-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mRVY3Ljkuj9cHzUG4jWeQoaUkHWnLw3Z+QfSWH7z22NNO6p1Bf2uF+K0c5BjBJlO pqZdUuwyzeM0o0gZAEslaA== 0000065984-95-000021.txt : 19950517 0000065984-95-000021.hdr.sgml : 19950516 ACCESSION NUMBER: 0000065984-95-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: MSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 135550175 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11299 FILM NUMBER: 95537092 BUSINESS ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 BUSINESS PHONE: 5045295262 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GSU HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY CORP /FL/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH UTILITIES INC DATE OF NAME CHANGE: 19890521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARKANSAS POWER & LIGHT CO CENTRAL INDEX KEY: 0000007323 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 710005900 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10764 FILM NUMBER: 95537093 BUSINESS ADDRESS: STREET 1: PO BOX 551 STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72203 BUSINESS PHONE: 5013774000 MAIL ADDRESS: STREET 1: P O BOX 551 CITY: LITTLE ROCK STATE: AR ZIP: 72203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GULF STATES UTILITIES CO CENTRAL INDEX KEY: 0000044570 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 740662730 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20371 FILM NUMBER: 95537155 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOUISIANA POWER & LIGHT CO /LA/ CENTRAL INDEX KEY: 0000060527 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 720245590 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08474 FILM NUMBER: 95537094 BUSINESS ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 BUSINESS PHONE: 5045953100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSISSIPPI POWER & LIGHT CO CENTRAL INDEX KEY: 0000066901 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 640205830 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00320 FILM NUMBER: 95537095 BUSINESS ADDRESS: STREET 1: PO BOX 1640 CITY: JACKSON STATE: MS ZIP: 39215-1640 BUSINESS PHONE: 6019692311 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ORLEANS PUBLIC SERVICE INC CENTRAL INDEX KEY: 0000071508 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 720273040 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05807 FILM NUMBER: 95537096 BUSINESS ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 BUSINESS PHONE: 5045953100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEM ENERGY RESOURCES INC CENTRAL INDEX KEY: 0000202584 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 720752777 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09067 FILM NUMBER: 95537097 BUSINESS ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 BUSINESS PHONE: 6019849000 MAIL ADDRESS: STREET 1: PO BOX 31995 CITY: JACKSON STATE: MS ZIP: 39286-1995 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH ENERGY INC DATE OF NAME CHANGE: 19860803 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1995 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 13-5550175 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 1-10764 ARKANSAS POWER & LIGHT COMPANY 71-0005900 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 1-2703 GULF STATES UTILITIES COMPANY 74-0662730 (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 838-6631 1-8474 LOUISIANA POWER & LIGHT COMPANY 72-0245590 (a Louisiana corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 0-320 MISSISSIPPI POWER & LIGHT COMPANY 64-0205830 (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 969-2311 0-5807 NEW ORLEANS PUBLIC SERVICE INC. 72-0273040 (a Louisiana corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 569-4000 1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777 (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Common Stock Outstanding Outstanding at April 30, 1995 Entergy Corporation ($0.01 par value) 227,746,450 ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q March 31, 1995 Page Number Definitions 1 Financial Statements: Entergy Corporation and Subsidiaries: Statements of Consolidated Income 5 Statements of Consolidated Cash Flows 6 Consolidated Balance Sheets 8 Arkansas Power & Light Company: Statements of Income 10 Statements of Cash Flows 11 Balance Sheets 12 Gulf States Utilities Company: Statements of Income (Loss) 14 Statements of Cash Flows 15 Balance Sheets 16 Louisiana Power & Light Company: Statements of Income 18 Statements of Cash Flows 19 Balance Sheets 20 Mississippi Power & Light Company: Statements of Income 22 Statements of Cash Flows 23 Balance Sheets 24 New Orleans Public Service Inc.: Statements of Income 26 Statements of Cash Flows 27 Balance Sheets 28 System Energy Resources, Inc.: Statements of Income 30 Statements of Cash Flows 31 Balance Sheets 32 Notes to Financial Statements 34 Management's Financial Discussion and Analysis 47 Part II: Item 1. Legal Proceedings 70 Item 4. Submission of Matters to a Vote of Security Holders 71 Item 5. Other Information 72 Item 6. Exhibits and Reports on Form 8-K 76 Experts 78 Signature 79 This combined Form 10-Q is separately filed by Entergy Corporation, Arkansas Power & Light Company, Gulf States Utilities Company, Louisiana Power & Light Company, Mississippi Power & Light Company, New Orleans Public Service Inc., and System Energy Resources, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf, and no company makes any representation as to information relating to the other companies. This combined Form 10-Q supplements and updates the Form 10-K for the calendar year ended December 31, 1994, filed by the individual registrants with the SEC and should be read in conjunction therewith. DEFINITIONS Certain abbreviations or acronyms used in the text are defined below: Abbreviation or Acronym Term ALJ Administrative Law Judge ANO Arkansas Nuclear One Steam Electric Generating Station ANO 2 Unit No. 2 of ANO AP&L Arkansas Power & Light Company APSC Arkansas Public Service Commission Availability Agreement Agreement, dated as of June 21, 1974, as amended, among System Energy and AP&L, LP&L, MP&L, and NOPSI, and the assignments thereof Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof CCLM Customer-Controlled Load Management (a DSM activity utilizing residential time-of-use rates) City of New Orleans or New Orleans, Louisiana City Council Council of the City of New Orleans, Louisiana D.C. Circuit United States Court of Appeals for the District of Columbia Circuit DSM Demand-Side Management (Least Cost Plan activities that influence electricity usage by customers) Entergy Corporation Entergy Corporation, a Delaware corporation, successor to Entergy Corporation, a Florida Corporation Entergy Operations Entergy Operations, Inc., a subsidiary of Entergy Corporation that has operating responsibility for ANO, Grand Gulf 1, River Bend, and Waterford 3 Entergy or System Entergy Corporation and its various direct and indirect subsidiaries Entergy Power Entergy Power, Inc., a subsidiary of Entergy Corporation that markets capacity and energy from certain generating facilities to other parties, principally non-affiliates, for resale Entergy Services Entergy Services, Inc. FERC Federal Energy Regulatory Commission Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 1994, of Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy G&R Bonds General and Refunding Mortgage Bonds issued and issuable by MP&L and NOPSI Grand Gulf Station Grand Gulf Steam Electric Generating Station (nuclear) Grand Gulf 1 Unit No. 1 of the Grand Gulf Station (nuclear) GSU Gulf States Utilities Company (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company) KWH Kilowatt-Hour(s) Least Cost Plan Least Cost Integrated Resource Plan (combination of demand- and supply-side resources to be used by Entergy to satisfy electricity demand) LP&L Louisiana Power & Light Company LPSC Louisiana Public Service Commission Merger The combination transaction, consummated on December 31, 1993, by which GSU became a subsidiary of Entergy Corporation and Entergy Corporation became a Delaware Corporation Money Pool System Money Pool, which allows certain System companies to borrow from, or lend to, certain other System companies MP&L Mississippi Power & Light Company MPSC Mississippi Public Service Commission NOPSI New Orleans Public Service Inc. NRC Nuclear Regulatory Commission Owner Participant A corporation that, in connection with the Waterford 3 sale and leaseback transactions, has acquired a beneficial interest in a trust, the Owner Trustee of which is the owner and lessor of undivided interests in Waterford 3 Owner Trustee Each institution and/or individual acting as Owner Trustee under a trust agreement with an Owner Participant in connection with the Waterford 3 sale and leaseback transactions PUCT Public Utility Commission of Texas Rate Cap The level of GSU's retail electric base rates in effect at December 31, 1993 for the Louisiana retail jurisdiction, and the level in effect prior to the Texas Cities Rate Settlement for the Texas retail jurisdiction, which may not be exceeded for the five years following December 31, 1993 Reallocation Agreement 1981 Agreement, superseded in part by a June 13, 1985 decision of the FERC, among AP&L, LP&L, MP&L, NOPSI, and System Energy, relating to the sale of capacity and energy from the Grand Gulf Station River Bend River Bend Steam Electric Generating Station (nuclear), owned 70% by GSU RUS Rural Utility Services (formerly the Rural Electrification Administration or "REA") SEC Securities and Exchange Commission SFAS Statement of Financial Accounting Standards as promulgated by the Financial Accounting Standards Board SFAS 109 SFAS No. 109, "Accounting for Income Taxes" System Agreement Agreement, effective January 1, 1983, as modified, among the System operating companies relating to the sharing of generating capacity and other power resources System Energy System Energy Resources, Inc. System Fuels System Fuels, Inc. System operating AP&L, GSU, LP&L, MP&L, and NOPSI, companies collectively System or Entergy Entergy Corporation and its various direct and indirect subsidiaries Unit Power Sales Agreement, dated as of June 10, Agreement 1982, as amended, among AP&L, LP&L, MP&L, NOPSI, 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 of the Waterford Steam Electric Generating Station (nuclear) ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands, Except Share Data) Operating Revenues: Electric $1,294,766 $1,340,252 Natural gas 40,670 54,079 Steam products 10,632 11,708 ---------- ---------- Total 1,346,068 1,406,039 ---------- ---------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 288,704 314,728 Purchased power 81,489 124,796 Nuclear refueling outage expenses 16,796 15,745 Other operation and maintenance 347,105 336,012 Depreciation, amortization, and decommissioning 169,544 160,809 Taxes other than income taxes 76,596 72,852 Income taxes 35,137 33,553 Amortization of rate deferrals 94,789 93,674 ---------- ---------- Total 1,110,160 1,152,169 ---------- ---------- Operating Income 235,908 253,870 ---------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 2,494 3,535 Miscellaneous - net 7,170 14,362 Income taxes (1,973) (8,197) ---------- ---------- Total 7,691 9,700 ---------- ---------- Interest Charges: Interest on long-term debt 160,631 167,703 Other interest - net 8,990 6,832 Allowance for borrowed funds used during construction (2,197) (2,642) Preferred dividend requirements of subsidiaries and other 19,850 20,942 ---------- ---------- Total 187,274 192,835 ---------- ---------- Net Income $56,325 $70,735 ========== ========== Earnings per average common share $0.25 $0.31 Dividends declared per common share $0.90 $0.90 Average number of common shares outstanding 227,415,009 230,584,786 See Notes to Consolidated Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Activities: Net income $56,325 $70,735 Noncash items included in net income: Change in rate deferrals/excess capacity-net 81,057 80,768 Depreciation, amortization, and decommissioning 169,544 160,809 Deferred income taxes and investment tax credits (19,160) 1,064 Allowance for equity funds used during construction (2,494) (3,535) Amortization of deferred revenues - (10,283) Changes in working capital: Receivables 104,230 89,848 Fuel inventory (9,605) 23,622 Accounts payable (70,433) (103,591) Taxes accrued 63,030 16,940 Interest accrued (13,246) (9,389) Reserve for rate refund 10,560 - Other working capital accounts (51,070) 36 Decommissioning trust contributions (5,666) (5,516) Provision for estimated losses and reserves 754 (13,503) Other (38,245) 24,426 -------- -------- Net cash flow provided by operating activities 275,581 322,431 -------- -------- Investing Activities: Construction/capital expenditures (108,367) (175,107) Allowance for equity funds used during construction 2,494 3,535 Nuclear fuel purchases (9,672) (9,344) Proceeds from sale/leaseback of nuclear fuel 39,440 1,035 Investment in nonregulated/nonutility properties (23,246) 240 -------- -------- Net cash flow used in investing activities (99,351) (179,641) -------- -------- Financing Activities: Retirement of: First mortgage bonds (20,825) (400) General and refunding mortgage bonds (29,200) - Other long-term debt (25) (44) Premium and expense on refinancing sale/leaseback bonds - (47,602) Repurchase of common stock - (35,590) Redemption of preferred stock (24,250) (24,250) Changes in short-term borrowings (38,625) Common stock dividends paid (101,969) (103,728) -------- -------- Net cash flow used in financing activities (214,894) (211,614) -------- -------- Net decrease in cash and cash equivalents (38,664) (68,824) Cash and cash equivalents at beginning of period 613,907 563,749 -------- -------- Cash and cash equivalents at end of period $575,243 $494,925 ======== ========
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid (received) during the period for: Interest - net of amount capitalized $172,220 $169,748 Income taxes $2,564 ($6,070) Noncash investing and financing activities: Capital lease obligations incurred $27,804 $20,547 Change in unrealized appreciation/depreciation of decommissioning trust assets $9,972 $15,634 See Notes to Consolidated Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) ASSETS Utility Plant: Electric $21,227,444 $21,184,013 Plant acquisition adjustment - GSU 483,889 487,955 Electric plant under leases 668,843 668,846 Property under capital leases - electric 159,279 161,950 Natural gas 164,043 164,013 Steam products 77,307 77,307 Construction work in progress 532,525 476,816 Nuclear fuel under capital leases 259,903 265,520 Nuclear fuel 65,032 70,147 ----------- ----------- Total 23,638,265 23,556,567 Less - accumulated depreciation and amortization 7,799,939 7,639,549 ----------- ----------- Utility plant - net 15,838,326 15,917,018 ----------- ----------- Other Property and Investments: Decommissioning trust funds 225,446 207,395 Other 291,031 240,745 ----------- ----------- Total 516,477 448,140 ----------- ----------- Current Assets: Cash and cash equivalents: Cash 101,914 87,700 Temporary cash investments - at cost, which approximates market 473,329 526,207 ----------- ----------- Total cash and cash equivalents 575,243 613,907 Special deposits 6,082 8,074 Notes receivable 13,958 19,190 Accounts receivable: Customer (less allowance for doubtful accounts of $6.7 million in 1995 and 1994) 281,167 325,410 Other 43,653 66,651 Accrued unbilled revenues 216,703 240,610 Fuel inventory 102,816 93,211 Materials and supplies - at average cost 371,393 365,956 Rate deferrals 384,236 380,612 Prepayments and other 93,237 98,811 ----------- ----------- Total 2,088,488 2,212,432 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 1,369,470 1,451,926 SFAS 109 regulatory asset - net 1,409,930 1,417,646 Unamortized loss on reacquired debt 232,382 232,420 Other regulatory assets 315,236 316,878 Long-term receivables 284,511 277,830 Other 334,095 339,201 ----------- ----------- Total 3,945,624 4,035,901 ----------- ----------- TOTAL $22,388,915 $22,613,491 =========== =========== See Notes to Consolidated Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $.01 par value, authorized 500,000,000 shares; issued 230,017,485 shares in 1995 and 1994 $2,300 $2,300 Paid-in capital 4,199,780 4,202,134 Retained earnings 2,076,824 2,223,739 Less - treasury stock (2,271,035 shares in 1995 and 2,608,908 in 1994) 67,378 77,378 ----------- ----------- Total common shareholders' equity 6,211,526 6,350,795 Subsidiary's preference stock 150,000 150,000 Subsidiaries' preferred stock: Without sinking fund 543,455 550,955 With sinking fund 283,198 299,946 Long-term debt 7,035,128 7,093,473 ----------- ----------- Total 14,223,307 14,445,169 ----------- ----------- Other Noncurrent Liabilities: Obligations under capital leases 265,889 273,947 Other 321,285 310,977 ----------- ----------- Total 587,174 584,924 ----------- ----------- Current Liabilities: Currently maturing long-term debt 364,885 349,085 Notes payable 133,242 171,867 Accounts payable 400,687 471,120 Customer deposits 137,019 134,478 Taxes accrued 155,608 92,578 Accumulated deferred income taxes 32,099 40,313 Interest accrued 182,393 195,639 Dividends declared 115,438 13,599 Deferred fuel cost 20,158 27,066 Obligations under capital leases 151,479 151,904 Reserve for rate refund 67,532 56,972 Other 293,229 327,330 ----------- ----------- Total 2,053,769 2,031,951 ----------- ----------- Deferred Credits: Accumulated deferred income taxes 3,893,009 3,915,138 Accumulated deferred investment tax credits 644,466 649,898 Other 987,190 986,411 ----------- ----------- Total 5,524,665 5,551,447 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $22,388,915 $22,613,491 =========== =========== See Notes to Consolidated Financial Statements.
ARKANSAS POWER & LIGHT COMPANY STATEMENTS OF INCOME For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Revenues $339,596 $371,091 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 41,167 63,474 Purchased power 81,747 91,182 Nuclear refueling outage expenses 6,967 8,634 Other operation and maintenance 93,658 80,526 Depreciation, amortization, and decommissioning 39,352 35,718 Taxes other than income taxes 10,111 9,115 Income taxes (2,469) (2,405) Amortization of rate deferrals 38,033 40,173 -------- -------- Total 308,566 326,417 -------- -------- Operating Income 31,030 44,674 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 915 1,154 Miscellaneous - net 15,532 14,659 Income taxes (6,097) (5,771) -------- -------- Total 10,350 10,042 -------- -------- Interest Charges: Interest on long-term debt 26,933 26,344 Other interest - net 3,116 2,804 Allowance for borrowed funds used during construction (731) (820) -------- -------- Total 29,318 28,328 -------- -------- Net Income 12,062 26,388 Preferred Stock Dividend Requirements and Other 4,561 4,883 -------- -------- Earnings Applicable to Common Stock $7,501 $21,505 ======== ======== See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Activities: Net income $12,062 $26,388 Noncash items included in net income: Change in rate deferrals/excess capacity-net 30,665 26,257 Depreciation, amortization, and decommissioning 39,352 35,718 Deferred income taxes and investment tax credits (1,201) (11,751) Allowance for equity funds used during construction (915) (1,154) Changes in working capital: Receivables 37,541 21,934 Fuel inventory (14,460) 12,695 Accounts payable 32,917 (25,725) Taxes accrued 8,488 20,167 Interest accrued 636 (334) Other working capital accounts (9,952) 1,391 Decommissioning trust contributions (2,386) (2,545) Provision for estimated losses and reserves (10,877) (7,938) Other 2,972 (6,919) -------- -------- Net cash flow provided by operating activities 124,842 88,184 -------- -------- Investing Activities: Construction expenditures (41,651) (40,188) Allowance for equity funds used during construction 915 1,154 Nuclear fuel purchases (76) - Proceeds from sale/leaseback of nuclear fuel 76 - -------- -------- Net cash flow used in investing activities (40,736) (39,034) -------- -------- Financing Activities: Retirement of first mortgage bonds (400) (400) Redemption of preferred stock (5,000) (5,000) Changes in short-term borrowings - 10,597 Dividends paid: Common stock (32,800) (17,900) Preferred stock (4,727) (5,049) -------- -------- Net cash flow used in financing activities (42,927) (17,752) -------- -------- Net increase in cash and cash equivalents 41,179 31,398 Cash and cash equivalents at beginning of period 80,756 1,825 -------- -------- Cash and cash equivalents at end of period $121,935 $33,223 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid (received) during the period for: Interest - net of amount capitalized $25,916 $24,655 Income taxes - ($242) Noncash investing and financing activities: Capital lease obligations incurred $76 $14,313 Change in unrealized appreciation/depreciation of decommissioning trust assets $6,234 $13,463 See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) ASSETS Utility Plant: Electric $4,310,936 $4,293,097 Property under capital leases 55,554 56,135 Construction work in progress 153,728 136,701 Nuclear fuel under capital lease 87,963 94,628 ---------- ---------- Total 4,608,181 4,580,561 Less - accumulated depreciation and amortization 1,744,886 1,710,216 ---------- ---------- Utility plant - net 2,863,295 2,870,345 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 11,215 11,215 Decommissioning trust fund 138,846 127,136 Other - at cost (less accumulated depreciation) 4,678 4,628 ---------- ---------- Total 154,739 142,979 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 15,116 3,737 Temporary cash investments - at cost, which approximates market: Associated companies 16,058 4,713 Other 90,761 72,306 Total cash and cash equivalents 121,935 80,756 Accounts receivable: Customer (less allowance for doubtful accounts of $2.0 million in 1995 and 1994) 36,892 53,781 Associated companies 23,116 28,506 Other 4,911 11,181 Accrued unbilled revenues 74,871 83,863 Fuel inventory - at average cost 49,021 34,561 Materials and supplies - at average cost 74,834 79,886 Rate deferrals 118,131 113,630 Deferred excess capacity 8,426 8,414 Prepayments and other 17,058 23,867 ---------- ---------- Total 529,195 518,445 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 327,555 360,496 Deferred excess capacity 17,823 20,060 SFAS 109 regulatory asset - net 221,691 227,068 Unamortized loss on reacquired debt 56,511 57,344 Other regulatory assets 69,625 68,813 Other 25,363 26,665 ---------- ---------- Total 718,568 760,446 ---------- ---------- TOTAL $4,265,797 $4,292,215 ========== ========== See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares in 1995 and 1994 $470 $470 Paid-in capital 590,844 590,844 Retained earnings 466,499 491,799 ---------- ---------- Total common shareholder's equity 1,057,813 1,083,113 Preferred stock: Without sinking fund 176,350 176,350 With sinking fund 53,527 58,527 Long-term debt 1,273,227 1,293,879 ---------- ---------- Total 2,560,917 2,611,869 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 87,304 94,534 Other 71,203 68,235 ---------- ---------- Total 158,507 162,769 ---------- ---------- Current Liabilities: Currently maturing long-term debt 53,175 28,175 Notes payable: Other 34,667 34,667 Accounts payable: Associated companies 44,272 17,345 Other 95,319 89,329 Customer deposits 17,582 17,113 Taxes accrued 53,727 45,239 Accumulated deferred income taxes 36,936 25,043 Interest accrued 31,700 31,064 Dividends declared 4,561 4,727 Co-owner advances 40,627 20,639 Deferred fuel cost 10,298 20,254 Nuclear refueling reserve 22,107 37,954 Obligations under capital leases 56,213 56,154 Other 29,165 45,632 ---------- ---------- Total 530,349 473,335 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 843,961 859,558 Accumulated deferred investment tax credits 117,117 118,548 Other 54,946 66,136 ---------- ---------- Total 1,016,024 1,044,242 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,265,797 $4,292,215 ========== ========== See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY STATEMENTS OF INCOME (LOSS) For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Revenues: Electric $378,791 $402,104 Natural gas 9,923 15,846 Steam products 10,632 11,708 -------- -------- Total 399,346 429,658 -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses and gas purchased for resale 114,921 119,018 Purchased power 39,537 60,220 Nuclear refueling outage expenses 3,031 2,520 Other operation and maintenance 102,424 102,050 Depreciation, amortization, and decommissioning 50,339 47,867 Taxes other than income taxes 25,379 24,346 Income taxes (162) (821) Amortization of rate deferrals 16,506 15,897 -------- -------- Total 351,975 371,097 -------- -------- Operating Income 47,371 58,561 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 251 260 Miscellaneous - net 5,914 4,443 Income taxes (865) (1,972) -------- -------- Total 5,300 2,731 -------- -------- Interest Charges: Interest on long-term debt 48,270 48,980 Other interest - net 1,010 1,475 Allowance for borrowed funds used during construction (244) (206) -------- -------- Total 49,036 50,249 -------- -------- Net Income 3,635 11,043 Preferred and Preference Stock Dividend Requirements and Other 7,590 7,407 -------- -------- Earnings (Loss) Applicable to Common Stock ($3,955) $3,636 ======== ======== See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Activities: Net income $3,635 $11,043 Noncash items included in net income: Change in rate deferrals 16,506 15,897 Depreciation, amortization, and decommissioning 50,339 47,867 Deferred income taxes and investment tax credits 914 1,150 Allowance for equity funds used during construction (251) (260) Changes in working capital: Receivables 58,324 (6,088) Fuel inventory 894 4,546 Accounts payable (10,624) (30,618) Taxes accrued 11,043 6,802 Interest accrued 4,466 6,375 Reserve for rate refund 10,560 - Other working capital accounts (4,667) (8,093) Decommissioning trust contributions (739) (493) Other (10,512) 5,648 -------- -------- Net cash flow provided by operating activities 129,888 53,776 -------- -------- Investing Activities: Construction expenditures (19,136) (20,824) Allowance for equity funds used during construction 251 260 Nuclear fuel purchases - (3,538) Proceeds from sale/leaseback of nuclear fuel - 1,035 -------- -------- Net cash flow used in investing activities (18,885) (23,067) -------- -------- Financing Activities: Proceeds from the issuance of other long-term debt 2,277 - Redemption of preferred and preference stock (2,250) (2,250) Dividends paid: Common stock - (100,000) Preferred and preference stock (7,514) (7,413) -------- -------- Net cash flow used in financing activities (7,487) (109,663) -------- -------- Net increase (decrease) in cash and cash equivalents 103,516 (78,954) Cash and cash equivalents at beginning of period 104,644 261,349 -------- -------- Cash and cash equivalents at end of period $208,160 $182,395 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest - net of amount capitalized $41,860 $40,192 Change in unrealized appreciation/depreciation of decommissioning trust assets $759 $390 See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) ASSETS Utility Plant: Electric $6,845,340 $6,842,726 Natural gas 44,505 44,505 Steam products 77,307 77,307 Property under capital leases 81,894 82,914 Construction work in progress 114,584 96,176 Nuclear fuel under capital leases 69,625 80,042 ---------- ---------- Total 7,233,255 7,223,670 Less - accumulated depreciation and amortization 2,552,492 2,504,826 ---------- ---------- Utility plant - net 4,680,763 4,718,844 ---------- ---------- Other Property and Investments: Decommissioning trust fund 23,006 21,309 Other - at cost (less accumulated depreciation) 36,930 29,315 ---------- ---------- Total 59,936 50,624 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 27,792 8,063 Temporary cash investments - at cost, which approximates market: Associated companies 25,058 5,085 Other 155,310 91,496 ---------- ---------- Total cash and cash equivalents 208,160 104,644 Accounts receivable: Customer (less allowance for doubtful accounts of $0.7 million in 1995 and 1994) 143,826 167,745 Associated companies 1,239 12,732 Other 2,467 20,706 Accrued unbilled revenues 34,797 39,470 Deferred fuel costs 2,065 6,314 Accumulated deferred income taxes 54,427 49,457 Fuel inventory 24,890 25,784 Materials and supplies - at average cost 99,246 90,054 Rate deferrals 92,079 100,478 Prepayments and other 10,238 13,754 ---------- ---------- Total 673,434 631,138 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 492,777 506,974 SFAS 109 regulatory asset - net 426,734 426,358 Unamortized loss on reacquired debt 67,325 63,994 Other regulatory assets 33,297 35,168 Long-term receivables 281,207 264,752 Other 144,918 145,609 ---------- ---------- Total 1,446,258 1,442,855 ---------- ---------- TOTAL $6,860,391 $6,843,461 ========== ========== See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares in 1995 and 1994 $114,055 $114,055 Paid-in capital 1,152,419 1,152,336 Retained earnings 260,671 264,626 ---------- ---------- Total common shareholder's equity 1,527,145 1,531,017 Preference stock 150,000 150,000 Preferred stock: Without sinking fund 136,444 136,444 With sinking fund 92,687 94,934 Long-term debt 2,300,744 2,318,417 ---------- ---------- Total 4,207,020 4,230,812 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 114,765 125,691 Other 72,340 68,753 ---------- ---------- Total 187,105 194,444 ---------- ---------- Current Liabilities: Currently maturing long-term debt 70,425 50,425 Accounts payable: Associated companies 43,786 31,722 Other 118,287 140,975 Customer deposits 22,685 22,216 Taxes accrued 23,521 12,478 Interest accrued 59,793 55,327 Nuclear refueling reserve 14,410 10,117 Obligations under capital leases 36,733 37,265 Reserve for rate refund 67,532 56,972 Other 103,961 111,963 ---------- ---------- Total 561,133 529,460 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 1,107,626 1,100,396 Accumulated deferred investment tax credits 198,340 199,428 Deferred River Bend finance charges 76,316 82,406 Other 522,851 506,515 ---------- ---------- Total 1,905,133 1,888,745 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $6,860,391 $6,843,461 ========== ========== See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY STATEMENTS OF INCOME For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Revenues $352,996 $383,826 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 52,050 58,108 Purchased power 74,995 103,496 Nuclear refueling outage expenses 4,517 4,591 Other operation and maintenance 72,538 73,631 Depreciation, amortization, and decommissioning 38,507 37,392 Taxes other than income taxes 15,716 14,437 Income taxes 18,696 16,843 Amortization of rate deferrals 6,660 6,660 -------- -------- Total 283,679 315,158 -------- -------- Operating Income 69,317 68,668 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 564 1,111 Miscellaneous - net 372 607 Income taxes (25) (10) -------- -------- Total 911 1,708 -------- -------- Interest Charges: Interest on long-term debt 32,572 32,473 Other interest - net 2,085 1,608 Allowance for borrowed funds used during construction (491) (801) -------- -------- Total 34,166 33,280 -------- -------- Net Income 36,062 37,096 Preferred Stock Dividend Requirements and Other 5,591 6,119 -------- -------- Earnings Applicable to Common Stock $30,471 $30,977 ======== ======== See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Activities: Net income $36,062 $37,096 Noncash items included in net income: Change in rate deferrals 6,660 6,660 Depreciation, amortization, and decommissioning 38,507 37,392 Deferred income taxes and investment tax credits (9,077) 11,147 Allowance for equity funds used during construction (564) (1,111) Amortization of deferred revenues - (10,283) Changes in working capital: Receivables 26,639 23,376 Accounts payable (25,464) (10,968) Taxes accrued 37,282 13,395 Interest accrued (7,458) (6,023) Other working capital accounts 633 2,796 Decommissioning trust contributions (1,204) (1,204) Other 1,708 (2,756) -------- -------- Net cash flow provided by operating activities 103,724 99,517 -------- -------- Investing Activities: Construction expenditures (20,055) (41,381) Allowance for equity funds used during construction 564 1,111 -------- -------- Net cash flow used in investing activities (19,491) (40,270) -------- -------- Financing Activities: Retirement of other long-term debt (25) (44) Redemption of preferred stock (7,500) (7,500) Changes in short-term borrowings (7,954) (27,148) Dividends paid: Common stock (55,700) (17,900) Preferred stock (5,491) (5,938) -------- -------- Net cash flow used in financing activities (76,670) (58,530) -------- -------- Net increase in cash and cash equivalents 7,563 717 Cash and cash equivalents at beginning of period 28,718 33,489 -------- -------- Cash and cash equivalents at end of period $36,281 $34,206 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest - net of amount capitalized $40,325 $37,730 Noncash investing and financing activities: Capital lease obligations incurred $75 $9,677 Change in unrealized appreciation/depreciation of decommissioning trust assets $1,294 $843 See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) ASSETS Utility Plant: Electric $4,786,450 $4,778,126 Electric plant under lease 229,468 229,468 Construction work in progress 102,454 94,791 Nuclear fuel under capital lease 36,316 44,238 Nuclear fuel 6,346 6,420 ---------- ---------- Total 5,161,034 5,153,043 Less - accumulated depreciation and amortization 1,634,337 1,600,510 ---------- ---------- Utility plant - net 3,526,697 3,552,533 ---------- ---------- Other Property and Investments: Nonutility property 20,060 20,060 Decommissioning trust fund 29,954 27,076 Investment in subsidiary company - at equity 14,230 14,230 Other 1,093 1,078 ---------- ---------- Total 65,337 62,444 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 2,693 - Temporary cash investments - at cost, which approximates market: Associated companies 670 - Other 32,918 28,718 ---------- ---------- Total cash and cash equivalents 36,281 28,718 Accounts receivable: Customer (less allowance for doubtful accounts of $1.2 million in 1995 and 1994) 45,964 58,858 Associated companies 1,248 9,827 Other 11,831 11,609 Accrued unbilled revenues 57,721 63,109 Accumulated deferred income taxes 5,309 3,702 Materials and supplies - at average cost 89,400 89,692 Rate deferrals 28,422 28,422 Prepayments and other 22,380 28,528 ---------- ---------- Total 298,556 322,465 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 18,949 25,609 SFAS 109 regulatory asset - net 374,901 379,263 Unamortized loss on reacquired debt 42,606 43,656 Other regulatory assets 25,006 25,736 Other 24,622 23,733 ---------- ---------- Total 486,084 497,997 ---------- ---------- TOTAL $4,376,674 $4,435,439 ========== ========== See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares in 1995 and 1994 $1,088,900 $1,088,900 Capital stock expense and other (5,029) (5,367) Retained earnings 88,190 113,420 ---------- ---------- Total common shareholder's equity 1,172,061 1,196,953 Preferred stock: Without sinking fund 160,500 160,500 With sinking fund 103,765 111,265 Long-term debt 1,368,194 1,403,055 ---------- ---------- Total 2,804,520 2,871,773 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 8,316 16,238 Other 55,327 54,216 ---------- ---------- Total 63,643 70,454 ---------- ---------- Current Liabilities: Currently maturing long-term debt 110,320 75,320 Notes payable: Associated companies - 7,954 Other 19,200 19,200 Accounts payable: Associated companies 22,865 20,793 Other 54,667 82,203 Customer deposits 55,602 54,934 Taxes accrued 35,422 (1,860) Interest accrued 35,529 42,987 Dividends declared 5,251 5,489 Deferred fuel cost 11,706 13,983 Obligations under capital leases 28,000 28,000 Other 16,628 20,156 ---------- ---------- Total 395,190 369,159 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 873,843 883,945 Accumulated deferred investment tax credits 149,832 151,259 Deferred interest - Waterford 3 lease obligation 26,172 26,000 Other 63,474 62,849 ---------- ---------- Total 1,113,321 1,124,053 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,376,674 $4,435,439 ========== ========== See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY STATEMENTS OF INCOME For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Revenues $193,324 $187,417 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 30,133 22,795 Purchased power 57,044 64,322 Other operation and maintenance 32,218 36,573 Depreciation and amortization 9,397 8,706 Taxes other than income taxes 10,589 10,276 Income taxes 3,363 1,225 Amortization of rate deferrals 28,310 24,805 -------- -------- Total 171,054 168,702 -------- -------- Operating Income 22,270 18,715 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 259 576 Miscellaneous - net 61 94 Income taxes (23) (36) -------- -------- Total 297 634 -------- -------- Interest Charges: Interest on long-term debt 11,092 12,503 Other interest - net 1,906 964 Allowance for borrowed funds used during construction (205) (367) -------- -------- Total 12,793 13,100 -------- -------- Net Income 9,774 6,249 Preferred Stock Dividend Requirements and Other 1,707 2,075 -------- -------- Earnings Applicable to Common Stock $8,067 $4,174 ======== ======== See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Activities: Net income $9,774 $6,249 Noncash items included in net income: Change in rate deferrals 14,755 20,861 Depreciation and amortization 9,397 8,706 Deferred income taxes and investment tax credits (3,740) 673 Allowance for equity funds used during construction (259) (576) Changes in working capital: Receivables 14,012 18,219 Fuel inventory (1,892) (335) Accounts payable 10,730 17,789 Taxes accrued (9,035) (14,146) Interest accrued (7,887) (6,956) Other working capital accounts 10,856 4,799 Other 5,129 (8,419) -------- -------- Net cash flow provided by operating activities 51,840 46,864 -------- -------- Investing Activities: Construction expenditures (12,275) (58,989) Allowance for equity funds used during construction 259 576 -------- -------- Net cash flow used in investing activities (12,016) (58,413) -------- -------- Financing Activities: Retirement of general and refunding bonds (40,000) - Redemption of preferred stock (8,000) (8,000) Changes in short-term borrowings 12,319 60,021 Dividends paid: Common stock (8,300) (4,600) Preferred stock (1,790) (1,995) -------- -------- Net cash flow provided by (used in) financing (45,771) 45,426 activities -------- -------- Net increase (decrease) in cash and cash equivalents (5,947) 33,877 Cash and cash equivalents at beginning of period 9,598 7,999 -------- -------- Cash and cash equivalents at end of period $3,651 $41,876 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid (received) during the period for: Interest - net of amount capitalized $20,278 $19,590 Income taxes $1,600 ($1,532) See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) ASSETS Utility Plant: Electric $1,486,019 $1,475,322 Construction work in progress 68,430 67,119 ---------- ---------- Total 1,554,449 1,542,441 Less - accumulated depreciation and amortization 591,330 582,514 ---------- ---------- Utility plant - net 963,119 959,927 ---------- ---------- Other Property and Investments: Investment in subsidiary company - at equity 5,531 5,531 Other 5,621 5,624 ---------- ---------- Total 11,152 11,155 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 3,651 5,080 Temporary cash investments - at cost, which approximates market Associated companies - 276 Other - 4,242 ---------- ---------- Total cash and cash equivalents 3,651 9,598 Notes receivable 4,377 4,937 Accounts receivable: Customer (less allowance for doubtful accounts of $2.1 million in 1995 and 1994) 28,076 32,564 Associated companies 591 4,680 Other 1,936 2,789 Accrued unbilled revenues 35,291 39,873 Fuel inventory - at average cost 6,672 4,780 Materials and supplies - at average cost 21,245 20,642 Rate deferrals 113,070 106,538 Prepayments and other 4,777 10,672 ---------- ---------- Total 219,686 237,073 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 364,433 385,720 Unamortized loss on reacquired debt 10,178 10,488 Other regulatory assets 9,633 10,168 Long-term receivable 5,537 6,345 Other 7,691 8,569 ---------- ---------- Total 397,472 421,290 ---------- ---------- TOTAL $1,591,429 $1,629,445 ========== ========== See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares in 1995 and 1994 $199,326 $199,326 Capital stock expense and other (1,661) (1,762) Retained earnings 231,778 232,011 -------- -------- Total common shareholder's equity 429,443 429,575 Preferred stock: Without sinking fund 57,881 57,881 With sinking fund 23,770 31,770 Long-term debt 475,279 475,233 -------- -------- Total 986,373 994,459 -------- -------- Other Noncurrent Liabilities: Obligations under capital leases 519 552 Other 11,931 8,984 -------- -------- Total 12,450 9,536 -------- -------- Current Liabilities: Currently maturing long-term debt 25,965 65,965 Notes payable: Associated companies 12,944 - Other 29,375 30,000 Accounts payable: Associated companies 23,491 2,350 Other 19,794 30,205 Customer deposits 23,209 22,793 Taxes accrued 11,786 20,821 Accumulated deferred income taxes 50,266 47,515 Interest accrued 12,490 20,377 Other 34,722 30,318 -------- -------- Total 244,042 270,344 -------- -------- Deferred Credits: Accumulated deferred income taxes 297,368 301,288 Accumulated deferred investment tax credits 29,141 29,528 SFAS 109 regulatory liability - net 10,915 13,099 Other 11,140 11,191 -------- -------- Total 348,564 355,106 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL $1,591,429 $1,629,445 ========== ========== See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Revenues: Electric $78,140 $78,855 Natural gas 30,746 38,233 -------- -------- Total 108,886 117,088 -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses and gas purchased for resale 30,978 33,915 Purchased power 29,682 37,732 Other operation and maintenance 16,753 19,671 Depreciation and amortization 4,828 4,710 Taxes other than income taxes 7,227 7,054 Income taxes 3,275 619 Amortization of rate deferrals 5,280 6,928 -------- -------- Total 98,023 110,629 -------- -------- Operating Income 10,863 6,459 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 26 113 Miscellaneous - net 416 510 Income taxes (160) (525) -------- -------- Total 282 98 -------- -------- Interest Charges: Interest on long-term debt 4,329 4,541 Other interest - net 592 287 Allowance for borrowed funds used during construction (21) (84) -------- -------- Total 4,900 4,744 -------- -------- Net Income 6,245 1,813 Preferred Stock Dividend Requirements and Other 400 458 -------- -------- Earnings Applicable to Common Stock $5,845 $1,355 ======== ======== See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Activities: Net income $6,245 $1,813 Noncash items included in net income: Change in rate deferrals 6,382 5,003 Depreciation and amortization 4,828 4,710 Deferred income taxes and investment tax credits (3,309) (4,254) Allowance for equity funds used during construction (26) (113) Changes in working capital: Receivables 3,091 9,063 Accounts payable 3,676 (6,759) Taxes accrued (30) 5,857 Interest accrued (955) (718) Income tax refund 6,531 - Other working capital accounts (4,680) 9,726 Other (3,175) 2,180 -------- -------- Net cash flow provided by operating activities 18,578 26,508 -------- -------- Investing Activities: Construction expenditures (5,028) (5,634) Allowance for equity funds used during construction 26 113 -------- -------- Net cash flow used in investing activities (5,002) (5,521) -------- -------- Financing Activities: Retirement of general and refunding bonds (9,200) - Redemption of preferred stock (1,500) (1,500) Dividends paid: Common stock - - Preferred stock (413) (471) -------- -------- Net cash flow used in financing activities (11,113) (1,971) -------- -------- Net increase in cash and cash equivalents 2,463 19,016 Cash and cash equivalents at beginning of period 8,031 43,317 -------- -------- Cash and cash equivalents at end of period $10,494 $62,333 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest - net of amount capitalized $5,702 $5,244 See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC. BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) ASSETS Utility Plant: Electric $470,874 $470,560 Natural gas 119,538 119,508 Construction work in progress 12,021 7,284 -------- -------- Total 602,433 597,352 Less - accumulated depreciation and amortization 324,210 319,576 -------- -------- Utility plant - net 278,223 277,776 -------- -------- Other Investments: Investment in subsidiary company - at equity 3,259 3,259 -------- -------- Current Assets: Cash and cash equivalents: Cash 1,231 849 Temporary cash investments - at cost, which approximates market: Associated companies 1,392 2,472 Other 7,871 4,710 -------- -------- Total cash and cash equivalents 10,494 8,031 Accounts receivable: Customer (less allowance for doubtful accounts of $0.8 million in 1995 and 1994) 24,806 23,938 Associated companies 46 3,503 Other 370 600 Accrued unbilled revenues 14,023 14,295 Deferred electric fuel and resale gas costs - 856 Materials and supplies - at average cost 9,159 9,676 Rate deferrals 32,533 31,544 Income tax receivable 13,641 20,172 Prepayments and other 11,665 5,636 -------- -------- Total 116,737 118,251 -------- -------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 165,756 173,127 SFAS 109 regulatory asset - net 9,034 8,792 Unamortized loss on reacquired debt 2,254 2,361 Other regulatory assets 5,647 5,647 Other 3,599 3,681 -------- -------- Total 186,290 193,608 -------- -------- TOTAL $584,509 $592,894 ======== ======== See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC. BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares in 1995 and 1994 $33,744 $33,744 Paid-in capital 36,247 36,201 Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 84,731 78,886 -------- -------- Total common shareholder's equity 154,722 148,831 Preferred stock: Without sinking fund 19,780 19,780 With sinking fund 1,949 3,450 Long-term debt 179,172 164,160 -------- -------- Total 355,623 336,221 -------- -------- Other Noncurrent Liabilities: Accumulated provision for losses 17,335 17,318 Other 1,082 1,745 -------- -------- Total 18,417 19,063 -------- -------- Current Liabilities: Currently maturing long-term debt - 24,200 Accounts payable: Associated companies 13,889 6,456 Other 15,746 19,503 Customer deposits 17,941 17,422 Accumulated deferred income taxes 4,633 4,925 Taxes accrued 2,299 2,329 Interest accrued 4,287 5,242 Other 19,439 19,982 -------- -------- Total 78,234 100,059 -------- -------- Deferred Credits: Accumulated deferred income taxes 87,639 89,246 Accumulated deferred investment tax credits 9,092 9,251 Other 35,504 39,054 -------- -------- Total 132,235 137,551 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL $584,509 $592,894 ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Revenues $151,664 $147,847 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 12,335 11,987 Nuclear refueling outage expenses 2,281 - Other operation and maintenance 25,099 21,540 Depreciation, amortization, and decommissioning 25,398 22,969 Taxes other than income taxes 7,174 6,873 Income taxes 19,305 20,136 -------- -------- Total 91,592 83,505 -------- -------- Operating Income 60,072 64,342 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 480 322 Miscellaneous - net 725 1,837 Income taxes 551 (1,720) -------- -------- Total 1,756 439 -------- -------- Interest Charges: Interest on long-term debt 37,434 42,862 Other interest - net 2,333 750 Allowance for borrowed funds used during construction (504) (380) -------- -------- Total 39,263 43,232 -------- -------- Net Income $22,565 $21,549 ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Activities: Net income $22,565 $21,549 Noncash items included in net income: Depreciation, amortization, and decommissioning 25,398 22,969 Deferred income taxes and investment tax credits (5,501) 5,705 Allowance for equity funds used during construction (480) (322) Changes in working capital: Receivables (95,228) (6,556) Accounts payable 39,786 1,887 Taxes accrued 12,510 (13,678) Interest accrued (2,660) (1,751) Other working capital accounts (23,839) (3,866) Recoverable income taxes - 18,733 Decommissioning trust contributions (1,304) (1,241) Other 2,574 9,970 -------- -------- Net cash flow provided by (used in) operating activities (26,179) 53,399 -------- -------- Investing Activities: Construction expenditures (7,734) (2,254) Allowance for equity funds used during construction 480 322 -------- -------- Net cash flow used in investing activities (7,254) (1,932) -------- -------- Financing Activities: Premium and expenses paid on refinancing sale/leaseback bonds - (47,602) Common stock dividends paid - (57,800) -------- -------- Net cash flow used in financing activities - (105,402) -------- -------- Net decrease in cash and cash equivalents (33,433) (53,935) Cash and cash equivalents at beginning of period 89,703 196,132 -------- -------- Cash and cash equivalents at end of period $56,270 $142,197 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid (received) during the period for: Interest - net of amount capitalized $40,903 $42,561 Income taxes $1,125 ($3,278) Noncash investing and financing activities: Capital lease obligations incurred $27,653 - Change in unrealized appreciation/depreciation of decommissioning trust assets $1,685 $938 See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) ASSETS Utility Plant: Electric $2,939,364 $2,939,384 Electric plant under lease 439,375 439,378 Construction work in progress 54,278 46,547 Nuclear fuel under capital lease 66,000 46,688 Nuclear fuel 24,535 26,360 ---------- ---------- Total 3,523,552 3,498,357 Less - accumulated depreciation 776,304 751,717 ---------- ---------- Utility plant - net 2,747,248 2,746,640 ---------- ---------- Other Investments: Decommissioning trust fund 33,810 30,359 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 422 - Temporary cash investments - at cost, which approximates market: Associated companies 8,395 5,489 Other 47,453 84,214 ---------- ---------- Total cash and cash equivalents 56,270 89,703 Accounts receivable: Associated companies 103,964 7,450 Other 2,126 3,412 Materials and supplies - at average cost 73,469 71,991 Prepayments and other 9,811 5,429 ---------- ---------- Total 245,640 177,985 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 388,484 389,264 Unamortized loss on reacquired debt 53,507 54,577 Other regulatory assets 198,191 199,080 Other 15,153 15,454 ---------- ---------- Total 655,335 658,375 ---------- ---------- TOTAL $3,682,033 $3,613,359 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS March 31, 1995 and December 31, 1994 (Unaudited)
1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 1995 and 1994 $789,350 $789,350 Paid-in capital 7 7 Retained earnings 108,246 85,681 ---------- ---------- Total common shareholder's equity 897,603 875,038 Long-term debt 1,438,511 1,438,305 ---------- ---------- Total 2,336,114 2,313,343 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 38,000 18,688 Other 14,342 14,342 ---------- ---------- Total 52,342 33,030 ---------- ---------- Current Liabilities: Currently maturing long-term debt 105,000 105,000 Accounts payable: Associated companies 22,066 32,272 Other 73,196 23,204 Taxes accrued 47,892 35,382 Interest accrued 38,136 40,796 Obligations under capital leases 28,000 28,000 Other 1,815 19,794 ---------- ---------- Total 316,105 284,448 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 740,266 746,502 Accumulated deferred investment tax credits 109,715 110,584 FERC Settlement - refund obligation 59,544 60,388 Other 67,947 65,064 ---------- ---------- Total 977,472 982,538 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $3,682,033 $3,613,359 ========== ========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES ARKANSAS POWER & LIGHT COMPANY GULF STATES UTILITIES COMPANY LOUISIANA POWER & LIGHT COMPANY MISSISSIPPI POWER & LIGHT COMPANY NEW ORLEANS PUBLIC SERVICE INC. SYSTEM ENERGY RESOURCES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES Cajun - River Bend Entergy Corporation and GSU GSU has significant business relationships with Cajun Electric Power Cooperative, Inc. (Cajun), including co-ownership of River Bend and Big Cajun 2, Unit 3. GSU and Cajun own 70% and 30% undivided interests in River Bend, respectively, and 42% and 58% undivided interests in Big Cajun 2, Unit 3, respectively. In June 1989, Cajun filed a civil action against GSU in the United States District Court for the Middle District of Louisiana (District Court). Cajun's complaint seeks to annul, rescind, terminate, and/or dissolve the Joint Ownership Participation and Operating Agreement entered into on August 28, 1979 (Operating Agreement) relating to River Bend. The suit also seeks to recover as damages, Cajun's alleged $1.6 billion investment in the unit plus attorneys' fees, interest, and costs. Two member cooperatives of Cajun have brought an independent action to declare the Operating Agreement void, based upon failure to get prior LPSC approval alleged to be necessary. GSU believes the suits are without merit and is contesting them vigorously. A trial on the portion of the suit by Cajun to rescind the Operating Agreement which began in April 1994 has been completed, and a ruling from the District Court is pending. No assurance can be given as to the outcome of this litigation. If GSU is ultimately unsuccessful in this litigation and is required to pay substantial damages, GSU would probably be unable to make such payments and would probably have to seek relief from its creditors under the United States Bankruptcy Code (Bankruptcy Code). Since 1992 Cajun has not paid its full share of capital costs and operating and maintenance expenses and other costs for repairs and improvements to River Bend. In addition, certain costs and expenses paid by Cajun were paid under protest. These actions were taken by Cajun based on its contention that River Bend's operating and maintenance expenses were excessive and because the RUS allegedly would not permit Cajun to pay such costs. Cajun has continued to fund its share of the nuclear decommissioning trust payments for River Bend, as well as insurance and safety-related expenses. Cajun's unpaid portion of River Bend operating (including nuclear fuel) and maintenance expenses and capital costs for the first three months of 1995 was approximately $17.4 million. Cajun's total share of River Bend annual operating (including nuclear fuel) and maintenance expenses and capital costs was approximately $76.1 million in 1994. In view of Cajun's failure to fund its share of River Bend- related operating, maintenance and capital costs, GSU has (i) credited GSU's share of expenses for Big Cajun 2, Unit 3 against amounts due from Cajun to GSU and (ii) sought to market Cajun's share of the power from River Bend and apply the proceeds to the amounts due from Cajun to GSU. As a result, on November 2, 1994, Cajun discontinued supplying GSU with its share of energy from Big Cajun 2, Unit 3. GSU requested an order from the District Court requiring Cajun to supply GSU with this energy, and allowing GSU to credit amounts due to Cajun for Big Cajun 2, Unit 3 energy against amounts Cajun owed to GSU for River Bend. In December 1994, the District Court ordered Cajun to supply GSU with its share of energy from Big Cajun 2, Unit 3 and ordered GSU to make payments for its share of Big Cajun 2, Unit 3 expenses to the registry of the District Court. On December 14, 1994, the LPSC ordered Cajun to decrease the rates charged to its member distribution cooperatives by approximately $30 million per year. The rate decrease is associated with the LPSC's prior finding of imprudence in Cajun's participation in River Bend. On December 21, 1994, Cajun filed a petition in the United States Bankruptcy Court for the Middle District of Louisiana seeking bankruptcy relief under Chapter 11 of the Bankruptcy Code. Cajun's bankruptcy could have a material adverse effect on GSU, including the possibility of an NRC action with respect to the operation of River Bend. GSU is taking steps to protect its interests and its claims against Cajun arising from the co- ownership in River Bend and Big Cajun 2, Unit 3. On December 31, 1994, the District Court issued an order lifting an automatic stay as to certain proceedings, with the result that the December 1994 order of the District Court referred to above, remains in effect. Cajun filed a Notice of Appeal on January 18, 1995, to the United States Court of Appeals for the Fifth Circuit seeking a reversal of the District Court's order. No hearing date has been set on Cajun's appeal. In the bankruptcy proceedings, Cajun filed a motion to reject the Operating Agreement as a burdensome executory contract. GSU responded on January 10, 1995, with a memorandum opposing Cajun's motion filed with the District Court. If the District Court were to grant Cajun's motion to reject the Operating Agreement, Cajun would be relieved of its financial obligations under the contract, while GSU would likely have a substantial damage claim arising from any such rejection. Although GSU believes that Cajun's motion to reject the Operating Agreement is without merit, it is not possible to predict the outcome or ultimate impact of these proceedings. During the period in which Cajun is not paying its share of River Bend-related costs, GSU intends to fund all costs necessary for the safe, continuing operation of the unit. The responsibilities of Entergy Operations, as the licensed operator of River Bend, for safely operating and maintaining the unit, are not affected by Cajun's actions. The net amount resulting from Cajun's failure to pay its full share of River Bend-related costs reduced by the proceeds from the sale of Cajun's share of River Bend power was $55.7 million as of March 31, 1995, compared with $50.8 million as of December 31, 1994. These amounts are reflected in long- term receivables with an offsetting reserve in other deferred credits. Cajun's bankruptcy may affect the ultimate collectibility of the amounts owed to GSU, including any amounts that may be awarded in litigation. Cajun - Transmission Service Entergy Corporation and GSU GSU and Cajun are parties to FERC proceedings relating to transmission service charge disputes. In April 1992, FERC issued an order. In May 1992, GSU and Cajun filed motions for rehearings which are pending at FERC. In June 1992, GSU filed a petition for review in the United States Fifth Circuit Court of Appeals (Court of Appeals) regarding certain of the issues decided by FERC. In August 1993, the Court of Appeals rendered an opinion reversing the FERC order regarding the portion of such disputes relating to the calculations of certain credits and equalization charges under GSU's service schedules with Cajun. The opinion remanded these issues to FERC for further proceedings consistent with its opinion. In February 1995, FERC clarified its order, eliminating an issue that GSU believes the Court of Appeals directed FERC to reconsider. In April 1995, the ALJ issued a ruling in the remanded portion of the proceeding, and the FERC is expected to issue a order in July 1995. GSU interprets the 1992 FERC order and the Court of Appeals' decision to mean that Cajun would owe GSU approximately $95.2 million as of March 31, 1995. However, due to the elimination of an issue by FERC in its February 1995 order, approximately $26.7 million of this amount may not be pursued by GSU in the remand proceedings, and the ALJ's April ruling, while awarding principle amounts to GSU, denied recovery of a portion of interest of approximately $8.5 million. GSU further estimates that if it were to prevail in its May 1992 motion for rehearing, and it prevails in its positions on remand, Cajun would owe GSU approximately $132.1 million as of March 31, 1995. If Cajun were to prevail in its May 1992 motion for rehearing to FERC, and if GSU were not to prevail in its May 1992 motion for rehearing to FERC, and if FERC does not implement the Court of Appeals' remand as GSU contends is required, GSU estimates it would owe Cajun approximately $86.2 million as of March 31, 1995. The above amounts are exclusive of a $7.3 million payment by Cajun on December 31, 1990, which the parties agreed to apply to the disputed transmission service charges. GSU and Cajun further agreed that their positions at FERC would remain unaffected by the $7.3 million payment. Pending FERC's ruling on the May 1992 motions for rehearing, GSU has continued to bill Cajun utilizing the historical billing methodology and has booked underpaid transmission charges, including interest, in the amount of $167.3 million as of March 31, 1995. This amount is reflected in long-term receivables with an offsetting reserve in other deferred credits. Financial Condition GSU Although GSU received partial rate relief relating to River Bend, GSU's financial position was severely strained from 1986 to 1990 by its inability to earn a return on and fully recover its investment and other costs associated with River Bend. Issues to be finally resolved in PUCT rate proceedings and appeals thereof, as discussed in Note 2, combined with the application of accounting standards, may result in substantial write-offs and charges that could result in substantial net losses being reported in 1995, and subsequent periods, with resulting substantial adverse adjustments to common shareholder's equity. Future earnings will continue to be adversely affected by the lack of full recovery and return on the investment and other costs associated with River Bend. Nonregulated Investments Entergy Corporation As discussed on pages 3 and 4 of the Form 10-K, Entergy Corporation continues to consider opportunities to expand its business, including opportunities in overseas power development. On March 31, 1995, Entergy Corporation, through its subsidiary, Entergy Power Development Company (EPDC), entered into an agreement with Enron Power Development Corporation, a subsidiary of Enron Corporation, to acquire a 20% interest in the Dabhol Power Project (Project) located in the State of Maharashtra, India. The Project is a 695 megawatt combined cycle facility which will burn distillate as its fuel. Entergy Corporation made an initial investment in the Project of approximately $20.5 million. The total Project is estimated to cost approximately $920 million. The Project is fully financed and under construction with commercial operation expected by the end of 1997. At the time of commercial operation EPDC will have invested approximately $90 million in the Project. In addition to its investment EPDC has committed to cover its pro rata share of cost overruns up to approximately $30 million, if they are incurred. Capital Requirements and Financing Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy See pages 109, 146-148, 189-191, 194, 228-230, 266-268, 299- 301, and 332 of the Form 10-K for information on the System operating companies' and System Energy's construction expenditures (excluding nuclear fuel) for the years 1995, 1996, and 1997, and long-term debt and preferred stock maturities and cash sinking fund requirements for the period 1995-1997. Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs Entergy Corporation, AP&L, GSU, LP&L, and System Energy See pages 110, 149-150, 194-195, 231-232, and 334-335 of the Form 10-K for information on nuclear liability, property and replacement power insurance, and related NRC regulations. See pages 110-112, 150-151, 195-196, 232-233, and 335-336 of the Form 10-K for information on the disposal of spent nuclear fuel, other high-level radioactive waste, and decommissioning costs associated with ANO, River Bend, Waterford 3, and Grand Gulf 1. The staff of the SEC has questioned certain of the financial accounting practices of the electric utility industry regarding the recognition, measurement, and classification of decommissioning costs for nuclear generating stations in the financial statements of electric utilities. In response to these questions, the Financial Accounting Standards Board is currently reviewing the accounting for decommissioning. If current electric utility industry accounting practices for such decommissioning are changed, among other things, annual provisions for decommissioning could increase, the estimated cost for decommissioning could be recorded as a liability rather than as accumulated depreciation, and trust fund income from the external decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense. ANO Matters Entergy Corporation and AP&L See pages 31, 83, 112, and 138 of the Form 10-K for information on leaks in certain steam generator tubes at ANO 2 that were discovered and repaired during an outage in March 1992. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages in September 1992, May 1993, April 1994, and January 1995. AP&L's budgeted maintenance expenditures were adequate to cover the cost of such repairs. Beginning in January 1995, ANO 2's output was reduced 15 megawatts or 1.6% due to secondary side fouling, tube plugging, and reduction of primary temperature. Entergy Operations is taking steps at ANO 2 to reduce the number and severity of future tube cracks. In addition, Entergy Operations periodically meets with the NRC to discuss such steps and results of inspections of the generator tubes, as well as the timing of future inspections. Additional inspections are planned for the normal refueling outage scheduled for October 1995. Environmental Issues GSU GSU has been notified by the U. S. Environmental Protection Agency (EPA) that it has been designated as a potentially responsible party for the cleanup of certain hazardous waste disposal sites. GSU is currently negotiating with the EPA and state authorities regarding the cleanup of some of these sites. Several class action and other suits have been filed in state and federal courts seeking relief from GSU and others for damages caused by the disposal of hazardous waste and for asbestos- related disease allegedly resulting from exposure on GSU premises. While the amounts at issue in the cleanup efforts and suits may be substantial, GSU believes that its results of operations and financial condition will not be materially affected by the outcome of the suits. Through March 31, 1995, GSU has expended $7.5 million cumulatively on the cleanup. As of March 31, 1995, GSU has a remaining recorded liability of $20.7 million related to the cleanup of six sites at which GSU has been designated a potentially responsible party. See pages 35-36, 39-40, and 196-197 of the Form 10-K for additional discussion of the sites in which GSU has been designated as a potentially responsible party by the EPA. LP&L During 1993, the Louisiana Department of Environmental Quality issued new rules for solid waste regulation, including waste water impoundments. LP&L has determined that certain of its power plant waste water impoundments are affected by these regulations and has chosen to either upgrade or close them. As a result, LP&L had a remaining recorded liability in the amount of $14.2 million at March 31, 1995, for waste water upgrades and closures to be completed by 1996. Cumulative expenditures relating to the upgrades and closures of waste water impoundments are $1.3 million as of March 31, 1995. See pages 37 and 233 of the Form 10-K for additional discussions of LP&L's waste water impoundment upgrades and closures. Waterford 3 Lease Obligations LP&L In September 1989, LP&L entered into three substantially identical but entirely separate transactions for the sale and leaseback of three undivided portions (aggregating approximately 9.3%) of its 100% ownership interest in Waterford 3. See pages 234-235 of the Form 10-K for further information. Upon the occurrence of certain events, LP&L may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from the lease transactions, and LP&L may be required to assume the outstanding bonds issued by the Owner Trustee to finance, in part, its acquisition of the undivided interests in Waterford 3. These events would include a failure, at specified dates, to maintain equity capital of at least 30% of adjusted capitalization and a fixed charge coverage ratio of at least 1.50 times earnings. As of March 31, 1995, LP&L's total equity capital was 48.67% of adjusted capitalization, and its fixed charge coverage ratio was 3.01. Reimbursement Agreement System Energy Under the provisions of the Reimbursement Agreement, as amended, 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 Reimbursement Agreement, to maintain its equity at not less than 33% of its adjusted capitalization (as defined in the Reimbursement 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 Reimbursement Agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the Reimbursement Agreement) of at least 1.60 times earnings. As of March 31, 1995, System Energy's equity approximated 36.38% of its adjusted capitalization, and its fixed charge coverage ratio was 1.23. As a result of charges recorded in the fourth quarter of 1994 related to an agreement with FERC settling a long-standing dispute involving income tax allocation procedures, System Energy has obtained the consent of certain banks to waive temporarily the fixed charge coverage covenant in the letters of credit and Reimbursement Agreement, until November 30, 1995. (See pages 92- 93 and 327 of the Form 10-K for information on the FERC Settlement.) System Energy expects that upon expiration of the waiver period, it will be in compliance with the fixed charge coverage covenant. Absent a waiver, System Energy's failure to perform this covenant could cause a draw under and/or early termination of the letters of credit. If the letters of credit were not replaced in a timely manner, a default or early termination of System Energy's leases could result. Draws under the letters of credit must be repaid by System Energy within 5 days (or in some cases, 90 days) following the date of the drawing. See page 334 of the Form 10-K for further information on the Reimbursement Agreement. NOTE 2. RATE AND REGULATORY MATTERS River Bend Entergy Corporation and GSU In May 1988, the PUCT granted GSU a permanent increase in annual revenues of $59.9 million resulting from the inclusion in rate base of approximately $1.6 billion of company-wide River Bend plant investment and approximately $182 million of related Texas retail jurisdiction deferred River Bend costs (Allowed Deferrals). In addition, the PUCT disallowed as imprudent $63.5 million of company-wide River Bend plant costs and placed in abeyance, with no finding as to prudence, approximately $1.4 billion of company-wide River Bend plant investment and approximately $157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs. The PUCT affirmed that the ultimate rate treatment of such amounts would be subject to a future demonstration of the prudence of such costs. GSU and intervening parties appealed this order (Rate Appeal) and GSU filed a separate rate case asking that the abeyed River Bend plant costs be found prudent (Separate Rate Case). Intervening parties filed suit in a Texas district court to prohibit the Separate Rate Case. The district court's decision was ultimately appealed to the Texas Supreme Court, which ruled in 1990 that the prudence of the purported abeyed costs could not be relitigated in a separate rate proceeding. The Texas Supreme Court's decision stated that all issues relating to the merits of the original PUCT order, including the prudence of all River Bend- related costs, should be addressed in the Rate Appeal. In October 1991, the Texas district court in the Rate Appeal issued an order holding that the PUCT had erred in assuming it could set aside $1.4 billion of the total costs of River Bend and consider them in a later proceeding, and that the PUCT had effectively found that GSU had not met its burden of proof related to the amounts placed in abeyance. The court ruled that the Allowed Deferrals should not be included in rate base, and further held that the PUCT had erred in reducing GSU's deferred costs by $1.50 for each $1.00 of revenue collected under the interim rate increases authorized in 1987 and 1988. The court remanded the case to the PUCT with instructions as to the proper handling of the Allowed Deferrals. GSU's motion for rehearing was denied and, in December 1991, GSU filed an appeal of the October 1991 district court order. The PUCT also appealed the October 1991 district court order, which served to supersede the district court's judgment, rendering it unenforceable under Texas law. In August 1994, the Texas Third District Court of Appeals (the Appellate Court) affirmed the district court's decision that there was substantial evidence to support the PUCT's 1988 decision not to include the abeyed construction costs in GSU's rate base. While acknowledging that the PUCT had exceeded its authority when it deferred a decision on the inclusion of those costs in rate base in order to allow GSU a further opportunity to demonstrate the prudence of those costs in a subsequent proceeding, the Appellate Court found that GSU had suffered no harm or lack of due process as a result of the PUCT's error. Accordingly, the Appellate Court held that the PUCT's action had the effect of disallowing the company-wide $1.4 billion of River Bend construction costs for ratemaking purposes. In its August 1994 opinion, the Appellate Court also held that GSU's deferred operating and maintenance costs associated with the allowed portion of River Bend should be included in rate base and that GSU's deferred River Bend carrying costs included in the Allowed Deferrals should also be included in rate base. The Appellate Court's August 1994 opinion affirmed the PUCT's original order in this case. The Appellate Court's August 1994 opinion was entered by two judges, with a third judge dissenting. The dissenting opinion stated that the result of the majority opinion was, among other things, to deprive GSU of due process at the PUCT because the PUCT had never made a finding on the $1.4 billion of construction costs. In October 1994, the Appellate Court denied GSU's motion for rehearing on the August 1994 opinion as to the $1.4 billion in River Bend construction costs and other matters. GSU appealed the Appellate Court's decision to the Texas Supreme Court. The Texas Supreme Court has not yet accepted the appeal, and no date for oral argument has been set. As of March 31, 1995, the River Bend plant costs disallowed for retail ratemaking purposes in Texas, the River Bend plant costs held in abeyance, and the related operating and carrying cost deferrals totaled (net of taxes) approximately $13 million, $284 million (both net of depreciation), and $170 million, respectively. Allowed Deferrals were approximately $87 million, net of taxes and amortization, as of March 31, 1995. GSU estimates it has recorded approximately $156 million of revenues as of March 31, 1995, as a result of the originally ordered rate treatment by the PUCT of these deferred costs. If recovery of the Allowed Deferrals is not upheld, future revenues based upon those allowed deferrals could also be lost, and no assurance can be given as to whether or not refunds of revenue received based upon such deferred costs previously recorded will be required. No assurance can be given as to the timing or outcome of the remands or appeals described above. GSU has made no write-offs or reserves for the River Bend-related costs. Management believes, based on advice from Clark, Thomas & Winters, a Professional Corporation, legal counsel of record in the Rate Appeal, that it is reasonably possible that the case will be remanded to the PUCT, and the PUCT will be allowed to rule on the prudence of the abeyed River Bend plant costs. Rate Caps imposed by the PUCT's regulatory approval of the Merger could result in GSU's inability to use the full amount of a favorable decision to immediately increase rates; however, a favorable decision could permit some increases and/or limit or prevent decreases during the period the Rate Caps are in effect. Management and legal counsel are unable to predict the amount, if any, of abeyed and previously disallowed River Bend plant costs that ultimately may be disallowed by the PUCT. As of March 31, 1995, a net of tax write- off of up to $297 million could be required based on an ultimate adverse ruling by the PUCT on the abeyed and disallowed costs. In prior proceedings, the PUCT has held that the original cost of nuclear power plants will be included in rates to the extent those costs were prudently incurred. Based upon these decisions, management believes that its River Bend construction costs were prudently incurred and that it is reasonably possible that it will recover in rate base, or otherwise through means such as a deregulated asset plan, all or substantially all of the abeyed River Bend plant costs. However, management also recognizes that it is reasonably possible that not all of the abeyed River Bend plant costs may ultimately be recovered. As part of its direct case in the Separate Rate Case, GSU filed a cost reconciliation study prepared by Sandlin Associates, management consultants with expertise in the cost analysis of nuclear power plants, which supports the reasonableness of the River Bend costs held in abeyance by the PUCT. This study determined that approximately 82% of the River Bend cost increase above the amount included by the PUCT in rate base was a result of changes in federal nuclear safety requirements and provided other support for the remainder of the abeyed amounts. There have been four other rate proceedings in Texas involving nuclear power plants. Disallowed investment in the plants ranged from 0% to 15%. Each case was unique, and the disallowances in each were made on a case-by-case basis for different reasons. Appeals of two of these PUCT decisions are currently pending. The following factors support management's position that a loss contingency requiring accrual has not occurred, and that all or substantially all of the abeyed plant costs will ultimately be recovered: 1. The $1.4 billion of abeyed River Bend plant costs have never been ruled imprudent and disallowed by the PUCT; 2. Sandlin Associates' analysis which supports the prudence of substantially all of the abeyed construction costs; 3. Historical inclusion by the PUCT of prudent construction costs in rate base; and 4. The analysis of GSU's internal legal staff, which has considerable experience in Texas rate case litigation. Additionally, management believes, based on advice from Clark, Thomas & Winters, a Professional Corporation, legal counsel of record in the Rate Appeal, that it is reasonably possible that the Allowed Deferrals will continue to be recovered in rates. Management also believes, based on advice from Clark, Thomas & Winters, a Professional Corporation, legal counsel of record in the Rate Appeal, that it is reasonably possible that the deferred costs related to the $1.4 billion of abeyed River Bend plant costs will be recovered in rates to the extent that the $1.4 billion of abeyed River Bend plant is recovered. However, a net of tax write-off of the $170 million of deferred costs related to the $1.4 billion of abeyed River Bend plant costs would be required if they are not allowed to be recovered in rates. The adoption of SFAS No.121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," (SFAS 121) which will become effective January 1, 1996, will require the write-off of the $170 million of rate deferrals discussed above, unless there are favorable regulatory or court actions related to these costs prior to adoption. The standard describes circumstances which may result in assets being impaired and provides criteria for recognition and measurement of asset impairment. See Note 7 for further information regarding SFAS 121. Filings with the PUCT and Texas Cities Entergy Corporation and GSU In March 1994, the Texas Office of Public Utility Counsel and certain cities served by GSU instituted an investigation of the reasonableness of GSU's rates. In June 1994, GSU provided the cities with information that supported the current rate level. In September 1994, various cities adopted ordinances directing GSU to reduce its Texas retail rates by $45.9 million. GSU appealed the cities' ordinances to the PUCT for a determination of reasonableness of GSU's rates. Hearings were held in December 1994 and on March 20, 1995 the PUCT ordered a $72.9 million annual base rate reduction for the period March 31, 1994, through September 1, 1994, decreasing to an annual base rate reduction of $52.9 million after September 1, 1994. In accordance with the Merger agreement, the rate reduction was applied retroactively to March 31, 1994. As a result, in 1994 GSU recorded a $57 million reserve for rate refund and a $12.8 million reserve for franchise taxes to be refunded. In the first quarter of 1995, GSU recorded an additional reserve for rate refund of approximately $9.8 million. The rate reduction is being appealed and no assurance can be given as to the timing or outcome of the appeal. LPSC Rate Review Entergy Corporation, GSU, and LP&L In May 1994, GSU made the first required post-Merger earnings analysis filing with the LPSC. On December 14, 1994, the LPSC ordered a $12.7 million annual rate reduction for GSU effective January 1995. The rate order included, among other things, a reduction in GSU's Louisiana jurisdictional authorized return on equity from 12.75% to 10.95% and the amortization for the benefit of the customers of $8.3 million of previously deferred unbilled revenue, representing one-half of the total resulting from a change in accounting for unbilled revenue. In December 1994, GSU received a preliminary injunction from the 19th Judicial District Court regarding $8.3 million of the reduction. On January 1, 1995, GSU reduced rates by $4.4 million. The entire $12.7 million reduction is being appealed and no assurance can be given as to the timing or outcome of the appeal. In August 1994, LP&L filed a performance-based formula rate plan with the LPSC. The proposed formula rate plan would continue existing LP&L rates at current levels, while providing financial incentive to reduce costs and maintain high levels of customer satisfaction and system reliability. The plan would allow LP&L the opportunity to earn a higher rate of return if it improves performance over time. Conversely, if performance declines, the rate of return LP&L could earn would be lowered. This provides a financial incentive for LP&L to maintain continuous improvement in all three performance categories (customer price, customer satisfaction, and customer reliability). Under the proposed plan, if LP&L's earnings fall within a bandwidth around a benchmark rate of return, there would be no adjustment in rates. If LP&L's earnings are above the bandwidth, the proposed plan would automatically reduce LP&L's base rates. Alternatively, if LP&L's earnings are below the bandwidth, the proposed plan would automatically increase LP&L's base rates. The reduction or increase in base rates would be an amount representing 50% of the difference between the earned rate of return and the nearest limit of the bandwidth. In no event would the annual adjustment in rates exceed 2% of LP&L's retail revenues. Hearings were held on the LP&L proposed performance-based formula rate plan in March 1995. On April 20, 1995 the LPSC Staff recommended a $49.4 million reduction in base rates. This recommended rate reduction included $8.5 million of rates previously reduced through fuel clause reductions; therefore, the net effect of recommended reduction is $40.9 million. The LPSC Staff recommended the approval of LP&L's proposed formula rate plan with the following modifications. An earnings band would be established from a 10.4% to a 12% return on equity. If LP&L's earnings fall within the bandwidth, no adjustment in rates occurs. If LP&L's earnings are above the 12% return on equity, a 60/40 sharing with customers occurs and customers receive 60% of earnings in excess of the 12% through prospective rate reductions. Alternatively, if LP&L's earnings are below the 10.4% return on equity, customers pay 60% of the difference between the realized return on equity and the 10.4% through prospective rate increases. The LPSC Staff's recommendation also included a reduction in LP&L's authorized rate of return from 12.76% to 11.2%. The LPSC is expected to issue a final order in late May 1995. Formula Rate Plan Entergy Corporation and MP&L Under a formulary incentive rate plan (Formula Rate Plan) effective March 25, 1994, MP&L's earned rate of return is calculated automatically every 12 months and compared to and adjusted against a benchmark rate of return (calculated under a separate formula within the Formula Rate Plan). The Formula Rate Plan allows for periodic small adjustments in rates based on a comparison of earned to benchmark returns and upon certain performance factors. Pursuant to a stipulation with the MPSC's Public Utilities Staff, MP&L did not request an adjustment in rates based on its earned rate of return for the 12-months ended December 31, 1994. February 1994 Ice Storm/Rate Rider Entergy Corporation and MP&L In early February 1994, an ice storm left more than 221,000 Entergy customers without electric power across the System's four- state service area. Repair costs totaled approximately $116.2 million, $30.8 million, and $77.2 million for the System, AP&L, and MP&L, respectively, with $85 million, $18.7 million, and $64.6 million of these amounts capitalized as plant-related costs. In September 1994, MPSC approved a stipulation with respect to the recovery of ice storm costs recorded through April 30, 1994. Under the stipulation, MP&L implemented an ice storm rate rider, which increased rates approximately $8 million for a period of five years beginning on September 29, 1995. This stipulation also states that at the end of the five-year period, the revenue requirement associated with the undepreciated ice storm capitalized costs will be included in MP&L's base rates to the extent that this revenue requirement does not result in MP&L's rate of return on rate base being above the benchmark rate of return under MP&L's formula rate plan. On April 28, 1995, MP&L filed for a rate increase of $2.9 million to be in effect for a four-year period beginning September 28, 1995, to recover costs related to the ice storm that were recorded after April 30, 1994. At the end of the four- year period, undepreciated ice storm capital costs recorded after April 30, 1994, will be treated as described above. MP&L's filing requested recovery of capital costs and deferred operating and maintenance expenses of approximately $14.2 million and $1 million, respectively. No assurance can be given as to the outcome of the filing. LPSC Fuel Cost Review GSU In November 1993, the LPSC ordered a review of GSU's fuel costs for the period October 1988 through September 1991 (Phase 1) based on the number of outages at River Bend and the findings in the June 1993 PUCT fuel reconciliation case. In July 1994, the LPSC ruled in the Phase 1 case that GSU should refund approximately $27 million to its customers. Under the order, a refund of $13.1 million was made through a billing credit on August 1994 bills. In August 1994, GSU appealed the remaining portion of the LPSC-ordered refund to the district court. GSU has made no reserve for the remaining portion, pending the outcome of the district court appeal, and no assurance can be given as to the timing or outcome of the appeal. On January 18, 1995, GSU met with the special counsel of the LPSC to discuss the procedural schedule for the next fuel review (Phase II). The period under investigation was determined to be from October 1991 to March 1995. Hearings are scheduled to begin in August 1995. PUCT Fuel Cost Review GSU For information on the PUCT Fuel Cost Review of the period December 1, 1986 through September 30, 1991, see pages 183-184 of the Form 10-K. On January 9, 1995, GSU and various parties reached an agreement for the reconciliation of over- and under-recovery of fuel and purchased power expenses for the period October 1, 1991, through December 31, 1993. In the fourth quarter of 1994, GSU recorded a reserve of $7.6 million as a result of this settlement. On April 17, 1995, the PUCT issued a final order approving the settlement. NOTE 3. PREFERRED AND COMMON STOCK Entergy Corporation Entergy Corporation periodically repurchases shares of its outstanding common stock either on the open market or through negotiated purchases or tender offers. Stock repurchases are made from time to time depending upon market conditions and authorization of the Entergy Corporation Board of Directors. During the first quarter of 1995, no shares of common stock were repurchased. During the first three months of 1995, Entergy Corporation issued 337,873 shares of its previously repurchased common stock, reducing the amount held as treasury stock by $10 million. Entergy Corporation issued these shares to meet the requirements of its various stock plans. For further information on Entergy Corporation's stock plans see pages 103-104 of the Form 10-K. AP&L On January 1, 1995, AP&L redeemed, pursuant to sinking fund requirements, 200,000 shares of its 13.28% Series Preferred Stock, $25 par value. GSU On March 15, 1995, GSU redeemed, pursuant to sinking fund requirements, 22,500 shares of its Adjustable Rate Series B Preferred Stock, $100 par value. LP&L On February 1, 1995, LP&L redeemed, pursuant to sinking fund requirements, 300,000 shares of its 12.64% Series Preferred Stock, $25 par value. MP&L On January 1, 1995, MP&L redeemed 70,000 shares of its 9.76% Series Preferred Stock, $100 par value. On March 1, 1995, MP&L redeemed 10,000 shares of its 12.00% Series Preferred Stock, $100 par value. NOPSI On March 1, 1995, NOPSI redeemed 15,000 shares of its 15.44% Series Preferred Stock, $100 par value. NOTE 4. LONG-TERM DEBT AP&L On February 1, 1995, AP&L redeemed, pursuant to sinking fund requirements, $0.4 million of its 8.75% Series First Mortgage Bonds due 1998. MP&L On February 1, 1995, MP&L retired $20 million of its 14.95% Series Bonds upon maturity. On March 1, 1995, MP&L retired $20 million of its 4.625% Series First Mortgage Bonds upon maturity. On April 12, 1995, MP&L issued $80 million of 8.80% Series G&R Bonds due 2005. NOPSI On February 1, 1995 NOPSI redeemed $9.2 million of its 13.90% Series G&R Bonds upon maturity. On April 27, 1995, NOPSI issued $30 million of 8.67% Series G&R Bonds due 2005. On May 1, 1995, NOPSI redeemed, pursuant to sinking fund requirements, $15 million of its 10.95% Series G&R Bonds due 1997. NOTE 5. RETAINED EARNINGS On January 27, 1995, Entergy Corporation's Board of Directors (Board) declared a common stock dividend of 45 cents per share which was paid on March 1, 1995. In addition, on March 25, 1995, the Board declared a common stock dividend of 45 cents per share payable on June 1, 1995. NOTE 6. RESTRUCTURING COSTS Entergy, AP&L, GSU, LP&L, MP&L, and NOPSI The restructuring program announced by Entergy in the third quarter of 1994 included anticipated reductions in the number of employees and the consolidation of offices and facilities. Restructuring charges associated with this program recorded in 1994 and the first quarter of 1995 are shown below by company together with actual termination benefits paid under the program. Restructuring Restructuring Liability Additional Liability Company December 31, Accruals Payments March 31, 1994 1995 (In Millions) AP&L $12.2 $ 0.6 $(2.6) $10.2 GSU 6.5 1.2 (1.4) 6.3 LP&L 6.8 1.0 (1.7) 6.1 MP&L 6.2 0.3 (0.7) 5.8 NOPSI 3.4 0.5 (0.5) 3.4 ----- ----- ----- ----- Total $35.1 $ 3.6 $(6.9) $31.8 ===== ===== ===== ===== The restructuring charges shown above primarily included employee severance costs related to the expected termination of approximately 2,150 employees. As of March 31, 1995, 1,649 employees have either been terminated or accepted voluntary separation under the restructuring plan. Additionally, GSU recorded $23.8 million in 1994 for remaining severance and augmented retirement benefits related to the Merger. Actual termination benefits paid under the program amounted to $4.8 million through March 31, 1995. NOTE 7. ACCOUNTING ISSUES New Accounting Standard - In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS 121, effective January 1, 1996. This standard describes circumstances which may result in assets (including goodwill such as the Merger acquisition adjustment, see pages 87-88 of the Form 10-K) being impaired and provides criteria for recognition and measurement of asset impairment. Note 2 describes regulatory assets of $170 million (net of tax) related to Texas retail deferred River Bend operating and carrying costs. Management believes these deferred costs will be required to be written off under the provisions of SFAS 121 unless there are favorable regulatory or court actions related to these costs prior to the adoption of the new standard by Entergy. Certain other assets and operations of Entergy totaling approximately $1.8 billion (pre-tax) are most potentially affected by the requirements of SFAS 121. Those assets include AP&L's and LP&L's retained share of Grand Gulf 1, Entergy Power's investment in the Independence and Ritchie power plants, GSU's Louisiana deregulated asset plan, and Texas jurisdiction abeyed portion of the River Bend plant, in addition to the FERC jurisdiction and steam department operations of GSU. As discussed in the Form 10-K, GSU has previously discontinued the application of SFAS 71 for the Louisiana deregulated asset plan, and operations of the FERC jurisdiction and steam department. Entergy will continually review these assets and operations in order to determine if the carrying value of such assets will be recovered. In most cases this determination will be based on the net cash flows expected to result from such operations and assets. Projected net cash flows will depend on the future operating costs associated with the assets, the efficiency and availability of the assets/generating units, and the future market/price for energy over the remaining life of the assets. Based on current estimates, Entergy anticipates that the net cash flows will recover the carrying value of the potentially affected assets. __________________________________________ In the opinion of Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy, the accompanying unaudited condensed financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassifying previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented. However, the business of AP&L, GSU, LP&L, MP&L, and NOPSI is subject to seasonal fluctuations, with the peak period occurring during the summer months. The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year. ENTERGY CORPORATION AND SUBSIDIARIES ARKANSAS POWER & LIGHT COMPANY GULF STATES UTILITIES COMPANY LOUISIANA POWER & LIGHT COMPANY MISSISSIPPI POWER & LIGHT COMPANY NEW ORLEANS PUBLIC SERVICE INC. SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy Liquidity is important to Entergy due to the capital intensive nature of its business, which requires large investments in long-lived assets. While large capital expenditures for the construction of new generating capacity are not currently planned, the System does require significant capital resources for the periodic maturity of certain series of debt and preferred stock and ongoing construction expenditures. Net cash flow from operations for Entergy Corporation, the System operating companies, and System Energy for the three months ended March 31, 1995 and 1994, was as follows (in millions): Three Months Three Months Company Ended 3/31/95 Ended 3/31/94 Entergy Corporation $275.6 $322.4 AP&L $124.8 $ 88.2 GSU $129.9 $ 53.8 LP&L $103.7 $ 99.5 MP&L $ 51.8 $ 46.9 NOPSI $ 18.6 $ 26.5 System Energy $(26.2) $ 53.4 For the three months ended March 31, 1995, AP&L's net cash flow from operations increased due primarily to reduced billings from System Energy resulting from a FERC audit settlement in 1994. GSU's net cash flow from operations increased for the three months ended March 31, 1995, due primarily to reductions in working capital. NOPSI's net cash flow from operations decreased for the three months ended March 31, 1995, due primarily to refunds associated with the 1994 NOPSI Settlement. Refund by NOPSI of a $25 million reserve established in December 1994 will be made over a 21-month period ending in September 1996. System Energy's net cash flow from operations decreased for the three months ended March 31, 1995, due primarily to refunds to associated companies resulting from a FERC audit settlement in 1994. In the first three months of 1995, as in recent years, cash from operations, supplemented by cash on hand, was sufficient to meet substantially all investing and financing requirements, including capital expenditures, dividends, and debt/preferred stock maturities. Entergy's ability to fund most of its capital requirements with cash from operations results from continued efforts to streamline operations and reduce costs, as well as collections under the rate phase-in plans, which exceed current cash requirements for the related costs. (In the income statement, these revenue collections are offset by the amortization of previously deferred costs so that there is no effect on net income.) The System operating companies and System Energy have the ability, subject to regulatory approval, to meet capital requirements through future debt or preferred stock issuances, as discussed below. Also, to the extent current market interest and dividend rates allow, the System operating companies and System Energy may continue to refinance high-cost debt and preferred stock prior to maturity. Productive investment of excess funds is necessary to enhance the long-term value of Entergy Corporation's common stock. Entergy Corporation will consider investing up to approximately $150 million per year for the next several years in nonregulated business opportunities. On March 31, 1995, Entergy Corporation, through its subsidiary, Entergy Power Development Company (EPDC), entered into an agreement with Enron Power Development Corporation, a subsidiary of Enron Corporation, to acquire a 20% interest in the Dabhol Power Project (Project) located in the State of Maharashtra, India. The Project is a 695 megawatt combined cycle facility which will burn distillate as its fuel. Entergy Corporation made an initial investment in the Project of approximately $20.5 million. The total Project is estimated to cost approximately $920 million. The Project is fully financed and under construction with commercial operation expected by the end of 1997. At the time of commercial operation EPDC will have invested approximately $90 million in the Project. In addition to its investment EPDC has committed to cover its pro rata share of cost overruns up to approximately $30 million, if they are incurred. See Note 1 and "Significant Factors and Known Trends - Nonregulated Investments" for additional information. Certain agreements and restrictions limit the amount of mortgage bonds and preferred stock that can be issued by each of the System operating companies and System Energy. Based on the most restrictive applicable tests as of March 31, 1995, and an assumed annual interest or dividend rate of 9.25%, each of the System operating companies and System Energy could have issued bonds or preferred stock in the following amounts (in millions): Company Bonds Preferred Stock AP&L $274 $388 GSU $ - $ - LP&L $117 $786 MP&L $165 $ 83 NOPSI $ 46 $ 39 System Energy $246 * * System Energy's charter does not provide for the issuance of preferred stock. In addition, the System operating companies and System Energy have the ability, subject to certain conditions, to issue bonds against retired bonds, in some cases without meeting an earnings coverage test. As a result of the charges recorded in 1994, GSU is currently precluded from issuing first mortgage bonds under its earnings coverage test. However, GSU has the ability to issue up to approximately $578 million of first mortgage bonds against previously retired bonds. AP&L may also issue preferred stock to refund outstanding preferred stock without meeting an earnings coverage test. GSU has no earnings coverage limitations on the issuance of preference stock. For information on the System operating companies' and System Energy's regulatory authorizations to issue and acquire securities, see Notes 3 and 4, and pages 102-105, 146-148, 189- 191, 228-230, 266-268, 299-301, and 332 of the Form 10-K. The System operating companies and System Energy have SEC authorization to effect short-term borrowings. As of March 31, 1995, GSU has unused lines of credit for short-term borrowings totaling $5.0 million. See pages 101, 145, 188, 227, 265, 299, and 331 of the Form 10-K for information on the System operating companies', System Energy's, and Entergy Services' short-term borrowing authorizations and bank lines of credit. At March 31, 1995, the System operating companies, Entergy Services, and System Fuels had outstanding short-term borrowings from the Money Pool and/or from banks as follows (in millions): Company Money Pool Banks AP&L $ - $34.0 GSU $ - $ - LP&L $ - $19.2 MP&L $12.9 $29.4 Entergy Services $39.8 $35.0 System Fuels $12.0 $15.0 Entergy Corporation's current primary capital requirements are to invest periodically in, or make loans to, its subsidiaries. Entergy Corporation expects to meet these requirements in 1995 - 1997 with internally generated funds and cash on hand. Entergy Corporation also pays dividends on its common stock, which aggregated $102 million in the first three months of 1995. Declarations of dividends on common stock are made at the discretion of the Board. It is anticipated that management will not recommend future dividend increases to the Board unless such increases are justified by sustained earnings growth of Entergy Corporation and its subsidiaries. Entergy Corporation receives funds through dividend payments from its subsidiaries. During the first three months of 1995, these common stock dividend payments totaled $96.8 million. Certain restrictions may limit the amount of these distributions. See page 106 of the Form 10-K for additional information. GSU did not make common stock dividend payments to Entergy Corporation in the first three months of 1995 in anticipation of a potential rate refund. NOPSI and System Energy did not make common stock dividend payments to Entergy Corporation in the first three months of 1995 due to refunds made to customers pursuant to the 1994 NOPSI Settlement and a FERC audit settlement, respectively. Entergy Corporation has a program to repurchase shares of its outstanding common stock. The timing and amount of such repurchases depend upon market conditions and Board authorization. See Note 3 for additional information. Entergy Corporation has requested, but not yet received, SEC authorization for a $300 million bank line of credit, the proceeds of which are expected to be used for common stock repurchases, investments in nonregulated and nonutility businesses, and other activities. Certain parties have intervened in this proceeding, and the application is pending. Increasing competition in the utility industry brings an increased need to stabilize costs and reduce retail rates. See "Significant Factors and Known Trends - Competition" for additional information on rate issues affecting the System. On March 20, 1995, the PUCT ordered GSU to implement a $72.9 million annual base rate reduction for the period March 31, 1994, through September 1, 1994, decreasing to an annual base rate reduction of $52.9 million after September 1, 1994. See Note 2 for additional information. In December 1994, NOPSI agreed to reduce electric and gas rates and issue credits and refunds to customers pursuant to the 1994 NOPSI Settlement. Under the terms of the settlement, NOPSI implemented rate reductions totaling $44.9 million effective January 1, 1995. NOPSI will implement an additional $4.4 million rate reduction on October 31, 1995. In addition, the 1994 NOPSI Settlement required NOPSI to credit its customers $25 million over a 21-month period beginning January 1, 1995, in order to resolve disputes with the Council regarding the interpretation of the 1991 NOPSI Settlement. Entergy Corporation and GSU See Notes 1 and 2 regarding litigation with Cajun and River Bend rate appeals. Write-offs or charges resulting from adverse rulings in these matters could result in additional net losses being reported by Entergy Corporation and GSU in 1995 and subsequent periods, with resulting adverse adjustments to common equity of Entergy Corporation and GSU. Also, adverse resolution of these matters could adversely affect GSU's ability to continue to pay dividends and obtain financing, which could in turn affect GSU's liquidity. Entergy Corporation and System Energy Under a Capital Funds Agreement, Entergy Corporation has agreed to supply to System Energy sufficient capital to maintain System Energy's equity capital at an amount equal to a minimum of 35% of its total capitalization (excluding short-term debt), and to permit the continuation of commercial operation of Grand Gulf 1 and to pay in full all indebtedness for borrowed money of System Energy when due under any circumstances. In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights as security for specific debt of System Energy, Entergy Corporation has agreed to make cash capital contributions, if required, to enable System Energy to make payments on such debt when due. The Capital Funds Agreement can be terminated by the parties thereto, subject to the receipt of consents of certain creditors. RESULTS OF OPERATIONS ENTERGY Net Income Consolidated net income decreased in the first quarter of 1995 due primarily to decreased revenues related to rate reserves/reductions at GSU, MP&L, and NOPSI, certain restructing costs, and decreased miscellaneous income - net. Significant factors affecting the results of operations and causing variances between the first quarter of 1995 and 1994 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales Detailed below are Entergy's operating revenues by source and KWH sales. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 441.5 $ 476.0 $(34.5) (7) Commercial 324.7 339.1 (14.4) (4) Industrial 414.1 436.1 (22.0) (5) Governmental 35.1 38.9 (3.8) (10) -------- -------- ------ Total retail 1,215.4 1,290.1 (74.7) (6) Sales for resale 74.5 69.4 5.1 7 Other 4.9 (19.3) 24.2 125 -------- -------- ------ Total $1,294.8 $1,340.2 $(45.4) (3) ======== ======== ====== Billed Electric Energy Sales (Millions of KWH): Residential 5,860 6,062 (202) (3) Commercial 4,473 4,406 67 2 Industrial 10,035 9,728 307 3 Governmental 539 525 14 3 ------ ------ ---- Total retail 20,907 20,721 186 1 Sales for resale 2,400 1,736 664 38 ------ ------ ---- Total 23,307 22,457 850 4 ====== ====== ==== Electric operating revenues decreased $45.4 million in the first quarter of 1995 due primarily to milder than normal winter weather as compared to 1994, decreased fuel adjustment revenues, and rate reserves/reductions at GSU, MP&L, and NOPSI, partially offset by increased sales for resale to nonassociated utilities. The changes in electric operating revenue for the three months ended March 31, 1995 are as follows: Increase/ Description (Decrease) (In Millions) Change in base rates $(28.6) Rate riders (7.4) Fuel cost recovery (46.0) Sales volume/weather 0.7 Other revenue (including unbilled) 16.5 1994 Provision for revenue reduction (NOPSI) 14.3 Sales for resale 5.1 ------ Total $(47.8) ====== Gas operating revenues decreased $13.4 million in the first quarter of 1995 due primarily to milder than normal winter weather, decreased fuel adjustment revenues as compared to 1994 and gas rate reductions agreed to in the 1994 NOPSI Settlement. Expenses Fuel for electric generation and fuel-related expenses decreased $26.0 million in the first quarter of 1995 due primarily to lower fuel costs. Purchased power decreased $43.3 million in the first quarter of 1995 due primarily to decreased power purchases from nonassociated utilities due to changes in generation requirements for the System operating companies. Income taxes decreased $4.6 million in the first quarter of 1995 due primarily to lower pretax income. Other Miscellaneous income - net decreased $7.2 million in the first quarter of 1995 due primarily to increased losses by Entergy Corporation's nonregulated business investments. The increased loss stems from expansion of domestic energy services operations and international power development activities. AP&L Net Income Net income decreased in the first quarter of 1995 due primarily to decreased sales for resale revenues and increased other operations and maintenance expenses. Significant factors affecting the results of operations and causing variances between the first quarter of 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are AP&L's operating revenues by source and KWH sales. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 124.2 $ 123.3 $ 0.9 1 Commercial 68.3 66.3 2.0 3 Industrial 77.6 72.8 4.8 7 Governmental 4.0 4.1 (0.1) (2) ------- ------- ------ Total retail 274.1 266.5 7.6 3 Sales for resale: Associated companies 29.1 66.6 (37.5) (56) Non-associated companies 38.6 44.3 (5.7) (13) Other (2.2) (6.3) 4.1 65 ------- ------- ------ Total $ 339.6 $ 371.1 $(31.5) (8) ======= ======= ====== Billed Electric Energy Sales (Millions of KWH): Residential 1,427 1,438 (11) (1) Commercial 947 931 16 2 Industrial 1,439 1,364 75 5 Governmental 53 58 (5) (8) ----- ----- ------ Total retail 3,866 3,791 75 2 Sales for resale: Associated companies 1,359 3,250 (1,891) (58) Non-associated companies 873 1,204 (331) (27) ----- ----- ------ Total 6,098 8,245 (2,147) (26) ===== ===== ====== Electric operating revenues decreased in the first quarter of 1995 primarily due to lower sales for resale to associated companies caused by changes in generation availability and requirements among the System operating companies. The changes in electric operating revenue for the three months ended March 31, 1995 are as follows: Increase/ Description (Decrease) (In Millions) Change in base rates $ 1.0 Rate riders 0.3 Fuel cost recovery 4.2 Sales volume/weather 2.1 Other revenue (including unbilled) 4.1 Sales for resale (43.2) ------ Total $(31.5) ====== Expenses Operating expenses decreased in the first quarter of 1995 primarily due to lower fuel and fuel-related expenses and purchased power expenses partially offset by an increase in other operation and maintenance expenses. Fuel and purchased power expenses decreased due to the lower sales for resale to associated companies as noted in "Revenues and Sales" above. The increase in other operation and maintenance expenses is primarily the result of additional work being performed and use of materials during ANO 1's refueling outage which began in mid- February 1995 and lasted through the end of the quarter. In addition ANO 2 experienced a 30 day mid-cycle outage during the first quarter of 1995 which also required additional work and materials. See Note 1 for an additional discussion of ANO 2's mid-cycle outage. GSU Net Income Net income decreased in the first quarter of 1995 due primarily to reduced base revenues resulting from rate reductions ordered by the PUCT in September 1994 and March 1995, partially offset by increased energy sales. Significant factors affecting the results of operations and causing variances between the first quarter of 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenue and Sales See table below for information on GSU's operating revenues by source and KWH sales. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Department Operating revenues: Residential $ 116.5 $ 123.8 $ (7.3) (6) Commercial 92.3 94.7 (2.4) (3) Industrial 142.3 153.0 (10.7) (7) Governmental 6.2 6.3 (0.1) (2) ------- ------- ------ Total retail 357.3 377.8 (20.5) (5) Sales for resale: Associated companies 10.2 9.3 0.9 10 Non-associated companies 14.8 9.1 5.7 63 Other (3.5) 5.9 (9.4) (159) ------- ------- ------ Total Electric Department $ 378.8 $ 402.1 $(23.3) (6) ======= ======= ====== Billed Electric Energy Sales (Millions of KWH): Residential 1,561 1,601 (40) (2) Commercial 1,342 1,307 35 3 Industrial 3,670 3,575 95 3 Governmental 88 74 14 19 ----- ----- --- Total retail 6,661 6,557 104 2 Sales for resale: Associated companies 501 398 103 26 Non-associated companies 473 143 330 231 ----- ----- --- Total Electric Department 7,635 7,098 537 8 Steam Department 397 410 (13) (3) ----- ----- --- Total 8,032 7,508 524 7 ===== ===== === Operating revenues decreased in the first quarter of 1995 due primarily to reduced base revenues resulting from rate reductions ordered by the PUCT in September 1994 and March 1995 (see Note 2 for further discussion) in addition to reduced fuel revenue. These decreases were partially offset by increased energy sales. Energy sales increased primarily due to increased sales for resale as a result of GSU's participation in the System power pool and non-weather related growth in the non-residential markets. The changes in electric operating revenue for the three months ended March 31, 1995 are as follows: Increase/ Description (Decrease) (In Millions) Change in base rates $(18.7) Fuel cost recovery (14.1) Sales volume/weather 2.6 Other revenue (including unbilled) 0.3 Sales for resale 6.6 ------ Total $(23.3) ====== Expenses Operating expenses decreased primarily due to lower purchased power expenses. Purchased power decreased in the first quarter of 1995 due primarily to changes in generation availability and requirements among the System operating companies. LP&L Net Income Net income remained relatively unchanged in the first quarter of 1995. This is due primarily to the completion in the second quarter of 1994 of the amortization of the proceeds resulting from litigation with a gas supplier, partially offset by increased sales for resale to non-associated utilities. Significant factors affecting the results of operations and causing variances between the first quarter of 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are LP&L's operating revenues by source and KWH sales. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 111.9 $124.9 $(13.0) (10) Commercial 76.0 80.8 (4.8) (6) Industrial 148.9 159.9 (11.0) (7) Governmental 7.7 7.9 (0.2) (3) ------- ------ ------ Total retail 344.5 373.5 (29.0) (8) Sales for resale: Associated companies 0.2 0.1 0.1 100 Non-associated companies 10.0 6.8 3.2 47 Other (1.7) 3.4 (5.1) (150) ------- ------ ------ Total $ 353.0 $383.8 $(30.8) (8) ======= ====== ====== Billed Electric Energy Sales (Millions of KWH): Residential 1,587 1,680 (93) (6) Commercial 1,019 1,028 (9) (1) Industrial 4,079 3,977 102 3 Governmental 110 107 3 3 ----- ----- --- Total retail 6,795 6,792 3 - Sales for resale: Associated companies 10 3 7 233 Non-associated companies 214 125 89 71 ----- ----- --- Total 7,019 6,920 99 1 ===== ===== === Electric operating revenues were lower in the first quarter of 1995 primarily due to lower fuel adjustment revenues, which do not affect net income. In addition, completion of the amortization of the proceeds resulting from litigation with a gas supplier in the second quarter of 1994 resulted in decreased other operating revenues for the first quarter of 1995, partially offset by higher sales to non-associated utilities. The changes in electric operating revenue for the three months ended March 31, 1995 are as follows: Increase/ Description (Decrease) (In Millions) Change in base rates $ 0.8 Fuel cost recovery (26.3) Sales volume/weather (3.4) Other revenue (including unbilled) (5.2) Sales for resale 3.3 ------ Total $(30.8) ====== Expenses Operating expenses decreased for the first quarter of 1995 primarily due to lower fuel and purchased power expenses. Fuel for electric generation and fuel-related expenses decreased primarily due to a lower per unit cost for gas fuel partially offset by an increase in gas fired generation. The decrease in purchased power expenses is primarily due to changes in generation availability and requirements among the System operating companies. MP&L Net Income Net income increased in the first quarter of 1995 due primarily to a decrease in other operation and maintenance expenses and an increase in sales for resale. These increases were partially offset by lower retail revenues due to the effects of the March 1994 rate reduction. Significant factors affecting the results of operations and causing variances between the first quarter of 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are MP&L's operating revenues by source and KWH sales. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 67.1 $ 76.1 $ (9.0) (12) Commercial 55.6 58.4 (2.8) (5) Industrial 40.2 44.1 (3.9) (9) Governmental 6.5 6.6 (0.1) (2) ------ ------ ----- Total retail 169.4 185.2 (15.8) (9) Sales for resale: Associated companies 6.6 5.1 1.5 29 Non-associated companies 4.2 3.0 1.2 40 Other 13.1 (5.9) 19.0 322 ------ ------ ----- Total $193.3 $187.4 $ 5.9 3 ====== ====== ===== Billed Electric Energy Sales (Millions of KWH): Residential 933 976 (43) (4) Commercial 724 683 41 6 Industrial 723 692 31 4 Governmental 78 77 1 1 ----- ----- --- Total retail 2,458 2,428 30 1 Sales for resale: Associated companies 159 56 103 184 Non-associated companies 140 76 64 84 ----- ----- --- Total 2,757 2,560 197 8 ===== ===== === Electric operating revenues increased in the first quarter of 1995 due to increased sales for resale and other revenues, partially offset by lower retail revenues. Sales for resale increased primarily due to changes in generation availability and requirements among the System operating companies. Other revenues increased primarily due to Grand Gulf over/under recovery, which does not affect net income. Retail revenues decreased primarily due to the effects of the March 1994 rate reduction. The changes in electric operating revenue for the three months ended March 31, 1995 are as follows: Increase/ Description (Decrease) (In Millions) Change in base rates $ (4.9) Grand Gulf rate rider (7.7) Fuel cost recovery (4.1) Sales volume/weather 0.9 Other revenue (including unbilled) 19.0 Sales for resale 2.7 ------ Total $ 5.9 ====== Expenses Operating expenses increased primarily due to increased amortization of rate deferrals and increased income taxes, partially offset by lower other operation and maintenance expenses. Other operation and maintenance expenses decreased primarily due to increased maintenance incurred at various plant sites during the first quarter of 1994. Income taxes increased in the first quarter of 1995 due to a higher pre-tax income. The amortization of rate deferrals increased in the first quarter of 1995 reflecting the fact that MP&L, based on the Revised Plan, collected more Grand Gulf 1-related costs from its customers in the first quarter of 1995 than it recovered in the same period in 1994. NOPSI Net Income Net income increased in the first quarter of 1995 due primarily to a provision for rate reduction that was recorded in the first quarter of 1994, partially offset by a permanent rate reduction that took effect on January 1, 1995. Significant factors affecting the results of operations and causing variances between the first quarter of 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are NOPSI's operating revenues by source and KWH sales. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 21.8 $ 28.0 $ (6.2) (22) Commercial 32.5 39.0 (6.5) (17) Industrial 5.1 6.3 (1.2) (19) Governmental 10.7 13.9 (3.2) (23) ------ ------ ------ Total retail 70.1 87.2 (17.1) (20) Sales for resale: Associated ompanies 1.3 0.1 1.2 * Non-associated companies 1.9 1.3 0.6 46 Other 4.8 (9.7) 14.5 149 ------ ------ ------ Total $ 78.1 $ 78.9 $ (0.8) (1) ====== ====== ====== Billed Electric Energy Sales (Millions of KWH): Residential 352 367 (15) (4) Commercial 440 457 (17) (4) Industrial 123 119 4 3 Governmental 210 210 - - ----- ----- --- Total retail 1,125 1,153 (28) (2) Sales for resale: Associated companies 66 2 64 * Non-associated companies 60 27 33 122 ----- ----- --- Total 1,251 1,182 69 6 ===== ===== === * Increase greater than 200 percent. Electric operating revenues decreased in the first quarter due primarily to a decrease in retail base revenues and lower fuel adjustment revenues. Retail base revenues decreased as a result of the rate reduction in accordance with the 1994 NOPSI Settlement as well as lower sales of energy due to warmer than normal winter weather. These decreases were partially offset by a reserve for revenue reduction recorded in the first quarter of 1994 and increased sales for resale to associated companies. The changes in electric operating revenue for the three months ended March 31, 1995 are as follows: Increase/ Description (Decrease) (In Millions) Change in base rates $ (6.8) Fuel cost recovery (5.7) Sales volume/weather (1.5) Other revenue (including unbilled) (2.9) 1994 Provision for revenue reduction 14.3 Sales for resale 1.8 ------ Total $ (0.8) ====== For the first quarter of 1995, gas operating revenues decreased due primarily to decreased gas sales in the first quarter as a result of a warmer winter than the prior year, the rate reduction agreed to in the 1994 NOPSI Settlement, and a lower unit puchase price for gas purchased for resale. Expenses Fuel for electric generation and fuel-related expenses decreased in the first quarter of 1995 due primarily to a decrease in gas purchased for resale. Gas purchased for resale decreased for the first quarter of 1995 due primarily to decreased gas sales and a lower unit purchase price. Purchased power expenses decreased in the first quarter of 1995 due primarily to changes in generation requirements among the System operating companies and lower costs. Income taxes increased in the first quarter of 1995 due primarily to higher pre-tax income. The decrease in the amortization of rate deferrals in the first quarter of 1995 is primarily a result of reduced over- recovery of Grand Gulf-1 related costs in 1995 compared to 1994. SYSTEM ENERGY Net Income Net income increased in the first quarter of 1995 due primarily to increased revenues and a reduction in interest expense, partially offset by an increase in operation and maintenance expenses, depreciation, amortization and decommissioning expense. Significant factors affecting the results of operations and causing variances between the first quarter of 1995 and 1994 are discussed under "Revenues" and "Expenses" below. Revenues Operating revenues recover operating expenses, depreciation and capital costs attributable to Grand Gulf 1. The capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1. Operating revenues increased in the first quarter of 1995 due primarily to increased expenses in connection with a Grand Gulf 1 refueling outage and higher depreciation, amortization, and decommissioning expense offset by a lower return on System Energy's decreasing investment in Grand Gulf 1 (caused by depreciation of the unit). Expenses Operation and maintenance expenses increased in the first quarter of 1995 principally as a result of a refueling outage which began April 15, 1995. Depreciation, amortization, and decommissioning expense increased in the first quarter of 1995 due primarily to an increase of $2 million in amortization expense as a result of the reclassification of $81 million of Grand Gulf costs in the November 1994 FERC Settlement. Interest expense decreased in the first quarter of 1995 due primarily to the retirement and refinancing of high-cost long- term debt. SIGNIFICANT FACTORS AND KNOWN TRENDS Entergy Corporation, AP&L, GSU, LP&L, MP&L, and NOPSI Competition The electric utility industry, including Entergy, is experiencing increased competitive pressures. Entergy is seeking to become a leading competitor in the changing electric energy business. Competition presents Entergy with many challenges. The following have been identified by Entergy as its major competitive challenges. Retail and Wholesale Rate Issues Increasing competition in the utility industry brings an increased need to stabilize or reduce retail rates. The retail regulatory philosophy is shifting in some jurisdictions from traditional cost-of-service regulation to incentive-rate regulation. Incentive and performance-based rate plans encourage efficiencies and productivity while permitting utilities and their customers to share in the results. MP&L implemented an incentive-rate plan in 1994 and LP&L filed a performance-based formula rate plan with the LPSC in August 1994 which is pending final approval from the LPSC. GSU agreed to shared-savings plans as part of the Merger. Recognizing that many industrial customers have energy alternatives, Entergy continues to work with these customers to address their needs. In certain cases, competitive prices are negotiated, using variable-rate designs. In a settlement with the Council that was approved on December 29, 1994, NOPSI agreed to reduce electric and gas rates and issue credits and refunds to customers. Effective January 1, 1995, NOPSI implemented a $31.8 million permanent reduction in electric base rates and a $3.1 million permanent reduction in gas base rates. On January 1, 1995, NOPSI also implemented a $10 million permanent reduction in electric base rates to reflect the reduced costs related to Grand Gulf 1, to be followed by an additional $4.4 million rate reduction on October 31, 1995. These Grand Gulf 1 rate reductions, which are expected to be largely offset by lower operating costs, may reduce NOPSI's after- tax net income by approximately $1.4 million per year beginning November 1, 1995. For additional information, see pages 73, 79, 97, 285, 290, and 295 of the Form 10-K. LP&L's five-year rate freeze expired in March 1994. In August 1994, LP&L filed a performance-based formula rate plan with the LPSC. The proposed formula rate plan would continue existing LP&L rates at current levels, while providing financial incentive to reduce costs and maintain high levels of customer satisfaction and system reliability. Hearings were held on the LP&L proposed performance-based formula rate plan in March 1995. On April 20, 1995 the LPSC Staff recommended a $49.4 million reduction in base rates. This recommended rate reduction included $8.5 million of rates previously reduced through fuel clause reductions; therefore, the net effect of the recommended reduction is $40.9 million. The LPSC Staff recommended the approval of LP&L's proposed formula rate plan with the following modifications. An earnings band would be established from a 10.4% to a 12% return on equity. If LP&L's earnings fall within the bandwidth, no adjustment in rates occurs. If LP&L's earnings are above the 12% return on equity, a 60/40 sharing with customers occurs and customers receive 60% of earnings in excess of the 12% through prospective rate reductions. Alternatively, if LP&L's earnings are below the 10.4% return on equity, customers pay 60% of the difference between the realized return on equity and the 10.4% through prospective rate increases. The LPSC Staff's recommendation also included a reduction in LP&L's authorized rate of return from 12.76% to 11.2%. The LPSC is expected to issue a final order in late May 1995. In connection with the Merger, AP&L and MP&L agreed with their respective retail regulators not to request any general retail rate increases that would take effect before November 1998, with certain exceptions. MP&L also agreed that during this period retail base rates under its formula rate plan would not be increased above the level of rates in effect on November 1, 1993. GSU agreed with the LPSC and PUCT to a five-year Rate Cap (beginning January 1, 1994) on retail electric rates, and to pass through to retail customers the fuel savings and a certain percentage of the nonfuel savings created by the Merger. Under the terms of their respective Merger agreements, the LPSC and PUCT have reviewed GSU's base rates during the first post-Merger earnings analysis. The LPSC ordered a $12.7 million annual rate reduction effective January 1, 1995. GSU received an injunction delaying implementation of $8.3 million of the reduction and on January 1, 1995, reduced rates by $4.4 million. The entire $12.7 million is being appealed. On March 20, 1995, the PUCT ordered a $72.9 million annual base rate reduction for the period March 31, 1994 through September 1, 1994, decreasing to an annual base rate reduction of $52.9 million after September 1, 1994. In accordance with the Merger agreement, the rate reduction is applied retroactively to March 31, 1994. The rate reduction is being appealed, and no assurance can be given as to the timing or outcome of the appeal. See Note 2 for further information. Retail wheeling, the transmission by an electric utility of energy produced by another entity over the utility's transmission and distribution system to a retail customer in the electric utility's area of service, is also evolving. Over a dozen states have been or are studying the concept of retail competition. In April 1994, the state of Michigan initiated a five-year experiment that would allow limited competition among public utilities. The experiment is currently being challenged in the courts. In April 1994, the California Public Utilities Commission (CPUC) proposed to deregulate that state's electric power industry, starting on January 1, 1996, to allow the largest industrial customers to select the lowest cost supplier for electricity service. Under the proposal, by the year 2002, smaller companies and residential customers in California would also be able to buy power from any suppliers. The CPUC is currently reviewing its proposal. The retail market for electricity is expected to become more competitive with such moves toward deregulation and with greater focus on customer choice. On April 21, 1995, a newly incorporated entity, Crescent City Utilities, Inc., submitted the Council a draft resolution intended to permit the use of NOPSI's gas and electric transmission and distribution facilities by any other franchised utility to supply electricity and gas to retail customers in New Orleans. On April 27, 1995, the Council issued a statement noting that the Council had played no role in the development of the resolution, that it had not received the document formally and that no hearings are scheduled to address its merits. However, the Council later stated its intention to schedule public hearings to consider competition in the electric utility service industries and retail electric industry. In some areas of the country, municipalities (or comparable entities) whose residents are served at retail by an investor- owned utility pursuant to a franchise are exploring the possibility of establishing new distribution systems in order to serve retail customers, especially large industrial customers, that currently receive service from an investor-owned utility. These options depend on the terms of a utility's franchise as well as on state law and regulation. In addition, FERC's authority to order utilities to transmit for a new or expanding municipal system is limited in certain respects. Where successful, however, the establishment of a municipal system or the acquisition by a municipal system of a utility's customers could result in the inability to recover costs that the utility has incurred in serving those customers. In mid-1994, FERC issued a notice of proposed rulemaking concerning a regulatory framework for dealing with recovery of stranded costs, such as high-cost nuclear generating units, which may be incurred by electric utilities as a result of increased competition. In addition to addressing recovery of stranded costs related to wholesale service, the proposal requested comment as to recovery of retail stranded costs in transmission rates where state regulatory authorities failed to address the issue or were in conflict. On March 29, 1995, FERC issued a supplemental notice of proposed rulemaking in this proceeding which would require public utilities to provide non- discriminatory open access transmission service to wholesale customers, and which would also provide guidance on the recovery of wholesale and retail stranded costs. Under the proposal, public utilities would be required to file transmission tariffs for both point-to-point and network services. Model transmission tariffs were included in the proposal. With regard to pending proceedings, including Entergy's tariff proceeding, FERC directed the parties to proceed with their cases while taking into account FERC's views expressed in the proposed rule. Comments will be filed in August 1995, with reply comments in October 1995. The risk of exposure to stranded costs which may result from competition in the industry will depend on the extent and timing of retail competition, the resolution of jurisdictional issues concerning stranded cost recovery, and the extent to which such costs are recovered from departing or remaining customers, among other matters. Cogeneration projects developed or considered by certain of GSU's industrial customers over the last several years have resulted in GSU developing and securing approval of rates lower than the rates previously approved by the PUCT and LPSC for such industrial customers. Such rates are designed to retain such customers, and to compete for and develop new loads, and do not presently recover GSU's full cost of service. The pricing agreements at non-full cost of service based rates fully recover all related costs but provide only a minimal return. Substantially all of such pricing agreements expire no later than 1997. In the first quarter of 1995, KWH sales to GSU's industrial customers at non-full cost of service rates, which make up approximately 25% of GSU's total industrial class, decreased 2%. Sales to the remaining GSU industrial customers increased 4%. In March 1995, LP&L received notice from a large industrial customer that the customer has decided to proceed with its proposed cogeneration project for the purpose of fulfilling its future electric energy needs. The customer will continue to purchase its energy requirements until its cogeneration facilities are completed, which is expected to be sometime after 1999. During 1994, this customer represented approximately 8% of total LP&L industrial sales, and provided $19 million of base revenue. In the wholesale rate area, FERC approved in 1992, with certain modifications, the proposal of AP&L, LP&L, MP&L, NOPSI, and Entergy Power to sell wholesale power at market-based rates and to provide to electric utilities "open access" to the System's transmission system (subject to certain requirements). GSU was later added to this filing. On October 31, 1994, as amended on January 25, 1995, Entergy Services filed with FERC revised transmission tariffs intended to provide access to transmission service on the same or comparable bases, terms, and conditions as the System operating companies, and the matter is pending. Open access and market pricing, once they take effect, will increase marketing opportunities for the System, but will also expose the System to the risk of loss of load or reduced revenues due to competition with alternative suppliers. In light of the rate issues discussed above, Entergy is aggressively reducing costs to avoid potential earnings erosions that might result as well as to compete successfully by becoming a low-cost producer. In 1994, Entergy announced a restructuring program related to certain of its operating units. This program is designed to reduce costs and improve operating efficiencies. See pages 117, 155, 201, 238, and 306 of the Form 10-K and Note 7 for further information. Also, in response to an increasingly competitive environment, AP&L, LP&L, MP&L, and NOPSI have announced intentions to revise their initial least-cost planning activities, and GSU is continuing to work with the Council and PUCT regarding integrated resource planning. The Energy Policy Act of 1992 The Energy Policy Act of 1992 (EP Act) addresses a wide range of energy issues and is altering the way Entergy and the rest of the electric utility industry operate. The EP Act encourages competition and affords utilities the opportunities and the risks associated with an open and more competitive market environment. The EP Act creates exemptions from regulation under the Public Utility Holding Company Act of 1935 (Holding Company Act) and creates a class of exempt wholesale generators consisting of utility affiliates and nonutilities that are owners and operators of facilities for the generation and transmission of power for sales at wholesale. The EP Act also gives FERC the authority to order investor-owned utilities, including the System operating companies, to transmit power and energy to or for wholesale purchasers and sellers. The law creates the potential for electric utilities and other power producers to gain increased access to the transmission systems of other entities to facilitate wholesale sales. Both the System operating companies and Entergy Power expect to compete in this market. In addition, the EP Act allows utilities to own and operate foreign generation, transmission, and distribution facilities. See "Nonregulated Investments" below for further information. Public Utility Holding Company Act of 1935 Entergy Corporation, along with 10 other electric utility holding companies, recently asked Congress to repeal the Holding Company Act. The Holding Company Act requires oversight by the SEC of many business practices and activities of utility holding companies and their subsidiaries including, among other things, nonutility activities. Entergy Corporation believes that the Holding Company Act inhibits its ability to compete in the evolving electric energy marketplace, and largely duplicates the oversight activities already performed by FERC and state and local public service commissions. Litigation and Regulatory Proceedings See Note 1 for information on the bankruptcy proceedings of Cajun and litigation with Cajun concerning Cajun's ownership interest in River Bend and the related possible material adverse effects on GSU's financial condition. See Note 2 for information on the possible material adverse effects on GSU's financial condition and results of operations due to $467 million of potential net of tax write-offs, and $156 million in refunds of previously collected revenue. These possible write-offs and refunds are in connection with outstanding appeals and remands regarding the River Bend plant and rate deferrals. Entergy Corporation and GSU The acquisition of GSU by Entergy Corporation was the largest electric utility merger in United States history. Entergy expects to achieve $850 million in fuel cost savings and $670 million in operation and maintenance expense savings over 10 years as a result of the Merger. Although common shareholders experienced some dilution in earnings as a result of the Merger, Entergy believes that the Merger will ultimately be beneficial to common shareholders in terms of strategic benefits as well as economies and efficiencies produced. For further information, see pages 117-118 and 201 of the Form 10-K. Nonregulated Investments As discussed on pages 3 and 4 of the Form 10-K, Entergy Corporation continues to consider opportunities to expand its utility and utility-related businesses that are not regulated by state and local regulatory authorities (nonregulated businesses). Entergy Corporation's investment strategy is to invest in nonregulated business opportunities that have the potential to earn a greater rate of return than its regulated utility operations, and Entergy Corporation may invest up to approximately $150 million per year for the next several years in nonregulated businesses. On March 31, 1995, Entergy Corporation, through its subsidiary, Entergy Power Development Company (EPDC), entered into an agreement with Enron Power Development Corporation, a subsidiary of Enron Corporation, to acquire a 20% interest in the Dabhol Power Project (Project) located in the State of Maharashtra, India. The Project is a 695 megawatt combined cycle facility which will burn distillate as its fuel. Entergy made an initial investment in the Project of approximately $20.5 million. The total Project is estimated to cost approximately $920 million. The Project is fully financed and under construction with commercial operation expected by the end of 1997. At the time of commercial operations EPDC will have invested approximately $90 million in the Project. In addition to its investment EPDC has committed to cover its pro rata share of cost overruns up to approximately $30 million, if they are incurred. As discussed on page 3 of the Form 10-K, Entergy Corporation requested authorization from the SEC to convert the debt obligation of Entergy Power into equity. On April 18, 1995, Entergy Corporation received authorization from the SEC to consummate this transaction. In the first three months of 1995, Entergy Corporation's nonregulated investments reduced consolidated net income by approximately $11.4 million. As of March 31, 1995, Entergy Corporation's investment in nonregulated businesses totaled $446.6 million. In the near term, these investments are unlikely to have a positive effect on earnings; but management believes that these investments will contribute to future earnings growth. ANO Matters ANO 2 experienced a forced outage for repair of certain steam generator tubes in March 1992. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages in September 1992, May 1993, April 1994, and January 1995. AP&L's budgeted maintenance expenditures were adequate to cover the cost of such repairs. Beginning in January 1995, ANO 2's output has been reduced 15 megawatts or 1.6% due to secondary side fouling, tube plugging, and reduction of primary temperature. Entergy Operations continues to take steps at ANO 2 to reduce the number and severity of future tube cracks. In addition, Entergy Operations continues to meet with the NRC to discuss such steps and results of inspections of the generator tubes, as well as the timing of future inspections. Additional inspections are planned for the normal refueling outage scheduled for October 1995. Deregulated Portion of River Bend As of March 31, 1995, GSU had not recovered a significant amount of its investment in, or received any return associated with, the portion of River Bend included in the deregulated asset plan in Louisiana and the portion of River Bend placed in abeyance as part of the Texas rate order which went into effect in July 1988. See Note 2 for further information. Future earnings will continue to be adversely affected by the lack of full recovery and return on the investment and other costs associated with River Bend. For the three months ended March 31, 1995, GSU recorded revenues resulting from the sale of electricity from the deregulated asset plan of approximately $7.9 million which, absent the deregulated asset plan, would not have been realized. Operation and maintenance expenses, including fuel, were approximately $8.3 million, and depreciation expense associated with the deregulated asset plan investment was approximately $4.6 million for the three months ended March 31, 1995. The operation and maintenance expenses and depreciation expense allocated to the deregulated asset plan as detailed above would have been incurred at River Bend with or without the deregulated asset plan. The future impact of the deregulated asset plan on GSU's results of operations and financial position will depend on River Bend's future operating costs, the unit's efficiency and availability, and the future market for energy over the remaining life of the unit. Based on current estimates of the factors discussed above, GSU anticipates that future revenues from the deregulated asset plan will fully recover all related costs. Property Tax Exemptions Exemptions from the payment of Louisiana local property taxes on Waterford 3 and River Bend, which have been in effect for 10 years for each of the plants, will expire in December 1995 and December 1996, respectively. LP&L and GSU are working with taxing authorities to determine the method for calculating the amount of the property taxes to be paid when the exemptions expire. LP&L believes that assessed property taxes will be recovered from its customers through rates. GSU believes that assessed property taxes allocated to its retail jurisdictions will be recovered from those customers through rates. Environmental Issues GSU has been notified by the U. S. Environmental Protection Agency (EPA) that it has been designated as a potentially responsible party for the cleanup of certain hazardous waste disposal sites. GSU is currently negotiating with the EPA and state authorities regarding the cleanup of some of these sites. Several class action and other suits have been filed in state and federal courts seeking relief from GSU and others for damages caused by the disposal of hazardous waste and for asbestos- related disease allegedly resulting from exposure on GSU premises. While the amounts at issue in the cleanup efforts and suits may be substantial, GSU believes that its results of operations and financial condition will not be materially affected by the outcome of the suits. Through March 31, 1995, GSU has expended $7.5 million cumulatively on the cleanup. As of March 31, 1995, GSU has a remaining recorded liability of $20.7 million related to the cleanup of six sites at which GSU has been designated a potentially responsible party. See pages 35-36, 39- 40, and 196-197 of the Form 10-K for additional discussion of the sites in which GSU has been designated as a potentially responsible party by the EPA. During 1993, the Louisiana Department of Environmental Quality issued new rules for solid waste regulation, including waste water impoundments. LP&L has determined that certain of its power plant waste water impoundments are affected by these regulations and has chosen to either upgrade or close them. As a result, LP&L had a remaining recorded liability in the amount of $14.2 million at March 31, 1995, for waste water upgrades and closures to be completed by 1996. Cumulative expenditures relating to the upgrades and closures of waste water impoundments are $1.3 million as of March 31, 1995. See pages 37 and 233 of the Form 10-K for additional discussions of LP&L's waste water impoundment upgrades and closures. Accounting Issues New Accounting Standard - In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of" (SFAS 121) effective January 1, 1996. This standard describes circumstances which may result in assets being impaired and provides criteria for recognition and measurement of asset impairment. See Notes 2 and 7 for information regarding the potential impacts of the new accounting standard on Entergy. Continued Application of SFAS 71 - As a result of the EP Act and actions of regulatory commissions, the electric utility industry is moving toward a combination of competition and a modified regulatory environment. The System's financial statements currently reflect, for the most part, assets and costs based on current cost-based ratemaking regulations, in accordance with SFAS 71, "Accounting for the Effects of Certain Types of Regulation." Continued applicability of SFAS 71 to the System's financial statements requires that rates set by an independent regulator on a cost-of-service basis can actually be charged to and collected from customers. In the event that either all or a portion of a utility's operations cease to meet those criteria for various reasons, including deregulation, a change in the method of regulation or a change in the competitive environment for the utility's regulated services, the utility should discontinue application of SFAS 71 for the relevant portion. That discontinuation should be reported by elimination from the balance sheet of the effects of any actions of regulators recorded as regulatory assets and liabilities. As of March 31, 1995, and for the foreseeable future, the System's financial statements continue to follow SFAS 71, except for certain portions of GSU's business (see page 88 of the Form 10-K for additional information). Accounting for Decommissioning Costs - The staff of the SEC has questioned certain of the accounting practices of the electric utility industry regarding the recognition, measurement, and classification of decommissioning costs for nuclear generating stations in the financial statements of electric utilities. In response to these questions, the FASB is currently reviewing the accounting for decommissioning. If current electric utility industry accounting practices for such decommissioning are changed, annual provisions for decommissioning could increase, the estimated cost for decommissioning could be recorded as a liability rather than as accumulated depreciation, and trust fund income from the external decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense. ENTERGY CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Item 1. Legal Proceedings System Agreement Entergy Corporation, AP&L, GSU, LP&L, MP&L, and NOPSI See page 16 of the Form 10-K for a discussion related to FERC's proceeding to consider whether the System Agreement permits certain out-of-service generating units to be included in reserve equalization calculations under Service Schedule MSS-1 of that agreement. On March 3, 1995, a FERC ALJ issued an opinion holding that the practice whereby the System operating companies included the out-of-service units in the reserve equalization calculations during the period 1987 through 1993 was not permitted by Service Schedule MSS-1 and, therefore, constituted a violation of the System Agreement. However, the ALJ found that the violation was in good faith and had benefited the customers of the System as a whole. Accordingly, the ALJ determined that no retroactive refunds by any of the System operating companies should be ordered. The ALJ also held that the System Agreement should be amended to allow out-of-service units to be included in reserve equalization, as proposed by the Offer of Settlement filed on February 16, 1994. The ALJ's order is subject to review by the FERC. If the FERC concurs with the finding that the System Agreement was violated, it would have the discretion, notwithstanding the ALJ's recommendation, to order that refunds be made. If that were to occur, certain System operating companies might be required to refund some or all of the amount by which they were underbilled pursuant to the System Agreement as a result of the inclusion of the out-of-service units in the reserve equalization formula. The System operating companies cannot determine at this time whether they would be authorized to recover through retail rates any amounts associated with refunds that might be ordered by the FERC in this proceeding. Briefs on exceptions to the ALJ's initial decision were filed on April 3, 1995 by Entergy Services, the LPSC, the MPSC, the Mississippi Attorney General, FERC staff and other parties. Briefs opposing exceptions were filed on April 24, 1995. See page 16-17 of the Form 10-K for a discussion of the LPSC's complaint filed with FERC alleging that the System Agreement results in unjust and unreasonable rates. On April 24, 1995, Entergy filed a response to the LPSC's complaint. Open Access Transmission Entergy Corporation, AP&L, GSU, LP&L, MP&L, and NOPSI See page 17 of the Form 10-K for a discussion of various petitions filed with D.C. Circuit related to FERC's 1992 orders regarding open access transmission and the sale of wholesale power at market-based rates. On March 29, 1995, FERC issued a supplemental notice of proposed rulemaking which would require public utilities to provide non-discriminatory open access transmission service to wholesale customers, and which would also provide guidance on the recovery of wholesale and retail stranded costs. Under the proposal, public utilities would be required to file transmission tariffs for both point-to-point and network services. Model transmission tariffs were included in the proposal. With regard to pending proceedings, including Entergy's tariff proceeding, FERC directed the parties to proceed with their cases while taking into account FERC's views expressed in the proposed rule. Comments will be filed in August 1995, with reply comments in October 1995. Merger-Related Proceedings Entergy Corporation and GSU See page 31 of the Form 10-K for information relating to the proceeding pending before the NRC Atomic Safety and Licensing Board (ASLB), which was instigated by Cajun and concerns the two Merger-related NRC issued license amendments for River Bend. A hearing in the proceeding before the ASLB was scheduled to begin May 9, 1995. On April 11, 1995, on motion of all the parties to the proceeding, the ASLB issued an Order revising the hearing schedule. Pursuant to this new Order, the hearing will begin no earlier than 81 days after the ASLB's ruling on GSU's Motion for Summary Disposition, which is still pending. See pages 38-39 of the Form 10-K for information regarding other merger-related suits. Cajun-Transmission Service Entergy Corporation and GSU See Note 1 and also pages 108 and 193-194 of the Form 10-K for a discussion of FERC proceedings relating to GSU and Cajun transmission service charge disputes. In April 1995, the ALJ issued a ruling in the remanded portion of the proceeding, and the FERC is expected to issue an order in July 1995. Flowage Easements Suits AP&L and Entergy Services See page 39 of the Form 10-K for a discussion of lawsuits filed against AP&L and Entergy Services by numerous plaintiffs in connection with the operation of two dams during a period of heavy rainfall and flooding in May 1990. On March 9, 1995, the Arkansas District Court granted a petition to reopen proceedings relating to plaintiff claims for which the flowage easements did not apply. Such claims had been stayed previously by the Arkansas District Court. This matter is pending. Panda Energy Corporation Complaint Entergy has received notification of the filing of an amended complaint by Panda Energy Corporation (Panda) against Entergy Enterprises, Inc., Entergy Power, Inc., Entergy Power Asia, Ltd., and Entergy Power Development Corporation in the Dallas District Court. The amended complaint alleges tortious interference with contractual relations, conspiracy, misappropriation of corporate opportunity, unfair competition and fraud, and constructive trust issues. Panda seeks damages of approximately $4.8 billion, of which $3.6 billion is claimed in punitive damages. Entergy believes that this lawsuit is without merit; however, no assurance can be given as to the timing or outcome of this matter. Item 4. Submission of Matters to a Vote of Security Holders Amendment of Company Bylaws MP&L On April 5, 1995, Entergy Corporation, the owner of all issued and outstanding shares of the common stock of MP&L, adopted a resolution to amend the second sentence of Section 11 of the bylaws of MP&L as follows: "The Vice Chairman and Chief Operating Officer of the Company shall also be a member of the Executive Committee." In addition the adopted resolution resolved that Edwin Lupberger, Jerry L. Maulden and Jerry D. Jackson shall continue as the members of the Executive Committee of MP&L until the next Annual Meeting of Shareholders of MP&L. Item 5. Other Information PUCT Fuel Cost Review GSU See Note 2 and also pages 22, 96 and 184 of the Form 10-K for a discussion of the PUCT's approval of GSU's settlement agreement of over- and under-recovery of fuel and purchased power expenses for the period October 1, 1991 through December 31, 1993. On April 17, 1995, the PUCT issued a final order approving the settlement. Performance-Based Formula Rate Plan Entergy Corporation and LP&L See Note 2 and pages 24-25, 95 and 224 of the Form 10-K, for a discussion of LP&L's performance-based formula rate plan filing with the LPSC. Hearings were held on the LP&L proposed performance-based formula rate plan in March 1995. On April 20, 1995 the LPSC Staff recommended a $49.4 million reduction in base rates. This recommended rate reduction included $8.5 million of rates previously reduced through fuel clause reductions; therefore, the net effect of the recommended reduction is $40.9 million. The LPSC Staff recommended the approval of LP&L's proposed formula rate plan with the following modifications. An earnings band would be established from a 10.4% to a 12% return on equity. If LP&L's earnings fall within the bandwidth, no adjustment in rates occurs. If LP&L's earnings are above the 12% return on equity, a 60/40 sharing with customers occurs and customers receive 60% of earnings in excess of the 12% through prospective rate reductions. Alternatively, if LP&L's earnings are below the 10.4% return on equity, customers pay 60% of the difference between the realized return on equity and the 10.4% through prospective rate increases. The LPSC Staff's recommendation also included a reduction in LP&L's authorized rate of return from 12.76% to 11.2%. The LPSC is expected to issue a final order in late May 1995. February 1994 Ice Storm/Rate Rider Entergy Corporation and MP&L See Note 2 and also pages 26, 95, 262 of the Form 10-K for a discussion of MP&L's rate recovery of the February 1994 ice storm damages. On April 28, 1995, MP&L filed for a rate increase of $2.9 million to be in effect for a four-year period beginning September 28, 1995, to recover costs related to the ice storm that were recorded after April 30, 1994. At the end of the four- year period, undepreciated ice storm capital costs recorded after April 30, 1994, will be treated consistently with undepreciated ice storm costs included under the September 1994 stipulation. MP&L's filing requested recovery of capital costs and deferred operating and maintenance expenses of approximately $14.2 million and $1 million, respectively. No assurance can be given as to the outcome of the filing. Nonregulated Investments Entergy Corporation As discussed on page 3 and 4 of the Form 10-K, Entergy Corporation continues to consider opportunities to expand its business, including opportunities in overseas power development. On March 31, 1995, Entergy Corporation, through its subsidiary, Entergy Power Development Company (EPDC), entered into an agreement with Enron Power Development Corp. (Enron), a subsidiary of Enron Corporation, to acquire a 20% interest in the Dabhol Power Project (Project) located in the State of Maharashtra, India. The Project is a 695 megawatt combined cycle facility which will burn distillate as its fuel. Entergy Corporation made an initial investment in the Project of approximately $20.5 million. The total Project is estimated to cost approximately $920 million. The Project is fully financed and under construction with commercial operation expected by the end of 1997. At the time of commercial operations EPDC will have invested approximately $90 million in the Project. In addition to its investment EPDC has committed to cover its pro rata share of cost overruns up to approximately $30 million, if they are incurred. See Note 1 for a discussion of EPDC's agreement with Enron to acquire a 20% interest in the Project. As discussed on page 3 of the Form 10-K, Entergy Corporation requested authorization from the SEC to convert the debt obligation of Entergy Power into equity. On April 18, 1995, Entergy Corporation received authorization from the SEC to consummate this transaction. Labor Contract Negotiations AP&L, GSU, and MP&L On June 24, 1995, GSU's labor union contract expires. Negotiations for a new GSU labor union contract began on April 24, 1995. The River Bend labor union employees' contract will be renegotiated separately in the near future. AP&L and MP&L's labor union contracts expire on October 1, 1995, and October 15, 1995, respectively. Although no contract negotiations are in process at present for AP&L and MP&L, renegotiations are expected in the near future. Common Stock Price Range and Dividends Entergy Corporation The shares of Entergy Corporation's common stock are listed on the New York, Chicago, and Pacific Stock Exchanges. The high and low sales prices of Entergy Corporation's common stock for the first quarter of 1995, as reported by The Wall Street Journal as composite transactions, were $24.75 and $20.00, respectively, per share. For the twelve months ended March 31, 1995, Entergy Corporation paid common stock dividends in an aggregate amount of $1.80 per share. As of March 31, 1995, the consolidated book value of a share of Entergy Corporation's common stock was $27.27 and the last reported sale price of Entergy Corporation's common stock on March 31, 1995, was $20 7/8 per share. Earnings Ratios AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy The System operating 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: Twelve Months Ended December 31, March 31, 1990 1991 1992 1993 1994 1995 Ratios of Earnings to Fixed Charges (a) AP&L 2.16 2.25 2.28 3.11(f) 2.32 2.18 GSU .80(g) 1.56 1.72 1.54 .36(g) .32(g) LP&L 2.32 2.40 2.79 3.06 2.91 2.89 MP&L 2.42 2.36 2.37 3.79(f) 2.12 2.22 NOPSI 2.73 5.66(e) 2.66 4.68(f) 1.91 2.23 System Energy 2.10 1.74 2.04 1.87 1.23 1.47 Twelve Months Ended December 31, March 31, 1990 1991 1992 1993 1994 1995 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends (a)(b)(c) AP&L 1.81 1.87 1.86 2.54(f) 1.97 1.86 GSU (d) .59(g) 1.19 1.37 1.21 .29(g) .26(g) LP&L 1.87 1.95 2.18 2.39 2.43 2.42 MP&L 1.93 1.94 1.97 3.08(f) 1.81 1.91 NOPSI 2.36 4.97(e) 2.36 4.12(f) 1.73 2.02 (a) "Earnings," as defined by SEC Regulation S-K, represent the aggregate of (1) net income, (2) taxes based on income, (3) investment tax credit adjustments - net, and (4) fixed charges. "Fixed Charges" include interest (whether expensed or capitalized), related amortization, and interest applicable to rentals charged to operating expenses. (b) "Preferred Dividends," as defined by SEC Regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the effective income tax rate. (c) System Energy's Amended and Restated Articles of Incorporation do not currently provide for the issuance of preferred stock. (d) "Preferred Dividends" in the case of GSU also include dividends on preference stock. (e) Earnings for the year ended December 31, 1991 include the $90 million effect of the 1991 NOPSI Settlement. (f) Earnings for the year ended December 31, 1993 include $81 million, $52 million, and $18 million for AP&L, MP&L, and NOPSI, respectively, related to the change in accounting principle to provide for the accrual of estimated unbilled revenues. (g) Earnings for the years ended December 31, 1994 and 1990, for GSU were not adequate to cover fixed charges by $144.8 million and $60.6 million, respectively. Earnings for the years ended December 31, 1994 and 1990, for GSU were not adequate to cover combined fixed charges and preferred dividends by $197.1 million and $165.1 million, respectively. Earnings for the twelve months ended March 31, 1995 for GSU were not adequate to cover fixed charges by $151.5 million. Earnings for the twelve months ended March 31, 1995 for GSU were not adequate to cover combined fixed charges and preferred dividends by $201.8 million. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* ** 4(a) - Tenth Supplemental Indenture, dated as of April 1, 1995, to MP&L's Mortgage and Deed of Trust (filed as Exhibit A-2(l) to Rule 24 Certificate dated April 21, 1995 in File No. 70-7914). ** 4(b) - Fifth Supplemental Indenture, dated as of April 1, 1995, to NOPSI's Mortgage and Deed of Trust (filed as Exhibit 4(a) to Form 8-K dated April 26, 1995 in File No. 0-5807). 23(a) - Consent of Friday, Eldredge & Clark. 23(b) - Consent of Monroe & Lemann (A Professional Corporation). 23(c) - Consent of Wise Carter Child & Caraway, Professional Association. 23(d) - Consent of Clark, Thomas & Winters (A Professional Corporation). 23(e) - Consent of Sandlin Associates. 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of March 31, 1995. 27(b) - Financial Data Schedule for AP&L as of March 31, 1995. 27(c) - Financial Data Schedule for GSU as of March 31, 1995. 27(d) - Financial Data Schedule for LP&L as of March 31, 1995. 27(e) - Financial Data Schedule for MP&L as of March 31, 1995. 27(f) - Financial Data Schedule for NOPSI as of March 31, 1995. 27(g) - Financial Data Schedule for System Energy as of March 31, 1995. 99(a) - AP&L's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - GSU's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - LP&L's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - MP&L's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - NOPSI's 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, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy for the fiscal year ended December 31, 1994, 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) - Opinion of Clark, Thomas & Winters, a professional corporation, dated September 30, 1992 regarding the effect of the October 1, 1991 judgment in GSU v. PUCT in the District Court of Travis County, Texas (99-1 in Registration No. 33-48889). ** 99(i) - Opinion of Clark, Thomas & Winters, a professional corporation, dated August 8, 1994 regarding recovery of costs deferred pursuant to PUCT order in Docket 6525 (filed as Exhibit 99(j) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 in File No. 1-2703). 99(j) - Opinion of Clark, Thomas & Winters, a professional corporation, confirming its opinions dated September 30, 1992 and August 8, 1994. ___________________________ * Reference is made to a duplicate list of exhibits being filed as a part of Form 10-Q for the quarter ended March 31, 1995, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being filed with Form 10-Q for the quarter ended March 31, 1995. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K NOPSI A current report on Form 8-K, dated April 20, 1995, was filed with the SEC on April 26, 1995, reporting information under Item 5. "Other Events." EXPERTS All statements in Part II of this Quarterly Report on Form 10-Q as to matters of law and legal conclusions, based on the belief or opinion of AP&L, LP&L, MP&L, NOPSI, and System Energy or otherwise, pertaining to the titles to properties, franchises and other operating rights of certain of the registrants filing this Quarterly Report on Form 10-Q, and their subsidiaries, the regulations to which they are subject and any legal proceedings to which they are parties are made on the authority of Friday, Eldredge & Clark, 2000 First Commercial Building, 400 West Capitol, Little Rock, Arkansas, as to AP&L; Monroe & Lemann (A Professional Corporation), 201 St. Charles Avenue, Suite 3300, New Orleans, Louisiana, as to LP&L and NOPSI; and Wise Carter Child & Caraway, Professional Association, Heritage Building, Jackson, Mississippi, as to MP&L and System Energy. The statements attributed to Clark, Thomas & Winters, a professional corporation, as to legal conclusions with respect to GSU's rate regulation in Texas in Note 2 to Entergy Corporation and Subsidiaries Consolidated Financial Statements, "Rate and Regulatory Matters," have been reviewed by such firm and are included herein upon the authority of such firm as experts. The statements attributed to Sandlin Associates regarding the analysis of River Bend construction costs of GSU in Note 2 to Entergy Corporation and Subsidiaries Consolidated Financial Statements, "Rate and Regulatory Matters," have been reviewed by such firm and are included herein upon the authority of such firm as experts. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries. ENTERGY CORPORATION ARKANSAS POWER & LIGHT COMPANY GULF STATES UTILITIES COMPANY LOUISIANA POWER & LIGHT COMPANY MISSISSIPPI POWER & LIGHT COMPANY NEW ORLEANS PUBLIC SERVICE INC. SYSTEM ENERGY RESOURCES, INC. /s/ Lee W. Randall Lee W. Randall Vice President and Chief Accounting Officer (For each Registrant and for each as Principal Accounting Officer) Date: May 11, 1995 EX-23 2 Exhibit 23(a) [Letterhead of Friday, Eldredge & Clark] May 9, 1995 Entergy Corporation 225 Baronne Street New Orleans, Louisiana 70112 Gentlemen: We consent to the reference to our firm under the heading "Experts" in the Quarterly Report on Form 10-Q being filed on or about the date hereof by Entergy Corporation, Arkansas Power & Light Company ("AP&L"), Gulf States Utilities Company, Louisiana Power & Light Company, Mississippi Power & Light Company, New Orleans Public Service Inc. and System Energy Resources, Inc. We further consent to the incorporation by reference of such reference to our firm into AP&L's Registration Statements (Form S- 3, File Nos. 33-36149, 33-48356 and 33-50289), and related Prospectuses pertaining to AP&L's First Mortgage Bonds and/or Preferred Stock and First Mortgage Bonds, respectively. Very truly yours, /s/ Friday, Eldredge & Clark FRIDAY, ELDREDGE & CLARK EX-23 3 Exhibit 23(b) [Letterhead of Monroe & Lemann] May 9, 1995 Entergy Corporation 225 Baronne Street New Orleans, Louisiana 70112 Gentlemen: We consent to the reference to our firm under the heading "Experts" in the Quarterly Report on Form 10-Q being filed on or about the date hereof by Entergy Corporation, Arkansas Power & Light Company, Gulf States Utilities Company, Louisiana Power & Light Company ("LP&L"), Mississippi Power & Light Company, New Orleans Public Service Inc. ("NOPSI") and System Energy Resources, Inc. We further consent to the incorporation by reference of such reference to our firm into LP&L's Registration Statements on Form S-3, and the related prospectuses (File Nos. 33-50937, 33-46085 and 33-39221) pertaining to LP&L's First Mortgage Bonds and Preferred Stock, and into NOPSI's Registration Statement on Form S-3, and the related prospectus (File No. 33- 57926) pertaining to NOPSI's General and Refunding Mortgage Bonds. Very truly yours, /s/ Monroe & Lemann MONROE & LEMANN EX-23 4 Exhibit 23(c) [Letterhead of Wise Carter Child & Caraway] May 9, 1995 Entergy Corporation 225 Baronne Street New Orleans, Louisiana 70112 Gentlemen: We consent to the reference to our firm under the heading "Experts" in the Quarterly Report on Form 10-Q being filed on or about the date hereof by Entergy Corporation, Arkansas Power & Light Company, Gulf States Utilities Company, Louisiana Power & Light Company, Mississippi Power & Light Company ("MP&L"), New Orleans Public Service Inc., and System Energy Resources, Inc. ("System Energy"). We further consent to the incorporation by reference of such reference to our firm into System Energy's Registration Statement on Form S-3, and the related prospectus (File No. 33-47662) pertaining to System Energy's First Mortgage Bonds, and into MP&L's Registration Statements on Form S-3, and the related prospectuses (File Nos. 33-53004, 33-55826 and 33- 50507) pertaining to MP&L's General and Refunding Mortgage Bonds and MP&L's Preferred Stock. Very truly yours, WISE CARTER CHILD & CARAWAY, Professional Association By: /s/ Robert B. McGehee Robert B. McGehee EX-23 5 Exhibit 23(d) [Letterhead of Clark, Thomas & Winters] CONSENT We consent to the reference to our firm under the heading "Experts" in the Quarterly Report on Form 10-Q being filed on or about the date hereof by Entergy Corporation, Arkansas Power & Light Company, Gulf States Utilities Company ("GSU"), Louisiana Power & Light Company, Mississippi Power & Light Company, New Orleans Public Service Inc. and System Energy Resources, Inc. We further consent to the incorporation by reference in the registration statements of GSU on Form S-3 and Form S-8 (File Numbers 2-76551, 2-98011, 33-49739, and 33-51181) of such reference and Statements of Legal Conclusions. /s/ Clark, Thomas & Winters A Professional Corporation CLARK, THOMAS & WINTERS, A Professional Corporation Austin, Texas May 9, 1995 EX-23 6 Exhibit 23(e) CONSENT We consent to the reference to our firm under the heading "Experts" in the Quarterly Report on Form 10-Q being filed on or about the date hereof by Entergy Corporation, Arkansas Power & Light Company, Gulf States Utilities Company ("GSU"), Louisiana Power & Light Company, Mississippi Power & Light Company, New Orleans Public Service Inc. and System Energy Resources, Inc. We further consent to the incorporation by reference of such reference to our firm into GSU's Registration Statements on Form S-3 and Form S-8 (File Numbers 2-76551, 2-98011, 33-49739 and 33- 51181) of such reference and Statements. /s/ Sandlin Associates SANDLIN ASSOCIATES Management Consultants Pasco, Washington May 8, 1995 EX-27 7
UT This schedule contains summary financial information extracted from Entergy Corporation and Subsidiaries financial statements for the quarter ended March 31, 1995 and is qualified in its entirety by reference to such financial statements. 0000065984 ENTERGY CORPORATION 1,000 3-MOS DEC-31-1995 MAR-31-1995 PER-BOOK 15,838,326 516,477 2,088,488 3,945,624 0 22,388,915 2,300 4,199,780 2,076,824 6,211,526 283,198 543,455 7,035,128 133,242 0 0 364,885 0 265,889 151,479 7,332,735 22,388,915 1,346,068 35,137 1,075,023 1,110,160 235,908 7,691 243,599 187,274 76,175 19,850 56,325 101,969 0 275,581 0 0
EX-27 8
UT This schedule contains summary financial information extracted from AP&L's financial statements for the quarter ended March 31, 1995 and is qualified in its entirety by reference to such financial statements. 0000007323 ARKANSAS POWER & LIGHT COMPANY 1,000 3-MOS DEC-31-1995 MAR-31-1995 PER-BOOK 2,863,295 154,739 529,195 718,568 0 4,265,797 470 590,844 466,499 1,057,813 53,527 176,350 1,273,227 34,667 0 0 53,175 0 87,304 56,213 1,473,521 4,265,797 339,596 (2,469) 311,035 308,566 31,030 10,350 41,380 29,318 12,062 4,561 7,501 32,800 0 124,842 0 0
EX-27 9
UT This schedule contains summary financial information extracted from GSU's financial statements for the quarter ended March 31, 1995 and is qualified in its entirety by reference to such financial statements. 0000044570 GULF STATES UTILITIES COMPANY 1,000 3-MOS DEC-31-1995 MAR-31-1995 PER-BOOK 4,680,763 59,936 673,434 1,446,258 0 6,860,391 114,055 1,152,419 260,671 1,527,145 92,687 136,444 2,300,744 0 0 0 70,425 0 114,765 36,733 2,581,448 6,860,391 399,346 (162) 352,137 351,975 47,371 5,300 52,671 49,036 3,635 7,590 (3,955) 0 0 129,888 0 0
EX-27 10
UT This schedule contains summary financial information extracted from LP&L's financial statements for the quarter ended March 31, 1995 and is qualified in its entirety by reference to such financial statements. 0000060527 LOUISIANA POWER & LIGHT COMPANY 1,000 3-MOS DEC-31-1995 MAR-31-1995 PER-BOOK 3,526,697 65,337 298,556 486,084 0 4,376,674 1,088,900 (5,029) 88,190 1,172,061 103,765 160,500 1,368,194 19,200 0 0 110,320 0 8,316 28,000 1,406,318 4,376,674 352,996 18,696 264,983 283,679 69,317 911 70,228 34,166 36,062 5,591 30,471 55,700 0 103,724 0 0
EX-27 11
UT This schedule contains summary financial information extracted from MP&L's financial statements for the quarter ended March 31, 1995 and is qualified in its entirety by reference to such financial statements. 0000066901 MISSISSIPPI POWER & LIGHT COMPANY 1,000 3-MOS DEC-31-1995 MAR-31-1995 PER-BOOK 963,119 11,152 219,686 397,472 0 1,591,429 199,326 (1,661) 231,778 429,443 23,770 57,881 475,279 42,319 0 0 25,965 0 519 0 536,253 1,591,429 193,324 3,363 167,691 171,054 22,270 297 22,567 12,793 9,774 1,707 8,067 8,300 0 51,840 0 0
EX-27 12
UT This schedule contains summary financial information extracted from NOPSI'S financial statements for the quarter ended March 31, 1995 and is qualified in its entirety by reference to such financial statements. 0000071508 NEW ORLEANS PUBLIC SERVICE INC. 1,000 3-MOS DEC-31-1995 MAR-31-1995 PER-BOOK 278,223 3,259 116,737 186,290 0 584,509 33,744 36,247 84,731 154,722 1,949 19,780 179,172 0 0 0 0 0 0 0 228,886 584,509 108,886 3,275 94,748 98,023 10,863 282 11,145 4,900 6,245 400 5,845 0 0 18,578 0 0
EX-27 13
UT This schedule contains summary financial information extracted from System Energy's financial statements for the quarter ended March 31, 1995 and is qualified in its entirety by reference to such financial statements. 0000202584 SYSTEM ENERGY RESOURCES, INC 1,000 3-MOS DEC-31-1995 MAR-31-1995 PER-BOOK 2,747,248 33,810 245,640 655,335 0 3,682,033 789,350 7 108,246 897,603 0 0 1,438,511 0 0 0 105,000 0 38,000 28,000 1,174,919 3,682,033 151,664 19,305 72,287 91,592 60,072 1,756 61,828 39,263 22,565 0 22,565 0 0 (26,179) 0 0
EX-99 14
Exhibit 99(a) Arkansas Power and Light Company Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, 1990 1991 1992 1993 1994 1995 (In Thousands, Except for Ratios) Fixed charges, as defined: Interest on long-term debt $132,607 $133,854 $120,317 $107,771 $101,439 $102,017 Interest on notes payable 1,027 -- 117 349 1,311 1,086 Amortization of expense and premium on debt-net(cr) 1,792 1,112 1,359 2,702 4,563 4,574 Other interest 1,567 1,303 2,308 8,769 3,501 6,133 Interest applicable to rentals 24,233 21,969 17,657 16,860 19,140 19,282 ---------------------------------------------------------- Total fixed charges, as defined 161,226 158,238 141,758 136,451 129,954 133,092 Preferred dividends, as defined (a) 30,851 31,458 32,195 30,334 23,234 23,321 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $192,077 $189,696 $173,953 $166,785 $153,188 $156,413 ========================================================== Earnings as defined: Net Income $129,765 $143,451 $130,529 $205,297 $142,263 $127,936 Add: Provision for income taxes: Federal & State 50,921 44,418 57,089 58,162 83,300 71,813 Deferred - net 17,943 11,048 3,490 34,748 (17,939) (7,643) Investment tax credit adjustment - net (12,022) (1,600) (9,989) (10,573) (36,141) (34,687) Fixed charges as above 161,226 158,238 141,758 136,451 129,954 133,092 ---------------------------------------------------------- Total earnings, as defined $347,833 $355,555 $322,877 $424,085 $301,437 $290,511 ========================================================== Ratio of earnings to fixed charges, as defined 2.16 2.25 2.28 3.11 2.32 2.18 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.81 1.87 1.86 2.54 1.97 1.86 ========================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 15
Exhibit 99(b) Gulf States Utilities Company Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, 1990 1991 1992 1993 1994 1995 Fixed charges, as defined: Interest on mortgage bonds $218,462 $201,335 $197,218 $172,494 $167,082 $166,683 Interest on notes payable 24,295 8,446 - - 763 824 Interest on long-term debt - other 12,668 19,507 21,155 19,440 19,440 19,440 Other interest 18,380 29,169 26,564 10,561 7,957 7,725 Amortization of expense and premium on debt-net(cr) 2,192 1,999 3,479 8,104 8,892 8,580 Interest applicable to rentals 23,761 24,049 23,759 23,455 21,539 19,021 ---------------------------------------------------------- Total fixed charges, as defined 299,758 284,505 272,175 234,054 225,673 222,273 Preferred dividends, as defined (a) 104,484 90,146 69,617 65,299 52,210 50,271 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $404,242 $374,651 $341,792 $299,353 $277,883 $272,544 ========================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes ($36,399) $112,391 $139,413 $69,462 ($82,755) ($90,229) Add: Income Taxes (24,216) 48,250 55,860 58,016 (62,086) (61,281) Fixed charges as above 299,758 284,505 272,175 234,054 225,673 222,273 ---------------------------------------------------------- Total earnings, as defined $239,143 $445,146 $467,448 $361,532 $80,832 $70,763 ========================================================== Ratio of earnings to fixed charges, as defined 0.80 1.56 1.72 1.54 0.36 0.32 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 0.59 1.19 1.37 1.21 0.29 0.26 ==========================================================
(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. (b) Earnings for the year ended December 31, 1994 and 1990, for GSU were not adequate to cover fixed charges by $144.8 million and $60.6 million, respectively. Earnings for the years ended December 31, 1994 and 1990, for GSU were not adequate to cover fixed charges and preferred dividends by $197.1 million and $165.1 million, respectively. Earnings for the twelve months ended March 31, 1995 for GSU were not adequate to cover fixed charges by $151.5 million. Earnings for the twelve months ended March 31, 1995 for GSU were not adequate to cover fixed charges and preferred dividends by $201.8 million. EX-99 16
Exhibit 99(c) Louisiana Power and Light Company Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, 1990 1991 1992 1993 1994 1995 Fixed charges, as defined: Interest on long-term debt $154,357 $158,816 $128,672 $124,633 $124,820 $124,897 Interest on notes payable 87 -- 150 898 1,948 2,037 Other interest charges 6,378 5,924 5,591 5,706 4,546 5,231 Amortization of expense and premium on debt - net(cr) 3,397 3,282 7,100 5,720 5,130 5,153 Interest applicable to rentals 12,906 11,381 9,363 8,519 8,332 10,363 --------------------------------------------------------------- Total fixed charges, as defined 177,125 179,403 150,876 145,476 144,776 147,681 Preferred dividends, as defined (a) 42,365 41,212 42,026 40,779 29,171 28,650 --------------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $219,490 $220,615 $192,902 $186,255 $173,947 $176,331 =============================================================== Earnings as defined: Net Income $155,049 $166,572 $182,989 $188,808 $213,839 $213,806 Add: Provision for income taxes: Federal and State 62,236 8,684 36,465 70,552 79,260 101,351 Deferred Federal and State - net (9,655) 67,792 51,889 43,017 21,580 1,708 Investment tax credit adjustment - net 26,646 8,244 (1,317) (2,756) (37,552) (37,305) Fixed charges as above 177,125 179,403 150,876 145,476 144,776 147,681 --------------------------------------------------------------- Total earnings, as defined $411,401 $430,695 $420,902 $445,097 $421,903 $427,241 =============================================================== Ratio of earnings to fixed charges, as defined 2.32 2.40 2.79 3.06 2.91 2.89 =============================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.87 1.95 2.18 2.39 2.43 2.42 ===============================================================
- ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. EX-99 17
Exhibit 99(d) Mississippi Power and Light Company Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, 1990 1991 1992 1993 1994 1995 Fixed charges, as defined: Interest on long-term debt $63,975 $63,628 $60,709 $52,099 $46,081 $44,733 Interest on notes payable 1,512 953 36 7 1,348 1,315 Other interest charges 1,494 1,444 1,636 1,795 3,581 4,556 Amortization of expense and premium on debt-net(cr) 1,737 1,617 1,685 1,458 1,754 1,691 Interest applicable to rentals 596 574 521 1,264 1,716 2,354 ---------------------------------------------------------- Total fixed charges, as defined 69,314 68,216 64,587 56,623 54,480 54,649 Preferred dividends, as defined (a) 17,584 14,962 12,823 12,990 9,447 9,013 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $86,898 $83,178 $77,410 $69,613 $63,927 $63,662 ========================================================== Earnings as defined: Net Income $60,830 $63,088 $65,036 $101,743 $48,779 $52,303 Add: Provision for income taxes: Federal and State 4,027 (1,001) 4,463 54,418 46,884 53,422 Deferred Federal and State - net 35,721 32,491 20,430 539 (26,763) (31,226) Investment tax credit adjustment - net (1,835) (1,634) (1,746) 1,036 (7,645) (7,596) Fixed charges as above 69,314 68,216 64,587 56,623 54,480 54,649 ----------------------------------------------------------- Total earnings, as defined $168,057 $161,160 $152,770 $214,359 $115,735 $121,552 =========================================================== Ratio of earnings to fixed charges, as defined 2.42 2.36 2.37 3.79 2.12 2.22 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.93 1.94 1.97 3.08 1.81 1.91 ===========================================================
- ------------------------ (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 18
Exhibit 99(e) New Orleans Public Service Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, 1990 1991 1992 1993 1994 1995 Fixed charges, as defined: Interest on mortgage bonds $24,472 $23,865 $22,934 $19,478 $16,382 $16,168 Interest on notes payable -- -- -- -- 153 138 Other interest charges 831 793 1,714 1,016 1,027 1,346 Amortization of expense and premium on debt-net(cr) 579 565 576 598 710 710 Interest applicable to rentals 160 517 444 544 1,245 1,544 ---------------------------------------------------------- Total fixed charges, as defined 26,042 25,740 25,668 21,636 19,517 19,906 Preferred dividends, as defined (a) 4,020 3,582 3,214 2,952 2,055 2,055 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $30,062 $29,322 $28,882 $24,588 $21,572 $21,961 ========================================================== Earnings as defined: Net Income $27,542 $74,699 $26,424 $47,709 $13,211 $17,644 Add: Provision for income taxes: Federal and State 134 8,885 16,575 27,479 22,606 17,453 Deferred Federal and State - net 17,370 36,947 (340) 5,203 (15,674) (8,246) Investment tax credit adjustment - net (75) (591) (170) (744) (2,332) (2,316) Fixed charges as above 26,042 25,740 25,668 21,636 19,517 19,906 ---------------------------------------------------------- Total earnings, as defined $71,013 $145,680 $68,157 $101,283 $37,328 $44,441 ========================================================== Ratio of earnings to fixed charges, as defined 2.73 5.66 2.66 4.68 1.91 2.23 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.36 4.97 2.36 4.12 1.73 2.02 ==========================================================
- ------------------------ (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 19
Exhibit 99 (f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges Twelve Months Ended December 31, March 31, 1990 1991 1992 1993 1994 1995 Fixed charges, as defined: Interest on long-term debt $230,644 $218,538 $196,618 $184,818 $162,517 $157,249 Interest on notes payable 0 0 0 0 88 111 Amortization of expense and premium on debt-net 10,532 7,495 6,417 4,520 6,731 6,571 Interest applicable to rentals 13,830 10,007 6,265 6,790 7,546 7,000 Other interest charges 1,460 3,617 1,506 1,600 7,168 9,466 ---------------------------------------------------------- Total fixed charges, as defined $256,466 $239,657 $210,806 $197,728 $184,050 $180,397 ========================================================== Earnings as defined: Net Income $168,677 $104,622 $130,141 $93,927 $5,407 $6,422 Add: Provision for income taxes: Federal and State 4,620 (26,848) 35,082 48,314 67,477 75,581 Deferred Federal and State - net 52,962 37,168 23,648 60,690 (27,374) 5,833 Investment tax credit adjustment - net 56,320 63,256 30,123 (30,452) (3,265) (3,265) Fixed charges as above 256,466 239,657 210,806 197,728 184,050 180,397 ---------------------------------------------------------- Total earnings, as defined $539,045 $417,855 $429,800 $370,207 $226,295 $264,968 ========================================================== Ratio of earnings to fixed charges, as defined 2.10 1.74 2.04 1.87 1.23 1.47 ==========================================================
EX-99 20 Exhibit 99(j) [LETTERHEAD OF CLARK, THOMAS & WINTERS] May 9, 1995 Gulf States Utilities Company 639 Loyola Avenue New Orleans, LA 70112 Attn: Scott Forbes Re: SEC Form 10-Q of Gulf States Utilities Company (the "Company") for the quarter ending March 31, 1995 Dear Mr. Forbes: Our firm has rendered to the Company two opinion letters dated September 30, 1992 and August 8, 1994, concerning certain issues presented in the appeal of PUCT Docket No. 7195 now pending in the Texas Third District Court of Appeals. In connection with the above-referenced Form 10-Q, we confirm to you as of the date hereof that we continue to hold the opinions set forth in the letter dated August 8, 1994 and in the September 30, 1992 letter which addressed the recovery of $1.45 billion of abeyed construction costs. CLARK, THOMAS & WINTERS A Professional Corporation /s/ Clark, Thomas & Winters, A Professional Corporation _______________________________ The opinion letters dated September 30, 1992 indicate that the amount of River Bend plant costs held in abeyance was $1.45 billion. The more correct amount, as indicated by the Company in its securities filings to which those opinions related, is $1.4 billion. -----END PRIVACY-ENHANCED MESSAGE-----