decommissioning trust contributions and realized change in trust assets (17,368) (16,286) -------- -------- Net cash flow used in investing activities (44,199) (30,925) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt - 101,856 Retirement of: Long-term debt (47,947) (282,885) Dividends paid: Common stock (71,700) (46,200) -------- -------- Net cash flow used in financing activities (119,647) (227,229) -------- -------- Net increase (decrease) in cash and cash equivalents 208,399 (131,941) Cash and cash equivalents at beginning of period 35,152 236,841 -------- -------- Cash and cash equivalents at end of period $243,551 $104,900 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $72,049 $123,049 Income taxes $104,042 $118,471 Noncash investing and financing activities: Change in unrealized appreciation/(depreciation) of decommissioning trust assets $4,988 ($1,012) See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS ASSETS September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $191 $136 Temporary cash investments - at cost, which approximates market 243,360 35,016 ---------- ---------- Total cash and cash equivalents 243,551 35,152 ---------- ---------- Accounts receivable: Associated companies 145,556 301,287 Other 2,369 670 ---------- ---------- Total receivables 147,925 301,957 ---------- ---------- Materials and supplies - at average cost 51,408 61,264 Deferred nuclear refueling outage costs 10,497 18,665 Prepayments and other 3,753 2,251 ---------- ---------- TOTAL 457,134 419,289 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 157,740 135,384 ---------- ---------- UTILITY PLANT Electric 3,094,367 3,060,324 Property under capital lease 444,850 434,993 Construction work in progress 20,469 58,510 Nuclear fuel under capital lease 56,466 78,020 ---------- ---------- TOTAL UTILITY PLANT 3,616,152 3,631,847 Less - accumulated depreciation and amortization 1,378,970 1,312,559 ---------- ---------- UTILITY PLANT - NET 2,237,182 2,319,288 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 209,630 242,834 Unamortized loss on reacquired debt 52,945 56,474 Other regulatory assets 181,728 185,910 Other 8,647 9,869 ---------- ---------- TOTAL 452,950 495,087 ---------- ---------- TOTAL ASSETS $3,305,006 $3,369,048 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDER'S EQUITY September 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $181,800 $77,947 Accounts payable: Associated companies 1,577 15,237 Other 20,085 18,470 Taxes accrued 67,104 55,383 Accumulated deferred income taxes 3,959 7,162 Interest accrued 30,100 40,000 Obligations under capital leases 38,421 38,421 Other 1,615 1,651 ---------- ---------- TOTAL 344,661 254,271 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 412,591 481,945 Accumulated deferred investment tax credits 90,385 93,219 Obligations under capital leases 18,045 39,599 FERC settlement - refund obligation 32,471 37,337 Other regulatory liabilities 106,055 73,313 Decommissioning 146,871 129,503 Regulatory reserves 313,651 267,771 Accumulated provisions 1,813 2,016 Other 16,565 16,014 ---------- ---------- TOTAL 1,138,447 1,140,717 ---------- ---------- Long-term debt 930,835 1,082,579 SHAREHOLDER'S EQUITY Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2000 and 1999 789,350 789,350 Retained earnings 101,713 102,131 ---------- ---------- TOTAL 891,063 891,481 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $3,305,006 $3,369,048 ========== ========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 9 to the financial statements in the Form 10-K for information on Entergy's estimated construction expenditures (excluding nuclear fuel), long-term debt and preferred stock maturities, and cash sinking fund requirements. Sales Warranties and Indemnities (Entergy Corporation) See Note 9 to the financial statements in the Form 10-K for information on certain warranties made by Entergy or its subsidiaries in the Entergy London and CitiPower sales transactions. Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 9 to the financial statements in the Form 10-K for information on nuclear liability, property and replacement power insurance, related NRC regulations, the disposal of spent nuclear fuel, other high-level radioactive waste, and decommissioning costs associated with ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf 1, and Pilgrim. System Energy was previously recovering in rates amounts sufficient to fund $198 million (in 1989 dollars) of its Grand Gulf 1 decommissioning costs. System Energy included updated decommissioning costs (based on a 1994 study) in its 1995 rate increase filing with FERC. Rates requested in this proceeding were placed into effect in December 1995, subject to refund. In July 2000, FERC issued an order approving a lower decommissioning cost than requested by System Energy. Pending consideration of System Energy's motion for rehearing, System Energy continues to collect decommissioning revenue at the requested level. See Note 2 to the financial statements for more information on System Energy's proposed rate increase proceeding at FERC. A decommissioning cost update was prepared for Waterford 3 in 1999 and produced a revised decommissioning cost update of $481.5 million. This cost update was filed with the LPSC in the third quarter of 2000. Entergy Arkansas filed a request with the NRC for a 20-year life extension for ANO 1 in February 2000. In October 2000, the APSC ordered Entergy Arkansas to reflect 20-year license extensions in its determination of the ANO 1 and ANO 2 decommissioning revenue requirements for rates to be effective January 1, 2001. Entergy Arkansas will not recover decommissioning costs in 2001 for ANO 1 and 2 based on the assumption that the licenses will be extended and that the existing decommissioning trust funds, together with the expected future earnings on such funds, will meet the estimated decommissioning costs. ANO Matters (Entergy Corporation and Entergy Arkansas) See Note 9 to the financial statements in the Form 10-K for information on cracks in a number of steam generator tubes at ANO 2 that were discovered and repaired during an outage in March 1992, and the replacement of the steam generators. ANO 2 went offline as scheduled on September 15, 2000 to replace its two steam generators. This scheduled outage is expected to last until mid-November 2000. Environmental Issues See "PART I, Item 1, Environmental Regulation, Other Environmental Matters" in the Form 10-K for additional discussion of environmental clean-up activity and related litigation for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans. (Entergy Arkansas) Entergy Arkansas has received notices from the EPA and the Arkansas Department of Environmental Quality (ADEQ) alleging that Entergy Arkansas, along with others, may be a potentially responsible party (PRP) for clean-up costs associated with various sites in Arkansas. As of September 30, 2000, a remaining recorded liability of approximately $7.1 million existed related to the cleanup of the remaining sites at which Entergy Arkansas has been designated a PRP. (Entergy Gulf States) Entergy Gulf States has been designated as a PRP for the cleanup of certain hazardous waste disposal sites. Entergy Gulf States is in periodic negotiations with the EPA and state authorities regarding the cleanup of certain of these sites. As of September 30, 2000, a remaining recorded liability of approximately $17.0 million existed related to the cleanup of the remaining sites at which Entergy Gulf States has been designated a PRP. (Entergy Louisiana and Entergy New Orleans) During 1993, the Louisiana Department of Environmental Quality (LDEQ) issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana and Entergy New Orleans have determined that certain of their power plant wastewater impoundments were affected by these regulations and chose to upgrade or close them. Completion of this work is awaiting LDEQ approval. LDEQ has issued notices of deficiencies for certain of these sites, and additional notices of deficiencies are expected. Recorded liabilities in the amounts of $5.8 million and $0.5 million existed at September 30, 2000 for wastewater upgrades and closures for Entergy Louisiana and Entergy New Orleans, respectively. Management of Entergy Louisiana and Entergy New Orleans believe these reserves are adequate based on current estimates. City Franchise Ordinances (Entergy New Orleans) Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to franchise ordinances. These ordinances contain a continuing option for the City to purchase Entergy New Orleans' electric and gas utility properties. Waterford 3 Lease Obligations (Entergy Louisiana) On September 28, 1989, Entergy Louisiana entered into three separate but substantially identical transactions for the sale and leaseback of undivided interests (aggregating approximately 9.3%) in Waterford 3, which were refinanced in 1997. Entergy Louisiana is obligated under certain circumstances to pay amounts sufficient to permit the Owner Participants to withdraw from these lease transactions. Additionally, Entergy Louisiana may be required to assume the outstanding bonds issued by the Owner Trustee under these leases to finance, in part, its acquisition of the undivided interests in Waterford 3. See Note 10 to the financial statements in the Form 10-K for further information. Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy Mississippi) Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy Mississippi are defendants in numerous lawsuits filed by former employees asserting that they were wrongfully terminated and/or discriminated against on the basis of age, race, and/or sex. The defendant companies are vigorously defending these suits and deny any liability to the plaintiffs. However, no assurance can be given as to the outcome of these cases. Reimbursement Agreement (System Energy) Under a bank letter of credit and reimbursement agreement, System Energy has agreed to a number of covenants relating to the maintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the agreement, to maintain its equity at not less than 33% of its adjusted capitalization (defined in the agreement to include certain amounts not included in capitalization for financial statement purposes). In addition, System Energy must maintain, with respect to each fiscal quarter during the term of the agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the agreement) of at least 1.60 times earnings. System Energy was in compliance with the above covenants at September 30, 2000. See Note 9 to the financial statements in the Form 10-K for further information. Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) In addition to those proceedings discussed elsewhere herein and in the Form 10-K, Entergy and the domestic utility companies are involved in a number of other legal proceedings and claims in the ordinary course of their businesses. While management is unable to predict the outcome of these other legal proceedings and claims, it is not expected that their ultimate resolution individually or collectively will have a material adverse effect on the results of operations, cash flows, or financial condition of these entities. NOTE 2. RATE AND REGULATORY MATTERS Electric Industry Restructuring Previous developments and information related to electric industry restructuring are presented in Note 2 to the financial statements in the Form 10-K. Arkansas (Entergy Corporation and Entergy Arkansas) As discussed in Note 2 to the financial statements in the Form 10-K, in April 1999 the Arkansas legislature enacted a law providing for competition in the electric utility industry through retail open access on January 1, 2002. When retail open access is achieved, the generation operations will become a competitive business, but transmission and distribution operations will continue to be regulated. Under the law, the APSC may delay implementation of retail open access, but not beyond June 30, 2003. In October 2000, Entergy joined with the APSC Staff and several other interested parties and recommended to the APSC that retail open access be delayed so that it begins no sooner than October 2003, and no later than October 2005. The recommendation was made in response to a request from the APSC, which is concerned that the current timeline is no longer feasible. The new proposal requires legislative approval because it extends the timeline beyond the terms of the current law. The Arkansas Legislature convenes its next session in January 2001. The implementation of the Arkansas retail open access law through rulemakings and company filings is ongoing. Rulemakings associated with energy service provider licensing rules and affiliate rules have been completed. In June 2000, the APSC declared that billing would become a competitive service at the beginning of retail open access. Entergy Arkansas filed a functional, but not corporate, unbundling plan with the APSC on August 8, 2000. The functional unbundling plan initially establishes separate business units for distribution, generation, and a new retail energy service provider. The plan contemplates the transfer of transmission assets to the Transco discussed herein and in the Form 10- K in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS." The functional unbundling plan is tentative because the regulatory requirements to implement the retail open access law have not been finalized, and changes to the details of the plan are possible. In June 2000, Entergy Arkansas filed an application to continue the stranded cost mitigation efforts agreed upon in the 1997 settlement agreement approved by the APSC. These mitigation efforts include the funding of a transition cost account with excess earnings to offset future stranded costs and the accelerated amortization of Entergy Arkansas' share of the Grand Gulf purchased power obligation under the Unit Power Sales Agreement. The filing included an updated stranded cost estimate intended to support Entergy Arkansas' recommendation that the mitigation efforts continue. The filing presents an estimated range of stranded costs based upon the comparison of possible generation asset market values to the generation assets' book values and contractual obligations. The range of possible generation asset market values used in the estimate was determined using generation asset sales in other jurisdictions. In rebuttal testimony filed by Entergy Arkansas in November 2000, Entergy Arkansas' stranded costs estimate was updated to a range of $227.8 million to $1.58 billion. Texas (Entergy Corporation and Entergy Gulf States) As discussed in Note 2 to the financial statements in the Form 10-K, in June 1999 the Texas legislature enacted a law providing for competition in the electric utility industry through retail open access. The law provides for retail open access by most electric utilities, including Entergy Gulf States, on January 1, 2002. When retail open access is achieved, the generation business and a new retail electricity provider function will become competitive businesses, but transmission and distribution operations will continue to be regulated. The new retail provider function will be the primary point of contact with the customers for most services beyond initiation of electric service and restoration of service following outages. In January 2000, as required by the Texas restructuring legislation, Entergy Gulf States filed a business separation plan with the PUCT, which was amended in June 2000. The plan provided that, by January 2002, Entergy Gulf States would ultimately be divided into a Texas distribution company, a Texas transmission company, a Texas generation company, a Texas retail electricity provider, and a Louisiana company that will encompass distribution, generation, transmission, and retail operations. In July 2000, the PUCT issued an interim order to approve the amended business separation plan. The plan provides that the Louisiana company would retain the liability for all debt obligations of Entergy Gulf States and that the property of the Texas companies would be released from the lien of Entergy Gulf States' mortgage. Each of the Texas companies would assume a pro-rata portion of Entergy Gulf States' debt obligations, which assumptions would not act to release the Louisiana company's obligations. Each of the Texas companies would also grant a lien on properties in favor of the Louisiana company to secure its obligations to the Louisiana company in respect of the assumed obligations. In addition, under the plan Entergy Gulf States will refinance or retire the Texas companies' portion of existing debt through 2004. Regulatory approvals from FERC, the SEC, and the LPSC will be required before the business separation plan can be implemented. Remaining business separation issues in Texas will be addressed in the cost unbundling proceeding before the PUCT. The LPSC has opened a docket to identify the changes in corporate structure of Entergy Gulf States, and their potential impact on Louisiana retail ratepayers, resulting from restructuring in Texas and Arkansas. Entergy Gulf States filed testimony in that proceeding in August 2000. The LPSC staff filed testimony in that proceeding in October 2000 criticizing Entergy Gulf States' proposal, particularly the part related to the Texas portion of generation assets being transferred to an unregulated entity. Hearings are scheduled for February 2001. On March 31, 2000, pursuant to the Texas restructuring legislation, Entergy Gulf States filed cost data with the PUCT for its unbundled business functions and proposed tariffs for its unbundled distribution utility. In the filing, Entergy Gulf States is seeking approval for recovery of the following, among other things: o the unbundled distribution utility's cost of service; o a 12% return on equity for the unbundled distribution utility; and o a ten-year non-bypassable charge to recover estimated stranded costs and a non-bypassable charge to recover nuclear decommissioning costs. A procedural schedule for the case has been established, calling for a hearing in January 2001. Management cannot predict the outcome of this proceeding. In connection with unbundled cost filings made by all Texas investor-owned utilities, the PUCT has opened a "generic docket" to determine issues that may be resolved on an industry-wide basis before the individual utility hearings begin. These issues include updating gas prices to be used in the model established by the PUCT for estimating stranded costs, the use of generic O&M escalation factors, and incentive mechanisms to enhance the authorized rate of return. The PUCT has ruled on the gas prices for estimated stranded costs and the proper use of operation and maintenance expense escalation. Additionally, the PUCT has converted the incentive mechanism portion of the docket into a proceeding on the generic use of capital structures and return on equity, while ruling against the use of generic incentive returns. In October 2000, Entergy Gulf States filed an updated revenue requirement reflecting the generic decisions of the PUCT to date, which reflects a slightly lower requirement than the March 2000 filing. New Orleans (Entergy Corporation and Entergy New Orleans) In October 1998, the Council established a procedural schedule to determine if natural gas retail competition is in the public interest. In April 1999, Entergy New Orleans filed a plan that would allow for gas retail open access in New Orleans. The plan outlines the conditions under which Entergy New Orleans could support gas retail open access should the Council find it in the public interest. Hearings were held on retail competition for gas service in November 1999. The advisors to the Council have issued a final report that proposes various pilot programs and finds that retail gas open access is not in the public interest at this time. The Council accepted an offer of settlement from Entergy New Orleans in this matter that would allow for a voluntary pilot program for a limited number of large industrial non-jurisdictional gas customers. Federal Regulatory Activity (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) In April 2000, the LPSC and the Council filed a complaint with FERC seeking revisions to the System Agreement that they allege are necessary to accommodate the introduction of retail competition in Texas and Arkansas, where Entergy Gulf States and Entergy Arkansas provide utility service, and to protect Entergy's Louisiana customers from any adverse impact that may occur due to the introduction of such retail competition in some jurisdictions but not others. The LPSC and the Council requested that FERC immediately institute a proceeding to permit changes to be adopted prior to January 1, 2002, and requested, among other things, that FERC cap certain of the System Agreement obligations of Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans and fix these companies' access to pool energy at the average level existing for the three years prior to the date that retail access is initiated in Texas and Arkansas. Alternatively, the LPSC and the Council requested that FERC require Entergy to provide wholesale power contracts to these companies to satisfy their energy requirements at costs no higher than would have been incurred if retail competition were not implemented. The LPSC and the Council requested that the relief be made available for at least eight years after implementation of retail competition or the withdrawal of Entergy Arkansas and Entergy Gulf States from the System Agreement, or until retail access is implemented in Louisiana and New Orleans. In addition, among other things, the LPSC and the Council asserted in their complaint that: o unless the requested relief is granted, the restructuring legislation adopted in Texas and Arkansas, to the extent such legislation requires, or has the effect of, altering the rights of parties under the System Agreement, will result in violations of the interstate commerce clause, the due process clause, and the impairment of contracts clause in the U.S. Constitution; and o the failure of the domestic utility companies to honor a right of first refusal with respect to any sale of generating capacity and associated energy under the System Agreement, and any attempt to eliminate such a right of first refusal from the System Agreement, would violate the Federal Power Act and constitute a breach of the System Agreement. In June 2000, Entergy's domestic utility companies filed proposed amendments to the System Agreement with FERC to facilitate the implementation of retail competition in Arkansas and Texas and to provide for continued equalization of costs among the domestic utilities in Louisiana and Mississippi. The amendments provide the following: o cessation of participation in all aspects of the System Agreement, other than those related to transmission equalization, for any jurisdictional division of a domestic utility operating in a jurisdiction that initiates retail open access; o certain sections of the System Agreement will no longer apply to the sales of generating capacity, whether through the sale of the asset or the output thereof, by a domestic utility operating in a jurisdiction that has established a date by which it will implement retail access; and o modification of the service schedule developed to track changes in energy costs resulting from the Entergy-Gulf States Utilities merger to include one final true-up of fuel costs upon cessation of one company's participation in the System Agreement, after which the service schedule will no longer be applicable for any purpose. Entergy believes that the proceedings relating to the proposed amendments serve as a response to the complaint by the LPSC and the Council and anticipates that the proceedings will be consolidated. In response to Entergy's proposal, the LPSC and the Council have requested that FERC dismiss the proposed amendments and proceed with the complaint proceedings. Several other parties have also intervened in the proceeding. In the event that the proceedings relating to the proposed amendments proceed, the LPSC and the Council have asserted that the charges to the domestic utility companies under the Unit Power Sales Agreement need to be reconsidered. Entergy has requested an expedited hearing on the proposed amendments and a final decision from FERC by October 1, 2001. A procedural schedule has been established, with the hearing beginning in February 2001 and an initial decision scheduled by the end of May 2001. Neither the timing, nor the ultimate outcome of these proceedings at FERC, can be predicted at this time. Retail Rate Proceedings Previous developments and information related to retail rate proceedings are presented in Note 2 to the financial statements in the Form 10-K. Filings with the APSC (Entergy Corporation and Entergy Arkansas) In March 2000, Entergy Arkansas filed its annually redetermined energy cost recovery (ECR) rate with the APSC in accordance with the energy cost recovery rider formula. The filing reflected that an increase was warranted to collect an under-recovery of energy costs for 1999. The increased ECR rate is effective April 2000 through March 2001. As discussed in Note 2 to the financial statements in the Form 10-K, Entergy Arkansas is operating under the terms of a settlement agreement approved by the APSC in December 1997 that allows the collection of excess earnings in a transition cost account. During 2000, Entergy Arkansas' operating expenses reflected reserves of $21.9 million ($13.5 million net of tax) to record the 2000 accrual of excess earnings and an adjustment of the 1999 accrual. Interest of $3.9 million ($2.4 million net of tax) was also recorded in the transition cost account for the first nine months of 2000. Filings with the PUCT and Texas Cities Rate Proceedings (Entergy Corporation and Entergy Gulf States) In September 1999, the PUCT approved the final adjustment of the rate refunds ordered as a result of Entergy Gulf States' November 1996 rate case. These refunds were completed in the October 1999 billing month. Pursuant to the September 1999 order, a true-up proceeding was initiated, which required Entergy Gulf States to refund an additional $25 million. This refund was concluded in December 1999. The PUCT approved the final refund and concluded the proceeding in June 2000. PUCT Fuel Cost Review (Entergy Corporation and Entergy Gulf States) As determined in the settlement agreement discussed in Note 2 to the financial statements in the Form 10-K, Entergy Gulf States adopted a methodology for calculating its fixed fuel factor based on the market price of natural gas. This calculation and any necessary adjustments occur semi-annually and will continue until December 2001. The amounts collected under Entergy Gulf States' fixed fuel factor through December 2001 are subject to fuel reconciliation proceedings before the PUCT, including a fuel reconciliation case filed by Entergy Gulf States in July 1999. In February 2000, Entergy Gulf States reached a settlement with all but one of the parties to that proceeding. The settlement reduces Entergy Gulf States' requested surcharge in the reconciliation filing from $14.7 million to $2.2 million. This settlement was approved by the PUCT in April 2000, confirming an interim order that allowed Entergy Gulf States to begin the recovery of the $2.2 million surcharge between April 2000 and January 2001. In addition, Entergy Gulf States agreed to file a fuel reconciliation case by January 12, 2001 covering the period from March 1, 1999 through August 31, 2000. The decrease in the requested surcharge was recorded in March 2000 and is reflected in Entergy Gulf States' operating income. In September 1999, Entergy Gulf States filed an application with the PUCT requesting an interim fuel surcharge to collect under-recovered fuel and purchased power expenses incurred from March 1999 through July 1999. In December 1999, the PUCT approved the collection of $33.9 million over a five-month period beginning January 2000. An administrative appeal of the interim fuel surcharge was filed by certain cities in Travis County District Court. The fuel and purchased power expenses contained in this surcharge will be subject to future fuel reconciliation proceedings. In September 2000, Entergy Gulf States requested an interim surcharge to collect the under-recovered fuel and purchased power expenses, including accrued interest, incurred from August 1999 through July 2000. Entergy Gulf States' requests the collection of $79.0 million over an eleven-month period beginning February 2001, and the request is currently pending before the PUCT. The fuel and purchased power expenses contained in this surcharge will be subject to future fuel reconciliation proceedings. Filings with the LPSC Annual Earnings Reviews (Entergy Corporation and Entergy Gulf States) In June 2000, the LPSC approved a settlement between Entergy Gulf States and the LPSC staff to refund $83 million, including interest, resolving refund issues in Entergy Gulf States' second, third, fourth, and fifth post-Merger earnings reviews by the LPSC. The refund, for which adequate reserves were recorded, occurred over a three-month period beginning July 2000. In May 2000, Entergy Gulf States filed its seventh required post- Merger earnings analysis with the LPSC. This filing will be subject to review by the LPSC, which may result in a change in rates. Entergy Gulf States also is proposing that the allowed return on common equity be increased from 10.95% to 11.60%. A procedural schedule has been established by the LPSC and hearings will begin in March 2001. Formula Rate Plan Filings (Entergy Corporation and Entergy Louisiana) In April 1999, Entergy Louisiana submitted its fourth annual performance-based rate plan filing for the 1998 test year. A rate reduction of $15 million was implemented effective August 1, 1999. In May 2000, the LPSC ordered an additional $6.4 million refund. The refund, for which an adequate reserve has been established, occurred in July 2000. In addition, the LPSC extended Entergy Louisiana's formula rate plan for an additional year with the last filing to be made on April 15, 2001. In May 2000, Entergy Louisiana submitted its fifth annual performance-based rate plan filing for the 1999 test year. As a result of this filing, Entergy Louisiana implemented a $24.8 million base rate reduction in August 2000. Entergy Louisiana is proposing to increase prospectively the allowed return on common equity from 10.5% to 11.6%, which, if approved, would reduce the amount of the rate reduction implemented. This filing will be subject to review by the LPSC. A procedural schedule has not yet been established by the LPSC. Filings with the Council The Council held hearings in May 1999 regarding the prudence of Entergy New Orleans' natural gas purchasing practices. Entergy New Orleans made an offer to settle this matter in conjunction with the offer to settle the gas retail open access issue that was accepted by the Council. Management has provided reserves for its estimate of the outcome of this proceeding. Fuel Adjustment Clause Litigation (Entergy Corporation and Entergy Louisiana) In May 1998, a group of ratepayers filed a complaint against Entergy Corporation, Entergy Power, and Entergy Louisiana in state court in Orleans Parish purportedly on behalf of all Entergy Louisiana ratepayers. The plaintiffs seek treble damages for alleged injuries arising from alleged violations by the defendants of Louisiana's antitrust laws in connection with the costs included in fuel filings with the LPSC and passed through to ratepayers. Among other things, the plaintiffs allege that Entergy Louisiana improperly introduced certain costs into the calculation of the fuel charges, including high-cost electricity imprudently purchased from its affiliates and high-cost gas imprudently purchased from independent third party suppliers. In addition, plaintiffs seek to recover interest and attorneys' fees. Exceptions were filed by Entergy, asserting that this dispute should be litigated before the LPSC and FERC. At the appropriate time, if necessary, Entergy will raise its defenses to the antitrust claims. At present, the suit in state court is stayed by stipulation of the parties. Plaintiffs also requested that the LPSC initiate a review of Entergy Louisiana's monthly fuel adjustment charge filings and force restitution to ratepayers of all costs that the plaintiffs allege were improperly included in those fuel adjustment filings. A few parties have also intervened in the LPSC proceeding. Discovery at the LPSC has been conducted. Direct testimony was filed with the LPSC by plaintiffs and the intervenors in July 1999. In their testimony for the period 1989 through 1998, plaintiffs purport to quantify many of their claims in an amount totaling $544 million, plus interest. The plaintiffs will likely assert additional damages for the period 1974 through 1988, if the proceeding continues. The Entergy companies filed responsive and rebuttal testimony in September 1999. Rebuttal testimony by the plaintiffs and intervenors was filed in November 1999. Entergy Louisiana has reached an agreement in principle with the LPSC staff for the settlement of the matter before the LPSC and has executed a definitive agreement with the plaintiffs for the settlement of the matter before the LPSC and the state court. The terms of the settlement agreement have not as yet been agreed to by intervenors to the LPSC proceeding, and must be approved by the LPSC and the state court. Under the terms of the settlement agreement, Entergy Louisiana would agree to refund to customers approximately $72 million to resolve all claims arising out of or relating to Entergy Louisiana's fuel adjustment clause filings from January 1, 1975 through December 31, 1999, except with respect to purchased power and associated costs included in the fuel adjustment clause filings for the period May 1 through September 30, 1999. Reserves were previously provided by Entergy Louisiana for the refund. If the proposed settlement is approved, Entergy Louisiana would also consent to future fuel cost recovery under a long-term gas contract based on a formula that would likely result in an under-recovery of actual costs under that contract for the remainder of its term, which runs through 2013. The future under-recovery cannot be precisely estimated at this time because it will depend upon factors that are not certain, such as the price of gas and the amount of gas purchased under the long-term contract. In recent years, Entergy Louisiana has made purchases under that contract totaling from $91 million to $121 million annually. Had the proposed settlement terms been applicable to such purchases, the under-recoveries would have ranged from $4 million to $9 million per year. A fairness hearing on the settlement agreement currently is scheduled before the ALJ on November 8 and 9, 2000. Following the hearing, the ALJ will make a recommendation to the LPSC and the LPSC will consider the matter at its meeting scheduled for December 2000. The settlement agreement with the plaintiffs contemplates that, within ten days of the LPSC's approval of the settlement, plaintiffs will seek class certification and approval of the settlement by the state court. Two of the intervenors, Marathon Oil Company and Louisiana Energy Users Group, requested that the LPSC review the prudence of a contract entered into by Entergy Louisiana to purchase energy generated by a hydroelectric facility known as the Vidalia project through the year 2031. Note 9 to the financial statements in the Form 10-K contains further discussions of the obligations related to the Vidalia project. By orders entered by the LPSC in 1985 and 1990, the LPSC approved Entergy Louisiana's entry into the Vidalia contract and Entergy Louisiana's right to recover, through the fuel adjustment clause, the costs of power purchased thereunder. Additionally, the wholesale electric rates under the Vidalia power purchase contract were filed at FERC. In December 1999, the LPSC instituted a review of the following issues relating to the Vidalia project: (i) the LPSC's jurisdiction over the Vidalia project; (ii) Entergy Louisiana's management of the Vidalia contract, including opportunities to restructure or otherwise reform the contract; (iii) the appropriateness of Entergy Louisiana's recovery of 100% of the Vidalia contract costs from ratepayers; (iv) the appropriateness of the fuel adjustment clause as the method for recovering all or part of the Vidalia contract costs; (v) the appropriate regulatory treatment of the Vidalia contract in the event the LPSC approves implementation of retail competition; and (vi) Entergy Louisiana's communication of pertinent information to the LPSC regarding the Vidalia project and contract. Based on its review, the LPSC will determine whether it should disallow any of the costs of the Vidalia project included in the fuel adjustment clause. In March 2000, Entergy Louisiana filed testimony in this sub-docket asserting that the prudence of the Vidalia contract already has been approved by final orders of the LPSC and that recovery of all amounts paid by Entergy Louisiana related to the Vidalia project pursuant to the FERC-filed rate is appropriate. Direct testimony was filed by intervenor Marathon Oil Company in May 2000 and by the LPSC staff and intervenor Louisiana Energy Users Group in July 2000. In its testimony the LPSC staff alleges that Entergy Louisiana was imprudent for not declaring to the LPSC that the Vidalia project had become uneconomic and not threatening to block the Vidalia project's owners' July 30, 1990 request that the LPSC clarify the LPSC's 1985 order (approving the Entergy Louisiana/Vidalia project power purchase agreement), unless the Vidalia project's owners' shared with Entergy Louisiana's ratepayers some portion of what the LPSC staff quantifies as approximately $90 million of tax consequences available to the project. The LPSC staff's testimony does not quantify how much of the potential tax savings Entergy Louisiana should have demanded in exchange for not attempting to block the Vidalia project's owners' request for clarification; however, that testimony does suggest various alternatives by which some portion of the $90 million, perhaps $45 million plus interest since 1990, could be returned to the ratepayers. The direct testimony of the intervenor Louisiana Energy Users Group alleges that Entergy Louisiana was imprudent for not attempting to block the Vidalia project's owners' July 30, 1990 request that the LPSC clarify the LPSC's 1985 order approving the Entergy Louisiana/Vidalia project power purchase agreement; however, that intervenor does not quantify the amount of damage alleged to have been caused by this alleged imprudence. The direct testimony of the intervenor Marathon Oil Company alleges with respect to Entergy Louisiana that imprudent Vidalia project costs should be disallowed and that Entergy Louisiana's customers should not be charged 100% of the Vidalia costs. It is anticipated that hearings in this sub-docket concerning the Vidalia contract will begin in January 2001. (Entergy Corporation and Entergy New Orleans) In April 1999, a group of ratepayers filed a complaint against Entergy New Orleans, Entergy Corporation, Entergy Services, and Entergy Power in state court in Orleans Parish purportedly on behalf of all Entergy New Orleans ratepayers. The plaintiffs seek treble damages for alleged injuries arising from the defendants' alleged violations of Louisiana's antitrust laws in connection with certain costs passed on to ratepayers in Entergy New Orleans' fuel adjustment filings with the Council. In particular, plaintiffs allege that Entergy New Orleans improperly included certain costs in the calculation of fuel charges and that Entergy New Orleans imprudently purchased high-cost fuel from other Entergy affiliates. Plaintiffs allege that Entergy New Orleans and the other defendant Entergy companies conspired to make these purchases to the detriment of Entergy New Orleans' ratepayers and to the benefit of Entergy's shareholders, in violation of Louisiana's antitrust laws. Plaintiffs also seek to recover interest and attorney's fees. Exceptions to the plaintiffs' allegations were filed by Entergy, asserting, among other things, that jurisdiction over these issues rests with the Council and FERC. If necessary, at the appropriate time, Entergy will also raise its defenses to the antitrust claims. At present, the suit in state court is stayed by stipulation of the parties. Plaintiffs also filed this complaint with the Council in order to initiate a review by the Council of the plantiffs' allegations and to force restitution to ratepayers of all costs they allege were improperly and imprudently included in the fuel adjustment filings. Discovery has begun in the proceedings before the Council. In April 2000, testimony was filed on behalf of the plaintiffs in this proceeding. The testimony asserts, among other things, that Entergy New Orleans and other defendants have engaged in fuel procurement and power purchasing practices that could have resulted in New Orleans customers being overcharged by more than $45 million over a period of years. However, it is not clear precisely what periods and damages are being alleged. Entergy intends to defend this matter vigorously, both in court and before the Council. The ultimate outcome of the lawsuit and the Council proceeding cannot be predicted at this time. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) In March 2000, Entergy Mississippi submitted its annual performance- based formula rate plan filing for the 1999 test year. The filing indicated that no change in rate levels was warranted and the current rate levels remain in effect. Purchased Power for Summer 2000 (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) The domestic utility companies filed applications with the APSC, the LPSC, the MPSC, and the Council to approve the sale of power by Entergy Gulf States from its unregulated, undivided 30% interest in River Bend formerly owned by Cajun to the other domestic utility companies during the summer of 2000. In addition, Entergy Gulf States and Entergy Louisiana filed an application with the LPSC for authorization to purchase capacity and electric power from third parties for the summer of 2000. The commissions and Council have approved the applications, with a reservation of their right to review the prudence of the purchases and the appropriate categorization of the costs as either capacity charges or energy charges for purposes of recovery. During its November 2000 meeting, the LPSC considered the Entergy Gulf States and Entergy Louisiana costs. The LPSC found that the costs were prudently incurred, but decided that approximately 34% of the costs should be categorized as capacity charges, and therefore should be recovered through base rates and not through the fuel adjustment clause. The LPSC's decision will result in refunds of approximately $11.1 million for Entergy Louisiana and approximately $3.6 million for Entergy Gulf States. These costs categorized as capacity charges will be included in the costs of service used to determine the base rates of those companies. Proposed Rate Increase (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) As discussed in Note 2 to the financial statements in the Form 10-K, System Energy applied to FERC in May 1995 for a $65.5 million rate increase. The request sought changes to System Energy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return on common equity. In December 1995, System Energy implemented the $65.5 million rate increase, subject to refund, for which a portion has been reserved. After a hearing, FERC issued an order in July 2000 in the proceeding. FERC affirmed the ALJ's adoption of a 10.8% return on equity, but modified the return to reflect changes in capital market conditions since the ALJ's decision. FERC adjusted the rate of return to 10.58% for the period December 1995 to the date of FERC's decision, and prospectively adjusted the rate of return to 10.94% from the date of FERC's decision. FERC's decision also changed other aspects of System Energy's proposed rate schedule, including the depreciation rate and decommissioning costs and their methodology. System Energy has provided reserves for a potential refund to the rate level of the initial ALJ decision, including interest. Management has analyzed the effect of FERC's decision, and concluded that a refund to the FERC decision rate level is not expected to have a material adverse effect on Entergy's, System Energy's, or the domestic utility companies results of operations. System Energy has filed a request for rehearing of FERC's order, which defers any refunds until after further FERC action. In August 2000, the MPSC approved Entergy Mississippi's second revised deferral plan that provides for a one-year suspension, until October 2001, of the recovery of the ALJ amount deferred prior to October 1998. The recovery of $11.8 million of the System Energy rate increase began in October 1998 and was being amortized over 48 months. The amount of System Energy's proposed rate increase in excess of this amount will continue to be deferred until the issuance of a final order by FERC, or October 2002, whichever occurs first. These deferred amounts, plus carrying charges, will be amortized over a 36-month period beginning in October 2002. NOTE 3. COMMON STOCK (Entergy Corporation) During the nine months ended September 30, 2000, Entergy Corporation repurchased 19,465,800 shares of common stock in the open market for an aggregate purchase price of approximately $496 million. These shares were purchased pursuant to Entergy's stock repurchase plan, to fulfill the requirements of various stock-based compensation and benefit plans, or under the terms of the Merger Agreement. Under the terms of the Merger Agreement, Entergy committed to use its commercially reasonable efforts to purchase in open market transactions $430 million of its common stock prior to the close of the Merger. After the signing of the Merger Agreement, Entergy repurchased 3.0 million shares for an aggregate amount of $100.2 million as of September 30, 2000. During the nine months ended September 30, 2000, Entergy Corporation issued 472,303 shares of its previously repurchased common stock to satisfy stock options exercised and employee stock purchases. In addition, Entergy Corporation received proceeds of approximately $2.0 million from the issuance of 89,894 shares of common stock under its dividend reinvestment and stock purchase plan. NOTE 4. LONG-TERM DEBT (Entergy Mississippi) On February 15, 2000, Entergy Mississippi issued $120 million of 7.75% Series First Mortgage Bonds due February 15, 2003. The proceeds are being used for general corporate purposes, including the retirement of short-term indebtedness that was incurred for working capital needs and capital expenditures. (Entergy Arkansas) On March 9, 2000, Entergy Arkansas issued $100 million of 7.72% Series First Mortgage Bonds due March 1, 2003. The proceeds are being used for general corporate purposes, including the retirement of short- term indebtedness that was incurred for working capital needs and capital expenditures. (Entergy Louisiana) On March 1, 2000, Entergy Louisiana redeemed, at maturity, $100 million of 6.00% Series First Mortgage Bonds using funds received from an open-account advance from Entergy Corporation. On May 23, 2000, Entergy Louisiana issued $150 million of 8.50% Series First Mortgage Bonds due June 1, 2003. The proceeds are being used for general corporate purposes, including the repayment of the open account advance from Entergy Corporation and of short-term indebtedness that was incurred for capital needs and capital expenditures. (Entergy Gulf States) On June 1, 2000, Entergy Gulf States issued $300 million of First Mortgage Bonds due June 2, 2003 bearing an initial rate of 8.04%. The interest rate is floating and is computed each quarter. The current rate is 7.88%. The proceeds are being used for general corporate purposes, including the retirement of short-term indebtedness that was incurred for capital needs and capital expenditures, and the mandatory redemption of $150 million of preference stock in June 2000. (Entergy New Orleans) On July 25, 2000, Entergy New Orleans issued $30 million of 8.125% Series First Mortgage Bonds due July 15, 2005. The proceeds are being used for general corporate purposes, including the retirement of short- term indebtedness that was incurred for capital needs and capital expenditures. (System Energy) On August 1, 2000, System Energy redeemed, at maturity, $45 million of 7.80% Series Debentures with internally generated funds. On October 1, 2000, System Energy redeemed, at maturity, $30 million of 7.38% Series Debentures with internally generated funds. (Entergy Corporation) As discussed in Note 7 to the Form 10-K, Saltend Cogeneration Company Limited (SCCL), an indirect wholly-owned subsidiary of EPDC, has in place a non-recourse senior credit facility and a non-recourse subordinated credit facility to finance the construction and operation of the Saltend power plant in the UK. All of the assets of SCCL are pledged as collateral under the senior credit facility and the subordinated credit facility. These facilities contain certain covenants, including the requirement that the Saltend power plant begin commercial operation by October 1, 2000. The plant has not commenced commercial operation, and therefore SCCL is in technical default on the facilities. The lender has agreed not to take any action at this time as a result of the default, but reserves all of its rights. Final testing of the Saltend plant is scheduled for early to mid-November 2000. The testing is required before commercial operation begins, and if successful the testing will remove the event of default. The amount of debt outstanding on the facilities as of September 30, 2000 is $588.2 million. Entergy's global power development business has entered into 10-year interest rate swap agreements with an average fixed rate of 6.539% for approximately 100% of the debt outstanding under the Damhead Creek bridge and term loan portion of the Senior Credit Facility. The global power development business is exposed to market risks from movements in interest rates for the hedged portion of the debt only in the unlikely event that the counter-parties to the interest rate swap agreements were to default on contractual payments. At September 30, 2000, Entergy's global power development business had interest rate swap agreements outstanding totalling a notional amount of $415.2 million. Under the senior credit facility and the subordinated credit facility, the ability of the global power development business to make distributions of dividends, loans, or advances to Entergy Corporation is restricted by, among other things, the requirement to pay permitted project costs, make debt repayments, and maintain cash reserves. See Note 7 to the financial statements in the Form 10-K for further discussion of the financing of the Damhead Creek project. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On October 27, 2000, Entergy Corporation's Board of Directors declared a common stock dividend of $0.315 per share, payable on December 1, 2000 to holders of record on November 10, 2000. NOTE 6. BUSINESS SEGMENT INFORMATION (Entergy Corporation) See Note 14 to the financial statements in the Form 10-K for information regarding Entergy's adoption of SFAS 131 and its operating segments. Entergy's segment financial information for the three months ended September 30, 2000 and 1999 is as follows (in thousands):
Domestic Power All Consolidated Utility and Marketing Other* Eliminations System Energy and Trading* 2000 Operating Revenues $2,412,482 $953,970 $ 82,660 $ (17,557) $ 3,431,555 Income Taxes 199,142 8,892 (107) - 207,927 Net Income 290,694 12,289 3,706 - 306,689 1999 Operating Revenues $ 2,044,282 $988,550 $ 45,853 $ (14,150) $ 3,064,535 Income Taxes 193,998 9,504 7,295 - 210,797 Net Income 292,297 17,287 (13,426) - 296,158
Entergy's segment financial information for the nine months ended September 30, 2000 and 1999 is as follows (in thousands):
Domestic Power All Consolidated Utility and Marketing Other* Eliminations System and Trading* Energy 2000 Operating Revenues $ 5,511,403 $1,672,931 $238,498 $ (41,997) $ 7,380,835 Income Taxes 390,640 16,688 33,288 - 440,616 Net Income 564,978 27,409 68,485 - 660,872 Total Assets 20,560,181 612,501 3,384,263 (529,842) 24,027,103 1999 Operating Revenues $ 4,977,012 $2,002,146 $ 67,581 $ (25,878) $ 7,020,861 Income Taxes 361,494 2,468 (21,559) - 342,403 Net Income 549,741 3,132 25,949 - 578,822 Total Assets 19,545,541 719,725 3,455,765 (323,205) 23,397,826
Businesses marked with * are referred to as the "competitive businesses," with the exception of the parent company, Entergy Corporation, which is also included in the "All Other" column. The "All Other" category includes the parent, Entergy Corporation, segments below the quantitative threshold for separate disclosure, and other business activities. Other segments principally include global power development and non-utility nuclear power operations and management. Other business activities principally include the gains on the sales of businesses. The elimination of power marketing and trading mark-to-market profits on intercompany power transactions is also included in "All Other". Eliminations are primarily inter-segment activity. NOTE 7. ENTERGY-FPL GROUP MERGER (Entergy Corporation) On July 30, 2000, Entergy Corporation and FPL Group entered into a Merger Agreement, providing for a business combination that results in the creation of a new company. For accounting purposes, the Merger will be recorded under the purchase method of accounting as an acquisition of Entergy by FPL Group. Each outstanding share of FPL Group common stock will be converted into the right to receive one share of the new company's common stock, and each outstanding share of Entergy Corporation common stock will be converted into the right to receive 0.585 of a share of the new company's common stock. It is expected that FPL Group's shareholders will own approximately 57% of the common equity of the new company and Entergy's shareholders will own approximately 43%. The new company will be given a new name that will be agreed upon between the Boards of Directors of FPL and Entergy prior to the consummation of the Merger. The new company will maintain its principal corporate offices and headquarters in Juno Beach, Florida, and will maintain its utility headquarters in New Orleans, Louisiana. The Merger is conditioned, among other things, upon approvals of the shareholders of FPL Group and Entergy and approvals of various local, state, and federal regulatory agencies and commissions. Entergy and FPL Group will seek to consummate the Merger by late 2001. NOTE 8. NEW ACCOUNTING PRONOUNCEMENT (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," which will be effective for Entergy in 2001. This statement requires that all derivatives be recognized in the balance sheet, either as assets or liabilities, measured at fair value. The changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. For fair-value hedge transactions in which Entergy is hedging changes in an asset's, liability's, or firm commitment's fair value, changes in the fair value of the derivative instrument will generally be offset in the income statement by changes in the hedged item's fair value. For cash-flow hedge transactions, in which Entergy is hedging the variability of cash flows related to a variable- rate asset, liability, or a forecasted transaction, changes in the fair value of the derivative instrument will be reported in other comprehensive income. The gains and losses on the derivative instrument that are reported in other comprehensive income will be reclassified as earnings in the periods in which earnings are impacted by the variability of the cash flows of the hedged item. The ineffective portion of all hedges will be recognized in current-period earnings. Entergy utilizes derivative financial instruments primarily for the following purposes: o trading activity in its power marketing and trading business; o to ensure adequate power supplies and to mitigate certain risks in the domestic utility business; and o to hedge cash flows for various transactions in its competitive businesses. The implementation of SFAS 133 will not materially impact the power marketing and trading business, as its derivative portfolio is already marked-to-market under the provisions of EITF 98-10, "Measuring the Value of Energy-Related Contracts". The derivatives utilized in the domestic utility business will be recorded at their fair value upon implementation of SFAS 133. However, these fair values will be offset by related regulatory assets and liabilities, as all revenues and costs associated with these derivatives are ultimately recovered from ratepayers. Based on Entergy's preliminary assessment of the impact of SFAS 133 on its other cash flow hedging derivative instruments, Entergy estimates that a net-of-tax cumulative-effect-type-adjustment in accumulated other comprehensive income and the impact on the consolidated income statements due to any ineffectiveness of these cash flow hedges will not be significant when the company adopts SFAS 133 on January 1, 2001. __________________________________ In the opinion of the management of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, the accompanying unaudited condensed financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented. However, the business of the domestic utility companies and System Energy is subject to seasonal fluctuations with the peak periods occurring during the third quarter. The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year. ENTERGY CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Item 1. Legal Proceedings See "PART I, Item 1, Other Regulation and Litigation" in the Form 10- K for a discussion of legal proceedings affecting Entergy. Set forth below are updates to the information contained in the Form 10-K. Union Pacific Railroad (Entergy Corporation and Entergy Arkansas) See "Union Pacific Railroad" in Item 1 of Part 1 of the Form 10-K for information relating to the civil suit filed by Entergy Arkansas and Entergy Services against Union Pacific Railroad Company (Union Pacific) seeking damages and the termination of coal shipping contracts with Union Pacific because of its failure to meet its contractual obligations to ship coal to Entergy Arkansas' two coal-fired plants. In the third quarter of 2000, Entergy and Union Pacific settled the dispute and the litigation has been dismissed. Aquila Power Corporation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) See "Aquila Power Corporation" in Item 1 of Part 1 of the Form 10-K and in Item 1 of Part II of the 2000 first quarter Form 10-Q for information relating to the lawsuit filed by Aquila Power Corporation (Aquila) against Entergy Services, as agent for the domestic utility companies. Ratepayer Lawsuits (Entergy Corporation, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) See "Ratepayer Lawsuits" in Item 1 of Part I of the Form 10-K for a discussion of the lawsuits filed by ratepayers with the LPSC, the Council, and in Louisiana state courts in Orleans and East Baton Rouge Parishes. See "Fuel Adjustment Clause Litigation" in Note 2 to the financial statements herein for developments that have occurred since the filing of the Form 10-K. In the lawsuit filed in state court in Orleans Parish alleging violations of Entergy New Orleans' limit on rate of return, in May 2000 a court of appeal granted Entergy New Orleans' exception to jurisdiction in the case and dismissed the proceeding. The Louisiana Supreme Court has denied the plaintiff's request for a writ of certiorari. The plaintiffs then commenced a similar proceeding before the Council. Management cannot predict the outcome of the proceeding before the Council. Franchise Service Area Litigation (Entergy Gulf States) See "Franchise Service Area Litigation" in Item 1 of Part 1 of the Form 10-K for information relating to the request filed by Beaumont Power and Light Company (BP&L) with the PUCT to obtain a certificate of convenience and necessity for those portions of Jefferson County, Texas, outside the boundaries of any municipality, except for the city of Beaumont, for which Entergy Gulf States provides retail electric service. In April 2000, the ALJ recommended denial of BP&L's application. In May 2000, the PUCT voted to remand the proceeding back to the ALJ to allow BP&L to provide further evidence. No procedural schedule has been set. Ice Storm Litigation (Entergy Corporation and Entergy Gulf States) See "Ice Storm Litigation" in Part I of the Form 10-K for information relating to the lawsuit filed by a group of Entergy Gulf States customers in Texas against Entergy Corporation, Entergy Gulf States, and other Entergy subsidiaries in state court in Jefferson County, Texas purportedly on behalf of all Entergy Gulf States customers in Texas who sustained outages in a January 1997 ice storm. In March 2000, an appellate court affirmed the district court's decision to certify the class. In response to Entergy's motion for rehearing, the appellate court reversed the district court, denied class certification, and remanded the case to the district court for proceedings consistent with its ruling. Management cannot predict the outcome of this matter. Litigation Environment (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) The four states in which Entergy and the domestic utility companies operate have proven to be unusually litigious environments. Judges and juries in these states, and in particular Louisiana and Texas, have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. Entergy uses all appropriate legal means to contest litigation threatened or filed against it, but the litigation environment in these states poses a business risk. Item 4. Submission of Matters to a Vote of Security Holders (Entergy Arkansas) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Arkansas: Hugh T. McDonald, Donald C. Hintz, Jerry D. Jackson, and C. John Wilder. (Entergy Gulf States) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Gulf States: E. Renae Conley, Joseph F. Domino, Donald C. Hintz, Jerry D. Jackson, and C. John Wilder. (Entergy Louisiana) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Louisiana: E. Renae Conley, Donald C. Hintz, Jerry D. Jackson, and C. John Wilder. (Entergy Mississippi) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Mississippi: Carolyn C. Shanks, Donald C. Hintz, Jerry D. Jackson, and C. John Wilder. (Entergy New Orleans) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy New Orleans: Daniel F. Packer, Donald C. Hintz, Jerry D. Jackson, and C. John Wilder. (System Energy) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of System Energy: Jerry W. Yelverton, Donald C. Hintz, and C. John Wilder. Item 5. Other Information Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) The domestic utility companies and System Energy have calculated ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends pursuant to Item 503 of Regulation S-K of the SEC as follows: Ratios of Earnings to Fixed Charges Twelve Months Ended December 31, September 30, 1995 1996 1997 1998 1999 2000 Entergy Arkansas 2.56 2.93 2.54 2.63 2.08 2.42 Entergy Gulf States 1.86 1.47 1.42 1.40 2.18 2.59 Entergy Louisiana 3.18 3.16 2.74 3.18 3.48 2.90 Entergy Mississippi 2.92 3.40 2.98 3.12 2.44 2.38 Entergy New Orleans 3.93 3.51 2.70 2.65 3.00 3.15 System Energy 2.07 2.21 2.31 2.52 1.90 2.42 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, September 30, 1995 1996 1997 1998 1999 2000 Entergy Arkansas 2.12 2.44 2.24 2.28 1.80 2.13 Entergy Gulf States (a) 1.54 1.19 1.23 1.20 1.86 2.31 Entergy Louisiana 2.60 2.64 2.36 2.75 3.09 2.57 Entergy Mississippi 2.51 2.95 2.69 2.80 2.18 2.14 Entergy New Orleans 3.56 3.22 2.44 2.41 2.74 2.87 (a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* ** 2(a) - Agreement and Plan of Merger dated as of July 30, 2000, among FPL Group, Inc., Entergy Corporation, WCB Holding Corp., Ranger Acquisition Corp. and Ring Acquisition Corp (filed as Exhibit 2.1 to Form 8-K dated July 31, 2000 in 1-11299). 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of September 30, 2000. 27(b) - Financial Data Schedule for Entergy Arkansas as of September 30, 2000. 27(c) - Financial Data Schedule for Entergy Gulf States as of September 30, 2000. 27(d) - Financial Data Schedule for Entergy Louisiana as of September 30, 2000. 27(e) - Financial Data Schedule for Entergy Mississippi as of September 30, 2000. 27(f) - Financial Data Schedule for Entergy New Orleans as of September 30, 2000. 27(g) - Financial Data Schedule for System Energy as of September 30, 2000. 99(a) - Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. ** 99(g) - Annual Reports on Form 10-K of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the fiscal year ended December 31, 1999, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-27031, 1-8474, 0-320, 0- 5807, and 1-9067, respectively). ** 99(h) - Quarterly Reports on Form 10-Q of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the quarter ended March 31, 2000, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-27031, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ** 99(i) - Quarterly Reports on Form 10-Q of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the quarter ended June 30, 2000, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-27031, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ___________________________ Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of Entergy Corporation and its subsidiaries on a consolidated basis. * Reference is made to a duplicate list of exhibits being filed as a part of this report on Form 10-Q for the quarter ended September 30, 2000, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being filed with this report on Form 10-Q for the quarter ended September 30, 2000. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K Entergy Corporation A Current Report on Form 8-K, dated July 26, 2000, was filed with the SEC on July 27, 2000, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". Entergy Corporation A Current Report on Form 8-K, dated July 30, 2000, was filed with the SEC on July 31, 2000, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". Entergy Corporation A Current Report on Form 8-K, dated July 30, 2000, was filed with the SEC on August 3, 2000, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". Entergy Corporation and Entergy Louisiana A Current Report on Form 8-K, dated August 11, 2000, was filed with the SEC on August 18, 2000, reporting information under Item 5. "Other Events". Entergy Corporation and Entergy Louisiana A Current Report on Form 8-K, dated October 19, 2000, was filed with the SEC on October 19, 2000, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries. ENTERGY CORPORATION ENTERGY ARKANSAS, INC. ENTERGY GULF STATES, INC. ENTERGY LOUISIANA, INC. ENTERGY MISSISSIPPI, INC. ENTERGY NEW ORLEANS, INC. SYSTEM ENERGY RESOURCES, INC. /s/ Nathan E. Langston Nathan E. Langston Vice President and Chief Accounting Officer (For each Registrant and for each as Principal Accounting Officer) Date: November 9, 2000 EX-27 2 0002.txt
UT This schedule contains summary financial information extracted from Entergy Corporation and Subsidiaries financial statements for the quarter ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000065984 ENTERGY CORPORATION AND SUBSIDIARIES 023 ENTERGY CORPORATION AND SUBSIDIARIES 1,000 9-MOS DEC-31-2000 SEP-30-2000 PER-BOOK 15,914,186 2,008,757 3,749,454 2,354,706 0 24,027,103 2,472 4,636,811 3,216,395 7,076,035 284,650 331,240 7,106,769 1,036 0 0 406,858 0 181,825 176,224 8,462,466 24,027,103 7,380,835 440,616 6,066,854 6,066,854 1,313,981 202,694 1,516,675 415,187 660,872 24,886 635,986 204,660 382,313 1,174,432 2.78 2.77
EX-27 3 0003.txt
UT This schedule contains summary financial information extracted from Entergy Arkansas, Inc. financial statements for the quarter ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000007323 ENTERGY ARKANSAS, INC. 001 ENTERGY ARKANSAS, INC. 1,000 9-MOS DEC-31-2000 SEP-30-2000 PER-BOOK 2,878,814 384,039 437,396 357,588 0 4,057,837 470 591,127 531,395 1,122,992 60,000 116,350 1,237,394 667 0 0 220 0 77,303 55,325 1,387,586 4,057,837 1,342,856 82,242 1,089,249 1,089,249 253,607 15,037 268,644 68,189 118,213 5,832 112,381 44,600 63,290 202,344 0 0
EX-27 4 0004.txt
UT This schedule contains summary financial information extracted from Entergy Gulf States, Inc. financial statements for the quarter ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000044570 ENTERGY GULF STATES, INC. 006 ENTERGY GULF STATES, INC. 1,000 9-MOS DEC-31-2000 SEP-30-2000 PER-BOOK 4,160,448 466,758 754,052 641,395 0 6,022,653 114,055 1,153,195 289,611 1,556,861 119,650 44,229 1,809,006 0 0 0 122,750 0 54,033 52,131 2,263,993 6,022,653 1,886,755 99,363 1,522,943 1,522,943 363,812 15,590 379,402 111,142 168,897 8,668 160,229 73,400 91,865 161,829 0 0
EX-27 5 0005.txt
UT This schedule contains summary financial information extracted from Entergy Louisiana, Inc. financial statements for the quarter ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000060527 ENTERGY LOUISIANA, INC. 012 ENTERGY LOUISIANA, INC. 1,000 9-MOS DEC-31-2000 SEP-30-2000 PER-BOOK 3,270,274 150,048 580,063 311,753 0 4,312,138 1,088,900 0 146,665 1,233,394 105,000 100,500 1,276,632 0 0 0 35,088 0 31,213 28,387 1,501,924 4,312,138 1,517,063 102,051 1,189,073 1,189,073 327,990 6,436 334,426 80,329 152,046 7,135 144,911 57,800 68,913 214,527 0 0
EX-27 6 0006.txt
UT This schedule contains summary financial information extracted from Entergy Mississippi, Inc. financial statements for the quarter ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000066901 ENTERGY MISSISSIPPI, INC. 016 ENTERGY MISSISSIPPI, INC. 1,000 9-MOS DEC-31-2000 SEP-30-2000 PER-BOOK 1,178,988 12,414 269,223 195,293 0 1,655,918 199,326 0 241,451 440,718 0 50,381 584,386 0 0 0 0 0 219 95 580,119 1,655,918 696,346 19,556 618,053 618,053 78,293 8,568 86,861 31,894 35,411 2,527 32,884 18,000 28,060 4,159 0 0
EX-27 7 0007.txt
UT This schedule contains summary financial information extracted from Entergy New Orleans, Inc. financial statements for the quarter ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000071508 ENTERGY NEW ORLEANS, INC. 017 ENTERGY NEW ORLEANS, INC. 1,000 9-MOS DEC-31-2000 SEP-30-2000 PER-BOOK 335,482 3,259 187,693 42,587 0 569,021 33,744 36,294 74,930 144,968 0 19,780 199,008 0 0 0 0 0 0 0 205,265 569,021 457,253 19,468 403,657 403,657 53,596 3,469 57,065 10,970 26,627 724 25,903 9,500 13,747 10,245 0 0
EX-27 8 0008.txt
UT This schedule contains summary financial information extracted from System Energy Resources, Inc. financial statements for the quarter ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000202584 SYSTEM ENERGY RESOURCES, INC. 018 SYSTEM ENERGY RESOURCES, INC. 1,000 9-MOS DEC-31-2000 SEP-30-2000 PER-BOOK 2,237,182 157,740 457,134 452,950 0 3,305,006 789,350 0 101,713 891,063 0 0 930,835 0 0 0 181,800 0 18,045 38,421 1,244,842 3,305,006 485,592 65,078 276,676 276,676 208,916 16,098 225,014 88,655 71,281 0 71,281 71,700 72,049 372,245 0 0
EX-99 9 0009.txt
Exhibit 99(a) Entergy Arkansas, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 September-00 Fixed charges, as defined: Total Interest Charges $115,337 $106,716 $104,165 $96,685 $97,023 $103,692 Interest applicable to rentals 18,158 19,121 17,529 15,511 17,289 14,944 --------------------------------------------------------- Total fixed charges, as defined 133,495 125,837 121,694 112,196 114,312 118,636 Preferred dividends, as defined (a) 27,636 24,731 16,073 16,763 17,836 16,348 --------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $161,131 $150,568 $137,767 $128,959 $132,148 $134,984 ========================================================= Earnings as defined: Net Income $136,666 $157,798 $127,977 $110,951 $69,313 $89,566 Add: Provision for income taxes: Total 72,081 84,445 59,220 71,374 54,012 79,294 Fixed charges as above 133,495 125,837 121,694 112,196 114,312 118,636 --------------------------------------------------------- Total earnings, as defined $342,242 $368,080 $308,891 $294,521 $237,637 $287,496 ========================================================= Ratio of earnings to fixed charges, as defined 2.56 2.93 2.54 2.63 2.08 2.42 ========================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.12 2.44 2.24 2.28 1.80 2.13 ========================================================= - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 10 0010.txt
Exhibit 99(b) Entergy Gulf States, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 September-00 Fixed charges, as defined: Total Interest charges $200,224 $193,890 $180,073 $178,220 $153,034 $155,455 Interest applicable to rentals 16,648 14,887 15,747 16,927 16,451 17,890 --------------------------------------------------------- Total fixed charges, as defined 216,872 208,777 195,820 195,147 169,485 173,345 Preferred dividends, as defined (a) 44,651 48,690 30,028 32,031 29,355 21,043 --------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $261,523 $257,467 $225,848 $227,178 $198,840 $194,388 ========================================================= Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes $122,919 ($3,887) $59,976 $46,393 $125,000 $182,517 Add: Income Taxes 63,244 102,091 22,402 31,773 75,165 93,392 Fixed charges as above 216,872 208,777 195,820 195,147 169,485 173,345 --------------------------------------------------------- Total earnings, as defined (b) $403,035 $306,981 $278,198 $273,313 $369,650 $449,254 ========================================================= Ratio of earnings to fixed charges, as defined 1.86 1.47 1.42 1.40 2.18 2.59 ========================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.54 1.19 1.23 1.20 1.86 2.31 ========================================================= (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. (b) Earnings for the year ended December 31, 1994, for GSU were not adequate to cover fixed charges combined fixed charges and preferred dividends by $144.8 million and $197.1 million, respectively.
EX-99 11 0011.txt
Exhibit 99(c) Entergy Louisiana, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 September-00 Fixed charges, as defined: Total Interest $136,901 $132,412 $128,900 $122,890 $117,247 $113,472 Interest applicable to rentals 9,332 10,601 9,203 9,564 9,221 7,581 -------------------------------------------------------- Total fixed charges, as defined 146,233 143,013 138,103 132,454 126,468 121,053 Preferred dividends, as defined (a) 32,847 28,234 22,103 20,925 16,006 15,596 -------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $179,080 $171,247 $160,206 $153,379 $142,474 $136,649 ======================================================== Earnings as defined: Net Income $201,537 $190,762 $141,757 $179,487 $191,770 $140,277 Add: Provision for income taxes: Total Taxes 117,114 118,559 98,965 109,104 122,368 89,934 Fixed charges as above 146,233 143,013 138,103 132,454 126,468 121,053 -------------------------------------------------------- Total earnings, as defined $464,884 $452,334 $378,825 $421,045 $440,606 $351,264 ======================================================== Ratio of earnings to fixed charges, as defined 3.18 3.16 2.74 3.18 3.48 2.90 ======================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.60 2.64 2.36 2.75 3.09 2.57 ======================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 12 0012.txt
Exhibit 99(d) Entergy Mississippi, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 September-00 Fixed charges, as defined: Total Interest $51,635 $48,007 $45,274 $40,927 $38,840 $42,807 Interest applicable to rentals 2,173 2,165 1,947 1,864 2,261 1,597 ---------------------------------------------------------- Total fixed charges, as defined 53,808 50,172 47,221 42,791 41,101 44,404 Preferred dividends, as defined (a) 9,004 7,610 5,123 4,878 4,878 4,922 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $62,812 $57,782 $52,344 $47,669 $45,979 $49,326 ========================================================== Earnings as defined: Net Income $68,667 $79,210 $66,661 $62,638 $41,588 $42,550 Add: Provision for income taxes: Total income taxes 34,877 41,107 26,744 28,031 17,537 18,668 Fixed charges as above 53,808 50,172 47,221 42,791 41,101 44,404 ---------------------------------------------------------- Total earnings, as defined $157,352 $170,489 $140,626 $133,460 $100,226 $105,622 ========================================================== Ratio of earnings to fixed charges, as defined 2.92 3.40 2.98 3.12 2.44 2.38 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.51 2.95 2.69 2.80 2.18 2.14 ========================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 13 0013.txt
Exhibit 99(e) Entergy New Orleans, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 September-00 Fixed charges, as defined: Total Interest $17,802 $16,304 $15,287 $14,792 $14,680 $15,388 Interest applicable to rentals 916 831 911 1,045 1,281 1,002 ----------------------------------------------------- Total fixed charges, as defined 18,718 17,135 16,198 15,837 15,961 16,390 Preferred dividends, as defined (a) 1,964 1,549 1,723 1,566 1,566 1,614 ----------------------------------------------------- Combined fixed charges and preferred dividends, as defined $20,682 $18,684 $17,921 $17,403 $17,527 $18,004 ===================================================== Earnings as defined: Net Income $34,386 $26,776 $15,451 $16,137 $18,961 $19,847 Add: Provision for income taxes: Total 20,467 16,216 12,142 10,042 13,030 15,400 Fixed charges as above 18,718 17,135 16,198 15,837 15,961 16,390 ----------------------------------------------------- Total earnings, as defined $73,571 $60,127 $43,791 $42,016 $47,952 $51,637 ===================================================== Ratio of earnings to fixed charges, as defined 3.93 3.51 2.70 2.65 3.00 3.15 ===================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 3.56 3.22 2.44 2.41 2.74 2.87 ===================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. (b) Earnings for the twelve months ended December 31, 1991 include the $90 million effect of the 1991 NOPSI Settlement.
EX-99 14 0014.txt
Exhibit 99(f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges 12 months 1995 1996 1997 1998 1999 September-00 Fixed charges, as defined: Total Interest $151,512 $143,720 $128,653 $116,060 $147,982 $121,495 Interest applicable to rentals 6,475 6,223 6,065 5,189 3,871 4,502 ------------------------------------------------------------ Total fixed charges, as defined $157,987 $149,943 $134,718 $121,249 $151,853 $125,997 ============================================================ Earnings as defined: Net Income $93,039 $98,668 $102,295 $106,476 $82,375 $99,431 Add: Provision for income taxes: Total 75,493 82,121 74,654 77,263 53,851 79,712 Fixed charges as above 157,987 149,943 134,718 121,249 151,853 125,997 ------------------------------------------------------------ Total earnings, as defined $326,519 $330,732 $311,667 $304,988 $288,079 $305,140 ============================================================ Ratio of earnings to fixed charges, as defined 2.07 2.21 2.31 2.52 1.90 2.42 ============================================================
-----END PRIVACY-ENHANCED MESSAGE-----