-----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, Ga34gXGWHuV3UJd/YUdtzv61wmQdJ1e1VCxK/F7Zh0DhApIjMVe+KjEJICB7CikT F54mf+kKTO94WX0SgEs1zw== /in/edgar/work/20000808/0000065984-00-500011/0000065984-00-500011.txt : 20000921 0000065984-00-500011.hdr.sgml : 20000921 ACCESSION NUMBER: 0000065984-00-500011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 721229752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11299 FILM NUMBER: 688399 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: [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: 688400 BUSINESS ADDRESS: STREET 1: 425 WEST CAPITOL AVE STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72201 BUSINESS PHONE: 5013774000 MAIL ADDRESS: STREET 1: P O BOX 551 CITY: LITTLE ROCK STATE: AR ZIP: 72203 FORMER COMPANY: FORMER CONFORMED NAME: ARKANSAS POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY GULF STATES INC CENTRAL INDEX KEY: 0000044570 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 740662730 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-27031 FILM NUMBER: 688401 BUSINESS ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 BUSINESS PHONE: 4098386631 MAIL ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 FORMER COMPANY: FORMER CONFORMED NAME: GULF STATES UTILITIES CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY LOUISIANA INC CENTRAL INDEX KEY: 0000060527 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 720245590 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08474 FILM NUMBER: 688402 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: [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: 688403 BUSINESS ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MS ZIP: 39201 BUSINESS PHONE: 6013685000 MAIL ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MI ZIP: 39201 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY NEW ORLEANS INC CENTRAL INDEX KEY: 0000071508 STANDARD INDUSTRIAL CLASSIFICATION: [4931 ] IRS NUMBER: 720273040 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05807 FILM NUMBER: 688404 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: [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: 688405 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 0001.txt _________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2000 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address of Principal Executive Identification No. Offices and Telephone Number 1-11299 ENTERGY CORPORATION 72-1229752 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 1-10764 ENTERGY ARKANSAS, INC. 71-0005900 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 1-27031 ENTERGY GULF STATES, INC. 74-0662730 (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 838-6631 1-8474 ENTERGY LOUISIANA, INC. 72-0245590 (a Louisiana corporation) 4809 Jefferson Highway Jefferson, Louisiana 70121 Telephone (504) 840-2734 0-320 ENTERGY MISSISSIPPI, INC. 64-0205830 (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040 (a Louisiana corporation) 1600 Perdido Building New Orleans, Louisiana 70112 Telephone (504) 670-3674 1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777 (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 _________________________________________________________________________ Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Common Stock Outstanding Outstanding at July 31, 2000 Entergy Corporation ($0.01 par value) 222,903,941 Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company reports herein only as to itself and makes no other representations whatsoever as to any other company. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 1999, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, filed by the individual registrants with the SEC, and should be read in conjunction therewith. Forward Looking Information The following constitutes a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that forward-looking statements contained herein with respect to the revenues, earnings, performance, strategies, prospects and other aspects of the business of Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., System Energy Resources, Inc., and their affiliated companies may involve risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, risks and uncertainties relating to: the effects of weather, the performance of generating units and transmission systems, the possession of nuclear materials, fuel prices and availability, the effects of regulatory decisions and changes in law, litigation, capital spending requirements, the onset of competition, advances in technology, changes in accounting standards, corporate restructuring and changes in capital structure, consummation of the business combination with FPL Group, Inc., movements in the markets for electricity and other energy-related commodities, changes in interest rates and in financial and foreign currency markets generally, changes in corporate strategies, and other factors. ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q June 30, 2000 Page Number Definitions 1 Management's Financial Discussion and Analysis - Significant Factors and Known Trends 3 Management's Financial Discussion and Analysis - Liquidity and Capital Resources 8 Results of Operations and Financial Statements: Entergy Corporation and Subsidiaries: Results of Operations 14 Consolidated Statements of Income 21 Consolidated Statements of Cash Flows 22 Consolidated Balance Sheets 24 Consolidated Statements of Retained Earnings, Comprehensive Income, and Paid-In Capital 26 Selected Operating Results 27 Entergy Arkansas, Inc.: Results of Operations 28 Income Statements 31 Statements of Cash Flows 33 Balance Sheets 34 Selected Operating Results 36 Entergy Gulf States, Inc.: Results of Operations 37 Income Statements 40 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 63 Statements of Cash Flows 65 Balance Sheets 66 Selected Operating Results 68 System Energy Resources, Inc.: Results of Operations 69 Income Statements 70 Statements of Cash Flows 71 Balance Sheets 72 Notes to Financial Statements for Entergy Corporation and Subsidiaries 74 Part II: Item 1. Legal Proceedings 85 Item 4. Submission of Matters to a Vote of Security Holders 86 Item 5. Other Information 87 Item 6. Exhibits and Reports on Form 8-K 88 Signature 90 DEFINITIONS Certain abbreviations or acronyms used in the text are defined below: Abbreviation or Acronym Term AFUDC Allowance for Funds Used During Construction ALJ Administrative Law Judge ANO 1 and 2 Units 1 and 2 of Arkansas Nuclear One Steam Electric Generating Station (nuclear), owned by Entergy Arkansas APSC Arkansas Public Service Commission Board Board of Directors of Entergy Corporation BPS British pounds sterling Cajun Cajun Electric Power Cooperative, Inc. Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof CitiPower CitiPower Pty., an electric distribution company serving Melbourne, Australia and surrounding suburbs, which was acquired by Entergy effective January 5, 1996, and was sold by Entergy effective December 31, 1998 Council Council of the City of New Orleans, Louisiana domestic utility companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively 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 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 Exempt foreign utility company under PUHCA Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 1999 of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy FPL Group FPL Group, Inc., a Florida Corporation and parent company of Florida Power & Light Company Grand Gulf 1 Unit No. 1 of the Grand Gulf Nuclear Generation Plant Independence Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power London Electricity London Electricity plc - a regional electric company serving London, England, which was acquired by Entergy London Investments plc, effective February 1, 1997, and was sold by Entergy effective December 4, 1998 LPSC Louisiana Public Service Commission Merger The business combination transaction pursuant to which the outstanding shares of FPL Group and the outstanding shares of Entergy Corporation will be converted into the right to receive 1.00 and 0.585 shares, respectively, of a new company Merger Agreement Agreement and Plan of Merger dated July 30, 2000 by and between FPL Group, Entergy Corporation, WCB Holding Corporation, Ranger Acquisition Corporation and Ring Acquisition Corporation MPSC Mississippi Public Service Commission MW Megawatt(s) Abbreviation or Acronym Term NRC Nuclear Regulatory Commission Pilgrim Pilgrim Nuclear Station, 670 MW facility located in Plymouth, Massachusetts purchased in July 1999 from Boston Edison by Entergy's non-utility nuclear power business PUCT Public Utility Commission of Texas PUHCA Public Utility Holding Company Act of 1935, as amended River Bend River Bend Nuclear Generation Plant SEC Securities and Exchange Commission SFAS Statement of Financial Accounting Standards as promulgated by the Financial Accounting Standards Board System Agreement Agreement, effective January 1, 1983, as modified, among the domestic utility companies relating to the sharing of generating capacity and other power resources System Energy System Energy Resources, Inc., an Arkansas corporation UK The United Kingdom of Great Britain and Northern Ireland Unit Power Sales Agreement Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf 1 Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant White Bluff White Bluff Steam Electric Generating Station, 57% owned by Entergy Arkansas ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a discussion of the increasing competitive pressures facing Entergy and the electric utility industry, as well as market risks and other significant issues affecting Entergy. Set forth below are recent updates to the information contained therein. Business Combination With FPL Group On July 30, 2000, Entergy Corporation and FPL Group entered into a Merger Agreement, providing for a business combination that results in the creation of a new company. Each outstanding share of FPL Group common stock will be converted into the right to receive one share of the new company's common stock, and each outstanding share of Entergy Corporation common stock will be converted into the right to receive 0.585 of a share of the new company's common stock. It is expected that FPL Group's shareholders will own approximately 57% of the common equity of the new company and Entergy's shareholders will own approximately 43%. The initial board of directors of the new company will consist of eight directors designated by FPL Group and seven directors designated by Entergy. The new company will be given a new name that will be agreed upon between the Boards of Directors of FPL and Entergy prior to the consummation of the Merger. The new company will maintain its principal corporate offices and headquarters in Juno Beach, Florida, and will maintain its utility headquarters in New Orleans, Louisiana. The Merger Agreement generally allows Entergy to continue business in the ordinary course consistent with past practice and contains certain restrictions on Entergy's capital activities, including restrictions on the issuance of securities, capital expenditures, dispositions, incurrence or guarantee of indebtedness, and trading or marketing of energy. Entergy generally will be permitted to take actions pursuant to restructuring legislation in the domestic utility companies' jurisdictions of operation and reorganize its transmission business. Under certain circumstances, if the Merger Agreement is terminated, a termination fee of $215 million may be payable by one of the parties. Both the FPL Group and Entergy Boards of Directors unanimously approved the Merger. The Merger is conditioned, among other things, upon approvals of the shareholders of FPL Group and Entergy and the receipt of required regulatory approvals of various local, state, and federal regulatory agencies and commissions, including the SEC and FERC. Entergy and FPL Group will seek to consummate the Merger by late 2001. Reference is made to Entergy's Form 8-K dated July 31, 2000, which attached copies of the Merger Agreement and a joint press release of Entergy and FPL Group announcing the execution of the Merger Agreement, and Entergy's Form 8-K dated August 3, 2000, which described the terms of the Merger Agreement and attached preliminary pro-forma financial statements of the new company. Domestic Transition to Competition State Regulatory and Legislative Activity Arkansas In April 1999, the Arkansas legislature enacted a law providing for competition in the electric utility industry through retail open access on January 1, 2002. When retail open access is achieved, the generation operations will become a competitive business, but transmission and distribution operations will continue to be regulated. The APSC may delay implementation of retail open access, but not beyond June 30, 2003. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS The implementation of the Arkansas retail open access law through rulemakings and company filings is ongoing. Rulemakings associated with energy service provider licensing rules and affiliate rules have been completed. In June 2000, the APSC declared that billing would become a competitive service at the beginning of retail open access. Entergy Arkansas filed a functional, but not corporate, unbundling plan with the APSC on August 8, 2000. The plan initially establishes separate business units for distribution, generation, and a new retail energy service provider. The plan contemplates the transfer of transmission assets to the Transco discussed in the Form 10-K at "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS." The functional unbundling plan is tentative because the regulatory requirements to implement the retail open access law have not been finalized, and changes to the plan are possible. Texas In June 1999, the Texas legislature enacted a law providing for competition in the electric utility industry through retail open access. The law provides for retail open access by most electric utilities, including Entergy Gulf States, on January 1, 2002. When retail open access is achieved, the generation business and a new retail electricity provider function will become competitive businesses, but transmission and distribution operations will continue to be regulated. The new retail electricity provider function will be the primary point of contact with customers for most services beyond initiation of electric service and restoration of service following outages. In January 2000, as required by the Texas restructuring legislation, Entergy Gulf States filed a business separation plan with the PUCT, which was amended in June 2000. The plan provides that, by January 2002, Entergy Gulf States will be divided into a Texas distribution company, a Texas transmission company, a Texas generation company, a Texas retail electricity provider, and a Louisiana company that will encompass distribution, generation, and transmission operations. In July 2000, the PUCT issued an interim order to approve the amended business separation plan. The plan provides that the Louisiana company would retain the liability for all debt obligations of Entergy Gulf States and that the property of the Texas companies would be released from the lien of Entergy Gulf States' mortgage. Each of the Texas companies would assume a portion of Entergy Gulf States' debt obligations, which assumptions would not act to release the Louisiana company's obligations. Each of the Texas companies would also grant a lien on properties in favor of the Louisiana company to secure its obligations to the Louisiana company in respect of the assumed obligations. In addition, under the plan Entergy Gulf States will refinance or retire existing debt through 2004. Regulatory approvals from FERC, the SEC, and the LPSC will be required before the business separation plan can be implemented. Remaining business separation issues in Texas will be addressed in the unbundled costs proceeding before the PUCT. The LPSC has opened a docket to identify the changes in corporate structure of Entergy Gulf States, and their potential impact on Louisiana retail ratepayers, resulting from restructuring in Texas and Arkansas. Entergy Gulf States filed testimony in that proceeding in August 2000 and hearings are scheduled in February 2001. Pursuant to the Texas restructuring legislation, Entergy Gulf States filed its separated business cost data and proposed transmission, distribution, and competition tariffs with the PUCT on March 31, 2000. This filing also included a proposal for a performance-based enhancement to the authorized rate of return on equity. Management does not agree with the arbitrary level of return on equity set by PUCT rules (200 basis points over the cost of a distribution utility's debt) and is seeking a higher return in its separated cost filing. At a pre-hearing conference held in April 2000, a procedural schedule for the case was established, calling for a hearing in January 2001. Management cannot predict the outcome of this proceeding. In connection with unbundled cost filings made by all Texas investor owned utilities, the PUCT has opened a "generic docket" to determine issues that may be resolved on an industry-wide basis, including incentive mechanisms to enhance the authorized rate of return, before the individual utility hearings begin. See Note 2 to the financial statements for further information on this filing. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Mississippi In May 2000, after two years of studies and hearings, the MPSC announced that it was suspending its docket studying the opening of the state's retail electricity markets to competition. The MPSC based its decision on its finding that competition could raise the electric rates paid by residential and small commercial customers. The final decision ultimately lies with the Mississippi Legislature, which has adjourned its 2000 session. Federal Regulatory Activity See "Part I, Item 1, Competition" in the Form 10-K for a discussion of changes that may result from retail competition and unbundling. In April 2000, the LPSC and the Council filed a complaint with FERC seeking revisions to the System Agreement that they allege are necessary to accommodate the introduction of retail competition in Texas and Arkansas, where Entergy Gulf States and Entergy Arkansas provide utility service, and to protect Entergy's Louisiana customers from any adverse impact that may occur due to the introduction of such retail competition in some jurisdictions but not others. The LPSC and the Council request that FERC immediately institute a proceeding to permit changes to be adopted prior to January 1, 2002, and request, among other things, that FERC cap certain of the System Agreement obligations of Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans and fix these companies' access to pool energy at the average level existing for the three years prior to the date that retail access is initiated in Texas and Arkansas. Alternatively, the LPSC and the Council request that FERC require Entergy to provide wholesale power contracts to these companies to satisfy their energy requirements at costs no higher than would have been incurred if retail competition were not implemented. The LPSC and the Council request that the relief be made available for at least eight years after implementation of retail competition or the withdrawal of Entergy Arkansas and Entergy Gulf States from the System Agreement, or until retail access is implemented in Louisiana and New Orleans. In addition, among other things, the LPSC and the Council assert in their complaint that: o unless the requested relief is granted, the restructuring legislation adopted in Texas and Arkansas, to the extent such legislation requires, or has the effect of, altering the rights of parties under the System Agreement, will result in violations of the interstate commerce clause, the due process clause, and the impairment of contracts clause in the U.S. Constitution; and o the failure of the domestic utility companies to honor a right of first refusal with respect to any sale of generating capacity and associated energy under the System Agreement, and any attempt to eliminate such right of first refusal from the System Agreement, would violate the Federal Power Act and constitute a breach of the System Agreement. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS In June 2000, Entergy's domestic utility companies filed proposed amendments to the System Agreement with FERC to facilitate the implementation of retail competition in Arkansas and Texas and to provide for continued equalization of costs among the domestic utilities in Louisiana and Mississippi. The amendments provide the following: o cessation of participation in all aspects of the System Agreement, other than those related to transmission equalization, for any jurisdictional division of a domestic utility operating in a jurisdiction that initiates retail access; o certain sections of the System Agreement will no longer apply to the sales of generating capacity, whether through the sale of the asset or the output thereof, by a domestic utility operating in a jurisdiction that has established a date by which it will implement retail access; and o modification of the service schedule developed to track changes in energy costs resulting from the Entergy-Gulf States Utilities merger to include one final true-up of fuel costs upon cessation of one company's participation in the System Agreement, which thereafter will no longer be applicable for any purpose. Entergy believes that the proceedings relating to the proposed amendments serve as a response to the complaint by the LPSC and the Council and anticipates that the proceedings would be consolidated. In response to Entergy's proposal, the LPSC and the Council have requested that FERC dismiss the proposed amendments and proceed with the complaint proceedings. Several other parties have also intervened in the proceeding. In the event that the proceedings relating to the proposed amendments proceed, the LPSC and the Council have asserted that the charges to the domestic utility companies under the Unit Power Sales Agreement need to be reconsidered. Entergy has requested an expedited hearing on the proposed amendments and that FERC issue a final decision by October 1, 2001. A procedural schedule has not been established. Neither the timing, nor the ultimate outcome of these proceedings at FERC can be predicted at this time. For a discussion of FERC's August 2000 order in the System Energy proposed rate increase proceeding, see Note 2 to the financial statements. State and Local Rate Regulation The domestic utility companies' retail and wholesale rate matters and other regulatory proceedings are discussed more thoroughly in Note 2 to the financial statements in the Form 10-K. In June 2000, the LPSC approved a settlement between Entergy Gulf States and the LPSC staff to refund $83 million resolving refund issues in Entergy Gulf States' second, third, fourth, and fifth post- Merger earnings reviews filed with the LPSC relating to the period January 1, 1994 through December 31, 1997. This refund, for which adequate reserves have been made, will occur over a three-month period beginning July 2000. In May 2000, Entergy Gulf States filed its seventh required post-Merger earnings analysis with the LPSC. This filing will be subject to review by the LPSC and may result in a change in rates. Entergy Gulf States also is proposing that the allowed return on common equity be increased to 11.60%. A schedule for this proceeding has not yet been established by the LPSC. In May 2000, the LPSC ordered Entergy Louisiana to refund an additional $6.4 million based on its fourth annual performance-based rate plan filed with the LPSC in April 1999 for the 1998 test year. The refund, for which an adequate reserve has been established, was effective April 2000. In May 2000, Entergy Louisiana submitted its fifth annual performance-based rate plan filing for the 1999 test year. The filing indicated that a $24.8 million base rate reduction might be appropriate for implementation effective August 2000. Entergy Louisiana is proposing to increase prospectively the allowed return on common equity from 10.5% to 11.6%, which would reduce the amount of any rate reduction. This filing will be subject to review by the LPSC. A procedural schedule has not yet been established by the LPSC in this proceeding. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Continued Application of SFAS 71 and Stranded Cost Exposure See "Continued Application of SFAS 71 and Stranded Cost Exposure" in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a discussion of the potential effects of discontinuation of SFAS 71 for the generation portion of Entergy's business as well as Entergy's exposure to stranded costs. Because management believes that definitive outcomes have not yet been determined regarding the transition to competition in any of Entergy's jurisdictions, the regulated operations of the domestic utility companies and System Energy continue to apply SFAS 71. The restructuring laws enacted in Arkansas and Texas provide an opportunity for the recovery of stranded costs following review and approval by the APSC or the PUCT. Nearly all of Entergy's exposure to stranded costs involves commitments that were approved by regulators. The actual amount of costs and obligations that will be identified as stranded will be determined in regulatory proceedings. The outcome of the Texas and Arkansas stranded cost proceedings cannot be predicted and will depend upon a number of variables, including the timing of stranded cost determination, the values attributable to certain strandable assets, and the assumptions concerning future market prices for electricity. In June 2000, Entergy Arkansas filed an application to continue the stranded cost mitigation efforts agreed upon in the 1997 settlement agreement approved by the APSC. These mitigation efforts include the funding of a transition cost account with excess earnings to offset future stranded costs and the accelerated amortization of Entergy Arkansas' share of the Grand Gulf purchased power obligation under the Unit Power Sales Agreement. The filing included an updated stranded cost estimate intended to support Entergy Arkansas' recommendation that the mitigation efforts continue. The filing presents an estimated range of stranded costs based upon the comparison of possible generation asset market values to the generation assets' book values and contractual obligations. The range of possible generation asset market values used in the estimate was determined using generation asset sales in other jurisdictions. The estimated range of stranded costs in Arkansas set forth in the filing is $254 million to $1.64 billion. Entergy Gulf States included an estimate of its Texas stranded costs in its March 31, 2000 separated costs filing with the PUCT. Using the model established by the PUCT staff, Entergy Gulf States' estimate of Texas stranded costs is $117.2 million. Entergy Gulf States disagrees with certain of the assumptions and estimates included in the PUCT model and believes that the model understates actual stranded costs. The model offsets potential strandable costs against mitigating factors, including the estimated fair value of existing generation plants, to determine an estimated stranded cost figure. The model, however, does not include estimated River Bend decommissioning costs. The Texas cost filing is discussed more thoroughly in Note 2 to the financial statements. Market Risks Disclosure In May 2000, to mitigate currency exchange rate risk, Entergy entered into separate foreign currency forward contracts to hedge the U.S. dollar equivalent amounts of its net equity investments to be made in the Saltend and Damhead Creek projects located in the United Kingdom. The forward contracts are in the notional amounts of BPS48 million and BPS36.1 million for Saltend and Damhead Creek, respectively. The forward contract for Saltend matured in July 2000 when the equity investment was made and locked in an average spot rate of $1.48338 to BPS1. The forward contract for Damhead Creek will mature in October 2000 and locks in an average spot rate of $1.48424 to BPS1. The banks obligated on these forward contracts are rated by Standard & Poor's at A-1 or above on their short-term obligations. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Cash Flows Operations Net cash flow provided by (used in) operations for Entergy, the domestic utility companies, and System Energy for the six months ended June 30, 2000 and 1999 was as follows: Six Months Ended Six Months Ended Company June 30, 2000 June 30, 1999 (In Millions) Entergy $737.8 $591.3 Entergy Arkansas $109.7 $121.0 Entergy Gulf States $105.6 $ 91.7 Entergy Louisiana $ 77.2 $154.7 Entergy Mississippi $(35.9) $ 55.5 Entergy New Orleans $ 16.9 $ 19.9 System Energy $325.1 $175.0 Entergy's consolidated cash flow from operations increased primarily due to its competitive businesses providing $88.7 million to consolidated operating cash flow compared with using $60.8 million for the six months ended June 30, 2000 and 1999, respectively. The increase is primarily due to: o net income from operations of Pilgrim; and o less cash used by the power marketing and trading business. Pilgrim was purchased in July 1999 and provided positive operating cash flow in the six months ended June 30, 2000 compared to no cash flow in the six months ended June 30, 1999. The power marketing and trading business had net income for the six months ended June 30, 2000 compared to a net loss in 1999, which caused this business to provide operating cash flow in 2000 whereas it had used operating cash flow in 1999. The operating cash flows of the domestic utility companies and System Energy were affected by the following money pool activity for the six months ended June 30, 2000: o System Energy's operating cash flow increased primarily due to payments received from affiliated companies; and o Entergy Louisiana and Entergy Mississippi used proceeds from debt issuances in 2000 to pay off borrowings from the money pool and create receivables from the money pool, resulting in an overall decrease in their respective operating cash flows. The money pool is an inter-company funding arrangement designed to reduce the domestic utility companies' and System Energy's dependence on external short-term borrowings. The money pool provides a means by which, on a daily basis, the excess funds of Entergy Corporation, the domestic utility companies, and System Energy may be used by the domestic utilities or System Energy when they have short-term cash requirements. See "Capital Resources" below for a discussion of the limitations on these borrowings. Operating cash flows for the domestic utility companies were also affected by increased use of cash related to deferred fuel costs. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Investing Activities Net cash used in investing activities increased for the six months ended June 30, 2000 due to increased construction expenditures in 2000. The increased construction expenditures were primarily due to: o spending on customer service and reliability improvements by the domestic utility companies; o construction of the Saltend and Damhead Creek power plants by Entergy's global power development business; and o construction costs of turbines incurred by Entergy's global power development business. The maturity of other temporary investments combined with the proceeds from the sale of the Freestone power project provided cash from investing activities in 2000. These sources of cash, however, were largely offset by the proceeds from the sales of Entergy Security, Inc. in January 1999 and Entergy Power Edesur Holdings and several telecommunications businesses in June 1999. Financing Activities Net cash provided by financing activities increased for the six months ended June 30, 2000 primarily due to: o the issuance of debt at Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy Mississippi; o additional borrowings under the Entergy Corporation credit facility in 2000 compared to repayments on that facility for the six months ended June 30, 1999; o increased borrowings under the credit facilities for the construction of the Saltend and Damhead Creek power projects by Entergy's global power development business; and o a reduction in the retirement of long-term debt. Partially offsetting the overall increase in cash provided was the increased repurchase of Entergy Corporation common stock and the redemption of Entergy Gulf States' preference stock in 2000. Business Combination With FPL Group Entergy Corporation and FPL Group entered into a Merger Agreement on July 30, 2000. See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" for a description of the Merger. The Merger Agreement generally allows Entergy to continue business in the ordinary course consistent with past practice and contains certain restrictions on Entergy's activities, including restrictions on the issuance of securities, capital expenditures, dispositions, incurrence or guarantee of indebtedness, and trading or marketing of energy. Entergy does not believe that these covenants will constrain its capital investment plan. Under certain circumstances, if the Merger Agreement is terminated, a termination fee of $215 million may be payable by one of the parties. In addition, under the terms of the Merger Agreement, Entergy will use its commercially reasonable efforts to purchase in open market transactions $430 million of shares of its common stock prior to the closing of the Merger. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES 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 assets. Entergy requires capital resources for: o construction and other capital expenditures; o debt and preferred stock maturities; o common stock repurchases; o capital investments; o funding of subsidiaries; and o dividend and interest payments. Management provides more information on construction expenditures, capital investments, and long-term debt and preferred stock maturities in Notes 5, 6, 7, and 9 to the financial statements in the Form 10-K. Sources of Capital Resources All of the domestic utility companies have issued debt in 2000, including an issuance by Entergy New Orleans in July 2000. The net proceeds of these issuances have been or will be used for general corporate purposes, including capital expenditures, the retirement of short-term indebtedness, and, in the case of Entergy Gulf States, the mandatory redemption of preference stock. See Note 4 to the financial statements for details regarding issuances of debt in 2000. All debt and common and preferred stock issuances require prior regulatory approval. 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 preferred securities. The domestic utility companies and System Energy expect to continue refinancing or redeeming higher cost debt and preferred stock prior to maturity, to the extent market conditions and interest and dividend rates are favorable. Short-term borrowings by the domestic utility companies and System Energy are limited to amounts authorized by the SEC. The current SEC-authorized limit of $1.078 billion for these companies is effective through November 30, 2001. Borrowings from the money pool and external borrowings combined may not exceed the SEC-authorized limit. As of June 30, 2000, only Entergy New Orleans had borrowings outstanding from the money pool, in the amount of $2.8 million. Other Entergy subsidiaries have SEC authorization to borrow from Entergy Corporation through the money pool, or from external sources, in an aggregate principal amount up to $265 million. These companies had $117.6 million of outstanding borrowings from the money pool as of June 30, 2000. Some of these borrowings are restricted as to use and are collateralized by certain assets. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES In May 2000, Entergy Corporation amended its 364-day bank credit facility, increasing the capacity from $250 million to $500 million, of which $435 million of borrowings were outstanding as of June 30, 2000. Proceeds from this credit facility were used for general corporate purposes, for working capital needs, and to repay the $120 million 364-day term loan discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-K. Uses of Capital Resources Entergy's global power development business is currently constructing two combined-cycle gas turbine merchant power plants, Saltend and Damhead Creek, in the UK. These projects are discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-K. The financing of the construction of these two power plants is discussed in Note 7 to the financial statements in the Form 10-K. Saltend was originally scheduled for commercial operations in January 2000, but is now expected to be complete by the end of 2000. The engineering, procurement, and construction contract with the construction contractor and the turbine manufacturer provides for liquidated damages for lost operating margin and incremental costs. For the six months ended June 30, 2000, Entergy recorded liquidated damages for lost operating margins of $32.9 million ($23 million net of tax). In October 1999, Entergy's global power development business obtained an option to acquire twenty-four GE7FA advanced technology gas turbines, four steam turbines, and eight GE7EA advanced technology gas turbines. The financing of these turbines is discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-K. In the sale of the Freestone power project, Entergy sold the rights to acquire four of the GE7FA turbines and two of the steam turbines. In March 2000, Entergy's non-utility nuclear business signed an agreement, subject to regulatory approvals, to purchase the New York Power Authority's (NYPA) 825 MW James A. FitzPatrick nuclear power plant located near Oswego, New York and NYPA's 980 MW Indian Point 3 nuclear power plant located in Westchester County, New York. Management expects to close the acquisition during the fourth quarter of 2000. Entergy will pay NYPA $50 million in cash at the closing of the purchase, plus seven annual installments of approximately $108 million commencing one year from the date of the closing, and eight annual installments of $20 million commencing eight years from the date of the closing. Entergy currently projects that these installments will be paid primarily from the proceeds of the sale of power from the plants and that Entergy will provide an additional $100 million of funding. Pursuant to the terms of the agreement with NYPA, the installment payments due by Entergy to NYPA must be secured by a letter of credit from an eligible financial institution. This letter of credit may be secured, in whole or in part, by an Entergy guarantee. Subject to certain conditions, Entergy's non-utility nuclear business has agreed to pay NYPA up to $10 million annually for up to 10 years, beginning on the second anniversary date of such acquisition, if Entergy acquires ownership of the Indian Point 2 nuclear power plant located in Westchester County, New York. If Entergy acquires the Nine Mile Point nuclear power plants (referred to in the following paragraph), it will pay NYPA up to $2 million annually for up to 10 years, commencing on the second anniversary date of such acquisition. NYPA also will be paid $2.5 million annually, for up to twenty years, by Entergy if the NRC grants an extension of the current nuclear operating licenses for the plants. These payments would commence on the first anniversary of the expiration of the respective current licenses and would continue during the extension period. In December 1999, Entergy's non-utility nuclear business signed an agreement with Rochester Gas and Electric Corporation (RG&E) to lease and operate the Nine Mile Point 1 and 2 nuclear power plants, totaling 1,754 MW, located in Scriba, New York. Nine Mile Point 1 is owned by Niagara Mohawk Power Corporation (NiMo), and Nine Mile Point 2 is co-owned by RG&E, NiMo, New York State Electric & Gas Corporation (NYSEG), Long Island Lighting Company doing business as LIPA, and Central Hudson Gas & Electric Corporation. The lease and operating agreement is subject to RG&E's acquisition of NiMo and NYSEG's ownership interests in the plants under RG&E's right of first refusal and is subject to approval by the New York Public Service Commission (NYPSC). NiMo and NYSEG initiated a proceeding before the NYPSC seeking authorization for the sale of their ownership interests in Nine Mile Point 1 and 2 to a third party. Entergy intervened in the proceedings, but on April 25, 2000, NiMo and NYSEG moved to withdraw the request for authority to transfer their interests in the Nine Mile plants on the grounds that there are multiple parties who wish to acquire them. The NYPSC encouraged the owners of the Nine Mile plants to determine the market ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES value of the plants through an open bid process, which will likely take place during the fall of 2000. Entergy expects to participate in the bidding to acquire the Nine Mile plants, or will seek a contract to lease and operate them. In May 2000, Entergy and Koch Industries, Inc. agreed to form a new joint venture company to be called Entergy-Koch L.P. Entergy will contribute to the venture its power marketing and trading business in the United States and the United Kingdom as well as approximately $350 million in cash. Of the $350 million, management expects approximately $200 million will be funded with debt that is non-recourse to Entergy Corporation, and approximately $150 million will be provided by Entergy from available cash. Koch Industries, Inc. will contribute to the venture its 10,000-mile Koch Gateway Pipeline, gas storage facilities including the Bistineau storage facility near Shreveport, Louisiana, and Koch Energy Trading, which markets and trades electricity, gas, weather derivatives and other energy-related commodities and services. The parties will have equal ownership interests in Entergy-Koch L.P., which will be governed by an eight-member board of directors. Entergy will have the right to appoint four members of the board. The venture, which will require prior approval from FERC and from the SEC under PUHCA, is expected to become operational near the end of 2000. In June 2000, Entergy announced a plan with The Shaw Group Inc. to form a new joint venture to be called Entergy-Shaw. The joint venture will provide management, engineering, procurement, construction, and commissioning services for electric power plants. Entergy-Shaw plans to operate in the rapidly growing electric power generation market, including providing services for Entergy's power development plans in North America and Europe. Entergy-Shaw is developing a market-driven reference plant design that is expected to reduce power plant capital costs significantly, while also reducing construction, commissioning, and operating risks. Entergy and Shaw will each own a 50% interest in the joint venture. Entergy does not expect to make a material capital contribution to this joint venture. Entergy's ability to invest in domestic and foreign generation businesses is subject to the SEC's regulations under PUHCA. These regulations limit the total amount that Entergy may invest in domestic and foreign generation businesses to 50 percent of consolidated retained earnings at the time an investment is made. In June 2000, the SEC issued an order that allows Entergy's EWG and FUCO investments to increase from 50% to 100% of Entergy's consolidated retained earnings. Entergy's ability to issue guarantees to its non- utility companies is currently limited by the SEC to a total of $750 million. Entergy currently has an application pending before the SEC to increase this limit by $2 billion. Under PUHCA, the SEC imposes a limit equal to 15% of consolidated capitalization on the amount that may be invested in "energy-related" businesses without specific SEC approval. Entergy has made investments in energy-related businesses, including power marketing and trading. Entergy's available capacity to make additional investments at June 30, 2000 was approximately $1.8 billion. Management expects the available capacity to be partially reduced by Entergy's anticipated investment in Entergy-Koch L.P. In the six months ended June 30, 2000, Entergy Corporation paid $139.6 million in cash dividends on its common stock and received dividend payments totaling $338.8 million from subsidiaries. Declarations of dividends on Entergy's common stock are made at the discretion of the Board. The Board evaluates the level of 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. Under the Merger Agreement Entergy can continue to pay dividends at existing levels with increases permitted up to 5% of the amount of the previous twelve-month period. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES 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. This 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 for the repurchase of Entergy common stock through December 31, 2001. Shares are purchased on a discretionary basis. As of June 30, 2000, Entergy has repurchased 24.7 million shares for an aggregate amount of $636.5 million under these authorizations. As discussed previously, under the terms of the July 30, 2000 Merger Agreement between Entergy and FPL Group, Entergy will use its commercially reasonable efforts to purchase in open market transactions $430 million of shares of its common stock prior to the close of the Merger. Entergy issues shares under its Dividend Reinvestment and Stock Purchase Plan and other compensation and benefit plans. See Note 3 to the financial statements for stock repurchases and issuances made during the six months ended June 30, 2000. See Notes 4, 5, 6, 7, 9, and 10 to the financial statements in the Form 10-K for further discussion of Entergy's capital and refinancing requirements and available lines of credit. Entergy Corporation and System Energy Pursuant to the Capital Funds Agreement, Entergy Corporation has agreed to supply System Energy with sufficient capital to: o maintain System Energy's equity capital 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 System Energy 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 RESULTS OF OPERATIONS Entergy's results of operations are discussed in two business categories, "Domestic Utility Companies and System Energy" and "Competitive Businesses". Domestic Utility Companies and System Energy is Entergy's predominant business segment, contributing 79% and 78% of Entergy's operating revenue for the three and six months ended June 30, 2000, respectively, and 76% and 77% of its net income for the three and six months ended June 30, 2000, respectively. Competitive Businesses include the following segments discussed in Note 6 to the financial statements: "Power Marketing and Trading" and "All Other". "All other" principally includes global power development, non-utility nuclear power, and the parent holding company, Entergy Corporation. The elimination of power marketing and trading mark-to-market profits on intercompany power transactions is also included in "All Other". Net Income Entergy Corporation's consolidated net income increased for the three and six months ended June 30, 2000 compared to the three and six months ended June 30, 1999 primarily due to: o overall increases of $12.1 million and $16.8 million in net income for the three and six months ended June 30, 2000, respectively, from the domestic utility companies and System Energy, primarily due to a decrease in reserves recorded in 2000 for potential rate actions and a decrease in interest and other charges at System Energy. The overall increases in net income were partially offset by increases in other operation and maintenance expenses at the domestic utility companies and an increase in the effective income tax rate; and o increases in net income of $20.0 million and $25.4 million for the three and six months ended June 30, 2000, respectively, from competitive businesses, primarily resulting from the operation of Pilgrim and liquidated damages received from the Saltend contractor as compensation for lost operating margin from the Saltend plant due to construction delays. The increases were partially offset by an increase in the effective tax rate. Pilgrim did not generate any revenues for Entergy in the six months ended June 30, 1999 because Entergy did not acquire it until July 1999. Consolidated net income also increased for the six months ended June 30, 2000 due to an increase in net income of $29.3 million for the power marketing and trading business primarily resulting from improved trading results and higher summer 2000 forward electricity prices affecting the mark-to-market valuation. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Domestic Utility Companies and System Energy Revenues and Sales The changes in electric operating revenues associated with the domestic utility companies for the three and six months ended June 30, 2000 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($52.5) ($76.3) Rate riders (4.8) (10.6) Fuel cost recovery 97.4 198.7 Sales volume/weather 6.9 24.9 Other revenue (including unbilled) (1.5) 16.9 Sales for resale 6.1 12.3 ----- ------ Total $51.6 $165.9 ===== ====== Base revenues Base revenues decreased for the three and six months ended June 30, 2000 primarily due to the reversal of regulatory reserves associated with the accelerated amortization of accounting order deferrals in 1999 in conjunction with the Texas rate settlement at Entergy Gulf States. The net income effect of this reversal was largely offset by the amortization of rate deferrals in 1999 discussed below. Base revenues also decreased for the six months ended June 30, 2000 due to provisions for potential rate refunds at Entergy Louisiana. The decrease was partially offset by reserves of $33 million recorded in 1999 for actual and potential refunds to Louisiana and Texas retail customers at Entergy Gulf States. Rate riders Rate rider revenues do not affect net income because they are offset by specific incurred expenses. Rate rider revenues decreased for the three and six months ended June 30, 2000 as a result of the decreased ANO Decommissioning and Grand Gulf 1 riders at Entergy Arkansas, both of which became effective in January 2000. 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 CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel cost recovery revenues increased for the three and six months ended June 30, 2000 due to: o an increased fuel factor implemented in September 1999 in Texas for Entergy Gulf States; o a fuel surcharge implemented in January 2000 in Texas for Entergy Gulf States; o an increase in the energy cost recovery rate that became effective in April 2000 at Entergy Arkansas; o higher fuel costs at Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans due to the increased market price of gas; and o an increase in the energy cost recovery rate at Entergy Mississippi that became effective in January 2000. Sales volume/weather Sales volume increased for the three and six months ended June 30, 2000 due to more favorable weather as well as increased usage by industrial customers at Entergy Gulf States and Entergy Louisiana. Other revenue (including unbilled) Other revenue increased for the six months ended June 30, 2000 primarily due to increased unbilled revenue volume and the addition of unbilled revenue for wholesale customers in Arkansas to the unbilled balance, partially offset by the effect of a change in estimate on unbilled revenues in the second quarter of 1999. The changed estimate more closely aligned the fuel component of unbilled revenues with regulatory treatment. Sales for resale Sales for resale increased for the three and six months ended June 30, 2000 due to increased generation and subsequent sales from River Bend in 2000 at Entergy Gulf States as a result of a refueling outage in the second quarter of 1999. Sales for resale also increased for the six months ended June 30, 2000 due to increased nuclear generation compared with 1999 at Entergy Arkansas, coupled with an increase in the market price of energy. Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased $93.1 million and $222.6 million for the three and six months ended June 30, 2000, respectively, primarily due to: o a shift from lower priced coal to higher priced gas and purchased power at Entergy Arkansas due to scheduled maintenance outages; o an increase in the market prices of purchased power and gas in 2000; o a shift to higher priced purchased power at Entergy Louisiana due to a planned outage at Waterford 3 in June 2000 and reduced gas generation; and o increased nuclear fuel expense in the second quarter of 2000 due to a scheduled outage at Entergy Gulf States in the second quarter of 1999. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel and purchased power expenses also increased for the six months ended June 30, 2000 primarily due to an adjustment of Entergy Gulf States' Texas jurisdiction deferred fuel balance as a result of the fuel reconciliation settlement with the PUCT. The increase was also due to a shift from lower priced coal to higher priced purchased power and gas at Entergy Gulf States as a result of scheduled outages in the first quarter of 2000. These increases were partially offset by an adjustment that increased the deferred fuel balance at Entergy Arkansas. Other operation and maintenance Other operation and maintenance expenses increased $38.0 million and $20.4 million for the three and six months ended June 30, 2000, respectively, primarily due to: o maintenance and planned outages for Entergy Louisiana at Waterford 3 and certain fossil plants; o the capitalization of costs associated with return-to-service generation projects in 1999 for Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans; o increased environmental reserves at Entergy Louisiana; and o an increase in customer service expenses, such as vegetation management at Entergy Arkansas and Entergy Louisiana. The increases were partially offset by the following at Entergy Gulf States: o decreased general plant maintenance in 2000; and o decreased environmental and injuries and damages reserves in 2000. Amortization of rate deferrals Amortization of rate deferrals decreased $80 million for the three and six months ended June 30, 2000 primarily due to the large reduction in the rate deferral balance resulting from the PUCT's approval in June 1999 of the Texas rate settlement at Entergy Gulf States. Other Other income Other income decreased $8.1 million and $6.6 million for the three and six months ended June 30, 2000, respectively, due to the reversal of the provision for abeyed River Bend plant costs at Entergy Gulf States in 1999, which exceeded the write-down of the plant, as the result of the June 1999 PUCT approval of the settlement agreement. Interest charges Interest on long-term debt decreased $8.1 million for the six months ended June 30, 2000 primarily due to the retirement and refinancing of certain long-term debt at Entergy Gulf States, Entergy Louisiana, and System Energy in 1999. Other interest decreased $22.7 million and $15.7 million for the three and six months ended June 30, 2000, respectively, due to an adjustment in 1999 at System Energy to the interest recorded for the potential refund to customers of its proposed rate increase pending at FERC. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Competitive Businesses Revenues and Sales Competitive business revenues decreased approximately $229 million and $172 million for the three and six months ended June 30, 2000, respectively. The decrease was primarily due to a decrease in revenue from the power marketing and trading business resulting from decreased electricity and gas trading volumes. Partially offsetting the decrease in 2000 was the increase in revenues for the non-utility nuclear business. For the three and six months ended June 30, 2000, the non-utility nuclear business had increased revenues of $60 million and $120 million, respectively, primarily from the operation of Pilgrim, which was purchased in July 1999. Although revenues for the power marketing and trading business decreased, the power marketing and trading business had an increase in net income of $29.3 million for the six months ended June 30, 2000 due to: o decreased purchased power expenses as discussed below; o improved trading performance; and o higher summer 2000 forward market electricity prices affecting the mark-to-market valuation. Expenses Fuel and purchased power expenses Fuel and purchased power expenses decreased $289 million and $320 million for the three and six months ended June 30, 2000, respectively. The decrease is attributable to decreased electricity and gas trading volumes in the power marketing and trading business. The overall decrease was partially offset by an increase in fuel and purchased power expenses related to the operation of Pilgrim. Other operation and maintenance Other operation and maintenance expenses increased $28 million for the six months ended June 30, 2000. The increase is primarily attributable to expenses incurred by the non-utility nuclear business from the operation of Pilgrim. Other Other income Other income increased $25 million and $17 million for the three and six months ended June 30, 2000, respectively, due to the following: o liquidated damages of $32.9 million ($23.0 million net of tax) received from the Saltend contractor as compensation for lost operating margin from the plant due to construction delays; o a $20.5 million ($13.3 million net of tax) gain on the sale in June 2000 of the global power development business' investment in the Freestone project located in Fairfield, Texas; and o an increase in interest and dividend income in 2000. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Partially offsetting these increases were the following in 1999: o a $26.7 million ($17 million net of tax) gain on the sale of Entergy Power Edesur Holdings in June; o a $12.9 million ($8 million net of tax) gain on sale of the Entergy Hyperion Telecommunications in June; o a $12.5 million ($.6 million net of tax) gain on the sale of Entergy Security, Inc. in January; and o a $7.6 million ($4.9 million net of tax) favorable adjustment to the final sale price of CitiPower in January. Interest charges Other interest charges increased $10 million and $16 million for the three and six months ended June 30, 2000, respectively, primarily due to the accretion of the decommissioning liability associated with Pilgrim and higher interest expense from increased borrowings on Entergy Corporation's short-term credit facility. Income Taxes The effective income tax rates for the three months ended June 30, 2000 and 1999 were 37.9% and 29.2%, respectively. The effective income tax rates for the six months ended June 30, 2000 and 1999 were 39.6% and 31.8%, respectively. The increase was primarily due to the recognition in 1999 of deferred tax benefits related to the expected utilization of foreign tax credits resulting in lower income taxes. ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited)
Three Months Ended Six Months Ended 2000 1999 2000 1999 (In Thousands, Except Share Data) OPERATING REVENUES Domestic electric $1,664,688 $1,613,136 $3,017,570 $2,851,719 Natural gas 28,396 22,149 74,292 59,880 Steam products - 7,254 - 15,550 Competitive businesses 444,704 673,865 857,418 1,029,177 ----------------------------------------------------- TOTAL 2,137,788 2,316,404 3,949,280 3,956,326 ----------------------------------------------------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 464,436 490,871 962,190 893,844 Purchased power 502,521 676,827 872,064 1,050,626 Nuclear refueling outage expenses 16,629 17,135 35,186 36,820 Other operation and maintenance 450,223 410,707 827,634 778,338 Decommissioning 6,169 10,758 17,106 23,432 Taxes other than income taxes 83,540 83,053 163,158 166,121 Depreciation and amortization 178,749 176,707 357,025 361,549 Other regulatory credits - net (5,900) (2,372) (20,506) (18,970) Amortization of rate deferrals 7,883 88,767 15,279 97,180 ----------------------------------------------------- TOTAL 1,704,250 1,952,453 3,229,136 3,388,940 ----------------------------------------------------- OPERATING INCOME 433,538 363,951 720,144 567,386 ----------------------------------------------------- OTHER INCOME Allowance for equity funds used during construction 8,041 7,348 15,735 12,759 Gain on sale of assets 21,057 40,718 21,574 61,301 Miscellaneous - net 73,651 40,064 102,633 60,016 ----------------------------------------------------- TOTAL 102,749 88,130 139,942 134,076 ----------------------------------------------------- INTEREST AND OTHER CHARGES Interest on long-term debt 118,462 120,164 232,121 242,695 Other interest - net 23,369 36,942 43,652 45,483 Distributions on preferred securities of subsidiary 4,709 4,710 9,419 9,419 Allowance for borrowed funds used during Construction (5,889) (5,926) (11,977) (10,405) ----------------------------------------------------- TOTAL 140,651 155,890 273,215 287,192 ----------------------------------------------------- INCOME BEFORE INCOME TAXES 395,636 296,191 586,871 414,270 Income taxes 149,863 86,433 232,688 131,606 ----------------------------------------------------- CONSOLIDATED NET INCOME 245,773 209,758 354,183 282,664 Preferred dividend requirements and other 8,581 9,981 18,131 20,706 ----------------------------------------------------- EARNINGS APPLICABLE TO COMMON STOCK $237,192 $199,777 $336,052 $261,958 ===================================================== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2000 and 1999 (Unaudited)
2000 1999 (In Thousands) OPERATING ACTIVITIES Consolidated net income $354,183 $282,664 Noncash items included in net income: Amortization of rate deferrals 15,279 97,180 Reserve for regulatory adjustments 37,113 13,344 Other regulatory credits - net (20,506) (18,970) Depreciation, amortization, and decommissioning 374,131 384,981 Deferred income taxes and investment tax credits (25,070) (180,410) Allowance for equity funds used during construction (15,735) (12,759) Gain on sale of assets - net (21,574) (61,301) Changes in working capital: Receivables (219,406) (427,677) Fuel inventory (28,416) (36,600) Accounts payable 185,462 353,302 Taxes accrued 131,612 262,406 Interest accrued 26,391 (35,306) Deferred fuel (154,214) (18,029) Other working capital accounts 59,295 (86,458) Provision for estimated losses and reserves (28,396) (24,632) Changes in other regulatory assets (32,028) (32,960) Other 99,715 132,513 ------------------------ Net cash flow provided by operating activities 737,836 591,288 ------------------------ INVESTING ACTIVITIES Construction/capital expenditures (822,584) (545,842) Allowance for equity funds used during construction 15,735 12,759 Nuclear fuel purchases (73,533) (92,196) Proceeds from sale/leaseback of nuclear fuel 43,758 75,097 Proceeds from sale of businesses 61,519 351,082 Investment in other nonregulated/nonutility properties (98,493) (14,406) Proceeds from other temporary investments 298,251 - Decommissioning trust contributions and realized change in trust assets (26,732) (35,738) Other 5,624 11,909 ------------------------ Net cash flow used in investing activities (596,455) (237,335) ------------------------ See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) FINANCING ACTIVITIES Proceeds from the issuance of: Long-term debt 925,889 617,220 Common stock 9,385 11,664 Retirement of long-term debt (103,970) (608,112) Repurchase of common stock (392,591) (14,957) Redemption of preferred and preference stock (152,493) (76,758) Changes in short-term borrowings - net 315,000 (215,500) Dividends paid: Common stock (139,585) (144,059) Preferred stock (16,715) (21,671) ------------------------- Net cash flow provided by (used in) financing activities 444,920 (452,173) ------------------------- Effect of exchange rates on cash and cash equivalents (2,946) (541) ------------------------- Net increase (decrease) in cash and cash equivalents 583,355 (98,761) Cash and cash equivalents at beginning of period 1,213,719 1,184,495 ------------------------- Cash and cash equivalents at end of period $1,797,074 $1,085,734 ========================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $224,697 $319,456 Income taxes $94,478 $50,819 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $7,379 $24,544 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $156,068 $108,198 Temporary cash investments - at cost, which approximates market 1,637,028 1,105,521 Special deposits 3,978 - ------------------------- Total cash and cash equivalents 1,797,074 1,213,719 ------------------------- Other temporary investments - at cost, which approximates market 23,100 321,351 Notes receivable 3,643 2,161 Accounts receivable: Customer 299,948 290,331 Allowance for doubtful accounts (9,007) (9,507) Other 354,719 207,898 Accrued unbilled revenues 375,983 298,616 ------------------------- Total receivables 1,021,643 787,338 ------------------------- Deferred fuel costs 394,875 240,661 Fuel inventory - at average cost 122,835 94,419 Materials and supplies - at average cost 358,217 392,403 Rate deferrals 24,265 30,394 Deferred nuclear refueling outage costs 33,708 58,119 Prepayments and other 101,796 78,567 ------------------------- TOTAL 3,881,156 3,219,132 ------------------------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 214 214 Decommissioning trust funds 1,284,301 1,246,023 Non-utility property - at cost (less accumulated depreciation) 327,191 317,165 Non-regulated investments 264,442 198,003 Other - at cost (less accumulated depreciation) 22,145 16,714 ------------------------- TOTAL 1,898,293 1,778,119 ------------------------- UTILITY PLANT Electric 23,421,808 23,163,161 Plant acquisition adjustment 398,797 406,929 Property under capital lease 771,466 768,500 Natural gas 190,000 186,041 Construction work in progress 1,960,517 1,500,617 Nuclear fuel under capital lease 262,996 286,476 Nuclear fuel 109,098 87,693 ------------------------- TOTAL UTILITY PLANT 27,114,682 26,399,417 Less - accumulated depreciation and amortization 11,248,370 10,898,661 ------------------------- UTILITY PLANT - NET 15,866,312 15,500,756 ------------------------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 7,430 16,581 SFAS 109 regulatory asset - net 1,031,503 1,068,006 Unamortized loss on reacquired debt 192,493 198,631 Other regulatory assets 706,401 637,870 Long-term receivables 30,970 32,260 Other 709,718 533,732 ------------------------- TOTAL 2,678,515 2,487,080 ------------------------- TOTAL ASSETS $24,324,276 $22,985,087 ========================= See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $194,108 $194,555 Notes payable 435,716 120,715 Accounts payable 796,560 707,678 Customer deposits 164,986 161,909 Taxes accrued 580,593 445,677 Accumulated deferred income taxes 115,987 72,640 Nuclear refueling outage costs 2,329 11,216 Interest accrued 153,388 129,028 Co-owner advances 14,382 7,018 Obligations under capital leases 175,466 178,247 Other 173,865 125,749 ------------------------- TOTAL 2,807,380 2,154,432 ------------------------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 3,224,430 3,310,340 Accumulated deferred investment tax credits 506,142 519,910 Obligations under capital leases 177,874 205,464 FERC settlement - refund obligation 34,143 37,337 Other regulatory liabilities 225,843 199,139 Decommissioning 725,858 703,453 Transition to competition 176,722 157,034 Regulatory reserves 415,420 378,307 Accumulated provisions 280,378 279,425 Other 818,711 535,156 ------------------------- TOTAL 6,585,521 6,325,565 ------------------------- Long-term debt 7,378,602 6,612,583 Preferred stock with sinking fund 69,650 69,650 Preference stock - 150,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holdingsolely junior subordinated deferrable debentures 215,000 215,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 335,961 338,455 Common stock, $.01 par value, authorized 500,000,000 shares; issued 247,172,239 shares in 2000 and 247,082,345 shares in 1999 2,472 2,471 Paid-in capital 4,636,407 4,636,163 Retained earnings 2,982,495 2,786,467 Accumulated other comprehensive income: Cumulative foreign currency translation adjustment (69,811) (68,782) Net unrealized investment losses (6,275) (5,023) Less - treasury stock, at cost (23,709,144 shares in 2000 and 8,045,434 shares in 1999) 613,126 231,894 ------------------------- TOTAL 7,268,123 7,457,857 ------------------------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $24,324,276 $22,985,087 ========================= See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended 2000 1999 (In Thousands) RETAINED EARNINGS Retained Earnings - Beginning of period $2,814,499 $2,514,735 Add - Earnings applicable to common stock 237,192 $237,192 199,777 $199,777 Deduct: Dividends declared on common stock 68,393 74,031 Capital stock and other expenses 803 108 ---------- ---------- Total 69,196 74,139 ---------- ---------- Retained Earnings - End of period $2,982,495 $2,640,373 ========== ========== ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): Balance at beginning of period ($79,447) ($46,360) Foreign currency translation adjustments (322) (322) (1,337) (1,337) Net unrealized investment gains 3,683 3,683 - - ---------- --------- Balance at end of period ($76,086) ($47,697) ========== -------- ========= -------- Comprehensive Income $240,553 $198,440 ======== ======== PAID-IN CAPITAL Paid-in Capital - Beginning of period $4,636,474 $4,631,040 Other paid in capital (67) 1,486 ---------- ---------- Paid-in Capital - End of period $4,636,407 $4,632,526 ========== ========== Six Months Ended 2000 1999 (In Thousands) RETAINED EARNINGS Retained Earnings - Beginning of period $2,786,467 $2,526,888 Add - Earnings applicable to common stock 336,052 $336,052 261,958 $261,958 Deduct: Dividends declared on common stock 140,051 148,020 Capital stock and other expenses (27) 453 ---------- ---------- Total 140,024 148,473 ---------- ---------- Retained Earnings - End of period $2,982,495 $2,640,373 ========== ========== ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): Balance at beginning of period ($73,805) ($46,739) Foreign currency translation adjustments (1,029) (1,029) (958) (958) Net unrealized investment losses (1,252) (1,252) - - ---------- ---------- Balance at end of period ($76,086) ($47,697) ========== -------- ========== -------- Comprehensive Income $333,771 $261,000 ======== ======== PAID-IN CAPITAL Paid-in Capital - Beginning of period $4,636,163 $4,630,609 Other paid in capital 244 1,917 ---------- ---------- Paid-in Capital - End of period $4,636,407 $4,632,526 ========== ========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited)
Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $524.9 $497.8 $27.1 5 Commercial 387.7 358.8 28.9 8 Industrial 497.1 449.6 47.5 11 Governmental 41.3 38.4 2.9 8 ----------------------------------- Total retail 1,451.0 1,344.6 106.4 8 Sales for resale 92.9 86.8 6.1 7 Other 120.8 181.7 (60.9) (34) ----------------------------------- Total $1,664.7 $1,613.1 $51.6 3 =================================== Billed Electric Energy Sales (GWH): Residential 6,857 6,850 7 - Commercial 5,880 5,741 139 2 Industrial 11,021 10,827 194 2 Governmental 635 624 11 2 ----------------------------------- Total retail 24,393 24,042 351 1 Sales for resale 2,523 2,094 429 20 ----------------------------------- Total 26,916 26,136 780 3 =================================== Six Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $993.1 $929.8 $63.3 7 Commercial 734.5 675.0 59.5 9 Industrial 950.5 856.2 94.3 11 Governmental 80.1 74.4 5.7 8 ---------------------------------- Total retail 2,758.2 2,535.4 222.8 9 Sales for resale 176.2 163.9 12.3 8 Other 83.2 152.4 (69.2) (45) ----------------------------------- Total $3,017.6 $2,851.7 $165.9 6 =================================== Billed Electric Energy Sales (GWH): Residential 13,369 13,267 102 1 Commercial 11,160 10,910 250 2 Industrial 21,638 21,043 595 3 Governmental 1,222 1,213 9 1 ----------------------------------- Total retail 47,389 46,433 956 2 Sales for resale 4,795 4,303 492 11 ----------------------------------- Total 52,184 50,736 1,448 3 ===================================
ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and six months ended June 30, 2000 compared to the three and six months ended June 30, 1999 primarily due to increased electric operating revenues, partially offset by an increase in other operation and maintenance expenses. Revenues and Sales The changes in electric operating revenues for the three months and six months ended June 30, 2000 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease Increase/(Decrease) (In Millions) Base revenues $1.7 $2.4 Rate riders (5.6) (12.0) Fuel cost recovery 10.9 21.7 Sales volume/weather 1.7 3.0 Other revenue (including unbilled) 19.6 27.0 Sales for resale 32.3 53.4 ----- ----- Total $60.6 $95.5 ===== ===== Rate riders Rate rider revenues do not affect net income because they are offset by specific incurred expenses. Rate rider revenues decreased for the three and six months ended June 30, 2000 as a result of the decreased ANO Decommissioning and Grand Gulf rate riders, both of which became effective in January 2000. The ANO Decommissioning rider allows Entergy Arkansas to recover the decommissioning costs associated with ANO 1 and 2. The Grand Gulf rate rider allows Entergy Arkansas to recover its share of operating costs for Grand Gulf 1. 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 months ended June 30, 2000 primarily due to an increase in the energy cost recovery rider (ECR) in April 2000. The increase in the ECR allows Entergy Arkansas to recover previously deferred fuel expenses. Fuel cost recovery revenues increased for the six months ended June 30, 2000 primarily due to the increase in the ECR in April 1999 affecting first quarter revenues and the increase in the ECR in April 2000 affecting second quarter revenues. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other revenue (including unbilled) Other revenue increased for the three and six months ended June 30, 2000 primarily due to increased unbilled revenue volume for retail customers, the addition of unbilled revenue for wholesale customers to the unbilled balance, and the effect of a change in estimate on unbilled revenues in the second quarter of 1999. The changed estimate more closely aligned the fuel component of unbilled revenues with regulatory treatment. Sales for resale Sales for resale increased for the three and six months ended June 30, 2000 primarily due to an increase in the market price of electricity. Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased for the three and six months ended June 30, 2000 primarily due to a shift to higher priced gas generation from lower priced coal generation resulting from planned maintenance outages at the White Bluff and Independence coal plants as well as an increase in the market price of purchased power and increased purchased power volume. Fuel and purchased power expenses also increased for the six months ended June 30, 2000 due to increased nuclear generation in 2000 due to a refueling outage at ANO 2 in the first quarter of 1999. The increased fuel and purchased power expenses for the six months ended June 30, 2000 were partially offset by an adjustment to the deferred fuel balance to reflect deferred fuel costs that Entergy Arkansas expects to recover in the future. Other operation and maintenance Other operation and maintenance expenses increased for the three and six months ended June 30, 2000 primarily due to: o capitalization of costs in June 1999 associated with return-to- service projects for certain fossil plants; o increased vegetation management costs; and o increased expenses for outside services employed. These increased expenses for the six months ended June 30, 2000 were partially offset by a larger nuclear insurance refund in 2000 compared to 1999. Decommissioning Decommissioning expense decreased for the three and six months ended June 30, 2000 primarily due to a true-up of the decommissioning liability in June 2000 for previous over-accruals. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other regulatory credits Other regulatory credits increased for the three and six months ended June 30, 2000 primarily due to an increased under-recovery of Grand Gulf 1 costs as a result of the decreased rate rider that became effective in January 2000 as ordered by the APSC. This increase was partially offset by an adjustment to the transition cost account as discussed in Note 2 to the financial statements. Other Income taxes The effective income tax rates for the three months ended June 30, 2000 and 1999 were 38.5% and 32.4%, respectively. The effective income tax rates for the six months ended June 30, 2000 and 1999 were 39.6% and 29.3%, respectively. The increases in the effective tax rates were due to increased pre-tax income for the three and six months ended June 30, 2000 combined with decreased flow-through tax benefits during those periods. These flow-through items include a tax liability on nuclear fuel purchases for 2000 compared with a tax credit on nuclear fuel purchases for 1999. ENTERGY ARKANSAS, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited)
Three Months Ended Six Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $447,823 $387,191 $794,700 $699,160 -------------------------------------------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 102,179 84,855 149,856 133,647 Purchased power 120,163 102,800 218,960 197,743 Nuclear refueling outage expenses 6,439 7,464 12,878 15,530 Other operation and maintenance 99,583 83,255 175,508 165,464 Decommissioning (2,741) 2,317 (713) 4,777 Taxes other than income taxes 8,979 9,259 17,695 18,516 Depreciation and amortization 41,695 40,929 82,996 82,598 Other regulatory credits - net (11,405) (3,900) (22,170) (11,487) --------------------------------------------- TOTAL 364,892 326,979 635,010 606,788 --------------------------------------------- OPERATING INCOME 82,931 60,212 159,690 92,372 --------------------------------------------- OTHER INCOME Allowance for equity funds used during construction 3,842 3,434 7,420 5,845 Miscellaneous - net 695 (194) 2,239 742 -------------------------------------------- TOTAL 4,537 3,240 9,659 6,587 -------------------------------------------- INTEREST AND OTHER CHARGES Interest on long-term debt 23,229 20,024 44,134 40,698 Other interest - net 2,111 1,565 4,408 3,090 Distributions on preferred securities of subsidiary 1,275 1,275 2,550 2,550 Allowance for borrowed funds used during construction (2,512) (2,221) (4,816) (3,878) -------------------------------------------- TOTAL 24,103 20,643 46,276 42,460 -------------------------------------------- INCOME BEFORE INCOME TAXES 63,365 42,809 123,073 56,499 Income taxes 24,387 13,880 48,781 16,559 -------------------------------------------- NET INCOME 38,978 28,929 74,292 39,940 Preferred dividend requirements and other 1,944 2,403 3,888 4,824 -------------------------------------------- EARNINGS APPLICABLE TO COMMON STOCK $37,034 $26,526 $70,404 $35,116 ============================================ See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2000 and 1999 (Unaudited)
2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $74,292 $39,940 Noncash items included in net income: Other regulatory credits - net (22,170) (11,487) Depreciation, amortization, and decommissioning 82,283 87,375 Deferred income taxes and investment tax credits (7,228) (8,302) Allowance for equity funds used during construction (7,420) (5,845) Loss on sale of assets - 2 Changes in working capital: Receivables (54,442) (6,379) Fuel inventory (4,858) (14,509) Accounts payable (46,445) 3,009 Taxes accrued 47,006 12,283 Interest accrued 5,535 (927) Deferred fuel costs 1,441 23,797 Other working capital accounts 28,184 8,018 Provision for estimated losses and reserves (2,577) (13,954) Changes in other regulatory assets (17,793) (29,612) Other 33,887 37,603 ----------------------- Net cash flow provided by operating activities 109,695 121,012 ----------------------- INVESTING ACTIVITIES Construction expenditures (156,875) (122,428) Allowance for equity funds used during construction 7,420 5,845 Nuclear fuel purchases (148) (25,859) Proceeds from sale/leaseback of nuclear fuel 148 25,859 Decommissioning trust contributions and realized change in trust assets (5,670) (10,111) ----------------------- Net cash flow used in investing activities (155,125) (126,694) ----------------------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 99,487 - Retirement of: Long-term debt - (39,267) Redemption of preferred stock - (2,027) Dividends paid: Common stock (5,600) (8,200) Preferred stock (1,859) (4,873) ---------------------- Net cash flow provided by (used in) financing activities 92,028 (54,367) ---------------------- Net increase (decrease) in cash and cash equivalents 46,598 (60,049) Cash and cash equivalents at beginning of period 6,862 93,105 ---------------------- Cash and cash equivalents at end of period $53,460 $33,056 ====================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $43,037 $44,738 Income taxes ($883) $12,250 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $4,506 $13,289 See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS ASSETS June 30, 2000 and December 31, 1999 (Unaudited)
2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $6,233 $6,862 Temporary cash investments - at cost, which approximates market 47,227 - ----------------------- Total cash and cash equivalents 53,460 6,862 ----------------------- Accounts receivable: Customer 70,257 73,357 Allowance for doubtful accounts (1,768) (1,768) Associated companies 50,636 27,073 Other 18,770 5,583 Accrued unbilled revenues 74,392 53,600 ----------------------- Total receivables 212,287 157,845 ----------------------- Deferred fuel costs 40,179 41,620 Fuel inventory - at average cost 29,343 24,485 Materials and supplies - at average cost 79,144 85,612 Deferred nuclear refueling outage costs 15,408 28,119 Prepayments and other 8,426 6,480 ----------------------- TOTAL 438,247 351,023 ----------------------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 11,215 11,215 Decommissioning trust funds 354,187 344,011 Non-utility property - at cost (less accumulated depreciation) 1,461 1,463 Other - at cost (less accumulated depreciation) 3,034 3,033 ----------------------- TOTAL 369,897 359,722 ----------------------- UTILITY PLANT Electric 4,912,483 4,854,433 Property under capital lease 43,480 44,471 Construction work in progress 363,311 267,091 Nuclear fuel under capital lease 79,405 85,725 Nuclear fuel 8,085 9,449 ----------------------- TOTAL UTILITY PLANT 5,406,764 5,261,169 Less - accumulated depreciation and amortization 2,480,896 2,401,021 ----------------------- UTILITY PLANT - NET 2,925,868 2,860,148 ----------------------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 185,987 192,344 Unamortized loss on reacquired debt 46,295 48,193 Other regulatory assets 131,109 106,959 Other 12,461 14,125 ----------------------- TOTAL 375,852 361,621 ----------------------- TOTAL ASSETS $4,109,864 $3,932,514 ======================= See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $220 $220 Notes payable 667 667 Accounts payable Associated companies 50,143 81,958 Other 88,330 102,959 Customer deposits 28,043 26,320 Taxes accrued 85,537 38,532 Accumulated deferred income taxes 42,138 38,649 Interest accrued 27,913 22,378 Co-owner advances 22,470 15,338 Obligations under capital leases 55,265 55,150 Other 15,724 11,598 ----------------------- TOTAL 416,450 393,769 ----------------------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 701,715 713,622 Accumulated deferred investment tax credits 90,822 94,852 Obligations under capital leases 67,620 75,045 Other regulatory liabilities 93,070 88,563 Transition to competition 116,982 109,933 Accumulated provisions 40,711 43,288 Other 51,099 51,080 ----------------------- TOTAL 1,162,019 1,176,383 ----------------------- Long-term debt 1,235,070 1,130,801 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 46,980,196 shares in 2000 and 1999 470 470 Paid-in capital 591,127 591,127 Retained earnings 528,378 463,614 ----------------------- TOTAL 1,236,325 1,171,561 ----------------------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,109,864 $3,932,514 ======================= See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $112.4 $110.9 $1.5 1 Commercial 72.3 68.5 3.8 6 Industrial 83.9 80.6 3.3 4 Governmental 3.7 3.6 0.1 3 ----------------------------- Total retail 272.3 263.6 8.7 3 Sales for resale Associated companies 93.4 60.9 32.5 53 Non-associated companies 49.1 49.3 (0.2) - Other 33.0 13.4 19.6 146 ----------------------------- Total $447.8 $387.2 $60.6 16 ============================= Billed Electric Energy Sales (GWH): Residential 1,302 1,310 (8) (1) Commercial 1,161 1,128 33 3 Industrial 1,714 1,694 20 1 Governmental 58 57 1 2 ----------------------------- Total retail 4,235 4,189 46 1 Sales for resale Associated companies 2,584 2,734 (150) (5) Non-associated companies 1,341 1,295 46 4 ----------------------------- Total 8,160 8,218 (58) (1) ============================= Six Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $230.1 $227.6 $2.5 1 Commercial 134.5 128.1 6.4 5 Industrial 157.5 151.4 6.1 4 Governmental 7.0 6.9 0.1 1 ----------------------------- Total retail 529.1 514.0 15.1 3 Sales for resale Associated companies 138.1 90.3 47.8 53 Non-associated companies 91.4 85.8 5.6 7 Other 36.1 9.1 27.0 297 ----------------------------- Total $794.7 $699.2 $95.5 14 ============================= Billed Electric Energy Sales (GWH): Residential 2,852 2,865 (13) - Commercial 2,237 2,187 50 2 Industrial 3,366 3,300 66 2 Governmental 112 112 - - ----------------------------- Total retail 8,567 8,464 103 1 Sales for resale Associated companies 4,265 4,270 (5) - Non-associated companies 2,491 2,116 375 18 ----------------------------- Total 15,323 14,850 473 3 ============================= ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and six months ended June 30, 2000 compared to the three and six months ended June 30, 1999 due to increased sales volume, decreased other operation and maintenance expenses, decreased depreciation and amortization expenses, and decreases in regulatory reserves. The increase for the six months ended June 30, 2000 was partially offset by an adjustment to the deferred fuel balance to reflect regulatory actions in the first quarter of 2000. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the three and six months ended June 30, 2000 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($54.3) ($45.9) Fuel cost recovery 65.5 116.6 Sales volume/weather 7.9 14.8 Other revenue (including unbilled) 6.8 5.0 Sales for resale 20.2 22.6 ----- ------ Total $46.1 $113.1 ===== ====== Base revenues Base revenues decreased for the three and six months ended June 30, 2000 primarily due to the reversal of regulatory reserves associated with the accelerated amortization of accounting order deferrals in 1999 in conjunction with the Texas rate settlement, the net income effect in 1999 of which was largely offset by the amortization of rate deferrals discussed below. These decreases were partially offset by reserves recorded in 1999 for actual and potential refunds to Louisiana and Texas retail customers at Entergy Gulf States. 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 six months ended June 30, 2000 due to a higher fuel factor that became effective in September 1999 and a fuel surcharge implemented in January 2000 in the Texas jurisdiction. Fuel cost recovery revenues also increased due to higher fuel and purchased power costs in the Louisiana jurisdiction due to increased market prices. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Sales volume/weather Sales volume increased for the three and six months ended June 30, 2000 due to more favorable weather as well as increased usage primarily by industrial customers in both Louisiana and Texas. Sales for resale Sales for resale increased for the three and six months ended June 30, 2000 primarily due to increased generation and subsequent sales from River Bend in the second quarter of 2000 as a result of a refueling outage in the second quarter of 1999. Steam operating revenues Steam operating revenues decreased for the three and six months ended June 30, 2000 due to a new lease arrangement that began in June 1999 for the Louisiana Station generating facility. Under the terms of this new lease, revenues and expenses are now classified as other income rather than steam operating revenues and other operation and maintenance expenses, respectively, which were the previous classifications. Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased for the three and six months ended June 30, 2000 due to: o an adjustment of the Texas jurisdiction deferred fuel balance as a result of the fuel reconciliation settlement with the PUCT; o increased nuclear fuel expense in the second quarter of 2000 due to a scheduled outage at River Bend in the second quarter of 1999; and o higher market prices for gas and purchased power. Other operation and maintenance Other operation and maintenance expenses decreased for the three and six months ended June 30, 2000 primarily due to: o decreased maintenance of general plant in 2000; o decreased requirements for environmental and injuries and damages reserves in 2000; and o lower salary expense. Depreciation and amortization Depreciation and amortization decreased for the three and six months ended June 30, 2000 primarily due to reduced River Bend depreciation expense as a result of the write-down of the River Bend abeyed plant required by the Texas rate settlement in June 1999. Amortization of rate deferrals Amortization of rate deferrals decreased for the three and six months ended June 30, 2000 primarily due to the large reduction in the rate deferral balance upon the PUCT's approval in June 1999 of the Texas rate settlement. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other Other income Other income decreased for the three and six months ended June 30, 2000 due to the reversal of the provision for abeyed River Bend plant costs in 1999, which exceeded the write-down of the plant as the result of the June 1999 PUCT approval of the settlement agreement. Income taxes The effective income tax rates for the three months ended June 30, 2000 and 1999 were 32.8% and 48.6%, respectively. The effective income tax rates for the six months ended June 30, 2000 and 1999 were 35.4% and 49.0%, respectively. The decreases in effective income tax rates for the three and six months ended June 30, 2000 are primarily due to tax adjustments in June 2000 for River Bend abeyed plant and an increase in flow-through and permanent items. ENTERGY GULF STATES, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited)
Three Months Ended Six Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $580,103 $534,022 $1,050,905 $937,828 Natural gas 6,283 5,267 18,697 16,984 Steam products - 7,254 - 15,550 --------------------------------------------- TOTAL 586,386 546,543 1,069,602 970,362 --------------------------------------------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 168,989 132,690 360,539 271,265 Purchased power 115,145 86,937 187,280 132,529 Nuclear refueling outage expenses 3,090 2,678 8,583 5,357 Other operation and maintenance 100,340 106,500 197,240 206,055 Decommissioning 1,568 1,510 3,136 4,790 Taxes other than income taxes 27,904 26,085 54,758 55,810 Depreciation and amortization 46,560 49,325 93,378 99,832 Other regulatory credits - net (3,645) (2,892) (11,790) (12,287) Amortization of rate deferrals 1,402 82,124 2,804 84,393 --------------------------------------------- TOTAL 461,353 484,957 895,928 847,744 --------------------------------------------- OPERATING INCOME 125,033 61,586 173,674 122,618 --------------------------------------------- OTHER INCOME Allowance for equity funds used during construction 1,745 1,091 3,486 2,317 Gain on sale of assets 532 462 1,047 909 Miscellaneous - net (20) 5,957 3,410 6,554 -------------------------------------------- TOTAL 2,257 7,510 7,943 9,780 -------------------------------------------- INTEREST AND OTHER CHARGES Interest on long-term debt 34,812 34,288 67,188 69,528 Other interest - net 1,705 888 3,110 1,572 Distributions on preferred securities of subsidiary 1,859 1,859 3,719 3,719 Allowance for borrowed funds used during construction (1,602) (1,026) (3,213) (2,135) -------------------------------------------- TOTAL 36,774 36,009 70,804 72,684 -------------------------------------------- INCOME BEFORE INCOME TAXES 90,516 33,087 110,813 59,714 Income taxes 29,701 16,065 39,241 29,255 -------------------------------------------- NET INCOME 60,815 17,022 71,572 30,459 Preferred dividend requirements and other 3,175 4,115 7,319 8,666 -------------------------------------------- EARNINGS APPLICABLE TO COMMON STOCK $57,640 $12,907 $64,253 $21,793 ============================================ See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $71,572 $30,459 Noncash items included in net income: Amortization of rate deferrals 2,804 84,393 Reserve for regulatory adjustments (638) (53,479) Other regulatory credits - net (11,790) (12,287) Depreciation, amortization, and 96,514 104,622 decommissioning Deferred income taxes and investment tax (12,174) 367 credits Allowance for equity funds used during (3,486) (2,317) construction Gain on sale of assets (1,047) (909) Changes in working capital: Receivables (76,632) (32,098) Fuel inventory (6,898) (13,939) Accounts payable 25,972 (2,652) Taxes accrued 19,347 26,997 Interest accrued 16,507 (754) Deferred fuel costs (24,849) (10,501) Other working capital accounts 5,945 (15,889) Provision for estimated losses and reserves (3,075) 2,694 Changes in other regulatory assets (18,426) 13,228 Other 25,930 (26,190) -------------------- Net cash flow provided by operating activities 105,576 91,745 -------------------- INVESTING ACTIVITIES Construction expenditures (138,464) (77,340) Allowance for equity funds used during construction 3,486 2,317 Nuclear fuel purchases (33,510) (37,930) Proceeds from sale/leaseback of nuclear fuel 13,797 37,930 Decommissioning trust contributions and realized change in trust assets (5,489) (5,866) -------------------- Net cash flow used in investing activities (160,180) (80,889) -------------------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 299,086 21,775 Retirement of: Long-term debt - (47,095) Redemption of preferred and preference (152,493) (24,731) stock Dividends paid: Common stock (14,200) - Preferred stock (8,174) (8,758) -------------------- Net cash flow provided by (used in) 124,219 (58,809) financing activities -------------------- Net increase (decrease) in cash and cash equivalents 69,615 (47,953) Cash and cash equivalents at beginning of period 32,312 115,736 -------------------- Cash and cash equivalents at end of period $101,927 $67,783 ==================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $54,877 $72,247 Income taxes $33,835 $10,934 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $2,128 $9,658 See Notes to Financial Statements. ENTERGY GULF STATES, INC. BALANCE SHEETS ASSETS June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $9,792 $8,607 Temporary cash investments - at cost, which approximates market 92,135 23,705 ----------------------- Total cash and cash equivalents 101,927 32,312 ----------------------- Accounts receivable: Customer 83,936 73,215 Allowance for doubtful accounts (1,828) (1,828) Associated companies 13,352 1,706 Other 40,658 15,030 Accrued unbilled revenues 119,034 90,396 ----------------------- Total receivables 255,152 178,519 ----------------------- Deferred fuel costs 159,306 134,458 Fuel inventory - at average cost 45,170 38,271 Materials and supplies - at average cost 103,523 112,585 Rate deferrals 5,606 5,606 Prepayments and other 22,483 21,750 ----------------------- TOTAL 693,167 523,501 ----------------------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 242,294 234,677 Non-utility property - at cost (less accumulated depreciation) 192,762 187,759 Other - at cost (less accumulated depreciation) 14,672 13,681 ----------------------- TOTAL 449,728 436,117 ----------------------- UTILITY PLANT Electric 7,444,157 7,365,407 Property under capital lease 42,847 46,210 Natural gas 54,163 52,473 Construction work in progress 190,003 145,492 Nuclear fuel under capital lease 53,416 70,801 Nuclear fuel 18,905 - ----------------------- TOTAL UTILITY PLANT 7,803,491 7,680,383 Less - accumulated depreciation and amortization 3,620,455 3,534,473 ----------------------- UTILITY PLANT - NET 4,183,036 4,145,910 ----------------------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 2,803 5,606 SFAS 109 regulatory asset - net 389,734 385,405 Unamortized loss on reacquired debt 39,694 40,576 Other regulatory assets 154,255 140,157 Long-term receivables 30,970 32,260 Other 16,181 23,490 ----------------------- TOTAL 633,637 627,494 ----------------------- TOTAL ASSETS $5,959,568 $5,733,022 ======================= See Notes to Financial Statements. ENTERGY GULF STATES, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Accounts payable: Associated companies $53,446 $79,962 Other 166,932 114,444 Customer deposits 36,275 33,360 Taxes accrued 121,146 101,798 Accumulated deferred income taxes 41,455 27,960 Nuclear refueling outage costs 2,329 11,216 Interest accrued 45,077 28,570 Obligations under capital leases 50,611 51,973 Other 17,226 14,557 ----------------------- TOTAL 534,497 463,840 ----------------------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 1,082,644 1,098,882 Accumulated deferred investment tax credits 174,750 178,500 Obligations under capital leases 45,651 65,038 Other regulatory liabilities 19,185 20,089 Decommissioning 140,524 139,194 Transition to competition 59,741 47,101 Regulatory reserves 109,898 110,536 Accumulated provisions 66,320 69,395 Other 105,974 117,804 ----------------------- TOTAL 1,804,687 1,846,539 ----------------------- Long-term debt 1,931,698 1,631,581 Preferred stock with sinking fund 34,650 34,650 Preference stock - 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 48,951 51,444 Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares in 2000 and 1999 114,055 114,055 Paid-in capital 1,153,195 1,153,131 Retained earnings 252,835 202,782 ----------------------- TOTAL 1,569,036 1,521,412 ----------------------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,959,568 $5,733,022 ======================= See Notes to Financial Statements. ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $159.1 $137.2 $21.9 16 Commercial 120.8 103.0 17.8 17 Industrial 208.2 170.4 37.8 22 Governmental 8.0 6.8 1.2 18 ---------------------------- Total retail 496.1 417.4 78.7 19 Sales for resale Associated companies 11.6 0.9 10.7 256 Non-associated companies 24.8 15.3 9.5 62 Other 47.6 100.4 (52.8) (53) --------------------------- Total $580.1 $534.0 $46.1 9 =========================== Billed Electric Energy Sales (GWH): Residential 2,100 2,039 61 3 Commercial 1,864 1,784 80 4 Industrial 4,545 4,442 103 2 Governmental 109 102 7 7 --------------------------- Total retail 8,618 8,367 251 3 Sales for resale Associated companies 44 17 27 159 Non-associated companies 974 428 546 128 --------------------------- Total 9,636 8,812 824 9 =========================== Six Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $296.9 $253.4 $43.5 17 Commercial 229.1 194.5 34.6 18 Industrial 392.6 326.6 66.0 20 Governmental 15.8 13.3 2.5 19 ----------------------------- Total retail 934.4 787.8 146.6 19 Sales for resale Associated companies 18.0 4.7 13.3 104 Non-associated companies 45.3 36.0 9.3 26 Other 53.2 109.3 (56.1) (51) ----------------------------- Total $1,050.9 $937.8 $113.1 12 ============================= Billed Electric Energy Sales (GWH): Residential 3,934 3,842 92 2 Commercial 3,506 3,384 122 4 Industrial 8,915 8,556 359 4 Governmental 214 202 12 6 ----------------------------- Total retail 16,569 15,984 585 4 Sales for resale Associated companies 231 170 61 36 Non-associated companies 1,773 1,413 360 25 ----------------------------- Total 18,573 17,567 1,006 6 ============================= ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three and six months ended June 30, 2000 compared to the three and six months ended June 30, 1999 primarily due to a decrease in unbilled revenues and an increase in other operation and maintenance expenses. Net income also decreased for the six months ended June 30, 2000 due to an increase in provisions for potential rate refunds. Revenues and Sales The changes in electric operating revenues for the three and six months ended June 30, 2000 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues $0.6 ($28.9) Fuel cost recovery 4.9 26.3 Sales volume/weather (1.8) 6.8 Other revenue (including unbilled) (52.8) (57.0) Sales for resale (8.4) (10.0) ------ ------ Total ($57.5) ($62.8) ====== ====== Base revenues Base revenues decreased for the six months ended June 30, 2000 primarily due to accruals for potential rate refunds. 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 six months ended June 30, 2000 as a result of higher fuel and purchased power expenses primarily due to the increased market price of natural gas. Sales volume/weather Sales volume increased for the six months ended June 30, 2000 primarily due to increased usage by industrial customers, as well as more favorable weather in the residential and commercial sectors. Other revenue (including unbilled) Other revenue decreased for the three and six months ended June 30, 2000 primarily due to the effect of a change in estimate on unbilled revenues in the second quarter of 1999. The changed estimate more closely aligned the fuel component of unbilled revenues with regulatory treatment. The decrease was partially offset by more favorable weather in the second quarter of 2000. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Sales for resale Sales for resale decreased for the three and six months ended June 30, 2000 primarily due to a decrease in gas generation coupled with increased sales to retail customers resulting in less electricity available for resale. Expenses Fuel and purchased power expenses Fuel and purchased power expenses decreased for the three months ended June 30, 2000 primarily due to an increased under- recovery of fuel costs compared to 1999 due to higher fuel prices in May and June 2000. These under-recoveries will be recovered in future months at which time the effect of the increased prices will be reflected in fuel expense. Fuel and purchased power expenses increased for the six months ended June 30, 2000 primarily due to a shift to higher priced purchased power due to reduced gas and nuclear generation and higher market prices for gas. The decrease in nuclear generation was due to a planned maintenance outage at Waterford 3 in June 2000. Other operation and maintenance Other operation and maintenance expenses increased for the three and six months ended June 30, 2000 primarily due to: o capitalization of costs in 1999 associated with return-to- service projects; o maintenance and planned maintenance outages at Waterford 3 and certain fossil plants; o insurance settlement proceeds received in 1999; o increased vegetation management costs; and o increased environmental reserves. Other Interest charges Interest on long-term debt decreased for the three and six months ended June 30, 2000 primarily due to the refinancing and net redemption of $77 million of long-term debt in 1999, partially offset by the issuance of $150 million of long-term debt in May 2000. Income taxes The effective income tax rates for the three months ended June 30, 2000 and 1999 were 40.1% and 39.4%, respectively. The effective income tax rates for the six months ended June 30, 2000 and 1999 were 41.2% and 40.0%, respectively.
ENTERGY LOUISIANA, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Six Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $448,067 $505,601 $794,888 $857,736 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 48,748 104,399 131,940 162,623 Purchased power 145,243 92,119 234,119 184,582 Nuclear refueling outage expenses 3,410 3,487 6,820 8,923 Other operation and maintenance 85,098 65,511 148,173 133,315 Decommissioning 2,606 2,197 5,211 4,393 Taxes other than income taxes 17,953 18,426 34,715 36,670 Depreciation and amortization 42,182 40,184 84,329 81,963 Other regulatory charges - net 240 - 480 - -------- -------- -------- -------- TOTAL 345,480 326,323 645,787 612,469 -------- -------- -------- -------- OPERATING INCOME 102,587 179,278 149,101 245,267 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 1,196 1,732 1,879 2,493 Miscellaneous - net 435 621 543 579 -------- -------- -------- -------- TOTAL 1,631 2,353 2,422 3,072 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 23,779 26,691 47,942 53,744 Other interest - net 1,896 1,041 3,946 2,212 Distributions on preferred securities of subsidiary 1,575 1,575 3,150 3,150 Allowance for borrowed funds used during construction (911) (1,716) (1,868) (2,367) -------- -------- -------- -------- TOTAL 26,339 27,591 53,170 56,739 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 77,879 154,040 98,353 191,600 Income taxes 31,192 60,669 40,474 76,742 -------- -------- -------- -------- NET INCOME 46,687 93,371 57,879 114,858 Preferred dividend requirements and other 2,378 2,378 4,757 5,048 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $44,309 $90,993 $53,122 $109,810 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $57,879 $114,858 Noncash items included in net income: Other regulatory charges - net 480 - Depreciation, amortization, and decommissioning 89,540 86,356 Deferred income taxes and investment tax credits 15,191 8,042 Allowance for equity funds used during construction (1,879) (2,493) Changes in working capital: Receivables (12,108) (60,053) Fuel inventory - (489) Accounts payable (57,456) (16,718) Taxes accrued 25,659 79,628 Interest accrued 10,250 (23,195) Deferred fuel costs (80,801) (17,934) Other working capital accounts 29,378 (11,062) Provision for estimated losses and reserves 3,375 112 Changes in other regulatory assets 6,663 13,901 Other (8,977) (16,283) -------- -------- Net cash flow provided by operating activities 77,194 154,670 -------- -------- INVESTING ACTIVITIES Construction expenditures (90,488) (55,932) Allowance for equity funds used during construction 1,879 2,493 Nuclear fuel purchases (29,806) (11,308) Proceeds from sale/leaseback of nuclear fuel 29,806 11,308 Decommissioning trust contributions and realized change in trust assets (4,030) (8,497) -------- -------- Net cash flow used in investing activities (92,639) (61,936) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 149,003 188,226 Retirement of: Long-term debt (100,000) (129,147) Redemption of preferred stock - (50,000) Dividends paid: Common stock (6,200) (31,900) Preferred stock (4,757) (5,632) -------- -------- Net cash flow provided by (used in) financing activities 38,046 (28,453) -------- -------- Net increase in cash and cash equivalents 22,601 64,281 Cash and cash equivalents at beginning of period 7,734 83,030 -------- -------- Cash and cash equivalents at end of period $30,335 $147,311 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $40,981 $79,593 Income taxes $17,572 $12,270 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $545 $2,389 See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS ASSETS June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $8,940 $7,734 Temporary cash investments - at cost, which approximates market 21,395 - ---------- ---------- Total cash and cash equivalents 30,335 7,734 ---------- ---------- Notes receivable 1,503 3 Accounts receivable: Customer 86,169 79,335 Allowance for doubtful accounts (1,615) (1,615) Associated companies 8,775 14,601 Other 10,762 10,762 Accrued unbilled revenues 117,300 106,200 ---------- ---------- Total receivables 221,391 209,283 ---------- ---------- Deferred fuel costs 82,963 2,161 Accumulated deferred income taxes - 12,520 Materials and supplies - at average cost 77,595 84,027 Deferred nuclear refueling outage costs 4,139 11,336 Prepayments and other 11,953 6,011 ---------- ---------- TOTAL 429,879 333,075 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 14,230 14,230 Decommissioning trust funds 105,518 100,943 Non-utility property - at cost (less accumulated depreciation) 21,800 21,433 ---------- ---------- TOTAL 141,548 136,606 ---------- ---------- UTILITY PLANT Electric 5,226,394 5,178,808 Property under capital lease 236,272 236,271 Construction work in progress 146,868 108,106 Nuclear fuel under capital lease 66,945 51,930 ---------- ---------- TOTAL UTILITY PLANT 5,676,479 5,575,115 Less - accumulated depreciation and amortization 2,377,723 2,294,394 ---------- ---------- UTILITY PLANT - NET 3,298,756 3,280,721 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 219,846 230,899 Unamortized loss on reacquired debt 35,719 35,856 Other regulatory assets 54,582 50,191 Other 13,996 17,302 ---------- ---------- TOTAL 324,143 334,248 ---------- ---------- TOTAL ASSETS $4,194,326 $4,084,650 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $35,088 $116,388 Accounts payable Associated companies 55,786 137,869 Other 115,395 90,768 Customer deposits 57,539 61,096 Taxes accrued 51,522 25,863 Accumulated deferred income taxes 15,763 - Interest accrued 30,486 20,236 Obligations under capital leases 28,387 28,387 Other 86,487 59,737 ---------- ---------- TOTAL 476,453 540,344 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 772,345 792,290 Accumulated deferred investment tax credits 120,154 123,155 Obligations under capital leases 38,558 23,543 Other regulatory liabilities 15,966 15,421 Accumulated provisions 61,462 58,087 Other 34,116 34,564 ---------- ---------- TOTAL 1,042,601 1,047,060 ---------- ---------- Long-term debt 1,276,567 1,145,463 Preferred stock with sinking fund 35,000 35,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 70,000 70,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 100,500 100,500 Common stock, no par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares in 2000 and 1999 1,088,900 1,088,900 Capital stock expense and other (2,171) (2,171) Retained earnings 106,476 59,554 ---------- ---------- TOTAL 1,293,705 1,246,783 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,194,326 $4,084,650 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $143.3 $145.2 ($1.9) (1) Commercial 94.9 94.0 0.9 1 Industrial 160.8 156.3 4.5 3 Governmental 8.4 8.2 0.2 2 ------ ------ ------ Total retail 407.4 403.7 3.7 1 Sales for resale Associated companies 0.2 5.4 (5.2) (96) Non-associated companies 10.0 13.2 (3.2) (24) Other 30.5 83.3 (52.8) (63) ------ ------ ------ Total $448.1 $505.6 ($57.5) (11) ====== ====== ====== Billed Electric Energy Sales (GWH): Residential 1,939 1,971 (32) (2) Commercial 1,296 1,287 9 1 Industrial 3,881 3,777 104 3 Governmental 117 115 2 2 ------ ------ ------ Total retail 7,233 7,150 83 1 Sales for resale Associated companies 3 142 (139) (98) Non-associated companies 110 233 (123) (53) ------ ------ ------ Total 7,346 7,525 (179) (2) ====== ====== ====== Six Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $262.3 $257.4 $4.9 2 Commercial 178.2 173.2 5.0 3 Industrial 313.5 294.6 18.9 6 Governmental 16.4 15.9 0.5 3 ------ ------ ------ Total retail 770.4 741.1 29.3 4 Sales for resale Associated companies 0.7 7.9 (7.2) (91) Non-associated companies 21.5 24.3 (2.8) (12) Other 2.3 84.4 (82.1) (97) ------ ------ ------ Total $794.9 $857.7 ($62.8) (7) ====== ====== ====== Billed Electric Energy Sales (GWH): Residential 3,672 3,661 11 - Commercial 2,444 2,418 26 1 Industrial 7,642 7,403 239 3 Governmental 231 230 1 - ------ ------ ------ Total retail 13,989 13,712 277 2 Sales for resale Associated companies 17 240 (223) (93) Non-associated companies 313 477 (164) (34) ------ ------ ------ Total 14,319 14,429 (110) (1) ====== ====== ====== ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and six months ended June 30, 2000 compared to the three and six months ended June 30, 1999 primarily due to an increase in unbilled revenues and other income, partially offset by increased rate reductions and increased other operation and maintenance expenses. Revenues and Sales The changes in electric operating revenues for the three and six months ended June 30, 2000 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($0.6) ($3.9) Grand Gulf rate rider 0.8 1.4 Fuel cost recovery 11.2 22.3 Sales volume/weather 0.1 1.2 Other revenue (including unbilled) 10.6 17.3 Sales for resale (1.1) (17.0) ----- ----- Total $21.0 $21.3 ===== ===== Base revenues Base revenues decreased for the six months ended June 30, 2000 primarily due to base rate reductions that became effective in May 1999 and May 2000. 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 six months ended June 30, 2000 primarily due to an increase in the energy cost recovery rider effective January 2000. Other revenue (including unbilled) Other revenue increased for the three and six months ended June 30, 2000 primarily due to the effect of favorable weather in the second quarter of 2000 and the effect of a change in estimate on unbilled revenues in the second quarter of 1999. The changed estimate more closely aligned the fuel component of unbilled revenues with regulatory treatment. Sales for resale Sales for resale decreased for the six months ended June 30, 2000 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 early 2000. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Fuel and purchased power expenses Fuel and purchased power expenses increased for the three months ended June 30, 2000 primarily due to: o a shift to higher priced gas generation and purchased power from lower priced coal generation due to a planned outage at Independence in May 2000; o increased purchased power prices; and o increased oil prices. Other operation and maintenance Other operation and maintenance expenses increased for the six months ended June 30, 2000 primarily due to increased plant maintenance and an increase in property insurance expense. Other regulatory credits - net Other regulatory credits decreased for the three and six months ended June 30, 2000 primarily due to a decrease in the deferral of Grand Gulf expenses. Other Other Income The increase in other income for the six months ended June 30, 2000 is primarily due to an increase in AFUDC as a result of higher construction expenditures and an increase in the interest income from the deferral of Grand Gulf 1 expenses. Income taxes The effective income tax rates for the three months ended June 30, 2000 and 1999 were 35.8% and 35.1%, respectively. The effective income tax rates for the six months ended June 30, 2000 and 1999 were 33.9% and 33.7%, respectively.
ENTERGY MISSISSIPPI, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Six Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $215,606 $194,637 $398,381 $377,080 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 31,043 37,341 75,330 96,775 Purchased power 95,038 79,804 171,866 148,269 Other operation and maintenance 43,082 41,795 78,705 72,913 Taxes other than income taxes 11,091 11,042 21,267 21,744 Depreciation and amortization 11,977 10,984 23,702 22,500 Other regulatory credits - net (5,409) (6,958) (14,487) (17,971) -------- -------- -------- -------- TOTAL 186,822 174,008 356,383 344,230 -------- -------- -------- -------- OPERATING INCOME 28,784 20,629 41,998 32,850 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 613 225 1,250 368 Miscellaneous - net 2,380 1,872 4,411 3,490 -------- -------- -------- -------- TOTAL 2,993 2,097 5,661 3,858 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 10,561 9,800 20,014 19,022 Other interest - net 676 601 1,696 1,444 Allowance for borrowed funds used during construction (479) (341) (983) (696) -------- -------- -------- -------- TOTAL 10,758 10,060 20,727 19,770 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 21,019 12,666 26,932 16,938 Income taxes 7,516 4,444 9,132 5,701 -------- -------- -------- -------- NET INCOME 13,503 8,222 17,800 11,237 Preferred dividend requirements and other 842 842 1,685 1,685 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $12,661 $7,380 $16,115 $9,552 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $17,800 $11,237 Noncash items included in net income: Other regulatory credits - net (14,487) (17,971) Depreciation and amortization 23,702 22,500 Deferred income taxes and investment tax credits 2,554 16,220 Allowance for equity funds used during construction (1,250) (368) Changes in working capital: Receivables (14,566) 20,306 Fuel inventory (885) (2,837) Accounts payable (32,666) 21,636 Taxes accrued 8,947 149 Interest accrued 1,908 (3,108) Deferred fuel costs (33,512) (1,341) Other working capital accounts 2,557 5,988 Provision for estimated losses and reserves (591) 848 Changes in other regulatory assets (18,550) (34,867) Other 23,127 17,079 -------- -------- Net cash flow provided by (used in) operating activities (35,912) 55,471 -------- -------- INVESTING ACTIVITIES Construction expenditures (63,770) (34,622) Allowance for equity funds used during construction 1,250 368 -------- -------- Net cash flow used in investing activities (62,520) (34,254) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt 119,175 153,762 Retirement of: Long-term debt - (133,277) Dividends paid: Common stock (5,800) (9,100) Preferred stock (1,685) (1,685) -------- -------- Net cash flow provided by financing activities 111,690 9,700 -------- -------- Net increase in cash and cash equivalents 13,258 30,917 Cash and cash equivalents at beginning of period 4,787 2,640 -------- -------- Cash and cash equivalents at end of period $18,045 $33,557 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $18,600 $22,648 Income taxes ($5,830) $23,711 See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS ASSETS June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $5,112 $4,787 Temporary cash investments - at cost, which approximates market 12,933 - ---------- ---------- Total cash and cash equivalents 18,045 4,787 ---------- ---------- Accounts receivable: Customer 35,241 35,675 Allowance for doubtful accounts (886) (886) Associated companies 4,219 1,370 Other 3,942 2,391 Accrued unbilled revenues 39,200 28,600 ---------- ---------- Total receivables 81,716 67,150 ---------- ---------- Deferred fuel costs 81,451 47,939 Accumulated deferred income taxes 3,797 - Fuel inventory - at average cost 4,659 3,774 Materials and supplies - at average cost 16,323 17,068 Prepayments and other 7,592 7,114 ---------- ---------- TOTAL 213,583 147,832 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 5,531 5,531 Non-utility property - at cost (less accumulated depreciation) 6,915 6,965 ---------- ---------- TOTAL 12,446 12,496 ---------- ---------- UTILITY PLANT Electric 1,818,497 1,763,636 Property under capital lease 338 384 Construction work in progress 73,524 66,789 ---------- ---------- TOTAL UTILITY PLANT 1,892,359 1,830,809 Less - accumulated depreciation and amortization 729,340 709,543 ---------- ---------- UTILITY PLANT - NET 1,163,019 1,121,266 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 24,408 24,051 Unamortized loss on reacquired debt 15,725 16,345 Other regulatory assets 150,436 132,243 Other 6,549 5,784 ---------- ---------- TOTAL 197,118 178,423 ---------- ---------- TOTAL ASSETS $1,586,166 $1,460,017 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Accounts payable Associated companies $41,431 $84,382 Other 42,755 32,470 Customer deposits 25,128 23,303 Taxes accrued 44,914 35,968 Accumulated deferred income taxes - 526 Interest accrued 11,946 10,038 Obligations under capital leases 98 95 Other 2,603 2,137 ---------- ---------- TOTAL 168,875 188,919 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 307,007 298,477 Accumulated deferred investment tax credits 20,158 20,908 Obligations under capital leases 240 290 Accumulated provisions 6,783 7,374 Other 12,268 3,368 ---------- ---------- TOTAL 346,456 330,417 ---------- ---------- Long-term debt 584,305 464,466 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 2000 and 1999 199,326 199,326 Capital stock expense and other (59) (59) Retained earnings 236,882 226,567 ---------- ---------- TOTAL 486,530 476,215 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,586,166 $1,460,017 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $73.4 $70.1 $3.3 5 Commercial 65.3 60.1 5.2 9 Industrial 39.3 36.7 2.6 7 Governmental 6.3 5.9 0.4 7 ------ ------ ----- Total retail 184.3 172.8 11.5 7 Sales for resale Associated companies 7.0 8.4 (1.4) (17) Non-associated companies 6.9 6.6 0.3 5 Other 17.4 6.8 10.6 156 ------ ------ ----- Total $215.6 $194.6 $21.0 11 ====== ====== ===== Billed Electric Energy Sales (GWH): Residential 1,013 1,028 (15) (1) Commercial 1,008 986 22 2 Industrial 786 787 (1) - Governmental 89 88 1 1 ------ ------ ----- Total retail 2,896 2,889 7 - Sales for resale Associated companies 82 188 (106) (56) Non-associated companies 62 89 (27) (30) ------ ------ ----- Total 3,040 3,166 (126) (4) ====== ====== ===== Six Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $139.5 $132.4 $7.1 5 Commercial 124.7 115.2 9.5 8 Industrial 76.7 72.8 3.9 5 Governmental 12.1 11.6 0.5 4 ------ ------ ----- Total retail 353.0 332.0 21.0 6 Sales for resale Associated companies 13.0 30.3 (17.3) (57) Non-associated companies 13.7 13.4 0.3 2 Other 18.7 1.4 17.3 1,236 ------ ------ ----- Total $398.4 $377.1 $21.3 6 ====== ====== ===== Billed Electric Energy Sales (GWH): Residential 2,036 2,032 4 - Commercial 1,926 1,875 51 3 Industrial 1,529 1,542 (13) (1) Governmental 169 170 (1) (1) ------ ------ ----- Total retail 5,660 5,619 41 1 Sales for resale Associated companies 207 1,165 (958) (82) Non-associated companies 139 201 (62) (31) ------ ------ ----- Total 6,006 6,985 (979) (14) ====== ====== ===== ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended June 30, 2000 compared to the three months ended June 30, 1999 primarily due to an increase in other operation and maintenance expenses. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the three and six months ended June 30, 2000 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues $0.1 $- Fuel cost recovery 4.9 11.8 Sales volume/weather (1.0) (0.9) Other revenue (including unbilled) (2.9) (1.3) Sales for resale 9.0 6.8 ----- ----- Total $10.1 $16.4 ===== ===== Fuel cost recovery revenues Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs. Fuel cost recovery revenues increased for the three and six months ended June 30, 2000 due to the increased market price of natural gas. Sales for resale Sales for resale increased for the three and six months ended June 30, 2000 primarily due to reduced generation at affiliate plants combined with an increase in the average price of electricity supplied for resale. Gas operating revenues Gas operating revenues increased for the three and six months ended June 30, 2000 primarily due to the increased market price of natural gas. ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Fuel and purchased power Fuel expenses increased for the three and six months ended June 30, 2000 primarily due to increased market prices for gas, along with increased generation in the second quarter due to an outage at Michoud Unit 3 in May 1999. The increase in fuel expenses for the three months ended June 30, 2000 was partially offset by decreased deferred fuel expenses. The increase in fuel expenses for the six months ended June 30, 2000 was partially offset by decreased purchased power volume due to displacement by increased gas generation in 2000. Other operation and maintenance Other operation and maintenance expenses increased for the three months ended June 30, 2000 primarily due to the capitalization of costs in 1999 associated with return-to-service projects. Other regulatory credits Other regulatory credits decreased for the six months ended June 30, 2000 primarily due to an over-recovery of Grand Gulf 1 related costs in 2000 compared to an under-recovery in 1999 and the amortization of Y2K cost deferrals in 2000. Other Income taxes For the three months ended June 30, 2000 and 1999, the effective income tax rates were 43.0% and 39.6%, respectively. For the six months ended June 30, 2000 and 1999, the effective income tax rates were 45.0% and 41.1%, respectively.
ENTERGY NEW ORLEANS, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Six Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $114,539 $104,404 $200,797 $184,446 Natural gas 22,112 16,882 55,595 42,897 -------- -------- -------- -------- TOTAL 136,651 121,286 256,392 227,343 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 40,231 20,140 82,032 51,076 Purchased power 38,784 41,464 73,895 77,916 Other operation and maintenance 22,806 17,293 39,657 40,272 Taxes other than income taxes 9,184 10,519 18,696 18,137 Depreciation and amortization 5,809 5,300 11,510 10,928 Other regulatory credits - net (1,732) (2,162) (3,333) (6,610) Amortization of rate deferrals 6,482 6,643 12,476 12,786 -------- -------- -------- -------- TOTAL 121,564 99,197 234,933 204,505 -------- -------- -------- -------- OPERATING INCOME 15,087 22,089 21,459 22,838 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 270 217 595 423 Miscellaneous - net 819 559 1,417 972 -------- -------- -------- -------- TOTAL 1,089 776 2,012 1,395 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 3,319 3,319 6,638 6,638 Other interest - net 410 333 826 654 Allowance for borrowed funds used during construction (207) (156) (445) (311) -------- -------- -------- -------- TOTAL 3,522 3,496 7,019 6,981 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 12,654 19,369 16,452 17,252 Income taxes 5,437 7,675 7,418 7,092 -------- -------- -------- -------- NET INCOME 7,217 11,694 9,034 10,160 Preferred dividend requirements and other 241 241 482 482 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $6,976 $11,453 $8,552 $9,678 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $9,034 $10,160 Noncash items included in net income: Amortization of rate deferrals 12,476 12,786 Other regulatory credits - net (3,333) (6,610) Depreciation and amortization 11,510 10,928 Deferred income taxes and investment tax credits 2,405 1,819 Allowance for equity funds used during (595) (423) construction Changes in working capital: Receivables (2,623) (6,041) Fuel inventory 1,920 1,229 Accounts payable 6,956 5,798 Taxes accrued 2,348 6,587 Interest accrued (417) (412) Deferred fuel costs (16,493) (12,050) Other working capital accounts (4,787) (718) Provision for estimated losses and reserves (509) (1,568) Changes in other regulatory assets (4,977) (7,499) Other 3,983 5,956 -------- -------- Net cash flow provided by operating activities 16,898 19,942 -------- -------- INVESTING ACTIVITIES Construction expenditures (17,463) (25,718) Allowance for equity funds used during construction 595 423 -------- -------- Net cash flow used in investing activities (16,868) (25,295) -------- -------- FINANCING ACTIVITIES Dividends paid: Preferred stock (241) (723) -------- -------- Net cash flow used in financing activities (241) (723) -------- -------- Net decrease in cash and cash equivalents (211) (6,076) Cash and cash equivalents at beginning of period 4,454 17,153 -------- -------- Cash and cash equivalents at end of period $4,243 $11,077 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid/(received) during the period for: Interest - net of amount capitalized $7,702 $7,524 Income taxes ($2,386) ($4,644) See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS ASSETS June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents $4,243 $4,454 Accounts receivable: Customer 24,254 28,658 Allowance for doubtful accounts (846) (846) Associated companies 724 404 Other 6,694 6,225 Accrued unbilled revenues 26,057 19,820 -------- -------- Total receivables 56,883 54,261 -------- -------- Deferred fuel costs 30,976 14,483 Fuel inventory - at average cost 1,373 3,293 Materials and supplies - at average cost 9,613 10,127 Rate deferrals 18,659 24,788 Prepayments and other 8,634 2,528 -------- -------- TOTAL 130,381 113,934 -------- -------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 3,259 3,259 -------- -------- UTILITY PLANT Electric 551,596 541,525 Natural gas 135,838 133,568 Construction work in progress 33,741 29,780 -------- -------- TOTAL UTILITY PLANT 721,175 704,873 Less - accumulated depreciation and amortization 392,316 382,797 -------- -------- UTILITY PLANT - NET 328,859 322,076 -------- -------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 4,627 10,974 Unamortized loss on reacquired debt 1,080 1,187 Other regulatory assets 38,016 33,039 Other 822 1,277 -------- -------- TOTAL 44,545 46,477 -------- -------- TOTAL ASSETS $507,044 $485,746 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Accounts payable Associated companies $18,046 $24,350 Other 41,521 28,261 Customer deposits 18,001 17,830 Taxes accrued 2,777 429 Accumulated deferred income taxes 15,030 10,863 Interest accrued 4,538 4,956 Other 6,399 5,524 -------- -------- TOTAL 106,312 92,213 -------- -------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 40,156 43,878 Accumulated deferred investment tax credits 6,122 6,378 SFAS 109 regulatory liability - net 10,140 7,528 Other regulatory liabilities 1,141 1,753 Accumulated provisions 8,328 8,836 Other 8,833 7,733 -------- -------- TOTAL 74,720 76,106 -------- -------- Long-term debt 169,116 169,083 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 19,780 19,780 Common stock, $4 par value, authorized 10,000,000 shares; issued 8,435,900 shares in 2000 and 1999 33,744 33,744 Paid-in capital 36,294 36,294 Retained earnings 67,078 58,526 -------- -------- TOTAL 156,896 148,344 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $507,044 $485,746 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $36.7 $34.4 $2.3 7 Commercial 34.4 33.3 1.1 3 Industrial 5.1 5.5 (0.4) (7) Governmental 14.8 13.8 1.0 7 ------ ------ ----- Total retail 91.0 87.0 4.0 5 Sales for resale Associated companies 10.9 1.6 9.3 581 Non-associated companies 2.2 2.5 (0.3) (12) Other 10.4 13.3 (2.9) (22) ------ ------ ----- Total $114.5 $104.4 $10.1 10 ====== ====== ===== Billed Electric Energy Sales (GWH): Residential 503 502 1 - Commercial 550 556 (6) (1) Industrial 95 127 (32) (25) Governmental 264 263 1 - ------ ------ ----- Total retail 1,412 1,448 (36) (2) Sales for resale Associated companies 218 56 162 289 Non-associated companies 35 49 (14) (29) ------ ------ ----- Total 1,665 1,553 112 7 ====== ====== ===== Six Months Ended Increase/ Description 2000 1999 (Decrease) % (In Millions) Electric Operating Revenues: Residential $64.2 $59.0 $5.2 9 Commercial 68.1 64.1 4.0 6 Industrial 10.1 10.7 (0.6) (6) Governmental 28.9 26.6 2.3 9 ------ ------ ----- Total retail 171.3 160.4 10.9 7 Sales for resale Associated companies 13.6 6.7 6.9 103 Non-associated companies 4.4 4.5 (0.1) (2) Other 11.5 12.8 (1.3) (10) ------ ------ ----- Total $200.8 $184.4 $16.4 9 ====== ====== ===== Billed Electric Energy Sales (GWH): Residential 876 866 10 1 Commercial 1,047 1,046 1 - Industrial 186 242 (56) (23) Governmental 497 498 (1) - ------ ------ ----- Total retail 2,606 2,652 (46) (2) Sales for resale Associated companies 301 288 13 5 Non-associated companies 79 96 (17) (18) ------ ------ ----- Total 2,986 3,036 (50) (2) ====== ====== ===== SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended June 30, 2000 compared to the three months ended June 30, 1999 primarily due to an increase in the effective tax rate. Net income increased for the six months ended June 30, 2000 compared to the six months ended June 30, 1999 primarily due to increased operating revenues and decreased interest charges, partially offset by an increase in the effective tax rate. 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 six months ended June 30, 2000 as compared to the same period in 1999 due to additional reserves recorded in the first quarter of 1999 for the potential refund of tariffs collected in System Energy's pending rate case before FERC. System Energy's proposed rate increase, which is subject to refund, and FERC's recent decision in the proceeding, is discussed in Note 2 to the financial statements. Other Interest charges Interest on long-term debt decreased for the three and six months ended June 30, 2000 as a result of the refinancing and redemption of pollution control revenue bonds and the redemption of first mortgage bonds in 1999. Other interest decreased for the six months ended June 30, 2000 due to an adjustment in the first quarter of 1999 to record interest on the potential refund of System Energy's proposed rate increase. Income taxes The effective income tax rates for the three months ended June 30, 2000 and 1999 were 48.9% and 31.1%, respectively. The effective income tax rates for the six months ended June 30, 2000 and 1999 were 47.9% and 38.8%, respectively. The increase was primarily due to the amortization of investment tax credits related to Grand Gulf Unit 2 affecting the 1999 tax rates.
SYSTEM ENERGY RESOURCES, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 2000 and 1999 (Unaudited) Three Months Ended Six Months Ended 2000 1999 2000 1999 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $159,389 $159,505 $316,479 $300,122 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 10,858 12,157 21,540 20,793 Nuclear refueling outage expenses 3,690 3,505 6,904 7,011 Other operation and maintenance 23,059 22,547 38,332 40,992 Decommissioning 4,736 4,736 9,472 9,472 Taxes other than income taxes 6,225 6,767 12,168 13,518 Depreciation and amortization 27,875 27,559 55,931 56,419 Other regulatory charges - net 16,051 13,540 30,796 29,385 -------- -------- -------- -------- TOTAL 92,494 90,811 175,143 177,590 -------- -------- -------- -------- OPERATING INCOME 66,895 68,694 141,336 122,532 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 374 648 1,106 1,313 Miscellaneous - net 5,096 4,145 9,192 8,204 -------- -------- -------- -------- TOTAL 5,470 4,793 10,298 9,517 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 22,636 25,270 46,762 51,099 Other interest - net 7,298 5,891 14,141 32,642 Allowance for borrowed funds used during construction (177) (466) (653) (1,017) -------- -------- -------- -------- TOTAL 29,757 30,695 60,250 82,724 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 42,608 42,792 91,384 49,325 Income taxes 20,822 13,309 43,811 19,142 -------- -------- -------- -------- NET INCOME $21,786 $29,483 $47,573 $30,183 ======== ======== ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2000 and 1999 (Unaudited) 2000 1999 (In Thousands) OPERATING ACTIVITIES Net income $47,573 $30,183 Noncash items included in net income: Reserve for regulatory adjustments 37,751 82,492 Other regulatory charges - net 30,796 29,385 Depreciation, amortization, and decommissioning 65,403 65,891 Deferred income taxes and investment tax credits (39,621) (62,462) Allowance for equity funds used during construction (1,106) (1,313) Changes in working capital: Receivables 186,754 (59,956) Accounts payable (14,193) 25,103 Taxes accrued 2,751 45,944 Interest accrued (9,375) (7,686) Other working capital accounts 12,218 3,149 Provision for estimated losses and reserves (106) (228) Changes in other regulatory assets 19,298 11,889 Other (13,084) 12,630 -------- -------- Net cash flow provided by operating activities 325,059 175,021 -------- -------- INVESTING ACTIVITIES Construction expenditures (24,557) (11,200) Allowance for equity funds used during construction 1,106 1,313 Decommissioning trust contributions and realized change in trust assets (11,544) (11,264) -------- -------- Net cash flow used in investing activities (34,995) (21,151) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Long-term debt - 101,862 Retirement of: Long-term debt (2,947) (182,884) Dividends paid: Common stock (47,000) (32,500) -------- -------- Net cash flow used in financing activities (49,947) (113,522) -------- -------- Net increase in cash and cash equivalents 240,117 40,348 Cash and cash equivalents at beginning of period 35,152 236,841 -------- -------- Cash and cash equivalents at end of period $275,269 $277,189 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $54,870 $70,231 Income taxes $37,045 $19,744 Noncash investing and financing activities: Change in unrealized appreciation/(depreciation) of decommissioning trust assets $199 ($792) See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS ASSETS June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $39 $136 Temporary cash investments - at cost, which approximates market 275,230 35,016 ---------- ---------- Total cash and cash equivalents 275,269 35,152 ---------- ---------- Accounts receivable: Associated companies 113,845 301,287 Other 1,358 670 ---------- ---------- Total receivables 115,203 301,957 ---------- ---------- Materials and supplies - at average cost 50,541 61,264 Deferred nuclear refueling outage costs 14,161 18,665 Prepayments and other 5,114 2,251 ---------- ---------- TOTAL 460,288 419,289 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 147,127 135,384 ---------- ---------- UTILITY PLANT Electric 3,062,317 3,060,324 Property under capital lease 444,850 434,993 Construction work in progress 71,196 58,510 Nuclear fuel under capital lease 63,231 78,020 ---------- ---------- TOTAL UTILITY PLANT 3,641,594 3,631,847 Less - accumulated depreciation and amortization 1,371,577 1,312,559 ---------- ---------- UTILITY PLANT - NET 2,270,017 2,319,288 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 221,668 242,834 Unamortized loss on reacquired debt 53,980 56,474 Other regulatory assets 187,779 185,910 Other 9,351 9,869 ---------- ---------- TOTAL 472,778 495,087 ---------- ---------- TOTAL ASSETS $3,350,210 $3,369,048 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2000 and December 31, 1999 (Unaudited) 2000 1999 (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $91,800 $77,947 Accounts payable Associated companies 1,372 15,237 Other 18,142 18,470 Taxes accrued 58,134 55,383 Accumulated deferred income taxes 5,378 7,162 Interest accrued 30,624 40,000 Obligations under capital leases 38,421 38,421 Other 1,505 1,651 ---------- ---------- TOTAL 245,376 254,271 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 435,323 481,945 Accumulated deferred investment tax credits 91,254 93,219 Obligations under capital leases 24,809 39,599 FERC settlement - refund obligation 34,143 37,337 Other regulatory liabilities 96,481 73,313 Decommissioning 141,048 129,503 Regulatory reserves 305,521 267,771 Accumulated provisions 1,910 2,016 Other 16,475 16,014 ---------- ---------- TOTAL 1,146,964 1,140,717 ---------- ---------- Long-term debt 1,065,817 1,082,579 SHAREHOLDERS' EQUITY Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2000 and 1999 789,350 789,350 Retained earnings 102,703 102,131 ---------- ---------- TOTAL 892,053 891,481 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,350,210 $3,369,048 ========== ========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 9 to the financial statements in the Form 10-K for information on Entergy's estimated construction expenditures (excluding nuclear fuel), long-term debt and preferred stock maturities, and cash sinking fund requirements. Sales Warranties and Indemnities (Entergy Corporation) See Note 9 to the financial statements in the Form 10-K for information on certain warranties made by Entergy or its subsidiaries in the Entergy London and CitiPower sales transactions. Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 9 to the financial statements in the Form 10-K for information on nuclear liability, property and replacement power insurance, related NRC regulations, the disposal of spent nuclear fuel, other high-level radioactive waste, and decommissioning costs associated with ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf 1, and Pilgrim. 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 for September 2000. On July 21, 2000, ANO 2 went offline to conduct additional inspections on the steam generator tubes as requested by the NRC. Management expects that ANO 2 will go back online in mid-August 2000. 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 in periodic negotiations with the U.S. Environmental Protection Agency and state authorities regarding the cleanup of certain of these sites. As of June 30, 2000, a remaining recorded liability of approximately $17.7 million existed related to the cleanup 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. Completion of this work is awaiting LDEQ approval. LDEQ has issued notices of deficiencies for certain of these sites. Additional notices of deficiencies are expected in the third quarter of 2000. Recorded liabilities in the amounts of $5.8 million and $0.5 million existed at June 30, 2000 for wastewater upgrades and closures for Entergy Louisiana and Entergy New Orleans, respectively. Management of Entergy Louisiana and Entergy New Orleans believe these reserves are adequate based on current estimates. City Franchise Ordinances (Entergy New Orleans) Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to franchise ordinances. These ordinances contain a continuing option for the City to purchase Entergy New Orleans' electric and gas utility properties. Waterford 3 Lease Obligations (Entergy Louisiana) On September 28, 1989, Entergy Louisiana entered into three separate but substantially identical transactions for the sale and leaseback of undivided interests (aggregating approximately 9.3%) in Waterford 3, which were refinanced in 1997. Entergy Louisiana is obligated under certain circumstances 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 financial statements in 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 on the basis of age, race, and/or sex. The defendant companies are vigorously defending these suits and deny any liability to the plaintiffs. However, no assurance can be given as to the outcome of these cases. Reimbursement Agreement (System Energy) Under a bank letter of credit and reimbursement agreement, System Energy has agreed to a number of covenants relating to the maintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the agreement, to maintain its equity at not less than 33% of its adjusted capitalization (defined in the agreement to include certain amounts not included in capitalization for financial statement purposes). In addition, System Energy must maintain, with respect to each fiscal quarter during the term of the agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the agreement) of at least 1.60 times earnings. System Energy was in compliance with the above covenants at June 30, 2000. See Note 9 to the financial statements in the Form 10-K for further information. Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) In addition to those proceedings discussed elsewhere herein and in the Form 10-K, Entergy and the domestic utility companies are involved in a number of other legal proceedings and claims in the ordinary course of their businesses. While management is unable to predict the outcome of these other legal proceedings and claims, it is not expected that their ultimate resolution individually or collectively will have a material adverse effect on the results of operations, cash flows, or financial condition of these entities. NOTE 2. RATE AND REGULATORY MATTERS Electric Industry Restructuring Previous developments and information related to electric industry restructuring are presented in Note 2 to the financial statements in the Form 10-K. Arkansas (Entergy Corporation and Entergy Arkansas) As discussed in Note 2 to the financial statements in the Form 10-K, in April 1999 the Arkansas legislature enacted a law providing for competition in the electric utility industry through retail open access on January 1, 2002. When retail open access is achieved, the generation operations will become a competitive business, but transmission and distribution operations will continue to be regulated. The APSC may delay implementation of retail open access, but not beyond June 30, 2003. The implementation of the Arkansas retail open access law through rulemakings and company filings is ongoing. Rulemakings associated with energy service provider licensing rules and affiliate rules have been completed. In June 2000, the APSC declared that billing would become a competitive service at the beginning of retail open access. Entergy Arkansas filed a functional, but not corporate, unbundling plan with the APSC on August 8, 2000. The plan initially establishes separate business units for distribution, generation, and a new retail energy service provider. The plan contemplates the transfer of transmission assets to the Transco discussed in the Form 10-K in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS." The functional unbundling plan is tentative because the regulatory requirements to implement the retail open access law have not been finalized, and changes to the details of the plan are likely. In June 2000, Entergy Arkansas filed an application to continue the stranded cost mitigation efforts agreed upon in the 1997 settlement agreement approved by the APSC. These mitigation efforts include the funding of a transition cost account with excess earnings to offset future stranded costs and the accelerated amortization of Entergy Arkansas' share of the Grand Gulf purchased power obligation under the Unit Power Sales Agreement. The filing included an updated stranded cost estimate intended to support Entergy Arkansas' recommendation that the mitigation efforts continue. The filing presents an estimated range of stranded costs based upon the comparison of possible generation asset market values to the generation assets' book values and contractual obligations. The range of possible generation asset market values used in the estimate was determined using generation asset sales in other jurisdictions. The estimated range of stranded costs in Arkansas set forth in the filing is $254 million to $1.64 billion. Texas (Entergy Corporation and Entergy Gulf States) As discussed in Note 2 to the financial statements in the Form 10-K, in June 1999 the Texas legislature enacted a law providing for competition in the electric utility industry through retail open access. The law provides for retail open access by most electric utilities, including Entergy Gulf States, on January 1, 2002. When retail open access is achieved, the generation business and a new retail electricity provider function will become competitive businesses, but transmission and distribution operations will continue to be regulated. The new retail provider function will be the primary point of contact with the customers for most services beyond initiation of electric service and restoration of service following outages. In January 2000, as required by the Texas restructuring legislation, Entergy Gulf States filed a business separation plan with the PUCT, which was amended in June 2000. The plan provided that, by January 2002, Entergy Gulf States would ultimately be divided into a Texas distribution company, a Texas transmission company, a Texas generation company, a Texas retail electricity provider, and a Louisiana company that will encompass distribution, generation, and transmission operations. In July 2000, the PUCT issued an interim order to approve the amended business separation plan. The plan provides that the Louisiana company would retain the liability for all debt obligations of Entergy Gulf States and that the property of the Texas companies would be released from the lien of Entergy Gulf States' mortgage. Each of the Texas companies would assume a portion of Entergy Gulf States' debt obligations, which assumptions would not act to release the Louisiana company's obligations. Each of the Texas companies would also grant a lien on properties in favor of the Louisiana company to secure its obligations to the Louisiana company in respect of the assumed obligations. In addition, under the plan Entergy Gulf States will refinance or retire existing debt through 2004. Regulatory approvals from FERC, the SEC, and the LPSC will be required before the business separation plan can be implemented. Remaining business separation issues in Texas will be addressed in the unbundled costs proceeding before the PUCT. The LPSC has opened a docket to identify the changes in corporate structure of Entergy Gulf States, and their potential impact on Louisiana retail ratepayers, resulting from restructuring in Texas and Arkansas. Entergy Gulf States filed testimony in that proceeding in August 2000 and hearings are scheduled in February 2001. On March 31, 2000, pursuant to the Texas restructuring legislation, Entergy Gulf States filed cost data with the PUCT for its unbundled business functions and proposed tariffs for its unbundled distribution utility. In the filing, Entergy Gulf States is seeking approval for recovery of the following, among other things: o the unbundled distribution utility's cost of service; o a 12% return on equity for the unbundled distribution utility; and o a ten-year non-bypassable charge to recover estimated stranded costs and a non-bypassable charge to recover nuclear decommissioning costs. At a prehearing conference held in April 2000, a procedural schedule for the case was established, calling for a hearing in January 2001. Management cannot predict the outcome of this proceeding. In connection with unbundled cost filings made by all Texas investor-owned utilities, the PUCT has opened a "generic docket" to determine issues that may be resolved on an industry-wide basis before the individual utility hearings begin. These issues include updating gas prices to be used in the model established by the PUCT for estimating stranded costs and incentive mechanisms to enhance the authorized rate of return. Federal Regulatory Activity (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) In April 2000, the LPSC and the Council filed a complaint with FERC seeking revisions to the System Agreement that they allege are necessary to accommodate the introduction of retail competition in Texas and Arkansas, where Entergy Gulf States and Entergy Arkansas provide utility service, and to protect Entergy's Louisiana customers from any adverse impact that may occur due to the introduction of such retail competition in some jurisdictions but not others. The LPSC and the Council request that FERC immediately institute a proceeding to permit changes to be adopted prior to January 1, 2002, and request, among other things, that FERC cap certain of the System Agreement obligations of Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans and fix these companies' access to pool energy at the average level existing for the three years prior to the date that retail access is initiated in Texas and Arkansas. Alternatively, the LPSC and the Council request that FERC require Entergy to provide wholesale power contracts to these companies to satisfy their energy requirements at costs no higher than would have been incurred if retail competition were not implemented. The LPSC and the Council request that the relief be made available for at least eight years after implementation of retail competition or the withdrawal of Entergy Arkansas and Entergy Gulf States from the System Agreement, or until retail access is implemented in Louisiana and New Orleans. In addition, among other things, the LPSC and the Council assert in their complaint that: o unless the requested relief is granted, the restructuring legislation adopted in Texas and Arkansas, to the extent such legislation requires, or has the effect of, altering the rights of parties under the System Agreement, will result in violations of the interstate commerce clause, the due process clause, and the impairment of contracts clause in the U.S. Constitution; and o the failure of the domestic utility companies to honor a right of first refusal with respect to any sale of generating capacity and associated energy under the System Agreement, and any attempt to eliminate such right of first refusal from the System Agreement, would violate the Federal Power Act and constitute a breach of the System Agreement. In June 2000, Entergy's domestic utility companies filed proposed amendments to the System Agreement with FERC to facilitate the implementation of retail competition in Arkansas and Texas and to provide for continued equalization of costs among the domestic utilities in Louisiana and Mississippi. The amendments provide the following: o cessation of participation in all aspects of the System Agreement, other than those related to transmission equalization, for any jurisdictional division of a domestic utility operating in a jurisdiction that initiates retail access; o certain sections of the System Agreement will no longer apply to the sales of generating capacity, whether through the sale of the asset or the output thereof, by a domestic utility operating in a jurisdiction that has established a date by which it will implement retail access; and o modification of the service schedule developed to track changes in energy costs resulting from the Entergy-Gulf States Utilities merger to include one final true-up of fuel costs upon cessation of one company's participation in the System Agreement, which thereafter will no longer be applicable for any purpose. Entergy believes that the proceedings relating to the proposed amendments serve as a response to the complaint by the LPSC and the Council and anticipates that the proceedings would be consolidated. In response to Entergy's proposal, the LPSC and the Council have requested that FERC dismiss the proposed amendments and proceed with the complaint proceedings. Several other parties have also intervened in the proceeding. In the event that the proceedings relating to the proposed amendments proceed, the LPSC and the Council have asserted that the charges to the domestic utility companies under the Unit Power Sales Agreement need to be reconsidered. Entergy has requested an expedited hearing on the proposed amendments and that FERC issue a final decision by October 1, 2001. A procedural schedule has not been established. Neither the timing, nor the ultimate outcome of these proceedings at FERC can be predicted at this time. Retail Rate Proceedings Previous developments and information related to retail rate proceedings are presented in Note 2 to the financial statements in the Form 10-K. Filings with the APSC (Entergy Corporation and Entergy Arkansas) In March 2000, Entergy Arkansas filed its annually redetermined energy cost recovery (ECR) rate with the APSC in accordance with the energy cost recovery rider formula. The filing reflected that an increase was warranted to collect an under-recovery of energy costs for 1999. The increased ECR rate is effective April 2000 through March 2001. As discussed in Note 2 to the financial statements in the Form 10-K, Entergy Arkansas is operating under the terms of a settlement agreement approved by the APSC in December 1997 that allows the collection of excess earnings in a transition cost account. An adjustment was made to the transition cost account in May 2000 resulting in a negative net income impact of $4.4 million ($2.7 million after tax). Interest of $2.6 million ($1.6 million net of tax) was also recorded in the transition cost account for the first six months of 2000. The results of operations reflect these charges in operating expenses. Filings with the PUCT and Texas Cities PUCT Fuel Cost Review (Entergy Corporation and Entergy Gulf States) As determined in the settlement agreement discussed in Note 2 to the financial statements in the Form 10-K, Entergy Gulf States adopted a methodology for calculating its fixed fuel factor based on the market price of natural gas. This calculation and any necessary adjustments occur semi-annually and will continue until December 2001. The amounts collected under Entergy Gulf States' fixed fuel factor through December 2001 are subject to fuel reconciliation proceedings before the PUCT, including a fuel reconciliation case filed by Entergy Gulf States in July 1999. In February 2000, Entergy Gulf States reached a settlement with all but one of the parties to that proceeding. Entergy Gulf States reconciled approximately $731 million (after excluding approximately $14 million related to Cajun issues to be handled in a subsequent proceeding) of fuel and purchased power costs. The settlement reduces Entergy Gulf States' requested surcharge in the reconciliation filing from $14.7 million to $2.2 million. This settlement was approved by the PUCT in April 2000, confirming an interim order that allowed Entergy Gulf States to begin the recovery of the $2.2 million surcharge between April 2000 and January 2001. In addition, Entergy Gulf States agreed to file a fuel reconciliation case by January 12, 2001 covering the period from March 1, 1999 through August 31, 2000. The decrease in the requested surcharge was recorded in March 2000 and is reflected in Entergy Gulf States' operating income. In September 1999, the PUCT approved the final adjustment of the rate refunds ordered as a result of Entergy Gulf States' November 1996 rate case. These refunds were completed in the October 1999 billing month. Pursuant to the September 1999 order, a true-up proceeding was initiated, which required Entergy Gulf States to refund an additional $25 million. This refund was concluded in December 1999. The PUCT approved the final refund and concluded the proceeding in June 2000. 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 incurred from March 1999 through July 1999. In December 1999, the PUCT approved the collection of $33.9 million over a five-month period beginning January 2000. An administrative appeal of the interim fuel surcharge was filed by certain cities in Travis County District Court. The fuel and purchased power expenses contained in this surcharge will be subject to future fuel reconciliation proceedings. Filings with the LPSC Annual Earnings Reviews (Entergy Corporation and Entergy Gulf States) In June 2000, the LPSC approved a settlement between Entergy Gulf States and the LPSC staff to refund $83 million, including interest, resolving refund issues in Entergy Gulf States' second, third, fourth, and fifth post-Merger earnings reviews by the LPSC. The refund, for which adequate reserves have been made, will occur over a three-month period beginning July 2000. In May 2000, Entergy Gulf States filed its seventh required post- Merger earnings analysis with the LPSC. This filing will be subject to review by the LPSC, which may result in a change in rates. Entergy Gulf States also is proposing that the allowed return on common equity be increased to 11.60%. A procedural schedule has not yet been established by the LPSC. Formula Rate Plan Filings (Entergy Corporation and Entergy Louisiana) In April 1999, Entergy Louisiana submitted its fourth annual performance-based rate plan filing for the 1998 test year. A rate reduction of $15 million was implemented effective August 1, 1999. In May 2000, the LPSC ordered an additional $6.4 million refund effective April 2000. Entergy Louisiana has provided reserves for these refunds. In addition, the LPSC extended Entergy Louisiana's formula rate plan for an additional year with the last filing to be made on April 15, 2001. In May 2000, Entergy Louisiana submitted its fifth annual performance-based rate plan filing for the 1999 test year. The filing indicated that a $24.8 million base rate reduction might be appropriate for implementation effective August 2000. Entergy Louisiana is proposing to increase prospectively the allowed return on common equity from 10.5% to 11.6%, which would reduce the amount of any rate reduction implemented. This filing will be subject to review by the LPSC. A procedural schedule has not yet been established by the LPSC. Fuel Adjustment Clause Litigation (Entergy Corporation and Entergy Louisiana) In May 1998, a group of ratepayers filed a complaint against Entergy Corporation, Entergy Power, and Entergy Louisiana in state court in Orleans Parish purportedly on behalf of all Entergy Louisiana ratepayers. The plaintiffs seek treble damages for alleged injuries arising from alleged violations by the defendants of Louisiana's antitrust laws in connection with the costs included in fuel filings with the LPSC and passed through to ratepayers. Among other things, the plaintiffs allege that Entergy Louisiana improperly introduced certain costs into the calculation of the fuel charges, including high-cost electricity imprudently purchased from its affiliates and high-cost gas imprudently purchased from independent third party suppliers. In addition, plaintiffs seek to recover interest and attorney's fees. Exceptions were filed by Entergy, asserting that this dispute should be litigated before the LPSC and FERC. At the appropriate time, if necessary, Entergy will raise its defenses to the antitrust claims. At present, the suit in state court is stayed by stipulation of the parties. Plaintiffs also requested that the LPSC initiate a review of Entergy Louisiana's monthly fuel adjustment charge filings and force restitution to ratepayers of all costs that the plaintiffs allege were improperly included in those fuel adjustment filings. Marathon Oil Company and Louisiana Energy Users Group have also intervened in the LPSC proceeding. Discovery at the LPSC has been conducted and is expected to continue. Direct testimony was filed with the LPSC by plaintiffs and the intervenors in July 1999. In their testimony for the period 1989 through 1998, plaintiffs purport to quantify many of their claims in an amount totaling $544 million, plus interest. The plaintiffs will likely assert additional damages for the period 1974 through 1988. The Entergy companies filed responsive and rebuttal testimony in September 1999. Rebuttal testimony by the plaintiffs and intervenors was filed in November 1999. Entergy Louisiana and the staff of the LPSC have reached an agreement in principle for the settlement of the matter before the LPSC. The terms of the proposed settlement have not as yet been agreed to by other parties to the LPSC proceeding, and must be approved by the LPSC after any parties contesting the settlement are afforded the opportunity for a hearing. Entergy Louisiana would agree under the proposed settlement terms to refund to customers approximately $72 million to resolve all claims arising out of or relating to Entergy Louisiana's fuel adjustment clause filings from January 1, 1975 through December 31, 1999, except with respect to purchased power and associated costs included in the fuel adjustment clause filings for the period May 1 through September 30, 1999. Reserves were previously provided by Entergy Louisiana for the refund. If the proposed settlement is approved, Entergy Louisiana would also consent to future fuel cost recovery under a long-term gas contract based on a formula that would likely result in an under- recovery of actual costs under that contract for the remainder of its term, which runs through 2013. The future under-recovery cannot be precisely estimated at this time because it will depend upon factors that are not certain, such as the price of gas and the amount of gas purchased under the long-term contract. In recent years, Entergy Louisiana has made purchases under that contract totaling from $91 million to $121 million annually. Had the proposed settlement terms been applicable to such purchases, the under-recoveries would have ranged from $4 million to $9 million per year. Hearings in this proceeding are scheduled for September 2000, which will include consideration of the proposed settlement. In its intervention, Marathon Oil Company and Louisiana Energy Users Group requested that the LPSC review the prudence of a contract entered into by Entergy Louisiana to purchase energy generated by a hydroelectric facility known as the Vidalia project through the year 2031. Note 9 to the financial statements in the Form 10-K contains further discussions of the obligations related to the Vidalia project. By orders entered by the LPSC in 1985 and 1990, the LPSC approved Entergy Louisiana's entry into the Vidalia contract and Entergy Louisiana's right to recover, through the fuel adjustment clause, the costs of power purchased thereunder. Additionally, the wholesale electric rates under the Vidalia power purchase contract were filed at FERC. In December 1999, the LPSC instituted a review of the following issues relating to the Vidalia project: (i) the LPSC's jurisdiction over the Vidalia project; (ii) Entergy Louisiana's management of the Vidalia contract, including opportunities to restructure or otherwise reform the contract; (iii) the appropriateness of Entergy Louisiana's recovery of 100% of the Vidalia contract costs from ratepayers; (iv) the appropriateness of the fuel adjustment clause as the method for recovering all or part of the Vidalia contract costs; (v) the appropriate regulatory treatment of the Vidalia contract in the event the LPSC approves implementation of retail competition; and (vi) Entergy Louisiana's communication of pertinent information to the LPSC regarding the Vidalia project and contract. Based on its review, the LPSC will determine whether it should disallow any of the costs of the Vidalia project included in the fuel adjustment clause. In March 2000, Entergy Louisiana filed testimony in this sub- docket asserting that the prudence of the Vidalia contract already has been approved by final orders of the LPSC and that recovery of all amounts paid by Entergy Louisiana related to the Vidalia project pursuant to the FERC-filed rate is appropriate. Direct testimony was filed by intervenor Marathon Oil Company in May 2000 and by the LPSC staff and intervenor Louisiana Energy Users Group in July 2000. In its testimony the LPSC staff alleges that Entergy Louisiana was imprudent for not declaring to the LPSC that the Vidalia project had become uneconomic and not threatening to block the Vidalia project's owners' July 30, 1990 request that the LPSC clarify the LPSC's 1985 order (approving the Entergy Louisiana/Vidalia project power purchase agreement), unless the Vidalia project's owners' shared with Entergy Louisiana's ratepayers some portion of what the LPSC staff quantifies as approximately $90 million of tax consequences available to the project. The LPSC staff's testimony does not quantify how much of the potential tax savings Entergy Louisiana should have demanded in exchange for not attempting to block the Vidalia project's owners' request for clarification; however, that testimony does suggest various alternatives by which some portion of the $90 million, perhaps $45 million plus interest since 1990, could be returned to the ratepayers. The direct testimony of the intervenor Louisiana Energy Users Group alleges that Entergy Louisiana was imprudent for not attempting to block the Vidalia project's owners' July 30, 1990 request that the LPSC clarify the LPSC's 1985 order approving the Entergy Louisiana/Vidalia project power purchase agreement; however, that intervenor does not quantify the amount of damage alleged to have been caused by this alleged imprudence. The direct testimony of the intervenor Marathon Oil Company alleges with respect to Entergy Louisiana that imprudent Vidalia project costs should be disallowed and that Entergy Louisiana's customers should not be charged 100% of the Vidalia costs. It is anticipated that hearings in this sub- docket concerning the Vidalia contract will be completed by the end of 2000. (Entergy Corporation and Entergy New Orleans) In April 1999, a group of ratepayers filed a complaint against Entergy New Orleans, Entergy Corporation, Entergy Services, and Entergy Power in state court in Orleans Parish purportedly on behalf of all Entergy New Orleans ratepayers. The plaintiffs seek treble damages for alleged injuries arising from the defendants' alleged violations of Louisiana's antitrust laws in connection with certain costs passed on to ratepayers in Entergy New Orleans' fuel adjustment filings with the Council. In particular, plaintiffs allege that Entergy New Orleans improperly included certain costs in the calculation of fuel charges and that Entergy New Orleans imprudently purchased high-cost fuel from other Entergy affiliates. Plaintiffs allege that Entergy New Orleans and the other defendant Entergy companies conspired to make these purchases to the detriment of Entergy New Orleans' ratepayers and to the benefit of Entergy's shareholders, in violation of Louisiana's antitrust laws. Plaintiffs also seek to recover interest and attorney's fees. Exceptions to the plaintiffs' allegations were filed by Entergy, asserting, among other things, that jurisdiction over these issues rests with the Council and FERC. If necessary, at the appropriate time, Entergy will also raise its defenses to the antitrust claims. At present, the suit in state court is stayed by stipulation of the parties. Plaintiffs also filed this complaint with the Council in order to initiate a review by the Council of their allegations and to force restitution to ratepayers of all costs they allege were improperly and imprudently included in the fuel adjustment filings. Discovery has begun in the proceedings before the Council. In April 2000, testimony was filed on behalf of the plaintiffs in this proceeding. The testimony asserts, among other things, that Entergy New Orleans and other defendants have engaged in fuel procurement and power purchasing practices that could have resulted in New Orleans customers being overcharged by more than $45 million over a period of years. However, it is not clear precisely what periods and damages are being alleged. Entergy intends to defend this matter vigorously, both in court and before the Council. The ultimate outcome of the lawsuit and the Council proceeding cannot be predicted at this time. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) In March 2000, Entergy Mississippi submitted its annual performance-based formula rate plan filing for the 1999 test year. The filing indicated that no change in rate levels was warranted and the current rate levels remain in effect. Purchased Power for Summer 2000 (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) The domestic utility companies filed applications with the APSC, the LPSC, the MPSC, and the Council to approve the sale of power by Entergy Gulf States from its unregulated, undivided 30% interest in River Bend formerly owned by Cajun to the other domestic utility companies during the summer of 2000. In addition, Entergy Gulf States and Entergy Louisiana filed an application with the LPSC for authorization to purchase capacity and electric power from third parties for the summer of 2000. The commissions and Council have approved the applications, with a reservation of their right to review the prudence of the purchases and the appropriate catagorization of the costs as either capacity or energy charges for purposes of recovery. Proposed Rate Increase (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) As discussed in Note 2 to the financial statements in the Form 10-K, System Energy applied to FERC in May 1995 for a $65.5 million rate increase. The request sought changes to System Energy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return on common equity. In December 1995, System Energy implemented the $65.5 million rate increase, subject to refund, for which a portion has been reserved. After a hearing, FERC issued an order in August 2000 in the proceeding. FERC affirmed the ALJ's adoption of a 10.8% return on equity, but modified the return to reflect changes in capital market conditions since the ALJ's decision. FERC adjusted the rate of return to 10.58% for the period December 1995 to the date of FERC's decision, and prospectively adjusted the rate of return to 10.94% from the date of FERC's decision. FERC's decision also changed other aspects of System Energy's proposed rate schedule, including the depreciation rate and decommissioning costs and their methodology. System Energy has provided reserves for a potential refund to the rate level of the initial ALJ decision, including interest. Management is analyzing the effect of FERC's decision, but a refund to the FERC decision rate level is not expected to have a material adverse effect on Entergy's, System Energy's, or the domestic utility companies results of operations. Management's analysis may result in a request for rehearing or an appeal of FERC's order. NOTE 3. COMMON STOCK (Entergy Corporation) During the six months ended June 30, 2000, Entergy Corporation repurchased 16,126,000 shares of common stock in the open market for an aggregate purchase price of approximately $389 million. These shares were purchased pursuant to Entergy's stock repurchase plan and also to fulfill the requirements of various stock-based compensation and benefit plans. Under the terms of the Merger Agreement, Entergy will use its commercially reasonable efforts to purchase in open market transactions an additional $430 million of shares of its common stock. During the six months ended June 30, 2000, Entergy Corporation issued 462,290 shares of its previously repurchased common stock to satisfy stock options exercised and employee stock purchases. In addition, Entergy Corporation received proceeds of approximately $2.0 million from the issuance of 89,894 shares of common stock under its dividend reinvestment and stock purchase plan. NOTE 4. LONG-TERM DEBT (Entergy Mississippi) On February 15, 2000, Entergy Mississippi issued $120 million of 7.75% Series First Mortgage Bonds due February 15, 2003. The proceeds are being used for general corporate purposes, including the retirement of short-term indebtedness that was incurred for working capital needs and capital expenditures. (Entergy Arkansas) On March 9, 2000, Entergy Arkansas issued $100 million of 7.72% Series First Mortgage Bonds due March 1, 2003. The proceeds are being used for general corporate purposes, including the retirement of short-term indebtedness that was incurred for working capital needs and capital expenditures. (Entergy Louisiana) On March 1, 2000, Entergy Louisiana redeemed, at maturity, $100 million of 6.00% Series First Mortgage Bonds using funds received from an open-account advance from Entergy Corporation. On May 23, 2000, Entergy Louisiana issued $150 million of 8.50% Series First Mortgage Bonds due June 1, 2003. The proceeds are being used for general corporate purposes, including the repayment of the open account advance from Entergy Corporation and of short-term indebtedness that was incurred for capital needs and capital expenditures. (Entergy Gulf States) On June 1, 2000, Entergy Gulf States issued $300 million of First Mortgage Bonds due June 2, 2003 bearing interest at an initial rate of 8.04%. The proceeds are being used for general corporate purposes, including the retirement of short-term indebtedness that was incurred for capital needs and capital expenditures, and the mandatory redemption of $150 million of preference stock. (Entergy New Orleans) On July 25, 2000, Entergy New Orleans issued $30 million of 8.125% Series First Mortgage Bonds due July 15, 2005. The proceeds are being used for general corporate purposes, including the retirement of short-term indebtedness that was incurred for capital needs and capital expenditures. (Entergy Corporation) In May 2000, Entergy's global power development business entered into 10-year interest rate swap agreements with an average fixed rate of 6.568% for approximately 75% of the debt outstanding under the Damhead Creek bridge and term loan portion of the Senior Credit Facility. The global power development business is exposed to market risks from movements in interest rates for the hedged portion of the debt only in the unlikely event that the counterparties to the interest rate swap agreements were to default on contractual payments. At June 30, 2000, Entergy's global power development business had outstanding interest rate swap agreements totalling a notional amount of $362.8 million. Under the Senior Credit Facility and the Subordinated Credit Facility, the ability of the global power development business to make distributions of dividends, loans, or advances to Entergy Corporation is restricted by, among other things, the requirement to pay permitted project costs, make debt repayments, and maintain cash reserves. See Note 7 to the financial statements in the Form 10-K for further discussion on the financing of the Damhead Creek project. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On July 28, 2000, Entergy Corporation's Board of Directors declared a common stock dividend of $0.30 per share, payable on September 1, 2000, to holders of record on August 14, 2000. 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 June 30, 2000 and 1999 is as follows (in thousands):
Domestic Power Utility and Marketing System and All Energy Trading* Other* Eliminations Consolidated 2000 Operating Revenues $1,697,577 $372,803 $ 79,988 $ (12,580) $2,137,788 Income Taxes 120,306 2,061 27,496 - 149,863 Net Income 186,946 3,823 55,004 - 245,773 1999 Operating Revenues $1,646,027 $ 668,797 $ 9,868 $ (8,288) $ 2,316,404 Income Taxes 107,903 1,187 (22,657) - 86,433 Net Income 174,868 (142) 35,032 - 209,758
Entergy's segment financial information for the six months ended June 30, 2000 and 1999 is as follows (in thousands):
Domestic Power Utility and Marketing System and Energy Trading* All Other* Eliminations Consolidated 2000 Operating Revenues $3,098,921 $718,960 $ 155,839 $ (24,440) $ 3,949,280 Income Taxes 191,497 7,797 33,394 - 232,688 Net Income 274,284 15,120 64,779 - 354,183 Total Assets 20,228,032 849,718 3,780,569 (534,043) 24,324,276 1999 Operating Revenues $2,932,729 $1,013,595 $ 21,731 $ (11,729) $ 3,956,326 Income Taxes 167,497 (7,036) (28,855) - 131,606 Net Income 257,444 (14,155) 39,375 - 282,664 Total Assets 19,515,460 952,960 2,838,509 (223,197) 23,083,732
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. The "All Other" category includes the parent, Entergy Corporation, segments below the quantitative threshold for separate disclosure, and other business activities. Other segments principally include global power development and non-utility nuclear power operations and management. Other business activities principally include the gains on the sales of businesses. The elimination of power marketing and trading mark-to-market profits on intercompany power transactions is also included in "All Other." Eliminations are primarily intersegment activity. NOTE 7. SUBSEQUENT EVENT (Entergy Corporation) On July 30, 2000, Entergy Corporation and FPL Group entered into a Merger Agreement, providing for a business combination that results in the creation of a new company. The Merger will be accounted for under the purchase method of accounting as an acquisition of Entergy by FPL Group. Each outstanding share of FPL Group common stock will be converted into the right to receive one share of the new company's common stock, and each outstanding share of Entergy Corporation common stock will be converted into the right to receive 0.585 of a share of the new company's common stock. It is expected that FPL Group's shareholders will own approximately 57% of the common equity of the new company and Entergy's shareholders will own approximately 43%. The new company will be given a new name that will be agreed upon between the Boards of Directors of FPL and Entergy prior to the consummation of the Merger. The new company will maintain its principal corporate offices and headquarters in Juno Beach, Florida, and will maintain its utility headquarters in New Orleans, Louisiana. The Merger is conditioned, among other things, upon approvals of the shareholders of FPL Group and Entergy and approvals of various local, state, and federal regulatory agencies and commissions. Entergy and FPL Group will seek to consummate the Merger by late 2001. __________________________________ In the opinion of the management of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, the accompanying unaudited condensed financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented. However, the business of the domestic utility companies and System Energy is subject to seasonal fluctuations with the peak periods occurring during the third quarter. The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year. ENTERGY CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Item 1. Legal Proceedings See "PART I, Item 1, Other Regulation and Litigation" in the Form 10-K for a discussion of legal proceedings affecting Entergy. Set forth below are updates to the information contained in the Form 10-K. Union Pacific Railroad (Entergy Corporation and Entergy Arkansas) See "Union Pacific Railroad" in Item 1 of Part 1 of the Form 10- K for information relating to the civil suit filed by Entergy Arkansas and Entergy Services against Union Pacific Railroad Company (Union Pacific) seeking damages and the termination of coal shipping contracts with Union Pacific because of its failure to meet its contractual obligations to ship coal to Entergy Arkansas' two coal- fired plants. In addition to rescission of the contracts and monetary damages, Entergy is seeking restitution for amounts paid to Union Pacific since the date of material breach that are above reasonable market rates. The case is scheduled for trial beginning in October 2000. Aquila Power Corporation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) See "Aquila Power Corporation" in Item 1 of Part 1 of the Form 10-K and in Item 1 of Part II of the 2000 first quarter Form 10-Q for information relating to the lawsuit filed by Aquila Power Corporation (Aquila) against Entergy Services, as agent for the domestic utility companies. Ratepayer Lawsuits (Entergy Corporation, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) See "Ratepayer Lawsuits" in Item 1 of Part I of the Form 10-K for a discussion of the lawsuits filed by ratepayers with the LPSC, the Council, and in Louisiana state courts in Orleans and East Baton Rouge Parishes. See "Fuel Adjustment Clause Litigation" in Note 2 to the financial statements herein for developments that have occurred since the filing of the Form 10-K. In the lawsuit filed in state court in Orleans Parish alleging violations of Entergy New Orleans' limit on rate of return, in May 2000 a court of appeal granted Entergy New Orleans' exception to jurisdiction in the case and dismissed the proceeding. Franchise Service Area Litigation (Entergy Gulf States) See "Franchise Service Area Litigation" in Item 1 of Part 1 of the Form 10-K 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, Texas, outside the boundaries of any municipality, except for the city of Beaumont, for which Entergy Gulf States provides retail electric service. In April 2000, the ALJ recommended denial of BP&L's application. In May 2000, the PUCT voted to remand the proceeding back to the ALJ to allow BP&L to provide further evidence. No procedural schedule has been set. Ice Storm Litigation (Entergy Corporation and Entergy Gulf States) See "Ice Storm Litigation" in Part I of the Form 10-K 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. In March 2000, an appellate court affirmed the district court's decision to certify the class. In response to Entergy's motion for rehearing the appellate court reversed the district court, denied class certification, and remanded the case to the district court for proceedings consistent with its ruling. 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 have proven to be unusually litigious environments. Judges and juries in these states, and in particular 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 appropriate legal means to contest litigation threatened or filed against it, but the litigation environment in these states poses a business risk. Item 4. Submission of Matters to a Vote of Security Holders Election of Board of Directors Entergy Corporation The annual meeting of stockholders of Entergy Corporation was held on May 12, 2000. The following matters were voted on and received the specified number of votes for, abstentions, votes withheld (against), and broker non-votes:
1. Election of Directors: Broker Name of Nominee Votes For Abstentions Votes Withheld Non-Votes W. Frank Blount 198,741,281 N/A 2,074,693 N/A George W. Davis 198,679,193 N/A 2,136,781 N/A Norman C. Francis 198,690,587 N/A 2,125,387 N/A J. Wayne Leonard 198,748,165 N/A 2,067,809 N/A Robert v.d. Luft 198,678,214 N/A 2,137,760 N/A Thomas F. McLarty, III 198,492,950 N/A 2,323,024 N/A Paul W. Murrill 197,859,191 N/A 2,956,783 N/A James R. Nichols 198,736,072 N/A 2,079,902 N/A William A. Percy, II 198,689,700 N/A 2,126,274 N/A D. H. Reilley 198,702,828 N/A 2,113,146 N/A Wm. Clifford Smith 197,940,015 N/A 2,875,959 N/A Bismark A. Steinhagen 198,737,362 N/A 2,078,612 N/A
2. Ratify the appointment of independent public accountants, PricewaterhouseCoopers LLP for the year 2000: 199,568,691 votes for; 470,300 votes against; 791,145 abstentions; and broker non-votes are not applicable. (Entergy Arkansas) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. 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: Hugh T. McDonald, Donald C. Hintz, Jerry D. Jackson, and C. John Wilder. (Entergy Gulf States) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. 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: E. Renae Conley, Joseph F. Domino, Donald C. Hintz, Jerry D. Jackson, and C. John Wilder. (Entergy Louisiana) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. 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: E. Renae Conley, Donald C. Hintz, Jerry D. Jackson, and C. John Wilder. (Entergy Mississippi) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. 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, Jerry D. Jackson, and C. John Wilder. (Entergy New Orleans) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. 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, Jerry D. Jackson, and C. John Wilder. (System Energy) A consent in lieu of the annual meeting of common stockholders was executed on July 31, 2000. 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, June 30, 1995 1996 1997 1998 1999 2000 Entergy Arkansas 2.56 2.93 2.54 2.63 2.08 2.62 Entergy Gulf States 1.86 1.47 1.42 1.40 2.18 2.49 Entergy Louisiana 3.18 3.16 2.74 3.18 3.48 2.82 Entergy Mississippi 2.92 3.40 2.98 3.12 2.44 2.66 Entergy New Orleans 3.93 3.51 2.70 2.65 3.00 2.99 System Energy 2.07 2.21 2.31 2.52 1.90 2.38 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, June 30, 1995 1996 1997 1998 1999 2000 Entergy Arkansas 2.12 2.44 2.24 2.28 1.80 2.26 Entergy Gulf States (a) 1.54 1.19 1.23 1.20 1.86 2.16 Entergy Louisiana 2.60 2.64 2.36 2.75 3.09 2.50 Entergy Mississippi 2.51 2.95 2.69 2.80 2.18 2.39 Entergy New Orleans 3.56 3.22 2.44 2.41 2.74 2.67 (a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* ** 2(a) - Agreement and Plan of Merger dated as of July 30, 2000, among FPL Group, Inc., Entergy Corporation, WCB Holding Corp., Ranger Acquisition Corp. and Ring Acquisition Corp (filed as Exhibit 2.1 to Form 8-K dated July 31, 2000 in 1-11299). ** 4(a) - Fifty-fifth Supplemental Indenture, dated as of May 15, 2000, to Entergy Louisiana's Mortgage and Deed of Trust, dated as of April 1,1944 (filed as Exhibit A-2(c) to Rule 24 Certificate dated June 2, 2000 in File No. 70-9141). 4(b) - Second Amended and Restated Credit Agreement, dated as of May 18, 2000, among Entergy, the Banks (The Bank of New York, The Chase Manhattan Bank, Citibank, N.A., ABN AMRO Bank N.V., The Bank of Nova Scotia, Bank One, N.A., Bayerische Landesbank Girozentrale, The Royal Bank of Scotland PLC, Barclays Bank PLC, Credit Agricole Indosuez, The Industrial Bank of Japan, KBC Bank NV, Union Bank of California, N.A., Westdeutsche Landesbank Girozentrale, and Mellon Bank, N.A.), and Citibank, N.A., as Agent. ** 4(c) - Fifty-ninth Supplemental Indenture, dated as of June 1, 2000, to Entergy Gulf States' Mortgage and Deed of Trust, dated as of September 1, 1926 (filed as Exhibit A-2(a) to Rule 24 Certificate dated June 23, 2000 in File No. 70- 8721). 4(d) - Eighth Supplemental Indenture, dated as of July 1, 2000, to Entergy New Orleans' Mortgage and Deed of Trust, dated as of May 1, 1987. 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of June 30, 2000. 27(b) - Financial Data Schedule for Entergy Arkansas as of June 30, 2000. 27(c) - Financial Data Schedule for Entergy Gulf States as of June 30, 2000. 27(d) - Financial Data Schedule for Entergy Louisiana as of June 30, 2000. 27(e) - Financial Data Schedule for Entergy Mississippi as of June 30, 2000. 27(f) - Financial Data Schedule for Entergy New Orleans as of June 30, 2000. 27(g) - Financial Data Schedule for System Energy as of June 30, 2000. 99(a) - Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. ** 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, 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(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, 2000, 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, 1-27031, 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 June 30, 2000, 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 June 30, 2000. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K Entergy Corporation A Current Report on Form 8-K, dated April 24, 2000, was filed with the SEC on April 28, 2000, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". Entergy Corporation A Current Report on Form 8-K, dated July 26, 2000, was filed with the SEC on July 27, 2000, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". Entergy Corporation A Current Report on Form 8-K, dated July 30, 2000, was filed with the SEC on July 31, 2000, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". Entergy Corporation A Current Report on Form 8-K, dated July 30, 2000, was filed with the SEC on August 3, 2000, reporting information under Item 5. "Other Events" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits". 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: August 8, 2000 EX-4 2 0002.txt Exhibit 4(b) EXECUTION COPY U.S. $500,000,000 SECOND AMENDED AND RESTATED CREDIT AGREEMENT Dated as of May __, 2000 Among ENTERGY CORPORATION as Borrower THE BANKS NAMED HEREIN as Banks CITIBANK, N.A. as Administrative Agent SALOMON SMITH BARNEY INC. as Sole Lead Arranger and THE BANK OF NEW YORK as Syndication Agent TABLE OF CONTENTS Section Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1 SECTION 1.01. Certain Defined Terms. 1 SECTION 1.02. Computation of Time Periods. 10 SECTION 1.03. Accounting Terms. 10 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES 10 SECTION 2.01. The Contract Advances. 10 SECTION 2.02. Making the Contract Advances. 11 SECTION 2.03. The Auction Advances. 12 SECTION 2.04. Fees. 16 SECTION 2.05. Adjustment of the Commitments. 16 SECTION 2.06. Repayment of Contract Advances. 17 SECTION 2.07. Interest on Contract Advances. 17 SECTION 2.08. Additional Interest on Eurodollar Rate Advances. 17 SECTION 2.09. Interest Rate Determination. 17 SECTION 2.10. Conversion of Contract Advances. 18 SECTION 2.11. Prepayments. 19 SECTION 2.12. Increased Costs. 19 SECTION 2.13. Illegality. 20 SECTION 2.14. Payments and Computations. 20 SECTION 2.15. Taxes. 22 SECTION 2.16. Sharing of Payments, Etc. 23 SECTION 2.17. Extension of Termination Date. 24 ARTICLE III CONDITIONS OF LENDING 25 SECTION 3.01. Conditions Precedent to Initial Advances. 25 SECTION 3.02. Conditions Precedent to Each Contract Borrowing. 26 SECTION 3.03. Conditions Precedent to Each Auction Borrowing. 27 SECTION 3.04. Conditions Precedent to Each Extension of the Revolving Period. 28 ARTICLE IV REPRESENTATIONS AND WARRANTIES 28 SECTION 4.01. Representations and Warranties of the Borrower. 28 ARTICLE V COVENANTS OF THE BORROWER 30 SECTION 5.01. Affirmative Covenants. 30 SECTION 5.02. Negative Covenants. 33 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES 35 SECTION 6.01. Events of Default. 35 SECTION 6.02. Remedies. 36 ARTICLE VII THE AGENT 37 SECTION 7.01. Authorization and Action. 37 SECTION 7.02. Administrative Agent's Reliance, Etc. 37 SECTION 7.03. Citibank and Affiliates. 38 SECTION 7.04. Lender Credit Decision. 38 SECTION 7.05. Indemnification. 38 SECTION 7.06. Successor Administrative Agent. 38 ARTICLE VIII MISCELLANEOUS 39 SECTION 8.01. Amendments, Etc. 39 SECTION 8.02. Notices, Etc. 40 SECTION 8.03. No Waiver; Remedies. 40 SECTION 8.04. Costs and Expenses; Indemnification. 40 SECTION 8.05. Right of Set-off. 41 SECTION 8.06. Binding Effect. 42 SECTION 8.07. Assignments and Participations. 42 SECTION 8.08. Governing Law. 46 SECTION 8.09. Consent to Jurisdiction; Waiver of Jury Trial. 46 SECTION 8.10. Execution in Counterparts. 46 SCHEDULES Schedule I - List of Applicable Lending Offices Schedule II - Commitment Schedule EXHIBITS Exhibit A-1 - Form of Contract Note Exhibit A-2 - Form of Auction Note Exhibit B-1 - Form of Notice of Contract Borrowing Exhibit B-2 - Form of Notice of Auction Borrowing Exhibit B-3 - Form of Notice of Conversion Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Opinion of Counsel for the Borrower Exhibit E - Form of Opinion of Special New York Counsel to the Administrative Agent SECOND AMENDED AND RESTATED CREDIT AGREEMENT Dated as of May 18, 2000 ENTERGY CORPORATION, a Delaware corporation (the "Borrower"), the banks (the "Banks") listed on the signature pages hereof, and Citibank, N.A. ("Citibank"), as administrative agent (the "Administrative Agent") for the Lenders hereunder, agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Advance" means a Contract Advance or an Auction Advance. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. "Agreement" means this Credit Agreement, as amended, supplemented or modified from time to time. "Applicable Lending Office" means, with respect to each Lender, such Lender's Domestic Lending Office in the case of a Base Rate Advance and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance and, in the case of an Auction Advance, the office of such Lender notified by such Lender to the Administrative Agent as its Applicable Lending Office with respect to such Auction Advance. "Applicable Margin" means, for any Eurodollar Rate Advance or any Base Rate Advance, (i) on any date the Utilization Percentage equals or is less than 50% (without giving effect to any Auction Reduction), the Eurodollar Margin or Base Rate Margin interest rate per annum set forth below in the columns identified as Level 1, Level 2, Level 3, Level 4 and Level 5, and (ii) on any date the Utilization Percentage exceeds 50% (without giving effect to any Auction Reduction), the Utilized Eurodollar Margin or Utilized Base Rate Margin interest rate per annum set forth below in the columns identified as Level 1, Level 2, Level 3, Level 4 and Level 5, in each case, determined by reference to the Relevant Rating. Level 1 Level 2 Level 3 Level 4 Level 5 Relevant Relevant Relevant Relevant Relevant Ratings Ratings Ratings Ratings Ratings Less than Less than Less than below S&P A- or Level 1 Level 2 Level 3 BBB-* better and BBB+ and BBB and BBB- or Moody's and or better or better or better below A3 or and and and Baa3* better Baa1 or Baa2 or Baa3 or better better better Interest Rate Per Annum Eurodollar Margin 0.400% 0.500% 0.550% 0.800% 1.750% Base Rate Margin 0.000% 0.000% 0.000% 0.000% 0.750% Utilized Eurodollar 0.525% 0.625% 0.675% 1.050% 2.000% Margin Utilized Base Rate 0.000% 0.000% 0.000% 0.050% 1.000% Margin *or unrated Any change in the Applicable Margin will be effective as of the date on which S&P or Moody's, as the case may be, announces the applicable change in any Senior Debt Rating. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee of that Lender, and accepted by the Administrative Agent, in substantially the form of Exhibit C hereto. "Auction Advance" means an advance by a Lender to the Borrower as part of an Auction Borrowing resulting from the auction bidding procedure described in Section 2.03. "Auction Borrowing" means a borrowing consisting of simultaneous Auction Advances from each of the Lenders whose offer to make one or more Auction Advances as part of such borrowing has been accepted by the Borrower under the auction bidding procedure described in Section 2.03. "Auction Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such Lender resulting from an Auction Advance made by such Lender. "Auction Reduction" has the meaning specified in Section 2.01. "Base Rate" means, for any period, a fluctuating interest rate per annum at all times equal to the higher of: (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; and (b) 1/2 of 1% per annum above the Federal Funds Rate in effect from time to time. "Base Rate Advance" means a Contract Advance that bears interest as provided in Section 2.07(a). "Borrowing" means a Contract Borrowing or an Auction Borrowing. "Business Day" means a day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capitalization" means, as of any date of determination, with respect to the Borrower and its subsidiaries determined on a consolidated basis, an amount equal to the sum of (i) the total principal amount of all Debt of the Borrower and its subsidiaries outstanding on such date, (ii) Consolidated Net Worth as of such date and (iii) to the extent not otherwise included in Capitalization, all preferred stock and other preferred securities of the Borrower and its subsidiaries, including preferred securities issued by any subsidiary trust, outstanding on such date. "Commitment" has the meaning specified in Section 2.01. "Consolidated Net Worth" means the sum of the capital stock (excluding treasury stock and capital stock subscribed for and unissued) and surplus (including earned surplus, capital surplus and the balance of the current profit and loss account not transferred to surplus) accounts of the Borrower and its subsidiaries appearing on a consolidated balance sheet of the Borrower and its subsidiaries prepared as of the date of determination in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e), after eliminating all intercompany transactions and all amounts properly attributable to minority interests, if any, in the stock and surplus of subsidiaries. "Contract Advance" means an advance by a Lender to the Borrower as part of a Contract Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance, each of which shall be a "Type" of Contract Advance. "Contract Borrowing" means a borrowing consisting of simultaneous Contract Advances of the same Type made by each of the Lenders pursuant to Section 2.01 or Converted pursuant to Section 2.09 or 2.10. "Contract Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A-1 hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Contract Advances made by such Lender. "Convert", "Conversion" and "Converted" each refers to a conversion of Contract Advances of one Type into Contract Advances of another Type or the selection of a new, or the renewal of the same, Interest Period for Eurodollar Rate Advances pursuant to Section 2.09 or 2.10. "Debt" of any Person means (without duplication) all liabilities, obligations and indebtedness (whether contingent or otherwise) of such Person (i) for borrowed money or evidenced by bonds, debentures, notes, or other similar instruments, (ii) to pay the deferred purchase price of property or services (other than such obligations incurred in the ordinary course of business on customary trade terms, provided that such obligations are not more than 30 days past due), (iii) as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, (iv) under reimbursement agreements or similar agreements with respect to the issuance of letters of credit (other than obligations in respect of letters of credit opened to provide for the payment of goods or services purchased in the ordinary course of business), (v) under any Guaranty Obligations and (vi) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA. "Domestic Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "Eligible Assignee" means a Person (a) (i) that is (A) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $500,000,000; (B) a commercial bank organized under the laws of any other country which is a member of the OECD, or a political subdivision of any such country, and having total assets in excess of $500,000,000, provided that such bank is acting through a branch or agency located in the United States or another country which is also a member of OECD; or (C) a Lender or a commercial bank Affiliate of any Lender immediately prior to an assignment and (ii) whose long-term public senior debt securities are rated at least "BBB-" by S&P or at least "Baa3" by Moody's; or (b) that is approved by the Borrower (whose approval shall not be unreasonably withheld) and the Administrative Agent. "Entergy Arkansas" means Entergy Arkansas, Inc., an Arkansas corporation. "Entergy Gulf States" means Entergy Gulf States, Inc., a Texas corporation. "Entergy Louisiana" means Entergy Louisiana, Inc., a Louisiana corporation. "Entergy Mississippi" means Entergy Mississippi, Inc., a Mississippi corporation. "Entergy New Orleans" means Entergy New Orleans, Inc., a Louisiana corporation. "Environmental Laws" means any federal, state or local laws, ordinances or codes, rules, orders, or regulations relating to pollution or protection of the environment, including, without limitation, laws relating to hazardous substances, laws relating to reclamation of land and waterways and laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollution, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder, each as amended and modified from time to time. "ERISA Affiliate" of a person or entity means any trade or business (whether or not incorporated) that is a member of a group of which such person or entity is a member and that is under common control with such person or entity within the meaning of Section 414 of the Internal Revenue Code of 1986, and the regulations promulgated and rulings issued thereunder, each as amended or modified from time to time. "ERISA Plan" means an employee benefit plan maintained for employees of any Person or any ERISA Affiliate of such Person subject to Title IV of ERISA. "ERISA Termination Event" means (i) a Reportable Event described in Section 4043 of ERISA and the regulations issued thereunder (other than a Reportable Event not subject to the provision for 30-day notice to PBGC), or (ii) the withdrawal of the Borrower or any of its ERISA Affiliates from an ERISA Plan during a plan year in which the Borrower or any of its ERISA Affiliates was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the filing of a notice of intent to terminate an ERISA Plan or the treatment of an ERISA Plan amendment as a termination under Section 4041 of ERISA, or (iv) the institution of proceedings to terminate an ERISA Plan by the PBGC or to appoint a trustee to administer any ERISA Plan, or (v) any other event or condition that would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer any ERISA Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. "Eurodollar Rate" means, for the Interest Period for each Eurodollar Rate Advance made as part of the same Contract Borrowing, an interest rate per annum equal to the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England, to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance made as part of such Contract Borrowing and for a period equal to such Interest Period. The Eurodollar Rate for the Interest Period for each Eurodollar Rate Advance made as part of the same Contract Borrowing shall be determined by the Administrative Agent on the basis of applicable rates furnished to and received by the Administrative Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.09. "Eurodollar Rate Advance" means a Contract Advance that bears interest as provided in Section 2.07(b). "Eurodollar Rate Reserve Percentage" of any Lender for the Interest Period for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Existing Credit Agreement" means that certain Credit Agreement, dated as of September 17, 1998, among the Borrower, certain banks and Citibank, N.A., as agent for such banks, as amended and restated by the Amendment and Restatement, dated as of September 15, 1999. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Fee Letter" means that certain letter agreement, dated as of April 6, 2000, among the Borrower, the Administrative Agent and Salomon Smith Barney Inc. "Guaranty Obligations" means (i) direct or indirect guaranties in respect of, and obligations to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, Debt of any Person and (ii) other guaranty or similar obligations in respect of the financial obligations of others, including, without limitation, Support Obligations. "Interest Period" means, for each Contract Advance made as part of the same Contract Borrowing, the period commencing on the date of such Contract Advance or the date of the Conversion of any Contract Advance into such a Contract Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be 1, 2, 3 or 6 months in the case of a Eurodollar Rate Advance, as the Borrower may, upon notice received by the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: (i) the Borrower may not select any Interest Period that ends after the Termination Date; (ii) Interest Periods commencing on the same date for Contract Advances made as part of the same Contract Borrowing shall be of the same duration; and (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, in the case of any Interest Period for a Eurodollar Rate Advance, that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day. "Junior Subordinated Debentures" means any junior subordinated deferrable interest debentures issued by any Significant Subsidiary or Entergy New Orleans from time to time. "Lenders" means the Banks listed on the signature pages hereof and each Person that shall become a party hereto pursuant to Section 8.07. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person or any of its subsidiaries shall be deemed to own, subject to a Lien, any asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Majority Lenders" means at any time Lenders holding at least 66-2/3% of the then aggregate unpaid principal amount of the Contract Notes held by Lenders, or, if no such principal amount is then outstanding, Lenders having at least 66-2/3% of the Commitments (without giving effect to any termination in whole of the Commitments pursuant to Section 6.02), provided, that for purposes hereof, neither the Borrower, nor any of its Affiliates, if a Lender, shall be included in (i) the Lenders holding such amount of the Contract Advances or having such amount of the Commitments or (ii) determining the aggregate unpaid principal amount of the Contract Advances or the total Commitments. "Moody's" means Moody's Investors Service, Inc. or any successor thereto. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding three plan years made or accrued an obligation to make contributions. "Non-Recourse Debt" means any Debt of any subsidiary of the Borrower that does not constitute Debt of the Borrower, any Significant Subsidiary or Entergy New Orleans. "Note" means a Contract Note or an Auction Note. "Notice of Contract Borrowing" has the meaning specified in Section 2.02(a). "Notice of Auction Borrowing" has the meaning specified in Section 2.03(a). "OECD" means the Organization for Economic Cooperation and Development. "PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Prepayment Event" means the occurrence of any event or the existence of any condition under any agreement or instrument relating to any Debt of the Borrower or of a Significant Subsidiary that, in either case, is outstanding in a principal amount in excess of $50,000,000 in the aggregate, which occurrence or event results in the declaration of such Debt being due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof. "Reference Banks" means Citibank, The Bank of New York and Bank One, NA. "Register" has the meaning specified in Section 8.07(c). "Relevant Rating" means Senior Debt Ratings of the Significant Subsidiary (other than SERI) having the second lowest Senior Debt Ratings from Moody's and S&P of all Significant Subsidiaries (other than SERI). "Reportable Event" has the meaning assigned to that term in Title IV of ERISA. "Revolving Period" means the period beginning the date hereof and ending on May 17, 2001, or such later date as to which the Lenders may from time to time agree pursuant to Section 2.17. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto. "SEC" means the United States Securities and Exchange Commission. "SEC Order" has the meaning specified in Section 3.01(a)(iii). "Senior Debt Rating" means, as to any Person, the rating assigned by Moody's or S&P to the senior secured long- term debt of such Person. "SERI" means Systems Energy Resources, Inc., an Arkansas corporation. "Significant Subsidiary" means Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, SERI and any other domestic regulated utility subsidiary of the Borrower: (i) the total assets (after intercompany eliminations) of which exceed 5% of the total assets of the Borrower and its subsidiaries or (ii) the net worth of which exceeds 5% of the Consolidated Net Worth of the Borrower and its subsidiaries, in each case as shown on the most recent audited consolidated balance sheet of the Borrower and its subsidiaries. "Support Obligations" means any financial obligation, contingent or otherwise, of any Person guaranteeing or otherwise supporting any Debt or other obligation of any other Person in any manner, whether directly or indirectly, and including, without limitation, any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Debt, (ii) to purchase property, securities or services for the purpose of assuring the owner of such Debt of the payment of such Debt, (iii) to maintain working capital, equity capital, available cash or other financial statement condition of the primary obligor so as to enable the primary obligor to pay such Debt, (iv) to provide equity capital under or in respect of equity subscription arrangements so as to assure any Person with respect to the payment of such Debt or the performance of such obligation, or (v) to provide financial support for the performance of, or to arrange for the performance of, any non-monetary obligations or non-funded debt payment obligations (including, without limitation, guaranties of payments under power purchase or other similar arrangements) of the primary obligor. "Term Election" has the meaning assigned to that term in Section 2.17(a). "Termination Date" means the earlier to occur of (i) the last day of the Revolving Period, or, if the Borrower shall have made the Term Election, the first anniversary of the last day of the Revolving Period, and (ii) the earlier date of termination in whole of the Commitments pursuant to Section 2.05 or Section 6.02 hereof. "Utilization Percentage" means, as of any time for the determination thereof, the percentage obtained by dividing the aggregate outstanding Advances by the Aggregate Commitments then in effect. "Yield" means, for any Auction Advance, the effective rate per annum at which interest on such Auction Advance is payable, computed on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) hereof. ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Contract Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Contract Advances to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an aggregate amount not to exceed at any time outstanding the amount set opposite such Lender's name on Schedule II hereto or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c), as such amount may be reduced pursuant to Section 2.05 or Section 2.17 (such Lender's "Commitment"), provided that the aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to the extent of the aggregate amount of the Auction Advances then outstanding and such deemed use of the aggregate amount of the Commitments shall be applied to the Lenders ratably according to their respective Commitments (such deemed use of the aggregate amount of the Commitments being an "Auction Reduction"). Each Contract Borrowing shall be in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Contract Advances of the same Type and, in the case of Eurodollar Rate Advances or, having the same Interest Period made or Converted on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, the Borrower may from time to time borrow, prepay pursuant to Section 2.11 and reborrow under this Section 2.01; provided, however, that at no time may the principal amount outstanding hereunder exceed the aggregate amount of the Commitments. SECTION 2.02. Making the Contract Advances. (a) Each Contract Borrowing shall be made on notice, given (i) in the case of a Contract Borrowing comprising Eurodollar Rate Advances, not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Contract Borrowing, and (ii) in the case of a Contract Borrowing comprising Base Rate Advances, not later than 11:00 A.M. (New York City time) on the date of the proposed Contract Borrowing, by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof. Each such notice of a Contract Borrowing (a "Notice of Contract Borrowing") shall be transmitted by telecopier, telex or cable, confirmed immediately in writing, in substantially the form of Exhibit B-1 hereto, specifying therein the requested (A) date of such Contract Borrowing, (B) Type of Contract Advances to be made in connection with such Contract Borrowing, (C) aggregate amount of such Contract Borrowing, and (D) in the case of a Contract Borrowing comprising Eurodollar Rate Advances, initial Interest Period for each such Contract Advance. Each Lender shall, before (x) 12:00 noon (New York City time) on the date of any Contract Borrowing comprising Eurodollar Rate Advances, and (y) 1:00 P.M. (New York City time) on the date of any Contract Borrowing comprising Base Rate Advances, make available for the account of its Applicable Lending Office to the Administrative Agent at its address referred to in Section 8.02, in same day funds, such Lender's ratable portion of such Contract Borrowing. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent's aforesaid address. (b) Each Notice of Contract Borrowing shall be irrevocable and binding on the Borrower. In the case of any Notice of Contract Borrowing requesting Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Contract Borrowing for such Contract Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Contract Advance to be made by such Lender as part of such Contract Borrowing when such Contract Advance, as a result of such failure, is not made on such date. (c) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Contract Borrowing that such Lender will not make available to the Administrative Agent such Lender's ratable portion of such Contract Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Contract Borrowing in accordance with subsection (a) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower (following the Administrative Agent's demand on such Lender for the corresponding amount) severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Contract Advances made in connection with such Contract Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's Contract Advance as part of such Contract Borrowing for purposes of this Agreement. (d) The failure of any Lender to make the Contract Advance to be made by it as part of any Contract Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Contract Advance on the date of such Contract Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Contract Advance to be made by such other Lender on the date of any Contract Borrowing. SECTION 2.03. The Auction Advances. (a) Each Lender severally agrees that the Borrower may request Auction Borrowings under this Section 2.03 from time to time on any Business Day during the period from the date hereof until the date occurring 31 days prior to the earlier to occur of the last day of the Revolving Period and the Termination Date in the manner set forth below; provided that, following the making of each Auction Borrowing, the aggregate amount of the Advances then outstanding shall not exceed the aggregate amount of the Commitments of the Lenders (computed without regard to any Auction Reduction). (i) The Borrower may request an Auction Borrowing by delivering to the Administrative Agent (A) by telecopier, telex or cable, confirmed immediately in writing, a notice of an Auction Borrowing (a "Notice of Auction Borrowing"), in substantially the form of Exhibit B-2 hereto, specifying the date and aggregate amount of the proposed Auction Borrowing, the maturity date for repayment of each Auction Advance to be made as part of such Auction Borrowing (which maturity date may not be earlier than the date occurring 30 days after the date of such Auction Borrowing or later than the earliest to occur of (1) 180 days after the date of the proposed Auction Borrowing (2) the last day of the Revolving Period and (3) the Termination Date), the interest payment date or dates relating thereto (which shall occur at least every 90 days), and any other terms to be applicable to such Auction Borrowing, not later than 10:00 A.M. (New York City time) (x) at least one Business Day prior to the date of the proposed Auction Borrowing, if the Borrower shall specify in the Notice of Auction Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum and (y) at least four Business Days prior to the date of the proposed Auction Borrowing, if the Borrower shall specify in the Notice of Auction Borrowing the basis (such as a quoted London interbank offered rate or the Federal Funds Rate) to be used by the Lenders in determining the rates of interest to be offered by them and (B) payment in full to the Administrative Agent of the aggregate auction administration fee specified in Section 2.04(b) hereof. The Administrative Agent shall in turn promptly notify each Lender of each request for an Auction Borrowing received by it from the Borrower by sending such Lender a copy of the related Notice of Auction Borrowing. (ii) Each Lender may, in its sole discretion, if it elects to do so, irrevocably offer to make one or more Auction Advances to the Borrower as part of such proposed Auction Borrowing at a rate or rates of interest specified by such Lender in its sole discretion, by notifying the Administrative Agent (which shall give prompt notice thereof to the Borrower), before 10:00 A.M. (New York City time) (A) on the date of such proposed Auction Borrowing, in the case of a Notice of Auction Borrowing delivered pursuant to clause (A)(x) of paragraph (i), above, and (B) three Business Days before the date of such proposed Auction Borrowing, in the case of a Notice of Auction Borrowing delivered pursuant to clause (A)(y) of paragraph (i), above, of the minimum amount and maximum amount of each Auction Advance that such Lender would be willing to make as part of such proposed Auction Borrowing (which amounts may, subject to the proviso to the first sentence of this Section 2.03(a), exceed such Lender's Commitment), the rate or rates of interest therefor, the basis, rate and margin used by such Lender (if applicable) in determining the rate or rates of interest so offered and the Yield (if different from such rate or rates), the interest period relating thereto and such Lender's Applicable Lending Office with respect to such Auction Advance; provided that if the Administrative Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify the Borrower of such offer before 9:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Administrative Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Administrative Agent, before 10:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Administrative Agent by the other Lenders, and such Lender shall not be obligated to, and shall not, make any Auction Advance as part of such Auction Borrowing; provided that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Auction Advance as part of such proposed Auction Borrowing. (iii) The Borrower shall, in turn, (A) before 11:00 A.M. (New York City time) on the date of such proposed Auction Borrowing, in the case of a Notice of Auction Borrowing delivered pursuant to clause (A)(x) of paragraph (i), above and (B) before 1:00 P.M. (New York City time) three Business Days before the date of such proposed Auction Borrowing, in the case of a Notice of Auction Borrowing delivered pursuant to clause (A)(y) of paragraph (i), above, either (1) cancel such Auction Borrowing by giving the Administrative Agent notice to that effect, or (2) irrevocably accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (ii) above, in its sole discretion, subject only to the provisions of this paragraph (iii), by giving notice to the Administrative Agent of the amount of each Auction Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to the Borrower by the Administrative Agent on behalf of such Lender for such Auction Advance pursuant to paragraph (ii) above) to be made by each Lender as part of such Auction Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (ii) above by giving the Administrative Agent notice to that effect; provided, however, that (w) the Borrower shall not accept an offer made pursuant to paragraph (ii) above, at any Yield if the Borrower shall have, or shall be deemed to have, rejected any other offer made pursuant to paragraph (ii) above, at a lower Yield, (x) if the Borrower declines to accept, or is otherwise restricted by the provisions of this Agreement from accepting, the maximum aggregate principal amount of Auction Borrowings offered at the same Yield pursuant to paragraph (ii) above, then the Borrower shall accept a pro rata portion of each offer made at such Yield, based as nearly as possible on the ratio of the aggregate principal amount of such offers to be accepted by the Borrower to the maximum aggregate principal amount of such offers made pursuant to paragraph (ii) above (rounding up or down to the next higher or lower multiple of $1,000,000), (y) no offer made pursuant to paragraph (ii) above shall be accepted unless the Auction Borrowing in respect of such offer is in an integral multiple of $1,000,000 and the aggregate amount of such offers accepted by the Borrower is equal to at least $5,000,000, and (z) no offer made pursuant to paragraph (ii) above shall be accepted at any interest rate in excess of the Base Rate then in effect plus 2% per annum (or such higher rate as may be permitted by applicable law, regulation or order). Any offer or offers made pursuant to paragraph (ii) above not expressly accepted or rejected by the Borrower in accordance with this paragraph (iii) shall be deemed to have been rejected by the Borrower. (iv) If the Borrower notifies the Administrative Agent that such Auction Borrowing is canceled pursuant to clause (1) of paragraph (iii) above, the Administrative Agent shall give prompt notice thereof to the Lenders and such Auction Borrowing shall not be made. (v) If the Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to clause (2) of paragraph (iii) above, the Administrative Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (ii) above, of the date and aggregate amount of such Auction Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (ii) above have been accepted by the Borrower, (B) each Lender that is to make an Auction Advance as part of such Auction Borrowing of the amount of each Auction Advance to be made by such Lender as part of such Auction Borrowing, and (C) each Lender that is to make an Auction Advance as part of such Auction Borrowing, upon receipt, that the Administrative Agent has received forms of documents appearing to fulfill the applicable conditions set forth in Article III. Each Lender that is to make an Auction Advance as part of such Auction Borrowing shall, before 12:00 noon (New York City time) on the date of such Auction Borrowing specified in the notice received from the Administrative Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Administrative Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Administrative Agent at its address referred to in Section 8.02 such Lender's portion of such Auction Borrowing, in same day funds. Upon fulfillment of the applicable conditions set forth in Article III and after receipt by the Administrative Agent of such funds, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent's aforesaid address. Promptly after each Auction Borrowing the Administrative Agent will notify each Lender of the amount of the Auction Borrowing, the consequent Auction Reduction and the dates upon which such Auction Reduction commenced and will terminate. (vi) If the Borrower accepts one or more of the offers made by any Lender pursuant to clause (B) of paragraph (iii) above, the Borrower shall indemnify such Lender against any loss, cost or expense incurred by such Lender as a result of any failure by the Borrower to fulfill on or before the date specified for such Auction Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by such Lender to fund the Auction Advance to be made by such Lender as part of such Auction Borrowing when such Auction Advance, as a result of such failure, is not made on such date. (b) Each Auction Borrowing shall be in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each Auction Borrowing, the Borrower shall be in compliance with the limitation set forth in the proviso to the first sentence of subsection (a) above. (c) Within the limits and on the conditions set forth in this Section 2.03, the Borrower may from time to time borrow under this Section 2.03, repay or prepay pursuant to subsection (d) below, and reborrow under this Section 2.03, provided that an Auction Borrowing shall not be made within three Business Days of the date of any other Auction Borrowing. (d) The Borrower shall repay to the Administrative Agent for the account of each Lender that has made an Auction Advance, or each other holder of an Auction Note, on the maturity date of each Auction Advance (such maturity date being that specified by the Borrower for repayment of such Auction Advance in the related Notice of Auction Borrowing delivered pursuant to subsection (a)(i) above and provided in the Auction Note evidencing such Auction Advance), the then unpaid principal amount of such Auction Advance. The Borrower shall have no right to prepay any principal amount of any Auction Advance unless, and then only on the terms, specified by the Borrower for such Auction Advance in the related Notice of Auction Borrowing delivered pursuant to subsection (a)(i)(A) above and set forth in the Auction Note evidencing such Auction Advance. (e) The Borrower shall pay interest on the unpaid principal amount of each Auction Advance from the date of such Auction Advance to the date the principal amount of such Auction Advance is repaid in full, at the rate of interest for such Auction Advance specified by the Lender making such Auction Advance in its notice with respect thereto delivered pursuant to subsection (a)(ii) above, payable on the interest payment date or dates specified by the Borrower for such Auction Advance in the related Notice of Auction Borrowing delivered pursuant to subsection (a)(i) above, as provided in the Auction Note evidencing such Auction Advance; provided, however, that, if and for so long as a Prepayment Event or an Event of Default shall have occurred and be continuing, the unpaid principal amount of each Auction Advance shall (to the fullest extent permitted by law) bear interest until paid in full at a rate per annum equal at all times to the Base Rate plus 2% per annum, payable upon demand. (f) The indebtedness of the Borrower resulting from each Auction Advance made to the Borrower as part of an Auction Borrowing shall be evidenced by a separate Auction Note of the Borrower payable to the order of the Lender making such Auction Advance. SECTION 2.04. Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee on the average daily amount of such Lender's Commitment (without giving effect to any Auction Reduction) from the date hereof in the case of each Bank, and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender, in the case of each other Lender, until the earlier to occur of the Termination Date and, in the case of the termination in whole of a Lender's Commitment pursuant to Section 2.05, the date of such termination, payable on the last day of each March, June, September and December during such period, and on the Termination Date at the rate per annum set forth below in the columns identified as Level 1, Level 2, Level 3, Level 4, and Level 5, determined by reference to the Relevant Rating: Level 1 Level 2 Level 3 Level 4 Level 5 Relevant Relevant Relevant Relevant Relevant Ratings Ratings Ratings Ratings Ratings A- or Less than Less than Less than below BBB-* S&P better Level 1 Level 2 Level 3 or Moody's and and BBB+ and BBB and BBB- below A3 or or better or better or better Baa3* better and Baa1 and Baa2 and Baa3 or better or better or better Rate Per Annum Facility Fee 0.100% 0.125% 0.150% 0.200% 0.250% *or unrated Any change in the facility fee will be effective as of the date on which S&P or Moody's, as the case may be, announces the applicable change in any Senior Debt Rating. (b) The Borrower agrees to pay to the Administrative Agent for its own account an auction administration fee in the amount of $2,000 in respect of each Auction Borrowing requested by the Borrower pursuant to Section 2.03(a)(i), payable on the date of such request. SECTION 2.05. Adjustment of the Commitments. (a) The Borrower shall have the right, upon at least three Business Days' notice to the Administrative Agent, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that the aggregate amount of the Commitments of the Lenders shall not be reduced to an amount that is less than the aggregate principal amount of the Auction Advances then outstanding, and provided, further, that each partial reduction shall be in the aggregate amount of $1,000,000 or an integral multiple thereof. (b) If the Borrower shall make the Term Election, then on the last day of the Revolving Period, the Commitments shall be permanently reduced to an amount equal to the aggregate principal amount of Advances then outstanding. In addition, if on any date following the last day of the Revolving Period the aggregate principal amount of Advances then outstanding shall be less than the Commitments, then on such date the Commitments shall be permanently reduced to an amount equal to the aggregate principal amount of Advances then outstanding. SECTION 2.06. Repayment of Contract Advances. The Borrower shall repay the principal amount of each Contract Advance made by each Lender in accordance with the Contract Note to the order of such Lender. SECTION 2.07. Interest on Contract Advances. The Borrower shall pay interest on the unpaid principal amount of each Contract Advance made by each Lender from the date of such Contract Advance until such principal amount shall be paid in full, at the following rates per annum: (a) Base Rate Advances. If such Contract Advance is a Base Rate Advance, a rate per annum equal at all times to the Base Rate in effect from time to time plus the Applicable Margin for such Base Rate Advance in effect from time to time, payable quarterly on the last day of each March, June, September and December and on the date such Base Rate Advance shall be Converted or paid in full. (b) Eurodollar Rate Advances. Subject to Section 2.08, if such Contract Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during the Interest Period for such Contract Advance to the sum of the Eurodollar Rate for such Interest Period plus the Applicable Margin for such Eurodollar Rate Advance in effect from time to time, payable on the last day of each Interest Period for such Eurodollar Rate Advance and on the date such Eurodollar Rate Advance shall be Converted or paid in full and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period. SECTION 2.08. Additional Interest on Eurodollar Rate Advances. The Borrower shall pay to each Lender, so long as such Lender shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of each Eurodollar Rate Advance of such Lender, from the date of such Contract Advance until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Contract Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Contract Advance. Such additional interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent, and such determination shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.09. Interest Rate Determination. (a) Each Reference Bank agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Administrative Agent for the purpose of determining any such interest rate, the Administrative Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks. (b) The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.07(a) or (b) and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under Section 2.07(b). (c) If fewer than two Reference Banks furnish timely information to the Administrative Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances, (i) the Administrative Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances, (ii) each such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (iii) the obligation of the Lenders to make, or to Convert Contract Advances into Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. (d) If, with respect to any Eurodollar Rate Advances, the Majority Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Majority Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert Contract Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.10. Conversion of Contract Advances. (a) Voluntary. The Borrower may, upon notice given to the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.09 and 2.13, on any Business Day, Convert all Contract Advances of one Type made in connection with the same Contract Borrowing into Advances of another Type; provided, however, that any Conversion of, or with respect to, any Eurodollar Rate Advances into Advances of another Type shall be made on, and only on, the last day of an Interest Period for such Eurodollar Rate Advances, unless the Borrower shall also reimburse the Lenders in respect thereof pursuant to Section 8.04(b) on the date of such Conversion. Each such notice of a Conversion (a "Notice of Conversion") shall be by telecopier, telex or cable, confirmed immediately in writing, in substantially the form of Exhibit B-3 hereto, specifying therein (i) the date of such Conversion, (ii) the Contract Advances to be Converted, and (iii) if such Conversion is into, or with respect to, Eurodollar Rate Advances, the duration of the Interest Period for each such Contract Advance. (b) Mandatory. If a Borrower shall fail to select the Type of any Contract Advance or the duration of any Interest Period for any Contract Borrowing comprising Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01 and Section 2.10(a), or if any proposed Conversion of a Contract Borrowing that is to comprise Eurodollar Rate Advances upon Conversion shall not occur as a result of the circumstances described in paragraph (c) below, the Administrative Agent will forthwith so notify the Borrower and the Lenders, and such Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances. (c) Failure to Convert. Each notice of Conversion given pursuant to subsection (a) above shall be irrevocable and binding on the Borrower. In the case of any Contract Borrowing that is to comprise Eurodollar Rate Advances upon Conversion, the Borrower agrees to indemnify each Lender against any loss, cost or expense incurred by such Lender if, as a result of the failure of the Borrower to satisfy any condition to such Conversion (including, without limitation, the occurrence of any Prepayment Event or Event of Default, or any event that would constitute an Event of Default or a Prepayment Event with notice or lapse of time or both), such Conversion does not occur. The Borrower's obligations under this subsection (c) shall survive the repayment of all other amounts owing to the Lenders and the Administrative Agent under this Agreement and the Notes and the termination of the Commitments. SECTION 2.11. Prepayments. The Borrower may, upon notice received by the Administrative Agent prior to 11:00 A.M. (New York City time) on any Business Day, with respect to Base Rate Advances, and upon at least two Business Days' notice to the Administrative Agent, with respect to Eurodollar Rate Advances, stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amounts of the Advances made as part of the same Contract Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (i) each partial prepayment shall be in an aggregate principal amount not less than $1,000,000 or any integral multiple of $100,000 in excess thereof and (ii) in the case of any such prepayment of an Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(b) on the date of such prepayment. SECTION 2.12. Increased Costs. (a) If, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements in the case of Eurodollar Rate Advances, included in the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances, then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type (including such Lender's commitment to lend hereunder) or the Advances, then, upon demand by such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall immediately pay to the Administrative Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder or the Advances made by such Lender. A certificate in reasonable detail as to such amounts submitted to the Borrower and the Administrative Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.13. Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent that the introduction of, any change in or any change in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, (i) the obligation of the Lenders to make, or to Convert Contract Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist and (ii) the Borrower shall forthwith prepay in full all Eurodollar Rate Advances of all Lenders then outstanding, together with interest accrued thereon, unless the Borrower, within five Business Days of notice from the Administrative Agent, Converts all Eurodollar Rate Advances of all Lenders then outstanding into Advances of another Type in accordance with Section 2.10. SECTION 2.14. Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes not later than 12:00 noon (New York City time) on the day when due in U.S. dollars to the Administrative Agent at its address referred to in Section 8.02 in same day funds. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.02(c), 2.03, 2.08, 2.12, 2.15 or 8.04(b)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(d), from and after the effective date specified in such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder or under any Note held by such Lender, to charge from time to time to the extent permitted by law against any or all of the Borrower's accounts with such Lender any amount so due. (c) All computations of interest based on the Base Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of facility fees and interest payable on Auction Advances shall be made by the Administrative Agent, and all computations of interest pursuant to Section 2.08 shall be made by a Lender, on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or facility fees are payable. Each determination by the Administrative Agent (or, in the case of Section 2.08, by a Lender) of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility fee, as the case may be; provided, however, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate. (f) Notwithstanding anything to the contrary contained herein, any amount payable by the Borrower hereunder or under any Note that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid in full at a rate per annum equal at all times to the Base Rate plus 2%, payable upon demand. SECTION 2.15. Taxes. (a) Any and all payments by the Borrower hereunder or under the Contract Notes shall be made, in accordance with Section 2.14, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Administrative Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or the Administrative Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender or the Administrative Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.15) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) The Borrower will indemnify each Lender and the Administrative Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.15) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. Nothing herein shall preclude the right of the Borrower to contest any such Taxes or Other Taxes so paid, and the Lenders in question or the Administrative Agent (as the case may be) will, following notice from, and at the expense of, the Borrower, take such actions as the Borrower may reasonably request to preserve the Borrower's rights to contest such Taxes or Other Taxes, and, promptly following receipt of any refund of amounts with respect to Taxes or Other Taxes for which such Lenders or the Administrative Agent were previously indemnified under this Section 2.15, pay to the Borrower such refunded amounts (including any interest paid by the relevant taxing authority with respect to such amounts). (d) Prior to the date of the initial Borrowing in the case of each Bank, and on the date of the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender, and from time to time thereafter if requested by the Borrower or the Administrative Agent, each Lender organized under the laws of a jurisdiction outside the United States shall provide the Administrative Agent and the Borrower with the forms prescribed by the Internal Revenue Service of the United States certifying that such Lender is exempt from United States withholding taxes with respect to all payments to be made to such Lender hereunder and under the Notes.. If for any reason during the term of this Agreement, any Lender becomes unable to submit the forms referred to above or the information or representations contained therein are no longer accurate in any material respect, such Lender shall notify the Administrative Agent and the Borrower in writing to that effect. Unless the Borrower and the Administrative Agent have received forms or other documents satisfactory to them indicating that payments hereunder or under any Note are not subject to United States withholding tax, the Borrower or, if the Borrower fails to do so, the Administrative Agent, shall withhold taxes from such payments at the applicable statutory rate in the case of payments to or for any Lender organized under the laws of a jurisdiction outside the United States. (e) Any Lender claiming any additional amounts payable pursuant to this Section 2.15 shall use its best efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office or take other actions customary or otherwise reasonable under the circumstances if the making of such a change or the taking of such actions would avoid the need for, or reduce the amount of, any such additional amounts which may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. (f) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.15 shall survive the payment in full of principal and interest hereunder and under the Notes. SECTION 2.16. Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Contract Advances made by it (other than pursuant to Section 2.02(c), 2.08, 2.12, 2.15 or 8.04(b)) in excess of its ratable share of payments on account of the Contract Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Contract Advances made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.16 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. SECTION 2.17. Extension of Termination Date. (a) At least 30 but no more than 45 days prior to the end of the then-current Revolving Period, the Borrower may, by delivering a written request to the Administrative Agent (each such request being irrevocable), request that the Revolving Period be extended for an additional period of 364 days, commencing on the last day of the then-current Revolving Period. Any such notice shall also indicate whether the Borrower elects, in the event that the Lenders determine not to extend the Revolving Period as requested by the Borrower, to extend the then-stated Termination Date from the last day of the then-current Revolving Period to the first anniversary of the last day of the then-current Revolving Period (any such election to so extend the Termination Date being the "Term Election"). Upon receipt of any such notice, the Administrative Agent shall promptly communicate such request to the Lenders. (b) No earlier than 30 days prior, and no later than 20 days prior, to the end of the then-current Revolving Period, each Lender may indicate to the Administrative Agent whether the Borrower's request to so extend the then-current Revolving Period is acceptable to such Lender, it being understood that the determination by each Lender will be in its sole and absolute discretion and that the failure of any Lender to so respond within such period shall be deemed to constitute a refusal by such Lender to consent to such requests (any Lender refusing or deemed to refuse any such request, a "Non-Consenting Lender"). The Administrative Agent will notify the Borrower, in writing, of the Lenders' decisions no later than 15 days prior to the end of the then-current Revolving Period. (c) Subject to the satisfaction of the conditions set forth in Section 3.04, in the event that Lenders having more than 50% of the Commitments have consented to the Borrower's request to extend the then-current Revolving Period, the then-current Revolving Period shall be extended for an additional period of 364 days with respect to the Commitments of such Lenders. The Commitments of Non-Consenting Lenders with respect to such request shall automatically terminate on the last day of the then- current Revolving Period (and the principal amount of all Advances made by such Non-Consenting Lenders, together with accrued interest to such date, shall be repaid), unless assigned pursuant to Section 8.07(i) hereof in which case the then-current Revolving Period shall be extended for such additional period with respect to such Commitments. (d) Subject to the satisfaction of the conditions set forth in Section 3.04, in the event that (i) Lenders having 50% or less of the Commitments have consented to the Borrower's request to extend the then-current Revolving Period and (ii) Commitments and Advances of Non-Consenting Lenders with respect to such request which have been assigned pursuant to Section 8.07(i) hereof, when aggregated with the Commitments of such consenting Lenders, comprise more than 50% of the Commitments, the then-current Revolving Period shall be extended for an additional period of 364 days with respect to such Commitments. The Commitments of the Non-Consenting Lenders shall automatically terminate on the last day of the then-current Revolving Period (and the principal amount of all Advances made by such Non-Consenting Lenders, together with accrued interest to such date, shall be repaid), unless assigned pursuant to Section 8.07(i) hereof. (e) Subject to the satisfaction of the condition set forth in Section 3.04(d)(ii), in the event that any request by the Borrower pursuant to subsection (a) above shall be denied and the Borrower shall have indicated in such request that, in the event of such denial, it has determined to effect the Term Election, then, effective as of the last day of the Revolving Period, the Termination Date shall be extended to the first anniversary of such day. In addition, in the event that the Borrower shall not have requested an extension of the then-current Revolving Period pursuant to subsection (a) above, the Borrower may nonetheless make the Term Election by giving written notice to such effect to the Administrative Agent at least ten Business Days prior to the last day of the then-current Revolving Period (which shall promptly give notice thereof to the Lenders), whereupon, subject to the satisfaction of the condition set forth in Section 3.04(d)(ii), the Termination Date shall, effective as of such last day, be extended to the first anniversary of such last day.. (f) Notwithstanding anything contained herein to the contrary, the Borrower's right to effect the Term Election as provided in either subsection (a) or (e), above, shall not affect any rights or remedies that the Lenders or the Administrative Agent may have at such time under Section 6.01 as a result of any Event of Default or Prepayment Event, or event that would constitute an Event of Default or Prepayment Event with notice or lapse of time or both, which may have occurred and then be continuing, either at the time of the giving of such notice or on the last day of the then-current Revolving Period. (g) Notwithstanding any other provision of this Agreement, the Revolving Period may be extended more than once pursuant to this Section 2.17 and the Term Election may be effected on the last day of the Revolving Period whether or not the same has been extended one or more times pursuant to this Section 2.17. ARTICLE III CONDITIONS OF LENDING SECTION 3.01. Conditions Precedent to Initial Advances. The obligation of each Lender to make its initial Advance is subject to the conditions precedent that on or before the date of such Advance: (a) The Administrative Agent shall have received the following, each dated the same date (except for the financial statements referred to in paragraph (iv) below), in form and substance satisfactory to the Administrative Agent and (except for the Contract Notes) with one copy for each Lender: (i) The Contract Notes payable to the order of each of the Lenders, respectively; (ii) Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement and the Notes, and of all documents evidencing other necessary corporate action with respect to this Agreement and the Notes; (iii) A certificate of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the Notes and the other documents to be delivered hereunder; (B) that attached thereto are true and correct copies of the Certificate of Incorporation and the By Laws of the Borrower, in each case in effect on such date; and (C) that attached thereto are true and correct copies of all governmental and regulatory authorizations and approvals required for the due execution, delivery and performance of this Agreement and the Notes, including, without limitation, a copy of the orders (File No. 70-8903) of the SEC under the Public Utility Holding Company Act of 1935 authorizing the Borrower's execution, delivery and performance of this Agreement and the Notes (collectively, the "SEC Order"); (iv) Copies of the consolidated balance sheets of the Borrower and its subsidiaries as of December 31, 1999, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its subsidiaries for the fiscal year then ended, and copies of the consolidated financial statements of the Borrower and its subsidiaries as of March 31, 2000, in each case certified by a duly authorized officer of the Borrower as having been prepared in accordance with generally accepted accounting principles consistently applied; (v) A favorable opinion of counsel for the Borrower, acceptable to the Administrative Agent, substantially in the form of Exhibit D hereto and as to such other matters as any Lender through the Administrative Agent may reasonably request; (vi) A favorable opinion of King & Spalding, Special New York counsel for the Administrative Agent, substantially in the form of Exhibit E hereto; and (vii) A duly executed and delivered Form U-1, in the form prescribed by Regulation U issued by the Board of Governors of the Federal Reserve System. (b) The Administrative Agent shall have received the fees payable pursuant to the Fee Letter. (c) The commitments of the lenders under the Existing Credit Agreement shall have been terminated, and the obligations of the Borrower under the Existing Credit Agreement to such lenders shall have been paid in full. SECTION 3.02. Conditions Precedent to Each Contract Borrowing. The obligation of each Lender to make a Contract Advance on the occasion of each Contract Borrowing (including the initial Contract Borrowing) shall be subject to the further conditions precedent that on the date of such Contract Borrowing: (a) the following statements shall be true (and each of the giving of the applicable Notice of Contract Borrowing or Notice of Conversion and the acceptance by the Borrower of any proceeds of a Contract Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Contract Borrowing or Conversion, as applicable, such statements are true): (i) The representations and warranties contained in Section 4.01 (excluding those contained in subsections (e) and (f) thereof if such Contract Borrowing does not increase the aggregate outstanding principal amount of Contract Advances over the aggregate outstanding principal amount of all Contract Advances immediately prior to the making of such Contract Borrowing) are correct on and as of the date of such Contract Borrowing, before and after giving effect to such Contract Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such Contract Borrowing or from the application of the proceeds therefrom, that constitutes a Prepayment Event or an Event of Default or would constitute an Event of Default or a Prepayment Event with notice or lapse of time or both. (b) The Administrative Agent shall have received such other approvals, opinions or documents with respect to the truth of the foregoing statements (i) and (ii) as any Lender through the Administrative Agent may reasonably request. SECTION 3.03. Conditions Precedent to Each Auction Borrowing. The obligation of each Lender that is to make an Auction Advance as part of any Auction Borrowing (including the initial Auction Borrowing) to make such Auction Advance is subject to the conditions precedent that on the date of such Auction Borrowing: (a) The Administrative Agent shall have received the written confirmatory Notice of Auction Borrowing with respect thereto. (b) The Administrative Agent shall have received an Auction Note, duly executed by the Borrower, payable to the order of such Lender for each of the Auction Advances to be made by such Lender as part of such Auction Borrowing, in a principal amount equal to the principal amount of the Auction Advance to be evidenced thereby and otherwise on such terms as were agreed to for such Auction Advance in accordance with Section 2.03. (c) The following statements shall be true (and each of the giving of the applicable Notice of Auction Borrowing and the acceptance by a Borrower of the proceeds of such Auction Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Auction Borrowing such statements are true): (i) The representations and warranties contained in Section 4.01 are correct on and as of the date of such Auction Borrowing, before and after giving effect to such Auction Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such Auction Borrowing or from the application of the proceeds therefrom, that constitutes a Prepayment Event or an Event of Default or that would constitute an Event of Default or a Prepayment Event with notice or lapse of time or both. (d) The Borrower shall have delivered to the Administrative Agent copies of such other approvals and documents with respect to the truth of the foregoing statements (i) and (ii) as any Lender through the Administrative Agent may reasonably request. SECTION 3.04. Conditions Precedent to Each Extension of the Revolving Period. In the event that the Borrower shall request an extension of the Revolving Period pursuant to Section 2.17, such extension shall take effect only upon the satisfaction of the following conditions precedent, together with such other conditions precedent as the extending Lenders may require in connection with such extension: (a) The Administrative Agent shall have prepared and delivered to the Borrower and each Lender (including each new bank and other financial institution to which a non-extending Lender's Commitment has been assigned pursuant to Section 8.07(i) hereof) a revised Schedule II which reflects the Commitments, as applicable, of each Lender. (b) The Borrower shall have paid all fees under or referenced in Section 2.04 hereof, to the extent then due and payable. (c) The Administrative Agent shall have received such other documents and legal opinions in respect of any aspect or consequence of the transactions contemplated by Section 2.17 as the Administrative Agent shall reasonably request, including, without limitation, copies of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of the Borrower authorizing the extension of the Termination Date. (d) The following statements shall be true on and as of the last day of the then-current Revolving Period: (i) The representations and warranties contained in Section 4.01 are correct, provided that, the representations contained in subsections (e) and (f) thereof are made with respect to the Borrower's Annual Report on Form 10-K most recently filed with the SEC and Quarterly Reports on Form 10-Q, if any, filed with the SEC after such Form 10-K; and (ii) No event has occurred and is continuing, or would result from such extension of the Termination Date, that constitutes a Prepayment Event or an Event of Default or would constitute an Event of Default or a Prepayment Event with notice or lapse of time or both. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and is duly qualified to do business as a foreign corporation in each jurisdiction in which the nature of the business conducted or the property owned, operated or leased by it requires such qualification, except where failure to so qualify would not materially adversely affect its condition (financial or otherwise), operations, business, properties, or prospects. (b) The execution, delivery and performance by the Borrower of this Agreement and the Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's charter or by laws, (ii) law applicable to the Borrower or its properties or (iii) any contractual or legal restriction binding on or affecting the Borrower or its properties. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Borrower of this Agreement or the Notes, except for the following (each of which has been duly filed or obtained, and is final and in full force and effect): (i) the filing of the Declaration on Form U-1 and amendments and exhibits thereto in File No. 70-8903 and (ii) the SEC Order. (d) This Agreement is, and the Notes when delivered hereunder will be, legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, subject, however, to any applicable bankruptcy, reorganization, rearrangement, moratorium or similar laws affecting generally the enforcement of creditors' rights and remedies and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). (e) The consolidated financial statements of the Borrower and its subsidiaries as of December 31, 1999 and for the year ended on such date, as set forth in the Borrower's Annual Report on Form 10-K for the fiscal year ended on such date, as filed with the SEC, accompanied by an opinion of PricewaterhouseCoopers LLP, and the consolidated financial statements of the Borrower and its subsidiaries as of March 31, 2000, and for the three-month period ended on such date set forth in the Borrower's Quarterly Report on Form 10-Q for the fiscal quarter ended on such date, as filed with the SEC, copies of each of which have been furnished to each Bank, fairly present (subject, in the case of such statements dated March 31, 2000, to year-end adjustments) the consolidated financial condition of the Borrower and its subsidiaries as at such dates and the consolidated results of the operations of the Borrower and its subsidiaries for the periods ended on such dates, in accordance with generally accepted accounting principles consistently applied. Except as disclosed in the Borrower's Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2000, since December 31, 1999, there has been no material adverse change in the financial condition or operations of the Borrower. (f) Except as disclosed in the Borrower's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, and the Borrower's Quarterly Report on Form 10-Q for the period ended March 31, 2000, there is no pending or threatened action or proceeding affecting the Borrower or any of its subsidiaries before any court, governmental agency or arbitrator that, if determined adversely, could reasonably be expected to have a material adverse effect upon the condition (financial or otherwise), operations, business, properties or prospects of the Borrower or on its ability to perform its obligations under this Agreement or any Note, or that purports to affect the legality, validity, binding effect or enforceability of this Agreement or any Note. There has been no change in any matter disclosed in such filings that could reasonably be expected to result in such a material adverse effect. (g) No event has occurred and is continuing that constitutes a Prepayment Event or an Event of Default or that would constitute an Event of Default or a Prepayment Event but for the requirement that notice be given or time elapse or both. (h) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and not more than 25% of the value of the assets of the Borrower and its subsidiaries subject to the restrictions of Section 5.02(a), (c) or (d) is, on the date hereof, represented by margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System). (i) The Borrower is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or an "investment advisor" within the meaning of the Investment Company Act of 1940, as amended. The Borrower is a "holding company" as that term is defined in, and is registered under, the Public Utility Holding Company Act of 1935. (j) No ERISA Termination Event has occurred, or is reasonably expected to occur, with respect to any ERISA Plan that may materially and adversely affect the condition (financial or otherwise), operations, business, properties or prospects of the Borrower and its subsidiaries, taken as a whole. (k) Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) with respect to each ERISA Plan, copies of which have been filed with the Internal Revenue Service and furnished to the Banks, is complete and accurate and fairly presents the funding status of such ERISA Plan, and since the date of such Schedule B there has been no material adverse change in such funding status. (l) The Borrower has not incurred, and does not reasonably expect to incur, any withdrawal liability under ERISA to any Multiemployer Plan. ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants. So long as any Note or any amount payable by the Borrower hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will, unless the Majority Lenders shall otherwise consent in writing: (a) Keep Books; Corporate Existence; Maintenance of Properties; Compliance with Laws; Insurance; Taxes; Inspection Rights. (i) keep proper books of record and account, all in accordance with generally accepted accounting principles; (ii) except as otherwise permitted by Section 5.02(c), preserve and keep in full force and effect its existence and preserve and keep in full force and effect its licenses, rights and franchises to the extent necessary to carry on its business; (iii) maintain and keep, or cause to be maintained and kept, its properties in good repair, working order and condition, and from time to time make or cause to be made all needful and proper repairs, renewals, replacements and improvements, in each case to the extent such properties are not obsolete and not necessary to carry on its business; (iv) comply in all material respects with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or its property, except to the extent being contested in good faith by appropriate proceedings, and compliance with ERISA and Environmental Laws; (v) maintain insurance with responsible and reputable insurance companies or associations or through its own program of self- insurance in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which it operates and furnish to the Administrative Agent, within a reasonable time after written request therefor, such information as to the insurance carried as any Lender, through the Administrative Agent, may reasonably request; (vi) pay and discharge its obligations and liabilities in the ordinary course of business, except to the extent that such obligations and liabilities are being contested in good faith by appropriate proceedings; and (vii) from time to time upon reasonable notice, permit or arrange for the Administrative Agent, the Lenders and their respective agents and representatives to inspect the records and books of account of the Borrower and its subsidiaries during regular business hours. (b) Use of Proceeds. The Borrower may use the proceeds of the Borrowings for only (i) general corporate purposes and (ii) subject to the terms and conditions of this Agreement, repurchases of common stock of the Borrower and/or investments in nonregulated and/or nonutility businesses. (c) Reporting Requirements. Furnish to the Lenders: (i) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, (A) consolidated balance sheets of the Borrower and its subsidiaries as of the end of such quarter and (B) consolidated statements of income and retained earnings of the Borrower and its subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, each certified by a duly authorized officer of the Borrower as having been prepared in accordance with generally accepted accounting principles, consistently applied; (ii) as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, a copy of the annual report for such year for the Borrower and its subsidiaries, containing consolidated financial statements for such year certified without qualification by PricewaterhouseCoopers LLP (or such other nationally recognized public accounting firm as the Administrative Agent may approve), and certified by a duly authorized officer of the Borrower as having been prepared in accordance with generally accepted accounting principles, consistently applied; (iii) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower and within 120 days after the end of the fiscal year of the Borrower, a certificate of a duly authorized officer of the Borrower, stating that no Prepayment Event or Event of Default has occurred and is continuing, or if a Prepayment Event or Event of Default has occurred and is continuing, a statement setting forth details of such Prepayment Event or Event of Default, as the case may be, and the action that the Borrower has taken and proposes to take with respect thereto; (iv) as soon as possible and in any event within five days after the Borrower has knowledge of the occurrence of each Prepayment Event, Event of Default and each event that, with the giving of notice or lapse of time or both, would constitute an Event of Default, continuing on the date of such statement, a statement of the duly authorized officer of the Borrower setting forth details of such Prepayment Event, Event of Default or event, as the case may be, and the actions that the Borrower has taken and proposes to take with respect thereto; (v) as soon as possible and in any event within five days after the Borrower receives notice of the commencement of any litigation against, or any arbitration, administrative, governmental or regulatory proceeding involving, the Borrower or any of its subsidiaries, that, if adversely determined, could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), operations, business, properties or prospects of the Borrower, notice of such litigation describing in reasonable detail the facts and circumstances concerning such litigation and the Borrower's or such subsidiary's proposed actions in connection therewith; (vi) promptly after the sending or filing thereof, copies of all reports that the Borrower sends to any of its securities holders, and copies of all reports and registration statements which the Borrower files with the SEC or any national securities exchange pursuant to the Securities Act of 1933 or the Exchange Act, and of all certificates pursuant to Rule 24 which the Borrower files with the SEC pursuant to the Public Utility Holding Company Act of 1935 in connection with the proceeding of the SEC in File No. 70-8903 related to the SEC Order or any subsequent proceedings related thereto; (vii) as soon as possible and in any event (A) within 30 days after the Borrower knows or has reason to know that any ERISA Termination Event described in clause (i) of the definition of ERISA Termination Event with respect to any ERISA Plan has occurred and (B) within 10 days after the Borrower knows or has reason to know that any other ERISA Termination Event with respect to any ERISA Plan has occurred, a statement of the chief financial officer of the Borrower describing such ERISA Termination Event and the action, if any, that the Borrower proposes to take with respect thereto; (viii) promptly and in any event within two Business Days after receipt thereof by the Borrower from the PBGC, copies of each notice received by the Borrower of the PBGC's intention to terminate any ERISA Plan or to have a trustee appointed to administer any ERISA Plan; (ix) promptly and in any event within 30 days after the filing thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each ERISA Plan; (x) promptly and in any event within five Business Days after receipt thereof by the Borrower from a Multiemployer Plan sponsor, a copy of each notice received by the Borrower concerning the imposition of withdrawal liability pursuant to Section 4202 of ERISA; (xi) promptly and in any event within five Business Days after Moody's or S&P has changed any Senior Debt Rating of any Significant Subsidiary, notice of such change; and (xii) such other information respecting the condition or operations, financial or otherwise, of the Borrower or any of its subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request. SECTION 5.02. Negative Covenants. So long as any Note or any amount payable by the Borrower hereunder shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not, without the written consent of the Majority Lenders: (a) Liens, Etc. Create or suffer to exist any Lien upon or with respect to any of its properties (including, without limitation, any shares of any class of equity security of any of its Significant Subsidiaries or of Entergy New Orleans), in each case to secure or provide for the payment of Debt, other than: (i) Liens in existence on the date of this Agreement; (ii) Liens for taxes, assessments or governmental charges or levies to the extent not past due, or which are being contested in good faith in appropriate proceedings diligently conducted and for which the Borrower has provided adequate reserves for the payment thereof in accordance with generally accepted accounting principles; (iii) pledges or deposits in the ordinary course of business to secure obligations under worker's compensation laws or similar legislation; (iv) other pledges or deposits in the ordinary course of business (other than for borrowed monies) that, in the aggregate, are not material to the Borrower; (v) purchase money mortgages or other liens or purchase money security interests upon or in any property acquired or held by the Borrower in the ordinary course of business to secure the purchase price of such property or to secure indebtedness incurred solely for the purpose of financing the acquisition of such property; (vi) Liens imposed by law such as materialmen's, mechanics', carriers', workers' and repairmen's Liens and other similar Liens arising in the ordinary course of business for sums not yet due or currently being contested in good faith by appropriate proceedings diligently conducted; (vii) attachment, judgment or other similar Liens arising in connection with court proceedings, provided that such Liens, in the aggregate, shall not exceed $50,000,000 at any one time outstanding, (viii) other Liens not otherwise referred to in the foregoing clauses (i) through (vii) above, provided that such Liens, in the aggregate, shall not exceed $100,000,000 at any one time and (ix) Liens created for the sole purpose of extending, renewing or replacing in whole or in part Debt secured by any Lien referred in the foregoing clauses (i) through (vi) above, provided that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal or replacement and that such extension, renewal or replacement, as the case may be, shall be limited to all or a part of the property or Debt that secured the Lien so extended, renewed or replaced (and any improvements on such property); provided, further, that no Lien permitted under the foregoing clauses (i) through (ix) shall be placed upon any shares of any class of equity security of any Significant Subsidiary or of Entergy New Orleans unless the obligations of the Borrower to the Lenders hereunder are simultaneously and ratably secured by such Lien pursuant to documentation satisfactory to the Lenders. (b) Limitation on Debt. Permit the total principal amount of all Debt of the Borrower and its subsidiaries, determined on a consolidated basis and without duplication of liability therefor, at any time to exceed 65% of Capitalization determined as of the last day of the most recently ended fiscal quarter of the Borrower; provided, however, that for purposes of this Section 5.02(b) "Debt" and "Capitalization" shall not include (i) Junior Subordinated Debentures issued to a subsidiary trust which has issued preferred securities that are included in the calculation of "Capitalization" and (ii) any Debt of any subsidiary of the Borrower that is Non-Recourse Debt. (c) Mergers, Etc. Merge with or into or consolidate with or into any other Person, except that the Borrower may merge with any other Person, provided that, immediately after giving effect to any such merger, (i) the Borrower is the surviving corporation or (A) the surviving corporation is organized under the laws of one of the states of the United States of America and assumes the Borrower's obligations hereunder in a manner acceptable to the Majority Lenders, and (B) after giving effect to such merger, the Relevant Rating shall be at least BBB- and Baa3, (ii) no event shall have occurred and be continuing that constitutes a Prepayment Event or an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both, and (iii) the Borrower shall not be liable with respect to any Debt or allow its property to be subject to any Lien which would not be permissible with respect to it or its property under this Agreement on the date of such transaction. (d) Disposition of Assets. Sell, lease, transfer, convey or otherwise dispose of (whether in one transaction or in a series of transactions) any shares of voting common stock (or of stock or other instruments convertible into voting common stock) of any Significant Subsidiary or of Entergy New Orleans, or permit any Significant Subsidiary or Entergy New Orleans to issue, sell or otherwise dispose of any of its shares of voting common stock (or of stock or other instruments convertible into voting common stock), except to the Borrower or a Significant Subsidiary. ARTICLE VI EVENTS OF DEFAULT AND REMEDIES SECTION 6.01. Events of Default. Each of the following events shall constitute an "Event of Default" hereunder: (a) The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable, or shall fail to pay interest thereon or any other amount payable under this Agreement or any of the Notes within three Business Days after the same becomes due and payable; or (b) Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect or misleading in any material respect when made; or (c) The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(b) or 5.02 or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or (d) The Borrower shall fail to pay any principal of or premium or interest on any Debt of the Borrower that is outstanding in a principal amount in excess of $50,000,000 in the aggregate (but excluding Debt evidenced by the Notes) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or (e) The Borrower, any Significant Subsidiary or Entergy New Orleans shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower, any Significant Subsidiary or Entergy New Orleans seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower, any Significant Subsidiary or Entergy New Orleans shall take any corporate action to authorize or to consent to any of the actions set forth above in this subsection (e); or (f) Any judgment or order for the payment of money in excess of $25,000,000 shall be rendered against the Borrower and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive Business Days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (g) (i) An ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower shall fail to maintain the minimum funding standards required by Section 412 of the Internal Revenue Code of 1986 for any plan year or a waiver of such standard is sought or granted under Section 412(d) of the Internal Revenue Code of 1986, or (ii) an ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower is, shall have been or will be terminated or the subject of termination proceedings under ERISA, or (iii) the Borrower or any ERISA Affiliate of the Borrower has incurred or will incur a liability to or on account of an ERISA Plan under Section 4062, 4063 or 4064 of ERISA and there shall result from such event either a liability or a material risk of incurring a liability to the PBGC or an ERISA Plan, or (iv) any ERISA Termination Event with respect to an ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower shall have occurred, and in the case of any event described in clauses (i) through (iv), (A) such event (if correctable) shall not have been corrected and (B) the then- present value of such ERISA Plan's vested benefits exceeds the then-current value of assets accumulated in such ERISA Plan by more than the amount of $25,000,000 (or in the case of an ERISA Termination Event involving the withdrawal of a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), the withdrawing employer's proportionate share of such excess shall exceed such amount). SECTION 6.02. Remedies. If any Prepayment Event or Event of Default shall occur and be continuing, then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower, any Significant Subsidiary or Entergy New Orleans under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action. Each Lender hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided, however, that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. SECTION 7.02. Administrative Agent's Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent: (i) may treat the payee of any Note as the holder thereof until the Administrative Agent receives and accepts an Assignment and Acceptance entered into by the Lender which is the payee of such Note, as assignor, and any assignee pursuant to Section 8.07; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. Citibank and Affiliates. With respect to its Commitment, the Advances made by it and the Notes issued to it, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any of its subsidiaries and any Person who may do business with or own securities of the Borrower or any such subsidiary, all as if Citibank were not the Administrative Agent and without any duty to account therefor to the Lenders. SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05. Indemnification. The Lenders agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of the Contract Notes then held by each of them (or if no Contract Notes are at the time outstanding or if any Contract Notes are held by Persons which are not Lenders, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that such expenses are reimbursable by the Borrower but for which the Administrative Agent is not reimbursed by the Borrower. SECTION 7.06. Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Administrative Agent, which, for so long as no Prepayment Event or Event of Default has occurred and is continuing, shall be a Lender and shall be approved by the Borrower (with such approval not to be unreasonably withheld or delayed). If no successor Administrative Agent shall have been so appointed by the Majority Lenders and approved by the Borrower, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States or of any other country that is a member of the OECD having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. Notwithstanding the foregoing, if no Prepayment Event or Event of Default, and no event that with the giving of notice or the passage of time, or both, would constitute an Prepayment Event or Event of Default, shall have occurred and be continuing, then no successor Administrative Agent shall be appointed under this Section 7.06 without the prior written consent of the Borrower, which consent shall not be unreasonably withheld or delayed. ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Contract Notes, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders (other than any Lender that is the Borrower or an Affiliate of the Borrower), do any of the following: (a) waive any of the conditions specified in Section 3.01, 3.02, 3.03 or 3.04, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Contract Notes or any fees or other amounts payable hereunder, (d) other than pursuant to Section 2.17 hereof, postpone any date fixed for any payment of principal of, or interest on, the Contract Notes or any fees or other amounts payable hereunder, (e) other than pursuant to Section 2.05(b) or Section 2.17 hereof, change the percentage of the Commitments or of the aggregate unpaid principal amount of the Contract Notes, or the number of Lenders, which shall be required for the Lenders or any of them to take any action hereunder or (f) amend this Section 8.01 or Section 2.17; and provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any Note. SECTION 8.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered, if to the Borrower, at its address at 639 Loyola Avenue, New Orleans, LA 70113, Attention: Treasurer; if to any Bank, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Administrative Agent, at its address at Two Pennsway, Suite 200, New Castle, Delaware 19720, Attention: Bank Loan Syndications, John Williams (Telephone: 302-894-6013, Telecopier: 302-894-6120); or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed, telecopied, telegraphed, telexed or cabled, be effective when deposited in the mails, telecopied, delivered to the telegraph company, confirmed by telex answerback or delivered to the cable company, respectively, except that notices and communications to the Administrative Agent pursuant to Article II or VII shall not be effective until received by the Administrative Agent. Except as otherwise provided in Section 5.01(c), notices and other communications given by the Borrower to the Administrative Agent shall be deemed given to the Lenders. SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 8.04. Costs and Expenses; Indemnification. (a) The Borrower agrees to pay on demand all costs and expenses incurred by the Administrative Agent in connection with the preparation, execution, delivery, syndication administration, modification and amendment of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. Any invoices to the Borrower with respect to the aforementioned expenses shall describe such costs and expenses in reasonable detail. The Borrower further agrees to pay on demand all costs and expenses, if any (including, without limitation, counsel fees and expenses of outside counsel and of internal counsel), incurred by the Administrative Agent and the Lenders in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of, and the protection of the rights of the Lenders under, this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 8.04(a). (b) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made other than on the last day of the Interest Period for such Contract Advance, as a result of a payment or Conversion pursuant to Section 2.09(d), 2.10 or 2.13, acceleration of the maturity of the Notes pursuant to Section 6.02, assignment to another Lender upon demand of the Borrower pursuant to Section 8.07(i) or (j) or for any other reason, the Borrower shall, upon demand by any Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (including loss of anticipated profits upon such Lender's representation to the Borrower that it has made reasonable efforts to mitigate such loss), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Contract Advance. Any Lender making a demand pursuant to this Section 8.04(b) shall provide the Borrower with a written certification of the amounts required to be paid to such Lender, showing in reasonable detail the basis for the Lender's determination of such amounts; provided, however, that no Lender shall be required to disclose any confidential or proprietary information in any certification provided pursuant hereto, and the failure of any Lender to provide such certification shall not affect the obligations of the Borrower hereunder. (c) The Borrower hereby agrees to indemnify and hold each Lender, the Administrative Agent and their respective Affiliates and their respective officers, directors, employees and professional advisors (each, an "Indemnified Person") harmless from and against any and all claims, damages, losses, liabilities, costs or expenses (including reasonable attorney's fees and expenses, whether or not such Indemnified Person is named as a party to any proceeding or is otherwise subjected to judicial or legal process arising from any such proceeding) that any of them may incur or which may be claimed against any of them by any person or entity by reason of or in connection with the execution, delivery or performance of this Agreement, the Notes or any transaction contemplated thereby, or the use by the Borrower or any of its subsidiaries of the proceeds of any Advance, except that no Indemnified Person shall be entitled to any indemnification hereunder to the extent that such claims, damages, losses, liabilities, costs or expenses are finally determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnified Person. The Borrower's obligations under this Section 8.04(c) shall survive the repayment of all amounts owing to the Lenders and the Administrative Agent under this Agreement and the Notes and the termination of the Commitments. If and to the extent that the obligations of the Borrower under this Section 8.04(c) are unenforceable for any reason, the Borrower agrees to make the maximum contribution to the payment and satisfaction thereof which is permissible under applicable law. SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default or Prepayment Event and (ii) the making of the request or the granting of the consent specified by Section 6.02 to authorize the Administrative Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and any Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify the Borrower after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section 8.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Lender may have. SECTION 8.06. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower, the Lenders and the Administrative Agent and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders. SECTION 8.07. Assignments and Participations. (a) Each Lender may assign to one or more banks or other entities all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Contract Advances owing to it and the Contract Note or Notes held by it); provided, however, that (i) the Borrower and the Administrative Agent shall have consented to such assignment (such consent not to be unreasonably withheld or delayed) by signing the Assignment and Acceptance referred to in clause (iv) below; (ii) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement (other than any Auction Advances or Auction Notes); (iii) the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $10,000,000 and shall be an integral multiple of $1,000,000 (or shall be the total amount of the assigning Lender's Commitment); and (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Contract Note or Notes subject to such assignment and a processing and recordation fee of $3,000 (plus an amount equal to out-of-pocket legal expenses of the Administrative Agent, estimated by the Administrative Agent and advised to such parties). Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). Notwithstanding anything to the contrary contained in this Agreement, any Lender at any time may assign all or any portion of its rights and obligations under this Agreement to any Affiliate of such Lender. (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (c) The Administrative Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Contract Advances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee, together with any Contract Note or Notes subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. Within five Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Contract Note or Notes a new Contract Note to the order of such assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder, a new Contract Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Contract Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Contract Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A-1 hereto. (e) Each Lender may assign to one or more banks or other entities any Auction Note or Notes held by it, without the consent of the Borrower. (f) Each Lender may sell participations to one or more banks, financial institutions or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, and (iv) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. (g) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any confidential information relating to the Borrower received by it from such Lender. (h) If any Lender shall fail to consent to the extension of the Termination Date pursuant to Section 2.17, then upon notification by the Administrative Agent of such Lender's refusal pursuant to Section 2.17(b), the Borrower may demand that such Lender assign, prior to the last day of the then-current Revolving Period, in accordance with this Section 8.07 to one or more assignees designated by the Borrower and acceptable to the Administrative Agent all (but not less than all) of such Lender's Commitment and the Contract Advances owing to it. If any such assignee designated by the Borrower shall fail to consummate such assignment on terms acceptable to such Lender, or if the Borrower shall fail to designate any such assignee for all of such Lender's Commitment or Advances, then such Lender may assign, prior to the last day of the then-current Revolving Period, such Commitment and Advances to any other assignee acceptable to the Administrative Agent in accordance with this Section 8.07; it being understood for purposes of this Section 8.07(i) that such assignment shall be conclusively deemed to be on terms acceptable to such Lender, and such Lender shall be compelled to consummate such assignment to an assignee designated by the Borrower, if such assignee (i) shall agree to such assignment in substantially the form of Exhibit C hereto and (ii) shall offer compensation to such Lender in an amount equal to the sum of the principal amount of all Contract Advances outstanding to such Lender plus all interest accrued thereon to the date of such payment plus all other amounts payable by the Borrower to such Lender hereunder (whether or not then due) as of the date of such payment accrued in favor of such Lender hereunder. (i) If any Lender shall make any demand for payment under Section 2.12 or 2.15, or if any Lender shall be the subject of any notification or assertion of illegality under Section 2.13, then within 30 days after any such demand (if, but only if, such demanded payment has been made by the Borrower) or notification or assertion, the Borrower may, with the approval of the Administrative Agent (which approval shall not be unreasonably withheld) and provided that no Prepayment Event, Event of Default or event that, with the giving of notice or lapse of time or both, would constitute an Event of Default, shall then have occurred and be continuing, demand that such Lender assign in accordance with this Section 8.07 to one or more assignees designated by the Borrower and acceptable to the Administrative Agent all (but not less than all) of such Lender's Commitment and the Contract Advances owing to it within the period ending on the later to occur of such 30th day and the last day of the longest of the then current Interest Periods for such Advances. If any such assignee designated by the Borrower and approved by the Administrative Agent shall fail to consummate such assignment on terms acceptable to such Lender, or if the Borrower shall fail to designate any such assignees acceptable to the Administrative Agent for all or part of such Lender's Commitment or Advances, then such demand by the Borrower shall become ineffective; it being understood for purposes of this subsection (j) that such assignment shall be conclusively deemed to be on terms acceptable to such Lender, and such Lender shall be compelled to consummate such assignment to an Eligible Assignee designated by the Borrower, if such Eligible Assignee (A) shall agree to such assignment by entering into an Assignment and Acceptance with such Lender and (B) shall offer compensation to such Lender in an amount equal to all amounts then owing by the Borrower to such Lender hereunder and under the Note made by the Borrower to such Lender, whether for principal, interest, fees, costs or expenses (other than the demanded payment referred to above and payable by the Borrower as a condition to the Borrower's right to demand such assignment), or otherwise. In addition, in the event that the Borrower shall be entitled to demand the replacement of any Lender pursuant to this subsection (j), the Borrower may, in the case of any such Lender, with the approval of the Administrative Agent (which approval shall not be unreasonably withheld) and provided that no Prepayment Event, Event of Default or event that, with the giving of notice or lapse of time or both, would constitute an Event of Default, shall then have occurred and be continuing, terminate all (but not less than all) such Lender's Commitment and prepay all (but not less than all) such Lender's Advances not so assigned, together with all interest accrued thereon to the date of such prepayment and all fees, costs and expenses and other amounts then owing by the Borrower to such Lender hereunder and under the Note made by the Borrower to such Lender, at any time from and after such later occurring day in accordance with Sections 2.05 and 2.11 hereof (but without the requirement stated therein for ratable treatment of the other Lenders), if and only if, after giving effect to such termination and prepayment, the sum of the aggregate principal amount of the Advances of all Lenders then outstanding does not exceed the then remaining Commitments of the Lenders. Notwithstanding anything set forth above in this subsection (j) to the contrary, the Borrower shall not be entitled to compel the assignment by any Lender demanding payment under Section 2.12(a) of its Commitment and Advances or terminate and prepay the Commitment and Advances of such Lender if, prior to or promptly following any such demand by the Borrower, such Lender shall have changed or shall change, as the case may be, its Applicable Lending Office for its Eurodollar Rate Advances so as to eliminate the further incurrence of such increased cost. In furtherance of the foregoing, any such Lender demanding payment or giving notice as provided above agrees to use reasonable efforts to so change its Applicable Lending Office if, to do so, would not result in the incurrence by such Lender of additional costs or expenses which it deems material or, in the sole judgment of such Lender, be inadvisable for regulatory, competitive or internal management reasons. (j) Anything in this Section 8.07 to the contrary notwithstanding, any Lender may assign and pledge all or any portion of its Commitment and the Advances owing to it to any Federal Reserve Bank (and its transferees) as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder. SECTION 8.08. Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. SECTION 8.09. Consent to Jurisdiction; Waiver of Jury Trial. (a) To the fullest extent permitted by law, the Borrower hereby irrevocably (i) submits to the non-exclusive jurisdiction of any New York State or Federal court sitting in New York City and any appellate court from any thereof in any action or proceeding arising out of or relating to this agreement or any other Loan Document, and (ii) agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or in such Federal court. The Borrower hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower also irrevocably consents, to the fullest extent permitted by law, to the service of any and all process in any such action or proceeding by the mailing by certified mail of copies of such process to the Borrower at its address specified in Section 8.02. The Borrower agrees, to the fullest extent permitted by law, that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (b) THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY NOTE, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER. SECTION 8.10. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. ENTERGY CORPORATION By Name: Title: CITIBANK, N.A., as Administrative Agent and Bank By Name: Title: BANKS ABN AMRO BANK N.V. By__________________________________ Name: Title: By__________________________________ Name: Title: BARCLAYS BANK PLC By__________________________________ Name: Title: THE BANK OF NEW YORK By__________________________________ Name: Title: THE BANK OF NOVA SCOTIA By__________________________________ Name: Title: BANK ONE, NA By__________________________________ Name: Title: BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH By__________________________________ Name: Title: By__________________________________ Name: Title: THE CHASE MANHATTAN BANK, N.A. By__________________________________ Name: Title: CREDIT AGRICOLE INDOSUEZ By__________________________________ Name: Title: By__________________________________ Name: Title: THE INDUSTRIAL BANK OF JAPAN, LIMITED NEW YORK BRANCH By__________________________________ Name: Title: KBC BANK N.V. By__________________________________ Name: Title: By__________________________________ Name: Title: MELLON BANK, N.A. By__________________________________ Name: Title: THE ROYAL BANK OF SCOTLAND PLC By__________________________________ Name: Title: UNION BANK OF CALIFORNIA, N.A. By__________________________________ Name: Title: WESTDEUTSCHE LANDESBANK GIROZENTRALE By__________________________________ Name: Title: By__________________________________ Name: Title:
SCHEDULE I ENTERGY CORPORATION $500,000,000 Credit Agreement Name of Bank Domestic Eurodollar Lending Office Lending Office ABN AMRO Bank N.V. 208 South LaSalle Street 208 South LaSalle Street Suite 1500 Suite 1500 Chicago, IL 60604-1003 Chicago, IL 60604-1003 Attn: Credit Administration Attn: Credit Administration Telephone: 312-992-5110 Telephone: 312-992-5110 Fax: 312-992-5111 Fax: 312-992-5111 The Bank of New York One Wall Street One Wall Street New York, NY 10286 New York, NY 10286 Attn: Steve Kalachman / Attn: Steve Kalachman / Lisa Williams Lisa Williams Telephone: 212-635-7881 Telephone: 212-635-7881 212-635-7535 212-635-7535 Fax: 212-635-7923 Fax: 212-635-7923 212-635-7924 212-635-7924 The Bank of Nova 600 Peachtree Street N.E. 600 Peachtree Street N.E. Scotia Suite 2700 Suite 2700 Atlanta, GA 30308 Atlanta, GA 30308 Attn: Donna Gardner Attn: Donna Gardner Telephone: 404-877-1559 Telephone: 404-877-1559 Fax: 404-888-8998 Fax: 404-888-8998 Bank One, NA 1 Bank One Plaza 1 Bank One Plaza Suite 0634 Suite 0634 Chicago, IL 60670 Chicago, IL 60670 Attn: Mattie Reed Attn: Mattie Reed Telephone: 312-732-5219 Telephone: 312-732-5219 Fax: 312-732-4840 Fax: 312-732-4840 Barclays Bank PLC 222 Broadway 222 Broadway New York, NY 10038 New York, NY 10038 Attn: Marsha Hamlette / Attn: Marsha Hamlette / Sydney Dennis Sydney Dennis Telephone: 212-412-4081 Telephone: 212-412-4081 212-412-2410 212-412-2410 Fax: 212-412-6709 Fax: 212-412-6709 Bayerische 560 Lexington Avenue Brienner Strasse 20 Landesbank New York, NY 10022 D-80333 Munich, Germany Girozentrale Attn: Patricia Sanchez Attn: Eurodollar Lending Office Telephone: 212-310-9810 Telephone: 011-49-89-2171-01 Fax: 212-310-9930 Fax: Credit Agricole 55 East Monroe 55 East Monroe Indosuez Chicago, IL 60603 Chicago, IL 60603 Attn: Wilma Persenaire Attn: Wilma Persenaire Telephone: 312-917-7424 Telephone: 312-917-7424 Fax: 312-372-4421 Fax: 312-372-4421 The Chase Manhattan One Chase Manhattan Plaza One Chase Manhattan Plaza Bank New York, NY 10081 New York, NY 10081 Attn: Lynette Lang Attn: Lynette Lang Telephone: 212-552-7692 Telephone: 212-552-7692 Fax: 212-552-5777 Fax: 212-552-5777 Citibank, N.A. One Court Square One Court Square Seventh Floor, Zone 1 Seventh Floor, Zone 1 Long Island City, NY 11120 Long Island City, NY 11120 Attn: John Mann Attn: John Mann Telephone: 718-248-4504 Telephone: 718-248-4504 Fax: 718-248-4844 Fax: 718-248-4844 The Industrial Bank New York Branch New York Branch of Japan, Limited 1251 Avenue of the Americas 1251 Avenue of the Americas New York, NY 10020-1104 New York, NY 10020-1104 Attn: Andrew Attn: Andrew Encarnacion/Credit Encarnacion/Credit Administration Administration Telephone: 212-282-4065 Telephone: 212-282-4065 Fax: 212-282-4480 Fax: 212-282-4480 KBC Bank N.V. New York Branch New York Branch 125 West 55th Street 125 West 55th Street New York, NY 10019 New York, NY 10019 Attn: Charlene Attn: Charlene Cumberbatch/Loan Cumberbatch/Loan Administration Administration Telephone: 212-541-0653 Telephone: 212-541-0653 Fax: 212-956-5581 Fax: 212-956-5581 Mellon Bank, N.A. Three Mellon Bank Center Three Mellon Bank Center Room 1203 Room 1203 Pittsburgh, PA 15259-0003 Pittsburgh, PA 15259-0003 Attn: Brenda Leiezapf Attn: Brenda Leiezapf Telephone: 412-234-8161 Telephone: 412-234-8161 Fax: 412-209-6146 Fax: 412-209-6146 The Royal Bank of Wall Street Plaza Wall Street Plaza Scotland PLC 26th Floor 26th Floor 88 Pine Street 88 Pine Street New York, NY 10035 New York, NY 10035 Attn: Helena Griffen Attn: Helena Griffen Telephone: 212-269-1700 Telephone: 212-269-1700 Fax: 212-344-4065 Fax: 212-344-4065 Union Bank of 445 S. Figueroa Street 445 S. Figueroa Street California, N.A. 15th Floor 15th Floor Los Angeles, CA 90071 Los Angeles, CA 90071 Attn: Dennis Blank Attn: Dennis Blank Telephone: 213-236-6564 Telephone: 213-236-6564 Fax: 213-236-4096 Fax: 213-236-4096 Westdeutsche 1211 Avenue of the Americas 1211 Avenue of the Americas Landesbank New York, NY 10036 New York, NY 10036 Girozentrale, New Attn: Attn: York Branch Telephone: Telephone: Fax: Fax:
SCHEDULE II COMMITMENT SCHEDULE Name of Lender Commitment Amount Citibank, N.A. $55,000,000 The Bank of New York $50,000,000 ABN AMRO Bank N.V. $45,000,000 Bank One, NA $45,000,000 Bayerische Landesbank Girozentrale $45,000,000 The Chase Manhattan Bank $35,000,000 The Royal Bank of Scotland PLC $35,000,000 The Bank of Nova Scotia $25,000,000 Barclays Bank PLC $25,000,000 Credit Agricole Indosuez $25,000,000 The Industrial Bank of Japan $25,000,000 KBC Bank NV $25,000,000 Union Bank of California, N.A. $25,000,000 Westdeutsche Landesbank Girozentrale, $25,000,000 New York Branch Mellon Bank, N.A. $15,000,000 Total Commitment: $500,000,000 EXHIBIT A-1 FORM OF CONTRACT NOTE U.S.$ Dated: , 20 FOR VALUE RECEIVED, the undersigned, ENTERGY CORPORATION, a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of (the "Lender") for the account of its Applicable Lending Office (such term and other capitalized terms herein being used as defined in the Credit Agreement referred to below) the principal sum of _________ Dollars (U.S.$________) or, if less, the aggregate principal amount of the Contract Advances made by the Lender to the Borrower pursuant to the Credit Agreement outstanding on the Termination Date, payable on the Termination Date. The Borrower promises to pay interest on the unpaid principal amount of each Contract Advance from the date of such Contract Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Citibank, N.A., as Administrative Agent, at 399 Park Avenue, New York, New York 10043, in same day funds. Each Contract Advance made by the Lender to the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note. This Promissory Note is one of the Contract Notes referred to in, and is entitled to the benefits of, the Credit Agreement, dated as of May __, 2000 (the "Credit Agreement"), among the Borrower, the Lender and certain other banks parties thereto, and Citibank, N.A., as Administrative Agent for the Lender and such other banks. The Credit Agreement, among other things, (i) provides for the making of Contract Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Contract Advance being evidenced by this Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. ENTERGY CORPORATION By Name: Title: ADVANCES, MATURITIES AND PAYMENTS OF PRINCIPAL Date Amount of Interest Principal Amount of Notation Advance Period Paid or Unpaid Made By (if any) Prepaid Principal of Advance Balance EXHIBIT A-2 FORM OF AUCTION NOTE U.S.$______________ Dated: __________, 20__ FOR VALUE RECEIVED, the undersigned, ENTERGY CORPORATION, a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of (the "Lender") for the account of its Applicable Lending Office (as defined in the Credit Agreement referred to below), on , 20__, the principal amount of Dollars ($ ). The Borrower promises to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, at the interest rate and payable on the interest payment date or dates provided below: [Interest Rate: ____% per annum] [or] [Description of Interest Rate Basis and Margin] (calculated on the basis of a year of ____ days for the actual number of days elapsed). Interest Payment Date or Dates: __________ Prepayment terms:______________________ Both principal and interest are payable in lawful money of the United States of America to or the account of the Lender at the office of Citibank, N.A., as Administrative Agent, at 399 Park Avenue, New York, New York 10043, in same day funds, free and clear of and without any deduction, with respect to the payee named above, for any and all present and future taxes, deductions, charges or withholdings, and all liabilities with respect thereto to the extent and in the manner provided in the Credit Agreement. This Promissory Note is one of the Auction Notes referred to in, and is entitled to the benefits of, the Credit Agreement, dated as of May __, 2000 (the "Credit Agreement"), among the Borrower, the Lender and certain other banks parties thereto, and Citibank, N..A., as Administrative Agent for the Lender and such other banks. The Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events. The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. ENTERGY CORPORATION By Name: Title: EXHIBIT B-1 FORM OF NOTICE OF CONTRACT BORROWING Citibank, N.A., as Administrative Agent for the Lenders parties to the Credit Agreement referred to below Two Pennsway, Suite 200 New Castle, Delaware 19720 [Date] Attention: Bank Loan Syndications Ladies and Gentlemen: The undersigned, Entergy Corporation, refers to the Credit Agreement, dated as of May __, 2000 (the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and Citibank, N.A., as Administrative Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Contract Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Contract Borrowing (the "Proposed Contract Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed Contract Borrowing is , 20 . (ii) The Type of Contract Advances to be made in connection with the Proposed Contract Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed Contract Borrowing is $ . (iv) The Interest Period for each Eurodollar Rate Advance made as part of the Proposed Contract Borrowing is month[s]1. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Contract Borrowing: _______________________________ 1 Delete for Base Rate Advances. (A) the representations and warranties contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Contract Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and (B) no event has occurred and is continuing, or would result from such Proposed Contract Borrowing or from the application of the proceeds therefrom, that constitutes a Prepayment Event or an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. Very truly yours, ENTERGY CORPORATION By Name: Title: EXHIBIT B-2 FORM OF NOTICE OF AUCTION BORROWING Citibank, N.A., as Administrative Agent for the Lenders parties to the Credit Agreement referred to below Two Pennsway, Suite 200 New Castle, Delaware 19720 [Date] Attention: Bank Loan Syndications Ladies and Gentlemen: The undersigned, Entergy Corporation, refers to the Credit Agreement, dated as of May __, 2000 (the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and Citibank, N.A., as Administrative Agent for said Lenders, and hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that the undersigned hereby requests an Auction Borrowing under the Credit Agreement, and in that connection sets forth the terms on which such Auction Borrowing (the "Proposed Auction Borrowing") is requested to be made: (A) Date of Auction Borrowing (B) Amount of Auction Borrowing (C) Maturity Date (D) Interest Rate Basis and Margin1 (E) Interest Computation Basis (F) Interest Payment Date(s) (G) Prepayment (H) (I) The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Auction Borrowing: _______________________________ 1 Include if applicable. (a) the representations and warranties contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Auction Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (b) no event has occurred and is continuing, or would result from the Proposed Auction Borrowing or from the application of the proceeds therefrom, that constitutes a Prepayment Event or an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both; and (d) after giving effect to the Proposed Auction Borrowing, the aggregate amount of the Advances then outstanding shall not exceed the aggregate amount of the Commitments of the Lenders (computed without regard to any Auction Reduction). The undersigned hereby confirms that the Proposed Auction Borrowing is to be made available to it in accordance with Section 2.03(a)(v) of the Credit Agreement. Very truly yours, ENTERGY CORPORATION By Name: Title: EXHIBIT B-3 FORM OF NOTICE OF CONVERSION Citibank, N.A., as Administrative Agent for the Lenders parties to the Credit Agreement referred to below Two Pennsway, Suite 200 New Castle, Delaware 19720 [Date] Attention: Bank Loan Syndications Ladies and Gentlemen: The undersigned, Entergy Corporation, refers to the Credit Agreement, dated as of May __, 2000 (the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders party thereto and Citibank, N.A., as Administrative Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.10 of the Credit Agreement, that the undersigned hereby requests a Conversion under the Credit Agreement, and in that connection sets forth below the information relating to such Conversion (the "Proposed Conversion") as required by Section 2.10 of the Credit Agreement: (i) The Business Day of the Proposed Conversion is __________, _____. (ii) The Type of Advances comprising the Proposed Conversion is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed Conversion is $__________. (iv) The Type of Advances to which such Advances are proposed to be Converted is [Base Rate Advances] [Eurodollar Rate Advances]. (v) The Interest Period for each Advance made as part of the Proposed Conversion is month(s).1 _______________________________ 1 Delete for Base Rate Advances The undersigned hereby represents and warrants that the following statements are true on the date hereof, and will be true on the date of the Proposed Conversion: (A) The Borrower's request for the Proposed Conversion is made in compliance with Section 2.10 of the Credit Agreement; and (B) The statements contained in Section 3.02 of the Credit Agreement are true. Very truly yours, ENTERGY CORPORATION By Name: Title: EXHIBIT C FORM OF ASSIGNMENT AND ACCEPTANCE Dated ___________, 20__ Reference is made to the Credit Agreement, dated as of May __, 2000 (as amended, modified or supplemented from time to time, the "Credit Agreement"), among Entergy Corporation, a Delaware corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement) and Citibank, N.A., as Administrative Agent for the Lenders (the "Administrative Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. (the "Assignor") and (the "Assignee") agree as follows: (a) The Assignor hereby sells and assigns to the Assignee without recourse, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to all of the Assignor's rights and obligations under the Credit Agreement as of the date hereof (other than in respect of Auction Advances and Auction Notes) which represents the percentage interest specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement (other than in respect of Auction Advances and Auction Notes), including, without limitation, such interest in the Assignor's Commitment, the Contract Advances owing to the Assignor, and the Contract Note[s] held by the Assignor. After giving effect to such sale and assignment, the Assignee's Commitment and the amount of the Contract Advances owing to the Assignee will be as set forth in Section 2 of Schedule 1. (b) The Assignor (A) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (B) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (C) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; and (D) attaches the Contract Note[s] referred to in paragraph 1 above and requests that the Administrative Agent exchange such Contract Note[s] for a new Contract Note payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto or new Contract Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto and the Assignor in an amount equal to the Commitment retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1 hereto. Except as specified in this Section 2, the assignment hereunder shall be without recourse to the Assignor. (c) The Assignee (A) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (B) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (C) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (D) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; [and] (E) specifies as its, Domestic Lending Office (and address for notices) and Eurodollar Lending Office the offices set forth beneath its name on the signature pages hereof [and (vi) attaches the forms prescribed by the Internal Revenue Service of the United States certifying that it is exempt from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement and the Notes].1 (d) Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent. The effective date of this Assignment and Acceptance shall be the date of acceptance thereof by the Administrative Agent, unless otherwise specified on Schedule 1 hereto (the "Effective Date"); provided, however, that in no event shall this Assignment and Acceptance become effective prior to the payment for the processing and recordation fee to the Administrative Agent as provided in Section 8.07(a) of the Credit Agreement. (e) Upon such acceptance and recording by the Administrative Agent, as of the Effective Date, (A) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (B) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. (f) Upon such acceptance and recording by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall make all payments under the Credit Agreement and the Contract Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Contract Notes for periods prior to the Effective Date directly between themselves. (g) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. _______________________________ 1 If the Assignee is organized under the laws of a jurisdiction outside the United States. (h) This Assignment and Acceptance may be signed in any number of counterparts, each of which shall be deemed an original, with the same effect as if the signatures thereto and hereto were up on the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on Schedule 1 hereto. [NAME OF ASSIGNOR] By Name: Title: [NAME OF ASSIGNEE] By Name: Title: Domestic Lending Office (and address for notices): [Address] Eurodollar Lending Office: [Address] Accepted this day of , 20__ CITIBANK, N.A., as Administrative Agent By Name: Title: Schedule 1 to Assignment and Acceptance Dated __________, 20__ Section (a) Percentage Interest: % Section (b) Assignee's Commitment: $ Aggregate Outstanding Principal Amount of Contract Advances owing $ to the Assignee: A Contract Note payable to the order of the Assignee Dated: _________, 20__ Principal amount: $ [A Contract Note payable to the order of the Assignor Dated: _________, 20__ Principal amount: $ ] Section (c) Effective Date1: _________, 20__ _______________________________ 1 This date should be no earlier than the date of acceptance by the Administrative Agent. EXHIBIT D FORM OF OPINION OF COUNSEL FOR THE BORROWER [Date] To each of the Lenders parties to the Credit Agreement referred to below, and to Citibank, N.A., as Administrative Agent Entergy Corporation Ladies and Gentlemen: I have acted as counsel to Entergy Corporation, a Delaware corporation (the "Borrower"), in connection with the preparation, execution and delivery of the Credit Agreement, dated as of May __, 2000, by and among the Borrower, the Banks parties thereto and the other Lenders from time to time parties thereto and Citibank, N.A., as Administrative Agent. This opinion is furnished to you at the request of the Borrower pursuant to Section 3.01(a)(v) of the Credit Agreement. Unless otherwise defined herein or unless the context otherwise requires, terms defined in the Credit Agreement are used herein as therein defined. In such capacity, I have examined: (i) Counterparts of the Credit Agreement, executed by the Borrower; (ii) The Contract Notes, executed by the Borrower; (iii) The form of the Auction Notes to be executed and delivered by the Borrower in connection with Auction Borrowings; (iv) The Certificate of Incorporation of the Borrower (the "Charter"); (v) The Bylaws of the Borrower (the "Bylaws"); (vi) A certificate of the Secretary of State of the State of Delaware, dated __________, 2000, attesting to the continued corporate existence and good standing of the Borrower in that State; (vii) A Certificate of the Secretary of State of the State of Louisiana, dated __________, 2000, attesting that the Borrower is a foreign corporation duly qualified to conduct business in that state; (viii) A copy of the Orders dated February 26, 1997 and December 22, 1999, of the Securities and Exchange Commission (File No. 70-8903) under the Public Utility Holding Company Act of 1935 (collectively, the "SEC Order"); and (ix) The other documents furnished by the Borrower to the Administrative Agent pursuant to Section 3.01(a) of the Credit Agreement. I have also examined such other corporate records of the Borrower, certificates of public officials and of officers of the Borrower, and agreements, instruments and other documents, as I have deemed necessary as a basis for the opinions expressed below. In my examination, I have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to me as originals, and the conformity with the originals of all documents submitted to me as copies. In making my examination of documents and instruments executed or to be executed by persons other than the Borrower, I have assumed that each such other person had the requisite power and authority to enter into and perform fully its obligations thereunder, the due authorization by each such other person for the execution, delivery and performance thereof and the due execution and delivery thereof by or on behalf of such person of each such document and instrument. In the case of any such person that is not a natural person, I have also assumed, insofar as it is relevant to the opinions set forth below, that each such other person is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was created, and is duly qualified and in good standing in each other jurisdiction where the failure to be so qualified could reasonably be expected to have a material effect upon its ability to execute, deliver and/or perform its obligations under any such document or instrument.. I have further assumed that each document, instrument, agreement, record and certificate reviewed by me for purposes of rendering the opinions expressed below has not been amended by any oral agreement, conduct or course of dealing between the parties thereto. As to questions of fact material to the opinions expressed herein, I have relied upon certificates and representations of officers of the Borrower (including but not limited to those contained in the Credit Agreement and certificates delivered upon the execution and delivery of the Credit Agreement) and of appropriate public officials, without independent verification of such matters except as otherwise described herein. Whenever my opinions herein with respect to the existence or absence of facts are stated to be to my knowledge or awareness, it is intended to signify that no information has come to my attention or the attention of other counsel working under my direction in connection with the preparation of this opinion letter that would give me or them actual knowledge of the existence or absence of such facts. However, except to the extent expressly set forth herein, neither I nor they have undertaken any independent investigation to determine the existence or absence of such facts, and no inference as to my or their knowledge of the existence or absence of such facts should be assumed. On the basis of the foregoing, having regard for such legal consideration as I deem relevant, and subject to the other limitations and qualifications contained in this letter, I am of the opinion that: (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business as a foreign corporation in each jurisdiction in which the nature of the business conducted or the property owned, operated or leased by it requires such qualification. (b) The execution, delivery and performance by the Borrower of the Credit Agreement and the Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action and do not contravene (i) the Charter or the Bylaws or (ii) law or (iii) any contractual or legal restriction binding on or affecting the Borrower. The Credit Agreement and the Contract Notes have been duly executed and delivered on behalf of the Borrower. When completed in the form thereof attached as Exhibit A-2 to the Credit Agreement, and executed by an authorized officer of the Borrower and delivered on behalf of the Borrower, each Auction Note will have been duly executed and delivered by the Borrower. (c) No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Borrower of the Credit Agreement and the Notes, except for the SEC Order, which has been obtained, is final and in full force and effect, and is not the subject of any appeal. (d) Except as disclosed in the Borrower's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, and in the Borrower's Quarterly Report on Form 10-Q for the period ended March 31, 2000, there is no pending or, to the best of my knowledge, threatened action or proceeding affecting the Borrower or any of its subsidiaries before any court, governmental agency or arbitrator that reasonably could be expected to affect materially and adversely the condition (financial or otherwise), operations, business, properties or prospects of the Borrower or its ability to perform its obligations under the Credit Agreement or any Note, or that purports to affect the legality, validity, binding effect or enforceability of the Credit Agreement or any Note. To the best of my knowledge, after inquiry, there has been no change in any matter disclosed in such filings that reasonably could be expected to result in such a material adverse effect. (e) The Borrower is not an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended, or an "investment adviser" within the meaning of the Investment Advisers Act of 1940, as amended. (f) The Credit Agreement and the Contract Notes constitute, and the Auction Notes, when completed in the form thereof attached as Exhibit A-2 to the Credit Agreement and executed by an authorized officer of the Borrower and delivered on behalf of the Borrower in accordance with the terms of the Credit Agreement, will constitute, the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms. My opinions above are subject to the following qualifications: (i) My opinions are subject, as to enforceability, to (A) bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights generally and (B) the application of general principles of equity, including but not limited to the right to have specific performance of contract obligations, regardless of whether considered in a proceeding in equity or at law. (ii) My opinion in paragraph (a) above, insofar as it relates to the due incorporation, valid existence and good standing of the Borrower under Delaware law, is given exclusively in reliance upon a certification of the Secretary of State of Delaware, upon which I believe I am justified in relying. A copy of such certification has been provided to you. (iii) My opinion set forth in paragraph (c) above as to the obtaining of necessary governmental and regulatory approvals is based solely upon a review of those laws that, in my experience, are normally applicable to the Borrower in connection with transactions of the type contemplated by the Credit Agreement. (iv) My opinion in paragraph (f) above as to the legality, validity, binding nature and enforceability of the Credit Agreement and the Notes is given in reliance upon a legal opinion of even date herewith of Thelen Reid & Priest LLP, New York counsel to the Borrower, and is subject to the assumptions, limitations and qualifications contained therein. A copy of the legal opinion of Thelen Reid & Priest LLP, is being provided to you contemporaneously herewith. Notwithstanding the qualifications set forth above, I have no actual knowledge of any matter within the scope of said qualifications that would cause me to change the opinions set forth in this letter. I am licensed to practice law only in the States of Louisiana and Mississippi and, except as otherwise provided herein, my role as counsel to the Company is limited to matters involving the laws of the State of Louisiana and the federal laws of the United States of America. Except to the extent otherwise expressly set forth herein, and except with respect to matters governed by the General Corporation Law of Delaware, I render no opinion on the laws of any other jurisdiction or any subdivision thereof, and have made no independent investigation into any such laws except as specifically provided herein. My opinions are expressed as of the date hereof, and I do not assume any obligation to update or supplement my opinions to reflect any fact or circumstance that hereafter comes to my attention, or any change in law that hereafter occurs. This opinion letter is being provided exclusively to and for the benefit of the addressees hereof. It is not to be furnished to or relied upon by any other party for any other purpose, without prior express written authorization from us, except that (A) Thelen Reid & Priest LLP may rely hereon in connection with their opinion to you of even date herewith on behalf of the Borrower as to matters of New York law, (B) King & Spalding hereby is authorized to rely on this letter in the rendering of their opinion to the Lenders dated as of the date hereof; and (C) any addressee of this letter may deliver a copy hereof to any person that becomes a Lender under the Credit Agreement after the date hereof, and such person may rely on this opinion as if it had been addressed and delivered to it on the date hereof as an original Bank that was a party to the Credit Agreement. Very truly yours, Ann G. Roy Bank Addressees: EXHIBIT E OPINION OF SPECIAL NEW YORK COUNSEL TO THE AGENT May 18, 2000 To each of the Lenders parties to the Credit Agreement referred to below, and to Citibank, N.A., as Administrative Agent Entergy Corporation Ladies and Gentlemen: We have acted as special New York counsel to Citibank, N.A., individually and as Administrative Agent, in connection with the preparation, execution and delivery of the Credit Agreement, dated as of May 18, 2000 (the "Credit Agreement"), among Entergy Corporation, the Banks parties thereto and Citibank, N.A., as Administrative Agent. Terms defined in the Credit Agreement are used herein as therein defined. In this connection, we have examined the following documents: (a) a counterpart of the Credit Agreement, executed by the parties thereto; (b) the Contract Notes to the order of each Bank; (c) the form of the Auction Notes, attached as Exhibit A-2 to the Credit Agreement, to be executed and delivered by the Borrower in connection with any Auction Borrowing; and (d) the other documents furnished to the Administrative Agent pursuant to Section 3.01(a) of the Credit Agreement, including (without limitation) the opinion (the "Opinion") of Ann G. Roy, counsel to the Borrower. In our examination of the documents referred to above, we have assumed the authenticity of all such documents submitted to us as originals, the genuineness of all signatures, the due authority of the parties executing such documents and the conformity to the originals of all such documents submitted to us as copies. We have also assumed that you have independently evaluated, and are satisfied with, the creditworthiness of the Borrower and the business terms reflected in the Credit Agreement. We have relied, as to factual matters, on the documents we have examined. To the extent that our opinions expressed below involve conclusions as to matters governed by law other than the law of the State of New York, we have relied upon the Opinion and have assumed without independent investigation the correctness of the matters set forth therein, our opinions expressed below being subject to the assumptions, qualifications and limitations set forth in the Opinion. Based upon and subject to the foregoing, and subject to the qualifications set forth below, we are of the opinion that the Credit Agreement and the Contract Notes are, and upon their completion, execution and delivery in accordance with the terms of the Credit Agreement, the Auction Notes will be, the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms. Our opinion is subject to the following qualifications: (i) The enforceability of the Borrower's obligations under the Credit Agreement and the Notes is subject to the effect of any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar law affecting creditors' rights generally. (ii) The enforceability of the Borrower's obligations under the Credit Agreement and the Notes is subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law). Such principles of equity are of general application, and, in applying such principles, a court, among other things, might not allow a contracting party to exercise remedies in respect of a default deemed immaterial, or might decline to order an obligor to perform covenants. (iii) We note further that, in addition to the application of equitable principles described above, courts have imposed an obligation on contracting parties to act reasonably and in good faith in the exercise of their contractual rights and remedies, and may also apply public policy considerations in limiting the right of parties seeking to obtain indemnification under circumstances where the conduct of such parties is determined to have constituted negligence. (iv) We express no opinion herein as to (A) Section 8.05 of the Credit Agreement, (B) the enforceability of provisions purporting to grant to a party conclusive rights of determination, (C) the availability of specific performance or other equitable remedies, (D) the enforceability of rights to indemnity under federal or state securities laws or (E) the enforceability of waivers by parties of their respective rights and remedies under law. (v) Our opinions expressed above are limited to the law of the State of New York, and we do not express any opinion herein concerning any other law. The foregoing opinion is solely for your benefit and may not be relied upon by any other person or entity, other than any Person that may become a Lender under the Credit Agreement after the date hereof. Very truly yours, _______________________________ 1 Delete for Base Rate Advances. 2 Include if applicable. 3 Delete for Base Rate Advances 1 If the Assignee is organized under the laws of a jurisdiction outside the United States. 1 This date should be no earlier than the date of acceptance by the Administrative Agent. EX-4 3 0003.txt Exhibit 4(d) ENTERGY NEW ORLEANS, INC. TO HARRIS TRUST COMPANY OF NEW YORK (successor to Bank of Montreal Trust Company) And THE BANK OF NEW YORK (herein becoming successor to Harris Trust Company of New York) And MARK F. McLAUGHLIN (successor to Z. George Klodnicki) And STEPHEN J. GIURLANDO (herein becoming successor to Mark F. McLaughlin) As Trustees under the Mortgage and Deed of Trust, dated as of May 1, 1987 of Entergy New Orleans, Inc. EIGHTH SUPPLEMENTAL INDENTURE Providing among other things for General and Refunding Mortgage Bonds designated as First Mortgage Bonds, 8.125% Series due July 15, 2005 (Eleventh Series) Dated as of July 1, 2000 EIGHTH SUPPLEMENTAL INDENTURE EIGHTH SUPPLEMENTAL INDENTURE, dated as of July 1, 2000, between ENTERGY NEW ORLEANS, INC., a corporation of the State of Louisiana, whose post office address is 1600 Perdido Building, New Orleans, Louisiana 70112 (the "Company") and HARRIS TRUST COMPANY OF NEW YORK (successor to BANK OF MONTREAL TRUST COMPANY), a corporation of the State of New York, whose principal office is located at 88 Pine Street, New York, New York 10005, (hereinafter sometimes called the "Corporate Trustee") which is hereby resigning as Corporate Trustee effective at the close of business on July 215, 2000, and THE BANK OF NEW YORK, a New York banking corporation, whose principal office is located at 101 Barclay Street, Floor 21 West, New York, New York 10286 (successor Corporate Trustee hereby to Harris Trust Company of New York), and MARK F. McLAUGHLIN (successor to Z. George Klodnicki), whose post office address is 44 Norwood Avenue, Allenhurst, New Jersey 07711, (hereinafter sometimes called the "Co-Trustee"), who is hereby resigning as Co-Trustee effective at the close of business on July 15, 2000, and STEPHEN J. GIURLANDO (successor Co-Trustee hereby to Mark F. McLaughlin), whose address is 63 Euclid Avenue, Massapequa, New York 11758) (the Corporate Trustee and the Co- Trustee being hereinafter together sometimes called the "Trustees"), as resigning and successor Trustees, as the case may be, under the Mortgage and Deed of Trust, dated as of May 1, 1987, executed and delivered by the Company (herein called the "Original Indenture"; the Original Indenture and any and all indentures and instruments supplemental thereto being herein called the "Indenture"); WHEREAS, the Original Indenture has been duly recorded and filed as required in the State of Louisiana simultaneously with the recording and filing of the First Supplemental Indenture thereto, dated as of May 1, 1987, between the Company and BANK OF MONTREAL TRUST COMPANY and Z. GEORGE KLODNICKI (Mark F. McLaughlin, successor), as trustees (herein called the "First Supplemental Indenture"); and WHEREAS, the Original Indenture was recorded in various Parishes in the State of Louisiana; and WHEREAS, the Company executed and delivered to the Trustees (as such term and all other defined terms used herein and not defined herein having the respective definitions to which reference is made in Article I below) its Second Supplemental Indenture, dated as of January 1, 1988, its Third Supplemental Indenture, dated as of March 1, 1993, its Fourth Supplemental Indenture, dated as of September 1, 1993, its Fifth Supplemental Indenture, dated as of April 1, 1995, its Sixth Supplemental Indenture, dated as of March 1, 1996, and its Seventh Supplemental Indenture, dated as of July 1, 1998 each as a supplement to the Original Indenture, which Supplemental Indentures have been duly recorded in various Parishes in the State of Louisiana, which Parishes are the same Parishes in which this Eighth Supplemental Indenture is to be recorded; and WHEREAS, the Company has heretofore issued, in accordance with the provisions of the Indenture, the following series of bonds: Series Principal Principal Amount Amount Issued Outstanding 10.95% Series due May 1, 1997 $75,000,000 None 13.20% Series due February 1, 1991 1,400,000 None 13.60% Series due February 1, 1993 29,400,000 None 13.90% Series due February 1, 1995 9,200,000 None 7% Series due March 1, 2003 25,000,000 25,000,000 8% Series due March 1, 2023 45,000,000 45,000,000 7.55% Series due September 1, 2023 30,000,000 30,000,000 8.67% Series due April 1, 2005 30,000,000 None 8% Series due March 1, 2006 40,000,000 40,000,000 7% Series due July 15, 2008 30,000,000 30,000,000 ; and WHEREAS, Section 19.04 of the Original Indenture provides, among other things, that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon the Company by any provision of the Indenture, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted, or to additional restriction if already restricted, and the Company may enter into any further covenants, limitations, restrictions or provisions for the benefit of any one or more series of bonds issued thereunder, or the Company may establish the terms and provisions of any series of bonds by an instrument in writing executed and acknowledged by the Company in such manner as would be necessary to entitle a conveyance of real estate to be recorded in all of the states in which any property at the time subject to the Lien of the Indenture shall be situated; and WHEREAS, the Company desires to create a new series of bonds under the Indenture and to add to its covenants and agreements contained in the Indenture certain other covenants and agreements to be observed by it; and WHEREAS, all things necessary to make this Eighth Supplemental Indenture a valid, binding and legal instrument have been performed, and the issue of said series of bonds, subject to the terms of the Indenture, has been in all respects duly authorized; NOW, THEREFORE, THIS EIGHTH SUPPLEMENTAL INDENTURE WITNESSETH: That Harris Trust Company of New York, resigning Corporate Trustee, hereby represents that pursuant to an Agreement and Plan of Merger dated as of March 18, 1999, Harris Trust Company of New York merged into Bank of Montreal Trust Company, the Corporate Trustee under the Indenture, and effective July 1, 1999, the combined entity changed its name to Harris Trust Company of New York. By virtue of Section 9.03of the Original Indenture, Harris Trust Company of New York became successor Corporate Trustee under the Indenture, without the execution or filing of any paper or the performance of any further act on the part of any other parties to the Indenture; That Harris Trust Company of New York, resigning Corporate Trustee and Mark F. McLaughlin, resigning Co-Trustee are parties to this Eighth Supplemental Indenture solely for the purpose of resigning from their positions as Trustees under the Indenture, as supplemented, and for the purpose of making the representations contained in the immediately preceding paragraph, and that they have no responsibility for the Eleventh Series of bonds being issued hereunder; That the undersigned Harris Trust Company of New York is hereby giving written notice to the Company that it is resigning as Corporate Trustee under the Indenture, such resignation to take effect at the close of business on July 15, 2000, unless previously a successor Corporate Trustee shall have been appointed as provided in the Indenture, as heretofore supplemented, in which event such resignation shall take effect immediately on the appointment of such successor Corporate Trustee; That, pursuant to Section 9.03 of the Original Indenture, as heretofore supplemented, and by order of its Board of Directors, the Company hereby appoints The Bank of New York as successor Corporate Trustee under the Indenture, as heretofore supplemented, subject to the conditions of Article XVI of the Original Indenture expressed, effective at the close of business on July 15, 2000; That the undersigned The Bank of New York, a New York banking corporation having its principal corporate trust office in the Borough of Manhattan, The City of New York, hereby accepts its said appointment by the Company, as successor Corporate Trustee under the Indenture, as heretofore supplemented; That the undersigned Harris Trust Company of New York hereby acknowledges receipt of an executed counterpart of this instrument; That the undersigned Mark F. McLaughlin is hereby giving written notice to the Company that he is resigning as Co-Trustee under the Indenture, such resignation to take effect at the close of business on July 15, 2000, unless previously a successor Co- Trustee shall have been appointed as provided in the Indenture, as heretofore supplemented, in which event such resignation shall take effect immediately on the appointment of such successor Co- Trustee; That, pursuant to Section 9.03 of the Original Indenture, as heretofore supplemented, the undersigned The Bank of New York, as successor Corporate Trustee hereby appoints Stephen J. Giurlando as successor Co-Trustee under the Indenture, as heretofore supplemented, subject to the conditions of Article XVII of the Original Indenture expressed, effective at the close of business on July 15, 2000, and the Company joins The Bank of New York in such appointment; That the undersigned Stephen J. Giurlando, a citizen of the United States of America, hereby accepts his said appointment by The Bank of New York as successor Co-Trustee under the Indenture, as heretofore supplemented; That the undersigned Mark F. McLaughlin hereby acknowledges receipt of an executed counterpart of this instrument; That the undersigned resigning Trustees will proceed with the giving of the notice of resignation as provided in Section 16.14 of the Original Indenture in substantially the form provided in Exhibit A hereto annexed; That the Company will proceed with the giving of the notice of appointment as provided in Section 16.15 of the Original Indenture in substantially the form provided in Exhibit A hereto annexed; and That the Company in consideration of the premises and of Ten Dollars ($10) to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in order to secure the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under the Indenture, according to their tenor and effect and the performance of all provisions of the Indenture (including any modification made as in the Indenture provided) and of said bonds, hath granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, hypothecated, affected, pledged, set over and confirmed and granted a security interest in, and by these presents doth grant, bargain, sell, release, convey, assign, transfer, mortgage, hypothecate, affect, pledge, set over and confirm and grant a security interest in (subject, however, to Excepted Encumbrances as defined in Section 1.06 of the Original Indenture), unto MARK F. McLAUGHLIN who is hereby resigning as Co-Trustee effective at the close of business on July 15, 2000, and (to the extent of its legal capacity to hold the same for the purposes hereof) to HARRIS TRUST COMPANY OF NEW YORK, which is hereby resigning as Corporate Trustee effective at the close of business on July 15, 2000, and effective at the close of business on July 15, 2000, unto STEPHEN J. GIURLANDO and (to the extent of its legal capacity to hold the same for the purpose hereof) to THE BANK OF NEW YORK, as Trustees under the Indenture, and to their successor or successors in said trust, and to said Trustees and their successors and assigns forever (1) all rights, legal and equitable, of the Company (whether in accordance with Paragraph 32 of that certain Resolution No. R-86-112, adopted by the Council of the City of New Orleans on March 20, 1986 and accepted by the Company on March 25, 1986, as superseded by Resolution No. R-91-157, effective October 4, 1991, as superseded by Resolution No. R-97-985, effective November 25, 1997, and as further superseded by Resolution No. R- 00-271 and Resolution No. R-00-272, each adopted on April 19, 2000 or pursuant to other regulatory authorization or by operation of law or otherwise), in the event of the purchase and acquisition by the City of New Orleans (or any other governmental authority or instrumentality or designee thereof) of properties and assets of the Company, to recover and receive payment and compensation from the City (or from such other governmental authority or instrumentality or designee thereof or any other person) of an amount equal to the aggregate uncollected balance of (A) the deferrals of Grand Gulf 1 Costs (as defined in the Original Indenture) and the deferred carrying charges accrued thereon that have accumulated prior to the City or such other entity providing official notice to the Company of the City's or such other entity's intent to effect such purchase and acquisition and (B) if and to the extent that the City or such other entity and the Company agree that the City or such other entity is liable for all or a portion of the aggregate uncollected balance of such deferrals accumulating thereafter or a court of final resort so holds, such deferrals that have accumulated subsequent to such notice (said rights of the Company, together with the proceeds and products thereof, being defined in the Original Indenture as the "Municipalization Interest"); and (2) all properties of the Company, real, personal and mixed, of the kind or nature described or mentioned in the Original Indenture; and (3) all properties of the Company specifically described in Article VI hereof and all other properties of the Company, real, personal and mixed, of the kind or nature specifically mentioned in the Original Indenture or of any other kind or nature acquired by the Company on or after the date of the execution and delivery of the Original Indenture (except any herein or in the Original Indenture, as heretofore supplemented, expressly excepted), now owned or, subject to the provisions of Section 15.03 of the Original Indenture, hereafter acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same, the scope and intent of the foregoing or of any general description contained herein or in the Original Indenture, as heretofore supplemented), all real estate, lands, easements, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same; all power sites, flowage rights, water rights, water locations, water appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways, waterways, dams, dam sites, aqueducts, and all other rights or means for appropriating, conveying, storing and supplying water; all rights of way and roads; all plants for the generation of electricity by steam, water and/or other power; all power houses, gas plants, street lighting systems, standards and other equipment incidental thereto; all telephone, radio and television systems, air-conditioning systems, and equipment incidental thereto, water wheels, water works, water systems, steam heat and hot water plants, substations, electric, gas and water lines, service and supply systems, bridges, culverts, tracks, ice or refrigeration plants and equipment, offices, buildings and other structures and the equipment thereof; all machinery, engines, boilers, dynamos, turbines, electric, gas and other machines, prime movers, regulators, meters, transformers, generators (including, but not limited to, engine driven generators and turbogenerator units), motors, electrical, gas and mechanical appliances, conduits, cables, water, steam heat, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, towers, overhead conductors and devices, underground conduits, underground conductors and devices, wires, cables, tools, implements, apparatus, storage battery equipment, and all other fixtures and presently; all municipal and other franchises, consents or permits; all lines for the transmission and distribution of electric current, gas, steam heat or water for any purpose including towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith and (except as herein or in the Original Indenture, as heretofore supplemented, expressly excepted) all the rights, title and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property herein or in the Original Indenture, as heretofore supplemented, described. TOGETHER WITH all and singular the tenements, hereditaments, prescriptions, servitudes and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 11.01 of the Original Indenture) the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property, rights and franchises and every part and parcel thereof. IT IS HEREBY AGREED by the Company that, subject to the provisions of Section 15.03 of the Original Indenture, all the property, rights and franchises acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) after the date hereof, except any herein or in the Original Indenture, as heretofore supplemented, expressly excepted, shall be and are as fully granted and conveyed hereby and as fully embraced within the Lien of the Original Indenture and the Lien hereof as if such property, rights and franchises were now owned by the Company and were specifically described herein and granted and conveyed hereby. PROVIDED that, except as provided herein and in the Original Indenture with respect to the Municipalization Interest, the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, hypothecated, affected, pledged, set over or confirmed hereunder, nor is a security interest therein hereby or by the Original Indenture, as heretofore supplemented, granted or intended to be granted, and the same are hereby expressly excepted from the Lien of the Indenture and the operation of this Eighth Supplemental Indenture, viz.: (1) cash, shares of stock, bonds, notes and other obligations and other securities not heretofore or hereafter specifically pledged, paid, deposited, delivered or held hereunder or covenanted so to be; (2) merchandise, equipment, apparatus, materials or supplies held for the purpose of sale or other disposition in the usual course of business or for the purpose of repairing or replacing (in whole or part) any rolling stock, buses, motor coaches, automobiles and other vehicles or aircraft or boats, ships, or other vessels and any fuel, oil and similar materials and supplies consumable in the operation of any of the properties of the Company; rolling stock, buses, motor coaches, automobiles and other vehicles and all aircraft; boats, ships and other vessels; all timber, minerals, mineral rights and royalties; (3) bills, notes and other instruments and accounts receivable, judgments, demands, general intangibles and chooses in action, and all contracts, leases and operating agreements not specifically pledged hereunder or under the Original Indenture or covenanted so to be; (4) the last day of the term of any lease or leasehold which may hereafter become subject to the Lien of the Indenture; (5) electric energy, gas, water, steam, ice, and other materials or products generated, manufactured, produced or purchased by the Company for sale, distribution or use in the ordinary course of its business; (6) any natural gas wells or natural gas leases or natural gas transportation lines or other works or property used primarily and principally in the production of natural gas or its transportation, primarily for the purpose of sale to natural gas customers or to a natural gas distribution or pipeline company, up to the point of connection with any distribution system; and (7) the Company's franchise to be a corporation; provided, however, that the property and rights expressly excepted from the Lien and operation of the Indenture in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event and as of the date that either or both of the Trustees or a receiver or trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XII of the Original Indenture by reason of the occurrence of a Default. TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, hypothecated, affected, pledged, set over or confirmed or in which a security interest has been granted by the Company as aforesaid, or intended so to be (subject, however, to Excepted Encumbrances as defined in Section 1.06 of the Original Indenture), unto MARK F. McLAUGHLIN and STEPHEN J. GIURLANDO and (to the extent of its legal capacity to hold the same for the purposes hereof) to HARRIS TRUST COMPANY OF NEW YORK and THE BANK OF NEW YORK, as resigning and successor Trustees, respectively, and their successors and assigns forever. IN TRUST NEVERTHELESS, for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as are set forth in the Original Indenture, as heretofore supplemented, this Eighth Supplemental Indenture being supplemental thereto. AND IT IS HEREBY COVENANTED by the Company that all the terms, conditions, provisos, covenants and provisions contained in the Original Indenture, as heretofore supplemented, shall affect and apply to the property hereinbefore and hereinafter described and conveyed and to the estate, rights, obligations and duties of the Company and the Trustees and the beneficiaries of the trust with respect to said property, and to the Trustees and their successors as Trustees of said property in the same manner and with the same effect as if said property had been owned by the Company at the time of the execution of the Original Indenture and had been specifically and at length described in and conveyed to said Trustees by the Original Indenture as a part of the property therein stated to be conveyed. The Company further covenants and agrees to and with the Trustees and their successor or successors in said trust under the Indenture, as follows: ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1.01 Terms From the Original Indenture and First through Seventh Supplemental Indentures. Except as set forth in Section 1.02 below, all defined terms used in this Eighth Supplemental Indenture and not otherwise defined herein shall have the respective meanings ascribed to them in the Original Indenture or the First through the Seventh Supplemental Indentures, as the case may be. Section 1.02 Certain Defined Terms. As used in this Eighth Supplemental Indenture, the following defined terms shall have the respective meanings specified unless the context clearly requires otherwise: The term "Adjusted Treasury Rate" shall mean, with respect to any redemption date: (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining term of the Bonds of the Eleventh Series, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight basis, rounding to the nearest month); or (ii) if such release (or any successor release) is not published during the week preceding the calculation date for the Adjusted Treasury Rate or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue(expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Adjusted Treasury Rate shall be calculated on the third Business Day preceding the redemption date. The term "Business Day" shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Trustee is closed for business. The term "Comparable Treasury Issue" shall mean the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Bonds of the Eleventh Series that would be utilized at the time of selection and in accordance with customary financial practice in pricing new issues of corporate debt securities of comparable maturities to the remaining term of the Bonds of the Eleventh Series. The term "Comparable Treasury Price" shall mean, with respect to any redemption date, (i) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest such Reference Treasury Dealer Quotations or (ii) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. The term "Independent Investment Banker" shall mean Morgan Stanley & Co. Incorporated or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company. The term "Original Indenture" shall have the meaning specified in the first paragraph hereof. The term "Person" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. The term "Reference Treasury Dealer" shall mean (i) Morgan Stanley & Co. Incorporated and its respective successors; provided, however, that if it shall cease to be a primary United States Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer and (ii) any other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with the Company. The term "Reference Treasury Dealer Quotations" shall mean, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m. on the third Business Day preceding such redemption date. The term "Eleventh Series" shall have the meaning specified in Section 2.01. Section 1.03 References are to Eighth Supplemental Indenture. Unless the context otherwise requires, all references herein to "Articles", "Sections" and other subdivisions refer to the corresponding Articles, Sections and other subdivisions of this Eighth Supplemental Indenture, and the words "herein", "hereof", "hereby", "hereunder" and words of similar import refer to this Eighth Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision hereof or to the Original Indenture or any other supplemental indenture thereto. Section 1.04 Number and Gender. Unless the context otherwise requires, defined terms in the singular include the plural, and in the plural include the singular. The use of a word of any gender shall include all genders. ARTICLE II THE ELEVENTH SERIES Section 2.01 Bonds of the Eleventh Series. Pursuant to Section 2.01 of the Original Indenture, there shall be a series of bonds designated 8.125% Series due July 15, 2005 (herein sometimes referred to as "Eleventh Series"), each of which shall also bear the descriptive title "First Mortgage Bond". The form of Bonds of the Eleventh Series shall be substantially in the form of Exhibit B hereto. Bonds of the Eleventh Series shall mature on July 15, 2005 and shall be issued only as fully registered bonds in denominations of One Thousand Dollars and, at the option of the Company, in any multiple or multiples thereof (the exercise of such option to be evidenced by the execution and delivery thereof). Bonds of the Eleventh Series shall bear interest at the rate of eight and one-eighth percent (8.125%) per annum (except as hereinafter provided), payable semi-annually in arrears on January 15 and July 15 of each year, and at maturity or earlier redemption, the first interest payment to be made on January 15, 2001 for the period from the date of original issuance of the Bonds of the Eleventh Series to January 15, 2001; the principal and interest on each said bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, New York, payable in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts. Interest on the Bonds of the Eleventh Series may at the option of the Company be paid by check mailed to the registered owners thereof. Overdue principal and (to the extent permitted by law) overdue interest in respect of the bonds of the Eleventh Series shall bear interest (before and after judgment) at the rate of nine and one-eighth percent (9.125%) per annum. Interest on the Bonds of the Eleventh Series shall be computed on the basis of a 360-day year consisting of twelve 30- day months. Interest on the Bonds of the Eleventh Series in respect of a portion of a month shall be calculated based on the actual number of days elapsed. The Company reserves the right to establish at any time, by Resolution of the Board of Directors of the Company, a form of coupon bond, and of appurtenant coupons, for the Eleventh Series and to provide for exchangeability of such coupon bonds with the bonds of said Series issued hereunder in fully registered form and to make all appropriate provisions for such purpose. Section 2.02 Redemption of Bonds of the Eleventh Series. (a) Bonds of the Eleventh Series shall be redeemable, at the option of the Company, in whole at any time, or in part from time to time, prior to maturity, upon notice mailed to each registered owner at his last address appearing on the registry books not less than 30 days nor more than 60 days prior to the date fixed for redemption, at the option of the Company, at a redemption price equal to the greater of (i) 100% of the principal amount of such Bonds of the Eleventh Series to be redeemed and (ii) as determined by the Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal of and interest on such Bonds of the Eleventh Series being redeemed (excluding the portion of any such interest accrued to such redemption date), discounted (for purposes of determining such present values) to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus .250%, plus, in each case, accrued interest thereon to such redemption date . (b) Bonds of the Eleventh Series shall also be redeemable in whole or in part, at any time prior to maturity, upon like notice, by the application (either at the option of the Company or pursuant to the requirements of the Original Indenture) of cash delivered to or deposited with the Trustee pursuant to the provisions of Section 9.05 and 11.06 of the Original Indenture, at the special redemption price of 100% of the principal amount of the Bonds of the Eleventh Series being redeemed, plus accrued interest thereon to the redemption date. (c) Bonds of the Eleventh Series are also redeemable, at the option of the holders thereof, as provided in Section 3.04 of the First Supplemental Indenture, as heretofore and hereby amended. Section 2.03 Transfer and Exchange. At the option of the registered owner, any Bonds of the Eleventh Series, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, New York, shall be exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations. Bonds of the Eleventh Series shall be transferable, upon the surrender thereof for cancellation, together with a written instrument of transfer in form approved by the registrar duly executed by the registered owner or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York, New York. Upon any such exchange or transfer of Bonds of the Eleventh Series, the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 2.05 of the Original Indenture, but the Company hereby waives any right to make a charge in addition thereto for any such exchange or transfer of Bonds of the Eleventh Series. Section 2.04 Dating of Bonds and Interest Payments. (a) Each Bond of the Eleventh Series shall be dated as of the date of authentication and shall bear interest from the last preceding interest payment date to which interest shall have been paid (unless the date of such bond is an interest payment date to which interest is paid, in which case from the date of such bond); provided that each Bond of the Eleventh Series dated prior to January 15, 2001 shall bear interest from the date of original issuance thereof; and provided, further, that if any Bond of the Eleventh Series shall be authenticated and delivered upon a transfer of, or in exchange for or in lieu of, any other Bond or Bonds of the Eleventh Series upon which interest is in default, it shall be dated so that such bond shall bear interest from the last preceding date to which interest shall have been paid on the bond or bonds in respect of which such bond shall have been delivered or from its date of original issuance, if no interest shall have been paid on the Bonds of the Eleventh Series. (b) Notwithstanding the foregoing, Bonds of the Eleventh Series shall be dated so that the person in whose name any Bond of the Eleventh Series is registered at the close of business on the Business Day immediately preceding an interest payment date shall be entitled to receive the interest payable on the interest payment date notwithstanding the cancellation of such bond upon any transfer or exchange thereof subsequent to such close of business and prior to such interest payment date, except if, and to the extent that, the Company shall default in the payment of interest due on such interest payment date, in which case such defaulted interest shall be paid to the persons in whose names Outstanding Bonds of the Eleventh Series are registered on the day immediately preceding the date of payment of such defaulted interest. Any Bond of the Eleventh Series issued upon any transfer or exchange subsequent to such close of business and prior to such interest payment date shall bear interest from such interest payment date. In the event there shall be more than one registered owner of Bonds of the Eleventh Series, then the Company shall not be required to make transfers or exchanges of bonds of said series for a period of fifteen (15) days next preceding any interest payment date of said series. ARTICLE III OTHER PROVISIONS FOR RETIREMENT OF BONDS Exchange or Redemption upon Merger or Consolidation. Section 3.01 Redemption Price upon Merger or Consolidation. The second sentence of subsection (a) of Section 3.04 of the First Supplemental Indenture, as amended and restated by the Seventh Supplemental Indenture is hereby further amended to insert the following words immediately after the words "the Seventh Supplemental Indenture": "shall (as the New LP&L Bonds being exchanged for Bonds of the Eleventh Series) be subject to redemption at the option of the Company on terms similar to those provided in the Eighth Supplemental Indenture," The redemption prices for any Bonds of the Eleventh Series redeemed pursuant to subsection (b) of Section 3.04 of the First Supplemental Indenture, as amended and restated by the Seventh Supplemental Indenture, shall be equal to the principal amount of the Bonds of the Eleventh Series to be redeemed, together with accrued interest to the redemption date. ARTICLE IV COVENANTS Section 4.01 Maintenance of Paying Agency. So long as any bonds of the Eleventh Series are Outstanding, the Company covenants that the office or agency of the Company in the Borough of Manhattan, The City of New York, New York, where the principal of or interest on any bonds of the Eleventh Series shall be payable, shall also be an office or agency where any such bonds may be transferred or exchanged and where notices, presentations or demands to or upon the Company in respect of such bonds or in respect of the Indenture may be given or made. Section 4.02 Further Assurances. From time to time whenever reasonably requested by the Trustee or the holders of a majority in principal amount of bonds of the Eleventh Series then Outstanding, the Company will make, execute and deliver or cause to be made, executed and delivered any and all such further and other instruments and assurances as may be reasonably necessary or proper to carry out the intention of or to facilitate the performance of the terms of the Indenture or to secure the rights and remedies of the holders of such bonds. Section 4.03 Limitation on Restricted Payments. (a) So long as any bonds of the Eleventh Series are Outstanding, the Company covenants that it will not declare any dividends on its common stock (other than (1) a dividend payable solely in shares of its common stock or (2) a dividend payable in cash in cases where, concurrently with the payment of such dividend, an amount in cash equal to such dividend is received by the Company as a capital contribution or as the proceeds of the issue and sale of shares of its common stock) or make any distribution on outstanding shares of its common stock or purchase or otherwise acquire for value any outstanding shares of its common stock (otherwise than in exchange for or out of the proceeds from the sale of other shares of its common stock) unless after such dividend, distribution, purchase or acquisition, the aggregate amount of such dividends, distributions, purchases and acquisitions paid or made subsequent to June 30, 2000 (other than any dividend declared by the Company on or before June 30, 2000) does not exceed (without giving effect to (1) any such dividends, distributions, purchases or acquisitions, or (2) any net transfers from earned surplus to stated capital accounts) the sum of (A) the aggregate amount credited subsequent to June 30, 2000, to earned surplus, (B) $150,000,000 and (C) such additional amounts as shall be authorized or approved, upon application by the Company and, after notice, by the SEC under the Holding Company Act. For the purpose of this Section 4.03, the aggregate amount credited subsequent to June 30, 2000, to earned surplus shall be determined in accordance with applicable generally accepted accounting principles and practices (or, if in the opinion of the Company's independent public accountants (delivered to the Trustee) there is an absence of any such generally accepted accounting principles and practices as to the determination in question, then in accordance with sound accounting practices) and after making provision for dividends upon any preferred stock of the Company, accumulated subsequent to such date, and in addition there shall be deducted from earned surplus all amounts (without duplication) of losses, write-offs, write-downs or amortization of property, whether extraordinary or otherwise, recorded in and applicable to a period or periods subsequent to June 30, 2000. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.01 Acceptance of Trusts. The Trustees hereby accept the trusts herein declared, provided, created or supplemented and agree to perform the same upon the terms and conditions herein and in the Original Indenture, as heretofore supplemented, set forth and upon the following terms and conditions: The Trustees shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Eighth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are solely made by the Company. In general, each and every term and condition contained in Article XVI of the Original Indenture shall apply to and form part of this Eighth Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Eighth Supplemental Indenture. Section 5.02 Effect of Eighth Supplemental Indenture under Louisiana Law. It is the intention and it is hereby agreed that so far as concerns that portion of the Mortgaged and Pledged Property situated within the State of Louisiana, the general language of conveyance contained in this Eighth Supplemental Indenture is intended and shall be construed as words of hypothecation and not of conveyance, and that so far as the said Louisiana property is concerned, this Eighth Supplemental Indenture shall be considered as an act of mortgage and pledge and granting of a security interest under the laws of the State of Louisiana, and the Trustees herein named are named as mortgagee and pledge and secured parties in trust for the benefit of themselves and of all present and future holders of bonds issued under the Indenture and any coupons thereto issued hereunder, and are irrevocably appointed special agents and representatives of the holders of such bonds and coupons and vested with full power in their behalf to effect and enforce the mortgage and pledge and a security interest hereby constituted for their benefit, or otherwise to act as herein provided for. Section 5.03 Record Date. The holders of the Bonds of the Eleventh Series shall be deemed to have consented and agreed that the Company may, but shall not be obligated to, fix a record date for the purpose of determining the holders of the Bonds of the Eleventh Series entitled to consent, if any such consent is required, to any amendment or supplement to the Indenture or the waiver of any provision thereof or any act to be performed thereunder. If a record date is fixed, those persons who were holders at such record date (or their duly designated proxies), and only those persons, shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such persons continue to be holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. Section 5.04 Titles. The titles of the several Articles and Sections of this Eighth Supplemental Indenture shall not be deemed to be any part hereof. Section 5.05 Counterparts. This Eighth Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 5.06 Governing Law. The laws of the State of New York shall govern this Eighth Supplemental Indenture and the Bonds of the Eleventh Series, except to the extent that the validity or perfection of the Lien of the Indenture, or remedies thereunder, are governed by the laws of a jurisdiction other than the State of New York. ARTICLE VI SPECIFIC DESCRIPTION OF PROPERTY PARAGRAPH ONE The Electric Generating Plants, Plant Sites and Stations of the Company, including all electric works, power houses, buildings, pipelines and structures owned by the Company and all land of the Company on which the same are situated and all of the Company's lands, together with the buildings and improvements thereon, and all rights, ways, servitudes, prescriptions, and easements, rights-of-way, permits, privileges, licenses, poles, wires, machinery, implements, switchyards, electric lines, equipment and appurtenances, forming a part of said plants, sites or stations, or any of them, or used or enjoyed, or capable of being used or enjoyed in conjunction with any of said power plants, sites, stations, lands and property. PARAGRAPH TWO The Electric Substations, Switching Stations, Microwave installations and UHF-VHF installations of the Company, and the Sites therefor, including all buildings, structures, towers, poles, all equipment, appliances and devices for transforming, converting, switching, transmitting and distributing electric energy, and for communications, and the lands of the Company on which the same are situated, and all of the Company's lands, rights, ways, servitudes, prescriptions, easements, rights-of-way, machinery, equipment, appliances, devices, licenses and appurtenances forming a part of said substations, switching stations, microwave installations or UHF-VHF installations, or any of them, or used or enjoyed or capable of being used or enjoyed in conjunction with any of them. PARAGRAPH THREE All and singular the Miscellaneous Lands and Real Estate or Rights and Interests therein of the Company, and buildings and improvements thereon, now owned, or, subject to the provisions of Section 15.03 of the Original Indenture, hereafter acquired during the existence of this trust. PARAGRAPH FOUR The Electric Transmission Lines of the Company, including the structures, towers, poles, wires, cables, switch racks, conductors, transformers, insulators, pipes, conduits, electric submarine cables, and all appliances, devices and equipment used or useful in connection with said transmission lines and systems, and all other property, real, personal or mixed, forming a part thereof or appertaining thereto, together with all rights-of-way, easements, prescriptions, servitudes, permits, privileges, licenses, consents, immunities and rights for or relating to the construction, maintenance or operation thereof, through, over, across, under or upon any public streets or highways or other lands, public or private. PARAGRAPH FIVE The Electric Distribution Lines and Systems of the Company, including the structures, towers, poles, wires, insulators and appurtenances, appliances, conductors, conduits, cables, transformers, meters, regulator stations and regulators, accessories, devices and equipment and all of the Company's other property, real, personal or mixed, forming a part of or used, occupied or enjoyed in connection with or in anywise appertaining to said distribution lines and systems, together with all of the Company's rights-of-way, easements, permits, prescriptions, privileges, municipal or other franchises, licenses, consents, immunities and rights for or relating to the construction, maintenance or operation thereof, through, over, across, under, or upon any public streets or highways or other lands or property, public or private. PARAGRAPH SIX The Gas Distributing Systems of the Company, whether now owned or, subject to the provisions of Section 15.03 of the Original Indenture, hereafter acquired, including gas regulator stations, gas main crossings, odorizing equipment, gas metering stations, shops, service buildings, office buildings, expansion tanks, conduits, gas mains and pipes, mechanical storage sheds, boilers, service pipes, fittings, city gates, pipelines, booster stations, reducer stations, valves, valve platforms, connections, meters and all appurtenances, appliances, devices and equipment and all the Company's other property, real, personal or mixed forming a part of or used, occupied or enjoyed in connection with or in anywise appertaining to said distributing systems, or any of them, together with all of the Company's rights-of-way, easements, prescriptions, servitudes, privileges, immunities, permits and franchises, licenses, consents and rights for or relating to the construction, maintenance or operation thereof, in, on, through, across or under any public streets or highways or other lands or property, public or private. PARAGRAPH SEVEN All of the franchises, privileges, permits, grants and consents for the construction, operation and maintenance of electric and gas systems in, on and under streets, alleys, highways, roads, public grounds and rights-of-way and all rights incident thereto which were granted by the governing and regulatory bodies of the City of New Orleans, State of Louisiana. Also all other franchises, privileges, permits, grants and consents owned or hereafter acquired by the Company for the construction, operation and maintenance of electric and gas systems in, on or under the streets, alleys, highways, roads, and public grounds, areas and rights-of-way and/or for the supply and sale of electricity or natural gas and all rights incident thereto, subject, however, to the provisions of Section 15.03 of the Original Indenture. IN WITNESS WHEREOF, ENTERGY NEW ORLEANS, INC. has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents, and its corporate seal to be attested by its Secretary or one of its Assistant Secretaries for and on its behalf, and HARRIS TRUST COMPANY OF NEW YORK, in acknowledgement of its resignation as Corporate Trustee, has caused its corporate name to be hereto affixed, and this instrument to be signed by one of its Authorized Signers and to be attested by one of its Authorized Signers and THE BANK OF NEW YORK, in token of its acceptance of the trust hereby created has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one of its Vice Presidents or Assistant Vice Presidents and its corporate seal to be attested by one of its Assistant Vice Presidents or Assistant Secretaries, and MARK F. McLAUGHLIN in acknowledgment of his resignation as Co-Trustee and STEPHEN J. GIURLANDO, in token of his acceptance of the trust hereby created, have hereunto set their hands a, all as of the day and year first above written. ENTERGY NEW ORLEANS, INC. By: Nathan E. Langston Vice President Attest: Christopher T. Screen Assistant Secretary Executed, sealed and delivered by ENTERGY NEW ORLEANS, INC. in the presence of: HARRIS TRUST COMPANY OF NEW YORK As Resigning Corporate Trustee By: Douglas J. MacInnes Attest: Assistant Secretary MARK F. McLAUGHLIN, As Resigning Co-Trustee Executed, sealed and delivered by HARRIS TRUST COMPANY OF NEW YORK and MARK F. McLAUGHLIN in the presence of: THE BANK OF NEW YORK As Successor Corporate Trustee By: Robert Massimillo Assistant Vice President Attest: Assistant Secretary STEPHEN J. GIURLANDO, As Successor Co-Trustee Executed, sealed and delivered by THE BANK OF NEW YORK and STEPHEN J. GIURLANDO in the presence of: STATE OF LOUISIANA ) ) SS.: PARISH OF ORLEANS ) On this _____ day of July, 2000, before me appeared Nathan E. Langston, to me personally known, who, being duly sworn, did say that he is Vice President of ENTERGY NEW ORLEANS, INC., and that the seal affixed to said instrument is the corporate seal of said corporation and that the foregoing instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors, and said Nathan E. Langston acknowledged said instrument to be the free act and deed of said corporation. On the ______ day of July, 2000, before me personally came Nathan E. Langston, to me known, who, being by me duly sworn, did depose and say that he resides at 125 Ayshire, Slidell, Louisiana 70461; that he is a Vice President of ENTERGY NEW ORLEANS, INC., one of the parties described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. Sylvia R. Bonin Notary Public Parish of Orleans, State of Louisiana My Commission is Issued for Life STATE OF NEW YORK ) ) SS.: COUNTY OF NEW YORK ) On this ____ day of July, 2000, before me appeared Douglas J. MacInnes, to me personally known, who, being duly sworn, did say that he is an Authorized Signer of HARRIS TRUST COMPANY OF NEW YORK, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors, and said Douglas J. MacInnes acknowledged said instrument to be the free act and deed of said corporation. On the ____ day of July, 2000, before me personally came Douglas J. MacInnes, to me known, who, being by me duly sworn, did depose and say that he resides at 20 Yorkshire Road, Hamilton, New Jersey 08610; that he is an Authorized Signer of HARRIS TRUST COMPANY OF NEW YORK, one of the parties described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. Notary Public, State of New York No. __________________ Qualified in ________ County Commission Expires ______________ STATE OF NEW YORK ) ) SS.: COUNTY OF NEW YORK ) On this ___ day of July, 2000, before me personally appeared MARK F. McLAUGHLIN, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same as his free act and deed. On the ___ day of July, 2000, before me personally came MARK F. McLAUGHLIN, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same. Notary Public, State of New York No. __________________ Qualified in ________ County Commission Expires ______________ STATE OF NEW YORK } ss.: COUNTY OF NEW YORK On this _____ day of July, 2000, before me appeared ROBERT MASSIMILLO to me personally known, who, being by me duly sworn, did say that he is an Assistant Vice President of THE BANK OF NEW YORK, and that the seal affixed to the above instrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors, and said Robert Massimillo acknowledged said instrument to be the free act and deed of said corporation. On the _____ day of July 2000, before me personally came ROBERT MASSIMILLO, to me known, who, being by me duly sworn, did depose and say that he resides at 87 Brandis Avenue, Staten Island, New York 10312; that he is an Assistant Vice President of THE BANK OF NEW YORK, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal, that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. Notary Public, State of New York No. __________________ Qualified in ________ County Commission Expires ______________ STATE OF NEW YORK } ss.: COUNTY OF NEW YORK On this _____ day of July, 2000, before me appeared STEPHEN J. GIURLANDO, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same as his free act and deed. On the _____ day of July, 2000, before me personally came STEPHEN J. GIURLANDO, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same. Notary Public, State of New York No. _____________ Qualified in _______________ County EXHIBIT A ENTERGY NEW ORLEANS, INC. Mortgage and Deed of Trust dated as of May 1, 1987, as supplemented NOTICE OF RESIGNATION OF CORPORATE TRUSTEE AND CO-TRUSTEE NOTICE IS HEREBY GIVEN, pursuant to Section 16.14 of the above-mentioned Indenture, of the resignation of Harris Trust Company of New York as Corporate Trustee and Mark F. McLaughlin as Co-Trustee under the Indenture, such resignation to take effect at the close of business on July 15, 2000. HARRIS TRUST COMPANY OF NEW YORK as Corporate Trustee July 15, 2000 NOTICE OF APPOINTMENT OF SUCCESSOR CORPORATE TRUSTEE AND SUCCESSOR CO-TRUSTEE NOTICE IS HEREBY GIVEN pursuant to Section 16.15 of the above-mentioned Indenture, that by authority of the Board of Directors of Entergy New Orleans, Inc., The Bank of New York has been appointed successor Corporate Trustee under the Indenture and has accepted such appointment, effective at the close of business on July 15, 2000, and that pursuant to Section 16.15 of the Indenture, Stephen J. Giurlando has been appointed by The Bank of New York, successor Co-Trustee under the Indenture and has accepted such appointment, effective at the close of business on July 15, 2000. ENTERGY NEW ORLEANS, INC. AND THE BANK OF NEW YORK, As Corporate Trustee July 15, 2000 EXHIBIT B [FORM OF BOND OF THE ELEVENTH SERIES] [(See legend at the end of this bond for restrictions on transferability and change of form)] FIRST MORTGAGE BOND 8.125% Series due July 15, 2005 CUSIP No. _________ No. R- __ $_________ ENTERGY NEW ORLEANS, INC. , a corporation duly organized and existing under the laws of the State of Louisiana (the "Company"), for value received, hereby promises to pay to ____________, or registered assigns, at the office or agency of the Company in The City of New York, New York, the principal sum of $____________ on July 15, 2005 in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts, and to pay in like manner to the registered owner hereof interest thereon from the date of original issuance hereof , if the date of this bond is prior to January 15, 2001,, or, if the date of this bond is on or after January 15, 2001, from the July 15 or January 15 next preceding the date of this bond to which interest has been paid (unless the date hereof is an interest payment date to which interest has been paid, in which case from the date hereof), at the rate of eight and one-eighth percent (8.125%) per annum in like coin or currency on January 15 and July 15 in each year and at maturity or earlier redemption until the principal of this bond shall have become due and been duly paid or provided for, and to pay interest (before and after judgment) on any overdue principal, premium, if any, and (to the extent permitted by law) on any overdue interest at the rate of nine and one-eighth percent (9.125%) per annum. Interest on this bond shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest on this bond in respect of a portion of a month shall be calculated based on the actual number of days elapsed. The interest so payable on any interest payment date will, subject to certain exceptions provided in the Mortgage hereinafter referred to, be paid to the person in whose name this bond is registered at the close of business on the Business Day immediately preceding such interest payment date. At the option of the Company, interest may be paid by check mailed on or prior to such interest payment date to the address of the person entitled thereto as such address shall appear on the register of the Company. This bond shall not become obligatory until The Bank of New York, the Trustee under the Mortgage, or its successor thereunder, shall have signed the form of authentication certificate endorsed hereon. This bond is one of a series of bonds of the Company issuable in series and is one of a duly authorized series known as its General and Refunding Mortgage Bonds, and designated as First Mortgage Bonds 8.125% Series due July 15, 2005 (herein called bonds of the Eleventh Series), all bonds of all series issued under and equally secured by a Mortgage and Deed of Trust (herein, together with any indenture supplemental thereto, called the Mortgage), dated as of May 1, 1987, duly executed by the Company to Bank of Montreal Trust Company (The Bank of New York, successor) and Z. George Klodnicki (Stephen J. Giurlando, successor), as Trustees. Reference is made to the Mortgage for a description of the mortgaged and pledged property, assets and rights, the nature and extent of the lien and security, the respective rights, limitations of rights, covenants, obligations, duties and immunities thereunder of the Company, the holders of bonds and the Trustees and the terms and conditions upon which the bonds are, and are to be, secured, the circumstances under which additional bonds may be issued and the definition of certain terms herein used, to all of which, by its acceptance of this bond, the holder of this bond agrees. The principal hereof may be declared or may become due prior to the maturity date hereinbefore named on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a Default as in the Mortgage provided. The Mortgage provides that in certain circumstances and upon certain conditions, such a declaration and its consequences or certain past defaults and the consequences thereof may be waived by such affirmative vote of holders of bonds as is specified in the Mortgage. The Mortgage contains provisions permitting the Company and the Trustee to execute supplemental indentures amending the Mortgage for certain specified purposes without the consent of holders of bonds. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or the rights of the holders of the bonds of the Eleventh Series and/or the terms and provisions of the Mortgage may be modified or altered by such affirmative vote or votes of the holders of bonds then Outstanding as are specified in the Mortgage. Any consent or waiver by the holder of this bond (unless effectively revoked as provided in the Mortgage) shall be conclusive and binding upon such holder and upon all future holders of this bond and of any bonds issued in exchange or substitution herefor, irrespective of whether or not any notation of such consent or waiver is made upon this bond or such other bond. No reference herein to the Mortgage and no provision of this bond or of the Mortgage shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this bond in the manner, at the respective times, at the rate and in the currency herein prescribed. The bonds are issuable as registered bonds without coupons in the denominations of $1,000 and integral multiples thereof. At the office or agency to be maintained by the Company in The City of New York, New York, and in the manner and subject to the provisions of the Mortgage, bonds may be exchanged for a like aggregate principal amount of bonds of other authorized denominations, without payment of any charge other than a sum sufficient to reimburse the Company for any tax or other governmental charge incident thereto. This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his duly authorized attorney, at the office or agency of the Company in The City of New York, New York, upon surrender of this bond, and upon payment, if the Company shall require it, of the transfer charges provided for in the Mortgage, and, thereupon, a new fully registered bond of the same series for a like principal amount will be issued to the transferee in exchange hereof as provided in the Mortgage. The Company and the Trustees may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes and neither the Company nor the Trustees shall be affected by any notice to the contrary. This bond is redeemable at the option of the Company under certain circumstances in the manner and at such redemption prices as are provided in the Mortgage. This bond is also redeemable at the option of the owner upon the events, in the manner and at such redemption price as is specified in the Mortgage. No recourse shall be had for the payment of the principal of or interest on this bond against any incorporator or any past, present or future subscriber to the capital stock, stockholder, officer or director of the Company or of any predecessor or successor corporation, as such, either directly or through the Company or any predecessor or successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, stockholders, officers and directors being released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. As provided in the Mortgage, this bond shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, Entergy New Orleans, Inc. has caused this bond to be signed in its corporate name by its Chairman of the Board, Chief Executive Officer, President or one of its Vice Presidents by his or her signature or a facsimile thereof, and its corporate seal to be impressed or imprinted hereon and attested by its Secretary or one of its Assistant Secretaries by his or her signature or a facsimile thereof. Dated: ENTERGY NEW ORLEANS, INC. By: Title: Attest: Name: Title: [FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE] TRUSTEE'S AUTHENTICATION CERTIFICATE This bond is one of the bonds, of the series herein designated, described or provided for in the within-mentioned mortgage. THE BANK OF NEW YORK, as Trustee, By: Authorized Signature LEGEND [Unless and until this bond is exchanged in whole or in part for certificated bonds registered in the names of the various beneficial holders hereof as then certified to the Trustee by The Depository Trust Company or its successor (the "Depositary"), this bond may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Unless this certificate is presented by an authorized representative of the Depositary to the Company or its agent for registration of transfer, exchange or payment, and any certificate to be issued is registered in the name of Cede & Co., or such other name as requested by an authorized representative of the Depositary and any amount payable thereunder is made payable to Cede & Co., or such other name, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. This bond may be exchanged for certificated bonds registered in the names of the various beneficial owners hereof if (a) the Depositary is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within 90 days, or (b) the Company elects to issue certificated bonds to beneficial owners (as certified to the Company by the Depositary).] EX-27 4 0004.txt
UT This schedule contains summary financial information extracted from Entergy Corporation and Subsidiaries financial statements for the quarter ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000065984 ENTERGY CORPORATION AND SUBSIDIARIES 023 ENTERGY CORPORATION AND SUBSIDIARIES 1,000 6-MOS DEC-31-2000 JUN-30-2000 PER-BOOK 15,866,312 1,898,293 3,881,156 2,678,515 0 24,324,276 2,472 4,636,407 2,982,495 6,932,162 284,650 405,611 7,378,602 435,716 0 0 194,108 0 177,874 175,466 7,720,525 24,324,276 3,949,280 232,688 3,229,136 3,229,136 720,144 139,942 860,086 273,215 354,183 18,131 336,052 139,585 224,697 737,836 1.45 1.45
EX-27 5 0005.txt
UT This schedule contains summary financial information extracted from Entergy Arkansas, Inc. financial statements for the quarter ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000007323 ENTERGY ARKANSAS, INC. 001 ENTERGY ARKANSAS, INC. 1,000 6-MOS DEC-31-2000 JUN-30-2000 PER-BOOK 2,925,868 369,897 438,247 375,852 0 4,109,864 470 591,127 528,378 1,119,975 60,000 116,350 1,235,070 667 0 0 220 0 67,620 55,265 1,454,697 4,109,864 794,700 48,781 635,010 635,010 159,690 9,659 169,349 46,276 74,292 3,888 70,404 0 43,037 109,695 0 0
EX-27 6 0006.txt
UT This schedule contains summary financial information extracted from Entergy Gulf States, Inc. financial statements for the quarter ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000044570 ENTERGY GULF STATES, INC. 006 ENTERGY GULF STATES, INC. 1,000 6-MOS DEC-31-2000 JUN-30-2000 PER-BOOK 4,183,036 449,728 693,167 633,637 0 5,959,568 114,055 1,153,195 252,835 1,520,085 119,650 48,951 1,931,698 0 0 0 0 0 45,651 50,611 2,242,922 5,959,568 1,069,602 39,241 895,928 895,928 173,674 7,943 181,617 70,804 71,572 7,319 64,253 14,200 54,877 105,576 0 0
EX-27 7 0007.txt
UT This schedule contains summary financial information extracted from Entergy Louisiana, Inc. financial statements for the quarter ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000060527 ENTERGY LOUISIANA, INC. 012 ENTERGY LOUISIANA, INC. 1,000 6-MOS DEC-31-2000 JUN-30-2000 PER-BOOK 3,298,756 141,548 429,879 324,143 0 4,194,326 1,088,900 0 106,476 1,193,205 105,000 100,500 1,276,567 0 0 0 35,088 0 38,558 28,387 1,452,109 4,194,326 794,888 40,474 645,787 645,787 149,101 2,422 151,523 53,170 57,879 4,757 53,122 6,200 40,981 77,194 0 0
EX-27 8 0008.txt
UT This schedule contains summary financial information extracted from Entergy Mississippi, Inc. financial statements for the quarter ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000066901 ENTERGY MISSISSIPPI, INC. 016 ENTERGY MISSISSIPPI, INC. 1,000 6-MOS DEC-31-2000 JUN-30-2000 PER-BOOK 1,163,019 12,446 213,583 197,118 0 1,586,166 199,326 0 236,822 436,149 0 50,381 584,305 0 0 0 0 0 240 98 514,993 1,586,166 398,381 9,132 356,383 356,383 41,998 5,661 47,659 20,727 17,800 1,685 16,115 5,800 18,600 35,912 0 0
EX-27 9 0009.txt
UT This schedule contains summary financial information extracted from Entergy New Orleans, Inc. financial statements for the quarter ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000071508 ENTERGY NEW ORLEANS, INC. 017 ENTERGY NEW ORLEANS, INC. 1,000 6-MOS DEC-31-2000 JUN-30-2000 PER-BOOK 328,859 3,259 130,381 44,545 0 507,044 33,744 36,294 67,078 137,116 0 19,780 169,116 0 0 0 0 0 0 0 181,032 507,044 256,392 7,418 234,933 234,933 21,459 2,012 23,471 7,019 9,034 482 8,552 0 7,702 16,898 0 0
EX-27 10 0010.txt
UT This schedule contains summary financial information extracted from System Energy Resources, Inc. financial statements for the quarter ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 0000202584 SYSTEM ENERGY RESOURCES, INC. 018 SYSTEM ENERGY RESOURCES, INC. 1,000 6-MOS DEC-31-2000 JUN-30-2000 PER-BOOK 2,270,017 147,127 460,288 472,778 0 3,350,210 789,350 0 102,703 892,053 0 0 1,065,817 0 0 0 91,800 0 24,809 38,421 1,237,310 3,350,210 316,479 43,811 175,143 175,143 141,336 10,298 151,634 60,250 47,573 0 47,573 47,000 54,870 325,059 0 0
EX-99 11 0011.txt
Exhibit 99(a) Entergy Arkansas, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 June-00 Fixed charges, as defined: Total Interest Charges $115,337 $106,716 $104,165 $96,685 $97,023 $101,777 Interest applicable to rentals 18,158 19,121 17,529 15,511 17,289 15,625 ------------------------------------------------------ Total fixed charges, as defined 133,495 125,837 121,694 112,196 114,312 117,402 Preferred dividends, as defined (a) 27,636 24,731 16,073 16,763 17,836 18,412 ------------------------------------------------------ Combined fixed charges and preferred dividends, as defined $161,131 $150,568 $137,767 $128,959 $132,148 $135,814 ====================================================== Earnings as defined: Net Income $136,666 $157,798 $127,977 $110,951 $69,313 $103,665 Add: Provision for income taxes: Total 72,081 84,445 59,220 71,374 54,012 86,234 Fixed charges as above 133,495 125,837 121,694 112,196 114,312 117,402 ------------------------------------------------------ Total earnings, as defined $342,242 $368,080 $308,891 $294,521 $237,637 $307,301 ====================================================== Ratio of earnings to fixed charges, as defined 2.56 2.93 2.54 2.63 2.08 2.62 ====================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.12 2.44 2.24 2.28 1.80 2.26 ====================================================== - ------------------------ (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 0012.txt
Exhibit 99(b) Entergy Gulf States, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 June-00 Fixed charges, as defined: Total Interest charges $200,224 $193,890 $180,073 $178,220 $153,034 $152,232 Interest applicable to rentals 16,648 14,887 15,747 16,927 16,451 16,542 ----------------------------------------------------- Total fixed charges, as defined 216,872 208,777 195,820 195,147 169,485 168,774 Preferred dividends, as defined (a) 44,651 48,690 30,028 32,031 29,355 25,992 ----------------------------------------------------- Combined fixed charges and preferred dividends, as defined $261,523 $257,467 $225,848 $227,178 $198,840 $194,766 ===================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes $122,919 ($3,887) $59,976 $46,393 $125,000 $166,113 Add: Income Taxes 63,244 102,091 22,402 31,773 75,165 85,151 Fixed charges as above 216,872 208,777 195,820 195,147 169,485 168,774 ----------------------------------------------------- Total earnings, as defined (b) $403,035 $306,981 $278,198 $273,313 $369,650 $420,038 ===================================================== Ratio of earnings to fixed charges, as defined 1.86 1.47 1.42 1.40 2.18 2.49 ===================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.54 1.19 1.23 1.20 1.86 2.16 ===================================================== (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 13 0013.txt
Exhibit 99(c) Entergy Louisiana, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 June 2000 Fixed charges, as defined: Total Interest $136,901 $132,412 $128,900 $122,890 $117,247 $113,179 Interest applicable to rentals 9,332 10,601 9,203 9,564 9,221 7,945 ----------------------------------------------------- Total fixed charges, as defined 146,233 143,013 138,103 132,454 126,468 121,124 Preferred dividends, as defined (a) 32,847 28,234 22,103 20,925 16,006 15,885 ----------------------------------------------------- Combined fixed charges and preferred dividends, as defined $179,080 $171,247 $160,206 $153,379 $142,474 $137,009 ===================================================== Earnings as defined: Net Income $201,537 $190,762 $141,757 $179,487 $191,770 $134,791 Add: Provision for income taxes: Total Taxes 117,114 118,559 98,965 109,104 122,368 86,100 Fixed charges as above 146,233 143,013 138,103 132,454 126,468 121,124 ----------------------------------------------------- Total earnings, as defined $464,884 $452,334 $378,825 $421,045 $440,606 $342,015 ===================================================== Ratio of earnings to fixed charges, as defined 3.18 3.16 2.74 3.18 3.48 2.82 ===================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.60 2.64 2.36 2.75 3.09 2.50 ===================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 14 0014.txt
Exhibit 99(d) Entergy Mississippi, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 June 2000 Fixed charges, as defined: Total Interest $51,635 $48,007 $45,274 $40,927 $38,840 $40,084 Interest applicable to rentals 2,173 2,165 1,947 1,864 2,261 1,449 -------------------------------------------------------- Total fixed charges, as defined 53,808 50,172 47,221 42,791 41,101 41,533 Preferred dividends, as defined (a) 9,004 7,610 5,123 4,878 4,878 4,810 -------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $62,812 $57,782 $52,344 $47,669 $45,979 $46,343 ======================================================== Earnings as defined: Net Income $68,667 $79,210 $66,661 $62,638 $41,588 $48,151 Add: Provision for income taxes: Total income taxes 34,877 41,107 26,744 28,031 17,537 20,968 Fixed charges as above 53,808 50,172 47,221 42,791 41,101 41,533 --------------------------------------------------------- Total earnings, as defined $157,352 $170,489 $140,626 $133,460 $100,226 $110,652 ========================================================= Ratio of earnings to fixed charges, as defined 2.92 3.40 2.98 3.12 2.44 2.66 ========================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.51 2.95 2.69 2.80 2.18 2.39 ========================================================= - ------------------------ (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.
EX-99 15 0015.txt
Exhibit 99(e) Entergy New Orleans, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1995 1996 1997 1998 1999 June 2000 Fixed charges, as defined: Total Interest $17,802 $16,304 $15,287 $14,792 $14,680 $14,852 Interest applicable to rentals 916 831 911 1,045 1,281 814 -------------------------------------------------- Total fixed charges, as defined 18,718 17,135 16,198 15,837 15,961 15,666 Preferred dividends, as defined (a) 1,964 1,549 1,723 1,566 1,566 1,908 -------------------------------------------------- Combined fixed charges and preferred dividends, as defined $20,682 $18,684 $17,921 $17,403 $17,527 $17,574 ================================================== Earnings as defined: Net Income $34,386 $26,776 $15,451 $16,137 $18,961 $17,835 Add: Provision for income taxes: Total 20,467 16,216 12,142 10,042 13,030 13,356 Fixed charges as above 18,718 17,135 16,198 15,837 15,961 15,666 -------------------------------------------------- Total earnings, as defined $73,571 $60,127 $43,791 $42,016 $47,952 $46,857 ================================================== Ratio of earnings to fixed charges, as defined 3.93 3.51 2.70 2.65 3.00 2.99 ================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 3.56 3.22 2.44 2.41 2.74 2.67 ================================================== - ------------------------ (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 16 0016.txt
Exhibit 99(f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges 12 months 1995 1996 1997 1998 1999 June 2000 Fixed charges, as defined: Total Interest $151,512 $143,720 $128,653 $116,060 $147,982 $125,144 Interest applicable to rentals 6,475 6,223 6,065 5,189 3,871 4,475 -------------------------------------------------------- Total fixed charges, as defined $157,987 $149,943 $134,718 $121,249 $151,853 $129,619 ======================================================== Earnings as defined: Net Income $93,039 $98,668 $102,295 $106,476 $82,375 $99,765 Add: Provision for income taxes: Total 75,493 82,121 74,654 77,263 53,851 78,520 Fixed charges as above 157,987 149,943 134,718 121,249 151,853 129,619 -------------------------------------------------------- Total earnings, as defined $326,519 $330,732 $311,667 $304,988 $288,079 $307,904 ======================================================== Ratio of earnings to fixed charges, as defined 2.07 2.21 2.31 2.52 1.90 2.38 ========================================================
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