-----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, NTHyXGS1d/AuxfmEDCuSeJaGi/86m5UTsQ8aYkwPfXw/LJ/1jZsKefwyzh7+740m pcCduj268Jy2292n8Yo8rg== 0000065984-98-000115.txt : 19981209 0000065984-98-000115.hdr.sgml : 19981209 ACCESSION NUMBER: 0000065984-98-000115 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 721229752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11299 FILM NUMBER: 98739001 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: 4911 IRS NUMBER: 710005900 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10764 FILM NUMBER: 98739002 BUSINESS ADDRESS: STREET 1: 425 WEST CAPITOL AVE STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72201 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: 4911 IRS NUMBER: 740662730 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-27031 FILM NUMBER: 98739003 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: 4911 IRS NUMBER: 720245590 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08474 FILM NUMBER: 98739004 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: 4911 IRS NUMBER: 640205830 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00320 FILM NUMBER: 98739005 BUSINESS ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MS ZIP: 39201 BUSINESS PHONE: 6013685000 MAIL ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MI ZIP: 39201 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY NEW ORLEANS INC CENTRAL INDEX KEY: 0000071508 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 720273040 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05807 FILM NUMBER: 98739006 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 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: 4911 IRS NUMBER: 720752777 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09067 FILM NUMBER: 98739007 BUSINESS ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 BUSINESS PHONE: 6013685000 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY POWER UK PLC CENTRAL INDEX KEY: 0001042730 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-33331 FILM NUMBER: 98739008 BUSINESS ADDRESS: STREET 1: 81 87 HIGH HOLBORN STREET 2: LONDON WC1V 6NU CITY: ENGLAND STATE: X0 ZIP: 00000 MAIL ADDRESS: STREET 1: 81-87 HIGH HOLBORN STREET 2: LONDON WC1V 6NU CITY: ENGLAND STATE: X0 ZIP: 00000 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 September 30, 1998 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 333-33331 ENTERGY LONDON INVESTMENTS PLC N/A (a limited company under the laws of England and Wales) Templar House 81-87 High Holborn London WC1V 6NU England Telephone 011-44-171-242-9050 _____________________________________________________________________ Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Common Stock Outstanding Outstanding at October 31, 1998 Entergy Corporation ($0.01 par value) 246,596,137 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., System Energy Resources, Inc., and Entergy London Investments plc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company reports herein only as to itself and makes no other representations whatsoever as to any other company. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 1997, and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998, filed by the individual registrants with the SEC, and should be read in conjunction therewith. EXCHANGE RATES For the convenience of the reader, this Form 10-Q contains translations of certain British pounds sterling (BPS) amounts into U.S. dollars at specified rates, or, if not so specified, at the noon buying rate in New York City for cable transfers in BPS as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate") on September 30, 1998 of $1.6989 = BPS1.00. No representation is made that the BPS amounts have been, could have been, or could be converted into U.S. dollars at the rates indicated or at any other rates. The following table sets out, for the periods indicated, certain information concerning the exchange rates between BPS and U.S. dollars based on the Noon Buying Rate in New York City for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York.
Period Period End Average (1) High Low ($ per BPS1.00) Three months ended September 30, 1997 1.62 1.63 1.69 1.58 Nine months ended September 30, 1997 1.62 1.63 1.71 1.58 Twelve months ended December 31, 1997 1.65 1.64 1.71 1.58 Three months ended September 30, 1998 1.70 1.65 1.71 1.62 Nine months ended September 30, 1998 1.70 1.65 1.71 1.61
(1) The average of the Noon Buying Rates in effect on the last business day of each month during the relevant period. Forward Looking Information 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, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., System Energy Resources, Inc., Entergy London Investments plc or their affiliated companies may be influenced by factors that could cause actual outcomes to be materially different than anticipated. 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, interest rate changes and changes in financial markets generally, changes in foreign currency exchange rates, the availability and cost of personnel trained in the year 2000 compliance area, the ability to locate and correct computer codes relevant to year 2000 issues, and other factors. ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q September 30, 1998 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 13 Consolidated Statements of Income and Comprehensive Income 17 Consolidated Statements of Cash Flows 18 Consolidated Balance Sheets 20 Selected Operating Results 22 Entergy Arkansas, Inc.: Results of Operations 23 Statements of Income 25 Statements of Cash Flows 27 Balance Sheets 28 Selected Operating Results 30 Entergy Gulf States, Inc.: Results of Operations 31 Statements of Income 33 Statements of Cash Flows 35 Balance Sheets 36 Selected Operating Results 38 Entergy Louisiana, Inc.: Results of Operations 39 Statements of Income 41 Statements of Cash Flows 43 Balance Sheets 44 Selected Operating Results 46 Entergy Mississippi, Inc.: Results of Operations 47 Statements of Income 49 Statements of Cash Flows 51 Balance Sheets 52 Selected Operating Results 54 Entergy New Orleans, Inc.: Results of Operations 55 Statements of Income 57 Statements of Cash Flows 59 Balance Sheets 60 Selected Operating Results 62 System Energy Resources, Inc.: Results of Operations 63 Statements of Income 64 Statements of Cash Flows 65 Balance Sheets 66 Entergy London Investments plc and Subsidiary: Results of Operations 68 Consolidated Statements of Income (Loss) and Comprehensive Income 70 Consolidated Statements of Cash Flows 71 Consolidated Balance Sheets 72 Notes to Financial Statements for Entergy Corporation and Subsidiaries 74 Part II: Item 1. Legal Proceedings 83 Item 4. Submission of Matters to a Vote of Security Holders 84 Item 5. Other Information 85 Item 6. Exhibits and Reports on Form 8-K 86 Signature 88 DEFINITIONS Certain abbreviations or acronyms used in the text are defined below: Abbreviation or Acronym Term ALJ Administrative Law Judge ANO Arkansas Nuclear One Plant ANO 1 Unit No. 1 of ANO ANO 2 Unit No. 2 of ANO APSC Arkansas Public Service Commission BPS British pounds sterling Cajun Cajun Electric Power Cooperative, Inc. Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof Council Council of the City of New Orleans, Louisiana domestic utility companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively EPA U.S. Environmental Protection Agency EPDC Energy Power Development Corporation EPI Entergy Power, Inc. EPMC Entergy Power Marketing Corp. ETHC Entergy Technology Holding Company Entergy Entergy Corporation and its various direct and indirect subsidiaries Entergy Arkansas Entergy Arkansas, Inc. Entergy Corporation Entergy Corporation, a Delaware corporation, successor to Entergy Corporation, a Florida corporation Entergy Gulf States Entergy Gulf States, Inc. (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company) Entergy London Entergy London Investments plc, formerly Entergy Power UK plc (including its wholly owned subsidiary, London Electricity) Entergy Louisiana Entergy Louisiana, Inc. Entergy Mississippi Entergy Mississippi, Inc. Entergy New Orleans Entergy New Orleans, 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. FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 1997, of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant GWH one million kilowatt-hours Independence Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 11% by EPI LPSC Louisiana Public Service Commission London Electricity London Electricity plc - a regional electric company serving London, England, which was acquired by Entergy effective February 1, 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 Abbreviation or Acronym Term 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 PUCT Public Utility Commission of Texas PUHCA Public Utility Holding Company Act of 1935, as amended River Bend River Bend Nuclear Plant, owned by Entergy Gulf States SEC Securities and Exchange Commission SFAS Statement of Financial Accounting Standards as promulgated by the Financial Accounting Standards Board System Agreement Agreement, effective January 1, 1983, as modified, among the domestic utility companies relating to the sharing of generating capacity and other power resources System Energy System Energy Resources, Inc. UK The United Kingdom of Great Britain and Northern Ireland Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant White Bluff White Bluff Steam Electric Generating Station, 57% owned by Entergy Arkansas ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Cash Flows Net cash flow from operations for Entergy Corporation, the domestic utility companies, System Energy, and Entergy London for the nine months ended September 30, 1998 and 1997 was as follows: Nine Months Nine Months Company Ended 9/30/98 Ended 9/30/97 (In Millions) Entergy Corporation $ 1,272.6 $1,574.7 Entergy Arkansas $ 272.4 $ 400.5 Entergy Gulf States $ 322.2 $ 382.6 Entergy Louisiana $ 261.2 $ 271.6 Entergy Mississippi $ 151.5 $ 141.0 Entergy New Orleans $ 34.9 $ 36.8 System Energy $ 184.9 $ 201.0 Entergy London $ 326.5 $ 200.4 For the first nine months of 1998, cash flow from operations declined compared to 1997 principally due to rate reductions at Entergy Arkansas, Entergy Gulf States, and Entergy New Orleans, as discussed in "Entergy Corporation and Subsidiaries, Management's Financial Discussion and Analysis, Results of Operations." Revenue collections under rate phase-in plans that exceed current cash requirements for the related costs continue to contribute to cash flow from operations. In the income statement, revenue collections from phase-in plans are offset by the amortization of the previously deferred costs so that there is no effect on net income. These phase-in plans, which currently contribute to Entergy Corporation's cash position, will expire in November 1998 for Entergy Arkansas, and in 2001 for Entergy New Orleans. Entergy Gulf States' Louisiana retail phase-in plan for River Bend expired in February 1998, and Entergy Mississippi's phase-in plan for Grand Gulf 1 expired in September 1998. Competitive businesses contributed $202.8 million to Entergy Corporation's cash flow from operations for the first nine months of 1998. Substantially all of such contributions came from London Electricity and CitiPower Pty, both of which are expected to be sold by Entergy during the next year. In accordance with the purchase method of accounting, London Electricity's results of operations are not included in the Entergy Corporation and Subsidiaries and the Entergy London Consolidated Statements of Cash Flows prior to February 1, 1997, the effective date of the acquisition of London Electricity. Financing Sources 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 nine months ended September 30, 1998. Should additional cash be needed to fund investments or to retire debt, the domestic utility companies and System Energy each have the ability, subject to regulatory approval and compliance with issuance tests, to issue debt or preferred securities to meet such requirements. Although the rate proceedings in Texas discussed in Note 2 could have a material adverse impact on Entergy Gulf States' cash flows from operations, management believes that Entergy Gulf States' cash flow from operations will be sufficient to fund its capital requirements for the foreseeable future. In addition, to the extent market conditions and interest and dividend rates allow, the domestic utility companies, System Energy, and Entergy London will continue to refinance and/or redeem higher cost debt and preferred stock prior to maturity. See Note 4 for a discussion of Entergy's recent redemptions. Entergy's domestic utility companies may continue to establish special purpose trusts or limited partnerships as financing subsidiaries for the purpose of issuing quarterly income preferred securities, such as those ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES issued in 1996 by Entergy Louisiana Capital I and Entergy Arkansas Capital I, and those issued in 1997 by Entergy Gulf States Capital I. Entergy Corporation, the domestic utility companies, System Energy, and Entergy London also have the ability to effect short-term borrowings. See Notes 4, 5, 6, 7, 9 and 10 in the Form 10-K for additional information on Entergy's and its subsidiaries' capital and refinancing requirements in 1998-2002. As of September 30, 1998, Entergy Corporation had no loans outstanding under a $250 million bank credit facility that expires in September 1999. In addition, Entergy Corporation had $165.5 million outstanding and ETHC had $82.8 million outstanding under a joint $300 million bank line of credit that also expires in September 1999. See Note 4 to the Form 10-K for information on the short-term borrowing authorizations and bank lines of credit of the domestic utility companies, System Energy, and Entergy London. London Electricity is Entergy London's only asset. Dividends paid by London Electricity provide Entergy London with its sole source of cash flow to pay its debt service. In addition to London Electricity's cash flow from operations, Entergy London has other primary sources of liquidity, including a commercial paper program and several committed and uncommitted credit lines provided to London Electricity by banking institutions. London Electricity intends to use credit available under existing facilities to finance its remaining payment of windfall profits taxes in December 1998, which will total approximately $119 million (BPS70 million). Management believes that cash flow from operations, together with Entergy London's sources of credit, will provide sufficient financial resources to meet London Electricity and Entergy London's projected capital needs and other expenditure requirements for the foreseeable future. London Electricity has represented to the Director General of Electricity Supply for the UK, in connection with its Public Electricity Supply License, that it will use all reasonable endeavors to maintain an investment grade rating on its long-term debt. Financing Uses During the last several years, Entergy has made a number of utility- related investments overseas. These include investments in electricity- related businesses in the UK, Australia, Argentina, Chile, Peru, Pakistan, and China. The ability of Entergy Corporation to provide additional capital to exempt wholesale generators or foreign utility companies currently is subject to the SEC's regulations under PUHCA. Absent SEC approval, these regulations limit the aggregate amount that Entergy may invest in foreign utility companies and exempt wholesale generators to 50% of consolidated retained earnings at the time an investment is made. Since November 1997, Entergy Corporation has not had the capacity to make additional investments under these regulations without SEC approval. Entergy has applied to the SEC to obtain additional authority to make such investments, and is also exploring means of raising capital for foreign electricity-related investments in a manner consistent with these regulations. As of September 30, 1998, Entergy Corporation had a net investment of $1.3 billion in equity capital in businesses other than the domestic utility businesses. However, if London Electricity and CitiPower are sold during the next twelve months, as expected, it is anticipated that Entergy may regain substantial ability to make investments under the SEC's PUHCA regulations, regardless of whether the SEC has acted on the pending application. See Note 7. In addition to its electricity-related foreign investments, Entergy has made investments in security monitoring and other telecommunications related businesses in the United States. Entergy's security monitoring businesses are currently being offered for sale. No specific SEC approvals are required for such investments, and there is no maximum regulatory limit on such investments. Entergy has also made investments in energy-related businesses, including power marketing. Under PUHCA, the SEC imposes a limit equal to 15% of consolidated capitalization on the amount that may be invested in such businesses without specific SEC ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES approval. Entergy currently has considerable capacity to make additional investments of this type before such limits would be exceeded. To make capital investments, fund its subsidiaries, and pay dividends, Entergy Corporation utilizes internally generated funds, cash on hand, funds available under its bank credit facilities, and bank financing as required. 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 nine months ended September 30, 1998 such dividend payments from the domestic utility companies and System Energy totaled $488.5 million. During the nine months ended September 30, 1998, Entergy Corporation paid $296 million of cash dividends on its common stock. Declarations of dividends on Entergy's common stock are made at the discretion of Entergy Corporation's Board of Directors (the Board). On August 2, 1998 and October 30, 1998 the Board declared quarterly dividends of $.30 per share on Entergy's common stock. These dividends represent a $.15 per share reduction from the prior level of Entergy's quarterly common stock dividends. The reduction was made in order to strengthen Entergy's financial position and fund investments. The Board will continue to evaluate the level of the dividend on Entergy's common stock, based upon Entergy's earnings and the Board's assessment of the financial strength of Entergy. See Note 8 in the Form 10-K for information on dividend restrictions. On October 30, 1998, Entergy Corporation's Board approved a plan for the repurchase in the open market of up to 5 million shares of common stock for an aggregate consideration of up to $250 million through December 31, 2001. Substantially all of the repurchased shares are expected to be used to fulfill the requirements of various compensation and benefit plans. Entergy Corporation and Entergy Gulf States During the fourth quarter of 1997, Entergy Gulf States established reserves of $381 million ($227 million net of tax) for the probable outcome of the pending rate case and abeyed plant cost proceedings in Texas based on management's estimates of the effects thereof. Entergy Gulf States recorded additional reserves of $123.5 million ($73.6 million net of tax) in 1998 which include $101.3 million ($60.3 million net of tax) for the retroactive rate reductions for the nine months ended September 30, 1998, and $22.2 million ($13.3 million net of tax) for the prospective portion of the rate reduction for the three months ended September 30, 1998 based on management's estimates. Refunds to customers began in August 1998, pursuant to the PUCT's order. Final resolution of these matters could have a material adverse effect on Entergy Gulf States' cash flow, return on investment, and ability to obtain financing, which in turn could affect Entergy Gulf States' liquidity and ability to pay common stock dividends to Entergy Corporation. See "Entergy Corporation and Subsidiaries, Management's Financial Discussion and Analysis, Significant Factors and Known Trends, Retail and Wholesale Rate Issues" and Note 2 for additional information. Entergy Corporation and System Energy Under the Capital Funds Agreement, Entergy Corporation has agreed to supply System Energy with 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. 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 committed 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", "Effects of Alternate Energy Sources on Retail Electric Sales to Industrial and Large Commercial Customers", and "Changes in Contract with Steam Customer" for a discussion of the competitive pressures facing Entergy and the electric utility industry. See also "Foreign Distribution and Supply", "Property Tax Exemptions", and "Market Risks" in the Form 10-K for a discussion of other significant issues affecting Entergy. Set forth below are recent developments to update the information contained in the Form 10-K for the sections presented. Domestic Competition and Industry Challenges Transition to Competition Filings See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS - Transition to Competition Filings" in the Form 10-K for a discussion of the domestic utility companies' filings with their respective state regulators concerning the transition to competition. Subsequent to the APSC's approval of Entergy Arkansas' transition to competition filing on December 12, 1997, the APSC opened four new generic restructuring dockets and scheduled a series of hearings throughout 1998. The APSC conducted hearings in three of these dockets in May 1998, in which the majority of the participating parties indicated that competition in the electric industry in Arkansas should begin by January 1, 2002. On October 1, 1998, the APSC submitted to the Arkansas Legislature its "Report on Restructuring the Arkansas Electric Utility Industry". This report recommended that electric generation supply competition in the electric industry in Arkansas start no later than the beginning of 2002. The report also recommends that the APSC be given the authority to address the following: market power, including affiliate codes of conduct; potential divestiture of utility assets; the determination, recovery, and securitization of stranded costs; and reliability of electric service. Arkansas law requires that legislation be enacted before competition is allowed in the state's retail electric utility industry. The Arkansas Legislature is expected to address the deregulation of the electric industry during its 1999 legislative session. The MPSC issued a Revised Proposed Transition Plan (the Plan) in June 1998 that included deletion of the previous prohibition on securitization of stranded costs and provided for enabling legislation necessary to implement the Plan in 2000. The Plan also provides for retail competition in Mississippi to begin January 1, 2001 and for recovery of allowable stranded costs through a non-bypassable charge during a transition period between January 2001 and the end of 2004. The MPSC conducted hearings in September 1998 on the market power and reliability studies previously filed (as requested by the MPSC) by the investor-owned utilities in Mississippi and has scheduled a hearing for November 1998 to address certification requirements and load dispatch and control rules. The LPSC and the Council have also established generic proceedings similar to those in Arkansas and Mississippi. During two recent technical conferences, Entergy has urged the FERC to consider the formation of a regional transmission company (Transco) as an acceptable alternative to an Independent System Operator (ISO) for the transmission of electricity. As currently contemplated by Entergy, Transco would be a FERC-regulated regional transmission company that would operate independently of Entergy's utility subsidiaries. Under the proposal, the transmission system and the employees who operate and maintain it would be transferred from Entergy's utility subsidiaries to a separate legal entity owned by Entergy, which would then be responsible for the operation and maintenance of the transmission system. The domestic utility companies would retain a passive ownership interest in the Transco, but would not control or otherwise direct the operation and management of Transco. Entergy anticipates filing with the FERC in late 1998 or early 1999, seeking a declaration as to whether a Transco would ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS be consistent with applicable FERC precedent on the formation of independent regional entities. Subsequent filings will be made with the FERC and the applicable state regulatory authorities seeking necessary approvals for the formation of the Transco. Retail and Wholesale Rate Issues See Note 2 to the Form 10-K for information regarding the settlement agreement filed with the APSC and the establishment of a transition cost account. The estimated reserve recorded in December 1997 was adjusted in September 1998 as a result of a mid-year streamlined earnings review procedure for a negative net income impact of $3.7 million. Entergy Arkansas also recorded an additional reserve of $27.9 million in September 1998 in the transition cost account to reflect the estimated 1998 accrual of excess earnings. Additional reserves may also be required in 1999 based on earnings reviews. On June 30, 1998, the PUCT began its deliberations on the Entergy Gulf States rate case filed in November 1996. The PUCT did not accept settlements filed in March and June by Entergy Gulf States and various intervenor groups. On July 22, 1998, the PUCT issued an order and after making modifications on rehearing, issued a second order on rehearing on October 14, 1998. The second order on rehearing reduces Entergy Gulf States' Texas rates by $111 million annually effective December 1, 1998, offset through May 1999 by the accelerated recovery of accounting order deferrals, resulting in a net reduction of $69 million on an annual basis through that date. This order also required a refund of $76 million. This refund is calculated as a rate reduction and service quality refund retroactive to June 1, 1996, offset by the accelerated recovery of the accounting order deferrals, actual taxes paid, and a fuel surcharge. This refund amount was reduced by $32 million from the original refund ordered in the July 22, 1998 order, but was offset by the passage of time from the original rate reduction's assumed effective date of August 1998 to the new assumed effective date of December 1, 1998. Entergy Gulf States established reserves of $381 million ($227 million net of tax) in the fourth quarter of 1997 for the probable outcome of the pending rate case and abeyed plant cost proceedings in Texas based on management's estimates of the effects thereof. Entergy Gulf States recorded additional reserves of $123.5 million ($73.6 million net of tax) in 1998 based on management's estimates which include $101.3 million ($60.3 million net of tax) for the retroactive rate reductions for the nine months ended September 30, 1998 and $22.2 million ($13.3 million net of tax) for the prospective portion of the rate reduction for the three months ended September 30, 1998. The results of operations of Entergy Gulf States for the three and nine months ended September 30, 1998 reflect these corresponding charges in operating revenues. See Note 2 for further discussion of accounting order deferrals and actual taxes paid. The PUCT's October 14, 1998 order on rehearing, if sustained, is expected to have a material adverse effect on Entergy Gulf States' revenues, cash flows, and net income. Entergy Gulf States will file a motion for reconsideration with the PUCT. The PUCT has until November 28, 1998 to act on the motion, or the motion is overruled by operation of law. Entergy Gulf States plans to seek such further remedies as may be available to it, including appealing the order if the motion for reconsideration fails to alter what Entergy Gulf States believes is an incorrect result based on the evidence before the PUCT. On July 29, 1998, a Texas state district court granted Entergy Gulf States' request for a temporary restraining order until August 12, 1998 to prevent enforcement of the PUCT's July 22, 1998 order. Subsequent to this, Entergy Gulf States entered an agreement with the PUCT that allowed for refunds pursuant to the PUCT's order to begin in August 1998 and delayed the implementation of the ordered rate decrease until 18 days following the issuance by the PUCT of a final and appealable order. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS A component of the rulings discussed above was a disallowance by the PUCT of recovery of approximately $49 million of Entergy's affiliate costs allocated to Entergy Gulf States in Texas. Entergy's affiliate costs result from managing Entergy Gulf States' fossil and nuclear generating plants and transmission and distribution systems, as well as providing human resources, accounting, legal, and other necessary services to Entergy Gulf States and Entergy Corporation's other electric utility subsidiaries. The PUCT had previously issued proposed rules governing affiliate transactions of Texas utility companies, including Entergy Gulf States. Hearings concerning the proposed rules were conducted by the PUCT in July 1998. However, the PUCT has withdrawn these proposed rules pending the outcome of the 1999 legislative session. The rules, if adopted in their proposed form, could severely restrict the types and extent of services provided to Entergy Gulf States by Entergy Services and Entergy Operations and will result in higher costs to Entergy Gulf States for equivalent services. It is not certain when or in what form the rules may be adopted. On March 13, 1998, on remand from the Supreme Court of Texas, the PUCT ruled by a vote of two to one that Entergy Gulf States should not be allowed to recover in rates any of the $1.4 billion of abeyed costs associated with its Texas jurisdictional investment in River Bend. These costs have been held in abeyance since 1988, during which time they have been the subject of appeals by Entergy Gulf States. Entergy Gulf States filed a motion for rehearing on this issue with the PUCT on April 2, 1998. This motion was denied by the PUCT by order dated July 8, 1998. Entergy Gulf States has again appealed the PUCT's decision on this matter to the Travis County District Court in Texas and it is currently in the scheduling process. Based on advice of counsel, management believes that it is probable that the matter will be remanded again to the PUCT for a further ruling on the prudence of the abeyed plant costs and it is reasonably possible that some portion of these costs will be included in rate base. On September 8, 1998, Entergy Gulf States filed an application with the PUCT for an increase in its fixed fuel factor and a surcharge to Texas retail customers for the cumulative under-recovery of fuel and purchased power costs. The proposed increase in the fixed fuel factor would result in increased revenues of $55.6 million annually compared to the current fixed fuel factor. The proposed surcharge is designed to recover $128.1 million, including interest, for fuel under-recoveries incurred during the period July 1, 1996 through June 30, 1998. Hearings on the merits were held in October 1998, and the PUCT is required to rule on the application by December 7, 1998. All amounts at issue in this proceeding will be subject to review in a future fuel reconciliation proceeding before the PUCT, at which time the PUCT will consider the reasonableness of Entergy Gulf States' fuel and purchased power expenses extending back to July 1, 1996. Entergy Gulf States cannot predict the outcome of this proceeding. In July 1998, Entergy Gulf States agreed to implement an $18 million rate reduction for Louisiana retail electric customers effective July 29, 1998 to reflect reductions that are expected to occur as a result of Entergy Gulf States' annual LPSC earnings reviews. Proceedings on issues in the second, third, and fourth post-Merger earnings analyses will continue. On September 10, 1998, the LPSC issued an order in the third required post-Merger earnings analysis that required a refund of $44.8 million for the period June 1, 1996 through May 31, 1997, and a prospective rate reduction of $54.6 million effective September 20, 1998. Due to the $18 million reduction that was implemented on July 29, 1998, an additional prospective reduction of $36.6 million would be required as a result of the third earnings analysis. Entergy Gulf States has not reserved for this reduction. Entergy Gulf States has appealed this order and has been granted injunctive relief pending a final decision on appeal. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS In July 1998, the LPSC also issued an order extending the Formula Rate Plan (FRP) for Entergy Louisiana through three additional annual filings. On September 10, 1998, Entergy Louisiana filed its FRP Evaluation Report, based on a 1997 test year. The filing indicated that earnings were such that no change in rates would be warranted with the exception of the elimination of a $3.7 million one-time credit that will result in a rate increase of this amount. Hearings will be conducted on this filing. On September 18, 1998, the MPSC announced a net rate reduction of $127.1 million, effective October 1, 1998 for all Entergy Mississippi customers. The reduction was scheduled to coincide with the expiration of the phase-in plan, which was implemented in the late 1980's in regard to Entergy Mississippi's portion of costs of System Energy's Grand Gulf 1 unit. The reduction was partially offset by the accelerated recovery of Entergy Mississippi's Grand Gulf purchased power obligation and the recovery of a portion of Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase. See Note 2 for further discussion of these offsets. The rate reduction will not result in a decrease in Entergy Mississippi's income, as the phase-in plan deferrals have now been fully amortized and there is no further expense associated with the phase-in plan to be recognized. See Note 2 to the Form 10-K and Note 2 herein for additional information regarding the above rate actions as well as a discussion of the ongoing trend of regulatory mandated rate reductions, incentive and performance-based regulation, and filings made with state and local regulators regarding an orderly transition to a more competitive market for electricity. Domestic and Foreign Competitive Businesses Following the conclusion of Entergy's Board of Directors meeting on August 2, 1998, management announced its intention to focus Entergy's resources on its domestic utilities, international power generation, nuclear operations, and power trading and marketing. Consistent with this intention, management expects to sell several businesses before the end of 1999. These businesses include the international distribution businesses of London Electricity and CitiPower Pty., Entergy's security monitoring business, and portions of Entergy's telecommunications interests. See Note 7 for further information. Proceeds from the sales will be used, in part, to pay off debt associated with the acquisition of these businesses. Also refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-K for a discussion of Entergy Corporation's current investments in nonregulated and foreign energy-related businesses. These investments may involve a greater risk than domestic regulated utility enterprises. For the nine months ended September 30, 1998, these investments contributed approximately $79 million to Entergy Corporation's consolidated net income. Entergy's investment in Entergy London contributed $161 million to net income for the nine months ended September 30, 1998, including $97 million due to recognition of foreign tax credits and other tax benefits and $39 million net of tax due to capitalization of information technology systems development costs, an adjustment to pension surplus based on actuarial studies, and a decrease in a provision for restructuring. Domestic power marketing operations and foreign power development and generation operations incurred net losses of $21 million and $6 million, respectively, for the nine months ended September 30, 1998, as a result of power trading losses and a counterparty default. CitiPower Pty., an Australian distribution business, contributed $21 million; and Edesur, S. A., an Argentine distribution business, contributed $5.2 million to net income. Entergy's domestic unregulated energy-related retail businesses had a net loss of $81 million for the nine months ended September 30, 1998, partially as a result of the net of tax loss of $36 million on the September 30, 1998 sale of Efficient Solutions, Inc., formerly Entergy Integrated Solutions, Inc. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS London Electricity has an exclusive right to supply electricity to residential and small industrial and commercial customers in its franchise area with demand of less than 100 KW. In late 1998, however, this segment of the supply business will be opened to competition, subject to a six-month transition period. This means the retail market will be fully opened and all customers will have access to competition by June 1999. See Note 2 in the Form 10-K for a discussion of Entergy London regulatory matters. In September 1998, Damhead Creek, a 775 MW combined cycle gas turbine merchant power plant located in Southeast England, entered the construction phase. Agreements have been finalized regarding interim financing and construction and gas supply contracts. Damhead Creek's power will be sold through the England and Wales Electricity Pool. The target date for commercial operation is the fourth quarter of 2000. See Note 4 for information regarding the financing. In September 1998, EPMC entered into a six-year energy management agreement (beginning January 1, 2000) with Ormet Primary Aluminum Corporation, which produces high-quality aluminum products for the fabrication, extrusion, and conversion markets. Under the terms of the contract, EPMC will acquire and optimize supply of up to 535 megawatts of electricity for Ormet's aluminum reduction plant and rolling mill in Hannibal, Ohio. In October 1998, Entergy Nuclear, Inc. (Entergy Nuclear) and the Maine Yankee Atomic Power Company, which owns the Maine Yankee nuclear plant, signed a long-term contract that calls for Entergy Nuclear to provide management oversight of decommissioning activities at Maine Yankee through the projected completion of such activities in 2004. Management believes this arrangement is the first of its kind for decommissioning and reflects a growing trend among utilities to utilize outside management for nuclear activities. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS", Note 7, and Note 13 in the Form 10- K for a discussion of Entergy's major nonregulated business opportunities and foreign energy-related investments. Domestic Deregulated 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. In late 1997, Cajun's 30% interest in River Bend was transferred by the Cajun bankruptcy trustee to Entergy Gulf States and such interest is being treated as a deregulated operation. The domestic deregulated operations of Entergy Gulf States showed operating income of $2.3 million and an operating loss of $3.3 million during the three and nine months ended September 30, 1998, respectively, compared to operating income of $6.6 million and $15.8 million during the comparable periods in 1997. The decrease in operating income from these deregulated operations for the three and nine months ended September 30, 1998 was principally due to (1) lower revenues from the wholesale jurisdiction resulting from reduced rates charged to both a large wholesale customer and to Cajun for transmission service, and (2) revenues from off-system sales of the transferred 30% portion of River Bend not fully recovering the costs associated with those sales. For the nine months ended September 30, 1998, the decrease in operating income was also due to decreased steam products revenues as a result of the revised contractual arrangement with the steam customer. These decreases were partially offset by higher revenues from the Louisiana deregulated portion of River Bend. The future impact of these deregulated operations on Entergy's and Entergy Gulf States' results of operations and financial position will depend on operating costs, efficiency and availability of generating units, and market prices for energy over the remaining life of the assets. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Accounting Issues New Accounting Standards - In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," which will be effective for Entergy in 2000. In early 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", which will be effective for Entergy in 1999. The adoption of SFAS 133 and SOP 98-1 is not expected to have a material effect on the financial position, results of operations, or cash flows of Entergy. See Note 6 herein for additional developments concerning these new accounting standards. Continued Application of SFAS 71 - 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 regulation 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 for the foreseeable future. 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 "Domestic Deregulated Operations" above. Although discussions with regulatory authorities regarding retail competition have occurred and are expected to continue, definitive outcomes have not yet been determined. 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. Year 2000 Issues Entergy has been evaluating its computer software and hardware, databases, embedded microprocessors (collectively referred to as "IT and non-IT assets"), suppliers, and other relationships to determine which actions are required to prevent problems related to the year 2000, and the resources required to take such actions. These problems may result in malfunctions in certain software applications, databases, and computer equipment with respect to dates on or after January 1, 2000, unless corrected. These malfunctions could disrupt operations of nuclear or fossil generating plants, operation of transmission and distribution systems, access to interconnections with neighboring utilities, and cause other operational problems. Entergy has adopted a four-step approach to address Year 2000 issues including: 1) an inventory of all IT and non-IT assets; 2) an assessment to determine if the assets are critical to the business and, if so, whether Year 2000 has an impact; 3) remediation to fix or replace systems determined to be Year 2000 deficient; and 4) certification of such critical systems to confirm Year 2000 compliance. Entergy has substantially completed its inventory of IT and non-IT assets, has identified systems and equipment that could be affected by the millennium change, and has assessed the risk of potential failure for most of its assets. Management defines year 2000 compliant services or products as those that perform the business, office automation, or process control requirements as designed into the twenty-first century. Management defines an asset as "certified" as year 2000 compliant after it has been modified or upgraded if necessary, tested, and deployed in the operating environment. Certification of Entergy's assets that significantly affect operations is scheduled to be substantially complete by the end of the first quarter of 1999, and is on schedule and approximately 40% complete at this time. Certification will continue for assets that do not significantly affect operations, but do impact efficiency and profitability, throughout 1999. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Entergy is currently performing an assessment of its vendors that affect Entergy's operations. Entergy's goal is to receive written confirmation of the year 2000 compliance of its critical vendors. Alternative suppliers or contingency plans will be considered for those suppliers who do not demonstrate a sufficient effort towards year 2000 readiness. Entergy intends to implement year 2000 contingency plans for suppliers throughout 1998 and 1999. Maintenance or modification costs will be expensed as incurred, while the costs of new software will be capitalized and amortized over the software's useful life. Management's current estimate of maintenance and modification costs related to year 2000 issues to be incurred in 1998 through mid-2000 is approximately $81 million, of which approximately $15 million has been incurred through September 1998. These expenses are being funded through operating cash flows. Capitalized costs related to year 2000 issues are not considered material. An independent consultant has been engaged to assist management in its assessment of the risks of year 2000 malfunctions. This assessment is currently in progress. Based on the risk determinations of this assessment, and the results of certification activities, management will create and implement contingency plans to address year 2000 issues, as needed, throughout 1999. Please see "Forward Looking Information" herein. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Effective February 1, 1997, Entergy Corporation acquired London Electricity. Accordingly, consolidated net income for the nine months ended September 30, 1997 reflects London Electricity's results subsequent to February 1, 1997. Net Income Consolidated net income increased for the three and nine months ended September 30, 1998, primarily due to higher competitive business revenues and lower income taxes, partially offset by an increase in operating expenses. The increase in competitive business revenues was partially offset by losses at EPMC due to increased power trading and a counterparty default. Additional reserves were recorded for rate reductions ordered by the PUCT with respect to Texas retail customers which totaled $13.3 million and $73.6 million net of tax for the three and nine months ended September 30, 1998, respectively. Income taxes were lower for the three and nine months ended September 30, 1998 due to an additional reduction in the UK corporation tax rate from 31% to 30% in the third quarter of 1998 and the recording of a one-time windfall profits tax at London Electricity in July 1997. This decrease was partially offset by a one-time reduction in income tax expense for London Electricity due to a reduction in the UK corporation tax rate from 33% to 31% in July 1997. Excluding the effects of the additional reserves in 1998 and the net tax adjustments in 1998 and 1997, net income would have decreased approximately $17.8 million, net of tax, for the three months ended September 30, 1998, and increased approximately $39.1 million, net of tax, for the nine months ended September 30, 1998 compared to the respective periods ended September 30, 1997. Significant factors affecting the results of operations and causing variances between the three and nine months ended September 30, 1998 and 1997 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 three and nine months ended September 30, 1998 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base revenues ($66.5) ($238.5) Rate riders (17.5) (54.0) Fuel cost recovery 17.0 (39.1) Sales volume/weather 86.8 158.0 Other revenue (including unbilled) (20.2) 8.4 Sales for resale 34.8 67.4 ----- ------ Total $34.4 ($97.8) ===== ====== Electric operating revenues for the domestic utility companies increased for the three months ended September 30, 1998, primarily due to increased sales volume at all domestic utility companies, increased sales for resale at Entergy Gulf States, and increased fuel cost recovery revenues at Entergy Gulf States, Entergy ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Mississippi, and Entergy New Orleans. Sales volume increased as a result of significantly warmer weather in the third quarter of 1998. Sales for resale at Entergy Gulf States increased due to an increase in sales to non-associated utilities and additional revenues related to the sale of energy from the 30% interest in River Bend transferred by the Cajun bankruptcy trustee to Entergy Gulf States in December 1997. Fuel cost recovery revenues, which do not impact net income, increased at Entergy Gulf States, Entergy Mississippi, and Entergy New Orleans primarily due to increased fuel prices and increased generation. Partially offsetting these increases were decreases in base revenue, rate rider revenue, and other revenue (primarily unbilled). Base revenues decreased at Entergy Gulf States primarily due to reserves recorded for rate reductions ordered by the PUCT with respect to Texas retail customers, aggressive pricing strategies for targeted customer segments, and base rate reductions in Louisiana that became effective in March and July 1998. Rate rider revenue, which does not affect net income, decreased at Entergy Arkansas due to the decline in Grand Gulf 1 cost recovery rate rider revenues reflecting scheduled reductions in the phase-in plan and the Stipulation and Settlement Agreement with the APSC. Unbilled revenue decreased at Entergy Louisiana primarily as a result of decreased sales to three large industrial customers and a decrease in sales volume due to distribution outages caused by major storms at the end of September 1998. Electric operating revenues for the domestic utility companies decreased for the nine months ended September 30, 1998. The decrease was primarily due to a decrease in base revenues at Entergy Gulf States, decreased rate rider revenue at Entergy Arkansas, and decreased fuel cost recovery revenues at Entergy Louisiana. Base revenues at Entergy Gulf States decreased primarily due to reserves recorded during the nine months ended September 30, 1998 for rate reductions ordered by the PUCT with respect to Texas retail customers, aggressive pricing strategies for targeted customer segments, and base rate reductions in Louisiana that became effective in March and July 1998. The decrease in rate rider revenue at Entergy Arkansas, which does not affect net income, was due to the scheduled decline in Grand Gulf 1 cost recovery rate rider revenues as provided in the phase-in plan. Fuel cost recovery revenues at Entergy Louisiana decreased due to lower pricing resulting from a change in generation mix. Partially offsetting these decreases were increases in sales volume and sales for resale. Sales volume increased for all domestic utility companies as a result of significantly warmer weather in 1998. Sales for resale at Entergy Gulf States increased due to an increase in sales to non-associated utilities and additional revenues related to the sale of energy from River Bend as discussed above. Competitive business revenues increased for the three and nine months ended September 30, 1998, primarily due to the significant increase in revenue at EPMC and EPI. This revenue increased as a result of increased sales volume on the spot market driven by increased demand resulting from increased marketing efforts and significantly warmer weather in 1998. This increase was offset for EPMC by increased power purchased for resale as discussed in expenses below. Entergy London revenues for the nine months ended September 30, 1998 were higher due to nine months of activity under Entergy ownership recorded in 1998 compared to eight months in 1997, partially offset by the impact of a 3% price reduction, effective April 1, 1997, for kilowatt-hours distributed. An additional 3% price reduction, effective April 1, 1998, also impacted the three and nine months ended September 30, 1998. Expenses Operating expenses increased for the three and nine months ended September 30, 1998. The increase in the three months ended September 30, 1998 was primarily due to increases in fuel expenses, purchased power expenses, other operation and maintenance expenses, and other regulatory charges, partially offset by the decreased amortization of rate deferrals. The increase in the nine months ended September 30, 1998 was primarily due to increases in purchased power expenses, other operation and maintenance expenses, depreciation, amortization, and decommissioning expense, and other regulatory charges, partially offset by a decrease in amortization of rate deferrals. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS The increase in fuel expenses for the three months ended September 30, 1998 was primarily due to increased volume of fuel purchased for resale at EPMC. The increase in purchased power expenses for the three and nine months ended September 30, 1998 was primarily the result of significantly increased power trading by EPMC. Also, for the three months ended September 30, 1998, the increase in purchased power expenses at EPMC was due to a $44 million counterparty default. Other regulatory charges for the three and nine months ended September 30, 1998, increased due to additional accruals made in 1998 for the transition cost account at Entergy Arkansas and the over-recovery of Grand Gulf 1-related costs at Entergy Mississippi. The increase in other operation and maintenance expenses for the three and nine months ended September 30, 1998 was principally due to: i) the write-off of certain costs related to Efficient Solutions, Inc. and ETHC's security companies in preparation for the sale; ii) the additional operation and maintenance expenses of security companies acquired by ETHC; and iii) increased transmission expenses at EPMC due to significantly increased power trading sales volume. These increases in other operation and maintenance expenses were partially offset by capitalization of information technology systems development costs, an adjustment to pension surplus based on actuarial studies, and a decrease in a provision for restructuring at London Electricity. The decrease in the amortization of rate deferrals was caused by a lower amortization as prescribed in the Grand Gulf 1 rate phase-in plan and the Stipulation and Settlement Agreement with the APSC at Entergy Arkansas and the expiration of the Louisiana retail phase-in plan for River Bend in February 1998 at Entergy Gulf States. Other The decrease in other income was a result of the loss on the sale of Efficient Solutions, Inc. in September 1998. See Note 7 for further information. Interest on long-term debt decreased for the three and nine months ended September 30, 1998, primarily due to the retirement, redemption, or refinancing of certain long-term debt in 1998 at Entergy Arkansas, Entergy Gulf States, and System Energy. The effective income tax rates for the three months ended September 30, 1998 and 1997 were 22.9% and 79.0%, respectively. The effective income tax rates for the nine months ended September 30, 1998 and 1997 were 26.4% and 57.3%, respectively. The decreases were due to i) the impact of the one-time windfall profits tax recorded in July 1997, partially offset by a reduction in the UK corporation tax rate from 33% to 31% in the same period, ii) the recording of a $44 million deferred tax benefit in June 1998 related to expected utilization of Entergy's capital loss carryforwards, and iii) the impact of an additional reduction in the UK corporation tax rate from 31% to 30% in the third quarter of 1998. The decrease in the three months ended September 30, 1998 was also due to decreased pretax income at certain competitive businesses and the expected utilization of foreign tax credits.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Nine Months Ended 1998 1997 1998 1997 (In Thousands, Except Share Data) Operating Revenues: Domestic electric $2,032,463 $1,998,058 $4,854,872 $4,952,725 Natural gas 17,003 17,516 91,616 98,037 Steam products 11,626 11,142 32,151 35,103 Competitive businesses 2,526,355 770,871 4,430,714 1,935,565 ---------- ---------- ---------- ---------- Total 4,587,447 2,797,587 9,409,353 7,021,430 ---------- ---------- ---------- ---------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 579,961 509,532 1,256,778 1,248,052 Purchased power 2,423,958 702,582 4,010,896 1,593,270 Nuclear refueling outage expenses 20,445 18,675 64,134 49,083 Other operation and maintenance 482,129 420,012 1,466,322 1,358,929 Depreciation, amortization, and decommissioning 256,375 246,736 753,922 716,051 Taxes other than income taxes 91,033 92,233 277,145 275,429 Other regulatory charges (credits) 71,542 22,541 11,759 (34,230) Amortization of rate deferrals 71,331 112,659 219,507 336,124 ---------- ---------- ---------- ---------- Total 3,996,774 2,124,970 8,060,463 5,542,708 ---------- ---------- ---------- ---------- Operating Income 590,673 672,617 1,348,890 1,478,722 ---------- ---------- ---------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 4,027 1,777 9,650 7,845 Sale of non-regulated business (68,590) - (68,590) - Miscellaneous - net 18,660 (914) 68,440 45,703 ---------- ---------- ---------- ---------- Total (45,903) 863 9,500 53,548 ---------- ---------- ---------- ---------- Interest Charges: Interest on long-term debt 182,899 208,909 565,785 599,709 Other interest - net 11,481 16,541 35,636 39,594 Distributions on preferred securities of subsidiaries 13,407 4,709 33,535 13,591 Allowance for borrowed funds used during construction (3,453) (1,455) (8,015) (6,332) ---------- ---------- ---------- ---------- Total 204,334 228,704 626,941 646,562 ---------- ---------- ---------- ---------- Income Before Income Taxes 340,436 444,776 731,449 885,708 Income Taxes 77,839 351,455 192,820 507,323 ---------- ---------- ---------- ---------- Net Income before Preferred Dividend Requirements and Other 262,597 93,321 538,629 378,385 Preferred and Preference Dividend Requirements of Subsidiaries and Other 11,611 12,379 35,091 41,405 ---------- ---------- ---------- ---------- Consolidated Net Income 250,986 80,942 503,538 336,980 Other Comprehensive Income: Foreign Currency Translation Adjustment (14,708) (15,885) (18,556) (27,407) ---------- ---------- ---------- ---------- Comprehensive Net Income $236,278 $65,057 $484,982 $309,573 ========== ========== ========== ========== Earnings per average common share: Basic and diluted $1.02 $0.33 $2.04 $1.41 Dividends declared per common share $0.30 $0.90 $1.20 $1.80 Average number of common shares outstanding: Basic 246,615,620 242,172,319 246,331,931 238,653,723 Diluted 246,699,893 242,258,956 246,432,782 238,735,315 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Nine Months Ended September 30, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income before preferred dividend requirements and other $538,629 $378,385 Noncash items included in net income: Amortization of rate deferrals 219,507 336,124 Other regulatory charges 11,759 (34,230) Depreciation, amortization, and decommissioning 753,922 716,051 Deferred income taxes and investment tax credits (125,224) (169,887) Allowance for equity funds used during construction (9,650) (7,845) Sale of non-regulated businesses 68,590 - Changes in working capital: Receivables (438,679) (175,147) Fuel inventory 26,119 68,892 Accounts payable 286,360 59,540 Taxes accrued 338,440 387,233 Windfall profit tax liability - 234,080 Interest accrued (19,151) (30,923) Deferred fuel (121,413) (31,819) Other working capital accounts (94,325) (71,912) Reserve for rate refund 76,883 - Provision for estimated losses and reserves (132,556) (40,814) Decommissioning trust contributions and realized change in trust assets (56,915) (50,950) Other (49,742) 7,937 ---------- ---------- Net cash flow provided by operating activities 1,272,554 1,574,715 ---------- ---------- Investing Activities: Construction/capital expenditures (712,671) (554,638) Allowance for equity funds used during construction 9,650 7,845 Nuclear fuel purchases (59,409) (52,323) Proceeds from sale/leaseback of nuclear fuel 78,969 91,504 Acquisition of London Electricity, net of cash acquired - (1,951,701) Investment in other nonregulated/nonutility properties (40,704) (10,576) Sale of non-regulated businesses (21,893) - Other (35,595) (25,863) ---------- ---------- Net cash flow used in investing activities (781,653) (2,495,752) ---------- ---------- See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Nine Months Ended September 30, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Financing Activities: Proceeds from the issuance of: General and refunding mortgage bonds 78,703 64,827 First mortgage bonds 141,994 84,064 Bank notes and other long-term debt 282,219 1,717,569 Preferred securities of subsidiary trusts and partnerships - 82,323 Common stock 15,333 238,193 Retirement of: First mortgage bonds (351,335) (327,692) General and refunding mortgage bonds (110,000) (7,622) Other long-term debt (211,754) (76,583) Redemption of preferred stock (10,250) (119,367) Changes in short-term borrowings - net (17,964) 103,454 Preferred stock dividends paid (35,217) (39,540) Common stock dividends paid (296,022) (328,182) ---------- ---------- Net cash flow provided by (used in) financing activities (514,293) 1,391,444 ---------- ---------- Effect of exchange rates on cash and cash equivalents 1,006 2,655 ---------- ---------- Net increase (decrease) in cash and cash equivalents (22,386) 473,062 Cash and cash equivalents at beginning of period 830,547 388,703 ---------- ---------- Cash and cash equivalents at end of period $808,161 $861,765 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $654,846 $650,190 Income taxes $97,775 $116,761 Noncash investing and financing activities: Change in unrealized appreciation/(depreciation) of decommissioning trust assets ($4,696) $16,309 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 (In Thousands) ASSETS Current Assets: Cash and cash equivalents: Cash $101,056 $85,067 Temporary cash investments - at cost, which approximates market 707,105 700,431 Special deposits - 45,049 ----------- ----------- Total cash and cash equivalents 808,161 830,547 Notes receivable 9,490 8,157 Accounts receivable: Customer (less allowance for doubtful accounts of $31 million in 1998 and $32.8 million in 1997) 580,825 458,085 Other 517,060 225,523 Accrued unbilled revenues 564,447 580,194 Deferred fuel costs 272,009 150,596 Accumulated deferred income taxes 18,800 - Fuel inventory 93,212 119,331 Materials and supplies - at average cost 392,778 367,870 Rate deferrals 46,710 237,302 Prepayments and other 170,600 193,717 ----------- ----------- Total 3,474,092 3,171,322 ----------- ----------- Other Property and Investments: Decommissioning trust funds 641,270 589,050 Non-regulated investments 529,023 568,951 Other 222,526 225,818 ----------- ----------- Total 1,392,819 1,383,819 ----------- ----------- Utility Plant: Electric 25,774,603 25,310,122 Plant acquisition adjustment - Entergy Gulf States 426,961 439,160 Electric plant under leases 675,317 674,483 Property under capital leases - electric 117,772 134,278 Natural gas 183,438 169,964 Steam products 83,037 82,289 Construction work in progress 811,872 565,667 Nuclear fuel under capital leases 254,062 269,011 Nuclear fuel 59,959 72,875 ----------- ----------- Total 28,387,021 27,717,849 Less - accumulated depreciation and amortization 10,205,316 9,585,021 ----------- ----------- Utility plant - net 18,181,705 18,132,828 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 133,687 162,602 SFAS 109 regulatory asset - net 1,148,885 1,174,187 Unamortized loss on reacquired debt 184,931 196,891 Other regulatory assets 514,416 466,780 Long-term receivables 35,163 36,984 CitiPower license (net of amortization of $32.2 million in 1998 and $25.6 million in 1997) 436,738 486,153 London Electricity license (net of amortization of $58.5 million in 1998 and $31.1 million in 1997) 1,344,518 1,327,312 Other 523,305 461,822 ----------- ----------- Total 4,321,643 4,312,731 ----------- ----------- TOTAL $27,370,259 $27,000,700 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 (In Thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Currently maturing long-term debt $323,992 $390,674 Notes payable 414,052 428,964 Accounts payable 1,197,566 915,800 Customer deposits 178,877 178,162 Taxes accrued 702,078 359,996 Accumulated deferred income taxes - 56,524 Interest accrued 194,873 214,763 Dividends declared 8,040 8,166 Obligations under capital leases 138,526 167,700 Other 26,295 81,303 ----------- ----------- Total 3,184,299 2,802,052 ----------- ----------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 4,502,106 4,567,052 Accumulated deferred investment tax credits 572,115 587,781 Obligations under capital leases 233,482 236,000 Other 1,855,571 1,857,514 ----------- ----------- Total 7,163,274 7,248,347 ----------- ----------- Long-term debt 8,942,186 9,068,325 Subsidiaries' preferred stock with sinking fund 178,755 185,005 Subsidiary's preference stock 150,000 150,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated deferrable debentures 215,000 215,000 Company-obligated redeemable preferred securities of subsidiary partnership holding solely junior subordinated deferrable debentures 300,000 300,000 Shareholders' Equity: Subsidiaries' preferred stock without sinking fund 334,455 338,455 Common stock, $.01 par value, authorized 500,000,000 shares; issued 246,763,336 shares in 1998 and 246,149,198 shares in 1997 2,468 2,461 Additional paid-in capital 4,629,098 4,613,572 Retained earnings 2,365,285 2,157,912 Cumulative foreign currency translation adjustment (88,373) (69,817) Less - treasury stock (222,354 shares in 1998 and 306,852 shares in 1997) 6,188 10,612 ----------- ----------- Total 7,236,745 7,031,971 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $27,370,259 $27,000,700 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Domestic Electric Operating Revenues: Residential $ 844.5 $ 803.6 $ 40.9 5 Commercial 454.9 466.2 (11.3) (2) Industrial 496.3 532.6 (36.3) (7) Governmental 48.9 46.8 2.1 4 --------------------------------- Total retail 1,844.6 1,849.2 (4.6) - Sales for resale 144.9 110.1 34.8 32 Other 43.0 38.8 4.2 11 --------------------------------- Total $ 2,032.5 $ 1,998.1 $ 34.4 2 ================================= Billed Electric Energy Sales (GWH): Residential 11,229 9,892 1,337 14 Commercial 7,122 6,563 559 9 Industrial 11,311 11,425 (114) (1) Governmental 745 693 52 8 --------------------------------- Total retail 30,407 28,573 1,834 6 Sales for resale 3,005 2,883 122 4 --------------------------------- Total 33,412 31,456 1,956 6 ================================= Nine Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Domestic Electric Operating Revenues: Residential $ 1,811.2 $ 1,759.9 $ 51.3 3 Commercial 1,148.4 1,197.0 (48.6) (4) Industrial 1,380.5 1,506.5 (126.0) (8) Governmental 133.2 128.8 4.4 3 --------------------------------- Total retail 4,473.3 4,592.2 (118.9) (3) Sales for resale 335.2 267.8 67.4 25 Other 46.4 92.7 (46.3) (50) --------------------------------- Total $ 4,854.9 $ 4,952.7 ($97.8) (2) ================================= Billed Electric Energy Sales (GWH): Residential 24,166 21,823 2,343 11 Commercial 17,446 16,410 1,036 6 Industrial 32,577 33,560 (983) (3) Governmental 2,042 1,886 156 8 --------------------------------- Total retail 76,231 73,679 2,552 3 Sales for resale 7,580 7,136 444 6 --------------------------------- Total 83,811 80,815 2,996 4 ================================= ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three and nine months ended September 30, 1998 primarily due to decreases in electric operating revenues, partially offset by decreases in operating expenses and interest expense. Significant factors affecting the results of operations and causing variances between the three and nine months ended September 30, 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 1998 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base revenues ($1.6) ($3.7) Rate riders (30.3) (77.8) Fuel cost recovery (11.1) (18.6) Sales volume/weather 27.7 50.2 Other revenue (including unbilled) 0.2 17.5 Sales for resale (3.7) (63.6) ------ ------ Total ($18.8) ($96.0) ====== ====== Electric operating revenues decreased for the three and nine months ended September 30, 1998, primarily due to a decrease in rate rider revenue and fuel cost recovery revenues, which do not affect net income, partially offset by an increase in sales volume. Electric operating revenues decreased for the nine months ended September 30, 1998, also due to a decrease in sales for resale, partially offset by an increase in other revenue (including unbilled). Rate rider revenue, which does not affect net income, decreased due to the decline in Grand Gulf 1 cost recovery rate rider revenues reflecting scheduled reductions in the phase- in plan and the Stipulation and Settlement Agreement with the APSC. See Note 2 for further discussion. Fuel cost recovery revenues decreased due to unfavorable pricing resulting from a change to a fixed fuel factor in January 1998, partially offset by an increase in generation. Sales volume increased as a result of significantly warmer weather in 1998. Sales for resale decreased for the nine months ended September 30, 1998, due to a decrease in sales to associated companies. This decrease was a result of reduced generation due to outages at both ANO1 and ANO2 and restricted generation at the Independence and White Bluff coal plants due to disruption in coal deliveries during the second quarter of 1998. Unbilled revenue increased for the nine months ended September 30, 1998, primarily as a result of increased sales volume due to warmer weather. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Operating expenses decreased for the three and nine months ended September 30, 1998, primarily due to decreases in fuel expenses and the amortization of Grand Gulf 1 rate deferrals, partially offset by an increase in other regulatory charges. Fuel expenses decreased primarily due to the impact of the under-recovered deferred fuel cost in excess of the fixed fuel factor billed to retail customers. The decrease in the amortization of Grand Gulf 1 rate deferrals was due to a decrease in amortization prescribed in the Grand Gulf 1 rate phase-in plan and the Stipulation and Settlement Agreement with the APSC. The increase in other regulatory charges was a result of additional accruals made in 1998 for the transition cost account. See Note 2 for further discussion of the Stipulation and Settlement Agreement with the APSC and the transition cost account. The increase in other regulatory charges was partially offset by an increase in the net under-recovery of Grand Gulf 1-related costs. Other Interest charges decreased for the three and nine months ended September 30, 1998 primarily due to the retirement of certain long-term debt in 1998. The effective income tax rate of 39.4% for the three months ended September 30, 1998 remained relatively unchanged from the rate of 38.5% for the three months ended September 30, 1997. For the nine months ended September 30, 1998 and 1997, the effective income tax rates were 39.2% and 37.3%, respectively. The increase in 1998 was primarily due to the increased reversal of previously recorded AFUDC amounts included in depreciation.
ENTERGY ARKANSAS, INC. STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Nine Months Ended 1998 1997 1998 1997 (In Thousands) (In Thousands) Operating Revenues $527,059 $545,849 $1,248,205 $1,344,199 -------- -------- ---------- ---------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 63,469 72,147 138,834 201,494 Purchased power 116,085 123,871 326,397 327,725 Nuclear refueling outage expenses 8,128 7,639 23,947 19,905 Other operation and maintenance 79,706 80,280 256,002 252,081 Depreciation, amortization, and decommissioning 44,303 42,745 134,336 125,529 Taxes other than income taxes 8,481 9,114 28,681 27,643 Other regulatory charges 43,983 22,957 21,878 14,208 Amortization of rate deferrals 22,067 38,408 66,202 115,162 -------- -------- ---------- ---------- Total 386,222 397,161 996,277 1,083,747 -------- -------- ---------- ---------- Operating Income 140,837 148,688 251,928 260,452 -------- -------- ---------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 1,934 (316) 4,266 2,572 Miscellaneous - net 2,092 4,573 10,640 14,987 -------- -------- ---------- ---------- Total 4,026 4,257 14,906 17,559 -------- -------- ---------- ---------- Interest Charges: Interest on long-term debt 20,974 23,368 66,095 71,595 Other interest - net 2,307 950 3,667 2,850 Distributions on preferred securities of subsidiary trust 1,275 1,275 3,825 3,825 Allowance for borrowed funds used during construction (1,383) 105 (3,034) (1,632) -------- -------- ---------- ---------- Total 23,173 25,698 70,553 76,638 -------- -------- ---------- ---------- Income Before Income Taxes 121,690 127,247 196,281 201,373 Income Taxes 47,959 48,996 76,960 75,189 -------- -------- ---------- ---------- Net Income 73,731 78,251 119,321 126,184 Preferred Stock Dividend Requirements and Other 2,526 2,733 7,745 8,363 -------- -------- ---------- ---------- Earnings Applicable to Common Stock $71,205 $75,518 $111,576 $117,821 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $119,321 $126,184 Noncash items included in net income: Amortization of rate deferrals 66,202 115,162 Other regulatory charges 21,878 14,208 Depreciation, amortization, and decommissioning 134,336 125,529 Deferred income taxes and investment tax credits (19,501) (58,694) Allowance for equity funds used during construction (4,266) (2,572) Changes in working capital: Receivables (78,001) (13,783) Fuel inventory 890 40,975 Accounts payable 41,397 (20,826) Taxes accrued 82,721 95,308 Interest accrued (2,566) 767 Deferred fuel costs (65,408) 7,688 Other working capital accounts (8,836) (34,326) Decommissioning trust contributions and realized change in trust assets (17,776) (18,255) Provision for estimated losses and reserves (3,800) 5,878 Other 5,816 17,262 --------- --------- Net cash flow provided by operating activities 272,407 400,505 --------- --------- Investing Activities: Construction expenditures (122,209) (101,796) Allowance for equity funds used during construction 4,266 2,572 Nuclear fuel purchases (38,354) (36,633) Proceeds from sale/leaseback of nuclear fuel 38,354 36,553 --------- --------- Net cash flow used in investing activities (117,943) (99,304) --------- --------- Financing Activities: Proceeds from the issuance of first mortgage bonds - 84,064 Retirement of: First mortgage bonds (105,774) (117,587) Other long term debt (45,500) - Redemption of preferred stock (4,000) (4,000) Dividends paid: Common stock (92,600) (97,200) Preferred stock (7,844) (8,462) --------- --------- Net cash flow used in financing activities (255,718) (143,185) --------- --------- Net increase (decrease) in cash and cash equivalents (101,254) 158,016 Cash and cash equivalents at beginning of period 203,391 43,857 --------- --------- Cash and cash equivalents at end of period $102,137 $201,873 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $64,367 $63,660 Income taxes $13,521 $29,011 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $35 $12,867 See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $15,013 $6,076 Temporary cash investments - at cost, which approximates market: Associated companies 18,311 41,389 Other 68,813 110,877 Special deposits - 45,049 ---------- ---------- Total cash and cash equivalents 102,137 203,391 Accounts receivable: Customer (less allowance for doubtful accounts of $1.8 million in 1998 and 1997) 110,844 71,910 Associated companies 74,918 46,166 Other 7,742 10,282 Accrued unbilled revenues 102,471 89,616 Deferred fuel costs 49,164 - Fuel inventory - at average cost 27,279 28,169 Materials and supplies - at average cost 87,931 79,692 Rate deferrals 9,046 75,249 Deferred nuclear refueling outage costs 25,540 24,335 Prepayments and other 11,006 8,647 ---------- ---------- Total 608,078 637,457 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 11,213 11,213 Decommissioning trust fund 268,384 250,573 Other - at cost (less accumulated depreciation) 4,984 4,939 ---------- ---------- Total 284,581 266,725 ---------- ---------- Utility Plant: Electric 4,709,866 4,650,065 Property under capital leases 51,539 53,843 Construction work in progress 189,875 123,087 Nuclear fuel under capital lease 99,871 92,621 ---------- ---------- Total 5,051,151 4,919,616 Less - accumulated depreciation and amortization 2,252,355 2,116,826 ---------- ---------- Utility plant - net 2,798,796 2,802,790 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 252,407 252,712 Unamortized loss on reacquired debt 52,706 53,780 Other regulatory assets 102,328 79,461 Other 22,781 13,952 ---------- ---------- Total 430,222 399,905 ---------- ---------- TOTAL $4,121,677 $4,106,877 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $865 $60,650 Notes payable 667 667 Accounts payable: Associated companies 84,450 59,438 Other 92,790 76,405 Customer deposits 25,318 23,437 Taxes accrued 160,048 77,327 Accumulated deferred income taxes 13,568 32,239 Interest accrued 26,260 28,826 Co-owner advances 11,443 7,666 Deferred fuel costs - 16,244 Obligations under capital leases 47,788 62,623 Other 19,005 21,696 ---------- ---------- Total 482,202 467,218 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 761,496 759,489 Accumulated deferred investment tax credits 100,050 103,899 Obligations under capital leases 103,621 83,841 Other 211,365 169,884 ---------- ---------- Total 1,176,532 1,117,113 ---------- ---------- Long-term debt 1,170,266 1,244,860 Preferred stock with sinking fund 31,027 31,027 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 112,350 116,350 Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares 470 470 Additional paid-in capital 590,134 590,134 Retained earnings 498,696 479,705 ---------- ---------- Total 1,201,650 1,186,659 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,121,677 $4,106,877 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1998 and 1997 Three Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Electric Operating Revenues: Residential $ 208.0 $ 194.1 $ 13.9 7 Commercial 91.7 105.5 (13.8) (13) Industrial 98.2 112.6 (14.4) (13) Governmental 4.2 5.2 (1.0) (19) ------------------------------ Total retail 402.1 417.4 (15.3) (4) Sales for resale: Associated companies 39.1 53.8 (14.7) (27) Non-associated companies 78.0 67.0 11.0 16 Other 7.8 7.6 0.2 3 ------------------------------ Total $ 527.0 $ 545.8 ($18.8) (3) ============================== Billed Electric Energy Sales (GWH): Residential 2,368 2,031 337 17 Commercial 1,510 1,391 119 9 Industrial 1,901 1,833 68 4 Governmental 67 67 - - ------------------------------ Total retail 5,846 5,322 524 10 Sales for resale: Associated companies 1,523 2,102 (579) (28) Non-associated companies 1,425 2,012 (587) (29) ------------------------------ Total 8,794 9,436 (642) (7) ============================== Nine Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Electric Operating Revenues: Residential $ 447.2 $ 430.7 $ 16.5 4 Commercial 220.0 254.0 (34.0) (13) Industrial 248.9 278.4 (29.5) (11) Governmental 11.2 14.1 (2.9) (21) ------------------------------ Total retail 927.3 977.2 (49.9) (5) Sales for resale: Associated companies 98.7 176.2 (77.5) (44) Non-associated companies 176.1 162.2 13.9 9 Other 46.1 28.6 17.5 61 ------------------------------- Total $1,248.2 $ 1,344.2 ($96.0) (7) =============================== Billed Electric Energy Sales (GWH): Residential 5,229 4,640 589 13 Commercial 3,629 3,371 258 8 Industrial 5,109 4,944 165 3 Governmental 178 184 (6) (3) ------------------------------ Total retail 14,145 13,139 1,006 8 Sales for resale: Associated companies 4,022 7,982 (3,960) (50) Non-associated companies 3,835 5,023 (1,188) (24) ------------------------------ Total 22,002 26,144 (4,142) (16) ==============================
ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended September 30, 1998, primarily due to an increase in operating revenues and a decrease in interest charges, partially offset by higher income taxes. Net income decreased for the nine months ended September 30, 1998, primarily due to a decrease in operating revenues, partially offset by a decrease in interest charges and lower income taxes. The changes in operating revenues for the three and nine months ended September 30, 1998 reflected additional reserves recorded for rate reductions ordered by the PUCT with respect to Texas retail customers which totaled $13.3 million and $73.6 million net of tax, respectively. Excluding the effects of the additional reserves, net income for the three and nine months ended September 30, 1998 would have increased approximately $20.8 million and $31.1 million, respectively. See Note 2 for a discussion of the additional reserves recorded for rate reductions ordered by the PUCT with respect to Texas retail customers. Significant factors affecting the results of operations and causing variances between the three and nine months ended September 30, 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 1998 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base revenues ($58.4) ($183.2) Fuel cost recovery 28.3 28.6 Sales volume/weather 23.0 49.1 Other revenue (including unbilled) (1.4) (0.6) Sales for resale 17.5 46.5 ---- ------ Total $9.0 ($59.6) ==== ====== Electric operating revenues increased for the three months ended September 30, 1998 primarily due to increases in fuel cost recovery revenues, which do not impact net income, and higher sales volume and sales for resale, partially offset by a decrease in base revenues. Electric operating revenues decreased for the nine months ended September 30, 1998 primarily due to the decrease in base revenues exceeding the impact of higher sales volume and increases in fuel cost recovery revenues and sales for resale. Base revenues decreased primarily due to reserves recorded during the three and nine months ended September 30, 1998 for rate reductions ordered by the PUCT with respect to Texas retail customers, aggressive pricing strategies for targeted customer segments, and base rate reductions in Louisiana that became effective in March and July 1998. The increase in fuel cost recovery revenues, which do not affect net income, was due to higher fuel prices and increased generation in 1998. Sales volume increased due to significantly warmer weather in 1998. Sales for resale increased due to additional revenues related to the sale of energy from the 30% interest in River Bend transferred by the Cajun bankruptcy trustee to Entergy Gulf States in December 1997 and an increase in sales to non-associated utilities as a result of an increase in the average price of wholesale energy. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Gas operating revenues decreased for the nine months ended September 30, 1998 due to a lower unit price for gas purchased for resale. Steam operating revenues decreased for the nine months ended September 30, 1998 primarily due to changes in the customer contract, which took effect in August 1997. Expenses Operating expenses for the three and nine months ended September 30, 1998 remained relatively unchanged reflecting increases in other operation and maintenance expenses, taxes other than income taxes, and a net increase in fuel and purchased power expenses, which were offset by a decrease in the amortization of rate deferrals. Other operation and maintenance expenses increased as a result of the inclusion of expenses related to the 30% interest in River Bend transferred by the Cajun bankruptcy trustee to Entergy Gulf States in December 1997. Entergy Gulf States now includes 100% of River Bend's operation and maintenance expenses in its operating expenses, as compared to 70% of such expenses for the three and nine months ended September 30, 1997. Taxes other than income taxes increased due to increased franchise, ad valorem, and payroll taxes. The net increase in fuel and purchased power expenses was primarily due to an increase in generation, partially offset by the impact of the under-recovered deferred fuel costs in excess of the fixed fuel factor billed to Texas retail customers. The amortization of rate deferrals decreased due to the expiration of the Louisiana retail phase- in plan for River Bend in February 1998. Other Interest charges decreased for the three and nine months ended September 30, 1998 primarily due to the retirement, redemption, or refinancing of certain long-term debt in 1997 and 1998. For the three months ended September 30, 1998 and 1997, the effective income tax rates were 42.0% and 40.4%, respectively. The effective income tax rates for the nine months ended September 30, 1998 and 1997 were 43.9% and 37.4%, respectively. The changes in the effective income tax rates in 1998 were primarily due to a decrease in the flow-through of tax benefits related to operating reserves and the increased reversal of previously recorded AFUDC amounts included in depreciation.
ENTERGY GULF STATES, INC. STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Nine Months Ended 1998 1997 1998 1997 (In Thousands) (In Thousands) Operating Revenues: Electric $593,326 $584,357 $1,430,665 $1,490,234 Natural gas 4,410 4,476 27,710 32,387 Steam products 11,626 11,141 32,151 35,102 -------- -------- ---------- ---------- Total 609,362 599,974 1,490,526 1,557,723 -------- -------- ---------- ---------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 159,442 152,511 406,696 411,595 Purchased power 95,358 93,208 254,990 238,977 Nuclear refueling outage expenses 3,403 1,569 11,627 6,787 Other operation and maintenance 99,802 93,978 296,502 269,422 Depreciation, amortization, and decommissioning 50,865 53,768 157,902 160,569 Taxes other than income taxes 33,191 25,800 92,159 81,810 Other regulatory credits (1,373) (5,602) (10,424) (17,550) Amortization of rate deferrals 2,270 26,377 19,480 79,091 -------- -------- ---------- ---------- Total 442,958 441,609 1,228,932 1,230,701 -------- -------- ---------- ---------- Operating Income 166,404 158,365 261,594 327,022 -------- -------- ---------- ---------- Other Income: Allowance for equity funds used during construction 757 235 2,057 1,686 Miscellaneous - net 7,357 7,029 13,855 15,618 -------- -------- ---------- ---------- Total 8,114 7,264 15,912 17,304 -------- -------- ---------- ---------- Interest Charges: Interest on long-term debt 37,104 40,516 114,192 124,257 Other interest - net 1,132 4,704 2,847 8,420 Distributions on preferred securities of subsidiary trust 1,859 1,859 5,578 5,041 Allowance for borrowed funds used during construction (611) (156) (1,625) (1,395) -------- -------- ---------- ---------- Total 39,484 46,923 120,992 136,323 -------- -------- ---------- ---------- Income Before Income Taxes 135,034 118,706 156,514 208,003 Income Taxes 56,721 47,966 68,686 77,700 -------- -------- ---------- ---------- Net Income 78,313 70,740 87,828 130,303 Preferred and Preference Stock Dividend Requirements and Other 4,747 5,025 14,335 18,963 -------- -------- ---------- ---------- Earnings Applicable to Common Stock $73,566 $65,715 $73,493 $111,340 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1998 and 1997 (Unaudited) Nine Months Ended 1998 1997 (In Thousands) Operating Activities: Net income $87,828 $130,303 Noncash items included in net income: Amortization of rate deferrals 19,480 79,091 Other regulatory credits (10,424) (17,550) Depreciation, amortization, and decommissioning 157,902 160,569 Deferred income taxes and investment tax credits 4,456 22,299 Allowance for equity funds used during construction (2,057) (1,686) Changes in working capital: Receivables (16,460) (55,099) Fuel inventory 6,560 19,761 Accounts payable (9,621) 26,758 Taxes accrued 65,956 60,741 Interest accrued 8,189 6,211 Deferred fuel costs (43,391) (29,208) Other working capital accounts (323) (4,059) Decommissioning trust contributions and realized change in trust assets (10,024) (7,131) Provision for estimated losses and reserves (4,978) (16,811) Reserve for rate refund 76,883 - Other (7,798) 8,361 --------- --------- Net cash flow provided by operating activities 322,178 382,550 --------- --------- Investing Activities: Construction expenditures (77,904) (96,998) Allowance for equity funds used during construction 2,057 1,686 Nuclear fuel purchases (226) (11,580) Proceeds from sale/leaseback of nuclear fuel 219 11,580 --------- --------- Net cash flow used in investing activities (75,854) (95,312) --------- --------- Financing Activities: Proceeds from the issuance of : Long-term debt 21,600 - Preferred securities of subsidiary trust - 82,323 Retirement of: First mortgage bonds (25,000) (57,240) Other long-term debt (72,090) (50,865) Redemption of preferred and preference stock (6,250) (93,367) Dividends paid: Common stock (109,400) (48,200) Preferred and preference stock (14,362) (16,960) --------- --------- Net cash flow used in financing activities (205,502) (184,309) --------- --------- Net increase in cash and cash equivalents 40,822 102,929 Cash and cash equivalents at beginning of period 165,164 122,406 --------- --------- Cash and cash equivalents at end of period $205,986 $225,335 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $101,855 $118,834 Income taxes $23,164 $2,631 Noncash investing and financing activities: Change in unrealized appreciation (depreciation) of decommissioning trust assets ($4,907) $2,129 See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $17,018 $10,549 Temporary cash investments - at cost, which approximates market: Associated companies 35,770 37,389 Other 153,198 117,226 ---------- ---------- Total cash and cash equivalents 205,986 165,164 Accounts receivable: Customer (less allowance for doubtful accounts of $1.8 million in 1998 and 1997) 103,075 99,762 Associated companies 7,395 9,024 Other 29,251 32,837 Accrued unbilled revenues 93,187 74,825 Deferred fuel costs 189,148 145,757 Accumulated deferred income taxes 29,656 22,093 Fuel inventory - at average cost 31,067 37,627 Materials and supplies - at average cost 107,326 104,690 Rate deferrals 9,077 21,749 Prepayments and other 28,116 21,680 ---------- ---------- Total 833,284 735,208 ---------- ---------- Other Property and Investments: Decommissioning trust fund 192,580 187,462 Other - at cost (less accumulated depreciation) 176,008 176,953 ---------- ---------- Total 368,588 364,415 ---------- ---------- Utility Plant: Electric 7,234,921 7,168,668 Natural gas 50,990 47,656 Steam products 83,037 82,289 Property under capital leases 56,319 67,946 Construction work in progress 95,158 90,333 Nuclear fuel under capital lease 37,738 54,390 Nuclear fuel 15,697 23,051 ---------- ---------- Total 7,573,860 7,534,333 Less - accumulated depreciation and amortization 3,138,741 2,996,147 ---------- ---------- Utility plant - net 4,435,119 4,538,186 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 91,602 98,410 SFAS 109 regulatory asset - net 379,332 376,275 Unamortized loss on reacquired debt 44,313 48,417 Other regulatory assets 83,175 86,819 Long-term receivables 35,163 36,984 Other 218,284 203,923 ---------- ---------- Total 851,869 850,828 ---------- ---------- TOTAL $6,488,860 $6,488,637 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $140,515 $190,890 Accounts payable: Associated companies 59,801 48,726 Other 88,748 109,444 Customer deposits 31,440 30,311 Taxes accrued 114,274 48,318 Interest accrued 53,343 45,154 Nuclear refueling reserve 14,431 3,386 Obligations under capital leases 34,153 30,280 Other 14,221 17,646 ---------- ---------- Total 550,926 524,155 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 1,142,622 1,124,644 Accumulated deferred investment tax credits 211,638 215,438 Obligations under capital leases 59,904 92,055 Other 981,941 923,409 ---------- ---------- Total 2,396,105 2,355,546 ---------- ---------- Long-term debt 1,677,768 1,702,719 Preferred stock with sinking fund 62,729 68,978 Preference stock 150,000 150,000 Company - obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 85,000 85,000 Shareholders' Equity: Preferred stock without sinking fund 51,444 51,444 Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares 114,055 114,055 Additional paid-in capital 1,152,575 1,152,575 Retained earnings 248,258 284,165 ---------- ---------- Total 1,566,332 1,602,239 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $6,488,860 $6,488,637 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollar In Millions) Electric Operating Revenues: Residential $ 202.7 $ 210.7 ($ 8.0) (4) Commercial 113.8 125.3 (11.5) (9) Industrial 189.1 189.2 (0.1) - Governmental 7.7 8.6 (0.9) (10) ------------------------------ Total retail 513.3 533.8 (20.5) (4) Sales for resale: Associated companies 3.2 7.6 (4.4) (58) Non-associated companies 39.4 17.5 21.9 125 Other (1) 37.4 25.4 12.0 47 ------------------------------ Total $ 593.3 $ 584.3 $ 9.0 2 ============================== Billed Electric Energy Sales (GWH): Residential 3,210 2,845 365 13 Commercial 2,102 1,935 167 9 Industrial 4,631 4,739 (108) (2) Governmental 141 131 10 8 ------------------------------ Total retail 10,084 9,650 434 4 Sales for resale: Associated companies 85 181 (96) (53) Non-associated companies 1,162 438 724 165 ------------------------------ Total 11,331 10,269 1,062 10 ============================== Nine Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollar In Millions) Electric Operating Revenues: Residential $ 470.5 $ 477.8 ($ 7.3) (2) Commercial 317.4 337.6 (20.2) (6) Industrial 539.3 544.1 (4.8) (1) Governmental 29.0 25.1 3.9 16 ------------------------------ Total retail 1,356.2 1,384.6 (28.4) (2) Sales for resale: Associated companies 13.3 13.1 0.2 2 Non-associated companies 88.1 41.8 46.3 111 Other (1) (27.0) 50.7 (77.7) (153) ------------------------------- Total $1,430.6 $ 1,490.2 ($ 59.6) (4) =============================== Billed Electric Energy Sales (GWH): Residential 6,878 6,282 596 9 Commercial 5,190 4,953 237 5 Industrial 13,594 13,459 135 1 Governmental 460 359 101 28 ------------------------------ Total retail 26,122 25,053 1,069 4 Sales for resale: Associated companies 347 380 (33) (9) Non-associated companies 2,609 1,077 1,532 142 ------------------------------ Total 29,078 26,510 2,568 10 ============================== (1) Includes the effect of the provision for rate refunds.
ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and nine months ended September 30, 1998 primarily due to a decrease in operating expenses, partially offset by a decrease in electric operating revenues and higher income taxes. Significant factors affecting the results of operations and causing variances between the three and nine months ended September 30, 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 1998 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base revenues ($1.7) ($34.9) Fuel cost recovery (26.9) (85.3) Sales volume/weather 18.4 25.7 Other revenue (including unbilled) (7.3) (0.2) Sales for resale 0.6 11.8 ------ ------ Total ($16.9) ($82.9) ====== ====== Electric operating revenues decreased for the three months ended September 30, 1998 primarily due to lower fuel cost recovery revenues, which do not affect net income, and a decrease in other revenue (primarily unbilled revenue), partially offset by an increase in sales volume. Electric operating revenues decreased for the nine months ended September 30, 1998 primarily due to a decrease in base revenues and lower fuel cost recovery revenues, which do not affect net income, partially offset by increases in sales volume and sales for resale. Fuel cost recovery revenues decreased due to lower pricing resulting from a change in generation mix. The decrease in unbilled revenue for the three months ended September 30, 1998 was primarily a result of decreased sales to three large industrial customers and a decrease in sales volume in late September 1998 due to distribution outages caused by major storms. Sales volume increased for the three and nine months ended September 30, 1998 due to significantly warmer weather in 1998. This increase in sales volume was partially offset by the loss of a large industrial customer as well as substantially lower sales to two other large industrial customers. For the nine months ended September 1998, base revenues decreased due to a base rate reduction that became effective in the third quarter of 1997. Sales for resale increased for the nine months ended September 1998 as a result of an increase in sales to associated companies primarily due to changes in generation requirements and availability among the domestic utility companies. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Operating expenses decreased for the three and nine months ended September 30, 1998 primarily due to a decrease in fuel expenses, purchased power expenses, and other operation and maintenance expenses. Fuel expenses decreased due to lower gas prices and a shift in mix to nuclear fuel. Purchased power expenses decreased due to shifting generation requirements in 1997 as a result of the extended refueling outage at the Waterford 3 nuclear plant and to increased generation in the third quarter of 1998. Other operation and maintenance expenses decreased due to non-refueling outage related contract work and maintenance performed at Waterford 3 in 1997. Other For the three and nine months ended September 30, 1998 and 1997, the effective income tax rates were relatively unchanged at 39.8% versus 39.7% and 40.9% versus 40.3%, respectively.
ENTERGY LOUISIANA, INC. STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Nine Months Ended 1998 1997 1998 1997 (In Thousands) (In Thousands) Operating Revenues $537,632 $554,486 $1,317,785 $1,400,732 -------- -------- ---------- ---------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 134,631 152,609 280,340 326,588 Purchased power 102,559 113,235 291,914 323,988 Nuclear refueling outage expenses 5,435 5,267 16,305 10,566 Other operation and maintenance 72,275 75,251 215,785 231,637 Depreciation, amortization, and decommissioning 40,102 42,877 127,332 128,343 Taxes other than income taxes 18,237 17,892 53,708 53,712 Other regulatory charges (credits) - (634) (1,754) 6,382 Amortization of rate deferrals - 13 - 5,749 -------- -------- ---------- ---------- Total 373,239 406,510 983,630 1,086,965 -------- -------- ---------- ---------- Operating Income 164,393 147,976 334,155 313,767 -------- -------- ---------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 586 601 1,406 1,038 Miscellaneous - net 339 (789) 2,708 (1,706) -------- -------- ---------- ---------- Total 925 (188) 4,114 (668) -------- -------- ---------- ---------- Interest Charges: Interest on long-term debt 27,180 27,921 84,790 88,011 Other interest - net 1,665 1,635 4,682 4,846 Distributions on preferred securities of subsidiary trust 1,575 1,575 4,725 4,725 Allowance for borrowed funds used during construction (535) (555) (1,285) (1,311) -------- -------- ---------- ---------- Total 29,885 30,576 92,912 96,271 -------- -------- ---------- ---------- Income Before Income Taxes 135,433 117,212 245,357 216,828 Income Taxes 53,963 46,531 100,424 87,368 -------- -------- ---------- ---------- Net Income 81,470 70,681 144,933 129,460 Preferred Stock Dividend Requirements and Other 3,253 3,251 9,760 10,097 -------- -------- ---------- ---------- Earnings Applicable to Common Stock $78,217 $67,430 $135,173 $119,363 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Nine Months ended September 30, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $144,933 $129,460 Noncash items included in net income: Amortization of rate deferrals - 5,749 Other regulatory charges (credits) (1,754) 6,382 Depreciation, amortization, and decommissioning 127,332 128,343 Deferred income taxes and investment tax credits 4,842 (8,136) Allowance for equity funds used during construction (1,406) (1,038) Changes in working capital: Receivables (60,531) (48,067) Accounts payable (12,276) (15,502) Taxes accrued 108,558 100,900 Interest accrued 1,895 (23,166) Deferred fuel costs (18,217) 5,296 Other working capital accounts 14,826 (1,525) Other deferred credits (26,479) 4,164 Decommissioning trust contributions and realized change in trust assets (11,062) (8,363) Provision for estimated losses and reserves 1,251 5,046 Other (10,674) (7,898) --------- --------- Net cash flow provided by operating activities 261,238 271,645 --------- --------- Investing Activities: Construction expenditures (62,672) (60,071) Allowance for equity funds used during construction 1,406 1,038 Nuclear fuel purchases (22,293) (43,332) Proceeds from sale/leaseback of nuclear fuel 9,872 43,332 --------- --------- Net cash flow used in investing activities (73,687) (59,033) --------- --------- Financing Activities: Proceeds from the issuance of first mortgage bonds 112,556 - Retirement of: First mortgage bonds (150,561) (34,000) Other long-term debt (175) (262) Redemption of preferred stock - (7,500) Changes in short-term borrowings - net - (31,066) Dividends paid: Common stock (138,500) (111,200) Preferred stock (9,760) (9,997) --------- --------- Net cash flow used in financing activities (186,440) (194,025) --------- --------- Net increase in cash and cash equivalents 1,111 18,587 Cash and cash equivalents at beginning of period 49,749 23,746 --------- --------- Cash and cash equivalents at end of period $50,860 $42,333 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized 86,292 $101,334 Income taxes $21,150 ($1,754) Noncash investing and financing activities: Change in unrealized appreciation/(depreciation) of decommissioning trust assets ($138) $1,877 See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $2,705 $5,148 Temporary cash investments - at cost, which approximates market 48,155 44,601 ---------- ---------- Total cash and cash equivalents 50,860 49,749 Accounts receivable: Customer (less allowance for doubtful accounts of $1.2 million in 1998 and 1997) 122,065 69,566 Associated companies 17,827 15,035 Other 8,785 7,441 Accrued unbilled revenues 65,770 61,874 Deferred fuel costs 14,949 - Accumulated deferred income taxes 8,727 10,994 Materials and supplies - at average cost 81,706 82,850 Deferred nuclear refueling outage costs 10,884 27,176 Prepayments and other 11,596 10,793 ---------- ---------- Total 393,169 335,478 ---------- ---------- Other Property and Investments: Nonutility property 22,525 22,525 Decommissioning trust fund 76,028 65,104 Investment in subsidiary companies - at equity 14,230 14,230 ---------- ---------- Total 112,783 101,859 ---------- ---------- Utility Plant: Electric 5,093,145 5,058,130 Property under capital leases 233,513 233,513 Construction work in progress 73,878 52,632 Nuclear fuel under capital lease 42,613 57,811 Nuclear fuel 13,982 1,560 ---------- ---------- Total 5,457,131 5,403,646 Less - accumulated depreciation and amortization 2,133,131 2,021,392 ---------- ---------- Utility plant - net 3,324,000 3,382,254 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 263,432 278,234 Unamortized loss on reacquired debt 31,668 33,468 Other regulatory assets 27,910 29,991 Other 16,209 14,116 ---------- ---------- Total 339,219 355,809 ---------- ---------- TOTAL $4,169,171 $4,175,400 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $294 $35,300 Accounts payable: Associated companies 43,443 43,508 Other 83,675 95,886 Customer deposits 55,936 55,331 Taxes accrued 133,801 25,243 Interest accrued 36,466 34,571 Dividends declared 3,253 3,253 Deferred fuel costs - 3,268 Obligations under capital leases 16,932 29,232 Other 6,166 8,578 ---------- ---------- Total 379,966 334,170 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 804,914 813,748 Accumulated deferred investment tax credits 130,085 134,276 Obligations under capital leases 25,682 28,579 Deferred interest - Waterford 3 lease obligation 9,942 17,799 Other 94,291 119,519 ---------- ---------- Total 1,064,914 1,113,921 ---------- ---------- Long-term debt 1,338,758 1,338,464 Preferred stock with sinking fund 85,000 85,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 70,000 70,000 Shareholders' Equity: Preferred stock without sinking fund 100,500 100,500 Common stock, no par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares 1,088,900 1,088,900 Capital stock expense and other (2,321) (2,321) Retained earnings 43,454 46,766 ---------- ---------- Total 1,230,533 1,233,845 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,169,171 $4,175,400 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Electric Operating Revenues: Residential $ 224.1 $ 222.6 $ 1.5 1 Commercial 112.1 116.8 (4.7) (4) Industrial 155.0 180.2 (25.2) (14) Governmental 8.8 9.1 (0.3) (3) ------------------------------ Total retail 500.0 528.7 (28.7) (5) Sales for resale: Associated companies 3.7 2.7 1.0 37 Non-associated companies 16.0 16.4 (0.4) (2) Other 17.9 6.7 11.2 167 ------------------------------ Total $ 537.6 $ 554.5 ($16.9) (3) ============================== Billed Electric Energy Sales (GWH): Residential 3,058 2,738 320 12 Commercial 1,615 1,502 113 8 Industrial 3,805 3,918 (113) (3) Governmental 125 119 6 5 ------------------------------ Total retail 8,603 8,277 326 4 Sales for resale: Associated companies 76 72 4 6 Non-associated companies 207 256 (49) (19) ------------------------------ Total 8,886 8,605 281 3 ============================== Nine Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Electric Operating Revenues: Residential $ 465.1 $ 475.4 ($ 10.3) (2) Commercial 274.6 291.4 (16.8) (6) Industrial 441.0 538.0 (97.0) (18) Governmental 24.5 26.2 (1.7) (6) ------------------------------ Total retail 1,205.2 1,331.0 (125.8) (9) Sales for resale: Associated companies 14.0 3.5 10.5 300 Non-associated companies 42.8 41.5 1.3 3 Other 55.8 24.7 31.1 126 ------------------------------- Total $1,317.8 $ 1,400.7 ($82.9) (6) =============================== Billed Electric Energy Sales (GWH): Residential 6,620 6,042 578 10 Commercial 3,979 3,732 247 7 Industrial 11,120 12,511 (1,391) (11) Governmental 364 348 16 5 ------------------------------ Total retail 22,083 22,633 (550) (2) Sales for resale: Associated companies 311 98 213 217 Non-associated companies 619 616 3 - ------------------------------ Total 23,013 23,347 (334) (1) ==============================
ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and nine months ended September 30, 1998 primarily due to an increase in electric operating revenues, partially offset by an increase in operating expenses and higher income taxes. Significant factors affecting the results of operations and causing variances between the three and nine months ended September 30, 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 1998 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base revenues ($3.5) ($9.0) Grand Gulf rate rider 12.8 23.8 Fuel cost recovery 9.1 15.0 Sales volume/weather 10.9 21.2 Other revenue (including unbilled) (2.8) 14.0 Sales for resale 3.3 25.5 ----- ----- Total $29.8 $90.5 ===== ===== Electric operating revenues increased for the three and nine months ended September 30, 1998 primarily due to increases in Grand Gulf rate rider revenue, sales volume, and fuel cost recovery revenues. The increase in other revenues (primarily unbilled revenues) and sales for resale also contributed to the increase in electric operating revenues for the nine months ended September 30, 1998. The increase in the Grand Gulf rate rider revenue, which does not affect net income, and in sales volume was primarily due to significantly warmer weather in 1998. The increase in fuel costs recovery revenues, which do not affect net income, was due to increased generation in 1998 as well as, for the nine months ended September 30, 1998, an MPSC order, effective May 1, 1997, that changed fuel recovery pricing to a fixed fuel factor, subject to annual review. For the nine months ended September 30, 1998, unbilled revenue increased due to increased sales volume and favorable pricing attributable to the application of the fixed fuel factor in 1998. For the nine months ended September 30, 1998, sales for resale increased as a result of an increase in sales to associated companies primarily due to increased generation and availability among the domestic utility companies. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Operating expenses increased for the three and nine months ended September 30, 1998 primarily due to an increase in fuel expenses and other regulatory charges (credits) which, for the nine months ended September 30, 1998, was partially offset by a decrease in purchased power expenses. The increase in fuel expenses was due to the impact of the under-recovery of deferred fuel costs in excess of the fixed fuel factor applied in 1997. In January 1998, Entergy Mississippi increased its fixed fuel factor to more accurately recover actual fuel expenses. The increase in other regulatory charges (credits), which do not materially affect net income, was a result of the over-recovery of Grand Gulf 1- related costs due to increased sales. The decrease in purchased power expense for the nine months ended September 30, 1998 was due to a shift from higher priced purchased power to lower priced fossil fuel. Other The effective income tax rate of 35.7% for the three months ended September 30, 1998 remained relatively unchanged from the rate of 35.4% for the three months ended September 30, 1997. For the nine months ended September 30, 1998 and 1997, the effective income tax rates were 34.8% and 33.6%, respectively. The increase in 1998 was primarily due to the impact of excess deferred taxes on rate deferrals and the amortization of investment tax credits.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Nine Months Ended 1998 1997 1998 1997 (In Thousands) (In Thousands) Operating Revenues $324,784 $294,983 $798,709 $708,203 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 85,859 72,379 196,260 138,928 Purchased power 71,404 71,441 210,030 218,015 Other operation and maintenance 30,631 32,227 90,861 95,704 Depreciation and amortization 10,900 10,739 33,294 32,120 Taxes other than income taxes 12,061 12,058 34,259 33,471 Other regulatory charges (credits) 24,912 7,596 2,883 (33,090) Amortization of rate deferrals 34,989 35,711 104,968 107,134 -------- -------- -------- -------- Total 270,756 242,151 672,555 592,282 -------- -------- -------- -------- Operating Income 54,028 52,832 126,154 115,921 -------- -------- -------- -------- Other Income: Allowance for equity funds used during construction 17 - 17 560 Miscellaneous - net 971 399 3,002 662 -------- -------- -------- -------- Total 988 399 3,019 1,222 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 9,153 9,798 28,614 31,211 Other interest - net 577 1,154 2,737 3,477 Allowance for borrowed funds used during construction (287) (20) (420) (482) -------- -------- -------- -------- Total 9,443 10,932 30,931 34,206 -------- -------- -------- -------- Income Before Income Taxes 45,573 42,299 98,242 82,937 Income Taxes 16,252 14,964 34,215 27,851 -------- -------- -------- -------- Net Income 29,321 27,335 64,027 55,086 Preferred Stock Dividend Requirements and Other 843 1,129 2,527 3,258 -------- -------- -------- -------- Earnings Applicable to Common Stock $28,478 $26,206 $61,500 $51,828 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $64,027 $55,086 Noncash items included in net income: Amortization of rate deferrals 104,968 107,134 Other regulatory charges (credits) 2,883 (33,090) Depreciation and amortization 33,294 32,120 Deferred income taxes and investment tax credits (35,446) (29,761) Allowance for equity funds used during construction (17) (560) Changes in working capital: Receivables (50,180) (18,818) Fuel inventory 809 5,011 Accounts payable 14,255 5,316 Taxes accrued 43,546 38,807 Interest accrued (1,212) (7,751) Other working capital accounts (7,703) (12,506) Other (17,740) 20 --------- --------- Net cash flow provided by operating activities 151,484 141,008 --------- --------- Investing Activities: Construction expenditures (31,391) (37,378) Allowance for equity funds used during construction 17 560 --------- --------- Net cash flow used in investing activities (31,374) (36,818) --------- --------- Financing Activities: Proceeds from the issuance of general and refunding mortgage bonds 78,703 64,827 Retirement of: General and refunding mortgage bonds (80,000) (96,000) Other long-term debt (20) (15) Redemption of preferred stock - (14,500) Changes in short-term borrowings - net (47,162) (7,132) Dividends paid: Common stock (66,000) (53,400) Preferred stock (2,527) (3,156) --------- --------- Net cash flow used in financing activities (117,006) (109,376) --------- --------- Net increase (decrease) in cash and cash equivalents 3,104 (5,186) Cash and cash equivalents at beginning of period 6,816 9,498 --------- --------- Cash and cash equivalents at end of period $9,920 $4,312 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $31,165 $41,044 Income taxes $18,926 $11,670 See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $8,999 $6,816 Temporary cash investments - at cost, which approximates market 921 - ---------- ---------- Total cash and cash equivalents 9,920 6,816 Accounts receivable: Customer (less allowance for doubtful accounts of $.9 million in 1998 and 1997) 67,280 36,636 Associated companies 10,792 6,842 Other 1,146 4,139 Accrued unbilled revenues 68,572 49,993 Deferred fuel costs 14,289 14,967 Fuel inventory - at average cost 2,577 3,386 Materials and supplies - at average cost 17,500 17,657 Rate deferrals - 104,969 Prepayments and other 4,790 24,896 ---------- ---------- Total 196,866 270,301 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 5,531 5,531 Other - at cost (less accumulated depreciation) 7,633 7,757 ---------- ---------- Total 13,164 13,288 ---------- ---------- Utility Plant: Electric 1,715,139 1,687,400 Construction work in progress 26,163 22,960 ---------- ---------- Total 1,741,302 1,710,360 Less - accumulated depreciation and amortization 684,605 656,828 ---------- ---------- Utility plant - net 1,056,697 1,053,532 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 27,702 22,993 Unamortized loss on reacquired debt 8,205 8,404 Other regulatory assets 88,261 64,827 Other 6,599 6,216 ---------- ---------- Total 130,767 102,440 ---------- ---------- TOTAL $1,397,494 $1,439,561 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $20 $20 Notes payable - associated companies - 47,162 Accounts payable: Associated companies 43,067 36,057 Other 18,521 11,276 Customer deposits 17,389 24,084 Taxes accrued 75,860 32,314 Accumulated deferred income taxes 600 44,277 Interest accrued 13,097 14,309 Other 3,183 2,806 ---------- ---------- Total 171,737 212,305 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 258,147 244,464 Accumulated deferred investment tax credits 22,784 23,915 Other 6,950 15,892 ---------- ---------- Total 287,881 284,271 ---------- ---------- Long-term debt 463,547 464,156 Shareholders' Equity: Preferred stock without sinking fund 50,381 50,381 Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares 199,326 199,326 Capital stock expense and other (59) (59) Retained earnings 224,681 229,181 ---------- ---------- Total 474,329 478,829 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $1,397,494 $1,439,561 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Electric Operating Revenues: Residential $ 139.2 $ 120.9 $ 18.3 15 Commercial 89.4 80.5 8.9 11 Industrial 46.0 44.3 1.7 4 Governmental 7.7 7.3 0.4 5 --------------------------- Total retail 282.3 253.0 29.3 12 Sales for resale: Associated companies 29.3 27.8 1.5 5 Non-associated companies 8.3 6.5 1.8 28 Other 4.9 7.7 (2.8) (36) --------------------------- Total $ 324.8 $ 295.0 $ 29.8 10 =========================== Billed Electric Energy Sales (GWH): Residential 1,750 1,517 233 15 Commercial 1,246 1,125 121 11 Industrial 830 806 24 3 Governmental 101 94 7 7 --------------------------- Total retail 3,927 3,542 385 11 Sales for resale: Associated companies 903 715 188 26 Non-associated companies 162 126 36 29 --------------------------- Total 4,992 4,383 609 14 =========================== Nine Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Electric Operating Revenues: Residential $ 297.1 $ 264.8 $ 32.3 12 Commercial 221.9 206.9 15.0 7 Industrial 130.9 127.8 3.1 2 Governmental 21.0 20.4 0.6 3 --------------------------- Total retail 670.9 619.9 51.0 8 Sales for resale: Associated companies 71.2 49.5 21.7 44 Non-associated companies 19.7 15.9 3.8 24 Other 36.9 22.9 14.0 61 --------------------------- Total $ 798.7 $ 708.2 $ 90.5 13 =========================== Billed Electric Energy Sales (GWH): Residential 3,759 3,338 421 13 Commercial 3,021 2,778 243 9 Industrial 2,359 2,279 80 4 Governmental 260 251 9 4 --------------------------- Total retail 9,399 8,646 753 9 Sales for resale: Associated companies 2,136 1,145 991 87 Non-associated companies 373 309 64 21 --------------------------- Total 11,908 10,100 1,808 18 ===========================
ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and nine months ended September 30, 1998 primarily due to an increase in electric operating revenues, partially offset by an increase in operating expenses. Significant factors affecting the results of operations and causing variances between the three and nine months ended September 30, 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 1998 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base revenues ($1.3) ($7.7) Fuel cost recovery 17.6 21.2 Sales volume/weather 6.8 11.8 Other revenue (including unbilled) 2.1 5.2 Sales for resale 1.1 1.1 ----- ----- Total $26.3 $31.6 ===== ===== Electric operating revenues increased for the three and nine months ended September 30, 1998 primarily due to increases in fuel cost recovery revenues, sales volume, and other revenue (primarily unbilled revenue), partially offset by a decrease in base revenues. Fuel cost recovery revenues, which do not affect net income, increased primarily due to higher fuel prices and increased generation. The increase in sales volume was primarily due to significantly warmer weather in 1998. The increase in unbilled revenue was primarily due to the impact of a September 1997 price refund, which lowered unbilled revenue at September 30, 1997. Base revenues decreased primarily due to reductions in residential and commercial rates that went into effect in August 1997. Expenses Operating expenses increased for the three and nine months ended September 30, 1998 primarily due to increases in fuel expense and other regulatory charges and, for the nine months ended September 30, 1998, an increase in purchased power. Fuel expenses increased primarily due to an increase in deferred electric fuel costs for the three months ended September 30, 1998, resulting from a net over-recovery of fuel costs in the third quarter of 1998 as compared to a net under-recovery of fuel costs in the third quarter of 1997. The increase in deferred electric fuel costs for the nine months ended September 30, 1998 was partially offset by an under-recovery of fuel costs requirements in the first and second quarters of 1998 due to increased generation. Additionally, for the nine months ended September 30, 1998, fuel oil expenses increased due to increased generation requirements and increased usage of fossil fuel. Partially offsetting the increase in fuel expenses was decreased gas purchased for resale expense due to lower gas prices. The increase in other regulatory charges, which do not materially affect net income, was primarily due to the increased over-recovery of Grand Gulf 1-related costs for the three and nine months ended September 30, 1998 compared to the net under-recovery for the same periods in 1997. Purchased power expenses increased for the nine months ended ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS September 30, 1998 primarily due to increased generation requirements as a result of significantly warmer weather in the second and third quarters of 1998. Other For the three and nine months ended September 30, 1998 and 1997, the effective income tax rates were relatively unchanged at 39.5% versus 40.0% and 41.6% versus 42.5%, respectively.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Nine Months Ended 1998 1997 1998 1997 (In Thousands) (In Thousands) Operating Revenues: Electric $153,215 $126,901 $340,672 $309,050 Natural gas 12,593 13,039 63,905 65,649 -------- -------- -------- -------- Total 165,808 139,940 404,577 374,699 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 47,512 28,146 103,196 96,586 Purchased power 44,058 46,958 130,886 119,922 Other operation and maintenance 20,677 19,443 57,763 52,125 Depreciation and amortization 5,224 5,477 16,303 16,068 Taxes other than income taxes 12,102 11,448 30,827 28,940 Other regulatory charges (credits) 4,020 (1,776) (824) (4,180) Amortization of rate deferrals 12,005 12,148 28,857 28,987 -------- -------- -------- -------- Total 145,598 121,844 367,008 338,448 -------- -------- -------- -------- Operating Income 20,210 18,096 37,569 36,251 -------- -------- -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 125 99 214 259 Miscellaneous - net 376 (27) 498 (7) -------- -------- -------- -------- Total 501 72 712 252 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 3,547 3,429 10,406 10,488 Other interest - net 294 485 771 1,064 Allowance for borrowed funds used during construction (97) (68) (165) (194) -------- -------- -------- -------- Total 3,744 3,846 11,012 11,358 -------- -------- -------- -------- Income Before Income Taxes 16,967 14,322 27,269 25,145 Income Taxes 6,709 5,732 11,336 10,699 -------- -------- -------- -------- Net Income 10,258 8,590 15,933 14,446 Preferred Stock Dividend Requirements and Other 242 242 724 724 -------- -------- -------- -------- Earnings Applicable to Common Stock $10,016 $8,348 $15,209 $13,722 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $15,933 $14,446 Noncash items included in net income: Amortization of rate deferrals 28,857 28,987 Other regulatory charges (credits) (824) (4,180) Depreciation and amortization 16,303 16,068 Deferred income taxes and investment tax credits (12,696) (1,690) Allowance for equity funds used during construction (214) (259) Changes in working capital: Receivables (24,676) (801) Accounts payable 2,161 (1,323) Taxes accrued 19,638 12,233 Interest accrued (3,054) (2,426) Deferred fuel and resale gas costs 4,925 (4,586) Other working capital accounts 528 (12,288) Other (11,977) (7,390) --------- --------- Net cash flow provided by operating activities 34,904 36,791 --------- --------- Investing Activities: Construction expenditures (12,073) (7,652) Allowance for equity funds used during construction 214 259 --------- --------- Net cash flow used in investing activities (11,859) (7,393) --------- --------- Financing Activities: Proceeds from the issuance of general and refunding mortgage bonds 29,438 - Retirement of: First mortgage bonds - (12,000) General and refunding mortgage bonds (30,000) - Dividends paid: Common stock (9,700) (26,000) Preferred stock (724) (965) --------- --------- Net cash flow used in financing activities (10,986) (38,965) --------- --------- Net increase (decrease) in cash and cash equivalents 12,059 (9,567) Cash and cash equivalents at beginning of period 11,376 17,510 --------- --------- Cash and cash equivalents at end of period $23,435 $7,943 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $13,259 $13,535 Income taxes - net $5,462 $4,309 See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $6,823 $4,321 Temporary cash investments - at cost, which approximates market: Associated companies 3,492 1,918 Other 13,120 5,137 -------- -------- Total cash and cash equivalents 23,435 11,376 Accounts receivable: Customer (less allowance for doubtful accounts of $0.7 million in 1998 and 1997) 48,607 26,913 Associated companies 921 1,081 Other 3,465 4,155 Accrued unbilled revenues 19,915 16,083 Deferred electric fuel and resale gas costs 4,459 9,384 Materials and supplies - at average cost 8,615 9,389 Rate deferrals 28,587 35,336 Prepayments and other 4,800 6,087 -------- -------- Total 142,804 119,804 -------- -------- Other Property and Investments: Investment in subsidiary companies - at equity 3,259 3,259 -------- -------- Utility Plant: Electric 514,074 508,338 Natural gas 132,448 122,308 Construction work in progress 15,676 19,184 -------- -------- Total 662,198 649,830 Less - accumulated depreciation and amortization 369,374 355,854 -------- -------- Utility plant - net 292,824 293,976 -------- -------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 42,085 64,192 SFAS 109 regulatory asset - net - 1,202 Unamortized loss on reacquired debt 1,453 1,435 Other regulatory assets 18,966 13,392 Other 1,409 890 -------- -------- Total 63,913 81,111 -------- -------- TOTAL $502,800 $498,150 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) Current Liabilities: Accounts payable: Associated companies $17,164 $15,922 Other 18,424 17,505 Customer deposits 17,991 16,982 Taxes accrued 24,908 5,270 Accumulated deferred income taxes 6,015 11,544 Interest accrued 1,995 5,049 Provision for rate refund - 3,108 Other 2,797 2,231 -------- -------- Total 89,294 77,611 -------- -------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 51,725 61,000 Accumulated deferred investment tax credits 7,019 7,396 Accumulated provision for property insurance 15,322 15,487 SFAS 109 regulatory liability - net 1,001 Other 12,552 16,327 -------- -------- Total 87,619 100,210 -------- -------- Long-term debt 169,002 168,953 Shareholders' Equity: Preferred stock without sinking fund 19,780 19,780 Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares 33,744 33,744 Additional paid-in capital 36,294 36,294 Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 67,067 61,558 -------- -------- Total 156,885 151,376 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL $502,800 $498,150 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Electric Operating Revenues: Residential $ 70.4 $ 55.3 $ 15.1 27 Commercial 47.8 38.3 9.5 25 Industrial 8.1 6.3 1.8 29 Governmental 20.5 16.6 3.9 23 ---------------------------- Total retail 146.8 116.5 30.3 26 Sales for resale: Associated companies 1.5 0.8 0.7 88 Non-associated companies 3.2 2.8 0.4 14 Other (1) 1.7 6.8 (5.1) (75) ---------------------------- Total $ 153.2 $ 126.9 $ 26.3 21 ============================ Billed Electric Energy Sales (GWH): Residential 844 761 83 11 Commercial 648 610 38 6 Industrial 144 128 16 13 Governmental 311 285 26 9 ---------------------------- Total retail 1,947 1,784 163 9 Sales for resale: Associated companies 42 22 20 91 Non-associated companies 50 51 (1) (2) ---------------------------- Total 2,039 1,857 182 10 ============================ Nine Months Ended Increase/ Description 1998 1997 (Decrease) % (Dollars In Millions) Electric Operating Revenues: Residential $ 131.3 $ 111.2 $ 20.1 18 Commercial 114.5 107.2 7.3 7 Industrial 20.4 18.2 2.2 12 Governmental 47.4 43.1 4.3 10 ---------------------------- Total retail 313.6 279.7 33.9 12 Sales for resale: Associated companies 6.8 7.8 (1.0) (13) Non-associated companies 8.5 6.4 2.1 33 Other (1) 11.8 15.2 (3.4) (22) ---------------------------- Total $ 340.7 $ 309.1 $ 31.6 10 ============================ Billed Electric Energy Sales (GWH): Residential 1,680 1,521 159 10 Commercial 1,628 1,576 52 3 Industrial 395 367 28 8 Governmental 780 745 35 5 ---------------------------- Total retail 4,483 4,209 274 7 Sales for resale: Associated companies 222 247 (25) (10) Non-associated companies 145 112 33 29 ---------------------------- Total 4,850 4,568 282 6 ============================ (1) Includes the effect of the provision for rate refunds.
SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income for the three and nine months ended September 30, 1998 remained relatively unchanged as compared to the same periods in 1997. Significant factors affecting the results of operations and causing variances between the three and nine months ended September 30, 1998 and 1997 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. See Note 2 to the Form 10- K for a discussion of System Energy's proposed rate increase, which is subject to refund. Expenses Operating expenses decreased for the three and nine months ended September 30, 1998 primarily due to lower other operation and maintenance expenses. The decrease in operating expenses for the nine months ended September 30, 1998, was also impacted by lower fuel expenses and depreciation, amortization, and decommissioning expenses. The decrease in other operation and maintenance expenses was due primarily to the impact of various materials and supplies refunds, an insurance refund, and a decrease in contract labor. Fuel expenses decreased because of lower generation due to a scheduled nuclear refueling outage in April and May of this year. Depreciation, amortization, and decommissioning expenses were lower as a result of the recognition of additional depreciation in the nine months ended September 30, 1997 associated with the sale and leaseback in 1989 of a portion of Grand Gulf 1. Other Interest on long-term debt decreased for the three and nine months ended September 30, 1998 as a result of the redemption of a series of First Mortgage Bonds in April 1998. For the three and nine months ended September 30, 1998 and 1997 the effective income tax rates were relatively unchanged at 45.1% versus 46.0% and 45.2% versus 44.8%, respectively.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Nine Months Ended 1998 1997 1998 1997 (In Thousands) (In Thousands) Operating Revenues $152,083 $160,573 $445,025 $477,255 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 12,278 12,270 29,308 36,728 Nuclear refueling outage expenses 3,479 4,202 12,255 11,826 Other operation and maintenance 22,513 28,431 66,285 77,228 Depreciation, amortization, and decommissioning 38,477 36,238 104,067 110,951 Taxes other than income taxes 6,564 6,619 20,202 19,825 -------- -------- -------- -------- Total 83,311 87,760 232,117 256,558 -------- -------- -------- -------- Operating Income 68,772 72,813 212,908 220,697 -------- -------- -------- -------- Other Income: Allowance for equity funds used during construction 608 1,169 1,689 1,730 Miscellaneous - net 3,058 2,323 8,670 5,564 -------- -------- -------- -------- Total 3,666 3,492 10,359 7,294 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 25,617 30,079 84,068 91,940 Other interest - net 1,560 1,720 4,827 5,331 Allowance for borrowed funds used during construction (542) (761) (1,488) (1,318) -------- -------- -------- -------- Total 26,635 31,038 87,407 95,953 -------- -------- -------- -------- Income Before Income Taxes 45,803 45,267 135,860 132,038 Income Taxes 20,664 20,818 61,355 59,151 -------- -------- -------- -------- Net Income $25,139 $24,449 $74,505 $72,887 ======== ======== ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $74,505 $72,887 Noncash items included in net income: Depreciation, amortization, and decommissioning 104,067 110,951 Deferred income taxes and investment tax credits (28,736) (30,168) Allowance for equity funds used during construction (1,689) (1,730) Changes in working capital: Receivables 1,283 (8,110) Accounts payable (4,318) 5,380 Taxes accrued 21,590 6,146 Interest accrued (10,830) 169 Other working capital accounts (6,621) 14,423 Decommissioning trust contributions and realized change in trust assets (18,053) (17,202) FERC Settlement - refund obligation (3,795) (3,351) Provision for estimated losses and reserves 51,503 30,303 Other 6,016 21,298 --------- --------- Net cash flow provided by operating activities 184,922 200,996 --------- --------- Investing Activities: Construction expenditures (20,004) (25,403) Allowance for equity funds used during construction 1,689 1,730 Nuclear fuel purchases (30,523) (39) Proceeds from sale/leaseback of nuclear fuel 30,523 39 --------- --------- Net cash flow used in investing activities (18,315) (23,673) --------- --------- Financing Activities: Retirement of: First mortgage bonds (70,000) (10,000) Other long-term debt (7,861) (7,319) Common stock dividends paid (72,300) (84,000) --------- --------- Net cash flow used in financing activities (150,161) (101,319) --------- --------- Net increase in cash and cash equivalents 16,446 76,004 Cash and cash equivalents at beginning of period 206,410 92,315 --------- --------- Cash and cash equivalents at end of period $222,856 $168,319 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $87,298 $89,681 Income taxes $63,664 $77,016 Noncash investing and financing activities: Change in unrealized appreciation (depreciation) of decommissioning trust assets $314 ($564) See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $686 $792 Temporary cash investments - at cost, which approximates market: Associated companies 46,695 55,891 Other 175,475 149,727 ---------- ---------- Total cash and cash equivalents 222,856 206,410 Accounts receivable: Associated companies 77,827 79,262 Other 4,292 4,140 Materials and supplies - at average cost 62,332 63,782 Deferred nuclear refueling outage costs 16,331 7,777 Prepayments and other 3,357 3,658 ---------- ---------- Total 386,995 365,029 ---------- ---------- Other Property and Investments: Decommissioning trust fund 104,279 85,912 ---------- ---------- Utility Plant: Electric 3,029,956 3,025,389 Electric plant under leases 441,803 440,970 Construction work in progress 52,872 36,445 Nuclear fuel under capital lease 73,839 64,190 ---------- ---------- Total 3,598,470 3,566,994 Less - accumulated depreciation and amortization 1,169,371 1,086,820 ---------- ---------- Utility plant - net 2,429,099 2,480,174 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 227,011 243,027 Unamortized loss on reacquired debt 46,587 51,386 Other regulatory assets 193,775 192,290 Other 13,614 14,213 ---------- ---------- Total 480,987 500,916 ---------- ---------- TOTAL $3,401,360 $3,432,031 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $160,000 $70,000 Accounts payable: Associated companies 25,637 29,131 Other 18,298 19,122 Taxes accrued 97,265 75,675 Interest accrued 31,492 42,322 Obligations under capital leases 36,156 41,977 Other 1,523 1,341 ---------- ---------- Total 370,371 279,568 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 516,858 562,051 Accumulated deferred investment tax credits 97,564 100,171 Obligations under capital leases 37,683 22,213 FERC Settlement - refund obligation 44,505 48,300 Other 307,877 227,847 ---------- ---------- Total 1,004,487 960,582 ---------- ---------- Long-term debt 1,174,350 1,341,948 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 62,802 60,583 ---------- ---------- Total 852,152 849,933 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $3,401,360 $3,432,031 ========== ========== See Notes to Financial Statements.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS The following discussion compares the results of operations for the three and nine months ended September 30, 1998 with the results of operations for the respective periods in 1997. The nine months ended September 30, 1997 includes eight months of results of operations for London Electricity due to its acquisition effective February 1, 1997. Net Income Net income increased for the three and nine months ended September 30, 1998 primarily due to decreases in income tax expenses, and, for the nine months ended, an increase in operating revenues, partially offset by an increase in operating expenses. Excluding the effects of the windfall profits tax in 1997 and the corporation tax rate changes in 1998 and 1997, which are discussed under "Other" below, net income would have increased approximately $40 million and $50 million for the three and nine months ended September 30, 1998, respectively. Significant factors affecting the results of operations and causing variances between the three and nine months ended September 30, 1998 and 1997 are discussed under "Revenues", "Expenses", and "Other" below. Revenues The changes in operating revenues for the three and nine months ended September 30, 1998 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Electricity distribution $17.0 $68.3 Electricity supply 3.9 177.8 Other 7.9 40.4 Intra-business (8.0) (65.8) ----- ------ Total $20.8 $220.7 ===== ====== Two principal factors determine the amount of revenues produced by the main electricity distribution and supply businesses: (1) the unit prices of the electricity distributed and supplied (which are controlled by the Distribution Price Control Formula and, for franchise customers, the Supply Price Control Formula, respectively, which determine the maximum average price per unit (kilowatt hour) of electricity that may be charged) and (2) the number of electricity units distributed and supplied which depends on the demand of London Electricity's customers for electricity within its Franchise Area. Demand varies based upon weather conditions and economic activity. London Electricity will have the exclusive right to supply all franchise supply customers in its Franchise Area until late 1998. Revenues from the distribution business increased for the three and nine months ended September 30, 1998. The increase for the three month period was primarily due to an increase in the BPS to U.S. dollar exchange rate for the period, a change in the seasonal tariff structure to recover higher system costs in the summer months, and a one time recovery of meter installation costs. The increase for the nine month period was principally due to an increase in units distributed as a result of the additional month of activity in 1998. Partially offsetting these factors was a distribution price reduction effective April 1, 1997. ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Franchise supply customers, who are generally residential and small commercial customers, comprised 56% and 59% of total supply sales volume for the three and nine months ended September 30, 1998, respectively. The volume of unit sales of electricity for franchise supply customers is influenced largely by the number of customers in London Electricity's Franchise Area, weather conditions, and prevailing economic conditions. Unit sales to non-franchise supply customers, who are typically large commercial and industrial businesses, constituted 44% and 41% of total supply sales volume for the three and nine months ended September 30, 1998, respectively. Sales to non-franchise supply customers are determined primarily by the success of the supply business in contracting to supply customers with electricity both inside and outside of London Electricity's Franchise Area. Such sales have declined as a percentage of the total supply sales mix from 46% and 45% for the comparable periods of 1997. During the three months ended September 30, 1998, the number of electricity units supplied decreased by 6% compared to the same period in 1997, while total revenues produced by the supply business increased by 1%. The increase in revenue was due to an increase in the BPS to U.S. dollar exchange rate for the three months ended September 30, 1998 compared to the same period in 1997. Sales volume decreased by 1% for franchise customers and decreased by 12% for non-franchise customers for the three months ended September 30, 1998. The decrease in sales volume for non-franchise customers was due principally to a strategy of pursuing customers with higher profit margins. During the nine months ended September 30, 1998, the number of electricity units supplied increased by 9% due to the additional month included in 1998 results. Other revenues increased for the three and nine month periods ended September 30, 1998, primarily due to increased marketing of natural gas to retail customers. Expenses Operating expenses decreased for the three months ended September 30, 1998 primarily due to capitalization of costs related to information technology systems development, an adjustment to pension surplus based on actuarial studies, and a reduction of a provision for restructuring to more appropriately reflect the remaining liability. Operating expenses increased for the nine months ended September 30, 1998 due principally to one additional month of operations included in 1998 compared to 1997. Other Interest charges increased for the nine months ended September 30, 1998, compared to the same periods in 1997, due principally to an increase in the average level of debt and preferred securities outstanding during 1998 compared to 1997. The increase in average debt levels was due principally to the acquisition of London Electricity effective February 1, 1997 that was not fully funded until May 1997. Such increase was partially offset by the November 1997 decrease in debt due to the transfer of a $114 million facility to Entergy London's parent in exchange for additional equity. Interest charges for the three months ended September 30, 1998 decreased primarily due to the transfer of the $114 million facility. Income tax expense for the three and nine months ended September 30, 1998 declined due to the one-time windfall profits tax of $234 million enacted by the UK government and recorded in July 1997, which was offset by the $65 million favorable impact of the reduction in the UK corporation tax rate from 33% to 31% in the same period. Income tax expense was also lower due to the $31 million favorable impact of the additional reduction in the UK corporation tax rate from 31% to 30% recorded in the third quarter of 1998.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Three Months Ended Nine Months Ended 1998 1997 1998 1997 (In Thousands) (In Thousands) Operating Revenues $464,760 $443,975 $1,494,552 $1,273,899 -------- -------- ----------- ----------- Operating Expenses: Purchased power 277,581 277,713 940,815 830,711 Depreciation and amortization 34,221 30,639 103,241 84,336 Other operation and maintenance costs 57,959 89,800 225,324 228,190 -------- -------- ----------- ----------- Total 369,761 398,152 1,269,380 1,143,237 -------- -------- ----------- ----------- Operating Income 94,999 45,823 225,172 130,662 -------- -------- ----------- ----------- Other Income (Deductions): Interest and dividend income 2,699 6,312 6,849 9,997 Gain (loss) on disposition of property 1,499 (4,759) 6,587 6,271 Miscellaneous - net 3,216 2,413 11,534 5,215 -------- -------- ----------- ----------- Total 7,414 3,966 24,970 21,483 -------- -------- ----------- ----------- Interest Charges: Distributions on preferred securities of subsidiary partnership 6,469 - 19,406 - Other interest - net 43,979 53,932 128,183 118,983 -------- -------- ----------- ----------- Total 50,448 53,932 147,589 118,983 -------- -------- ----------- ----------- Income (Loss) Before Income Taxes 51,965 (4,143) 102,553 33,162 Income Taxes (Benefit) (15,638) 168,127 22 180,470 -------- -------- ----------- ----------- Net Income (Loss) 67,603 (172,270) 102,531 (147,308) Other comprehensive income: Foreign currency translation adjustments 14,749 (7,023) 24,974 1,143 -------- -------- ----------- ----------- Comprehensive Income $82,352 ($179,293) $127,505 ($146,165) ======== ========= =========== =========== See Notes to Financial Statements.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net Income (Loss) $102,531 ($147,308) Noncash items included in net income: Depreciation and amortization 103,241 84,336 Deferred income taxes (15,145) (63,671) Imputed interest on parent company debt 84,369 - Changes in assets and liabilities: Inventory (3,704) 937 Accounts receivable and unbilled revenue 108,883 (7,406) Other receivables 23,023 38,818 Prepayments and other 543 (2,030) Long-term receivables and other (17,966) (573) Accounts payable 11,519 46,402 Income taxes accrued 14,582 223,738 Interest accrued 7,113 10,566 Deferred revenue and other current liabilities (4,312) 14,171 Other liabilities (87,006) 2,431 Other (1,192) - --------- ---------- Net cash flow provided by operating activities 326,479 200,411 --------- ---------- Investing Activities: Construction expenditures (151,367) (98,352) Acquisition of London Electricity, net of cash acquired - (1,951,701) Other investments (20,031) 6,656 --------- ---------- Net cash flow used in investing activities (171,398) (2,043,397) --------- ---------- Financing Activities: Proceeds from the issuance of: Bank notes and other long-term debt - 1,717,479 Common Stock - 391,953 Retirement of long-term debt (6,957) - Common stock dividends paid (110,688) - Changes in short-term borrowings - net (13,142) (184,571) --------- ---------- Net cash flow provided by (used in) financing activities (130,787) 1,924,861 --------- ---------- Effect of exchange rates on cash and cash equivalents 2,806 (1,279) --------- ---------- Net increase in cash and cash equivalents 27,100 80,596 Cash and cash equivalents at beginning of period 44,388 - --------- ---------- Cash and cash equivalents at end of period $71,488 $80,596 ========= ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $142,233 $100,951 Income taxes - net $8,247 $9,927 See Notes to Financial Statements.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $4,049 $ - Temporary cash investments - at cost, which approximates market 67,439 44,388 ---------- ---------- Total cash and cash equivalents 71,488 44,388 Notes receivable 5,056 7,364 Accounts receivable: Customer (less allowance for doubtful accounts of $19.9 million in 1998 and $21.9 million in 1997) 121,512 139,265 Other 33,070 52,374 Accrued unbilled revenue 182,286 262,818 Accumulated deferred income taxes 43,833 12,401 Inventory 17,889 13,650 Prepayments and other 13,514 13,623 ---------- ---------- Total 488,648 545,883 ---------- ---------- Property, Plant, and Equipment: Property, plant and equipment 2,579,882 2,353,181 Less - accumulated depreciation 168,187 90,021 ---------- ---------- Property, plant, and equipment - net 2,411,695 2,263,160 ---------- ---------- Other Property, Investments, and Assets: Investments, long-term 32,296 11,413 Distribution license (net of accumulated amortization of $58.5 million in 1998 and $31.3 million in 1997) 1,344,518 1,327,312 Long-term receivables 17,735 17,172 Prepaid pension asset 266,655 241,216 Other 11,282 10,079 ---------- ---------- Total 1,672,486 1,607,192 ---------- ---------- TOTAL $4,572,829 $4,416,235 ========== ========== See Notes to Financial Statements.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS September 30, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $22,299 $33,814 Notes payable 235,241 240,794 Accounts payable 373,096 349,821 Customer deposits 27,713 24,946 Taxes accrued 139,881 120,981 Interest accrued 21,950 14,201 Other 728 805 ---------- ---------- Total 820,908 785,362 ---------- ---------- Other Liabilities: Accumulated deferred income taxes 1,041,685 995,865 Other 214,268 299,775 ---------- ---------- Total 1,255,953 1,295,640 ---------- ---------- Long-term debt 1,729,691 1,669,401 Company-obligated redeemable preferred securities of subsidiary partnership holding solely junior subordinated deferrable debentures 300,000 300,000 Shareholders' Equity: Common stock, BPS1 par value, 901,000,000 shares authorized, 877,359,785 shares issued and outstanding (less Entergy UK Limited debt adjustment of $1,376.5 million in 1998 and $1,371.8 million in 1997) 114,000 114,000 Additional paid-in capital 391,981 391,981 Accumulated deficit (56,919) (132,390) Cumulative foreign currency translation 17,215 (7,759) ---------- ---------- Total 466,277 365,832 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,572,829 $4,416,235 ========== ========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES See "Cajun - Coal Contracts" in Note 9 of the Form 10-K for information relating to the declaratory judgment action filed by Entergy Gulf States against the coal suppliers to Big Cajun 2, a coal-fired power station located in Point Coupee Parish, Louisiana, in which Entergy Gulf States owns a 42% undivided interest in Unit 3. Entergy Gulf States filed a similar petition for a declaratory judgment against the rail and barge companies that transport the coal from Wyoming to Big Cajun 2. A motion for summary judgment in that proceeding was filed by Entergy Gulf States and denied by the Cajun bankruptcy judge. Concurrently with this denial, the bankruptcy judge filed a report with the district court, recommending that the appeal by the coal suppliers be remanded for reconsideration by the bankruptcy judge in light of his decision in the coal transporters' action. The district court remanded the declaratory judgment proceeding against the coal suppliers back to the bankruptcy court, and a trial was held on the issue of liability of Entergy Gulf States to both the coal suppliers and transporters. No assurance can be given regarding the timing or outcome of this proceeding. Collectively, the coal suppliers and transporters have asserted claims in the Cajun bankruptcy case that exceed $1.6 billion. Entergy Gulf States believes these claims to be without merit and significantly exaggerated as to the damages alleged. While their position is not entirely clear, the coal suppliers and transporters apparently allege that Entergy Gulf States, as a joint venturer with Cajun in Big Cajun 2, should be responsible under Louisiana law for as much as 100% of their alleged claims against Cajun, despite Entergy Gulf States only owning 14% of the entire power station. Entergy Gulf States believes that it has no liability to either the coal suppliers or transporters. Entergy Gulf States' position is that it was not engaged in a joint venture with Cajun but rather that Cajun was the operator of Unit 3 in which Entergy Gulf States owns an undivided interest. Whether liability will ultimately be asserted against Entergy Gulf States by the coal suppliers and transporters depends upon which plan of reorganization is confirmed in the Cajun bankruptcy case. Two competing plans of reorganization have been filed and are still pending in the bankruptcy case, one of which contains settlements with the coal suppliers and transporters that would satisfy their claims. The district judge disqualified the other plan of reorganization, which did not contain a settlement with the coal suppliers and transporters, but the United States Court of Appeals for the Fifth Circuit reversed the decision of the district judge in August 1998. A decision by the bankruptcy judge on whether to confirm one of the two competing plans of reorganization is now pending. No assurance can be given regarding the timing or outcome of this decision. Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy London, and System Energy) See Note 9 in the Form 10-K for information on the domestic utility companies', System Energy's, and Entergy London's construction expenditures (excluding nuclear fuel) for the years 1998, 1999, and 2000 and long-term debt and preferred stock maturities and cash sinking fund requirements for the period 1998-2000. In August 1998, Entergy announced a new strategic direction that includes the expected sale of London Electricity. See Note 7 for further information. 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 in the Form 10-K for information on nuclear liability, property and replacement power insurance, related NRC regulations, the disposal of spent nuclear fuel, other high-level radioactive waste, and decommissioning costs associated with ANO 1, ANO 2, River Bend, Waterford 3, and Grand Gulf 1. The owner/licensees of each of Entergy's five nuclear units previously participated in a private insurance program that provides coverage for certain worker tort claims filed for bodily injury caused by radiation exposure. The program continues to provide for a maximum aggregate assessment of approximately $16 million for the five nuclear units in the event that losses exceed accumulated reserve funds. ANO Matters (Entergy Corporation and Entergy Arkansas) See Note 9 in the Form 10-K for information on cracks in a number of steam generator tubes at ANO 2 that were discovered and repaired during an outage in March 1992. Further repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent mid-cycle outage in March 1998. In March 1998, Entergy Arkansas filed a Petition for Declaratory Order and Approval of New Depreciation Rates with the APSC, requesting approval of the steam generator replacement project and appropriate revised depreciation rates. In July 1998, Entergy Operations entered into a contract, with certain cancellation provisions, for the installation of the replacement steam generators. Environmental Issues (Entergy Gulf States) Entergy Gulf States has been designated as a potentially responsible party (PRP) 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 September 30, 1998, a remaining recorded liability of $20 million existed relating to the clean up of the remaining sites at which Entergy Gulf States has been designated a PRP. 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 PRP by the EPA and related litigation. (Entergy Louisiana) During 1993, the Louisiana Department of Environmental Quality (LDEQ) issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana has determined that certain of its power plant wastewater impoundments were affected by these regulations and chose to upgrade or close them. Cumulative expenditures relating to the upgrades and closures of wastewater impoundments were $7.1 million as of September 30, 1998. A remaining recorded liability in the amount of $6.7 million existed at September 30, 1998 for wastewater upgrades and closures. Completion of this work is pending LDEQ approval. 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, which were refinanced in 1997. Upon the occurrence of certain events, Entergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from 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 September 30, 1998. 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 in the Form 10-K for 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, Entergy Louisiana, and Entergy New Orleans) Entergy Corporation, Entergy Louisiana and Entergy New Orleans are defendants in numerous lawsuits filed in Louisiana state court on behalf of approximately 147 plaintiffs who claim that they were illegally terminated from their jobs due to discrimination on the basis of age. The plaintiffs requested that the court certify the matter as a class action. In August 1997, the district court certified the case as a class action. The district court decision to certify the class action was reversed by the Louisiana Fifth Circuit Court of Appeal in April 1998. No assurance can be given as to the timing or outcome of these proceedings. (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. In May 1997, the jury rendered findings as to 22 of the plaintiffs indicating that Entergy had no liability to them for discrimination. These plaintiffs have appealed that decision. The jury did find that Entergy had intentionally discriminated against the remaining five plaintiffs on the basis of age. Entergy concluded settlements with these five plaintiffs during the first quarter of 1998. The remaining lawsuits have predominantly either been settled for nominal amounts or decided by summary judgment in favor of Entergy. However, certain plaintiff appeals are still pending. NOTE 2. RATE AND REGULATORY MATTERS River Bend (Entergy Corporation and Entergy Gulf States) See Note 2 to the Form 10-K for information related to previous developments in the original Entergy Gulf States rate proceeding in 1988 seeking recovery of River Bend plant investment and related deferred costs. On March 13, 1998, the PUCT issued an order disallowing recovery of $1.4 billion of company-wide abeyed plant costs and approximately $157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs (Abeyed Deferrals). On June 30, 1998, the PUCT affirmed its March 1998 decision on Motions for Rehearing, and issued an order to that effect on July 8, 1998. Entergy Gulf States has again appealed the PUCT's decision in the Texas courts. Based on advice of counsel, management believes that it is probable that the matter will be remanded again to the PUCT for further ruling on the prudence of the abeyed plant costs, and it is reasonably possible that some portion of these costs will be included in rate base. Therefore, management believes that the reserves discussed below in "Retail Rate Proceedings, Filings with the PUCT," are adequate to reflect the probable outcome of the abeyed plant costs proceeding, but no assurance can be given that additional future reserves or write-offs will not be required. The Texas share of these costs, which is not currently in rates, is approximately $624 million, based on 1988 costs and the jurisdictional allocation included in current rates. As of September 30, 1998, 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 $11 million and $244 million, respectively. On April 14, 1998, an ALJ issued a proposal for decision (PFD) in the pending judicial remand of the PUCT's 1988 decision to require Entergy Gulf States to use tax benefits generated by disallowed expenses to reduce rates (actual taxes paid). The PFD called for recovery of $100.1 million plus carrying costs over a period not to exceed seven years. Entergy Gulf States believes that additional amounts should be allowed to account for tax liabilities that will result from the recovery and for certain other matters. On June 30, 1998, the PUCT adjusted the PFD to call for the recovery of $74 million primarily by reducing the allowed carrying costs from the overall rate of return to the amount allowed for the over and under billing for utility service. These costs were used to offset the retroactive rate refund discussed herein. Retail Rate Proceedings Filings with the APSC (Entergy Corporation and Entergy Arkansas) See Note 2 to the Form 10-K for information regarding the settlement agreement filed with the APSC and the establishment of a transition cost account. The estimated reserve recorded in December 1997 was adjusted in September 1998 as a result of a mid-year streamlined earnings review procedure for a negative net income impact of $3.7 million. Entergy Arkansas also recorded an additional reserve of $27.9 million in September 1998 in the transition cost account to reflect the estimated 1998 accrual of excess earnings. The results of operations of Entergy Arkansas for the three and nine months ended September 30, 1998 reflect these charges in operating expenses. Additional reserves may also be required in 1999 based on earnings reviews, which will have similar net income effects. Filings with the PUCT (Entergy Corporation and Entergy Gulf States) On June 30, 1998, the PUCT began its deliberations on the Entergy Gulf States' rate case filed in November 1996. The PUCT did not accept settlements filed in March and June by Entergy Gulf States and various intervenor groups. On July 22, 1998, the PUCT issued an order and after making modifications on rehearing, issued its second order on rehearing on October 14, 1998. The second order on rehearing reduces Entergy Gulf States' Texas rates by $111 million annually effective December 1, 1998, offset through May 1999 by accelerated recovery of accounting order deferrals, resulting in a net reduction of $69 million on an annual basis through that date. This order also required a refund of $76 million. This refund is calculated as a rate reduction and service quality refund retroactive to June 1, 1996, offset by the accelerated recovery of the accounting order deferrals, actual taxes paid, and a fuel surcharge. This refund amount was reduced by $32 million from the original refund ordered in the July 22, 1998 order, but was offset by the passage of time from the original rate reduction's assumed effective date of August 1998 to the new assumed effective date of December 1, 1998. Entergy Gulf States established reserves of approximately $381 million ($227 million net of taxes) in the fourth quarter of 1997 to reflect the probable outcome of the rate case and abeyed plant cost proceedings based on management's estimates of the effects thereof. Entergy Gulf States recorded additional reserves of $123.5 million ($73.6 million net of taxes) in 1998 based on management's estimates which include $101.3 million ($60.3 million net of tax) for the retroactive rate actions for the nine months ended September 30, 1998, and $22.2 million ($13.3 million net of tax) for the prospective portion of the rate reduction for the three months ended September 30, 1998. The results of operations of Entergy Gulf States for the three and nine months ended September 30, 1998 reflect these corresponding charges in operating revenues. The PUCT's October 14, 1998 order on rehearing, if sustained, is expected to have a material adverse effect on Entergy Gulf States' revenues, cash flow, and net income. Entergy Gulf States has filed a motion for reconsideration with the PUCT. The PUCT has until November 28, 1998 to act on the motion or the motion is overruled by operation of law. Entergy Gulf States plans to seek such further remedies as may be available to it, including appealing the order if the motion for reconsideration fails to alter what Entergy Gulf States believes is an incorrect result based on the evidence before the PUCT. On July 29, 1998, a Texas state district court granted Entergy Gulf States' request for a temporary restraining order until August 12, 1998 to prevent enforcement of the PUCT's July 22, 1998 order. Subsequent to this, Entergy Gulf States entered an agreement with the PUCT that allowed for refunds pursuant to the PUCT's order to begin in August 1998 and delayed the implementation of the ordered rate decrease until 18 days following issuance by the PUCT of a final and appealable order. A component of the rulings discussed above was a disallowance by the PUCT of recovery of approximately $49 million of Entergy's affiliate costs allocated to Entergy Gulf States in Texas. Entergy's affiliate costs result from managing Entergy Gulf States' fossil and nuclear generating plants and transmission and distribution systems, as well as providing human resources, accounting, legal, and other necessary services to Entergy Gulf States and Entergy Corporation's other electric utility subsidiaries. The PUCT had previously issued proposed rules governing affiliate transactions of Texas utility companies, including Entergy Gulf States. Hearings concerning the proposed rules were conducted by the PUCT in July 1998. However, the PUCT has withdrawn these proposed rules pending the outcome of the 1999 legislative session. The rules, if adopted in their proposed form, could severely restrict the types and extent of services provided to Entergy Gulf States by Entergy Services and Entergy Operation, and will result in higher costs to Entergy Gulf States for equivalent services. It is not certain when or in what form the rules may be adopted. On September 8, 1998, Entergy Gulf States filed an application with the PUCT for an increase in its fixed fuel factor and a surcharge to Texas retail customers for the cumulative under-recovery of fuel and purchased power costs. The proposed increase in the fixed fuel factor would result in increased revenues of $55.6 million annually compared to the current fixed fuel factor. The proposed surcharge is designed to recover $128.1 million, including interest, for fuel under-recoveries incurred during the period July 1, 1996 through June 30, 1998. Hearings on the merits were held in October 1998, and the PUCT is required to rule on the application by December 7, 1998. All amounts at issue in this proceeding will be subject to review in a future fuel reconciliation proceeding before the PUCT, at which time the PUCT will consider the reasonableness of Entergy Gulf States' fuel and purchased power expenses extending back to July 1, 1996. Entergy Gulf States cannot predict the outcome of this proceeding. Filings with the LPSC (Entergy Corporation and Entergy Gulf States) On May 29, 1998, Entergy Gulf States filed its fifth required post- Merger earnings analysis with the LPSC. No rate reduction was shown to be required in this filing. Entergy Gulf States' filing will be subject to further review by the LPSC, which may result in a change in rates. Hearings are scheduled to begin in April 1999. In July 1998, Entergy Gulf States agreed to implement an $18 million rate reduction effective July 29, 1998 to reflect reductions that are expected to occur as a result of Entergy Gulf States' annual earnings reviews. Proceedings on issues in the second, third, and fourth post- Merger earnings analyses will continue. On September 10, 1998, the LPSC issued an order in the third required post-Merger earnings analysis that required a refund of $44.8 million for the period June 1, 1996 through May 31, 1997, and a prospective rate reduction of $54.6 million effective September 20, 1998. Due to the $18 million reduction that was implemented effective July 29, 1998, an additional prospective reduction of only $36.6 million would be required as a result of the third earnings analysis. Entergy Gulf States has not reserved for this reduction. Entergy Gulf States has appealed this order and has been granted injunctive relief pending a final decision on appeal. (Entergy Corporation and Entergy Louisiana) On April 15, 1996, Entergy Louisiana made its first annual performance-based formula rate plan filing based on the 1995 test year. On June 19, 1996, the LPSC approved a $12 million annual reduction in base rates effective July 1, 1996. Subsequently, additional issues were resolved by means of a settlement conference, increasing the base rate reduction to $16.5 million. On January 21, 1998, the LPSC approved an $8 million prospective annual rate reduction reflecting a change in Entergy Louisiana's allowed return on equity, together with a $4 million refund making this change effective July 1, 1997. On May 30, 1997, Entergy Louisiana made its annual formula rate plan filing with the LPSC for the 1996 test year. This filing resulted in a total rate reduction of approximately $54.5 million, which was implemented beginning in the first filing cycle of July 1997. Rates were reduced by an additional $0.7 million effective July 1, 1997, and by an additional $2.9 million effective March 1998. A final order is expected during the fourth quarter of 1998. The LPSC determined in July 1998 that the annual formula rate plan filings for Entergy Louisiana would be extended for an additional three years, through an April 2000 filing for the 1999 test year. In September 1998, Entergy Louisiana made its third annual formula rate plan filing with the LPSC for the 1997 test year. The filing indicated that earnings were such that no change in rates would be warranted with the exception of the elimination of a $3.7 million one-time credit that will result in a rate increase of this amount. Hearings will be conducted on this filing. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) On March 15, 1998, Entergy Mississippi filed its annual earnings review with the MPSC under its formula rate plan for the 1997 test year. In April 1998, the MPSC issued an order approving a prospective rate reduction of $6.6 million. This rate reduction went into effect May 1, 1998. Filings with the Council (Entergy Corporation and Entergy New Orleans) Entergy New Orleans made its cost of service and revenue requirement filing in conjunction with its transition to competition plan on September 17, 1997. Hearings on the ratemaking issues in the filing were held in July 1998. Entergy New Orleans filed a settlement agreement before the Council, which was approved on November 5, 1998. The settlement agreement required base rate reductions for Entergy New Orleans' electric customers of $7.1 million effective January 1, 1999; $3.2 million effective October 1, 1999; and $16.1 million effective October 1, 2000. The agreement also required a $1.9 million base rate reduction for Entergy New Orleans' gas customers effective January 1999. The settlement prohibited Entergy New Orleans from seeking any base rate increases prior to October 1, 2001. Grand Gulf Accelerated Recovery Tariff (Entergy Arkansas) In April 1998, FERC approved the Grand Gulf Accelerated Recovery Tariff that Entergy Arkansas filed as part of the settlement agreement that was approved by the APSC in December 1997. The tariff was designed to allow Entergy Arkansas to pay down a portion of its Grand Gulf obligation in advance of the implementation to retail access in Arkansas. The tariff will go into effect January 1, 1999. See Note 2 to the Form 10-K for a discussion of the settlement agreement with the APSC. (Entergy Mississippi) On September 29, 1998, FERC approved the Grand Gulf Accelerated Recovery Tariff for Entergy Mississippi's allocable portion of Grand Gulf that was filed with the FERC in August 1998. The tariff provides for the acceleration of Entergy Mississippi's Grand Gulf purchased power obligation in an amount totaling $221.3 million over the period October 1, 1998 through June 30, 2004 and is used to offset the rate reduction described below. River Bend Cost Deferrals (Entergy Corporation and Entergy Gulf States) Entergy Gulf States deferred approximately $369 million of River Bend operating and purchased power costs, depreciation, and accrued carrying charges, pursuant to a 1986 PUCT accounting order. Approximately $182 million of these costs were being amortized over a 20- year period, and the remaining $187 million was written off in the first quarter of 1996 in accordance with SFAS 121. These accounting order deferrals have been given accelerated recovery in the July 22, 1998 PUCT order discussed above. Entergy Gulf States has not recorded such accelerated recovery pending the resolution of its motion for reconciliation of the order. For further discussion, see Retail Rate Proceedings above. Grand Gulf 1 Deferrals (Entergy Corporation and Entergy Mississippi) See Note 2 of the Form 10-K for information regarding Entergy Mississippi's plan with the MPSC for recovery of previously deferred Grand Gulf 1-related costs. The completion of the recovery of the deferred costs and associated carrying charges, offset by i) the accelerated recovery of Entergy Mississippi's Grand Gulf purchased power obligation and ii) the recovery of a portion of Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase discussed herein, results in a $127.1 million annual rate reduction for Entergy Mississippi as of October 1, 1998. The reduction will not result in a decrease in Entergy Mississippi's income as the phase-in plan deferrals have now been fully amortized and no further expense associated with the phase-in plan will be recognized. Proposed Rate Increase (Entergy Mississippi) See Note 2 of the Form 10-K for information regarding System Energy's application with FERC for a rate increase and Entergy Mississippi's allocation of the proposed rate increase. On August 12, 1998, Entergy Mississippi filed a revised deferral plan with the MPSC that provides for recovery of a portion of the System Energy rate increase effective October 1, 1998. Under the revised plan, Entergy Mississippi will continue to defer until September 30, 2000, or until the issuance of a final order by the FERC, the difference between the System Energy rate increase and the amount of the increase approved by the ALJ's initial decision ("ALJ Decision Level") issued on July 11, 1996. This deferred amount will be amortized over 54 months beginning October 2000. Entergy Mississippi began recovery of its allocation at the ALJ Decision Level in October 1998. The previously deferred portion of the ALJ Decision Level, including carrying charges, will be recovered over 48 months. NOTE 3. COMMON STOCK (Entergy Corporation) During the nine months ended September 30, 1998, Entergy Corporation issued 284,498 shares of its previously repurchased common stock to satisfy stock options exercised and stock purchases under its Equity Ownership Plan. During the third quarter of 1998, Entergy Corporation repurchased 200,000 shares from the trust originally established to hold the shares expected to be awarded under the 1996-1998 Long-term Incentive Plan. In addition, Entergy Corporation received proceeds of $8.6 million from the issuance of 320,030 shares of common stock under its dividend reinvestment and stock purchase plan during the nine months ended September 30, 1998. NOTE 4. LONG-TERM DEBT (Entergy Gulf States) On October 1, 1998, Entergy Gulf States retired $40 million of 6.75% Series First Mortgage Bonds upon maturity. On November 1, 1998, Entergy Gulf States retired $75 million of 7.35% Series First Mortgage Bonds upon maturity. (System Energy Resources) On November 4, 1998, System Energy Resources issued $216 million of 5 7/8% Pollution Control Revenue Bonds due April 1, 2022. The proceeds will be used to redeem on December 1, 1998, $10.0 million of the $49.5 million of 9.5% Series Pollution Control Revenue Bonds due 2013 and $206 million of 9.875% Series C Pollution Control Revenue Bonds due 2014. (Entergy Corporation) See Note 7 in the Form 10-K for a discussion of the financing of EPDC's Damhead Creek project. In September 1998, a subsidiary of EPDC entered into a BPS75 million ($127.5 million) six-month bridge financing to fund certain construction and development costs related to the project. Contemporaneously with the bridge financing, EPDC obtained a commitment letter for the long-term financing requirements of the project, which is expected to be completed by the end of the term of the bridge financing. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On October 30, 1998, Entergy Corporation's Board of Directors declared a common stock dividend of $.30 per share, payable on December 1, 1998, to holders of record on November 12, 1998. NOTE 6. ACCOUNTING ISSUES (Entergy Corporation and Entergy London) New Accounting Standards - In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," which will be effective for Entergy in 2000. This statement requires that all derivatives be recognized in the statement of financial position as either assets or liabilities and measured at fair value. The statement also requires the designation and reassessment of all hedging relationships. The changes in fair value of derivatives will be recognized in earnings or in comprehensive income, depending on the type of hedge relationship involved. The adoption of SFAS 133 is not expected to have a material effect on the financial position, results of operations, or cash flows of Entergy Corporation or Entergy London. During 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", which will be effective for Entergy in 1999. This SOP requires that computer software costs that are incurred in the preliminary project stage be expensed as incurred. Once the capitalization criteria of the SOP have been met, external direct cost of materials and services used in developing or obtaining internal use computer software, as well as payroll and payroll- related costs of employees (to the extent of time spent directly on internal use computer software projects), and interest costs incurred in developing such computer software should be capitalized. Training costs and data conversion costs should be expensed as incurred, with certain exceptions. The adoption of SOP 98-1 is not expected to have a material effect on the financial position, results of operations, or cash flows of Entergy Corporation. NOTE 7. DISPOSITION OF SUBSIDIARY BUSINESSES (Entergy Corporation and Entergy London) On August 2, 1998, Entergy's Board of Directors approved a new strategic direction for Entergy that includes the expected sale of several businesses before the end of 1999. These businesses include London Electricity, CitiPower Pty., Entergy Security, Inc., Efficient Solutions, Inc., and certain portions of Entergy's telecommunications businesses. On September 30, 1998, Entergy sold its energy management subsidiary, Efficient Solutions, Inc. (formerly Entergy Integrated Solutions, Inc.) The loss on the sale of $68.6 million ($35.9 million net of tax) is reflected in other income in the accompanying Consolidated Statements of Income and Comprehensive Income. The remaining businesses expected to be sold collectively represent $5.7 billion of Entergy's total assets as of September 30, 1998 and generated $174 million of Entergy's net income for the nine months then ended. Management believes that the sale price of these businesses will exceed their net book value at September 30, 1998. Accordingly, no adjustment has been recorded at September 30, 1998 for the carrying amount of these businesses in the accompanying financial statements. __________________________________ In the opinion of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London, 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 the domestic utility companies, System Energy, and Entergy London is subject to seasonal fluctuations with the peak periods occurring during the third quarter for the domestic utilities companies and System Energy and occurring during the first quarter for Entergy London. 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. See "Employment Litigation" in Note 1 herein for developments that have occurred since the filing of the Form 10-K. Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States) See "Cajun - Coal Contracts" in Note 9 of the Form 10-K for information relating to the declaratory judgment action filed by Entergy Gulf States and the counterclaims filed by the defendants. See "Cajun - Coal Contracts" in Note 1 herein for developments that have occurred since the filing of the Form 10-K. Catalyst Technologies, Inc. (Entergy Corporation) See "Catalyst Technologies, Inc." in Item 1 of Part I of the Form 10- K for information relating to the lawsuit filed by Catalyst Technologies, Inc. Oral argument on the plaintiff's appeal has been set for November 1998. Union Pacific Railroad Company (Entergy Corporation and Entergy Arkansas) See "Union Pacific Railroad Company" in Item 1 of Part II of the 1998 first and second quarter Entergy Forms 10-Q for a discussion of the civil suit filed by Entergy Arkansas and Entergy Services against Union Pacific Railroad Company. Aquila Power Corporation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) See "Aquila Power Corporation" in Item 1 of Part II of the 1998 second quarter Entergy Form 10-Q for a discussion of the complaint filed with the FERC by Aquila Power Corporation against Entergy Services, as agent for the domestic utility companies. Ratepayer Lawsuits (Entergy Corporation, Entergy Louisiana, and Entergy New Orleans) See "Ratepayer Lawsuits" in Item 1 of Part II of the 1998 second quarter Entergy Form 10-Q for a discussion of the lawsuits filed by ratepayers in Louisiana state courts in Orleans and East Baton Rouge Parishes, and with the LPSC. Asbestos Litigation (Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) See "Asbestos Litigation" in Item 1 of Part II of the 1998 second quarter Entergy Form 10-Q for a discussion of the numerous individual and class action lawsuits filed against Entergy's domestic utility subsidiaries, and in particular Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans on behalf of persons claiming injury as a result of exposure to asbestos. Panda Energy Corporation (Entergy Corporation) In 1994, Panda Energy Corporation (Panda) commenced litigation in Texas in the Dallas District Court against Entergy Corporation. Entergy Enterprises, Inc., EPI, Entergy Power Asia, Ltd., and Entergy Power Development Corporation, direct and indirect wholly owned subsidiaries of Entergy Corporation, are also named as defendants. The allegations include, among others, tortious interference with contractual relations, conspiracy, misappropriation of corporate opportunity, unfair competition and fraud, and constructive trust issues. Panda seeks damages of approximately $4.8 billion, of which $3.6 billion is claimed in punitive damages. The district court granted the defendants' motion for summary judgment and dismissed the lawsuit, finding that Panda is unable to show damages and that the facts alleged do not support a cause of action against the defendants. In August 1998, an appellate court reversed the dismissal and remanded the lawsuit to the trial court. The defendants petitioned the appellate court for rehearing, but that petition was denied in October 1998. Entergy Gulf States expects to petition the Texas Supreme Court for review of the appellate court decision. Franchise Fee Litigation (Entergy Gulf States) In September 1998, the City of Nederland filed a petition against Entergy Gulf States, and Entergy Services, Inc. in state court in Jefferson County, Texas purportedly on behalf of all Texas municipalities that have ordinances or agreements with Entergy Gulf States. The lawsuit alleges that Entergy Gulf States has been underpaying its franchise fees due to failure to properly calculate its gross receipts. Plaintiff seeks a judgment for the allegedly underpaid fees and punitive damages. Entergy will vigorously defend itself in the lawsuit. Fiber Optic Cable Litigation (Entergy Corporation) In May 1998, a group of property owners filed a petition against Entergy Corporation, Entergy Gulf States, Entergy Services, and ETHC in state court in Jefferson County, Texas purportedly on behalf of all property owners throughout the Entergy service area who have conveyed easements to the defendants. The lawsuit alleges that Entergy placed fiber optic cable across their property without obtaining appropriate easements. The plaintiffs seek actual damages for the use of the land and a share of the profits made through use of the fiber optic cables and punitive damages. Entergy will vigorously defend itself in the lawsuit. Item 4. Submission of Matters to a Vote of Security Holders During the third quarter of 1998, no matters were submitted to a vote of the security holders of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, or Entergy London. Item 5. Other Information Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London) The domestic utility companies, System Energy, and Entergy London 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, Sept 30, 1993 1994 1995 1996 1997 1998 Entergy Arkansas 3.11(b) 2.32 2.56 2.93 2.54 2.57 Entergy Gulf States 1.54 (c)- 1.86 1.47 1.42 1.17 Entergy Louisiana 3.06 2.91 3.18 3.16 2.74 2.98 Entergy Mississippi 3.79(b) 2.12 2.92 3.40 2.98 3.48 Entergy New Orleans 4.68(b) 1.91 3.93 3.51 2.70 2.87 System Energy 1.87 1.23 2.07 2.21 2.31 2.45 Entergy London N/A N/A N/A N/A 1.16 1.47 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, Sept 30, 1993 1994 1995 1996 1997 1998 Entergy Arkansas 2.54(b) 1.97 2.12 2.44 2.24 2.27 Entergy Gulf States (a) 1.21 (c)- 1.54 1.19 1.23 1.01 Entergy Louisiana 2.39 2.43 2.60 2.64 2.36 2.56 Entergy Mississippi 3.08(b) 1.81 2.51 2.95 2.69 3.14 Entergy New Orleans 4.12(b) 1.73 3.56 3.22 2.44 2.59 (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 a 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. Shareholder Proposals (Entergy Corporation) Stockholders wishing to bring a proposal before the 1999 Annual Meeting of Stockholders, but not to include it in Entergy Corporation's Proxy Statement, must cause written notice of the proposal to be received by the Secretary of the Company at the principal executive offices in New Orleans, Louisiana by no later than February 13, 1999. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* 3(a) - By-laws of Entergy, as amended and currently in effect. 3(b) - By-laws of Entergy Arkansas, as amended and currently in effect. 3(c) - By-laws of Entergy Gulf States, as amended and currently in effect. 3(d) - By-laws of Entergy Louisiana, as amended and currently in effect. 3(e) - By-laws of Entergy Mississippi, as amended and currently in effect. 3(f) - By-laws of Entergy New Orleans, as amended and currently in effect. 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of September 30, 1998. 27(b) - Financial Data Schedule for Entergy Arkansas as of September 30, 1998. 27(c) - Financial Data Schedule for Entergy Gulf States as of September 30, 1998. 27(d) - Financial Data Schedule for Entergy Louisiana as of September 30, 1998. 27(e) - Financial Data Schedule for Entergy Mississippi as of September 30, 1998. 27(f) - Financial Data Schedule for Entergy New Orleans as of September 30, 1998. 27(g) - Financial Data Schedule for System Energy as of September 30, 1998. 27(h) - Financial Data Schedule for Entergy London as of September 30, 1998. 99(a) - Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. 99(g) - Entergy London's Computation of Ratios of Earnings to Fixed Charges, as defined. ** 99(h) - Annual Reports on Form 10-K of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London for the fiscal year ended December 31, 1997, 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, 1-9067, and 333-33331, respectively). ** 99(i) - Quarterly Reports on Form 10-Q of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London for the quarter ended March 31, 1998, 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, 1-9067, and 333-33331, respectively). ** 99(j) - Quarterly Reports on Form 10-Q of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London for the quarter ended June 30, 1998, 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, 1-9067, and 333-33331, respectively). ___________________________ Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of Entergy Corporation and its subsidiaries on a consolidated basis. * Reference is made to a duplicate list of exhibits being filed as a part of this report on Form 10-Q for the quarter ended September 30, 1998, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being filed with this report on Form 10-Q for the quarter ended September 30, 1998. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K Entergy Corporation and Entergy Gulf States A Current Report on Form 8-K, dated July 14, 1998, was filed with the SEC on July 24, 1998, reporting information under Item 5. "Other Events". SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries. ENTERGY CORPORATION ENTERGY ARKANSAS, INC. ENTERGY GULF STATES, INC. ENTERGY LOUISIANA, INC. ENTERGY MISSISSIPPI, INC. ENTERGY NEW ORLEANS, INC. SYSTEM ENERGY RESOURCES, INC. /s/ Nathan E. Langston Nathan E. Langston Vice President and Chief Accounting Officer (For each Registrant and for each as Principal Accounting Officer) ENTERGY LONDON INVESTMENTS PLC /s/ Nathan E. Langston Nathan E. Langston Director and Vice President and Audit Controller Date: November 6, 1998 EX-3 2 Exhibit 3(a) BYLAWS OF ENTERGY CORPORATION AS AMENDED SEPTEMBER 14, 1998 ARTICLE I. OFFICES. The principal business office of the Corporation shall be in New Orleans, Louisiana. The Corporation may also have offices at such other places as the Board of Directors may from time to time designate or the business of the Corporation may require. ARTICLE II. MEETINGS OF STOCKHOLDERS. SECTION 1. Place of Meetings. All meetings of stockholders, whether annual or special, shall be held at the office of the Corporation in the City of New Orleans, Parish of Orleans, State of Louisiana, unless some other place for said meeting, either within or without the State of Delaware, shall have been fixed by the Board of Directors and set forth in the notice of meeting. SECTION 2. Annual Meeting. The annual meeting of stockholders for the election of Directors and the transaction of such other business as may properly come before the meeting shall be held on such date and at such time of day as shall have been fixed by resolution of the Board of Directors. With respect to any such annual meeting of stockholders, the Corporation shall solicit proxies, relating to all matters proposed by the management of the Corporation at the time of such solicitation, to be submitted for action at said annual meeting, from the holders of all securities of the Corporation entitled to vote at such annual meeting. SECTION 3. Special Meetings. Special meetings of the stockholders may be held at any time upon the call of a majority of the entire Board of Directors, the Chairman of the Board, the person, if any, designated by the Board of Directors as the Chief Executive Officer, a majority of the entire Executive Committee of the Board of Directors, if there should be one, or by the holders of not less than a majority of the outstanding stock entitled to vote at the special meeting. The notice of each special meeting shall state the place, date, hour, and purpose or purposes of the proposed meeting, and the business transacted at such meeting shall be confined to such purpose or purposes. Such written notice shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. In the event that a special meeting is called by the holders of not less than a majority of the outstanding stock entitled to vote at the special meeting in accordance with the provisions of the Articles of Incorporation and this Section 3 of Article II, the Board of Directors shall, within ten days of receipt of such call (i) fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors and (ii) set a special meeting date, which meeting date shall be not less than ten nor more than sixty days after the record date established pursuant to clause (i). SECTION 4. Stockholders' Lists. A complete list of the stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order, with the residence of each, and the number of shares held by each, shall be prepared by the Secretary and filed in the principal business office of the Corporation, and shall be open to the examination of any stockholder, during the usual hours for business at least ten days before any meeting, at the place where such meeting is to be held, or at another location within the city where such meeting is to be held specified in the notice, and shall be available at the time and place of such meeting and open to the examination of any stockholder. SECTION 5. Notice. A written or printed notice, signed by the Chairman of the Board, a President, a Vice President, the Secretary or an Assistant Secretary, the Treasurer or an Assistant Treasurer, of the time, place and purpose or purposes of every meeting of stockholders shall be served upon or mailed or caused to be mailed, postage prepaid, by the Secretary or the officer performing his duties not less than ten nor more than sixty days before such meeting to each stockholder of record entitled to vote at his home address as it appears upon the stock book of the Corporation. SECTION 6. Inspectors Of Election. At any meeting of stockholders the Chairman of the meeting shall appoint two persons, who need not be stockholders, to act as Inspectors of Election. No Director or candidate for the office of Director shall be appointed as such Inspector. Before entering upon the discharge of his duties, each Inspector shall first take and subscribe an oath faithfully to execute the duties of Inspector at such meeting with strict impartiality and according to the best of his ability. The Inspectors shall take charge of the polls and after the balloting shall make a certificate of the result of the vote taken which shall be filed with the minutes of the meeting. SECTION 7. Organization. The chief executive officer or, in his absence, a person appointed by him or, in default of such appointment, the officer next in seniority of position, shall call meetings of the stockholders to order and shall act as chairman thereof. The Secretary of the Corporation, if present, shall act as secretary of all meetings of stockholders, and in his absence, the presiding officer may appoint a secretary. SECTION 8. Order of Business. At all meetings of the stockholders the order of business shall be as follows: (a) call to order; (b) appointment of a Secretary, if necessary; (c) presentation of proof of the due calling of the meeting; (d) presentation and examination of proxies, and determination of the number of shares present in person or by proxy and entitled to vote; (e) reading and settlement of the minutes of the previous meeting; (f) reports of officers and committees, if any; (g) the election of Directors if the meeting is an annual meeting or a meeting called for that purpose; (h) unfinished business; (i) new business; and (j) adjournment. ARTICLE III. DIRECTORS SECTION 1. General Powers. The property, affairs and business of the Corporation shall be managed by the Board of Directors. SECTION 2. Term of Office. The term of office of each Director shall be until the next annual meeting of stockholders and until his successor is duly elected and qualified or until the earlier death, resignation or removal of such Director. SECTION 3. Resignations. Any Director may resign at any time by giving notice of such resignation to the Board of Directors, the Chairman of the Board, the Vice Chairman, a President, a Vice President, the Secretary or an Assistant Secretary of the Corporation. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer. SECTION 4. Meetings. Notice. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board or by the Chairman of the Board, the Vice Chairman, a President or a Vice President and as may be specified in the notice or waiver of notice of any meeting. Meetings may be held at any time upon the call of the Chief Executive Officer of the Corporation or any two of the Directors by oral, telegraphic or written notice, duly given, or sent or mailed to each Director not less than twenty-four hours before such meeting. Regular meetings of the Board may be held without notice at such time and place as shall from time to time be determined by resolution of the Board, but in any event at intervals of not more than three months. SECTION 5. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at any annual meeting of stockholders properly held for such purpose or at any special meeting of stockholders called for the purpose of electing directors (a) by or at the direction of the Board, (b) by any committee or person appointed by the Board for such purpose, or (c) by any stockholder of the Corporation who is a stockholder of record on the date of the giving of the notice provided for in this Section 5 of Article III and on the record date for the determination of stockholders entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 5 of Article III. Such nominations by any stockholder of record shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall have been delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting not less than 60 days nor more than 85 days prior to the anniversary date of the immediately preceding annual meeting of the stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder to be timely must be so delivered or received not later than the close of business on the 10th day following the earlier of the date on which such notice or public disclosure of the date of the meeting was given or made and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the 10th day following the earlier of the date on which notice or public disclosure of the date of the special meeting was given or made. Such stockholder's notice to the Secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a Director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the Corporation and any of its subsidiaries which are owned beneficially or of record by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations of proxies for election of Directors pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Public Utility Holding Company Act of 1935, as amended, and any rules or regulations promulgated thereunder, and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder, (ii) the class and number of shares of capital stock of the Corporation which are owned beneficially or of record by the stockholder, (iii) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) pursuant to which the nominations are to be made by the stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. The Corporation may require any proposed nominee to furnish his written consent to serve if elected and such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a Director of the Corporation. No person shall be eligible for election as a Director of the Corporation if his election to the Board of Directors would cause the Corporation to be in violation of any applicable statute, rule or regulation, and unless nominated in accordance with the procedures set forth herein. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedures, and the defective nomination shall be disregarded. ARTICLE IV. EXECUTIVE COMMITTEE AND OTHER COMMITTEES. SECTION 1. Executive Committee. The Board of Directors may appoint an Executive Committee of not less than three or more than five members, to serve during the pleasure of the Board, to consist of the Chief Executive Officer and such additional Directors as the Board may from time to time designate. The Chief Executive Officer of the Corporation shall be Chairman of the Executive Committee. SECTION 2. Procedure. The Executive Committee shall meet at the call of the Chairman of the Executive Committee or of any two members. A majority of the members shall be necessary to constitute a quorum and action shall be taken by a majority vote of those present. SECTION 3. Powers and Reports. During the intervals between the meetings of the Board of Directors, the Executive Committee shall possess and may exercise all the powers of the Board in the management and direction of the business and affairs of the Corporation. The taking of action by the Executive Committee shall be conclusive evidence that the Board was not in session when such action was taken. The Executive Committee shall keep regular minutes of its proceedings and all action by the Executive Committee shall be reported to the Board at its meeting next following the meeting of the Executive Committee and shall be subject to revision or alteration by the Board; provided, that no rights of third parties shall be affected by such revision or alteration. SECTION 4. Other Committees. From time to time the Board of Directors, by the affirmative vote of a majority of the whole Board, may appoint other committees for any purpose or purposes, and such committees shall have powers as shall be conferred by the resolution of appointment. ARTICLE V. OFFICERS. SECTION 1. Executive Officers. The Board of Directors shall elect individuals to occupy at least three executive offices: Secretary, Treasurer and at least one other office, being either Chairman of the Board, President or Vice President. In its discretion, the Board of Directors may elect individuals to occupy other executive offices, including (if not so elected above) Chairman of the Board, Vice Chairman of the Board, one or more Presidents or Vice Presidents and whatever other executive offices which the Board sees fit to fill. The Board of Directors shall, by resolution, designate one executive officer as the Chief Executive Officer of the Corporation who, subject to the direction of the Board of Directors and of the Executive Committee, shall have direct charge of and general supervision over the business and affairs of the Corporation. The officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders, and each shall hold office until his successor shall have been duly elected and qualified, or until he shall have died or resigned or shall have been removed by majority vote of the whole Board. The powers and duties of Secretary and Treasurer may be exercised and performed by the same person, and a Vice President may at the same time hold any other office except President. SECTION 2. Chairman of the Board. If a Chairman of the Board is elected by the Board of Directors, he shall be a member of the Board of Directors, shall preside at all meetings of the Board of Directors, and shall have such other duties as from time to time may be assigned to him by the Board of Directors, by the Executive Committee or, if the Chairman of the Board is not the designated Chief Executive Officer of the Corporation, by such Chief Executive Officer. SECTION 3. President. If one or more Presidents are elected by the Board of Directors, each such President shall perform duties incident to the office of a president of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors, by the Executive Committee or, if any such President is not designated the Chief Executive Officer of the Corporation, by the Chief Executive Officer. SECTION 4. Vice Presidents. Each Vice President shall have such powers and shall perform such duties as from time to time may be conferred upon or assigned to him by the Board of Directors or the Executive Committee, or as may be delegated to him by the Chief Executive Officer. SECTION 5. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose, he shall see that all notices are duly given in accordance with the provisions of law and these By-laws; he shall be custodian of the records and of the corporate seal of the Corporation; he shall see that the corporate seal is affixed to all documents the execution of which under the seal is duly authorized, and when the seal is so affixed he may attest the same; he may sign, with the Chairman of the Board, the Vice Chairman of the Board, a President or a Vice President, certificates of stock of the Corporation; and in general, he shall perform all duties incident to the office of a secretary of a corporation, and such other duties as from time to time may be assigned to him by the Chief Executive Officer, the Chairman of the Board, the Vice Chairman of the Board, a President, the Board of Directors or the Executive Committee. The Secretary shall also keep, or cause to be kept, a stock book, containing the name, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number of shares held by them respectively, and the time when they respectively became the owners thereof. SECTION 6. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation, checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; singly or jointly with another person as the Board of Directors may authorize, he may sign checks of the Corporation and pay out and dispose of the proceeds under the direction of the Board; he shall render or cause to be rendered to the Chairman of the Board, the President and the Board of Directors, whenever requested, an account of the financial condition of the Corporation; he may sign, with the Chairman of the Board, the Vice Chairman of the Board, a President or a Vice President, certificates of stock of the Corporation; and in general, shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Chairman of the Board, the Vice Chairman of the Board, a President, the Board of Directors or the Executive Committee. SECTION 7. Subordinate Officers. The Board of Directors may appoint such assistant secretaries, assistant treasurers and other subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. SECTION 8. Vacancies. Absences. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors, at any regular or special meeting. Except when the law requires the act of a particular officer, the Board of Directors or the Executive Committee whenever necessary may, in the absence of any officer, designate any other officer or properly qualified employee, to perform the duties of the one absent for the time being, and such designated officer or employee shall have, when so acting, all the powers herein given to such absent officer. SECTION 9. Resignations. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the Vice Chairman of the Board, a President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon written receipt thereof by the Board of Directors or by such officer. ARTICLE VI. CAPITAL STOCK. SECTION 1. Stock Certificates. Every stockholder shall be entitled to have a certificate certifying the number of shares owned by him in the Corporation. Certificates of stock shall be signed by the Chairman of Board, the Vice Chairman of the Board, a President or a Vice President and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, and sealed with the seal of the Corporation. Such seal may be facsimile, engraved or printed. Where such certificate is signed (1) by a transfer agent or an assistant transfer agent, other than the Corporation itself, or (2) by a transfer clerk acting on behalf of the Corporation and a registrar, the signature of the Chairman of the Board, the Vice Chairman of the Board, any such President, Vice President, Treasurer, Secretary, Assistant Treasurer or Assistant Secretary may be facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the Corporation. SECTION 2. Transfer of Shares. The shares of stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Board of Directors may appoint one or more transfer agents and registrars of the stock of the Corporation. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by law. SECTION 3. Record Dates. The Board of Directors may fix a date, not greater than sixty days nor less than ten days in advance of the date of any meeting of stockholders or adjournment thereof, and may fix a date not exceeding sixty days prior to the date stockholders are entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other purpose, as a record date for the purpose of determining stockholders entitled to notice of, or to vote at, any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend, or for any other purpose; and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to notice of, or to vote at, such meeting of stockholders or any adjournment thereof, or entitled to receive payment of such dividend, or for such other purpose, notwithstanding any transfer of stock on the books of the Corporation after the record date so fixed. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with this Section 3 of Article VI. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. ARTICLE VII CHECKS, NOTES, ETC. SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the Corporation's bank accounts and all bills of exchange, promissory notes, acceptances, obligations and other instruments for the payment of money, shall be signed by the Chairman of the Board, the Vice Chairman of the Board, any President or Vice President and by the Treasurer or any Assistant Treasurer, or shall be signed by such other officer or officers, person or persons, as shall be thereunto authorized by the Board of Directors or the Executive Committee. SECTION 2. Execution of Contracts, Assignments. etc. All contracts, agreements, endorsements, assignments, transfers, stock powers, and other instruments shall be signed by the Chief Executive Officer, the Chairman of the Board, the Vice Chairman of the Board or any President or Vice President or shall be signed by such officer or officers, person or persons, as shall be thereunto authorized by the Board of Directors or the Executive Committee or by the Chief Executive Officer, Chairman of the Board or a President pursuant to authorization by the Board of Directors. SECTION 3. Voting of Stock and Execution of Proxies. The Chairman of the Board, the Vice Chairman of the Board, any President or Vice President or any other officer of the Corporation designated by the Board of Directors, the Executive Committee, the Chairman of the Board, or a President, shall be authorized to attend any meeting of the stockholders of any other corporation in which the Corporation is an owner of stock and to vote such stock upon all matters coming before such meeting. The Chairman of the Board, the Vice Chairman of the Board or any President or Vice President may sign and issue proxies to vote shares of stock of other corporations owned by the Corporation. ARTICLE VIII. WAIVERS. Whenever under the provisions of these By-laws or of any law the stockholders or Directors are authorized to hold any meeting or take any action after notice or after the lapse of any prescribed period of time, such meeting or action may be held or taken without notice and without such lapse of time, on written waiver of such notice and lapse of time signed by every person entitled to such notice or by his attorney or attorneys thereunto authorized, either before or after the meeting or action to which such notice relates. ARTICLE IX. SEAL. The seal of the Corporation shall show the year of its incorporation and shall be in such form as the Board of Directors shall prescribe. The seal on any corporate obligation for the payment of money may be a facsimile, engraved or printed. ARTICLE X. INDEMNIFICATION. SECTION 1. Power to Indemnify in Actions, Suits or Proceedings other Than Those by or in the Right of the Corporation. Subject to Section 3 of this Article X the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation by reason) of the fact that he is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. SECTION 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 3 of this Article X, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. SECTION 3. Authorization of Indemnification. Any indemnification under this Article X (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article X, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable or, even if obtainable, by majority vote of a committee duly designated by the Board of Directors (in which directors who are parties may participate) consisting solely of two or more directors not at the time parties to such action, suit or proceeding, or (iii) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iv) by the stockholders. To the extent, however, that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case. Any indemnification under this Article X shall be made promptly and, in any event, to the extend practicable, within sixty days of receipt by the Corporation of the written request of the person to be indemnified. SECTION 4. Good Faith Defined. For purposes of any determination under Section 3 of this Article X, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to him by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term ''another enterprise'' as used in this Section 4 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was sending at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this Article X, as the case may be. SECTION 5. Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 3 of this Article and notwithstanding the absence of any determination thereunder, any director or officer may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article X. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 1 or 2 of this Article X, as the case may be. Neither a contrary determination in the specify case under Section 3 of this Article X nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application. SECTION 6. Expenses Payable in Advance. Expenses incurred by a director or officer in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding within fourteen days after receipt by the Corporation of a written statement from such director or officer requesting such an advancement, together with an undertaking, if required by law at the time of such advance, by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article X. SECTION 7. Nonexclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article X shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-law, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action taken (or omitted to be taken) in his official capacity and as to action taken (or omitted to be taken) in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 of this Article X shall be made to the fullest extent permitted by law. The provisions of this Article X shall not be deemed to prelude the indemnification of any person who is not specified in Sections 1 or 2 of this Article X but whom the Corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise. SECTION 8. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware or the provisions of this Article X. The Corporation may also obtain a letter of credit, act as self-insurer, create a reserve, trust, escrow, cash collateral or other fund or account, enter into indemnification agreements, pledge or grant a security interest in any assets or properties of the Corporation, or use any other mechanism or arrangement whatsoever in such amounts, at such costs, and upon such other terms and conditions as the Board of Directors shall deem appropriate for the protection of any or all such persons. SECTION 9. Certain Definitions. For purposes of this Article X, references to ''the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors and officers, so that any person who is or as a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article X with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article X, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation'' shall include any service as a director or officer of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article X. SECTION 10. Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article X shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 11. Limitation on Indemnification. Notwithstanding anything contained in this Article to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 5 hereof), the Corporation shall not be obligated to indemnify any director or officer in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. SECTION 12. Indemnification of Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to directors, employees and agents of the Corporation or of its wholly or partially owned, direct or indirect affiliated or subsidiary companies similar to those conferred in this Article X to directors and officers of the Corporation. SECTION 13. Repeal or Modification. All rights to indemnification and to advancement of expenses under this Article X shall be deemed to be a contract between the Corporation and each director and officer who serves or has served in any such capacity, and each other person as to whom the Corporation has agreed to grant indemnity at any time while this Article is in effect. Any repeal or modification of this Article or any repeal or modification of relevant provisions of the General Corporation Law of the State of Delaware or any other applicable law shall not in any way diminish any right to indemnification or to advancement of expenses of such director, officer or other person as to whom the Corporation has agreed to grant indemnity, or the obligations of the Corporation, arising hereunder for claims relating to matters occurring prior to such repeal or modification. SECTION 14. Separability. If this Article X or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer, and each employee, agent and other person as to whom the Corporation has agreed to grant indemnity to the full extent permitted by any applicable portion of this Article X that shall not have been invalidated and to the full extent permitted by applicable law. ARTICLE Xl. AMENDMENTS. SECTION 1. Amendments. Subject to the provisions of applicable law and of the Certificate of Incorporation, these By-laws may be altered, amended or repealed and new By- laws adopted either (1) at any annual or special meeting of the stockholders at which a quorum is present or represented, provided notice of the proposed amendment shall have been contained in the notice of meeting, or (2) by the Board of Directors at any regular or special meeting at which a quorum is present, provided notice of the proposed amendment shall have been given. Any repeal, alteration, amendment or adoption of any new By-law must be approved by either the holders of a majority of the outstanding stock entitled to vote thereon or by a majority of the entire Board of Directors then in office, except that any repeal, alteration, amendment or adoption of any new By-law which is inconsistent with ARTICLE X of the By-laws must be approved by either the holders of two-thirds (66 2/3%) of the outstanding capital stock entitled to vote thereon or by a majority of the entire Board of Directors then in office. SECTION 2. Entire Board of Director. As used in this Article XI and in these By-laws generally, the term "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies. ARTICLE XII. STOCKHOLDER-PROPOSED BUSINESS AT ANNUAL MEETINGS. To properly bring business before the annual meeting of stockholders, a stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 85 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder to be timely must be so delivered or received not later than the close of business on the 10th day following the earlier of the date on which such notice or public disclosure of the date of the meeting was given or made. A stockholder's notice to the Secretary shall set forth as to each item of business the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the capital stock of the Corporation which are owned beneficially or of record by the stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. Notwithstanding anything in the By-laws to the contrary, no business shall be brought before the annual meeting by a stockholder or conducted at such annual meeting except in accordance with the procedures set forth in this Article XII; provided, however, that nothing in this Article Xll shall be deemed to prelude discussion by any stockholder of any business properly brought before the annual meeting. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Article XII, and any such business shall not be transacted. EX-3 3 Exhibit 3(b) BYLAWS OF ENTERGY ARKANSAS, INC. AS OF OCTOBER 5, 1998 ARTICLE I OFFICES The principal business office of the Company shall be in Little Rock, Arkansas. The Company may also have offices at such other places as the Board of Directors may from time to time designate. ARTICLE II SHAREHOLDERS Section 1. PLACE OF HOLDING MEETINGS. Meetings of the shareholders shall be held in the offices of the Company in the City of Little Rock, State of Arkansas; or may be held at other places in or outside the State of Arkansas. Section 2. ANNUAL MEETINGS OF SHAREHOLDERS - ELECTION OF DIRECTORS. The annual meeting of the shareholders for the election of directors and the transaction of such other corporate business as may properly come before such meeting, shall be held on the third Wednesday in May unless such day is a legal holiday, in which case such meeting shall be held on the first day thereafter which is not a legal holiday, unless the shareholders elect to hold the annual meeting on a substitute date. At each annual meeting the shareholders entitled to vote shall elect directors in the number provided by these Bylaws to serve until the next annual meeting, unless there is arrearage in the payment of preferred stock dividends as hereinafter stated. If dividends payable on any shares of the Preferred Stock at any time outstanding shall be in arrears in an amount equal to or greater than the aggregate dividends accumulated on the outstanding Preferred Stock in any period of twelve (12) months, then the holders of the Preferred Stock, voting separately from the holders of the Common Stock, shall be entitled to elect the smallest number of directors necessary to constitute a majority of the then authorized number of directors, and the remaining directors shall be elected as first provided in this section; provided that if and when accumulated and unpaid dividends on the then outstanding shares of Preferred Stock shall be paid or declared and set apart for payment, then at the next annual meeting of the shareholders, or earlier at a special meeting of the shareholders duly convened for such purpose, new directors may be elected by the vote of the shareholders of the Company as first provided in this section. In the event of the failure to hold the annual meeting of shareholders, or should be shareholders fail to elect directors at the annual meeting, then in either case the director for the ensuing year may be elected at a special meeting of the shareholders called for such purpose. At each annual meeting the shareholders may transact such other corporate business as may properly come before said meeting. Section 3. SPECIAL MEETING OF SHAREHOLDERS. Special meetings of the shareholders entitled to vote upon any matters may be held upon call of the Chairman of the Board, the President, the Board of Directors, the Executive Committee, or shareholders holding at least ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting, provided that such shareholders deliver to the Company's secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held. Notice of special meetings shall be given in regular manner. Section 4. NOTICE OF SHAREHOLDERS MEETINGS. Written or printed notice of all meetings of shareholders stating the date, time, and place of the meeting and in the case of a special meeting a description of the purpose or purposes for which the meeting is being called shall be mailed by either the Chairman of the Board, the President, or the Secretary to each shareholder of record entitled to vote at his last known post office address, at least ten (10) days and no more than sixty (60) days before the meeting except as otherwise provided by law. Such notice shall be deemed to be given when deposited in the mail, postage prepaid, directed to the shareholder at his post office address as it appeals on the records of the Company. For any meeting of shareholders called to consider matters on which all the shareholders are not entitled to vote, notice need not be sent to those shareholders who are not entitled to vote at such meeting but only to those shareholders of the class or classes entitled to vote. Section 5. QUORUM; VOTE REQUIRED FOR ACTION. A majority of the votes entitled to be cast by the shareholders of the Company representing a separate voting group must be present in person or by proxy at each meeting of the shareholders to constitute a quorum. A majority of the votes cast by a voting group shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the Amended and Restated Articles of Incorporation. Section 6. ADJOURNMENTS. Any meeting of shareholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice. need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting in which the adjournment is taken. At the adjourned meeting the Company may transact any business which might have been transacted at the original meeting. If after the adjournment a new record date is fixed for the adjourned meeting, which must be done if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting in the manner provided by these Bylaws. Section 7. OFFICERS FOR SHAREHOLDERS MEETINGS. Meetings of. shareholders shall be presided over by (in the order following) the Chairman of the Board, the President, or such officer as may be named for the purpose by resolution of the Board of Directors, or if no such officer is present, by a Chairman elected at the meeting. The Secretary of the Company shall act as Secretary of such meeting, if present. In his absence or incapacity to serve, the presiding Chairman may appoint a Secretary. Section 8. PROXIES. Each shareholder entitled to vote at a meeting of shareholders may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after eleven (11) months from its date, unless the proxy provides for longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient at law to support an irrevocable power. A shareholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Company. Proxies shall be dated and shall be filed with the records of the meeting. Section 9. FIXING DATE FOR DETERMINATION OF SHAREHOLDERS OF RECORD. In order that the Company may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect to any change, conversion, or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than seventy (70) days nor less than ten (10) days before the date of such meeting nor more than seventy (70) days prior to any other action. If no record date is flexed: (i) the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (ii) the record date for determining shareholders for any other purpose shall be at the close of business on the date on which the Board of Directors adopts a resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, the Board of Directors may fix a new record date for the adjourned meeting, which it must do if the meeting is adjourned to a date more than one hundred and twenty (120) days after the date fixed for the original meeting. Section 10. LIST OF SHAREHOLDERS ENTITLED TO VOTE. After fixing the record date for a meeting, the Secretary shall prepare an alphabetical listing of the names of all of the shareholders of the Company who are entitled to notice of the shareholders' meeting, which list must be arranged by voting group (and within each voting group by class or series of shares) and must show the address of and number of shares held by each such shareholder. The shareholders list must be made available for inspection by any shareholder, beginning two (2) business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the Company's main office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder, his agent, or attorney shall be entitled on written demand to inspect and to copy the list during regular business hours and during the period it is available for inspection. The Company shall make the shareholders list available at the meeting, any shareholder, his agent, or attorney shall be entitled to inspect the list at any time during the meeting or any adjournment thereof. Section 11. INFORMAL ACTION BY SHAREHOLDERS. Unless otherwise restricted by law or the Amended and Restated Articles of Incorporation, any action required or permitted to be taken at any annual or special meeting of the shareholders may be taken without a meeting, without prior notice and without a vote, if one or more written consents, setting forth the action taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. All written consents executed by one or more shareholders shall be included in the minutes or filed with the corporate records. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who have not consented in writing. In addition, if it is required by law that notice of the proposed action be given to nonvoting shareholders and the action is to be taken by written consent of the voting shareholders, the Company must give its nonvoting shareholders written notice of the proposed action at least ten (10) days before the action is taken. ARTICLE III DIRECTORS Section 1. NUMBER; GENERAL DUTIES; TERM; ELIGIBILITY; AND REMOVAL. The shareholders or the Board of Directors shall have the power from time to time to fix the number of directors of the Company, provided that the number so fixed shall not be less than three (3) or more than fifteen (15). Ownership of capital stock of the Company shall not be a prerequisite to serving as a Director. Any Director, who is also an officer (except the chief executive officer or a former chief executive officer) or employee of the Company, shall not be eligible for re- election after the date of his retirement as an officer or employee of the Company; however, he shall be permitted to complete the regular term of the office as a Director which he is serving at the time of his retirement. A Director who is or has previously been the Company's chief executive officer at the time of his retirement from active employment with the Company, or a Director who is not an officer or employee of the Company, shall not be eligible for re- election after his seventieth birthday, but he shall be permitted to complete the regular term of office as a Director which he is serving at the time he reaches his seventieth birthday. Directors shall continue to serve until their successors are duly elected and qualified, unless prevented by death, resignation or inability to serve or by removal as provided in the Amended and Restated Articles of Incorporation. Section 2. QUORUM: VOTE REQUIRED FOR ACTION. A majority of the directors shall constitute a quorum at any meeting, except when otherwise provided by law; provided, however, that a majority of the directors present may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice; if at least one-third (1/3) of the directors are present at the meeting. Except in cases in which the Amended and Restated Articles of Incorporation or these Bylaws provide otherwise the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 3. ORGANIZATION. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in his absence by a Vice Chairman of the Board, if any, or in his absence by the President, or in their absence, by a Chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the Chairman of the meeting may appoint any person to act as secretary of the meeting. Section 4. MEETINGS AND NOTICES OF MEETINGS. Meetings of the Board of Directors shall be held at the times fixed by resolution of the Board, or upon call of the Chairman of the Board, the President, or any two directors, and may be held at any place within or without the State of Arkansas. The Secretary, or an officer performing his duties, shall give reasonable notice (which must be at least two (2) days' prior notice) of all meetings of the directors called, provided that a meeting may be held without notice immediately after the annual election, and notice need not be given of regular meetings held at times fixed by resolution of the Board. Meetings may be held at any time without notice if all the directors are present, or if those not present waive notice either before or after the meeting. Section 5. FEES AND COMPENSATION OF DIRECTORS. The Board of Directors shall have the power to authorize the payment of compensation to the directors for services to the Company, including fees for attendance at meetings of the Board of Directors. of the Executive Committee, and all other committees, and to determine the amount of such compensation and fees. Section 6. ELECTION OF OFFICERS. The Board of Directors shall elect officers of the Corporation as designated in Article V of these bylaws. Section 7. SALARIES OF OFFICERS. The Board of Directors shall fix salaries and compensation to be paid to officers of the Company or shall designate such person who shall be authorized to fix salaries and compensation to be paid to officers of the Company. Section 8. VACANCIES. Vacancies occurring among the directors shall be filled as provided in the Amended and Restated Articles. Section 9. INFORMAL ACTION BY DIRECTORS. Unless otherwise restricted by the Amended and Restated Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes or proceedings of the Board or committee. Action taken under this section of the Bylaws is effective when the last director signs the consent, unless the consent specifies a different effective date. Section 10. TELEPHONIC MEETINGS PERMITTED. Members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can simultaneously hear each other, and participation in a meeting pursuant to this Bylaw shall constitute presence in person at such meeting. Section 11. GENERAL POWERS OF DIRECTORS. The Board of Directors shall have the power to manage the business of the Company and, subject to the restrictions imposed by law and by the Amended and Restated Articles of Incorporation, may exercise all the powers of the Company. Section 12. CHAIRMAN OF THE BOARD. The Board of Directors shall designate one of its members as Chairman of the Board. The position of Chairman of the Board is not an officer position; therefore, the Chairman of the Board need not be an officer of the Corporation. ARTICLE IV COMMITTEES Section 1. EXECUTIVE COMMITTEE. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, appoint an Executive Committee of not less than two or more than four members, to serve at the pleasure of the Board of Directors. Such Committee shall have and may exercise all the powers of the Board of Directors during the intervals between its meetings, which may be lawfully delegated, subject to such limitations which may be provided by resolution of the Board of Directors. Section 2. OTHER COMMITTEES. The Board of Directors may by resolution appoint other committees of directors to perform such duties and take such action as may be lawfully delegated and as the Board may authorize and direct. The Board shall have the power at any time to change the membership of such committees, to fill vacancies in committee personnel and rescind the power and authority of such committees. Section 3. MINUTES OF MEETINGS. All committees shall keep regular minutes of their proceedings and report the same to the Board of Directors. Section 4. EX-OFFICIO MEMBERS. The Chairman of the Board of Directors and the President of the Company shall both be ex-officio members of each duly appointed committee. Section 5. COMMITTEE RULES. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter, and repeal rules for the conduct of its business. In the absence of such rules, each committee shall conduct its business in the same manner as the Board of Directors conduct its business pursuant to Article III of these Bylaws. ARTICLE V OFFICERS Section 1. The Board of Directors shall elect individuals to occupy at least three executive offices: President, Secretary and Treasurer. In its discretion, the Board of Directors may elect individuals to occupy other executive offices, including Chief Executive Officer, Vice Chairman, Chief Operating Officer, Vice President and such other executive offices as the Board shall designate. Officers shall be elected annually and shall hold office until their respective successors shall have been duly elected and qualified, or until such officer shall have died or resigned or shall have been removed by majority vote of the whole Board. To the extent permitted by the laws of the State of Arkansas, individuals may occupy more than one office. Section 2. PRESIDENT. The President shall perform duties incident to the office of a president of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors, by the Executive Committee or, if the Board has elected a Chief Executive Officer and if the Chief Executive Officer is not the President, by the Chief Executive Officer. Section 3. VICE PRESIDENTS. Each Vice President shall have such powers and shall perform such duties as from time to time may be conferred upon or assigned to him by the Board of Directors or the Executive Committee, or as may be delegated to him by the President or the Chief Executive Officer. Section 4. SECRETARY. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; shall see that all notices are duly given in accordance with the provisions of law and these bylaws; shall be custodian of the records and of the corporate seal of the Corporation; shall see that the corporate seal is affixed to all documents the execution of which under the seal is duly authorized, and when the seal is so affixed he may attest the same; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all duties incident to the office of a secretary of a corporation, and such other duties as from time to time may be assigned to the Secretary by the Chief Executive Officer, the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. The Secretary shall also keep, or cause to be kept, a stock book, containing the name, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number of shares held by them respectively, and the time when they respectively became the owners thereof. Section 5. TREASURER. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors. The Treasurer may endorse for collection on behalf of the Corporation, checks, notes and other obligations; may sign receipts and vouchers for payments made to the Corporation singly or jointly with another person as the Board of Directors may authorize; may sign checks of the Corporation and pay out and dispose of the proceeds under the direction of the Board; shall render or cause to be rendered to the Chairman of the Board, the President and the Board of Directors, whenever requested, an account of the financial condition of the Corporation; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. Section 6. SUBORDINATE OFFICERS. The Board of Directors may appoint such assistant secretaries, assistant treasurers and other officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove such officers and to prescribe the powers and duties thereof. Section 7. VACANCIES; ABSENCES. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. Except when the law requires the act of a particular officer, the Board of Directors or the Executive Committee, whenever necessary, may, in the absence of any officer, designate any other officer or properly qualified employee, to perform the duties of the one absent for the time being, and such designated officer or employee shall have, when so acting, all the powers herein given to such absent officer. Section 8. RESIGNATIONS. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, a Vice Chairman, the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon written receipt thereof by the Board of Directors or by such officer. ARTICLE VI CAPITAL STOCK Section 1. CERTIFICATES OF STOCK. Certificates of stock of the Company must bear the corporate seal of the Company and shall be signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer, the Secretary, or an Assistant Secretary of the Company, but when any such certificate is signed by a Transfer Agent or Registrar, the signature of any such corporate officer and the corporate seal upon such certificate may be facsimiles, engraved or printed. The stock of the Company shall be transferable or assign able on the books of the Company by the holders in person or by attorney on the surrender of the certificates therefore duly endorsed. The Board 3f Directors may appoint one or more transfer agents and registrars of the stock. Section 2. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES: ISSUANCE OF NEW CERTIFICATES. The company may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Company may require the owner of the lost, stolen, or destroyed certificate, or his legal representative, to give the Company a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of such new certificate. Section 3. CLASSES OF STOCK - DESIGNATION. If the Company shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, option or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights shall be set forth in full or summarized on the face or back of the certificate which the Company shall issue to represent such class or series of stock, provided, that except as otherwise provided by Arkansas law, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate which the Company shall issue to represent such class or series of stock, a statement that the Company will furnish without charge to each shareholder who so requests the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights. Section 4. DIVIDENDS. The directors may declare dividends upon the capital stock of the Company as and when they deem advisable and according to law. ARTICLE VII INDEMNIFICATION OF DIRECTORS, OFFICERS EMPLOYEES AND AGENTS Section 1. RIGHT TO INDEMNIFICATION. Each person (including here and hereinafter, the heirs, executors, administrators, or estate of such person) (1) who is or was a director or officer of the Company, (2) who is or was an employee of the Company other than an officer, (3) who is or was an agent of the Company and whom the Corporation has expressly agreed to indemnify, or (4) who is or was serving at the request of the Company as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise shall be indemnified by the Company as of right to the fullest extent permitted or authorized by the Arkansas Business Corporation Act of 1987 (sometimes referred to herein as the "1987 Act") or subsequent legislation (but in the case of any such subsequent legislation, only to the extent that it permits the Company to provide broader indemnification rights than permitted prior to such legislation), against any liability or expense, awarded or assessed against him, or incurred by him, or paid or to be paid by him in settlement thereof, in his capacity as such director, officer, employee or agent,. or arising out of his status as such director, officer, employee, or agent, including expenses and amounts paid by him in settlement of any proceeding asserted or brought against him by or in the right of any person, including the Company, in any such capacity or arising out of his status as such. Each director, officer, employee, or agent of the Company to whom indemnification rights under this Article VII have been or may be granted is referred to herein as an "Indemnified Person". The Board of Directors may, upon approval of such director, officer, employee, or agent of the Company, authorize the Company's counsel to represent such person in any proceeding, whether or not the Company is a party to such proceeding. Notwithstanding the foregoing, except as specified in Section 3 of this Article, the Company shall indemnify an Indemnified Person in connection with a proceeding (or part thereof) initiated by such Indemnified Person only if authorization for such proceeding (or part thereof) was not denied by the Board of Directors of the Company prior to sixty (60) days after receipt by the Company of written notice thereof from such person. Section 2. ADVANCEMENT OF EXPENSES. Costs, charges and expenses incurred by a director, officer or employee in defending a proceeding shall be paid by the Company to the fullest extent permitted or authorized by the applicable Arkansas Act pursuant to Section 1 of this Article or subsequent legislation (but in the case of any such subsequent legislation, only to the extent that it permits the Company to provide broader rights to advance costs, charges and expenses than permitted prior to such legislation) in advance of the final disposition of such proceeding, within fourteen (14) days after the receipt by the Company of a written statement from such director, officer or employee requesting such an advancement together with an undertaking, if required by law at the time of such advance, by or on behalf of the person seeking such advance, to repay all amounts so advanced in the event that it shall ultimately be determined that such person is not entitled to be indemnified by the Company as authorized in this Article. In the case of agents of the Company, advancements of costs, charges and expenses may be made upon such other terms and conditions as the Board of Directors may deem appropriate. Section 3. PROCEDURE FOR INDEMNIFICATION AND OBTAINING ADVANCEMENT OF EXPENSES. Any indemnification of liabilities and expenses or advancement of expenses under this Article shall be made promptly, and, in the case of indemnification, in any event within sixty (60) days of receipt by the Company of the written request of the Indemnified Person, or, in the case of advancement of expenses, as set forth in Section 2 of this Article. If the Company denies such request in whole or in part or if no disposition thereof is made within the applicable time limit or if the Company otherwise fails to provide indemnification or advancement as provided for in this Article, and despite any contrary determination by or on behalf of the Company in the specific case, the Indemnified Person may enforce his right to indemnification or advancement, or both, in an appropriate proceeding brought in a court of competent jurisdiction and shall be entitled to such indemnification or advancement, or both, as the court shall by order direct. Such person's reasonable expenses in obtaining court-ordered indemnification or. advancement shall be reimbursed by the Company. No such contrary determination by or on behalf of the Company shall be a defense to such proceeding or create a presumption. that the claimant has not met the applicable standard of conduct, if any, for indemnification or for an advancement pursuant to Section 1 or Section 2 of this Article. It shall be a defense to any such action that the claimant has not met the applicable standard of conduct, if any, pursuant to Section 1 or Section 2 of this Article. Section 4. OTHER RIGHTS: CONTINUATION OF RIGHT TO INDEMNIFICATION AND ADVANCEMENTS. The rights to indemnification and to advancements provided by this Article shall not be deemed exclusive of any other or further rights to which a person seeking indemnification or advancements may be entitled under any law (common or statutory), agreement, vote of shareholders or disinterested directors or otherwise, either as to action taken or omitted to be taken in his official capacity or as to action taken or omitted to be taken in another capacity while holding office or while employed by or acting as agent for the Company, and shall continue as to an Indemnified Person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. All rights to indemnification and to advancements of expenses under this Article shall be deemed to be a contract between the Company and each Indemnified Person. Any repeal or modification of this Article or any repeal or modification of relevant provisions of the applicable Arkansas Business Corporation Act or any other applicable law shall not m any way diminish any right to indemnification or to advancement of expenses of such Indemnified Person, or the obligations of the Company, arising hereunder for claims relating to matters occurring prior to such repeal or modification. Section 5. INSURANCE AND OTHER ARRANGEMENTS. The Company may maintain insurance, at its expense, to protect itself and/or any person who is or was or has agreed to become a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against any liability asserted against him or incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the Company would have the legal power to directly indemnify him against such liability. The Company may also obtain a letter of credit, act as self- insurer, create a reserve, trust, escrow, cash collateral or other fund or account, enter into indemnification agreements, pledge or grant a security interest in any asset or properties of the Company, or use any other mechanism or arrangement whatsoever in such amounts, at such costs, and upon such other terms and conditions as the Board of Directors shall deem appropriate for the protection of any or all such persons. Section 6. SEPARABILITY. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall be nevertheless indemnify each director and officer, and each employee and agent of the Company as to whom the Company has agreed to grant indemnity, as to liabilities and expenses, and amounts paid or to be paid in settlement with respect to any proceeding, including an action by or in the right of the Company, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law. Section 7. TERMS. For purposes of this Article and in each case without limiting the generality thereof, the term "other enterprises" includes employee benefit plans; the term "expenses" includes reasonable counsel fees; the term "liability" includes obligations to pay a judgment, settlement, penalty, fine (including an excise tax assessed on a person with respect to any employee benefit plan), and expenses actually and reasonably incurred with respect to a proceeding; the term "proceeding" includes any threatened, pending, or completed action, suit, or other type of proceeding, whether civil, criminal, administrative, or investigative; and the term "serving at the request of the Company" includes any service as a director, officer, employee or agent of the Company that imposes duties on or involves services by such persons, including duties relating to an employee benefit plan and its participants or beneficiaries. ARTICLE VIII MISCELLANEOUS PROVISIONS Section 1. DEPOSITARIES. The Board of Directors is authorized to select such depositaries as it shall deem proper for the funds of the Company, or may authorize the proper officers of the Company to do so. Checks and drafts against such deposited funds shall be signed and countersigned by officers or persons to be specifically specified by the Board of Directors. Section 2. WAIVERS. Whenever under the provisions of these Bylaws or of any law the shareholders or directors are authorized to hold any meeting or take any action after notice or after the lapse of any prescribed period of time, such meeting or action may be held or taken without notice and without such lapse of time, on written waiver of such notice and lapse of time signed by every person entitled to such notice who did not properly receive such notice or by his attorney or attorneys thereunto authorized, either before or after the meeting or action to which such notice relates. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, unless the person at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and with respect to directors does not vote for or assent to the action taken. In addition, with respect to shareholders, attendance of a person at a meeting shall constitute a waiver of objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the person objects to considering the matter when it is presented. All waivers of notice shall be filed with the minutes of the meeting. Section 3. EXECUTION OF CHECKS, NOTES, ETC. All checks and drafts on the Company's bank accounts and all bills of exchange, promissory notes, acceptances, obligations and other instruments for the payment of money shall be signed by the President or any Vice President and by the Treasurer or any Assistant Treasurer, or shall be signed by such other officer or officers, person or persons, as shall be thereunto authorized by the Board of Directors or the Executive Committee, or shall be signed by such officer or officers, person or persons, as shall be thereunto authorized in the indenture relating to a security issued by the Company provided that when specifically authorized by the Board of Directors, the signature of any corporate officer or other person and the corporate seal upon instruments described above may be facsimile, engraved or printed. Section 4. CORPORATE SEAL. The corporate seal of the Company shall be in such form as required by law and as the Board of Directors shall prescribe. The seal on any corporate obligation for the payment of money may be a facsimile, engraved or printed. Section 5. DIRECTORS EMERITUS AND ADVISORY DIRECTORS. Any individual who shall have served as a Director of this Company may by action of either the shareholders or the Board of Directors be declared to be a Director Emeritus for the remainder of his natural life as recognition of the past services rendered to the Company. A Director Emeritus, as such, shall not have the right to vote at meetings of the Board of Directors. A Director Emeritus shall receive from the Company such remuneration as shall be fixed by the Board of Directors. Any individual who shall have served as a Director of this Company may by action of either the shareholders or the Board of Directors be declared to be an Advisory Director who shall serve for a term not exceeding one (1) year from the date of his election. An Advisory Director, as such, shall not have the right to vote at meetings of the Board of Directors. An Advisory Director shall receive from the Company such remuneration as shall be fixed by the Board of Directors. Section 6. INSPECTION OF BYLAWS. A copy of the Bylaws, with all amendments thereto, shall at all times be kept in a convenient place at the main office of the Company, and shall be open for inspection to all shareholders during normal business hours. Section 7. INTERESTED DIRECTORS AND OFFICERS: QUORUM. No contract or transaction between the Company and one or more of its directors or officers, or between the Company and any other company, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purposes, if: (l) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors; provided, however, that the contract or transaction may not be authorized, approved, or ratified by a single director; or (2) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a vote of the shareholders; or (3) the contract or transaction is fair to the Company. If a majority of the disinterested directors vote to authorize, approve, or ratify the contract or transaction, a quorum shall be deemed present for purpose of taking action under this Section 7. If the contract or the transaction is approved by shareholders, the shares owned by or voted under the control of an interested director or an interested company, partnership, association, or other organization in which one or more of the Company's directors or officers are directors or officers, or have a financial interest, shall not be counted in the vote of shareholders. The vote of such shares, however, shall be counted in determining whether the transaction or contract is approved under the Amended and Restated Articles of Incorporation or the Arkansas Business Corporation Act of 1981. A majority of the shares that are entitled to be counted in a vote on the transaction or contract under this Section 7 constitutes a quorum for the purpose of taking action under this Section 7. Section 8. FORM OF RECORDS. Any records maintained by the Company in the regular course of its business, including a stock ledger, books of account, and minute books, may be kept on, or by in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Company shall so convert any records so kept upon the request of any person entitled to inspect the same. Section 9. AMENDMENT OF BYLAWS. Except as otherwise provided by law and the Articles of Incorporation, these Bylaws may be amended, changed or altered by either the shareholders or Board of Directors at a duly convened meeting, the notice of which includes notice of the proposed amendment, change or alteration. EX-3 4 Exhibit 3(c) BYLAWS OF ENTERGY GULF STATES, INC. AS OF OCTOBER 5, 1998 ARTICLE I. Name. The name of this Corporation shall be ENTERGY GULF STATES, INC. ARTICLE II. Shareholders' Meetings. All meetings of the Shareholders shall be held at a place and time to be set either by the Shareholders or by the Board of Directors. With or without motion, the Chairman of any meeting of the Shareholders may appoint Inspectors and Tellers for such meeting who shall examine into the qualifications of the Shareholders present in person or represented at the meeting by proxy, report the shares represented at the meeting and tabulate the vote on such matters as may come before the meeting. ARTICLE III. Annual Meeting. The Annual Meeting of the Shareholders of this Corporation shall be held on a date selected either by the Shareholders or by the Board of Directors ARTICLE IV. Special Meetings. Special Meetings of the Shareholders of this Corporation shall be held whenever called by the Chairman of the Board of Directors, the Vice Chairman, the President, a Vice President or a majority of the Board of Directors, or whenever the holder or holders of one-tenth (1/10) of the shares of the capital stock issued and outstanding and entitled to vote shall make written application therefor to the Secretary or an Assistant Secretary, stating the time and purpose of the meeting applied for. Special Meetings of the Shareholders shall also be held following the accrual or termination of the right of the preferred stock of the Corporation, voting as a class, to elect the smallest number of Directors of this Corporation necessary to constitute a majority of the members of the Board of Directors, whenever requested to be called in the manner provided in Paragraph 6 of Article VI of the Restated Articles of Incorporation of the Corporation as amended. ARTICLE V. Notice of Shareholders' Meetings. Written or printed notice of all Shareholders' Meetings, stating the time and place, and, in the case of Special Meetings, the purpose or purposes for which such meetings are called, shall be delivered by the Secretary or an Assistant Secretary, by mail, to each Shareholder of record, having voting power in respect of the business to be transacted thereat, at his or her registered address, at least ten (10) and not more than sixty (60) days prior to the date of the meeting, and the person giving such notice shall make affidavit in relation thereto; provided that such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid, and further provided that notice of any such meeting shall be deemed to be sufficiently delivered to any Shareholder who, while the provisions of the Trading with the Enemy Act (Public Act No. 91 of the Sixty-fifth Congress of the United States of America, as now or hereafter amended) shall be operative, shall appear from the stock books to be or shall be known to the Corporation to be an "enemy" or "ally of enemy" as defined in the said Act and whose address appearing on such stock books is outside the United States, or the mailing to whom of notice shall at the time be prohibited by any other law of the United States of America or by any executive order or regulation issued or promulgated by any officer or agency of the United States of America (a) if, at least ten (10) days prior to the date of the meeting, a copy of the notice of the meeting shall be mailed to any person or agency who by any such law, order or regulation shall have been duly designated to receive such notice or duty designated or appointed as custodian of the property of such Shareholder; or (b) if a brief notice of such meeting, including, in the case of a Special Meeting, either a brief statement of the objects for which such meeting is called or a statement as to where there may be obtained a copy of a written notice containing a statement of such objects, shall be published by the Corporation at least once, not less than ten (10) days before the meeting in a daily newspaper published in the English language and of general circulation in the City of Beaumont, Texas. Any meeting at which all Shareholders having voting power in respect of the business to be transacted thereat are present, either in person or represented by proxy, or of which those not present have waived notice in writing, shall be a legal meeting for the transaction of business, notwithstanding that notice has not been given as herein before provided. ARTICLE VI. Waiver of Notice. Notice of any Shareholders' Meeting may be waived by any Shareholder and the presence at any meeting, either in person or by proxy, of a Shareholder having voting power in respect of the business to be transacted thereat shall be deemed as to such Shareholder a waiver of notice of the meeting. ARTICLE VII. Quorum. At any meeting of the Shareholders, a majority of the shares of capital stock issued and outstanding and entitled to vote in respect of the business to be transacted thereat, represented by such Shareholders of record in person or by proxy, shall constitute a quorum, but a less interest may adjourn any meeting from time to time and the same shall be held as adjourned without further notice. When a quorum is present at any meeting, the vote of the holders of a majority of the shares of capital stock entitled to vote represented thereat shall decide all questions brought before such meeting, unless the question is one upon which by express provision of law or of the Articles of Incorporation of the Corporation or of these Bylaws a larger or different vote is required, in which case such express provision shall govern and control the decision of such question. The provisions of this Article are, however, subject to the provisions of Paragraphs 6 and 13 of Article VI of the Articles of Incorporation of the Corporation as amended. ARTICLE VIII. Proxy and Voting. The voting power of the respective classes of stock of the Corporation shall be as provided in Article VI of the Articles of Incorporation of the Corporation as amended. Shareholders of record entitled to vote may vote at any meeting either in person or by proxy in writing, which shall be filed with the Secretary of the meeting before being voted. Such proxies shall entitle the holders thereof to vote at any adjournment of such meeting, but shall not be valid after the final adjournment thereof or after eleven (11) months from the date of its execution unless otherwise provided in the proxy. Each holder of record of stock of the Corporation of any class shall, as to all matters in respect of which such class of stock has voting power, be entitled to one vote for each share of stock of such class standing in his name on the books of the Corporation. ARTICLE IX. Board of Directors. The Shareholders or the Board of Directors shall have the power from time to time to fix the number of directors of the Company, provided that the number so fixed shall not be less than three (3) or more than fifteen (15). No person shall be eligible for election or re-election as a Director of the Company after attaining age seventy (70) except as otherwise permitted by the Board by special resolution heretofore adopted. Any Director who retires from active employment by the Company shall, concurrently with such retirement, resign as a Director of the Company The foregoing provisions placing qualifications on the eligibility of Directors are, however, subject to Paragraphs 6 and 13 of Clause E of Article V~ of the Restated Articles of Incorporation of the Corporation as amended. ARTICLE X. Powers of Directors. The Board of Directors shall have the entire management of the business of the Corporation. In the management and control of the property, business and affairs of the Corporation, the Board of Directors is hereby vested with all the powers possessed by the Corporation itself, so far as this delegation of authority is not inconsistent with the laws of the State of Texas, with the Articles of Incorporation of the Corporation or with these Bylaws. The Board of Directors shall have power to determine what constitutes net earnings, profits and surplus, respectively, what amount shall be reserved for working capital and for any other purposes, and what amount shall be declared as dividends, and such determination of the Board of Directors shall be final and conclusive. ARTICLE XI. Fees of Directors and Others. The Board of Directors shall have power to fix and determine the fee or fees to be paid members of the Board of Directors or any Committees appointed by the Directors or Shareholders for attendance at meetings of said Directors or Committees. Any fees so fixed and determined by the Board of Directors shall be subject to revision or amendment by the Shareholders. ARTICLE XII. Executive and Other Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, appoint an Executive Committee of not less than two or more than four members, to serve at the pleasure of the Board of Directors. Such Committee shall have and may exercise all the powers of the Board of Directors during the intervals between its meetings, which may be lawfully delegated, subject to such limitations which may be provided by resolution of the Board of Directors. The Board of Directors may likewise appoint from its number or from the Shareholders other Committees from time to time, the number composing such Committees and the powers conferred upon the same to be determined by vote of the Board of Directors. ARTICLE XIII. Meetings. Regular Meetings of the Board of Directors shall be held at such places within or without the State of Texas and at such times as the Board by vote may determine from time to time, and if so determined no notice thereof need be given. Special Meetings of the Board of Directors may be held at any time or place, either within or without the State of Texas. whenever called by the Chairman of the Board of Directors, the Vice Chairman, the President, a Vice President, the Secretary, an Assistant Secretary or three or more Directors, notice thereof being given to each Director by the Secretary or an Assistant Secretary or officer calling the meeting, or at any time without formal notice provided all the Directors are present or those not present have waived notice thereof. Notice of Special Meetings, stating the time and place thereof, shall be given by mailing the same to each Director at his residence or business address at least two days before the meeting or by delivering the same to him personally or by telephoning or telegraphing the same to him at his residence or business address at least one day before the meeting ARTICLE XIV. Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business, but a less number may adjourn any meeting from time to time and the same may be held without further notice. When a quorum is present at any meeting, a majority vote of the members in attendance thereat shall decide any question brought before such meeting, except as otherwise provided by law or by these Bylaws ARTICLE XV. Officers. The Board of Directors shall elect individuals to occupy at least three executive offices: President, Secretary and Treasurer. In its discretion, the Board of Directors may elect individuals to occupy other executive offices, including Chief Executive Officer, Vice Chairman, Chief Operating Officer, Vice President and such other executive offices as the Board shall designate. Officers shall be elected annually and shall hold office until their respective successors shall have been duly elected and qualified, or until such officer shall have died or resigned or shall have been removed by majority vote of the whole Board. To the extent permitted by the laws of the State of Texas, individuals may occupy more than one office. ARTICLE XVI. Subordinate Officers. The Board of Directors may appoint such assistant secretaries, assistant treasurers and other officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove such officers and to prescribe the powers and duties thereof. ARTICLE XVII. Chairman of the Board. The Board of Directors shall designate one of its members as Chairman of the Board. The position of Chairman of the Board is not an officer position; therefore the Chairman of the Board need not be an officer of the Company. ARTICLE XVIII. President. The President shall perform duties incident to the office of a president of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors, by the Executive Committee or, if the Board has elected a Chief Executive Officer and if the Chief Executive Officer is not the President, by the Chief Executive Officer. ARTICLE XIX. Vice President. Each Vice President shall have such powers and shall perform such duties as from time to time may be conferred upon or assigned to him by the Board of Directors or the Executive Committee, or as may be delegated to him by the President or the Chief Executive Officer. ARTICLE XX. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; shall see that all notices are duly given in accordance with the provisions of law and these bylaws; shall be custodian of the records and of the corporate seal of the Corporation; shall see that the corporate seal is affixed to all documents the execution of which under the seal is duly authorized, and when the seal is so affixed he may attest the same; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all duties incident to the office of a secretary of a corporation, and such other duties as from time to time may be assigned to the Secretary by the Chief Executive Officer, the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. The Secretary shall also keep, or cause to be kept, a stock book, containing the name, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number of shares held by them respectively, and the time when they respectively became the owners thereof. ARTICLE XXI. Treasurer and Controller. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors. The Treasurer may endorse for collection on behalf of the Corporation, checks, notes and other obligations; may sign receipts and vouchers for payments made to the Corporation singly or jointly with another person as the Board of Directors may authorize; may sign checks of the Corporation and pay out and dispose of the proceeds under the direction of the Board; shall render or cause to be rendered to the Chairman of the Board, the President and the Board of Directors, whenever requested, an account of the financial condition of the Corporation; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. ARTICLE XXII. Resignations. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, a Chairman of the Board, the Vice Chairman, the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon written receipt thereof by the Board of Directors or by such officer. ARTICLE XXIII. Vacancies, Absences. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. Except when the law requires the act of a particular officer, the Board of Directors or the Executive Committee, whenever necessary, may, in the absence of any officer, designate any other officer or properly qualified employee, to perform the duties of the one absent for the time being, and such designated officer or employee shall have, when so acting, all the powers herein given to such absent officer. ARTICLE XXIV. Capital Stock. The amount of capital stock, and of each class thereof, shall be as fixed in the Articles of Incorporation or in any lawful amendments thereto and the votes of the Corporation from time to time ARTICLE XXV. Certificates of Stock. Every Shareholder shall be entitled to a certificate or certificates representing shares of the capital stock of the Corporation in such form, complying with the law as may be prescribed by the Board of Directors, duly numbered and sealed with the corporate seal of the Corporation and setting forth the number and kind of shares to which such Shareholder is entitled. Such certificates shall be signed by the Chairman of the Board of Directors, the Vice Chairman, the President or a Vice President and by the Secretary or an Assistant Secretary. The Board of Directors may also appoint one or more Transfer Agents and/or Registrars for the stock of any class or classes and may require stock certificates to be countersigned by one or more of them. If certificates representing shares of capital stock of this Corporation are manually signed either by a Transfer Agent or by a Registrar, the signatures thereon of the Chairman of the Board of Directors, the Vice Chairman, the President or a Vice President and the Secretary or an Assistant Secretary of this Corporation may be facsimiles, engraved or printed. Any provisions of these Bylaws with reference to the signing of stock certificates shall include, in cases above permitted, such facsimile signatures. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers of this Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by this Corporation, such certificate or certificates may nevertheless be adopted by the Board of Directors of this Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of this Corporation. Any stock certificates bearing facsimile signatures of officers of this Corporation, as above provided, may also bear a facsimile of the seal of this Corporation. ARTICLE XXVI. Transfer of Stock. Shares of stock may be transferred by delivery of the certificate accompanied either by an assignment in writing on the back of the certificate or by a written power of attorney to sell, assign and transfer the same signed by the person appearing by the certificate to be the owner of the shares represented thereby. No transfer shall affect the right of the Corporation to pay any dividend due upon the stock, or to treat the holder of record as the holder in fact, until such transfer is recorded upon the books of the Corporation or a new certificate is issued to the person to whom it has been so transferred. It shall be the duty of every Shareholder to notify the Corporation of his post office address. The Board of Directors shall have power to close the stock transfer books of this Corporation for a period not exceeding 50 days preceding the date of any meeting of Shareholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding 60 days preceding the date of any meeting of Shareholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the Shareholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment or rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of this Corporation after any such record date fixed as aforesaid ARTICLE XXVII. Loss of Certificates. In case of the loss, mutilation or destruction of a certificate representing shares of stock, a duplicate certificate may be issued upon such terms as the Board of Directors may prescribe ARTICLE XXVIII. Seal. The seal of this Corporation shall consist of a flat-faced circular die with the words and figures "GULF STATES UTILITIES COMPANY CORPORATE SEAL 1925 TEXAS" cut or engraved thereon ARTICLE XXIX. Books and Records. Unless otherwise expressly required by the laws of the State of Texas, the books and the records of the Corporation may be kept outside of the State of Texas at such place or places as may be designated from time to time by the Board of Directors. ARTICLE XXX. Amendments. These Bylaws may be amended, added to, altered or repealed by the Board of Directors of the Company. In the event of any such amendment, alteration or repeal of these Bylaws by the Board of Directors, the notice of the Annual Meeting of the Shareholders which shall thereafter first be sent to the Shareholders shall state that the Bylaws have been so amended, added to, altered or repealed and shall describe or set forth or be accompanied by statement describing or setting forth such amendment, addition, alteration or the text ~f any article which has been repealed. Notwithstanding anything hereinabove contained, these Bylaws may be amended, added to, altered or repealed at any Annual or Special Meeting of the Shareholders by vote in either case of a majority of the voting power of the shares of the capital stock issued and outstanding and entitled to vote in respect thereof, unless the question is one upon which by express provisions of law or of the Articles of Incorporation or of these Bylaws a larger or different vote is required, in which case such express provision shall govern and control the decision of such question, provided, however, that notice is given in the call of said meeting that an amendment, addition, alteration or repeal is to be acted upon. ARTICLE XXXI. Indemnification. A. The Corporation shall indemnify any person who was or is a named defendant or respondent or is threatened to be made a named defendant or respondent in a proceeding (which shall ;include any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative, any appeal in such an action, suit or proceeding, and any inquiry or investigation that could lead to such an action, suit, or proceeding including but not limited to any action, suit or proceeding brought by or in behalf of the Corporation) because the person is or was a director, officer, or employee of the Corporation, and any person who, while a director, officer, or employee is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another domestic or foreign corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, or is or was a nominee or designee of the Corporation who is or was serving at the request of the Corporation as a director or officer of any domestic or foreign corporation which is owned in whole or part by the Corporation, against, judgments, penalties (including excise and similar taxes), fines, settlements, and reasonable expenses (including but not limited to court costs and attorneys' fees) actually incurred by the person in connection with such proceeding, if the person (1) conducted himself or herself in good faith, (2) reasonably believed in the case of conduct in his or her official capacity as a director, officer, or employee of the Corporation, that his or her conduct was in the Corporation's best interests and in all other cases that his or her conduct was at least not opposed to the Corporation's best interests and (3) in the case of any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. This indemnity is expressly intended to apply regardless of the sole, concurrent, or contributing negligence or fault of the person to be indemnified provided that the standards of conduct described in clauses (l), (2), and (3) are met. In addition to the other standards of conduct described in clauses (1), (2), and (3), indemnification and payment or reimbursement of expenses of employees under this Article XXXIII shall be provided for an employee (who is not a director or officer) only when the employee's conduct was within the course and scope of his or her employment by the Corporation. B. The Corporation shall indemnify a director, officer, or employee, or such A nominee or designee or person who, at the request of the Corporation, is serving in capacities described above against reasonable expenses (including but not limited to court costs and attorneys' fees) incurred by him or her in connection with a proceeding in which he or she is a named defendant or respondent because he or she is or was a director, officer, or employee, or such a nominee or designee if he or she has been wholly successful, on the merits or otherwise, in the defense of the proceeding. C. Indemnification provided under Section A shall be made by the Corporation (except as provided in Section B) only if it is determined in accordance with the following procedures that the person has met the requirements set forth in Section A and that indemnification is permissible Such determination that indemnification is permissible under Section A shall be made (1) by a majority vote of a quorum consisting of directors who at the time of the vote were not named defendants or respondents in the proceeding, or (2) if such a quorum cannot be obtained by a majority vote of a committee of the board of directors, designated to act in the matter by a majority vote of all directors, consisting solely of two or more directors who at the time of the vote are not named defendants or respondents in the proceeding, or (3) by special legal counsel selected by the board of directors or a committee of the board by vote as set forth in subsections (1) or (2) of this Section C, or, if such a quorum cannot be obtained and such a committee cannot be established, by a majority vote of all directors, or (4) by the shareholders in a vote that excludes the shares held by directors who are named defendants or respondents in the proceeding. The termination of a proceeding by judgment, order, settlement, or conviction, or on a plea of nolo contendere or its equivalent is not of itself determinative that the persons did not meet the requirements set forth in Section A above. A person shall be deemed to have been found liable in respect of any claim, issue or matter only after the person shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom, The provisions of Section A are intended to make mandatory the indemnification permitted therein and, together with Article IX of the Restated Articles of Incorporation, shall constitute authorization of indemnification in the manner required Determinations as to reasonableness of expenses under Section A shall be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, determination as to reasonableness of expenses shall be made in the manner specified in subsection (3) of the first paragraph of this Section C for the selection of special legal counsel. Determinations as to the reasonableness of expenses under Sections B and F shall be made in any manner which may be used to determine if indemnification is permissible under Section A. Action taken or omitted by a person with respect to an employee benefit plan in the performance of his or her duties for a purpose reasonably believed by him or her to be in the interest of the participants and beneficiaries of the plan is deemed to be for a purpose which is not opposed to the best interests of the Corporation D. Notwithstanding the provisions of Section A, except to the extent permitted by the next sentence, a person shall not be indemnified by the Corporation in respect of a proceeding in which the person is found liable on the basis that personal benefit was improperly received by the person, whether or not the benefit resulted from an action taken in the person's official capacity, or in which the person is found liable to the Corporation. If a person is found liable to the Corporation or is found liable on the basis that personal benefit was improperly received by the person, the indemnification (i) is limited to reasonable expenses actually incurred by the person in connection with the proceeding and (ii) shall not be made in respect of any proceeding in which the person shall have been found liable for willful or intentional misconduct in the performance of his duty to the Corporation. E. Reasonable expenses incurred by a director, officer, or employee, or such a nominee or designee or person serving in capacities described above at the request of the Corporation who was, is, or is threatened to b~ made a named defendant or respondent in a proceeding, may be paid or reimbursed by the Corporation in advance of the final disposition of the proceeding and without any of the determinations specified in Section C after (1) the Corporation receives a written affirmation by the person of his or her good faith belief that he or she has met the standard of conduct that is necessary for indemnification under this Article XXXIII and a written undertaking by or on behalf of the person to repay the amount paid or reimbursed if it is ultimately determined that he or she has not met those requirements. The written undertaking required by this Section E must be an unlimited general obligation of the person but need not be secured, and may be accepted without reference to financial ability to make repayment. F. Notwithstanding any other provision of this Article XXXIII, the Corporation shall pay or reimburse reasonable expenses incurred by a director, officer, or employee, or such a nominee or designee in person who, at the request of the Corporation, is serving in capacities described above in connection with his appearance as a witness or other participation in a proceeding at a time when he is not a named defendant or respondent in the proceeding. G. The indemnification provided by this Article XXXIII shall not be deemed to limit the powers of the Corporation to indemnify or to advance expenses to any person who is or was a director, officer, employee, agent, nominee, or designee of the Corporation conferred on the Corporation by the Texas Business Corporation Act (as now in effect or as same may be amended) or other applicable law and shall not be deemed exclusive of any rights to which those indemnified may be entitled under any agreement, contract, insurance, arrangement, vote of shareholders or disinterested directors, statute, court order, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office (including but not limited to service as plan fiduciary), and shall continue as to a person who has ceased to be a director, officer, employee, agent, nominee, or designee or person serving in a named capacity at the request of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such person. This Article XXXIII is intended to be consistent with the powers granted by the Texas Business Corporation Act, as heretofore and hereafter amended, and terms used herein shall be defiled and the provisions of this Article XXXIII shall be interpreted and applied consistently with such law. The provisions of this Article XXXIII shall be deemed several, and if and to the extent any provision of this Article XXXIII is determined not to be consistent with the provisions of such Act, as heretofore and hereafter amended, then the other provisions to the extent consistent shall remain valid and in full force and effect. H. The Corporation may purchase and maintain insurance or another arrangement on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or who is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another domestic or foreign corporation, partnership, joint venture, sole proprietorship, trust, or other enterprise, or employee benefit plan against any liability asserted against him or her and incurred by him or her in such capacity or arising out of his or her status as such a person, whether or not the Corporation would have the power to indemnify him or her against that liability under the provisions of the Restated Articles of Incorporation as amended, this Article XXXIII, the Texas Business Corporation Act, as heretofore and hereafter amended, or otherwise. Nothing in this Article XXXIII is intended to authorize a double payment to a person entitled to indemnification or reimbursement by the Corporation pursuant to this Article XXXIII of an amount actually paid to such person or expended for such person's benefit under any such insurance or other arrangement. If the insurance or other arrangement is with a person or entity that is not regularly engaged in the business of providing insurance coverage, the insurance or arrangement may provide for payment of a liability with respect to which the Corporation would not have the power to indemnify the person only if including coverage for the additional liability has been approved by the shareholders of the Corporation. Without limiting the power of the Corporation to procure or maintain any kind of insurance or other arrangement the Corporation may, for the benefit of persons indemnified by the Corporation, (1) create a trust fund; (2) establish any form of self-insurance; (3) secure its indemnity obligation by grant of a security interest or other lien on the assets of the Corporation; or (4) establish a letter of credit, guaranty, or surely arrangement. The insurance or other arrangement may be procured, maintained, or established within the Corporation or with any insurer or other person deemed appropriate by the board of directors regardless of whether all or part of the stock or other securities of the insurer or other person are owned in whole or part by the Corporation In the absence of fraud, the judgment of the board of directors as to the terms and conditions of the insurance or other arrangement and the identity of the insurer or other person participating in an arrangement shall be conclusive and the insurance or arrangement shall not be voidable and shall not subject the directors approving the insurance or arrangement to liability, on any ground, regardless of whether directors participating in the approval are beneficiaries of the insurance or arrangement. I. Any indemnification of or advance of expenses to any person in accordance with this Article XXXIII or otherwise shall be reported in writing to the shareholders with or before the notice or waiver of notice of the next shareholders' meeting or with or before the next submission to shareholders of a consent to action without a meeting, and, in any case, within the twelve (12) month period immediately following the date of the indemnification or advance. Failure to make or delay in making any such report shall not affect the Corporation's obligation to make any such indemnification or advance J. The indemnification provided hereunder to any person who is or was serving as an employee benefit plan fiduciary shall not operate to relieve any such person who acts as a plan fiduciary from any responsibility or liability under applicable laws, and the indemnification provided hereunder to a plan fiduciary is limited to satisfaction of liabilities incurred by such person as a plan fiduciary, subject to the terms and conditions stated in this Article XXXIII. For purposes of this Article XXXIII, the Corporation shall be deemed to have requested a director or officer to serve an employee benefit plan whenever the performance by him or her of his or her duties to the Corporation also imposes duties on or otherwise involves services by him or her to the plan or participants or beneficiaries of the plan. Excise taxes assessed on a director or officer with respect to an employee benefit plan pursuant to applicable law shall be deemed fines. K. These indemnities shall apply with respect to acts, omissions, and occurrences before or after September 3, 1987; provided that (i) if the indemnities in effect prior to such date should operate in any respect to provide greater indemnification for the person affected or (ii) if it should be determined that these indemnities may not lawfully be applied retroactively from date of adoption, then the indemnities in effect prior to such date shall continue to apply and shall be effective and enforceable with respect thereto. EX-3 5 Exhibit 3(d) BY-LAWS OF ENTERGY LOUISIANA, INC. AS OF OCTOBER 5, 1998 Section 1. The annual meeting of the stockholders of the Corporation for the election of directors and such other business as shall properly come before such meeting shall be held in May of each year on a date and at a time and place to be fixed by the Board of Directors of the Company at least thirty (30) days before the date of such meeting so fixed. Section 2. Special meetings of the stockholders may be held at the registered office of the Corporation in the City of New Orleans, Louisiana, or at such other place or places as the Board of Directors may from time to time determine. Section 3. Special meetings of the stockholders of the Corporation may be held upon the order of the chief executive officer (whether the Chairman of the Board or the President), the Board of Directors, the Executive Committee or of stockholders of record holding one-fourth of the outstanding stock entitled to vote at such meetings. Section 4. Notice of every meeting of the stockholders shall be given in the manner provided by law to each stockholder entitled thereto unless waived by such stockholder. Section 5. The holders of a majority of the outstanding stock of the Corporation entitled to vote upon any matter to be acted upon present in person or by proxy shall constitute a quorum for the transaction of business at any meeting of stockholders but less than a quorum shall have power to adjourn. Section 6. Certificates of stock shall be signed by the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary and sealed with the seal of the Corporation. If certificates of stock of this Corporation are countersigned by a transfer agent or by a registrar, other than the Corporation itself, the signatures thereon of the Corporation's officers may be facsimiles. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates, shall cease to be such officer or officers of this Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by this Corporation, such certificate or certificates may, nevertheless, be adopted by the Board of Directors of this Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of this Corporation. Any stock certificates bearing facsimile signatures of officers of this Corporation, as above provided, may also bear a facsimile of the seal of this Corporation. Section 7. The stock of the Corporation shall be transferable or assignable only on the books of the Corporation by the holders in person or by attorney on the surrender of the certificates therefor duly endorsed for transfer. Section 8. Meetings of the Board of Directors may be held within or without the State of Louisiana, at the times fixed by resolution of the Board or upon the order of the Chairman of the Board or the President or a Vice President or any two directors. Meetings of the Board of Directors may be held by means of telephone conference calls, in which connection (a) the directors may participate in and hold such a meeting by means of conference telephone or similar communications equipment provided that all persons participating in the meeting can hear and communicate with each other, and (b) participation in such a meeting shall constitute presence in person at such meeting except where such participation is for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. The Secretary or other officer performing his duties shall give at least two days' notice of all meetings of directors, provided, however, that a meeting may be held immediately after the annual election of directors without notice, and that a meeting may be held at any other time without notice if all the directors are present or those not present waive notice either before, at or after the meeting. Notice by mail or telegraph to the usual business or residence address of the director at least two days before the meeting shall be sufficient. The Board of Directors shall designate one of its members as Chairman of the Board. The position of Chairman of the Board is not an officer position; therefore, the Chairman of the Board need not be an officer of the Corporation. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, appoint an Executive Committee of not less than two or more than four members, to serve at the pleasure of the Board of Directors. Such Committee shall have and may exercise all the powers of the Board of Directors during the intervals between its meetings, which may be lawfully delegated, subject to such limitations which may be provided by resolution of the Board of Directors. Section 9. The Board of Directors shall elect individuals to occupy at least three executive offices: President, Secretary and Treasurer. In its discretion, the Board of Directors may elect individuals to occupy other executive offices, including Chief Executive Officer, Vice Chairman, Chief Operating Officer, Vice President and such other executive offices as the Board shall designate. Officers shall be elected annually and shall hold office until their respective successors shall have been duly elected and qualified, or until such officer shall have died or resigned or shall have been removed by majority vote of the whole Board. To the extent permitted by the laws of the State of Louisiana, individuals may occupy more than one office. President. The President shall perform duties incident to the office of a president of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors, by the Executive Committee or, if the Board has elected a Chief Executive Officer and if the Chief Executive Officer is not the President, by the Chief Executive Officer. Vice Presidents. Each Vice President shall have such powers and shall perform such duties as from time to time may be conferred upon or assigned to him by the Board of Directors or the Executive Committee, or as may be delegated to him by the President or the Chief Executive Officer. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; shall see that all notices are duly given in accordance with the provisions of law and these bylaws; shall be custodian of the records and of the corporate seal of the Corporation; shall see that the corporate seal is affixed to all documents the execution of which under the seal is duly authorized, and when the seal is so affixed he may attest the same; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all duties incident to the office of a secretary of a corporation, and such other duties as from time to time may be assigned to the Secretary by the Chief Executive Officer, the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. The Secretary shall also keep, or cause to be kept, a stock book, containing the name, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number of shares held by them respectively, and the time when they respectively became the owners thereof. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors. The Treasurer may endorse for collection on behalf of the Corporation, checks, notes and other obligations; may sign receipts and vouchers for payments made to the Corporation singly or jointly with another person as the Board of Directors may authorize; may sign checks of the Corporation and pay out and dispose of the proceeds under the direction of the Board; shall render or cause to be rendered to the Chairman of the Board, the President and the Board of Directors, whenever requested, an account of the financial condition of the Corporation; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. Subordinate Officers. The Board of Directors may appoint such assistant secretaries, assistant treasurers and other officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove such officers and to prescribe the powers and duties thereof. Vacancies; Absences. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. Except when the law requires the act of a particular officer, the Board of Directors or the Executive Committee, whenever necessary, may, in the absence of any officer, designate any other officer or properly qualified employee, to perform the duties of the one absent for the time being, and such designated officer or employee shall have, when so acting, all the powers herein given to such absent officer. Resignations. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, a Vice Chairman, the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon written receipt thereof by the Board of Directors or by such officer. Section 10. The officers of the Corporation shall have such duties as usually pertain to their offices, except as modified by the Board of Directors, and shall also have such powers and duties as may from time to time be conferred upon them by the Board of Directors. Section 11. No person shall be eligible to be or shall be elected or appointed or re-elected or re-appointed as a director of the Corporation after such person shall have attained the age of seventy (70) years. Section 12. The Board of Directors may alter or amend these By-Laws at any meeting duly held as herein provided. EX-3 6 Exhibit 3(e) BY-LAWS OF ENTERGY MISSISSIPPI, INC. AS OF OCTOBER 5, 1998 SECTION 1 - The Annual Meeting of the Stockholders of the Corporation for the election of Directors and such other business as shall properly come before such meeting shall be held at the office of the Corporation in the City of Jackson, Mississippi, on the fourth Thursday in May in each year, at ten o'clock in the morning, unless such day is a legal holiday in the State of Mississippi, in which case such meeting shall be held on the first day thereafter which is not a legal holiday, or at such other place within or without the State of Mississippi and at such other time as the Board of Directors may by resolution designate. SECTION 2 - Special Meetings of the Stockholders may be held at the principal office of the Corporation in the City of Jackson, Mississippi, or at such other place or places as the Board of Directors may from time to time determine. SECTION 3 - Special Meetings of the Stockholders of the Corporation may be held upon the order of the Chairman of the Board, the Board of Directors, the Executive Committee, or of Stockholders of record holding one-tenth of the outstanding stock entitled to vote at such meetings. SECTION 4 - Notice of every meeting of Stockholders shall be given in the manner provided by law to each Stockholder entitled thereto unless waived by such Stockholder. SECTION 5 - The holders of a majority of the outstanding stock of the Corporation entitled to vote upon any matter to be acted upon present in person or by proxy shall constitute a quorum for the transaction of business at any meeting of Stockholders but less than a quorum shall have power to adjourn. SECTION 6 - Certificates of stock shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary, but where any such certificate is signed by a Transfer Agent and by a Registrar, the signature of any such officer or officers and the seal of the Company upon such certificates may be facsimile, engraved or printed. SECTION 7 - The stock of the Corporation shall be transferable or assignable only on the books of the Corporation by the holders in person or by attorney on the surrender of the certificates therefor duly endorsed for transfer. SECTION 8 - Notwithstanding any other provision in these bylaws of the Corporation to the contrary, the stockholders or the Board of Directors shall have the power from time to time to fix the number of directors of the Company, provided that the number so fixed shall not be less than three (3) or more than fifteen (15). Each director shall hold office until the next annual Meeting of Stockholders of the Corporation and until his successor shall have been elected and qualified. Directors need not be residents of the State of Mississippi. Meetings of the Board of Directors may be held within or without the State of Mississippi, at the time fixed by Resolution of the Board or upon the order of the Chairman of the Board, the President, a Vice President, or any two Directors. The Secretary or any other Officer performing his duties shall give at least two days' notice of all meetings of the Board of Directors in the manner provided by law, provided however, a director may waive such notice in the manner provided by law. The Board of Directors shall designate one of its members as Chairman of the Board. The position of Chairman of the Board is not an officer position; therefore, the Chairman of the Board need not be an officer of the Corporation. SECTION 9 - a) The Board of Directors shall elect individuals to occupy at least three executive offices: President, Secretary and Treasurer. In its discretion, the Board of Directors may elect individuals to occupy other executive offices, including Chief Executive Officer, Vice Chairman, Chief Operating Officer, Vice President and such other executive offices as the Board shall designate. Officers shall be elected annually and shall hold office until their respective successors shall have been duly elected and qualified, or until such officer shall have died or resigned or shall have been removed by majority vote of the whole Board. To the extent permitted by the laws of the State of Mississippi, individuals may occupy more than one office. b) President. The President shall perform duties incident to the office of a president of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors, by the Executive Committee or, if the Board has elected a Chief Executive Officer and if the Chief Executive Officer is not the President, by the Chief Executive Officer. c) Vice Presidents. Each Vice President shall have such powers and shall perform such duties as from time to time may be conferred upon or assigned to him by the Board of Directors or the Executive Committee, or as may be delegated to him by the President or the Chief Executive Officer. d) Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; shall see that all notices are duly given in accordance with the provisions of law and these bylaws; shall be custodian of the records and of the corporate seal of the Corporation; shall see that the corporate seal is affixed to all documents the execution of which under the seal is duly authorized, and when the seal is so affixed he may attest the same; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all duties incident to the office of a secretary of a corporation, and such other duties as from time to time may be assigned to the Secretary by the Chief Executive Officer, the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. The Secretary shall also keep, or cause to be kept, a stock book, containing the name, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number of shares held by them respectively, and the time when they respectively became the owners thereof. e) Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors. The Treasurer may endorse for collection on behalf of the Corporation, checks, notes and other obligations; may sign receipts and vouchers for payments made to the Corporation singly or jointly with another person as the Board of Directors may authorize; may sign checks of the Corporation and pay out and dispose of the proceeds under the direction of the Board; shall render or cause to be rendered to the Chairman of the Board, the President and the Board of Directors, whenever requested, an account of the financial condition of the Corporation; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. f) Subordinate Officers. The Board of Directors may appoint such assistant secretaries, assistant treasurers and other officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove such officers and to prescribe the powers and duties thereof. g) Vacancies; Absences. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. Except when the law requires the act of a particular officer, the Board of Directors or the Executive Committee, whenever necessary, may, in the absence of any officer, designate any other officer or properly qualified employee, to perform the duties of the one absent for the time being, and such designated officer or employee shall have, when so acting, all the powers herein given to such absent officer. SECTION 10 - Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, a Vice Chairman, the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon written receipt thereof by the Board of Directors or by such officer. SECTION 11 - EXECUTIVE COMMITTEE - The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, appoint an Executive Committee of not less than two or more than four members, to serve at the pleasure of the Board of Directors. Such Committee shall have and may exercise all the powers of the Board of Directors during the intervals between its meetings, which may be lawfully delegated, subject to such limitations which may be provided by resolution of the Board of Directors. SECTION 12 - OTHER COMMITTEES - From time to time the Board of Directors, by the affirmative vote of a majority of the whole Board may appoint other committees for any purpose or purposes, and such committees shall have such powers as shall be conferred by the Resolution of appointment. SECTION 13 - INDEMNIFICATION 13.1 Definitions - In this by-law: (1) "Director" means an individual who is or was a director of the Corporation or, unless the context requires otherwise, an individual who, while a director of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, including charitable, non-profit or civic organizations. A director is considered to be serving an employee benefit plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Director" includes unless the context requires otherwise, the estate or personal representative of a director. (2) "Employee" means an individual who is or was an employee of the Corporation, or, unless the context requires otherwise, an individual who, while an employee of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, including charitable, non-profit or civic organizations. An employee is considered to be serving an employee benefit plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Employee" includes, unless the context requires otherwise, the estate or personal representative of an employee. (3) "Expenses" include counsel fees. (4) "Liability" means the obligation to pay a judgment, settlement, penalty, fine, or reasonable expenses incurred with respect to a proceeding. Without any limitation whatsoever upon the generality thereof, the term "fine" as used in this Section shall include (1) any penalty imposed by the Nuclear Regulatory Commission (the "NRC"), including penalties pursuant to NRC regulations, 10 CFR Part 21, (2) penalties or assessments (including any excise tax assessment) with respect to any employee benefit plan pursuant to the Employee Retirement Income Security Act of 1974, as amended, or otherwise, and (3) penalties pursuant to any Federal, state or local environmental laws or regulations. (5) "Officer" means an individual who is or was an officer of the Corporation, or, unless the context requires otherwise, an individual who, while an officer of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, including charitable, non-profit or civic organizations. An officer is considered to be serving an employee benefit plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Officer" includes, unless the context requires otherwise, the estate or personal representative of an officer. (6) "Official capacity" means: (i) when used with respect to a director, the office of director in the Corporation; and (ii) when used with respect to an individual other than a director as contemplated in Section 13.7, the office in the Corporation held by the officer or the employment undertaken by the employee on behalf of the Corporation. "Official capacity" does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, including charitable, non-profit or civic organizations. (7) "Party" includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (8) "Proceeding" means any threatened, pending, or completed action suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal. 13.2 Authority to Indemnify (a) Except as provided in subsection (d), the Corporation shall indemnify an individual made a party to a proceeding because he is or was a director against liability incurred in the proceeding if: (1) He conducted himself in good faith; and (2) He reasonably believed: (i) In the case of conduct in his official capacity with the Corporation, that his conduct was in its best interests; and (ii) In all other cases, that his conduct was at least not opposed to its best interests, and (3) In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. (b) A director's conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interest of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection (a)(2)(ii). (c) The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section. (d) The corporation shall not indemnify a director under this section: (1) In connection with a proceeding by or in the right of the Corporation in which the director was adjudged liable to the Corporation; or (2) In connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. (e) Indemnification permitted under this section in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding. (f) The Corporation shall have power to make any further indemnity, including advance of expenses, to and to enter contracts of indemnity with any director that may be authorized by the articles of incorporation or any bylaw made by the shareholders or any resolution adopted, before or after the event, by the shareholders, except an indemnity against his gross negligence or willful misconduct. Unless the articles of incorporation, or any such bylaw or resolution provide otherwise, any determination as to any further indemnity shall be made in accordance with subsection (b) of Section 13.6. Each such indemnity may continue as to a person who has ceased to have the capacity referred to above and may inure to the benefit of the heirs, executors and administrators of such person. 13.3 Mandatory Indemnification The Corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director of the Corporation against reasonable expenses incurred by him in connection with the proceeding. 13.4 Advance for Expenses (a) The Corporation shall pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if: (1) The director furnishes the Corporation a written affirmation of his good faith belief that he has met the standard of conduct described in Section 13.2; (2) The director furnishes the Corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he did not meet the standard of conduct; and (3) A determination is made that the facts then known to those making the determination would not preclude indemnification under these By-Laws. (b) The undertaking required by subsection (a)(2) must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment. (c) Determinations and authorizations of payments under this section shall be made in the manner specified in Section 13.6. 13.5 Court-Ordered Indemnification A director of the Corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction as provided by law. 13.6 Determination and Authorization of Indemnification (a) The Corporation may not indemnify a director under Section 13.2 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in Section 13.2. (b) The determination shall be made: (1) By the Board of Directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding; (2) If a quorum cannot be obtained under subsection (b) (1), by majority vote of a committee duly designated by the Board of Directors (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding; (3) By special legal counsel: (i) Selected by the Board of Directors or its committee in the manner prescribed in subsection (b) (1) or (b) (2); or (ii) If a quorum of the Board of Directors cannot be obtained under subsection (b) (1) and a committee cannot be designated under subsection (b) (2), selected by a majority vote of the full Board of Directors (in which selection directors who are parties may participate); or (4) By the shareholders, but shares owned by or voted under the control of directors who are at the time parties to the proceeding may not be voted on the determination. (c) Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (b) (3) to select counsel. 13.7 Indemnification of Officers, Employees and Agents (1) An officer of the Corporation who is not a director is entitled to mandatory indemnification under Section 13.3, and is entitled to apply for court-ordered indemnification under Section 13.5, in each case to the same extent as a director; and (2) The Corporation shall indemnify and advance expenses under these By-Laws to an officer or employee of the Corporation who is not a director to the same extent as to a director as provided under Sections 13.2, 13.4 and 13.6. 13.8 Insurance If authorized by the Board of Directors, the Board of Directors of Middle South Utilities. Inc. and/or otherwise properly authorized, the Corporation shall purchase and maintain insurance on behalf of an individual who is or was a director, officer, or employee of the Corporation against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer or employee, whether or not the Corporation would have power to indemnify him against the same liability under Sections 13.2 or 13.3. If further authorized as provided in this subsection, the Corporation shall purchase and maintain such insurance on behalf of an individual who is or was a director, officer or employee who, while a director, officer or employee of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, including charitable, non-profit or civic organizations, whether or not the Corporation would have power to indemnify him against the same liability under Sections 13.2 or 13.3. 13.9 Application of By-Law (a) This By-Law does not limit the Corporation's power to pay or reimburse expenses incurred by a director, officer or employee in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent to the proceeding. (b) The foregoing rights shall not be exclusive of other rights to which any director, officer or employee may otherwise be entitled. (c) The foregoing shall not limit any right or power of the Corporation to provide indemnification as allowed by statute or otherwise. 13.10 Rights Deemed Contract Rights All rights to indemnification and to advancement of expenses under these By-Laws shall be deemed to be provided by a contract between the Corporation and the director, officer or employee who serves in such capacity at any time while these By-Laws are in effect. Any repeal or modification of this By-Law shall not affect any rights or obligations then existing. SECTION 14 - The Board of Directors may alter or amend these by-laws at any meeting duly held as herein provided. EX-3 7 Exhibit 3(f) By-Laws of Entergy New Orleans, Inc. As of October 5, 1998 Section 1. The annual meeting of the stockholders of the Corporation for the election of directors and such other business as shall properly come before such meeting shall be held in May of each year on a date and at a time and place to be fixed by the Board of Directors of the Company at least thirty (30) days before the date of such meeting so fixed. Section 2. Special meetings of the stockholders of the Corporation may be held upon the call of the President, the Board of Directors or of the stockholders holding one-fifth of the outstanding Common Stock, at the office of the Company in the State of Louisiana. Such call shall state the purpose, place and time of the meeting. Section 3. Notice of the time, place and purpose of every meeting of stockholders shall be mailed by the Secretary or the officer performing his duties, at least fifteen (15) days before the meeting, to each stockholder entitled to vote in accordance with Section 5 hereof, at his last known post office address, provided, however, that if the stockholder be present at a meeting, or in writing waive notice thereof before or after the meeting, notice of the meeting to such stockholder is unnecessary. Section 4. The holders of forty per centum (40%) of the stock of the Corporation entitled to vote, present in person or by proxy, shall constitute a quorum, but less than a quorum shall have power to adjourn. Section 5. At all meetings of stockholders each common stockholder shall be entitled to one vote for each share of stock held by him and may vote and otherwise act in person or by proxy, but no proxy shall be voted more than eleven (11) months after its date. Section 6. At least two (2) days before each election by the stockholders a full list of stockholders entitled to vote at the election, arranged in alphabetical order with the residence of each and the number of shares held by each, shall be prepared by the Secretary or officer designated by the Board of Directors and filed in the principal office of the Corporation, which shall at all times during the usual hours of business, for said two (2) days and during the election, be open to the examination of any stockholder. Section 7. Certificates of stock shall be of such form and device as the Board of Directors may elect, and shall be signed by, or bear the facsimile signatures of, the President or Vice-President, and either the Secretary or Assistant Secretary, or the Treasurer or Assistant Treasurer. Section 8. The stock of the Corporation shall be transferable or assignable on the books of the Corporation by the holders in person or by attorney on the surrender of the certificates therefor. The Board of Directors may appoint one or more transfer agents and registrars of the stock. The books for the transfer of the stock may be closed for such periods before and during the payment of dividends and the holdings of meetings of stockholders, not to exceed thirty (30) days at any one time, as the Board of Directors may from time to time determine; and the Corporation shall make no transfer of stock on its books during such period. Section 9. The affairs of the Corporation shall be managed by a Board consisting of not less than three (3) nor more than fifteen (15) directors, who shall be elected annually by the stockholders by ballot, to hold office until their successors are elected and qualified. The number of persons, within the foregoing limits, to compose the Board of Directors at any given time shall be fixed by either the stockholders or by the Board of Directors. The stockholders at any meeting, by a majority vote of all the outstanding Common Stock, may remove any director and fill the vacancy. Vacancies in the Board of Directors or in the offices, except vacancies in the Board of Directors caused by an increase in the number of directors, may be filled by the Board at any meeting. Vacancies in the Board of Directors arising from an increase in the number of directors shall be filled at the annual meeting or at a special meeting of stockholders called for that purpose. The Board of Directors shall have power and authority to authorize the payment of compensation to the directors for services to the Corporation, including fees for attendance at meetings of the Board of Directors, of the Executive Committee and all other committees, and to determine the amount of such compensation or fees. . The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any action, suit or proceeding whether civil, criminal, administrative or investigative (including any action by or in the right of the Corporation) by reason of the fact that such person is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer or employee of another business, foreign or nonprofit Corporation, partnership, joint venture or other enterprise, against expenses (including attorneys' fees), judgments, fines, settlements, and any other penalty regardless of statutory characterization, actually and reasonably incurred by such person in connection with such suit or proceeding if such person acted in good faith, not contrary to Corporation instructions or rules, in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful; provided that in case of actions by or in the right of the Corporation, the indemnity shall be limited to expenses (including attorneys' fees and amounts paid in settlement not exceeding, in the judgment of the Board of Directors, the estimated expense of litigating the action to conclusion) actually and reasonably incurred in connection with the defense or settlement of such action; and provided, further, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court and the Board of Directors by a majority vote of a quorum of disinterested directors shall determine, upon application, that despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court and the Board of Directors by a majority vote of a quorum of disinterested directors shall deem proper. Any indemnification under this Section shall be made by the Corporation only as authorized in a specific case upon a determination that the applicable standards of conduct set out above have been met. Such determination can be made (1) by the Board of Directors by a majority vote of a quorum of disinterested directors, or (2) if such a quorum is not obtainable or a quorum of disinterested directors so directs, by independent legal counsel. The body or person making the determination may waive the requirement concerning conformity to Corporation instructions or rules. The other standards may not be waived. However, any act or omission undertaken in good faith in response to an order or other enforcement mechanism of a federal, state or local authority, shall be construed to be in the best interest of the Corporation in conformity to corporate instructions and rules. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the conduct was unlawful. Expenses incurred in defending such an action, suit or proceeding, may be paid by the Corporation in advance of the final disposition thereof if authorized by the Board of Directors in the manner provided immediately above, upon receipt of an undertaking by or on behalf of the director, officer or employee to repay such amount, unless it shall ultimately be determined that such person is entitled to be indemnified by the Corporation as authorized in this Section. The indemnification provided above shall not be deemed exclusive of any other rights to which the person indemnified may be entitled under any by-law, agreement, authorization of shareholders or disinterested directors, or otherwise, and shall continue as to a person who has ceased to be a director, officer or employee, and shall inure to the benefit of such person's legal representatives. Section 10. Meetings of the Board of Directors shall be held at the time fixed by resolution of the Board or upon call of the President or a Vice President or any two directors. Meetings of the Board of Directors may be held by means of telephone conference calls, in which connection (a) the directors may participate in and hold such a meeting by means of conference telephone or similar communications equipment provided that all persons participating in the meeting can hear and communicate with each other, and (b) participation in such a meeting shall constitute presence in person at such meeting except where such participation is for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. The Secretary or officer performing his duties shall give reasonable notice (which need not exceed two (2) days) of all meetings of directors, provided that a meeting may be held without notice immediately after the annual election, and notice need not be given of regular meetings held at times fixed by resolutions of the Board. Meetings may be held at any time without notice if all directors are present or if those not present waive notice either before or after the meeting. Notice by mailing or telegraph to the usual business or residence address of the director shall be sufficient. Five (5) members of the Board shall constitute a quorum. Section 11. The Board of Directors shall designate one of its members as Chairman of the Board. The position of Chairman of the Board is not an officer position; therefore, the Chairman of the Board need not be an officer of the Corporation. Section 12 a) The Board of Directors shall elect individuals to occupy at least three executive offices: President, Secretary and Treasurer. In its discretion, the Board of Directors may elect individuals to occupy other executive offices, including Chief Executive Officer, Vice Chairman, Chief Operating Officer, Vice President and such other executive offices as the Board shall designate. Officers shall be elected annually and shall hold office until their respective successors shall have been duly elected and qualified, or until such officer shall have died or resigned or shall have been removed by majority vote of the whole Board. To the extent permitted by the laws of the State of Louisiana, individuals may occupy more than one office. b) President. The President shall perform duties incident to the office of a president of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors, by the Executive Committee or, if the Board has elected a Chief Executive Officer and if the Chief Executive Officer is not the President, by the Chief Executive Officer. c) Vice Presidents. Each Vice President shall have such powers and shall perform such duties as from time to time may be conferred upon or assigned to him by the Board of Directors or the Executive Committee, or as may be delegated to him by the President or the Chief Executive Officer. d) Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; shall see that all notices are duly given in accordance with the provisions of law and these bylaws; shall be custodian of the records and of the corporate seal of the Corporation; shall see that the corporate seal is affixed to all documents the execution of which under the seal is duly authorized, and when the seal is so affixed he may attest the same; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all duties incident to the office of a secretary of a corporation, and such other duties as from time to time may be assigned to the Secretary by the Chief Executive Officer, the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. The Secretary shall also keep, or cause to be kept, a stock book, containing the name, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number of shares held by them respectively, and the time when they respectively became the owners thereof. e) Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors. The Treasurer may endorse for collection on behalf of the Corporation, checks, notes and other obligations; may sign receipts and vouchers for payments made to the Corporation singly or jointly with another person as the Board of Directors may authorize; may sign checks of the Corporation and pay out and dispose of the proceeds under the direction of the Board; shall render or cause to be rendered to the Chairman of the Board, the President and the Board of Directors, whenever requested, an account of the financial condition of the Corporation; may sign, with the Chairman of the Board, a Vice Chairman, the President or a Vice President, certificates of stock of the Corporation; and, in general, shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Chairman of the Board, a Vice Chairman, the President, the Board of Directors or the Executive Committee. f) Subordinate Officers. The Board of Directors may appoint such assistant secretaries, assistant treasurers and other officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove such officers and to prescribe the powers and duties thereof. g) Vacancies; Absences. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. Except when the law requires the act of a particular officer, the Board of Directors or the Executive Committee, whenever necessary, may, in the absence of any officer, designate any other officer or properly qualified employee, to perform the duties of the one absent for the time being, and such designated officer or employee shall have, when so acting, all the powers herein given to such absent officer. Section 13. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, a Vice Chairman, the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon written receipt thereof by the Board of Directors or by such officer. Section 14. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, appoint an Executive Committee of not less than two or more than four members, to serve at the pleasure of the Board of Directors. Such Committee shall have and may exercise all the powers of the Board of Directors during the intervals between its meetings, which may be lawfully delegated, subject to such limitations which may be provided by resolution of the Board of Directors. Section 15. The Board of Directors is authorized to select such depositaries as they shall deem proper for the funds of the Corporation. All checks and drafts against such deposited funds shall be signed and countersigned by officers or persons to be specified by the Board of Directors or the Executive Committee. Section 16. The corporate seal of the Corporation shall be in such form as the Board of Directors shall prescribe. Section 17. Either the Board of Directors or the stockholders may alter or amend these By-Laws at any meeting duly held as above provided, the notice of which includes notice of the proposed amendment. EX-27 8
UT This schedule contains summary financial information extracted from Entergy Corporation and Subsidiaries financial statements for the quarter ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000065984 ENTERGY CORPORATION AND SUBSIDIARIES 023 ENTERGY CORPORATION AND SUBSIDIARIES 1,000 9-MOS DEC-31-1997 SEP-30-1998 PER-BOOK 18,181,705 1,392,819 3,474,092 4,321,643 0 27,370,259 2,468 4,629,098 2,365,285 6,902,290 393,755 784,455 8,942,186 414,052 0 0 323,992 0 233,482 138,526 9,237,521 27,370,259 9,409,353 192,820 8,060,463 8,060,463 1,348,890 9,500 1,358,390 626,941 538,629 35,091 503,538 296,022 654,846 1,272,554 2.04 2.04
EX-27 9
UT This schedule contains summary financial information extracted from Entergy Arkansas, Inc. financial statements for the quarter ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000007323 ENTERGY ARKANSAS, INC. 001 ENTERGY ARKANSAS, INC. 1,000 9-MOS DEC-31-1997 SEP-30-1998 PER-BOOK 2,798,796 284,581 608,078 430,222 0 4,121,677 470 590,134 498,696 1,089,300 91,027 112,350 1,170,266 667 0 0 865 0 103,621 47,788 1,505,793 4,121,677 1,248,205 76,960 996,277 996,277 251,928 14,906 266,834 70,553 119,321 7,745 111,576 92,600 64,367 272,407 0 0
EX-27 10
UT This schedule contains summary financial information extracted from Entergy Gulf States, Inc. financial statements for the quarter ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000044570 ENTERGY GULF STATES, INC. 006 ENTERGY GULF STATES, INC. 1,000 9-MOS DEC-31-1997 SEP-30-1998 PER-BOOK 4,435,119 368,588 833,284 851,869 0 6,488,860 114,055 1,152,575 248,258 1,514,888 147,729 201,444 1,677,768 0 0 0 140,515 0 59,904 34,153 2,712,459 6,488,860 1,490,526 68,686 1,228,932 1,228,932 261,594 15,912 277,506 120,992 87,828 14,335 73,493 109,400 101,855 322,178 0 0
EX-27 11
UT This schedule contains summary financial information extracted from Entergy Louisiana, Inc. financial statements for the quarter ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000060527 ENTERGY LOUISIANA, INC. 012 ENTERGY LOUISIANA, INC. 1,000 9-MOS DEC-31-1997 SEP-30-1998 PER-BOOK 3,324,000 112,783 393,169 339,219 0 4,169,171 1,088,900 0 43,454 1,130,033 155,000 100,500 1,338,758 0 0 0 294 0 25,682 16,932 1,401,972 4,169,171 1,317,785 100,424 983,630 983,630 334,155 4,114 338,269 92,912 144,933 9,760 135,173 138,500 86,292 261,238 0 0
EX-27 12
UT This schedule contains summary financial information extracted from Entergy Mississippi, Inc. financial statements for the quarter ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000066901 ENTERGY MISSISSIPPI, INC. 016 ENTERGY MISSISSIPPI, INC. 1,000 9-MOS DEC-31-1997 SEP-30-1998 PER-BOOK 1,056,697 13,164 196,866 130,767 0 1,397,494 199,326 0 224,681 423,948 0 50,381 463,547 0 0 0 20 0 0 0 459,598 1,397,494 798,709 34,215 672,555 672,555 126,154 3,019 129,173 30,931 64,027 2,527 61,500 66,000 31,165 151,484 0 0
EX-27 13
UT This schedule contains summary financial information extracted from Entergy New Orleans, Inc. financial statements for the quarter ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000071508 ENTERGY NEW ORLEANS, INC. 017 ENTERGY NEW ORLEANS, INC. 1,000 9-MOS DEC-31-1997 SEP-30-1998 PER-BOOK 292,824 3,259 142,804 63,913 0 502,800 33,744 36,294 67,067 137,105 0 19,780 169,002 0 0 0 0 0 0 0 176,913 502,800 404,577 11,336 367,008 367,008 37,569 712 38,281 11,012 15,933 724 15,209 9,700 13,259 34,904 0 0
EX-27 14
UT This schedule contains summary financial information extracted from System Energy Resources, Inc. financial statements for the quarter ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0000202584 SYSTEM ENERGY RESOURCES, INC. 018 SYSTEM ENERGY RESOURCES, INC. 1,000 9-MOS DEC-31-1997 SEP-30-1998 PER-BOOK 2,429,099 104,279 386,995 480,987 0 3,401,360 789,350 0 62,802 852,152 0 0 1,174,350 0 0 0 160,000 0 37,683 36,156 1,141,019 3,401,360 445,025 61,355 232,117 232,117 212,908 10,359 223,267 87,407 74,505 0 74,505 72,300 87,298 184,922 0 0
EX-27 15
UT This schedule contains summary financial information extracted from Entergy London Investments, Inc. financial statements for the quarter ended September 30, 1998 and is qualified in its entirety by reference to such financial statements. 0001042730 ENTERGY LONDON INVESTMENTS, INC. 036 ENTERGY LONDON INVESTMENTS, INC. 1,000 9-MOS DEC-31-1997 SEP-30-1998 PER-BOOK 2,411,695 1,672,486 488,648 0 0 4,572,829 114,000 391,981 (56,919) 466,277 0 300,000 1,729,691 235,241 0 0 22,299 0 0 0 1,819,321 4,572,829 1,494,552 102,553 1,269,380 1,269,380 225,172 24,970 250,142 147,589 102,531 0 102,531 110,688 142,233 326,479 0 0
EX-99 16
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 Sept 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest Charges 119,591 110,814 115,337 106,716 104,165 99,482 Interest applicable to rentals 16,860 19,140 18,158 19,121 17,529 16,289 ---------------------------------------------------------------- Total fixed charges, as defined 136,451 129,954 133,495 125,837 121,694 115,771 Preferred dividends, as defined (a) 30,334 23,234 27,636 24,731 16,073 15,467 ---------------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $166,785 $153,188 $161,131 $150,568 $137,767 $131,238 ================================================================ Earnings as defined: Net Income $205,297 $142,263 $136,666 $157,798 $127,977 121,114 Add: Provision for income taxes: Total 82,337 29,220 72,081 84,445 59,220 60,991 Fixed charges as above 136,451 129,954 133,495 125,837 121,694 115,771 ---------------------------------------------------------------- Total earnings, as defined $424,085 $301,437 $342,242 $368,080 $308,891 $297,876 ================================================================ Ratio of earnings to fixed charges, as defined 3.11 2.32 2.56 2.93 2.54 2.57 ================================================================ Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.54 1.97 2.12 2.44 2.24 2.27 ================================================================ - - - - - - - - - ------------------------ (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 17
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 Sept 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest charges 210,599 204,134 200,224 193,890 180,073 164,972 Interest applicable to rentals 23,455 21,539 16,648 14,887 15,747 16,593 ----------------------------------------------------------- Total fixed charges, as defined 234,054 225,673 216,872 208,777 195,820 181,565 Preferred dividends, as defined (a) 65,299 52,210 44,651 48,690 30,028 28,501 ----------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $299,353 $277,883 $261,523 $257,467 $225,848 $210,066 =========================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes $69,462 ($82,755) $122,919 ($3,887) 59,976 17,501 Add: Income Taxes 58,016 (62,086) 63,244 102,091 22,402 13,388 Fixed charges as above 234,054 225,673 216,872 208,777 195,820 181,565 ----------------------------------------------------------- Total earnings, as defined (b) $361,532 $80,832 $403,035 $306,981 $278,198 $212,454 =========================================================== Ratio of earnings to fixed charges, as defined 1.54 0.36 1.86 1.47 1.42 1.17 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.21 0.29 1.54 1.19 1.23 1.01 =========================================================== (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 18
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 Sept 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest 136,957 136,444 136,901 132,412 128,900 125,515 Interest applicable to rentals 8,519 8,332 9,332 10,601 9,203 10,547 ------------------------------------------------------------- Total fixed charges, as defined 145,476 144,776 146,233 143,013 138,103 136,062 Preferred dividends, as defined (a) 40,779 29,171 32,847 28,234 22,103 22,283 ------------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $186,255 $173,947 $179,080 $171,247 $160,206 $158,345 ============================================================= Earnings as defined: Net Income $188,808 $213,839 $201,537 $190,762 $141,757 157,230 Add: Provision for income taxes: Total Taxes 110,813 63,288 117,114 118,559 98,965 112,021 Fixed charges as above 145,476 144,776 146,233 143,013 138,103 136,062 ------------------------------------------------------------- Total earnings, as defined $445,097 $421,903 $464,884 $452,334 $378,825 $405,313 ============================================================= Ratio of earnings to fixed charges, as defined 3.06 2.91 3.18 3.16 2.74 2.98 ============================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.39 2.43 2.60 2.64 2.36 2.56 ============================================================= - - - - - - - - - ------------------------ (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 19
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 Sept 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest 55,359 52,764 51,635 48,007 45,274 41,937 Interest applicable to rentals 1,264 1,716 2,173 2,165 1,947 1,979 ------------------------------------------------------------- Total fixed charges, as defined 56,623 54,480 53,808 50,172 47,221 43,916 Preferred dividends, as defined (a) 12,990 9,447 9,004 7,610 5,123 4,677 ------------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $69,613 $63,927 $62,812 $57,782 $52,344 $48,593 ============================================================ Earnings as defined: Net Income $101,743 $48,779 $68,667 $79,210 66,661 75,602 Add: Provision for income taxes: Total income taxes 55,993 12,476 34,877 41,107 26,744 33,108 Fixed charges as above 56,623 54,480 53,808 50,172 47,221 43,916 ------------------------------------------------------------- Total earnings, as defined $214,359 $115,735 $157,352 $170,489 $140,626 $152,626 ============================================================= Ratio of earnings to fixed charges, as defined 3.79 2.12 2.92 3.40 2.98 3.48 ============================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 3.08 1.81 2.51 2.95 2.69 3.14 ============================================================= - - - - - - - - - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 20
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 Sept 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest 21,092 18,272 17,802 16,304 15,287 14,912 Interest applicable to rentals 544 1,245 916 831 911 992 ---------------------------------------------------------- Total fixed charges, as defined 21,636 19,517 18,718 17,135 16,198 15,904 Preferred dividends, as defined (a) 2,952 2,071 1,964 1,549 1,723 1,702 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $24,588 $21,588 $20,682 $18,684 $17,921 $17,606 ========================================================== Earnings as defined: Net Income $47,709 $13,211 $34,386 $26,776 $15,451 $16,938 Add: Provision for income taxes: Total 31,938 4,600 20,467 16,216 12,142 12,779 Fixed charges as above 21,636 19,517 18,718 17,135 16,198 15,904 ----------------------------------------------------------- Total earnings, as defined $101,283 $37,328 $73,571 $60,127 $43,791 $45,621 =========================================================== Ratio of earnings to fixed charges, as defined 4.68 1.91 3.93 3.51 2.70 2.87 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 4.12 1.73 3.56 3.22 2.44 2.59 =========================================================== - - - - - - - - - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. (b) Earnings for the twelve months ended December 31, 1991 include the $90 million effect of the 1991 NOPSI Settlement.
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Exhibit 99(f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges Sept 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest 190,938 176,504 151,512 143,720 128,653 120,277 Interest applicable to rentals 6,790 7,546 6,475 6,223 6,065 4,817 --------------------------------------------------------------- Total fixed charges, as defined $197,728 $184,050 $157,987 $149,943 $134,718 $125,094 =============================================================== Earnings as defined: Net Income $93,927 $5,407 $93,039 $98,668 $102,295 $103,913 Add: Provision for income taxes: Total 78,552 36,838 75,493 82,121 74,654 76,858 Fixed charges as above 197,728 184,050 157,987 149,943 134,718 125,094 --------------------------------------------------------------- Total earnings, as defined $370,207 $226,295 $326,519 $330,732 $311,667 $305,865 =============================================================== Ratio of earnings to fixed charges, as defined 1.87 1.23 2.07 2.21 2.31 2.45 ===============================================================
EX-99 22 Exhibit 99(g) Entergy London Investments Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges December 31, Sept 30, 1997 1998 Fixed charges, as defined: Total Interest 178,647 207,253 Interest applicable to rentals 3,766 4,108 --------------------- Total fixed charges, as defined $182,413 $211,361 ===================== Earnings as defined: Net Income ($147,335) $102,504 Add: Provision for income taxes: Total 177,023 (3,425) Fixed charges as above 182,413 211,361 --------------------- Total earnings, as defined $212,101 $310,440 ===================== Ratio of earnings to fixed charges, as defined 1.16 1.47 ===================== -----END PRIVACY-ENHANCED MESSAGE-----