-----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, Vw29ZcnBQ6UVzpwJ5QxYQGoiofwgcOhOl60EmSAxytoreLyBd3ecQKhGsNXCovV1 5rFuBqw8Lf9e3XzL8uDl8w== 0000065984-99-000113.txt : 19991115 0000065984-99-000113.hdr.sgml : 19991115 ACCESSION NUMBER: 0000065984-99-000113 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [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: 99750527 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 MAIL ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GSU HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY CORP /FL/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH UTILITIES INC DATE OF NAME CHANGE: 19890521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY ARKANSAS INC CENTRAL INDEX KEY: 0000007323 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 710005900 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10764 FILM NUMBER: 99750528 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: ELECTRIC SERVICES [4911] IRS NUMBER: 740662730 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-27031 FILM NUMBER: 99750529 BUSINESS ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 BUSINESS PHONE: 4098386631 MAIL ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 FORMER COMPANY: FORMER CONFORMED NAME: GULF STATES UTILITIES CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY LOUISIANA INC CENTRAL INDEX KEY: 0000060527 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 720245590 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08474 FILM NUMBER: 99750530 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045953100 MAIL ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY MISSISSIPPI INC CENTRAL INDEX KEY: 0000066901 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 640205830 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00320 FILM NUMBER: 99750531 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: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 720273040 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05807 FILM NUMBER: 99750532 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 MAIL ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORL STATE: LA ZIP: 70161 FORMER COMPANY: FORMER CONFORMED NAME: NEW ORLEANS PUBLIC SERVICE INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEM ENERGY RESOURCES INC CENTRAL INDEX KEY: 0000202584 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 720752777 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09067 FILM NUMBER: 99750533 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 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, 1999 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address of Principal Executive Identification No. Offices and Telephone Number 1-11299 ENTERGY CORPORATION 72-1229752 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 1-10764 ENTERGY ARKANSAS, INC. 71-0005900 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 1-2703 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) 576-4000 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) 576-4000 1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777 (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 ___________________________________________________________________________ Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Common Stock Outstanding Outstanding at October 31, 1999 Entergy Corporation ($0.01 par value) 241,282,570 This combined Quarterly Report on Form 10-Q is separately filed by Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company 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, 1998, and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and June 30, 1999, filed by the individual registrants with the SEC, and should be read in conjunction therewith. 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., and System Energy Resources, Inc. 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 ability to locate and correct computer codes relevant to Year 2000 issues and related matters, and other factors. ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q September 30, 1999 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 8 Results of Operations and Financial Statements: Entergy Corporation and Subsidiaries: Results of Operations 13 Consolidated Statements of Income 19 Consolidated Statements of Cash Flows 20 Consolidated Balance Sheets 22 Statements of Consolidated Retained Earnings and Comprehensive Income 24 Selected Operating Results 25 Entergy Arkansas, Inc.: Results of Operations 26 Income Statements 29 Statements of Cash Flows 31 Balance Sheets 32 Selected Operating Results 34 Entergy Gulf States, Inc.: Results of Operations 35 Income Statements 39 Statements of Cash Flows 41 Balance Sheets 42 Selected Operating Results 44 Entergy Louisiana, Inc.: Results of Operations 45 Income Statements 47 Statements of Cash Flows 49 Balance Sheets 50 Selected Operating Results 52 Entergy Mississippi, Inc.: Results of Operations 53 Income Statements 55 Statements of Cash Flows 57 Balance Sheets 58 Selected Operating Results 60 Entergy New Orleans, Inc.: Results of Operations 61 Income Statements 64 Statements of Cash Flows 65 Balance Sheets 66 Selected Operating Results 68 System Energy Resources, Inc.: Results of Operations 69 Income Statements 71 Statements of Cash Flows 73 Balance Sheets 74 Notes to Financial Statements for Entergy Corporation and Subsidiaries 76 Part II: Item 1. Legal Proceedings 86 Item 4. Submission of Matters to a Vote of Security Holders 87 Item 5. Other Information 88 Item 6. Exhibits and Reports on Form 8-K 89 Signature 91 DEFINITIONS Certain abbreviations or acronyms used in the text are defined below: Abbreviation or Acronym Term AFUDC Allowance for Funds Used During Construction ALJ Administrative Law Judge ANO Arkansas Nuclear One Plant ANO 1 Unit No. 1 of ANO ANO 2 Unit No. 2 of ANO APSC Arkansas Public Service Commission Board Board of Directors of Entergy Corporation Cajun Cajun Electric Power Cooperative, Inc. Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof CitiPower CitiPower Pty., an electric distribution company serving Melbourne, Australia and surrounding suburbs, which was acquired by Entergy effective January 5, 1996 and was sold on December 31, 1998. Council Council of the City of New Orleans, Louisiana domestic utility companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively EPA U.S. Environmental Protection Agency ETHC Entergy Technology Holding Company EWG Exempt wholesale generator under PUHCA Entergy Entergy Corporation and its various direct and indirect subsidiaries Entergy Arkansas Entergy Arkansas, Inc., an Arkansas corporation Entergy Corporation Entergy Corporation, a Delaware corporation Entergy Gulf States Entergy Gulf States, Inc., a Texas corporation (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company) Entergy London Entergy London Investments plc, formerly Entergy Power UK plc (including its wholly owned subsidiary, London Electricity) Entergy Louisiana Entergy Louisiana, Inc., a Louisiana corporation Entergy Mississippi Entergy Mississippi, Inc., a Mississippi corporation Entergy New Orleans Entergy New Orleans, Inc., a Louisiana corporation FERC Federal Energy Regulatory Commission FUCO an exempt foreign utility company under PUHCA Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 1998 of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant Independence Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 11% by Entergy Power, Inc. 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 and was sold on December 4, 1998. MPSC Mississippi Public Service Commission MW Megawatt(s) 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 SEC Securities and Exchange Commission SFAS Statement of Financial Accounting Standards as promulgated by the Financial Accounting Standards Board System Energy System Energy Resources, Inc., an Arkansas corporation Unit Power Sales Agreement Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf 1 UK The United Kingdom of Great Britain and Northern Ireland Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Cash Flows Operations Net cash flow from operations for Entergy Corporation, the domestic utility companies, and System Energy for the nine months ended September 30, 1999 and 1998 was as follows: Nine Months Ended Nine Months Ended Company September 30, 1999 September 30, 1998 (In Millions) Entergy Corporation $962.9 $1,272.6 Entergy Arkansas $217.7 $ 295.5 Entergy Gulf States $206.8 $ 323.8 Entergy Louisiana $299.0 $ 256.9 Entergy Mississippi $103.3 $ 104.1 Entergy New Orleans $ 47.3 $ 33.3 System Energy $109.9 $ 194.1 Entergy's consolidated cash flow from operations decreased compared to 1998 primarily due to the completion of rate phase-in plans and adverse rate activity at certain of the domestic utility companies and a decrease in cash provided by competitive businesses. Rate phase-in plans contributed to cash flow from operations in 1998. Under these plans, revenues collected exceed the cash cost of expenses. These plans positively impacted cash flow from operations, but had no net income effect because the higher revenues were offset by the amortization of previously deferred costs. During 1998 the following phase-in plans were completed: o Entergy Gulf States' Louisiana retail phase-in plan for River Bend in February; o Entergy Mississippi's phase-in plan for Grand Gulf 1 in September; and o Entergy Arkansas' phase-in plan for Grand Gulf 1 in November. The operating cash flow provided by competitive businesses was $2.9 million for the nine months ended September 30, 1999. For the nine months ended September 30, 1998, the competitive businesses provided $202.8 million to operating cash flow. This change was primarily due to the sales in December 1998 of London Electricity and CitiPower, which had provided positive operating cash flow in 1998 but contributed no operating cash flow in 1999. The decrease in operating cash flow provided by the competitive businesses was partially offset by: o the sales of Efficient Solutions, Inc. in September 1998 and Entergy Security, Inc. in January 1999, which had used operating cash flow in 1998 and used none in 1999; and o net income for the power marketing and trading businesses through September 1999 compared to a net loss through September 1998, which caused this business to provide operating cash flow in 1999 whereas it used operating cash flow in 1998. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Investing Activities Net cash used in investing activities decreased compared to the nine months ended September 30, 1998. The decrease was primarily caused by: o the maturity in August 1999 of the notes receivable purchased with the net proceeds from the sale of London Electricity. The $956.4 million in proceeds from the sale of London Electricity were partially reinvested in other temporary investments consisting of U.S. dollar denominated commercial paper; and o the sales of Entergy Security, Inc. in January 1999 and Entergy Power Edesur Holding, LTD, TeleCorp Holding Corporation, Inc., Entergy Hyperion Telecommunications of Mississippi, LLC, Entergy Hyperion Telecommunications of Louisiana, LLC, and Entergy Hyperion Telecommunications of Arkansas, LLC in June 1999. The decrease was partially offset by increased construction expenditures. The increased expenditures were primarily due to construction of the Saltend and Damhead Creek power plants by Entergy's global power development business, spending on customer service and reliability improvements by the domestic utility companies, and the return to service of generation plants at Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. Financing Activities Net cash used in financing activities increased compared to 1998 primarily due to: o the redemption of preferred stock in 1999 at Entergy Gulf States and Entergy Louisiana; o the repurchase of Entergy Corporation common stock; and o the repayment of bank borrowings by Entergy Corporation and ETHC with a portion of the proceeds from the sale of Entergy Security, Inc. These uses were partially offset by: o borrowings under the credit facilities associated with the construction of the Saltend and Damhead Creek power plants by Entergy's global power development business; o a reduction in the amount of debt retirements at Entergy Arkansas; and o a reduction in dividend payments made by Entergy Corporation in 1999 compared to 1998. Capital Resources Entergy requires capital resources for: o construction and other capital expenditures; o debt and preferred stock maturities; o capital investments; o funding of subsidiaries; and o dividend and interest payments. Management provides more information on construction expenditures and long-term debt and preferred stock maturities in Note 9 to the financial statements in the Form 10-K. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy's sources of funds to meet its capital requirements include: o internally generated funds; o cash on hand; o debt or preferred stock issuances; o bank financing under new or existing facilities; o short-term borrowings; and o sales of businesses. During the nine months ended September 30, 1999, cash from operations and cash on hand met substantially all investing and financing requirements of the domestic utility companies and System Energy. During this period Entergy Corporation received dividend payments totaling $431.5 million from the domestic utility companies and System Energy. As of September 30, 1999, the status of Entergy's short-term credit facilities is as follows: o Entergy Corporation had no borrowings outstanding under a $250 million bank credit facility that was amended and restated in September 1999. o The Entergy Corporation and ETHC joint $50 million bank line of credit was terminated on July 6, 1999. Proceeds from the June 1999 sales of TeleCorp Holding Corporation, Inc., Entergy Hyperion Telecommunications of Mississippi, LLC, Entergy Hyperion Telecommunications of Louisiana, LLC, and Entergy Hyperion Telecommunications of Arkansas, LLC were used to repay the borrowings previously outstanding under this line. o The external bank credit lines of the domestic utility companies expired on May 31, 1999 and were not renewed. o Entergy's global power development business entered into a $250 million bank credit facility in March 1999, which expired on August 25, 1999. In November 1996, SEC authorization was received by the domestic utility companies to increase their short-term borrowing limits to amounts totaling $1.3 billion. This included a total short-term borrowing limit for the domestic utility companies of $1.078 billion. This authorization is effective through November 30, 2001. As of September 30, 1999, only Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans had borrowings outstanding from the money pool, in the amounts of $92.2 million, $11.1 million, and $4.6 million, respectively. The money pool is an inter-company borrowing arrangement designed to reduce the domestic utility companies' dependence on external short-term borrowings. All securities issuances by Entergy, the domestic utility companies, and System Energy are subject to regulatory approval either by the SEC or by state or local utility regulators. Preferred stock and debt issuances are subject to issuance tests set forth in corporate charters, bond indentures, and other agreements. The domestic utility companies may also establish special purpose trusts or limited partnerships as financing subsidiaries for the purpose of issuing quarterly or monthly income preferred securities. Management expects that the domestic utility companies and System Energy will continue to refinance or redeem higher cost debt and preferred stock prior to maturity to the extent market conditions and interest and dividend rates are favorable. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy's global power development business is currently constructing two combined cycle gas turbine merchant power plants in the UK. Saltend, a 1,200 MW combined cycle gas turbine plant, will provide steam and electricity to BP Chemicals' nearby complex with the remaining electricity to be sold into the national power pool. Originally scheduled for commercial operation in January 2000, Saltend's completion, according to the construction contractor, will slip into early second quarter 2000. The second plant is an 800 MW facility known as Damhead Creek. It is expected to begin commercial operation in fourth quarter 2000. The financing of the construction of these two power plants is discussed in Note 7 to the financial statements in the Form 10-K. In October 1999, Entergy's global power development business announced it is considering bids for up to a 50% interest in Saltend. Entergy's global power development business has several other projects in various stages of development. These include the Fairfield and Riverside projects. Fairfield, a planned 1,000MW combined cycle gas turbine merchant power plant to be constructed in Fairfield, Texas, is adjacent to Entergy Gulf States' service territory. Riverside is a planned 500MW combined cycle gas turbine cogeneration plant to be constructed in Lake Charles, Louisiana. Riverside is expected to be owned 50% by Entergy's global power development business and 50% by an industrial customer of Entergy. In October 1999, Entergy's global power development business obtained an option to acquire from GE Power Systems twenty-four GE7FA advanced technology gas turbines and four steam turbines for $1.9 billion and eight GE7EA advanced technology gas turbines for $160 million for delivery from 2001 through 2004. The acquisitions will include long-term service agreements. Four of the gas turbines are expected to be used in the Fairfield project, and the remainder are expected to be used in other future generation projects. Management anticipates that the acquisition of these turbines will be funded by a combination of cash on hand, project financing, and other external financing. Payments scheduled for these acquisitions include $53 million in the fourth quarter 1999 and $269 million in 2000. On July 13, 1999, Entergy's non-utility nuclear power business acquired from Boston Edison Company (BECO) the 670 MW Pilgrim Nuclear Station located in Plymouth, Massachusetts. The acquisition included the plant, real estate, materials and supplies, and nuclear fuel, for a purchase price of $81 million. The purchase price was funded with proceeds from the sales of non-regulated businesses. As part of the Pilgrim purchase, BECO funded a $471 million decommissioning trust fund, which was transferred to an Entergy subsidiary. After a favorable tax determination regarding the trust fund, Entergy has agreed to return $43 million of the trust fund to BECO subsequent to September 30, 1999. Based on Entergy's estimate the trust fund is adequate to cover future decommissioning costs for the Pilgrim plant. Further discussion of this acquisition can be found in Note 1 to the financial statements in this report and in "Part I, Item 1, Other Businesses" in the Form 10-K. Entergy's non-utility nuclear power business will continue to pursue the acquisition of additional nuclear power plants. In November 1999, this business entered into exclusive negotiations with the New York Power Authority (NYPA) for a ninety day period with regard to the potential sale of NYPA's James A. FitzPatrick 800 MW nuclear power plant located near Oswego, New York and NYPA's Indian Point 3 980 MW nuclear power plant located in Westchester County, New York. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy's ability to invest in domestic and foreign generation businesses is subject to regulation by the SEC under PUHCA. Absent SEC approval, the aggregate amount that Entergy, but not its non-regulated FUCO and EWG subsidiaries, may invest in domestic and foreign utility businesses is limited to an amount equal to 50% of consolidated retained earnings at the time an investment is made. Using the proceeds from the sales of London Electricity and CitiPower, Entergy's FUCO and EWG subsidiaries have the ability to make significant additional investments in domestic and foreign generation businesses. Entergy has also made investments in energy-related businesses, including power marketing and trading. Under the SEC's regulations pursuant to PUHCA, there is a limit equal to 15% of consolidated capitalization on the amount that may be invested in such businesses without specific SEC approval. Entergy currently has considerable capacity to make additional investments of this type without exceeding this limit. In the nine months ended September 30, 1999, Entergy Corporation paid $218 million in cash dividends on its common stock. Declarations of dividends on Entergy's common stock are made at the discretion of the Board. The Board evaluates the level of Entergy common stock dividends based upon Entergy's earnings and financial strength. Dividend restrictions are discussed in Note 8 to the financial statements in the Form 10-K. In October 1998, the Board approved a plan for the repurchase of Entergy common stock through December 31, 2001 to fulfill the requirements of various compensation and benefit plans. The stock repurchase plan provides for purchases in the open market of up to 5 million shares for an aggregate consideration of up to $250 million. In July 1999, the Board approved the commitment of up to an additional $750 million toward the repurchase of Entergy common stock through December 31, 2001. The shares are being purchased on a discretionary basis. See Note 3 to the financial statements for stock repurchases and issuances made during the nine months ended September 30, 1999. See Note 4 to the financial statements in this report for a discussion of Entergy's recent long-term debt activity. See Notes 4, 5, 6, 7, 9 and 10 to the financial statements in the Form 10-K for additional information on Entergy's and its subsidiaries' capital and financing requirements in 1999-2003. Entergy Corporation and System Energy Pursuant to the Capital Funds Agreement between Entergy Corporation and System Energy, Entergy Corporation has agreed to supply System Energy with sufficient capital to: o maintain System Energy's equity at a minimum of 35% of its total capitalization (excluding short-term debt); o permit the continued commercial operation of Grand Gulf 1; o pay in full all System Energy indebtedness for borrowed money when due; and o enable System Energy to make payments on specific debt under supplements to the agreement assigning System Energy's rights in the agreement as security for the specific debt. The Capital Funds Agreement and other Grand Gulf 1 related agreements are more thoroughly discussed in Note 9 to the financial statements in the Form 10-K. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K, including "Domestic Competition - - Regulatory and Legislative Activity - Transition-to-Competition Filings", "Industrial and Commercial Customers", and "Other Electric Utility Trends" for a discussion of the increasing competitive pressures facing Entergy and the electric utility industry. See also "Market Risks" in the Form 10-K for a discussion of other significant issues affecting Entergy. Set forth below are recent updates to the information contained in the Form 10-K under the other headings contained therein. Significant events have affected and will continue to affect Entergy's results of operations. During the past twelve months, Entergy sold its interests in London Electricity, CitiPower, Efficient Solutions, Inc., and most of its telecommunications businesses, producing significant non- recurring cash receipts. For financial information on Entergy's remaining competitive businesses see Note 6 to the financial statements included in this report. In addition, the domestic utility companies and System Energy have been and will continue to be subject to regulatory proceedings relating to several issues, including, but not limited to, their transition to competition, rate recovery, and accounting matters, some or all of which could impact their results of operations negatively. These factors affect Entergy's competitive businesses and domestic utility companies and will affect Entergy's results of operations in the future. Domestic Competition Regulatory and Legislative Activity Open Access In April 1999, Entergy filed a proposal seeking guidance from FERC regarding the formation of an independent transmission company (Transco), which would own, operate, control, and maintain transmission assets. Transco member companies, which could include companies other than Entergy or its subsidiaries, would receive passive ownership, but no voting rights. The transmission assets and related employees of the domestic utility companies would be transferred to the Transco. In July 1999, FERC issued an order in response to Entergy's proposal. FERC concluded that passive ownership of a Transco by a generating company or other market participant could meet FERC's current independence and governance requirements, provided the Transco is structured to address certain issues and concerns raised by FERC. The issues and concerns identified by FERC relate to the selection process for the Transco's board of directors, the Transco board's fiduciary obligations to the member companies, the ability of the Transco to raise additional capital, and restrictions on transactions between the Transco and the member companies. Management expects to make additional filings with federal, state, and local regulatory authorities addressing these and other issues and seeking necessary approvals for the formation of the Transco. If approved, the Transco would likely become operational in 2001. Legislative Activity In April 1999, the governor of Arkansas signed into law a restructuring bill passed by the Arkansas Legislature. The law provides for retail open access by electric utilities on January 1, 2002. The APSC may delay implementation of retail open access, but not beyond June 30, 2003. The new law provides the opportunity for recovery of stranded and transition costs pursuant to a review and approval by the APSC, and for securitization of the allowed stranded costs. The law also requires Entergy Arkansas and other utilities to make filings separating (unbundling) their costs into generation, transmission, distribution, and customer service functions. Entergy Arkansas' unbundled rate filing must be made by January 1, 2000. Utilities such as Entergy Arkansas that own transmission facilities must subject them to operation by an independent transmission organization by the retail open access date. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS In June 1999, the governor of Texas signed into law a restructuring bill passed by the Texas Legislature. The law provides for retail open access by most electric utilities on January 1, 2002, market power mitigation measures, the opportunity for stranded cost recovery, and securitization of regulatory assets and stranded costs. The law also requires unbundling of the generation, transmission and distribution, and retail provider functions, requires filing by January 10, 2000 of the utilities' plans to unbundle these functions, and requires filing by April 1, 2000 of unbundled costs and proposed transmission, distribution, and competition tariffs. The market power mitigation measures include a limit on the ownership of generation assets by a power generation company within a specified region. It is uncertain what implications this limit will have for Entergy Gulf States or the Entergy system. However, it is possible that the legislation could result in Entergy Gulf States having to use mitigation measures, including divesting some of its generation assets, if Entergy Gulf States is found to have generation market power. The law also requires affected utilities to sell at auction, at least 60 days before January 1, 2002, entitlements to at least 15% of their Texas jurisdictional installed generation capacity. The obligation to auction capacity entitlements continues for up to 60 months after January 1, 2002, or until 40% of jurisdictional customers have chosen an alternative supplier, if earlier. Pursuant to the law, utilities such as Entergy Gulf States that own transmission facilities must subject them to operational control by an independent transmission organization by the retail open access date. The PUCT and various participants in the industry are currently in the process of implementing the legislation through various rulemaking and other proceedings. Regulatory Activity In March 1999, the LPSC deferred making a decision on whether electric industry restructuring is in the public interest. However, the LPSC staff, outside consultants, and counsel were directed to work together to analyze and resolve outstanding issues and recommend a plan for the implementation of retail competition for consideration by the LPSC by January 1, 2001. Once the Louisiana plan is presented to the LPSC, and if it is determined that retail competition is in the public interest, it is anticipated that the LPSC staff, outside consultants, counsel, and industry members will work together to refine the plan in order that it can be implemented at a future date. See Note 2 to the financial statements in the Form 10-K for information regarding the Revised Proposed Transition Plan (the Plan) issued by the MPSC in June 1998. The MPSC continues to hold periodic hearings and request informational filings regarding various potential effects of retail competition. Enabling legislation necessary to implement the Plan cannot be considered until the next session of the Mississippi Legislature, which is scheduled to begin in January 2000. State and Local Regulation As discussed in Note 2 to the financial statements in the Form 10-K, the PUCT had issued for comment proposed "Code of Conduct" rules governing transactions between utilities and their affiliates. In June 1999, the PUCT withdrew its proposed rules, and proposed new rules in August 1999. The new rules implement the requirement of the new Texas retail open access law that the PUCT adopt a code of conduct to ensure that utilities do not give an impermissible advantage to competitive affiliates. The PUCT currently plans to adopt final rules by the end of 1999. The current form of the proposed rules would allow the continuation of shared services affiliates, such as Entergy Operations, Inc. and Entergy Services, Inc. Accordingly, the changes to Entergy's organization as a result of these rules would be much less substantial than those that would have been required under the PUCT's original published rules, which severely limited the use of shared services affiliates. However, management cannot predict the final form of the adopted rules and, therefore, their impact. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Entergy Mississippi implemented a $13.3 million rate reduction effective May 1999 based on its annual performance-based formula rate plan filing for the 1998 test year. In June 1999, Entergy Mississippi revised its filing resulting in an additional rate reduction of approximately $1.5 million, effective July 1999. Entergy Louisiana submitted its fourth annual performance-based formula rate plan filing for the 1998 test year in April 1999, which indicated that a $20.7 million base rate reduction might be appropriate. Based on Entergy Louisiana's filing and on subsequent comments filed by Entergy Louisiana, the LPSC staff, and other parties, Entergy Louisiana implemented a rate reduction of approximately $15.0 million, effective August 1, 1999. Entergy Louisiana's filing is subject to further review by the LPSC, which may result in an additional change in rates. Hearings are scheduled to commence before the LPSC in May 2000. Accounting Issues Continued Application of SFAS 71 and Stranded Cost Exposure The domestic utility companies' and System Energy's financial statements primarily reflect assets and costs based on existing cost-based ratemaking regulation in accordance with SFAS 71, "Accounting for the Effects of Certain Types of Regulation". Continued applicability of SFAS 71 to the financial statements requires that rates set by an independent regulator on a cost-of-service basis be charged to and collected from customers. Under historical ratemaking practice, regulated electric utilities are granted exclusive geographic franchises to sell electricity. The utilities are obligated to make investments and incur obligations to serve customers. In return, prudently incurred costs are recovered from customers along with a return on investment. Additionally, regulators have required certain operating costs to be deferred for future recovery from customers. These costs have been recorded as regulatory assets in the financial statements. The electric utility industry's movement toward a combination of competition and a modified regulatory environment will likely result in rates for the generation portion of the business that are not based on cost of service. As a result, the generation portion of the business could be required to discontinue application of SFAS 71. If a utility company is required to discontinue application of SFAS 71 for a portion or all of its operations, it could be required to record asset impairments and remove regulatory assets and liabilities from its balance sheet. Management believes that definitive outcomes have not yet been determined regarding the transition to competition in each of Entergy's jurisdictions. Therefore, the regulated operations of the domestic utility companies and System Energy continue to apply SFAS 71. Arkansas and Texas have enacted retail open access laws as described above, but Entergy believes that significant issues remain to be addressed by Texas and Arkansas regulators, and the enacted laws do not provide sufficient detail to determine definitively the impact on Entergy Arkansas' and Entergy Gulf States' regulated operations. A potential effect of a transition to competition, including the restructuring that will result from the Arkansas and Texas restructuring laws, is stranded costs. Stranded costs are costs or commitments made by utilities under a regulated pricing system that may not be recovered in a competitive market. The restructuring laws enacted in Arkansas and Texas provide for the recovery of stranded costs subsequent to a process of review and approval by the APSC or PUCT. Entergy's exposure to stranded costs is comprised primarily of the following: o the regulatorily approved cost of constructing its nuclear generating plants, which may become uneconomic in a competitive environment (the domestic utility companies' net investment in nuclear generation is provided in Note 1 to the financial statements in the Form 10-K); o obligations that may be above-market under the Unit Power Sales Agreement and under a hydroelectric facility long-term purchased power contract, which were entered into by certain of the domestic utility companies with regulatory approval (detail concerning these obligations is provided in Note 9 to the financial statements in the Form 10-K); ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS o the decommissioning cost for some or all of its nuclear generating plants (detail concerning these costs is provided in Note 9 to the financial statements in the Form 10-K); o the regulatorily approved cost of constructing some of its fossil- fueled generating plants and the obligations that may be above-market under related fuel contracts (detail concerning the domestic utility companies' net investment in generation other than nuclear, which is primarily fossil fueled, is provided in Note 1 to the financial statements in the Form 10-K, and detail concerning certain fuel contracts is provided in Note 9 to the financial statements in the Form 10-K); and o regulatory assets. The amount of these costs currently reflected in the financial statements and the estimated net present value of the contractual obligations described above total approximately $2.7 billion for Entergy Arkansas, $3.6 billion for Entergy Gulf States, $3.9 billion for Entergy Louisiana, $0.9 billion for Entergy Mississippi, and $0.4 billion for Entergy New Orleans. The ultimate determination of the amount of the costs that are stranded in Arkansas or Texas will be made pursuant to future regulatory proceedings. The outcome of those proceedings is difficult to predict, and will depend upon the timing of stranded cost determination, the values attributable to certain strandable assets, assumptions concerning future market prices for electricity, and other factors. It is not possible to predict the magnitude of costs that may actually be stranded or the ability to mitigate those costs in Louisiana, Mississippi, and New Orleans because of the absence of restructuring legislation or regulatory determinations in those jurisdictions. Until the proceedings in Arkansas and Texas are concluded, it is anticipated that both Entergy Arkansas and Entergy Gulf States will continue to apply SFAS 71 to their regulated operations. SFAS 71 will continue to be applied in Entergy's other jurisdictions pending further legislative or regulatory developments. Discontinuation of the application of SFAS 71 by the respective domestic utility companies and System Energy, combined with a regulatory determination or legislation that does not allow for recovery of all or a portion of its stranded costs, could have a material adverse impact on the respective domestic utility companies' and Entergy's financial statements. However, management believes that the amount of costs that will be stranded without a means of recovery or mitigation for the domestic utility companies will be significantly less than the amounts referred to in the preceding paragraph. The application of SFAS 71 is discussed more thoroughly in Note 1 to the financial statements in the Form 10-K. Year 2000 Issues Management 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 actions required to prevent problems related to the Year 2000, and the resources required to take such actions. Unless corrected, these problems may result in malfunctions in certain software applications, databases, and computer equipment with respect to dates on or after January 1, 2000. These malfunctions could disrupt operations of nuclear or fossil generating plants, operation of transmission and distribution systems, and access to interconnections with neighboring utilities, and could cause other operational problems. While it is not possible to anticipate all future events, especially when third parties are involved, management believes the most reasonably likely worst case scenario is isolated disruptions of service, which should be rapidly restored. Management has adopted a four-step approach to address Year 2000 issues including: o an inventory of all IT and non-IT assets; o an assessment to determine if the IT and non-IT assets are critical to the business and, if so, whether Year 2000 has an impact on them; o remediation or replacement of critical systems determined to be Year 2000 deficient; and o certification of such critical systems to confirm Year 2000 compliance. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Management has completed its inventory of IT and non-IT assets, identified systems and equipment that could be affected by the millennium change, and assessed the risk of potential failure for its assets. Management defines services or products as Year 2000 "compliant" when they 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 IT and non-IT assets that significantly affect service to customers, and of IT and non-IT assets that do not significantly affect service to customers, but are important to Entergy operations, was complete in June 1999. Management has completed an assessment of its vendors that affect Entergy's operations with respect to Year 2000 issues. All vendors have been contacted by letter, and vendors whose failure to provide services would quickly downgrade or suspend Entergy's operations have been interviewed and evaluated for Year 2000 readiness. Entergy's goal is to receive written confirmation of the Year 2000 readiness of these critical vendors. Entergy's contingency plans will include utilization of alternative suppliers and stockpiling of fuel and other supplies. Management will implement Year 2000 contingency plans for vendors throughout 1999. Maintenance or modification costs associated with Year 2000 compliance are being expensed as incurred, while the costs of new software are being capitalized and amortized over the software's useful life. Management's current estimate of maintenance and modification costs related to Year 2000 issues which have been or will be incurred between 1998 and mid-2000 is approximately $50 million. Entergy has incurred approximately $48 million of this total through September 1999. These expenses are being funded through operating cash flows. Additionally, total capitalized costs for projects accelerated due to Year 2000 issues are estimated to be $19 million. Entergy has incurred approximately $17 million of this total through September 1999. Based on the Year 2000 risk determinations of management, an independent consultant's risk assessment, and the results of certification activities, management has created and is implementing contingency plans throughout 1999 to address Year 2000 issues. Management completed its written contingency plans in June 1999, using the guidelines issued by the Nuclear Energy Institute and the guidelines issued by the North American Electric Reliability Council. The contingency plans address various types of asset failures that could cause disruptions in service, and create specific mitigation strategies to rapidly restore service to customers. For example, to mitigate the risk of loss of generation, Entergy intends to carry more generation reserve than normal within its control area during the hours surrounding midnight, December 31, 1999. Although Entergy is taking steps that it believes will address the Year 2000 issue, this issue presents risks that may not be entirely foreseen and eliminated and which could significantly affect utility operations and financial performance. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and nine months ended September 30, 1999 compared to the three and nine months ended September 30, 1998, primarily due to decreases in interest charges, depreciation and amortization, and other operation and maintenance expenses, and an increase in other income, partially offset by a decrease in operating revenues. Note 6 to the financial statements provides a detailed breakdown of financial information by business segment. Competitive businesses are included in the following segments discussed in Note 6: power marketing and trading, Entergy London, CitiPower, and all other. All other also includes the parent company, Entergy Corporation, and the elimination of power marketing and trading mark-to-market profits on intercompany power transactions. Net income for the three and nine months ended September 30, 1998 reflected the results of operations for Entergy London, CitiPower, Efficient Solutions, Inc., Entergy Security, Inc., Entergy Power Edesur Holdings, Entergy Hyperion Telecommunications, and TeleCorp Holding Corporation, Inc. These businesses were sold between late 1998 and mid- 1999, and are therefore not included in some or all of 1999's results of operations. Revenues and Sales Domestic Utility Companies and System Energy The changes in electric operating revenues associated with the domestic utility companies for the three and nine months ended September 30, 1999 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($11.7) $79.4 Rate riders (63.2) (146.6) Fuel cost recovery 67.4 83.1 Sales volume/weather (11.9) 20.2 Other revenue (including unbilled) 1.0 5.3 Sales for resale 5.4 (25.1) ------ ----- Total ($13.0) $16.3 ====== ===== Base revenues Base revenues decreased for the three months ended September 30, 1999 primarily due to: o Texas retail annual base rate reductions of $69 million and $4.2 million that were implemented in December 1998 and March 1999, respectively; and o reserves recorded at Entergy Gulf States in the Louisiana jurisdiction in the third quarter of 1999 for the estimated outcomes of annual earnings reviews. These decreases were partially offset by a reduction in the amount of reserves recorded in the third quarter of 1999 compared to the third quarter of 1998 for the anticipated effects of rate proceedings in Texas. Base revenues increased for the nine months ended September 30, 1999 primarily due to: o a $93.6 million reversal in June 1999 of regulatory reserves associated with the accelerated amortization of accounting order deferrals in conjunction with the settlement agreement in Entergy Gulf States' November 1998 Texas rate filing. The settlement agreement was approved by the PUCT in June 1999. The net income effect of this reversal is largely offset by the amortization of rate deferrals discussed below; and o a reduction in the amount of reserves recorded in 1999 compared to 1998 for the anticipated effects of rate proceedings in Texas. Partially offsetting these increases were: o Louisiana retail annual base rate reductions of $87 million and $18 million that were implemented at Entergy Gulf States in February and August 1998, respectively; o Texas retail annual base rate reductions of $69 million and $4.2 million that were implemented in December 1998 and March 1999, respectively; and o reserves recorded at Entergy Gulf States in the Louisiana jurisdiction in 1999 for the estimated outcomes of annual earnings reviews. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Rate rider Rate rider revenues do not affect net income because they are offset by specific incurred expenses. Rate rider revenues decreased $63.2 million and $146.6 million for the three and nine months ended September 30, 1999, respectively, as a result of a revised Grand Gulf rider. This new rider eliminated revenues attributable to the Grand Gulf phase-in plan, which was completed in November 1998 for Entergy Arkansas and September 1998 for Entergy Mississippi. These decreases were partially offset by the implementation of the Grand Gulf Accelerated Recovery Tariffs at Entergy Arkansas and Entergy Mississippi, allowing these companies to accelerate a portion of the payments of their Grand Gulf purchased power obligations. The tariffs became effective in January 1999 and October 1998, respectively. Fuel cost recovery Fuel cost recovery revenues do not affect net income because they are an increase to revenues that is offset by specific incurred fuel costs. Fuel cost recovery revenues increased for the three and nine months ended September 30, 1999 due to: o an increased fuel factor implemented in Entergy Gulf States' Texas jurisdiction; o a fuel surcharge implemented in Entergy Gulf States' Texas jurisdiction in February 1999; o an increase in the energy cost recovery rate effective April 1999 at Entergy Arkansas; and o the 1998 completion of a customer refund obligation under the 1997 energy cost recovery agreement at Entergy Arkansas. Sales volume/weather Sales volume decreased for the three months ended September 30, 1999 primarily due to less favorable weather, particularly at Entergy Gulf States and Entergy Louisiana. Sales volume increased $20.2 million for the nine months ended September 30, 1999 primarily due to an increase in the number of customers at Entergy Arkansas, Entergy Gulf States, Entergy Mississippi, and Entergy New Orleans, especially in the higher margin residential and commercial sectors. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other revenue Other revenue for the three and nine months ended September 30, 1999 was affected by a change in estimated unbilled revenues of the domestic utility companies. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. The net effect of this change was to increase other revenue, although this increase was largely offset by milder weather in 1999. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Sales for resale Sales for resale increased $5.4 million for the three months ended September 30, 1999 primarily due to favorable unit prices at Entergy Gulf States and Entergy Louisiana, partially offset by the loss of certain municipal and co-op customer contracts at Entergy Arkansas and decreased generation availability at Entergy Arkansas due to plant outages in August and September 1999. Sales for resale decreased $25.1 million for the nine months ended September 30, 1999 primarily due to the loss of certain municipal and co-op customer contracts at Entergy Arkansas. Competitive Businesses Competitive business revenues decreased approximately $1.5 billion and $2.4 billion for the three and nine months ended September 30, 1999, respectively. These decreases were primarily due to decreased sales revenues in the power marketing and trading business and the sales of Entergy London, CitiPower, and Efficient Solutions, Inc. in 1998. The decreased sales revenues in the power marketing and trading business resulted from decreased electricity trading volumes for this business in the peak summer months in 1999 compared to 1998. However, the impact on net income from these decreased revenues was more than offset by decreased fuel and purchased power expenses as discussed in Expenses and other below, resulting in an increase in operating income for this business for the three and nine months ended September 30, 1999 compared to the three and nine months ended September 30, 1998. Expenses and other Domestic Utility Companies and System Energy Fuel and purchased power expenses Net fuel and purchased power expenses increased for the three and nine months ended September 30, 1999 primarily due to: o an increase in the price of purchased power and gas in the summer months of 1999 due to increased demand and decreased availability in the market; o a shift from lower priced nuclear fuel to higher priced gas and purchased power due to nuclear outages at Entergy Arkansas and Entergy Louisiana, and limited availability of lower priced coal units at Entergy Arkansas; o a higher fuel factor and fuel surcharge in the Texas jurisdiction in 1999; o the 1998 completion of a customer refund obligation under the 1997 energy cost recovery agreement at Entergy Arkansas, which lowered 1998 fuel cost recoveries; and o an increase in the energy cost recovery rate effective April 1999 at Entergy Arkansas. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other operation and maintenance Other operation and maintenance increased for the three and nine months ended September 30, 1999 primarily due to spending on customer service and reliability improvements. Depreciation and amortization Depreciation and amortization decreased for the three and nine months ended September 30, 1999 due to: o reduced River Bend depreciation expense as a result of the write-down of the River Bend abeyed plant required by the Texas rate settlement; o reduced transmission and distribution depreciation rates at Entergy Gulf States as a result of compliance with PUCT and LPSC rate orders; o reduced amortization of the River Bend Unit 2 cancellation loss as a result of the completion of amortization for the Louisiana portion of the loss and the reduction in amortization of the Texas portion in accordance with a PUCT rate order; o lower depreciation due to a review of plant in-service dates for consistency with regulatory treatment; and o lower depreciation associated with the sale and leaseback of a portion of Grand Gulf 1 as compared to the same period in 1998. Other regulatory charges Other regulatory charges decreased for the three and nine months ended September 30, 1999 primarily due to: o a decreased over-recovery of Grand Gulf 1 related costs at Entergy Mississippi; o an under-recovery of Grand Gulf 1 related costs at Entergy New Orleans; and o accruals made in 1998 at Entergy Arkansas for the transition cost account. These decreases were largely offset for the nine months ended September 30, 1999 by an increase in regulatory charges at System Energy related to the implementation of the Grand Gulf Accelerated Recovery Tariffs at Entergy Arkansas and Entergy Mississippi. These tariffs allow System Energy to accelerate its recovery of Grand Gulf 1 plant investment costs. Amortization of rate deferrals The amortization of rate deferrals decreased for the three and nine months ended September 30, 1999 primarily due to: o the completion of the Grand Gulf 1 rate phase-in plans at Entergy Arkansas and Entergy Mississippi in November and September 1998, respectively; o the completion of the Louisiana retail rate phase-in plan for River Bend at Entergy Gulf States in February 1998; and o the reduction in the amortization of the Texas portion of the River Bend accounting order deferrals as a result of the Texas rate settlement at Entergy Gulf States which reduced the deferred asset. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS These decreases were partially offset for the nine months ended September 30, 1999 by the increase in amortization expense due to the reduction in the unamortized balance of the accounting order deferrals at Entergy Gulf States in June 1999 as a result of the Texas rate settlement referred to above. Other income Other income increased for the three and nine months ended September 30, 1999 primarily due to an increase in AFUDC resulting from an adjustment recorded in the third quarter of 1999 on certain capital projects. Other income also increased for the nine months ended September 30, 1999 due to an increase in AFUDC resulting from large nuclear projects at Entergy Arkansas and Entergy Louisiana. Interest charges Interest charges decreased for the three and nine months ended September 30, 1999 primarily due to the retirement, redemption, or refinancing of certain long-term debt at Entergy Gulf States, Entergy Louisiana, and System Energy and also at Entergy Arkansas for the nine months ended September 30, 1999. This decrease was partially offset by interest on the potential refund of System Energy's proposed rate increase. See Note 2 for further discussion. Competitive Businesses Fuel and purchased power expenses Fuel and purchased power expenses decreased for the three and nine months ended September 30, 1999 primarily due to the business sales previously discussed, decreased electricity trading volume in the power marketing and trading business, and a $44 million counterparty default incurred in 1998 by the power marketing and trading business. These decreases are partially offset by increased gas trading volume in the power marketing and trading business. Other operation and maintenance expenses Other operation and maintenance expenses decreased for the three and nine months ended September 30, 1999 primarily due to the business sales previously discussed. The decrease was partially offset by an increase in such expenses for the power marketing and trading business compared to the three and nine months ended September 30, 1998, resulting primarily from increased risk management and back-office support. Other income Other income increased for the three and nine months ended September 30, 1999 due primarily to: o interest income of $45.5 million in 1999 on the proceeds of the sales of Entergy London and CitiPower; and o a $68.6 million ($35.9 million net of tax) loss on the sale of Efficient Solutions, Inc. (formerly Entergy Integrated Solutions, Inc.) in September 1998. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other income also increased for the nine months ended September 30, 1999 due to: o a $26.7 million ($17 million net of tax) gain on the sale of Entergy Power Edesur Holdings in June 1999; o a $12.9 million ($8.0 million net of tax) gain on the sale of Entergy Hyperion Telecommunications in June 1999; o a $12.5 million ($.6 million net of tax) gain on the sale of Entergy Security, Inc. in January 1999; and o a $7.6 million ($4.9 million net of tax) adjustment to the final sale price of CitiPower in January 1999. Interest charges Interest on long-term debt decreased for the three and nine months ended September 30, 1999 due primarily to the retirement of debt associated with the Entergy London and CitiPower businesses. Income Taxes The effective income tax rates for the three months ended September 30, 1999 and 1998 were 41.6% and 22.9%, respectively. The effective income tax rates for the nine months ended September 30, 1999 and 1998 were 37.2% and 26.4%, respectively. The effective income tax rate increased in the current year primarily due to the favorable impact of the reduction in the UK corporation tax rate from 31% to 30% in the third quarter of 1998, the recording of a deferred tax benefit in the second quarter of 1998 related to the expected utilization of capital loss carryforwards, and the recording of deferred tax benefits in the third quarter of 1998 related to the expected utilization of foreign tax credits. These increases were partially offset by the recording of deferred tax benefits in the second quarter of 1999 related to expected utilization of foreign tax credits.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Nine Months Ended 1999 1998 1999 1998 (In Thousands, Except Share Data) OPERATING REVENUES Domestic electric $2,019,513 $2,032,463 $4,871,232 $4,854,872 Natural gas 18,441 17,003 78,321 91,616 Steam products - 11,626 15,550 32,151 Competitive businesses 1,026,581 2,526,355 2,055,758 4,430,714 ---------- ---------- ---------- ---------- TOTAL 3,064,535 4,587,447 7,020,861 9,409,353 ---------- ---------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 584,211 579,961 1,478,055 1,256,778 Purchased power 1,139,855 2,423,958 2,190,481 4,010,896 Nuclear refueling outage expenses 19,594 20,445 56,414 64,134 Other operation and maintenance 413,221 482,129 1,181,559 1,466,322 Decommissioning 11,572 12,559 35,004 36,508 Taxes other than income taxes 93,028 91,033 259,149 277,145 Depreciation and amortization 161,616 243,816 523,165 717,414 Other regulatory charges - net 29,003 71,542 10,033 11,759 Amortization of rate deferrals 10,722 71,331 107,902 219,507 ---------- ---------- ---------- ---------- TOTAL 2,462,822 3,996,774 5,841,762 8,060,463 ---------- ---------- ---------- ---------- OPERATING INCOME 601,713 590,673 1,179,099 1,348,890 ---------- ---------- ---------- ---------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 7,877 4,027 20,636 9,650 Gain (loss) on sale of assets - net 587 (67,212) 61,888 (54,091) Miscellaneous - net 24,959 17,282 74,975 53,941 ---------- ---------- ---------- ---------- TOTAL 33,423 (45,903) 157,499 9,500 ---------- ---------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 116,615 182,899 359,310 565,785 Other interest - net 12,921 11,481 58,404 35,636 Distributions on preferred securities of subsidiaries 4,709 13,407 14,128 33,535 Allowance for borrowed funds used during construction (6,064) (3,453) (16,469) (8,015) ---------- ---------- ---------- ---------- TOTAL 128,181 204,334 415,373 626,941 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 506,955 340,436 921,225 731,449 Income taxes 210,797 77,839 342,403 192,820 ---------- ---------- ---------- ---------- CONSOLIDATED NET INCOME 296,158 262,597 578,822 538,629 Preferred dividend requirements of subsidiaries and others 9,939 11,611 30,645 35,091 ---------- ---------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $286,219 $250,986 $548,177 $503,538 ========== ========== ========== ========== Earnings per average common share: Basic and diluted $1.16 $1.02 $2.22 $2.04 Dividends declared per common share $0.30 $0.30 $0.90 $1.20 Average number of common shares outstanding: Basic 246,253,929 246,615,620 246,541,754 246,331,931 Diluted 246,386,502 246,777,031 247,095,210 246,509,467 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Nine Months Ended September 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Consolidated net income $578,822 $538,629 Noncash items included in net income: Amortization of rate deferrals 107,902 219,507 Reserve for regulatory adjustments (13,156) 128,807 Other regulatory charges 10,033 11,759 Depreciation, amortization, and decommissioning 558,169 753,922 Deferred income taxes and investment tax credits (180,764) (125,224) Allowance for equity funds used during construction (20,636) (9,650) (Gain) loss on sale of assets (61,888) 54,091 Changes in working capital (Net of effects from dispositions): Receivables (383,339) (438,679) Fuel inventory (28,551) 26,119 Accounts payable 244,784 286,360 Taxes accrued 391,609 338,440 Interest accrued (39,348) (19,151) Deferred fuel (169,347) (121,413) Other working capital accounts 1,121 (94,325) Decommissioning trust contributions and realized change in trust assets (45,847) (56,915) Provision for estimated losses and reserves (31,995) (132,556) Changes in other regulatory assets (33,766) (30,873) Other 79,082 (56,294) -------- --------- Net cash flow provided by operating activities 962,885 1,272,554 -------- --------- INVESTING ACTIVITIES Construction/capital expenditures (792,348) (712,671) Allowance for equity funds used during construction 20,636 9,650 Nuclear fuel purchases (114,764) (59,409) Proceeds from sale/leaseback of nuclear fuel 108,938 78,969 Proceeds from sale of businesses 351,082 (21,893) Investment in other nonregulated/nonutility properties (80,864) (40,704) Proceeds from notes receivable 956,356 - Purchase of other temporary investments (468,653) - Other 7,908 (35,595) -------- --------- Net cash flow used in investing activities (11,709) (781,653) -------- --------- See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Nine Months Ended September 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) FINANCING ACTIVITIES Proceeds from the issuance of: First mortgage bonds 74,679 141,994 G&R mortgage bonds 124,192 78,703 Other long-term debt 585,051 282,219 Common stock 13,390 15,333 Retirement of: First mortgage bonds (345,887) (351,335) G&R mortgage bonds (132,413) (110,000) Other long-term debt (369,625) (211,754) Repurchase of common stock (129,160) - Redemption of preferred stock (77,958) (10,250) Changes in short-term borrowings - net (285,500) (17,964) Dividends paid: Preferred stock (31,340) (35,217) Common stock (218,042) (296,022) ---------- -------- Net cash flow used in financing activities (792,613) (514,293) ---------- -------- Effect of exchange rates on cash and cash equivalents 1,340 1,006 ---------- -------- Net increase (decrease) in cash and cash equivalents 159,903 (22,386) Cash and cash equivalents at beginning of period 1,184,495 830,547 ---------- -------- Cash and cash equivalents at end of period $1,344,398 $808,161 ========== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $447,054 $627,534 Income taxes $155,426 $97,775 Noncash investing and financing activities: Change in unrealized appreciation/(depreciation) of decommissioning trust assets $22,916 ($4,696) See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $152,081 $386,764 Temporary cash investments - at cost, which approximates market 1,090,317 797,731 Special deposits 102,000 - ----------- ----------- Total cash and cash equivalents 1,344,398 1,184,495 ----------- ----------- Other temporary investments - at cost, which approximates market 468,653 - Notes receivable 2,262 959,328 Accounts receivable: Customer 429,791 280,648 Allowance for doubtful accounts (9,194) (10,300) Other 360,172 197,362 Accrued unbilled revenues 346,120 245,350 ----------- ----------- Total receivables 1,126,889 713,060 ----------- ----------- Deferred fuel costs 338,187 169,589 Fuel inventory - at average cost 118,157 90,408 Materials and supplies - at average cost 392,030 374,674 Rate deferrals 33,500 37,507 Deferred nuclear refueling outage costs 41,336 37,138 Prepayments and other 87,397 77,749 ----------- ----------- TOTAL 3,952,809 3,643,948 ----------- ----------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 214 214 Decommissioning trust funds 1,248,780 709,018 Non-utility property - at cost (less accumulated depreciation) 216,969 205,660 Non-regulated investments 262,633 557,347 Other - at cost (less accumulated depreciation) 16,491 16,041 ----------- ----------- TOTAL 1,745,087 1,488,280 ----------- ----------- UTILITY PLANT Electric 23,170,302 22,704,572 Plant acquisition adjustment 410,996 423,195 Property under capital lease 777,459 789,045 Natural gas 188,162 183,621 Steam products - 80,537 Construction work in progress 1,140,618 911,278 Nuclear fuel under capital lease 307,402 282,595 Nuclear fuel 88,223 29,690 ----------- ----------- TOTAL UTILITY PLANT 26,083,162 25,404,533 Less - accumulated depreciation and amortization (10,803,794) (10,075,951) ----------- ----------- UTILITY PLANT - NET 15,279,368 15,328,582 ----------- ----------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 21,199 125,095 SFAS 109 regulatory asset - net 1,102,862 1,141,318 Unamortized loss on reacquired debt 198,699 191,786 Other regulatory assets 600,401 528,179 Long-term receivables 32,876 34,617 Other 464,525 354,889 ----------- ----------- TOTAL 2,420,562 2,375,884 ----------- ----------- TOTAL ASSETS $23,397,826 $22,836,694 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $316,735 $255,221 Notes payable 665 296,790 Accounts payable 757,743 522,072 Customer deposits 153,897 148,972 Taxes accrued 675,102 284,847 Accumulated deferred income taxes 97,926 31,976 Nuclear refueling outage costs 5,700 16,991 Interest accrued 145,567 185,688 Co-owner advances 14,305 4,073 Obligations under capital leases 175,964 176,270 Other 81,214 58,909 ----------- ----------- TOTAL 2,424,818 1,981,809 ----------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 3,319,890 3,538,332 Accumulated deferred investment tax credits 524,351 565,744 Obligations under capital leases 232,944 220,209 FERC settlement - refund obligation 38,861 43,159 Other regulatory liabilities 196,760 153,163 Decommissioning 594,651 107,365 Transition to competition 95,856 90,623 Regulatory reserves 354,620 674,310 Accumulated provisions 262,707 252,321 Other 742,557 635,024 ----------- ----------- TOTAL 6,363,197 6,280,250 ----------- ----------- Long-term debt 6,504,287 6,596,617 Preferred stock with sinking fund 89,650 167,523 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 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 338,454 338,455 Common stock, $.01 par value, authorized 500,000,000 shares; issued 247,016,020 shares in 1999 and 246,829,076 shares in 1998 2,470 2,468 Paid-in capital 4,634,412 4,630,609 Retained earnings 2,852,718 2,526,888 Accumulated other comprehensive loss, net of tax: Cumulative foreign currency translation adjustment (64,691) (46,739) Less - treasury stock, at cost (3,721,974 shares in 1999 and 208,907 shares in 1998) 112,489 6,186 ----------- ----------- TOTAL 7,650,874 7,445,495 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $23,397,826 $22,836,694 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED RETAINED EARNINGS AND COMPREHENSIVE INCOME For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended 1999 1998 (In Thousands) RETAINED EARNINGS Retained Earnings - Beginning of period $2,640,373 $2,188,165 Add - Earnings applicable to common stock 286,219 $286,219 250,986 $250,986 Deduct: Dividends declared on common stock 74,057 73,983 Capital stock and other expenses (183) (117) ---------- ---------- Total 73,874 73,866 ---------- ---------- Retained Earnings - End of period $2,852,718 $2,365,285 ========== ========== ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Balance at beginning of period ($47,697) ($73,665) Foreign currency translation adjustments (16,994) (16,994) (14,708) (14,708) ---------- ---------- Balance at end of period ($64,691) ($88,373) ========== -------- ========== -------- Comprehensive Income $269,225 $236,278 ======== ======== Nine Months Ended 1999 1998 (In Thousands) RETAINED EARNINGS Retained Earnings - Beginning of period $2,526,888 $2,157,912 Add - Earnings applicable to common stock 548,177 $548,177 503,538 $503,538 Deduct: Dividends declared on common stock 222,077 295,514 Capital stock and other expenses 270 651 ---------- ---------- Total 222,347 296,165 ---------- ---------- Retained Earnings - End of period $2,852,718 $2,365,285 ========== ========== ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Balance at beginning of period ($46,739) ($69,817) Foreign currency translation adjustments (17,952) (17,952) (18,556) (18,556) ---------- ---------- Balance at end of period ($64,691) ($88,373) ========== -------- ========== -------- Comprehensive Income $530,225 $484,982 ======== ======== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $ 815.3 $ 844.5 ($29.2) (3) Commercial 450.8 454.9 (4.1) (1) Industrial 513.9 496.3 17.6 4 Governmental 46.6 48.9 (2.3) (5) ---------------------------------- Total retail 1,826.6 1,844.6 (18.0) (1) Sales for resale 151.7 144.9 6.8 5 Other 41.2 43.0 (1.8) (4) ---------------------------------- Total $2,019.5 $ 2,032.5 ($13.0) (1) ================================== Billed Electric Energy Sales (GWH): Residential 11,007 11,229 (222) (2) Commercial 7,227 7,122 105 1 Industrial 11,297 11,311 (14) - Governmental 720 745 (25) (3) ---------------------------------- Total retail 30,251 30,407 (156) (1) Sales for resale 3,087 3,005 82 3 ---------------------------------- Total 33,338 33,412 (74) - ================================== Nine Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $ 1,745.2 $ 1,811.2 ($66.0) (4) Commercial 1,125.9 1,148.4 (22.5) (2) Industrial 1,370.1 1,380.5 (10.4) (1) Governmental 120.9 133.2 (12.3) (9) ---------------------------------- Total retail 4,362.1 4,473.3 (111.2) (2) Sales for resale 315.6 335.2 (19.6) (6) Other 193.5 46.4 147.1 317 ---------------------------------- Total $4,871.2 $ 4,854.9 $16.3 - ================================== Billed Electric Energy Sales (GWH): Residential 24,274 24,166 108 - Commercial 18,137 17,446 691 4 Industrial 32,340 32,577 (237) (1) Governmental 1,932 2,042 (110) (5) ---------------------------------- Total retail 76,683 76,231 452 1 Sales for resale 7,391 7,580 (189) (2) ---------------------------------- Total 84,074 83,811 263 - ==================================
ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended September 30, 1999 compared to the three months ended September 30, 1998 primarily due to decreased unbilled revenues and increased other operation and maintenance expenses, partially offset by decreased regulatory charges. Net income decreased for the nine months ended September 30, 1999 compared to the nine months ended September 30, 1998 primarily due to decreased unbilled revenues, partially offset by decreased regulatory charges and interest expenses, and increased allowance for equity funds used during construction. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 1999 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues $1.0 $1.8 Rate riders (22.3) (51.9) Fuel cost recovery 14.6 26.4 Sales volume/weather - 5.7 Other revenue (including unbilled) (23.4) (52.4) Sales for resale (8.2) 10.2 ------ ------ Total ($38.3) ($60.2) ====== ====== Rate rider Rate rider revenues do not affect net income because they are offset by specific incurred expenses. Rate rider revenues decreased for the three and nine months ended September 30, 1999 as a result of a revised Grand Gulf rider, which includes consideration of the expiration of the Grand Gulf 1 phase-in plan in November 1998, partially offset by the Grand Gulf Accelerated Recovery Tariff (GGART). The tariff was designed to allow Entergy Arkansas to pay down a portion of its Grand Gulf purchased power obligation in advance of the implementation of retail access in Arkansas. The rider and GGART became effective with the first billing cycle in January 1999. Fuel cost recovery Fuel cost recovery revenues do not affect net income because they are an increase to revenues that is offset by specific incurred fuel costs. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel cost recovery revenues increased for the three and nine months ended September 30, 1999 due to an increase in the energy cost recovery rate effective April 1999 and the 1998 completion of a customer refund obligation under the 1997 energy cost recovery agreement, which lowered 1998 fuel cost recoveries. The increase in the energy cost recovery rate allows Entergy Arkansas to recover previously under-recovered fuel expenses. Other revenue Other revenue decreased for the three and nine months ended September 30, 1999 primarily due to a change in estimated unbilled revenues and less favorable weather in 1999. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. A decrease in price as a result of a change in the customer class mix also contributed to the decrease. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Sales for resale Sales for resale decreased for the three months ended September 30, 1999 primarily due to the loss of certain municipal and co-op customer contracts and decreased generation availability due to plant outages at White Bluff and ANO in August 1999 and September 1999, respectively. Sales for resale increased for the nine months ended September 30, 1999 due to increased generation availability in 1999 as a result of maintenance outages in 1998. Outages at affiliate plants in 1999 resulted in an increase in sales to affiliated companies. This increase was partially offset by decreased revenues from municipals, co-ops, and nonaffiliated companies due to the loss of certain customer contracts. Expenses Fuel and purchased power expenses Net fuel and purchased power expenses increased for the three months ended September 30, 1999 primarily due to the increase in the price of purchased power and gas in the summer months of 1999 as a result of increased demand and decreased availability in the market. Fuel and purchased power expenses increased for the nine months ended September 30, 1999 due to the 1998 completion of a customer refund obligation under the 1997 energy cost recovery agreement, which lowered 1998 fuel cost recoveries, and an increase in the energy cost recovery rate effective April 1999. The increase in the energy cost recovery rate allows Entergy Arkansas to recover previously under-recovered fuel expenses. The high prices of purchased power and gas in the summer months of 1999 also contributed to the increase in expense. Other operation and maintenance Other operation and maintenance expenses increased for the three months ended September 30, 1999 primarily due to: o increased distribution expenses related to additional customer service and tree trimming expenditures; o increased general plant maintenance at ANO; and o increased maintenance at ANO 1 while the plant was down for refueling in September 1999. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other regulatory charges Other regulatory charges decreased for the three and nine months ended September 30, 1999 primarily due to the accruals in September 1998 for the transition cost account. The decrease for the nine month period was partially offset by increased recovery of Grand Gulf 1 costs. Amortization of rate deferrals The amortization of Grand Gulf 1 rate deferrals decreased for the three and nine months ended September 30, 1999 due to the completion of the Grand Gulf 1 rate phase-in plan in November 1998. The amortization of previously deferred cost had no material effect on net income. Other Allowance for equity funds used during construction increased for the three and nine months ended September 30, 1999 due to third quarter adjustments to AFUDC on certain capital projects. Interest expenses decreased for the three and nine months ended September 30, 1999 due to the retirement, refinancing, or redemption of certain long-term debt in 1998 and 1999. Income taxes The effective income tax rates for the three months ended September 30, 1999 and 1998 were 41.0% and 39.4%, respectively. The effective income tax rates for the nine months ended September 30, 1999 and 1998 were 36.8% and 39.2%, respectively. The decrease in the effective tax rates for the nine months ended was due to lower pretax income and increased flow-through tax benefits.
ENTERGY ARKANSAS, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Nine Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $488,801 $527,059 $1,187,961 $1,248,205 -------- -------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 52,965 63,469 186,612 138,834 Purchased power 164,295 116,085 362,039 326,397 Nuclear refueling outage expenses 7,599 8,128 23,129 23,947 Other operation and maintenance 91,685 79,706 257,150 256,002 Decommissioning 3,277 4,464 8,054 10,700 Taxes other than income taxes 8,841 8,480 27,355 28,681 Depreciation and amortization 38,190 39,839 120,788 123,636 Other regulatory charges (credits) - net 8,379 43,984 (3,108) 21,878 Amortization of rate deferrals - 22,067 - 66,202 -------- -------- ---------- ---------- TOTAL 375,231 386,222 982,019 996,277 -------- -------- ---------- ---------- OPERATING INCOME 113,570 140,837 205,942 251,928 -------- -------- ---------- ---------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 3,614 1,934 9,458 4,266 Gain (loss) on sale of assets 2 (1) - 1,773 Miscellaneous - net 1,710 2,093 2,455 8,867 -------- -------- ---------- ---------- TOTAL 5,326 4,026 11,913 14,906 -------- -------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 20,042 20,974 60,741 66,095 Other interest - net 1,569 2,307 4,658 3,667 Dividends on preferred securities of subsidiary 1,275 1,275 3,825 3,825 Allowance for borrowed funds used during construction (2,412) (1,383) (6,290) (3,034) -------- -------- ---------- ---------- TOTAL 20,474 23,173 62,934 70,553 -------- -------- ---------- ---------- INCOME BEFORE INCOME TAXES 98,422 121,690 154,921 196,281 Income taxes 40,401 47,959 56,960 76,960 -------- -------- ---------- ---------- NET INCOME 58,021 73,731 97,961 119,321 Preferred dividend requirements and other 2,370 2,526 7,194 7,745 -------- -------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $55,651 $71,205 $90,767 $111,576 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $97,961 $119,321 Noncash items included in net income: Amortization of rate deferrals - 66,202 Other regulatory charges (credits) (3,108) 21,878 Depreciation, amortization, and decommissioning 128,842 134,336 Deferred income taxes and investment tax credits (1,414) (19,501) Allowance for equity funds used during construction (9,458) (4,266) Gain on sale of assets - (1,773) Changes in working capital: Receivables (22,706) (54,923) Fuel inventory (21,843) 889 Accounts payable 24,874 41,397 Taxes accrued 36,285 82,721 Interest accrued (270) (2,565) Deferred fuel costs (7,738) (65,408) Other working capital accounts 13,941 (8,740) Decommissioning trust contributions and realized change in trust assets (12,889) (17,776) Provision for estimated losses and reserves (12,029) (778) Changes in other regulatory assets (22,355) (25,584) Other 29,563 30,055 -------- -------- Net cash flow provided by operating activities 217,656 295,485 -------- -------- INVESTING ACTIVITIES Construction expenditures (172,655) (122,209) Allowance for equity funds used during construction 9,458 4,266 Nuclear fuel purchases (32,497) (38,354) Proceeds from sale/leaseback of nuclear fuel 32,473 38,354 -------- -------- Net cash flow used in investing activities (163,221) (117,943) -------- -------- FINANCING ACTIVITIES Retirement of: First mortgage bonds (38,287) (105,774) Other long-term debt (980) (45,500) Redemption of preferred stock (2,027) (4,000) Dividends paid: Common stock (78,800) (92,600) Preferred stock (7,212) (7,844) -------- -------- Net cash flow used in financing activities (127,306) (255,718) -------- -------- Net decrease in cash and cash equivalents (72,871) (78,176) Cash and cash equivalents at beginning of period 93,105 162,002 -------- -------- Cash and cash equivalents at end of period $20,234 $ 83,826 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $61,143 $67,314 Income taxes $16,927 $13,521 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $13,401 $35 See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS ASSETS September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $9,999 $9,814 Temporary cash investments - at cost, which approximates market 10,235 83,291 ---------- ---------- Total cash and cash equivalents 20,234 93,105 ---------- ---------- Accounts receivable: Customer 109,932 72,234 Allowance for doubtful accounts (1,753) (1,753) Associated companies 51,893 50,145 Other 1,910 4,510 Accrued unbilled revenues 58,943 73,083 ---------- ---------- Total receivables 220,925 198,219 ---------- ---------- Deferred fuel costs 48,929 41,191 Fuel inventory - at average cost 41,695 19,852 Materials and supplies - at average cost 90,733 89,033 Deferred nuclear refueling outage costs 22,875 17,787 Prepayments and other 7,705 5,557 ---------- ---------- TOTAL 453,096 464,744 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 11,214 11,214 Decommissioning trust funds 329,575 303,285 Non-utility property - at cost (less accumulated depreciation) 1,464 1,468 Other - at cost (less accumulated depreciation) 2,993 3,602 ---------- ---------- TOTAL 345,246 319,569 ---------- ---------- UTILITY PLANT Electric 4,867,025 4,731,699 Property under capital lease 46,855 49,415 Construction work in progress 204,440 201,853 Nuclear fuel under capital lease 95,681 95,589 Nuclear fuel 5,776 - ---------- ---------- TOTAL UTILITY PLANT 5,219,777 5,078,556 Less - accumulated depreciation and amortization (2,385,730) (2,275,170) ---------- ---------- UTILITY PLANT - NET 2,834,047 2,803,386 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 251,398 248,275 Unamortized loss on reacquired debt 49,165 51,747 Other regulatory assets 116,158 96,927 Other 15,273 22,003 ---------- ---------- TOTAL 431,994 418,952 ---------- ---------- TOTAL ASSETS $4,064,383 $4,006,651 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $340 $1,094 Notes payable 667 667 Accounts payable: Associated companies 56,121 47,963 Other 96,684 79,969 Customer deposits 25,888 25,196 Taxes accrued 104,870 68,585 Accumulated deferred income taxes 31,712 24,162 Interest accrued 25,016 25,285 Co-owner advances 22,434 4,073 Obligations under capital leases 63,012 64,068 Other 19,990 16,183 ---------- ---------- TOTAL 446,734 357,245 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 754,881 756,571 Accumulated deferred investment tax credits 94,939 98,768 Obligations under capital leases 79,524 80,936 Other regulatory liabilities 78,985 65,583 Transition to competition 95,856 90,623 Accumulated provisions 39,375 51,404 Other 58,085 56,400 ---------- ---------- TOTAL 1,201,645 1,200,285 ---------- ---------- Long-term debt 1,129,228 1,172,285 Preferred stock with sinking fund 20,000 22,027 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 60,000 60,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 116,350 116,350 Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares in 1999 and 1998 470 470 Paid-in capital 590,134 590,134 Retained earnings 499,822 487,855 ---------- ---------- TOTAL 1,206,776 1,194,809 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,064,383 $4,006,651 ========== ========== See Notes To Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 198.2 $ 208.0 ($9.8) (5) Commercial 92.3 91.7 0.6 1 Industrial 100.5 98.2 2.3 2 Governmental 4.3 4.2 0.1 2 ------------------------------- Total retail 395.3 402.1 (6.8) (2) Sales for resale Associated companies 42.3 39.1 3.2 8 Non-associated companies 66.6 78.0 (11.4) (15) Other (15.4) 7.9 (23.3) (295) ------------------------------- Total $ 488.8 $ 527.1 ($38.3) (7) =============================== Billed Electric Energy Sales (GWH): Residential 2,317 2,368 (51) (2) Commercial 1,545 1,510 35 2 Industrial 1,944 1,901 43 2 Governmental 69 67 2 3 ------------------------------- Total retail 5,875 5,846 29 - Sales for resale Associated companies 1,304 1,523 (219) (14) Non-associated companies 1,607 1,425 182 13 ------------------------------- Total 8,786 8,794 (8) - =============================== Nine Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 425.8 $ 447.2 ($21.4) (5) Commercial 220.4 220.0 0.4 - Industrial 251.9 248.9 3.0 1 Governmental 11.1 11.2 (0.1) (1) -------------------------------- Total retail 909.2 927.3 (18.1) (2) Sales for resale Associated companies 132.7 98.7 34.0 34 Non-associated companies 152.3 176.1 (23.8) (14) Other (6.2) 46.1 (52.3) (113) -------------------------------- Total $1,188.0 $ 1,248.2 ($60.2) (5) ================================ Billed Electric Energy Sales (GWH): Residential 5,182 5,229 (47) (1) Commercial 3,732 3,629 103 3 Industrial 5,244 5,109 135 3 Governmental 181 178 3 2 -------------------------------- Total retail 14,339 14,145 194 1 Sales for resale Associated companies 5,575 4,023 1,552 39 Non-associated companies 3,723 3,835 (112) (3) -------------------------------- Total 23,637 22,003 1,634 7 ================================
ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and nine months ended September 30, 1999 compared to the three and nine months ended September 30, 1998 primarily due to increased operating revenues, lower depreciation and amortization expense, and decreased interest expense. For the nine months ended, this increase was also due to higher other income and was partially offset by increased operating expenses and income taxes. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the three and nine months ended September 30, 1999 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($10.0) $84.1 Fuel cost recovery 52.2 56.5 Sales volume/weather (3.4) 6.5 Other revenue (including unbilled) 4.6 14.9 Sales for resale 34.8 16.6 ----- ------ Total $78.2 $178.6 ===== ====== Base revenues Base revenues decreased for the three months ended September 30, 1999 primarily due to: o Texas retail annual base rate reductions of $69 million and $4.2 million that were implemented in December 1998 and March 1999, respectively; and o reserves recorded in the Louisiana jurisdiction in the third quarter of 1999 for the estimated outcomes of annual earnings reviews. These decreases were partially offset by a reduction in the amount of reserves recorded in the third quarter of 1999 compared to the third quarter of 1998 for the anticipated effects of rate proceedings in Texas. Base revenues increased for the nine months ended September 30, 1999 primarily due to: o a $93.6 million reversal in June 1999 of regulatory reserves associated with the accelerated amortization of accounting order deferrals in conjunction with the settlement agreement in Entergy Gulf States' November 1998 rate filing. The settlement agreement was approved by the PUCT in June 1999. The net income effect of this reversal is largely offset by the amortization of rate deferrals discussed below; and o a reduction in the amount of reserves recorded in 1999 compared to 1998 for the anticipated effects of rate proceedings in Texas. Partially offsetting these increases were: o Louisiana retail annual base rate reductions of $87 million and $18 million that were implemented in February and August 1998, respectively; o Texas retail annual base rate reductions of $69 million and $4.2 million that were implemented in December 1998 and March 1999, respectively; and o reserves recorded in the Louisiana jurisdiction in 1999 for the estimated outcomes of annual earnings reviews. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel cost recovery Fuel cost recovery revenues do not affect net income because they are an increase to revenues that is offset by specific incurred fuel costs. Fuel cost recovery revenues increased for the three and nine months ended September 30, 1999 due to a higher fuel factor in 1999 and a fuel surcharge implemented in February 1999, both in the Texas jurisdiction. These increases were partially offset by reduced fuel recovery in the Louisiana jurisdiction primarily due to lower fuel prices and decreased generation for the period included in fuel cost recovery revenues. Sales volume/weather Sales volume decreased for the three months ended September 30, 1999 primarily due to less favorable summer weather in 1999. Sales volume increased for the nine months ended September 30, 1999 due to an increase in usage and the number of customers in the higher margin residential and commercial customer classes, partially offset by decreased usage in the lower margin industrial customer class. Other revenue Other revenue increased for the three and nine months ended September 30, 1999 primarily due to a change in estimated unbilled revenues. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. This increase was partially offset by milder weather in 1999. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Sales for resale Sales for resale revenues increased for the three and nine months ended September 30, 1999 as a result of increased sales to associated companies due to greater energy availability and higher unit prices. This was partially offset by lower sales of energy from April to June 1999 due to less generation available for sale because of the extended refueling outage at River Bend which began in early April 1999. River Bend was brought back on-line at full power on July 14, 1999. Gas operating revenues Gas operating revenues decreased for the nine months ended September 30, 1999 primarily due to lower prices of gas purchased for resale as well as decreased usage as a result of warmer winter weather, especially in the residential and commercial sectors. Steam operating revenues Steam operating revenues decreased for the three and nine months ended September 30, 1999 due to a new lease arrangement for Louisiana Station 1 that began in June 1999. Under the terms of this new lease, revenues are now classified as other income rather than steam operating revenues, which was the previous classification. It is expected that less revenue will be realized under the new lease arrangement compared to the previous arrangement with the steam customer. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Fuel and purchased power Fuel and purchased power expenses increased for the three and nine months ended September 30, 1999 primarily due to higher gas expense due to higher unit gas prices in the third quarter of 1999. Partially offsetting the increase for the three months was additional fuel cost deferrals as a result of fuel cost under-recovery during the period. The increase for the nine months was also due to a shift to gas generation in the first six months of 1999 because of the reduced availability of Nelson 6 and the extended River Bend nuclear refueling outage. The increase was partially offset by lower gas prices during the first six months of 1999. Purchased power expense increased due to higher unit prices despite a decrease in the volume purchased. Fuel and purchased power expenses also increased for the nine months ended due to reduced fuel cost under-recovery as a result of the higher fuel factor and fuel surcharge in the Texas jurisdiction in 1999. Other operation and maintenance Other operation and maintenance expenses decreased for the three months ended September 30, 1999 primarily due to a reduction in fossil expenses primarily as a result of outages in 1998 at both the Willow Glen and Lewis Creek plants. This decrease was partially offset by higher tree- trimming, support service and consultant expenses. Other operation and maintenance expenses increased for the nine months ended September 30, 1999 due to increases in employee benefit expense, casualty reserve accruals, and tree-trimming expenses, partially offset by the lower fossil expenses described above. Taxes other than income taxes Taxes other than income taxes decreased for the three and nine months ended September 30, 1999 primarily due to reduced local franchise taxes as a result of less revenue being subject to the tax in 1999. Depreciation and amortization Depreciation and amortization decreased for the three and nine months ended September 30, 1999 due to: o reduced River Bend depreciation expense as a result of the write-down of the River Bend abeyed plant required by the Texas rate settlement; o reduced transmission and distribution depreciation rates as a result of compliance with PUCT and LPSC rate orders; o reduced amortization of the River Bend Unit 2 cancellation loss as a result of the completion of amortization for the Louisiana portion of the loss and the reduction in amortization of the Texas portion in accordance with a PUCT rate order; and o lower depreciation due to a review of plant in-service dates for consistency with regulatory treatment. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS These factors were partially offset by an increase in the River Bend depreciation rate as a result of compliance with PUCT and LPSC rate orders. Amortization of rate deferrals The amortization of rate deferrals decreased for the three months ended September 30, 1999 primarily due to the June 1999 Texas rate settlement, which resulted in a substantial reduction in the unamortized balance of rate deferrals. Partially offsetting this reduction was a shorter amortization period ending December 31, 2001. The previous amortization period for these deferrals was scheduled to run through late 2009. The amortization of rate deferrals increased for the nine months ended September 30, 1999 primarily due to the large reduction of these deferrals in June 1999. Partially offsetting this increase for the nine month period was the reduction in the amortization of Texas rate deferrals described above and the completion of the Louisiana retail rate phase-in plan for River Bend in February 1998. Other Other income Other income increased for the three and nine months ended September 30, 1999 primarily due to third quarter adjustments to AFUDC on certain capital projects. Interest charges Interest charges decreased for the three and nine months ended September 30, 1999 primarily due to the retirement, redemption, or refinancing of certain long-term debt in 1998 and the first quarter of 1999. Income taxes The effective income tax rates for the three months ended September 30, 1999 and 1998 were 39.1% and 42.0%, respectively. The effective income tax rates for the nine months ended September 30, 1999 and 1998 were 42.1% and 43.9%, respectively. The decreases in 1999 were primarily due to reduced taxable income as a result of higher tax depreciation and increased amortization of investment tax credits.
ENTERGY GULF STATES, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Nine Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $671,457 $593,326 $1,609,285 $1,430,665 Natural gas 4,619 4,410 21,603 27,710 Steam products - 11,626 15,550 32,151 -------- -------- ---------- ---------- TOTAL 676,076 609,362 1,646,438 1,490,526 -------- -------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 180,037 159,442 451,301 406,696 Purchased power 163,546 95,358 296,075 254,989 Nuclear refueling outage expenses 5,010 3,334 10,366 11,558 Other operation and maintenance 96,661 99,871 302,718 296,572 Decommissioning 1,362 1,162 6,152 5,010 Taxes other than income taxes 30,611 33,191 86,421 92,159 Depreciation and amortization 40,053 50,178 139,885 154,298 Other regulatory credits - net (3,390) (1,847) (15,677) (11,830) Amortization of rate deferrals 1,402 2,269 85,795 19,480 -------- -------- ---------- ---------- TOTAL 515,292 442,958 1,363,036 1,228,932 -------- -------- ---------- ---------- OPERATING INCOME 160,784 166,404 283,402 261,594 -------- -------- ---------- ---------- OTHER INCOME Allowance for equity funds used during construction 2,424 757 4,741 2,057 Gain on sale of assets 602 407 1,512 1,182 Miscellaneous - net 5,909 6,950 12,462 12,673 -------- -------- ---------- ---------- TOTAL 8,935 8,114 18,715 15,912 -------- -------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 34,117 37,104 103,645 114,192 Other interest - net 3,112 1,132 4,683 2,847 Dividends on preferred securities of subsidiary 1,859 1,859 5,578 5,578 Allowance for borrowed funds used during construction (2,170) (611) (4,305) (1,625) -------- -------- ---------- ---------- TOTAL 36,918 39,484 109,601 120,992 -------- -------- ---------- ---------- INCOME BEFORE INCOME TAXES 132,801 135,034 192,516 156,514 Income taxes 51,880 56,721 81,136 68,686 -------- -------- ---------- ---------- NET INCOME 80,921 78,313 111,380 87,828 Preferred and preference dividend requirements and other 4,108 4,747 12,774 14,335 -------- -------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $76,813 $73,566 $98,606 $73,493 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $111,380 $87,828 Noncash items included in net income: Amortization of rate deferrals 85,795 19,480 Reserve for regulatory adjustments (107,901) 76,883 Other regulatory credits (15,677) (11,830) Depreciation, amortization, and decommissioning 146,037 159,308 Deferred income taxes and investment tax credits 18,482 4,456 Allowance for equity funds used during construction (4,741) (2,057) Gain on sale of assets (1,512) (1,182) Changes in working capital: Receivables (72,852) (14,841) Fuel inventory (12,196) 6,560 Accounts payable 16,240 (9,621) Taxes accrued 81,302 65,956 Interest accrued 7,396 8,189 Deferred fuel costs (40,647) (43,391) Other working capital accounts (13,133) (296) Decommissioning trust contributions and realized change in trust assets (8,162) (617) Provision for estimated losses and reserves 5,529 (4,978) Changes in other regulatory assets 1,217 587 Other 10,286 (16,637) --------- --------- Net cash flow provided by operating activities 206,843 323,797 --------- --------- INVESTING ACTIVITIES Construction expenditures (122,538) (77,904) Allowance for equity funds used during construction 4,741 2,057 Nuclear fuel purchases (51,980) (226) Proceeds from sale/leaseback of nuclear fuel 43,009 219 --------- --------- Net cash flow used in investing activities (126,768) (75,854) --------- --------- FINANCING ACTIVITIES Proceeds from issuance of: Other long-term debt 122,999 21,600 Retirement of: First mortgage bonds (25,000) (25,000) Other long-term debt (22,920) (72,090) Redemption of preferred stock (25,931) (6,250) Dividends paid: Common stock (88,000) (109,400) Preferred stock (12,873) (14,362) --------- --------- Net cash flow used in financing activities (51,725) (205,502) --------- --------- Net increase in cash and cash equivalents 28,350 42,441 Cash and cash equivalents at beginning of period 115,736 127,775 --------- --------- Cash and cash equivalents at end of period $144,086 $170,216 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $101,963 $109,058 Income taxes $3,114 $23,164 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $8,540 $4,907 See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS ASSETS September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $12,186 $11,629 Temporary cash investments - at cost, which approximates market 29,900 104,107 Special deposits 102,000 - ---------- ---------- Total cash and cash equivalents 144,086 115,736 ---------- ---------- Accounts receivable: Customer 108,065 78,961 Allowance for doubtful accounts (1,735) (1,735) Associated companies 17,783 23,250 Other 28,890 28,265 Accrued unbilled revenues 108,159 59,569 ---------- ---------- Total receivables 261,162 188,310 ---------- ---------- Deferred fuel costs 173,544 132,896 Fuel inventory - at average cost 42,397 30,201 Materials and supplies - at average cost 108,531 108,346 Rate deferrals 5,606 9,077 Prepayments and other 24,530 20,495 ---------- ---------- TOTAL 759,856 605,061 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 226,471 209,770 Non-utility property - at cost (less accumulated depreciation) 187,054 165,272 Other - at cost (less accumulated depreciation) 13,498 12,426 ---------- ---------- TOTAL 427,023 387,468 ---------- ---------- UTILITY PLANT Electric 7,353,247 7,250,789 Property under capital lease 48,074 54,427 Natural gas 52,996 51,053 Steam products - 80,537 Construction work in progress 100,660 105,121 Nuclear fuel under capital lease 81,191 46,572 ---------- ---------- TOTAL UTILITY PLANT 7,636,168 7,588,499 Less - accumulated depreciation and amortization (3,509,640) (3,141,518) ---------- ---------- UTILITY PLANT - NET 4,126,528 4,446,981 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 7,008 89,333 SFAS 109 regulatory asset - net 374,796 376,406 Unamortized loss on reacquired debt 39,522 42,879 Other regulatory assets 90,307 89,914 Long-term receivables 32,876 34,617 Other 22,584 221,085 ---------- ---------- TOTAL 567,093 854,234 ---------- ---------- TOTAL ASSETS $5,880,500 $6,293,744 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $148,000 $71,515 Accounts payable: Associated companies 51,893 60,932 Other 116,381 91,102 Customer deposits 32,788 31,462 Taxes accrued 137,082 55,780 Accumulated deferred income taxes 42,376 21,260 Nuclear refueling outage costs 5,700 16,991 Interest accrued 50,027 42,631 Obligations under capital leases 35,176 34,343 Other 17,193 16,325 ---------- ---------- TOTAL 636,616 442,341 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 1,091,162 1,081,598 Accumulated deferred investment tax credits 180,090 193,509 Obligations under capital leases 94,089 66,656 Other regulatory liabilities 20,809 30,287 Regulatory reserves 100,588 515,023 Accumulated provisions 66,428 60,899 Other 258,661 455,997 ---------- ---------- TOTAL 1,811,827 2,403,969 ---------- ---------- Long-term debt 1,631,522 1,631,658 Preferred stock with sinking fund 34,650 60,497 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 in 1999 and 1998 114,055 114,055 Paid-in capital 1,152,575 1,152,575 Retained earnings 212,811 202,205 ---------- ---------- TOTAL 1,530,885 1,520,279 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,880,500 $6,293,744 ========== ========== See Notes To Financial Statements.
ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 209.9 $ 202.7 $ 7.2 4 Commercial 121.8 113.8 8.0 7 Industrial 197.8 189.1 8.7 5 Governmental 7.2 7.8 (0.6) (8) --------------------------------- Total retail 536.7 513.4 23.3 5 Sales for resale Associated companies 27.0 3.2 23.8 744 Non-associated companies 50.4 39.4 11.0 28 Other 57.4 37.3 20.1 54 --------------------------------- Total $ 671.5 $ 593.3 $ 78.2 13 ================================= Billed Electric Energy Sales (GWH): Residential 3,182 3,210 (28) (1) Commercial 2,175 2,102 73 3 Industrial 4,555 4,631 (76) (2) Governmental 112 141 (29) (21) --------------------------------- Total retail 10,024 10,084 (60) (1) Sales for resale Associated companies 306 85 221 260 Non-associated companies 1,104 1,162 (58) (5) --------------------------------- Total 11,434 11,331 103 1 ================================= Nine Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 463.3 $ 470.5 ($7.2) (2) Commercial 316.3 317.3 (1.0) - Industrial 524.3 539.3 (15.0) (3) Governmental 20.5 29.1 (8.6) (30) --------------------------------- Total retail 1,324.4 1,356.2 (31.8) (2) Sales for resale Associated companies 31.6 13.3 18.3 138 Non-associated companies 86.4 88.1 (1.7) (2) Other 166.9 (26.9) 193.8 720 --------------------------------- Total $ 1,609.3 $ 1,430.7 $ 178.6 12 ================================= Billed Electric Energy Sales (GWH): Residential 7,024 6,878 146 2 Commercial 5,558 5,190 368 7 Industrial 13,111 13,594 (483) (4) Governmental 314 460 (146) (32) --------------------------------- Total retail 26,007 26,122 (115) - Sales for resale Associated companies 476 347 129 37 Non-associated companies 2,517 2,608 (91) (3) --------------------------------- Total 29,000 29,077 (77) - =================================
ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended September 30, 1999 compared to the three months ended September 30, 1998 primarily due to an increase in unbilled revenue, and decreases in interest charges and nuclear refueling outage expenses, partially offset by a decrease in sales volume/weather revenues. Net income increased for the nine months ended September 30, 1999 compared to the nine months ended September 30, 1998 primarily due to an increase in unbilled revenue, and decreases in other operation and maintenance expenses, interest charges, and nuclear refueling outage expenses. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 1999 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues $3.1 $5.7 Fuel cost recovery 9.8 22.8 Sales volume/weather (8.0) (0.6) Other revenue (including unbilled) 16.1 75.6 Sales for resale 18.3 13.4 ----- ------ Total $39.3 $116.9 ===== ====== Fuel cost recovery Fuel cost recovery revenues do not affect net income because they are an increase to revenues that is offset by specific incurred fuel costs. Fuel cost recovery revenues increased for the three and nine months ended September 30, 1999 primarily due to a shift from lower priced nuclear fuel to higher priced gas and purchased power due to nuclear outages at Waterford 3 in 1999. Sales volume/weather Sales volume decreased for the three months ended September 30, 1999 primarily due to less favorable weather in the residential and commercial sectors. Other revenue Other revenue increased for the three and nine months ended September 30, 1999 primarily due to a change in estimated unbilled revenues. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Sales for resale revenue Sales for resale increased for the three and nine months ended September 30, 1999 primarily due to increased sales to affiliates as a result of outages at affiliate plants in 1999 and favorable unit prices in July and August 1999 caused by increased purchased power and natural gas market prices. Expenses Fuel and purchased power Net fuel and purchased power expenses increased for the three and nine months ended September 30, 1999 due to a shift from lower priced nuclear fuel to higher priced gas and purchased power due to nuclear outages at Waterford 3 in 1999. Nuclear refueling outage expenses Nuclear refueling outage expenses decreased for the three and nine months ended September 30, 1999 as a result of the amortization of larger outage expenses in 1998 due to the extended nuclear refueling outage in 1997. Other operation and maintenance Other operation and maintenance expenses decreased for the nine months ended September 30, 1999 primarily due to: o insurance settlement proceeds received in June 1999 related to the replacement of a heat exchanger; o the receipt of higher insurance distributions in 1999; o the capitalization of costs associated with return to service projects; and o a reduction in outside contractors at Waterford 3. Other Interest charges Interest on long-term debt decreased for the three and nine months ended September 30, 1999 primarily due to the redemption, retirement, or refinancing of certain long-term debt during 1999. Income taxes The effective income tax rates for the three months ended September 30, 1999 and 1998 remained relatively unchanged at 39.4% and 39.8%, respectively. The effective income tax rates for the nine months ended September 30, 1999 and 1998 also remained relatively unchanged at 39.8% and 40.9%, respectively. ENTERGY LOUISIANA, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited)
Three Months Ended Nine Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $576,956 $537,632 $1,434,692 $1,317,785 -------- -------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 112,908 134,630 275,531 280,340 Purchased power 156,391 102,559 340,973 291,914 Nuclear refueling outage expenses 3,481 5,435 12,403 16,305 Other operation and maintenance 72,181 72,276 205,497 215,785 Decommissioning 2,197 2,197 6,590 6,590 Taxes other than income taxes 19,145 18,237 55,815 53,708 Depreciation and amortization 38,601 37,905 120,564 120,742 Other regulatory credits - net - - - (1,754) -------- -------- ---------- ---------- TOTAL 404,904 373,239 1,017,373 983,630 -------- -------- ---------- ---------- OPERATING INCOME 172,052 164,393 417,319 334,155 -------- -------- ---------- ---------- OTHER INCOME Allowance for equity funds used during construction 790 586 3,282 1,406 Gain on sale of assets - - - 2,340 Miscellaneous - net 862 340 1,442 368 -------- -------- ---------- ---------- TOTAL 1,652 926 4,724 4,114 -------- -------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 24,728 27,181 78,472 84,790 Other interest - net 1,609 1,665 3,821 4,682 Dividends on preferred securities of subsidiary 1,575 1,575 4,725 4,725 Allowance for borrowed funds used during construction (631) (535) (2,998) (1,285) -------- -------- ---------- ---------- TOTAL 27,281 29,886 84,020 92,912 -------- -------- ---------- ---------- INCOME BEFORE INCOME TAXES 146,423 135,433 338,023 245,357 Income taxes 57,744 53,963 134,485 100,424 -------- -------- ---------- ---------- NET INCOME 88,679 81,470 203,538 144,933 Preferred dividend requirements and other 2,378 3,253 7,427 9,760 -------- -------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK $86,301 $78,217 $196,111 $135,173 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1999 and 1998 (Unaudited)
1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $203,538 $144,933 Noncash items included in net income: Other regulatory credits - (1,754) Depreciation, amortization, and decommissioning 127,154 127,332 Deferred income taxes and investment tax credits 25,141 4,842 Allowance for equity funds used during construction (3,282) (1,406) Gain on sale of assets - (2,340) Changes in working capital: Receivables (107,103) (64,824) Accounts payable 96,470 (12,277) Taxes accrued 63,173 108,558 Interest accrued (28,789) 1,895 Deferred fuel costs (64,836) (18,217) Other working capital accounts (2,438) 14,826 Decommissioning trust contributions and realized change in trust assets (8,510) (11,062) Provision for estimated losses and reserves 2,290 6,024 Changes in other regulatory assets 20,033 12,109 Other (23,864) (51,693) -------- -------- Net cash flow provided by operating activities 298,977 256,946 -------- -------- INVESTING ACTIVITIES Construction expenditures (86,163) (62,672) Allowance for equity funds used during construction 3,282 1,406 Nuclear fuel purchases (11,308) (22,293) Proceeds from sale/leaseback of nuclear fuel 11,308 9,872 -------- -------- Net cash flow used in investing activities (82,881) (73,687) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: First mortgage bonds 74,679 112,556 Other long-term debt 113,418 - Retirement of: First mortgage bonds (122,600) (150,561) Other long-term debt (129,710) (175) Redemption of preferred stock (50,000) - Dividends paid: Common stock (165,400) (138,500) Preferred stock (8,010) (9,760) -------- -------- Net cash flow used in financing activities (287,623) (186,440) -------- -------- Net increase (decrease) in cash and cash equivalents (71,527) (3,181) Cash and cash equivalents at beginning of period 83,030 43,920 -------- -------- Cash and cash equivalents at end of period $11,503 $40,739 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $111,675 $88,282 Income taxes $82,454 $21,150 Noncash investing and financing activities: Change in unrealized appreciation/(depreciation) of decommissioning trust assets $1,987 ($138) See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS ASSETS September 30, 1999 and December 31, 1998 (Unaudited)
1999 1998 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $11,503 $10,187 Temporary cash investments - at cost, which approximates market - 72,843 ---------- ---------- Total cash and cash equivalents 11,503 83,030 ---------- ---------- Accounts receivable: Customer 122,517 65,262 Allowance for doubtful accounts (1,164) (1,164) Associated companies 16,538 33,775 Other 12,030 19,305 Accrued unbilled revenues 124,900 50,540 ---------- ---------- Total receivables 274,821 167,718 ---------- ---------- Deferred fuel costs 57,038 - Accumulated deferred income taxes - 13,331 Materials and supplies - at average cost 81,536 82,220 Deferred nuclear refueling outage costs 14,814 6,498 Prepayments and other 7,961 11,566 ---------- ---------- TOTAL 447,673 364,363 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 14,230 14,230 Decommissioning trust funds 93,178 82,680 Non-utility property - at cost (less accumulated depreciation) 21,454 21,460 ---------- ---------- TOTAL 128,862 118,370 ---------- ---------- UTILITY PLANT Electric 5,191,079 5,095,278 Property under capital lease 234,339 234,339 Construction work in progress 75,584 85,565 Nuclear fuel under capital lease 59,048 75,814 ---------- ---------- TOTAL UTILITY PLANT 5,560,050 5,490,996 Less - accumulated depreciation and amortization (2,274,416) (2,158,800) ---------- ---------- UTILITY PLANT - NET 3,285,634 3,332,196 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 253,799 270,068 Unamortized loss on reacquired debt 33,810 30,629 Other regulatory assets 45,835 49,599 Other 16,469 15,816 ---------- ---------- TOTAL 349,913 366,112 ---------- ---------- TOTAL ASSETS $4,212,082 $4,181,041 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS'EQUITY September 30, 1999 and December 31, 1998 (Unaudited)
1999 1998 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $120,448 $6,772 Accounts payable: Associated companies 140,719 43,051 Other 89,267 90,465 Customer deposits 55,489 55,966 Taxes accrued 81,376 18,203 Accumulated deferred income taxes 14,821 - Interest accrued 24,513 53,302 Deferred fuel cost - 7,798 Obligations under capital leases 32,539 32,539 Other 9,079 7,644 ---------- ---------- TOTAL 568,251 315,740 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 826,143 840,931 Accumulated deferred investment tax credits 124,538 128,689 Obligations under capital leases 26,509 43,275 Other regulatory liabilities 12,824 10,836 Accumulated provisions 54,934 52,645 Other 39,711 39,791 ---------- ---------- TOTAL 1,084,659 1,116,167 ---------- ---------- Long-term debt 1,161,594 1,332,315 Preferred stock with sinking fund 35,000 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 in 1999 and 1998 1,088,900 1,088,900 Capital stock expense and other (2,321) (2,320) Retained earnings 105,499 74,739 ---------- ---------- TOTAL 1,292,578 1,261,819 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,212,082 $4,181,041 ========== ========== See Notes To Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 228.2 $ 224.1 $ 4.1 2 Commercial 116.3 112.2 4.1 4 Industrial 168.4 155.0 13.4 9 Governmental 9.1 8.8 0.3 3 --------------------------------- Total retail 522.0 500.1 21.9 4 Sales for resale Associated companies 18.4 3.7 14.7 397 Non-associated companies 19.6 16.0 3.6 23 Other 16.9 17.8 (0.9) (5) --------------------------------- Total $ 576.9 $ 537.6 $ 39.3 7 ================================= Billed Electric Energy Sales (GWH): Residential 2,955 3,058 (103) (3) Commercial 1,568 1,615 (47) (3) Industrial 3,802 3,805 (3) - Governmental 123 126 (3) (2) --------------------------------- Total retail 8,448 8,604 (156) (2) Sales for resale Associated companies 150 76 74 97 Non-associated companies 195 207 (12) (6) --------------------------------- Total 8,793 8,887 (94) (1) ================================= Nine Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 485.6 $ 465.0 $ 20.6 4 Commercial 289.4 274.7 14.7 5 Industrial 463.1 441.0 22.1 5 Governmental 25.0 24.5 0.5 2 ----------------------------------- Total retail 1,263.1 1,205.2 57.9 5 Sales for resale Associated companies 26.3 14.0 12.3 88 Non-associated companies 43.9 42.8 1.1 3 Other 101.4 55.8 45.6 82 ----------------------------------- Total $ 1,434.7 $ 1,317.8 $ 116.9 9 =================================== Billed Electric Energy Sales (GWH): Residential 6,615 6,620 (5) - Commercial 3,986 3,979 7 - Industrial 11,205 11,120 85 1 Governmental 354 364 (10) (3) --------------------------------- Total retail 22,160 22,083 77 - Sales for resale Associated companies 390 311 79 25 Non-associated companies 672 619 53 9 --------------------------------- Total 23,222 23,013 209 1 =================================
ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three and nine months ended September 30, 1999 compared to the three and nine months ended September 30, 1998 primarily due to a decrease in unbilled revenues and an increase in other operation and maintenance expense, partially offset by a decrease in interest expense. Revenues and Sales The changes in electric operating revenues for the three and nine months ended September 30, 1999 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($4.0) ($6.5) Grand Gulf rate rider (40.9) (94.7) Fuel cost recovery (3.6) (7.7) Sales volume/weather 1.2 5.2 Other revenue (including unbilled) (5.9) (32.7) Sales for resale (4.4) (18.1) ------ ------- Total ($57.6) ($154.5) ====== ======= Base revenues Base revenues decreased for the three and nine months ended September 30, 1999 due to a base rate reduction that became effective in May 1999. Grand Gulf rate rider revenues Rate rider revenues do not affect net income because they are offset by specific incurred expenses. Grand Gulf rate rider revenue decreased for the three and nine months ended September 30, 1999 as a result of a new rider which became effective October 1, 1998. This new rider eliminated revenues attributable to the Grand Gulf phase-in plan, which was completed in September 1998. However, this decrease was partially offset by the Grand Gulf Accelerated Recovery Tariff, which also became effective October 1, 1998. This tariff provides for accelerated recovery of a portion of Entergy Mississippi's Grand Gulf purchased power obligation. Other revenue Other revenue decreased for the three and nine months ended September 30, 1999 primarily due to less favorable weather in 1999. A change in estimated unbilled revenues also significantly contributed to the decrease for the nine months ended September 30, 1999. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Sales for resale Sales for resale decreased for the three and nine months ended September 30, 1999 primarily due to a decrease in sales to associated companies as a result of decreased oil generation due to plant outages at Entergy Mississippi in 1999. The decrease for the nine months ended September 30, 1999 was also due to higher sales to associated companies in 1998 as a result of an outage at Entergy Arkansas. Expenses Fuel and purchased power expenses Net fuel and purchased power expenses decreased slightly for the three and nine months ended September 30, 1999 due to a decrease in total generation requirements. The decrease was largely offset by a shift from lower priced oil generation to higher priced purchased power as a result of plant outages in 1999. Other operation and maintenance Other operation and maintenance expenses increased for the three and nine months ended September 30, 1999 primarily due to: o plant outages in 1999; o an increase in customer service and reliability improvement spending; o adjustments to compensation accruals; and o an increase in casualty reserves. Other regulatory charges Other regulatory charges decreased for the three and nine months ended September 30, 1999 due to a decreased over-recovery of Grand Gulf 1 related costs because of the new rider implemented in October 1998. Amortization of rate deferrals Amortization of rate deferrals decreased for the three and nine months ended September 30, 1999 due to the completion of the Grand Gulf 1 rate phase-in plan in September 1998. These phase-ins had no material effect on net income. Other Interest and other charges Interest on long-term debt decreased for the three and nine months ended September 30, 1999 primarily due to the retirement, redemption, or refinancing of certain long-term debt in 1999. Income taxes The effective income tax rates for the three months ended September 30, 1999 and 1998 remained relatively unchanged at 35.4% and 35.7%, respectively. The effective income tax rates for the nine months ended September 30, 1999 and 1998 remained unchanged at 34.8%.
ENTERGY MISSISSIPPI, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Nine Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $267,159 $324,784 $644,239 $798,709 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 44,842 85,859 141,617 196,260 Purchased power 111,236 71,404 259,505 210,030 Other operation and maintenance 35,355 30,631 108,268 91,883 Taxes other than income taxes 11,752 12,060 33,496 34,259 Depreciation and amortization 9,166 10,900 31,665 33,294 Other regulatory charges (credits) - net 12,290 24,912 (5,681) 2,883 Amortization of rate deferrals - 34,990 - 104,969 -------- -------- -------- -------- TOTAL 224,641 270,756 568,870 673,578 -------- -------- -------- -------- OPERATING INCOME 42,518 54,028 75,369 125,131 -------- -------- -------- -------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 325 17 693 17 Gain (loss) on sale of assets 1 (1) - 1,023 Miscellaneous - net 1,723 971 5,215 3,002 -------- -------- -------- -------- TOTAL 2,049 987 5,908 4,042 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 8,113 9,153 27,135 28,614 Other interest - net 849 577 2,294 2,737 Allowance for borrowed funds used during construction (330) (287) (1,026) (420) -------- -------- -------- -------- TOTAL 8,632 9,443 28,403 30,931 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 35,935 45,572 52,874 98,242 Income taxes 12,724 16,252 18,425 34,215 -------- -------- -------- -------- NET INCOME 23,211 29,320 34,449 64,027 Preferred dividend requirements and other 842 842 2,527 2,527 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $22,369 $28,478 $31,922 $61,500 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $34,449 $64,027 Noncash items included in net income: Amortization of rate deferrals - 104,969 Other regulatory charges (credits) (5,681) 2,883 Depreciation and amortization 31,665 33,294 Deferred income taxes and investment tax credits 15,432 (35,447) Allowance for equity funds used during construction (693) (17) Gain on sale of assets - (1,023) Changes in working capital: Receivables 10,702 (50,374) Fuel inventory (1,942) 809 Accounts payable 31,504 (32,907) Taxes accrued 51,337 43,546 Interest accrued (1,351) (1,212) Deferred fuel costs (37,805) 678 Other working capital accounts 10,428 (8,348) Provision for estimated losses and reserves 2,033 (5,499) Changes in other regulatory assets (39,284) (28,143) Other 2,526 16,892 -------- -------- Net cash flow provided by operating activities 103,320 104,128 -------- -------- INVESTING ACTIVITIES Construction expenditures (59,151) (31,391) Allowance for equity funds used during construction 693 17 -------- -------- Net cash flow used in investing activities (58,458) (31,374) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: G&R mortgage bonds 124,192 78,703 Other long-term debt 29,491 - Retirement of: G&R mortgage bonds (132,413) (80,000) Other long-term debt (30,865) (20) Dividends paid: Common stock (28,700) (66,000) Preferred stock (2,521) (2,527) -------- -------- Net cash flow used in financing activities (40,816) (69,844) -------- -------- Net increase in cash and cash equivalents 4,046 2,910 Cash and cash equivalents at beginning of period 2,640 6,816 -------- -------- Cash and cash equivalents at end of period $6,686 $9,726 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $29,386 $31,585 Income taxes ($53,785) $18,926 See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS ASSETS September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $6,686 $2,640 Accounts receivable: Customer 48,245 39,701 Allowance for doubtful accounts (1,217) (1,217) Associated companies 3,004 5,703 Other 623 1,267 Accrued unbilled revenues 30,000 45,904 ---------- ---------- Total receivables 80,655 91,358 ---------- ---------- Deferred fuel costs 39,913 2,108 Accumulated deferred income taxes 4,759 665 Fuel inventory - at average cost 4,945 3,002 Materials and supplies - at average cost 16,533 17,149 Prepayments and other 6,336 12,256 ---------- ---------- TOTAL 159,827 129,178 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 5,531 5,531 Non-utility property - at cost (less accumulated depreciation) 6,997 7,056 Other - at cost (less accumulated depreciation) - 13 ---------- ---------- TOTAL 12,528 12,600 ---------- ---------- UTILITY PLANT Electric 1,766,552 1,718,426 Property under capital lease 407 477 Construction work in progress 40,036 35,317 ---------- ---------- TOTAL UTILITY PLANT 1,806,995 1,754,220 Less - accumulated depreciation and amortization (710,426) (685,214) ---------- ---------- UTILITY PLANT - NET 1,096,569 1,069,006 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 25,201 25,515 Unamortized loss on reacquired debt 16,677 7,981 Other regulatory assets 140,199 100,601 Other 6,927 6,048 ---------- ---------- TOTAL 189,004 140,145 ---------- ---------- TOTAL ASSETS $1,457,928 $1,350,929 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $- $20 Accounts payable: Associated companies 48,209 44,091 Other 45,830 18,444 Customer deposits 22,206 18,265 Taxes accrued 57,350 6,013 Interest accrued 13,281 14,632 Obligations under capital leases 93 92 Other 2,278 2,319 ---------- ---------- TOTAL 189,247 103,876 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 301,488 281,017 Accumulated deferred investment tax credits 21,283 22,408 Obligations under capital leases 314 384 Accumulated provisions 5,233 3,200 Other 634 4,331 ---------- ---------- TOTAL 328,952 311,340 ---------- ---------- Long-term debt 464,411 463,616 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 50,381 50,381 Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares in 1999 and 1998 199,326 199,326 Capital stock expense and other (59) (59) Retained earnings 225,670 222,449 ---------- ---------- TOTAL 475,318 472,097 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,457,928 $1,350,929 ========== ========== See Notes To Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 114.1 $ 139.2 ($25.1) (18) Commercial 75.3 89.5 (14.2) (16) Industrial 39.4 46.0 (6.6) (14) Governmental 6.3 7.7 (1.4) (18) ------------------------------- Total retail 235.1 282.4 (47.3) (17) Sales for resale Associated companies 23.4 29.3 (5.9) (20) Non-associated companies 11.9 10.4 1.5 14 Other (3.2) 2.7 (5.9) (219) ------------------------------- Total $ 267.2 $ 324.8 ($57.6) (18) =============================== Billed Electric Energy Sales (GWH): Residential 1,745 1,750 (5) - Commercial 1,290 1,247 43 3 Industrial 853 830 23 3 Governmental 103 101 2 2 ------------------------------- Total retail 3,991 3,928 63 2 Sales for resale Associated companies 362 903 (541) (60) Non-associated companies 140 162 (22) (14) ------------------------------- Total 4,493 4,993 (500) (10) =============================== Nine Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 246.5 $ 297.1 ($50.6) (17) Commercial 190.5 221.9 (31.4) (14) Industrial 112.3 130.9 (18.6) (14) Governmental 17.9 21.0 (3.1) (15) ------------------------------- Total retail 567.2 670.9 (103.7) (15) Sales for resale Associated companies 53.6 71.2 (17.6) (25) Non-associated companies 25.2 25.7 (0.5) (2) Other (1.8) 30.9 (32.7) (106) ------------------------------- Total $ 644.2 $ 798.7 ($154.5) (19) =============================== Billed Electric Energy Sales (GWH): Residential 3,777 3,759 18 - Commercial 3,165 3,021 144 5 Industrial 2,394 2,359 35 1 Governmental 274 260 14 5 ------------------------------- Total retail 9,610 9,399 211 2 Sales for resale Associated companies 1,527 2,137 (610) (29) Non-associated companies 342 373 (31) (8) ------------------------------- Total 11,479 11,909 (430) (4) ===============================
ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended September 30, 1999 compared to the three months ended September 30, 1998 primarily due to an increase in unbilled revenues. Net income increased for the nine months ended September 30, 1999 compared to the nine months ended September 30, 1998 primarily due to increases in unbilled revenues and sales volume, partially offset by an increase in other operation and maintenance expenses. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the three and nine months ended September 30, 1999 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($1.8) ($5.7) Fuel cost recovery (5.6) (14.9) Sales volume/weather (1.7) 3.4 Other revenue (including unbilled) 0.8 5.2 Sales for resale 4.4 5.1 ----- ----- Total ($3.9) ($6.9) ===== ===== Base revenues Base revenues decreased for the three and nine months ended September 30, 1999 primarily due to changes in pricing in the commercial sector and a scheduled rate change in the amortization of Grand Gulf 1 phase-in expenses. Fuel cost recovery revenues Fuel cost recovery revenues do not affect net income because they are an addition to revenues that is offset by specific incurred fuel costs. Fuel cost recovery revenues decreased for the three and nine months ended September 30, 1999 primarily due to an under-recovery of deferred fuel expenses resulting from increased fuel and purchased power costs in July and August 1999 compared to the comparable periods in the prior year. Sales volume/weather Sales volume/weather increased for the nine months ended September 30, 1999 primarily due to an increase in the number of customers especially in the higher margin residential and commercial sectors. ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other revenue Other revenue increased for the nine months ended September 30, 1999 primarily due to a change in estimated unbilled revenues. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. The increase was partially offset by less favorable weather in 1999. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Sales for resale Sales for resale increased for the three and nine months ended September 30, 1999 primarily due to favorable unit prices resulting from increased purchased power and gas market prices, coupled with an increase in affiliated sales volume. Gas Operating Revenues Gas operating revenues decreased for the nine months ended September 30, 1999 due to decreased usage primarily in the residential sector. Expenses Fuel and purchased power Net fuel and purchased power expenses decreased for the nine months ended September 30, 1999 primarily due to an under-recovery of deferred fuel expenses resulting from increased fuel and purchased power costs in July and August 1999 compared to the comparable periods in the prior year. Other operation and maintenance Other operation and maintenance increased for the nine months ended September 30, 1999 due to: o increases in spending for customer service and reliability improvements; o increases in environmental provisions; and o adjustments to compensation and accruals. Other regulatory charges (credits) Other regulatory credits increased for the three months ended September 30, 1999 primarily due to an under-recovery of Grand Gulf 1 related costs in 1999 versus an over-recovery in 1998. Other regulatory credits increased for the nine months ended September 30, 1999 primarily due to a greater under-recovery of Grand Gulf 1 costs in 1999. Amortization of rate deferrals Amortization of rate deferrals decreased for the three and nine months ended September 30, 1999 primarily due to a scheduled rate change in the amortization of Grand Gulf 1 phase-in expenses. ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other Income taxes For the three months ended September 30, 1999 and 1998, the effective income tax rates remained relatively unchanged at 39.1% and 39.5%, respectively. For the nine months ended September 30, 1999 and 1998, the effective income tax rates were 39.9% and 41.5%, respectively. The decrease in tax rates for the nine months ended September 30, 1999 was primarily due to the increase in pretax income reducing the impact of permanent differences and flow through items.
ENTERGY NEW ORLEANS, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Nine Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $149,320 $153,215 $333,765 $340,672 Natural gas 13,821 12,593 56,718 63,905 -------- -------- -------- -------- TOTAL 163,141 165,808 390,483 404,577 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 36,179 47,512 87,255 103,196 Purchased power 54,877 44,058 132,793 130,886 Other operation and maintenance 19,956 20,677 60,227 57,762 Taxes other than income taxes 11,540 12,102 29,677 30,827 Depreciation and amortization 4,867 5,225 15,795 16,304 Other regulatory charges (credits) - net (2,221) 4,019 (8,831) (824) Amortization of rate deferrals 9,321 12,005 22,107 28,857 -------- -------- -------- -------- TOTAL 134,519 145,598 339,023 367,008 -------- -------- -------- -------- OPERATING INCOME 28,622 20,210 51,460 37,569 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 236 125 659 214 Gain on sale of assets - - - 458 Miscellaneous - net 213 377 1,185 41 -------- -------- -------- -------- TOTAL 449 502 1,844 713 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 3,319 3,547 9,958 10,406 Other interest - net 334 295 988 772 Allowance for borrowed funds used during construction (170) (97) (481) (165) -------- -------- -------- -------- TOTAL 3,483 3,745 10,465 11,013 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 25,588 16,967 42,839 27,269 Income taxes 10,006 6,710 17,098 11,336 -------- -------- -------- -------- NET INCOME 15,582 10,257 25,741 15,933 Preferred dividend requirements and other 241 241 724 724 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $15,341 $10,016 $25,017 $15,209 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $25,741 $15,933 Noncash items included in net income: Amortization of rate deferrals 22,107 28,857 Other regulatory credits (8,831) (824) Depreciation and amortization 15,795 16,304 Deferred income taxes and investment tax credits 2,094 (12,696) Allowance for equity funds used during construction (659) (214) Gain on sale of assets - (458) Changes in working capital: Receivables (22,069) (26,249) Fuel inventory 1,194 2,611 Accounts payable 15,739 2,161 Taxes accrued 19,112 19,639 Interest accrued (2,894) (3,055) Deferred fuel costs (17,573) 4,925 Other working capital accounts 1,586 (2,083) Provision for estimated losses and reserves (1,678) (312) Changes in other regulatory assets (9,679) (4,373) Other 7,265 (6,836) -------- -------- Net cash flow provided by operating activities 47,250 33,330 -------- -------- INVESTING ACTIVITIES Construction expenditures (34,823) (12,073) Allowance for equity funds used during construction 659 214 -------- -------- Net cash flow used in investing activities (34,164) (11,859) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: First mortgage bonds - 29,438 Retirement of: G&R mortgage bonds - (30,000) Dividends paid: Common stock (24,400) (9,700) Preferred stock (724) (724) -------- -------- Net cash flow used in financing activities (25,124) (10,986) -------- -------- Net increase (decrease) in cash and cash equivalents (12,038) 10,485 Cash and cash equivalents at beginning of period 17,153 9,458 -------- -------- Cash and cash equivalents at end of period $5,115 $19,943 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $13,569 $13,992 Income taxes ($6,301) $5,462 See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS ASSETS September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $5,115 $3,769 Temporary cash investments - at cost, which approximates market - 13,384 -------- -------- Total cash and cash equivalents 5,115 17,153 -------- -------- Accounts receivable: Customer 40,947 24,355 Allowance for doubtful accounts (761) (761) Associated companies 682 3,320 Other 4,086 3,835 Accrued unbilled revenues 24,118 16,254 -------- -------- Total receivables 69,072 47,003 -------- -------- Deferred fuel costs 18,763 1,191 Fuel inventory - at average cost 2,278 3,472 Materials and supplies - at average cost 9,498 8,845 Rate deferrals 27,894 28,430 Prepayments and other 4,884 6,686 -------- -------- TOTAL 137,504 112,780 -------- -------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 3,259 3,259 -------- -------- UTILITY PLANT Electric 543,967 514,685 Natural gas 135,166 132,568 Construction work in progress 21,462 20,184 -------- -------- TOTAL UTILITY PLANT 700,595 667,437 Less - accumulated depreciation and amortization (384,907) (371,558) -------- -------- UTILITY PLANT - NET 315,688 295,879 -------- -------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 14,191 35,762 Unamortized loss on reacquired debt 1,240 1,399 Other regulatory assets 31,237 21,558 Other 1,284 1,267 -------- -------- TOTAL 47,952 59,986 -------- -------- TOTAL ASSETS $504,403 $471,904 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT LIABILITIES Accounts payable: Associated companies $20,338 $18,283 Other 24,693 11,008 Customer deposits 17,526 18,083 Taxes accrued 19,112 - Accumulated deferred income taxes 12,357 6,284 Interest accrued 2,024 4,919 Other 2,776 1,782 -------- -------- TOTAL 98,826 60,359 -------- -------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 50,992 57,214 Accumulated deferred investment tax credits 6,506 6,894 SFAS 109 regulatory liability - net 3,667 942 Other regulatory liabilities 2,063 3,146 Accumulated provisions 7,689 9,367 Other 8,128 8,116 -------- -------- TOTAL 79,045 85,679 -------- -------- Long-term debt 169,067 169,018 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 19,780 19,780 Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares in 1999 and 1998 33,744 33,744 Paid-in capital 36,294 36,294 Retained earnings 67,647 67,030 -------- -------- TOTAL 157,465 156,848 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $504,403 $471,904 ======== ======== See Notes To Financial Statements.
ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 65.0 $ 70.4 ($5.4) (8) Commercial 45.2 47.8 (2.6) (5) Industrial 7.8 8.1 (0.3) (4) Governmental 19.7 20.5 (0.8) (4) -------------------------------- Total retail 137.7 146.8 (9.1) (6) Sales for resale Associated companies 5.3 1.6 3.7 231 Non-associated companies 3.9 3.2 0.7 22 Other 2.4 1.6 0.8 50 -------------------------------- Total $149.3 $153.2 ($3.9) (3) ================================ Billed Electric Energy Sales (GWH): Residential 809 844 (35) (4) Commercial 649 648 1 - Industrial 144 144 - - Governmental 312 311 1 - -------------------------------- Total retail 1,914 1,947 (33) (2) Sales for resale Associated companies 83 42 41 98 Non-associated companies 41 50 (9) (18) -------------------------------- Total 2,038 2,039 (1) - ================================ Nine Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 124.0 $ 131.3 ($7.3) (6) Commercial 109.3 114.5 (5.2) (5) Industrial 18.6 20.4 (1.8) (9) Governmental 46.3 47.4 (1.1) (2) --------------------------------- Total retail 298.2 313.6 (15.4) (5) Sales for resale Associated companies 12.0 6.8 5.2 76 Non-associated companies 8.4 8.5 (0.1) (1) Other 15.2 11.8 3.4 29 --------------------------------- Total $ 333.8 $ 340.7 ($6.9) (2) ================================= Billed Electric Energy Sales (GWH): Residential 1,675 1,680 (5) - Commercial 1,695 1,628 67 4 Industrial 386 395 (9) (2) Governmental 811 780 31 4 --------------------------------- Total retail 4,567 4,483 84 2 Sales for resale Associated companies 371 222 149 67 Non-associated companies 137 145 (8) (6) --------------------------------- Total 5,075 4,850 225 5 =================================
SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three and nine months ended September 30, 1999 primarily as a result of the additional reserves and interest recorded for the potential refund of System Energy's proposed rate increase. Revenues Operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt. Operating revenues increased for the three and nine months ended September 30, 1999 due to the implementation of the Grand Gulf Accelerated Recovery Tariff (GGART) at Entergy Arkansas and Entergy Mississippi. The tariff was designed to allow Entergy Arkansas and Entergy Mississippi to pay down a portion of their Grand Gulf purchased power obligation in advance of the implementation of retail access. It became effective on January 1, 1999 and October 1, 1998 for Entergy Arkansas and Entergy Mississippi, respectively. The GGART is discussed in Note 2 to the financial statements in the Form 10-K. System Energy's proposed rate increase, which is subject to refund, is discussed in Note 2 to the financial statements. Expenses Fuel expenses Fuel expenses increased for the nine months ended September 30, 1999 as a result of greater nuclear fuel generation in 1999 due to a scheduled nuclear refueling outage in April and May 1998. Depreciation Depreciation expenses decreased for the three and nine months ended September 30, 1999 due to lower depreciation associated with the sale and leaseback of a portion of Grand Gulf 1, as compared to the same period in 1998. Other regulatory charges The increase in other regulatory charges for the three and nine months ended September 30, 1999 reflects the implementation of the GGART at Entergy Arkansas and Entergy Mississippi, as discussed above. The GGART does not affect net income because it is an addition to revenues that is offset by specific incurred expenses. Other Other income Other income increased for the three and nine months ended September 30, 1999 due to additional interest income earned on larger short-term investments. SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Interest charges Other interest increased for the three and nine months ended September 30, 1999 due to interest on the potential refund of System Energy's proposed rate increase. Interest on long-term debt decreased for the nine months ended September 30, 1999 as a result of the refinancing and redemption of pollution control revenue bonds in 1998 and 1999, and the redemption of first mortgage bonds in 1999. Income taxes The effective income tax rates remained relatively unchanged for the three months ended September 30, 1999 and 1998 at 45.5% and 45.1%, respectively. The effective tax rates for the nine months ended September 30, 1999 and 1998 were 42.0% and 45.2%, respectively. The decrease in 1999 was primarily due to lower income and the amortization of investment tax credits related to Grand Gulf Unit 2.
SYSTEM ENERGY RESOURCES, INC. INCOME STATEMENTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited) Three Months Ended Nine Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $163,801 $152,083 $463,923 $445,025 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 11,659 12,278 32,453 29,308 Nuclear refueling outage expenses 3,505 3,479 10,516 12,255 Other operation and maintenance 23,822 22,513 64,814 66,285 Decommissioning 4,736 4,736 14,208 14,208 Taxes other than income taxes 6,721 6,564 20,240 20,202 Depreciation and amortization 28,212 33,741 84,631 89,859 Other regulatory charges - net 13,945 - 43,330 - -------- -------- -------- -------- TOTAL 92,600 83,311 270,192 232,117 -------- -------- -------- -------- OPERATING INCOME 71,201 68,772 193,731 212,908 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 489 609 1,802 1,690 Miscellaneous - net 4,244 3,058 12,448 8,670 -------- -------- -------- -------- TOTAL 4,733 3,667 14,250 10,360 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 26,028 25,617 77,127 84,068 Other interest - net 6,139 1,560 38,781 4,827 Allowance for borrowed funds used during construction (352) (542) (1,369) (1,487) -------- -------- -------- -------- TOTAL 31,815 26,635 114,539 87,408 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 44,119 45,804 93,442 135,860 Income taxes 20,076 20,665 39,217 61,355 -------- -------- -------- -------- NET INCOME $24,043 $25,139 $54,225 $74,505 ======== ======== ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $54,225 $74,505 Noncash items included in net income: Reserve for regulatory adjustments 94,745 51,924 Other regulatory charges 43,330 - Depreciation, amortization, and decommissioning 98,839 104,067 Deferred income taxes and investment tax credits (78,247) (28,736) Allowance for equity funds used during construction (1,802) (1,690) Changes in working capital: Receivables (100,766) 10,478 Accounts payable 14,489 (4,319) Taxes accrued (14,181) 21,590 Interest accrued (13,355) (10,830) Other working capital accounts 7,377 (6,604) Decommissioning trust contributions and realized change in trust assets (16,286) (18,053) Provision for estimated losses and reserves (268) (421) Changes in other regulatory assets 22,419 14,531 Other (592) (12,325) -------- -------- Net cash flow provided by operating activities 109,927 194,117 -------- -------- INVESTING ACTIVITIES Construction expenditures (16,441) (20,004) Allowance for equity funds used during construction 1,802 1,690 Nuclear fuel purchases (22,148) (30,523) Proceeds from sale/leaseback of nuclear fuel 22,148 30,523 -------- -------- Net cash flow used in investing activities (14,639) (18,314) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Other long-term debt 101,856 - Retirement of: First mortgage bonds (160,000) (70,000) Other long-term debt (122,885) (7,861) Dividends paid: Common stock (46,200) (72,300) -------- -------- Net cash flow used in financing activities (227,229) (150,161) -------- -------- Net increase (decrease) in cash and cash equivalents (131,941) 25,642 Cash and cash equivalents at beginning of period 236,841 150,519 -------- -------- Cash and cash equivalents at end of period $104,900 $176,161 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $123,049 $93,613 Income taxes $118,471 $63,664 Noncash investing and financing activities: Change in unrealized appreciation/(depreciation) of decommissioning trust assets ($1,012) $314 See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEET ASSETS September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $137 $120 Temporary cash investments - at cost, which approximates market 104,763 236,721 ---------- ---------- Total cash and cash equivalents 104,900 236,841 ---------- ---------- Accounts receivable: Associated companies 216,592 125,171 Other 13,776 4,431 ---------- ---------- Total receivables 230,368 129,602 ---------- ---------- Materials and supplies - at average cost 63,225 62,203 Deferred nuclear refueling outage costs 3,647 12,853 Prepayments and other 3,421 2,592 ---------- ---------- TOTAL 405,561 444,091 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 128,556 113,282 ---------- ---------- UTILITY PLANT Electric 3,052,649 3,030,636 Property under capital lease 441,614 441,098 Construction work in progress 46,937 57,076 Nuclear fuel under capital lease 71,482 64,621 ---------- ---------- TOTAL UTILITY PLANT 3,612,682 3,593,431 Less - accumulated depreciation and amortization (1,280,690) (1,198,266) ---------- ---------- UTILITY PLANT - NET 2,331,992 2,395,165 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 201,336 221,996 Unamortized loss on reacquired debt 58,285 57,150 Other regulatory assets 186,497 188,256 Other 11,353 11,265 ---------- ---------- TOTAL 457,471 478,667 ---------- ---------- TOTAL ASSETS $3,323,580 $3,431,205 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEET LIABILITIES AND SHAREHOLDERS' EQUITY September 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $47,947 $175,820 Accounts payable: Associated companies 36,049 25,975 Other 23,835 19,420 Taxes accrued 62,625 76,806 Accumulated deferred income taxes 1,420 5,022 Interest accrued 28,667 42,022 Obligations under capital leases 41,835 41,835 Other 1,565 1,543 ---------- ---------- TOTAL 243,943 388,443 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 434,598 506,727 Accumulated deferred investment tax credits 94,088 96,695 Obligations under capital leases 29,647 22,786 FERC settlement - refund obligation 38,861 43,159 Other regulatory liabilities 82,080 43,309 Decommissioning 123,651 107,365 Regulatory reserves 254,032 159,287 Accumulated provisions 1,704 1,971 Other 16,282 17,524 ---------- ---------- TOTAL 1,074,943 998,823 ---------- ---------- Long-term debt 1,112,560 1,159,830 SHAREHOLDERS' EQUITY Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 1999 in 1998 789,350 789,350 Retained earnings 102,784 94,759 ---------- ---------- TOTAL 892,134 884,109 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,323,580 $3,431,205 ========== ========== See Notes To Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES 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 actions filed by Entergy Gulf States in the U.S. Bankruptcy Court in which the Cajun bankruptcy case is pending. In October 1999, the bankruptcy court entered an order, pursuant to a settlement agreement among the parties, that confirmed a plan of reorganization in the bankruptcy case. The settlement agreement and plan of reorganization effectively release Entergy Gulf States from any claims asserted by the coal suppliers and transporters for Big Cajun II. The appeals between Entergy and the coal suppliers and transporters will be dismissed upon the effective date of the plan of reorganization. Capital Requirements and Financing (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 Entergy's estimated construction expenditures (excluding nuclear fuel) for the years 1999, 2000, and 2001 and long-term debt and preferred stock maturities and cash sinking fund requirements for the period 1999-2001. In October 1999, Entergy's global power development business obtained an option to acquire from GE Power Systems twenty-four GE7FA advanced technology gas turbines and four steam turbines for $1.9 billion and eight GE7EA advanced technology gas turbines for $160 million for delivery from 2001 through 2004. The acquisitions will include long-term service agreements. Management anticipates that the acquisition of these turbines will be funded by a combination of cash on hand, project financing, and other external financing. Payments scheduled for these acquisitions include $53 million in the fourth quarter 1999 and $269 million in 2000. Sales Warranties and Indemnities (Entergy Corporation) See Note 9 in the Form 10-K for information on certain warranties made by Entergy or its subsidiaries in the Entergy London and CitiPower sales transactions. Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 9 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. In July 1999, Entergy's non-utility nuclear power business purchased the 670 MW Pilgrim Nuclear Station (Pilgrim) including the plant, real estate, materials and supplies, and nuclear fuel from Boston Edison (BECO) for a purchase price of $81 million. As part of the Pilgrim purchase, BECO funded a $471 million decommissioning trust fund, which was transferred to an Entergy subsidiary. After a favorable tax determination regarding the trust fund, Entergy has agreed to return $43 million of the trust fund to BECO subsequent to September 30, 1999. Based on Entergy's estimate the trust fund is adequate to cover future decommissioning costs for the Pilgrim plant. As discussed in the Form 10-K, the Price-Anderson Act assessment exposure for Pilgrim is $88.1 million per nuclear incident. With the addition of Pilgrim, the private insurance program providing coverage for worker tort claims discussed in the Form 10-K provides for a maximum assessment of approximately $18.6 million for Entergy's six nuclear units. Pilgrim is insured for $1.115 billion in property damages under the insurance programs discussed in the Form 10-K. Pilgrim's assessment maximum under the property damage and replacement power/business interruption insurance programs discussed in the Form 10-K is $7.3 million. The spent fuel storage facility at Pilgrim is expected to provide storage capacity until approximately 2003. Entergy plans to modify the facility to provide sufficient spent fuel storage capacity through approximately 2012. ANO Matters (Entergy Corporation and Entergy Arkansas) See Note 9 to the financial statements in the Form 10-K for information on cracks in a number of steam generator tubes at ANO 2 that were discovered and repaired during an outage in March 1992, and the replacement of the steam generators scheduled in 2000. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent outage in February 1999. Environmental Issues (Entergy Gulf States) Entergy Gulf States has been designated as a potentially responsible party (PRP) for the cleanup 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, 1999, a remaining recorded liability of approximately $19.8 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 Entergy Gulf States environmental clean-up activity and related litigation. (Entergy Louisiana and Entergy New Orleans) During 1993, the Louisiana Department of Environmental Quality (LDEQ) issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana and Entergy New Orleans have determined that certain of their power plant wastewater impoundments were affected by these regulations and chose to upgrade or close them. As a result, a remaining recorded liability in the amount of $5.8 million and $0.5 million existed at September 30, 1999 for wastewater upgrades and closures for Entergy Louisiana and Entergy New Orleans, respectively. 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. Entergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from these lease transactions. Additionally, Entergy Louisiana may be required to assume the outstanding bonds issued by the Owner Trustee under these leases to finance, in part, its acquisition of the undivided interests in Waterford 3. See Note 10 to the Form 10-K for further information. Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are defendants in numerous lawsuits filed by former employees asserting that they were wrongfully terminated and/or discriminated against due to age, race, and/or sex. Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are vigorously defending these suits and deny any liability to the plaintiffs. However, no assurance can be given as to the outcome of these cases. Reimbursement Agreement (System Energy) Under a bank letter of credit and reimbursement agreement, System Energy has agreed to a number of covenants relating to the maintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the agreement, to maintain its equity at not less than 33% of its adjusted capitalization (defined in the agreement to include certain amounts not included in capitalization for financial statement purposes). In addition, System Energy must maintain, with respect to each fiscal quarter during the term of the agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the agreement) of at least 1.60 times earnings. System Energy was in compliance with the above covenants at September 30, 1999. See Note 9 to the Form 10-K for further information. Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) In addition to those discussed above, Entergy and the domestic utility companies are involved in a number of legal proceedings and claims in the ordinary course of their business. While management is unable to predict the outcome of such litigation, it is not expected that the ultimate resolution of these matters will have a material adverse effect on results of operations, cash flows, or financial condition of these entities. NOTE 2. RATE AND REGULATORY MATTERS Retail Rate Proceedings Filings with the APSC (Entergy Corporation and Entergy Arkansas) Entergy Arkansas' rate schedules include an Energy Cost Recovery Rider, which is designed to permit recovery of the costs of fuel and purchased energy costs. The rider utilizes projected energy costs for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over-recovery or under-recovery of the energy cost for the prior calendar year. In March 1999, Entergy Arkansas filed its annually redetermined energy cost rate with the APSC in accordance with the Energy Cost Recovery Rider formula and special circumstance agreement. The filing reflected that an increase was warranted to offset an under-recovery of the energy costs for 1998. The increased energy cost rate is effective April 1999 through March 2000. 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 transition cost account reserve recorded for Entergy Arkansas in 1998 was adjusted in June 1999 as a result of the final 1998 APSC order on the transition cost account for a negative net income impact of $.9 million. The results of operations reflect these charges in operating expenses. As of September 30, 1999, the transition cost account balance was $95.9 million. Filings with the PUCT (Entergy Corporation and Entergy Gulf States) Previous developments and information related to Entergy Gulf States' retail rate proceedings are presented in Note 2 to the Form 10-K. In June 1999, the PUCT issued its final order approving the settlement agreement that Entergy Gulf States had entered into in February 1999. On July 20, 1999, intervenor Office of Public Utility Counsel (OPC) filed a motion for rehearing, addressing limited portions of the discussion included in the final order. On August 5, 1999, the PUCT voted not to hear the OPC's motion for rehearing. The OPC then filed a notice to withdraw from the settlement alleging that the PUCT order was not materially consistent with the settlement agreement and that its withdrawal rendered the agreement null and void. The PUCT considered the matter in mid-August and upheld its order. The OPC has filed an appeal of this decision at Travis County District Court. Entergy Gulf States cannot predict the impact of OPC's appeal. The settlement agreement resolves the pending appeal of Entergy Gulf States' 1996 rate proceedings as well as its 1998 rate proceedings and all of the settling parties' pending appeals in other matters, except for the appeal in the River Bend abeyed cost recovery proceeding. The settlement agreement provides for the following: o an annual $4.2 million base rate reduction, effective March 1, 1999, which is in addition to the annual $69 million base rate reduction (net of River Bend accounting order deferrals) in the PUCT's second order on rehearing in October 1998; o a methodology for semi-annual revisions of the fixed fuel factor based on the market price of natural gas; o a base rate freeze through June 1, 2000. In accordance with the Texas restructuring law, the base rate freeze extends through December 2001; o amortization of the remaining River Bend accounting order deferrals as of January 1, 1999, over three years on a straight-line basis, provided that such accounting order deferrals shall not be recognized in any subsequent base rate case or stranded cost calculation; o the dismissal of all pending appeals of the settling parties relating to Entergy Gulf States' proceedings with the PUCT, except the River Bend appeal discussed in Note 2 to the Form 10-K; and o the potential recovery in the River Bend appeal is limited to $115 million net plant in service as of January 1, 2002, less depreciation over the remaining life of the plant beginning January 1, 2002 through the date the plant costs are included in rate base, provided that any such recovery shall not be used to increase rates above the level agreed to in the settlement agreement. As a result of the settlement agreement, in June 1999, Entergy Gulf States o removed from its balance sheet a $207.3 million deferred asset and the associated provision recorded for unrecovered purchased power costs and deferred revenue from Nelson Industrial Steam Company, which had no net income impact on Entergy Gulf States; o removed the reserve for River Bend plant costs held in abeyance and reduced the plant asset, resulting in other income of $4.8 million; and o removed the $93.9 million reserve for the amortization of River Bend accounting order deferrals to reflect the three year amortization schedule detailed in the agreement. The income impact of this removal was largely offset by an increase in the rate of amortization of the accounting order deferrals. In December 1998, the PUCT issued an order approving the implementation of a revised fixed fuel factor and fuel and purchased power surcharge that would result in increased recovery of $112.1 million of under-recovered fuel costs, inclusive of interest, over a 24-month period. These increases were implemented in the first billing cycle in February 1999. In March 1999, North Star Steel Texas, Inc. and certain cities served by Entergy Gulf States appealed the PUCT's order to the State District Court in Travis County, Texas. In September 1999, in accordance with the settlement agreement, the cities dismissed their appeal. Entergy Gulf States cannot predict the outcome of the appeal of North Star Steel Texas, Inc. Based on the settlement agreement approved in June 1999 discussed above, Entergy Gulf States has adopted a methodology for calculating its fixed fuel factor based on the market price of natural gas. This calculation and any necessary adjustments to the fuel factor will be made semi-annually beginning March 1, 1999. The calculation for March 1, 1999 showed that the fuel factor adopted in the December 1998 PUCT order discussed above should be reduced. This fuel factor reduction was approved by the PUCT in February 1999. The calculation for September 1, 1999 showed an increase to the March 1 fuel factor was required. The increased factor was put in place in September 1999 and approved by the PUCT in October 1999. The amounts collected under Entergy Gulf States' fixed fuel factor are and will continue to be the subject of fuel reconciliation proceedings before the PUCT, including a fuel reconciliation case filed by Entergy Gulf States in July 1999. In the proceeding the PUCT will consider the reasonableness of Entergy Gulf States' fuel and purchased power expenses incurred between July 1, 1996 and February 28, 1999 and Entergy Gulf States' request to implement a surcharge of under-recovered fuel expenses. Expenses incurred after February 28, 1999 will be addressed in future fuel reconciliation proceedings before the PUCT. Hearings on the fuel reconciliation proceeding filed in July 1999 are scheduled for December 1999. Management cannot predict the outcome of this or future fuel reconciliation proceedings. In September 1999, Entergy Gulf States filed an application with the PUCT requesting an interim fuel surcharge to collect under-recovered fuel and purchased power expenses from March 1999 through July 1999. The requested surcharge would collect $33.9 million over five months, beginning January 2000. Hearings were held in October 1999, and an order is expected from the PUCT in the fourth quarter of 1999. The fuel and purchased power expenses contained in this surcharge will be subject to future fuel reconciliation proceedings. Management cannot predict the outcome of the filing. In June 1999, the PUCT instituted a proceeding to consider the final adjustment of the rate refunds that were ordered in the PUCT's October 1998 second order on rehearing described in Note 2 to the Form 10-K. These refunds were required to occur over the fourteen-month period of August 1998 through September 1999. The PUCT issued an order on July 16, 1999 adopting a methodology which required Entergy Gulf States to refund an additional $25 million. This refund was recorded in the second quarter of 1999 and was reflected as a reduction in operating revenues. In September and October 1999, the City Councils of six Texas cities in Entergy Gulf States' service territory enacted ordinances which purport to require Entergy Gulf States to "book and hold in a suspense account all revenues from the sale of River Bend power attributable to the 30% share acquired from Cajun Electric Cooperative pending regulatory determination of the appropriate regulatory treatment of such power." The ordinances purport to be effective December 1997. Entergy Gulf States filed for a review of the ordinances at the PUCT in October 1999. Entergy Gulf States believes that the ordinances are beyond the cities' authority and contrary to the Texas Public Utility Regulatory Act. Management, however, cannot predict the outcome of its challenge to the validity of the ordinances. Filings with the LPSC (Entergy Corporation, Entergy Gulf States and Entergy Louisiana) In September 1996, the LPSC completed the second phase of its review of Entergy Gulf States' fuel costs, which covered the period October 1991 through December 1994. In October 1996, the LPSC issued an order requiring a $34.2 million refund. The refund includes a disallowance of $14.3 million of capital costs (including interest) related to certain gas transportation and storage facilities, which were recovered through the fuel clause, and which have been refunded pursuant to the October 1996 LPSC Settlement. Entergy Gulf States will be permitted to recover these costs in the future through base rates. Subsequently, Entergy Gulf States appealed and received an injunction to stay this order, except insofar as the order required the $14.3 million refund. In January 1999, the Louisiana Supreme Court affirmed the LPSC's October 1996 order. In accordance with this decision, Entergy Gulf States refunded $26.2 million, including interest, in August 1999. Management reserved for this refund in 1998 in connection with estimates of the probable outcome of this proceeding and the annual earnings reviews discussed in Note 2 to the financial statements in the Form 10-K. In the third quarter of 1999, Entergy Louisiana settled its third annual performance-based formula rate plan filing with the LPSC. The third annual performance-based formula rate plan filing is discussed in Note 2 to the financial statements in the Form 10-K. The settlement requires no further change in Entergy Louisiana's base rates. In April 1999, Entergy Louisiana submitted its fourth annual performance-based formula rate plan filing for the 1998 test year. The filing indicated that a $20.7 million base rate reduction might be appropriate. Based on Entergy Louisiana's filing and on subsequent comments filed by Entergy Louisiana, the LPSC staff, and other parties, Entergy Louisiana implemented an interim rate reduction of approximately $15.0 million, effective August 1, 1999. Entergy Louisiana's filing will be subject to further review by the LPSC, which may result in an additional change in rates. Hearings are scheduled to commence before the LPSC in May 2000. Also in April 1999, the Louisiana Supreme Court rendered a decision in the second post-Merger earnings review of Entergy Gulf States. Previous developments and information related to Entergy Gulf States' post-Merger earnings reviews are presented in Note 2 to the financial statements to the Form 10-K. In this most recent decision, the Louisiana Supreme Court decided in favor of Entergy Gulf States on two of the issues raised in its appeal, one of which will reduce the refund that Entergy Gulf States will be required to make from $9.6 million to $6.0 million. The case has been remanded to the LPSC and management is continuing to evaluate the implications of this decision. In May 1999, Entergy Gulf States filed its sixth required post-Merger earnings analysis with the LPSC. This filing will be subject to review by the LPSC, which may result in a change in rates. Hearings are scheduled for February 2000. Through September 1999, Entergy Gulf States has recorded an additional $22.1 million in reserves for management's updated estimates of the outcomes of the annual earnings reviews and fuel cost review in Louisiana. These reserves are primarily reflected as a reduction of Entergy Gulf States' operating revenues. In March 1999, the LPSC deferred making a decision on whether electric industry restructuring in Louisiana is in the public interest. Anticipating that retail competition will be in the public interest at some future date, the LPSC approved the development of a Louisiana specific plan for possible future implementation. The LPSC staff, outside consultants, and counsel were directed to work together to analyze and resolve outstanding issues and recommend a plan for the implementation of retail competition for consideration by the LPSC by January 1, 2001. Once the Louisiana specific plan is presented to the LPSC, and if it is determined that retail competition is in the public interest in Louisiana, it is anticipated that the LPSC staff, outside consultants, counsel, and industry members will work together to refine the submitted plan in order that it can be implemented at a future date. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) In March 1999, Entergy Mississippi submitted its annual performance- based formula rate plan filing for the 1998 test year. In April 1999, the MPSC issued an order approving a prospective rate reduction of $13.3 million. This rate reduction went into effect May 1, 1999. In June 1999, Entergy Mississippi revised its March 1999 filing to include a portion of refinanced long-term debt not included in the original filing. This revision resulted in an additional rate reduction of approximately $1.5 million, effective July 1999. Filings with the Council (Entergy Corporation and Entergy New Orleans) In April 1999, Entergy New Orleans filed, in compliance with directives of the Council, a plan that would allow for gas retail open access in New Orleans. The plan outlines the conditions under which Entergy New Orleans could support retail open access should the Council find it in the public interest. It is anticipated that a hearing process on the public interest issue will be completed by December 1999. Proposed Rate Increase (System Energy) As reported in the Form 10-K, System Energy filed an application with FERC in 1995 requesting a rate increase of $65.5 million. The rate increase was put into effect, subject to refund, in December 1995. After holding hearings in 1996, a FERC ALJ found that portions of System Energy's request should be rejected, including a proposed increase in return on common equity from 11% to 13% and a requested change in decommissioning cost methodology. The ALJ recommended a decrease in the return on common equity from 11% to 10.86%. Other portions of System Energy's request for a rate increase were approved by the ALJ. All of the ALJ's findings are advisory, and may be accepted, modified or rejected by FERC in a final order. No such order has been forthcoming. If the FERC were to approve the ALJ's findings, System Energy would be required to make a refund of money collected under its proposed tariff in the amount of $219.5 million as of September 30, 1999, together with interest in the amount of $34.5 million. As of September 30, 1999, System Energy has provided reserves for such refund and interest thereon in the aggregate amount of $254 million. It is not certain when FERC may issue a final order in this rate proceeding or whether FERC will accept, modify, or reject the ALJ's findings. Although management believes that the reserves discussed above are adequate to reflect the probable outcome of this proceeding, additional reserves or write-offs could be required in the future. NOTE 3. COMMON STOCK (Entergy Corporation) During the nine months ended September 30, 1999, Entergy Corporation repurchased 4,136,700 shares of common stock in the open market. These shares were purchased pursuant to Entergy's stock repurchase plan and also to fulfill the requirements of various compensation and benefit plans. Entergy Corporation issued 623,633 shares of its previously repurchased common stock to satisfy stock options exercised and employee stock purchases. In addition, Entergy Corporation received proceeds of $5.6 million from the issuance of 186,944 shares of common stock under its dividend reinvestment and stock purchase plan. NOTE 4. LONG-TERM DEBT (Entergy Gulf States) On September 29, 1999, in connection with two refunding agreements with Entergy Gulf States, the Parish of West Feliciana, State of Louisiana issued $62 million of Pollution Control Revenue Refunding Bonds (Series 1999-A), accruing interest at a rate of 5.65% per annum for the first five years, due 2028, and $40 million of 6.6% Pollution Control Revenue Refunding Bonds (Series 1999-B) due 2028. The proceeds from these issuances will be used to refund $102 million of 8.0% Pollution Control Revenue Refunding Bonds (Series 1994), due 2024, on December 1, 1999. (Entergy Louisiana) On October 7, 1999, in connection with a refunding agreement with Entergy Louisiana, the Parish of St. Charles, State of Louisiana issued $111 million of Pollution Control Revenue Refunding Bonds (Series 1999-C), accruing interest at a rate of 5.35% per annum for the first four years, due 2029. The proceeds from this issuance will be used to refund the following series: o $105 million of 8.0% Pollution Control Revenue Bonds (1984 Second Series, due 2014) on December 1, 1999; o $3.385 million of 6.40% Pollution Control Revenue Bonds (1977 Series, due 2007) on January 1, 2000; and o $2.565 million of 8.0% Pollution Control Revenue Bonds (1979 Series, due 2009) on January 1, 2000. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On October 29, 1999, the Board declared a common stock dividend of $.30 per share, payable on December 1, 1999, to holders of record on November 10, 1999. NOTE 6. BUSINESS SEGMENT INFORMATION (Entergy Corporation) See Note 14 to the financial statements in the Form 10-K for information regarding Entergy's adoption of SFAS 131 and its operating segments. Entergy's segment financial information for the three months ended September 30, 1999 and 1998 is as follows (in thousands):
Domestic Utility Power and System Marketing Entergy Energy and Trading* London* CitiPower* All Other* Eliminations Consolidated 1999 Operating Revenues $2,044,283 $988,550 $ - $ - $45,979 ($14,277) $3,064,535 ----------------------------------------------------------------------------------- Operating Expenses: Fuel & gas purch. for resale 438,591 145,140 - - 1,199 (719) 584,211 Purchased power 360,862 793,329 - - (5,406) (8,930) 1,139,855 Nuclear refueling outages 19,594 - - - - - 19,594 Other operation & maint. 334,484 21,658 - - 62,150 (5,071) 413,221 Deprec, amort. & decomm. 170,660 1,378 - - 1,150 - 173,188 Taxes other than income 88,610 104 - - 4,314 - 93,028 Other regulatory charges - net 29,003 - - - - - 29,003 Amort. of rate deferrals 10,722 - - - - - 10,722 ----------------------------------------------------------------------------------- Total oper. expenses 1,452,526 961,609 - - 63,407 (14,720) 2,462,822 ----------------------------------------------------------------------------------- Operating Income 591,757 26,941 - - (17,428) 443 601,713 Other Income (Deductions) 20,627 1,125 - - 13,732 (2,061) 33,423 Interest Charges 126,091 1,276 - - 2,432 (1,618) 128,181 ----------------------------------------------------------------------------------- Income Before Income Taxes 486,293 26,790 - - (6,128) - 506,955 Income Taxes 193,996 9,504 - - 7,297 - 210,797 ----------------------------------------------------------------------------------- Net Income (Loss) $292,297 $17,286 $ - $ - ($13,425) $ - $296,158 =================================================================================== 1998 Operating Revenues $2,068,692 $1,969,342 $464,760 $73,042 $28,077 ($16,466) $4,587,447 ----------------------------------------------------------------------------------- Operating Expenses: Fuel & gas purch. for resale 503,157 81,743 - - (3,419) (1,520) 579,961 Purchased power 186,950 1,945,139 277,581 23,713 (562) (8,863) 2,423,958 Nuclear refueling outages 20,445 - - - - - 20,445 Other operation & maint. 319,324 16,825 57,959 16,779 77,770 (6,528) 482,129 Deprec, amort. & decomm. 189,873 1,255 34,221 6,721 24,305 - 256,375 Taxes other than income 90,606 185 - (151) 393 - 91,033 Other regulatory charges - net 71,542 - - - - - 71,542 Amort. of rate deferrals 71,331 - - - - - 71,331 ----------------------------------------------------------------------------------- Total oper. expenses 1,453,228 2,045,147 369,761 47,062 98,487 (16,911) 3,996,774 ----------------------------------------------------------------------------------- Operating Income 615,464 (75,805) 94,999 25,980 (70,410) 445 590,673 Other Income (Deductions) 15,765 2,103 7,414 (22) (70,430) (733) (45,903) Interest Charges 129,940 57 50,448 13,076 11,101 (288) 204,334 ----------------------------------------------------------------------------------- Income Before Income Taxes 501,289 (73,759) 51,965 12,882 (151,941) - 340,436 Income Taxes 202,658 (27,974) (15,638) 2,232 (83,439) - 77,839 ----------------------------------------------------------------------------------- Net Income (Loss) $298,631 ($45,785) $67,603 $10,650 ($68,502) $ - $262,597 ===================================================================================
Entergy's segment financial information for the nine months ended September 30, 1999 and 1998 is as follows: Domestic Utility and Power System Marketing Entergy Energy and Trading* London* CitiPower* All Other* Eliminations Consolidated 1999 Operating Revenues $4,977,012 $2,002,146 $ - $ - $67,582 ($25,879) $7,020,861 ----------------------------------------------------------------------------------------- Operating Expenses: Fuel & gas purch. for resale 1,174,769 305,146 - - (1,141) (719) 1,478,055 Purchased power 576,590 1,635,685 - - (5,801) (15,993) 2,190,481 Nuclear refueling outages 56,414 - - - - - 56,414 Other operation & maint. 986,124 53,442 - - 152,760 (10,767) 1,181,559 Deprec, amort. & decomm. 548,332 3,707 - - 6,130 - 558,169 Taxes other than income 253,003 502 - - 5,644 - 259,149 Other regulatory charges - net 10,033 - - - - - 10,033 Amort. of rate deferrals 107,902 - - - - - 107,902 ----------------------------------------------------------------------------------------- Total oper. expenses 3,713,167 1,998,482 - - 157,592 (27,479) 5,841,762 ----------------------------------------------------------------------------------------- Operating Income 1,263,845 3,664 - - (90,010) 1,600 1,179,099 Other Income (Deductions) 50,302 3,217 - - 107,510 (3,530) 157,499 Interest Charges 402,913 1,280 - - 13,110 (1,930) 415,373 ----------------------------------------------------------------------------------------- Income Before Income Taxes 911,234 5,601 - - 4,390 - 921,225 Income Taxes 361,493 2,468 - - (21,558) - 342,403 ----------------------------------------------------------------------------------------- Net Income $549,741 $3,133 $ - $ - $25,948 $ - $578,822 ========================================================================================= 1998 Operating Revenues $4,992,164 $2,626,900 $1,494,552 $230,543 $97,245 ($32,051) $9,409,353 ----------------------------------------------------------------------------------------- Operating Expenses: Fuel & gas purch. for resale 1,154,634 109,077 - - (5,413) (1,520) 1,256,778 Purchased power 513,700 2,514,614 940,815 77,723 (15,059) (20,897) 4,010,896 Nuclear refueling outages 64,134 - - - - - 64,134 Other operation & maint. 968,664 38,310 225,324 49,850 195,143 (10,969) 1,466,322 Deprec, amort. & decomm. 573,235 3,795 103,241 21,163 52,488 - 753,922 Taxes other than income 259,709 695 - 14,970 1,771 - 277,145 Other regulatory charges - net 11,759 - - - - - 11,759 Amort. of rate deferrals 219,507 - - - - - 219,507 ----------------------------------------------------------------------------------------- Total oper. expenses 3,765,342 2,666,491 1,269,380 163,706 228,930 (33,386) 8,060,463 ----------------------------------------------------------------------------------------- Operating Income 1,226,822 (39,591) 225,172 66,837 (131,685) 1,335 1,348,890 Other Income (Deductions) 41,652 6,327 24,970 123 (61,509) (2,063) 9,500 Interest Charges 405,543 151 147,589 41,415 32,971 (728) 626,941 ----------------------------------------------------------------------------------------- Income Before Income Taxes 862,931 (33,415) 102,553 25,545 (226,165) - 731,449 Income Taxes 354,434 (12,147) 22 4,723 (154,212) - 192,820 ----------------------------------------------------------------------------------------- Net Income (Loss) $508,497 ($21,268) $102,531 $20,822 ($71,953) $ - $538,629 ========================================================================================= Businesses marked with * are referred to as the "competitive businesses," with the exception of the parent company, Entergy Corporation, which is also included in the "All Other" column. Eliminations are primarily intersegment activity. __________________________________ In the opinion of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, the accompanying unaudited condensed financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented. However, the business of the domestic utility companies and System Energy is subject to seasonal fluctuations with the peak periods occurring during the third quarter. The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year. ENTERGY CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Item 1. Legal Proceedings See "PART I, Item 1, Other Regulation and Litigation" in the Form 10-K for a discussion of legal proceedings affecting Entergy. Set forth below are updates to the information contained in the Form 10-K. 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 actions 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. This proceeding was dismissed in March 1999 in accordance with the settlement agreement discussed in the Form 10-K. Ratepayer Lawsuits (Entergy Corporation, Entergy Louisiana, and Entergy New Orleans) See "Ratepayer Lawsuits" in Item 1 of Part I of the Form 10-K and in Item 1 of Part II of the 1999 first and second quarter Forms 10-Q for a discussion of the lawsuits filed by ratepayers with the LPSC, the New Orleans City Council, and in Louisiana state courts in Orleans and East Baton Rouge Parishes. Fiber Optic Cable Litigation (Entergy Corporation, Entergy Gulf States) See "Fiber Optic Cable Litigation" in Item 1 of Part II of the 1999 first quarter Form 10-Q for information relating to the lawsuit filed by a group of property owners against Entergy Corporation, Entergy Gulf States, Entergy Services, and ETHC. Franchise Service Area Litigation (Entergy Gulf States) See "Franchise Service Area Litigation" in Item 1 of Part 1 of the Form 10-K and in Item 1 of Part II of the 1999 second quarter Form 10-Q for information relating to the request filed by Beaumont Power and Light Company (BP&L) with the PUCT to obtain a certificate of convenience and necessity for those portions of Jefferson County outside the boundaries of any municipality for which Entergy Gulf States provides retail electric service. A hearing on the merits of BP&L's application has been scheduled for December 1999, at which time the similar matter involving Corpus Christi Power & Light Company will also be heard. BP&L has amended its application to add a request for a certificate of convenience and necessity to provide retail electric service within the City of Beaumont. BP&L's original application contemplated using Entergy Gulf States' facilities in providing service, but the amended application acknowledges that the Texas electric utility restructuring law requires BP&L to use its own facilities to connect to its customers, if it is granted a certificate of convenience and necessity. Ice Storm Litigation (Entergy Corporation and Entergy Gulf States) See "Ice Storm Litigation" in Item 1 of Part II of the 1999 second quarter Form 10-Q for information relating to the lawsuit filed by a group of Entergy Gulf States customers in Texas against Entergy Corporation, Entergy Gulf States, and other Entergy subsidiaries in state court in Jefferson County, Texas purportedly on behalf of all Entergy Gulf States customers in Texas who sustained outages in a January 1997 ice storm. Panda Energy Corporation (Entergy Corporation) See "Panda Energy Corporation" in Item 1 of Part I of the Form 10-K for information relating to the lawsuit filed by Panda Energy Corporation (Panda). In October 1999, the parties agreed to settle the lawsuit for a cash payment to Panda that is immaterial to the results of operations and financial condition of Entergy, and the proceeding will be dismissed. Litigation Environment (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) The four states in which Entergy and the domestic utility companies operate, and in particular Louisiana and Texas, have proven to be unusually litigious environments. Judges and juries in Louisiana and Texas have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. Entergy uses all means appropriate to contest litigation threatened or filed against it, but the litigation environment in the states referred to poses a significant business risk. Environmental Matters (Entergy Louisiana and Entergy New Orleans) Entergy New Orleans has completed the stabilization and abatement of asbestos containing material at the A. B. Paterson Generating Plant, located in New Orleans, Louisiana. Entergy notified the Louisiana Department of Environmental Quality of its intent to repair and remove insulation and machinery gaskets. On-site abatement of gaskets and insulating material was completed during the third quarter of 1999. The cost incurred through September 30, 1999 is approximately $1.9 million, and future costs are not expected to exceed the existing provision of approximately $45,000. During 1993, the LDEQ issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana and Entergy New Orleans have determined that certain of their power plant wastewater impoundments were affected by these regulations and have chosen to upgrade or close them. As a result, a remaining recorded liability in the amount of $5.8 million for Entergy Louisiana and $470,000 for Entergy New Orleans existed at September 30, 1999 for wastewater upgrades and closures. Completion of this work is awaiting the LDEQ's approval. Item 4. Submission of Matters to a Vote of Security Holders (Entergy Arkansas) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Arkansas: Thomas J. Wright, Donald C. Hintz, and C. John Wilder. (Entergy Gulf States) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Gulf States: Jerry D. Jackson, Joseph F. Domino, Donald C. Hintz, and C. John Wilder. (Entergy Louisiana) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Louisiana: Jerry D. Jackson, Donald C. Hintz, and C. John Wilder. (Entergy Mississippi) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Mississippi: Carolyn C. Shanks, Donald C. Hintz, and C. John Wilder. (Entergy New Orleans) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy New Orleans: Daniel F. Packer, Donald C. Hintz, and C. John Wilder. (System Energy) A consent in lieu of the annual meeting of common stockholders was executed on July 30, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of System Energy: Jerry W. Yelverton, Donald C. Hintz, and C. John Wilder. Item 5. Other Information Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) The domestic utility companies and System Energy have calculated ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends pursuant to Item 503 of Regulation S- K of the SEC as follows: Ratios of Earnings to Fixed Charges Twelve Months Ended December 31, September 30, 1994 1995 1996 1997 1998 1999 Entergy Arkansas 2.32 2.56 2.93 2.54 2.63 2.29 Entergy Gulf States (b)- 1.86 1.47 1.42 1.40 1.61 Entergy Louisiana 2.91 3.18 3.16 2.74 3.18 4.06 Entergy Mississippi 2.12 2.92 3.40 2.98 3.12 2.10 Entergy New Orleans 1.91 3.93 3.51 2.70 2.65 3.65 System Energy 1.23 2.07 2.21 2.31 2.52 1.90 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, September 30, 1994 1995 1996 1997 1998 1999 Entergy Arkansas 1.97 2.12 2.44 2.24 2.28 2.01 Entergy Gulf States (a) (b)- 1.54 1.19 1.23 1.20 1.39 Entergy Louisiana 2.43 2.60 2.64 2.36 2.75 3.58 Entergy Mississippi 1.81 2.51 2.95 2.69 2.80 1.88 Entergy New Orleans 1.73 3.56 3.22 2.44 2.41 3.32 (a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock. (b) Earnings for the year ended December 31, 1994, for Entergy Gulf States were not adequate to cover fixed charges and combined fixed charges and preferred dividends by $144.8 million and $197.1 million, respectively. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* ** 4(a) - Refunding Agreement (Series 1999-A) between Entergy Gulf States and Parish of West Feliciana, State of Louisiana dated as of September 1, 1999 (B-3(c) to Rule 24 Certificate dated October 8, 1999 in File No. 70-8721). ** 4(b) - Refunding Agreement (Series 1999-B) between Entergy Gulf States and Parish of West Feliciana, State of Louisiana dated as of September 1, 1999 (B-3(d) to Rule 24 Certificate dated October 8, 1999 in File No. 70-8721). ** 4(c) - Refunding Agreement (Series 1999-C) between Entergy Louisiana and Parish of St. Charles, State of Louisiana dated as of October 1, 1999 (B-11(a) to Rule 24 Certificate dated October 15, 1999 in File No. 70-9141). 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of September 30, 1999. 27(b) - Financial Data Schedule for Entergy Arkansas as of September 30, 1999. 27(c) - Financial Data Schedule for Entergy Gulf States as of September 30, 1999. 27(d) - Financial Data Schedule for Entergy Louisiana as of September 30, 1999. 27(e) - Financial Data Schedule for Entergy Mississippi as of September 30, 1999. 27(f) - Financial Data Schedule for Entergy New Orleans as of September 30, 1999. 27(g) - Financial Data Schedule for System Energy as of September 30, 1999. 99(a) - Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. ** 99(g) - Annual Reports on Form 10-K of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the fiscal year ended December 31, 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, and 1-9067, respectively). ** 99(h) - Quarterly Reports on Form 10-Q of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the quarter ended March 31, 1999, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ** 99(i) - Quarterly Reports on Form 10-Q of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the quarter ended June 30, 1999, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ___________________________ Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of Entergy Corporation and its subsidiaries on a consolidated basis. * Reference is made to a duplicate list of exhibits being filed as a part of this report on Form 10-Q for the quarter ended September 30, 1999, 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, 1999. ** 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 23, 1999, was filed with the SEC on July 23, 1999, reporting information under Item 5. "Other Events". A Current Report on Form 8-K, dated September 9, 1999, was filed with the SEC on September 9, 1999, 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) Date: November 12, 1999
EX-27 2
UT This schedule contains summary financial information extracted from Entergy Corporation and Subsidiaries financial statements for the quarter ended September 30, 1999 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-31-1999 SEP-30-1999 PER-BOOK 15,279,368 1,745,087 3,952,809 2,420,562 0 23,397,826 2,470 4,634,412 2,852,718 7,312,420 304,650 488,454 6,504,287 665 0 0 316,735 0 232,944 175,964 8,061,707 23,397,826 7,020,861 342,403 5,841,762 5,841,762 1,179,099 157,499 1,336,598 415,373 578,822 30,645 548,177 218,042 447,054 962,885 2.22 2.22
EX-27 3
UT This schedule contains summary financial information extracted from Entergy Arkansas, Inc. financial statements for the quarter ended September 30, 1999 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-31-1999 SEP-30-1999 PER-BOOK 2,834,047 345,246 453,096 431,994 0 4,064,383 470 590,134 499,822 1,090,426 80,000 116,350 1,129,228 667 0 0 340 0 79,524 63,012 1,504,836 4,064,383 1,187,961 56,960 982,019 982,019 205,942 11,913 217,855 62,934 97,961 7,194 90,767 78,800 61,143 217,656 0 0
EX-27 4
UT This schedule contains summary financial information extracted from Entergy Gulf States, Inc. financial statements for the quarter ended September 30, 1999 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-31-1999 SEP-30-1999 PER-BOOK 4,126,528 427,023 759,856 567,093 0 5,880,500 114,055 1,152,575 212,811 1,479,441 119,650 201,444 1,631,522 0 0 0 148,000 0 94,089 35,176 2,171,178 5,880,500 1,646,438 81,136 1,363,036 1,363,036 283,402 18,715 302,117 109,601 111,380 12,774 98,606 88,000 101,963 206,843 0 0
EX-27 5
UT This schedule contains summary financial information extracted from Entergy Louisiana, Inc. financial statements for the quarter ended September 30, 1999 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-31-1999 SEP-30-1999 PER-BOOK 3,285,634 128,862 447,673 349,913 0 4,212,082 1,088,900 0 105,499 1,192,078 105,000 100,500 1,161,594 0 0 0 120,448 0 26,509 32,539 1,473,414 4,212,082 1,434,692 134,485 1,017,373 1,017,373 417,319 4,724 422,043 84,020 203,538 7,427 196,111 165,400 111,675 298,977 0 0
EX-27 6
UT This schedule contains summary financial information extracted from Entergy Mississippi, Inc. financial statements for the quarter ended September 30, 1999 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-31-1999 SEP-30-1999 PER-BOOK 1,096,569 12,528 159,827 189,004 0 1,457,928 199,326 0 225,670 424,937 0 50,381 464,411 0 0 0 0 0 314 93 517,792 1,457,928 644,239 18,425 568,870 568,870 75,369 5,908 81,277 28,403 34,449 2,527 31,922 28,700 29,386 103,320 0 0
EX-27 7
UT This schedule contains summary financial information extracted from Entergy New Orleans, Inc. financial statements for the quarter ended September 30, 1999 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-31-1999 SEP-30-1999 PER-BOOK 315,688 3,259 137,504 47,952 0 504,403 33,744 36,293 67,647 137,685 0 19,780 169,067 0 0 0 0 0 0 0 177,871 504,403 390,483 17,098 339,023 339,023 51,460 1,844 53,304 10,465 25,741 724 25,017 24,400 13,569 47,250 0 0
EX-27 8
UT This schedule contains summary financial information extracted from System Energy Resources, Inc. financial statements for the quarter ended September 30, 1999 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-31-1999 SEP-30-1999 PER-BOOK 2,331,992 128,556 405,561 457,471 0 3,323,580 789,350 0 102,784 892,134 0 0 1,112,560 0 0 0 47,947 0 29,647 41,835 1,199,457 3,323,850 463,923 39,217 270,192 270,192 193,731 14,250 207,981 114,539 54,225 0 54,225 46,200 123,049 109,927 0 0
EX-99 9
Exhibit 99(a) Entergy Arkansas, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 September-99 Fixed charges, as defined: Total Interest Charges $110,814 $115,337 $106,716 $104,165 $96,685 $92,322 Interest applicable to rentals 19,140 18,158 19,121 17,529 15,511 16,786 ------------------------------------------------------------ Total fixed charges, as defined 129,954 133,495 125,837 121,694 112,196 109,108 Preferred dividends, as defined (a) 23,234 27,636 24,731 16,073 16,763 15,400 ------------------------------------------------------------ Combined fixed charges and preferred dividends, as defined $153,188 $161,131 $150,568 $137,767 $128,959 $124,508 ============================================================ Earnings as defined: Net Income $142,263 $136,666 $157,798 $127,977 $110,951 $89,591 Add: Provision for income taxes: Total 29,220 72,081 84,445 59,220 71,374 51,374 Fixed charges as above 129,954 133,495 125,837 121,694 112,196 109,108 ------------------------------------------------------------ Total earnings, as defined $301,437 $342,242 $368,080 $308,891 $294,521 $250,073 ============================================================ Ratio of earnings to fixed charges, as defined 2.32 2.56 2.93 2.54 2.63 2.29 ============================================================ Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.97 2.12 2.44 2.24 2.28 2.01 ============================================================ - ------------------------ (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.
EX-99 10
Exhibit 99(b) Entergy Gulf States, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 Sept 1999 Fixed charges, as defined: Total Interest charges $204,134 $200,224 $193,890 $180,073 $178,220 $169,509 Interest applicable to rentals 21,539 16,648 14,887 15,747 16,927 18,807 ----------------------------------------------------------- Total fixed charges, as defined 225,673 216,872 208,777 195,820 195,147 188,316 Preferred dividends, as defined (a) 52,210 44,651 48,690 30,028 32,031 28,564 ----------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $277,883 $261,523 $257,467 $225,848 $227,178 $216,880 =========================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes ($82,755) $122,919 ($3,887) $59,976 $46,393 $69,945 Add: Income Taxes (62,086) 63,244 102,091 22,402 31,773 44,223 Fixed charges as above 225,673 216,872 208,777 195,820 195,147 188,316 ----------------------------------------------------------- Total earnings, as defined (b) $80,832 $403,035 $306,981 $278,198 $273,313 $302,484 =========================================================== Ratio of earnings to fixed charges, as defined 0.36 1.86 1.47 1.42 1.40 1.61 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 0.29 1.54 1.19 1.23 1.20 1.39 =========================================================== (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. (b) Earnings for the year ended December 31, 1994, for GSU were not adequate to cover fixed charges combined fixed charges and preferred dividends by $144.8 million and $197.1 million, respectively.
EX-99 11
Exhibit 99(c) Entergy Louisiana, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 Sept 99 Fixed charges, as defined: Total Interest $136,444 $136,901 $132,412 $128,900 $122,890 $115,711 Interest applicable to rentals 8,332 9,332 10,601 9,203 9,564 8,841 ----------------------------------------------------------- Total fixed charges, as defined 144,776 146,233 143,013 138,103 132,454 124,552 Preferred dividends, as defined (a) 29,171 32,847 28,234 22,103 20,925 16,736 ----------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $173,947 $179,080 $171,247 $160,206 $153,379 $141,288 =========================================================== Earnings as defined: Net Income $213,839 $201,537 $190,762 $141,757 $179,487 $238,092 Add: Provision for income taxes: Total Taxes 63,288 117,114 118,559 98,965 109,104 143,165 Fixed charges as above 144,776 146,233 143,013 138,103 132,454 124,552 ----------------------------------------------------------- Total earnings, as defined $421,903 $464,884 $452,334 $378,825 $421,045 $505,809 =========================================================== Ratio of earnings to fixed charges, as defined 2.91 3.18 3.16 2.74 3.18 4.06 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.43 2.60 2.64 2.36 2.75 3.58 =========================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 12
Exhibit 99(d) Entergy Mississippi, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 Sept 1999 Fixed charges, as defined: Total Interest $52,764 $51,635 $48,007 $45,274 $40,927 $39,005 Interest applicable to rentals 1,716 2,173 2,165 1,947 1,864 2,235 ----------------------------------------------------------- Total fixed charges, as defined 54,480 53,808 50,172 47,221 42,791 41,240 Preferred dividends, as defined (a) 9,447 9,004 7,610 5,123 4,878 4,880 ----------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $63,927 $62,812 $57,782 $52,344 $47,669 $46,120 =========================================================== Earnings as defined: Net Income $48,779 $68,667 $79,210 $66,661 $62,638 $33,060 Add: Provision for income taxes: Total income taxes 12,476 34,877 41,107 26,744 28,031 12,241 Fixed charges as above 54,480 53,808 50,172 47,221 42,791 41,240 ----------------------------------------------------------- Total earnings, as defined $115,735 $157,352 $170,489 $140,626 $133,460 $86,541 =========================================================== Ratio of earnings to fixed charges, as defined 2.12 2.92 3.40 2.98 3.12 2.10 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.81 2.51 2.95 2.69 2.80 1.88 =========================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 13
Exhibit 99(e) Entergy New Orleans, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 Sept 1999 Fixed charges, as defined: Total Interest $18,272 $17,802 $16,304 $15,287 $14,792 $14,561 Interest applicable to rentals 1,245 916 831 911 1,045 1,213 --------------------------------------------------------- Total fixed charges, as defined 19,517 18,718 17,135 16,198 15,837 15,774 Preferred dividends, as defined (a) 2,071 1,964 1,549 1,723 1,566 1,532 --------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $21,588 $20,682 $18,684 $17,921 $17,403 $17,306 ========================================================= Earnings as defined: Net Income $13,211 $34,386 $26,776 $15,451 $16,137 $25,945 Add: Provision for income taxes: Total 4,600 20,467 16,216 12,142 10,042 15,804 Fixed charges as above 19,517 18,718 17,135 16,198 15,837 15,774 --------------------------------------------------------- Total earnings, as defined $37,328 $73,571 $60,127 $43,791 $42,016 $57,523 ========================================================= Ratio of earnings to fixed charges, as defined 1.91 3.93 3.51 2.70 2.65 3.65 ========================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.73 3.56 3.22 2.44 2.41 3.32 ========================================================= - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. (b) Earnings for the twelve months ended December 31, 1991 include the $90 million effect of the 1991 NOPSI Settlement.
EX-99 14
Exhibit 99(f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges 12 months 1994 1995 1996 1997 1998 Sept 1999 Fixed charges, as defined: Total Interest $176,504 $151,512 $143,720 $128,653 $116,060 $143,073 Interest applicable to rentals 7,546 6,475 6,223 6,065 5,189 14,379 ----------------------------------------------------------- Total fixed charges, as defined $184,050 $157,987 $149,943 $134,718 $121,249 $157,452 =========================================================== Earnings as defined: Net Income $5,407 $93,039 $98,668 $102,295 $106,476 $86,196 Add: Provision for income taxes: Total 36,838 75,493 82,121 74,654 77,263 55,125 Fixed charges as above 184,050 157,987 149,943 134,718 121,249 157,452 ----------------------------------------------------------- Total earnings, as defined $226,295 $326,519 $330,732 $311,667 $304,988 $298,773 =========================================================== Ratio of earnings to fixed charges, as defined 1.23 2.07 2.21 2.31 2.52 1.90 ===========================================================
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