-----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, O0eK5l1mgBE/DHB5NB5S7tQVtsaDq9gc/WtEVHYC40MEHnP/b/z+vJ4cmBtuXOoH 287ghvUFUmwUuAUwoETAVg== 0000065984-97-000032.txt : 19970507 0000065984-97-000032.hdr.sgml : 19970507 ACCESSION NUMBER: 0000065984-97-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970506 SROS: CSX SROS: NYSE SROS: PSE 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: 1934 Act SEC FILE NUMBER: 001-11299 FILM NUMBER: 97596480 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 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: 1934 Act SEC FILE NUMBER: 001-10764 FILM NUMBER: 97596481 BUSINESS ADDRESS: STREET 1: PO BOX 551 STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72203 BUSINESS PHONE: 5013774000 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: 1934 Act SEC FILE NUMBER: 000-20371 FILM NUMBER: 97596482 BUSINESS ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 BUSINESS PHONE: 4098386631 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: 1934 Act SEC FILE NUMBER: 001-08474 FILM NUMBER: 97596483 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045953100 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: 1934 Act SEC FILE NUMBER: 000-00320 FILM NUMBER: 97596484 BUSINESS ADDRESS: STREET 1: PO BOX 1640 CITY: JACKSON STATE: MS ZIP: 39215-1640 BUSINESS PHONE: 6019692311 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: 1934 Act SEC FILE NUMBER: 000-05807 FILM NUMBER: 97596485 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045953100 MAIL ADDRESS: STREET 1: PO BOX 60340 CITY: NEW ORL STATE: LA ZIP: 70160 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: 1934 Act SEC FILE NUMBER: 001-09067 FILM NUMBER: 97596486 BUSINESS ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 BUSINESS PHONE: 6019849000 MAIL ADDRESS: STREET 1: PO BOX 31995 CITY: JACKSON STATE: MS ZIP: 39286-1995 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH ENERGY INC DATE OF NAME CHANGE: 19860803 10-Q 1 _____________________________________________________________________ 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, 1997 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) 529-5262 1-10764 ENTERGY ARKANSAS, INC. 71-0005900 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 1-2703 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) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 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) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 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, 1997 Entergy Corporation ($0.01 par value) 237,666,428 ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q March 31, 1997 Page Number Definitions 1 Management's Financial Discussion and Analysis - Liquidity and Capital Resources 3 Management's Financial Discussion and Analysis - Significant Factors and Known Trends 6 Results of Operations and Financial Statements: Entergy Corporation and Subsidiaries: Results of Operations 10 Statements of Consolidated Income (Loss) 13 Statements of Consolidated Cash Flows 14 Consolidated Balance Sheets 16 Selected Operating Results 18 Entergy Arkansas, Inc.: Results of Operations 19 Statements of Income 20 Statements of Cash Flows 21 Balance Sheets 22 Selected Operating Results 24 Entergy Gulf States, Inc.: Results of Operations 26 Statements of Income (Loss) 28 Statements of Cash Flows 29 Balance Sheets 30 Selected Operating Results 32 Entergy Louisiana, Inc.: Results of Operations 33 Statements of Income 34 Statements of Cash Flows 35 Balance Sheets 36 Selected Operating Results 38 Entergy Mississippi, Inc.: Results of Operations 39 Statements of Income 40 Statements of Cash Flows 41 Balance Sheets 42 Selected Operating Results 44 Entergy New Orleans, Inc.: Results of Operations 45 Statements of Income 46 Statements of Cash Flows 47 Balance Sheets 48 Selected Operating Results 50 System Energy Resources, Inc.: Results of Operations 51 Statements of Income 52 Statements of Cash Flows 53 Balance Sheets 54 Notes to Financial Statements for Entergy Corporation and Subsidiaries 56 Part II: Item 1. Legal Proceedings 66 Item 5. Other Information 67 Item 6. Exhibits and Reports on Form 8-K 67 Experts 69 Signature 70 This combined Quarterly Report on Form 10-Q is separately filed by Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes representations 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, 1996, filed by the individual registrants with the SEC and should be read in conjunction therewith. Investors are cautioned that forward-looking statements contained herein with respect to the revenues, earnings, competitive performance, or other prospects for the business of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, or their affiliated companies may be influenced by factors that could cause actual outcomes and results to be materially different than projected. Such factors include, but are not limited to, the effects of weather, the performance of generating units, fuel prices and availability, regulatory decisions and the effects of changes in law, capital spending requirements, the evolution of competition, changes in accounting standards, and other factors. DEFINITIONS Certain abbreviations or acronyms used in the text are defined below: Abbreviation or Acronym Term Algiers 15th Ward of the City of New Orleans, Louisiana ALJ Administrative Law Judge ANO Arkansas Nuclear One Plant ANO 1 Unit No. 1 of ANO ANO 2 Unit No. 2 of ANO 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 Ltd. 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 Entergy Entergy Corporation and its various direct and indirect subsidiaries Entergy Arkansas Entergy Arkansas, Inc., formerly Arkansas Power & Light Company Entergy Corporation Entergy Corporation, a Delaware corporation, successor to Entergy Corporation, a Florida corporation Entergy Enterprises Entergy Enterprises, Inc. Entergy Gulf States Entergy Gulf States, Inc., formerly Gulf States Utilities Company (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company) Entergy Louisiana Entergy Louisiana, Inc., formerly Louisiana Power & Light Company Entergy Mississippi Entergy Mississippi, Inc., formerly Mississippi Power & Light Company Entergy New Orleans Entergy New Orleans, Inc., formerly New Orleans Public Service Inc. Entergy Operations Entergy Operations, Inc., a subsidiary of Entergy Corporation that has operating responsibility for ANO, Grand Gulf 1, River Bend, and Waterford 3 Entergy Services Entergy Services, Inc. EPA U.S. Environmental Protection Agency EPAct Energy Policy Act of 1992 FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission Abbreviation or Acronym Term Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 1996, of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant ISES Independence Steam Electric Generating Station kWh Kilowatt-hour(s) LPSC Louisiana Public Service Commission London Electricity London Electricity plc - a regional electric company serving London, England, which was acquired by Entergy on February 7, 1997 Merger The combination transaction, consummated on December 31, 1993, by which Entergy Gulf States became a subsidiary of Entergy Corporation and Entergy Corporation became a Delaware corporation MPSC Mississippi Public Service Commission NRC Nuclear Regulatory Commission Owner Participant A corporation that, in connection with the Waterford 3 sale and leaseback transactions, has acquired a beneficial interest in a trust, the Owner Trustee of which is the owner and lessor of undivided interests in Waterford 3 Owner Trustee Each institution and/or individual acting as Owner Trustee under a trust agreement with an Owner Participant in connection with the Waterford 3 sale and leaseback transactions PCBs Polychlorinated biphenyls PUCHA Public Utility Holding Company Act of 1935, as amended PUCT Public Utility Commission of Texas PURPA Public Utility Regulatory Policies Act River Bend River Bend Nuclear Plant, owned 70% by Entergy Gulf States RUS Rural Utilities Service SEC Securities and Exchange Commission SFAS Statement of Financial Accounting Standards as promulgated by the Financial Accounting Standards Board System Energy System Energy Resources, Inc. System Fuels System Fuels, Inc. Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Cash Flows Net cash flow from operations for Entergy, the domestic utility companies, and System Energy for the first quarter of 1997 and 1996 was as follows: First Quarter First Quarter Company 1997 1996 (In Millions) Entergy $486.1 $268.3 Entergy Arkansas $142.6 $111.8 Entergy Gulf States $110.7 $ 34.8 Entergy Louisiana $ 76.2 $ 88.7 Entergy Mississippi $ 35.7 $ 29.7 Entergy New Orleans $ 12.6 $ (2.9) System Energy $ 69.8 $ 67.7 The positive cash flow from operations for the domestic utility companies results from continued efforts to streamline operations and to reduce costs, as well as from collections under rate phase-in plans that exceed current cash requirements for the related costs. In the income statement, these revenue collections are offset by the amortization of previously deferred costs so that there is no effect on net income. These phase-in plans will continue to contribute to Entergy's cash position over the next several years. The Grand Gulf 1 phase-in plans will expire in 1998 for Entergy Arkansas and Entergy Mississippi, and in 2001 for Entergy New Orleans. Entergy Gulf States' phase-in plan for River Bend will expire in 1998, and Entergy Louisiana's phase-in plan for Waterford 3 will expire in June 1997. Financing Sources As discussed in Note 8, the acquisition of London Electricity for $2.1 billion was accomplished in February 1997. The acquisition was financed with $1.7 billion of debt that is non-recourse to Entergy Corporation, and $392 million of equity provided by Entergy Corporation from available cash and borrowings under its $300 million line of credit. Excluding the London Electricity investment, cash from operations, supplemented by cash on hand, was sufficient to meet substantially all investing and financing requirements of the domestic utility companies and System Energy, including capital expenditures, dividends, and debt and preferred stock maturities for the first quarter of 1997. Entergy has been able to fund the capital requirements for its domestic utility companies with cash from operations resulting from the items discussed above in "Cash Flows". Should additional cash be needed to fund investments or retire debt, the domestic utility companies and System Energy have the ability, subject to regulatory approval and compliance with issuance tests, to issue debt or preferred securities to meet such requirements. In addition, to the extent market conditions and interest and dividend rates allow, the domestic utility companies and System Energy will continue to refinance and/or redeem higher cost debt and preferred stock prior to maturity. The domestic utility companies may continue to establish special purpose trusts as financing subsidiaries for the purpose of issuing preferred trust securities, such as those issued in 1996 by Entergy Louisiana Capital I and Entergy Arkansas Capital I, and those issued in January 1997 by Entergy Gulf States Capital I. Entergy Corporation, the domestic utility companies, and System Energy also have SEC authorization to effect short-term borrowings. See Notes 4, 5, 6, 7, and 9 in the Form 10-K for additional information on Entergy's capital and refinancing requirements in 1997-2001. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1997, Entergy Corporation had $275 million outstanding on its $300 million bank credit facility which amount had been used for the acquisition of London Electricity in February 1997. Also, Entergy Technology Holding Company (ETHC) had $20 million outstanding on its $100 million bank line of credit as of March 31, 1997. See Note 4 to the Form 10-K for information on the domestic utility companies' and System Energy's short-term borrowing authorizations and bank lines of credit. Financing Uses Productive investment by Entergy Corporation is integral to enhancing the long-term value of its common stock. Entergy Corporation has been expanding its investments in business opportunities overseas as well as in the United States. Through the first quarter of 1997, Entergy Corporation had acquired or participated in foreign electric ventures in Australia, Argentina, Chile, Pakistan, Peru, and the United Kingdom, and had acquired several telecommunications-based businesses in the United States. As of March 31, 1997, Entergy Corporation had a net investment of $1.2 billion in equity capital in businesses other than its domestic utility companies. See Note 8 for a discussion of Entergy Corporation's acquisition of London Electricity on February 7, 1997. To make capital investments, fund its subsidiaries, and pay dividends, Entergy Corporation will utilize internally generated funds, cash on hand, funds available under its $300 million credit facility, funds received from its dividend reinvestment and stock purchase plan, and other bank financings as required. See Note 3 herein for information regarding proceeds from the issuance of common stock related to Entergy's dividend reinvestment and stock purchase plan in the first quarter of 1997. See Note 9 in the Form 10-K for a discussion of capital requirements. Entergy Corporation receives funds through dividend payments from its subsidiaries. During the first quarter of 1997, such dividend payments from subsidiaries totaled $102.4 million. In order to improve its capital structure, Entergy Gulf States has not paid common stock dividends since the third quarter of 1994. In the first quarter of 1997, Entergy Corporation paid $105 million of common stock dividends. Declarations of dividends on common stock are made at the discretion of Entergy Corporation's Board of Directors. Management will not recommend future dividend increases to the Board unless such increases are justified by adequate earnings growth of Entergy Corporation and its subsidiaries. See Note 8 in the Form 10-K for information on dividend restrictions. Entergy Corporation and Entergy Gulf States See Notes 1 and 2 regarding River Bend and Cajun litigation. An adverse ruling regarding River Bend could result in up to approximately $276 million of potential write-offs (net of tax) and up to $210 million in refunds of previously collected revenue. Such write-offs and charges could result in substantial net losses being reported in the future by Entergy Gulf States, with resulting adverse adjustments to the common equity of Entergy Corporation and Entergy Gulf States. Adverse resolution of these matters could negatively affect Entergy Gulf States' ability to obtain financing, which could in turn affect Entergy Gulf States' liquidity and ability to resume paying common stock dividends. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy Corporation and System Energy Under the Capital Funds Agreement, Entergy Corporation has agreed to supply to System Energy sufficient capital to maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt), to permit the continued commercial operation of Grand Gulf 1, and to pay in full all indebtedness for borrowed money of System Energy when due under any circumstances. In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights thereunder as security for specific debt of System Energy, Entergy Corporation has agreed to make cash capital contributions, if required, to enable System Energy to make payments on such debt when due. The Capital Funds Agreement may be terminated by the parties thereto, subject to the consent of certain creditors. 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, including "Open Access Transmission", "Municipalization", "Industry Consolidation", "Functional Unbundling", and "Effects of Alternate Energy Sources on Retail Electric Sales to Industrial and Large Commercial Customers" for a discussion of the increasing competitive pressures facing Entergy and the electric utility industry. See "ANO Matters", and "Property Tax Exemptions" in the Form 10-K for a discussion of other significant issues affecting Entergy. Set forth below are recent developments to the Form 10-K for the sections presented. Competition and Industry Challenges Transition to Competition Filings See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K and Note 2 herein for a discussion of the domestic utility companies' filings with their respective state regulators concerning the transition to competition. Entergy Gulf States made a supplemental filing with the PUCT on April 4, 1997, outlining a comprehensive market reform proposal calling for the establishment of retail competition, service quality standards, a regional power exchange, and an independent system operator. Entergy Gulf States requested from the PUCT a reciprocal commitment ensuring the full recovery of prudently incurred investments previously approved by regulators. The PUCT has scheduled the transition to competition hearings to begin in September 1997. The MPSC conducted hearings in April 1997 on various transition to competition issues, including the recoverability of stranded costs, the potential for cost shifting, and electric supply reliability and expects to issue an order in mid-1997 outlining a plan for restructuring the electric utility industry in Mississippi. Entergy Arkansas filed a supplement to its transition to competition with the APSC on May 1, 1997. This filing is similar to the supplemental filing made by Entergy Gulf States as discussed above. See Note 2 for additional information regarding this filing. The Council established two new dockets in March 1997 regarding electric and gas utility service competition in the City of New Orleans. One docket will address competitive issues, including the advisability of implementing competition, recoverability and measurement of stranded costs, maximization of consumer savings from competition and minimization of cost-shifting, and potential conflicts between federal, state, and local regulators, as such issues relate to electric and gas service currently being provided to New Orleans customers by Entergy New Orleans. The second docket will address the same issues related to the provision of electric service to Algiers customers by Entergy Louisiana. A procedural schedule was established which required comments to be filed in April 1997 and sets hearings for May, July and October 1997. Entergy New Orleans intends to file a specific transition to competition plan following these hearings. Retail and Wholesale Rate Issues See Note 2 to the Form 10-K and Note 2 herein for a discussion of the ongoing trend of regulator mandated rate reductions as well as incentive and performance-based regulation and filings made with state and local regulators regarding an orderly transition to a more competitive market for electricity. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Legislative Activity A number of bills recently have been introduced in Congress calling for deregulation of the electric power industry. Included in these proposals are some that would amend or repeal PUCHA and/or PURPA. These bills generally have provisions that would give consumers the ability to choose their own electricity service provider. A major issue before Congress is whether the federal government should establish a definitive timetable for all states to offer direct retail access to customers and, if so, the timing of such. One bill introduced in early April would require direct retail access no later than January 1, 1999. The first three of four scheduled congressional field hearings on electricity deregulation were held during April and early May 1997. Entergy has been a participant in discussions aimed at developing legislation related to electric utility industry restructuring and competition that could be passed by the Texas Legislature before it adjourns June 2, 1997. Entergy intends to continue to have an active role in these discussions. The Arkansas Senate has passed a resolution requesting a study of the impact of competition in the electric utility industry on the citizens of Arkansas, the electric utility industry, and the regulatory authority of the APSC. This study is scheduled to begin no later than December 1, 1997. Domestic and Foreign Investments Entergy Corporation seeks opportunities to expand its domestic and foreign businesses that are not regulated by domestic state and local utility regulatory authorities. Such business ventures currently include power development and operations and retail services related to the utility business. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" for a discussion of Entergy Corporation's 1997 investments in nonregulated and foreign energy-related businesses. These investments may involve a greater risk than domestic regulated utility enterprises. In the first quarter of 1997, Entergy Corporation's domestic and foreign energy-related investments increased consolidated net income by approximately $28 million. Entergy Nuclear Inc. (Entergy Nuclear) began providing management and operations services in February 1997 for an initial period of up to one year to Maine Yankee Atomic Power Company (Maine Yankee) at its Maine Yankee nuclear plant. The creation of Entergy Nuclear and its undertaking with Maine Yankee are authorized by existing SEC orders previously granted to Entergy Enterprises. Entergy Corporation has an application pending at the SEC to create a different structure under which Entergy Nuclear would engage in this business for other nuclear utilities. As of April 30, 1997, Entergy Corporation controlled over 99% of the common shares of London Electricity. For additional information related to this acquisition, see Note 8 herein. Through London Electricity, Entergy expects to gain valuable experience in the deregulated United Kingdom electricity market that can be transferred to the expected deregulated market in the United States. London Electricity expects to be in a fully competitive supply market beginning April 1998. In conjunction with the acquisition of London Electricity, Entergy established an international retail operations group to coordinate the retail electric operations in the United Kingdom, Australia, and Argentina. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS In February 1997, Entergy Richmond Power Corporation, a wholly- owned subsidiary of Entergy Power Development Corporation, sold its 50% interest in Richmond Power Enterprise LP (owner of a gas-fired electric and steam generation facility), to a third party for $10 million, realizing an after tax gain of $2.7 million. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K, and Note 8, herein, for a discussion of Entergy's major nonregulated business opportunities and foreign energy-related investments. Windfall Profits Tax As a result of Parliamentary elections held on May 1, 1997, in which the Labour Party gained control of the British government, it is anticipated that legislation imposing a "windfall profits tax" will be proposed. There has been widespread speculation that such a tax, which would raise funds to address the government's budget deficit, would be targeted at regional electric utilities, such as London Electricity, and possibly other utility service providers. It is impossible to predict at this time if or when such a tax will be enacted, or the amount of the tax. However, such a tax could have a material adverse effect upon London Electricity's net income. Deregulated Utility Operations Entergy Gulf States discontinued regulatory accounting principles in 1989 for its wholesale jurisdiction and steam department, and in 1991 for the Louisiana deregulated portion of River Bend. Net income from these operations during the first quarter of 1997 was $4.6 million compared to $6.2 million during the first quarter of 1996. The decrease in net income from these deregulated operations for the first quarter of 1997 was principally due to decreased steam products revenues, partially offset by reduced operation and maintenance expenses. The future impact of the deregulated utility operations on Entergy's and Entergy Gulf States' results of operations and financial position will depend on future operating costs, future efficiency and availability of generating units, and future market prices for energy over the remaining life of the assets. Accounting Issues See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" and Note 1 in the Form 10-K for a discussion of the impact of the adoption by Entergy of SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of", effective January 1, 1996. Continued Application of SFAS 71 - As a result of the EPAct, the actions of regulatory bodies, and other factors, the electric utility industry is moving toward a combination of competition and a modified regulatory environment. The domestic utility companies' and System Energy's financial statements currently reflect, for the most part, assets and costs based on existing cost-based ratemaking regulations in accordance with SFAS 71, "Accounting for the Effects of Certain Types of Regulation" (SFAS 71). Continued applicability of SFAS 71 to the domestic utility companies' and System Energy's financial statements requires that rates set by an independent regulator on a cost-of-service basis be charged to and collected from customers. In the event that all or a portion of a utility's operations cease to meet those criteria for various reasons, including deregulation, a change in the method of regulation, or a change in the competitive environment for the utility's regulated services, the utility is required to discontinue application of SFAS 71 for the relevant portion of its operations by eliminating from the balance sheet the effects of any actions of regulators recorded as regulatory assets and liabilities. The effect of discontinuing the application of SFAS 71 would have a material adverse impact on Entergy's financial statements. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS The SEC has expressed concern regarding the continuing applicability of SFAS 71 to the financial statements of certain California electric utilities. California regulators have directed these utilities to transition to a fully competitive retail environment by 2002, with a 10 percent rate reduction for residential and small commercial customers becoming effective January 1, 1998, and full recovery of above market rate investment and other costs (stranded costs). The SEC is concerned that this plan does not meet the criteria of SFAS 71 that rates be set on an individual company cost-of-service basis. It is anticipated that the Emerging Issues Task Force of the FASB will address this issue during the next several months. The ultimate resolution of this issue has significant financial accounting and reporting implications for the domestic utility companies' transition to competition filings. The domestic utility companies' and System Energy's financial statements continue to apply SFAS 71 for their regulated operations, except for those portions of Entergy Gulf States' business described in "Deregulated Utility Operations" above. Although discussions with regulatory authorities regarding retail competition have occurred and are expected to continue, management does not expect any definitive outcomes in the foreseeable future, and therefore, the regulated operations continue to apply SFAS 71. See Note 1 to the Form 10-K for additional discussion of Entergy's application of SFAS 71. Accounting for Decommissioning Costs - In February 1996, the FASB issued an exposure draft of a proposed SFAS addressing the accounting for decommissioning costs of nuclear generating units as well as liabilities related to the closure and removal of all long- lived assets. See Note 1 for a discussion of proposed changes in the accounting for decommissioning/closure costs and the potential impact of these changes on Entergy. Financial Derivatives Derivative instruments have been used by Entergy on a limited basis. Entergy has a policy that financial derivatives are to be used only to mitigate business risks and not for speculative purposes. See Notes 7 and 9 to the Form 10-K and Note 4 herein for additional information concerning Entergy's derivative instruments outstanding as of December 31, 1996, and March 31, 1997. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS On February 7, 1997, Entergy Corporation finalized its acquisition of London Electricity. In accordance with the purchase method of accounting, the results of operations for the first quarter of 1996 of Entergy Corporation and subsidiaries reported in the Statements of Consolidated Income (Loss) and Cash Flows do not include London Electricity's results of operations. Consolidated net income for the first quarter of 1997 includes a positive effect due to the inclusion of London Electricity for the portion of the first quarter subsequent to February 1. See Note 8 for additional information regarding London Electricity. Net Income Consolidated net income increased for the first quarter of 1997 primarily due to the $174 million net of tax write-off of River Bend rate deferrals in 1996 pursuant to SFAS 121. Excluding this item, net income would have increased $23 million for the first quarter of 1997 due to the increase in foreign utility income, resulting from the inclusion of London Electricity and increased earnings of CitiPower. London Electricity contributed earnings of $15.6 million (or $0.07 per share) to first quarter consolidated net income. CitiPower's net income increased primarily due to decreases in the average cost of purchased power and increases in the average temperature experienced during the first two months of 1997 in Melbourne, Australia. Significant factors affecting the results of operations and causing variances between the first quarter of 1997 and 1996 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales The changes in electric operating revenues associated with Entergy's domestic regulated operations for the first quarter of 1997 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($23.0) Rate riders (4.5) Fuel cost recovery 62.9 Sales volume/weather 3.8 Other revenue (including unbilled) 13.5 Sales for resale (13.9) ----- Total $38.8 ===== Electric operating revenues of the domestic utility companies and System Energy increased for the first quarter of 1997 as a result of higher fuel adjustment revenues, which do not affect net income, partially offset by rate reductions at various domestic utility companies. Fuel adjustment revenues increased due to higher fuel prices. Nonregulated and foreign energy related business revenues increased for the first quarter of 1997 due mainly to the February 1997 acquisition of London Electricity. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Operating expenses for the portion of the first quarter of 1997 subsequent to February 1 include the operating expenses of London Electricity, which were not included in the prior year's financial statements. Excluding the operating expenses of London Electricity, Entergy's operating expenses increased for the first quarter of 1997 as discussed below. For the first quarter of 1997, fuel expenses increased as a result of higher fuel prices as discussed above. The increase in depreciation, amortization, and decommissioning is due to (i) additional depreciation recorded by System Energy associated with the sale and leaseback in 1989 of a portion of Grand Gulf 1 and (ii) plant additions and improvements. Rate deferrals recorded in the first quarter of 1996 relate primarily to the LPSC-approved rate deferral of the Waterford 3 property tax first imposed in 1996. This tax is currently included in base rates. Other Other income increased for the first quarter of 1997 as a result of the 1996 write-off of River Bend rate deferrals pursuant to SFAS 121 and a decrease in Grand Gulf 1 carrying charges at Entergy Arkansas due to a decline in the deferral balance. Excluding London Electricity, interest on long-term debt decreased for the first quarter of 1997 due primarily to ongoing retirement and refinancing of higher cost debt. Interest on debt associated with the London Electricity acquisition more than offset this decrease. Income tax expense increased primarily due to higher pretax income.
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME (LOSS) For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands, Except Share Data) Operating Revenues: Electric $1,451,925 $1,413,068 Natural gas 57,496 57,473 Steam products 11,089 15,578 Nonregulated and foreign energy-related businesses 525,243 112,873 ---------- ---------- Total 2,045,753 1,598,992 ---------- ---------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 398,742 375,764 Purchased power 420,962 158,157 Nuclear refueling outage expenses 17,236 14,209 Other operation and maintenance 426,087 353,212 Depreciation, amortization, and decommissioning 228,029 194,567 Taxes other than income taxes 92,991 88,971 Rate deferrals (9,575) (19,802) Amortization of rate deferrals 99,063 91,511 ---------- ---------- Total 1,673,535 1,256,589 ---------- ---------- Operating Income 372,218 342,403 ---------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 3,033 2,558 Write-off of River Bend rate deferrals - (194,498) Miscellaneous - net 17,393 10,778 ---------- ---------- Total 20,426 (181,162) ---------- ---------- Interest Charges: Interest on long-term debt 185,490 172,843 Other interest - net 11,905 11,847 Distributions on preferred securities of subsidiaries 4,172 - Allowance for borrowed funds used during construction (2,437) (2,138) Preferred and preference dividend requirements of subsidiaries and other 16,723 18,081 ---------- ---------- Total 215,853 200,633 ---------- ---------- Income (Loss) Before Income Taxes 176,791 (39,392) Income Taxes 67,029 47,680 ---------- ---------- Net Income (Loss) $109,762 ($87,072) ========== ========== Earnings (loss) per average common share $0.47 ($0.38) Dividends declared per common share $0.45 $0.90 Average number of common shares outstanding 235,133,608 227,780,604 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Activities: Net income (loss) $109,762 ($87,072) Noncash items included in net income (loss): Write-off of River Bend rate deferrals - 194,498 Change in rate deferrals/excess capacity-net 111,036 105,388 Depreciation, amortization, and decommissioning 228,029 194,567 Deferred income taxes and investment tax credits (53,743) (45,013) Allowance for equity funds used during construction (5,470) (2,558) Changes in working capital: Receivables 115,155 37,148 Fuel inventory 32,438 23,212 Accounts payable (201,617) (32,984) Taxes accrued 119,438 65,289 Interest accrued (10,637) (65,276) Other working capital accounts 98,914 (81,209) Decommissioning trust contributions (14,656) (12,146) Other (42,584) (25,535) ---------- ---------- Net cash flow provided by operating activities 486,065 268,309 ---------- ---------- Investing Activities: Construction/capital expenditures (125,743) (131,435) Allowance for equity funds used during construction 5,470 2,558 Nuclear fuel purchases (54,155) (65,430) Proceeds from sale/leaseback of nuclear fuel 68,319 46,872 Acquisition of CitiPower - (1,156,112) Acquisition of London Electricity, net of cash acquired (2,021,501) - Investment in nonregulated/nonutility properties 12,515 (5,171) ---------- ---------- Net cash flow used in investing activities (2,115,095) (1,308,718) ---------- ----------
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Financing Activities: Proceeds from the issuance of: General and refunding mortgage bonds - 39,608 First mortgage bonds 84,490 198,250 Bank notes and other long-term debt 1,630,280 946,167 Common Stock 98,695 - Preferred securities of subsidiaries trust 82,323 - Retirement of: First mortgage bonds - (133,687) General and refunding mortgage bonds (87,965) - Other long-term debt - (92,744) Redemption of preferred stock (101,728) (19,704) Changes in short-term borrowings - net 258,274 277,000 Common stock dividends paid (105,035) (99,714) ---------- ---------- Net cash flow provided by financing activities 1,859,334 1,115,176 ---------- ---------- Effect of exchange rates on cash and cash equivalents (758) 40 ---------- ---------- Net increase in cash and cash equivalents 229,546 74,807 Cash and cash equivalents at beginning of period 388,703 533,590 ---------- ---------- Cash and cash equivalents at end of period $618,249 $608,397 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $223,444 $239,354 Income taxes $3,002 $12,032 Noncash investing and financing activities: Change in unrealized depreciation of decommissioning trust assets ($1,119) ($4,265) See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $125,027 $34,807 Temporary cash investments - at cost, which approximates market 391,130 346,782 Special deposits 102,092 7,114 ----------- ----------- Total cash and cash equivalents 618,249 388,703 Notes receivable 9,524 1,384 Accounts receivable: Customer (less allowance for doubtful accounts of $26.4 million in 1997 and $9.2 million in 1996) 562,916 324,687 Other 148,717 99,066 Accrued unbilled revenues 468,238 351,429 Deferred fuel 86,965 122,184 Fuel inventory 122,195 139,603 Materials and supplies - at average cost 375,985 339,622 Rate deferrals 411,483 444,543 Prepayments and other 190,884 151,312 ----------- ----------- Total 2,995,156 2,362,533 ----------- ----------- Other Property and Investments: Decommissioning trust funds 375,933 357,962 Non-regulated investments 502,629 513,058 Other 78,417 59,053 ----------- ----------- Total 956,979 930,073 ----------- ----------- Utility Plant: Electric 25,039,087 22,811,164 Plant acquisition adjustment - Entergy Gulf States 451,359 455,425 Electric plant under leases 680,246 679,991 Property under capital leases - electric 143,857 147,277 Natural gas 175,093 168,143 Steam products 81,743 81,743 Construction work in progress 411,694 401,676 Nuclear fuel under capital leases 284,489 250,651 Nuclear fuel 58,030 112,625 ----------- ----------- Total 27,325,598 25,108,695 Less - accumulated depreciation and amortization 9,045,596 8,885,572 ----------- ----------- Utility plant - net 18,280,002 16,223,123 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 321,517 399,493 SFAS 109 regulatory asset - net 1,194,590 1,196,041 Unamortized loss on reacquired debt 212,183 217,664 Other regulatory assets 436,340 435,652 Long-term receivables 211,524 216,082 CitiPower license (net of $3.8 million of amortization) 598,897 606,214 London Electricity license (net of $6.4 million of amortization) 1,541,414 - Other 399,960 379,419 ----------- ----------- Total 4,916,425 3,450,565 ----------- ----------- TOTAL $27,148,562 $22,966,294 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $412,332 $345,620 Notes payable 567,811 20,686 Accounts payable 511,661 554,558 Customer deposits 181,693 155,534 Taxes accrued 370,004 180,340 Accumulated deferred income taxes 47,248 78,010 Interest accrued 195,834 203,425 Dividends declared 5,486 8,950 Obligations under capital leases 152,077 151,287 Other 280,575 184,157 ----------- ----------- Total 2,724,721 1,882,567 ----------- ----------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 4,674,949 3,770,760 Accumulated deferred investment tax credits 602,793 607,641 Obligations under capital leases 277,012 247,360 Other 1,791,020 1,298,306 ----------- ----------- Total 7,345,774 5,924,067 ----------- ----------- Long-term debt 9,422,701 7,590,804 Subsidiaries' preferred stock with sinking fund 200,237 216,986 Subsidiary's preference stock 150,000 150,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 215,000 130,000 Shareholders' Equity: Subsidiaries' preferred stock without sinking fund 345,954 430,955 Common stock, $.01 par value, authorized 500,000,000 shares; issued 237,865,027 shares in 1997 and 234,456,457 shares in 1996 2,378 2,345 Paid-in capital 4,410,325 4,320,591 Retained earnings 2,345,917 2,341,703 Cumulative foreign currency translation adjustment 20,966 21,725 Less - treasury stock (1,131,223 shares in 1997 and 1,496,118 shares in 1996) 35,411 45,449 ----------- ----------- Total 7,090,129 7,071,870 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $27,148,562 $22,966,294 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) Three Months Ended Increase/ Description 1997 1996 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $ 502.1 $ 507.1 ($5.0) (1) Commercial 368.3 354.5 13.8 4 Industrial 496.9 460.3 36.6 8 Governmental 41.6 38.7 2.9 7 --------- --------- ------ Total retail 1,408.9 1,360.6 48.3 4 Sales for resale 76.6 90.1 (13.5) (15) Other (33.6) (37.6) 4.0 (11) --------- --------- ------ Total $ 1,451.9 $ 1,413.1 $ 38.8 3 ========= ========= ====== Billed Electric Energy Sales (Millions of kWh): Residential 6,399 6,667 (268) (4) Commercial 4,895 4,792 103 2 Industrial 10,897 10,445 452 4 Governmental 595 556 39 7 --------- --------- ------ Total retail 22,786 22,460 326 1 Sales for resale 2,425 2,575 (150) (6) --------- --------- ------ Total 25,211 25,035 176 1 ========= ========= ======
ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 1997 due to reduced operating revenues, partially offset by lower income taxes. Significant factors affecting the results of operations and causing variances between the first quarter of 1997 and 1996 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1997 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues $0.9 Rate riders 1.4 Fuel cost recovery 3.8 Sales volume/weather (0.8) Other revenue (including unbilled) (10.1) Sales for resale (3.6) ----- Total ($8.4) ===== Electric operating revenues decreased for the first quarter of 1997 primarily due to an decrease in unbilled revenue. Unbilled revenue decreased primarily due to milder weather in the first quarter of 1997. Expenses Operating expenses increased for the first quarter of 1997 primarily due to an increase in the amortization of Grand Gulf 1 rate deferrals. The increase in the amortization of Grand Gulf 1 rate deferrals is due to an increase in amortization prescribed in the Grand Gulf 1 rate phase-in plan. Other Miscellaneous other income - net decreased for the first quarter of 1997 due to reduced Grand Gulf 1 carrying charges as a result of a decline in the deferral balance. Income tax expense decreased for the first quarter of 1997 because of lower pretax income.
ENTERGY ARKANSAS, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Revenues $374,731 $383,081 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 66,593 65,200 Purchased power 94,734 98,625 Nuclear refueling outage expenses 6,900 7,542 Other operation and maintenance 85,716 83,265 Depreciation, amortization, and decommissioning 41,449 41,030 Taxes other than income taxes 9,428 9,018 Amortization of rate deferrals 39,021 36,446 -------- -------- Total 343,841 341,126 -------- -------- Operating Income 30,890 41,955 -------- -------- Other Income: Allowance for equity funds used during construction 1,443 1,090 Miscellaneous - net 5,325 8,239 -------- -------- Total 6,768 9,329 -------- -------- Interest Charges: Interest on long-term debt 24,450 24,835 Other interest - net 929 1,027 Distributions on preferred securities of subsidiary 1,275 - Allowance for borrowed funds used during construction (868) (665) -------- -------- Total 25,786 25,197 -------- -------- Income Before Income Taxes 11,872 26,087 Income Taxes 2,024 6,819 -------- -------- Net Income 9,848 19,268 Preferred Stock Dividend Requirements and Other 2,832 4,458 -------- -------- Earnings Applicable to Common Stock $7,016 $14,810 ======== ======== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Activities: Net income $9,848 $19,268 Noncash items included in net income: Change in rate deferrals/excess capacity-net 40,661 35,953 Depreciation, amortization, and decommissioning 41,449 41,030 Deferred income taxes and investment tax credits (21,515) (18,102) Allowance for equity funds used during construction (1,443) (1,090) Changes in working capital: Receivables 61,901 24,582 Fuel inventory 3,511 3,174 Accounts payable (22,825) (3,762) Taxes accrued 26,040 26,025 Interest accrued (421) (14,743) Other working capital accounts (6,349) 2,326 Decommissioning trust contributions (4,046) (4,140) Provision for estimated losses and reserves 3,036 529 Other 12,726 733 -------- -------- Net cash flow provided by operating activities 142,573 111,783 -------- -------- Investing Activities: Construction expenditures (32,479) (32,250) Allowance for equity funds used during construction 1,443 1,090 Nuclear fuel purchases (35,574) (19,081) Proceeds from sale/leaseback of nuclear fuel 35,595 18,470 -------- -------- Net cash flow used in investing activities (31,015) (31,771) -------- -------- Financing Activities: Proceeds from issuance of first mortgage bonds 84,490 84,256 Retirement of first mortgage bonds (30,000) (30,437) Dividends paid: Common stock (26,400) - Preferred stock (5,663) (8,917) -------- -------- Net cash flow provided by financing activities 22,427 44,902 -------- -------- Net increase in cash and cash equivalents 133,985 124,914 Cash and cash equivalents at beginning of period 43,857 11,798 -------- -------- Cash and cash equivalents at end of period $177,842 $136,712 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $22,208 $37,479 Income taxes $4,260 $6,460 Noncash investing and financing activities: Acquisition of nuclear fuel $27,500 - Change in unrealized appreciation (depreciation) of decommissioning trust assets $143 ($4,363) See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $18,302 $5,117 Temporary cash investments - at cost, which approximates market: Associated companies 29,404 17,462 Other 42,228 21,278 Special deposits 87,908 - ---------- ---------- Total cash and cash equivalents 177,842 43,857 Accounts receivable: Customer (less allowance for doubtful accounts of $2.3 million in 1997 and 1996) 55,866 71,144 Associated companies 29,034 45,303 Other 3,557 5,862 Accrued unbilled revenues 76,715 104,764 Fuel inventory - at average cost 53,808 57,319 Materials and supplies - at average cost 83,715 72,976 Rate deferrals 136,923 153,141 Deferred excess capacity 6,630 9,005 Deferred nuclear refueling outage costs 18,552 24,534 Prepayments and other 5,838 7,491 ---------- ---------- Total 648,480 595,396 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 11,211 11,211 Decommissioning trust fund 209,944 203,274 Other - at cost (less accumulated depreciation) 3,858 5,058 ---------- ---------- Total 225,013 219,543 ---------- ---------- Utility Plant: Electric 4,588,636 4,578,728 Property under capital leases 56,977 57,869 Construction work in progress 95,239 83,524 Nuclear fuel under capital lease 104,206 79,103 Nuclear fuel - 27,500 ---------- ---------- Total 4,845,058 4,826,724 Less - accumulated depreciation and amortization 2,016,518 1,976,204 ---------- ---------- Utility plant - net 2,828,540 2,850,520 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 53,181 75,249 SFAS 109 regulatory asset - net 245,278 244,767 Unamortized loss on reacquired debt 55,772 56,664 Other regulatory assets 82,271 80,257 Other 31,302 31,421 ---------- ---------- Total 467,804 488,358 ---------- ---------- TOTAL $4,169,837 $4,153,817 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $90,052 $32,465 Notes payable 667 667 Accounts payable: Associated companies 45,912 91,205 Other 92,557 97,589 Customer deposits 23,087 21,800 Taxes accrued 80,234 54,194 Accumulated deferred income taxes 59,149 70,506 Interest accrued 27,204 27,625 Co-owner advances 29,691 33,873 Deferred fuel cost 11,331 6,955 Obligations under capital leases 53,044 53,012 Other 13,241 17,967 ---------- ---------- Total 526,169 507,858 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 777,449 785,994 Accumulated deferred investment tax credits 107,205 108,307 Obligations under capital leases 108,139 83,940 Other 117,804 113,998 ---------- ---------- Total 1,110,597 1,092,239 ---------- ---------- Long-term debt 1,254,122 1,255,388 Preferred stock with sinking fund 40,027 40,027 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 470 470 Paid-in capital 590,169 590,169 Retained earnings 471,933 491,316 ---------- ---------- Total 1,178,922 1,198,305 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,169,837 $4,153,817 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1997 and 1996 Three Months Ended Increase/ Description 1997 1996 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 131.4 $ 132.2 ($0.8) (1) Commercial 72.6 70.6 2.0 3 Industrial 81.6 77.7 3.9 5 Governmental 4.3 4.1 0.2 5 ------- ------- ----- Total retail 289.9 284.6 5.3 2 Sales for resale Associated companies 60.8 59.8 1.0 2 Non-associated companies 44.2 48.8 (4.6) (9) Other (20.2) (10.1) (10.1) 100 ------- ------- ----- Total $ 374.7 $ 383.1 ($8.4) (2) ======= ======= ===== Billed Electric Energy Sales (Millions of kWh): Residential 1,518 1,571 (53) (3) Commercial 1,008 996 12 1 Industrial 1,570 1,525 45 3 Governmental 60 56 4 7 ------- ------- ----- Total retail 4,156 4,148 8 - Sales for resale Associated companies 2,974 2,654 320 12 Non-associated companies 1,496 1,674 (178) (11) ------- ------- ----- Total 8,626 8,476 150 2 ======= ======= =====
ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the first quarter of 1997 primarily due to the $174 million net of tax write-off of River Bend rate deferrals required by the adoption of SFAS 121 in the first quarter of 1996. Excluding the effect of the write-off, net income for the first quarter of 1997 would have increased approximately $10.8 million due to increased sales volume and a decrease in other operation and maintenance expenses and interest on long-term debt. Significant factors affecting the results of operations and causing variances between the first quarter of 1997 and 1996 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1997 are as follows: Description Increase/(Decrease) (In Millions) Change in base revenues ($16.9) Fuel cost recovery 22.3 Sales volume/weather 6.5 Other revenue (including unbilled) 17.2 Sales for resale (7.1) ----- Total $22.0 ===== Electric operating revenues increased for the first quarter of 1997 as a result of higher fuel adjustment revenues and increased other revenue, partially offset by a reduction in base revenue. Fuel adjustment revenues, which do not affect net income, increased due to elevated fuel prices. The increase in other revenue is primarily due to an increase in unbilled revenue. Unbilled revenue increased due to increased generation in the first quarter of 1997. Base revenues decreased primarily due to rate reductions implemented for Louisiana retail customers in February 1997. Gas operating revenues increased for the first quarter of 1997 due to an increase in the fixed fuel factor granted by the LPSC. This increase permits recovery of previously uncollected gas revenues. Expenses Operating expenses increased for the first quarter of 1997 as a result of higher fuel expenses, including purchased power, partially offset by a decrease in other operation and maintenance expenses. Purchased power increased because of higher energy requirements resulting from higher sales to non-associated utilities. Other operation and maintenance expenses decreased as a result of the receipt by Entergy Gulf States of proceeds from the sale of Cajun's share of River Bend power. See Note 1 for additional information. No such sales were made in the first quarter of 1996 due to a nuclear refueling outage at River Bend. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other Other income increased for the first quarter of 1997, primarily due to the write-off of River Bend rate deferrals required by the adoption of SFAS 121 in the first quarter of 1996. Interest charges decreased due to the retirement of certain high cost long-term debt. Income taxes increased due to higher pretax income.
ENTERGY GULF STATES, INC. STATEMENTS OF INCOME (LOSS) For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Revenues: Electric $448,138 $426,177 Natural gas 22,101 14,876 Steam products 11,089 15,578 -------- -------- Total 481,328 456,631 -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 120,392 117,409 Purchased power 79,341 67,834 Nuclear refueling outage expenses 2,645 2,360 Other operation and maintenance 83,262 96,741 Depreciation, amortization, and decommissioning 52,968 51,251 Taxes other than income taxes 29,207 26,334 Amortization of rate deferrals 20,499 17,644 -------- -------- Total 388,314 379,573 -------- -------- Operating Income 93,014 77,058 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 725 493 Write-off of River Bend rate deferrals - (194,498) Miscellaneous - net 4,101 4,940 -------- -------- Total 4,826 (189,065) -------- -------- Interest Charges: Interest on long-term debt 41,986 46,488 Other interest - net 2,738 950 Distributions on preferred securities of subsidiary 1,322 - Allowance for borrowed funds used during construction (619) (428) -------- -------- Total 45,427 47,010 -------- -------- Income (Loss) Before Income Taxes 52,413 (159,017) Income Taxes 19,878 (6,760) -------- -------- Net Income (Loss) 32,535 (152,257) Preferred Stock Dividend Requirements and Other 8,943 7,219 -------- -------- Earnings (Loss) Applicable to Common Stock $23,592 ($159,476) ======== ========= See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Activities: Net income (loss) $32,535 ($152,257) Noncash items included in net income (loss): Write-off of River Bend rate deferrals - 194,498 Change in rate deferrals 20,275 17,644 Depreciation, amortization, and decommissioning 52,968 51,251 Deferred income taxes and investment tax credits 6,614 (6,812) Allowance for equity funds used during construction (725) (493) Changes in working capital: Receivables (15,453) 8,020 Fuel inventory 3,838 6,822 Accounts payable (19,558) (902) Taxes accrued 4,981 (6,976) Interest accrued 7,099 (21,462) Deferred fuel (3,648) (30,733) Other working capital accounts 12,860 (25,779) Decommissioning trust contributions (1,481) (1,481) Provision for estimated losses and reserves (2,284) 2,648 Other 12,638 777 -------- -------- Net cash flow provided by operating activities 110,659 34,765 -------- -------- Investing Activities: Construction expenditures (27,932) (36,419) Allowance for equity funds used during construction 725 493 Nuclear fuel purchases - (22,188) Proceeds from sale/leaseback of nuclear fuel - 23,375 -------- -------- Net cash flow used in investing activities (27,207) (34,739) -------- -------- Financing Activities: Proceeds from the issuance of: Long-term debt - 780 Preferred securities of subsidiary trust 82,323 - Retirement of first mortgage bonds (41,965) (20,000) Redemption of preferred and preference stock (89,367) (4,204) Dividends paid on preferred and preference stock (6,940) (7,132) -------- -------- Net cash flow used in financing activities (55,949) (30,556) -------- -------- Net increase (decrease) in cash and cash equivalents 27,503 (30,530) Cash and cash equivalents at beginning of period 122,406 234,604 -------- -------- Cash and cash equivalents at end of period $149,909 $204,074 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $34,925 $66,212 Change in unrealized appreciation of decommissioning trust assets $41 - See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $18,670 $6,573 Temporary cash investments - at cost, which approximates market: Associated companies 47,463 45,234 Other 83,776 70,599 ---------- ---------- Total cash and cash equivalents 149,909 122,406 Accounts receivable: Customer (less allowance for doubtful accounts of $2.0 million in 1997 and 1996) 97,876 87,883 Associated companies 2,179 2,777 Other 31,475 30,758 Accrued unbilled revenues 80,692 75,351 Deferred fuel costs 103,151 99,503 Accumulated deferred income taxes 57,947 56,714 Fuel inventory - at average cost 41,171 45,009 Materials and supplies - at average cost 91,750 86,157 Rate deferrals 92,164 105,456 Prepayments and other 13,756 16,321 ---------- ---------- Total 762,070 728,335 ---------- ---------- Other Property and Investments: Decommissioning trust fund 43,960 41,983 Other - at cost (less accumulated depreciation) 38,859 38,358 ---------- ---------- Total 82,819 80,341 ---------- ---------- Utility Plant: Electric 7,137,572 7,112,021 Natural Gas 47,017 45,443 Steam products 81,743 81,743 Property under capital leases 72,363 72,800 Construction work in progress 106,291 112,137 Nuclear fuel under capital lease 43,276 49,833 ---------- ---------- Total 7,488,262 7,473,977 Less - accumulated depreciation and amortization 2,890,955 2,846,083 ---------- ---------- Utility plant - net 4,597,307 4,627,894 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 107,086 120,158 SFAS 109 regulatory asset - net 376,921 372,817 Unamortized loss on reacquired debt 53,071 54,761 Other regulatory assets 42,919 45,139 Long-term receivables 211,524 216,082 Other 187,450 185,921 ---------- ---------- Total 978,971 994,878 ---------- ---------- TOTAL $6,421,167 $6,431,448 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $150,865 $160,865 Accounts payable: Associated companies 50,169 55,630 Other 71,444 85,541 Customer deposits 26,724 25,572 Taxes accrued 41,128 36,147 Interest accrued 56,750 49,651 Nuclear refueling reserve 15,283 12,354 Obligations under capital leases 39,650 39,110 Other 29,993 18,186 ---------- ---------- Total 482,006 483,056 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 1,220,762 1,200,935 Accumulated deferred investment tax credits 218,289 219,188 Obligations under capital leases 75,989 83,524 Deferred River Bend finance charges 27,599 33,688 Other 535,948 539,752 ---------- ---------- Total 2,078,587 2,077,087 ---------- ---------- Long-term debt 1,883,401 1,915,346 Preferred stock with sinking fund 75,210 77,459 Preference stock 150,000 150,000 Company - obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 85,000 - Shareholders' Equity: Preferred stock without sinking fund 51,444 136,444 Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares 114,055 114,055 Paid-in capital 1,152,575 1,152,689 Retained earnings 348,889 325,312 ---------- ---------- Total 1,666,963 1,728,500 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $6,421,167 $6,431,448 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) Three Months Ended Increase/ Description 1997 1996 (Decrease) % (In Millions) Electric Department Operating Revenues: Residential $ 133.6 $ 134.7 ($ 1.1) (1) Commercial 105.4 102.5 2.9 3 Industrial 177.9 160.6 17.3 11 Governmental 8.0 7.0 1.0 14 ------- ------- ----- Total retail 424.9 404.8 20.1 5 Sales for resale Associated companies 9.0 2.8 6.2 221 Non-associated companies 5.7 19.0 (13.3) (70) Other 8.6 (0.4) 9.0 2250 ------- ------- ----- Total Electric Department $ 448.2 $ 426.2 $ 22.0 5 ======= ======= ====== Billed Electric Energy Sales (Millions of kWh): Residential 1,793 1,825 (32) (2) Commercial 1,488 1,462 26 2 Industrial 4,165 3,901 264 7 Governmental 115 92 23 25 ------- ------- ----- Total retail 7,561 7,280 281 4 Sales for resale Associated companies 46 56 (10) (18) Non-associated companies 664 500 164 33 ------- ------- ----- Total Electric Department 8,271 7,836 435 6 ======= ======= =====
ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 1997 primarily due to a decrease in base revenues and to an increase in other operation and maintenance expenses. These factors were partially offset by a decrease in income taxes. Significant factors affecting the results of operations and causing variances between the first quarter of 1997 and 1996 are discussed under "Revenues and Sales", "Expenses" , and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1997 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($5.7) Fuel cost recovery 22.4 Sales volume/weather (2.2) Other revenue (including unbilled) 4.2 Sales for resale (2.5) ----- Total $16.2 ===== Electric operating revenues increased for the first quarter of 1997 primarily due to higher fuel adjustment revenues, which do not affect net income. This increase was partially offset by a prior year base rate reduction ordered in the second quarter of 1996 and lower sales volume due to warmer weather in the first quarter of 1997. Fuel adjustment revenues increased due to higher fuel prices. Expenses Operating expenses increased for the first quarter of 1997 as a result of increases in fuel expenses, higher other operation and maintenance expenses, and the impact of 1996 rate deferrals, as discussed below. The increase in fuel expenses for the first quarter of 1997 is primarily the result of higher fuel prices. Other operation and maintenance expenses increased due to higher nuclear maintenance expenses. Waterford 3 property taxes recorded in 1996 were offset by the recording of the LPSC-approved rate deferral for these taxes. Depreciation expense increased due to plant additions and improvements. Other Income taxes decreased due to lower pretax income.
ENTERGY LOUISIANA, INC. STATEMENTS OF INCOME For the Three Months ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Revenues $433,983 $417,767 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 112,916 90,680 Purchased power 96,196 100,875 Nuclear refueling outage expenses 3,975 4,000 Other operation and maintenance 74,085 65,770 Depreciation, amortization, and decommissioning 44,371 41,741 Taxes other than income taxes 18,239 19,734 Rate deferrals (6,859) Amortization of rate deferrals 6,321 6,660 -------- -------- Total 356,103 322,601 -------- -------- Operating Income 77,880 95,166 -------- -------- Other Income: Allowance for equity funds used during construction 218 277 Miscellaneous - net (641) 286 -------- -------- Total (423) 563 -------- -------- Interest Charges: Interest on long-term debt 30,083 30,717 Other interest - net 1,935 2,336 Distributions on preferred securities of subsidiary 1,575 - Allowance for borrowed funds used during construction (378) (408) -------- -------- Total 33,215 32,645 -------- -------- Income Before Income Taxes 44,242 63,084 Income Taxes 18,070 22,554 -------- -------- Net Income 26,172 40,530 Preferred Stock Dividend Requirements and Other 3,592 4,915 -------- -------- Earnings Applicable to Common Stock $22,580 $35,615 ======== ======== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Three Months ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Activities: Net income $26,172 $40,530 Noncash items included in net income: Change in rate deferrals 2,826 6,660 Depreciation, amortization, and decommissioning 44,371 41,741 Deferred income taxes and investment tax credits (17,008) (4,169) Allowance for equity funds used during construction (218) (277) Changes in working capital: Receivables 2,259 6,447 Accounts payable (33,184) (2,740) Taxes accrued 23,535 40,406 Interest accrued (21,862) (17,143) Deferred fuel 23,843 (3,784) Other working capital accounts 18,534 (7,543) Decommissioning trust contributions (4,393) (4,393) Provision for estimated losses and reserves 2,586 (615) Other 8,734 (6,382) -------- -------- Net cash flow provided by operating activities 76,195 88,738 -------- -------- Investing Activities: Construction expenditures (12,421) (26,235) Allowance for equity funds used during construction 218 277 Nuclear fuel purchases (32,685) - Proceeds from sale/leaseback of nuclear fuel 32,685 - -------- -------- Net cash flow used in investing activities (12,203) (25,958) -------- -------- Financing Activities: Proceeds from the issuance of first mortgage bonds - 113,994 Retirement of: First mortgage bonds (16,000) (35,000) Other long-term debt - (44) Redemption of preferred stock (7,500) (7,500) Changes in short-term borrowings - net (6,694) (28,468) Dividends paid: Common stock (26,900) (14,400) Preferred stock (3,490) (5,151) -------- -------- Net cash flow (used in) provided by financing activities (60,584) 23,431 -------- -------- Net increase in cash and cash equivalents 3,408 86,211 Cash and cash equivalents at beginning of period 23,746 34,370 -------- -------- Cash and cash equivalents at end of period $27,154 $120,581 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $52,242 $48,455 Change in unrealized depreciation of decommissioning trust assets ($321) ($94) See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $4,926 $1,804 Temporary cash investments - at cost, which approximates market 22,228 21,942 ---------- ---------- Total cash and cash equivalents 27,154 23,746 Accounts receivable: Customer (less allowance for doubtful accounts of $1.4 million in 1997 and 1996) 75,952 73,823 Associated companies 12,060 11,606 Other 5,998 7,053 Accrued unbilled revenues 60,092 63,879 Deferred fuel costs - 18,347 Accumulated deferred income taxes 15,692 1,465 Materials and supplies - at average cost 87,548 78,449 Rate deferrals 2,923 5,749 Deferred nuclear refueling outage costs 2,412 5,300 Prepaid income tax - 24,651 Prepayments and other 11,712 10,234 ---------- ---------- Total 301,543 324,302 ---------- ---------- Other Property and Investments: Nonutility property 22,492 22,525 Decommissioning trust fund 55,108 50,481 Investment in subsidiary companies - at equity 14,230 14,230 ---------- ---------- Total 91,830 87,236 ---------- ---------- Utility Plant: Electric 5,005,501 4,997,456 Property under capital leases 232,582 232,582 Construction work in progress 52,768 56,180 Nuclear fuel under capital lease 62,287 38,157 Nuclear fuel 1,506 34,191 ---------- ---------- Total 5,354,644 5,358,566 Less - accumulated depreciation and amortization 1,921,269 1,881,847 ---------- ---------- Utility plant - net 3,433,375 3,476,719 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 292,910 295,836 Unamortized loss on reacquired debt 36,531 37,552 Other regulatory assets 27,203 30,320 Other 27,100 27,313 ---------- ---------- Total 383,744 391,021 ---------- ---------- TOTAL $4,210,492 $4,279,278 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $53,400 $34,275 Notes payable - associated companies 24,372 31,066 Accounts payable: Associated companies 40,825 73,389 Other 56,245 89,550 Customer deposits 59,974 59,070 Taxes accrued 30,925 7,390 Interest accrued 27,387 49,249 Dividends declared 3,252 3,489 Deferred fuel costs 5,496 - Obligations under capital leases 28,000 28,000 Other 5,609 4,940 ---------- ---------- Total 335,485 380,418 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 826,793 831,093 Accumulated deferred investment tax credits 138,494 139,899 Obligations under capital leases 34,287 10,156 Deferred interest - Waterford 3 lease obligation 17,055 16,809 Other 118,626 114,665 ---------- ---------- Total 1,135,255 1,112,622 ---------- ---------- Long-term debt 1,338,229 1,373,233 Preferred stock with sinking fund 85,000 92,500 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 1,088,900 1,088,900 Capital stock expense and other (2,321) (2,659) Retained earnings 59,444 63,764 ---------- ---------- Total 1,246,523 1,250,505 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,210,492 $4,279,278 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) Three Months Ended Increase/ Description 1997 1996 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 133.3 $ 135.3 ($ 2.0) (1) Commercial 89.5 86.0 3.5 4 Industrial 188.1 175.6 12.5 7 Governmental 9.0 8.5 0.5 6 ------- ------- ----- Total retail 419.9 405.4 14.5 4 Sales for resale Associated companies 0.3 0.2 0.1 50 Non-associated companies 11.9 14.5 (2.6) (18) Other 1.9 (2.3) 4.2 183 ------- ------- ----- Total $ 434.0 $ 417.8 $ 16.2 4 ======= ======= ======= Billed Electric Energy Sales (Millions of kWh): Residential 1,723 1,826 (103) (6) Commercial 1,103 1,092 11 1 Industrial 4,325 4,213 112 3 Governmental 119 115 4 3 ------- ------- ----- Total retail 7,270 7,246 24 - Sales for resale Associated companies 7 3 4 133 Non-associated companies 140 233 (93) (40) ------- ------- ----- Total 7,417 7,482 (65) (1) ======= ======= =====
ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 1997 as a result of an increase in other operation and maintenance expenses partially offset by a decrease in income tax expense. Significant factors affecting the results of operations and causing variances between the first quarter of 1997 and 1996 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1997 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($0.3) Grand Gulf rate rider (5.9) Fuel cost recovery 8.1 Sales volume/weather - Other revenue (including unbilled) (2.7) Sales for resale (2.8) ----- Total ($3.6) ===== Electric operating revenues decreased for the first quarter of 1997, due to decreases in the Grand Gulf 1 rate rider revenues and sales for resale, which do not affect net income. These decreases were partially offset by an increase in the fuel adjustment revenues, which also have no impact on net income. In connection with an annual MPSC review, in October 1996, Entergy Mississippi's Grand Gulf 1 rate rider was decreased based on the estimate of costs over the next year. Therefore, Grand Gulf 1 rate rider revenues for the first quarter of 1997 were lower than revenues for the same period in 1996. Sales for resale, specifically sales to associated companies, decreased primarily due to changes in the generation requirements and availability among the domestic utility companies. Fuel adjustment clause revenues increased due to higher fuel costs, as discussed below. Expenses Operating expenses increased for the first quarter of 1997 due to increases in fuel, purchased power, and other operation and maintenance expenses. Fuel and purchased power expenses increased as a result of higher fuel costs for the first quarter of 1997. The increase in other operation and maintenance expenses was partially due to the settlement of an injury claim. Higher contract work and materials and supplies expenses in the first quarter of 1997 also contributed to the increase in other operation and maintenance expense. Rate deferrals reducing operating expenses in 1996 and 1997 represent the deferral of Entergy Mississippi's portion of the proposed System Energy rate increase. See Note 2 for a further discussion. Other Income tax expense for the first quarter of 1997 decreased because of lower pretax income.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Revenues $200,328 $203,902 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 40,023 39,746 Purchased power 70,359 67,312 Other operation and maintenance 30,020 27,649 Depreciation and amortization 10,699 10,027 Taxes other than income taxes 10,336 9,585 Rate deferrals (7,614) (7,151) Amortization of rate deferrals 23,811 26,264 -------- -------- Total 177,634 173,432 -------- -------- Operating Income 22,694 30,470 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 286 273 Miscellaneous - net (312) (78) -------- -------- Total (26) 195 -------- -------- Interest Charges: Interest on long-term debt 10,623 11,039 Other interest - net 1,336 940 Allowance for borrowed funds used during construction (231) (224) -------- -------- Total 11,728 11,755 -------- -------- Income Before Income Taxes 10,940 18,910 Income Taxes 2,588 5,986 -------- -------- Net Income 8,352 12,924 Preferred Stock Dividend Requirements and Other 1,115 1,248 -------- -------- Earnings Applicable to Common Stock $7,237 $11,676 ======== ======== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Activities: Net income $8,352 $12,924 Noncash items included in net income: Change in rate deferrals 35,710 31,475 Depreciation and amortization 10,699 10,027 Deferred income taxes and investment tax credits (6,269) (7,907) Allowance for equity funds used during construction (286) (273) Changes in working capital: Receivables 23,627 4,269 Fuel inventory 963 1,055 Accounts payable (7,461) 4,350 Taxes accrued (7,668) (10,253) Interest accrued (4,197) (9,419) Other working capital accounts 95 4,977 Change in other regulatory assets (18,506) (12,428) Other (231) 927 -------- -------- Net cash flow provided by operating activities 35,684 29,724 -------- -------- Investing Activities: Construction expenditures (10,468) (19,297) Allowance for equity funds used during construction 286 273 -------- -------- Net cash flow used in investing activities (10,182) (19,024) -------- -------- Financing Activities: Retirement of first mortgage bonds - (25,000) Redemption of preferred stock (7,000) (8,000) Changes in short-term borrowings - net (11,141) 17,436 Dividends paid: Common stock (9,200) (7,700) Preferred stock (1,128) (1,392) -------- -------- Net cash flow used in financing activities (28,469) (24,656) -------- -------- Net decrease in cash and cash equivalents (2,967) (13,956) Cash and cash equivalents at beginning of period 9,498 16,945 -------- -------- Cash and cash equivalents at end of period $6,531 $2,989 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $15,620 $20,860 Income taxes - $4,932 See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $6,531 $2,384 Special deposits - 7,114 ---------- ---------- Total cash and cash equivalents 6,531 9,498 Accounts receivable: Customer (less allowance for doubtful accounts of $1.4 million in 1997 and 1996) 34,510 44,809 Associated companies 1,905 4,382 Other 1,033 2,014 Accrued unbilled revenues 39,513 49,383 Fuel inventory - at average cost 5,698 6,661 Materials and supplies - at average cost 21,408 17,567 Rate deferrals 141,656 142,504 Prepayments and other 5,125 7,434 ---------- ---------- Total 257,379 284,252 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 5,531 5,531 Other - at cost (less accumulated depreciation) 7,886 7,923 ---------- ---------- Total 13,417 13,454 ---------- ---------- Utility Plant: Electric 1,638,705 1,633,484 Construction work in progress 48,831 47,373 ---------- ---------- Total 1,687,536 1,680,857 Less - accumulated depreciation and amortization 642,726 635,754 ---------- ---------- Utility plant - net 1,044,810 1,045,103 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 69,726 104,588 SFAS 109 regulatory asset - net 14,819 11,813 Unamortized loss on reacquired debt 9,042 9,254 Other regulatory assets 64,815 46,309 Other 6,628 6,693 ---------- ---------- Total 165,030 178,657 ---------- ---------- TOTAL $1,480,636 $1,521,466 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $96,015 $96,015 Notes payable - associated companies 39,112 50,253 Accounts payable: Associated companies 32,164 32,878 Other 16,954 23,701 Customer deposits 26,690 26,258 Taxes accrued 18,814 26,482 Accumulated deferred income taxes 58,309 58,634 Interest accrued 16,712 20,909 Other 5,002 3,065 ---------- ---------- Total 309,772 338,195 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 246,960 249,522 Accumulated deferred investment tax credits 25,045 25,422 Other 18,794 19,445 ---------- ---------- Total 290,799 294,389 ---------- ---------- Long-term debt 399,100 399,054 Preferred stock with sinking fund - 7,000 Shareholders' Equity: Preferred stock without sinking fund 57,881 57,881 Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares 199,326 199,326 Capital stock expense and other (42) (143) Retained earnings 223,800 225,764 ---------- ---------- Total 480,965 482,828 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $1,480,636 $1,521,466 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) Three Months Ended Increase/ Description 1997 1996 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 75.2 $ 77.5 ($ 2.3) (3) Commercial 64.5 62.3 2.2 4 Industrial 43.0 40.8 2.2 5 Governmental 6.7 6.9 (0.2) (3) ------- ------- ----- Total retail 189.4 187.5 1.9 1 Sales for resale Associated companies 11.0 13.6 (2.6) (19) Non-associated companies 5.1 5.3 (0.2) (4) Other (5.2) (2.5) (2.7) (108) ------- ------- ----- Total $ 200.3 $ 203.9 ($ 3.6) (2) ======= ======= ====== Billed Electric Energy Sales (Millions of kWh): Residential 991 1,055 (64) (6) Commercial 819 777 42 5 Industrial 723 694 29 4 Governmental 80 81 (1) (1) ------- ------- ----- Total retail 2,613 2,607 6 - Sales for resale Associated companies 197 269 (72) (27) Non-associated companies 102 116 (14) (12) ------- ------- ----- Total 2,912 2,992 (80) (3) ======= ======= =====
ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 1997 as a result of reduced natural gas sales, partially offset by reduced income taxes. Significant factors affecting the results of operations and causing variances between the first quarter of 1997 and 1996 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1997 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($1.0) Fuel cost recovery 6.3 Sales volume/weather 0.3 Other revenue (including unbilled) 0.1 Sales for resale (0.8) ---- Total $4.9 ==== Electric operating revenues increased for the first quarter of 1997 due to an increase in fuel adjustment revenues, which do not affect net income. Fuel adjustment revenues increased due to elevated fuel prices during the period for which fuel revenues were billed. Gas operating revenues decreased for the first quarter of 1997 due to a lower unit purchase price for gas purchased for resale and due to a reduction in sales. Milder weather in the first quarter of 1997 is primarily responsible the reduction in sales. Expenses Operating expenses increased for the first quarter of 1997 due to increased taxes other than income taxes and increased amortization of rate deferrals. Taxes other than income taxes increased due to higher franchise taxes resulting from a December 1996 Council order increasing Entergy New Orleans' annual franchise fee from 2.5% to 5% of gross revenues. The increase in amortization of rate deferrals in the first quarter of 1997 is primarily a result of increased over- recovery of Grand Gulf 1 related costs in 1997 compared to 1996. Other Income tax expense decreased for the first quarter of 1997 due to lower pretax income.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Revenues: Electric $89,561 $84,683 Natural gas 35,395 42,597 -------- -------- Total 124,956 127,280 -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 42,782 41,436 Purchased power 36,582 38,739 Other operation and maintenance 15,255 16,424 Depreciation and amortization 5,193 4,971 Taxes other than income taxes 8,886 6,863 Rate deferrals (1,961) (1,401) Amortization of rate deferrals 9,464 4,496 -------- -------- Total 116,201 111,528 -------- -------- Operating Income 8,755 15,752 -------- -------- Other Income: Allowance for equity funds used during construction 80 74 Miscellaneous - net 31 774 -------- -------- Total 111 848 -------- -------- Interest Charges: Interest on long-term debt 3,623 4,059 Other interest - net 291 282 Allowance for borrowed funds used during construction (63) (59) -------- -------- Total 3,851 4,282 -------- -------- Income Before Income Taxes 5,015 12,318 Income Taxes 2,197 4,283 -------- -------- Net Income 2,818 8,035 Preferred Stock Dividend Requirements and Other 241 241 -------- -------- Earnings Applicable to Common Stock $2,577 $7,794 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Activities: Net income $2,818 $8,035 Noncash items included in net income: Change in rate deferrals 7,848 7,565 Depreciation and amortization 5,193 4,971 Deferred income taxes and investment tax credits (3,654) 2,270 Allowance for equity funds used during construction (80) (74) Changes in working capital: Receivables 6,890 5,675 Accounts payable (2,210) (5,397) Taxes accrued 7,052 2,584 Interest accrued (2,602) (2,917) Other working capital accounts (10,556) (18,263) Other 1,896 (7,339) -------- ------- Net cash flow provided by (used in) operating activities 12,595 (2,890) -------- ------- Investing Activities: Construction expenditures (684) (7,919) Allowance for equity funds used during construction 80 74 -------- ------- Net cash flow used in investing activities (604) (7,845) -------- ------- Financing Activities: Proceeds from the issuance of general and refunding mortgage bonds - 39,608 Retirement of first mortgage bonds - (23,250) Dividends paid: Common stock (2,800) (3,300) Preferred stock (482) (482) -------- ------- Net cash flow (used in) provided by financing activities (3,282) 12,576 -------- ------- Net increase in cash and cash equivalents 8,709 1,841 Cash and cash equivalents at beginning of period 17,510 49,746 -------- ------- Cash and cash equivalents at end of period $26,219 $51,587 ======== ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $6,360 $7,054 See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $3,366 $1,015 Temporary cash investments - at cost, which approximates market: Associated companies 3,558 7,435 Other 5,111 9,060 Special deposits 14,184 - -------- -------- Total cash and cash equivalents 26,219 17,510 Accounts receivable: Customer (less allowance for doubtful accounts of $0.7 million in 1997 and 1996) 23,971 27,430 Associated companies 1,264 714 Other 2,826 1,764 Accrued unbilled revenues 12,021 17,064 Deferred electric fuel and resale gas costs 7,399 7,290 Materials and supplies - at average cost 12,913 9,904 Rate deferrals 37,818 37,692 Prepayments and other 11,542 7,157 -------- -------- Total 135,973 126,525 -------- -------- Other Property and Investments: Investment in subsidiary companies - at equity 3,259 3,259 -------- -------- Utility Plant: Electric 507,265 503,061 Natural gas 128,076 122,700 Construction work in progress 8,784 18,247 -------- -------- Total 644,125 644,008 Less - accumulated depreciation and amortization 352,390 347,790 -------- -------- Utility plant - net 291,735 296,218 -------- -------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 91,524 99,498 SFAS 109 regulatory asset - net 5,276 6,051 Unamortized loss on reacquired debt 1,583 1,647 Other regulatory assets 17,976 15,908 Other 806 890 -------- -------- Total 117,165 123,994 -------- -------- TOTAL $548,132 $549,996 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $12,000 $12,000 Accounts payable: Associated companies 14,824 18,757 Other 15,853 14,130 Customer deposits 19,067 18,974 Taxes accrued 8,256 1,204 Accumulated deferred income taxes 3,429 5,584 Interest accrued 2,723 5,325 Provision for rate refund 16,274 19,465 Other 1,566 1,521 -------- -------- Total 93,992 96,960 -------- -------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 70,621 72,895 Accumulated deferred investment tax credits 7,837 7,984 Accumulated provision for property insurance 15,666 15,666 Other 28,444 24,713 -------- -------- Total 122,568 121,258 -------- -------- Long-term debt 168,904 168,888 Shareholders' Equity: Preferred stock without sinking fund 19,780 19,780 Common Shareholder's Equity: Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares 33,744 33,744 Paid-in capital 36,294 36,294 Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 72,850 73,072 -------- -------- Total 162,668 162,890 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL $548,132 $549,996 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) Three Months Ended Increase/ Description 1997 1996 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 28.7 $ 31.7 ($ 3.0) (9) Commercial 36.3 33.2 3.1 9 Industrial 6.2 5.6 0.6 11 Governmental 13.6 12.2 1.4 11 ------- ------- ----- Total retail 84.8 82.7 2.1 3 Sales for resale Associated companies 1.9 1.9 0.0 - Non-associated companies 1.7 2.5 (0.8) (32) Other 1.2 (2.4) 3.6 (150) ------- ------- ----- Total $ 89.6 $ 84.7 $ 4.9 6 ======= ======= ===== Billed Electric Energy Sales (Millions of kWh): Residential 374 391 (17) (4) Commercial 478 465 13 3 Industrial 114 111 3 3 Governmental 221 212 9 4 ------- ------- ----- Total retail 1,187 1,179 8 1 Sales for resale Associated companies 47 45 2 4 Non-associated companies 23 52 (29) (56) ------- ------- ----- Total 1,257 1,276 (19) (1) ======= ======= =====
SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased slightly for the first quarter of 1997 as compared to the same period in 1996 primarily as a result of lower interest charges, partially offset by increased nuclear refueling outage expenses and depreciation, amortization and decommissioning expenses. Significant factors affecting the results of operations and causing variances between the first quarter of 1997 and 1996 are discussed under "Revenues," "Expenses," and "Other" below. 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 allocable to its investment in Grand Gulf 1. Operating revenues remained relatively unchanged for the first quarter of 1997. Expenses Operating expenses increased for the first quarter of 1997 due to higher nuclear refueling outage expenses and higher depreciation, amortization, and decommissioning expenses. Nuclear refueling outage expenses increased due to costs that were deferred from the November 1996 outage, which are now being amortized over an 18 month period beginning December 1996. In the majority of 1996, such costs were expensed as incurred. The increase in depreciation, amortization, and decommissioning expense is due to the recognition of additional depreciation associated with the sale and leaseback in 1989 of a portion of Grand Gulf 1, in accordance with regulatory approval. Other Interest charges decreased for the first quarter of 1997 due to the refinancing of higher cost long-term debt in 1996. Income taxes decreased due to lower pretax income.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Revenues $155,662 $156,424 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 12,017 12,840 Nuclear refueling outage expenses 3,717 308 Other operation and maintenance 20,390 21,433 Depreciation, amortization, and decommissioning 38,797 31,999 Taxes other than income taxes 6,425 6,906 -------- -------- Total 81,346 73,486 -------- -------- Operating Income 74,316 82,938 -------- -------- Other Income: Allowance for equity funds used during construction 280 350 Miscellaneous - net 1,323 839 -------- -------- Total 1,603 1,189 -------- -------- Interest Charges: Interest on long-term debt 30,758 37,953 Other interest - net 1,782 1,991 Allowance for borrowed funds used during construction (279) (354) -------- -------- Total 32,261 39,590 -------- -------- Income Before Income Taxes 43,658 44,537 Income Taxes 19,313 21,007 -------- -------- Net Income $24,345 $23,530 ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 (In Thousands) Operating Activities: Net income $24,345 $23,530 Noncash items included in net income: Depreciation, amortization, and decommissioning 38,797 31,999 Deferred income taxes and investment tax credits (11,568) (8,897) Allowance for equity funds used during construction (280) (350) Changes in working capital: Receivables (2,294) (2,870) Accounts payable (2,241) 17,326 Taxes accrued 15,587 13,735 Interest accrued (2,171) (10,825) Other working capital accounts (220) (4,711) Decommissioning trust contributions (1,579) (2,131) FERC Settlement - refund obligation (1,082) (956) Provision for estimated losses and reserves 12,808 13,954 Other (263) (2,137) -------- -------- Net cash flow provided by operating activities 69,839 67,667 -------- -------- Investing Activities: Construction expenditures (1,699) (1,384) Allowance for equity funds used during construction 280 350 Nuclear fuel purchases (39) (733) Proceeds from sale/leaseback of nuclear fuel 39 - -------- -------- Net cash flow used in investing activities (1,419) (1,767) -------- -------- Financing Activities: Proceeds from the issuance of long term debt - 89,192 Retirement of long term debt - (92,700) Changes in short-term borrowings - net - (2,990) Common stock dividends paid (37,100) (23,300) -------- -------- Net cash flow used in financing activities (37,100) (29,798) -------- -------- Net increase in cash and cash equivalents 31,320 36,102 Cash and cash equivalents at beginning of period 92,315 240 -------- -------- Cash and cash equivalents at end of period $123,635 $36,342 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $32,398 $48,911 Income taxes - $1,500 Noncash investing and financing activities: Change in unrealized appreciation (depreciation) of decommissioning trust assets ($982) $192 See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $ - $26 Temporary cash investments - at cost, which approximates market: Associated companies 50,750 41,600 Other 72,885 50,689 ---------- ---------- Total cash and cash equivalents 123,635 92,315 Accounts receivable: Associated companies 74,455 71,337 Other 1,698 2,522 Materials and supplies - at average cost 66,823 66,302 Deferred nuclear refueling outage costs 20,772 24,005 Prepayments and other 7,644 4,929 ---------- ---------- Total 295,027 261,410 ---------- ---------- Other Property and Investments: Decommissioning trust fund 66,922 62,223 ---------- ---------- Utility Plant: Electric 2,994,191 2,994,445 Electric plant under leases 447,663 447,409 Construction work in progress 43,061 41,362 Nuclear fuel under capital lease 74,719 83,558 ---------- ---------- Total 3,559,634 3,566,774 Less - accumulated depreciation and amortization 1,003,292 974,472 ---------- ---------- Utility plant - net 2,556,342 2,592,302 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 259,385 264,758 Unamortized loss on reacquired debt 56,185 57,785 Other regulatory assets 201,156 207,214 Other 15,387 15,601 ---------- ---------- Total 532,113 545,358 ---------- ---------- TOTAL $3,450,404 $3,461,293 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS March 31, 1997 and December 31, 1996 (Unaudited) 1997 1996 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $10,000 $10,000 Accounts payable: Associated companies 25,330 18,245 Other 9,510 18,836 Taxes accrued 83,410 67,823 Interest accrued 32,024 34,195 Obligations under capital leases 28,000 28,000 Other 2,089 2,306 ---------- ---------- Total 190,363 179,405 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 606,908 624,020 Accumulated deferred investment tax credits 102,778 103,647 Obligations under capital leases 46,719 55,558 FERC Settlement - refund obligation 51,757 52,839 Other 184,227 165,517 ---------- ---------- Total 992,389 1,001,581 ---------- ---------- Long-term debt 1,418,969 1,418,869 Common Shareholder's Equity: Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares 789,350 789,350 Retained earnings 59,333 72,088 ---------- ---------- Total 848,683 861,438 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $3,450,404 $3,461,293 ========== ========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES Cajun - River Bend (Entergy Corporation and Entergy Gulf States) Entergy Gulf States and Cajun, respectively, own 70% and 30% undivided interests in River Bend (operated by Entergy Gulf States), and 42% and 58% undivided interests in Big Cajun 2, Unit 3 (operated by Cajun). These relationships have spawned a number of long- standing disputes and claims between the parties. An agreement setting forth terms for the resolution of all such disputes has been reached by Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, and was approved by the United States District Court for the Middle District of Louisiana (District Court) on August 26, 1996 (Cajun Settlement). On September 6, 1996, the Committee of Unsecured Creditors in the Cajun bankruptcy proceeding filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit (Fifth Circuit), objecting that the order approving the settlement was separate from the approval of a plan of reorganization and, therefore, improper. The Cajun Settlement is subject to this appeal and approvals by the appropriate regulatory agencies. Entergy Gulf States has made filings with the FERC and the SEC seeking approval for the transfer of certain Cajun transmission assets to Entergy Gulf States. Management believes that it is probable that the Cajun Settlement will ultimately be approved and consummated. On December 16, 1996, the Bankruptcy Court began hearings on the balloting and the plan that will be adopted. See Note 9 of the Form 10-K for additional information regarding the Cajun litigation, Cajun's bankruptcy proceedings, and related filings. The terms of the Cajun Settlement include, but are not limited to, the following: (i) Cajun's interest in River Bend will be turned over to the RUS, which will have the option to retain the interest, sell it to a third party, or transfer it to Entergy Gulf States at no cost; (ii) Cajun will set aside a total of $125 million for its share of the decommissioning costs of River Bend; (iii) Cajun will transfer certain transmission assets to Entergy Gulf States; (iv) Cajun and Entergy Gulf States will settle transmission disputes and release each other from claims for payment under transmission arrangements, as discussed under "Cajun - Transmission Service" below; (v) all funds paid by Entergy Gulf States into the registry of the District Court will be returned to Entergy Gulf States; (vi) Cajun will be released from its unpaid past, present, and future liability for River Bend costs and expenses; and (vii) all litigation between Cajun and Entergy Gulf States will be dismissed. Based on the District Court's approval of the Cajun Settlement, the litigation accrual established in 1994 for possible losses associated with the Cajun- River Bend litigation was reversed in September 1996. Cajun has not paid its full share of capital costs, operating and maintenance expenses, and other costs for repairs and improvements to River Bend since 1992. Cajun's unpaid portion of River Bend operating and maintenance expenses (including nuclear fuel) and capital costs for the first quarter of 1997 was approximately $12.4 million. The cumulative cost to Entergy Gulf States resulting from Cajun's failure to pay its full share of River Bend-related costs, reduced by the proceeds from the sale by Entergy Gulf States of Cajun's share of River Bend power and payments into the registry of the District Court for Entergy Gulf States' portion of expenses for Big Cajun 2, Unit 3, was $6.0 million as of March 31, 1997. Cajun's unpaid portion of the River Bend related costs is reflected in long-term receivables which is substantially reserved for in other deferred credits. As discussed above, the Cajun Settlement will conclude all disputes regarding the non-payment by Cajun of River Bend operating and maintenance expenses. Cajun continues to pay its share of decommissioning costs for River Bend. The RUS entered into an agreement as of February 11, 1997 for the sale of Cajun's 30% interest in River Bend to PECO Energy Company (PECO) pursuant to authorization granted in the Bankruptcy Court Order of August 26, 1996. Under the terms of this agreement, the RUS may accept proposals from other parties, and PECO has the option to terminate. To accomplish the sale of the assets, the Cajun bankruptcy trustee has filed a motion to sell the Cajun River Bend interest, which motion also seeks an order extending the time by which the Cajun Settlement must be consummated from June 1, 1997 to December 31, 1997. The RUS and Entergy Gulf States have consented to the motion. The motion is set for hearing on May 29, 1997 before the Bankruptcy Court. Cajun - Transmission Service (Entergy Corporation and Entergy Gulf States) Entergy Gulf States and Cajun are parties to FERC proceedings relating to transmission service charge disputes. As a result of the proposed Cajun Settlement, the FERC has dismissed or placed in abeyance various proceedings pending before it, to which Cajun or the Cajun Trustee are parties, that would be resolved by the Cajun Settlement. See Note 9 in the Form 10-K for additional information regarding these FERC proceedings and FERC orders issued as a result of such proceedings. Under Entergy Gulf States' interpretation of a 1992 FERC order, as modified by FERC's orders issued on August 3, 1995, and October 2, 1995, and as agreed to by the Cajun bankruptcy trustee, Cajun would owe Entergy Gulf States approximately $71.6 million as of March 31, 1997. Entergy Gulf States further estimates that if it were to prevail in its May 1992 motion for rehearing and on certain other issues decided adversely to Entergy Gulf States in the February 1995, August 1995, and October 1995 FERC orders, which Entergy Gulf States has appealed, Cajun would owe Entergy Gulf States approximately $160.5 million as of March 31, 1997. If Cajun were to prevail in its May 1992 motion for rehearing to FERC, and if Entergy Gulf States were not to prevail in its May 1992 motion for rehearing to FERC, and if Cajun were to prevail in appealing FERC's August and October 1995 orders, Entergy Gulf States estimates it would owe Cajun approximately $114.1 million as of March 31, 1997. The above amounts are exclusive of a $7.3 million payment by Cajun on December 31, 1990, which the parties agreed to apply to the disputed transmission service charges. Pending FERC's ruling on the May 1992 motions for rehearing, Entergy Gulf States has continued to bill Cajun utilizing the historical billing methodology and has recorded underpaid transmission charges, including interest, in the amount of $145.8 million as of March 31, 1997. This amount is reflected in long-term receivables with an offsetting reserve in other deferred credits. FERC has determined that the collection of the pre-petition debt of Cajun is an issue properly decided in the bankruptcy proceeding. Refer to "Cajun - River Bend" above for a discussion of the Cajun Settlement. Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States) On January 13, 1997, Entergy Gulf States filed a declaratory judgment action in the U.S. Bankruptcy Court where the Cajun bankruptcy is pending, seeking a ruling that Entergy Gulf States would not be liable for damages to certain coal suppliers for Big Cajun II, Unit 3, if the Cajun bankruptcy trustee were to reject their coal contracts as a part of a plan of reorganization in the bankruptcy proceeding. In its pleading, Entergy Gulf States takes the position that it is not a party to, and has no liability under, those coal contracts. On February 12, 1997, the coal suppliers and the Cajun bankruptcy Trustee filed a response in the declaratory judgment action and made certain counterclaims and crossclaims. They contend that Entergy Gulf States' declaratory judgment action should be dismissed and, in the alternative, argue that Cajun is Entergy Gulf States' agent in the procurement of coal for Big Cajun II, Unit 3, and that Entergy Gulf States is a party to and has liability under the coal supply contracts. The potential liability, should these contracts be rejected, is uncertain, but could be materially adverse to Entergy Gulf States. This matter, which has not been scheduled for a hearing, will be strongly contested by Entergy Gulf States. However, at present there is no basis upon which to predict the timing or outcome of this litigation. 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 Form 10-K for information on the domestic utility companies' and System Energy's construction expenditures (excluding nuclear fuel), for the years 1997, 1998, and 1999 and long- term debt and preferred stock maturities and cash sinking fund requirements for the period 1997-1999. 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 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, River Bend, Waterford 3, and Grand Gulf 1. The FASB issued an exposure draft of a proposed SFAS (which proposed a 1997 effective date) in February 1996 regarding the recognition, measurement and classification of decommissioning costs for nuclear power plants. The proposed SFAS would require measurement of the liability for closure and removal of long-lived assets (including decommissioning) based on discounted future cash flows. Those future cash flows should be determined by estimating current costs and adjusting for inflation, efficiencies that may be gained from experience with similar activities, and consideration of reasonable future advances in technology. After receiving comments on the exposure draft, the FASB has decided that the effective date for the proposed SFAS will be later than 1997, although a final effective date has not yet been announced. If current electric utility industry accounting practices with respect to nuclear decommissioning and other closure costs are changed, annual provisions for such costs could increase, the estimated cost for decommissioning/closure could be recorded as a liability rather than as accumulated depreciation, and trust fund income from decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense. ANO Matters (Entergy Corporation and Entergy Arkansas) Cracks in certain steam generator tubes at ANO 2 were discovered and repaired during an outage in March 1992. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent forced outage in November 1996. ANO 2's output has been reduced by 23 megawatts due to steam generator fouling and tube plugging. The unit may be approaching the current limit for the number of steam generator tubes that can be plugged with the unit in operation. If the established limit is reached during a future outage, it could become necessary for Entergy Operations to insert sleeves in steam generator tubes that were previously plugged. On October 25, 1996, Entergy Corporation's Board of Directors authorized Entergy Operations to negotiate a contract, with appropriate cancellation provisions, for the fabrication and replacement of the steam generators at ANO 2. Entergy estimates the cost of fabrication and replacement of the steam generators to be approximately $150 million. Letters of intent for the fabrication and installation have been entered into by Entergy Operations, which includes a commitment for not more than $4.2 million through May 1997. Contracts are expected to be entered into in 1997. It is anticipated that the steam generators will be installed during a planned refueling outage in 2000. Entergy Operations periodically meets with the NRC to discuss the results of inspections of the steam generator tubes, as well as the timing of future inspections. Environmental Issues (Entergy Arkansas) In May 1995, Entergy Arkansas was named as a defendant in a suit by Reynolds Metals Company (Reynolds), seeking to recover a share of the costs associated with the clean-up of hazardous substances at a site south of Arkadelphia, Arkansas. Reynolds alleges that it has spent $11.2 million to clean-up the site, and that the site was contaminated with PCBs for which Entergy Arkansas bears some responsibility. Entergy Arkansas, voluntarily, at its expense, completed remediation at a nearby substation site and believes that it has no liability for contamination at that portion of the site that is subject to the Reynolds suit and is contesting the lawsuit. An August 1997 trial date has been tentatively scheduled. Regardless of the outcome, Entergy Arkansas does not believe this matter would have a materially adverse effect on its financial condition or results of operations. See "Environmental Regulation" in Item 1 of Part I of the Form 10-K for additional information on the PCB contamination at the two former Reynolds plant sites in Arkansas to which Entergy Arkansas had supplied power. (Entergy Gulf States) Entergy Gulf States has been designated as a potentially responsible party for the clean-up of certain hazardous waste disposal sites. Entergy Gulf States is currently negotiating with the EPA and state authorities regarding the clean-up of certain of these sites. As of March 31, 1997, a remaining recorded liability of $21.4 million existed relating to the clean-up of the sites at which Entergy Gulf States has been designated a potentially responsible party. See "Environmental Regulation" in Item 1 of Part I of the Form 10-K for additional discussion of the sites where Entergy Gulf States has been designated as a potentially responsible party by the EPA and related litigation. (Entergy Louisiana) During 1993, the Louisiana Department of Environmental Quality issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana has determined that certain of its power plant waste water impoundments were affected by these regulations and chose to upgrade or close them. A remaining recorded liability in the amount of $6.7 million existed at March 31, 1997, for waste water upgrades and closures to be completed by the end of 1997. Cumulative expenditures relating to the upgrades and closures of waste water impoundments were $7.1 million as of March 31, 1997. Waterford 3 Lease Obligations (Entergy Louisiana) On September 28, 1989, Entergy Louisiana entered into three transactions for the sale and leaseback of undivided interests (aggregating approximately 9.3%) in Waterford 3. Upon the occurrence of certain events, Entergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from the lease transactions, and Entergy Louisiana may be required to assume the outstanding bonds issued by the Owner Trustee to finance, in part, its acquisition of the undivided interests in Waterford 3. See Note 10 to the Form 10-K for further information. 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, 1997. See Note 9 to the Form 10-K for further information. Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) See Note 9 to the Form 10-K for further information relating to lawsuits filed by former employees asserting they were wrongfully terminated and/or discriminated against on the basis of age, race, and/or sex. (Entergy Corporation and Entergy Arkansas) Entergy Corporation and Entergy Arkansas are defendants in a number of lawsuits filed in federal court on behalf of a total of approximately 62 plaintiffs who claim they were illegally terminated from their jobs due to discrimination on the basis of age or race. The first of these lawsuits, originally involving 29 plaintiffs, was tried before a jury beginning in April 1997. Settlements were reached with two of the plaintiffs prior to the trial. On May 1, 1997, the jury rendered findings as to 22 of the plaintiffs indicating that Entergy had no liability to them for discrimination. The jury did find that Entergy had intentionally discriminated against the remaining 5 plaintiffs on the basis of age. As a result, these plaintiffs will be awarded damages equal to twice their back pay plus lost future wages and attorneys' fees. It is estimated that the back pay will not exceed approximately $500,000, while damages for lost future wages and attorneys' fees remain to be decided in an ensuing phase of the proceedings in this case. A date for the next phase of the case has not yet been set. A trial date for another suit, involving 18 plaintiffs is set for May 1997. Another of the suits is set for trial in November 1997. No trial dates have been set for the remaining cases. NOTE 2. RATE AND REGULATORY MATTERS River Bend (Entergy Corporation and Entergy Gulf States) In 1988, the PUCT granted Entergy Gulf States a permanent increase in annual revenues of $59.9 million resulting from the inclusion in rate base of approximately $1.6 billion of company-wide River Bend plant investment and approximately $182 million of related Texas retail jurisdiction deferred River Bend costs (Allowed Deferrals). At the same time, the PUCT disallowed as imprudent $63.5 million of company-wide River Bend plant costs and placed in abeyance, with no finding as to prudence, approximately $1.4 billion of company-wide River Bend plant investment and approximately $157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs (Abeyed Deferrals). The PUCT's order has been the subject of several appellate proceedings, culminating in an appeal to the Texas Supreme Court (Supreme Court). On January 31, 1997, the Supreme Court issued an opinion reversing the PUCT's order and remanding the case to the PUCT for further proceedings. The Supreme Court found that the PUCT had prejudiced Entergy Gulf States' rights by attempting to defer a ruling on the abeyed plant costs and incorrectly determined the amount of federal income tax expense that should have been allowed in rates. The Supreme Court ruled that the PUCT could choose either to conduct hearings and take further evidence or to decide the case on the original evidence. On February 18, 1997, the Texas Office of Public Utility Counsel filed a motion for rehearing of the Supreme Court's decision, arguing that the Supreme Court's remand should have instructed the PUCT as to how the case should be dealt with on remand. Entergy Gulf States filed a brief in opposition to the motion for rehearing on February 25, 1997. Entergy Gulf States believes it to be unlikely that the Supreme Court will grant the motion for rehearing. No procedural schedule has yet been issued by the PUCT concerning the case on remand. As of March 31, 1997, the River Bend plant costs disallowed for retail ratemaking purposes in Texas and the River Bend plant costs held in abeyance totaled (net of taxes and depreciation) approximately $12 million and $264 million, respectively. The Allowed Deferrals were approximately $75 million, net of taxes and amortization, as of March 31, 1997. Entergy Gulf States estimates it has collected approximately $210 million of revenues as of March 31, 1997, as a result of the originally ordered rate treatment by the PUCT of these deferred costs. If recovery of the Allowed Deferrals is not upheld, future refunds could be required and future revenues based upon the Allowed Deferrals could also be lost. However, management believes that it is probable that the Allowed Deferrals will continue to be recovered in rates. As a result of the application of SFAS 121, Entergy Gulf States wrote off Abeyed Deferrals of $169 million, net of tax, effective January 1, 1996. In light of the continuing proceedings before the PUCT and the courts (including the January 31, 1997 decision of the Texas Supreme Court), Entergy Gulf States has made no write-offs or reserves for the River Bend plant-related costs. At this time, management and legal counsel are unable to predict the amount of the abeyed and previously disallowed River Bend plant costs, if any, that may ultimately be allowed in Entergy Gulf States' Texas retail rates. In prior proceedings involving other utilities, the PUCT has held that the original cost of nuclear power plants will be recoverable in electric rates to the extent those costs were prudently incurred. In another proceeding Entergy Gulf States has previously filed with the PUCT a cost reconciliation study prepared by Sandlin Associates, management consultants with expertise in the cost analysis of nuclear power plants, which supports the reasonableness of the River Bend costs held in abeyance by the PUCT. This reconciliation study determined that approximately 82% of the River Bend cost increase above the amount included by the PUCT in rate base was a result of changes in federal nuclear safety requirements, and provided other support for the remainder of the abeyed amounts. In particular, there have been four other rate proceedings in Texas involving nuclear power plants. Disallowed investment in the plants ranged from 0% to 15%. Each case was unique, and the disallowances in each were made for different reasons. Appeals of two of these PUCT decisions are currently pending. Based upon the PUCT's prior decisions, management believes that River Bend construction costs were prudently incurred and that it is reasonably possible that it will recover through rates, or otherwise through means such as a deregulated asset plan, all or substantially all of the abeyed River Bend plant costs. In the event of an adverse ruling in this case, a net of tax write-off, as of March 31, 1997, of up to $276 million and up to $210 million in refunds of previously collected revenue could be required. Retail Rate Proceedings Filings with the APSC (Entergy Corporation and Entergy Arkansas) In October 1996, Entergy Arkansas filed a proposal with the APSC designed to achieve an orderly transition to retail electric competition in Arkansas. Entergy Arkansas supplemented its proposal with a May 1, 1997 filing. The proposal includes a rate decrease totaling $158 million over a two year period beginning January 1998 and provides for a universal service charge for customers that remain connected to Entergy Arkansas' electric facilities but choose to purchase their electricity from another source. Although these proposals allow for the complete recovery of the remaining plant investment associated with ANO 1, ANO 2, and Entergy Arkansas' portion of Grand Gulf 1 as of December 31, 1995, over a seven year period, the NRC operating licenses for these plants permit continued operation until the years 2014, 2018, and 2022, respectively. Hearings are expected to begin in September 1997. Filings with the PUCT (Entergy Corporation and Entergy Gulf States) In December 1995, Entergy Gulf States filed a petition with the PUCT for reconciliation of fuel and purchased power expenses for the period January 1, 1994, through June 30, 1995. Entergy Gulf States believes that there was an under-recovered fuel balance, including interest, of $22.4 million as of June 1995. Hearings were concluded in October 1996, and in April 1997 the PUCT issued its final order which approved recovery of approximately $18.8 million of the under- recovered fuel balance, including interest. In April 1997, various parties to the proceeding, including Entergy Gulf States, filed motions for rehearing, which are currently pending before the PUCT. In accordance with the Merger agreement, Entergy Gulf States filed a rate proceeding with the PUCT in November 1996. In April 1996, certain cities served by Entergy Gulf States (Cities) instituted investigations of the reasonableness of Entergy Gulf States' rates. In May 1996, the Cities agreed to forego their pending investigation based on the assurance that any rate decrease ordered in the November 1996 filing will be retroactive to June 1, 1996, and will accrue interest until refunded. The agreement further provides that no base rate increase will be retroactive. Subsequent to the November 1996 filing, the Cities passed ordinances reducing Entergy Gulf States' rates by $43.6 million. Entergy Gulf States has appealed these ordinances with the PUCT, and these appeals have been consolidated in the pending rate proceeding. Included in the November 1996 filing was a proposal to achieve an orderly transition to retail electric competition in Texas, similar to the filing described below that Entergy Gulf States made with the LPSC. This filing with the PUCT will be litigated in four phases as follows: (i) fuel factor/fuel reconciliation phase, of which Entergy Gulf States believes there was an under-recovered fuel balance of $41.4 million, including interest, for the period July 1, 1995 through June 30, 1996; (ii) revenue requirement phase; (iii) cost allocation/rate design phase; and (iv) competitive issues phase. Hearings on these matters are scheduled to begin in June 1997. No assurance can be given as to the outcome of these hearings. Filings with the LPSC (Entergy Corporation and Entergy Gulf States) On May 31, 1995, Entergy Gulf States filed its second required post-Merger earnings analysis with the LPSC. Hearings on this review were held in December 1995. On October 4, 1996, the LPSC issued an order requiring a $33.3 million annual base rate reduction and a $9.6 million refund. One component of the rate reduction removes from base rates approximately $13.4 million annually of costs that will be recovered in the future through the fuel adjustment clause. On October 23, 1996, Entergy Gulf States appealed the LPSC's order and obtained an injunction to stay the order, except insofar as it requires the $13.4 million reduction, which Entergy Gulf States implemented in November 1996. In addition, pursuant to an October 1996 settlement with the LPSC, Entergy Gulf States will be allowed to recover $8.1 million annually related to certain gas transportation and storage facilities costs. This amount will be applied as an offset against any refund that may be required by a final judgment in Entergy Gulf States' appeal of the second post-Merger earnings review order. On May 31, 1996, Entergy Gulf States filed its third required post-Merger earnings analysis with the LPSC. Based on this earnings filing, on June 1, 1996, Entergy Gulf States implemented a $5.3 million annual rate reduction. Hearings on this filing concluded in March 1997. An additional rate reduction may be required upon the issuance by the LPSC of a final rate order. (Entergy Corporation, Entergy Gulf States, and Entergy Louisiana) In October 1996, Entergy Gulf States and Entergy Louisiana filed proposals with the LPSC designed to achieve an orderly transition to retail electric competition in Louisiana, while protecting certain classes of ratepayers from bearing the burden of cost shifting. The proposals do not increase rates for any customer class. However, these proposals do provide for a universal service charge for customers that remain connected to Entergy Gulf States' or Entergy Louisiana's electric facilities but choose to purchase their electricity from another source. In addition, the proposals include a base rate freeze, which would be put into effect for seven years in the Louisiana areas serviced by Entergy Gulf States and Entergy Louisiana. Although these proposals allow for the complete recovery of the remaining plant investment associated with River Bend, and Waterford 3 as of December 31, 1995, over a seven year period, the NRC operating licenses for these plants permit continued operation until the years 2025 and 2024, respectively. Hearings on these proposals are expected to begin in June 1997. In February 1997, the LPSC identified certain issues embodied in the Entergy Gulf States and Entergy Louisiana proposals that will be included in those companies' annual rate filings expected to be made on May 30, 1997, and other issues that now will be included in an ongoing generic regulatory proceeding examining electric industry restructuring. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) On March 15, 1997, Entergy Mississippi filed its annual earnings review with the MPSC under its formula rate plan for the 1996 test year. In April 1997, the MPSC issued an order requiring a prospective rate reduction of $11.2 million. This rate reduction went into effect May 1, 1997. Entergy Mississippi has initiated discussions with the MPSC regarding an orderly transition to a more competitive market for electricity. In August 1996, Entergy Mississippi filed a proposal with the MPSC for a rate rider to assure recovery of all Grand Gulf costs incurred to serve customers. The rider would maintain current rates for electric service provided by Entergy Mississippi and would apply to customers within Entergy Mississippi's service area who obtain electricity in the future from a source other than Entergy Mississippi. Entergy Mississippi designed this rider to assure that commitments made under the current system of regulation are honored and that cost burdens are not unfairly transferred from departing customers to those who remain on the Entergy Mississippi system. On August 22, 1996, the MPSC remanded this proposal and established a generic docket to consider competition for retail electric service. Hearings on this docket concluded in April 1997, and an order is expected mid-year. Filings with the Council (Entergy Corporation and Entergy New Orleans) The Council issued a resolution in February 1997 indicating that it will conduct an investigation of the justness and reasonableness of Entergy New Orleans' allowed rate of return, base rates, and adjustment clauses. The Council established hearing dates in April 1997 on the issue of rate of return, and directed Entergy New Orleans to make a cost of service and revenue requirement filing on May 1, 1997. In April 1997, Entergy New Orleans proposed a $16 million prospective rate reduction in order to resolve the disputed rate of return and other issues raised in the first phase of the proceeding. The proposed settlement would also postpone the cost of service and revenue requirement filing until September 1997. The Council is considering the proposed settlement and a decision is expected in May 1997. A procedural schedule has not been set with respect to these other issues. Proposed Rate Increase (System Energy) System Energy filed an application with FERC on May 12, 1995, for a $65.5 million rate increase. The request seeks changes to System Energy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return on common equity. The request also includes a proposed change in the accounting recognition of nuclear refueling outage costs from that of expensing those costs as incurred to the deferral and amortization method described in Note 1 with respect to Entergy Arkansas. On December 12, 1995, System Energy implemented a $65.5 million rate increase, subject to refund. Management has decided to record a reserve for a portion of the rate increase. Hearings on System Energy's request began in January 1996 and were completed in February 1996. On July 11, 1996, the ALJ issued an initial decision in this proceeding that agreed with certain of System Energy's proposals, including the change in accounting for nuclear refueling outage costs, while rejecting a proposed increase in return on common equity and recommending a slight decrease. The ALJ also rejected the proposed change in the decommissioning cost methodology. The decision of the ALJ is preliminary and may be modified in the final decision from FERC which is expected in the second quarter of 1997. Management is unable to predict the final outcome of the rate increase request or the amount of any refunds in excess of reserves that may be required. (Entergy Mississippi) Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase is $21.6 million annually. In July 1995, Entergy Mississippi filed a schedule with the MPSC that defers the retail recovery of the System Energy rate increase. The deferral plan, which was approved by the MPSC, began in December 1995, the effective date of the System Energy rate increase, and will end after the issuance of a final order by FERC. The final amount of the deferred rate increase is to be amortized over 48 months beginning in October 1998. (Entergy New Orleans) Entergy New Orleans' allocation of the proposed System Energy wholesale rate increase is $11.1 million annually. In February 1996, Entergy New Orleans filed a plan with the Council to defer 50% of the amount of the System Energy rate increase. The deferral began in February 1996 and will end after the issuance of a final order by FERC. NOTE 3. COMMON STOCK (Entergy Corporation) During the first quarter of 1997, Entergy Corporation issued 364,895 shares of its previously repurchased common stock, reducing the amount held as treasury stock by approximately $10 million. Entergy Corporation issued these shares to meet the requirements of its various stock plans. In addition, Entergy Corporation received proceeds of $90.7 million from the issuance of 3,408,570 shares of common stock under its dividend reinvestment and stock purchase plan during the first quarter of 1997. NOTE 4. LONG-TERM DEBT (Entergy Corporation) See Note 7 of the Form 10-K for a discussion of Entergy Power UK plc's credit facility. 945 million British Pounds (1.55 billion US dollars) of variable rate borrowings were outstanding under this facility as of March 31, 1997. The weighted average interest rate on the borrowings outstanding as of March 31, 1997 was 7.92%. Entergy Power UK plc (Entergy Power UK) entered into several interest rate swaps to reduce the impact of interest rate changes on its debt related to the London Electricity acquisition. The interest rate swap agreements involve the exchange of fixed and floating rate interest payments periodically over the life of the agreements without the exchange of the underlying principal amounts. If the counterparties to an interest rate swap agreement were to default on contractual payments, the subsidiary could be exposed to increased costs related to replacing the original agreement. However, Entergy Power UK does not anticipate nonperformance by any counterparty to any interest rate swap in effect at March 31, 1997. At March 31, 1997, Entergy Power UK was a party to a notional amount of 400 million British Pounds of interest rate swaps with maturity dates ranging from March 2000 to September 2001. (Entergy Arkansas) On April 18, 1997, Entergy Arkansas redeemed, prior to its maturity, $87.6 million of its 10.00% Series First Mortgage Bonds due February 1, 2020, at a price equal to 100% of the principal amount thereof, using funds deposited with the mortgage trustee pursuant to the annual maintenance and replacement fund requirement as provided under Entergy Arkansas' mortgage. (Entergy New Orleans) On April 1, 1997, Entergy New Orleans retired $12 million of its 5.875% Series First Mortgage Bonds upon maturity. These bonds were retired with internally generated cash. As these bonds were the last outstanding under the 1944 Mortgage and Deed of Trust of Entergy New Orleans, the Mortgage was canceled. Entergy New Orleans will continue to operate with its 1987 Mortgage. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On April 9, 1997, Entergy Corporation's Board of Directors declared a common stock dividend of 45 cents per share payable on June 1, 1997, to holders of record on May 14, 1997. NOTE 6. RESTRUCTURING COSTS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) In 1994 and 1995, Entergy implemented various restructuring programs to reduce the number of employees and consolidate offices and facilities. The programs were designed to reduce costs and improve operating efficiencies. The restructuring liability associated with these programs was $3.2 million as of December 31, 1996. Approximately $1.4 million of restructuring charges were incurred in the first quarter of 1997, resulting in a remaining liability of $1.8 million as of March 31, 1997. The restructuring charges primarily include employee severance costs related to the expected termination of approximately 2,750 employees in various groups. As of March 31, 1997, approximately 2,740 of these employees had either been terminated or accepted voluntary separation packages under the restructuring plan. In December 1996, Entergy recorded $21.3 million of restructuring charges (of which $18 million was recorded by Entergy Services) associated with the transition to competition. Approximately $5.2 million of charges related to the transition to competition were incurred in the first quarter of 1997, resulting in a remaining liability of $16.1 million as of March 31, 1997. NOTE 7. ACCOUNTING ISSUES (Entergy Corporation) New Accounting Standard - In March 1997, the FASB issued SFAS 128, "Earnings per Share", effective for financial statements for periods ending after December 15, 1997. This statement will simplify the computation of earnings per share for many companies by eliminating calculation provisions which were required by the prior earnings per share standard, Accounting Principles Board Opinion 15. The adoption of SFAS 128 is not expected to have a material effect on the calculation of earnings per share for Entergy Corporation. NOTE 8. ACQUISITION OF LONDON ELECTRICITY plc (Entergy Corporation) On December 18, 1996, Entergy made a formal cash offer to acquire London Electricity for $2.1 billion. London Electricity is a regional electric company serving approximately two million customers in the metropolitan area of London, England. The offer was approved by authorities in the United Kingdom, and as of February 7, 1997, the offer was made unconditional. Entergy, through Entergy Power UK plc, now controls over 99% of the common shares of London Electricity. Through procedures available under applicable law, Entergy expects to gain control of 100% of the common shares of London Electricity. Entergy has included the results of operations of London Electricity in its results of operations beginning on February 1, 1997 based on management's determination that effective control was met on that date. The acquisition was financed with $1.7 billion of debt that is non-recourse to Entergy Corporation and $392 million of equity provided by Entergy Corporation from available cash and borrowings under its $300 million line of credit. The cost of the London Electricity license is being amortized on a straight-line basis over a 40 year period beginning February 1, 1997. As of March 31, 1997, the unamortized balance of the license was $1.5 billion, which is based on a preliminary purchase price allocation. In accordance with the purchase method of accounting, the first quarter results of operations for Entergy Corporation reported in its Statements of Consolidated Income (Loss) and Cash Flows do not reflect London Electricity's results of operations for any period prior to February 1, 1997. The pro forma combined revenues, net income, and earnings per common share of Entergy Corporation presented below give effect to the acquisition as if it had occurred on January 1, 1996 and 1997, respectively. This pro forma information is not necessarily indicative of the results of operations that would have occurred had the acquisition been consummated for the period for which it is being given effect. For the First Quarter of: 1997 1996 (a) (In Thousands of U.S. Dollars, Except Share Data) Operating revenues $2,294,376 $ 2,165,679 Net income (loss) $ 128,686 $ (84,968) Earnings (loss) per average $ .55 $ (.37) common share (a) - Net income in 1996 includes the $174 million net of tax write- off of River Bend rate deferrals pursuant to SFAS 121. __________________________________ In the opinion 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 reclassifying 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 Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans is subject to seasonal fluctuations, with the peak period occurring during the summer months. 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 Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) See "Employment Litigation" in Item 1 of Part I of the Form 10-K for information relating to lawsuits filed by former employees asserting they were wrongfully terminated and/or discriminated against due to age, race, and/or sex. Entergy Corporation and Entergy Arkansas are defendants in a number of lawsuits filed in federal court on behalf of a total of approximately 62 plaintiffs who claim they were illegally terminated from their jobs due to discrimination on the basis of age or race. The first of these lawsuits, originally involving 29 plaintiffs, was tried before a jury beginning in April 1997. Settlements were reached with two of the plaintiffs prior to the trial. On May 1, 1997, the jury rendered findings as to 22 of the plaintiffs indicating that Entergy had no liability to them for discrimination. The jury did find that Entergy had intentionally discriminated against the remaining 5 plaintiffs on the basis of age. As a result, these plaintiffs will be awarded damages equal to twice their back pay plus lost future wages and attorneys' fees. It is estimated that the back pay will not exceed approximately $500,000, while damages for lost future wages and attorneys' fees remain to be decided in an ensuing phase of the proceedings in this case. A date for the next phase of the case has not yet been set. A trial date for another suit, involving 18 plaintiffs is set for May 1997. Another of the suits is set for trial in November 1997. No trial dates have been set for the remaining cases. Federal Income Tax Audit (Entergy Corporation, Entergy Louisiana, and System Energy) In August 1994, Entergy received an IRS report covering the federal income tax audit of Entergy Corporation and subsidiaries for the years 1988 - 1990. The report asserts an $80 million tax deficiency for the 1990 consolidated federal income tax returns related primarily to the utilization of accelerated investment tax credits associated with Waterford 3 and Grand Gulf nuclear plants. Changes to the initial report, made in the IRS appeal process, have reduced the assessment related to the issue by $22 million to $58 million. Entergy and the Appeals Officer agreed to pursue a "technical advice" ruling from the IRS National Office to address the remainder of the issue. In March 1997, Entergy Corporation received notification that the IRS National Office had ruled in its favor, thereby negating the asserted deficiency and resolving the audit. Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States) On January 13, 1997, Entergy Gulf States filed a declaratory judgment action in the U.S. Bankruptcy Court where the Cajun bankruptcy is pending, seeking a ruling that Entergy Gulf States would not be liable for damages to certain coal suppliers for Big Cajun II, Unit 3, if the Cajun bankruptcy trustee were to reject their coal contracts as a part of a plan of reorganization in the bankruptcy proceeding. In its pleading, Entergy Gulf States takes the position that it is not a party to, and has no liability under, those coal contracts. On February 12, 1997, the coal suppliers and the Cajun bankruptcy Trustee filed a response in the declaratory judgment action and made certain counterclaims and crossclaims. They contend that Entergy Gulf States' declaratory judgment action should be dismissed and, in the alternative, argue that Cajun is Entergy Gulf States' agent in the procurement of coal for Big Cajun II, Unit 3, and that Entergy Gulf States is a party to and has liability under the coal supply contracts. The potential liability, should these contracts be rejected, is uncertain, but could be materially adverse to Entergy Gulf States. This matter, which has not been scheduled for a hearing, will be strongly contested by Entergy Gulf States. However, at present there is no basis upon which to predict the timing or outcome of this litigation. 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, 1992 1993 1994 1995 1996 1997 Entergy Arkansas 2.28 3.11(b) 2.32 2.56 2.93 2.83 Entergy Gulf States 1.72 1.54 .36(c) 1.86 1.47 2.49 Entergy Louisiana 2.79 3.06 2.91 3.18 3.16 3.04 Entergy Mississippi 2.37 3.79(b) 2.12 2.92 3.40 3.24 Entergy New Orleans 2.66 4.68(b) 1.91 3.93 3.51 3.13 System Energy 2.04 1.87 1.23 2.07 2.21 2.27 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, 1992 1993 1994 1995 1996 1997 Entergy Arkansas 1.86 2.54(b) 1.97 2.12 2.44 2.40 Entergy Gulf States (a) 1.37 1.21 .29(c) 1.54 1.19 2.06 Entergy Louisiana 2.18 2.39 2.43 2.60 2.64 2.57 Entergy Mississippi 1.97 3.08(b) 1.81 2.51 2.94 2.83 Entergy New Orleans 2.36 4.12(b) 1.73 3.56 3.22 2.86 (a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock. (b) Earnings for the year ended December 31, 1993, include $81 million, $52 million, and $18 million for Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans, respectively, related to the change in accounting principle to provide for the accrual of estimated unbilled revenues. (c) Earnings for the year ended December 31, 1994, for Entergy Gulf States were not adequate to cover fixed charges and combined fixed charges and preferred dividends by $144.8 million and $197.1 million, respectively. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* ** 4(a) - Fifty-fourth Supplemental Indenture, dated as of March 1, 1997, to Entergy Arkansas' Mortgage and Deed of Trust, dated as of October 1, 1944 (filed as Exhibit C- 2(a) to Form U5S for the year ended December 31, 1996). 23(a) - Consent of Sandlin Associates. 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of March 31, 1997. 27(b) - Financial Data Schedule for Entergy Arkansas as of March 31, 1997. 27(c) - Financial Data Schedule for Entergy Gulf States as of March 31, 1997. 27(d) - Financial Data Schedule for Entergy Louisiana as of March 31, 1997. 27(e) - Financial Data Schedule for Entergy Mississippi as of March 31, 1997. 27(f) - Financial Data Schedule for Entergy New Orleans as of March 31, 1997. 27(g) - Financial Data Schedule for System Energy as of March 31, 1997. 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 Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - Entergy Mississippi Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - Entergy New Orleans Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. ** 99(g) - Annual Reports on Form 10-K of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the fiscal year ended December 31, 1996, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1- 2703, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ___________________________ Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of Entergy Corporation and its subsidiaries on a consolidated basis. * Reference is made to a duplicate list of exhibits being filed as a part of this report on Form 10-Q for the quarter ended March 31, 1997, 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, 1997. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K Entergy A current report on Form 8-K, dated February 7, 1997, was filed with the SEC on April 21, 1997, reporting information under Item 7. "Financial Statements, ProForma Financial Statements and Exhibits." EXPERTS The statements attributed to Sandlin Associates regarding the analysis of River Bend construction costs of Entergy Gulf States in Note 2 to Entergy Corporation and Subsidiaries Consolidated Financial Statements, "Rate and Regulatory Matters," have been reviewed by such firm and are included herein upon the authority of such firm as experts. 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/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting Officer and Assistant Secretary (For each Registrant and for each as Principal Accounting Officer) Date: May 6, 1997 EX-23 2 Exhibit 23(a) CONSENT We consent to the reference to our firm under the heading "Experts" in the Quarterly Report on Form 10-Q being filed on or about the date hereof by Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc. ("Entergy Gulf States"), Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. We further consent to the incorporation by reference of such reference to our firm into Entergy Gulf States' Registration Statements on Form S-3 (File Numbers 33- 49739 and 33-51181), Form S-8 (File Numbers 2-76551 and 2- 98011) and on Form S-2 (File Number 333-17911) of such reference and Statements. /s/ L. S. Sandlin SANDLIN ASSOCIATES Management Consultants Pasco, Washington May 5, 1997 EX-27 3
UT This schedule contains summary financial information extracted from Entergy Corporation financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 0000065984 ENTERGY CORPORATION AND SUBSIDIARIES 023 ENTERGY CORPORATION AND SUBSIDIARIES 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 18,280,002 956,979 2,995,156 4,916,425 0 27,148,562 2,378 4,410,325 2,345,917 7,090,129 200,237 345,954 9,422,701 567,811 0 0 412,332 0 277,012 152,077 9,011,818 27,148,562 2,045,753 67,029 1,673,535 1,673,535 372,218 20,426 392,644 199,130 109,762 16,723 109,762 0 0 486,065 0 0
EX-27 4
UT This schedule contains summary financial information extracted from Entergy Arkansas, Inc. financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 0000007323 ENTERGY ARKANSAS, INC. 001 ENTERGY ARKANSAS, INC. 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 2,828,540 225,013 648,480 467,804 0 4,169,837 470 590,169 471,933 1,178,922 40,027 116,350 1,254,122 667 0 0 90,052 0 108,139 53,044 1,444,864 4,169,837 374,731 2,024 343,841 343,841 30,890 6,768 37,658 25,786 9,848 2,832 7,016 0 0 142,573 0 0
EX-27 5
UT This schedule contains summary financial information extracted from Entergy Gulf States, Inc. financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 0000044570 ENTERGY GULF STATES, INC. 006 ENTERGY GULF STATES, INC. 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 4,597,307 82,819 762,070 978,971 0 6,421,167 114,055 1,152,575 348,889 1,666,963 75,210 51,444 1,883,401 0 0 0 150,865 0 75,989 39,650 2,529,089 6,421,167 481,328 19,878 388,314 388,314 93,014 4,826 97,840 45,427 32,535 8,943 23,592 0 0 110,659 0 0
EX-27 6
UT This schedule contains summary financial information extracted from Entergy Louisiana, Inc. financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 0000060527 ENTERGY LOUISIANA, INC. 012 ENTERGY LOUISIANA, INC. 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 3,433,375 91,830 301,543 383,744 0 4,210,492 1,088,900 (2,321) 59,444 1,246,523 85,000 100,500 1,338,229 24,372 0 0 53,400 0 34,287 28,000 1,400,681 4,210,492 433,983 18,070 356,103 356,103 77,880 (423) 77,457 33,215 26,172 3,592 22,580 0 0 76,195 0 0
EX-27 7
UT This schedule contains summary financial information extracted from Entergy Mississippi, Inc. financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 0000066901 ENTERGY MISSISSIPPI, INC. 016 ENTERGY MISSISSIPPI, INC. 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 1,044,810 13,417 257,379 165,030 0 1,480,636 199,326 (42) 223,800 480,965 0 57,881 399,100 39,112 0 0 96,015 0 0 0 465,444 1,480,636 200,328 2,588 177,634 177,634 22,694 (26) 22,668 11,728 8,352 1,115 7,237 0 0 35,684 0 0
EX-27 8
UT This schedule contains summary financial information extracted from Entergy New Orleans, Inc. financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 0000071508 ENTERGY NEW ORLEANS, INC. 017 ENTERGY NEW ORLEANS, INC. 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 291,735 3,259 135,973 117,165 0 548,132 33,744 36,294 72,850 162,668 0 19,780 168,904 0 0 0 12,000 0 0 0 204,560 548,132 124,956 2,197 116,201 116,201 8,755 111 8,866 3,851 2,818 241 2,577 0 0 12,595 0 0
EX-27 9
UT This schedule contains summary financial information extracted from System Energy, Inc. financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 0000202584 SYSTEM ENERGY RESOURCES, INC. 018 SYSTEM ENERGY RESOURCES, INC. 1,000 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 2,556,342 66,922 295,027 532,113 0 3,450,404 789,350 0 59,333 848,683 0 0 1,418,969 0 0 0 10,000 0 46,719 28,000 1,098,033 3,450,404 155,662 19,313 81,346 81,346 74,316 1,603 75,919 32,261 24,345 0 24,345 0 0 69,839 0 0
EX-99 10
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 March 31, 1992 1993 1994 1995 1996 1997 Fixed charges, as defined: Interest on long-term debt $120,317 $107,771 $101,439 $102,339 $93,852 $93,463 Interest on notes payable 117 349 1,311 678 688 660 Amortization of expense and premium on debt-net(cr) 1,359 2,702 4,563 4,514 4,679 4,684 Other interest 2,308 8,769 3,501 7,806 5,570 5,499 Dividends on preferred securities of subsidiary trust -- -- -- -- 1,927 3,202 Interest applicable to rentals 17,657 16,860 19,140 18,158 19,121 17,051 ---------------------------------------------------------------------- Total fixed charges, as defined 141,758 136,451 129,954 133,495 125,837 124,559 Preferred dividends, as defined (a) 32,195 30,334 23,234 27,636 24,731 22,109 ---------------------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $173,953 $166,785 $153,188 $161,131 $150,568 $146,668 ====================================================================== Earnings as defined: Net Income $130,529 $205,297 $142,263 $136,666 $157,798 148,378 Add: Provision for income taxes: Federal & State 57,089 58,162 83,300 105,964 128,982 127,600 Deferred - net 3,490 34,748 (17,939) (28,225) (39,772) (43,236) Investment tax credit adjustment - net (9,989) (10,573) (36,141) (5,658) (4,765) (4,714) Fixed charges as above 141,758 136,451 129,954 133,495 125,837 124,559 ---------------------------------------------------------------------- Total earnings, as defined $322,877 $424,085 $301,437 $342,242 $368,080 $352,587 ====================================================================== Ratio of earnings to fixed charges, as defined 2.28 3.11 2.32 2.56 2.93 2.83 ====================================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.86 2.54 1.97 2.12 2.44 2.40 ====================================================================== - ------------------------ (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 11
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 March 31, 1992 1993 1994 1995 1996 1997 Fixed charges, as defined: Interest on long-term debt $197,218 $172,494 $167,082 $181,994 $172,191 $167,870 Interest on notes payable 21,155 19,440 20,203 810 800 749 Other interest 26,564 10,561 7,957 8,074 12,019 13,857 Amortization of expense and premium on debt-net(cr) 3,479 8,104 8,892 9,346 7,455 10,274 Dividends on preferred securities of subsidiary trust -- -- -- -- -- 1,322 Interest applicable to rentals 23,759 23,455 21,539 16,648 14,887 13,860 -------------------------------------------------------------------- Total fixed charges, as defined 272,175 234,054 225,673 216,872 207,352 207,932 Preferred dividends, as defined (a) 69,617 65,299 52,210 44,651 48,690 42,994 -------------------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $341,792 $299,353 $277,883 $261,523 $256,042 $250,926 ==================================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes $139,413 $69,462 ($82,755) $122,919 ($3,887) 180,905 Add: Income Taxes 55,860 58,016 (62,086) 63,244 102,091 128,728 Fixed charges as above 272,175 234,054 225,673 216,872 207,352 207,932 -------------------------------------------------------------------- Total earnings, as defined (b) $467,448 $361,532 $80,832 $403,035 $305,556 $517,565 ==================================================================== Ratio of earnings to fixed charges, as defined 1.72 1.54 0.36 1.86 1.47 2.49 ==================================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.37 1.21 0.29 1.54 1.19 2.06 ==================================================================== (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 12
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, 1992 1993 1994 1995 1996 1997 Fixed charges, as defined: Interest on long-term debt $128,672 $124,633 $124,820 $124,507 $117,609 $116,947 Interest on notes payable 150 898 1,948 1,932 2,143 2,466 Other interest charges 5,591 5,706 4,546 5,278 4,795 4,071 Dividends on preferred securities of subsidiary trust 2,870 4,445 Amortization of expense and premium on debt - net(cr) 7,100 5,720 5,130 5,184 4,995 5,024 Interest applicable to rentals 9,363 8,519 8,332 9,332 10,601 9,771 ------------------------------------------------------------------------ Total fixed charges, as defined 150,876 145,476 144,776 146,233 143,013 142,724 Preferred dividends, as defined (a) 42,026 40,779 29,171 32,847 28,234 26,083 ------------------------------------------------------------------------ Combined fixed charges and preferred dividends, as defined $192,902 $186,255 $173,947 $179,080 $171,247 $168,807 ======================================================================== Earnings as defined: Net Income $182,989 $188,808 $213,839 $201,537 $190,762 $176,404 Add: Provision for income taxes: Federal and State 36,465 70,552 79,260 114,665 97,169 105,521 Deferred Federal and State - net 51,889 43,017 21,580 8,148 27,237 14,391 Investment tax credit adjustment - net (1,317) (2,756) (37,552) (5,699) (5,847) (5,836) Fixed charges as above 150,876 145,476 144,776 146,233 143,013 142,724 ------------------------------------------------------------------------ Total earnings, as defined $420,902 $445,097 $421,903 $464,884 $452,334 $433,204 ======================================================================== Ratio of earnings to fixed charges, as defined 2.79 3.06 2.91 3.18 3.16 3.04 ======================================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.18 2.39 2.43 2.60 2.64 2.57 ======================================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 13
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 December 31, March 31, 1992 1993 1994 1995 1996 1997 Fixed charges, as defined: Interest on long-term debt $60,709 $52,099 $46,081 $46,241 $42,897 $42,490 Interest on notes payable 36 7 1,348 474 1,633 1,963 Other interest charges 1,636 1,795 3,581 4,164 2,237 2,303 Amortization of expense and premium on debt-net(cr) 1,685 1,458 1,754 756 1,240 1,233 Interest applicable to rentals 521 1,264 1,716 2,173 2,165 2,141 ------------------------------------------------------------------------- Total fixed charges, as defined 64,587 56,623 54,480 53,808 50,172 50,130 Preferred dividends, as defined (a) 12,823 12,990 9,447 9,004 7,720 7,222 ------------------------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $77,410 $69,613 $63,927 $62,812 $57,892 $57,352 ========================================================================= Earnings as defined: Net Income $65,036 $101,743 $48,779 $68,667 $79,210 74,638 Add: Provision for income taxes: Federal and State 4,463 54,418 46,884 71,651 73,994 68,958 Deferred Federal and State - net 20,430 539 (26,763) (35,224) (29,390) (29,645) Investment tax credit adjustment - net (1,746) 1,036 (7,645) (1,550) (3,497) (1,606) Fixed charges as above 64,587 56,623 54,480 53,808 50,172 50,154 ------------------------------------------------------------------------- Total earnings, as defined $152,770 $214,359 $115,735 $157,352 $170,489 $162,499 ========================================================================= Ratio of earnings to fixed charges, as defined 2.37 3.79 2.12 2.92 3.40 3.24 ========================================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.97 3.08 1.81 2.51 2.94 2.83 ========================================================================= - ------------------------ (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 14
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, 1992 1993 1994 1995 1996 1997 Fixed charges, as defined: Interest on long-term debt $22,934 $19,478 $16,382 $15,330 $14,787 $14,403 Interest on notes payable -- -- 153 130 146 133 Other interest charges 1,714 1,016 1,027 1,723 890 912 Amortization of expense and premium on debt-net(cr) 576 598 710 619 481 429 Interest applicable to rentals 444 544 1,245 916 831 867 -------------------------------------------------------------------------- Total fixed charges, as defined 25,668 21,636 19,517 18,718 17,135 16,744 Preferred dividends, as defined (a) 3,214 2,952 2,071 1,964 1,549 1,609 -------------------------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $28,882 $24,588 $21,588 $20,682 $18,684 $18,353 ========================================================================== Earnings as defined: Net Income $26,424 $47,709 $13,211 $34,386 $26,776 $21,559 Add: Provision for income taxes: Federal and State 16,575 27,479 22,606 22,465 28,490 32,475 Deferred Federal and State - net (340) 5,203 (15,674) (1,364) (11,587) (17,669) Investment tax credit adjustment - net (170) (744) (2,332) (634) (687) (675) Fixed charges as above 25,668 21,636 19,517 18,718 17,135 16,744 -------------------------------------------------------------------------- Total earnings, as defined $68,157 $101,283 $37,328 $73,571 $60,127 $52,434 ========================================================================== Ratio of earnings to fixed charges, as defined 2.66 4.68 1.91 3.93 3.51 3.13 ========================================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.36 4.12 1.73 3.56 3.22 2.86 ========================================================================== - ------------------------ (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 15
Exhibit 99(f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges March 31, 1992 1993 1994 1995 1996 1997 Fixed charges, as defined: Interest on long-term debt $196,618 $184,818 $162,517 $136,916 $128,704 $120,979 Interest on notes payable -- -- 88 473 289 206 Amortization of expense and premium on debt-net 6,417 4,520 6,731 6,104 6,672 7,202 Interest applicable to rentals 6,265 6,790 7,546 6,475 6,223 5,617 Other interest charges 1,506 1,600 7,168 8,019 8,055 7,929 -------------------------------------------------------------------------- Total fixed charges, as defined $210,806 $197,728 $184,050 $157,987 $149,943 $141,933 ========================================================================== Earnings as defined: Net Income $130,141 $93,927 $5,407 $93,039 $98,668 $ 99,483 Add: Provision for income taxes: Federal and State 35,082 48,314 67,477 120,830 33,146 34,124 Deferred Federal and State - net 23,648 60,690 (27,374) (41,871) 52,447 49,776 Investment tax credit adjustment - net 30,123 (30,452) (3,265) (3,466) (3,472) (3,472) Fixed charges as above 210,806 197,728 184,050 157,987 149,943 141,933 -------------------------------------------------------------------------- Total earnings, as defined $429,800 $370,207 $226,295 $326,519 $330,732 $321,844 ========================================================================== Ratio of earnings to fixed charges, as defined 2.04 1.87 1.23 2.07 2.21 2.27 ==========================================================================
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