0000065984-95-000045.txt : 19950816 0000065984-95-000045.hdr.sgml : 19950816 ACCESSION NUMBER: 0000065984-95-000045 CONFORMED SUBMISSION TYPE: 35-CERT PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19950815 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 135550175 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 35-CERT SEC ACT: 1935 Act SEC FILE NUMBER: 070-08010 FILM NUMBER: 95564382 BUSINESS ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 BUSINESS PHONE: 5045295262 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GSU HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY CORP /FL/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH UTILITIES INC DATE OF NAME CHANGE: 19890521 35-CERT 1 UNITED STATES OF AMERICA BEFORE THE SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. * * * * * * * * * * * * * * * * * In the Matter of * * ENTERGY CORPORATION * CERTIFICATE ENTERGY ENTERPRISES, INC. * PURSUANT TO RULE 24 * File No. 70-7851 * File No. 70-8002 * File No. 70-8010 * File No. 70-8105 * * (Public Utility Holding Company * Act of 1935) * * * * * * * * * * * * * * * * * * Pursuant to Rule 24 promulgated by the Securities and Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935, as amended (Act), modified by the application(s) - declaration(s), as amended, in the above referenced files and the related orders dated July 25, 1991, December 14, 1992(2), December 28, 1992, July 8, 1993, and June 30, 1995, respectively, this is to certify that the following transactions were carried out during the three (3) months ended June 30, 1995 by Entergy Enterprises, Inc. (formerly Electec, Inc.) pursuant to the authorization of the SEC. Programs Authorized Pursuant to the Orders, Entergy Enterprises, Inc. (Enterprises) is authorized to (a) conduct preliminary development activities with respect to various investment opportunities for the Entergy System, (b) market to non- associates the System's expertise and capabilities in energy- related areas, including the expertise of Entergy Power, Inc. (EPI) gained from its bulk power business, (c) market to non- associates intellectual property developed by System companies, (d) provide various consulting, management, administrative and support services to associate companies, excluding certain associate companies (Excluded Companies), (e) provide directly, or indirectly through one or more special purpose subsidiary companies of Entergy or Enterprises, various operations and maintenance services to non-associate or associate companies (other than Excluded Companies), and (f) develop and field test a proposed telecommunications system for advanced energy management and other utility applications. _______________________________ The Excluded Companies are Entergy's retail operating companies (Arkansas Power & Light Company, Louisiana Power & Light Company, Mississippi Power & Light Company, New Orleans Public Service Inc. and Gulf States Utilities Company), System Energy Resources, Inc. System Fuels, Inc., Entergy Operations, Inc., Entergy Services, Inc., and any other subsidiaries that Entergy may create whose activities and operations are primarily related to the domestic sale of electric energy at retail or at wholesale to affiliates or the provision of goods or services thereto. During the quarter, Enterprises participated in the following: I. Preliminary Development Activities Enterprises has been engaged in preliminary development activities relating to investigating sites, research, contract drafting and negotiations, acquiring options or rights, partnership selection and other activities necessary to identify and analyze investment opportunities for Entergy Corporation (Entergy). These development activities include domestic and international opportunities. During the quarter, Enterprises expended $1,307,064 for preliminary development activities associated with potential investments that would qualify as "exempt wholesale generators" under Section 32(a) of the Act. In addition, Enterprises expended $275,740 for preliminary development activities associated with potential investments that would qualify as "foreign utility companies" under Section 33 of the Act. Enterprises also expended $665,640 for preliminary development activities associated with potential investments that would qualify as "nonutility business." Finally, Enterprises expended $771,078 and $164,118 for preliminary development activities associated with demand side management activities and non-exempt domestic wholesale generating and transmission facilities, respectively. II. Management Services Provided to Associate Companies Enterprises provided certain management and support services to its associate companies, EPI, Entergy S.A., Entergy Argentina S.A., Entergy Systems and Service, Inc. (Entergy SASI), Entergy Power Development Corporation (EPDC), and Entergy Pakistan, Ltd. (EPL). Enterprises charged these companies for costs incurred plus an indirect loading based upon current month EEI administrative charges. In regard to EPI ($210,000.22), these services included marketing of EPI capacity and energy to other utilities at wholesale, preparation of contracts and regulatory filings, oversight of plant operations and maintenance by plant operators, and procurement of transmission services. In regard to Entergy S.A.($28,643.90), Entergy Argentina S.A. ($68,212.46), Entergy SASI ($46,337.98), EPDC ($3,844,915.29),and EPL ($85,445.30), these services were related to management oversight and project development. III. Consulting Activities with Non-Associate Companies Enterprises, under contract with Louisiana Hydroelectric Ltd. Partnership, continues to provide an array of technical services/support for a hydro electric transmission line project. Certain Entergy Services, Inc. personnel are providing the services. The Louisiana Hydroelectric Ltd. Partnership was charged $11,000 for services rendered during this quarter. IV. First Pacific Networks, Inc. Transactions A. Description of Progress in Development and Testing of CCLM/AFS During the second quarter of 1995, Enterprises and First Pacific Networks, Inc. ("FPN") continued their efforts in the development, modification and testing of FPN's PX System in order to create a Customer Controlled Load Management/Automatic Feedback System ("CCLM/AFS" or the "System") for advanced energy management applications. During this period, testing of CCLM/AFS continued to reveal problems which, in Enterprises' opinion, adversely affect the reliability of the System. In light of this, on May 24, 1995, Enterprises and FPN entered into an amendment to the Product License Agreement (as so amended, the "Second Amended Agreement") terminating the parties' joint effort to complete the development of CCLM/AFS. Notwithstanding the Second Amended Agreement, FPN may proceed independently with the development of the System. Additionally, FPN will continue to provide support for System testing through September, 1995. Pursuant to the Second Amended Agreement, Enterprises' exclusive license to make, use and market CCLM/AFS within the territorial limits of the Entergy Electric System ("Entergy System") is retained and expanded (as provided below). Enterprises also retains, in modified form, a right to share in revenues derived from the marketing of CCLM/AFS outside the Entergy System. In general, the Second Amended Agreement modifies the Product License Agreement, as previously amended, in the following respects: (1) Modification of Enterprises' License Rights (a) Enterprises agrees not to exercise its license rights pertaining to the marketing of CCLM/AFS outside the Entergy System unless FPN fails (i) to actively market CCLM/AFS products for a period of one year or (ii) becomes the subject of bankruptcy proceedings. (b) The following license rights of Enterprises will expire fourteen (14) months following Enterprises' receipt from FPN of the sum of $7 million (i.e. the balance of $9 million agreed to be paid by FPN pursuant to the Amended Agreement): (i) certain rights to preferential pricing for purchase of CCLM/AFS components, and maintenance services related thereto, for use or marketing within the Entergy System (subject to Enterprises' retained right to purchase Products and services from FPN on terms no less favorable than those made available to any other party for similar transactions); and (ii) Enterprises' right to market CCLM/AFS to Qualifying Utilities outside the Entergy System. (c) Enterprises license rights are expanded by granting Enterprises an exclusive license to sublicense, sell, lease or otherwise provide CCLM/AFS to non-affiliated entities whose principal business is the electric, gas or water utility business ("Qualifying Utilities") within the Entergy System. Enterprises agrees to pay FPN 10% of any license or sublicense fees received from Qualifying Utilities for use of CCLM/AFS in the Entergy System. (2) License Fees Paid by Enterprises and Other Payments Between the Parties In consideration of Enterprises' being discharged from any further obligations under the Agreement (including the $850,000 remaining balance of the $8.5 million License Fee that otherwise would have been required to be paid by Enterprises to FPN), pursuant to the Second Amended Agreement, Enterprises (a) has made payment to FPN of the sum of $520,000, and (b) agrees to pay FPN the additional sum of $100,000 for support provided by FPN in connection with the Chenal Valley testing of CCLM/AFS. The parties further agree that the remaining $7 million, which FPN agreed under the Amended Agreement to pay Enterprises on March 15, 1998 (assuming Enterprises had performed its obligations under the Amended Agreement) will now be paid by FPN without condition as follows: $3,500,000 on March 15, 1998 and $3,500,000 on March 15, 1999 (the "FPN Payments"); provided, however, that any royalty or license fee revenues received by Enterprises prior to March 15, 1999 will be credited against and reduce the amount of the FPN Payments otherwise payable to Enterprises. (3) Termination of Obligations Re: Joint Development of CCLM/AFS The provisions of the Agreement providing for the joint development of CCLM/AFS have been deleted in their entirety, including Enterprises' commitment under the Amended Agreement to co-fund with FPN further development costs relating to CCLM/AFS up to a maximum of $1 million of development costs. Accordingly, pursuant to the Second Amended Agreement, there is no longer any schedule for the development of CCLM/AFS, and CCLM/AFS will not be subject to acceptance by Enterprises. (4) Sharing of Revenues from Licensing and Other Marketing of CCLM/AFS to Qualifying Utilities Outside the Entergy System Under the Amended Agreement, the parties agreed that all revenues from licenses or sublicenses of CCLM/AFS (including intellectual property contained therein) would be divided equally. Enterprises would also receive 5% of gross revenues derived from the sale, lease or other marketing of CCLM/AFS hardware components. Under the Second Amended Agreement, the parties agree that, in lieu of the previous arrangement, Enterprises will be paid 10% of gross revenues received by FPN from licenses and sublicenses to Qualifying Utilities which will continue for a ten- year period following receipt by Enterprises of the FPN Payments. Additionally, Enterprises will receive 2% of net receipts received by FPN from CCLM/AFS sales to Qualifying or Non-Qualifying Utilities until receipt of the FPN Payments and 1% of gross receipts received by FPN from sales/leases of CCLM/AFS hardware components for a period of ten years thereafter. (5) Term and Termination The Second Amended Agreement provides that the term of Enterprises' exclusive license (a) to make, use, sell, lease or otherwise provide CCLM/AFS to customers and end users within the Entergy System, and (b) to sublicense, sell, lease or otherwise provide CCLM/AFS to Qualifying Utilities within the Entergy System, is perpetual. Enterprises' other license rights expire 14 months following receipt of the FPN Payments (as provided above). Inasmuch as FPN has no further obligations to Enterprises with respect to the development and support of CCLM/AFS, the provisions of the Agreement providing for Enterprises' right to terminate the Agreement by reason of the default of FPN have been deleted in their entirety. Despite the termination of the joint development effort with FPN, consistent with Enterprises' authorization to engage in preliminary development activities, Enterprises is continuing to investigate other products/technologies that can be used to establish a low cost and reliable customer controlled load management ("CCLM") system and is seeking to identify other providers of technology that can assist in development of such a system. It is anticipated that FPN's future role in Enterprises' CCLM system development effort may be limited to supplying certain components. Enterprises is preparing to test a system that uses FPN equipment as a means of data transport, with hardware/software for the evaluation and test being provided by a number of other vendors and software being developed by Entergy System personnel. B. Costs and Revenues Re: CCLM/AFS Total costs incurred by Enterprises in connection with the development, field testing and marketing of CCLM/AFS during the three month period ending June 30, 1995 were $771,078. Enterprises has no information on costs incurred by FPN in connection with the development and marketing of CCLM/AFS during this period. Total costs incurred by FPN and billed for the three month period ending June 30, 1995 with respect to the field testing of CCLM/AFS were $592,425. C. Future Reporting Re: CCLM/AFS Inasmuch as Enterprises will no longer jointly develop CCLM/AFS with FPN or provide development funding for FPN, Enterprises proposes to discontinue quarterly reports on the joint development of CCLM/AFS with FPN following the report covering the calendar quarter ending September 30, 1995. Future Rule 24 Certificates filed by Enterprises will report on any revenues derived from sales and licenses of CCLM/AFS, and related products and services, to non-affiliated companies, as well as costs incurred in connection therewith, as required pursuant to the Commission's orders dated July 25, 1991 (HCAR No. 25353) and July 13, 1992 (HCAR No. 25580). V. Financing, Amortization and Financial Statements During the three months ended June 30, 1995: A. Enterprises incurred amortization expenses relating to the FPN license in the amount of $156,517 and to the organization of Entergy SASI in the amount of $6,307. B. Enterprises' unaudited unconsolidated Balance Sheet and unconsolidated Income Statement for the three month period ended June 30, 1995 are included as Exhibit 1. IN WITNESS WHEREOF, the undersigned companies have caused this certificate to be executed on this 15th day of August, 1995. ENTERGY CORPORATION By: /s/ Gerald D. McInvale Gerald D. McInvale Executive Vice President and Chief Financial Officer ENTERGY ENTERPRISES, INC. By: /s/ Terry L. Ogletree Terry L. Ogletree Executive Vice President EX-99 2 ENTERGY ENTERPRISES, INC. UNCONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995 (UNAUDITED) ASSETS PROPERTY Furniture and Equipment $ 1,006,775.36 Intangible Assets 63,071.28 ------------------- Total Property 1,069,846.64 ------------------- INVESTMENTS Investment in FPN 4,716,896.25 Investment in Entergy SASI, Inc. 138,500,000.00 Earnings from Entergy SASI, Inc. (26,837,883.77) Special Deposits 30,000.00 ------------------- 116,409,012.48 ------------------- CURRENT & ACCRUED ASSETS Cash 660,873.57 Working Funds/Travel Advances 68,798.59 Temporary Cash Investments 999,091.67 Accounts Receivable 43,000.32 Accounts Receivable - Associated Companies 12,326,290.79 Accrued Interest 151.39 ------------------- Total Current and Accrued Assets 14,098,206.33 ------------------- DEFERRED DEBITS FPN License (Net of Amortization) 1,930,376.70 Accumulated Deferred Income Tax-Fed & State 4,978,623.75 Miscellaneous Deferred Debits (421,136.73) ------------------- Total Deferred Debits 6,487,863.72 ------------------- Total Assets $ 138,064,929.17 =================== These are interim financial statements prepared without notes. ENTERGY ENTERPRISES, INC. UNCONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995 (UNAUDITED) CAPITAL Common Stock $ 54,400,000.00 Miscellaneous Paid-in Capital 125,000,000.00 Retained Earnings (41,363,680.93) Retained Earnings - Unrealized Holding Losses (2,925,917.75) ------------------- Total Capital 135,110,401.32 ------------------- LIABILITIES CURRENT & ACCRUED LIABILITIES Accounts Payable 798,785.74 Accounts Payable to Associated Companies 1,011,442.05 Taxes Accrued (3,403,865.47) Tax Collections Payable (25,623.43) Miscellaneous Current & Accrued Liabilities 1,388,047.73 ------------------- Total Current & Accrued Liabilities (231,213.38) ------------------- DEFERRED CREDITS Other Deferred Credits 3,185,741.23 ------------------- Total Deferred Credits 3,185,741.23 ------------------- Total Liabilities 2,954,527.85 ------------------- Total Capital & Liabilities $ 138,064,929.17 =================== These are interim financial statements prepared without notes. ENTERGY ENTERPRISES, INC. UNCONSOLIDATED INCOME STATEMENT SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) REVENUE Services Rendered Non-Associates $ 97,973.99 Services Rendered Associates 6,984,358.34 Equity in Earnings of Subsidiaries (10,590,936.54) Miscellaneous Income 0.00 ------------------- Interest Income 104,373.35 ------------------- Total Revenue (3,404,230.86) ------------------- EXPENSES Salaries, Wages and Benefits 4,928,240.98 Outside Services 2,369,412.58 Rent 554,140.76 Administrative and General 1,668,076.59 Insurance 42,000.30 Directors' Fees and Expenses 13,937.00 ------------------- Total Administrative and General Expense 9,575,808.21 Taxes Other Than Income 11,756.32 Depreciation and Amortization 230,262.20 Amortization of SASI Organization Costs 12,613.61 Amortization of FPN Organization Costs 313,034.10 Miscellaneous Expenses 30,712.94 ------------------- Total Expenses 10,174,187.38 ------------------- Interest Expense 0.00 ------------------- Income (Loss) Before Income Taxes (13,578,418.24) Income Taxes - Federal (Benefit) (131,368.62) Income Taxes - State (Benefit) (393,073.57) Provision for Deferred Income Taxes - Federal (881,571.81) Provision for Deferred Income Taxes - State (174,968.44) ------------------- Net Income (Loss) $ (11,997,435.80) =================== These are interim financial statements prepared without notes.