-----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, SLRqq66Wi2nMVwCPxXklRf1SMY9n0QfLKxiDkuzWQdwHvCC5nMzNXQ5Vha7kQyU+ /NIGcyqktdfqAmAnJOdlhQ== 0000065984-98-000078.txt : 19980506 0000065984-98-000078.hdr.sgml : 19980506 ACCESSION NUMBER: 0000065984-98-000078 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980505 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 721229752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11299 FILM NUMBER: 98610457 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: SEC FILE NUMBER: 001-10764 FILM NUMBER: 98610458 BUSINESS ADDRESS: STREET 1: 425 WEST CAPITOL AVE STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72201 BUSINESS PHONE: 5013774000 MAIL ADDRESS: STREET 1: P O BOX 551 CITY: LITTLE ROCK STATE: AR ZIP: 72203 FORMER COMPANY: FORMER CONFORMED NAME: ARKANSAS POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY GULF STATES INC CENTRAL INDEX KEY: 0000044570 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 740662730 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-27031 FILM NUMBER: 98610459 BUSINESS ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 BUSINESS PHONE: 4098386631 MAIL ADDRESS: STREET 1: 350 PINE ST CITY: BEAUMONT STATE: TX ZIP: 77701 FORMER COMPANY: FORMER CONFORMED NAME: GULF STATES UTILITIES CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY LOUISIANA INC CENTRAL INDEX KEY: 0000060527 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 720245590 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08474 FILM NUMBER: 98610460 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: SEC FILE NUMBER: 000-00320 FILM NUMBER: 98610461 BUSINESS ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MS ZIP: 39201 BUSINESS PHONE: 6013685000 MAIL ADDRESS: STREET 1: 308 EAST PEARL STREET CITY: JACKSON STATE: MI ZIP: 39201 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI POWER & LIGHT CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY NEW ORLEANS INC CENTRAL INDEX KEY: 0000071508 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 720273040 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05807 FILM NUMBER: 98610462 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 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: SEC FILE NUMBER: 001-09067 FILM NUMBER: 98610463 BUSINESS ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 BUSINESS PHONE: 6013685000 MAIL ADDRESS: STREET 1: PO BOX 31995 CITY: JACKSON STATE: MS ZIP: 39286-1995 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH ENERGY INC DATE OF NAME CHANGE: 19860803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY POWER UK PLC CENTRAL INDEX KEY: 0001042730 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 070-09081 FILM NUMBER: 98610464 BUSINESS ADDRESS: STREET 1: 81 87 HIGH HOLBORN STREET 2: LONDON WC1V 6NU CITY: ENGLAND STATE: X0 ZIP: 00000 MAIL ADDRESS: STREET 1: 81-87 HIGH HOLBORN STREET 2: LONDON WC1V 6NU CITY: ENGLAND STATE: X0 ZIP: 00000 10-Q 1 _____________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1998 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address of Principal Executive Identification No. Offices and Telephone Number 1-11299 ENTERGY CORPORATION 72-1229752 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 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 333-33331 ENTERGY LONDON INVESTMENTS PLC N/A (a limited company under the laws of England and Wales) Templar House 81-87 High Holborn London WC1V 6NU England Telephone 011-44-171-242-9050 _____________________________________________________________________ Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Common Stock Outstanding Outstanding at April 30, 1998 Entergy Corporation ($0.01 par value) 246,400,397 ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q March 31, 1998 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 Results of Operations and Financial Statements: Entergy Corporation and Subsidiaries: Results of Operations 9 Consolidated Statements of Income and Comprehensive Income 11 Consolidated Statements of Cash Flows 12 Consolidated Balance Sheets 14 Selected Operating Results 16 Entergy Arkansas, Inc.: Results of Operations 17 Statements of Income 18 Statements of Cash Flows 19 Balance Sheets 20 Selected Operating Results 22 Entergy Gulf States, Inc.: Results of Operations 24 Statements of Income 26 Statements of Cash Flows 27 Balance Sheets 28 Selected Operating Results 30 Entergy Louisiana, Inc.: Results of Operations 31 Statements of Income 32 Statements of Cash Flows 33 Balance Sheets 34 Selected Operating Results 36 Entergy Mississippi, Inc.: Results of Operations 37 Statements of Income 38 Statements of Cash Flows 39 Balance Sheets 40 Selected Operating Results 42 Entergy New Orleans, Inc.: Results of Operations 43 Statements of Income (Loss) 44 Statements of Cash Flows 45 Balance Sheets 46 Selected Operating Results 48 System Energy Resources, Inc.: Results of Operations 49 Statements of Income 50 Statements of Cash Flows 51 Balance Sheets 52 Entergy London Investments plc and Subsidiary: Results of Operations 54 Consolidated Statements of Income and Comprehensive Income 56 Consolidated Statements of Cash Flows 57 Consolidated Balance Sheets 58 Notes to Financial Statements for Entergy Corporation and Subsidiaries 60 Part II: Item 1. Legal Proceedings 65 Item 5. Other Information 66 Item 6. Exhibits and Reports on Form 8-K 67 Signature 69 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., System Energy Resources, Inc, and Entergy London Investments plc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representations whatsoever as to any other company. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 1997, filed by the individual registrants with the SEC, and should be read in conjunction therewith. EXCHANGE RATES For the convenience of the reader, this Form 10-Q contains translations of certain British pounds sterling (BPS) amounts into U.S. dollars at specified rates, or, if not so specified, the noon buying rate in New York City for cable transfers in BPS as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate") on March 31, 1998 of $1.6725 = BPS1.00. No representation is made that the BPS amounts have been, could have been or could be converted into U.S. dollars at the rates indicated or at any other rates. The following table sets out, for the periods indicated, certain information concerning the exchange rates between BPS and U.S. dollars based on the Noon Buying Rate in New York City for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York. Period Period Average High Low End (1) ($ per BPS1.00) Quarter ended March 31, 1997 1.64 1.63 1.71 1.59 Year ended December 31, 1997 1.65 1.64 1.71 1.58 Quarter ended March 31, 1998 1.67 1.65 1.69 1.61 (1) The average of the Noon Buying Rates in effect on the last business day of each month during the relevant period. Forward Looking Information Investors are cautioned that forward-looking statements contained herein with respect to the revenues, earnings, competitive performance, or other prospects for the business of Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., System Energy Resources, Inc., Entergy London Investments plc or their affiliated companies may be influenced by factors that could cause actual outcomes to be materially different than anticipated. Such factors include, but are not limited to, the effects of weather, the performance of generating units, fuel prices and availability, regulatory decisions and the effects of changes in law, capital spending requirements, the evolution of competition, changes in accounting standards, interest rate changes, changes in foreign currency exchange rates, and other factors. 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 APSC Arkansas Public Service Commission BPS British pounds sterling Cajun Cajun Electric Power Cooperative, Inc. Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof Council Council of the City of New Orleans, Louisiana domestic utility companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively Entergy Entergy Corporation and its various direct and indirect subsidiaries Entergy Arkansas Entergy Arkansas, Inc. Entergy Corporation Entergy Corporation, a Delaware corporation, successor to Entergy Corporation, a Florida corporation Entergy Gulf States Entergy Gulf States, Inc. (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company) Entergy London Entergy London Investments plc, formerly Entergy Power UK plc (including its wholly owned subsidiary, London Electricity plc) Entergy Louisiana Entergy Louisiana, Inc. Entergy Mississippi Entergy Mississippi, Inc. Entergy New Orleans Entergy New Orleans, 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 Services Entergy Services, Inc. EPA U.S. Environmental Protection Agency 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, 1997, of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant London Electricity London Electricity plc - a regional electric company serving London, England, which was acquired by Entergy effective February 1, 1997 MPSC Mississippi Public Service Commission NRC Nuclear Regulatory Commission Owner Participant A corporation that, in connection with the Waterford 3 sale and leaseback transactions, has acquired a beneficial interest in a trust, the Owner Trustee of which is the owner and lessor of undivided interests in Waterford 3 Owner Trustee Each institution and/or individual acting as Owner Trustee under a trust agreement with an Owner Participant in connection with the Waterford 3 sale and leaseback transactions PUHCA Public Utility Holding Company Act of 1935, as amended PUCT Public Utility Commission of Texas River Bend River Bend Nuclear Plant, owned by Entergy Gulf States SEC Securities and Exchange Commission SFAS Statement of Financial Accounting Standards as promulgated by the Financial Accounting Standards Board System Agreement Agreement, effective January 1, 1983, as modified, among the domestic utility companies relating to the sharing of generating capacity and other power resources System Energy System Energy Resources, Inc. UK The United Kingdom of Great Britain and Northern Ireland Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Cash Flows Net cash flow from operations for Entergy Corporation, the domestic utility companies, System Energy, and Entergy London for the three months ended March 31, 1998 and 1997 was as follows: Three Months Three Months Company Ended 3/31/98 Ended 3/31/97 (In Millions) Entergy Corporation $274.5 $505.2 Entergy Arkansas $102.6 $142.6 Entergy Gulf States $114.7 $110.7 Entergy Louisiana $ 64.7 $ 76.2 Entergy Mississippi $ 24.5 $ 35.7 Entergy New Orleans $ 1.7 $ 12.6 System Energy $ 62.8 $ 69.8 Entergy London $ 64.1 $ 99.6 For the first quarter of 1998, cash flow from operations declined compared to 1997 in part due to lower domestic electric operating revenues, higher purchased power expenses, and higher other operation and maintenance expenses, as discussed in "Entergy Corporation and Subsidiaries, Management's Financial Discussion and Analysis, Results of Operations." Revenue collections under rate phase-in plans that exceed current cash requirements for the related costs continue to contribute to cash flow from operations. In the income statement, revenue collections from phase-in plans are offset by the amortization of the previously deferred costs so that there is no effect on net income. These phase-in plans which currently contribute to Entergy Corporation's cash position will expire in November 1998 for Entergy Arkansas, in September 1998 for Entergy Mississippi, and in 2001 for Entergy New Orleans. Entergy Gulf States' Louisiana retail phase-in plan for River Bend expired in February 1998. Net cash flow used in operating activities for the competitive growth businesses was $10.1 million primarily due to the business expansion activities of Entergy Power Development Corporation and Entergy Technology Holding Company. In accordance with the purchase method of accounting, London Electricity's results of operations are not included in Entergy Corporation and Subsidiaries' and Entergy London's Statements of Consolidated Cash Flows prior to February 1, 1997, the effective date of the acquisition of London Electricity. Financing Sources London Electricity is Entergy London's sole investment and only asset. Entergy London is therefore dependent upon dividends from London Electricity for all of its cash flow. In addition to London Electricity's cash flow from operations, Entergy London has other primary sources of liquidity including London Electricity's several uncommitted credit lines provided by banking institutions and London Electricity's commercial paper program. In addition, London Electricity intends to use availability under existing facilities, or replacements thereof, to finance its remaining payment of windfall profits taxes in December 1998, which will total approximately $117 million (BPS70 million). Management believes that cash flow from operations, together with Entergy London's existing sources of credit, will result in sufficient financial resources being available to meet Entergy London's projected capital needs and other expenditure requirements for the foreseeable future. London Electricity has represented to the Director General of Electricity Supply for the UK, in connection with its Public Electricity Supply License, that it will use all reasonable endeavors to maintain an investment grade rating on its long-term debt. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Excluding London Electricity, cash from operations, supplemented by cash on hand, was sufficient to meet substantially all investing and financing requirements of the domestic utility companies and System Energy, including capital expenditures, dividends, and debt and preferred stock maturities, for the three months ended March 31, 1998. Entergy's domestic utility companies have been able to fund their capital requirements with cash from operations as discussed above in "Cash Flows". Should additional cash be needed to fund investments or to retire debt, the domestic utility companies and System Energy each have the ability, subject to regulatory approval and compliance with issuance tests, to issue debt or preferred securities to meet such requirements. In addition, to the extent market conditions and interest and dividend rates allow, the domestic utility companies, System Energy, and Entergy London will continue to refinance and/or redeem higher cost debt and preferred stock prior to maturity. See Note 4 herein for a discussion of Entergy's recent redemptions. Entergy's domestic utility companies and Entergy London may continue to establish special purpose trusts or limited partnerships as financing subsidiaries for the purpose of issuing quarterly income preferred securities, such as those issued in 1996 by Entergy Louisiana Capital I and Entergy Arkansas Capital I, and those issued in 1997 by Entergy Gulf States Capital I and Entergy London Capital, L.P. Entergy Corporation, the domestic utility companies, System Energy, and Entergy London also have the ability to effect short-term borrowings. See Notes 4, 5, 6, 7, 9 and 10 in the Form 10-K for additional information on Entergy's capital and refinancing requirements in 1998-2002. As of March 31, 1998, Entergy Corporation had $120 million outstanding under its $300 million bank credit facility. In addition, Entergy Corporation had $147.5 million outstanding and Entergy Technology Holding Company (ETHC) had $100.8 million outstanding on a joint $300 million bank line of credit as of March 31, 1998. See Note 4 to the Form 10-K for information on the domestic utility companies', System Energy's, and Entergy London's short-term borrowing authorizations and bank lines of credit. Financing Uses Management believes that productive investment by Entergy is integral to enhancing the long-term value of its common stock. Entergy has been expanding its investments overseas as well as in the United States. As of March 31, 1998, Entergy had acquired or participated in foreign electric ventures in Australia, Argentina, Chile, China, Pakistan, Peru, and the UK. The ability of Entergy Corporation to provide additional capital to exempt wholesale generators or foreign utility companies currently is subject to the SEC's regulations under PUHCA. Absent SEC approval, these regulations limit the aggregate amount that Entergy may invest in foreign utility companies and exempt wholesale generators to 50% of consolidated retained earnings at the time an investment is made. As of November 1997, Entergy Corporation no longer had capacity to make additional investments under these regulations without SEC approval. Entergy has applied to the SEC to obtain additional authority to make such investments, and is also exploring means of raising capital for other foreign investments in a manner not inconsistent with these regulations. As of March 31, 1998, Entergy Corporation had a net investment of $1.3 billion in equity capital in competitive growth businesses. To make capital investments, fund its subsidiaries, and pay dividends, Entergy Corporation utilizes internally generated funds, cash on hand, funds available under its bank credit facilities, and bank financing as required. See Note 9 in the Form 10-K for a discussion of capital requirements. Entergy Corporation receives funds through dividend payments from its subsidiaries. During the three months ended March 31, 1998 such dividend payments from subsidiaries totaled $104.0 million. During the three months ended March 31, 1998, Entergy Corporation paid $110.9 million of cash dividends on its common stock. Declarations of dividends on Entergy's common stock are made at the discretion of Entergy Corporation's Board of Directors. See Note 8 in the Form 10-K for information on dividend restrictions. Entergy's management has announced that it is undertaking a review of Entergy's financial strategies, with a view to optimizing the uses of financial resources cash flow and strengthening credit quality. As a part of such review, management will reassess, among other things, the 1998 capital budget, allocations of capital for non- utility investments, the possibilities for strategic purchases and/or sales of assets, as well as whether the dividend on common stock should be maintained at the current level. Entergy previously announced intentions to sell an interest in certain of its non- utility investments in a public offering. This action has been postponed for an indefinite period. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy Corporation and Entergy Gulf States During the fourth quarter of 1997, Entergy Gulf States established reserves of $381 million ($227 million net of tax) for the probable effects of a proposed agreement in principle between the parties to the Entergy Gulf States rate proceedings in Texas. For the three months ended March 31, 1998, Entergy Gulf States recorded an additional reserve of $9.3 million to account for the impact of the $40 million base rate reduction stipulated in the settlement agreement. Entergy Gulf States expects that a similar reserve will be required for each quarter until a resolution of the Texas case is reached. Final resolution of these matters could negatively affect Entergy Gulf States' ability to obtain financing, which in turn could affect Entergy Gulf States' liquidity and ability to pay common stock dividends to Entergy Corporation. See Note 2 for details regarding the proposed agreement in principle. Entergy Corporation and System Energy Under the Capital Funds Agreement, Entergy Corporation has agreed to supply System Energy with 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. In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights thereunder as security for specific debt of System Energy, Entergy Corporation has committed 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 See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K, including "Open Access Transmission", "Municipalization", "Industry Consolidation", "Functional Unbundling", "Effects of Alternate Energy Sources on Retail Electric Sales to Industrial and Large Commercial Customers", and "Changes in Contract with Steam Customer" for a discussion of the increasing competitive pressures facing Entergy and the electric utility industry. See also "Foreign Distribution and Supply", "Property Tax Exemptions", and "Market Risks" in the Form 10- K for a discussion of other significant issues affecting Entergy. Set forth below are recent developments to update the information contained in the Form 10-K for the sections presented. Domestic Competition and Industry Challenges Transition to Competition Filings See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS - Transition to Competition Filings" in the Form 10-K for a discussion of the domestic utility companies' filings with their respective state regulators concerning the transition to competition. Subsequent to the APSC's approval of Entergy Arkansas' transition to competition filing on December 12, 1997, the APSC opened four new generic restructuring dockets and scheduled a series of hearings throughout 1998. Comments from interested parties are being accepted by the APSC. A final report of the APSC will be submitted to the Legislature prior to its 1999 session. Similar generic proceedings have also been established by the public service commissions in Louisiana and Mississippi and by the Council. Retail and Wholesale Rate Issues In March 1998, certain parties to the Entergy Gulf States rate proceedings in Texas regarding the transition to competition issues reached an agreement in principle, subject to approval by the PUCT and certain cities served by Entergy Gulf States, which would resolve many of the pending rate issues. The agreement in principle has been finalized in a formal settlement agreement, which was filed with the PUCT on March 25, 1998. Several parties to the rate case, including the PUCT General Counsel, have signed the settlement agreement contingent upon the approval of certain cities served by Entergy Gulf States, but the steering committee for those cities has recommended that the cities not join the settlement agreement. Entergy Gulf States cannot predict whether the settlement will be approved or whether a settlement will be reached on other terms. See Note 2 for additional information regarding recent developments in this proceeding. See Note 2 to the Form 10-K and Note 2 herein for a discussion of the ongoing trend of regulator mandated rate reductions as well as incentive and performance-based regulation and filings made with state and local regulators regarding an orderly transition to a more competitive market for electricity. Legislative Activity In late March 1998 the Clinton Administration released its plan for electricity restructuring. The plan calls for customer choice by 2003 in addition to the recovery of stranded costs and repeal of PUHCA. With little time remaining on the congressional calendar, it appears increasingly unlikely that any comprehensive electric restructuring legislation or a repeal of PUHCA will be enacted during 1998. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Domestic and Foreign Competitive Growth Businesses Entergy Corporation seeks opportunities to expand its domestic and foreign businesses that are not regulated by domestic state and local utility regulatory authorities. Such business ventures currently include power development and operations and retail services related to the utility business. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" in the Form 10-K for a discussion of Entergy Corporation's investments in nonregulated and foreign energy-related businesses. These investments may involve a greater risk than domestic regulated utility enterprises. In the first quarter of 1998, these investments increased consolidated net income by approximately $11 million. At present, London Electricity has an exclusive right to supply electricity to residential and small industrial and commercial customers in its franchise area with demand of less than 100 KW. In late 1998, this segment of the supply business will become open to competition, subject to a six-month transition period. This means the market will be fully opened with all customers having access to competition by June 1999. See Note 2 in the Form 10-K for a discussion of Entergy London regulatory matters. On June 30, 1997, the UK government announced a review of the regulatory framework governing the utilities, including electricity and distribution. The Department of Trade and Industry green paper, "A Fair Deal for Consumers - Modernising the Framework for Utility Regulation", was published in late March 1998. Among the proposals with implications for Entergy London contained in this paper are recommendations for the separation of the electric distribution and supply businesses, the placing of customer interests on a statutory footing and mechanisms to ensure unearned gains are shared among all stakeholders. Entergy London is currently preparing a detailed response which is due by May 31, 1998. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" and Note 13 in the Form 10-K for a discussion of Entergy's major nonregulated business opportunities and foreign energy-related investments. Domestic Deregulated 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. In late 1997, Cajun's 30% interest in River Bend was transferred by the Cajun bankruptcy trustee to Entergy Gulf States and such interest is being treated as a deregulated operation. The domestic deregulated operations of Entergy Gulf States show a net loss of $2.9 million during the first quarter of 1998 compared to net income of $4.6 million during the first quarter of 1997. The decrease in net income from these deregulated operations for the first quarter of 1998 was principally due to (1) lower revenues from the wholesale jurisdiction resulting from reduced rates charged to both a large wholesale customer and to Cajun for transmission service, (2) decreased steam products revenues as a result of the revised contractual arrangement with the steam customer, and (3) revenues from off-system sales of the transferred 30% portion of River Bend not fully recovering the costs associated with those sales. These decreases were partially offset by higher revenues from the Louisiana deregulated portion of River Bend. The future impact of these deregulated operations on Entergy's and Entergy Gulf States' results of operations and financial position will depend on future operating costs, future efficiency and availability of generating units, and future market prices for energy over the remaining life of the assets. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Union Pacific Railroad Company (Entergy Corporation and Entergy Arkansas) In October 1997, Entergy Arkansas and Entergy Services filed a civil suit against Union Pacific Railroad Company (Union Pacific) in the United States District Court for the Middle District of Louisiana. This lawsuit, which seeks damages and the termination of coal shipping contracts with Union Pacific, maintains that Union Pacific has failed to meet its contractual obligations to ship coal to Entergy Arkansas' two large coal-fired plants and that such failure has impaired Entergy Arkansas' ability to generate and sell electricity from these plants. This lawsuit is entering the discovery phase. Meanwhile, there has been little or no improvement in the coal deliveries by the Union Pacific Railroad Company ("Union Pacific") to Entergy Arkansas' coal fired generating stations, and coal inventories at these stations are very low. Entergy Arkansas has requested that Union Pacific allow another railroad to deliver coal to the White Bluff generating station. It is not certain whether Union Pacific will honor this request. If it does not, Entergy will seek an order from the Federal Surface Transportation Board requiring Union Pacific to allow the other railroad to bring coal to the White Bluff site. If coal inventories cannot be rebuilt for the summer season, one or more of Entergy Arkansas' coal-fired generating stations may not be able to operate at full capacity, which could result in increased wholesale replacement power purchases. The operational and financial effect of Union Pacific's failure to deliver coal to Entergy Arkansas during the second and third quarters of 1998 will depend upon a number of factors, such as weather, that Entergy Arkansas cannot control. However, Entergy Arkansas will seek to mitigate the effects of inadequate coal inventories. The ultimate outcome of the Union Pacific litigation cannot be determined at this time. Accounting Issues The electric utility industry is moving toward a combination of competition and a modified regulatory environment. The domestic utility 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 domestic utility 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 for the foreseeable future. The domestic utility companies' and System Energy's financial statements continue to apply SFAS 71 for their regulated operations, except for those portions of Entergy Gulf States' business described in "Domestic Deregulated Operations" above. Although discussions with regulatory authorities regarding retail competition have occurred and are expected to continue, definitive outcomes have not yet been determined; therefore, the regulated operations continue to apply SFAS 71. See Note 1 to the Form 10-K for additional discussion of Entergy's application of SFAS 71. Year 2000 Issues Like many companies, Entergy is currently evaluating its computer software, databases, embedded microprocessors, suppliers, and other constituent relationships to determine the extent to which modifications are required to prevent problems related to the year 2000, and the resources which will be required to make such modifications. These problems could result in malfunctions in certain software applications, databases, and computer equipment with respect to dates on or after January 1, 2000, unless corrected. Many of Entergy's suppliers also face year 2000 issues, which could affect their performance and indirectly affect Entergy. Entergy has been working on the above mentioned modifications and contingencies throughout most of 1997, and will continue these efforts throughout 1998 and into 1999. Preliminary estimates of the total costs to be incurred by Entergy's global enterprises in 1998 through mid-2000 have now been revised to approximately $120 million. Maintenance or modification costs will be expensed as incurred, while the costs of new software will be capitalized and amortized over the software's useful life in accordance with EITF 96-14: "Accounting for the Costs Associated with Modifying Computer Software for the Year 2000." ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Effective February 1, 1997, Entergy Corporation acquired London Electricity. Accordingly, consolidated net income for the three months ended March 31, 1997 reflects London Electricity's results subsequent to February 1, 1997. See Note 7 to the Form 10-K for additional information regarding London Electricity. Net Income Consolidated net income decreased for the first quarter of 1998 primarily due to lower domestic electric operating revenues, higher purchased power expenses, and higher other operation and maintenance expenses, partially offset by lower fuel prices as described below. Entergy anticipates that its overall results of operations for the first half of 1998 will be less favorable than in 1997, primarily as a result of domestic utility rate reductions ordered by the regulators in 1997 and the loss of three large industrial customers in 1997. The full effect of these events is being seen in 1998. Significant factors affecting the results of operations and causing variances between the first quarter of 1998 and 1997 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 first quarter of 1998 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($22.7) Rate riders (25.6) Fuel cost recovery (64.1) Sales volume/weather (18.3) Other revenue (including unbilled) (10.3) Sales for resale 9.1 ------- Total ($131.9) ======= Electric operating revenues for the domestic utility companies decreased for the first quarter of 1998 primarily due to lower fuel adjustment revenues at Entergy Louisiana (which do not affect net income), decreased rate rider revenues at Entergy Arkansas (which do not affect net income), decreased base revenues at Entergy Gulf States and Entergy Louisiana, and lower sales volume at Entergy Louisiana. Fuel adjustment revenues decreased primarily due to lower sales volume and lower unit prices at Entergy Louisiana in the first quarter of 1998. Rate rider revenues at Entergy Arkansas decreased primarily due to the decline in Grand Gulf 1 cost recovery rate rider revenues reflecting scheduled reductions in the phase-in plan. Base revenues at Entergy Gulf States decreased primarily due to aggressive pricing strategies for targeted customer segments, the reserve accrued in the first quarter of 1998 for rate refunds for Texas retail customers, and a base rate reduction for the Louisiana retail customers in the first quarter of 1998. This decrease is partially offset by a reserve accrued in the first quarter of 1997 for Entergy Gulf States in Louisiana. Base revenues at Entergy Louisiana decreased due to a base rate reduction that became effective in the third quarter of 1997. Sales volume decreased, primarily at Entergy Louisiana, due to the loss of a large industrial customer as well as substantially lower sales to another large industrial customer during the current period due to customer cogeneration. Milder weather also contributed to lower sales volume. Competitive growth business revenues increased for the first quarter of 1998. Entergy London revenues were higher due to an additional month of activity under Entergy ownership recorded in 1998 compared to 1997, partially offset by a 3% price reduction, effective April 1, 1997, for kilowatt-hours distributed. Also contributing to the increase in competitive growth business revenues was an increase in revenue at Entergy Power Marketing Corporation as a result of a strong marketing effort, which is offset by increased power purchased for resale as discussed below. The acquisition of new security companies at Entergy Technology Holding Company also contributed to the increase in competitive growth business revenues. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Gas operating revenues decreased for the first quarter of 1998 primarily due to a lower unit price for gas purchased for resale at Entergy Gulf States and Entergy New Orleans. Expenses Operating expenses increased for the first quarter of 1998. The increase is primarily due to increases in purchased power, other operation and maintenance expenses, and depreciation, amortization, and decommissioning expense. The increase was partially offset by a reduction in fuel expenses, decreased amortization of rate deferrals, and an increase in other regulatory credits. The increase in purchased power is primarily the result of a higher level of power trading by Entergy Power Marketing Corporation and the additional month of Entergy London activity in the first quarter of 1998. The increase in other operation and maintenance expenses is principally due to one additional month of Entergy London operations in 1998 as compared to 1997, the write-off of certain investments, and the increase in the U.S. dollar to BPS exchange rate during the first quarter of 1998 at Entergy London. Operation and maintenance expenses of security companies acquired by Entergy Technology Holding Company subsequent to the first quarter of 1997 also contributed to the increase in such expenses. At Entergy Gulf States, other operation and maintenance expenses increased as a result of the inclusion of expenses related to the 30% interest in River Bend transferred by the Cajun bankruptcy trustee to Entergy Gulf States in December 1997. Entergy Gulf States' 1998 results include 100% of River Bend's operation and maintenance expenses in its operating expenses, as compared to 70% of such expenses in the first quarter of 1997. The increase in depreciation, amortization, and decommissioning is primarily due to the inclusion of an additional month of depreciation and amortization expense at Entergy London in 1998, acquisition of additional security company assets at Entergy Technology Holding Company and increased installment contracts at Entergy Integrated Solutions, Inc. Offsetting these increases was a decrease in fuel expenses primarily at Entergy Arkansas and Entergy Louisiana due to decreased generation and lower gas prices. Milder weather in the first quarter of 1998 contributed to the decreased generation. The decrease in the amortization of rate deferrals is due to a decrease in amortization at Entergy Arkansas as prescribed in the Grand Gulf 1 rate phase-in plan. In addition, the amortization of rate deferrals at Entergy Gulf States also decreased due to the expiration of the Louisiana retail phase-in plan for River Bend in February 1998. The increase in other regulatory credits is due to the net under-recovery of Grand Gulf 1 related costs in the first quarter of 1998, as compared to the net over-recovery in the first quarter of 1997. Other Miscellaneous other income - net increased for the first quarter of 1998, primarily due to increased dividend income at Entergy Power Development Corporation, increased profits from Entergy London's equity method investments, and increased gains on the sale of London Electricity fixed assets. Interest on long-term debt increased in the first quarter of 1998 primarily due to three months of interest accrued at Entergy London in 1998 as compared to two months in 1997. Distributions on preferred securities of subsidiaries increased due to an issuance by Entergy London of Cumulative Quarterly Income Preferred Securities in November 1997. The effective income tax rates for the first quarter of 1998 and 1997 were 44.6% and 34.6%, respectively. The increase in 1998 is primarily due to the increased reversal of previously recorded AFUDC amounts included in depreciation at Entergy Arkansas and Entergy Gulf States and the impact of a research and experimentation credit recorded in the first quarter of 1997 at Entergy Arkansas and Entergy Louisiana.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands, Except Share Data) Operating Revenues: Domestic electric $1,320,052 $1,451,925 Natural gas 50,425 57,496 Steam products 8,400 11,089 Competitive growth businesses 934,215 525,243 ---------- ---------- Total 2,313,092 2,045,753 ---------- ---------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 348,963 398,742 Purchased power 778,674 420,962 Nuclear refueling outage expenses 22,674 17,236 Other operation and maintenance 483,688 426,087 Depreciation, amortization, and decommissioning 252,458 228,029 Taxes other than income taxes 95,794 92,991 Other regulatory credits (34,766) (21,546) Amortization of rate deferrals 80,100 111,034 ---------- ---------- Total 2,027,585 1,673,535 ---------- ---------- Operating Income 285,507 372,218 ---------- ---------- Other Income: Allowance for equity funds used during construction 2,349 3,033 Miscellaneous - net 31,573 17,393 ---------- ---------- Total 33,922 20,426 ---------- ---------- Interest Charges: Interest on long-term debt 191,576 185,490 Other interest - net 10,102 11,905 Distributions on preferred securities of subsidiaries 11,178 4,172 Allowance for borrowed funds used during construction (1,880) (2,437) ---------- ---------- Total 210,976 199,130 ---------- ---------- Income Before Income Taxes 108,453 193,514 Income Taxes 48,399 67,029 ---------- ---------- Net Income before Preferred Dividend Requirements and Other 60,054 126,485 Preferred and Preference Dividend Requirements of Subsidiaries and Other 11,776 16,723 ---------- ---------- Consolidated Net Income 48,278 109,762 ---------- ---------- Other Comprehensive Income: Foreign Currency Translation Adjustment 16,693 (759) ---------- ---------- Comprehensive Net Income $64,971 $109,003 ========== ========== Earnings per average common share: Basic and diluted $0.20 $0.47 Dividends declared per common share $0.90 $0.45 Average number of common shares outstanding: Basic 245,920,415 235,133,608 Diluted 246,092,660 235,230,360 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net Income before Preferred Dividend Requirements and Other $60,054 $126,485 Noncash items included in net income: Amortization of rate deferrals 80,100 111,034 Other regulatory charges (credits) (34,766) (21,546) Depreciation, amortization, and decommissioning 252,458 228,029 Deferred income taxes and investment tax credits (54,938) (53,743) Allowance for equity funds used during construction (2,349) (3,033) Changes in working capital: Receivables 178,897 115,155 Fuel inventory 9,457 32,438 Accounts payable (214,906) (201,617) Taxes accrued 71,519 119,438 Interest accrued (9,490) (10,637) Other working capital accounts 19,789 98,914 Provision for estimated losses and reserves (62,335) (1,558) Decommissioning trust contributions and realized change in trust assets (18,894) (14,656) Other (97) (19,478) -------- ---------- Net cash flow provided by operating activities $274,499 505,225 -------- ---------- Investing Activities: Construction/capital expenditures (223,231) (125,743) Allowance for equity funds used during construction 2,349 3,033 Nuclear fuel purchases (515) (54,155) Proceeds from sale/leaseback of nuclear fuel 7,433 68,319 Acquisition of London Electricity, net of cash acquired - (2,021,501) Acquisition of security companies (16,591) - Investment in other nonregulated/nonutility properties (7,934) 12,515 -------- ---------- Net cash flow used in investing activities (238,489) (2,117,532) -------- ----------
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Financing Activities Proceeds from the issuance of: First mortgage bonds 112,556 84,490 Bank notes and other long-term debt 95,840 1,630,280 Preferred securities of subsidiaries trust - 82,323 Common stock 12,026 98,695 Retirement of: First mortgage bonds (60,000) - General and refunding mortgage bonds - (87,965) Other long-term debt (83,208) - Redemption of preferred stock (2,250) (101,728) Changes in short-term borrowings - net 167,490 258,274 Preferred stock dividends paid (11,776) (16,723) Common stock dividends paid (110,939) (105,035) -------- --------- Net cash flow provided by financing activities 119,739 1,842,611 -------- --------- Effect of exchange rates on cash and cash equivalents 2,740 (758) -------- --------- Net increase in cash and cash equivalents 158,489 229,546 Cash and cash equivalents at beginning of period 830,547 388,703 -------- --------- Cash and cash equivalents at end of period $989,036 $618,249 ======== ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $207,888 $223,444 Income taxes $14,589 $3,002 Noncash investing and financing activities: Change in unrealized appreciation/(depreciation) of decommissioning trust assets $18,894 ($1,119) See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 (In Thousands) ASSETS Current Assets: Cash and cash equivalents: Cash $66,288 $85,067 Temporary cash investments - at cost, which approximates market 716,413 700,431 Special deposits 206,335 45,049 Total cash and cash equivalents 989,036 830,547 Notes receivable 5,589 8,157 Accounts receivable: Customer (less allowance for doubtful accounts of $31.7 million in 1998 and $32.8 million in 1997) 419,424 458,085 Other 216,846 225,523 Accrued unbilled revenues 461,651 580,194 Deferred fuel 126,295 150,596 Fuel inventory 109,874 119,331 Materials and supplies - at average cost 388,249 367,870 Rate deferrals 165,615 237,302 Prepayments and other 180,871 193,717 ----------- ----------- Total 3,063,450 3,171,322 ----------- ----------- Other Property and Investments: Decommissioning trust funds 626,356 589,050 Non-regulated investments 588,896 568,951 Other 222,988 225,818 ----------- ----------- Total 1,438,240 1,383,819 ----------- ----------- Utility Plant: Electric 25,505,909 25,310,122 Plant acquisition adjustment - Entergy Gulf States 435,094 439,160 Electric plant under leases 674,483 674,483 Property under capital leases - electric 131,197 134,278 Natural gas 176,173 169,964 Steam products 81,881 82,289 Construction work in progress 627,360 565,667 Nuclear fuel under capital leases 245,164 269,011 Nuclear fuel 70,961 72,875 ----------- ----------- Total 27,948,222 27,717,849 Less - accumulated depreciation and amortization 9,798,817 9,585,021 ----------- ----------- Utility plant - net 18,149,405 18,132,828 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 154,189 162,602 SFAS 109 regulatory asset - net 1,166,144 1,174,187 Unamortized loss on reacquired debt 191,981 196,891 Other regulatory assets 495,678 466,780 Long-term receivables 36,301 36,984 CitiPower license (net of amortization of $29.4 million in 1998 and $25.6 million in 1997) 493,991 486,153 London Electricity license (net of amortization of $40.3 million in 1998 and $ 25.6 million in 1997) 1,342,226 1,327,312 Other 510,221 461,822 ----------- ----------- Total 4,390,731 4,312,731 ----------- ----------- TOTAL $27,041,826 $27,000,700 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 (In Thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Currently maturing long-term debt $504,687 $390,674 Notes payable 602,118 428,964 Accounts payable 714,245 915,800 Customer deposits 183,736 178,162 Taxes accrued 436,791 359,996 Accumulated deferred income taxes 15,500 56,524 Interest accrued 205,739 214,763 Dividends declared 118,865 8,166 Obligations under capital leases 175,979 167,700 Other 61,817 81,303 ----------- ----------- Total 3,019,477 2,802,052 ----------- ----------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 4,578,364 4,567,052 Accumulated deferred investment tax credits 574,866 587,781 Obligations under capital leases 200,784 236,000 Other 1,904,456 1,857,514 ----------- ----------- Total 7,258,470 7,248,347 ----------- ----------- Long-term debt 9,025,711 9,068,325 Subsidiaries' preferred stock with sinking fund 182,755 185,005 Subsidiary's preference stock 150,000 150,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 215,000 215,000 Company-obligated redeemable preferred securities of subsidiary holding solely junior subordinated deferrable debentures 300,000 300,000 Shareholders' Equity: Subsidiaries' preferred stock without sinking fund 338,455 338,455 Common stock, $.01 par value, authorized 500,000,000 shares; issued 246,556,946 shares in 1998 and 246,149,198 shares in 1997 2,466 2,461 Additional paid-in capital 4,625,592 4,613,572 Retained earnings 1,984,903 2,157,912 Cumulative foreign currency translation adjustment (53,124) (69,817) Less - treasury stock (266,085 shares in 1998 and 306,852 shares in 1997) 7,879 10,612 ----------- ----------- Total 6,890,413 7,031,971 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $27,041,826 $27,000,700 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (In Millions) Domestic Utility Electric Operating Revenues: Residential $ 463.1 $ 502.1 ($39.0) (8) Commercial 332.6 368.3 (35.7) (10) Industrial 444.7 496.9 (52.2) (11) Governmental 41.5 41.6 (0.1) - ------------------------------ Total retail 1,281.9 1,408.9 (127.0) (9) Sales for resale 83.0 76.6 6.4 8 Other (44.9) (33.6) (11.3) (34) ------------------------------ Total $1,320.0 $ 1,451.9 ($131.9) (9) ============================== Billed Electric Energy Sales (GWH): Residential 6,240 6,399 (159) (2) Commercial 4,829 4,895 (66) (1) Industrial 10,412 10,897 (485) (4) Governmental 627 595 32 5 ------------------------------ Total retail 22,108 22,786 (678) (3) Sales for resale 1,930 2,425 (495) (20) ------------------------------ Total 24,038 25,211 (1,173) (5) ============================== ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 1998 primarily due to a decrease in electric operating revenues, partially offset by a decrease in operating expenses. Significant factors affecting the results of operations and causing variances between the first quarter of 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1998 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues $1.6 Rate riders (27.1) Fuel cost recovery (6.7) Sales volume/weather (1.6) Other revenue (including unbilled) 15.6 Sales for resale (26.6) ------ Total ($44.8) ====== Electric operating revenues decreased for the first quarter of 1998 primarily as a result of a decrease in rate rider revenue and sales for resale, partially offset by an increase in other revenue (primarily unbilled revenue). Rate rider revenue (which does not affect net income) decreased primarily due to the decline in Grand Gulf 1 cost recovery rate rider revenues reflecting scheduled reductions in the phase-in plan. Sales for resale decreased due to a decrease in sales to associated companies as a result of changes in generation requirements and availability among the domestic utility companies. Unbilled revenue increased primarily as a result of an increase in generation and the prior year's unfavorable variance in fuel revenues. Expenses Operating expenses decreased for the first quarter of 1998 primarily due to decreases in fuel expenses and in the amortization of Grand Gulf 1 rate deferrals and an increase in other regulatory credits. Fuel expenses decreased primarily due to a reduction in generation related to the decrease in sales for resale. The decrease in the amortization of Grand Gulf 1 rate deferrals is due to a decrease in amortization prescribed in the Grand Gulf 1 rate phase-in plan and the Stipulation and Settlement Agreement with the APSC. The change in other regulatory credits is a result of the net under- recovery of Grand Gulf 1 related costs in the first quarter of 1998 compared to the net over-recovery in the first quarter of 1997. Other The effective income tax rates for the first quarter of 1998 and 1997 were 42.7% and 17.1%, respectively. The increase in 1998 is primarily due to the increased reversal of previously recorded AFUDC amounts included in depreciation and the impact of a research and experimentation credit recorded in the first quarter of 1997.
ENTERGY ARKANSAS, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Revenues $329,869 $374,731 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 46,223 66,593 Purchased power 95,395 94,734 Nuclear refueling outage expenses 8,091 6,900 Other operation and maintenance 85,799 85,716 Depreciation, amortization, and decommissioning 45,260 41,449 Taxes other than income taxes 10,360 9,428 Other regulatory charges (credits) (10,581) 736 Amortization of rate deferrals 22,068 38,285 -------- -------- Total 302,615 343,841 -------- -------- Operating Income 27,254 30,890 -------- -------- Other Income: Allowance for equity funds used during construction 704 1,443 Miscellaneous - net 6,870 5,325 -------- -------- Total 7,574 6,768 -------- -------- Interest Charges: Interest on long-term debt 23,464 24,450 Other interest - net 776 929 Distributions on preferred securities of subsidiary 1,255 1,275 Allowance for borrowed funds used during construction (487) (868) -------- -------- Total 25,008 25,786 -------- -------- Income Before Income Taxes 9,820 11,872 Income Taxes 4,197 2,024 -------- -------- Net Income 5,623 9,848 Preferred Stock Dividend Requirements and Other 2,626 2,832 -------- -------- Earnings Applicable to Common Stock $2,997 $7,016 ======== ======== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $5,623 $9,848 Noncash items included in net income: Amortization of rate deferrals 22,068 38,285 Other regulatory charges (credits) (10,581) 736 Depreciation, amortization, and decommissioning 45,260 41,449 Deferred income taxes and investment tax credits (9,854) (21,515) Allowance for equity funds used during construction (704) (1,443) Changes in working capital: Receivables 46,353 61,901 Fuel inventory 1,151 3,511 Accounts payable 11,184 (22,825) Taxes accrued 19,038 26,040 Interest accrued (1,462) (421) Other working capital accounts (16,353) (6,349) Decommissioning trust contributions and realized change in trust assets (6,281) (4,046) Provision for estimated losses and reserves (1,706) 3,036 Other (1,092) 14,366 --------- --------- Net cash flow provided by operating activities 102,644 142,573 --------- --------- Investing Activities: Construction expenditures (28,837) (32,479) Allowance for equity funds used during construction 704 1,443 Nuclear fuel purchases (6,832) (35,574) Proceeds from sale/leaseback of nuclear fuel 6,832 35,595 --------- --------- Net cash flow used in investing activities (28,133) (31,015) --------- --------- Financing Activities: Proceeds from the issuance of first mortgage bonds - 84,490 Retirement of: First mortgage bonds - (30,000) Other long-term debt (45,500) - Dividends paid: Common stock - (26,400) Preferred stock (2,626) (5,663) --------- --------- Net cash flow provided by (used in) financing activities (48,126) 22,427 --------- --------- Net increase in cash and cash equivalents 26,385 133,985 Cash and cash equivalents at beginning of period 203,391 43,857 --------- --------- Cash and cash equivalents at end of period $229,776 $177,842 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $26,891 $22,208 Income taxes $469 $4,260 Noncash investing and financing activities: Capital lease obligations incurred - $27,500 Change in unrealized appreciation of decommissioning trust assets $12,502 $143 See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $3,386 $6,076 Temporary cash investments - at cost, which approximates market: Associated companies 40,395 41,389 Other 95,221 110,877 Special deposits 90,774 45,049 ---------- ---------- Total cash and cash equivalents 229,776 203,391 Accounts receivable: Customer (less allowance for doubtful accounts of $1.8 million in 1998 and 1997) 64,320 71,910 Associated companies 35,206 46,166 Other 6,905 10,282 Accrued unbilled revenues 65,190 89,616 Fuel inventory - at average cost 27,018 28,169 Materials and supplies - at average cost 83,145 79,692 Rate deferrals 53,181 75,249 Deferred nuclear refueling outage costs 18,079 24,335 Prepayments and other 12,236 8,647 ---------- ---------- Total 595,056 637,457 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 11,213 11,213 Decommissioning trust fund 269,356 250,573 Other - at cost (less accumulated depreciation) 4,982 4,939 ---------- ---------- Total 285,551 266,725 ---------- ---------- Utility Plant: Electric 4,663,349 4,650,065 Property under capital leases 52,918 53,843 Construction work in progress 145,143 123,087 Nuclear fuel under capital lease 90,591 92,621 ---------- ---------- Total 4,952,001 4,919,616 Less - accumulated depreciation and amortization 2,163,747 2,116,826 ---------- ---------- Utility plant - net 2,788,254 2,802,790 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 252,275 252,712 Unamortized loss on reacquired debt 53,180 53,780 Other regulatory assets 84,738 79,461 Other 13,273 13,952 ---------- ---------- Total 403,466 399,905 ---------- ---------- TOTAL $4,072,327 $4,106,877 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $105,924 $60,650 Notes payable 667 667 Accounts payable: Associated companies 70,555 59,438 Other 76,472 76,405 Customer deposits 24,433 23,437 Taxes accrued 96,365 77,327 Accumulated deferred income taxes 25,203 32,239 Interest accrued 27,364 28,826 Co-owner advances 12,068 7,666 Deferred fuel cost 2,548 16,244 Obligations under capital leases 60,810 62,623 Other 14,427 21,696 ---------- ---------- Total 516,836 467,218 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 759,010 759,489 Accumulated deferred investment tax credits 102,616 103,899 Obligations under capital leases 82,700 83,841 Other 174,233 169,884 ---------- ---------- Total 1,118,559 1,117,113 ---------- ---------- Long-term debt 1,156,250 1,244,860 Preferred stock with sinking fund 31,027 31,027 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 60,000 60,000 Shareholder's Equity: Preferred stock without sinking fund 116,350 116,350 Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares 470 470 Additional Paid-in capital 590,134 590,134 Retained earnings 482,701 479,705 ---------- ---------- Total 1,189,655 1,186,659 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,072,327 $4,106,877 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 120.9 $ 131.4 ($10.5) (8) Commercial 59.5 72.6 (13.1) (18) Industrial 72.3 81.6 (9.3) (11) Governmental 3.4 4.3 (0.9) (21) --------------------------- Total retail 256.1 289.9 (33.8) (12) Sales for resale Associated companies 34.2 60.8 (26.6) (44) Non-associated companies 44.2 44.2 - - Other (4.6) (20.2) 15.6 77 --------------------------- Total $ 329.9 $ 374.7 ($44.8) (12) =========================== Billed Electric Energy Sales (GWH): Residential 1,504 1,518 (14) (1) Commercial 1,003 1,008 (5) - Industrial 1,566 1,570 (4) - Governmental 55 60 (5) (8) --------------------------- Total retail 4,128 4,156 (28) (1) Sales for resale Associated companies 1,638 2,974 (1,336) (45) Non-associated companies 1,173 1,496 (323) (22) --------------------------- Total 6,939 8,626 (1,687) (20) =========================== ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 1998 primarily due to a decrease in operating revenues and an increase in operating expenses, partially offset by a decrease in interest charges and lower income taxes. Significant factors affecting the results of operations and causing variances between the first quarter of 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1998 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($10.2) Fuel cost recovery (1.6) Sales volume/weather - Other revenue (including unbilled) (13.1) Sales for resale 8.6 ------ Total ($16.3) ====== Electric operating revenues decreased for the first quarter of 1998 primarily due to decreases in base revenues and other revenue (primarily unbilled revenue). These decreases are partially offset by an increase in sales for resale. Base revenues decreased primarily due to aggressive pricing strategies for targeted customer segments, the reserve accrued in the first quarter of 1998 for rate refunds for Texas retail customers, and a base rate reduction in Louisiana in the first quarter of 1998. This decrease is partially offset by a Louisiana reserve accrued in the first quarter of 1997. Unbilled revenues decreased as a result of decreased pricing due to a rate reduction in the first quarter of 1998 as compared to the first quarter of 1997. Sales for resale increased due to an increase in sales to non-associated utilities and additional revenues related to the sale of energy from the 30% interest in River Bend transferred by the Cajun bankruptcy trustee to Entergy Gulf States in December 1997. Gas operating revenues decreased for the first quarter of 1998 due to a lower unit price for gas purchased for resale. Steam operating revenues decreased for the first quarter of 1998 primarily due to changes in the customer contract in 1996, which were not fully effective in the first quarter of 1997. Expenses Operating expenses increased slightly for the first quarter of 1998 primarily due to increased other operation and maintenance expenses, partially offset by a decrease in the amortization of rate deferrals. Other operation and maintenance expenses increased as a result of the inclusion of expenses related to the 30% interest in River Bend transferred by the Cajun bankruptcy trustee to Entergy Gulf States in December 1997. Entergy Gulf States now includes 100% of River Bend's operation and maintenance expenses in its operating expenses, as compared to 70% of such expenses in the first quarter of 1997. The amortization of rate deferrals decreased for the first quarter of 1998 due to the expiration of the Louisiana retail phase- in plan for River Bend in February 1998. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other Interest charges decreased for the first quarter of 1998 primarily due to the retirement of certain long-term debt in 1997. The effective income tax rates for the first quarter of 1998 and 1997 were 46.8% and 37.9%, respectively. The increase in 1998 is primarily due to the increased reversal of previously recorded AFUDC amounts included in depreciation.
ENTERGY GULF STATES, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Revenues: Electric $431,864 $448,138 Natural gas 17,245 22,101 Steam products 8,400 11,089 -------- -------- Total 457,509 481,328 -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 118,286 120,392 Purchased power 78,660 79,341 Nuclear refueling outage expenses 4,549 2,645 Other operation and maintenance 98,539 83,262 Depreciation, amortization, and decommissioning 54,297 52,968 Taxes other than income taxes 30,911 29,207 Other regulatory credits (6,336) (5,865) Amortization of rate deferrals 14,942 26,364 -------- -------- Total 393,848 388,314 -------- -------- Operating Income 63,661 93,014 -------- -------- Other Income: Allowance for equity funds used during construction 612 725 Miscellaneous - net 3,960 4,101 -------- -------- Total 4,572 4,826 -------- -------- Interest Charges: Interest on long-term debt 38,371 41,986 Other interest - net 744 2,738 Distributions on preferred securities of subsidiary 1,860 1,322 Allowance for borrowed funds used during construction (467) (619) -------- -------- Total 40,508 45,427 -------- -------- Income Before Income Taxes 27,725 52,413 Income Taxes 12,969 19,878 -------- -------- Net Income 14,756 32,535 Preferred and Preference Stock Dividend Requirements and Other 4,814 8,943 -------- -------- Earnings Applicable to Common Stock $9,942 $23,592 ======== ======== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $14,756 $32,535 Noncash items included in net income: Amortization of rate deferrals 14,942 26,364 Other regulatory credits (6,336) (5,865) Depreciation, amortization, and decommissioning 54,297 52,968 Deferred income taxes and investment tax credits (12,750) 6,614 Allowance for equity funds used during construction (612) (725) Changes in working capital: Receivables 29,735 (15,453) Fuel inventory (3,252) 3,838 Accounts payable (23,962) (19,558) Taxes accrued 17,416 4,981 Interest accrued 7,812 7,099 Deferred fuel 14,027 (3,648) Other working capital accounts 6,790 12,860 Decommissioning trust contributions and realized change in trust assets (4,005) (1,926) Provision for estimated losses and reserves (3,574) (2,284) Other 9,458 12,859 -------- -------- Net cash flow provided by operating activities 114,742 110,659 -------- -------- Investing Activities: Construction expenditures (21,553) (27,932) Allowance for equity funds used during construction 612 725 Nuclear fuel purchases (153) - Proceeds from sale/leaseback of nuclear fuel 146 - -------- -------- Net cash flow used in investing activities (20,948) (27,207) -------- -------- Financing Activities: Proceeds from the issuance of preferred securities of subsidiary trust - 82,323 Retirement of first mortgage bonds (25,000) (41,965) Redemption of preferred and preference stock (2,250) (89,367) Dividends paid: Common stock (71,358) - Preferred and preference stock (4,814) (6,940) -------- -------- Net cash flow used in financing activities (103,422) (55,949) -------- -------- Net increase (decrease) in cash and cash equivalents (9,628) 27,503 Cash and cash equivalents at beginning of period 165,164 122,406 -------- -------- Cash and cash equivalents at end of period $155,536 $149,909 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $29,047 $34,925 Income taxes $7,455 - Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $2,278 $41 See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $7,967 $10,549 Temporary cash investments - at cost, which approximates market: Associated companies 38,810 37,389 Other 108,759 117,226 ---------- ---------- Total cash and cash equivalents 155,536 165,164 Accounts receivable: Customer (less allowance for doubtful accounts of $1.8 million in 1998 and 1997) 80,245 99,762 Associated companies 11,166 9,024 Other 24,344 32,837 Accrued unbilled revenues 70,958 74,825 Deferred fuel costs 131,730 145,757 Accumulated deferred income taxes 27,683 22,093 Fuel inventory - at average cost 40,879 37,627 Materials and supplies - at average cost 109,393 104,690 Rate deferrals 9,077 21,749 Prepayments and other 14,905 21,680 ---------- ---------- Total 675,916 735,208 ---------- ---------- Other Property and Investments: Decommissioning trust fund 193,745 187,462 Other - at cost (less accumulated depreciation) 176,848 176,953 ---------- ---------- Total 370,593 364,415 ---------- ---------- Utility Plant: Electric 7,186,550 7,168,668 Natural Gas 48,460 47,656 Steam products 81,881 82,289 Property under capital leases 66,677 67,946 Construction work in progress 92,100 90,333 Nuclear fuel under capital lease 48,600 54,390 Nuclear fuel 20,466 23,051 ---------- ---------- Total 7,544,734 7,534,333 Less - accumulated depreciation and amortization 3,044,950 2,996,147 ---------- ---------- Utility plant - net 4,499,784 4,538,186 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 96,140 98,410 SFAS 109 regulatory asset - net 376,902 376,275 Unamortized loss on reacquired debt 46,987 48,417 Other regulatory assets 86,152 86,819 Long-term receivables 36,301 36,984 Other 210,802 203,923 ---------- ---------- Total 853,284 850,828 ---------- ---------- TOTAL $6,399,577 $6,488,637 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $190,890 $190,890 Accounts payable: Associated companies 55,835 48,726 Other 78,373 109,444 Customer deposits 31,424 30,311 Taxes accrued 65,734 48,318 Interest accrued 52,966 45,154 Nuclear refueling reserve 7,332 3,386 Obligations under capital leases 30,307 30,280 Other 17,305 17,646 ---------- ---------- Total 530,166 524,155 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 1,127,422 1,124,644 Accumulated deferred investment tax credits 206,271 215,438 Obligations under capital leases 84,971 92,055 Deferred River Bend finance charges 4,646 9,330 Other 925,659 914,079 ---------- ---------- Total 2,348,969 2,355,546 ---------- ---------- Long-term debt 1,677,775 1,702,719 Preferred stock with sinking fund 66,728 68,978 Preference stock 150,000 150,000 Company - obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 85,000 85,000 Shareholder's Equity: Preferred stock without sinking fund 51,444 51,444 Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares 114,055 114,055 Additional paid-in capital 1,152,575 1,152,575 Retained earnings 222,865 284,165 ---------- ---------- Total 1,540,939 1,602,239 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $6,399,577 $6,488,637 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (In Millions) Electric Department Operating Revenues: Residential $ 128.3 $ 133.6 ($ 5.3) (4) Commercial 100.4 105.4 (5.0) (5) Industrial 175.6 177.9 (2.3) (1) Governmental 10.6 8.0 2.6 33 --------------------------- Total retail 414.9 424.9 (10.0) (2) Sales for resale Associated companies 1.8 9.0 (7.2) (80) Non-associated companies 21.5 5.7 15.8 277 Other (1) (6.3) 8.6 (14.9) (173) --------------------------- Total Electric Department $ 431.9 $ 448.2 ($ 16.3) (4) =========================== Billed Electric Energy Sales (GWH): Residential 1,720 1,793 (73) (4) Commercial 1,441 1,488 (47) (3) Industrial 4,348 4,165 183 4 Governmental 154 115 39 34 --------------------------- Total retail 7,663 7,561 102 1 Sales for resale Associated companies 57 46 11 24 Non-associated companies 501 664 (163) (25) --------------------------- Total Electric Department 8,221 8,271 (50) (1) =========================== (1) Includes the effect of the provision for rate refunds. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 1998 primarily due to a decrease in electric operating revenues, partially offset by a decrease in operating expenses and lower income taxes. Significant factors affecting the results of operations and causing variances between the first quarter of 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1998 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($8.4) Fuel cost recovery (46.1) Sales volume/weather (16.0) Other revenue (including unbilled) (7.1) Sales for resale (0.3) ------ Total ($77.9) ====== Electric operating revenues decreased for the first quarter of 1998 primarily due to lower fuel adjustment revenues, which do not affect net income, decreases in base revenues and other revenues, and lower sales volume. Fuel adjustment revenues decreased due to lower sales volume and pricing. Base revenues decreased due to a base rate reduction that became effective in the third quarter of 1997. The decrease in other revenue, primarily unbilled revenue, is due to a decrease in sales volume and pricing. Sales volume decreased due to the loss of a large industrial customer as well as substantially lower sales to another large industrial customer during the current period due to customer cogeneration. Milder weather in the first quarter of 1998 also contributed to the lower sales volume. Expenses Operating expenses decreased for the first quarter of 1998 primarily due to a decrease in fuel and purchased power expenses as a result of decreased generation as a result of lower sales volume and lower gas prices. Other The effective income tax rates for the first quarter of 1998 and 1997 were 46.9% and 40.8%, respectively. The increase in 1998 is primarily due to the impact of a research and experimentation credit recorded in the first quarter of 1997.
ENTERGY LOUISIANA, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Revenues $356,038 $433,983 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 74,702 112,916 Purchased power 87,996 96,196 Nuclear refueling outage expenses 5,435 3,975 Other operation and maintenance 71,024 74,085 Depreciation, amortization, and decommissioning 44,078 44,371 Taxes other than income taxes 18,458 18,239 Other regulatory charges (credits) (877) 3,495 Amortization of rate deferrals - 2,826 -------- -------- Total 300,816 356,103 -------- -------- Operating Income 55,222 77,880 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 361 218 Miscellaneous - net 2,140 (641) -------- -------- Total 2,501 (423) -------- -------- Interest Charges: Interest on long-term debt 28,762 30,083 Other interest - net 1,506 1,935 Distributions on preferred securities of subsidiary 1,575 1,575 Allowance for borrowed funds used during construction (333) (378) -------- -------- Total 31,510 33,215 -------- -------- Income Before Income Taxes 26,213 44,242 Income Taxes 12,296 18,070 -------- -------- Net Income 13,917 26,172 Preferred Stock Dividend Requirements and Other 3,253 3,592 -------- -------- Earnings Applicable to Common Stock $10,664 $22,580 ======== ======== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Three Months ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $13,917 $26,172 Noncash items included in net income: Amortization of rate deferrals - 2,826 Other regulatory charges (credits) (877) 3,495 Depreciation, amortization, and decommissioning 44,078 44,371 Deferred income taxes and investment tax credits (12,317) (17,008) Allowance for equity funds used during construction (361) (218) Changes in working capital: Receivables 21,549 2,259 Accounts payable (38,381) (33,184) Taxes accrued 29,713 23,535 Interest accrued (8,091) (21,862) Deferred fuel 16,221 23,843 Other working capital accounts 600 18,534 Decommissioning trust contributions and realized change in trust assets (2,860) (4,393) Provision for estimated losses and reserves 1,120 2,586 Other 353 5,239 -------- -------- Net cash flow provided by operating activities 64,664 76,195 -------- -------- Investing Activities: Construction expenditures (19,325) (12,421) Allowance for equity funds used during construction 361 218 Nuclear fuel purchases - (32,685) Proceeds from sale/leaseback of nuclear fuel - 32,685 -------- -------- Net cash flow used in investing activities (18,964) (12,203) -------- -------- Financing Activities: Proceeds from the issuance of first mortgage bonds 112,556 - Retirement of first mortgage bonds (35,000) (16,000) Redemption of preferred stock - (7,500) Changes in short-term borrowings - net - (6,694) Dividends paid: Common stock (5,200) (26,900) Preferred stock (3,253) (3,490) -------- -------- Net cash flow provided by (used in) financing activities 69,103 (60,584) -------- -------- Net increase in cash and cash equivalents 114,803 3,408 Cash and cash equivalents at beginning of period 49,749 23,746 -------- -------- Cash and cash equivalents at end of period $164,552 $27,154 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $36,780 $52,242 Income taxes $8,400 - Noncash investing and financing activities: Change in unrealized appreciation (depreciation) of decommissioning trust assets $2,358 ($321) See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $5,366 $5,148 Temporary cash investments - at cost, which approximates market 43,625 44,601 Special deposits 115,561 - ---------- ---------- Total cash and cash equivalents 164,552 49,749 Accounts receivable: Customer (less allowance for doubtful accounts of $1.2 million in 1998 and 1997) 55,479 69,566 Associated companies 16,081 15,035 Other 8,897 7,441 Accrued unbilled revenues 51,910 61,874 Accumulated deferred income taxes 19,789 10,994 Materials and supplies - at average cost 83,937 82,850 Deferred nuclear refueling outage costs 21,741 27,176 Prepayments and other 15,728 10,793 ---------- ---------- Total 438,114 335,478 ---------- ---------- Other Property and Investments: Nonutility property 22,525 22,525 Decommissioning trust fund 70,322 65,104 Investment in subsidiary companies - at equity 14,230 14,230 ---------- ---------- Total 107,077 101,859 ---------- ---------- Utility Plant: Electric 5,071,875 5,058,130 Property under capital leases 233,513 233,513 Construction work in progress 53,386 52,632 Nuclear fuel under capital lease 48,880 57,811 Nuclear fuel 1,560 1,560 ---------- ---------- Total 5,409,214 5,403,646 Less - accumulated depreciation and amortization 2,057,877 2,021,392 ---------- ---------- Utility plant - net 3,351,337 3,382,254 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 273,572 278,234 Unamortized loss on reacquired debt 32,448 33,468 Other regulatory assets 29,500 29,991 Other 16,053 14,116 ---------- ---------- Total 351,573 355,809 ---------- ---------- TOTAL $4,248,101 $4,175,400 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $115,892 $35,300 Accounts payable: Associated companies 42,119 43,508 Other 58,894 95,886 Customer deposits 55,512 55,331 Taxes accrued 54,956 25,243 Interest accrued 26,480 34,571 Dividends declared 3,253 3,253 Deferred fuel costs 19,489 3,268 Obligations under capital leases 42,064 29,232 Other 9,584 8,578 ---------- ---------- Total 428,243 334,170 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 807,096 813,748 Accumulated deferred investment tax credits 132,879 134,276 Obligations under capital leases 6,816 28,579 Deferred interest - Waterford 3 lease obligation 18,605 17,799 Other 122,476 119,519 ---------- ---------- Total 1,087,872 1,113,921 ---------- ---------- Long-term debt 1,337,677 1,338,464 Preferred stock with sinking fund 85,000 85,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 70,000 70,000 Shareholder's Equity: Preferred stock without sinking fund 100,500 100,500 Common stock, no par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares 1,088,900 1,088,900 Capital stock expense and other (2,321) (2,321) Retained earnings 52,230 46,766 ---------- ---------- Total 1,239,309 1,233,845 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,248,101 $4,175,400 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 114.1 $ 133.3 ($ 19.2) (14) Commercial 78.7 89.5 (10.8) (12) Industrial 149.5 188.1 (38.6) (21) Governmental 8.3 9.0 (0.7) (8) --------------------------- Total retail 350.6 419.9 (69.3) (17) Sales for resale Associated companies 0.9 0.3 0.6 200 Non-associated companies 11.0 11.9 (0.9) (8) Other (1) (6.5) 1.8 (8.3) (461) --------------------------- Total $ 356.0 $ 433.9 ($77.9) (18) =========================== Billed Electric Energy Sales (GWH): Residential 1,656 1,723 (67) (4) Commercial 1,089 1,103 (14) (1) Industrial 3,641 4,325 (684) (16) Governmental 124 119 5 4 --------------------------- Total retail 6,510 7,270 (760) (10) Sales for resale Associated companies 28 7 21 300 Non-associated companies 153 140 13 9 --------------------------- Total 6,691 7,417 (726) (10) =========================== (1) Includes the effect of the provision for rate refunds. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the first quarter of 1998 primarily as a result of an increase in operating expenses, partially offset by an increase in electric operating revenues. Significant factors affecting the results of operations and causing variances between the first quarter of 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1998 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($2.2) Grand Gulf rate riders 1.5 Fuel cost recovery (4.1) Sales volume/weather 1.0 Other revenue (including unbilled) 3.2 Sales for resale 5.3 ---- Total $4.7 ==== Electric operating revenues increased for the first quarter of 1998 primarily due to an increase in sales for resale and other revenue (primarily unbilled revenue), partially offset by a decrease in fuel adjustment revenues, which do not affect net income. Sales for resale increased as a result of an increase in sales to associated companies primarily due to changes in generation requirements and availability among the domestic utility companies. The decrease in fuel adjustment revenues is due to an MPSC order, effective May 1, 1997, that changed fuel recovery pricing to a fixed fuel factor, which is adjusted annually. The increase in unbilled revenue is primarily a result of the prior year's unfavorable price variance in fuel revenues that is not recurring in the current year due to the fixed fuel factor. Expenses Operating expenses increased for the first quarter of 1998 primarily due to an increase in fuel expenses and a decrease in other regulatory credits, partially offset by decreases in purchased power expenses and other operation and maintenance expenses. The increase in fuel expenses is due to increased generation requirements and a shift from higher priced purchased power to lower priced fossil fuel. The decrease in other regulatory credits is a result of the decrease in the under-recovery of Grand Gulf 1 related costs. Other operation and maintenance expenses decreased primarily as a result of higher loss reserve expenses associated with the settlement of an injury claim and increased materials and supplies expense in the first quarter of 1997. Other The effective income tax rate of 21.6% for the first quarter of 1998 remained relatively unchanged from the rate of 23.7% for the first quarter of 1997. ENTERGY MISSISSIPPI, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Revenues $205,017 $200,328 Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses 51,312 40,023 Purchased power 66,594 70,359 Other operation and maintenance 27,823 30,020 Depreciation and amortization 11,315 10,699 Taxes other than income taxes 11,155 10,336 Other regulatory credits (14,578) (19,514) Amortization of rate deferrals 34,990 35,711 -------- -------- Total 188,611 177,634 -------- -------- Operating Income 16,406 22,694 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 20 286 Miscellaneous - net 1,027 (312) -------- -------- Total 1,047 (26) -------- -------- Interest Charges: Interest on long-term debt 9,576 10,623 Other interest - net 1,295 1,336 Allowance for borrowed funds used during construction (40) (231) -------- -------- Total 10,831 11,728 -------- -------- Income Before Income Taxes 6,622 10,940 Income Taxes 1,428 2,588 -------- -------- Net Income 5,194 8,352 Preferred Stock Dividend Requirements and Other 843 1,115 -------- -------- Earnings Applicable to Common Stock $4,351 $7,237 ======== ======== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $5,194 $8,352 Noncash items included in net income: Amortization of rate deferrals 34,990 35,711 Other regulatory credits (14,578) (19,514) Depreciation and amortization 11,315 10,699 Deferred income taxes and investment tax credits (6,485) (6,269) Allowance for equity funds used during construction (20) (286) Changes in working capital: Receivables 5,930 23,627 Accounts payable 1,213 (7,461) Taxes accrued (9,085) (7,668) Interest accrued (339) (4,197) Other working capital accounts 64 951 Other (3,668) 1,739 -------- -------- Net cash flow provided by operating activities 24,531 35,684 -------- -------- Investing Activities: Construction expenditures (7,908) (10,468) Allowance for equity funds used during construction 20 286 -------- -------- Net cash flow used in investing activities (7,888) (10,182) -------- -------- Financing Activities: Redemption of preferred stock - (7,000) Changes in short-term borrowings - net (13,202) (11,141) Dividends paid: Common stock (4,300) (9,200) Preferred stock (842) (1,128) -------- -------- Net cash flow used in financing activities (18,344) (28,469) -------- -------- Net decrease in cash and cash equivalents (1,701) (2,967) Cash and cash equivalents at beginning of period 6,816 9,498 -------- -------- Cash and cash equivalents at end of period $5,115 $6,531 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $10,871 $15,620 Income taxes ($1,879) - See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents $5,115 $6,816 Accounts receivable: Customer (less allowance for doubtful accounts of $1 million in 1998 and 1997) 35,544 36,636 Associated companies 10,775 6,842 Other 2,908 4,139 Accrued unbilled revenues 42,453 49,993 Deferred fuel costs 15,203 14,967 Fuel inventory - at average cost 3,357 3,386 Materials and supplies - at average cost 19,093 17,657 Rate deferrals 69,979 104,969 Prepayments and other 16,680 24,896 ---------- ---------- Total 221,107 270,301 ---------- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 5,531 5,531 Other - at cost (less accumulated depreciation) 7,735 7,757 ---------- ---------- Total 13,266 13,288 ---------- ---------- Utility Plant: Electric 1,694,094 1,687,400 Construction work in progress 22,983 22,960 ---------- ---------- Total 1,717,077 1,710,360 Less - accumulated depreciation and amortization 666,474 656,828 ---------- ---------- Utility plant - net 1,050,603 1,053,532 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 24,778 22,993 Unamortized loss on reacquired debt 8,191 8,404 Other regulatory assets 87,084 64,827 Other 6,121 6,216 ---------- ---------- Total 126,174 102,440 ---------- ---------- TOTAL $1,411,150 $1,439,561 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $20 $20 Notes payable - associated companies 33,960 47,162 Accounts payable: Associated companies 43,334 36,057 Other 5,212 11,276 Customer deposits 24,133 24,084 Taxes accrued 23,229 32,314 Accumulated deferred income taxes 30,893 44,277 Interest accrued 13,970 14,309 Other 2,806 2,806 ---------- ---------- Total 177,557 212,305 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 253,561 244,464 Accumulated deferred investment tax credits 23,538 23,915 Other 13,409 15,892 ---------- ---------- Total 290,508 284,271 ---------- ---------- Long-term debt 464,205 464,156 Shareholder's Equity: Preferred stock without sinking fund 50,381 50,381 Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares 199,326 199,326 Capital stock expense and other (59) (59) Retained earnings 229,232 229,181 ---------- ---------- Total 478,880 478,829 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $1,411,150 $1,439,561 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 74.9 $ 75.2 ($ 0.3) - Commercial 62.8 64.5 (1.7) (3) Industrial 41.4 43.0 (1.6) (4) Governmental 6.5 6.7 (0.2) (3) --------------------------- Total retail 185.6 189.4 (3.8) (2) Sales for resale Associated companies 17.2 11.0 6.2 56 Non-associated companies 4.2 5.1 (0.9) (18) Other (2.0) (5.2) 3.2 62 --------------------------- Total $ 205.0 $ 200.3 $ 4.7 2 =========================== Billed Electric Energy Sales (GWH): Residential 1,004 991 13 1 Commercial 836 819 17 2 Industrial 739 723 16 2 Governmental 76 80 (4) (5) --------------------------- Total retail 2,655 2,613 42 2 Sales for resale Associated companies 380 197 183 93 Non-associated companies 65 102 (37) (36) --------------------------- Total 3,100 2,912 188 6 =========================== ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income (loss) decreased for the first quarter of 1998 primarily due to a decrease in electric and gas operating revenues, partially offset by a decrease in operating expenses and lower income taxes. Significant factors affecting the results of operations and causing variances between the first quarter of 1998 and 1997 are discussed under "Revenues and Sales", "Expenses", and "Other" below. Revenues and Sales The changes in electric operating revenues for the first quarter of 1998 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Change in base revenues ($3.5) Fuel cost recovery (5.6) Sales volume/weather (1.7) Other revenue (including unbilled) (0.2) Sales for resale 1.9 ----- Total ($9.1) ===== Electric operating revenues decreased for the first quarter of 1998 primarily due to decreases in base revenues, fuel adjustment revenues, and sales volume partially offset by an increase in sales for resale. Fuel adjustment revenues (which do not affect net income) decreased because of lower fuel prices. The decrease in 1998 base revenues is primarily due to reductions in residential and commercial rates that went into effect in August 1997. Sales volume decreased due to milder weather in the current period. The increase in sales for resale resulted from an increase in electric sales to associated companies primarily due to change in the generation requirements and availability among the domestic utility companies. Additionally, Entergy New Orleans wrote off unrecoverable receivables of $1.6 million during the first quarter of 1998 contributing to the net decrease in other revenue. Gas operating revenues decreased for the first quarter of 1998 primarily due to a lower unit purchase price for gas purchased for resale. Expenses Operating expenses decreased for the first quarter of 1998 primarily due to decreases in fuel and purchased power expenses and an increase in other regulatory credits. These decreases are partially offset by an increase in other operation and maintenance expenses. Gas purchased for resale decreased due to lower gas prices. This decrease is partially offset by an increase in fuel expenses as a result of increased generation requirements and a shift from higher priced purchased power to lower priced fossil fuel. The increase in other regulatory credits is primarily a result of the net under-recovery of Grand Gulf 1 related costs in the first quarter of 1998 compared to the net over-recovery in the first quarter of 1997. Other operation and maintenance expenses increased for the first quarter of 1998 primarily due to an increase in administrative and general salary expense. Other The effective income tax rates for the first quarter of 1998 and 1997 were (7.4%) and 43.8%, respectively. The income tax benefit generated from the net loss in the first quarter of 1998 was offset by the increased reversal of previously recorded AFUDC amounts included in depreciation.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF INCOME (LOSS) For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Revenues: Electric $80,482 $89,561 Natural gas 33,181 35,395 -------- -------- Total 113,663 124,956 -------- -------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 38,891 42,782 Purchased power 34,761 36,582 Other operation and maintenance 17,143 15,255 Depreciation and amortization 5,781 5,193 Taxes other than income taxes 9,488 8,886 Other regulatory charges (credits) (2,393) (345) Amortization of rate deferrals 8,101 7,848 -------- -------- Total 111,772 116,201 -------- -------- Operating Income 1,891 8,755 -------- -------- Other Income: Allowance for equity funds used during construction 99 80 Miscellaneous - net 765 31 -------- -------- Total 864 111 -------- -------- Interest Charges: Interest on long-term debt 3,430 3,623 Other interest - net 241 291 Allowance for borrowed funds used during construction (76) (63) -------- -------- Total 3,595 3,851 -------- -------- Income (Loss) Before Income Taxes (840) 5,015 Income Taxes 62 2,197 -------- -------- Net Income (Loss) (902) 2,818 Preferred Stock Dividend Requirements and Other 241 241 -------- -------- Earnings Applicable to Common Stock ($1,143) $2,577 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income (loss) ($902) $2,818 Noncash items included in net income (loss): Amortization of rate deferrals 8,101 7,848 Other regulatory charges (credits) (2,393) (345) Depreciation and amortization 5,781 5,193 Deferred income taxes and investment tax credits (3,696) (3,654) Allowance for equity funds used during construction (99) (80) Changes in working capital: Receivables 4,216 6,890 Accounts payable (4,327) (2,210) Taxes accrued 1,879 7,052 Interest accrued (2,675) (2,602) Other working capital accounts (3,196) (10,556) Other (1,000) 2,241 ------- ------- Net cash flow provided by operating activities 1,689 12,595 ------- ------- Investing Activities: Construction expenditures (3,426) (684) Allowance for equity funds used during construction 99 80 ------- ------- Net cash flow used in investing activities (3,327) (604) ------- ------- Financing Activities: Dividends paid: Common stock - (2,800) Preferred stock (241) (482) ------- ------- Net cash flow used in financing activities (241) (3,282) ------- ------- Net increase (decrease) in cash and cash equivalents (1,879) 8,709 Cash and cash equivalents at beginning of period 11,376 17,510 ------- ------- Cash and cash equivalents at end of period $9,497 $26,219 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $6,195 $6,360 Income taxes - net $2,323 - See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $1,834 $4,321 Temporary cash investments - at cost, which approximates market: Associated companies 2,282 1,918 Other 5,381 5,137 -------- -------- Total cash and cash equivalents 9,497 11,376 Accounts receivable: Customer (less allowance for doubtful accounts of $0.7 million in 1998 and 1997) 25,006 26,913 Associated companies 2,304 1,081 Other 3,752 4,155 Accrued unbilled revenues 12,954 16,083 Deferred electric fuel and resale gas costs 5,552 9,384 Materials and supplies - at average cost 9,572 9,389 Rate deferrals 33,378 35,336 Prepaid income taxes 8,619 54 Prepayments and other 1,644 6,033 -------- -------- Total 112,278 119,804 -------- -------- Other Property and Investments: Investment in subsidiary companies - at equity 3,259 3,259 -------- -------- Utility Plant: Electric 509,716 508,338 Natural gas 127,712 122,308 Construction work in progress 15,495 19,184 -------- -------- Total 652,923 649,830 Less - accumulated depreciation and amortization 360,774 355,854 -------- -------- Utility plant - net 292,149 293,976 -------- -------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 58,049 64,192 SFAS 109 regulatory asset - net 234 1,202 Unamortized loss on reacquired debt 1,388 1,435 Other regulatory assets 15,503 13,392 Other 870 890 -------- -------- Total 76,044 81,111 -------- -------- TOTAL $483,730 $498,150 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Accounts payable: Associated companies $15,106 $15,922 Other 13,994 17,505 Customer deposits 17,474 16,982 Taxes accrued 7,149 5,270 Accumulated deferred income taxes 9,824 11,544 Interest accrued 2,374 5,049 Provision for rate refund - 3,108 Other 2,232 2,231 -------- -------- Total 68,153 77,611 -------- -------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 58,080 61,000 Accumulated deferred investment tax credits 7,270 7,396 Accumulated provision for property insurance 15,487 15,487 Other 15,538 16,327 -------- -------- Total 96,375 100,210 -------- -------- Long-term debt 168,969 168,953 Shareholder's Equity: Preferred stock without sinking fund 19,780 19,780 Common Shareholder's Equity: Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares 33,744 33,744 Additional paid-in capital 36,294 36,294 Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 60,415 61,558 -------- -------- Total 150,233 151,376 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL $483,730 $498,150 ======== ======== See Notes to Financial Statements. ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) Three Months Ended Increase/ Description 1998 1997 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 24.9 $ 28.7 ($ 3.8) (13) Commercial 31.3 36.3 (5.0) (14) Industrial 5.9 6.2 (0.3) (5) Governmental 12.7 13.6 (0.9) (7) --------------------------- Total retail 74.8 84.8 (10.0) (12) Sales for resale Associated companies 3.4 1.9 1.5 79 Non-associated companies 2.1 1.7 0.4 24 Other (1) 0.2 1.2 (1.0) (83) --------------------------- Total $ 80.5 $ 89.6 ($ 9.1) (10) =========================== Billed Electric Energy Sales (GWH): Residential 355 374 (19) (5) Commercial 459 478 (19) (4) Industrial 118 114 4 4 Governmental 219 221 (2) (1) --------------------------- Total retail 1,151 1,187 (36) (3) Sales for resale Associated companies 123 47 76 162 Non-associated companies 38 23 15 65 --------------------------- Total 1,312 1,257 55 4 =========================== (1) Includes the effect of the provision for rate refunds. SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income for the first quarter of 1998 remained relatively unchanged as compared to the same period in 1997. Significant factors affecting the results of operations and causing variances between the first quarter of 1998 and 1997 are discussed under "Revenues", "Expenses", and "Other" 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. See Note 2 to the Form 10-K for a discussion of System Energy's proposed rate increase, which is subject to refund. Expenses Operating expenses decreased for the first quarter of 1998 primarily due to lower depreciation, amortization, and decommissioning expenses as a result of the recognition of additional depreciation in the first quarter of 1997 associated with the sale and leaseback in 1989 of a portion of Grand Gulf 1. Other Other income increased for the first quarter of 1998 primarily due to increased interest income from short- term investments. The effective income tax rate of 45.2% for the first quarter of 1998 remained relatively unchanged from the rate of 44.2% for the first quarter of 1997.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Revenues $148,606 $155,662 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 10,847 12,017 Nuclear refueling outage expenses 4,599 3,717 Other operation and maintenance 21,281 20,390 Depreciation, amortization, and decommissioning 33,158 38,797 Taxes other than income taxes 6,762 6,425 -------- -------- Total 76,647 81,346 -------- -------- Operating Income 71,959 74,316 -------- -------- Other Income: Allowance for equity funds used during construction 553 280 Miscellaneous - net 3,105 1,323 -------- -------- Total 3,658 1,603 -------- -------- Interest Charges: Interest on long-term debt 29,576 30,758 Other interest - net 1,653 1,782 Allowance for borrowed funds used during construction (476) (279) -------- -------- Total 30,753 32,261 -------- -------- Income Before Income Taxes 44,864 43,658 Income Taxes 20,277 19,313 -------- -------- Net Income $24,587 $24,345 ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net income $24,587 $24,345 Noncash items included in net income: Depreciation, amortization, and decommissioning 33,158 38,797 Deferred income taxes and investment tax credits (11,325) (11,568) Allowance for equity funds used during construction (553) (280) Changes in working capital: Receivables (717) (2,294) Accounts payable (1,137) (2,241) Taxes accrued 13,431 15,587 Interest accrued (11,348) (2,171) Other working capital accounts 1,223 (220) Decommissioning trust contributions and realized change in trust assets (5,748) (1,579) FERC Settlement - refund obligation (1,226) (1,082) Provision for estimated losses and reserves 19,291 12,808 Other 3,130 (263) -------- -------- Net cash flow provided by operating activities 62,766 69,839 -------- -------- Investing Activities: Construction expenditures (10,166) (1,699) Allowance for equity funds used during construction 553 280 Nuclear fuel purchases (608) (39) Proceeds from sale/leaseback of nuclear fuel 608 39 -------- -------- Net cash flow used in investing activities (9,613) (1,419) -------- -------- Financing Activities: Common stock dividends paid (23,100) (37,100) -------- -------- Net cash flow used in financing activities (23,100) (37,100) -------- -------- Net increase in cash and cash equivalents 30,053 31,320 Cash and cash equivalents at beginning of period 206,410 92,315 -------- -------- Cash and cash equivalents at end of period $236,463 $123,635 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $17,982 $32,398 Income taxes $3,600 - Noncash investing and financing activities: Change in unrealized appreciation (depreciation) of decommissioning trust assets $1,274 ($982) See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $823 $792 Temporary cash investments - at cost, which approximates market: Associated companies 70,187 55,891 Other 165,453 149,727 ---------- ---------- Total cash and cash equivalents 236,463 206,410 Accounts receivable: Associated companies 80,092 79,262 Other 4,027 4,140 Materials and supplies - at average cost 63,126 63,782 Deferred nuclear refueling outage costs 4,459 7,777 Prepayments and other 6,392 3,658 ---------- ---------- Total 394,559 365,029 ---------- ---------- Other Property and Investments: Decommissioning trust fund 92,933 85,912 ---------- ---------- Utility Plant: Electric 3,025,236 3,025,389 Electric plant under leases 440,970 440,970 Construction work in progress 46,610 36,445 Nuclear fuel under capital lease 57,093 64,190 ---------- ---------- Total 3,569,909 3,566,994 Less - accumulated depreciation and amortization 1,115,791 1,086,820 ---------- ---------- Utility plant - net 2,454,118 2,480,174 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 238,384 243,027 Unamortized loss on reacquired debt 49,786 51,386 Other regulatory assets 192,702 192,290 Other 13,917 14,213 ---------- ---------- Total 494,789 500,916 ---------- ---------- TOTAL $3,436,399 $3,432,031 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $70,000 $70,000 Accounts payable: Associated companies 30,212 29,131 Other 16,904 19,122 Taxes accrued 89,106 75,675 Interest accrued 30,974 42,322 Obligations under capital leases 39,139 41,977 Other 1,324 1,341 ---------- ---------- Total 277,659 279,568 ---------- ---------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 545,996 562,051 Accumulated deferred investment tax credits 99,302 100,171 Obligations under capital leases 17,954 22,213 FERC Settlement - refund obligation 47,074 48,300 Other 262,808 227,847 ---------- ---------- Total 973,134 960,582 ---------- ---------- Long-term debt 1,334,186 1,341,948 Common Shareholder's Equity: Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares 789,350 789,350 Retained earnings 62,070 60,583 ---------- ---------- Total 851,420 849,933 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $3,436,399 $3,432,031 ========== ========== See Notes to Financial Statements.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Results of Operations The following discussion compares the results of operations for the first quarter of 1998 with the results of operations for the first quarter of 1997. The first quarter of 1997 includes two months of results for London Electricity due to its acquisition effective February 1, 1997. Net Income Net income decreased for the first quarter of 1998 primarily due to an increase in interest charges and operating expenses, partially offset by an increase in operating revenues. Significant factors affecting the results of operations and causing variances between the first quarter of 1998 and 1997 are discussed under "Revenues", "Expenses", and "Other" below. Revenues Operating revenues increased for the first quarter of 1998 due principally to the inclusion of an additional month of operations in 1998 as compared to 1997. The changes in operating revenues for the first quarter of 1998 are as follows: First Quarter Description Increase/(Decrease) (In Millions) Electricity distribution $47 Electricity supply 167 Other 16 Intra-business (55) ---- Total $175 ==== Two principal factors determine the amount of revenues produced by the main electricity distribution and supply businesses: the unit prices of the electricity distributed and supplied (which are controlled by the Distribution Price Control Formula and Supply Price Control Formula, respectively, which determine the maximum average price per unit (kilowatt hour) of electricity that may be charged) and the number of electricity units distributed and supplied which depends on the demand of London Electricity's customers for electricity within its Franchise Area. Demand varies based upon weather conditions and economic activity. London Electricity is expected to have the exclusive right to supply all franchise supply customers in its Franchise Area until late 1998. Revenues from the distribution business increased for the first quarter of 1998, principally due to an increase in units distributed as a result of there being three months of London Electricity operations in the first quarter of 1998 compared to only two months in the first quarter of 1997. Also contributing to the total increase was the increase in the U.S. dollar to BPS average exchange rate from 1.61 to 1.00 in the first quarter of 1997 to 1.65 to 1.00 during the first quarter of 1998. Partially offsetting these factors was a 3% distribution price reduction effective April 1, 1997 and a decline in the overall level of sales volume due to milder than normal weather in the first quarter of 1998 ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Franchise supply customers, who are generally residential and small commercial rather than industrial customers, comprised 61% of total supply sales volume for the first quarter of 1998. The volume of unit sales of electricity for franchise supply customers is influenced largely by the number of customers in London Electricity's Franchise Area, weather conditions and prevailing economic conditions. Unit sales to non-franchise supply customers, who are typically large commercial and industrial businesses, constituted 39% of total sales volume for the first quarter of 1998. Sales to non- franchise supply customers are determined primarily by the success of the supply business in contracting to supply customers with electricity both inside and outside of London Electricity's Franchise Area. Such sales have declined as a percentage of the total supply sales mix from 43% for the first quarter of 1997. During the first quarter of 1998, the number of electricity units supplied increased by 45% from the first quarter of 1997 (which contains only two months of London Electricity operations) while total revenues produced by the supply business increased by 49%, due in part to the higher exchange rate in the first quarter of 1998. Volume increased for both franchise supply customers and non- franchise supply customers as compared with 1997 due to the additional month included in the first quarter of 1998 results. This increase was partially offset by a decline in the overall level of sales volume due to milder than normal weather in the first quarter of 1998 Expenses Operating expenses increased for the first quarter of 1998 primarily due to increases in purchased power expense, depreciation and amortization expense and in other operation and maintenance costs. These increases were due principally to one additional month of operations reported in 1998 as compared to 1997, as well as the write-off of certain investments. Also contributing to the total increase was the increase in the U.S. dollars to BPS exchange rate during the first quarter of 1998. Other Net interest charges increased for the first quarter of 1998 due principally to three months of interest accrual in 1998 as compared to only two months in 1997 as well as to distributions on preferred securities of subsidiaries which were issued in late 1997. Other income (deductions) increased for the first quarter of 1998 due principally to increased profits from Entergy London's equity method investments, and increased gains on the sale of London Electricity fixed assets. The effective income tax rates for the first quarter of 1998 and 1997 were 30.7% and 35.2%, respectively. The decrease in 1998 is principally due to the reduction in the UK corporation tax rate from 33% to 31%, effective as of April 1, 1997.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Revenues $550,790 $375,956 Operating Expenses: Purchased power 366,896 263,298 Depreciation and amortization 33,745 20,761 Other operation and maintenance costs 94,186 52,788 -------- -------- Total 494,827 336,847 -------- -------- Operating Income 55,963 39,109 -------- -------- Other income (deductions): Interest and dividend income 1,423 322 Miscellaneous - net 7,316 1,609 -------- -------- Total 8,739 1,931 -------- -------- Interest Charges: Distributions on preferred securities of subsidiary 6,469 - Other interest - net 41,105 20,439 -------- -------- Total 47,574 20,439 -------- -------- Income Before Income Taxes 17,128 20,601 Income Taxes 5,251 7,242 -------- -------- Net Income 11,877 13,359 Other comprehensive income: Foreign currency translation adjustments 12,255 2,368 -------- -------- Other comprehensive income 12,255 2,368 -------- -------- Comprehensive income $24,132 $15,727 ======== ======== See Notes to Financial Statements.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1998 and 1997 (Unaudited) 1998 1997 (In Thousands) Operating Activities: Net Income $11,877 $13,359 Noncash items included in net income: Depreciation and amortization 33,745 20,761 Deferred income taxes 257 5,633 Imputed interest on parent company debt 27,154 - Changes in assets and liabilities: Inventory 1,569 1,448 Accounts receivable and unbilled revenue 70,358 (8,047) Other receivables 16,278 49,248 Prepayments and other 7,271 (15,128) Long-term receivables and other (6,764) (56,490) Accounts payable (49,208) (29,291) Income taxes accrued 4,483 11,266 Interest accrued (3,421) (3,219) Deferred revenue and other current liabilities (4,768) 322 Other liabilities (45,573) 109,761 Other 825 - -------- -------- Net cash flow provided by operating activities 64,083 99,623 -------- -------- Investing Activities: Construction expenditures (61,145) (57,777) Acquisition of London, net of cash acquired - (1,889,918) Other investments 358 11,105 -------- -------- Net cash flow used in investing activities (60,787) (1,936,590) -------- -------- Financing Activities: Proceeds from the issuance of: Bank notes and other long-term debt - 1,520,883 Common Stock - 391,981 Payment of long-term debt (12,802) - Common stock dividends paid (52,739) - Changes in short-term borrowings - net 86,492 (32,832) -------- -------- Net cash flow provided by financing activities 20,951 1,880,032 -------- -------- Effect of exchange rates on cash and cash equivalents 1,449 (1,851) -------- -------- Net decrease in cash and cash equivalents 25,696 41,214 Cash and cash equivalents at beginning of period 44,388 - -------- -------- Cash and cash equivalents at end of period $70,084 $41,214 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $23,668 $13,197 Cash paid for income taxes - $1,609 See Notes to Financial Statements.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 ASSETS (In Thousands) Current Assets: Cash and cash equivalents: Cash $9,181 $ - Temporary cash investments - at cost, which approximates market 60,903 44,388 ---------- ------------- Total cash and cash equivalents 70,084 44,388 Notes receivable 4,982 7,364 Accounts receivable: Customer (less allowance for doubtful accounts of $ 20.8 million in 1998 and $ 19.3 million in 1997) 143,985 139,265 Other 39,276 52,374 Accrued unbilled revenue 193,744 262,818 Accumulated deferred income taxes 12,621 12,401 Inventory 12,298 13,650 Prepayments and other 6,476 13,623 ---------- ------------- Total 483,466 545,883 ---------- ------------- Property, Plant, and Equipment: Property, plant and equipment 2,454,174 2,353,181 Less - accumulated depreciation 115,250 90,021 ---------- ------------- Property, plant, and equipment - net 2,338,924 2,263,160 ---------- ------------- Other Property, Investments, and Assets: Investments, long-term 11,252 11,413 Distribution license (net of accumulated amortization of $40.3 million in 1998 and $25.6 million in 1997) 1,342,226 1,327,312 Long-term receivables 17,477 17,172 Prepaid pension asset 252,360 241,216 Other 10,268 10,079 ---------- ------------- Total 1,633,583 1,607,192 ---------- ------------- TOTAL $4,455,973 $4,416,235 ========== ============= See Notes to Financial Statements.
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS March 31, 1998 and December 31, 1997 (Unaudited) 1998 1997 LIABILITIES AND SHAREHOLDER'S EQUITY (In Thousands) Current Liabilities: Currently maturing long-term debt $21,961 $33,814 Notes payable 332,950 240,794 Accounts payable 306,030 349,821 Customer deposits 27,643 24,946 Taxes accrued 127,682 120,981 Interest accrued 10,977 14,201 Other 767 805 ---------- ------------- Total 828,010 785,362 ---------- ------------- Other Liabilities: Accumulated deferred income taxes 1,013,812 995,865 Other 251,745 299,775 ---------- ------------- Total 1,265,557 1,295,640 ---------- ------------- Long-term debt 1,698,473 1,669,401 Company-obligated redeemable preferred securities of subsidiary holding solely junior subordinated deferrable debentures 300,000 300,000 Shareholders' Equity: Common stock, BPS1 par value, 901,000,000 shares authorized, 877,359,785 shares issued and outstanding (less Entergy UK Limited debt adjustment of $1,371.8 million) 114,000 114,000 Additional paid-in capital 391,981 391,981 Accumulated deficit (146,544) (132,390) Cumulative foreign currency translation 4,496 (7,759) ---------- ------------- Total 363,933 365,832 ---------- ------------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,455,973 $4,416,235 ========== =============
ENTERGY CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States) See "Cajun - Coal Contracts" in Note 9 of the Form 10-K for information relating to the declaratory judgment action filed by Entergy Gulf States and the counterclaims filed by the defendants. The oral argument on the appeal by the defendants that was set for April 1998 has been continued with no new date set for the argument. Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy London, and System Energy) See Note 9 in the Form 10-K for information on the domestic utility companies', System Energy's, and Entergy London's construction expenditures (excluding nuclear fuel) for the years 1998, 1999, and 2000 and long-term debt and preferred stock maturities and cash sinking fund requirements for the period 1998- 2000. Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 9 in the Form 10-K for information on nuclear liability, property and replacement power insurance, related NRC regulations, the disposal of spent nuclear fuel, other high-level radioactive waste, and decommissioning costs associated with ANO 1, ANO 2, River Bend, Waterford 3, and Grand Gulf 1. The owner/licensees of each of Entergy's five nuclear units no longer participate in the private insurance program that provides coverage for worker tort claims filed for bodily injury caused by radiation exposure. The nuclear incident private insurance program discussed in Note 9 in the Form 10-K now covers this liability. 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 mid-cycle outage in March 1998. Turbine modifications were installed in May 1997 to restore most of the output lost 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 during a future outage, it could become necessary for Entergy Operations to insert sleeves in steam generator tubes that were previously plugged. On October 25, 1996, Entergy Corporation's Board of Directors authorized Entergy Operations to negotiate a contract for the fabrication and replacement of the steam generators at ANO 2. Entergy estimates the cost of fabrication and replacement of the steam generators to be approximately $150 million. Entergy Operations has entered into a contract, subject to certain cancellation provisions, for the design and fabrication of replacement steam generators. A letter of intent has been signed for the installation of the replacement steam generators. It is anticipated that the steam generators will be installed during a planned refueling outage in 2000. Entergy Operations periodically meets with the NRC to discuss the results of inspections of the steam generator tubes, as well as the timing of future inspections. In March 1998, Entergy Arkansas filed a Petition for Declaratory Order and Approval of New Depreciation Rates with the APSC, requesting approval of the steam generator replacement project and appropriate revised depreciation rates. Environmental Issues (Entergy Gulf States) Entergy Gulf States has been designated as a potentially responsible party (PRP) 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. As of March 31, 1998, a remaining recorded liability of $20.1 million existed relating to the clean-up of the sites at which Entergy Gulf States has been designated a PRP. See "Environmental Regulation" in Item 1 of Part I of the Form 10-K for additional discussion of the sites where Entergy Gulf States has been designated as a PRP by the EPA and related litigation. (Entergy Louisiana) During 1993, the Louisiana Department of Environmental Quality (LDEQ) issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana has determined that certain of its power plant wastewater impoundments were affected by these regulations and chose to upgrade or close them. As a result, a remaining recorded liability in the amount of $6.7 million existed at March 31, 1998, for waste water upgrades and closures. Completion of this work is pending LDEQ approval. Cumulative expenditures relating to the upgrades and closures of wastewater impoundments were $7.1 million as of March 31, 1998. 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 10 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 March 31, 1998. See Note 9 to the Form 10-K for further information. Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) See Note 9 in the Form 10-K for information relating to lawsuits filed by former employees asserting they were wrongfully terminated and/or discriminated against on the basis of age, race, and/or sex. (Entergy Corporation, Entergy Louisiana, and Entergy New Orleans) Entergy Corporation, Entergy Louisiana and Entergy New Orleans are defendants in numerous lawsuits filed in Louisiana state court on behalf of approximately 147 plaintiffs who claim that they were illegally terminated from their jobs due to discrimination on the basis of age. The plaintiffs requested that the court certify the matter as a class action. In August 1997, the district court certified the case as a class action. The district court decision to certify the class action was reversed by the Louisiana Fifth Circuit Court of Appeal in April 1998. No assurance can be given as to the timing or outcome of these proceedings. (Entergy Corporation and Entergy Arkansas) Entergy Corporation and Entergy Arkansas are defendants in a number of lawsuits filed in federal court on behalf of a total of approximately 62 plaintiffs who claim they were illegally terminated from their jobs due to discrimination on the basis of age or race. The first of these lawsuits, originally involving 29 plaintiffs, was tried before a jury beginning in April 1997. Settlements were reached with two of the plaintiffs prior to the trial. On May 1, 1997, the jury rendered findings as to 22 of the plaintiffs indicating that Entergy had no liability to them for discrimination. The jury did find that Entergy had intentionally discriminated against the remaining five plaintiffs on the basis of age. Entergy concluded settlements with these five plaintiffs during the first quarter of 1998. A trial date for another suit involving 18 plaintiffs, originally scheduled for May 1997, had been set for April 1998. However, a motion for summary judgment in favor of Entergy has been granted. Another suit, involving a single plaintiff, was set for trial in February 1998 and has been continued with no new trial date set. Another of the suits, involving nine plaintiffs, has been set for trial in June 1998. The last of these suits is in the discovery stage and has been set for trial in July 1998. NOTE 2. RATE AND REGULATORY MATTERS River Bend (Entergy Corporation and Entergy Gulf States) See Note 2 to the Form 10-K for information related to previous developments in the original Entergy Gulf States rate proceeding in 1988 seeking recovery of River Bend plant investment and related deferred costs. On March 13, 1998, the PUCT issued an order disallowing recovery of $1.4 billion of company-wide abeyed plant costs and approximately $157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs (Abeyed Deferrals). The Texas share of the abeyed plant costs, which is not currently in rates, is approximately $624 million, based on 1988 costs and the jurisdictional allocation included in current rates. As of March 31, 1998, the River Bend plant costs originally disallowed for retail ratemaking purposes in Texas and the River Bend plant costs held in abeyance totaled (net of taxes and accumulated depreciation) approximately $11 million and $248 million, respectively. On April 14, 1998, an ALJ issued a proposal for decision (PFD) in the pending judicial remand of the PUCT's 1988 decision to require Entergy Gulf States to use tax benefits generated by disallowed expenses to reduce rates. The PFD calls for recovery of $100.1 million plus carrying costs over a period not to exceed seven years. Entergy Gulf States believes that additional amounts should be allowed to account for tax liability that will result from the recovery and for certain other matters. The PUCT is expected to consider this PFD together with the PFD in the pending rate case discussed below by July 1998. The PUCT can accept, reject, or modify the proposals. Retail Rate Proceedings Filings with the PUCT (Entergy Corporation and Entergy Gulf States) In March 1998, certain parties to the Entergy Gulf States rate proceedings in Texas reached an agreement in principle, subject to approval by the PUCT and the Cities, which would resolve a number of pending Texas regulatory proceedings with the exception of existing service quality issues and certain appeals of other cases by parties who have not joined in the proposed settlement. The proposed agreement in principle would: (i) include a base rate reduction of $40 million on an annual basis, with a refund retroactive to June 1, 1996; (ii) provide for a recovery of $25 million of under-recovered fuel costs; (iii) hold base rates at the same level until January 1, 2002; (iv) provide a total service quality credit of $10.4 million to ratepayers retroactive to June 1996; and (v) allow recovery in rates, beginning at the end of the rate freeze, of $125 million of net plant in service related to the abeyed portion of River Bend. The agreement in principle has been finalized in a formal settlement agreement, which was filed with the PUCT on March 25, 1998. Several parties to the rate case, including the PUCT General Counsel, have signed the settlement agreement contingent upon the approval of certain Cities served by Entergy Gulf States, but the steering committee for those cities has recommended that the Cities not join the Settlement Agreement. Entergy Gulf States cannot predict whether this rate case will be settled and, if so, upon what terms. Entergy Gulf States has established reserves to reflect the agreement in principle based on management's estimates of the effects thereof. These reserves of approximately $381 million (or $227 million net of taxes) were recorded in the fourth quarter of 1997. For the three months ended March 31, 1998, Entergy Gulf States recorded an additional reserve of $9.3 million to account for the impact of the $40 million base rate reduction stipulated in the settlement agreement. Entergy Gulf States expects that a similar reserve will be required for each quarter until a resolution of the Texas case is reached. On March 25, 1998, subsequent to the filing of the Settlement Agreement, an ALJ in the rate proceeding filed a PFD that calls for a $144 million base rate reduction, retroactive to June 1, 1996, which would be partially offset by a $28 million fuel expense surcharge spread over twelve months relating to the past under recovery of fuel and purchased power expenses by Entergy Gulf States. In addition, the PFD recommends that none of the abeyed plant costs and the Abeyed Deferrals be included in the Entergy Gulf States' Texas jurisdictional rates. Entergy Gulf States disagrees with the ALJ recommendations in this PFD, which includes numerous disallowances of the recovery of costs to which Entergy Gulf States believes it is entitled, and will file exceptions to this PFD. Entergy Gulf States is unable to predict at this time whether the PUCT will approve some or all of the terms of either the settlement agreement or this PFD or make other findings in the case. Accordingly, the ultimate outcome of the case, and its effect on Entergy Gulf States' financial condition, which could be material, is uncertain. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) On March 15, 1998, Entergy Mississippi filed its annual earnings review with the MPSC under its formula rate plan for the 1997 test year. In April 1998, the MPSC issued an order approving a prospective rate reduction of $6.6 million. This rate reduction went into effect May 1, 1998. Grand Gulf Accelerated Recovery Tariff On April 15, 1998, FERC approved the Grand Gulf Accelerated Recovery Tariff that Entergy Arkansas filed as part of the settlement agreement, which was approved by the APSC in December 1997. The tariff was designed to allow Entergy Arkansas to pay down a portion of its Grand Gulf obligation in advance of the implementation to retail access in Arkansas. The tariff will go into effect January 1, 1999. See Note 2 to the Form 10-K for a discussion of the settlement agreement with the APSC. NOTE 3. COMMON STOCK (Entergy Corporation) During the first quarter 1998, Entergy Corporation issued 40,767 shares of its previously repurchased common stock to satisfy stock options exercised and stock purchases under its Equity Ownership Plan. In addition, Entergy Corporation received proceeds of $3.3 million from the issuance of 114,585 shares of common stock under its dividend reinvestment and stock purchase plan during the first quarter of 1998. Additionally, during April 1998, Entergy Corporation issued 111,141 shares of its previously repurchased common stock to satisfy stock options exercised and stock purchases under its Equity Ownership Plan. NOTE 4. LONG-TERM DEBT (Entergy Arkansas) On April 27, 1998, Entergy Arkansas redeemed, prior to maturity, $75 million of 9.75% Series First Mortgage Bonds due 2019, $11.7 million of 8.7% Series First Mortgage Bonds due 2022 and $4.1 million of 10% Series First Mortgage Bonds due 2020. These bonds were redeemed with internally generated funds. (Entergy Louisiana) On April 27, 1998, Entergy Louisiana redeemed, prior to maturity, $90 million of 8.5% Series First Mortgage Bonds due 2022 and $25.6 million of 8% Series First Mortgage Bonds due 2003. Proceeds from the issuance on March 19, 1998 of $115 million of 6.5% Series First Mortgage Bonds due 2008 were used for these redemptions. (Entergy Mississippi) On April 8, 1998, Entergy Mississippi issued $80 million of 6.45% Series General and Refunding Mortgage Bonds due 2008. The proceeds will be used to redeem on May 8, 1998, $80 million of 8.80% General and Refunding Mortgage Bonds due 2005. (Entergy Gulf States) On May 1, 1998, Entergy Gulf States remarketed $28.4 million Parish of West Feliciana Series 1985-D variable rate Pollution Control Revenue Bonds due 2015 and $20.0 million Parish of West Feliciana Series 1986 variable rate Pollution Control Revenue Bonds due 2016 at a fixed interest rate of 5.8% until maturity. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On January 23, 1998, Entergy Corporation's Board of Directors declared a common stock dividend of 45 cents per share, payable on March 1, 1998, to holders of record on February 11, 1998. On March 25, 1998, Entergy Corporation's Board of Directors declared a common stock dividend of 45 cents per share, payable on June 1, 1998, to holders of record on May 13, 1998. __________________________________ In the opinion of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London, 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 the domestic utility companies, System Energy, and Entergy London is subject to seasonal fluctuations with the peak periods occurring during the third quarter for the domestic utilities companies and System Energy and occurring during the first quarter for Entergy London. 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 Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) See "Employment Litigation" in Item 1 of Part I of the Form 10-K for information relating to lawsuits filed by former employees asserting they were wrongfully terminated and/or discriminated against due to age, race, and/or sex. See "Employment Litigation" in Note 1 herein for developments that have occurred since the filing of the Form 10-K. Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States) See "Cajun - Coal Contracts" in Note 9 of the Form 10-K for information relating to the declaratory judgment action filed by Entergy Gulf States and the counterclaims filed by the defendants. See "Cajun - Coal Contracts" in Note 1 herein for developments that have occurred since the filing of the Form 10-K. Catalyst Technologies, Inc. (Entergy Corporation) See "Catalyst Technologies, Inc." in Item 1 of Part I of the Form 10-K for information relating to the lawsuit filed by Catalyst Technologies, Inc. In March 1998, the plaintiff filed its appeal brief, and Entergy Corporation's response brief is due in May 1998. The date of oral argument on the appeal has not been set. Union Pacific Railroad Company (Entergy Corporation and Entergy Arkansas) In October 1997, Entergy Arkansas and Entergy Services filed a civil suit against Union Pacific Railroad Company (Union Pacific) in the United States District Court for the Middle District of Louisiana. This lawsuit, which seeks damages and the termination of coal shipping contracts with Union Pacific, maintains that Union Pacific has failed to meet its contractual obligations to ship coal to Entergy Arkansas' two large coal-fired plants and that such failure has impaired Entergy Arkansas' ability to generate and sell electricity from these plants. This lawsuit is entering the discovery phase. Meanwhile, there has been little or no improvement in the coal deliveries by the Union Pacific Railroad Company ("Union Pacific") to Entergy Arkansas' coal fired generating stations, and coal inventories at these stations are very low. Entergy Arkansas has requested that Union Pacific allow another railroad to deliver coal to the White Bluff generating station. It is not certain whether Union Pacific will honor this request. If it does not, Entergy will seek an order from the Federal Surface Transportation Board requiring Union Pacific to allow the other railroad to bring coal to the White Bluff site. If coal inventories cannot be rebuilt for the summer season, one or more of Entergy Arkansas' coal-fired generating stations may not be able to operate at full capacity, which could result in increased wholesale replacement power purchases. The operational and financial effect of Union Pacific's failure to deliver coal to Entergy Arkansas during the second and third quarters of 1998 will depend upon a number of factors, such as weather, that Entergy Arkansas cannot control. However, Entergy Arkansas will seek to mitigate the effects of inadequate coal inventories. The ultimate outcome of the Union Pacific litigation cannot be determined at this time. Aquila Power Corporation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) In March 1998, Aquila Power Corporation ("Aquila") filed a complaint with the FERC against Entergy Services, as agent for the domestic utility companies, alleging that Entergy's domestic utility companies improperly reserved transmission capacity on Entergy's transmission system, resulting in the denial of Aquila's request for transmission service. Aquila's complaint seeks compensation for lost profits, an order prohibiting Entergy and/or its affiliates from engaging in similar conduct, and suspension of the domestic utility companies' and Entergy Power Marketing Corporation's market-rate authority. Entergy is preparing its response to the Aquila allegations, which response will be filed by May 11, 1998. New Orleans Ratepayers (Entergy New Orleans) In April 1998, a group of residential and business ratepayers filed a complaint against Entergy New Orleans in state court in Orleans Parish on behalf of all ratepayers in New Orleans. The plaintiffs allege that Entergy New Orleans overcharged ratepayers by at least $300 million since 1975 in violation of limits set by the 1922 franchise ordinances passed by the City of New Orleans City Council. The plaintiffs seek, among other things, (1) a declaratory judgment that such franchise ordinances have been violated, and (2) a remand to the City Council for the establishment of the amount of overcharges plus interest. Management believes the lawsuit is completely without merit. Entergy New Orleans has charged only those rates authorized by the City Council, which the City Council has set in accordance with applicable law. Entergy New Orleans will vigorously defend itself in the lawsuit. Item 5. Other Information Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy London) The domestic utility companies, System Energy, and Entergy London 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, March 31, 1993 1994 1995 1996 1997 1998 Entergy Arkansas 3.11(b) 2.32 2.56 2.93 2.54 2.54 Entergy Gulf States 1.54 (c)- 1.86 1.47 1.42 1.30 Entergy Louisiana 3.06 2.91 3.18 3.16 2.74 2.63 Entergy Mississippi 3.79(b) 2.12 2.92 3.40 2.98 2.94 Entergy New Orleans 4.68(b) 1.91 3.93 3.51 2.70 2.36 System Energy 1.87 1.23 2.07 2.21 2.31 2.34 Entergy London N/A N/A N/A N/A (d)- (d)- Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, 1993 1994 1995 1996 1997 1998 Entergy Arkansas 2.54(b) 1.97 2.12 2.44 2.24 2.22 Entergy Gulf States(a) 1.21 (c)- 1.54 1.19 1.23 1.14 Entergy Louisiana 2.39 2.43 2.60 2.64 2.36 2.25 Entergy Mississippi 3.08(b) 1.81 2.51 2.94 2.69 2.65 Entergy New Orleans 4.12(b) 1.73 3.56 3.22 2.44 2.16 (a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock. (b) 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 a change in accounting principle to provide for the accrual of estimated unbilled revenues. (c) Earnings for the year ended December 31, 1994, for Entergy Gulf States were not adequate to cover fixed charges and combined fixed charges and preferred dividends by $144.8 million and $197.1 million, respectively. (d) As a result of the windfall profits tax of $234 million, earnings for the twelve months ended December 31, 1997 and March 31, 1998 for Entergy London were insufficient to cover fixed charges by $204 million and $196 million, respectively. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* ** 4(a) - Fifty-second Supplemental Indenture, dated as of March 1, 1998, to Entergy Louisiana's Mortgage and Deed of Trust, dated as of April 1, 1944 (filed as Exhibit A- 2(a) to Rule 24 Certificate dated April 3, 1998 in File No. 70-9141). ** 4(b) - Twelfth Supplemental Indenture, dated as of April 1, 1998, to Entergy Mississippi's Mortgage and Deed of Trust, dated as of February 1, 1988 (filed as Exhibit A-2(b) to Rule 24 Certificate dated April 16, 1998 in File No. 70-8719). 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of March 31, 1998. 27(b) - Financial Data Schedule for Entergy Arkansas as of March 31, 1998. 27(c) - Financial Data Schedule for Entergy Gulf States as of March 31, 1998. 27(d) - Financial Data Schedule for Entergy Louisiana as of March 31, 1998. 27(e) - Financial Data Schedule for Entergy Mississippi as of March 31, 1998. 27(f) - Financial Data Schedule for Entergy New Orleans as of March 31, 1998. 27(g) - Financial Data Schedule for System Energy as of March 31, 1998. 27(h) - Financial Data Schedule for Entergy London as of March 31, 1998. 99(a) - Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. 99(g) - Entergy London'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, System Energy, and Entergy London for the fiscal year ended December 31, 1997, 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, 1-9067, and 333-33331, respectively). ___________________________ Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of Entergy Corporation and its subsidiaries on a consolidated basis. * Reference is made to a duplicate list of exhibits being filed as a part of this report on Form 10-Q for the quarter ended March 31, 1998, 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 March 31, 1998. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K Entergy Corporation and Entergy Gulf States A Current Report on Form 8-K, dated January 14, 1998, was filed with the SEC on January 15, 1998, reporting information under Item 5. "Other Events". SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries. ENTERGY CORPORATION ENTERGY ARKANSAS, INC. ENTERGY GULF STATES, INC. ENTERGY LOUISIANA, INC. ENTERGY MISSISSIPPI, INC. ENTERGY NEW ORLEANS, INC. SYSTEM ENERGY RESOURCES, INC. ENTERGY LONDON INVESTMENTS PLC /s/ Louis E. Buck Louis E. Buck Vice President, Chief Accounting Officer and Assistant Secretary (For each Registrant and for each as Principal Accounting Officer) Date: May 4, 1998 EX-27 2
UT This schedule contains summary financial information extracted from Entergy Corporation and Subsidiaries financial statements for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000065984 ENTERGY CORPORATION AND SUBSIDIARIES 023 ENTERGY CORPORATION AND SUBSIDIARIES 1,000 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 18,149,405 1,438,240 3,063,450 4,390,731 0 27,041,826 2,466 4,625,592 1,984,903 6,551,958 397,755 788,455 9,025,711 602,118 0 0 504,687 0 200,784 175,979 8,794,389 27,041,826 2,313,092 48,399 2,027,585 2,027,585 285,507 33,922 319,429 210,976 60,054 11,776 64,971 110,939 207,888 274,499 .20 .20
EX-27 3
UT This schedule contains summary financial information extracted from Entergy Arkansas, Inc. financial statements for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000007323 ENTERGY ARKANSAS, INC. 001 ENTERGY ARKANSAS, INC. 1,000 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 2,788,254 285,551 595,056 403,466 0 4,072,327 470 590,134 482,701 1,073,305 91,027 116,350 1,156,250 667 0 0 105,924 0 82,700 60,810 1,385,294 4,072,327 329,869 4,197 302,615 302,615 27,254 7,574 34,828 25,008 5,623 2,626 2,997 0 26,891 102,644 0 0
EX-27 4
UT This schedule contains summary financial information extracted from Entergy Gulf States, Inc. financial statements for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000044570 ENTERGY GULF STATES, INC. 006 ENTERGY GULF STATES, INC. 1,000 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 4,499,784 370,593 675,916 853,284 0 6,399,577 114,055 1,152,575 222,865 1,489,495 151,728 201,444 1,677,775 0 0 0 190,890 0 84,971 30,307 2,572,967 6,399,577 457,509 12,969 393,848 393,848 63,661 4,572 68,233 40,508 14,756 4,814 9,942 71,358 29,047 114,742 0 0
EX-27 5
UT This schedule contains summary financial information extracted from Entergy Louisiana, Inc. financial statements for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000060527 ENTERGY LOUISIANA, INC. 012 ENTERGY LOUISIANA, INC. 1,000 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 3,351,337 107,077 438,114 351,573 0 4,248,101 1,088,900 0 52,230 1,138,809 155,000 100,500 1,337,677 0 0 0 115,892 0 6,816 42,064 1,351,343 4,248,101 356,038 12,296 300,816 300,816 55,222 2,501 57,723 31,510 13,917 3,253 10,664 5,200 36,780 64,664 0 0
EX-27 6
UT This schedule contains summary financial information extracted from Entergy Mississippi, Inc. financial statements for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000066901 ENTERGY MISSISSIPP, INC. 016 ENTERGY MISSISSIPPI, INC. 1,000 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 1,050,603 13,266 221,107 126,174 0 1,411,150 199,326 0 229,232 428,499 0 50,381 464,205 33,960 0 0 20 0 0 0 434,085 1,411,150 205,017 1,428 188,611 188,611 16,406 1,047 17,453 10,831 5,194 843 4,351 4,300 10,871 24,531 0 0
EX-27 7
UT This schedule contains summary financial information extracted from Entergy New Orleans, Inc. financial statements for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000071508 ENTERGY NEW ORLEANS, INC. 017 ENTERGY NEW ORLEANS, INC. 1,000 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 292,149 3,259 112,278 76,044 0 483,730 33,744 36,294 60,415 130,453 0 19,780 168,969 0 0 0 0 0 0 0 164,528 483,730 113,663 62 111,772 111,772 1,891 864 2,755 3,595 (902) 241 (1,143) 0 6,195 1,689 0 0
EX-27 8
UT This schedule contains summary financial information extracted from System Energy Resources, Inc. financial statements for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000202584 SYSTEM ENERGY RESOURCES, INC. 018 SYSTEM ENERGY RESOURCES, INC. 1,000 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 2,454,118 92,933 394,559 494,789 0 3,436,399 789,350 0 62,070 851,420 0 0 1,334,186 0 0 0 70,000 0 17,954 39,139 1,123,700 3,436,399 148,606 20,277 76,647 76,647 71,959 3,658 75,617 30,753 24,587 0 24,587 23,100 17,982 62,766 0 0
EX-27 9
UT This schedule contains summary financial information extracted from Entergy London Investments, Inc. financial statements for the quarter ended March 31, 1998 and is qualified in its entirety by reference to such financial statements. 0001042730 ENTERGY LONDON INVESTMENTS, INC. 036 ENTERGY LONDON INVESTMENTS, INC. 1,000 3-MOS DEC-31-1998 MAR-31-1998 PER-BOOK 2,338,924 1,633,583 483,466 0 0 4,455,973 114,000 391,981 (146,544) 363,933 0 300,000 1,689,473 332,950 0 0 21,961 0 0 0 1,743,152 4,455,973 550,790 5,251 494,827 494,827 55,963 8,739 64,702 47,574 11,877 12,255 24,132 52,739 23,668 64,083 0 0
EX-99 10
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 March 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest Charges 119,591 110,814 115,337 106,716 104,165 103,006 Interest applicable to rentals 16,860 19,140 18,158 19,121 17,529 17,582 ---------------------------------------------------------- Total fixed charges, as defined 136,451 129,954 133,495 125,837 121,694 120,588 Preferred dividends, as defined (a) 30,334 23,234 27,636 24,731 16,073 15,641 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $166,785 $153,188 $161,131 $150,568 $137,767 $136,229 ========================================================== Earnings as defined: Net Income $205,297 $142,263 $136,666 $157,798 $127,977 126,778 Add: Provision for income taxes: Total 82,337 29,220 72,081 84,445 59,220 58,368 Fixed charges as above 136,451 129,954 133,495 125,837 121,694 120,588 ---------------------------------------------------------- Total earnings, as defined $424,085 $301,437 $342,242 $368,080 $308,891 $305,734 ========================================================== Ratio of earnings to fixed charges, as defined 3.11 2.32 2.56 2.93 2.54 2.54 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.54 1.97 2.12 2.44 2.24 2.24 ========================================================== - ------------------------ (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 11
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 March 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest charges 210,599 204,134 200,224 193,890 180,073 175,002 Interest applicable to rentals 23,455 21,539 16,648 14,887 15,747 16,587 ---------------------------------------------------------- Total fixed charges, as defined 234,054 225,673 216,872 208,777 195,820 191,589 Preferred dividends, as defined (a) 65,299 52,210 44,651 48,690 30,028 27,893 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $299,353 $277,883 $261,523 $257,467 $225,848 $219,482 ========================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes $69,462 ($82,755) $122,919 ($3,887) 59,976 42,197 Add: Income Taxes 58,016 (62,086) 63,244 102,091 22,402 15,493 Fixed charges as above 234,054 225,673 216,872 208,777 195,820 191,589 ---------------------------------------------------------- Total earnings, as defined (b) $361,532 $80,832 $403,035 $306,981 $278,198 $249,279 ========================================================== Ratio of earnings to fixed charges, as defined 1.54 0.36 1.86 1.47 1.42 1.30 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.21 0.29 1.54 1.19 1.23 1.14 ========================================================== (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. (b) Earnings for the year ended December 31, 1994, for GSU were not adequate to cover fixed charges combined fixed charges and preferred dividends by $144.8 million and $197.1 million, respectively.
EX-99 12
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 March 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest 136,957 136,444 136,901 132,412 128,900 127,150 Interest applicable to rentals 8,519 8,332 9,332 10,601 9,203 9,587 ------------------------------------------------------------ Total fixed charges, as defined 145,476 144,776 146,233 143,013 138,103 136,737 Preferred dividends, as defined (a) 40,779 29,171 32,847 28,234 22,103 22,731 ------------------------------------------------------------ Combined fixed charges and preferred dividends, as defined $186,255 $173,947 $179,080 $171,247 $160,206 $159,468 ============================================================ Earnings as defined: Net Income $188,808 $213,839 $201,537 $190,762 $141,757 129,502 Add: Provision for income taxes: Total Taxes 110,813 63,288 117,114 118,559 98,965 93,191 Fixed charges as above 145,476 144,776 146,233 143,013 138,103 136,737 ------------------------------------------------------------ Total earnings, as defined $445,097 $421,903 $464,884 $452,334 $378,825 $359,430 ============================================================ Ratio of earnings to fixed charges, as defined 3.06 2.91 3.18 3.16 2.74 2.63 ============================================================ Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.39 2.43 2.60 2.64 2.36 2.25 ============================================================ - ------------------------ (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(d) Entergy Mississippi, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends March 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest 55,359 52,764 51,635 48,007 45,274 44,186 Interest applicable to rentals 1,264 1,716 2,173 2,165 1,947 1,853 ----------------------------------------------------------- Total fixed charges, as defined 56,623 54,480 53,808 50,172 47,221 46,039 Preferred dividends, as defined (a) 12,990 9,447 9,004 7,610 5,123 4,870 ----------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $69,613 $63,927 $62,812 $57,782 $52,344 $50,909 ========================================================== Earnings as defined: Net Income $101,743 $48,779 $68,667 $79,210 66,661 63,503 Add: Provision for income taxes: Total income taxes 55,993 12,476 34,877 41,107 26,744 25,584 Fixed charges as above 56,623 54,480 53,808 50,172 47,221 46,039 ----------------------------------------------------------- Total earnings, as defined $214,359 $115,735 $157,352 $170,489 $140,626 $135,126 =========================================================== Ratio of earnings to fixed charges, as defined 3.79 2.12 2.92 3.40 2.98 2.94 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 3.08 1.81 2.51 2.95 2.69 2.65 =========================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 14
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 March 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest 21,092 18,272 17,802 16,304 15,287 15,044 Interest applicable to rentals 544 1,245 916 831 911 905 ---------------------------------------------------------- Total fixed charges, as defined 21,636 19,517 18,718 17,135 16,198 15,949 Preferred dividends, as defined (a) 2,952 2,071 1,964 1,549 1,723 1,518 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $24,588 $21,588 $20,682 $18,684 $17,921 $17,467 =========================================================== Earnings as defined: Net Income $47,709 $13,211 $34,386 $26,776 $15,451 $11,731 Add: Provision for income taxes: Total 31,938 4,600 20,467 16,216 12,142 10,007 Fixed charges as above 21,636 19,517 18,718 17,135 16,198 15,949 ----------------------------------------------------------- Total earnings, as defined $101,283 $37,328 $73,571 $60,127 $43,791 $37,687 =========================================================== Ratio of earnings to fixed charges, as defined 4.68 1.91 3.93 3.51 2.70 2.36 =========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 4.12 1.73 3.56 3.22 2.44 2.16 =========================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate. (b) Earnings for the twelve months ended December 31, 1991 include the $90 million effect of the 1991 NOPSI Settlement.
EX-99 15
Exhibit 99(f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges March 1993 1994 1995 1996 1997 1998 Fixed charges, as defined: Total Interest 190,938 176,504 151,512 143,720 128,653 127,342 Interest applicable to rentals 6,790 7,546 6,475 6,223 6,065 5,662 --------------------------------------------------------------- Total fixed charges, as defined $197,728 $184,050 $157,987 $149,943 $134,718 $133,004 =============================================================== Earnings as defined: Net Income $93,927 $5,407 $93,039 $98,668 $102,295 $102,537 Add: Provision for income taxes: Total 78,552 36,838 75,493 82,121 74,654 75,618 Fixed charges as above 197,728 184,050 157,987 149,943 134,718 133,004 --------------------------------------------------------------- Total earnings, as defined $370,207 $226,295 $326,519 $330,732 $311,667 $311,159 =============================================================== Ratio of earnings to fixed charges, as defined 1.87 1.23 2.07 2.21 2.31 2.34 ===============================================================
EX-99 16 Exhibit 99(g) Entergy London Investments Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges December 31, March 31, 1997 1998 Fixed charges, as defined: Total Interest 178,647 205,782 Interest applicable to rentals 3,766 4,108 -------- -------- Total fixed charges, as defined $182,413 $209,890 ======== ======== Earnings as defined: Net Income ($148,856) ($138,082) Add: Provision for income taxes: Total (55,536) (57,527) Fixed charges as above 182,413 209,890 -------- ------- Total earnings, as defined ($21,979) $14,281 ======== ======= Ratio of earnings to fixed charges, as defined -0.12 0.07 ======== ======= -----END PRIVACY-ENHANCED MESSAGE-----