-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JuVDC2mtsdXZSrkXRalWpxvBfY5bbtyb81u1SOWZIbtkqr621aek1XgaD8boqydA BgMRN/UBe4UI5XcwJud0sw== 0000065984-96-000124.txt : 19960806 0000065984-96-000124.hdr.sgml : 19960806 ACCESSION NUMBER: 0000065984-96-000124 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 18 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960805 SROS: NYSE 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: 96603565 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GSU HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY CORP /FL/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH UTILITIES INC DATE OF NAME CHANGE: 19890521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY ARKANSAS INC CENTRAL INDEX KEY: 0000007323 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96603566 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 FORMER COMPANY: FORMER CONFORMED NAME: ARKANSAS POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY GULF STATES INC CENTRAL INDEX KEY: 0000044570 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 740662730 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20371 FILM NUMBER: 96603567 BUSINESS ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 BUSINESS PHONE: 4098386631 MAIL ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 FORMER COMPANY: FORMER CONFORMED NAME: GULF STATES UTILITIES CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY LOUISIANA INC CENTRAL INDEX KEY: 0000060527 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 720245590 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08474 FILM NUMBER: 96603568 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045953100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY MISSISSIPPI INC CENTRAL INDEX KEY: 0000066901 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96603569 BUSINESS ADDRESS: STREET 1: PO BOX 1640 CITY: JACKSON STATE: MS ZIP: 39215-1640 BUSINESS PHONE: 6019692311 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY NEW ORLEANS INC CENTRAL INDEX KEY: 0000071508 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 720273040 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05807 FILM NUMBER: 96603570 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045953100 MAIL ADDRESS: STREET 1: PO BOX 60340 CITY: NEW ORL STATE: LA ZIP: 70160 FORMER COMPANY: FORMER CONFORMED NAME: NEW ORLEANS PUBLIC SERVICE INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEM ENERGY RESOURCES INC CENTRAL INDEX KEY: 0000202584 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96603571 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 June 30, 1996 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 Offices Identification No. and Telephone Number - ----------- -------------------------------------- ------------------ 1-11299 ENTERGY CORPORATION 72-1229752 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 1-10764 ENTERGY ARKANSAS, INC. 71-0005900 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 1-2703 ENTERGY GULF STATES, INC. 74-0662730 (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 838-6631 1-8474 ENTERGY LOUISIANA, INC. 72-0245590 (a Louisiana corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 0-320 ENTERGY MISSISSIPPI, INC. 64-0205830 (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040 (a Louisiana corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 529-5262 1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777 (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Common Stock Outstanding Outstanding at July 31, 1996 Entergy Corporation ($0.01 par value) 228,042,517 ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q June 30, 1996 Page Number ----------- Definitions 1 Management's Financial Discussion and Analysis - Liquidity and Capital Resources 3 Management's Financial Discussion and Analysis - Significant Factors and Known Trends 6 Financial Statements and Results of Operations: Entergy Corporation and Subsidiaries: Results of Operations 10 Statements of Consolidated Income 12 Statements of Consolidated Cash Flows 13 Consolidated Balance Sheets 15 Selected Operating Results 17 Entergy Arkansas, Inc.: Results of Operations 19 Statements of Income 21 Statements of Cash Flows 22 Balance Sheets 23 Selected Operating Results 25 Entergy Gulf States, Inc.: Results of Operations 27 Statements of Income (Loss) 29 Statements of Cash Flows 30 Balance Sheets 31 Selected Operating Results 33 Entergy Louisiana, Inc.: Results of Operations 34 Statements of Income 35 Statements of Cash Flows 36 Balance Sheets 37 Selected Operating Results 39 Entergy Mississippi, Inc.: Results of Operations 41 Statements of Income 43 Statements of Cash Flows 44 Balance Sheets 45 Selected Operating Results 47 Entergy New Orleans, Inc.: Results of Operations 48 Statements of Income 49 Statements of Cash Flows 50 Balance Sheets 51 Selected Operating Results 53 System Energy Resources, Inc.: Results of Operations 54 Statements of Income 55 Statements of Cash Flows 56 Balance Sheets 57 Notes to Financial Statements for Entergy Corporation and Subsidiaries 59 Part II: Item 1. Legal Proceedings 70 Item 4. Submission of Matters to a Vote of Security Holders 71 Item 5. Other Information 73 Item 6. Exhibits and Reports on Form 8-K 74 Experts 76 Signature 77 This combined Quarterly Report on Form 10-Q is separately filed by Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. None of these companies make any representations as to information relating to the other companies. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on the Form 10-K for the calendar year ended December 31, 1995, filed by the individual registrants with the SEC and should be read in conjunction therewith. On April 22, 1996, the operating companies of Entergy Corporation filed amendments to their articles of incorporation to change their names. DEFINITIONS ------------ Certain abbreviations or acronyms used in the text are defined below: Abbreviation or Acronym Term - ----------------------- ---- ALJ Administrative Law Judge ANO Arkansas Nuclear One Plant ANO 1 Unit No. 1 of ANO ANO 2 Unit No. 2 of ANO Cajun Cajun Electric Power Cooperative, Inc. Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof CitiPower CitiPower Ltd. - an electric distribution company serving Melbourne, Australia, and surrounding suburbs, which was acquired by Entergy on January 5, 1996 Council Council of the City of New Orleans, Louisiana Entergy Arkansas Entergy Arkansas, Inc., formerly Arkansas Power & Light Company Entergy Corporation Entergy Corporation, a Delaware corporation, successor to Entergy Corporation, a Florida corporation Entergy Enterprises Entergy Enterprises, Inc. EIS Entergy Integrated Solutions, Inc. Entergy Gulf States Entergy Gulf States, Inc., formerly Gulf States Utilities Company (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company) Entergy Louisiana Entergy Louisiana, Inc., formerly Louisiana Power & Light Company Entergy Mississippi Entergy Mississippi, Inc., formerly Mississippi Power & Light Company Entergy New Orleans Entergy New Orleans, Inc., formerly New Orleans Public Service Inc. Entergy Operations Entergy Operations, Inc., a subsidiary of Entergy Corporation that has operating responsibility for ANO, Grand Gulf 1, River Bend, and Waterford 3 Entergy or System Entergy Corporation and its various direct and indirect subsidiaries Entergy Services Entergy Services, Inc. FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 1995, of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant KWh Kilowatt-hour(s) LPSC Louisiana Public Service Commission Merger The combination transaction, consummated on December 31, 1993, by which Entergy Gulf States became a subsidiary of Entergy Corporation and Entergy Corporation became a Delaware corporation Money Pool System Money Pool, which allows certain System companies to borrow from, or lend to, certain other System companies MPSC Mississippi Public Service Commission MWh Megawatt-hour(s) NRC Nuclear Regulatory Commission N/A Not applicable operating companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively 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 PCBs Polychlorinated biphenyls PUCT Public Utility Commission of Texas PURPA Public Utility Regulatory Policies Act River Bend River Bend Nuclear Plant, owned 70% by Entergy Gulf States SEC Securities and Exchange Commission SFAS Statement of Financial Accounting Standards as promulgated by the Financial Accounting Standards Board System Energy System Energy Resources, Inc. System Fuels System Fuels, Inc. System or Entergy Entergy Corporation and its various direct and indirect subsidiaries Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy Cash Flows - ---------- Net cash flow from operations for Entergy Corporation, the operating companies, and System Energy for the six months ended June 30, 1996, and 1995, was as follows: Six Months Six Months Company Ended 6/30/96 Ended 6/30/95 ------- ------------- ------------- (In Millions) Entergy Corporation $590.0 $449.7 Entergy Arkansas $157.8 $141.3 Entergy Gulf States $113.6 $100.4 Entergy Louisiana $155.9 $159.7 Entergy Mississippi $ 80.7 $ 74.8 Entergy New Orleans $ 15.0 $ 14.5 System Energy $129.3 $ 51.4 Entergy Arkansas' cash flow from operations increased for the six months ended June 30, 1996, due to an increase in retail energy sales. Entergy Gulf States' cash flow from operations increased for the six months ended June 30, 1996, due to an increase in retail energy sales partially offset by increased income taxes. System Energy's net cash flow from operations increased for the six months ended June 30, 1996, due primarily to refunds made to associated companies in 1995 resulting from a FERC audit settlement in 1994. Financing Sources - ----------------- As discussed in Note 9, on January 5, 1996, Entergy acquired CitiPower for approximately $1.2 billion. The acquisition was funded by a $294 million equity investment, with the balance funded by the issuance of debt. Entergy funded the majority of the equity portion of the investment with funds borrowed from a $300 million line of credit. Excluding the CitiPower investment, 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 for the first six months of 1996. Entergy's current ability to fund most of its capital requirements with cash from operations results from continued efforts to streamline operations and to reduce costs, as well as from collections under rate phase-in plans that 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.) These phase-in plans will continue to contribute to Entergy's cash position for the next several years. Specifically, the Grand Gulf 1 phase-in plans will expire in 1998 for Entergy Arkansas and Entergy Mississippi, and in 2001 for Entergy New Orleans. Entergy Gulf States' phase-in plan for River Bend will expire in 1998, and Entergy Louisiana's phase-in plan for Waterford 3 expires in November 1996. Should additional cash be needed for investing and financing requirements, the operating companies and System Energy have the ability, subject to regulatory approval, to issue debt or preferred securities to meet such requirements, as discussed below. In addition, to the extent market interest and dividend rates allow, the operating companies and System Energy will continue to refinance high-cost debt and preferred stock prior to maturity. The operating companies may establish special purpose trusts as financing subsidiaries for the purpose of issuing preferred trust securities, such as the 9% Cumulative Quarterly Income Preferred Securities, issued by Entergy Louisiana Capital I, a financing subsidiary of Entergy Louisiana. See Note 5 for a further discussion. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES In May 1996, Entergy Corporation registered 10 million additional shares of common stock pursuant to a new dividend reinvestment and stock purchase plan. The plan became effective in July 1996. Entergy periodically reviews its capital structure to determine its future needs for debt and equity financing. Certain agreements and restrictions limit the amount of mortgage bonds and preferred stock that can be issued by the operating companies and System Energy. Based on the most restrictive applicable tests and available retired bond credits as of June 30, 1996, and assumed annual interest or dividend rates of 8.5% for bonds and 7.8% for preferred stock, each of the operating companies and System Energy could have issued mortgage bonds or preferred stock up to the following amounts: Mortgage Preferred Company Bonds (a) Stock (In Millions) ----------------------- ------------- ------------ Entergy Arkansas $ 820 $ 759 Entergy Gulf States (b) $ 645 $ - Entergy Louisiana $ 676 $ 972 Entergy Mississippi $ 502 $ 433 Entergy New Orleans $ 93 $ 249 System Energy $ 150 (c) (a)Includes bonds issuable based on retired bond credits. (b)Entergy Gulf States was precluded from issuing mortgage bonds and preferred stock under its earnings coverage tests at June 30, 1996, due to the write-off of River Bend rate deferrals in the first quarter of 1996, as discussed in Note 8. Amount reflected above is the amount issuable based on retired bond credits. (c) System Energy's charter does not provide for the issuance of preferred stock. Entergy Gulf States has no earnings coverage limitations on the issuance of preference stock. Entergy Arkansas may also issue preferred stock to refund outstanding preferred stock without meeting an earnings coverage test. The operating companies and System Energy have SEC authorization to effect short-term borrowings. See Note 4 to the Form 10-K for information on the operating companies' and System Energy's short- term borrowing authorizations and bank lines of credit. At June 30, 1996, Entergy Louisiana and Entergy Mississippi had outstanding short- term borrowings from the Money Pool of $49.1 million and $2.2 million, respectively. In addition, Entergy Services and System Fuels had available bank lines of credit of $34 million and $45 million, respectively, at June 30, 1996. Entergy Corporation had $270 million outstanding under its $300 million bank credit facility at June 30, 1996, of which $230 million was used for the acquisition of CitiPower in January 1996. Financing Uses - -------------- As discussed in Part I of the Form 10-K, Entergy Corporation has been expanding its investments in energy-related business opportunities overseas and in the United States. As of June 30, 1996, Entergy Corporation had invested $869.6 million in equity capital (reduced by $180 million of accumulated losses) in nonregulated businesses, including CitiPower. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES In addition to investing in nonregulated businesses, Entergy Corporation's capital requirements result from periodically investing in, or making loans to, its subsidiaries, and sustaining its dividends. To meet such capital requirements, Entergy Corporation will utilize internally generated funds, cash on hand, funds remaining on its $300 million credit facility, funds received from its new dividend reinvestment plan, and other bank financings as may be required. Entergy Corporation receives funds through dividend payments from its domestic utility subsidiaries. During the first six months of 1996, such dividend payments from subsidiaries totaled $147.7 million. Due to its financial position, Entergy Gulf States has not paid common stock dividends since the third quarter of 1994 and is not currently expected to pay common stock dividends during 1996. Entergy Corporation paid $199.5 million of dividends on its common stock during the first six months of 1996. Declarations of dividends on common stock are made at the discretion of Entergy Corporation's Board of Directors. Management will not recommend future dividend increases to the Board unless such increases are justified by adequate earnings growth of Entergy Corporation and its subsidiaries. See Note 7 to the Form 10-K for information on dividend restrictions. Entergy Corporation and Entergy Gulf States See Notes 1 and 2 regarding the River Bend rate appeal and litigation with Cajun. An adverse ruling in the River Bend rate appeal could result in approximately $284 million of potential write- offs (net of tax) and $193 million in refunds of previously collected revenue. Such write-offs and charges could result in additional substantial net losses being reported in the future by Entergy Corporation and Entergy Gulf States, with resulting adverse adjustments to common equity of Entergy Corporation and Entergy Gulf States. Adverse resolution of these matters could adversely affect Entergy Gulf States' ability to obtain financing, which in turn could affect Entergy Gulf States' liquidity and ability to pay dividends. Although Entergy Corporation's common shareholders have 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. Entergy Corporation and System Energy Under the Capital Funds Agreement, Entergy Corporation has agreed to supply to System Energy sufficient capital to maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt), to permit the continued commercial operation of Grand Gulf 1, and to pay in full all indebtedness for borrowed money of System Energy when due 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 may be terminated by the parties thereto, subject to the consent of certain creditors. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Competition and Industry Challenges - ----------------------------------- See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a discussion of the increasing competitive pressures facing Entergy and the electric utility industry. On April 24, 1996, FERC issued Order No. 888 affirming its initial proposal that all public utilities subject to its jurisdiction provide comparable wholesale transmission access through the filing of a single open access tariff. FERC established the minimum conditions that must be included in such open access tariffs and also set forth certain provisions concerning the structuring of transactions within power pools, public utility holding companies, and bilateral coordination arrangements. The rules took effect sixty days after they were published in the Federal Register. In addition, the FERC ruled that public utilities are entitled to full recovery of prudently incurred costs allocable to FERC jurisdictional customers. If the costs are stranded by retail wheeling, public utilities should first seek recovery of these costs from the appropriate state or local regulators. Concurrently with the issuance of Order No. 888, FERC issued Order No. 889 which prescribes the requirements and procedures for the implementation and maintenance of an Open Access-Time Information System by each public utility. In addition, FERC issued a Notice of Proposed Rulemaking concerning capacity reservation tariffs as the next phase of FERC's efforts to promote wholesale competition. As noted in the Form 10-K, Entergy proposed that FERC serve in a federal "back-stop" role for stranded cost recovery in a holding company or other multi-state situation. FERC's final rule recognized that denial of retail stranded cost recovery by a state regulatory authority could inappropriately shift the disallowed costs to affiliated operating companies in other states. FERC encouraged the affected state regulators in such situations to seek a mutually agreeable approach to this potential problem. If the approach results in a filing to modify a jurisdictional agreement, FERC could agree with such a proposal, particularly if other interested parties support the filing. In the event the state or local regulators cannot reach a consensus, FERC would ultimately have to resolve the appropriate treatment of such stranded costs. Entergy plans to begin discussions with its state and local regulators regarding the orderly transition to a more competitive market for electricity. Entergy will be making a series of filings with regulators during the remainder of the year. On August 2, 1996, Entergy Mississippi filed with the MPSC a proposal for a rate rider to assure cost recovery. The rider, which does not change current rates for electric service provided by Entergy Mississippi, would apply to customers within the area certificated to Entergy Mississippi who obtain electricity in the future from a source other than Entergy Mississippi. In order to protect its core customers against the effects of retail access, were that to become available, Entergy Mississippi has designed this rider to assure that commitments made under the current system of regulation are honored and that cost burdens are not unfairly transferred from departing customers to those who remain on the Entergy Mississippi system. Retail and Wholesale Rate Issues See Note 2 to the Form 10-K and herein for a discussion of the ongoing trend of regulatory-ordered rate reductions as well as incentive and performance-based regulation. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Potential Changes in the Electric Utility Industry Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a discussion of legislative and regulatory developments relating to the potential for retail competition in the areas served by the operating companies. Significant Industrial Cogeneration Effects The development of proposals for cogeneration projects by certain industrial customers of Entergy Gulf States and Entergy Louisiana over the last several years has caused Entergy Gulf States and Entergy Louisiana to develop and secure approval for rate tariffs lower than those previously approved by the PUCT and LPSC for such industrial customers. In certain cases, contracts or special tariffs that use flexible pricing have been negotiated with industrial customers to keep these customers on the System. The contracts and tariffs are not at full cost-of-service rates. Although the rates fully recover operating expenses and depreciation, they provide only a minimal return on investment. During the six months ended June 30, 1996, KWh sales to industrial customers of Entergy Gulf States and Entergy Louisiana at less than full cost-of-service rates made up approximately 30% and 40% of total industrial sales, respectively. During 1995, Entergy Louisiana received separate notices from two large industrial customers that they will proceed with proposed cogeneration projects for the purpose of fulfilling most of their future electric energy needs. These customers will continue to purchase their energy requirements from Entergy Louisiana until their cogeneration facilities are completed and operational, which is expected to occur in 1997-1998. After that time, these customers will still purchase energy from Entergy Louisiana, but at a reduced level. During the six months ended June 30, 1996, these two customers represented an aggregate of approximately 18% of Entergy Louisiana's industrial sales and provided 12% of its total industrial base revenues. Domestic and Foreign Energy-Related Investments - ----------------------------------------------- Entergy Corporation continues to seek opportunities to expand its domestic and foreign energy-related businesses that are not regulated by state and local utility regulatory authorities. These investments encompass power development (including investments in foreign utilities) and new technology. Entergy Corporation's strategy is to identify and pursue business opportunities that have the potential to earn a greater return than its domestic regulated utility operations. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" for a discussion of Entergy Corporation's investments in domestic and foreign energy-related businesses. These investments may involve a greater risk than domestic regulated utility enterprises. In the six months ended June 30, 1996, Entergy Corporation's domestic and foreign energy-related investments reduced consolidated net income by approximately $10.3 million. The power development investments, in the aggregate, were profitable during the six months ended June 30, 1996, and management believes that they will generally continue to provide profits in the current year. However, the income provided by power development investments was offset by losses experienced by new technology investments. In May 1996, Entergy Corporation filed for SEC authorization to provide nuclear plant operations, management, and related services to non-affiliated companies. Entergy Corporation proposes to provide these services through a new subsidiary, Entergy Nuclear, Inc. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K, and Note 9, herein, for a discussion of Entergy's major nonregulated business opportunities and foreign energy-related investments. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS ANO Matters - ----------- Entergy Operations has made periodic inspections and repairs on the boiler tubes in ANO 2's steam generators, which have experienced cracking. Entergy Operations is gathering information and assessing various options for the repair or replacement of ANO 2's steam generators. See Note 1 for additional information. Deregulated Utility Operations - ------------------------------ Entergy Gulf States discontinued regulatory accounting principles in 1989 for its wholesale jurisdiction and steam department and in 1991 for the Louisiana deregulated portion of River Bend. The recent improving trend in net income from these operations continued during the three months and six months ended June 30, 1996, when the related operating income was $1.8 million and $8.0 million, respectively, compared to $1.2 million for the fiscal year ended 1995. The improvement in net income from deregulated operations in the three months and six months ended June 30, 1996, was due to increased revenues and reduced operation and maintenance expenses, partially offset by increased income taxes. Refer to Entergy Gulf States' Results of Operations for discussion of these trends. The future impact of the deregulated utility operations on Entergy's and Entergy Gulf States' results of operations and financial position will depend on future operating costs, the future efficiency and availability of generating units, and the future market prices for energy over the remaining life of the assets. Entergy expects the performance of its deregulated utility operations to continue to improve due to ongoing reductions in operation and maintenance expenses. Property Tax Exemptions - ----------------------- As discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K, Waterford 3's local property tax exemption expired in December 1995, and River Bend's local property tax exemption will expire in December 1996. In a March 1996 LPSC order, Entergy Louisiana was permitted to defer the estimated Waterford 3 property tax from January 1996 through June 1996. The order allows for the recovery of the property tax and also for the recovery, from July 1996 through June 1997, of the related deferral. In April 1996, Louisiana authorities set Waterford 3's 1996 property tax at $21.5 million. Environmental Issues - -------------------- Entergy Gulf States has been notified by the U. S. Environmental Protection Agency (EPA) that it has been designated as a potentially responsible party for the clean-up of certain hazardous waste disposal sites. See Note 1 for additional information. As a consequence of solid waste regulations issued by the Louisiana Department of Environmental Quality in 1993, Entergy Louisiana is upgrading or closing certain of its power plant wastewater impoundments. See Note 1 for additional information. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Accounting Issues - ----------------- Continued Application of SFAS 71 - As a result of the 1992 Energy Policy Act, the actions of regulatory commissions, and other factors, the electric utility industry is moving toward a combination of competition and a modified regulatory environment. The operating companies' and System Energy's financial statements currently reflect, for the most part, assets and costs based on existing cost- based ratemaking regulations in accordance with SFAS 71, "Accounting for the Effects of Certain Types of Regulation" (SFAS 71). Continued applicability of SFAS 71 to the operating companies' and System Energy's financial statements requires that rates set by an independent regulator on a cost-of-service basis be charged to and collected from customers. In the event that 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 of its obligations. The discontinuation should be reported by eliminating from the balance sheet the effects of any actions of regulators recorded as regulatory assets and liabilities. The operating companies' and System Energy's financial statements continue to follow SFAS 71 for its regulated operations, except for those portions of Entergy Gulf States' business described in "Deregulated Utility Operations" above. Accounting for Decommissioning Costs -. In February 1996, the FASB issued an exposure draft of a proposed SFAS addressing the accounting for decommissioning costs of nuclear generating units as well as liabilities related to the closure and removal of all long-lived assets. See Note 1 for a discussion of proposed changes in the accounting for decommissioning/closure costs and the potential impact of these changes on Entergy. Financial Derivatives - --------------------- Derivative instruments have been used by Entergy on a limited basis. Entergy has a policy that financial derivatives are to be used only to mitigate business risks and not for speculative purposes. At June 30, 1996, Entergy had an insignificant amount of derivative instruments outstanding. _________________________________________ Investors are cautioned that forward-looking statements contained herein with respect to the revenues, earnings, competitive performance, or other prospects for the business of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, or their affiliated companies may be influenced by factors that could cause actual outcomes and results to be materially different than projected. Such factors include, but are not limited to, the effects of weather, the performance of generating units, fuel prices and availability, regulatory decisions and the effects of changes in law, the evolution of competition, changes in accounting standards, and other factors. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS On January 5, 1996, Entergy Corporation finalized its acquisition of CitiPower. In accordance with the purchase method of accounting, the results of operations for the three months and six months ended June 30, 1995, of Entergy Corporation and subsidiaries reported in its Statements of Consolidated Income and Cash Flows do not include CitiPower's results of operations. See Note 9 for additional information regarding CitiPower. Net Income - ---------- Consolidated net income increased for the three months ended June 30, 1996, primarily due to lower other operation and maintenance expenses for domestic regulated operations as a result of restructuring programs, as discussed in Note 7, and ongoing operating efficiency improvement programs throughout Entergy. Consolidated net income decreased for the six months ended June 30, 1996, due to the $174 million net of tax write-off of River Bend rate deferrals pursuant to SFAS 121 and the one-time recording in 1995 of the cumulative effect of the change in accounting method for incremental nuclear refueling outage maintenance costs at Entergy Arkansas. Excluding the above mentioned items, net income would have increased $57 million for the six months ended June 30, 1996, primarily due to lower other operation and maintenance expenses as discussed above and higher retail energy sales. Significant factors affecting the results of operations and causing variances between the three months and six months ended June 30, 1996, and 1995 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales - ------------------ The changes in electric operating revenues associated with Entergy's domestic regulated operations for the three months and six months ended June 30, 1996, are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) ---------------- ------------------- ------------------- (In Millions) Change in base revenues $(26.3) $(52.3) Rate riders 11.0 13.6 Fuel cost recovery 126.6 228.1 Sales volume/weather 35.3 102.4 Other revenue (including (14.8) (44.5) unbilled) Sales for resale 25.3 45.4 ------ ------ Total $157.1 $292.7 ====== ====== Electric operating revenues increased for the three and six months ended June 30, 1996, as a result of higher fuel adjustment revenues, which do not affect net income, and increases in retail sales and sales for resale, partially offset by rate reductions at various operating companies. More severe weather in 1996 and non-weather related volume growth contributed to the increase in retail electric operating revenues for the six months ended June 30, 1996. The increase in sales for resale was primarily the result of increased energy sales outside of Entergy's service area. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Gas operating revenues increased for the three months and six months ended June 30, 1996, because of increased sales related to colder than normal winter weather in the first quarter of 1996 and a higher unit purchase price for gas purchased for resale. Nonregulated and foreign-energy related business revenues increased for the three months and six months ended June 30, 1996, as a result of the January 1996 acquisition of CitiPower. See Note 9 for additional information regarding CitiPower. Expenses - -------- Operating expenses for the three months and six months ended June 30, 1996, include the operating expenses of CitiPower, which were not included in the prior year financial statements. See Note 9 for additional information regarding CitiPower. Excluding the operating expenses of CitiPower, Entergy's operating expenses increased for the three months and six months ended June 30, 1996. The following discussion excludes the impact of the acquisition of CitiPower. Fuel and purchased power expenses increased as a result of the increase in energy sales as discussed above and higher fuel costs. Income tax expense increased primarily due to higher pretax income excluding the River Bend rate deferral write-off and the prior year change in accounting method. Other operation and maintenance expenses decreased for the three months and six months ended June 30, 1996, due to lower payroll related expenses, resulting from restructuring programs as discussed in Note 7, in addition to ongoing operating efficiency improvement programs throughout Entergy. Rate deferrals charged against operating expenses in 1996 represent the deferral of Waterford 3 local property taxes, the deferral of a portion of the proposed System Energy rate increase at Entergy Mississippi and Entergy New Orleans, and the deferral of least cost planning expenses at Entergy New Orleans. Nuclear refueling outage expenses decreased primarily due to a 1995 refueling outage at Grand Gulf 1. Interest charges increased for the three months and six months ended June 30, 1996, due primarily to interest on long-term debt related to the investment in CitiPower and borrowings by Entergy Corporation from a $300 million line of credit. Excluding this increase, interest expense decreased $6.1 million and $11.6 million for the three months and six months ended June 30, 1996, due to ongoing retirement and refinancing of high cost debt at the operating companies and System Energy. Other - ----- Other Income decreased for the three months and six months ended June 30, 1996, primarily due to a decrease in interest income as a result of lower balances in temporary cash investments, and a decrease in Grand Gulf 1 carrying charges at Entergy Arkansas because of a decline in the deferral balance. In addition, Other Income decreased for the six months ended June 30, 1996, as a result of the write-off of River Bend rate deferrals pursuant to SFAS 121, as discussed in Note 8.
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME For the Three and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Six Months Ended ------------------------- ------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- (In Thousands, Except Share Data) Operating Revenues: Electric $1,674,610 $1,517,488 $3,087,678 $2,794,978 Natural gas 28,991 20,118 86,464 60,788 Steam products 15,214 12,791 30,792 23,423 Nonregulated and foreign energy-related business 133,710 14,520 246,583 23,128 --------- --------- --------- --------- Total 1,852,525 1,564,917 3,451,517 2,902,317 --------- --------- --------- --------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 405,549 308,612 781,313 597,572 Purchased power 189,153 89,234 347,310 171,743 Nuclear refueling outage expenses 13,739 34,167 27,948 53,181 Other operation and maintenance 380,085 376,840 733,297 736,433 Depreciation, amortization, and decommissioning 195,100 170,932 389,667 341,412 Taxes other than income taxes 89,942 73,887 178,913 150,522 Income taxes 121,920 107,522 184,506 137,143 Rate deferrals (11,273) - (31,075) - Amortization of rate deferrals 90,213 76,622 181,724 158,390 --------- --------- --------- --------- Total 1,474,428 1,237,816 2,793,603 2,346,396 --------- --------- --------- --------- Operating Income 378,097 327,101 657,914 555,921 --------- --------- --------- --------- Other Income (Deductions): Allowance for equity funds used during construction 2,796 2,353 5,354 4,847 Write-off of River Bend rate deferrals - - (194,498) - Miscellaneous - net 13,834 20,277 24,613 37,833 Income taxes (5,553) (3,281) 9,353 (9,900) --------- --------- --------- --------- Total 11,077 19,349 (155,178) 32,780 --------- --------- --------- --------- Interest Charges: Interest on long-term debt 174,704 161,042 347,547 321,673 Other interest - net 10,098 5,662 21,945 14,652 Allowance for borrowed funds used during construction (2,329) (2,007) (4,467) (4,204) Preferred and preference dividend requirements of subsidiaries and other 18,378 19,050 36,459 38,900 --------- --------- --------- --------- Total 200,851 183,747 401,484 371,021 --------- --------- --------- --------- Income before the Cumulative Effect of Accounting Change 188,323 162,703 101,252 217,680 Cumulative Effect of Accounting Change (net of income taxes) - - - 35,415 --------- --------- --------- --------- Net Income $188,323 $162,703 $101,252 $253,095 =========== =========== =========== =========== Earnings per average common share before cumulative effect of accounting change $0.83 $0.71 $0.44 $0.96 Earnings per average common share $0.83 $0.71 $0.44 $1.11 Dividends declared per common share - - $0.90 $0.90 Average number of common shares outstanding 228,036,032 227,747,609 227,908,318 227,582,228 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Six Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $101,252 $253,095 Noncash items included in net income: Write-off of River Bend rate deferrals 194,498 - Cumulative effect of a change in accounting principle - (35,415) Change in rate deferrals/excess capacity-net 210,399 162,963 Depreciation, amortization, and decommissioning 390,038 339,101 Deferred income taxes and investment tax credits (49,738) (2,091) Allowance for equity funds used during construction (5,354) (4,847) Changes in working capital: Receivables (101,595) (91,462) Fuel inventory 7,348 (37,175) Accounts payable 7,740 (74,712) Taxes accrued 63,797 77,924 Interest accrued (6,238) (7,924) Other working capital accounts (132,057) (170,930) Decommissioning trust contributions (26,157) (12,653) Provision for estimated losses and reserves 15,753 16,451 Other (79,674) 37,422 -------- -------- Net cash flow provided by operating activities 590,012 449,747 -------- -------- Investing Activities: Construction/capital expenditures (285,411) (243,061) Allowance for equity funds used during construction 5,354 4,847 Nuclear fuel purchases (73,782) (177,776) Proceeds from sale/leaseback of nuclear fuel 54,241 210,265 Acquisition of CitiPower (1,156,112) - Investment in nonregulated/nonutility properties (6,426) (46,243) Other (20,752) - --------- -------- Net cash flow used in investing activities (1,482,888) (251,968) --------- -------- Financing Activities: Proceeds from the issuance of: General and refunding mortgage bonds 39,608 109,285 First mortgage bonds 198,250 - Bank notes and other long-term debt 947,443 43,538 Retirement of: First mortgage bonds (357,016) (96,025) General and refunding mortgage bonds (30,000) (44,200) Other long-term debt (93,373) (45,404) Redemption of preferred stock (25,580) (26,250) Changes in short-term borrowings - net 225,025 (103,534) Common stock dividends paid (199,493) (204,267) --------- -------- Net cash flow provided by (used in) financing activities 704,864 (366,857) --------- -------- Effect of exchange rates on cash and cash equivalents 73 - --------- -------- Net decrease in cash and cash equivalents (187,939) (169,078) Cash and cash equivalents at beginning of period 533,590 613,907 --------- -------- Cash and cash equivalents at end of period $345,651 $444,829 ========= ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $354,051 $323,218 Income taxes $159,719 $86,327 Noncash investing and financing activities: Capital lease obligations incurred $16,358 - Change in unrealized appreciation/depreciation of decommissioning trust assets ($11,103) $17,521 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) ASSETS Utility Plant: Electric $22,449,711 $21,698,593 Plant acquisition adjustment - Entergy Gulf States 463,557 471,690 Electric plant under leases 677,821 675,425 Property under capital leases - electric 153,166 145,146 Natural gas 167,927 166,872 Steam products 77,541 77,551 Construction work in progress 541,001 482,950 Nuclear fuel under capital leases 266,970 312,782 Nuclear fuel 69,091 49,100 ---------- ---------- Total 24,866,785 24,080,109 Less - accumulated depreciation and amortization 8,564,155 8,259,318 ---------- ---------- Utility plant - net 16,302,630 15,820,791 ---------- ---------- Other Property and Investments: Decommissioning trust funds 305,546 277,716 Other 456,538 434,619 ---------- ---------- Total 762,084 712,335 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 51,666 42,822 Temporary cash investments - at cost, which approximates market 293,985 490,768 ---------- ---------- Total cash and cash equivalents 345,651 533,590 Notes receivable 5,397 6,907 Accounts receivable: Customer (less allowance for doubtful accounts of $8.6 million in 1996 and $7.1 million in 1995) 381,297 333,343 Other 74,105 59,176 Accrued unbilled revenues 389,655 293,461 Deferred fuel 99,064 25,924 Fuel inventory 114,969 122,167 Materials and supplies - at average cost 351,919 345,330 Rate deferrals 431,950 420,221 Prepayments and other 160,485 175,121 ---------- ---------- Total 2,354,492 2,315,240 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 620,647 1,033,282 SFAS 109 regulatory asset - net 1,205,370 1,279,495 Unamortized loss on reacquired debt 221,161 224,131 Other regulatory assets 386,677 329,397 Long-term receivables 221,206 224,726 CitiPower license (net of $7.7 million of amortization) 620,988 - Other 350,476 326,533 ---------- ---------- Total 3,626,525 3,417,564 ---------- ---------- TOTAL $23,045,731 $22,265,930 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $.01 par value, authorized 500,000,000 shares; issued 230,017,485 shares $2,300 $2,300 Paid-in capital 4,200,883 4,201,483 Retained earnings 2,231,591 2,335,579 Cumulative foreign currency translation adjustment 19,344 - Less - treasury stock (1,976,132 shares in 1996 and 2,251,318 in 1995) 59,772 67,642 ---------- ---------- Total common shareholders' equity 6,394,346 6,471,720 Subsidiary's preference stock 150,000 150,000 Subsidiaries' preferred stock: Without sinking fund 550,955 550,955 With sinking fund 227,985 253,460 Long-term debt 7,853,286 6,777,124 ---------- ---------- Total 15,176,572 14,203,259 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 271,192 303,664 Other 349,155 326,804 ---------- ---------- Total 620,347 630,468 ---------- ---------- Current Liabilities: Currently maturing long-term debt 257,603 558,650 Notes payable 270,692 45,667 Accounts payable 509,916 460,379 Customer deposits 149,080 140,054 Taxes accrued 271,625 207,828 Accumulated deferred income taxes 105,685 72,847 Interest accrued 189,678 195,445 Dividends declared 11,655 12,194 Obligations under capital leases 149,812 151,140 Other 182,228 247,039 ---------- ---------- Total 2,097,974 2,091,243 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 3,631,027 3,777,644 Accumulated deferred investment tax credits 600,656 612,701 Other 919,155 950,615 ---------- ---------- Total 5,150,838 5,340,960 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $23,045,731 $22,265,930 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three Months and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 516.5 $ 480.0 $ 36.5 8 Commercial 380.1 357.3 22.8 6 Industrial 497.0 433.0 64.0 15 Governmental 41.2 37.5 3.7 10 --------- --------- ------- Total retail 1,434.8 1,307.8 127.0 10 Sales for resale 103.4 78.2 25.2 32 Other 136.4 131.5 4.9 4 --------- --------- ------- Total $ 1,674.6 $ 1,517.5 $ 157.1 10 ========= ========= ======= Billed Electric Energy Sales (Millions of KWh): Residential 6,305 6,047 258 4 Commercial 5,084 4,958 126 3 Industrial 10,984 10,325 659 6 Governmental 591 564 27 5 --------- --------- ------- Total retail 22,964 21,894 1,070 5 Sales for resale 3,235 2,404 831 35 --------- --------- ------- Total 26,199 24,298 1,901 8 ========= ========= ======= Six Months Ended Increase/ Description 1996 1995 (Decreas) % (In Millions) Electric Operating Revenues: Residential $ 1,023.5 $ 921.5 $ 102.0 11 Commercial 734.6 682.0 52.6 8 Industrial 957.3 847.0 110.3 13 Governmental 80.0 72.7 7.3 10 --------- --------- ------- Total retail 2,795.4 2,523.2 272.2 11 Sales for resale 193.6 148.2 45.4 31 Other 98.7 123.6 (24.9) (20) --------- --------- ------- Total $ 3,087.7 $ 2,795.0 $ 292.7 10 ========= ========= ======= Billed Electric Energy Sales (Millions of KWh): Residential 12,972 11,907 1,065 9 Commercial 9,877 9,431 446 5 Industrial 21,429 20,360 1,069 5 Governmental 1,147 1,103 44 4 --------- --------- ------- Total retail 45,425 42,801 2,624 6 Sales for resale 5,809 4,248 1,561 37 --------- --------- ------- Total 51,234 47,049 4,185 9 ========= ========= ======= ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income - ---------- Net income increased for the three months ended June 30, 1996, as a result of increased retail energy sales due to extreme weather in the current year. Net income decreased for the six months ended June 30, 1996, due primarily to the one-time recording in 1995 of the cumulative effect of the change in accounting method for incremental nuclear refueling outage maintenance costs. Excluding the above mentioned item, net income would have increased $16.4 million for the six months ended June 30, 1996, due primarily to increased retail energy sales, and decreased other operation and maintenance expense. Significant factors affecting the results of operations and causing variances between the three months and six months ended June 30, 1996, and 1995 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales - ------------------ The changes in electric operating revenues for the three months and six months ended June 30, 1996, are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) ------------ ------------------- ------------------- (In Millions) Change in base revenues $(5.8) $(9.0) Rate riders 2.1 0.3 Fuel cost recovery 7.3 5.5 Sales volume/weather 12.2 24.5 Other revenue (including (1.9) (4.8) unbilled) Sales for resale 41.9 82.8 ----- ----- Total $55.8 $99.3 ===== ===== Electric operating revenues increased for the three months and six months ended June 30, 1996, primarily due to increased retail energy sales and sales for resale. The increase in sales for resale is due to higher generation availability than in the same period of 1995. The increase in retail energy sales resulted from increased customer usage, partially attributable to more severe weather as compared to the same period in 1995. Expenses - -------- Operating expenses increased for the three months and six months ended June 30, 1996, due to an increase in fuel, purchased power, and income tax expense. The increase in fuel and purchased power expenses is largely due to an increase in generation and purchases related to the increase in sales for resale in 1996. Income tax expense increased because of higher pretax income. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS The increase in operating expenses for the six months ended June 30, 1996, was partially offset by a decrease in other operation and maintenance expenses resulting from non-outage related maintenance performed during ANO 1's refueling outage in the first quarter of 1995. In addition, ANO 2 underwent a 30 day mid-cycle outage during the first three months of 1995 that also required additional non- outage related maintenance. Other - ----- Miscellaneous other income - net decreased in the three months and six months ended June 30, 1996, due to reduced Grand Gulf 1 carrying charges as a result of a decline in the deferral balance.
ENTERGY ARKANSAS, INC. STATEMENTS OF INCOME For the Three and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Six Months Ended ------------------------- ------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- (In Thousands) (In Thousands) Operating Revenues $467,990 $412,164 $851,071 $751,760 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 66,475 63,639 131,675 104,806 Purchased power 121,631 84,176 220,256 165,923 Nuclear refueling outage expenses 7,541 7,903 15,083 17,088 Other operation and maintenance 85,871 85,786 169,136 179,444 Depreciation, amortization, and decommissioning 40,786 39,602 81,816 78,954 Taxes other than income taxes 10,425 9,984 19,443 20,095 Income taxes 29,714 23,813 33,305 20,474 Amortization of rate deferrals 30,024 29,894 66,470 67,927 -------- -------- -------- -------- Total 392,467 344,797 737,184 654,711 -------- -------- -------- -------- Operating Income 75,523 67,367 113,887 97,049 -------- -------- -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 1,061 691 2,151 1,606 Miscellaneous - net 7,891 10,820 16,130 26,352 Income taxes (3,205) (4,241) (6,433) (10,338) -------- -------- -------- -------- Total 5,747 7,270 11,848 17,620 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 24,932 26,611 49,767 53,544 Other interest - net 1,260 624 2,287 3,740 Allowance for borrowed funds used during construction (634) (442) (1,299) (1,173) -------- -------- -------- -------- Total 25,558 26,793 50,755 56,111 -------- -------- -------- -------- Income before the Cumulative Effect of Accounting Change 55,712 47,844 74,980 58,558 Cumulative Effect of Accounting Change (net of income taxes) - - - 35,415 -------- -------- -------- -------- Net Income 55,712 47,844 74,980 93,973 Preferred Stock Dividend Requirements and Other 4,426 4,545 8,884 9,106 -------- -------- -------- -------- Earnings Applicable to Common Stock $51,286 $43,299 $66,096 $84,867 ========= ========= ========= ========= See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $74,980 $93,973 Noncash items included in net income: Cumulative effect of a change in accounting principle - (35,415) Change in rate deferrals/excess capacity-net 69,808 61,207 Depreciation, amortization, and decommissioning 81,816 78,954 Deferred income taxes and investment tax credits (28,555) (11,005) Allowance for equity funds used during construction (2,151) (1,606) Changes in working capital: Receivables (28,948) (41,124) Fuel inventory 23 (34,626) Accounts payable (7,352) 33,684 Taxes accrued 15,028 28,691 Interest accrued (3,500) (759) Other working capital accounts 2,254 (29,974) Decommissioning trust contributions (7,530) (6,071) Provision for estimated losses and reserves 2,362 3,522 Other (10,471) 1,829 -------- -------- Net cash flow provided by operating activities 157,764 141,280 -------- -------- Investing Activities: Construction expenditures (67,212) (78,692) Allowance for equity funds used during construction 2,151 1,606 Nuclear fuel purchases (26,049) (32,874) Proceeds from sale/leaseback of nuclear fuel 25,437 32,831 -------- -------- Net cash flow used in investing activities (65,673) (77,129) -------- -------- Financing Activities: Proceeds from issuance of first mortgage bonds 84,256 - Retirement of first mortgage bonds (112,807) (25,600) Redemption of preferred stock (4,000) (7,000) Changes in short-term borrowings - net (34,000) Dividends paid: Common stock (15,300) (40,300) Preferred stock (8,983) (9,321) -------- -------- Net cash flow used in financing activities (56,834) (116,221) -------- -------- Net increase (decrease) in cash and cash equivalents 35,257 (52,070) Cash and cash equivalents at beginning of period 11,798 80,756 -------- -------- Cash and cash equivalents at end of period $47,055 $28,686 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $49,169 $51,392 Income taxes $56,452 $13,843 Noncash investing and financing activities: Capital lease obligations incurred $16,358 - Change in unrealized appreciation/depreciation of decommissioning trust assets ($7,482) $11,347 See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) ASSETS Utility Plant: Electric $4,472,179 $4,438,519 Property under capital leases 60,287 48,968 Construction work in progress 131,685 119,874 Nuclear fuel under capital lease 99,235 98,691 ---------- ---------- Total 4,763,386 4,706,052 Less - accumulated depreciation and amortization 1,911,817 1,846,112 ---------- ---------- Utility plant - net 2,851,569 2,859,940 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 11,122 11,122 Decommissioning trust fund 174,615 166,832 Other - at cost (less accumulated depreciation) 4,976 5,085 ---------- ---------- Total 190,713 183,039 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 5,787 7,780 Temporary cash investments - at cost, which approximates market: Associated companies 20,913 908 Other 20,355 3,110 ---------- ---------- Total cash and cash equivalents 47,055 11,798 Accounts receivable: Customer (less allowance for doubtful accounts of $2.1 million in 1996 and 1995) 75,038 75,445 Associated companies 43,477 40,577 Other 7,687 6,962 Accrued unbilled revenues 119,286 93,556 Fuel inventory - at average cost 57,433 57,456 Materials and supplies - at average cost 77,108 75,030 Rate deferrals 142,388 131,634 Deferred excess capacity 13,081 11,088 Deferred nuclear refueling outage costs 16,975 32,824 Prepayments and other 11,805 15,215 ---------- ---------- Total 611,333 551,585 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 151,819 228,390 Deferred excess capacity - 5,984 SFAS 109 regulatory asset - net 228,887 219,906 Unamortized loss on reacquired debt 58,448 58,684 Other regulatory assets 78,101 68,160 Other 29,886 28,727 ---------- ---------- Total 547,141 609,851 ---------- ---------- TOTAL $4,200,756 $4,204,415 =========== =========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares $470 $470 Paid-in capital 590,794 590,844 Retained earnings 543,182 492,386 ---------- ---------- Total common shareholder's equity 1,134,446 1,083,700 Preferred stock: Without sinking fund 176,350 176,350 With sinking fund 45,027 49,027 Long-term debt 1,253,743 1,281,203 ---------- ---------- Total 2,609,566 2,590,280 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 106,862 93,574 Other 73,336 67,444 ---------- ---------- Total 180,198 161,018 ---------- ---------- Current Liabilities: Currently maturing long-term debt 32,900 28,700 Notes payable 667 667 Accounts payable: Associated companies 40,283 42,156 Other 114,771 120,250 Customer deposits 19,811 18,594 Taxes accrued 55,187 40,159 Accumulated deferred income taxes 61,755 48,992 Interest accrued 26,740 30,240 Dividends declared 4,359 4,458 Co-owner advances 24,331 34,450 Deferred fuel cost 15,024 17,837 Obligations under capital leases 52,660 54,697 Other 23,026 26,238 ---------- ---------- Total 471,514 467,438 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 793,757 823,471 Accumulated deferred investment tax credits 110,584 112,890 Other 35,137 49,318 ---------- ---------- Total 939,478 985,679 ---------- ---------- Commitments and Contingencies (Note 1) TOTAL $4,200,756 $4,204,415 =========== =========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three Months and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 118.3 $ 109.0 $ 9.3 9 Commercial 77.4 73.9 3.5 5 Industrial 87.2 84.9 2.3 3 Governmental 4.1 4.0 0.1 2 ------- ------- ------ Total retail 287.0 271.8 15.2 6 Sales for resale Associated companies 75.5 51.2 24.3 47 Non-associated companies 58.1 40.5 17.6 43 Other 47.4 48.7 (1.3) (3) ------- ------- ------ Total $ 468.0 $ 412.2 $ 55.8 14 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 1,274 1,149 125 11 Commercial 1,038 976 62 6 Industrial 1,566 1,515 51 3 Governmental 57 66 (9) (14) ------- ------- ------ Total retail 3,935 3,706 229 6 Sales for resale Associated companies 3,113 2,396 717 30 Non-associated companies 2,035 1,243 792 64 ------- ------- ------ Total 9,083 7,345 1,738 24 ======= ======= ====== Six Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 250.5 $ 233.2 $ 17.3 7 Commercial 147.9 142.2 5.7 4 Industrial 165.0 162.5 2.5 2 Governmental 8.2 8.0 0.2 2 ------- ------- ------ Total retail 571.6 545.9 25.7 5 Sales for resale Associated companies 135.4 80.3 55.1 69 Non-associated companies 106.9 79.1 27.8 35 Other 37.2 46.5 (9.3) (20) ------- ------- ------ Total $ 851.1 $ 751.8 $ 99.3 13 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 2,845 2,576 269 10 Commercial 2,034 1,923 111 6 Industrial 3,092 2,954 138 5 Governmental 113 119 (6) (5) ------- ------- ------ Total retail 8,084 7,572 512 7 Sales for resale Associated companies 5,767 3,755 2,012 54 Non-associated companies 3,708 2,199 1,509 69 ------- ------- ------ Total 17,559 13,526 4,033 30 ======= ======= ====== ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income - ---------- Net income increased for the three months ended June 30, 1996, due primarily to lower other operation and maintenance expenses, partially offset by increased income tax expense. Net income decreased for the six months ended June 30, 1996, due to the $174 million net of tax write-off of River Bend rate deferrals required by the adoption of SFAS 121. Excluding the write-off, net income for the six months ended June 30, 1996, would have increased $22 million primarily due to increased electric retail energy sales and lower other operation and maintenance expenses, partially offset by increased income tax expense. Significant factors affecting the results of operations and causing variances between the three months and six months ended June 30, 1996, and 1995 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales - ------------------ The changes in electric operating revenues for the three months and six months ended June 30, 1996, are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) ----------- ------------------- ------------------- (In Millions) Change in base revenues $(16.6) $(19.2) Fuel cost recovery 57.3 91.3 Sales volume/weather 19.8 46.5 Other revenue (including (4.9) (12.3) unbilled) Sales for resale (14.4) (17.7) ------ ------ Total $41.2 $88.6 ====== ====== Electric operating revenues increased for the three and six months ended June 30, 1996, as a result of higher fuel adjustment revenues, which do not affect net income, and increased customer usage, partially attributable to more severe winter and summer weather than in the same periods in 1995. These increases were partially offset by a rate reduction ordered for Texas in 1995 and lower sales for resale to associated companies, due to changing generation availability and requirements among the operating companies. Gas operating revenues and steam operating revenues increased for the three months and six months ended June 30, 1996, primarily due to higher fuel prices and increased usage. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses - -------- Operating expenses increased for the three months and six months ended June 30, 1996, as a result of higher fuel expenses, including purchased power, and higher income taxes. These increases were partially offset by a decrease in other operation and maintenance expenses. Fuel and purchased power expenses, taken together, increased because of higher gas prices and increased energy requirements resulting from higher energy sales. Income taxes increased primarily due to higher pre-tax income, excluding the net effect of the write-off of River Bend rate deferrals discussed below. Other operation and maintenance expenses decreased for the three months and six months ended June 30, 1996, principally due to lower payroll-related expenses associated with restructuring programs accrued for in 1995. Other - ----- Other income decreased for the six months ended June 30, 1996, due to the write-off of River Bend rate deferrals pursuant to the adoption of SFAS 121, which became effective January 1, 1996. See Note 8 for further discussion. Income taxes on other income for the same period decreased as a result of this write-off.
ENTERGY GULF STATES, INC. STATEMENTS OF INCOME (LOSS) For the Three and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Six Months Ended ------------------------- ------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- (In Thousands) (In Thousands) Operating Revenues: Electric $503,490 $462,297 $929,667 $841,088 Natural gas 6,863 4,521 21,739 14,444 Steam products 15,214 12,791 30,792 23,423 -------- -------- -------- -------- Total 525,567 479,609 982,198 878,955 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 125,057 126,908 242,466 241,829 Purchased power 86,760 37,918 154,594 78,475 Nuclear refueling outage expenses 2,572 2,743 4,932 5,774 Other operation and maintenance 97,730 108,472 194,471 209,876 Depreciation, amortization, and decommissioning 51,504 50,392 102,755 100,731 Taxes other than income taxes 25,205 24,752 51,539 50,131 Income taxes 28,870 23,140 40,853 22,978 Amortization of rate deferrals 18,319 16,506 35,963 33,012 -------- -------- -------- -------- Total 436,017 390,831 827,573 742,806 -------- -------- -------- -------- Operating Income 89,550 88,778 154,625 136,149 -------- -------- -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 739 266 1,232 517 Write-off of River Bend rate deferrals - - (194,498) - Miscellaneous - net 5,690 5,696 10,630 11,610 Income taxes (2,032) (2,164) 16,711 (3,029) -------- -------- -------- -------- Total 4,397 3,798 (165,925) 9,098 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 46,476 48,357 92,964 96,627 Other interest - net 959 1,083 1,909 2,093 Allowance for borrowed funds used during construction (628) (217) (1,056) (461) -------- -------- -------- -------- Total 46,807 49,223 93,817 98,259 -------- -------- -------- -------- Net Income (Loss) 47,140 43,353 (105,117) 46,988 Preferred and Preference Stock Dividend Requirements and Other 7,066 7,426 14,285 15,016 -------- -------- -------- -------- Earnings (Loss) Applicable to Common Stock $40,074 $35,927 ($119,402) $31,972 ========= ========= ========= ========= See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income (loss) ($105,117) $46,988 Noncash items included in net income (loss): Write-off of River Bend rate deferrals 194,498 - Change in rate deferrals 35,963 33,012 Depreciation, amortization, and decommissioning 102,755 101,113 Deferred income taxes and investment tax credits 23,368 25,403 Allowance for equity funds used during construction (1,232) (517) Changes in working capital: Receivables (17,731) (7,940) Fuel inventory (4,962) (1,894) Accounts payable 6,912 (34,007) Taxes accrued 1,869 24,832 Interest accrued (16,162) (9,334) Reserve for rate refund 2,381 Other working capital accounts (79,869) (87,395) Decommissioning trust contributions (2,961) (1,478) Provision for estimated losses and reserves (8,222) 4,232 Other (15,525) 4,954 -------- -------- Net cash flow provided by operating activities 113,584 100,350 -------- -------- Investing Activities: Construction expenditures (84,521) (53,779) Allowance for equity funds used during construction 1,232 517 Nuclear fuel purchases (21,580) - Proceeds from sale/leaseback of nuclear fuel 23,375 - -------- -------- Net cash flow used in investing activities (81,494) (53,262) -------- -------- Financing Activities: Proceeds from the issuance of long-term debt 780 2,277 Retirement of: First mortgage bonds (65,959) - Other long-term debt (425) - Redemption of preferred and preference stock (4,204) (2,250) Dividends paid on preferred and preference stock (14,198) (14,917) -------- -------- Net cash flow used in financing activities (84,006) (14,890) -------- -------- Net increase (decrease) in cash and cash equivalents (51,916) 32,198 Cash and cash equivalents at beginning of period 234,604 104,644 -------- -------- Cash and cash equivalents at end of period $182,688 $136,842 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $105,598 $102,618 Income taxes $70 $77 Noncash investing and financing activities: Change in unrealized appreciation/depreciation of decommissioning trust assets ($752) $1,651 See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) ASSETS Utility Plant: Electric $6,984,549 $6,942,983 Natural gas 45,789 45,789 Steam products 77,541 77,551 Property under capital leases 76,108 77,918 Construction work in progress 185,676 148,043 Nuclear fuel under capital lease 59,666 69,853 ---------- ---------- Total 7,429,329 7,362,137 Less - accumulated depreciation and amortization 2,758,105 2,664,943 ---------- ---------- Utility plant - net 4,671,224 4,697,194 ---------- ---------- Other Property and Investments: Decommissioning trust fund 36,067 32,943 Other - at cost (less accumulated depreciation) 23,392 28,626 ---------- ---------- Total 59,459 61,569 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 15,182 13,751 Temporary cash investments - at cost, which approximates market: Associated companies 75,232 46,336 Other 92,274 174,517 ---------- ---------- Total cash and cash equivalents 182,688 234,604 Accounts receivable: Customer (less allowance for doubtful accounts of $1.6 million in 1996 and 1995) 114,364 110,187 Associated companies 1,301 1,395 Other 18,662 15,497 Accrued unbilled revenues 83,864 73,381 Deferred fuel costs 79,825 31,154 Accumulated deferred income taxes 30,737 43,465 Fuel inventory - at average cost 37,103 32,141 Materials and supplies - at average cost 91,576 91,288 Rate deferrals 101,542 97,164 Prepayments and other 18,337 15,566 ---------- ---------- Total 759,999 745,842 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 172,886 419,904 SFAS 109 regulatory asset - net 376,103 453,628 Unamortized loss on reacquired debt 57,087 61,233 Other regulatory assets 24,935 27,836 Long-term receivables 221,207 224,727 Other 174,614 169,125 ---------- ---------- Total 1,026,832 1,356,453 ---------- ---------- TOTAL $6,517,514 $6,861,058 =========== =========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares $114,055 $114,055 Paid-in capital 1,152,592 1,152,505 Retained earnings 238,301 357,704 ---------- ---------- Total common shareholder's equity 1,504,948 1,624,264 Preference stock 150,000 150,000 Preferred stock: Without sinking fund 136,444 136,444 With sinking fund 83,450 87,654 Long-term debt 2,093,682 2,175,471 ---------- ---------- Total 3,968,524 4,173,833 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 98,295 108,078 Other 70,767 78,245 ---------- ---------- Total 169,062 186,323 ---------- ---------- Current Liabilities: Currently maturing long-term debt 160,425 145,425 Accounts payable: Associated companies 42,638 31,349 Other 132,151 136,528 Customer deposits 23,187 21,983 Taxes accrued 39,282 37,413 Interest accrued 40,675 56,837 Nuclear refueling reserve 7,026 22,627 Obligations under capital leases 38,086 37,773 Other 72,911 86,653 ---------- ---------- Total 556,381 576,588 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 1,114,218 1,177,144 Accumulated deferred investment tax credits 205,709 208,618 Deferred River Bend finance charges 45,868 58,047 Other 457,752 480,505 ---------- ---------- Total 1,823,547 1,924,314 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $6,517,514 $6,861,058 =========== =========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three Months and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Department Operating Revenues: Residential $ 141.9 $ 132.6 $ 9.3 7 Commercial 109.4 99.3 10.1 10 Industrial 177.0 145.2 31.8 22 Governmental 7.8 6.2 1.6 26 ------- ------- ------ Total retail 436.1 383.3 52.8 14 Sales for resale Associated companies 2.8 22.6 (19.8) (88) Non-associated companies 21.2 15.8 5.4 34 Other 43.4 40.6 2.8 7 ------- ------- ------ Total Electric Department $ 503.5 $ 462.3 $ 41.2 9 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 1,821 1,754 67 4 Commercial 1,556 1,507 49 3 Industrial 4,163 3,677 486 13 Governmental 110 63 47 75 ------- ------- ------ Total retail 7,650 7,001 649 9 Sales for resale Associated companies 84 1,057 (973) (92) Non-associated companies 678 548 130 24 ------- ------- ------ Total Electric Department 8,412 8,606 (194) (2) Steam Department 437 452 (15) (3) ------- ------- ------ Total 8,849 9,058 (209) (2) ======= ======= ====== Six Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Department Operating Revenues: Residential $ 276.6 $ 249.1 $ 27.5 11 Commercial 211.9 191.6 20.3 11 Industrial 337.6 287.5 50.1 17 Governmental 14.8 12.4 2.4 19 ------- ------- ------ Total retail 840.9 740.6 100.3 14 Sales for resale Associated companies 5.5 32.8 (27.3) (83) Non-associated companies 40.2 30.6 9.6 31 Other 43.1 37.1 6.0 16 ------- ------- ------ Total Electric Department $ 929.7 $ 841.1 $ 88.6 11 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 3,645 3,315 330 10 Commercial 3,018 2,849 169 6 Industrial 8,064 7,347 717 10 Governmental 203 151 52 34 ------- ------- ------ Total retail 14,930 13,662 1,268 9 Sales for resale Associated companies 140 1,558 (1,418) (91) Non-associated companies 1,178 1,021 157 15 ------- ------- ------ Total Electric Department 16,248 16,241 7 - Steam Department 853 849 4 - ------- ------- ------ Total 17,101 17,090 11 - ======= ======= ====== ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income - ---------- Net income increased for the three months ended June 30, 1996, due primarily to a decrease in other operation and maintenance expenses. Net income increased for the six months ended June 30, 1996, as the result of an increase in retail energy sales and a decrease in other operation and maintenance expenses and interest on long-term debt, partially offset by increased income taxes. Significant factors affecting the results of operations and causing variances between the three months and six months ended June 30, 1996, and 1995 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales - ------------------ The changes in electric operating revenues for the three months and six months ended June 30, 1996, are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) ----------- ------------------- ------------------- (In Millions) Change in base revenues $(4.7) $(18.5) Fuel cost recovery 51.4 105.7 Sales volume/weather 2.4 22.9 Other revenue (including 0.9 0.3 unbilled) Sales for resale 1.2 5.2 ----- ------ Total $51.2 $115.6 ===== ====== Electric operating revenues increased for the three months and six months ended June 30, 1996, primarily due to higher fuel adjustment revenues, which do not affect net income, and higher retail sales, partially offset by a decrease in rates. Colder weather in the first three months of 1996 contributed to the increase in retail sales. A base rate reduction ordered in the second quarter of 1995 and a subsequent settlement of related issues during the fourth quarter of 1995 partially offset the effect of these increases. Expenses - -------- Operating expenses increased for the three months and six months ended June 30, 1996, due primarily to an increase in fuel and purchased power expenses and higher taxes other than income taxes partially offset by a decrease in other operation and maintenance expenses and the recording of rate deferrals in 1996. The increase in fuel and purchased power is primarily the result of increased energy sales. See discussion in "Revenues and Sales" above. Higher gas costs also contributed to the increase in fuel expenses. Taxes other than income taxes increased for the three months and six months ended June 30, 1996, largely as a result of the expiration of Waterford 3's local property tax exemption in December 1995, and was offset by the recording of the LPSC-approved rate deferral for these taxes as discussed in Note 2. Other operation and maintenance expenses decreased due to lower payroll expenses partially offset by a 1995 court settlement that reduced legal expenses. Higher pretax income resulted in increased income tax expenses for the six months ended June 30, 1996. Interest on long-term debt decreased for the six months ended June 30, 1996, due to the retirement and refinancing of higher-cost long- term debt during the current year.
ENTERGY LOUISIANA, INC. STATEMENTS OF INCOME For the Three and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Six Months Ended ------------------------- ------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- (In Thousands) (In Thousands) Operating Revenues $457,847 $406,575 $875,614 $760,037 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 100,662 59,551 191,342 111,601 Purchased power 100,062 93,478 200,937 168,473 Nuclear refueling outage expenses 3,933 4,516 7,933 9,033 Other operation and maintenance 70,907 73,265 136,677 146,269 Depreciation, amortization, and decommissioning 41,931 38,910 83,672 77,417 Taxes other than income taxes 18,246 14,332 37,980 30,048 Income taxes 32,165 29,667 54,693 48,363 Rate deferrals (4,516) - (11,375) - Amortization of rate deferrals 6,886 6,886 13,546 13,546 -------- -------- -------- -------- Total 370,276 320,605 715,405 604,750 -------- -------- -------- -------- Operating Income 87,571 85,970 160,209 155,287 -------- -------- -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 249 539 526 1,103 Miscellaneous - net 442 209 728 581 Income taxes (75) 37 (101) 12 -------- -------- -------- -------- Total 616 785 1,153 1,696 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 31,062 32,512 61,779 65,084 Other interest - net 2,163 1,660 4,499 3,745 Allowance for borrowed funds used during construction (423) (499) (831) (990) -------- -------- -------- -------- Total 32,802 33,673 65,447 67,839 -------- -------- -------- -------- Net Income 55,385 53,082 95,915 89,144 Preferred Stock Dividend Requirements and Other 5,253 5,219 10,168 10,810 -------- -------- -------- -------- Earnings Applicable to Common Stock $50,132 $47,863 $85,747 $78,334 ========= ========= ========= ========= See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $95,915 $89,144 Noncash items included in net income: Change in rate deferrals 13,546 13,546 Depreciation, amortization, and decommissioning 83,672 77,417 Deferred income taxes and investment tax credits (12,206) (10,535) Allowance for equity funds used during construction (526) (1,103) Changes in working capital: Receivables (25,733) (7,873) Accounts payable 3,694 5,084 Taxes accrued 40,291 27,686 Interest accrued (5,901) (2,216) Other working capital accounts (14,593) (30,279) Decommissioning trust contributions (6,593) (2,408) Other (15,684) 1,264 -------- -------- Net cash flow provided by operating activities 155,882 159,727 -------- -------- Investing Activities: Construction expenditures (53,592) (43,559) Allowance for equity funds used during construction 526 1,103 Nuclear fuel purchases (40,493) Proceeds from sale/leaseback of nuclear fuel 40,493 -------- -------- Net cash flow used in investing activities (53,066) (42,456) -------- -------- Financing Activities: Proceeds from the issuance of first mortgage bonds 113,994 - Retirement of: First mortgage bonds (130,000) - Other long-term debt (233) (69) Redemption of preferred stock (7,500) (7,500) Changes in short-term borrowings - net (27,386) (9,344) Dividends paid: Common stock (50,200) (86,200) Preferred stock (10,072) (10,743) -------- -------- Net cash flow used in financing activities (111,397) (113,856) -------- -------- Net increase (decrease) in cash and cash equivalents (8,581) 3,415 Cash and cash equivalents at beginning of period 34,370 28,718 -------- -------- Cash and cash equivalents at end of period $25,789 $32,133 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $68,870 $67,432 Income taxes $48,729 $43,623 Noncash investing and financing activities: Change in unrealized appreciation/depreciation of decommissioning trust assets ($1,814) $1,934 See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) ASSETS Utility Plant: Electric $4,927,904 $4,886,898 Property under capital leases 231,121 231,121 Construction work in progress 84,337 87,567 Nuclear fuel under capital lease 54,405 72,864 Nuclear fuel 1,507 1,506 ---------- ---------- Total 5,299,274 5,279,956 Less - accumulated depreciation and amortization 1,808,944 1,742,306 ---------- ---------- Utility plant - net 3,490,330 3,537,650 ---------- ---------- Other Property and Investments: Nonutility property 20,060 20,060 Decommissioning trust fund 44,844 38,560 Investment in subsidiary companies - at equity 14,230 14,230 Other - 1,113 ---------- ---------- Total 79,134 73,963 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 4,415 3,952 Temporary cash investments - at cost, which approximates market 21,374 30,418 ---------- ---------- Total cash and cash equivalents 25,789 34,370 Accounts receivable: Customer (less allowance for doubtful accounts of $1.4 million in 1996 and 1995) 89,606 72,328 Associated companies 5,719 8,033 Other 8,625 8,979 Accrued unbilled revenues 73,255 62,132 Deferred fuel costs 18,958 10,200 Materials and supplies - at average cost 80,959 79,799 Rate deferrals 12,063 25,609 Deferred nuclear refueling outage costs 13,251 21,344 Prepayments and other 13,111 9,118 ---------- ---------- Total 341,336 331,912 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 304,955 301,520 Unamortized loss on reacquired debt 39,596 39,474 Other regulatory assets 36,099 23,935 Other 24,247 23,069 ---------- ---------- Total 404,897 387,998 ---------- ---------- TOTAL $4,315,697 $4,331,523 =========== =========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares $1,088,900 $1,088,900 Capital stock expense and other (4,542) (4,836) Retained earnings 107,696 72,150 ---------- ---------- Total common shareholder's equity 1,192,054 1,156,214 Preferred stock: Without sinking fund 160,500 160,500 With sinking fund 92,509 100,009 Long-term debt 1,391,058 1,385,171 ---------- ---------- Total 2,836,121 2,801,894 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 26,405 43,362 Other 53,292 50,835 ---------- ---------- Total 79,697 94,197 ---------- ---------- Current Liabilities: Currently maturing long-term debt 16,263 35,260 Notes payable: Associated companies 49,073 61,459 Other - 15,000 Accounts payable: Associated companies 32,137 37,494 Other 78,973 69,922 Customer deposits 57,797 56,924 Taxes accrued 58,903 18,612 Accumulated deferred income taxes 348 3,366 Interest accrued 38,301 44,202 Dividends declared 4,907 5,149 Obligations under capital leases 28,000 28,000 Other 7,749 17,397 ---------- ---------- Total 372,451 392,785 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 804,676 807,278 Accumulated deferred investment tax credits 142,728 145,561 Deferred interest - Waterford 3 lease obligation 24,344 23,947 Other 55,680 65,861 ---------- ---------- Total 1,027,428 1,042,647 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,315,697 $4,331,523 =========== =========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three Months and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 139.9 $ 132.9 $ 7.0 5 Commercial 90.5 85.4 5.1 6 Industrial 182.5 153.5 29.0 19 Governmental 8.3 7.8 0.5 6 ------- ------- ------ Total retail 421.2 379.6 41.6 11 Sales for resale Associated companies 0.5 0.2 0.3 150 Non-associated companies 15.0 14.1 0.9 6 Other 21.1 12.7 8.4 66 ------- ------- ------ Total $ 457.8 $ 406.6 $ 51.2 13 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 1,788 1,787 1 - Commercial 1,156 1,159 (3) - Industrial 4,399 4,247 152 4 Governmental 110 108 2 2 ------- ------- ------ Total retail 7,453 7,301 152 2 Sales for resale Associated companies 15 9 6 67 Non-associated companies 280 360 (80) (22) ------- ------- ------ Total 7,748 7,670 78 1 ======= ======= ====== Six Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 275.2 $ 244.8 $ 30.4 12 Commercial 176.5 161.4 15.1 9 Industrial 358.1 302.4 55.7 18 Governmental 16.8 15.5 1.3 8 ------- ------- ------ Total retail 826.6 724.1 102.5 14 Sales for resale Associated companies 0.7 0.4 0.3 75 Non-associated companies 29.4 24.5 4.9 20 Other 18.9 11.0 7.9 72 ------- ------- ------ Total $ 875.6 $ 760.0 $115.6 15 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 3,613 3,374 239 7 Commercial 2,248 2,178 70 3 Industrial 8,613 8,326 287 3 Governmental 225 218 7 3 ------- ------- ------ Total retail 14,699 14,096 603 4 Sales for resale Associated companies 18 19 (1) (5) Non-associated companies 513 574 (61) (11) ------- ------- ------ Total 15,230 14,689 541 4 ======= ======= ====== ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income - ---------- Net income increased for the three months and six months ended June 30, 1996, primarily due to an increase in electric operating revenues and a decrease in other operation and maintenance expenses, partially offset by an increase in income tax expense. Significant factors affecting the results of operations and causing variances between the three months and six months ended June 30, 1996, and 1995 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales - ------------------ The changes in electric operating revenues for the three months and six months ended June 30, 1996, are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) ----------- ------------------- ------------------- (In Millions) Change in base revenues $(1.4) $(2.2) Grand Gulf rate rider 9.0 13.3 Fuel cost recovery 3.3 11.7 Sales volume/weather 4.1 8.7 Other revenue (including 1.2 - unbilled) Sales for resale 8.1 16.2 ----- ----- Total $24.3 $47.7 ===== ===== Electric operating revenues increased for the three months and six months ended June 30, 1996, due to increases in revenues from the Grand Gulf 1 rate rider, the fuel adjustment clause, and electric sales. Revenues from the Grand Gulf I rate rider and the fuel adjustment clause do not affect net income. In connection with an annual MPSC review, in October 1995, Entergy Mississippi's Grand Gulf 1 rate rider was adjusted upward as a result of its undercollection of Grand Gulf 1 costs. Therefore, Grand Gulf 1 rate rider revenues for the three months and six months ended June 30, 1996, were greater than revenues for the same period last year. Fuel adjustment clause revenues increased due to higher fuel costs, as discussed below. The increase in retail sales volume is primarily attributed to more severe weather in 1996, compared to the same period in 1995. Sales for resale, specifically sales to associated companies, increased primarily due to changes in the generation requirements and availability among the operating companies. Expenses - -------- Fuel and purchased power expenses, taken together, increased for the three months and six months ended June 30, 1996. Fuel expenses increased for the period due to higher gas prices and higher generation requirements resulting from increased energy sales. However, as the result of the lower cost of purchased power, more power was purchased to meet the increased sales demand. Other operation and maintenance expenses decreased for the three months and six months ended June 30, 1996, as a result of lower payroll, contract work, and materials and supplies expenses. Payroll expenses decreased as a result of the restructuring program accrual made in June 1995. This restructuring program has resulted in a reduction in the number of Entergy Mississippi employees throughout 1995 and 1996. Contract work and materials and supplies expenses decreased because of the turbine repairs at some of Entergy Mississippi's generating plants in 1995. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Income taxes increased for the three months and six months ended June 30, 1996, primarily due to the higher pretax income resulting from increased revenue and reduced other operation and maintenance expenses. Rate deferrals charged against operating expenses in 1996 represent the deferral of Entergy Mississippi's portion of the proposed System Energy rate increase. See Note 2 for a discussion of Entergy Mississippi's deferral of the System Energy rate increase. The amortization of rate deferrals increased for the three months and six months ended June 30, 1996, in accordance with the Grand Gulf 1 related deferral plan. The plan allows for the recovery of more Grand Gulf 1-related costs in 1996 than in 1995.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF INCOME For the Three and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Six Months Ended ------------------------- ------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- (In Thousands) (In Thousands) Operating Revenues $247,479 $223,156 $451,381 $403,715 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 48,080 33,550 87,826 63,939 Purchased power 68,732 70,966 136,044 128,010 Other operation and maintenance 28,828 39,937 56,477 72,155 Depreciation and amortization 10,052 9,338 20,079 18,735 Taxes other than income taxes 11,148 10,494 20,733 21,083 Income taxes 16,196 10,731 22,212 14,094 Rate deferrals (5,372) - (12,523) - Amortization of rate deferrals 28,728 15,348 54,992 30,637 -------- -------- -------- -------- Total 206,392 190,364 385,840 348,653 -------- -------- -------- -------- Operating Income 41,087 32,792 65,541 55,062 -------- -------- -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 370 269 643 528 Miscellaneous - net 847 796 769 857 Income taxes (331) (305) (301) (328) -------- -------- -------- -------- Total 886 760 1,111 1,057 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 11,517 11,856 22,556 22,948 Other interest - net 934 1,352 1,874 3,258 Allowance for borrowed funds used during construction (297) (234) (521) (439) -------- -------- -------- -------- Total 12,154 12,974 23,909 25,767 -------- -------- -------- -------- Net Income 29,819 20,578 42,743 30,352 Preferred Stock Dividend Requirements and Other 1,392 1,544 2,640 3,251 -------- -------- -------- -------- Earnings Applicable to Common Stock $28,427 $19,034 $40,103 $27,101 ========= ========= ========= ========= See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $42,743 $30,352 Noncash items included in net income: Change in rate deferrals 62,928 29,566 Depreciation and amortization 20,079 18,735 Deferred income taxes and investment tax credits (15,472) (7,196) Allowance for equity funds used during construction (643) (528) Changes in working capital: Receivables (25,853) (19,922) Fuel inventory 1,752 (4,448) Accounts payable 15,136 23,540 Taxes accrued 1,132 (4,239) Interest accrued (2,646) 903 Other working capital accounts 2,985 (3,864) Other (21,405) 11,856 -------- -------- Net cash flow provided by operating activities 80,736 74,755 -------- -------- Investing Activities: Construction expenditures (42,256) (34,388) Allowance for equity funds used during construction 643 528 -------- -------- Net cash flow used in investing activities (41,613) (33,860) -------- -------- Financing Activities: Proceeds from the issuance of general and refunding mortgage bonds - 79,480 Retirement of: General and refunding mortgage bonds - (20,000) First mortgage bonds (25,000) (20,000) Other long-term debt (15) (15) Redemption of preferred stock (9,876) (8,000) Changes in short-term borrowings - net 2,209 (30,000) Dividends paid: Common stock (17,000) (16,400) Preferred stock (2,630) (3,343) -------- -------- Net cash flow used in financing activities (52,312) (18,278) -------- -------- Net increase (decrease) in cash and cash equivalents (13,189) 22,617 Cash and cash equivalents at beginning of period 16,945 9,598 -------- -------- Cash and cash equivalents at end of period $3,756 $32,215 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $25,928 $24,066 Income taxes $23,973 $15,431 See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) ASSETS Utility Plant: Electric $1,571,591 $1,559,955 Construction work in progress 68,110 55,443 ---------- ---------- Total 1,639,701 1,615,398 Less - accumulated depreciation and amortization 615,636 613,712 ---------- ---------- Utility plant - net 1,024,065 1,001,686 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 5,531 5,531 Other 5,605 5,615 ---------- ---------- Total 11,136 11,146 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 3,756 2,574 Temporary cash investments - at cost, which approximates market: Associated companies - 3,248 Other - 11,123 ---------- ---------- Total cash and cash equivalents 3,756 16,945 Accounts receivable: Customer (less allowance for doubtful accounts of $1.6 million in 1996 and 1995) 50,600 46,214 Associated companies 6,780 1,134 Other 2,948 1,967 Accrued unbilled revenues 61,990 47,150 Fuel inventory - at average cost 4,929 6,681 Materials and supplies - at average cost 19,658 19,233 Rate deferrals 139,110 130,622 Prepayments and other 7,046 11,536 ---------- ---------- Total 296,817 281,482 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 175,656 247,072 SFAS 109 regulatory asset - net 10,231 6,445 Unamortized loss on reacquired debt 9,679 10,105 Other regulatory assets 37,167 17,736 Other 6,635 6,311 ---------- ---------- Total 239,368 287,669 ---------- ---------- TOTAL $1,571,386 $1,581,983 =========== =========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares $199,326 $199,326 Capital stock expense and other (143) (218) Retained earnings 254,566 231,463 ---------- ---------- Total common shareholder's equity 453,749 430,571 Preferred stock: Without sinking fund 57,881 57,881 With sinking fund 7,000 16,770 Long-term debt 494,963 494,404 ---------- ---------- Total 1,013,593 999,626 ---------- ---------- Other Noncurrent Liabilities 8,891 11,625 ---------- ---------- Current Liabilities: Currently maturing long-term debt 36,015 61,015 Notes payable - associated companies 2,209 - Accounts payable: Associated companies 26,167 24,391 Other 45,460 32,100 Customer deposits 25,530 24,339 Taxes accrued 29,771 28,639 Accumulated deferred income taxes 57,335 54,090 Interest accrued 19,188 21,834 Other 4,407 6,875 ---------- ---------- Total 246,082 253,283 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 266,369 278,581 Accumulated deferred investment tax credits 26,176 27,978 Other 10,275 10,890 ---------- ---------- Total 302,820 317,449 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $1,571,386 $1,581,983 =========== =========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three Months and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 82.7 $ 74.5 $ 8.2 11 Commercial 66.8 63.3 3.5 6 Industrial 44.0 43.7 0.3 1 Governmental 7.1 6.8 0.3 4 ------- ------- ------ Total retail 200.6 188.3 12.3 7 Sales for resale Associated companies 13.0 6.0 7.0 117 Non-associated companies 6.4 5.4 1.0 19 Other 27.5 23.5 4.0 17 ------- ------- ------ Total $ 247.5 $ 223.2 $ 24.3 11 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 972 884 88 10 Commercial 830 794 36 5 Industrial 736 740 (4) (1) Governmental 83 80 3 4 ------- ------- ------ Total retail 2,621 2,498 123 5 Sales for resale Associated companies 301 100 201 201 Non-associated companies 167 176 (9) (5) ------- ------- ------ Total 3,089 2,774 315 11 ======= ======= ====== Six Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 160.2 $ 141.6 $ 18.6 13 Commercial 129.0 118.8 10.2 9 Industrial 84.8 83.9 0.9 1 Governmental 14.0 13.3 0.7 5 ------- ------- ------ Total retail 388.0 357.6 30.4 9 Sales for resale Associated companies 26.8 12.6 14.2 113 Non-associated companies 11.7 9.6 2.1 22 Other 24.9 23.9 1.0 4 ------- ------- ------ Total $ 451.4 $ 403.7 $ 47.7 12 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 2,027 1,817 210 12 Commercial 1,608 1,518 90 6 Industrial 1,429 1,464 (35) (2) Governmental 164 158 6 4 ------- ------- ------ Total retail 5,228 4,957 271 5 Sales for resale Associated companies 570 259 311 120 Non-associated companies 284 316 (32) (10) ------- ------- ------ Total 6,082 5,532 550 10 ======= ======= ====== ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income - ---------- Net income increased for the three months ended June 30, 1996, due primarily to higher gas revenues and for the six months ended June 30, 1996, principally due to the recording of additional rate deferrals. Significant factors affecting the results of operations and causing variances between the three months ended and six months ended June 30, 1996, and 1995 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales - ------------------ The changes in electric operating revenues for the three months and six months ended June 30, 1996, are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) ----------- ------------------- ------------------- (In Millions) Change in base revenues $2.1 $(3.4) Fuel cost recovery 7.2 13.9 Sales volume/weather (3.2) (0.2) Other revenue (including 1.6 (1.6) unbilled) Sales for resale 0.9 2.1 ----- ----- Total $8.6 $10.8 ===== ===== Electric operating revenues increased for the three months and six months ended June 30, 1996, mainly due to the increase in fuel adjustment revenues. Fuel adjustment revenues increased due to higher fuel prices during the first six months of 1996 and higher purchased power expenses during the first three months of the year. Retail sales decreased for both the three months and six months primarily as the result of decreases in industrial sales due principally to a significant reduction in electricity usage by a large customer. For the six months ended June 30, 1996, this decrease was partially offset by an increase in sales due to colder weather. For the three months and six months ended June 30, 1996, gas operating revenues increased due primarily to increased gas sales as a result of the colder winter and a higher unit purchase price for gas purchased for resale. Expenses - -------- Operating expenses increased for the three months ended June 30, 1996, due primarily to increases in fuel expenses and gas purchased for resale, partially offset by the recording of rate deferrals and the reduced amortization of previous deferrals in 1996. These same factors together with higher purchased power expenses in the first three months of 1996 are the principal reasons for the increases in operating expenses for the six months ended June 30, 1996. Fuel expenses increased due to significantly higher prices for gas used in generation as a result of widespread cold weather in the first few months of 1996. Gas purchased for resale increased as a result of higher gas sales and a higher unit purchase price, which was caused by the increased demand for gas due to the weather. Purchased power expenses decreased for the three months ended June 30, 1996, as a result of a decrease in the price of power purchased. The rate deferrals recorded were associated with the deferral of a portion of the System Energy rate increase being billed to Entergy New Orleans and the deferral of costs related to least cost planning, which are expected to be recovered in future rates. See Note 2 for a discussion of Entergy New Orleans' deferral of the System Energy rate increase.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF INCOME For the Three and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Six Months Ended ------------------------- ------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- (In Thousands) (In Thousands) Operating Revenues: Electric $105,701 $97,070 $185,992 $175,210 Natural gas 22,128 15,596 64,725 46,342 -------- -------- -------- -------- Total 127,829 112,666 250,717 221,552 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 31,584 14,461 73,020 45,439 Purchased power 41,302 44,245 80,041 73,927 Other operation and maintenance 19,065 17,162 35,489 33,915 Depreciation and amortization 5,011 4,786 9,982 9,614 Taxes other than income taxes 6,757 6,607 13,620 13,834 Income taxes 5,296 4,920 9,281 8,195 Rate deferrals (1,384) - (7,177) - Amortization of rate deferrals 5,886 7,985 10,382 13,265 -------- -------- -------- -------- Operating Income 14,312 12,500 26,079 23,363 -------- -------- -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 81 35 155 61 Miscellaneous - net 288 73 1,062 489 Income taxes (111) (28) (409) (188) -------- -------- -------- -------- Total 258 80 808 362 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 3,953 3,544 8,012 7,873 Other interest - net 320 375 602 967 Allowance for borrowed funds used during construction (63) (27) (122) (48) -------- -------- -------- -------- Total 4,210 3,892 8,492 8,792 -------- -------- -------- -------- Net Income 10,360 8,688 18,395 14,933 Preferred Stock Dividend Requirements and Other 241 317 482 717 -------- -------- -------- -------- Earnings Applicable to Common Stock $10,119 $8,371 $17,913 $14,216 ========= ========= ========= ========= See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $18,395 $14,933 Noncash items included in net income: Change in rate deferrals 15,972 13,452 Depreciation and amortization 9,982 9,614 Deferred income taxes and investment tax credits 1,167 (1,202) Allowance for equity funds used during construction (155) (61) Changes in working capital: Receivables 1,102 (7,972) Accounts payable (3,571) 13,145 Taxes accrued 2,295 (999) Interest accrued (501) (594) Income tax refund - 704 Other working capital accounts (19,728) (16,015) Other (9,992) (10,465) -------- -------- Net cash flow provided by operating activities 14,966 14,540 -------- -------- Investing Activities: Construction expenditures (17,991) (8,738) Allowance for equity funds used during construction 155 61 -------- -------- Net cash flow used in investing activities (17,836) (8,677) -------- -------- Financing Activities: Proceeds from the issuance of general and refunding mortgage bonds 39,608 29,805 Retirement of: First mortgage bonds (23,250) - General and refunding mortgage bonds (30,000) (24,200) Redemption of preferred stock - (1,500) Dividends paid: Common stock (18,900) (5,800) Preferred stock (482) (775) -------- -------- Net cash flow used in financing activities (33,024) (2,470) -------- -------- Net increase (decrease) in cash and cash equivalents (35,894) 3,393 Cash and cash equivalents at beginning of period 49,746 8,031 -------- -------- Cash and cash equivalents at end of period $13,852 $11,424 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $8,698 $9,056 Income Taxes $6,299 $10,465 See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEET June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) ASSETS Utility Plant: Electric $493,007 $483,581 Natural gas 122,138 121,083 Construction work in progress 19,080 17,525 ---------- ---------- Total 634,225 622,189 Less - accumulated depreciation and amortization 340,587 335,021 ---------- ---------- Utility plant - net 293,638 287,168 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 3,259 3,259 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 2,332 1,693 Temporary cash investments - at cost, which approximates market: Associated companies 5,838 10,860 Other 5,682 37,193 ---------- ---------- Total cash and cash equivalents 13,852 49,746 Accounts receivable: Customer (less allowance for doubtful accounts of $0.5 million in 1996 and $0.8 million in 1995) 27,046 29,168 Associated companies 36 551 Other 711 843 Accrued unbilled revenues 18,909 17,242 Deferred electric fuel and resale gas costs 12,954 2,647 Materials and supplies - at average cost 9,512 8,950 Rate deferrals 36,849 35,191 Prepayments and other 9,941 4,529 ---------- ---------- Total 129,810 148,867 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 120,286 137,916 SFAS 109 regulatory asset - net 7,941 6,813 Unamortized loss on reacquired debt 1,776 1,932 Other regulatory assets 11,576 9,204 Other 1,352 1,047 ---------- ---------- Total 142,931 156,912 ---------- ---------- TOTAL $569,638 $596,206 =========== =========== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares $33,744 $33,744 Paid-in capital 36,294 36,306 Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 80,274 81,261 ---------- ---------- Total common shareholder's equity 150,312 151,311 Preferred stock - without sinking fund 19,780 19,780 Long-term debt 168,855 155,958 ---------- ---------- Total 338,947 327,049 ---------- ---------- Other Noncurrent Liabilities 17,700 17,745 ---------- ---------- Current Liabilities: Currently maturing long-term debt 12,000 38,250 Accounts payable: Associated companies 15,077 13,851 Other 19,877 24,674 Customer deposits 18,496 18,214 Accumulated deferred income taxes 16,984 9,174 Taxes accrued 7,849 5,554 Interest accrued 4,610 5,111 Other 10,375 14,345 ---------- ---------- Total 105,268 129,173 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 76,496 81,654 Accumulated deferred investment tax credits 8,300 8,618 Other 22,927 31,967 ---------- ---------- Total 107,723 122,239 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $569,638 $596,206 ========== ========== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three Months and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 33.8 $ 31.0 $ 2.8 9 Commercial 36.1 35.4 0.7 2 Industrial 6.2 5.6 0.6 11 Governmental 13.8 12.8 1.0 8 ------- ------- ------ Total retail 89.9 84.8 5.1 6 Sales for resale Associated companies 0.5 0.0 0.5 - Non-associated companies 2.9 2.4 0.5 21 Other 12.4 9.9 2.5 25 ------- ------- ------ Total $ 105.7 $ 97.1 $ 8.6 9 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 451 473 (22) (5) Commercial 504 521 (17) (3) Industrial 120 146 (26) (18) Governmental 230 248 (18) (7) ------- ------- ------ Total retail 1,305 1,388 (83) (6) Sales for resale Associated companies 14 2 12 600 Non-associated companies 74 76 (2) (3) ------- ------- ------ Total 1,393 1,466 (73) (5) ======= ======= ====== Six Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 61.1 $ 52.8 $ 8.3 16 Commercial 69.3 67.9 1.4 2 Industrial 11.8 10.7 1.1 10 Governmental 26.1 23.5 2.6 11 ------- ------- ------ Total retail 168.3 154.9 13.4 9 Sales for resale Associated companies 2.3 1.3 1.0 77 Non-associated companies 5.4 4.3 1.1 26 Other 10.0 14.7 (4.7) (32) ------- ------- ------ Total $ 186.0 $ 175.2 $ 10.8 6 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 842 825 17 2 Commercial 969 962 7 1 Industrial 231 269 (38) (14) Governmental 442 458 (16) (3) ------- ------- ------ Total retail 2,484 2,514 (30) (1) Sales for resale Associated companies 59 68 (9) (13) Non-associated companies 126 136 (10) (7) ------- ------- ------ Total 2,669 2,718 (49) (2) ======= ======= ====== SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income - ---------- Net income for the three months and six months ended June 30, 1996, remained relatively unchanged as compared to the same period in 1995. Significant factors affecting the results of operations and causing variances between the three months and six months ended June 30, 1996, and 1995 are discussed under "Revenues" and "Expenses" below. Revenues - -------- Operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1. Operating revenues increased slightly for the three months and six months ended June 30, 1996, due primarily to an increase in fuel and fuel-related expenses and increased depreciation, amortization, and decommissioning expenses offset by a decrease in nuclear refueling outage expenses as discussed under "Expenses" below. The increase in fuel and fuel-related expenses is due to a refueling outage in 1995. The increase in decommissioning costs and depreciation rates is reflected in the 1995 System Energy FERC rate increase filing, subject to refund. See Note 2 for a discussion of the proposed rate increase. Expenses - -------- Operating expenses increased for the three months and six months ended June 30, 1996, due to an increase in fuel and fuel-related expenses and depreciation, amortization, and decommissioning expenses. These increases were offset by a decrease in nuclear refueling outage expenses. Fuel and fuel-related expenses, as well as depreciation, amortization, and decommissioning expenses increased for the reasons stated above. The decrease in nuclear refueling outage expenses was attributed to the effect of refueling outage expenses incurred in 1995 and the absence of a refueling outage to date in 1996. Other operation and maintenance expenses increased for the three months ended June 30, 1996, primarily due to timing differences in accounting for maintenance expenditures.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF INCOME For the Three and Six Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Six Months Ended ------------------------- ------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- (In Thousands) (In Thousands) Operating Revenues $160,369 $158,632 $316,793 $310,296 -------- -------- -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 12,171 3,561 25,011 15,896 Nuclear refueling outage expenses - 19,005 - 21,286 Other operation and maintenance 26,591 23,803 48,332 48,902 Depreciation, amortization, and decommissioning 32,014 24,535 64,013 49,933 Taxes other than income taxes 6,699 7,024 13,605 14,198 Income taxes 21,192 19,414 41,884 38,719 -------- -------- -------- -------- Total 98,667 97,342 192,845 188,934 -------- -------- -------- -------- Operating Income 61,702 61,290 123,948 121,362 -------- -------- -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 297 552 647 1,032 Miscellaneous - net 627 1,017 1,466 1,742 Income taxes 201 501 (114) 1,052 -------- -------- -------- -------- Total 1,125 2,070 1,999 3,826 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 37,021 38,162 74,974 75,596 Other interest - net 2,707 1,984 4,698 4,317 Allowance for borrowed funds used during construction (283) (588) (637) (1,092) -------- -------- -------- -------- Total 39,445 39,558 79,035 78,821 -------- -------- -------- -------- Net Income $23,382 $23,802 $46,912 $46,367 ========= ========= ========= ========= See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $46,912 $46,367 Noncash items included in net income: Depreciation, amortization, and decommissioning 64,013 49,933 Deferred income taxes and investment tax credits (16,354) (7,335) Allowance for equity funds used during construction (647) (1,032) Changes in working capital: Receivables (2,835) (60,206) Accounts payable (967) (181) Taxes accrued 17,497 14,062 Interest accrued 9,192 3,127 Other working capital accounts (3,531) (22,710) Decommissioning trust contributions (9,073) (2,696) FERC Settlement - refund obligation (1,942) - Provision for estimated losses and reserves 23,932 - Other 3,151 32,074 -------- -------- Net cash flow provided by operating activities 129,348 51,403 -------- -------- Investing Activities: Construction expenditures (3,624) (17,178) Allowance for equity funds used during construction 647 1,032 Nuclear fuel purchases (1,135) (52,188) Proceeds from sale/leaseback of nuclear fuel 402 52,188 -------- -------- Net cash flow used in investing activities (3,710) (16,146) -------- -------- Financing Activities: Proceeds from the issuance of long-term debt 89,192 43,538 Retirement of long-term debt (92,700) (45,320) Changes in short-term borrowings - net (2,990) - Common stock dividends paid (46,300) (47,600) -------- -------- Net cash flow used in financing activities (52,798) (49,382) -------- -------- Net increase (decrease) in cash and cash equivalents 72,840 (14,125) Cash and cash equivalents at beginning of period 240 89,703 -------- -------- Cash and cash equivalents at end of period $73,080 $75,578 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $66,790 $72,647 Income taxes $30,944 $23,659 Noncash investing and financing activities: Change in unrealized appreciation/depreciation of decommissioning trust assets ($1,055) $2,589 See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) ASSETS Utility Plant: Electric $2,997,125 $2,977,303 Electric plant under lease 446,701 444,305 Construction work in progress 15,958 35,946 Nuclear fuel under capital lease 53,664 71,374 ---------- ---------- Total 3,513,448 3,528,928 Less - accumulated depreciation and amortization 917,387 861,752 ---------- ---------- Utility plant - net 2,596,061 2,667,176 ---------- ---------- Other Property and Investments: Decommissioning trust fund 50,020 40,927 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 141 240 Temporary cash investments - at cost, which approximates market: Associated companies 36,963 - Other 35,976 - ---------- ---------- Total cash and cash equivalents 73,080 240 Accounts receivable: Associated companies 76,969 72,458 Other 3,161 4,837 Materials and supplies - at average cost 66,651 67,661 Prepayments and other 19,065 16,050 ---------- ---------- Total 238,926 161,246 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 277,253 291,181 Unamortized loss on reacquired debt 54,574 52,702 Other regulatory assets 200,001 203,731 Other 14,607 14,049 ---------- ---------- Total 546,435 561,663 ---------- ---------- TOTAL $3,431,442 $3,431,012 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS June 30, 1996 and December 31, 1995 (Unaudited) 1996 1995 ---------- ---------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares $789,350 $789,350 Paid-in capital - 7 Retained earnings 86,532 85,920 ---------- ---------- Total common shareholder's equity 875,882 875,277 Long-term debt 1,471,336 1,219,917 ---------- ---------- Total 2,347,218 2,095,194 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 25,664 44,107 Other 41,745 16,068 ---------- ---------- Total 67,409 60,175 ---------- ---------- Current Liabilities: Currently maturing long-term debt - 250,000 Notes payable - associated companies - 2,990 Accounts payable: Associated companies 24,248 17,458 Other 11,305 19,063 Taxes accrued 90,145 72,648 Interest accrued 45,935 36,743 Obligations under capital lease 28,000 28,000 Other 2,688 4,211 ---------- ---------- Total 202,321 431,113 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 571,846 602,182 Accumulated deferred investment tax credits 105,381 107,119 FERC Settlement - refund obligation 54,906 56,848 Other 82,361 78,381 ---------- ---------- Total 814,494 844,530 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $3,431,442 $3,431,012 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES Cajun - River Bend (Entergy Corporation and Entergy Gulf States) - ------------------ Entergy Gulf States has significant business relationships with Cajun, including co-ownership of River Bend (operated by Entergy Gulf States) and Big Cajun 2, Unit 3 (operated by Cajun). Entergy Gulf States and Cajun, respectively, own 70% and 30% undivided interests in River Bend, and 42% and 58% undivided interests in Big Cajun 2, Unit 3. These relationships have spawned a number of significant and long-standing disputes and claims between the parties. A preliminary agreement setting forth terms for the resolution of such disputes has been reached by Entergy Gulf States, the Bankruptcy Trustee for Cajun, and the Rural Utilities Service (RUS). In June 1989, Cajun filed a civil action against Entergy Gulf States in the United States District Court for the Middle District of Louisiana (District Court). Cajun's complaint seeks to rescind or terminate the Joint Ownership Participation and Operating Agreement (Operating Agreement) entered into on August 28, 1979, relating to River Bend. The suit also seeks to recover 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 their failure to get prior LPSC approval alleged to be necessary. Entergy Gulf States 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 began in April 1994 and was completed in March 1995. On October 24, 1995, the District Court issued a memorandum opinion ruling in favor of Entergy Gulf States. The District Court found that Cajun had not proved that Entergy Gulf States fraudulently induced it to execute the Operating Agreement and that Cajun failed to timely assert its claim. A final judgment on this portion of the suit will not be entered until all claims asserted by Cajun in the case have been heard. The trial of the second portion of the suit was previously scheduled to begin on July 2, 1996 but was postponed due to the proposed settlement of the Cajun and Entergy Gulf States disputes. If the ultimate outcome of this litigation requires Entergy Gulf States to pay substantial damages, it would probably be unable to make such payments and could be forced to seek relief from its creditors under the United States Bankruptcy Code. Cajun has not paid its full share of capital costs, operating and maintenance expenses, and other costs for repairs and improvements to River Bend since 1992. Cajun's unpaid portion of River Bend operating and maintenance expenses (including nuclear fuel) and capital costs for the six months ended June 30, 1996, was approximately $32.1 million. The cumulative cost to Entergy Gulf States resulting from Cajun's failure to pay its full share of River Bend-related costs, reduced by the proceeds from the sale by Entergy Gulf States of Cajun's share of River Bend power, and payments into the registry of the District Court for Entergy Gulf States' portion of expenses for Big Cajun 2, Unit 3, was $22.8 million as of June 30, 1996, compared with $31.1 million as of December 31, 1995. Cajun's unpaid portion of the River Bend related costs is 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 Entergy Gulf States, including any amounts that may be awarded in litigation. Cajun continues to pay its share of decommissioning costs for River Bend. See Note 8 of the Form 10-K for additional information regarding the Cajun litigation, Cajun's bankruptcy proceedings, related filings, and the ongoing potential effects of these matters upon Entergy Gulf States. In its bankruptcy proceedings, Cajun filed a motion on January 10, 1995, to reject the Operating Agreement as a burdensome executory contract. Entergy Gulf States responded on January 10, 1995, with a memorandum opposing Cajun's motion. Should the court grant Cajun's motion to reject the Operating Agreement, Cajun would be relieved of its financial obligations under the contract, while Entergy Gulf States would likely have a substantial damage claim arising from any such rejection. Although Entergy Gulf States believes that Cajun's motion to reject the Operating Agreement is without merit, it is not possible to predict the outcome of these proceedings. On March 8, 1996, Southwestern Electric Power Company (SWEPCO), Entergy Gulf States, and certain member cooperatives of Cajun filed a joint proposal to bring an end to the Cajun bankruptcy proceeding. The proposal was submitted in response to a bid procedure established by the Cajun bankruptcy trustee. On April 19, 1996, SWEPCO, Entergy Gulf States and certain Cajun member cooperatives filed a separate plan of reorganization with the court based upon their earlier proposal. On April 22, 1996, the Cajun bankruptcy trustee filed a plan of reorganization with the bankruptcy court based on the proposal of two non-affiliated companies to take over the non-nuclear operations of Cajun. The timing and completion of the reorganization plan depends on bankruptcy court approval and any required regulatory approvals. On April 26, 1996, Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, Cajun's largest creditor, agreed in principle to a settlement of all disputes between Cajun and Entergy Gulf States. The terms include, but are not limited to, the following: (i) Cajun's interest in River Bend will be turned over to the RUS, which will have the option to retain the interest, sell it to a third party, or transfer it to Entergy Gulf States at no cost; (ii) Cajun will set aside a total of $125 million for the decommissioning of its interest in River Bend; (iii) Cajun will transfer certain transmission assets to Entergy Gulf States; (iv) Cajun will settle transmission disputes and be released from claims for payment under transmission arrangements with Entergy Gulf States as discussed under "Cajun - Transmission Service" below; and (v) all funds paid by Entergy Gulf States into the registry of the District Court will be returned to Entergy Gulf States. The settlement is subject to approvals by the RUS, the Board of Directors of Entergy Corporation and Entergy Gulf States, the U.S. Bankruptcy Court, and appropriate regulatory agencies. Cajun - Transmission Service (Entergy Corporation and Entergy Gulf States) Entergy Gulf States and Cajun are parties to FERC proceedings relating to transmission service charge disputes. See Note 8 in the Form 10-K for additional information regarding these FERC proceedings, FERC orders issued as a result of such proceedings, and the potential effects of these proceedings upon Entergy Gulf States. Under Entergy Gulf States' interpretation of a 1992 FERC order, as modified by FERC's orders issued on August 3, 1995, and October 2, 1995, Cajun would owe Entergy Gulf States approximately $67.4 million as of June 30, 1996. Entergy Gulf States further estimates that if it were to prevail in its May 1992 motion for rehearing and on certain other issues decided adversely to Entergy Gulf States in the February 1995, August 1995, and October 1995 FERC orders, which Entergy Gulf States has appealed, Cajun would owe Entergy Gulf States approximately $151.0 million as of June 30, 1996. If Cajun were to prevail in its May 1992 motion for rehearing to FERC, and if Entergy Gulf States were not to prevail in its May 1992 motion for rehearing to FERC, and if Cajun were to prevail in appealing FERC's August and October 1995 orders, Entergy Gulf States estimates it would owe Cajun approximately $103.1 million as of June 30, 1996. 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. Pending FERC's ruling on the May 1992 motions for rehearing, Entergy Gulf States has continued to bill Cajun utilizing the historical billing methodology and has recorded underpaid transmission charges, including interest, in the amount of $140.6 million as of June 30, 1996. This amount is reflected in long-term receivables with an offsetting reserve in other deferred credits. Cajun's bankruptcy may affect Entergy Gulf States' collection of the above amounts. FERC has determined that the collection of the pre- petition debt of Cajun is an issue properly decided in the bankruptcy proceeding. Refer to "Cajun - River Bend" above for a discussion of the potential settlement of the Cajun and Entergy Gulf States disputes. Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 8 to the Form 10-K for information on the operating companies' and System Energy's construction expenditures (excluding nuclear fuel) for the years 1996, 1997, and 1998, and long-term debt and preferred stock maturities and cash sinking fund requirements for the period 1996-1998. Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 8 to the Form 10-K for information on nuclear liability, property and replacement power insurance, related NRC regulations, the disposal of spent nuclear fuel, other high-level radioactive waste, and decommissioning costs associated with ANO, River Bend, Waterford 3, and Grand Gulf 1. 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 plants in the financial statements of electric utilities. In response to these questions, the FASB has been reviewing the accounting for decommissioning and has expanded the scope of its review to include liabilities related to the closure and removal of all long-lived assets. An exposure draft of the proposed SFAS (which is proposed to be effective in 1997) was issued in February 1996. The proposed SFAS would require measurement of the liability for closure and removal of long-lived assets (including decommissioning) based on discounted future cash flows. Those future cash flows should be determined by estimating current costs and adjusting for inflation, efficiencies that may be gained from experience with similar activities, and consideration of reasonable future advances in technology. It also would require that changes in the decommissioning/closure cost liability resulting from changes in assumptions should be recognized with a corresponding adjustment to the plant asset, and depreciation should be revised prospectively. The proposed SFAS states that the initial recognition of the decommissioning/closure cost liability would result in an asset that should be presented with other plant costs on the financial statements because the cost of decommissioning/closing the plant would be recognized as part of the total cost of the plant asset. In addition, there would be a regulatory asset recognized on the financial statements to the extent the initial decommissioning/closure liability has increased due to the passage of time, and such costs are probable of future recovery. If current electric utility industry accounting practices with respect to nuclear decommissioning and other closure costs are changed, annual provisions for such costs could increase, the estimated cost for decommissioning/closure could be recorded as a liability rather than as accumulated depreciation, and trust fund income from decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense. ANO Matters (Entergy Corporation and Entergy Arkansas) Cracks in certain steam generator tubes at ANO 2 were discovered and repaired during an outage in March 1992. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent refueling outage in October 1995. During the October 1995 inspection, additional cracks in the tubes were discovered. ANO 2's output has been reduced by 23 megawatts due to steam generator fouling and tube plugging. The unit may be approaching the current limit for the number of steam generator tubes that can be plugged with the unit in operation. If the established limit is reached, Entergy Operations could be required during future outages to insert sleeves in steam generator tubes that were previously plugged. Entergy Operations is in the process of gathering information and assessing various options for the repair or the replacement of ANO 2's steam generators. Certain of these options could, in the future, require significant capital expenditures and result in additional outages. A decision as to the repair or replacement of ANO 2's steam generators is anticipated in late 1996 or early 1997. Entergy Operations periodically meets with the NRC to discuss the results of inspections of the generator tubes, as well as the timing of future inspections. Environmental Issues (Entergy Arkansas) In May 1995, Entergy Arkansas was named as a defendant in a suit by Reynolds Metals Company (Reynolds), seeking to recover a share of the costs associated with the clean-up of hazardous substances at a site south of Arkadelphia, Arkansas. Reynolds alleges that it has spent $11.2 million to clean-up the site, and that the site was contaminated with PCBs for which Entergy Arkansas bears some responsibility. Entergy Arkansas, voluntarily, at its expense, completed remediation at this site and at a nearby substation site. Entergy Arkansas believes that it has no liability for contamination at the site that is subject to the Reynolds suit and is contesting the lawsuit. Regardless of the outcome, Entergy Arkansas does not believe this matter would have a materially adverse effect on its financial condition or results of operations. See "Environmental Regulation" in Item 1 of Part I of the Form 10-K for additional information on the PCB contamination at the two former Reynolds plant sites in Arkansas to which Entergy Arkansas had supplied power. (Entergy Gulf States) Entergy Gulf States has been designated as a potentially responsible party for the clean-up of certain hazardous waste disposal sites. Entergy Gulf States is currently negotiating with the EPA and state authorities regarding the clean-up of certain of these sites. Through June 30, 1996, $8.0 million has been expended on the clean- up. As of June 30, 1996, a remaining recorded liability of $21.6 million existed relating to the clean-up of the sites at which Entergy Gulf States has been designated a potentially responsible party. See "Environmental Regulation" in Item 1 of Part I of the Form 10-K for additional discussion of the sites where Entergy Gulf States has been designated as a potentially responsible party by the EPA and related litigation. (Entergy Louisiana) During 1993, the Louisiana Department of Environmental Quality issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana has determined that certain of its power plant waste water impoundments were affected by these regulations and chose to upgrade or close them. A remaining recorded liability in the amount of $9.8 million existed at June 30, 1996, for waste water upgrades and closures to be completed by the end of 1996. Cumulative expenditures relating to the upgrades and closures of waste water impoundments were $6.7 million as of June 30, 1996. (Entergy Integrated Solutions, Inc.) In June 1996, EIS closed its Pelzer, South Carolina facility, which had been leased from a third party since June 1995. EIS subsequently was advised that solid wastes were improperly buried on the leased property. EIS conducted an investigation which confirmed the presence of buried lighting ballasts on adjacent property and disclosed the possible burial of light bulb waste containing hazardous substances under the building on the leased property. It appears that the material was buried prior to the time that EIS leased the premises. A report has been provided to the Environmental Protection Agency and to the South Carolina Department of Health and Environmental Control. Based on its investigation, EIS does not believe that it is liable for costs of remediating the leased premises. Preliminary estimates of the cost of remediation range from $600,000 to $880,000. Waterford 3 Lease Obligations (Entergy Louisiana) - ----------------------------- On September 28, 1989, Entergy Louisiana entered into three transactions for the sale and leaseback of undivided interests (aggregating approximately 9.3%) in Waterford 3. Upon the occurrence of certain events, Entergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from the lease transactions, and Entergy Louisiana may be required to assume the outstanding bonds issued by the Owner Trustee to finance, in part, its acquisition of the undivided interests in Waterford 3. See Note 9 to the Form 10-K for further information. Reimbursement Agreement (System Energy) - ----------------------- Under a bank letter of credit and reimbursement agreement, System Energy has agreed to a number of covenants relating to the maintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the agreement, to maintain its equity at not less than 33% of its adjusted capitalization (defined in the agreement to include certain amounts not included in capitalization for financial statement purposes). In addition, System Energy must maintain, with respect to each fiscal quarter during the term of the agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the agreement) of at least 1.60 times earnings. System Energy was in compliance with the above covenants at June 30, 1996. See Note 8 to the Form 10-K for further information. NOTE 2. RATE AND REGULATORY MATTERS River Bend (Entergy Corporation and Entergy Gulf States) - ---------- In May 1988, the PUCT granted Entergy Gulf States 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 (Abeyed Deferrals). As discussed in Note 2 to the Form 10-K, various appeals of the PUCT's order have been filed (Rate Appeal). Entergy Gulf States filed an appeal with the Texas Supreme Court and, on February 9, 1996, the Texas Supreme Court agreed to hear the appeal. Oral arguments were held on March 19, 1996. The timing of a decision by the Texas Supreme Court is not certain. As of June 30, 1996, the River Bend plant costs disallowed for retail ratemaking purposes in Texas and the River Bend plant costs held in abeyance totaled (net of taxes and depreciation) approximately $12 million and $272 million, respectively. Allowed Deferrals were approximately $80 million, net of taxes and amortization, as of June 30, 1996. Entergy Gulf States estimates it has collected approximately $193 million of revenues as of June 30, 1996, 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 thereon could be lost, and no assurance can be given as to whether or not refunds to customers of revenue received based upon such deferred costs would be required. During the first quarter of 1996, Entergy Gulf States wrote off Abeyed Deferrals of $169 million, net of tax, in accordance with SFAS 121, which became effective January 1, 1996, but it has made no write- offs or reserves for the River Bend plant-related costs. A general remand by the Texas Supreme Court in the Rate Appeal would enable Entergy Gulf States to seek recovery of the Abeyed Deferrals. Based on advice from Clark, Thomas & Winters, A Professional Corporation, legal counsel of record in the Rate Appeal, management believes that it is reasonably possible that the case will be remanded to the PUCT, and that the PUCT will be allowed to rule on the prudence of the abeyed River Bend plant costs. Management and legal counsel are unable to predict the amount, if any, of abeyed and previously disallowed River Bend plant costs that ultimately might be disallowed by the PUCT. As of June 30, 1996, a net of tax write-off of up to $284 million could be required if the PUCT ultimately issues an adverse ruling on the abeyed and disallowed plant costs. The following factors support management's position that a loss contingency requiring accrual has not occurred, and its belief 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. Analysis by Sandlin Associates, 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 Entergy Gulf States' internal legal staff, which has considerable experience in Texas rate case litigation. Additionally, based on advice from Clark, Thomas & Winters, management believes that it is reasonably possible that the Allowed Deferrals will continue to be recovered in rates, and that it is reasonably possible that the Abeyed Deferrals will be recovered in rates to the extent that the $1.4 billion of abeyed River Bend plant is recovered. Filings with the LPSC - --------------------- (Entergy Corporation and Entergy Gulf States) See Note 2 in the Form 10-K for a discussion of Entergy Gulf States' required earnings analysis filing with the LPSC for the test year preceding the Merger (1993). Entergy Gulf States appealed to the Louisiana Supreme Court the 1994 LPSC order for an annual rate reduction of $12.7 million. During the appeal, a preliminary injunction Entergy Gulf States received from the District Court, relating to the $8.3 million earnings effect of a 1994 change in accounting for unbilled revenues, remained in effect. On July 2, 1996, the Louisiana Supreme Court ruled on the appeal. The Court found that the LPSC ruled incorrectly on the treatment of the initial balance of unbilled revenues and the revenue annualization adjustment. As a result, Entergy Gulf States will not be required to refund the $8.3 million. The case, which included other disputed matters, was remanded to the LPSC for further proceedings. On May 31, 1995, Entergy Gulf States filed its first required post- Merger earnings analysis with the LPSC. Hearings on this review were held in December 1995. The ALJ issued a preliminary decision on May 28, 1996, and a decision is expected from the LPSC in the third quarter of 1996. On May 31, 1996, Entergy Gulf States filed its second required post- Merger earnings analysis with the LPSC. On June 1, 1996, a $5 million annual rate reduction based on the earnings filing went into effect. Hearings on this filing are scheduled for November 1996. (Entergy Corporation and Entergy Louisiana) See Note 2 in the Form 10-K for a discussion of Entergy Louisiana's performance-based formula rate plan approved in a June 1995 LPSC rate order, Entergy Louisiana's subsequent appeal of the LPSC's order, and the final settlement of this appeal. The property tax exemption for Waterford 3 ended in December 1995 and Entergy Louisiana will be required to pay $21.5 million in property taxes to St. Charles Parish for the 1996 tax year. In a March 1996 LPSC order, Entergy Louisiana was permitted to defer the rate recovery of these taxes for the period January 1996 through June 1996. The order allowed for the recovery of the property tax and also for the recovery, from July 1996 through June 1997, of the related deferral. In addition, Entergy Louisiana's phase-in-plan for Waterford 3 will expire in November 1996. Entergy Louisiana is recovering deferred costs annually of approximately $28.4 million. On April 15, 1996, Entergy Louisiana filed its performance based formula rate plan for the 1995 test year with the LPSC. On June 19, 1996, the LPSC approved a $12 million annual reduction in base rates effective July 1, 1996. This reduction was based upon the 1995 test year results under the formula rate plan and the expiration of the Waterford 3 phase-in-plan discussed above, partially offset by the recovery of the property taxes on Waterford 3 and the related deferral discussed above. Other issues under the formula rate plan remain unresolved and could result in an additional rate reduction retroactive to July 1, 1996, that is not expected to exceed $10 million. Additionally, the LPSC has indicated that it will initiate a review of Entergy Louisiana's allowed return on equity. No procedural schedule has been established for this review. Filings with the PUCT (Entergy Corporation and Entergy Gulf States) - --------------------- On December 6, 1995, Entergy Gulf States filed a petition with the PUCT for reconciliation of fuel and purchased power expenses for the period January 1, 1994, through June 30, 1995. Entergy Gulf States believes that there was an under-recovered fuel balance, including interest, of $22.4 million as of June 1995. Hearings are scheduled to begin in August 1996. Management is unable to predict the final outcome of this proceeding. In accordance with the Merger agreement, Entergy Gulf States is required to file a rate proceeding with the PUCT in November 1996. However, in April 1996, certain cities served by Entergy Gulf States (Cities) instituted investigations of the reasonableness of Entergy Gulf States' rates. In May 1996, the Cities agreed to forego their investigation based on the assurance that any rate decrease ordered in the November 1996 filing will be retroactive to June 1, 1996, and accrue interest until refunded. The agreement further provides that no base rate increase will be retroactive. Management is unable to predict the final outcome of this proceeding. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) - --------------------- On March 15, 1996, Entergy Mississippi filed its annual earnings review with the MPSC under its formula rate plan. On April 18, 1996, the MPSC issued an order approving and adopting a joint stipulation and placing the prospective rate reduction of $5.9 million into effect on May 1, 1996. Filings with the Council (Entergy Corporation and Entergy New Orleans) - ------------------------ Pursuant to the 1994 NOPSI Settlement, Entergy New Orleans is required to make earnings filings with the Council for the 1995 and 1996 rate years. A review of Entergy New Orleans' earnings for the test year ending September 30, 1995, required Entergy New Orleans to credit customers $6.2 million over a 12-month period which began in March 1996. Hearings before the Council on the reasonableness and prudence of Entergy New Orleans' deferred Least Cost Integrated Resource Planning expenses for cost recovery purposes were previously scheduled for April 1996, but have been delayed. Proposed Rate Increase - ---------------------- (System Energy) System Energy filed an application with FERC on May 12, 1995, for a $65.5 million rate increase. The request seeks changes to System Energy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return on common equity. On December 12, 1995, System Energy implemented a $65.5 million rate increase, subject to refund. Management has elected to record a reserve for a portion of the rate increase. Hearings on System Energy's request began in January 1996 and were completed in February 1996. On July 11, 1996, the ALJ issued an initial decision in this proceeding that agreed with certain of System Energy's proposals, while rejecting a proposed increase in return on common equity and recommending a slight decrease. The ALJ also rejected the proposed change in the decommissioning cost methodology. The decision of the ALJ is preliminary and may be modified in the final decision from FERC which is expected in the first quarter of 1997. Management is unable predict the final outcome of the rate increase request, or the amount of any refunds in excess of reserves that may be required. (Entergy Mississippi) Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase is $21.6 million annually. In July 1995, Entergy Mississippi filed a schedule with the MPSC that defers the retail recovery of the System Energy rate increase. The deferral plan, which was approved by the MPSC, began in December 1995, the effective date of the System Energy rate increase, and will end after the issuance of a final order by FERC. The final amount of the deferred rate increase is to be amortized over 48 months beginning in October 1998. (Entergy New Orleans) Entergy New Orleans' allocation of the proposed System Energy wholesale rate increase is $11.1 million annually. In February 1996, Entergy New Orleans filed a plan with the Council to defer 50% of the amount of the System Energy rate increase. The deferral began in February 1996 and will end after the issuance of a final order by FERC. LPSC Fuel Cost Review (Entergy Corporation and Entergy Gulf States) - --------------------- See Note 2 to the Form 10-K, for a discussion of the LPSC's review of Entergy Gulf States' fuel costs for the period October 1988 through September 1991 and Entergy Gulf States' subsequent appeal of $13.9 million of fuel costs disallowed by the LPSC. On April 15, 1996, the district court affirmed the LPSC decision. Entergy Gulf States intends to appeal this decision to the Louisiana Supreme Court. The LPSC is currently conducting the second phase of its review of Entergy Gulf States' fuel costs for the period October 1991 through December 1994. On June 30, 1995, the LPSC consultants filed testimony recommending a disallowance of $38.7 million of fuel costs. Hearings began in December 1995 and were completed in March 1996. A decision is expected in the third quarter of 1996. NOTE 3. COMMON STOCK (Entergy Corporation) During the first six months of 1996, Entergy Corporation issued 275,186 shares of its previously repurchased common stock, reducing the amount held as treasury stock by $7.9 million. Entergy Corporation issued these shares to meet the requirements of its various stock plans. NOTE 4. LONG-TERM DEBT (Entergy Corporation) An Entergy subsidiary signed an agreement with several banks on January 5, 1996, to obtain a revolving credit facility in the aggregate amount of $1.2 billion Australian dollars ($870 million US dollars) for the acquisition of CitiPower. The facility was partially drawn down on the same date, bears interest at an average rate of 8.43%, and is non-recourse to Entergy. The maturity date of the credit facility is June 30, 2000, unless certain events occur which would cause the maturity date to be extended to a date no later than December 31, 2000. As part of the CitiPower acquisition, Entergy Corporation provided credit support, in the form of a bank letter of credit and other agreements, totaling approximately $79 million. The subsidiary entered into several interest rate swaps to reduce the impact of interest rate changes on its debt related to the CitiPower acquisition. The interest rate swap agreements involve exchanges of floating rate interest payments for fixed rate interest payments without the exchange of the underlying notional amounts. Market risks arise from the movements in interest rates. If the counterparties to an interest rate swap agreement were to default on contractual payments, the subsidiary could be exposed to increased costs related to replacing the original agreement. However, the subsidiary does not anticipate nonperformance by any counterparty to any interest rate swap in effect at June 30, 1996. At June 30, 1996, this subsidiary was a party to a notional amount of $900 million Australian dollars of interest rate swaps with maturity dates ranging from February 1999 to December 2000. (Entergy Gulf States) On July 1, 1996, Entergy Gulf States redeemed, pursuant to sinking fund requirements, $50 million of its 9.72% Series Debentures due 1998. (Entergy Mississippi) On July 15, 1996, Entergy Mississippi retired $26 million of its 11.18% Series General and Refunding Bonds upon maturity. (System Energy) On August 1, 1996, System Energy issued $100 million of its 7.28% Series First Mortgage Bonds due 1999 and $135 million of its 7.71% Series First Mortgage Bonds due 2001. NOTE 5. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES (Entergy Louisiana) Entergy Louisiana Capital I (Trust) was established as a financing subsidiary of Entergy Louisiana for the purpose of issuing common and preferred securities. On July 16, 1996, the Trust issued $70 million in aggregate liquidation preference amount of 9% Cumulative Quarterly Income Preferred Securities (Preferred Securities) in a public offering and $2.2 million of common securities to Entergy Louisiana. The Trust used the proceeds from the sale of the Preferred Securities and the common securities to purchase from Entergy Louisiana 9% junior subordinated deferrable interest debentures in the amount of $72.2 million (Debentures). The Debentures held by the Trust are its only asset and the Trust will use interest payments received on the Debentures to make cash distributions on the Preferred Securities. The Preferred Securities of the Trust, as well as the Debentures, mature on September 30, 2045. The Preferred Securities are redeemable, however, at the option of Entergy Louisiana beginning in 2001 at 100% of their principal amount, or earlier under certain limited circumstances, including the loss of the tax deduction arising out of the interest paid on the Debentures. Entergy Louisiana has, pursuant to certain agreements taken together, fully and unconditionally guaranteed payment of distributions on the Preferred Securities. Entergy Louisiana is the owner of all of the common securities of the Trust, which constitute 3% of the Trust's total capital. NOTE 6. RETAINED EARNINGS (Entergy Corporation) On July 26, 1996, Entergy Corporation's Board of Directors declared a common stock dividend of 45 cents per share payable on September 1, 1996, to holders of record on August 7, 1996. NOTE 7. RESTRUCTURING COSTS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) In 1994 and 1995, Entergy implemented various restructuring programs to reduce the number of employees and consolidate offices and facilities. The programs were designed to reduce costs and improve operating efficiencies in order to enable Entergy to become a low-cost producer. The balances as of December 31, 1995, and June 30, 1996, for restructuring liabilities associated with these programs are shown below by company along with the actual termination benefits paid under the programs.
Liability as of Adjustments Payments Liability as of December 31, Made in Made in June 30, Company 1995 1996 1996 1996 (In Millions) Entergy Arkansas $8.3 $0.1 ($6.5) $1.9 Entergy Gulf States 5.4 0.3 (4.1) 1.6 Entergy Louisiana 2.2 0.2 (2.2) 0.2 Entergy Mississippi 2.5 (1.2) (0.7) 0.6 Entergy New Orleans 0.6 0.2 (0.6) 0.2 Other 5.2 0.4 (4.0) 1.6 ----- ------ ------ ---- Total $24.2 - ($18.1) $6.1 ===== ====== ====== ====
The restructuring charges shown above primarily include employee severance costs related to the expected termination of approximately 2,750 employees in various groups. As of June 30, 1996, approximately 2,575 employees had either been terminated or accepted voluntary separation packages under the restructuring plan. NOTE 8. ACCOUNTING ISSUES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) New Accounting Standard - In March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of", which became effective January 1, 1996. This statement describes circumstances which may result in assets being impaired, in addition to providing criteria for recognition and measurement of asset impairment. In the first quarter of 1996, Entergy Gulf States' regulatory assets of $169 million (net of tax) related to Texas retail deferred River Bend operating and carrying costs and $5 million (net of tax) related to Louisiana retail deferred River Bend operating costs were written off under the provisions of SFAS 121. See Note 1 to the Form 10-K for additional details regarding other assets and operations potentially impacted in the future by the requirements of SFAS 121 and the process for periodically reviewing those assets and operations for impairment. NOTE 9. ENTERGY CORPORATION-CITIPOWER ACQUISITION (Entergy Corporation) On January 5, 1996, Entergy Corporation finalized its acquisition of CitiPower, an electric distribution company serving Melbourne, Australia, and surrounding suburbs. The purchase price of CitiPower was approximately $1.2 billion US dollars, of which $294 million US dollars represented an equity investment by Entergy Corporation, and the remainder represented debt. Entergy Corporation funded the majority of the equity portion of the investment by using $230 million of its $300 million bank revolving credit facility. CitiPower is one of five electric distribution businesses in the state of Victoria. CitiPower's distribution area accounts for approximately 10% of Victoria's population. For the fiscal year ended June 30, 1996, CitiPower supplied approximately 4.5 million MWh of electricity to over 237,000 customer sites. Approximately 36,000, or 16%, of these sites were commercial customers. The CitiPower license is being amortized on a straight-line basis over a 40 year period beginning January 5, 1996. As of June 30, 1996, the unamortized balance of the license was $621 million. In accordance with the purchase method of accounting, the three months and six months results of operations for Entergy Corporation reported in its Statements of Consolidated Income and Cash Flows do not reflect CitiPower's results of operations for any period prior to January 5, 1996. The pro forma combined revenues, net income, earnings per common share before the cumulative effect of accounting change, and earnings per common share of Entergy Corporation presented below give effect to the acquisition as if it had occurred at January 1, 1995. This pro forma information is not necessarily indicative of the results of operations that would have occurred had the acquisition been consummated for the period for which it is being given effect. Three Months Six Months Ended Ended June 30, 1995 June 30, 1995 --------------- --------------- (In Thousands of U.S. dollars, Except Share Data) Operating revenues $1,667,117 $3,104,317 Net income $ 150,583 $ 239,995 Earnings per verage common share before cumulative effect of accounting change $ 0.66 $ 0.90 Earnings per average common share $ 0.66 $ 1.05 CitiPower's results of operations for the three months and six months ended June 30, 1996, (beginning on January 5, 1996, at the date of acquisition) are included in Entergy Corporation's Consolidated Financial Statements and are stated separately below: Three Months Ended Six Months Ended June 30, 1996 June 30, 1996 -------------------- ------------------- (In Thousands of U.S. dollars) Operating revenues $ 103,803 $ 195,439 Operating expenses $ 90,189 $ 163,819 Interest charges $ 19,742 $ 37,495 Net income $ (6,128) $ (5,875) _________________________________________ In the opinion of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, the accompanying unaudited condensed financial statements contain all adjustments (consisting primarily of normal recurring accruals and 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 Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans 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 PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- Merger-Related Proceedings (Entergy Corporation and Entergy Gulf States) - -------------------------- See "Nuclear Operations" in Item 1 of Part I of the Form 10-K for information relating to the merger related proceedings before the D.C. Circuit and the proceeding pending before the NRC Atomic Safety and Licensing Board (ASLB), which was instigated by Cajun and concerns the two Merger-related license amendments issued by the NRC for River Bend. In March 1996, the ASLB, responding to Cajun's request, dismissed the pending proceedings without prejudice. On an unopposed motion from the parties to the proceedings before the D.C. Circuit, who requested a continuance in light of the pending settlement between Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, the D.C. Circuit ordered that the cases be removed from oral argument and held in abeyance pending a further order of the court. Cajun - River Bend (Entergy Corporation and Entergy Gulf States) - ------------------ See Note 8 of the Form 10-K and Note 1 for a discussion of the Cajun litigation and bankruptcy proceedings. On March 8, 1996, SWEPCO, Entergy Gulf States, and certain member cooperatives of Cajun, submitted a joint proposal to bring an end to the Cajun bankruptcy proceeding. The proposal was made in response to a bid procedure established by the Cajun bankruptcy trustee. On April 19, 1996, SWEPCO, Entergy Gulf States, and certain Cajun member cooperatives filed a separate plan of reorganization with the court based upon their earlier proposal. On April 22, 1996, the Cajun bankruptcy trustee filed a plan of reorganization with the bankruptcy court based on a proposal by two non-affiliated companies to take over the non-nuclear operations of Cajun. The timing and completion of the reorganization plan depends on bankruptcy court approval and any required regulatory approvals. On April 26, 1996, Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, Cajun's largest creditor, agreed in principle to a settlement of all litigation and bankruptcy disputes between Cajun and Entergy Gulf States. The terms include, but are not limited to, the following: (i) Cajun's interest in River Bend will be turned over to the RUS, which will have the option to retain the interest, sell it to a third party, or transfer it to Entergy Gulf States at no cost; (ii) Cajun will set aside a total of $125 million for the decommissioning of its interest in River Bend; (iii) Cajun will transfer certain transmission assets to Entergy Gulf States; (iv) Cajun will settle transmission disputes and be released from claims for payment under transmission arrangements with Entergy Gulf States; and (v) all funds paid by Entergy Gulf States into the registry of the District Court will be returned to Entergy Gulf States. The settlement is subject to further approvals by the RUS, the Board of Directors of Entergy Corporation and Entergy Gulf States, the U.S. Bankruptcy Court, and appropriate regulatory agencies. Catalyst Technologies, Inc. (Entergy Corporation) - --------------------------- See "Other Regulation and Litigation" in Item 1 of Part I of the Form 10-K for information relating to the petition filed by Catalyst Technologies, Inc. (CTI) against Electec, Inc. (Electec), the predecessor to Entergy Enterprises. The petition alleges breach of contract, breach of the obligation of good-faith and fair dealing, and bad-faith breach of contract against Electec. It was originally believed CTI was claiming damages of approximately $36 million from Entergy Enterprises. It now appears that CTI will allege damages ranging from $231 million to $258 million. Entergy Enterprises' believes that CTI is not entitled to any damages, and that even if damages were sustained, they would not exceed $600,000. The case is scheduled for a jury trial beginning on December 2, 1996 in Civil District Court for the Parish of Orleans, Louisiana. Entergy Enterprises is vigorously contesting these claims. Panda Energy Corporation Complaint (Entergy Corporation) - ---------------------------------- See "Other Regulation and Litigation" in Item 1 of Part I of the Form 10-K for information relating to the litigation brought by Panda Energy Corporation (Panda) naming Entergy Corporation, Entergy Enterprises, Entergy Power, Entergy Power Asia, Ltd., and Entergy Power Development Corporation as defendants. Panda was seeking damages of $4.8 billion. Entergy believes that this litigation is unfounded, but entered into arrangements on April 30, 1996, to settle the matter for $350,000. The settlement provided that it could be revoked by Entergy if the court ruled on the case. The Dallas District Court entered an order of dismissal because the plaintiff was unable to show any damages and the facts did not support a cause of action against the defendants. As a result, Entergy revoked the $350,000 settlement agreement. Panda has filed an appeal of the court's order for dismissal. System Agreement (Entergy Corporation, Entergy Arkansas, Entergy Gulf - ---------------- States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) See "Rate Matters and Regulation" in Item 1 of Part I of the Form 10-K for information relating to a complaint filed with FERC by the Arkansas Public Service Commission alleging that FERC's allocation of nuclear decommissioning costs in the System is no longer just and reasonable. A prehearing conference was held on July 30, 1996, and a procedural schedule was adopted which provides for hearings to begin on February 18, 1997. See "Rate Matters and Regulation" in Item 1 of Part I of the Form 10-K for information relating to a complaint filed with FERC by the LPSC alleging that the System Agreement results in unjust and unreasonable rates. On July 31, 1996, FERC dismissed the LPSC's complaint in this matter. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- Amended and Restated Articles of Incorporation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) A consent in lieu of a special meeting of common stockholders was executed on April 22, 1996. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding common stock shares of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The common stockholder, by such consent, approved the amendment of each of the companies' Amended and Restated Articles of Incorporation to change the name of Arkansas Power & Light Company to Entergy Arkansas, Inc., the name of Gulf States Utilities Company to Entergy Gulf States, Inc., the name of Louisiana Power & Light Company to Entergy Louisiana, Inc., the name of Mississippi Power & Light Company to Entergy Mississippi, Inc., and the name of New Orleans Public Service, Inc. to Entergy New Orleans, Inc. Election of Board of Directors - ------------------------------ Entergy Corporation The annual meeting of stockholders of Entergy Corporation was held on May 17, 1996. The following matters were voted on and received the specified number of votes for, abstentions, votes withheld (against), and broker non-votes: 1. Election of Directors: Votes Broker Name of Nominee Votes For Abstentions Withheld Non-Votes - --------------- --------- ----------- -------- --------- W. Frank Blount 195,919,979 N/A 1,691,068 N/A John A. Cooper, Jr. 195,943,790 N/A 1,677,257 N/A Lucie J. Fjeldstad 190,211,582 N/A 5,860,333 N/A Norman C. Francis 195,790,417 N/A 1,820,630 N/A Kaneaster Hodges, Jr. 195,932,515 N/A 1,678,532 N/A Robert v. d. Luft 195,928,122 N/A 1,682,925 N/A Edwin Lupberger 195,848,707 N/A 1,762,340 N/A Kinnaird R. McKee 195,870,455 N/A 1,740,592 N/A Paul W. Murrill 195,902,712 N/A 1,708,335 N/A James R. Nichols 195,960,486 N/A 1,650,560 N/A Eugene H. Owen 195,878,399 N/A 1,732,648 N/A John N. Palmer, Sr. 195,995,619 N/A 1,615,428 N/A Robert D. Pugh 195,879,738 N/A 1,731,309 N/A H. Duke Shackelford 195,883,250 N/A 1,727,797 N/A Wm. Clifford Smith 195,966,191 N/A 1,644,856 N/A Bismark A. Steinhagen 195,956,688 N/A 1,654,379 N/A 2. Appointment of independent public accountants, Coopers & Lybrand L.L.P., for the year 1996: 194,722,004 votes for; 2,008,535 votes against; 830,508 abstentions; and broker non-votes are not applicable. 3. Entergy will discontinue the use of all options, rights, stock appreciation rights, etc., after termination of existing agreements with management and directors: 158,298,995 votes against; 20,468,816 broker non-votes, 14,606,438 votes for; and 4,236,798 abstentions. (Entergy Arkansas) A consent in lieu of the annual meeting of common stockholders was executed on May 13, 1996. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Arkansas: Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, R. Drake Keith, Edwin Lupberger, Jerry L. Maulden, and Gerald D. McInvale. (Entergy Gulf States) A consent in lieu of the annual meeting of common stockholders was executed on May 13, 1996. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Gulf States: Michael B. Bemis, John J. Cordaro, Frank F. Gallaher, Donald C. Hintz, Jerry D. Jackson, Karen R. Johnson, Edwin Lupberger, Jerry L. Maulden, and Gerald D. McInvale. (Entergy Louisiana) A consent in lieu of the annual meeting of common stockholders was executed on May 13, 1996. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Louisiana: Michael B. Bemis, John J. Cordaro, Donald C. Hintz, Jerry D. Jackson, Edwin Lupberger, Jerry L. Maulden, and Gerald D. McInvale. (Entergy Mississippi) A consent in lieu of the annual meeting of common stockholders was executed on May 13, 1996. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Mississippi: Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin A. Lupberger, Jerry L. Maulden, Gerald D. McInvale, and Donald E. Meiners. (Entergy New Orleans) A consent in lieu of the annual meeting of common stockholders was executed on May 13, 1996. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy New Orleans: Jerry D. Jackson, Edwin Lupberger, Jerry L. Maulden, Gerald D. McInvale, and Daniel F. Packer. (System Energy) A consent in lieu of the annual meeting of common stockholders was executed on May 13, 1996. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of System Energy: Donald C. Hintz, Edwin Lupberger, Gerald D. McInvale, and Jerry L. Maulden. Item 5. Other Information Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) The 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:
Ratios of Earnings to Fixed Charges ------------------------------------- Twelve Months Ended ------------------------------------- December 31, June 30, ------------------------------------- --------- C<> 1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ---- Entergy Arkansas 2.25 2.28 3.11(c) 2.32 2.56 2.81 Entergy Gulf States 1.56 1.72 1.54 .36(d) 1.86 1.15 Entergy Louisiana 2.40 2.79 3.06 2.91 3.18 3.30 Entergy Mississippi 2.36 2.37 3.79(c) 2.12 2.92 3.38 Entergy New Orleans 5.66(b) 2.66 4.68(c) 1.91 3.93 4.23 System Energy 1.74 2.04 1.87 1.23 2.07 2.09
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends -------------------------------------- Twelve Months Ended -------------------------------------- December 31, June 30, ------------------------------------- -------- 1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ---- Entergy Arkansas 1.87 1.86 2.54(c) 1.97 2.12 2.32 Entergy Gulf States(a) 1.19 1.37 1.21 .29(d) 1.54 0.95(d) Entergy Louisiana 1.95 2.18 2.39 2.43 2.60 2.70 Entergy Mississippi 1.94 1.97 3.08(c) 1.81 2.51 2.93 Entergy New Orleans 4.97(b) 2.36 4.12(c) 1.73 3.56 3.89
(a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock. (b) Earnings for the year ended December 31, 1991, include the $90 million effect of the 1991 NOPSI Settlement. (c) Earnings for the year ended December 31, 1993, include $81 million, $52 million, and $18 million for Entergy Arkansas, Entergy Mississippi, and Entergy New Orleans, respectively, related to the change in accounting principle to provide for the accrual of estimated unbilled revenues. (d) Earnings for the year ended December 31, 1994, for Entergy Gulf States were not adequate to cover fixed charges by $144.8 million. Earnings for the years ended December 31, 1994, and June 30, 1996, for Entergy Gulf States were not adequate to cover combined fixed charges and preferred dividends by $197.1 million and $12.7 million, respectively. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* ** 4(a) - Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities, dated as of July 1, 1996 (filed as Exhibit A-14(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70- 8487). ** 4(b) - Amended and Restated Trust Agreement of Entergy Louisiana Capital I dated July 16, 1996 of Series A Preferred Securities (filed as Exhibit A-16(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70-8487). ** 4(c) - Guarantee Agreement between Entergy Louisiana, Inc. (as Guarantor) and The Bank of New York (as Trustee) dated as of July 16, 1996 with respect to Entergy Louisiana Capital I's obligation on its 9% Cumulative Quarterly Income Preferred Securities, Series A (filed as Exhibit A-19(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70- 8487). 4(d) - Agreement as to Expenses and Liabilities between Entergy Louisiana, Inc. and Entergy Louisiana Capital I dated July 16, 1996 23(a) - Consent of Clark, Thomas & Winters (A Professional Corporation). 23(b) - Consent of Sandlin Associates. 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of June 30, 1996. 27(b) - Financial Data Schedule for Entergy Arkansas as of June 30, 1996. 27(c) - Financial Data Schedule for Entergy Gulf States as of June 30, 1996. 27(d) - Financial Data Schedule for Entergy Louisiana as of June 30, 1996. 27(e) - Financial Data Schedule for Entergy Mississippi as of June 30, 1996. 27(f) - Financial Data Schedule for Entergy New Orleans as of June 30, 1996. 27(g) - Financial Data Schedule for System Energy as of June 30, 1996. 99(a) - Entergy Arkansas Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - Entergy Gulf States Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - Entergy Louisiana Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - Entergy Mississippi Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - Entergy New Orleans Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. ** 99(g) - Annual Reports on Form 10-K of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the fiscal year ended December 31, 1995, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ** 99(h) - Quarterly Report on Form 10-Q of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the quarter ended March 31, 1996, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ** 99(i) - Opinion of Clark, Thomas & Winters, A Professional Corporation, dated September 30, 1992, regarding the effect of the October 1, 1991, judgment in Entergy Gulf States v. PUCT in the District Court of Travis County, Texas (99-1 in Registration No. 33-48889). ** 99(j) - 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(k) - 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 this report on Form 10-Q for the quarter ended June 30, 1996, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being filed with this report on Form 10-Q for the quarter ended June 30, 1996. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K None. EXPERTS The statements attributed to Clark, Thomas & Winters, A Professional Corporation, as to legal conclusions with respect to Entergy Gulf States' 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 Entergy Gulf States 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 ENTERGY ARKANSAS, INC. ENTERGY GULF STATES, INC. ENTERGY LOUISIANA, INC. ENTERGY MISSISSIPPI, INC. ENTERGY NEW ORLEANS, INC. SYSTEM ENERGY RESOURCES, INC. /s/ Louis E. Buck, Jr. Louis E. Buck, Jr. Vice President, Chief Accounting Officer and Assistant Secretary (For each Registrant and for each as Principal Accounting Officer) Date: August 5, 1996 EX-4 2 Exhibit 4(d) AGREEMENT AS TO EXPENSES AND LIABILITIES AGREEMENT dated as of July 16, 1996, between Entergy Louisiana, Inc., a Louisiana corporation ("Entergy Louisiana"), and Entergy Louisiana Capital I, a Delaware business trust (the "Trust"). WHEREAS, the Trust intends to issue its Common Securities (the "Common Securities") to and receive Debentures from Entergy Louisiana and to issue its 9% Cumulative Quarterly Income Preferred Securities, Series A (the "Preferred Securities") with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of July 16, 1996 as the same may be amended from time to time (the "Trust Agreement"); WHEREAS, Entergy Louisiana will directly own all of the Common Securities and will issue the Debentures; NOW, THEREFORE, in consideration of the purchase by each holder of the Preferred Securities, which purchase Entergy Louisiana hereby agrees shall benefit Entergy Louisiana and which purchase Entergy Louisiana acknowledges will be made in reliance upon the execution and delivery of this Agreement, Entergy Louisiana, including in its capacity as holder of the Common Securities, and the Trust hereby agree as follows: ARTICLE I Section 1.01. Guarantee by Entergy Louisiana. Subject to the terms and conditions hereof, Entergy Louisiana hereby irrevocably and unconditionally guarantees the full payment, when and as due, of any and all Obligations (as hereinafter defined) to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries"). As used herein, "Obligations" means any indebtedness, expenses or liabilities of the Trust, other than (i) obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be and (ii) obligations arising out of the negligence, willful misconduct or bad faith of the Trustees of the Trust. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. Section 1.02. Term of Agreement. This Agreement shall terminate and be of no further force and effect upon the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any Obligation, under the Guarantee Agreement dated the date hereof by Entergy Louisiana and The Bank of New York, as guarantee trustee, or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute. Section 1.03. Waiver of Notice. Entergy Louisiana hereby waives notice of acceptance of this Agreement and of any Obligation to which it applies or may apply, and Entergy Louisiana hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 1.04. No Impairment. The obligations, covenants, agreements and duties of Entergy Louisiana under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the extension of time for the payment by the Trust of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the Obligations; (b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Trust granting indulgence or extension of any kind; or (c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust. There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, Entergy Louisiana with respect to the happening of any of the foregoing. Section 1.05. Enforcement. A Beneficiary may enforce this Agreement directly against Entergy Louisiana and Entergy Louisiana waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against Entergy Louisiana. ARTICLE II Section 2.01. Binding Effect. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of Entergy Louisiana and shall inure to the benefit of the Beneficiaries. Section 2.02. Amendment. So long as there remains any Beneficiary or any Preferred Securities of any series are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities. Section 2.03. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same against receipt therefor by facsimile transmission (confirmed by mail), telex or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer-back, if sent by telex), to wit: Entergy Louisiana Capital I c/o Steve C. McNeal, Administrative Trustee 639 Loyola Avenue New Orleans, Louisiana 70113 Facsimile No.: (504) 576-4455 Entergy Louisiana, Inc. 639 Loyola Avenue New Orleans, Louisiana 70113 Facsimile No.: (504) 576-4455 Attention: Treasurer Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES). THIS EXPENSE AGREEMENT is executed as of the day and year first above written. ENTERGY LOUISIANA, INC. By:______________________________ Name: William J. Regan, Jr. Title: Vice President and Treasurer ENTERGY LOUISIANA CAPITAL I By: ______________________________ Frank Williford IV not in his individual capacity, but solely as Administrative Trustee EX-23 3 Exhibit 23(a) [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, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. We further consent to the incorporation by reference in the registration statements of Entergy Gulf States, Inc. 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 August 5, 1996 EX-23 4 Exhibit 23(b) 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, Entergy Arkansas, Inc., Entergy Gulf States, Inc. ("Entergy Gulf States"), Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. We further consent to the incorporation by reference of such reference to our firm into Entergy Gulf States' 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/ L. S. Sandlin SANDLIN ASSOCIATES Management Consultants Pasco, Washington August 5, 1996 EX-27 5
UT This schedule contains summary financial information extracted from Entergy Corporation financial statements for the quarter ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 017 ENTERGY CORPORATION AND SUBSIDIARIES 0000065984 ENTERGY CORPORATION 1,000 6-MOS DEC-31-1995 JUN-30-1996 PER-BOOK 16,302,630 762,084 2,354,492 3,626,525 0 23,045,731 2,300 4,200,883 2,231,591 6,394,346 227,985 550,955 7,853,286 270,692 0 0 257,603 0 271,192 149,812 7,029,432 23,045,731 3,451,517 184,506 2,609,097 2,793,603 657,914 (155,178) 502,736 401,484 101,252 0 101,252 0 0 590,012 0 0
EX-27 6
UT This schedule contains summary financial information extracted from AP&L'S financial statements for the quarter ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 001 ENTERGY ARKANSAS, INC. 0000007323 ENTERGY ARKANSAS, INC. 1,000 6-MOS DEC-31-1995 JUN-30-1996 PER-BOOK 2,851,569 190,713 611,333 547,141 0 4,200,756 470 590,794 543,182 1,134,446 45,027 176,350 1,253,743 667 0 0 32,900 0 106,862 52,660 1,398,101 4,200,756 851,071 33,305 703,879 737,184 113,887 11,848 125,735 50,755 74,980 8,884 66,096 0 0 157,764 0 0
EX-27 7
UT This schedule contains summary financial information extracted from GSU'S financial statements for the quarter ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 003 ENTERGY GULF STATES, INC. 0000044570 ENTERGY GULF STATES, INC. 1,000 6-MOS DEC-31-1995 JUN-30-1996 PER-BOOK 4,671,224 59,459 759,999 1,026,832 0 6,517,514 114,055 1,152,592 238,301 1,504,948 83,450 136,444 2,093,682 0 0 0 160,425 0 98,295 38,086 2,402,184 6,517,514 982,198 40,853 786,720 827,573 154,625 (165,925) (11,300) 93,817 (105,117) 14,285 (119,402) 0 0 113,584 0 0
EX-27 8
UT This schedule contains summary financial information extracted from LP&L'S financial statements for the quarter ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 009 ENTERGY LOUISIANA, INC. 0000060527 ENTERGY LOUISIANA, INC. 1,000 6-MOS DEC-31-1995 JUN-30-1996 PER-BOOK 3,490,330 79,134 341,336 404,897 0 4,315,697 1,088,900 (4,542) 107,696 1,192,054 92,509 160,500 1,391,058 49,073 0 0 16,263 0 26,405 28,000 1,359,835 4,315,697 875,614 54,693 660,712 715,405 160,209 1,153 161,362 65,447 95,915 10,168 85,747 0 0 155,882 0 0
EX-27 9
UT This schedule contains summary financial information extracted from MP&L'S financial statements for the quarter ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 010 ENTERGY MISSISSIPPI, INC. 0000066901 ENTERGY MISSISSIPPI, INC. 1,000 6-MOS DEC-31-1995 JUN-30-1996 PER-BOOK 1,024,065 11,136 296,817 239,368 0 1,571,386 199,326 (143) 254,566 453,749 7,000 57,881 494,963 2,209 0 0 36,015 0 0 0 519,569 1,571,386 451,381 20,733 365,107 385,840 65,541 1,111 66,652 23,909 42,743 2,640 40,103 0 0 80,736 0 0
EX-27 10
UT This schedule contains summary financial information extracted from NOPSI'S financial statements for the quarter ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 011 ENTERGY NEW ORLEANS, INC. 0000071508 ENTERGY NEW ORLEANS, INC. 1,000 6-MOS DEC-31-1995 JUN-30-1996 PER-BOOK 293,638 3,259 129,810 142,931 0 569,638 33,744 36,294 80,274 150,312 0 19,780 168,855 0 0 0 12,000 0 0 0 218,691 569,638 250,717 9,281 215,357 224,638 26,079 808 26,887 8,492 18,395 482 17,913 0 0 14,966 0 0
EX-27 11
UT This schedule contains summary financial information extracted from System Energy's financial statements for the quarter ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 012 SYSTEM ENERGY RESOURES, INC. 0000202584 SYSTEM ENERGY RESOURCES, INC. 1,000 6-MOS DEC-31-1995 JUN-30-1996 PER-BOOK 2,596,061 50,020 238,926 546,435 0 3,431,442 789,350 0 86,532 875,882 0 0 1,471,336 0 0 0 0 0 25,664 28,000 1,030,560 3,431,442 316,793 41,884 150,961 192,845 123,948 1,999 125,947 79,035 46,912 0 46,912 0 0 129,348 0 0
EX-99 12
Exhibit 99(a) Entergy Arkansas, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends June 30, 1991 1992 1993 1994 1995 1996 Fixed charges, as defined: Interest on long-term debt $133,854 $120,317 $107,771 $101,439 $102,339 $98,465 Interest on notes payable -- 117 349 1,311 678 657 Amortization of expense and premium on debt-net(cr) 1,112 1,359 2,702 4,563 4,514 4,612 Other interest 1,303 2,308 8,769 3,501 7,806 6,374 Interest applicable to rentals 21,969 17,657 16,860 19,140 18,158 19,372 ---------------------------------------------------------- Total fixed charges, as defined 158,238 141,758 136,451 129,954 133,495 129,480 Preferred dividends, as defined (a) 31,458 32,195 30,334 23,234 27,636 27,328 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $189,696 $173,953 $166,785 $153,188 $161,131 $156,808 ========================================================== Earnings as defined: Net Income $143,451 $130,529 $205,297 $142,263 $136,666 $153,086 Add: Provision for income taxes: Federal & State 44,418 57,089 58,162 83,300 105,964 132,440 Deferred - net 11,048 3,490 34,748 (17,939) (28,225) (46,190) Investment tax credit adjustment - net (1,600) (9,989) (10,573) (36,141) (5,658) (5,243) Fixed charges as above 158,238 141,758 136,451 129,954 133,495 129,480 ---------------------------------------------------------- Total earnings, as defined $355,555 $322,877 $424,085 $301,437 $342,242 $363,573 ========================================================== Ratio of earnings to fixed charges, as defined 2.25 2.28 3.11 2.32 2.56 2.81 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.87 1.86 2.54 1.97 2.12 2.32 ========================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 13
Exhibit 99(b) Entergy Gulf States, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends June 30, 1991 1992 1993 1994 1995 1996 Fixed charges, as defined: Interest on long-term debt $201,335 $197,218 $172,494 $167,082 $181,994 $178,499 Interest on notes payable 27,953 21,155 19,440 20,203 810 862 Other interest 29,169 26,564 10,561 7,957 8,074 7,839 Amortization of expense and premium on debt-net(cr) 1,999 3,479 8,104 8,892 9,346 9,177 Interest applicable to rentals 24,049 23,759 23,455 21,539 16,648 15,015 ---------------------------------------------------------- Total fixed charges, as defined 284,505 272,175 234,054 225,673 216,872 211,392 Preferred dividends, as defined (a) 90,146 69,617 65,299 52,210 44,651 44,912 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $374,651 $341,792 $299,353 $277,883 $261,523 $256,304 ========================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes $112,391 $139,413 $69,462 ($82,755) $122,919 ($29,186) Add: Income Taxes 48,250 55,860 58,016 (62,086) 63,244 61,378 Fixed charges as above 284,505 272,175 234,054 225,673 216,872 211,392 ---------------------------------------------------------- Total earnings, as defined (b) $445,146 $467,448 $361,532 $80,832 $403,035 $243,584 ========================================================== Ratio of earnings to fixed charges, as defined 1.56 1.72 1.54 0.36 1.86 1.15 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.19 1.37 1.21 0.29 1.54 0.95 ========================================================== (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. (b) Earnings for the year ended December 31, 1994, for GSU were not adequate to cover fixed charges by $144.8 million. Earnings for the year ended December 31, 1994, and June 30, 1996 for GSU were not adequate to cover fixed charges and preferred dividends by $197.1 million and $12.7 million, respectively.
EX-99 14
Exhibit 99(c) Entergy Louisiana, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends June 30, 1991 1992 1993 1994 1995 1996 Fixed charges, as defined: Interest on long-term debt $158,816 $128,672 $124,633 $124,820 $124,507 $121,348 Interest on notes payable -- 150 898 1,948 1,932 2,498 Other interest charges 5,924 5,591 5,706 4,546 5,278 5,466 Amortization of expense and premium on debt - net(cr) 3,282 7,100 5,720 5,130 5,184 5,037 Interest applicable to rentals 11,381 9,363 8,519 8,332 9,332 9,678 ----------------------------------------------------------- Total fixed charges, as defined 179,403 150,876 145,476 144,776 146,233 144,027 Preferred dividends, as defined (a) 41,212 42,026 40,779 29,171 32,847 32,075 ----------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $220,615 $192,902 $186,255 $173,947 $179,080 $176,102 =========================================================== Earnings as defined: Net Income $166,572 $182,989 $188,808 $213,839 $201,537 $208,308 Add: Provision for income taxes: Federal and State 8,684 36,465 70,552 79,260 114,665 122,779 Deferred Federal and State - net 67,792 51,889 43,017 21,580 8,148 6,599 Investment tax credit adjustment - net 8,244 (1,317) (2,756) (37,552) (5,699) (5,821) Fixed charges as above 179,403 150,876 145,476 144,776 146,233 144,027 ----------------------------------------------------------- Total earnings, as defined $430,695 $420,902 $445,097 $421,903 $464,884 $475,892 =========================================================== Ratio of earnings to fixed charges, as defined 2.40 2.79 3.06 2.91 3.18 3.30 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.95 2.18 2.39 2.43 2.60 2.70 =========================================================== - ------------------------ (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(d) Entergy Mississippi, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends June 30, 1991 1992 1993 1994 1995 1996 Fixed charges, as defined: Interest on long-term debt $63,628 $60,709 $52,099 $46,081 $46,241 $46,021 Interest on notes payable 953 36 7 1,348 474 899 Other interest charges 1,444 1,636 1,795 3,581 4,164 2,356 Amortization of expense and premium on debt-net(cr) 1,617 1,685 1,458 1,754 756 584 Interest applicable to rentals 574 521 1,264 1,716 2,173 2,220 ---------------------------------------------------------- Total fixed charges, as defined 68,216 64,587 56,623 54,480 53,808 52,080 Preferred dividends, as defined (a) 14,962 12,823 12,990 9,447 9,004 8,039 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $83,178 $77,410 $69,613 $63,927 $62,812 $60,119 ========================================================== Earnings as defined: Net Income $63,088 $65,036 $101,743 $48,779 $68,667 $81,058 Add: Provision for income taxes: Federal and State (1,001) 4,463 54,418 46,884 71,651 88,019 Deferred Federal and State - net 32,491 20,430 539 (26,763) (35,224) (41,555) Investment tax credit adjustment - net (1,634) (1,746) 1,036 (7,645) (1,550) (3,495) Fixed charges as above 68,216 64,587 56,623 54,480 53,808 52,080 ----------------------------------------------------------- Total earnings, as defined $161,160 $152,770 $214,359 $115,735 $157,352 $176,107 =========================================================== Ratio of earnings to fixed charges, as defined 2.36 2.37 3.79 2.12 2.92 3.38 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.94 1.97 3.08 1.81 2.51 2.93 =========================================================== - ------------------------ (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 16
Exhibit 99(e) Entergy New Orleans, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends June 30 1991 1992 1993 1994 1995 1996 Fixed charges, as defined: Interest on long-term debt $23,865 $22,934 $19,478 $16,382 $15,330 $15,504 Interest on notes payable -- -- -- 153 130 133 Other interest charges 793 1,714 1,016 1,027 1,723 1,354 Amortization of expense and premium on debt-net(cr) 565 576 598 710 619 584 Interest applicable to rentals 517 444 544 1,245 916 876 ------------------------------------------------------- Total fixed charges, as defined 25,740 25,668 21,636 19,517 18,718 18,451 Preferred dividends, as defined (a) 3,582 3,214 2,952 2,071 1,964 1,641 ------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $29,322 $28,882 $24,588 $21,588 $20,682 $20,092 ======================================================= Earnings as defined: Net Income $74,699 $26,424 $47,709 $13,211 $34,386 $37,848 Add: Provision for income taxes: Federal and State 8,885 16,575 27,479 22,606 22,465 21,404 Deferred Federal and State - net 36,947 (340) 5,203 (15,674) (1,364) 1,044 Investment tax credit adjustment - net (591) (170) (744) (2,332) (634) (673) Fixed charges as above 25,740 25,668 21,636 19,517 18,718 18,451 -------------------------------------------------------- Total earnings, as defined $145,680 $68,157 $101,283 $37,328 $73,571 $78,074 ======================================================== Ratio of earnings to fixed charges, as defined 5.66 2.66 4.68 1.91 3.93 4.23 ======================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 4.97 2.36 4.12 1.73 3.56 3.89 ======================================================== - ------------------------ (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 17
Exhibit 99(f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges June 30, 1991 1992 1993 1994 1995 1996 Fixed charges, as defined: Interest on long-term debt $218,538 $196,618 $184,818 $162,517 $136,916 $136,288 Interest on notes payable -- -- -- 88 473 571 Amortization of expense and premium on debt-net 7,495 6,417 4,520 6,731 6,104 6,109 Interest applicable to rentals 10,007 6,265 6,790 7,546 6,475 8,394 Other interest charges 3,617 1,506 1,600 7,168 8,019 8,301 ---------------------------------------------------------- Total fixed charges, as defined $239,657 $210,806 $197,728 $184,050 $157,987 $159,663 ========================================================== Earnings as defined: Net Income $104,622 $130,141 $93,927 $5,407 $93,039 $93,584 Add: Provision for income taxes: Federal and State (26,848) 35,082 48,314 67,477 120,830 134,180 Deferred Federal and State - net 37,168 23,648 60,690 (27,374) (41,871) (50,890) Investment tax credit adjustment - net 63,256 30,123 (30,452) (3,265) (3,466) (3,466) Fixed charges as above 239,657 210,806 197,728 184,050 157,987 159,663 ---------------------------------------------------------- Total earnings, as defined $417,855 $429,800 $370,207 $226,295 $326,519 $333,071 ========================================================== Ratio of earnings to fixed charges, as defined 1.74 2.04 1.87 1.23 2.07 2.09 ==========================================================
EX-99 18 Exhibit 99(k) [LETTERHEAD OF CLARK, THOMAS & WINTERS] August 5, 1996 Entergy Gulf States, Inc. 639 Loyola Avenue New Orleans, LA 70112 Attn: Chris Barrilleaux Re: SEC Form 10-Q of Entergy Gulf States, Inc. (the "Company") for the quarter ending June 30, 1996 Dear Mr. Barrilleaux: 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 Supreme Court of Texas. 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-----