-----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, JUUfcJ0ZE8nG7ujYXMsSvuiVsm5BWIAFaD7Jfd6Sc5GtFXCXkIsCGhynJWrHdUcA mVR84MYgm/OztrvpJgehzA== 0000065984-01-500024.txt : 20010514 0000065984-01-500024.hdr.sgml : 20010514 ACCESSION NUMBER: 0000065984-01-500024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 135550175 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11299 FILM NUMBER: 1630222 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045764000 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: ELECTRIC SERVICES [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: 1630223 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: ELECTRIC SERVICES [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: 1630224 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: ELECTRIC SERVICES [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: 1630225 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: ELECTRIC SERVICES [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: 1630226 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: ELECTRIC & OTHER SERVICES COMBINED [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: 1630227 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: ELECTRIC SERVICES [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: 1630228 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 a08701.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 March 31, 2001 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 April 30, 2001 Entergy Corporation ($0.01 par value) 220,713,500 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, 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., and 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 and purchased power prices and availability, the effects of regulatory decisions and changes in law, litigation, capital spending requirements, the onset of competition, including the ability to recover net regulatory assets and other potential stranded costs, the effects of recent developments in the California electricity market on the utility industry nationally, advances in technology, changes in accounting standards, corporate restructuring and changes in capital structure, the success of new business ventures, changes in the markets for electricity and other energy-related commodities, changes in interest rates and in financial and foreign currency markets generally, the economic climate and growth in Entergy's service territories, changes in corporate strategies, and other factors. ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q March 31, 2001 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 5 Results of Operations and Financial Statements: Entergy Corporation and Subsidiaries: Results of Operations 9 Consolidated Statements of Income 13 Consolidated Statements of Cash Flows 14 Consolidated Balance Sheets 16 Consolidated Statements of Retained Earnings, Comprehensive Income and Paid-In Capital 18 Selected Operating Results 19 Entergy Arkansas, Inc.: Results of Operations 20 Income Statements 23 Statements of Cash Flows 25 Balance Sheets 26 Selected Operating Results 28 Entergy Gulf States, Inc.: Results of Operations 29 Income Statements 31 Statements of Cash Flows 33 Balance Sheets 34 Selected Operating Results 36 Entergy Louisiana, Inc.: Results of Operations 37 Income Statements 39 Statements of Cash Flows 41 Balance Sheets 42 Selected Operating Results 44 Entergy Mississippi, Inc.: Results of Operations 45 Income Statements 47 Statements of Cash Flows 49 Balance Sheets 50 Selected Operating Results 52 Entergy New Orleans, Inc.: Results of Operations 53 Income Statements 55 Statements of Cash Flows 57 Balance Sheets 58 Selected Operating Results 60 System Energy Resources, Inc.: Results of Operations 61 Income Statements 62 Statements of Cash Flows 63 Balance Sheets 64 Notes to Financial Statements for Entergy Corporation and Subsidiaries 66 Part II: Item 1. Legal Proceedings 74 Item 5. Other Information 74 Item 6. Exhibits and Reports on Form 8-K 74 Signature 77 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. Entergy Corporation Entergy Corporation, a Delaware corporation Entergy Gulf States Entergy Gulf States, Inc., including its wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company Entergy-Koch Entergy-Koch, L.P., a joint venture equally owned by Entergy and Koch Industries, Inc. Entergy London Entergy London Investments plc, formerly Entergy Power UK plc (including its wholly owned subsidiary, London Electricity plc), which was sold by Entergy effective December 4, 1998 Entergy Louisiana Entergy Louisiana, Inc. Entergy Mississippi Entergy Mississippi, Inc. Entergy New Orleans Entergy New Orleans, Inc. FERC Federal Energy Regulatory Commission FitzPatrick James A. FitzPatrick nuclear power plant, 825 MW facility located near Oswego, New York, purchased in November 2000, from New York Power Authority by Entergy's domestic non-utility nuclear business FUCO Exempt foreign utility company under PUHCA Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 2000 of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy Grand Gulf 1 Unit No. 1 of the Grand Gulf Nuclear Generation Plant GGART Grand Gulf Accelerated Recovery Tariff GWH One million kilowatt-hours Independence Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power Indian Point 3 Indian Point 3 nuclear power plant, 980 MW facility located in Westchester County, New York, purchased in November 2000, from New York Power Authority by Entergy's domestic non- utility nuclear business LPSC Louisiana Public Service Commission Abbreviation or Acronym Term 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, which was mutually terminated on April 1, 2001 MPSC Mississippi Public Service Commission MW Megawatt(s) Net revenue Operating revenue net of fuel, fuel-related, and purchased power expenses; other regulatory credits; and amortization of rate deferrals NRC Nuclear Regulatory Commission NYPA New York Power Authority 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 Steam Electric Generating Station (nuclear) 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. 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. See "Item 1. Business - BUSINESS OF ENTERGY - Industry Restructuring and Competition" in the Form 10-K for issues concerning the timing and implementation of Entergy's transition to competition, including potential conflicts among Entergy's regulated jurisdictions. Although transition to competition filings have been made in all jurisdictions, proceedings have not yet commenced in all cases. Set forth below are updates to the information contained therein. Business Combination with FPL Group On July 30, 2000, Entergy Corporation and FPL Group, Inc. entered into a Merger Agreement providing for a business combination that would have resulted in the creation of a new company. On April 1, 2001, Entergy Corporation and FPL Group terminated the Merger Agreement by mutual decision. Both companies agreed that no termination fee is payable under the terms of the Merger Agreement, unless within nine months of the termination one party agrees to a substantially similar transaction with another party. Each company will bear its own merger- related expenses. Entergy has filed for withdrawal of its merger-related filings submitted to the FERC, the SEC, and state and local regulatory agencies. Domestic Transition to Competition Federal Regulatory Activity 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 FERC's Order 2000 and Entergy's proposed Transco. In March 2001, FERC issued an order that found the Transco's governance structure met the independence requirements of Order 2000. However, FERC concluded that it could not at this time finally approve the Southwest Power Pool (SPP) Partnership regional transmission organization (RTO) as satisfying the scope and configuration requirements of Order 2000. FERC raised the following three issues: o the current SPP transmission owners that intend to commit their facilities to the Transco must file an application with the FERC to transfer control of their transmission facilities to the SPP Partnership RTO; o the Transco and SPP should investigate participation in the proposed RTO by neighboring utilities; and o the Transco and SPP must provide the FERC with more details on the structure of the proposed RTO. FERC directed SPP and Entergy to file a report that responds to these issues by May 25, 2001. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS 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 April 2001, Entergy Arkansas filed with the APSC a proposal to recover, over approximately a five and one-half year period beginning July 2001, $155 million in costs, plus carrying charges, associated with power restoration during the December 2000 ice storms. No assurance can be given as to the outcome or timing of 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. Final resolution of the regulatory proceedings regarding the transition to competition of Entergy Gulf States' Texas generation business will likely require the discontinuance of the application of SFAS 71 accounting treatment to that business, which management expects to occur in the second quarter of 2001. The regulatory proceedings are discussed in "Domestic Transition to Competition - State Regulatory and Legislative Activity - Texas" in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K and that discussion is updated in Note 2 to the financial statements herein. There may be a material adverse impact on Entergy's and Entergy Gulf States' financial statements upon the discontinuance of SFAS 71 accounting treatment. 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 first quarter of 2001 and 2000 was as follows: First First Company Quarter Quarter 2001 2000 (In Millions) Entergy $184.6 $329.7 Entergy Arkansas $ 30.5 $ 36.5 Entergy Gulf States $ 90.7 $ 81.5 Entergy Louisiana $ 49.0 $ 33.9 Entergy Mississippi ($70.7) ($63.6) Entergy New Orleans ($20.6) $ 4.5 System Energy $ 72.7 $188.5 Entergy's consolidated cash flow from operations decreased primarily due to a decrease, excluding the effect of money pool activity, of $195 million in cash provided by the domestic utility companies and System Energy. The decrease was partially offset by an increase of $56.8 million in cash provided by the domestic non-utility nuclear business, primarily from the operation of Fitzpatrick and Indian Point 3. FitzPatrick and Indian Point 3 were purchased in November 2000. The decrease by the domestic utility companies and System Energy was primarily due to payments for higher fuel costs and for restoration costs associated with the December 2000 ice storms in Arkansas. These payments were made primarily from borrowings from the money pool and external lines of credit, which are discussed below. The operating cash flows of the domestic utility companies were also affected by the following increases (decreases) in money pool borrowings in 2001: First Quarter Company 2001 (In Millions) Entergy Arkansas $45.1 Entergy Gulf States $69.4 Entergy Mississippi ($32.2) Entergy New Orleans $ 3.2 For the lenders to the money pool, Entergy Louisiana's money pool receivables increased $14.4 million and System Energy's money pool receivables increased $20.4 million in the first quarter of 2001. System Energy's money pool receivables decreased $105.8 million in the first quarter of 2000. 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 ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES System Energy may be used by the domestic utility companies or System Energy to fulfill short-term cash requirements. See "Capital Resources - Sources of Capital" below for a discussion of the limitations on these borrowings. Investing Activities Net cash used in investing activities increased compared with the first quarter of 2000 primarily due to the following: o capital contributions made in the formation of Entergy-Koch, L.P., a joint venture with Koch Industries, Inc.; o payments made by Entergy Wholesale Operations for turbines; o the maturity of other temporary investments in 2000; and o the under-recovery of deferred fuel costs incurred in 2001 at certain of the domestic utility companies due to higher market prices of fuel and purchased power expenses. Entergy Arkansas and the Texas portion of Entergy Gulf States have treated these costs as regulatory investments because these companies are allowed by their regulatory jurisdictions to recover the accumulated fuel cost regulatory asset over longer than a twelve month period, and the companies will earn a return on the under-recovered balances. Decreased construction expenditures due to completion of construction of the Saltend and Damhead Creek plants partially offset the overall increase in cash used in 2001. Financing Activities Net cash provided by financing activities decreased compared with the first quarter of 2000 primarily due to: o a higher amount of debt issued by the domestic utility companies in 2000 than in 2001; and o no additional borrowings in 2001 under the Saltend and Damhead Creek credit facilities due to the completion of construction of the plants. Partially offsetting the overall decrease in cash provided were the following: o a lower amount of debt retirements by the domestic utility companies in 2001; and o repurchases of Entergy Corporation common stock made in 2000 compared to none made in the first quarter of 2001. Entergy anticipates limited repurchase activity for the remainder of 2001, as it considers various growth investment opportunities. Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi all obtained credit facilities during the first quarter of 2001 and borrowed under these facilities to their full capacity during the quarter. The cash provided by the borrowings from these credit facilities is offset by the decreased amount of draws made by Entergy Corporation on its credit facility during the first quarter of 2001 compared to the first quarter of 2000. See "Capital Resources - Sources of Capital" for further discussion of these facilities. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Capital Resources See MANAGEMENT'S DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES - Capital Resources" in the Form 10-K for a discussion of Entergy's sources of funds and capital requirements. The following are updates to the Form 10-K. Sources of Capital As discussed in the Form 10-K, certain of the domestic utility companies have issued or expect to issue debt in 2001. See Note 4 to the financial statements herein for details regarding debt issued in 2001. Short-term borrowings by the domestic utility companies and System Energy, including borrowings under the money pool, are limited to amounts authorized by the SEC. See Note 4 to the financial statements in the Form 10-K for further discussion of Entergy's short-term borrowing limits. In 2001, Entergy received SEC approval to increase the authorized limits for the following companies, as follows: Company Previous Limit Current Limit Entergy Mississippi $103 million $160 million Entergy New Orleans $ 35 million $100 million Other Entergy Subsidiaries $265 million $420 million The approval increased the current SEC authorized short-term borrowing limits for the domestic utility companies and System Energy from $1.078 billion to $1.2 billion. The SEC authorized limits are effective through November 30, 2001. The following companies have borrowings outstanding from the money pool at March 31, 2001: Outstanding Company Borrowings Entergy Arkansas $ 75.8 million Entergy Gulf States $ 45.9 million Entergy Mississippi $ 1.0 million Entergy New Orleans $ 8.9 million Other Entergy Subsidiaries $106.3 million Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi each obtained 364-day credit facilities in 2001, and the lines have been fully drawn. Entergy Arkansas used the proceeds primarily to pay for costs incurred in the December 2000 ice storms. Entergy Louisiana and Entergy Mississippi used the proceeds for general corporate purposes and working capital needs. The facilities have variable interest rates and the average commitment fee is 0.13%. The amounts and dates obtained for the facilities are as follows: Amount of Company Facility Date Obtained Entergy Arkansas $63 million January 31, 2001 Entergy Louisiana $30 million January 31, 2001 Entergy Mississippi $25 million February 2, 2001 Entergy Corporation has a $500 million bank credit facility, which was fully drawn as of March 31, 2001. The facility terminates in mid-May 2001, and Entergy expects to renew and possibly increase the facility prior to its expiration. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Uses of Capital PUHCA Restrictions on Uses of Capital Entergy's ability to invest in domestic and foreign generation businesses is subject to the SEC's regulations under PUHCA. As authorized by the SEC, Entergy is allowed to invest an amount equal to 100% of its average consolidated retained earnings in domestic and foreign generation businesses. As of March 31, 2001, Entergy's investments subject to this rule totaled $918.5 million constituting 28.3% of its average consolidated retained earnings. See "PUHCA Restrictions on Uses of Capital" in "MANAGEMENT'S DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10- K for a discussion of other PUHCA restrictions affecting Entergy, such as its capacity to invest in "energy-related" businesses and its ability to guarantee obligations of its non-utility subsidiaries. Other Uses of Capital by Entergy Corporation For the first quarter of 2001, Entergy Corporation paid $66.7 million in cash dividends on its common stock and received dividend payments and returns of capital totaling $70.1 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 Entergy common stock dividends based upon Entergy's earnings, financial strength, and capital requirements. Restrictions on the ability of Entergy's subsidiaries to pay dividends are discussed in Note 8 to the financial statements in the Form 10-K. Non-Utility Nuclear Business In connection with the acquisition of the FitzPatrick and Indian Point 3 nuclear power plants, the installment payments due by Entergy to NYPA must be secured by a letter of credit from an eligible financial institution. On November 21, 2000, upon closing of the acquisition of the NYPA plants, Entergy delivered a $577 million letter of credit, with NYPA as beneficiary, in accordance with the terms of such agreement. The letter of credit was backed by cash collateral, and this cash is reflected in the balance sheet as "Special deposits." In January 2001, Entergy replaced $440 million of the cash collateral with an Entergy Corporation guarantee. Most of the cash released by this guarantee was used to fund Entergy's contributions to the Entergy-Koch joint venture discussed below under "Joint Ventures." Joint Ventures On January 31, 2001, subsidiaries of Entergy and Koch Industries, Inc. formed a new limited partnership called Entergy-Koch, L.P. Entergy contributed substantially all of its power marketing and trading business in the United States and the United Kingdom and made other contributions, including equity and loans, totaling $414 million. Koch Energy, Inc. contributed to the venture its 9,000-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. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Entergy's consolidated earnings applicable to common stock were $154.2 million for the first quarter of 2001, resulting in increases in basic and diluted earnings per share of 67% and 64%, respectively. The increases in earnings per share in the first quarter of 2001 were also affected by Entergy's share repurchase program. The changes in earnings applicable to common stock by operating segments for the first quarter of 2001 are as follows: First Quarter Operating Segments Increase/(Decrease) (In Thousands) Domestic Utility and System Energy $35,933 Entergy-Koch/Power Marketing and Trading 5,028 Domestic Non-Utility Nuclear 18,501 Entergy Wholesale Operations (EWO) 4,012 Other, including parent company (8,179) ------- Total $55,295 ======= See Note 6 to the financial statements for additional business segment information. The increased earnings for the domestic utility and System Energy were primarily due to an increase in net revenues as a result of colder than normal weather in 2001, higher prices of electricity sold for resale, particularly at Entergy Gulf States and Entergy Arkansas, and a decrease in reserves for potential rate actions at Entergy Louisiana. The increases to earnings were partially offset by decreases in unbilled revenue, increases in operating expenses, and the decrease in first quarter 2000 fuel expense from a true-up of the Entergy Arkansas deferred fuel balance. Prior to 2001, revenues and expenses from the operation of Entergy's power marketing and trading business were consolidated in Entergy's financial statements. On January 31, 2001, Entergy contributed substantially all of its power marketing and trading business to Entergy-Koch. Entergy accounts for its share in the investment under the equity method. Therefore, in 2001 the Entergy- Koch/Power Marketing and Trading segment includes Entergy's equity in earnings attributable to Entergy-Koch. The partnership agreement contains disproportionate income allocations between the partners for several different sources of partnership earnings through 2003. The increase in earnings at the domestic non-utility nuclear business in 2001 was primarily due to the ownership of the FitzPatrick and Indian Point 3 plants, which Entergy purchased in November 2000. The increase in earnings at EWO in 2001 was primarily due to $13.9 million of liquidated damages received from the Damhead contractor as compensation for lost operating margin from the plant due to construction delays. Entergy's income before taxes is discussed according to the operating segments listed above. "Competitive businesses" operating revenues in the statements of income include primarily revenues generated by domestic non-utility nuclear, EWO, and for 2000 only, power marketing and trading. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Domestic Utility Companies and System Energy The changes in electric operating revenues for Entergy's domestic utility companies for the first quarter of 2001 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Base rate changes $1.3 Rate riders 3.2 Fuel cost recovery 450.3 Volume 9.8 Weather 42.9 Other revenue (including unbilled) (27.2) Sales for resale 39.3 ------ Total $519.6 ====== 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 do not have a material net effect on earnings. Fuel cost recovery revenues increased primarily due to: o increased fuel recovery factors at Entergy Arkansas, Entergy Gulf States in the Texas jurisdiction, and Entergy Mississippi; and o higher fuel and purchased power costs recovered through fuel mechanisms at Entergy Gulf States in the Louisiana jurisdiction, Entergy Louisiana, and Entergy New Orleans due to the increased market price of natural gas. Along with the increase in fuel cost recovery revenues, fuel and purchased power expenses for electric sales increased approximately $438.9 million in 2001, primarily due to an increase in the market prices of purchased power, natural gas, and fuel oil, coupled with increased generation. Other effects on electric operating revenue Electric sales vary seasonally in response to weather and usually peak in the summer. The effect of colder than normal winter weather conditions contributed to the increase in electric sales. For the first quarter of 2001, electricity sales volume in the domestic utility companies' service territories increased 1,052 GWH due to the impact of weather conditions. The number of customers in the domestic utility companies' service territories increased only slightly during these periods. Sales for resale increased due to higher prices of resale electricity and increased availability of energy for resale from increased net generation. The increase was partially offset by a decrease in unbilled revenues caused by less favorable sales volume in the period included in the March 2001 unbilled revenue calculation. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Gas operating revenue Natural gas revenues increased primarily due to increased market prices for natural gas and additional sales volume due to the colder than normal winter. The increase in gas revenues was largely offset by an increase of approximately $58.8 million in fuel expenses for natural gas. Other impacts on earnings The following activity also affected 2001 earnings for the domestic utility companies and System Energy: o an increase of $12 million in other taxes, primarily from increased franchise taxes; o an increase of $14.7 million in depreciation and amortization expenses due to increased net capital additions; and o an increase of $5.7 million in interest expense due to increased borrowings. Partially offsetting the above is an increase of $13.6 million in interest income, primarily on deferred fuel costs. Entergy-Koch/Power Marketing and Trading As previously discussed, substantially all of Entergy's power marketing and trading business was contributed to the Entergy-Koch joint venture in 2001, and earnings from this joint venture are reported as equity in earnings of unconsolidated equity affiliates in the financial statements. As a result, this segment experienced decreased revenues and fuel and purchased power expenses of $327.8 million and $297.3 million, respectively, in 2001. The impact on earnings from the decreased revenues is more than offset by the equity in earnings from Entergy's interest in the joint venture. Domestic Non-Utility Nuclear Increased earnings for the domestic non-utility nuclear business were primarily due to increased revenues of $118.5 million, primarily from the operation of the FitzPatrick and Indian Point 3 plants. The increased revenues were partially offset by the following: o increased operation and maintenance expenses of $55.8 million; o increased taxes other than income taxes of $9.4 million; and o increased interest expense of $8.9 million related to debt issued to purchase the FitzPatrick and Indian Point 3 plants. Entergy Wholesale Operations EWO experienced an increase in operating revenues of $450.3 million primarily due to the results from its interest in Highland Energy, which was acquired in June 2000, and the results from the Saltend and Damhead Creek plants, which began commercial operation in late November 2000 and early 2001, respectively. However, the impact on earnings from the increased revenues is more than offset by increased fuel and purchased power expenses of $400.2 million, increased operation and maintenance expense of $36.8 million, and increased interest expense of $19 million. The increase in earnings from EWO was primarily due to $13.9 million ($9.7 million net of tax) of liquidated damages received from the Damhead Creek construction contractor as compensation for lost operating margin from the plant due to construction delays. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other Earnings for Other decreased primarily due to $21.8 million ($13.4 million) of merger-related expenses incurred by Entergy Corporation in the first quarter of 2001. Income taxes The effective income tax rates for the first quarters of 2001 and 2000 were 40.3% and 43.3%, respectively. The decrease was primarily due to higher pre-tax income, which reduced the effect of flow-through items.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands, Except Share Data) OPERATING REVENUES Domestic electric $1,872,545 $1,352,896 Natural gas 110,384 45,881 Competitive businesses 669,498 412,715 ---------- ---------- TOTAL 2,652,427 1,811,492 ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale 1,125,863 497,754 Purchased power 363,879 369,544 Nuclear refueling outage expenses 17,207 18,557 Other operation and maintenance 470,459 377,410 Decommissioning 8,901 10,938 Taxes other than income taxes 102,463 79,618 Depreciation and amortization 203,077 178,276 Other regulatory credits - net (4,842) (14,605) Amortization of rate deferrals 4,453 7,396 ---------- ---------- TOTAL 2,291,460 1,524,888 ---------- ---------- OPERATING INCOME 360,967 286,604 ---------- ---------- OTHER INCOME Allowance for equity funds used during construction 4,943 7,695 Gain on sale of assets - net 588 517 Equity in earnings of unconsolidated equity affiliates 25,064 - Miscellaneous - net 55,393 28,982 ---------- ---------- TOTAL 85,988 37,194 ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 128,971 113,659 Other interest - net 47,914 20,283 Distributions on preferred securities of subsidiaries 4,709 4,709 Allowance for borrowed funds used during construction (3,939) (6,088) ---------- ---------- TOTAL 177,655 132,563 ---------- ---------- INCOME BEFORE INCOME TAXES 269,300 191,235 Income taxes 108,429 82,825 ---------- ---------- CONSOLIDATED NET INCOME 160,871 108,410 Preferred dividend requirements and other 6,716 9,550 ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $154,155 $98,860 ========== ========== Earnings per average common share: Basic $0.70 $0.42 Diluted $0.69 $0.42 Dividends declared per common share $0.32 $0.30 Average number of common shares outstanding: Basic 219,917,139 236,608,445 Diluted 223,785,716 236,671,604 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING ACTIVITIES Consolidated net income $160,871 $108,410 Noncash items included in net income: Amortization of rate deferrals 4,453 7,396 Reserve for regulatory adjustments 28,791 19,888 Other regulatory credits - net (4,842) (14,605) Depreciation, amortization, and decommissioning 211,978 189,214 Deferred income taxes and investment tax credits 7,665 (30,652) Allowance for equity funds used during construction (4,943) (7,695) Gain on sale of assets - net (588) (517) Equity in earnings of unconsolidated equity affiliates (25,064) - Changes in working capital: Receivables 112,551 37,462 Fuel inventory (48,407) (25,783) Accounts payable (365,644) (27,239) Taxes accrued 67,693 44,026 Interest accrued (33,367) (25,053) Deferred fuel 105,184 51,767 Other working capital accounts 4,182 (4,917) Provision for estimated losses and reserves 2,326 (19,521) Changes in other regulatory assets (73,755) (3,741) Other 35,470 31,298 -------- -------- Net cash flow provided by operating activities 184,554 329,738 -------- -------- INVESTING ACTIVITIES Construction/capital expenditures (264,946) (388,443) Allowance for equity funds used during construction 4,943 7,695 Nuclear fuel purchases (36,753) (41,215) Proceeds from sale/leaseback of nuclear fuel 33,740 13,952 Investment in other non-regulated/non-utility properties (73,990) - Increase in other investments (365,067) - Proceeds from other temporary investments - 321,351 Decommissioning trust contributions and realized change in trust assets (16,406) (12,624) Other regulatory investments (53,637) (19,141) Other 24,936 (226) -------- -------- Net cash flow used in investing activities (747,180) (118,651) -------- -------- See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) FINANCING ACTIVITIES Proceeds from the issuance of: Long-term debt 99,506 370,465 Common stock 15,724 1,972 Retirement of long-term debt (77,363) (103,212) Repurchase of common stock - (155,981) Redemption of preferred stock (1,999) (2,493) Changes in short-term borrowings - net 231,000 230,000 Other 16,673 - Dividends paid: Common stock (66,655) (71,040) Preferred stock (4,785) (7,330) -------- -------- Net cash flow provided by financing activities 212,101 262,381 -------- -------- Effect of exchange rates on cash and cash equivalents (2,068) (1,091) -------- -------- Net increase (decrease) in cash and cash equivalents (352,593) 472,377 Cash and cash equivalents at beginning of period 1,382,424 1,213,719 ---------- ---------- Cash and cash equivalents at end of period $1,029,831 $1,686,096 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $206,176 $156,560 Income taxes $1,406 $35,995 Noncash investing and financing activities: Change in unrealized depreciation of decommissioning trust assets ($8,914) ($9,906) Net assets contributed to Entergy-Koch $80,145 - See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $161,420 $157,550 Temporary cash investments - at cost, which approximates market 722,772 640,038 Special deposits 145,639 584,836 ----------- ----------- Total cash and cash equivalents 1,029,831 1,382,424 ----------- ----------- Notes receivable 6,543 3,608 Accounts receivable: Customer 527,433 497,821 Allowance for doubtful accounts (10,161) (9,947) Other 201,011 395,518 Accrued unbilled revenues 366,039 415,409 ----------- ----------- Total receivables 1,084,322 1,298,801 ----------- ----------- Deferred fuel costs 537,362 568,331 Fuel inventory - at average cost 142,439 93,679 Materials and supplies - at average cost 437,548 425,357 Rate deferrals 12,130 16,581 Deferred nuclear refueling outage costs 38,324 46,544 Prepayments and other 79,573 122,690 ----------- ----------- TOTAL 3,368,072 3,958,015 ----------- ----------- OTHER PROPERTY AND INVESTMENTS Investment in affiliates - at equity 499,247 214 Decommissioning trust funds 1,330,343 1,315,857 Non-utility property - at cost (less accumulated 286,997 262,952 depreciation) Non-regulated investments 149,801 189,154 Other - at cost (less accumulated depreciation) 70,598 27,036 ----------- ----------- TOTAL 2,336,986 1,795,213 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT Electric 25,470,142 25,137,562 Plant acquisition adjustment 386,598 390,664 Property under capital lease 846,006 831,822 Natural gas 192,388 190,989 Construction work in progress 743,421 936,785 Nuclear fuel under capital lease 283,929 277,673 Nuclear fuel 169,062 157,603 ----------- ----------- TOTAL PROPERTY, PLANT AND EQUIPMENT 28,091,546 27,923,098 Less - accumulated depreciation and amortization 11,645,521 11,477,352 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT - NET 16,446,025 16,445,746 ----------- ----------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 972,696 980,266 Unamortized loss on reacquired debt 179,336 183,627 Deferred fuel costs 75,083 95,661 Other regulatory assets 873,838 792,515 Long-term receivables 28,710 29,575 Other 911,013 1,171,278 ----------- ----------- TOTAL 3,040,676 3,252,922 ----------- ----------- TOTAL ASSETS $25,191,759 $25,451,896 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $827,585 $464,215 Notes payable 623,019 388,023 Accounts payable 712,965 1,204,227 Customer deposits 174,520 172,169 Taxes accrued 519,370 451,811 Accumulated deferred income taxes 188,829 225,649 Nuclear refueling outage costs 13,253 10,209 Interest accrued 139,424 172,033 Obligations under capital leases 157,239 156,907 Other 231,586 192,908 ----------- ----------- TOTAL 3,587,790 3,438,151 ----------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 3,282,199 3,249,083 Accumulated deferred investment tax credits 488,509 494,315 Obligations under capital leases 205,830 201,873 FERC settlement - refund obligation 28,965 30,745 Other regulatory liabilities 129,995 104,841 Decommissioning 761,100 749,708 Transition to competition 199,981 191,934 Regulatory reserves 425,581 396,789 Accumulated provisions 346,344 390,116 Other 705,659 853,137 ----------- ----------- TOTAL 6,574,163 6,662,541 ----------- ----------- Long-term debt 7,351,758 7,732,093 Preferred stock with sinking fund 63,760 65,758 Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated deferrable debentures 215,000 215,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 334,687 334,688 Common stock, $.01 par value, authorized 500,000,000 shares; issued 248,174,087 shares in 2001 and 248,094,614 shares in 2000 2,482 2,481 Paid-in capital 4,663,923 4,660,483 Retained earnings 3,275,548 3,190,639 Accumulated other comprehensive loss (117,968) (75,033) Less - treasury stock, at cost (27,865,077 shares in 2001 and 28,490,031 shares in 2000) 759,384 774,905 ----------- ----------- TOTAL 7,399,288 7,338,353 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $25,191,759 $25,451,896 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) RETAINED EARNINGS Retained Earnings - Beginning of period $3,190,639 $2,786,467 Add - Earnings applicable to common stock 154,155 $154,155 98,860 $98,860 Deduct: Dividends declared on common stock 69,246 71,658 Capital stock and other expenses - (830) ---------- ---------- Total 69,246 70,828 ---------- ---------- Retained Earnings - End of period $3,275,548 $2,814,499 ========== ========== ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): Balance at beginning of period ($75,033) ($73,805) Cumulative effect to January 1, 2001 of accounting change regarding fair value of derivative instruments (29,067) - - - Net derivative instrument fair value changes arising during the period (13,446) (13,446) - - Foreign currency translation adjustments (2,027) (2,027) (707) (707) Net unrealized investment gains (losses) 1,605 1,605 (4,935) (4,935) ---------- -------- ---------- ------- Balance at end of period: Accumulated derivative instrument fair value changes (42,513) - Other accumulated comprehensive income (loss) items (75,455) (79,447) ---------- ---------- Total ($117,968) ($79,447) ========== -------- ========== ------- Comprehensive Income $140,287 $93,218 ======== ======= PAID-IN CAPITAL Paid-in Capital - Beginning of period $4,660,483 $4,636,163 Add: Common stock issuances related to stock plans 3,440 311 ---------- ---------- Paid-in Capital - End of period $4,663,923 $4,636,474 ========== ========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) Increase/ Description 2001 2000 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $ 635.0 $ 468.2 $ 166.8 36 Commercial 451.4 346.9 104.5 30 Industrial 653.6 453.4 200.2 44 Governmental 53.5 38.8 14.7 38 --------- --------- -------- Total retail 1,793.5 1,307.3 486.2 37 Sales for resale 122.5 83.2 39.3 47 Other (43.5) (37.6) (5.9) (16) --------- --------- -------- Total $ 1,872.5 $ 1,352.9 $ 519.6 38 ========= ========= ======== Billed Electric Energy Sales (GWH): Residential 7,537 6,512 1,025 16 Commercial 5,574 5,280 294 6 Industrial 10,311 10,617 (306) (3) Governmental 615 586 29 5 --------- --------- -------- Total retail 24,037 22,995 1,042 5 Sales for resale 2,449 2,272 177 8 --------- --------- -------- Total 26,486 25,267 1,219 5 ========= ========= ======== ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 2001 primarily due to increased depreciation expense, increased interest charges, and the effect on 2000 fuel expense of a $23.5 million true-up of the deferred fuel balance in the first quarter of 2000. The overall decrease was partially offset by increased net revenue. Revenues and Sales The changes in electric operating revenues for the first quarter of 2001 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Base rate changes ($9.3) Rate riders 3.2 Fuel cost recovery 19.6 Volume 8.0 Weather 11.9 Other revenue (including unbilled) (8.9) Sales for resale 22.4 ----- Total $46.9 ===== Base rate changes Base rate changes decreased revenues for the first quarter of 2001 primarily due to the effect of block rates on residential customers and lower prices for industrial and commercial customers. 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. Fuel cost recovery revenue increased for the first quarter of 2001 primarily due to an increase in the energy cost rate, which became effective in April 2000. The increase in the energy cost rate allows Entergy Arkansas to recover previously under-recovered fuel expenses. Volume Electric sales volume increased for the first quarter of 2001 due to increased usage of 118 GWH by the residential and commercial sectors. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Weather Electric sales vary seasonally in response to weather and usually peak in the summer. The effect of colder than normal winter weather in the first quarter of 2001 contributed to the increase in electric sales. For the first quarter of 2001, the effect of favorable weather increased electric sales volume by 261 GWH in the residential and commercial sectors. Other revenue (including unbilled) Unbilled revenue decreased for the first quarter of 2001 primarily due to the effect of less favorable weather on the period included in the March 2001 unbilled revenue calculation. Sales for resale Sales for resale increased for the first quarter of 2001 primarily due to an increase in sales volume to municipalities and co-ops coupled with an increase in the average market price of energy. Expenses Fuel and purchased power Fuel and purchased power expenses increased for the first quarter of 2001 primarily due to: o increased market prices of natural gas and purchased power; and o the effect on 2000 expenses of a $23.5 million true-up of the deferred fuel balance made in the first quarter of 2000 as a result of the energy cost recovery filing. Other operation and maintenance Other operation and maintenance expenses decreased for the first quarter of 2001 primarily due to decreased nuclear expenses of $4.0 million related to maintenance outages at ANO 1 in the first quarter of 2000. Depreciation and amortization Depreciation and amortization expenses increased for the first quarter of 2001 primarily due to net capital additions of $420 million during 2000. Other regulatory credits Other regulatory credits decreased for the first quarter of 2001 primarily due to an increase in the Grand Gulf 1 rider, which allows for increased recovery of Grand Gulf 1 costs. Other Other income Other income decreased for the first quarter of 2001 primarily due to a decrease in the allowance for equity funds used during construction due to a lower construction work in progress balance in 2001. The construction balance was lower because the ANO 2 replacement steam generators were placed in service in 2000. The decrease was partially offset by increased interest income recorded on the deferred fuel balance. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Interest charges Interest charges increased for the first quarter of 2001 due to: o the issuance of $100 million of long-term debt in March 2000; o interest expense on a $63 million credit facility obtained in January 2001; and o a decrease in the allowance for borrowed funds used during construction because of the lower construction work in progress balance in 2001. Income taxes The effective income tax rates for the first quarter of 2001 and 2000 were 42.2% and 40.9%, respectively. The increase in the effective tax rate was due to decreased tax benefits from the allowance for equity funds used during construction.
ENTERGY ARKANSAS, INC. INCOME STATEMENTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING REVENUES Domestic electric $393,800 $346,877 -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale 70,748 47,677 Purchased power 124,098 98,797 Nuclear refueling outage expenses 6,821 6,439 Other operation and maintenance 71,545 75,925 Decommissioning (3) 2,028 Taxes other than income taxes 8,764 8,716 Depreciation and amortization 46,635 41,301 Other regulatory credits - net (6,455) (10,765) -------- -------- TOTAL 322,153 270,118 -------- -------- OPERATING INCOME 71,647 76,759 -------- -------- OTHER INCOME Allowance for equity funds used during construction 1,091 3,578 Miscellaneous - net 3,807 1,545 -------- -------- TOTAL 4,898 5,123 -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 22,436 20,906 Other interest - net 3,390 2,297 Distributions on preferred securities of subsidiary 1,275 1,275 Allowance for borrowed funds used during construction (711) (2,304) -------- -------- TOTAL 26,390 22,174 -------- -------- INCOME BEFORE INCOME TAXES 50,155 59,708 Income taxes 21,177 24,394 -------- -------- NET INCOME 28,978 35,314 Preferred dividend requirements and other 1,944 1,944 -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $27,034 $33,370 ======== ======== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING ACTIVITIES Net income $28,978 $35,314 Noncash items included in net income: Other regulatory credits - net (6,455) (10,765) Depreciation, amortization, and decommissioning 46,632 43,329 Deferred income taxes and investment tax credits 19,910 3,376 Allowance for equity funds used during construction (1,091) (3,578) Changes in working capital: Receivables 46,501 (11,532) Fuel inventory (12,143) (23,485) Accounts payable (132,596) (58,822) Taxes accrued 4,880 41,318 Interest accrued (2,397) 1,547 Deferred fuel costs 19,888 7,722 Other working capital accounts 18,541 4,265 Provision for estimated losses and reserves (3,589) (1,377) Changes in other regulatory assets (25,470) (2,596) Changes in other deferred credits 22,254 (43) Other 6,704 11,844 -------- -------- Net cash flow provided by operating activities 30,547 36,517 -------- -------- INVESTING ACTIVITIES Construction expenditures (67,383) (69,634) Allowance for equity funds used during construction 1,091 3,578 Nuclear fuel purchases (19,099) (148) Proceeds from sale/leaseback of nuclear fuel 19,099 148 Decommissioning trust contributions and realized change in trust assets (2,270) (3,450) Other regulatory investments (19,921) (18,530) -------- -------- Net cash flow used in investing activities (88,483) (88,036) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of long-term debt - 99,630 Changes in short-term borrowings 63,000 - Dividends paid: Common stock (300) - -------- -------- Net cash flow provided by financing activities 62,700 99,630 -------- -------- Net increase in cash and cash equivalents 4,764 48,111 Cash and cash equivalents at beginning of period 7,838 6,862 -------- -------- Cash and cash equivalents at end of period $12,602 $54,973 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $28,237 $21,694 Income taxes ($3) ($15,400) Noncash investing and financing activities: Change in unrealized depreciation of decommissioning trust assets ($3,826) ($4,378) See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS ASSETS March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT ASSETS Cash and cash equivalents $12,602 $7,838 Accounts receivable: Customer 85,105 98,550 Allowance for doubtful accounts (1,667) (1,667) Associated companies 16,237 22,286 Other 13,476 26,221 Accrued unbilled revenues 51,626 65,887 ---------- ---------- Total accounts receivable 164,777 211,277 ---------- ---------- Deferred fuel costs 103,003 102,970 Fuel inventory - at average cost 21,952 9,809 Materials and supplies - at average cost 82,144 80,682 Deferred nuclear refueling outage costs 22,082 23,541 Prepayments and other 9,596 5,540 ---------- ---------- TOTAL 416,156 441,657 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in affiliates - at equity 11,217 11,217 Decommissioning trust funds 354,296 355,852 Non-utility property - at cost (less accumulated depreciation) 1,468 1,469 Other - at cost (less accumulated depreciation) 2,976 3,032 ---------- ---------- TOTAL 369,957 371,570 ---------- ---------- UTILITY PLANT Electric 5,278,241 5,274,066 Property under capital lease 39,745 40,289 Construction work in progress 117,011 87,389 Nuclear fuel under capital lease 103,163 107,023 Nuclear fuel 8,626 6,720 ---------- ---------- TOTAL UTILITY PLANT 5,546,786 5,515,487 Less - accumulated depreciation and amortization 2,576,906 2,534,463 ---------- ---------- UTILITY PLANT - NET 2,969,880 2,981,024 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 161,972 162,952 Unamortized loss on reacquired debt 43,505 44,428 Other regulatory assets 280,853 221,805 Other 8,195 4,775 ---------- ---------- TOTAL 494,525 433,960 ---------- ---------- TOTAL ASSETS $4,250,518 $4,228,211 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $85,000 $100 Notes payable 63,667 667 Accounts payable: Associated companies 109,128 94,776 Other 84,365 231,313 Customer deposits 30,137 29,775 Taxes accrued 45,143 40,263 Accumulated deferred income taxes 48,138 55,127 Interest accrued 25,227 27,624 Obligations under capital leases 46,025 45,962 Other 39,125 14,942 ---------- ---------- TOTAL 575,955 540,549 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 744,375 715,891 Accumulated deferred investment tax credits 87,007 88,264 Obligations under capital leases 96,883 101,350 Transition to competition 120,883 119,553 Accumulated provisions 38,804 42,393 Other 86,522 64,267 ---------- ---------- TOTAL 1,174,474 1,131,718 ---------- ---------- Long-term debt 1,157,123 1,239,712 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 2001 and 2000 470 470 Paid-in capital 591,127 591,127 Retained earnings 575,019 548,285 ---------- ---------- TOTAL 1,282,966 1,256,232 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,250,518 $4,228,211 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) Increase/ Description 2001 2000 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 140.0 $ 117.7 $ 22.3 19 Commercial 68.4 62.2 6.2 10 Industrial 78.3 73.7 4.6 6 Governmental 3.5 3.2 0.3 9 ------- ------- ------- Total retail 290.2 256.8 33.4 13 Sales for resale Associated companies 49.6 45.1 4.5 10 Non-associated companies 59.8 41.9 17.9 43 Other (5.8) 3.1 (8.9) (287) ------- ------- ------- Total $ 393.8 $ 346.9 $ 46.9 14 ======= ======= ======= Billed Electric Energy Sales (GWH): Residential 1,854 1,550 304 20 Commercial 1,150 1,075 75 7 Industrial 1,660 1,652 8 - Governmental 57 54 3 6 ------- ------- ------- Total retail 4,721 4,331 390 9 Sales for resale Associated companies 1,128 1,681 (553) (33) Non-associated companies 1,331 1,149 182 16 ------- ------- ------- Total 7,180 7,161 19 - ======= ======= ======= ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the first quarter of 2001 primarily due to increased net revenue, partially offset by an increase in interest expense. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the first quarter of 2001 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Base rate changes ($1.7) Fuel cost recovery 171.2 Volume (0.2) Weather 15.6 Other revenue (including unbilled) 6.6 Sales for resale 36.6 ------ Total $228.1 ====== 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. Fuel cost recovery revenues increased for the first quarter of 2001 in both operational jurisdictions of Entergy Gulf States. In the Louisiana jurisdiction, fuel recovery revenues increased $140.7 million due to the current period recovery through the fuel adjustment clause of higher fuel and purchased power costs from prior months. In the Louisiana jurisdiction, these fuel costs are recovered on a two-month lag. In the Texas jurisdiction, fuel cost recovery revenues increased $30.5 million due to increases in the fixed fuel factor in August 2000 and March 2001 and due to a fuel recovery surcharge which became effective in February 2001. Weather Electric sales vary seasonally in response to weather and usually peak in the summer. The effect of colder than normal winter weather in the first quarter of 2001 contributed to the increase in electric sales. For the first quarter of 2001, the effect of favorable weather across both jurisdictions increased electric sales volume by 339 GWH in the residential and commercial sectors. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Sales for resale Sales for resale increased primarily due to: o increased sales volume to adjoining utility systems because more power was available for sale; o increased prices for resale electricity in 2001; and o increased sales volume to municipal and co-op customers. Included in the sales for resale is the sale to adjoining utility systems of power from the 30% share of River Bend acquired from Cajun, which Entergy Gulf States treats as an asset not subject to state rate regulation. Gas operating revenues Gas operating revenues increased for the first quarter of 2001 due to the increased market price of natural gas and increased sales due to a colder than normal winter. The increase in gas revenues was largely offset by increased fuel expenses for gas purchased for resale. Expenses Fuel and purchased power Fuel and purchased power expenses increased for the first quarter of 2001 due to: o higher market prices for natural gas, which increased 160% over this quarter last year; o higher market prices for purchased power; and o increased generation requirements. Depreciation and amortization Depreciation and amortization increased for the first quarter of 2001 primarily due to $209 million of net capital additions in 2000. Other Interest charges Interest charges increased for the first quarter of 2001 primarily due to the issuance of $300 million of long-term debt in June 2000. Preferred dividend requirements Preferred dividend requirements decreased due to the redemption in June 2000 of $150 million of preference stock, which paid dividends of 7% per annum. Income taxes The effective income tax rates for the first quarter of 2001 and 2000 were 37.1% and 47.0%, respectively. This decrease is primarily due to increased tax benefits from depreciation and decreased state income taxes. These decreases in the effective tax rate were partially offset by decreased tax benefits from investment tax credits and flow-through items.
ENTERGY GULF STATES, INC. INCOME STATEMENTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING REVENUES Domestic electric $698,876 $470,817 Natural gas 35,600 12,414 -------- -------- TOTAL 734,476 483,231 -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale 293,166 191,550 Purchased power 141,953 72,135 Nuclear refueling outage expenses 3,090 5,493 Other operation and maintenance 93,254 95,121 Decommissioning 1,562 1,568 Taxes other than income taxes 30,996 26,854 Depreciation and amortization 49,761 46,818 Other regulatory credits - net (6,890) (8,145) Amortization of rate deferrals 1,402 1,402 -------- -------- TOTAL 608,294 432,796 -------- -------- OPERATING INCOME 126,182 50,435 -------- -------- OTHER INCOME Allowance for equity funds used during construction 1,825 1,741 Gain on sale of assets 585 515 Miscellaneous - net 6,521 1,635 -------- -------- TOTAL 8,931 3,891 -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 38,793 32,375 Other interest - net 2,336 1,404 Distributions on preferred securities of subsidiary 1,859 1,859 Allowance for borrowed funds used during construction (1,714) (1,609) -------- -------- TOTAL 41,274 34,029 -------- -------- INCOME BEFORE INCOME TAXES 93,839 20,297 Income taxes 34,793 9,540 -------- -------- NET INCOME 59,046 10,757 Preferred dividend requirements and other 1,310 4,144 -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $57,736 $6,613 ======== ======== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING ACTIVITIES Net income $59,046 $10,757 Noncash items included in net income: Amortization of rate deferrals 1,402 1,402 Reserve for regulatory adjustments 2,073 333 Other regulatory credits - net (6,890) (8,145) Depreciation, amortization, and decommissioning 51,323 48,386 Deferred income taxes and investment tax credits 35,990 (19,306) Allowance for equity funds used during construction (1,825) (1,741) Gain on sale of assets (585) (515) Changes in working capital: Receivables 30,298 6 Fuel inventory (12,574) (8,561) Accounts payable (95,746) 21,661 Taxes accrued (7,338) (9,828) Interest accrued 3,030 (7,242) Deferred fuel costs 23,481 37,296 Other working capital accounts 11,818 10,624 Provision for estimated losses and reserves (1,332) (1,110) Changes in other regulatory assets (10,298) (6,470) Other 8,798 13,908 -------- -------- Net cash flow provided by operating activities 90,671 81,455 -------- -------- INVESTING ACTIVITIES Construction expenditures (60,860) (50,130) Allowance for equity funds used during construction 1,825 1,741 Nuclear fuel purchases (3,937) (33,304) Proceeds from sale/leaseback of nuclear fuel 3,937 13,797 Decommissioning trust contributions and realized change in trust assets (2,807) (2,608) Other regulatory investments (33,716) - -------- -------- Net cash flow used in investing activities (95,558) (70,504) -------- -------- FINANCING ACTIVITIES Redemption of preferred stock (1,999) (2,493) Dividends paid: Common stock (19,000) (3,400) Preferred stock (1,323) (4,109) -------- -------- Net cash flow used in financing activities (22,322) (10,002) -------- -------- Net increase (decrease) in cash and cash equivalents (27,209) 949 Cash and cash equivalents at beginning of period 68,279 32,312 -------- -------- Cash and cash equivalents at end of period $41,070 $33,261 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $38,649 $41,483 Income taxes - $33,835 Noncash investing and financing activities: Change in unrealized depreciation of decommissioning trust assets ($2,674) ($2,826) See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS ASSETS March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $12,983 $10,726 Temporary cash investments - at cost, which approximates market 28,087 57,553 ---------- ---------- Total cash and cash equivalents 41,070 68,279 ---------- ---------- Accounts receivable: Customer 119,873 125,412 Allowance for doubtful accounts (2,131) (2,131) Associated companies 2,447 27,660 Other 20,405 22,837 Accrued unbilled revenues 139,270 136,384 ---------- ---------- Total accounts receivable 279,864 310,162 ---------- ---------- Deferred fuel costs 298,361 288,126 Fuel inventory - at average cost 49,832 37,258 Materials and supplies - at average cost 100,303 100,018 Rate deferrals 4,205 5,606 Prepayments and other 14,086 22,332 ---------- ---------- TOTAL 787,721 831,781 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 243,688 243,555 Non-utility property - at cost (less accumulated depreciation) 194,376 194,422 Other - at cost (less accumulated depreciation) 15,597 14,826 ---------- ---------- TOTAL 453,661 452,803 ---------- ---------- UTILITY PLANT Electric 7,551,047 7,574,905 Property under capital lease 37,166 38,564 Natural gas 56,578 56,163 Construction work in progress 186,604 144,814 Nuclear fuel under capital lease 53,908 57,472 ---------- ---------- TOTAL UTILITY PLANT 7,885,303 7,871,918 Less - accumulated depreciation and amortization 3,687,220 3,680,662 ---------- ---------- UTILITY PLANT - NET 4,198,083 4,191,256 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 406,748 403,934 Unamortized loss on reacquired debt 37,007 37,903 Other regulatory assets 176,889 169,405 Long-term receivables 28,860 29,586 Other 17,216 17,349 ---------- ---------- TOTAL 666,720 658,177 ---------- ---------- TOTAL ASSETS $6,106,185 $6,134,017 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY March 31, 2001 and December 31, 2000 2001 2000 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $272,750 $122,750 Accounts payable: Associated companies 86,896 66,312 Other 142,200 258,529 Customer deposits 38,843 37,489 Taxes accrued 125,031 132,368 Accumulated deferred income taxes 96,602 94,032 Nuclear refueling outage costs 13,253 10,209 Interest accrued 46,568 43,539 Obligations under capital leases 42,808 42,524 Other 18,863 19,418 ---------- ---------- TOTAL 883,814 827,170 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 1,154,831 1,115,119 Accumulated deferred investment tax credits 169,192 171,000 Obligations under capital leases 48,265 53,512 Other regulatory liabilities 268 669 Decommissioning 143,282 142,604 Transition to competition 79,098 72,381 Regulatory reserves 63,039 60,965 Accumulated provisions 66,072 67,404 Other 86,835 98,501 ---------- ---------- TOTAL 1,810,882 1,782,155 ---------- ---------- Long-term debt 1,658,938 1,808,879 Preferred stock with sinking fund 28,760 30,758 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 47,677 47,677 Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares in 2001 and 2000 114,055 114,055 Paid-in capital 1,153,233 1,153,195 Retained earnings 323,826 285,128 ---------- ---------- TOTAL 1,638,791 1,600,055 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,106,185 $6,134,017 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) Increase/ Description 2001 2000 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 188.5 $ 137.9 $ 50.6 37 Commercial 145.3 108.3 37.0 34 Industrial 280.6 184.5 96.1 52 Governmental 9.9 7.7 2.2 29 ------- ------- ------- Total retail 624.3 438.4 185.9 42 Sales for resale Associated companies 12.4 6.5 5.9 91 Non-associated companies 51.1 20.4 30.7 150 Other 11.1 5.5 5.6 102 ------- ------- ------- Total $ 698.9 $ 470.8 $ 228.1 48 ======= ======= ======= Billed Electric Energy Sales (GWH): Residential 2,126 1,833 293 16 Commercial 1,744 1,642 102 6 Industrial 4,252 4,370 (118) (3) Governmental 111 105 6 6 ------- ------- ------- Total retail 8,233 7,950 283 4 Sales for resale Associated companies 107 188 (81) (43) Non-associated companies 959 799 160 20 ------- ------- ------- Total 9,299 8,937 362 4 ======= ======= ======= ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 2001 primarily due to a decrease in unbilled revenues, an increase in other operation and maintenance expenses, and an increase in depreciation and amortization expenses. The overall decrease was partially offset by a decrease in provisions for rate refunds and an increase in interest income. Revenues and Sales The changes in electric operating revenues for the first quarter of 2001 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Base rate changes $15.2 Fuel cost recovery 197.2 Volume 1.0 Weather 9.4 Other revenue (including unbilled) (18.5) Sales for resale (2.2) ------ Total $202.1 ====== Base rate changes Base rate changes increased primarily due to accruals for potential rate refunds in 2000, partially offset by additional formula rate plan reductions effective August 2000. 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 as a result of higher fuel and purchased power expenses primarily due to the increased market price of natural gas. Weather Electric sales vary seasonally in response to weather and usually peak in the summer. The effect of colder than normal winter weather in the first quarter of 2001 contributed to the increase in electric sales. For the first quarter of 2001, the effect of favorable weather increased electric sales volume by 232 GWH in the residential and commercial sectors. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other revenue (including unbilled) Unbilled revenue decreased for the first quarter of 2001 primarily due to less favorable sales volume in the period included in the March 2001 unbilled revenue calculation. Expenses Fuel and purchased power Fuel and purchased power expenses increased for the first quarter of 2001 primarily due to increased market prices of natural gas and purchased power. Other operation and maintenance Other operation and maintenance expenses increased for the first quarter of 2001 primarily due to: o an increase of $3.4 million in plant maintenance at certain fossil plants; o an increase of $1.3 million in injuries and damages expense; and o an increase of $1.3 million in customer records and collection expenses. Depreciation and amortization Depreciation and amortization expenses increased for the first quarter of 2001 primarily due to $179 million of net capital additions in 2000. Other Other income Interest income increased for the first quarter of 2001, primarily due to interest from deferred fuel costs and money pool investments. Interest and other charges Other interest increased for the first quarter of 2001 primarily due to interest accrued on reserves provided for fuel-related refunds. The refunds are expected to occur in the summer of 2001. Income taxes The effective income tax rates for the first quarter of 2001 and 2000 were 48.4% and 45.3%, respectively. The increase in the effective income tax rate is primarily due to lower pre-tax income increasing the effect of permanent differences and flow-through items.
ENTERGY LOUISIANA, INC. INCOME STATEMENTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING REVENUES Domestic electric $548,914 $346,820 -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale 234,423 83,191 Purchased power 135,505 88,875 Nuclear refueling outage expenses 3,262 3,410 Other operation and maintenance 69,813 63,075 Decommissioning 2,606 2,606 Taxes other than income taxes 18,552 16,763 Depreciation and amortization 44,946 42,147 Other regulatory charges - net 540 240 -------- -------- TOTAL 509,647 300,307 -------- -------- OPERATING INCOME 39,267 46,513 -------- -------- OTHER INCOME Allowance for equity funds used during construction 935 683 Miscellaneous - net 1,936 108 -------- -------- TOTAL 2,871 791 -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 24,456 24,163 Other interest - net 3,518 2,050 Distributions on preferred securities of subsidiary 1,575 1,575 Allowance for borrowed funds used during construction (709) (957) -------- -------- TOTAL 28,840 26,831 -------- -------- INCOME BEFORE INCOME TAXES 13,298 20,473 Income taxes 6,439 9,282 -------- -------- NET INCOME 6,859 11,191 Preferred dividend requirements and other 2,378 2,378 -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $4,481 $8,813 ======== ======== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING ACTIVITIES Net income $6,859 $11,191 Noncash items included in net income: Reserve for regulatory adjustments 250 - Other regulatory charges - net 540 240 Depreciation, amortization, and decommissioning 47,552 44,753 Deferred income taxes and investment tax credits (32,902) (12,187) Allowance for equity funds used during construction (935) (683) Changes in working capital: Receivables 27,171 15,211 Accounts payable (104,832) (65,581) Taxes accrued 49,557 23,218 Interest accrued (10,899) 57 Deferred fuel costs 63,264 (94) Other working capital accounts 2,198 17,637 Provision for estimated losses and reserves 1,820 381 Changes in other regulatory assets (4,465) 5,249 Other 3,807 (5,513) -------- -------- Net cash flow provided by operating activities 48,985 33,879 -------- -------- INVESTING ACTIVITIES Construction expenditures (42,193) (30,345) Allowance for equity funds used during construction 935 683 Decommissioning trust contributions and realized change in trust assets (5,637) (776) -------- -------- Net cash flow used in investing activities (46,895) (30,438) -------- -------- FINANCING ACTIVITIES Retirement of long-term debt (16,388) (100,000) Changes in short-term borrowings 30,000 - Advances from Parent - 100,000 Dividends paid: Preferred stock (2,378) (2,378) -------- -------- Net cash flow provided by (used in) financing activities 11,234 (2,378) -------- -------- Net increase in cash and cash equivalents 13,324 1,063 Cash and cash equivalents at beginning of period 43,959 7,734 -------- -------- Cash and cash equivalents at end of period $57,283 $8,797 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $38,950 $25,456 Income taxes - $9,900 Noncash investing and financing activities: Change in unrealized depreciation of decommissioning trust assets ($1,224) ($1,499) See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS ASSETS March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $10,120 $14,138 Temporary cash investments - at cost, which approximates market 47,163 29,821 ---------- ---------- Total cash and cash equivalents 57,283 43,959 ---------- ---------- Notes receivable 3,025 1,510 Accounts receivable: Customer 105,537 111,292 Allowance for doubtful accounts (1,771) (1,771) Associated companies 41,831 30,518 Other 11,070 13,698 Accrued unbilled revenues 122,600 152,700 ---------- ---------- Total accounts receivable 279,267 306,437 ---------- ---------- Deferred fuel costs 20,787 84,051 Accumulated deferred income taxes 6,777 - Materials and supplies - at average cost 78,621 77,389 Deferred nuclear refueling outage costs 13,221 16,425 Prepayments and other 12,471 9,996 ---------- ---------- TOTAL 471,452 539,767 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in affiliates - at equity 14,230 14,230 Decommissioning trust funds 114,676 110,263 Non-utility property - at cost (less accumulated depreciation) 21,655 21,700 ---------- ---------- TOTAL 150,561 146,193 ---------- ---------- UTILITY PLANT Electric 5,369,799 5,357,920 Property under capital lease 238,427 238,427 Construction work in progress 114,260 85,299 Nuclear fuel under capital lease 55,888 63,923 ---------- ---------- TOTAL UTILITY PLANT 5,778,374 5,745,569 Less - accumulated depreciation and amortization 2,485,986 2,441,937 ---------- ---------- UTILITY PLANT - NET 3,292,388 3,303,632 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 206,437 204,810 Unamortized loss on reacquired debt 32,018 33,244 Other regulatory assets 53,719 50,881 Other 13,602 10,882 ---------- ---------- TOTAL 305,776 299,817 ---------- ---------- TOTAL ASSETS $4,220,177 $4,289,409 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $132,668 $35,088 Notes payable 30,000 - Accounts payable: Associated companies 20,502 71,948 Other 91,455 144,841 Customer deposits 60,166 60,227 Taxes accrued 72,864 23,307 Accumulated deferred income taxes - 20,545 Interest accrued 24,637 35,536 Obligations under capital leases 34,274 34,274 Other 106,892 102,614 ---------- ---------- TOTAL 573,458 528,380 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 756,012 757,362 Accumulated deferred investment tax credits 116,031 117,393 Obligations under capital leases 21,614 29,649 Regulatory reserves 11,706 11,456 Accumulated provisions 66,021 64,201 Other 65,514 61,724 ---------- ---------- TOTAL 1,036,898 1,041,785 ---------- ---------- Long-term debt 1,162,792 1,276,696 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 2001 and 2000 1,088,900 1,088,900 Capital stock expense and other (2,171) (2,171) Retained earnings 154,800 150,319 ---------- ---------- TOTAL 1,342,029 1,337,548 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,220,177 $4,289,409 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) Increase/ Description 2001 2000 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 184.7 $ 119.1 $ 65.6 55 Commercial 121.2 83.3 37.9 45 Industrial 245.2 152.7 92.5 61 Governmental 12.3 7.9 4.4 56 ------- ------- ------ Total retail 563.4 363.0 200.4 55 Sales for resale Associated companies 4.1 0.5 3.6 720 Non-associated companies 5.8 11.6 (5.8) (50) Other (24.4) (28.3) 3.9 14 ------- ------- ------ Total $ 548.9 $ 346.8 $202.1 58 ======= ======= ====== Billed Electric Energy Sales (GWH): Residential 1,944 1,733 211 12 Commercial 1,217 1,148 69 6 Industrial 3,574 3,762 (188) (5) Governmental 128 113 15 13 ------- ------- ------ Total retail 6,863 6,756 107 2 Sales for resale Associated companies 53 13 40 308 Non-associated companies 96 203 (107) (53) ------- ------- ------ Total 7,012 6,972 40 1 ======= ======= ====== ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased slightly for the first quarter of 2001 primarily due to increased net revenue, decreased operation and maintenance expenses, and increased interest income, partially offset by increased interest charges and an increase in the effective tax rate. Revenues and Sales The changes in electric operating revenues for the first quarter of 2001 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Base rate changes ($2.0) Fuel cost recovery 23.3 Volume 2.5 Weather 3.9 Other revenue (including unbilled) (2.6) Sales for resale 48.3 ----- Total $73.4 ===== 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 first quarter of 2001 primarily due to an increase in the energy cost recovery rider to collect the under-recovered fuel and purchased power costs incurred as of September 30, 2000. The recovery of $136.7 million, plus carrying charges, will occur over a 24-month period beginning January 2001. Volume Increased usage by the residential and commercial sectors, after adjusting for weather effects, increased electric sales volume by 77 GWH in the first quarter of 2001. Weather Electric sales vary seasonally in response to weather and usually peak in the summer. The effect of colder than normal winter weather in the first quarter of 2001 contributed to an increase in electric sales. For the first quarter of 2001, the effect of favorable weather increased electric sales volume by 174 GWH in the residential and commercial sectors. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other revenue (including unbilled) Unbilled revenue decreased for the first quarter of 2001 primarily due to the effect of less favorable weather in the period included in the March 2001 unbilled revenue calculation. Sales for resale Sales for resale increased for the first quarter of 2001 primarily due to increased net generation resulting in more energy available for sale, coupled with increased prices for resale electricity. The increase came from sales to affiliates, which are generally made at a low margin. Expenses Fuel and purchased power Fuel and purchased power expenses increased for the first quarter of 2001 primarily due to increased generation requirements and increased market prices of natural gas and purchased power. Other operation and maintenance Other operation and maintenance expenses decreased for the first quarter of 2001 primarily due to outage costs at certain fossil plants in 2000 and an insurance reimbursement received in 2001 for an October 1999 turbine generator failure. Other Other income Interest income increased for the first quarter of 2001 primarily due to interest recorded on the deferred fuel balance as a result of an MPSC order providing for a 24-month recovery of the September 2000 under- recovered electric deferred fuel balance of $136.7 million. Interest and other charges Interest on long-term debt increased for the first quarter of 2001 primarily due to the issuance of $120 million of long-term debt in February 2000 and the issuance of $70 million of long-term debt in January 2001. Income taxes The effective income tax rates for the first quarter of 2001 and 2000 were 35.8% and 27.3%, respectively. The increase in the effective income tax rate for 2001 was primarily due to the increase in pre-tax income reducing the impact of permanent differences and flow-through items.
ENTERGY MISSISSIPPI, INC. INCOME STATEMENTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING REVENUES Domestic electric $256,158 $182,775 -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale 110,059 44,287 Purchased power 83,464 76,828 Other operation and maintenance 33,248 35,623 Taxes other than income taxes 11,273 10,176 Depreciation and amortization 13,274 11,725 Other regulatory credits - net (9,684) (9,078) -------- -------- TOTAL 241,634 169,561 -------- -------- OPERATING INCOME 14,524 13,214 -------- -------- OTHER INCOME Allowance for equity funds used during construction 423 637 Miscellaneous - net 4,146 2,030 -------- -------- TOTAL 4,569 2,667 -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 11,144 9,454 Other interest - net 1,233 1,020 Allowance for borrowed funds used during construction (347) (504) -------- -------- TOTAL 12,030 9,970 -------- -------- INCOME BEFORE INCOME TAXES 7,063 5,911 Income taxes 2,528 1,616 -------- -------- NET INCOME 4,535 4,295 Preferred dividend requirements and other 842 842 -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $3,693 $3,453 ======== ======== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING ACTIVITIES Net income $4,535 $4,295 Noncash items included in net income: Other regulatory credits - net (9,684) (9,078) Depreciation and amortization 13,274 11,725 Deferred income taxes and investment tax credits 4,805 3,731 Allowance for equity funds used during construction (423) (637) Changes in working capital: Receivables 25,186 (5,521) Fuel inventory (3,547) 786 Accounts payable (73,374) (54,785) Taxes accrued (23,597) (27,128) Interest accrued 2,062 2,528 Deferred fuel costs (12,807) 10,312 Other working capital accounts (4,563) 572 Provision for estimated losses and reserves (784) (473) Changes in other regulatory assets (9,010) (9,661) Other 17,250 9,741 -------- -------- Net cash flow used in operating activities (70,677) (63,593) -------- -------- INVESTING ACTIVITIES Construction expenditures (22,163) (26,337) Allowance for equity funds used during construction 423 637 Other regulatory investments - (8,637) -------- -------- Net cash flow used in investing activities (21,740) (34,337) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of long-term debt 69,689 119,241 Changes in short-term borrowings 25,000 - Dividends paid: Common stock (2,000) (1,000) Preferred stock (842) (842) -------- -------- Net cash flow provided by financing activities 91,847 117,399 -------- -------- Net increase (decrease) in cash and cash equivalents (570) 19,469 Cash and cash equivalents at beginning of period 5,113 4,787 -------- -------- Cash and cash equivalents at end of period $4,543 $24,256 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $9,779 $7,317 Income taxes - $4,664 See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS ASSETS March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT ASSETS Cash and cash equivalents $4,543 $5,113 Accounts receivable: Customer 40,346 44,517 Allowance for doubtful accounts (1,044) (1,044) Associated companies 1,816 10,741 Other 4,174 9,964 Accrued unbilled revenues 27,300 33,600 ---------- ---------- Total accounts receivable 72,592 97,778 ---------- ---------- Deferred fuel costs 98,335 64,950 Fuel inventory - at average cost 6,983 3,436 Materials and supplies - at average cost 19,632 18,485 Prepayments and other 7,832 3,004 ---------- ---------- TOTAL 209,917 192,766 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in affiliates - at equity 5,531 5,531 Non-utility property - at cost (less accumulated depreciation) 6,819 6,851 ---------- ---------- TOTAL 12,350 12,382 ---------- ---------- UTILITY PLANT Electric 1,891,384 1,885,501 Property under capital lease 265 290 Construction work in progress 59,395 44,085 ---------- ---------- TOTAL UTILITY PLANT 1,951,044 1,929,876 Less - accumulated depreciation and amortization 745,991 733,977 ---------- ---------- UTILITY PLANT - NET 1,205,053 1,195,899 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 27,164 25,544 Unamortized loss on reacquired debt 14,823 15,122 Deferred fuel costs 75,083 95,661 Other regulatory assets 148,069 140,679 Other 8,032 5,886 ---------- ---------- TOTAL 273,171 282,892 ---------- ---------- TOTAL ASSETS $1,700,491 $1,683,939 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT LIABILITIES Notes payable $25,048 $- Accounts payable: Associated companies 32,529 92,980 Other 13,963 26,933 Customer deposits 27,247 26,368 Taxes accrued 8,265 31,862 Accumulated deferred income taxes 49,764 47,734 Interest accrued 15,161 13,099 Obligations under capital leases 63 79 Other 3,072 2,540 ---------- ---------- TOTAL 175,112 241,595 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 311,668 306,295 Accumulated deferred investment tax credits 19,033 19,408 Obligations under capital leases 202 211 Accumulated provisions 6,022 6,806 Other 38,445 31,339 ---------- ---------- TOTAL 375,370 364,059 ---------- ---------- Long-term debt 654,499 584,467 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 2001 and 2000 199,326 199,326 Capital stock expense and other (59) (59) Retained earnings 245,862 244,170 ---------- ---------- TOTAL 495,510 493,818 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,700,491 $1,683,939 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) Increase/ Description 2001 2000 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 80.9 $ 66.1 $ 14.8 22 Commercial 67.6 59.5 8.1 14 Industrial 41.3 37.4 3.9 10 Governmental 6.7 5.8 0.9 16 ------ ------ ------ Total retail 196.5 168.8 27.7 16 Sales for resale Associated companies 56.6 5.9 50.7 859 Non-associated companies 4.4 6.8 (2.4) (35) Other (1.3) 1.3 (2.6) (200) ------ ------ ------ Total $256.2 $182.8 $ 73.4 40 ====== ====== ====== Billed Electric Energy Sales (GWH): Residential 1,215 1,023 192 19 Commercial 975 918 57 6 Industrial 734 743 (9) (1) Governmental 90 80 10 13 ------ ------ ------ Total retail 3,014 2,764 250 9 Sales for resale Associated companies 874 125 749 599 Non-associated companies 51 77 (26) (34) ------ ------ ------ Total 3,939 2,966 973 33 ====== ====== ====== ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 2001 primarily due to increased other operation and maintenance expenses, increased taxes other than income taxes, and increased interest expense, partially offset by increased net revenue. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the first quarter of 2001 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Base rate changes ($0.9) Fuel cost recovery 39.0 Volume (1.5) Weather 2.1 Other revenue (including unbilled) 1.5 Sales for resale 2.8 ----- Total $43.0 ===== Fuel cost recovery 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 first quarter of 2001 primarily due to the increased market price of natural gas. Weather Electric sales vary seasonally in response to weather and usually peak in the summer. The effect of colder than normal weather in the first quarter of 2001 increased electric sales. For the first quarter of 2001, the effect of favorable weather increased electric sales volume by 46 GWH in the residential and commercial sectors. Sales for resale Sales for resale increased for the first quarter of 2001 primarily due to an increase in the average price of electricity supplied for resale sales, partially offset by a decrease in net generation. ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Gas operating revenues Gas operating revenues increased for the first quarter of 2001 due to the increased market price of natural gas and increased sales due to a colder than normal winter. The increase in gas revenues was largely offset by increased expenses for gas purchased for resale. Expenses Fuel and purchased power Fuel and purchased power expenses increased for the first quarter of 2001 primarily due to the increased market prices of natural gas and purchased power. Other operation and maintenance Other operation and maintenance expenses increased for the first quarter of 2001 primarily due to an increase of $1.6 million in uncollectible accounts expense and an increase of $1.2 million in maintenance expense due to an unplanned outage. Taxes other than income taxes Taxes other than income taxes increased for the first quarter of 2001 primarily due to an increase in local franchise taxes as a result of higher retail revenue. Amortization of rate deferrals Amortization of rate deferrals decreased for the first quarter of 2001 primarily due to a scheduled rate change in the amortization of Grand Gulf 1 phase-in expenses. The Grand Gulf 1 phase-in plan will be complete in November 2001. Other Interest and other charges Interest on long-term debt increased for the first quarter of 2001 primarily due to $30 million issuances of long-term debt in July 2000 and in February 2001. Income taxes The effective income tax rates for the first quarter of 2001 and 2000 were 56.3% and 52.2%, respectively. The increase in the tax rate for the first quarter of 2001 was primarily due to the decrease in pre- tax income increasing the impact of permanent differences and flow- through items.
ENTERGY NEW ORLEANS, INC. INCOME STATEMENTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING REVENUES Domestic electric $129,231 $86,259 Natural gas 74,784 33,483 -------- ------- TOTAL 204,015 119,742 -------- ------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale 108,827 41,801 Purchased power 48,467 35,111 Other operation and maintenance 20,960 16,851 Taxes other than income taxes 13,686 9,512 Depreciation and amortization 6,326 5,701 Other regulatory credits - net (1,521) (1,602) Amortization of rate deferrals 3,052 5,996 -------- ------- TOTAL 199,797 113,370 -------- ------- OPERATING INCOME 4,218 6,372 -------- ------- OTHER INCOME Allowance for equity funds used during construction 398 325 Miscellaneous - net 693 598 -------- ------- TOTAL 1,091 923 -------- ------- INTEREST AND OTHER CHARGES Interest on long-term debt 4,118 3,319 Other interest - net 426 416 Allowance for borrowed funds used during construction (320) (238) -------- ------- TOTAL 4,224 3,497 -------- ------- INCOME BEFORE INCOME TAXES 1,085 3,798 Income taxes 611 1,981 -------- ------- NET INCOME 474 1,817 Preferred dividend requirements and other 241 241 -------- ------- EARNINGS APPLICABLE TO COMMON STOCK $233 $1,576 ======== ======= See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING ACTIVITIES Net income $474 $1,817 Noncash items included in net income: Amortization of rate deferrals 3,052 5,996 Reserve for regulatory adjustments (1,176) - Other regulatory credits - net (1,521) (1,602) Depreciation and amortization 6,326 5,701 Deferred income taxes and investment tax credits (4,608) (3,501) Allowance for equity funds used during construction (398) (325) Changes in working capital: Receivables (5,036) 8,720 Fuel inventory 3,942 828 Accounts payable (18,690) (9,369) Taxes accrued 3,560 5,095 Interest accrued (3,753) (3,369) Deferred fuel costs 11,358 4,557 Other working capital accounts (10,275) (8,934) Provision for estimated losses and reserves (2,243) (579) Changes in other regulatory assets (3,093) (2,318) Other 1,496 1,775 -------- ------- Net cash flow provided by (used in) operating activities (20,585) 4,492 -------- ------- INVESTING ACTIVITIES Construction expenditures (11,194) (8,051) Allowance for equity funds used during construction 398 325 -------- ------- Net cash flow used in investing activities (10,796) (7,726) -------- ------- FINANCING ACTIVITIES Proceeds from issuance of long-term debt 29,817 - Dividends paid: Preferred stock (241) - -------- ------- Net cash flow provided by financing activities 29,576 - -------- ------- Net decrease in cash and cash equivalents (1,805) (3,234) Cash and cash equivalents at beginning of period 6,302 4,454 -------- ------- Cash and cash equivalents at end of period $4,497 $1,220 ======== ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $7,758 $7,014 Income taxes - ($45) See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS ASSETS March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT ASSETS Cash and cash equivalents $4,497 $6,302 Notes receivable 1,513 - Accounts receivable: Customer 77,361 67,264 Allowance for doubtful accounts (770) (770) Associated companies 784 2,800 Other 2,307 3,709 Accrued unbilled revenues 25,194 26,838 -------- -------- Total accounts receivable 104,876 99,841 -------- -------- Deferred fuel costs 16,875 28,234 Fuel inventory - at average cost 262 4,204 Materials and supplies - at average cost 9,101 9,630 Rate deferrals 7,925 10,974 Prepayments and other 10,362 1,416 -------- -------- TOTAL 155,411 160,601 -------- -------- OTHER INVESTMENTS Investment in subsidiary companies - at equity 3,259 3,259 -------- -------- UTILITY PLANT Electric 572,519 572,061 Natural gas 135,810 134,826 Construction work in progress 45,968 36,489 -------- -------- TOTAL UTILITY PLANT 754,297 743,376 Less - accumulated depreciation and amortization 399,921 394,271 -------- -------- UTILITY PLANT - NET 354,376 349,105 -------- -------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Unamortized loss on reacquired debt 921 974 Other regulatory assets 47,769 44,676 Other 1,608 616 -------- -------- TOTAL 50,298 46,266 -------- -------- TOTAL ASSETS $563,344 $559,231 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT LIABILITIES Accounts payable: Associated companies $32,475 $24,637 Other 31,037 57,566 Customer deposits 18,127 18,311 Taxes accrued 9,384 5,823 Accumulated deferred income taxes 869 6,543 Interest accrued 2,365 6,119 Other 3,049 3,211 -------- -------- TOTAL 97,306 122,210 -------- -------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 44,434 43,754 Accumulated deferred investment tax credits 5,741 5,868 SFAS 109 regulatory liability - net 13,531 12,607 Other regulatory liabilities 388 537 Accumulated provisions 6,228 8,471 Other 12,066 12,356 -------- -------- TOTAL 82,388 83,593 -------- -------- Long-term debt 229,020 199,031 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 2001 and 2000 33,744 33,744 Paid-in capital 36,294 36,294 Retained earnings 64,812 64,579 -------- -------- TOTAL 154,630 154,397 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $563,344 $559,231 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) Increase/ Description 2001 2000 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 41.0 $ 27.5 $ 13.5 49 Commercial 48.9 33.7 15.2 45 Industrial 8.3 5.1 3.2 63 Governmental 20.9 14.1 6.8 48 ------ ------ ------ Total retail 119.1 80.4 38.7 48 Sales for resale Associated companies 7.0 2.6 4.4 169 Non-associated companies 0.6 2.2 (1.6) (73) Other 2.5 1.1 1.4 127 ------ ------ ------ Total $129.2 $ 86.3 $ 42.9 50 ====== ====== ====== Billed Electric Energy Sales (GWH): Residential 397 373 24 6 Commercial 488 497 (9) (2) Industrial 91 91 - - Governmental 227 233 (6) (3) ------ ------ ------ Total retail 1,203 1,194 9 1 Sales for resale Associated companies 63 83 (20) (24) Non-associated companies 13 44 (31) (70) ------ ------ ------ Total 1,279 1,321 (42) (3) ====== ====== ====== SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 2001 primarily due to a larger provision for potential rate refunds, partially offset by decreased interest 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. System Energy's proposed rate increase, which is subject to refund, is discussed in Note 2 to the financial statements in the Form 10-K. Expenses Other Regulatory Charges Other regulatory charges increased for the first quarter of 2001 primarily due to charges associated with the GGART in place at Entergy Arkansas and Entergy Mississippi. The GGART is discussed in Note 2 to the financial statements. Other Interest charges Interest on long-term debt decreased for the first quarter of 2001 primarily due to: o a decrease of $1.3 million in the line of credit fees associated with the sale-leaseback of Grand Gulf 1; o a decrease of $1.6 million in interest expense associated with the sale-leaseback of Grand Gulf 1; and o a decrease of $1.4 million in interest expense due to the retirement of $75 million of long-term debt in 2000. Other interest expense increased for the first quarter of 2001 due to interest on the potential refund of System Energy's proposed rate increase. Income taxes The effective income tax rates for the first quarter of 2001 and 2000 were 45.8% and 47.1%, respectively. The decrease in the effective tax rate is primarily due to the decrease in pre-tax income increasing the impact of flow-through items.
SYSTEM ENERGY RESOURCES, INC. INCOME STATEMENTS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING REVENUES Domestic electric $151,166 $157,089 -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel-related expenses, and gas purchased for resale 10,072 10,683 Nuclear refueling outage expenses 4,034 3,214 Other operation and maintenance 16,374 15,272 Decommissioning 4,736 4,736 Taxes other than income taxes 6,708 5,943 Depreciation and amortization 29,481 28,056 Other regulatory charges - net 19,167 14,745 -------- -------- TOTAL 90,572 82,649 -------- -------- OPERATING INCOME 60,594 74,440 -------- -------- OTHER INCOME Allowance for equity funds used during construction 270 732 Miscellaneous - net 5,071 4,096 -------- -------- TOTAL 5,341 4,828 -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 19,011 24,126 Other interest - net 8,706 6,843 Allowance for borrowed funds used during construction (137) (476) -------- -------- TOTAL 27,580 30,493 -------- -------- INCOME BEFORE INCOME TAXES 38,355 48,775 Income taxes 17,557 22,989 -------- -------- NET INCOME $20,798 $25,786 ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2001 and 2000 (Unaudited) 2001 2000 (In Thousands) OPERATING ACTIVITIES Net income $20,798 $25,786 Noncash items included in net income: Reserve for regulatory adjustments 27,644 19,555 Other regulatory charges - net 19,167 14,745 Depreciation, amortization, and decommissioning 34,217 32,792 Deferred income taxes and investment tax credits (24,524) (19,377) Allowance for equity funds used during construction (270) (732) Changes in working capital: Receivables (37,157) 103,319 Accounts payable 13,389 263 Taxes accrued 26,464 30,056 Interest accrued (23,111) (18,587) Other working capital accounts 905 (3,424) Provision for estimated losses and reserves (164) 15 Changes in other regulatory assets 10,306 11,795 Other 5,072 (7,705) -------- -------- Net cash flow provided by operating activities 72,736 188,501 -------- -------- INVESTING ACTIVITIES Construction expenditures (7,607) (9,250) Allowance for equity funds used during construction 270 732 Nuclear fuel purchases (10,704) (7) Proceeds from sale/leaseback of nuclear fuel 10,704 7 Decommissioning trust contributions and realized change in trust assets (5,692) (5,790) -------- -------- Net cash flow used in investing activities (13,029) (14,308) -------- -------- FINANCING ACTIVITIES Retirement of long-term debt (16,800) (2,947) Dividends paid: Common stock (22,800) (23,600) -------- -------- Net cash flow used in financing activities (39,600) (26,547) -------- -------- Net increase in cash and cash equivalents 20,107 147,646 Cash and cash equivalents at beginning of period 202,218 35,152 -------- -------- Cash and cash equivalents at end of period $222,325 $182,798 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $49,725 $42,653 Income taxes - ($4,035) Noncash investing and financing activities: Change in unrealized depreciation of decommissioning trust assets ($1,190) ($1,204) See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS ASSETS March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $31 $44 Temporary cash investments - at cost, which approximates market 222,294 202,174 ---------- ---------- Total cash and cash equivalents 222,325 202,218 ---------- ---------- Accounts receivable: Associated companies 232,870 212,551 Other 19,032 2,194 ---------- ---------- Total accounts receivable 251,902 214,745 ---------- ---------- Materials and supplies - at average cost 52,179 52,235 Deferred nuclear refueling outage costs 3,020 6,577 Prepayments and other 5,515 2,639 ---------- ---------- TOTAL 534,941 478,414 ---------- ---------- OTHER INVESTMENTS Decommissioning trust funds 162,074 157,572 ---------- ---------- UTILITY PLANT Electric 3,093,454 3,093,033 Property under capital lease 449,851 449,851 Construction work in progress 31,205 24,029 Nuclear fuel under capital lease 70,970 49,256 ---------- ---------- TOTAL UTILITY PLANT 3,645,480 3,616,169 Less - accumulated depreciation and amortization 1,437,807 1,407,885 ---------- ---------- UTILITY PLANT - NET 2,207,673 2,208,284 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 183,907 195,634 Unamortized loss on reacquired debt 51,063 51,957 Other regulatory assets 175,938 174,517 Other 8,946 8,172 ---------- ---------- TOTAL 419,854 430,280 ---------- ---------- TOTAL ASSETS $3,324,542 $3,274,550 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDER'S EQUITY March 31, 2001 and December 31, 2000 (Unaudited) 2001 2000 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $165,891 $151,800 Accounts payable: Associated companies 2,433 2,722 Other 37,263 23,585 Taxes accrued 94,994 68,530 Accumulated deferred income taxes 270 1,648 Interest accrued 20,897 44,007 Obligations under capital leases 32,119 32,119 Other 1,839 1,674 ---------- ---------- TOTAL 355,706 326,085 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 363,678 391,505 Accumulated deferred investment tax credits 88,647 89,516 Obligations under capital leases 38,851 17,137 FERC settlement - refund obligation 28,965 30,745 Other regulatory liabilities 132,128 103,634 Decommissioning 158,889 153,197 Regulatory reserves 350,012 322,368 Accumulated provisions 524 689 Other 15,736 15,394 ---------- ---------- TOTAL 1,177,430 1,124,185 ---------- ---------- Long-term debt 899,982 930,854 SHAREHOLDER'S EQUITY Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2001 and 2000 789,350 789,350 Retained earnings 102,074 104,076 ---------- ---------- TOTAL 891,424 893,426 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $3,324,542 $3,274,550 ========== ========== 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 (including nuclear fuel but excluding AFUDC), 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, Pilgrim, Indian Point 3, and FitzPatrick. Environmental Issues (Entergy Arkansas) In previous years, 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 a site in Arkansas. As of March 31, 2001, a remaining recorded liability of approximately $5.0 million existed related to the cleanup of that site. (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 currently negotiating with the EPA and state authorities regarding the cleanup of these sites. As of March 31, 2001, a remaining recorded liability of approximately $16.5 million existed related to the cleanup of the remaining sites at which the EPA has designated Entergy Gulf States as 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 have chosen to upgrade or close them. Recorded liabilities in the amounts of $5.8 million for Entergy Louisiana and $0.5 million for Entergy New Orleans existed at March 31, 2001 for wastewater upgrades and closures. Completion of this work is awaiting LDEQ approval. 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. A resolution to study the advantages for ratepayers that might result from an acquisition of these properties has been filed in a committee of the Council. The committee has deferred consideration of that resolution until May 2001 and no further action has been taken. The full Council must approve the resolution to commence such a study before it can become effective. 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. Upon the occurrence of certain events Entergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from these lease transactions and may be required to assume the outstanding bonds issued to finance, in part, the lessors' 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 March 31, 2001. 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, the target date for retail open access has been delayed until no sooner than October 1, 2003 and no later than October 1, 2005. In October 2000, in compliance with the currently enacted deregulation law, Entergy Arkansas filed a market power study in accordance with the guidelines adopted by the APSC. In February 2001, Entergy Arkansas filed supplemental testimony to address the effects of the proposed Transco on Entergy Arkansas' market power. In December 2000, Entergy Arkansas filed an application for approval to transfer Entergy Arkansas' transmission assets to the Transco. Texas (Entergy Corporation and Entergy Gulf States) As discussed in Note 2 to the financial statements in the Form 10-K, the Texas legislature enacted a law providing retail open access by most investor-owned electric utilities, including Entergy Gulf States, on January 1, 2002. With retail open access, generation and a new retail electric provider operation will be competitive businesses, but transmission and distribution operations will continue to be regulated. The new retail electric provider will be the primary point of contact with customers. In March 2001, Entergy Gulf States filed with the PUCT a non- unanimous settlement agreement in its unbundled cost of service proceeding that establishes the Texas distribution company's revenue requirement. The settlement agreement is between Entergy Gulf States, the PUCT Staff, and other parties. Pursuant to a generic rule prescribed by the PUCT, the Texas distribution company's allowed return on equity will be 11.25%. The capital structure prescribed by the PUCT is 60% debt and 40% equity. A rider to recover nuclear decommissioning costs will be implemented. Also in the settlement agreement, the parties agree that Entergy Gulf States' Texas jurisdictional stranded costs and benefits are $0, and no charge to recover stranded costs or credit to refund excess mitigation will be implemented. Nevertheless, if legislation passes in Texas that requires Entergy Gulf States to pass-through or share stranded benefits with its customers, that legislation will control this issue. After a hearing in April 2001, the PUCT voted to approve a rate order consistent with the terms of the settlement. A written interim order is expected by the end of May 2001. The LPSC has opened a docket to identify the changes in corporate structure and operations of Entergy Gulf States, and their potential impact on Louisiana retail ratepayers, resulting from restructuring in Texas and Arkansas. Entergy Gulf States and the LPSC staff have reached a settlement on certain Texas business separation plan issues, and the terms were submitted in April 2001 to intervenors. The settlement is set for hearing at the LPSC in May 2001. The settlement term sheet includes the following features: o shortens, to the end of 2002, the period for the Texas distribution company and the unbundled transmission entity to extinguish their respective assumed portions of Entergy Gulf States' debt obligations; o adds a contingent indemnity by Entergy Corporation with respect to the unbundled transmission entity's assumed portion of Entergy Gulf States' debt obligations in the event that the obligations have not been extinguished prior to December 31, 2002 (which in no event will continue beyond December 31, 2004); and o prohibits the transfer of Texas generation assets to the Texas generation company until outstanding Entergy Gulf States long-term debt and preferred stock (or equivalent amount) allocable to the assets have been paid, which shall be not later than December 31, 2004. Entergy Gulf States may transfer generation assets either in whole or in part as portions of the allocable outstanding long-term debt and preferred stock (or equivalent amount) are paid. Hearings are scheduled for June 2001 on contested issues in the proceeding, and a decision is not expected until September 2001. The outcome of the Louisiana proceeding will be reported to the PUCT and the Office of Public Utility Counsel and may require additional PUCT action before the business separation plan is final. Management cannot predict the outcome of the proceedings on the plan, which is scheduled to be in effect on January 1, 2002. 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 2001, Entergy Arkansas filed its annually redetermined energy cost rate with the APSC in accordance with the energy cost rate formula, including a new energy allocation factor. The filing reflected that an increase was warranted due to the increase in fuel and purchased power costs and to collect the accumulated under-recovery of energy costs for 2000. The increased energy cost rate is effective April 2001 through March 2002. Filings with the PUCT and Texas Cities Recovery of River Bend Costs (Entergy Corporation and Entergy Gulf States) In March 1998, the PUCT disallowed recovery of $1.4 billion of company-wide abeyed River Bend plant costs, which have been held in abeyance since 1988. Entergy Gulf States appealed the PUCT's decision on this matter to the Travis County District Court in Texas. Subsequent to the July 1999 settlement agreement discussed in Note 2 to the financial statements in the Form 10-K, Entergy Gulf States removed the reserve for River Bend plant costs held in abeyance and reduced the value of the plant asset. The July 1999 settlement agreement limits potential recovery of the remaining plant asset, less depreciation, to $115 million as of January 1, 2002. In the unbundled cost of service proceeding settlement discussed above, and consistent with the July 1999 settlement, Entergy Gulf States agrees not to prosecute its appeal until January 1, 2002. Entergy Gulf States also agrees that it will not seek recovery of the abeyed plant costs through any additional charge to Texas ratepayers. The financial statement impact of the settlement agreement on the abeyed plant costs will ultimately depend on several factors, including the possible discontinuance of SFAS 71 accounting treatment to the Texas generation business, the determination of the market value of generation assets, and the possible enactment of legislation in Texas requiring the pass-through or sharing of any stranded benefits with Texas ratepayers. No assurance can be given that additional reserves or write-offs will not be required in the future. PUCT Fuel Cost Review (Entergy Corporation and Entergy Gulf States) As determined in the July 1999 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. In January 2001, Entergy Gulf States filed a fuel reconciliation case covering the period from March 1, 1999 to August 31, 2000. Entergy Gulf States is reconciling approximately $583 million of fuel and purchased power costs. As part of this filing, Entergy Gulf States requested the collection of $28 million, plus interest, of under- recovered fuel and purchased power costs. A procedural schedule has been established calling for a hearing in August 2001. In March 2001, Entergy Gulf States filed an application with the PUCT requesting an interim surcharge to collect under-recovered fuel and purchased power expenses incurred from September 2000 through January 2001. Entergy Gulf States is requesting the recovery of $82 million, plus interest, from July through December 2001. The request is currently pending before the PUCT and an order is expected by June 2001. The fuel and purchased power expenses contained in this surcharge request will be subject to future fuel reconciliation proceedings. Filings with the LPSC Annual Earnings Reviews (Entergy Corporation and Entergy Gulf States) 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 to 11.60%. Hearings are scheduled for June 2001. Formula Rate Plan Filings (Entergy Corporation and Entergy Louisiana) In May 2000, Entergy Louisiana submitted its fifth annual performance-based formula 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 any rate reduction implemented in its formula rate plan proceedings. This filing will be subject to review by the LPSC. A procedural schedule has not yet been established by the LPSC. In April 2001, Entergy Louisiana submitted its sixth annual performance-based formula rate plan filing for the 2000 test year. The filing indicated that an immaterial base rate reduction might be appropriate for implementation effective August 2001. This filing will be subject to review by the LPSC. A procedural schedule has not yet been established by the LPSC. 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. 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 intervened in the LPSC proceeding. In direct testimony, plaintiffs purport to quantify many of their claims for the period 1989 through 1998 in an amount totaling $544 million, plus interest. Entergy Louisiana has agreed to settle both of these proceedings. The LPSC approved the settlement agreement following a fairness hearing before an ALJ in November 2000. The state court certified the plaintiff class and approved the settlement after a fairness hearing in April 2001. Under the terms of the settlement agreement, Entergy Louisiana agrees 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. Entergy Louisiana previously provided reserves for the refund, which Entergy Louisiana expects to make during the summer of 2001. Also under the terms of the settlement, Entergy Louisiana consents 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. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) In March 2001, Entergy Mississippi submitted its annual performance- based formula rate plan filing for the 2000 test year. The submittal indicated a $6.7 million rate increase adjustment to take place under the formula rate plan. In April 2001, the MPSC Staff and Entergy Mississippi entered into a stipulation that provides for an increase of $5.6 million, which was approved by the MPSC and is effective in May 2001. Filings with the Council Fuel Adjustment Clause Litigation (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 attorneys' 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 plaintiffs' 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 $59 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. Hearings are to be held in October 2001. The ultimate outcome of the lawsuit and the Council proceeding cannot be predicted at this time. Grand Gulf Accelerated Recovery Tariff (Entergy Arkansas) In April 1998, FERC approved the GGART that Entergy Arkansas filed as part of the settlement agreement that the APSC approved in December 1997. The GGART was designed to allow Entergy Arkansas to pay down a portion of its Grand Gulf purchased power obligation in advance of the implementation of retail access in Arkansas. The GGART provides for the acceleration of $165.3 million of its obligation over the period January 1, 1999 through June 30, 2004. In April 2001, FERC approved Entergy Arkansas' filing that requested cessation of the GGART effective July 1, 2001. Entergy Arkansas made the filing pursuant to the terms of a December 2000 settlement agreement with the APSC, which is discussed in Note 2 to the financial statements in the Form 10-K. December 2000 Ice Storms (Entergy Arkansas) In mid- and late December 2000, two separate ice storms left 226,000 and 212,500 Entergy Arkansas customers, respectively, without electric power in its service area. The storms were the most severe natural disasters ever to affect Entergy Arkansas, causing damage to transmission and distribution lines, equipment, poles, and facilities. In April 2001, Entergy Arkansas filed with the APSC a proposal to recover, over approximately a five and one-half year period, $155 million in costs, plus carrying charges, associated with power restoration caused by the December 2000 ice storms. After responses filed by the APSC Staff and other parties regarding, among other things, the procedural schedule, Entergy Arkansas filed a suggested schedule that calls for a hearing on its filing in October 2001. No assurance can be given as to the timing or outcome of this proceeding. NOTE 3. COMMON STOCK (Entergy Corporation) During the first quarter of 2001, Entergy Corporation issued 624,954 shares of its previously repurchased common stock to satisfy stock options exercised and employee stock purchases. In addition, Entergy Corporation received proceeds of approximately $2.1 million from the issuance of 79,473 shares of common stock to satisfy stock options exercised. NOTE 4. LONG-TERM DEBT (Entergy Mississippi) On January 31, 2001, Entergy Mississippi issued $70 million of 6.25% Series First Mortgage Bonds due February 1, 2003. The proceeds are being used for general corporate purposes, including the retirement of short- term indebtedness incurred from money pool borrowings for capital expenditures and working capital needs. (Entergy New Orleans) On February 23, 2001, Entergy New Orleans issued $30 million of 6.65% Series First Mortgage Bonds due March 1, 2004. The proceeds are being used for general corporate purposes, including the retirement of short-term indebtedness incurred from money pool borrowings for capital expenditures and working capital needs. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On April 4, 2001, Entergy Corporation's Board of Directors declared a common stock dividend of $0.315 per share, payable on June 1, 2001, to holders of record on May 15, 2001. NOTE 6. BUSINESS SEGMENT INFORMATION (Entergy Corporation) Entergy's reportable segments as of March 31, 2001, are domestic utility and System Energy, Entergy-Koch, Entergy Wholesale Operations (EWO), and domestic non-utility nuclear. Prior to the first quarter of 2001, Entergy also reported its power marketing and trading segment that engaged in the marketing of wholesale electricity, gas, other generating fuels, electric capacity, and financial instruments. On January 31, 2001, Entergy contributed substantially all of the power marketing and trading business to the Entergy-Koch joint venture, and now reports results from the joint venture as equity in earnings of unconsolidated equity affiliates in the financial statements. See Note 9 to the financial statements for further discussion of the investment in Entergy- Koch, L.P. EWO, which includes Entergy's global power development business, and domestic non-utility nuclear were formerly reported in "all other," but they are now reportable segments. "All Other" now includes the parent company, Entergy Corporation, and other business activity. Other business activity in the All Other column is principally gains or losses on the sales of businesses, and the earnings on the proceeds of those sales. Entergy's segment financial information for the first quarter of 2001 and 2000 is as follows (in thousands):
Domestic Entergy- EWO* Domestic All Other* Eliminations Consolidated Utility and Koch/ Non-Utility System Power Nuclear * Energy Marketing and Trading* 2001 Operating Revenues $1,983,707 $ - $ 477,946 $ 179,375 $12,390 ($991) $2,652,427 Equity in Net Income (Loss) of Affiliates - 25,668 (604) - - - 25,064 Income Taxes (Benefit) 85,505 10,174 (2,578) 19,919 (4,591) - 108,429 Net Income (Loss) 120,437 16,565 1,780 29,959 (7,870) - 160,871 Total Assets 20,562,033 575,689 2,090,400 1,874,783 983,934 (895,080) 25,191,759 2000 Operating Revenues $1,401,444 $327,786 $ 27,630 $ 60,830 $5,761 ($11,959) $1,811,492 Income Taxes (Benefit) 71,191 5,874 (3,428) 8,564 624 - 82,825 Net Income (Loss) 87,338 11,537 (2,232) 11,458 309 - 108,410 Total Assets 19,556,488 500,175 1,555,280 583,279 1,782,441 (615,436) 23,362,227
Businesses marked with * are sometimes referred to as the "competitive businesses," with the exception of the parent company, Entergy Corporation. Eliminations are primarily intersegment activity. NOTE 7. ENTERGY-FPL GROUP MERGER (Entergy Corporation) On July 30, 2000, Entergy Corporation and FPL Group, Inc. entered into a Merger Agreement providing for a business combination that would have resulted in the creation of a new company. On April 1, 2001, Entergy Corporation and FPL Group, Inc. terminated the Merger Agreement by mutual decision. Both companies agreed that no termination fee is payable under the terms of the Merger Agreement, unless within nine months of the termination one party agrees to a substantially similar transaction with another party. Each company will bear its own merger- related expenses. Entergy has filed for withdrawal of its merger-related filings submitted to the FERC, the SEC, and state and local regulatory agencies. NOTE 8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (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 was implemented effective January 1, 2001. This statement requires that all derivatives be recognized in the balance sheet, either as assets or liabilities, 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 by Entergy Wholesale Operations; 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 did not materially impact the power marketing and trading business, as its derivative portfolio was already marked-to-market under the provisions of EITF 98-10, "Measuring the Value of Energy-Related Contracts". Effective January 1, 2001, Entergy recorded a net-of-tax cumulative-effect-type adjustment of approximately $18.0 million reducing accumulated other comprehensive income to recognize at fair value all derivative instruments that are designated as cash-flow hedging instruments, primarily interest rate swaps and foreign currency forward contracts related to Entergy's competitive businesses. The FASB's Derivatives Implementation Group (DIG) is considering a number of issues affecting the power industry. Entergy's interpretation of these issues in its initial implementation of SFAS 133 is based on management's application of existing accounting literature. To the extent that the DIG ultimately interprets these issues differently than Entergy, Entergy's financial statements could be materially affected in future periods, although the amount of the possible effect cannot be quantified at this time. NOTE 9. INVESTMENT IN ENTERGY-KOCH, L.P. (Entergy Corporation) On January 31, 2001, subsidiaries of Entergy and Koch Industries, Inc. formed Entergy-Koch, L.P., a limited partnership equally owned by Entergy and Koch Industries, Inc. An eight-member board of directors, equally appointed by Entergy and Koch Industries, Inc., governs Entergy- Koch, L.P. As part of the joint venture agreement, Entergy contributed substantially all of its power marketing and trading business in the United States and the United Kingdom and made other contributions, including equity and loans, totaling $414 million. Koch Industries, Inc. contributed to the venture its 9,000-mile Koch Gateway Pipeline (which has been renamed the Gulf South Pipeline), gas storage facilities, including the Bistineau storage facility near Shreveport, Louisiana, and Koch Energy Trading, which marketed and traded electricity, gas, weather derivatives, and other energy-related commodities and services. The joint venture's trading activities are now conducted under the name Axia Energy. Entergy's investment in Entergy-Koch, L.P. is accounted for under the equity method of accounting. The partnership agreement contains disproportionate income allocations between the partners for several different sources of partnership earnings through 2003. __________________________________ 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. Ratepayer Lawsuits (Entergy Corporation, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) See "Ratepayer Lawsuits, Entergy Louisiana Fuel Clause Lawsuit" in Item 1 of Part I of the Form 10-K for a discussion of the complaints filed by ratepayers with the LPSC and in Louisiana state court in Orleans Parish. See "Filings with the LPSC, 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. See "Ratepayer Lawsuits, Vidalia Project Sub-Docket" in Item 1 of Part I of the Form 10-K for a discussion of the sub-docket established in the Entergy Louisiana Fuel Clause Lawsuit at the LPSC. In late April and early May 2001, the LPSC conducted hearings addressing the issues listed in the Form 10-K, except for the issue of the appropriate regulatory treatment of the Vidalia contract in the event the LPSC approves implementation of retail competition. With regard to that issue, the parties entered a joint stipulation that the issue more appropriately would be considered in a separate, existing docket specifically devoted to stranded-cost-related issues. With regard to the other issues, Entergy Louisiana asserted at the hearings that it has prudently managed the Vidalia contract and that, through final orders issued in 1985 and 1990, the LPSC itself previously has recognized Entergy Louisiana's prudence by formally and expressly approving the Vidalia contract and the recovery through the fuel adjustment clause of all amounts paid by Entergy Louisiana pursuant to the FERC-filed rate. The LPSC staff alleged at the hearings that the Vidalia project owners' July 30, 1990 request that the LPSC clarify the LPSC's 1985 order (approving the Entergy Louisiana/Vidalia project purchase power agreement) and approve a sale and leaseback of the project, presented Entergy Louisiana with an approximately three-week "window of opportunity" (prior to the LPSC's issuance of the 1990 order) during which Entergy Louisiana could have used its purported leverage either: (1) to attempt to restructure the FERC-filed rate schedule contained in the Vidalia contract; or (2) to attempt to secure a concession from the Vidalia project owners whereby, at a minimum, the owners would share with Entergy Louisiana ratepayers some portion of what the LPSC staff quantifies as approximately $90 million of tax benefits. The LPSC staff and intervenors further alleged at the hearings that Entergy Louisiana was imprudent for not preparing and presenting to the LPSC during the August 1990 hearings on the Vidalia project owners' motion for clarification, an updated life cycle economic analysis showing that, as of August 1990, the Vidalia contract appeared to have become uneconomic due to the significant drop in projected avoided costs precipitated by, among other things, the legislative repeal of the Fuel Use Act of 1978 and the steep decline in oil and gas prices in the mid- to late-1980s. Additionally, Marathon Oil Company and the Sewerage and Water Board of New Orleans alleged at the hearings that the Vidalia project owners had incurred construction cost overruns and escalating operating costs, and had paid excessive royalties to the Town of Vidalia, and that these costs were imprudent and should be disallowed, in whole or in part. However, these intervenors recommended that, although Entergy Louisiana ratepayers should reap the benefits of any such disallowances, the Town of Vidalia and the Vidalia project owners, and not Entergy Louisiana, should bear the cost of any such disallowances. The LPSC staff has proposed several alternative and non-mutually- exclusive remedies, including without limitation: reducing prospectively some portion of the above market Vidalia contract costs that Entergy Louisiana is allowed to recover through the fuel adjustment clause; shifting prudently incurred costs to base rates and disallowing imprudently-incurred costs; imposing a rate of return performance penalty for some appropriate period of time; and disallowing as part of fuel cost recovery some portion of the purported tax savings and other benefits associated with the 1990 clarification motion, plus interest since 1990. The LPSC staff has recommended that the ALJ who presided over the hearings make a recommendation to the LPSC with regard to the prudence and jurisdictional issues and certify the question of remedies to the LPSC. 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, March 31, 1996 1997 1998 1999 2000 2001 Entergy Arkansas 2.93 2.54 2.63 2.08 3.01 2.91 Entergy Gulf States 1.47 1.42 1.40 2.18 2.60 2.92 Entergy Louisiana 3.16 2.74 3.18 3.48 3.33 3.23 Entergy Mississippi 3.40 2.98 3.12 2.44 2.33 2.30 Entergy New Orleans 3.51 2.70 2.65 3.00 2.66 2.44 System Energy 2.21 2.31 2.52 1.90 2.41 2.36 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, 1996 1997 1998 1999 2000 2001 Entergy Arkansas 2.44 2.24 2.28 1.80 2.70 2.61 Entergy Gulf States (a) 1.19 1.23 1.20 1.86 2.39 2.77 Entergy Louisiana 2.64 2.36 2.75 3.09 2.93 2.84 Entergy Mississippi 2.95 2.69 2.80 2.18 2.09 2.07 Entergy New Orleans 3.22 2.44 2.41 2.74 2.43 2.22 (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* ** 4(a) - Sixteenth Supplemental Indenture, dated as of January 1, 2001, to Entergy Mississippi's Mortgage and Deed of Trust, dated as of February 1, 1988 (filed as Exhibit A- 2(a) to Rule 24 Certificate dated February 9, 2001 in File No. 70-9757). ** 4(b) - Ninth Supplemental Indenture, dated as of February 1, 2001, to Entergy New Orleans' Mortgage and Deed of Trust, dated as of May 1, 1987 (filed as Exhibit C-5(a) to Form U5S for the year ended December 31, 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. ___________________________ 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 March 31, 2001, 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 March 31, 2001. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K Entergy Corporation A Current Report on Form 8-K, dated January 9, 2001, was filed with the SEC on January 9, 2001, reporting information under Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits" and Item 9. "Regulation FD Disclosure". Entergy Corporation A Current Report on Form 8-K, dated February 1, 2001, was filed with the SEC on February 1, 2001, reporting information under Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits" and Item 9. "Regulation FD Disclosure". Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy A Current Report on Form 8-K, dated March 19, 2001, was filed with the SEC on March 19, 2001, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy A Current Report on Form 8-K, dated April 2, 2001, was filed with the SEC on April 2, 2001, 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 April 3, 2001, was filed with the SEC on April 3, 2001, reporting information under Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits" and Item 9. "Regulation FD Disclosure". Entergy Corporation A Current Report on Form 8-K, dated April 25, 2001, was filed with the SEC on April 25, 2001, reporting information under Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits" and Item 9. "Regulation FD Disclosure". 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: May 10, 2001 EX-99 2 a0870199a.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 Twelve Months Ended March 31, 1996 1997 1998 1999 2000 2001 Fixed charges, as defined: Total Interest Charges $106,716 $104,165 $96,685 $97,023 $101,600 $104,223 Interest applicable to rentals 19,121 17,529 15,511 17,289 16,449 15,101 ---------------------------------------------------------- Total fixed charges, as defined 125,837 121,694 112,196 114,312 118,049 $119,324 Preferred dividends, as defined (a) 24,731 16,073 16,763 17,836 13,479 13,557 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $150,568 $137,767 $128,959 $132,148 $131,528 $132,881 ========================================================== Earnings as defined: Net Income $157,798 $127,977 $110,951 $69,313 $137,047 $130,711 Add: Provision for income taxes: Total 84,445 59,220 71,374 54,012 100,512 97,295 Fixed charges as above 125,837 121,694 112,196 114,312 118,049 119,324 ---------------------------------------------------------- Total earnings, as defined $368,080 $308,891 $294,521 $237,637 $355,608 $347,330 ========================================================== Ratio of earnings to fixed charges, as defined 2.93 2.54 2.63 2.08 3.01 2.91 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.44 2.24 2.28 1.80 2.70 2.61 ========================================================== - ------------------------ (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 3 a0870199b.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 Twelve Months Ended March 31, 1996 1997 1998 1999 2000 2001 Fixed charges, as defined: Total Interest charges $193,890 $180,073 $178,220 $153,034 $158,949 $166,299 Interest applicable to rentals 14,887 15,747 16,927 16,451 18,307 20,136 ---------------------------------------------------------- Total fixed charges, as defined 208,777 195,820 195,147 169,485 177,256 $186,435 Preferred dividends, as defined (a) 48,690 30,028 32,031 29,355 15,742 10,005 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $257,467 $225,848 $227,178 $198,840 $192,998 $196,440 ========================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes ($3,887) $59,976 $46,393 $125,000 $180,343 $228,632 Add: Income Taxes 102,091 22,402 31,773 75,165 103,603 128,856 Fixed charges as above 208,777 195,820 195,147 169,485 177,256 186,435 ---------------------------------------------------------- Total earnings, as defined (b) $306,981 $278,198 $273,313 $369,650 $461,202 $543,923 ========================================================== Ratio of earnings to fixed charges, as defined 1.47 1.42 1.40 2.18 2.60 2.92 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.19 1.23 1.20 1.86 2.39 2.77 ========================================================== (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 4 a0870199c.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 March 31, 1996 1997 1998 1999 2000 2001 Fixed charges, as defined: Total Interest $132,412 $128,900 $122,890 $117,247 $111,743 $113,504 Interest applicable to rentals 10,601 9,203 9,564 9,221 6,458 6,992 ---------------------------------------------------------- Total fixed charges, as defined 143,013 138,103 132,454 126,468 118,201 $120,496 Preferred dividends, as defined (a) 28,234 22,103 20,925 16,006 16,102 16,362 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $171,247 $160,206 $153,379 $142,474 $134,303 $136,858 ========================================================== Earnings as defined: Net Income $190,762 $141,757 $179,487 $191,770 $162,679 $158,347 Add: Provision for income taxes: Total Taxes 118,559 98,965 109,104 122,368 112,645 109,802 Fixed charges as above 143,013 138,103 132,454 126,468 118,201 120,496 ---------------------------------------------------------- Total earnings, as defined $452,334 $378,825 $421,045 $440,606 $393,525 $388,645 ========================================================== Ratio of earnings to fixed charges, as defined 3.16 2.74 3.18 3.48 3.33 3.23 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.64 2.36 2.75 3.09 2.93 2.84 ========================================================== - ------------------------ (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 5 a0870199d.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 March 31, 1996 1997 1998 1999 2000 2001 Fixed charges, as defined: Total Interest $48,007 $45,274 $40,927 $38,840 $44,877 $46,780 Interest applicable to rentals 2,165 1,947 1,864 2,261 1,596 1,559 --------------------------------------------------------- Total fixed charges, as defined 50,172 47,221 42,791 41,101 46,473 $48,339 Preferred dividends, as defined (a) 7,610 5,123 4,878 4,878 5,347 5,500 --------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $57,782 $52,344 $47,669 $45,979 $51,820 $53,839 ========================================================= Earnings as defined: Net Income $79,210 $66,661 $62,638 $41,588 $38,973 $39,213 Add: Provision for income taxes: Total income taxes 41,107 26,744 28,031 17,537 22,868 23,780 Fixed charges as above 50,172 47,221 42,791 41,101 46,473 48,339 ---------------------------------------------------------- Total earnings, as defined $170,489 $140,626 $133,460 $100,226 $108,314 $111,332 ========================================================== Ratio of earnings to fixed charges, as defined 3.40 2.98 3.12 2.44 2.33 2.30 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.95 2.69 2.80 2.18 2.09 2.07 ========================================================== - ------------------------ (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 6 a0870199e.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 March 31, 1996 1997 1998 1999 2000 2001 Fixed charges, as defined: Total Interest $16,304 $15,287 $14,792 $14,680 $15,891 $16,700 Interest applicable to rentals 831 911 1,045 1,281 1,008 998 --------------------------------------------------------- Total fixed charges, as defined 17,135 16,198 15,837 15,961 16,899 $17,698 Preferred dividends, as defined (a) 1,549 1,723 1,566 1,566 1,643 1,691 --------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $18,684 $17,921 $17,403 $17,527 $18,542 $19,389 ========================================================= Earnings as defined: Net Income $26,776 $15,451 $16,137 $18,961 $16,518 $15,175 Add: Provision for income taxes: Total 16,216 12,142 10,042 13,030 11,597 10,227 Fixed charges as above 17,135 16,198 15,837 15,961 16,899 17,698 --------------------------------------------------------- Total earnings, as defined $60,127 $43,791 $42,016 $47,952 $45,014 $43,100 ========================================================= Ratio of earnings to fixed charges, as defined 3.51 2.70 2.65 3.00 2.66 2.44 ========================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 3.22 2.44 2.41 2.74 2.43 2.22 ========================================================= - ------------------------ (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 7 a0870199f.txt Exhibit 99(f)
System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges March 31, 1996 1997 1998 1999 2000 2001 Fixed charges, as defined: Total Interest $143,720 $128,653 $116,060 $147,982 $118,519 $115,267 Interest applicable to rentals 6,223 6,065 5,189 3,871 5,753 5,564 ---------------------------------------------------------- Total fixed charges, as defined $149,943 $134,718 $121,249 $151,853 $124,272 $120,831 ========================================================== Earnings as defined: Net Income $98,668 $102,295 $106,476 $82,375 $93,745 $88,757 Add: Provision for income taxes: Total 82,121 74,654 77,263 53,851 81,263 75,831 Fixed charges as above 149,943 134,718 121,249 151,853 124,272 120,831 ---------------------------------------------------------- Total earnings, as defined $330,732 $311,667 $304,988 $288,079 $299,280 $285,419 ========================================================== Ratio of earnings to fixed charges, as defined 2.21 2.31 2.52 1.90 2.41 2.36 ==========================================================
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