-----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, JTUT2yKVTc6XWbAABqvMLjCglKN23GT+91w6UyDcwQXYrejmgZLoJ9NGcl9pB+kL /EL3n7lroHI7PHqGNvcSRA== 0000065984-99-000092.txt : 19990816 0000065984-99-000092.hdr.sgml : 19990816 ACCESSION NUMBER: 0000065984-99-000092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 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: 99687626 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 MAIL ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GSU HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY CORP /FL/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH UTILITIES INC DATE OF NAME CHANGE: 19890521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY ARKANSAS INC CENTRAL INDEX KEY: 0000007323 STANDARD INDUSTRIAL CLASSIFICATION: 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: 99687627 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: 99687628 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: 99687629 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045953100 MAIL ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORLEANS STATE: LA ZIP: 70161 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY MISSISSIPPI INC CENTRAL INDEX KEY: 0000066901 STANDARD INDUSTRIAL CLASSIFICATION: 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: 99687630 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: 99687631 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 MAIL ADDRESS: STREET 1: PO BOX 61000 CITY: NEW ORL STATE: LA ZIP: 70161 FORMER COMPANY: FORMER CONFORMED NAME: NEW ORLEANS PUBLIC SERVICE INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEM ENERGY RESOURCES INC CENTRAL INDEX KEY: 0000202584 STANDARD INDUSTRIAL CLASSIFICATION: 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: 99687632 BUSINESS ADDRESS: STREET 1: ECHELON ONE STREET 2: 1340 ECHELON PKWY CITY: JACKSON STATE: MS ZIP: 39213 BUSINESS PHONE: 6013685000 MAIL ADDRESS: STREET 1: PO BOX 31995 CITY: JACKSON STATE: MS ZIP: 39286-1995 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH ENERGY INC DATE OF NAME CHANGE: 19860803 10-Q 1 _____________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1999 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address of Principal Executive Identification No. Offices and Telephone Number 1-11299 ENTERGY CORPORATION 72-1229752 (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 1-10764 ENTERGY ARKANSAS, INC. 71-0005900 (an Arkansas corporation) 425 West Capitol Avenue, 40th Floor Little Rock, Arkansas 72201 Telephone (501) 377-4000 1-2703 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) 576-4000 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) 576-4000 1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777 (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 _________________________________________________________________________ Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Common Stock Outstanding Outstanding at July 31, 1999 Entergy Corporation ($0.01 par value) 246,833,959 This combined Quarterly Report on Form 10-Q is separately filed by Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company reports herein only as to itself and makes no other representations whatsoever as to any other company. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 1998, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, filed by the individual registrants with the SEC, and should be read in conjunction therewith. 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., and System Energy Resources, Inc. 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 and changes in financial markets generally, changes in foreign currency exchange rates, the ability to locate and correct computer codes relevant to Year 2000 issues and related matters, and other factors. ENTERGY CORPORATION AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q June 30, 1999 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 7 Results of Operations and Financial Statements: Entergy Corporation and Subsidiaries: Results of Operations 11 Consolidated Statements of Income and Comprehensive Income 17 Consolidated Statements of Cash Flows 18 Consolidated Balance Sheets 20 Selected Operating Results 22 Entergy Arkansas, Inc.: Results of Operations 23 Income Statements 26 Statements of Cash Flows 27 Balance Sheets 28 Selected Operating Results 30 Entergy Gulf States, Inc.: Results of Operations 31 Income Statements 35 Statements of Cash Flows 37 Balance Sheets 38 Selected Operating Results 40 Entergy Louisiana, Inc.: Results of Operations 41 Income Statements 43 Statements of Cash Flows 45 Balance Sheets 46 Selected Operating Results 48 Entergy Mississippi, Inc.: Results of Operations 49 Income Statements 51 Statements of Cash Flows 53 Balance Sheets 54 Selected Operating Results 56 Entergy New Orleans, Inc.: Results of Operations 57 Income Statements 59 Statements of Cash Flows 61 Balance Sheets 62 Selected Operating Results 64 System Energy Resources, Inc.: Results of Operations 65 Income Statements 67 Statements of Cash Flows 69 Balance Sheets 70 Notes to Financial Statements for Entergy Corporation and Subsidiaries 72 Part II: Item 1. Legal Proceedings 81 Item 4. Submission of Matters to a Vote of Security Holders 83 Item 5. Other Information 85 Item 6. Exhibits and Reports on Form 8-K 86 Signature 88 DEFINITIONS Certain abbreviations or acronyms used in the text are defined below: Abbreviation or Acronym Term AFUDC Allowance for Funds Used During Construction ALJ Administrative Law Judge ANO Arkansas Nuclear One Plant ANO 1 Unit No. 1 of ANO ANO 2 Unit No. 2 of ANO APSC Arkansas Public Service Commission Board Board of Directors of Entergy Corporation Cajun Cajun Electric Power Cooperative, Inc. Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended, between System Energy and Entergy Corporation, and the assignments thereof CitiPower CitiPower Pty., an electric distribution company serving Melbourne, Australia and surrounding suburbs, which was acquired by Entergy effective January 5, 1996 and was sold effective December 31, 1998. Council Council of the City of New Orleans, Louisiana domestic utility companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, collectively EPA U.S. Environmental Protection Agency ETHC Entergy Technology Holding Company EWG Exempt wholesale generator under PUHCA Entergy Entergy Corporation and its various direct and indirect subsidiaries Entergy Arkansas Entergy Arkansas, Inc., an Arkansas corporation Entergy Corporation Entergy Corporation, a Delaware corporation Entergy Gulf States Entergy Gulf States, Inc., a Texas corporation (including wholly owned subsidiaries - Varibus Corporation, GSG&T, Inc., Prudential Oil & Gas, Inc., and Southern Gulf Railway Company) Entergy London Entergy London Investments plc, formerly Entergy Power UK plc (including its wholly owned subsidiary, London Electricity) Entergy Louisiana Entergy Louisiana, Inc., a Louisiana corporation Entergy Mississippi Entergy Mississippi, Inc., a Mississippi corporation Entergy New Orleans Entergy New Orleans, Inc., a Louisiana corporation FERC Federal Energy Regulatory Commission FUCO an exempt foreign utility company under PUHCA Form 10-K The combined Annual Report on Form 10-K for the year ended December 31, 1998 of Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant Independence Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 11% by Entergy Power, Inc. LPSC Louisiana Public Service Commission London Electricity London Electricity plc, a regional electric company serving London, England, which was acquired by Entergy effective February 1, 1997 and was sold effective December 4, 1998. MPSC Mississippi Public Service Commission MW Megawatt(s) NRC Nuclear Regulatory Commission Owner Participant A corporation that, in connection with the Waterford 3 sale and leaseback transactions, has acquired a beneficial interest in a trust, the Owner Trustee of which is the owner and lessor of undivided interests in Waterford 3 Owner Trustee Each institution and/or individual acting as Owner Trustee under a trust agreement with an Owner Participant in connection with the Waterford 3 sale and leaseback transactions PUCT Public Utility Commission of Texas PUHCA Public Utility Holding Company Act of 1935, as amended 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 Energy System Energy Resources, Inc., an Arkansas corporation 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 Operations Net cash flow from operations for Entergy Corporation, the domestic utility companies, and System Energy for the six months ended June 30, 1999 and 1998 was as follows: Six Months Ended Six Months Ended Company June 30, 1999 June 30, 1998 (In Millions) Entergy Corporation $ 555.6 $653.3 Entergy Arkansas $ 102.6 $ 95.3 Entergy Gulf States $ 81.8 $161.7 Entergy Louisiana $ 139.0 $128.7 Entergy Mississippi $ 34.9 $ 73.3 Entergy New Orleans $ 19.8 $ 6.3 System Energy $ 201.8 $ 93.2 Entergy's consolidated cash flow from operations decreased compared to 1998 principally due to the completion of rate phase-in plans and adverse rate activity at certain of the domestic utility companies, and an increase in cash used by competitive businesses. Rate phase-in plans contributed to cash flow from operations in 1998. Under these plans, revenues collected exceed the cash cost of expenses. These plans positively impacted cash flow from operations, but had no net income effect because the higher revenues were offset by the amortization of previously deferred costs. During 1998 the following phase-in plans were completed: o Entergy Gulf States' Louisiana retail phase-in plan for River Bend in February; o Entergy Mississippi's phase-in plan for Grand Gulf 1 in September; and o Entergy Arkansas' phase-in plan for Grand Gulf 1 in November. The operating cash flow used by competitive businesses was $60.6 million for the six months ended June 30, 1999. For the six months ended June 30, 1998, the competitive businesses provided $155.9 million to operating cash flow. This change was principally due to: o the sales of London Electricity and CitiPower in December 1998, which had provided positive operating cash flow in 1998 but contributed no operating cash flow in 1999; and o a net loss for the power marketing and trading business in 1999 compared to net income in 1998, which caused this business to use operating cash flow in 1999 whereas it provided operating cash flow in 1998. The increase in operating cash flow used by the competitive businesses was partially offset by: o the sales of Efficient Solutions, Inc. in September 1998 and Entergy Security, Inc. in January 1999, which had used operating cash flow in 1998 and used none in 1999; and o positive operating cash flow contributed by the global power development business, which had used operating cash flow in 1998. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Investing Activities Net cash used in investing activities decreased compared to the six months ended June 30, 1998 principally due to the sales of Entergy Security, Inc. in January 1999 and Entergy Power Edesur Holding, LTD, TeleCorp Holding Corporation, Inc., Entergy Hyperion Telecommunications of Mississippi, LLC, Entergy Hyperion Telecommunications of Louisiana, LLC, and Entergy Hyperion Telecommunications of Arkansas, LLC in June 1999. Financing Activities Net cash used in financing activities increased compared to 1998 principally due to: o the redemption of preferred stock in 1999 at Entergy Gulf States and Entergy Louisiana; and o the repayment of a line of credit by Entergy Corporation and ETHC with a portion of the proceeds from the sale of Entergy Security, Inc. These uses were partially offset by borrowings under the credit facilities associated with the construction of the Saltend and Damhead Creek power plants by Entergy's global power development business and a reduction in the amount of debt retirements at Entergy Arkansas. Capital Resources Entergy requires capital resources for: o construction and other capital expenditures; o debt and preferred stock maturities; o capital investments; o funding of subsidiaries; and o dividend and interest payments. Management provides more information on construction expenditures and long-term debt and preferred stock maturities in Note 9 to the financial statements in the Form 10-K. Entergy's sources to meet its capital requirements include: o internally generated funds; o cash on hand; o debt or preferred stock issuances; o bank financing under new or existing facilities; o short-term borrowings; and o sales of businesses. During the six months ended June 30, 1999, cash from operations and cash on hand met substantially all investing and financing requirements of the domestic utility companies and System Energy. During this period Entergy Corporation received dividend payments totaling $81.7 million from the domestic utility companies and System Energy. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1999, Entergy had committed short-term credit facilities in the amount of $550 million, of which $440 million was unused. The status of Entergy's short-term credit facilities is as follows: o At June 30, 1999, Entergy Corporation had $60 million of borrowings outstanding under a $250 million bank credit facility that expires in September 1999. o Entergy Corporation had no borrowings outstanding and ETHC had $50 million of borrowings outstanding under a joint $50 million bank line of credit at June 30, 1999. This line had been reduced from $100 million in June 1999 and was terminated on July 6, 1999. Proceeds from the June 1999 sales of TeleCorp Holding Corporation, Inc., Entergy Hyperion Telecommunications of Mississippi, LLC, Entergy Hyperion Telecommunications of Louisiana, LLC, and Entergy Hyperion Telecommunications of Arkansas, LLC were used to repay the borrowings outstanding under this line. o The external credit lines of the domestic utility companies expired on May 31, 1999 and were not renewed. o Entergy's global power development business entered into a $250 million bank credit facility in March 1999 that will expire on August 25, 1999, but had no borrowings outstanding under this facility as of June 30, 1999. The commitment fee for this facility is currently .15% of the undrawn amount. In November 1996, SEC authorization was received by the domestic utility companies to increase their short-term borrowing limits to amounts totaling $1.3 billion. This included a total short-term borrowing limit for the domestic utility companies of $1.078 billion. This authorization is effective through November 30, 2001. As of June 30, 1999, only Entergy Mississippi had borrowings outstanding from the money pool, in the amount of $21 million. The money pool is an inter-company borrowing arrangement designed to reduce the domestic utility companies' dependence on external short-term borrowings. All securities issuances by Entergy, the domestic utility companies, and System Energy are subject to regulatory approval. Preferred stock and debt issuances are subject to issuance tests set forth in corporate charters, bond indentures, and other agreements. The domestic utility companies may also establish special purpose trusts or limited partnerships as financing subsidiaries for the purpose of issuing quarterly income preferred securities. Management expects that the domestic utility companies and System Energy will continue to refinance or redeem higher cost debt and preferred stock prior to maturity to the extent market conditions and interest and dividend rates are favorable. Entergy's global power development business is currently constructing two combined cycle gas turbine merchant power plants in the UK. The first is a 1200 MW plant known as Saltend. It is expected to begin commercial operation in the first quarter of 2000. The second is a 792 MW plant known as Damhead Creek. It is expected to begin commercial operation in the fourth quarter of 2000. The financing of the construction of these two power plants is discussed in Note 7 to the financial statements in the Form 10-K. On July 13, 1999, Entergy's non-utility nuclear power business acquired from Boston Edison Company (BECO) the 670 MW Pilgrim Nuclear Station located in Plymouth, Massachusetts. The acquisition included the plant, real estate, materials and supplies, and nuclear fuel, for a purchase price of $81 million. As part of the Pilgrim purchase, BECO has funded a $471 million decommissioning trust fund. The purchase price was funded with proceeds from the sales of non- regulated businesses. Further discussion of this acquisition can be found in "Part I, Item 1, Other Businesses" in the Form 10-K. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy's ability to invest in domestic and foreign generation businesses is subject to the SEC's regulations under PUHCA. Absent SEC approval, these regulations limit the aggregate amount that Entergy, but not its non-regulated FUCO and EWG subsidiaries, may invest in domestic and foreign utility businesses to an amount equal to 50% of consolidated retained earnings at the time an investment is made. Due to the sale of electric distribution businesses in the UK and Australia in 1998, Entergy's FUCO and EWG subsidiaries have the ability to make significant additional investments in domestic and foreign generation businesses. Entergy has also made investments in energy-related businesses, including power marketing and trading. Under the SEC's regulations pursuant to PUHCA, the SEC imposes a limit equal to 15% of consolidated capitalization on the amount that may be invested in such businesses without specific SEC approval. Entergy currently has considerable capacity to make additional investments of this type before such limits would be exceeded. In the six months ended June 30, 1999, Entergy Corporation paid $144.1 million in cash dividends on its common stock. Declarations of dividends on Entergy's common stock are made at the discretion of the Board. The Board evaluates the level of Entergy common stock dividends based upon Entergy's earnings and financial strength. Dividend restrictions are discussed in Note 8 to the financial statements in the Form 10-K. In October 1998, the Board approved a plan for the repurchase of Entergy common stock through December 31, 2001 to fulfill the requirements of various compensation and benefit plans. The stock repurchase plan provides for purchases in the open market of up to 5 million shares for an aggregate consideration of up to $250 million. In addition, on July 30, 1999, the Board approved the commitment of up to $750 million in funds towards the repurchase of Entergy common stock. These purchases will be made on a discretionary basis, utilizing internal funds. See Note 3 to the financial statements for stock repurchases and issuances made during the six months ended June 30, 1999. See Note 4 to the financial statements in this report for a discussion of Entergy's recent long-term debt activity. See Notes 4, 5, 6, 7, 9 and 10 to the financial statements in the Form 10-K for additional information on Entergy's and its subsidiaries' capital and refinancing requirements in 1999-2003. Entergy Corporation and System Energy Pursuant to the Capital Funds Agreement between Entergy Corporation and System Energy, Entergy Corporation has agreed to supply System Energy with sufficient capital to: o maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt); o permit the continued commercial operation of Grand Gulf 1; o pay in full all System Energy indebtedness for borrowed money when due; and o enable System Energy to make payments on specific debt under supplements to the agreement assigning System Energy's rights in the agreement as security for the specific debt. The Capital Funds Agreement and other Grand Gulf 1 related agreements are more thoroughly discussed in Note 9 to the financial statements in the Form 10-K. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K, including "Domestic Competition - Regulatory and Legislative Activity - Transition-to-Competition Filings", "Industrial and Commercial Customers", and "Other Electric Utility Trends" for a discussion of the increasing competitive pressures facing Entergy and the electric utility industry. See also "Market Risks" in the Form 10-K for a discussion of other significant issues affecting Entergy. Set forth below are recent updates to the information contained in the Form 10- K under the other headings contained therein. Several significant events have affected and will continue to affect Entergy's results of operations. During the past twelve months, Entergy sold its interests in London Electricity, CitiPower, Efficient Solutions, Inc., and most of its telecommunications businesses, producing significant cash receipts which are non- recurring. Entergy's power marketing and trading activities have increased operating revenues and expenses during the three and six months ended June 30, 1999. For more information see Note 6 to the financial statements included in this report. In addition, on July 30, 1999, the Board approved the commitment of up to $750 million in funds towards the repurchase of Entergy common stock. These purchases will be made on a discretionary basis, utilizing internal funds. Finally, the domestic operating companies have been and will continue to be subject to regulatory proceedings relating to several issues, including but not limited to their transition to competition, rate recovery, and accounting matters, some or all of which impact their results of operations negatively. All of these factors affect Entergy's competitive businesses and domestic utility companies and will affect Entergy's results of operations in the future. Domestic Competition Regulatory and Legislative Activity Open Access In April 1999, Entergy filed a proposal seeking guidance from FERC regarding the formation of a separate, independent transmission company (Transco), which would own, operate, control, and maintain transmission assets. Transco member companies, which could include companies other than Entergy or its subsidiaries, would receive passive ownership, but no voting rights. The transmission assets and related employees of the domestic utility companies would be transferred to the Transco. In 1999, FERC issued an order in response to Entergy's proposal. FERC concluded that passive ownership of a Transco by a generating company or other market participant could meet FERC's current independence and governance requirements provided the Transco is structured to address certain issues and concerns raised by FERC. The issues and concerns identified by FERC relate to the Transco board selection process, the Transco board's fiduciary obligations to the member companies, the ability of Transco to raise additional capital, and restrictions on transactions between the Transco and the member companies. Management expects to make additional filings with federal, state, and local regulatory authorities addressing these and other issues and seeking necessary approvals for the formation of the Transco. If approved, the Transco would likely not become operational until 2001 or 2002, depending upon the timing of such regulatory approvals. Legislative Activity In April 1999, the governor of Arkansas signed into law a restructuring bill passed by the Arkansas Legislature. The law provides for retail open access by electric utilities on January 1, 2002. The APSC may delay implementation of retail open access, but not beyond June 30, 2003. The new law provides for the opportunity for recovery of stranded costs pursuant to a review and approval by the APSC, and for securitization of the allowed stranded costs. The law also requires Entergy Arkansas and other utilities to make filings separating (unbundling) their costs into generation, transmission, and distribution functions. Entergy Arkansas' filing must be made by January 1, 2000. Utilities that own transmission facilities must subject them to operation by an independent transmission organization. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS In June 1999, the governor of Texas signed into law a restructuring bill passed by the Texas Legislature. The law provides for retail open access by most electric utilities on January 1, 2002, market power mitigation measures, the opportunity for stranded cost recovery, and securitization of regulatory assets and stranded costs. The law also requires unbundling of the generation, transmission and distribution, and retail provider functions, and requires filing of the utilities' plans to unbundle functions by January 10, 2000. The market power mitigation measures include a limit on the ownership of generation assets by a power generation company within a specified region. It is uncertain what the implications of this limit will be for Entergy Gulf States or the Entergy system generally. However, it is possible that the legislation could result in Entergy Gulf States having to use mitigation measures including divesting some of its generation assets, should it be determined that it has generation market power. The law also requires affected utilities to sell at auction, at least 60 days before January 1, 2002, entitlements to at least 15% of their Texas jurisdictional installed generation capacity. The obligation to auction capacity continues for up to 60 months after January 1, 2002. Pursuant to the law, utilities that own transmission facilities must subject them to operational control by an independent transmission organization. The PUCT and various participants in the industry are currently in the process of implementing the legislation through various rulemaking and other proceedings. Regulatory Activity The LPSC has directed its staff to develop a Louisiana-specific competition plan by January 1, 2001 for its consideration. Through mid-2000, the LPSC staff will convene technical conferences and study various potential effects of retail competition. No specific date has been targeted for the start of competition, should it be decided that competition in Louisiana is in the public interest. See Note 2 to the financial statements in the Form 10-K for information regarding the Revised Proposed Transition Plan (the Plan) issued by the MPSC in June 1998. The MPSC continues to hold periodic hearings and request informational filings regarding various potential effects of retail competition. Enabling legislation necessary to implement the Plan cannot be considered until the next session of the Mississippi Legislature, which is scheduled to begin in January 2000. State and Local Regulation As discussed in Note 2 to the financial statements in the Form 10-K, the PUCT had issued for comment proposed "Code of Conduct" rules governing transactions between utilities and their affiliates. In June 1999, the PUCT withdrew its proposed rules, and is expected to propose new rules in August 1999. The new rules are expected to implement the requirement of the new Texas retail open access law that the PUCT adopt a code of conduct to ensure that, during the transition to and after the introduction of retail competition, utilities do not give an impermissible advantage to competitive affiliates. The PUCT currently plans to adopt final rules by the fall of 1999. Management cannot predict what form the adopted rules will have and, therefore, what their impact will be. Entergy Mississippi implemented a $13.3 million rate reduction effective May 1999 based on its annual performance-based formula rate plan filing for the 1998 test year. In June 1999, Entergy Mississippi revised its filing resulting in an additional rate reduction of approximately $1.5 million, effective July 1999. Entergy Louisiana submitted its fourth annual performance-based formula rate plan filing for the 1998 test year in April 1999, which indicated that Entergy Louisiana would implement a $20.7 million base rate reduction effective August 1999. Based on Entergy Louisiana's filing and on subsequent comments filed by Entergy Louisiana, the LPSC staff, and other parties, Entergy Louisiana expects to implement a rate reduction of approximately $15.0 million, effective August 1, 1999. Entergy Louisiana's filing will then be subject to further review by the LPSC, which may result in an additional change in rates. No procedural schedule has been established by the LPSC. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Accounting Issues Continued Application of SFAS 71 The domestic utility companies' and System Energy's financial statements principally reflect assets and costs based on existing cost-based ratemaking regulation in accordance with SFAS 71,"Accounting for the Effects of Certain Types of Regulation". Continued applicability of SFAS 71 to the 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 electric utility industry's movement toward a combination of competition and a modified regulatory environment could result in rates that are not based on cost of service. If a utility company is required to discontinue application of SFAS 71 for a portion or all of its operations, it could be required to remove regulatory assets and liabilities from its balance sheet. As discussed above, definitive outcomes have not yet been determined regarding the transition to competition filings in Entergy's jurisdictions; therefore, the regulated operations of the domestic utility companies and System Energy continue to apply SFAS 71. Arkansas and Texas have enacted retail open access laws, but the laws do not provide sufficient detail to determine definitively how Entergy Arkansas' and Entergy Gulf States' regulated operations will be affected. The laws provide for the recovery of stranded costs subsequent to a process of review and approval by the APSC or PUCT. Until such a review is concluded, it is anticipated that both Entergy Arkansas and Entergy Gulf States will continue to apply SFAS 71. Discontinuation of the application of SFAS 71 by the domestic utility companies and System Energy could have a material adverse impact on Entergy's financial statements. The application of SFAS 71 is discussed more thoroughly in Note 1 to the financial statements in the Form 10-K. Year 2000 Issues Management has been evaluating its computer software and hardware, databases, embedded microprocessors (collectively referred to as "IT and non-IT assets"), suppliers, and other relationships to determine actions required to prevent problems related to the Year 2000, and the resources required to take such actions. Unless corrected, these problems may result in malfunctions in certain software applications, databases, and computer equipment with respect to dates on or after January 1, 2000. These malfunctions could disrupt operations of nuclear or fossil generating plants, operation of transmission and distribution systems, and access to interconnections with neighboring utilities, and could cause other operational problems. While it is not possible to anticipate all future events, especially when third parties are involved, management believes the most reasonably likely worst case scenario is isolated disruptions of service, which should be rapidly restored. Management has adopted a four-step approach to address Year 2000 issues including: o an inventory of all IT and non-IT assets; o an assessment to determine if the IT and non-IT assets are critical to the business and, if so, whether Year 2000 has an impact on them; o remediation or replacement of critical systems determined to be Year 2000 deficient; and o certification of such critical systems to confirm Year 2000 compliance. Management has completed its inventory of IT and non-IT assets, identified systems and equipment that could be affected by the millennium change, and assessed the risk of potential failure for its assets. Management defines services or products as Year 2000 "compliant" when they perform the business, office automation, or process control requirements as designed into the twenty-first century. Management defines an asset as "certified" as Year 2000 compliant after it has been modified, or upgraded if necessary, tested, and deployed in the operating environment. Certification of Entergy's IT and non-IT assets that significantly affect service to customers, and of IT and non-IT assets that do not significantly affect service to customers, but are important to Entergy operations, was complete by the end of the second quarter of 1999. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS SIGNIFICANT FACTORS AND KNOWN TRENDS Management has completed an assessment of its vendors that affect Entergy's operations with respect to Year 2000 issues. All vendors have been contacted by letter, and vendors whose failure to provide services would quickly downgrade or suspend Entergy's operations have been interviewed and evaluated for Year 2000 readiness. Entergy's goal is to receive written confirmation of the Year 2000 readiness of these critical vendors. Entergy's contingency plans will include utilization of alternative suppliers and stockpiling of fuel and other supplies. Management will implement Year 2000 contingency plans for vendors throughout 1999. Maintenance or modification costs associated with Year 2000 compliance are being expensed as incurred, while the costs of new software are being capitalized and amortized over the software's useful life. Management's current estimate of maintenance and modification costs related to Year 2000 issues which have been or will be incurred between 1998 and mid-2000 is approximately $54 million. Entergy has incurred approximately $44 million of this total through June 1999. These expenses are being funded through operating cash flows. Additionally, total capitalized costs for projects accelerated due to Year 2000 issues are estimated to be $19 million. Entergy has incurred approximately $15 million of this total through June 1999. Based on the Year 2000 risk determinations of management, an independent consultant's risk assessment, and the results of certification activities, management has created and is implementing contingency plans throughout 1999 to address Year 2000 issues. Management completed its written contingency plans by the end of June 1999, using the guidelines issued by the Nuclear Energy Institute and the guidelines issued by the North American Electric Reliability Council. The contingency plans address various types of asset failures that could cause disruptions in service, and create specific mitigation strategies to rapidly restore service to customers. For example, to mitigate the risk of loss of generation, Entergy intends to carry more generation reserve than normal within its control area during the hours surrounding midnight, December 31, 1999. Although Entergy is taking steps that it believes will address the Year 2000 issue, this issue presents risks that may not be entirely foreseen and eliminated and which could significantly affect utility operations and financial performance. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended June 30, 1999 compared to the three months ended June 30, 1998, primarily due to a decrease in operating revenues and an increase in income taxes, partially offset by decreases in operating expenses and interest charges, and an increase in other income. Net income increased slightly for the six months ended June 30, 1999 compared to the six months ended June 30, 1998, primarily due to decreases in operating expenses and interest charges and an increase in other income, partially offset by a decrease in operating revenues, and an increase in income taxes. Note 6 to the financial statements provides a detailed breakdown of financial information by business segment. Competitive businesses are included in the following segments discussed in Note 6: power marketing and trading, Entergy London, CitiPower, and other. Net income for the three and six months ended June 30, 1998 reflected the results of operations for Entergy London, CitiPower, Efficient Solutions, Inc., Entergy Security, Inc., Entergy Power Edesur Holdings, Entergy Hyperion Telecommunications, and TeleCorp Holding Corporation, Inc. These businesses were sold between late 1998 and mid-1999, and are therefore not included in some or all of 1999's results of operations. Revenues and Sales Domestic Utility Companies and System Energy The changes in electric operating revenues associated with the domestic utility companies for the three and six months ended June 30, 1999 are as follows: Three Months Ended Six Months Ended Description Increase/Decrease) Increase/(Decrease) (In Millions) Base revenues $116.1 $82.2 Rate riders (43.5) (83.4) Fuel cost recovery 51.3 24.6 Sales volume/weather 12.7 32.1 Other revenue (including unbilled) (3.1) 4.2 Sales for resale (22.7) (30.4) ------ ----- Total $110.8 $29.3 ====== ===== Base revenues Base revenues increased $116 million and $82 million for the three and six months ended June 30, 1999, respectively, primarily due to: o a $93.6 million reversal of regulatory reserves associated with the accelerated amortization of accounting order deferrals in conjunction with the Texas rate settlement, the net income effect of which is largely offset by the amortization of rate deferrals discussed below; and o reserves of $33 million recorded for actual and potential refunds to Louisiana and Texas retail customers during the three and six months ended June 30, 1999 compared to $101 million of reserves recorded during the same periods in 1998 for the anticipated effects of the rate proceedings in Texas. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS These increases were partially offset by annual base rate reductions at Entergy Gulf States in the Louisiana jurisdiction of $87 million and $18 million implemented in February and August 1998, respectively, and by Texas retail annual base rate reductions of $69 million and $4.2 million implemented in December 1998 and March 1999, respectively. Rate rider Rate rider revenues do not affect net income because they are offset by specific incurred expenses. Rate rider revenues decreased $44 million and $83 million for the three and six months ended June 30, 1999, respectively, as a result of a revised Grand Gulf rider. This new rider eliminated revenues attributable to the Grand Gulf phase-in plan, which was completed in November 1998 for Entergy Arkansas and September 1998 for Entergy Mississippi. These decreases were partially offset by the implementation of the Grand Gulf Accelerated Recovery Tariffs at Entergy Arkansas and Entergy Mississippi, which allows these companies to accelerate a portion of the payments of their Grand Gulf purchased power obligations. The tariffs became effective in January 1999 and October 1998, respectively. Fuel cost recovery Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs. Fuel cost recovery revenues increased $51 million and $25 million for the three and six months ended June 30, 1999, respectively, due to: o a shift from lower priced nuclear fuel to higher priced gas at Entergy Louisiana due to the nuclear refueling outage at Waterford 3; o an increased fuel factor at Entergy Gulf States; o a fuel surcharge implemented in Entergy Gulf States' Texas jurisdiction in February 1999; o an increase in the energy cost recovery rate effective April 1999 at Entergy Arkansas; and o increased fuel expense resulting from increased generation due to outages in 1998 at Entergy Arkansas. Sales volume/weather Sales volume increased $13 million and $32 million for the three and six months ended June 30, 1999 due to: o an increase in usage and the number of customers at Entergy Gulf States, especially in the higher margin residential and commercial sectors; and o an increase in usage at Entergy Louisiana. Such increases were partially offset by decreased usage in the lower margin industrial customer class at Entergy Gulf States. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other revenue Other revenue for the three and six months ended June 30, 1999 was affected by a change in estimated unbilled revenues of the domestic utility companies. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. The net effect of this change was to increase other revenue, although this increase was largely offset by milder weather in 1999. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Sales for resale Sales for resale decreased $23 million and $30 million for the three and six months ended June 30, 1999, respectively, principally due to decreased generation available for sale to non-affiliates because of refueling outages at affiliate plants in 1999. Competitive Businesses Competitive business revenues decreased approximately $296 million and $875 million for the three and six months ended June 30, 1999, respectively. These decreases were primarily due to the sale of Entergy London, CitiPower, and Efficient Solutions, Inc. in 1998. These decreases were partially offset by increased sales revenues in the power marketing and trading business. However, the impact on net income from these revenues was more than offset by increased power purchased and fuel and gas purchased for resale as discussed in Expenses and other below, which resulted in a decline in operating income for this business for the three and six months ended June 30, 1999 compared to the three and six months ended June 30, 1998. Expenses and other Domestic Utility Companies and System Energy Fuel and purchased power expenses Fuel expenses increased for the three and six months ended June 30, 1999 principally due to: o the 1998 completion of a customer refund obligation under the 1997 energy cost recovery agreement at Entergy Arkansas, which lowered 1998 fuel cost recoveries; o an increase in the energy cost recovery rate effective April 1999 at Entergy Arkansas; and o a shift from lower priced nuclear fuel to higher priced gas due to nuclear outages at Entergy Louisiana. Fuel expenses also increased for the three months ended June 30, 1999 due to: o an increase in deferred fuel cost recovery in 1999 at Entergy Louisiana as a result of a settlement refund in 1998; o a shift to higher cost gas generation due to reduced availability at Nelson 6 and the extended River Bend nuclear refueling outage at Entergy Gulf States; and o reduced fuel cost deferrals at Entergy Gulf States as a result of the higher fuel factor and fuel surcharge in the Texas jurisdiction in 1999. Fuel expenses also increased for the six months ended June 30, 1999 due to increased generation in 1999 as a result of maintenance and refueling outages in 1998 at Entergy Arkansas. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Purchased power expenses decreased for the three and six months ended June 30, 1999 principally due to a shift to lower priced generation at Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana. Other regulatory credits Other regulatory credits decreased for the three and six months ended June 30, 1999 primarily due to an increase in regulatory charges at System Energy related to the implementation of the Grand Gulf Accelerated Recovery Tariffs at Entergy Arkansas and Entergy Mississippi. These tariffs allow System Energy to increase its recovery of Grand Gulf 1 plant investment costs. The decrease was also due to a lesser amount of under-recovery of Grand Gulf 1 costs at Entergy Arkansas. Amortization of rate deferrals The amortization of rate deferrals increased for the three months ended June 30, 1999 primarily due to an increase in the rate of amortization of the Texas portion of River Bend accounting order deferrals at Entergy Gulf States through December 2001 as a result of the PUCT's approval of the settlement agreement in June 1999. See Note 2 for the discussion of this settlement agreement. This increase was partially offset by the expiration of the Grand Gulf 1 rate phase-in plans at Entergy Arkansas and Entergy Mississippi in November and September 1998, respectively. The amortization of rate deferrals decreased for the six months ended June 30, 1999 primarily due to the expiration of the Grand Gulf 1 rate phase-in plans at Entergy Arkansas and Entergy Mississippi in November and September 1998, respectively, and the completion of the Louisiana retail rate phase-in plan for River Bend at Entergy Gulf States in February 1998. These decreases were partially offset by increased amortization at Entergy Gulf States due to the PUCT's approval of the settlement agreement in June 1999. Other income Other income increased $10.7 million at the domestic utility companies for the three months ended June 30, 1999 primarily due to: o the reversal of the provision for the abeyed River Bend plant costs at Entergy Gulf States, which exceeded the write-down of the plant as the result of the June 1999 PUCT approval of the settlement agreement; and o an increase in allowance for equity funds used during construction due to large nuclear projects at Entergy Arkansas and Entergy Louisiana. Interest charges Interest charges increased for the three and six months ended June 30, 1999 due to an adjustment to interest on the potential refund of System Energy's proposed rate increase. See Note 2 for further discussion. This increase was partially offset by a decrease in interest due to the retirement, redemption, or refinancing of certain long-term debt at Entergy Gulf States, Entergy Louisiana, and System Energy for the three and six months ended June 30, 1999 and at Entergy Arkansas for the six months ended June 30, 1999. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Competitive Businesses Fuel and purchased power expenses As compared to the comparable prior year periods, fuel and purchased power expenses increased in the power marketing and trading business by $313 million for the three months ended June 30, 1999 and $405 million for the six months ended June 30, 1999 principally due to increased gas trading volume. Other operation and maintenance expenses Other operation and maintenance expenses decreased for the three and six months ended June 30, 1999 compared to the three and six months ended June 30, 1998 principally due to the business sales previously discussed. The decrease was partially offset by the elimination of profits on intercompany power transactions and an increase for the power marketing and trading business compared to the three and six months ended June 30, 1998. Power marketing and trading increases resulted from higher gas trading volumes and staffing levels and increased risk management and back-office support. Other income Other income increased for the three and six months ended June 30, 1999 due principally to: o a $26.7 million ($17 million net of tax) gain on the sale of Entergy Power Edesur Holdings in June 1999; o a $12.9 million ($8.0 million net of tax) gain on the sale of Entergy Hyperion Telecommunications in June 1999; and o interest income of $35.4 million in 1999 on the proceeds of the sales of Entergy London and CitiPower. Other income also increased for the six months ended June 30, 1999 due to: o a $12.5 million ($.6 million net of tax) gain on the sale of Entergy Security, Inc. in January 1999; and o a $7.6 million ($4.9 million net of tax) adjustment to the final sale price of CitiPower in January 1999. These increases are partially offset by the following income recorded in the first quarter of 1998 from an Entergy investment in Asia: o dividend income of $9.1 million; and o a gain of $1.0 million on the partial sale of the investment. Interest charges Interest on long-term debt was decreased by $63 million and $125 million for the three and six months ended June 30, 1999, respectively, by the retirement of debt associated with the Entergy London and CitiPower businesses. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Income Taxes The effective income tax rates for the three months ended June 30, 1999 and 1998 were 29.2% and 23.6%, respectively. The effective income tax rates for the six months ended June 30, 1999 and 1998 were 31.8% and 29.4%, respectively. The effective income tax rate increased primarily due to the recording of a deferred tax benefit in June 1998 related to the expected utilization of capital loss carryforwards, partially offset by the recording of deferred tax benefits in June 1999 related to expected utilization of foreign tax credits.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three and Six Months ended June 30, 1999 and 1998 (Unaudited) Three Months Ended Six Months Ended 1999 1998 1999 1998 OPERATING REVENUES (In Thousands, Except Per Share Data) Domestic electric $1,613,136 $1,502,357 $2,851,719 $2,822,409 Natural gas 22,149 24,188 59,880 74,613 Steam products 7,254 12,125 15,550 20,525 Competitive businesses 673,865 970,144 1,029,177 1,904,359 ---------- ---------- ---------- ---------- TOTAL 2,316,404 2,508,814 3,956,326 4,821,906 ---------- ---------- ---------- ---------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 490,871 327,854 893,844 676,817 Purchased power 676,827 808,264 1,050,626 1,586,938 Nuclear refueling outage expenses 17,135 21,015 36,820 43,689 Other operation and maintenance 400,706 500,505 768,338 984,193 Decommissioning 10,758 11,926 23,432 23,949 Taxes other than income taxes 83,053 90,318 166,121 186,112 Depreciation and amortization 177,181 233,163 361,549 473,598 Other regulatory credits, net (2,845) (25,017) (18,970) (59,783) Amortization of rate deferrals 88,767 68,076 97,180 148,176 ---------- ---------- ---------- ---------- TOTAL OPERATING EXPENSES 1,942,453 2,036,104 3,378,940 4,063,689 ---------- ---------- ---------- ---------- OPERATING INCOME 373,951 472,710 577,386 758,217 ---------- ---------- ---------- ---------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 7,348 3,274 12,759 5,623 Gain on sale of assets 40,718 3,586 61,301 13,121 Miscellaneous - net 30,064 14,622 50,016 36,660 ---------- ---------- ---------- ---------- TOTAL 78,130 21,482 124,076 55,404 ---------- ---------- ---------- ---------- INTEREST AND OTHER CHARGES Interest on long-term debt 120,164 191,310 242,695 382,886 Other interest - net 36,942 14,053 45,483 24,155 Dividends on preferred securities of subsidiaries 4,710 8,950 9,419 20,128 Allowance for borrowed funds used during construction (5,926) (2,682) (10,405) (4,562) ---------- ---------- ---------- ---------- TOTAL 155,890 211,631 287,192 422,607 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 296,191 282,561 414,270 391,014 Income taxes 86,433 66,582 131,606 114,981 ---------- ---------- ---------- ---------- CONSOLIDATED NET INCOME 209,758 215,979 282,664 276,033 Preferred dividend requirements of subsidiaries and others 9,981 11,704 20,706 23,480 ---------- ---------- ---------- ---------- EARNINGS APPLICABLE TO COMMON STOCK 199,777 204,275 261,958 252,553 OTHER COMPREHENSIVE INCOME Foreign currency translation adjustment (1,337) (20,541) (958) (3,848) ---------- ---------- ---------- ---------- COMPREHENSIVE INCOME $198,440 $183,734 $261,000 $248,705 ========== ========== ========== ========== Earnings per average common share: Basic and diluted $0.81 $0.83 $1.06 $1.03 Dividends declared per common share $0.30 $0.45 $0.60 $0.90 Average number of common shares outstanding: Basic 246,795,710 246,452,120 246,688,052 246,187,736 Diluted 247,207,417 246,555,555 246,962,310 246,373,335 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Six Months Ended June 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Consolidated Net Income $282,664 $276,033 Noncash items included in net income: Amortization of rate deferrals 97,180 148,176 Reserve for regulatory adjustments 13,344 138,902 Other regulatory charges (18,970) (59,783) Depreciation, amortization, and decommissioning 384,981 497,547 Deferred income taxes and investment tax credits (180,410) (88,348) Allowance for equity funds used during construction (12,759) (5,623) Gain on sale of assets (61,301) (13,121) Changes in working capital (Net of effects from dispositions): Receivables (427,677) (54,452) Fuel inventory (36,600) 3,868 Accounts payable 353,302 (38,423) Taxes accrued 262,406 134,994 Interest accrued (35,306) 590 Deferred fuel (18,029) (81,916) Other working capital accounts (86,458) (35,683) Decommissioning trust contributions and realized change in trust assets (35,738) (37,674) Provision for estimated losses and reserves (24,632) (118,290) Changes in other regulatory assets (32,960) (36,546) Other 132,513 23,084 --------- --------- Net cash flow provided by operating activities 555,550 653,335 --------- --------- INVESTING ACTIVITIES Construction/capital expenditures (545,842) (454,309) Allowance for equity funds used during construction 12,759 5,623 Nuclear fuel purchases (92,196) (41,126) Proceeds from sale/leaseback of nuclear fuel 75,097 37,666 Proceeds from sale of businesses 351,082 2,511 Investment in other nonregulated/nonutility properties (14,406) (50,844) Other 11,909 (7,360) --------- --------- Net cash flow used in investing activities (201,597) (507,839) --------- --------- See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Six Months Ended June 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) FINANCING ACTIVITIES Proceeds from the issuance of: First mortgage bonds 74,691 112,556 G&R mortgage bonds 124,192 78,703 Other long-term debt 418,337 201,070 Common stock 11,664 15,228 Retirement of: First mortgage bonds (245,887) (341,335) G&R mortgage bonds (132,412) (80,000) Other long-term debt (229,813) (125,389) Repurchase of common stock (14,957) - Redemption of preferred stock (76,758) (6,250) Changes in short-term borrowings - net (215,500) 186,167 Dividends paid: Preferred stock (21,671) (23,580) Common stock (144,059) (221,772) -------- -------- Net cash flow used in financing activities (452,173) (204,602) -------- -------- Effect of exchange rates on cash and cash equivalents (541) 1,894 -------- -------- Net decrease in cash and cash equivalents (98,761) (57,212) Cash and cash equivalents at beginning of period 1,184,495 830,547 ---------- -------- Cash and cash equivalents at end of period $1,085,734 $773,335 ========== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $319,456 $412,674 Income taxes $50,819 $78,761 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $24,544 $22,854 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 ASSETS (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $102,903 $386,764 Temporary cash investments - at cost, which approximates market: Other 837,831 797,731 Special deposits 145,000 - ----------- ----------- Total cash and cash equivalents 1,085,734 1,184,495 ----------- ----------- Notes receivable 958,779 959,328 Accounts receivable: Customer 278,570 280,648 Allowance for doubtful accounts (7,130) (10,300) Other 500,440 197,362 Accrued unbilled revenues 365,652 245,350 ----------- ----------- Total receivables 1,137,532 713,060 ----------- ----------- Deferred fuel costs 187,617 169,589 Fuel inventory - at average cost 124,014 90,408 Materials and supplies - at average cost 368,576 374,674 Rate deferrals 33,727 37,507 Deferred nuclear refueling outage costs 49,399 37,138 Prepayments and other 137,954 77,749 ----------- ----------- TOTAL 4,083,332 3,643,948 ----------- ----------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 214 214 Decommissioning trust funds 769,299 709,018 Non-utility property - at cost (less accumulated depreciation 205,650 205,660 Non-regulated investments 287,354 557,347 Other - at cost (less accumulated depreciation) 17,717 16,041 ----------- ----------- TOTAL 1,280,234 1,488,280 ----------- ----------- UTILITY PLANT Electric 22,924,700 22,704,572 Plant acquisition adjustment 415,062 423,195 Property under capital lease 782,035 789,045 Natural gas 185,799 183,621 Steam products 81,549 80,537 Construction work in progress 1,159,065 911,278 Nuclear fuel under capital lease 322,783 282,595 Nuclear fuel 32,061 29,690 ----------- ----------- TOTAL UTILITY PLANT 25,903,054 25,404,533 Less - accumulated depreciation and amortization (10,732,127) (10,075,951) ----------- ----------- UTILITY PLANT - NET 15,170,927 15,328,582 ----------- ----------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 31,696 125,095 SFAS 109 regulatory asset - net 1,111,175 1,141,318 Unamortized loss on reacquired debt 193,401 191,786 Other regulatory assets 598,142 528,179 Long-term receivables 33,474 34,617 Other 581,351 354,889 ----------- ----------- TOTAL 2,549,239 2,375,884 ----------- ----------- TOTAL ASSETS $23,083,732 $22,836,694 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $411,297 $255,221 Notes payable 60,593 296,790 Accounts payable: Other 867,987 522,072 Customer deposits 152,663 148,972 Taxes accrued 544,807 284,847 Accumulated deferred income taxes 64,081 31,976 Nuclear refueling outage costs 4,036 16,991 Interest accrued 150,022 185,688 Co-owner advances 15,268 4,073 Obligations under capital leases 176,247 176,270 Other 70,039 58,909 ----------- ----------- TOTAL 2,517,040 1,981,809 ----------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 3,362,764 3,538,332 Accumulated deferred investment tax credits 529,981 565,744 Obligations under capital leases 252,717 220,209 FERC settlement - refund obligation 40,338 43,159 Other regulatory liabilities 194,961 153,163 Decommissioning 118,630 107,365 Transition to competition 94,554 90,623 Regulatory reserves 381,120 674,310 Accumulated provisions 252,532 252,321 Other 862,100 635,024 ----------- ----------- TOTAL 6,089,697 6,280,250 ----------- ----------- Long-term debt 6,458,758 6,596,617 Preferred stock with sinking fund 90,850 167,523 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 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 338,454 338,455 Common stock, $.01 par value, authorized 500,000,000 shares; issued 246,954,406 shares in 1999 and 246,829,076 shares in 1998 2,470 2,468 Paid-in capital 4,632,526 4,630,609 Retained earnings 2,640,373 2,526,888 Cumulative foreign currency translation adjustment (47,697) (46,739) Less - treasury stock, at cost (129,009 shares in 1999 and 208,907 shares in 1998) 3,739 6,186 ----------- ----------- TOTAL 7,562,387 7,445,495 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $23,083,732 $22,836,694 =========== =========== See Notes To Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 497.8 $ 503.7 ($5.9) (1) Commercial 358.8 360.8 (2.0) (1) Industrial 449.5 439.5 10.0 2 Governmental 38.4 42.7 (4.3) (10) ------------------------------- Total retail 1,344.5 1,346.7 (2.2) - Sales for resale 88.9 107.3 (18.4) (17) Other 179.7 48.3 131.4 272 ------------------------------- Total $1,613.1 $1,502.3 $ 110.8 7 =============================== Billed Electric Energy Sales (GWH): Residential 6,850 6,697 153 2 Commercial 5,741 5,496 245 4 Industrial 10,827 10,854 (27) - Governmental 624 669 (45) (7) ------------------------------- Total retail 24,042 23,716 326 1 Sales for resale 2,094 2,645 (551) (21) ------------------------------- Total 26,136 26,361 (225) (1) =============================== Six Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Domestic Electric Operating Revenues: Residential $ 929.8 $ 966.7 ($36.9) (4) Commercial 675.0 693.5 (18.5) (3) Industrial 856.2 884.2 (28.0) (3) Governmental 74.4 84.2 (9.8) (12) ------------------------------ Total retail 2,535.4 2,628.6 (93.2) (4) Sales for resale 163.9 190.4 (26.5) (14) Other 152.4 3.4 149.0 4,382 ------------------------------ Total $2,851.7 $2,822.4 $ 29.3 1 ============================== Billed Electric Energy Sales (GWH): Residential 13,267 12,937 330 3 Commercial 10,910 10,325 585 6 Industrial 21,043 21,266 (223) (1) Governmental 1,213 1,297 (84) (6) ------------------------------ Total retail 46,433 45,825 608 1 Sales for resale 4,303 4,574 (271) (6) ------------------------------ Total 50,736 50,399 337 1 ============================== ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended June 30, 1999 compared to the three months ended June 30, 1999 primarily due to decreased electric operating revenues and increased operating expenses, partially offset by decreased income taxes. Net income decreased for the six months ended June 30, 1999 compared to the six months ended June 30, 1998 primarily due to decreased electric operating revenues, partially offset by decreased operating expenses and income taxes. Revenues and Sales The changes in electric operating revenues for the three and six months ended June 30, 1999 are as follows: Three Months Ended Six Months Ended Description Increase/Decrease) Increase/(Decrease) (In Millions) Base revenues $0.3 $0.8 Rate riders (15.4) (29.6) Fuel cost recovery 10.0 11.8 Sales volume/weather (0.4) 5.7 Other revenue (including unbilled) (29.4) (29.1) Sales for resale 30.7 18.4 ----- ------ Total ($4.2) ($22.0) ===== ====== Rate rider Rate rider revenues do not affect net income because they are offset by specific incurred expenses. Rate rider revenues decreased for the three and six months ended June 30, 1999 as a result of a revised Grand Gulf rider, which includes consideration of the expiration of the Grand Gulf 1 phase- in plan in November 1998, partially offset by the Grand Gulf Accelerated Recovery Tariff (GGART). The tariff was designed to allow Entergy Arkansas to pay down a portion of its Grand Gulf purchased power obligation in advance of the implementation of retail access in Arkansas. The rider and GGART became effective with the first billing cycle in January 1999. Fuel cost recovery Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs. Fuel cost recovery revenues increased for the three and six months ended June 30, 1999 due to: o an increase in the energy cost recovery rate effective April 1999; and o increased fuel expense resulting from increased generation in 1999 due to outages in 1998. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other revenue Other revenue for the three and six months ended June 30, 1999 decreased primarily due to a change in estimated unbilled revenues. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. Milder weather in 1999 also contributed to this decrease. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Sales for resale Sales for resale increased for the three and six months ended June 30, 1999 due to increased generation availability in 1999 as a result of maintenance outages in 1998. Refueling outages at affiliate plants in 1999 resulted in a shift in sales to affiliated companies. Expenses Fuel and fuel related expenses Fuel expenses increased for the three and six months ended June 30, 1999 due to the 1998 completion of a customer refund obligation under the 1997 energy cost recovery agreement, which lowered 1998 fuel cost recoveries, and an increase in the energy cost recovery rate effective April 1999. The increase in the energy cost recovery rate allows Entergy Arkansas to recover previously under-recovered fuel expenses. The increase in fuel expenses for the six months ended June 30, 1999 was also due to increased nuclear fuel and coal expense. Nuclear fuel and coal expenses increased due to increased generation in 1999 as a result of more maintenance and refueling outages occurring in 1998 than in 1999. Purchased power Purchased power expenses decreased for the three and six months ended June 30, 1999 due to a shift to lower priced nuclear and coal generation resulting from increased generation availability in 1999 as a result of more refueling and maintenance outages occurring in 1998 than in 1999. Other operation and maintenance Other operation and maintenance expenses decreased for the three and six months ended June 30, 1999 principally due to the capitalization of costs associated with return to service projects for certain fossil plants. The decrease in other operation and maintenance expenses for the six months ended June 30, 1999 was also due to: o a mid-cycle outage in February and March 1998 at ANO 2; and o increased insurance distributions in 1999 due to improved plant insurance ratings. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other regulatory credits Other regulatory credits decreased for the three and six months ended June 30, 1999 due to lower under-recovery of Grand Gulf 1 costs. Amortization of rate deferrals The amortization of Grand Gulf 1 rate deferrals decreased for the three and six months ended June 30, 1999 due to the completion of the Grand Gulf 1 rate phase-in plan in November 1998. Income taxes The effective income tax rates for the three months ended June 30, 1999 and 1998 were 32.4% and 38.3%, respectively. The effective income tax rates for the six months ended June 30, 1999 and 1998 were 29.3% and 38.9%, respectively. The decreases in the effective tax rates were due to lower pretax income and flow-through of tax benefits related to accumulated provision for property insurance.
ENTERGY ARKANSAS, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited) Three Months Ended Six Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $387,191 $391,357 $699,160 $721,146 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 84,855 29,142 133,647 75,365 Purchased power 102,800 114,997 197,743 210,312 Nuclear refueling outage expenses 7,464 7,728 15,530 15,819 Other operation and maintenance 83,255 90,498 165,464 176,296 Decommissioning 2,317 3,024 4,777 6,236 Taxes other than income taxes 9,259 9,840 18,516 20,200 Depreciation and amortization 40,929 41,748 82,598 83,797 Other regulatory credits (3,900) (11,524) (11,487) (22,105) Amortization of rate deferrals - 22,067 - 44,135 -------- -------- -------- -------- TOTAL OPERATING EXPENSES 326,979 307,520 606,788 610,055 -------- -------- -------- -------- OPERATING INCOME 60,212 83,837 92,372 111,091 -------- -------- -------- -------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 3,434 1,628 5,845 2,332 Gain/(loss) on sale of assets (1) (1) (2) 1,775 Miscellaneous - net (193) 1,679 744 6,773 -------- -------- -------- -------- TOTAL 3,240 3,306 6,587 10,880 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 20,024 21,657 40,698 45,121 Other interest - net 1,565 604 3,090 1,360 Dividends on preferred securities of subsidiaries 1,275 1,275 2,550 2,550 Allowance for borrowed funds used during construction (2,221) (1,164) (3,878) (1,651) -------- -------- -------- -------- TOTAL 20,643 22,372 42,460 47,380 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 42,809 64,771 56,499 74,591 Income taxes 13,880 24,804 16,559 29,001 -------- -------- -------- -------- NET INCOME 28,929 39,967 39,940 45,590 Preferred dividend requirements of subsidiaries and others 2,403 2,593 4,824 5,219 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $26,526 $37,374 $35,116 $40,371 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $39,940 $45,590 Noncash items included in net income: Amortization of rate deferrals - 44,135 Other regulatory charges (11,487) (22,105) Depreciation, amortization, and decommissioning 87,375 90,033 Deferred income taxes and investment tax credits (8,302) 2,886 Allowance for equity funds used during construction (5,845) (2,332) Gain/loss on sale of assets 2 (1,775) Changes in working capital: Receivables (14,680) (34,717) Fuel inventory (14,509) (4,465) Accounts payable 3,009 69,394 Taxes accrued 12,283 9,714 Interest accrued (927) (4,013) Deferred fuel costs 23,797 (43,643) Other working capital accounts 8,018 (12,921) Decommissioning trust contributions and realized change in trust assets (10,111) (12,678) Provision for estimated losses and reserves (13,954) (3,076) Changes in other regulatory assets (29,612) (14,911) Other 37,603 (9,858) --------- -------- Net cash flow provided by operating activities 102,600 95,258 --------- -------- INVESTING ACTIVITIES Construction expenditures (122,428) (81,803) Allowance for equity funds used during construction 5,845 2,332 Nuclear fuel purchases (25,859) (6,997) Proceeds from sale/leaseback of nuclear fuel 25,859 6,997 --------- -------- Net cash flow used in investing activities (116,583) (79,471) --------- -------- FINANCING ACTIVITIES Retirement of: First mortgage bonds (38,287) (105,774) Other long-term debt (980) (45,500) Redemption of preferred stock (2,027) (4,000) Dividends paid: Common stock (8,200) (7,500) Preferred stock (4,873) (5,318) --------- -------- Net cash flow used in financing activities (54,367) (168,092) --------- -------- Net decrease in cash and cash equivalents (68,350) (152,305) Cash and cash equivalents at beginning of period 108,748 203,391 --------- -------- Cash and cash equivalents at end of period $40,398 $51,086 ========= ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $41,712 $48,855 Income taxes $12,250 $16,747 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $13,289 $15,048 See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 ASSETS (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $8,394 $9,814 Temporary cash investments - at cost, which approximates market: Associated companies 7,342 15,643 Other 24,662 83,291 ---------- ---------- Total cash and cash equivalents 40,398 108,748 ---------- ---------- Accounts receivable: Customer 69,664 72,234 Allowance for doubtful accounts (1,753) (1,753) Associated companies 42,514 34,502 Other 3,989 4,510 Accrued unbilled revenues 82,843 73,083 ---------- ---------- Total receivables 197,257 182,576 ---------- ---------- Deferred fuel costs 17,394 41,191 Fuel inventory - at average cost 34,361 19,852 Materials and supplies - at average cost 90,362 89,033 Deferred nuclear refueling outage costs 24,455 17,787 Prepayments and other 6,927 5,557 ---------- ---------- TOTAL 411,154 464,744 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 11,214 11,214 Decommissioning trust funds 326,684 303,285 Non-utility property - at cost (less accumulated depreciation) 1,466 1,468 Other - at cost (less accumulated depreciation) 4,401 3,602 ---------- ---------- TOTAL 343,765 319,569 ---------- ---------- UTILITY PLANT Electric 4,784,412 4,731,699 Property under capital lease 47,937 49,415 Construction work in progress 245,188 201,853 Nuclear fuel under capital lease 100,053 95,589 Nuclear fuel 6,216 - ---------- ---------- TOTAL UTILITY PLANT 5,183,806 5,078,556 Less - accumulated depreciation and amortization (2,351,938) (2,275,170) ---------- ---------- UTILITY PLANT - NET 2,831,868 2,803,386 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 256,646 248,275 Unamortized loss on reacquired debt 50,129 51,747 Other regulatory assets 118,167 96,927 Other 13,976 22,003 ---------- ---------- TOTAL 438,918 418,952 ---------- ---------- TOTAL ASSETS $4,025,705 $4,006,651 ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $340 $1,094 Notes payable 667 667 Accounts payable: Associated companies 49,229 47,963 Other 81,712 79,969 Customer deposits 25,926 25,196 Taxes accrued 80,868 68,585 Accumulated deferred income taxes 22,825 24,162 Interest accrued 24,358 25,285 Co-owner advances 23,397 4,073 Obligations under capital leases 63,679 64,068 Other 13,466 16,183 ---------- ---------- TOTAL 386,467 357,245 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 761,069 756,571 Accumulated deferred investment tax credits 96,215 98,768 Obligations under capital leases 84,410 80,936 Other regulatory liabilities 79,196 65,583 Transition to competition 94,554 90,623 Accumulated provisions 37,450 51,404 Other 57,255 56,400 ---------- ---------- TOTAL 1,210,149 1,200,285 ---------- ---------- Long-term debt 1,127,404 1,172,285 Preferred stock with sinking fund 20,000 22,027 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 60,000 60,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 116,350 116,350 Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares 470 470 Additional paid-in capital 590,134 590,134 Retained earnings 514,731 487,855 ---------- ---------- TOTAL 1,221,685 1,194,809 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,025,705 $4,006,651 ========== ========== See Notes To Financial Statements.
ENTERGY ARKANSAS, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 1999 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 110.9 $ 118.3 ($7.4) (6) Commercial 68.5 68.9 (0.4) (1) Industrial 80.7 78.4 2.3 3 Governmental 3.6 3.6 - - ----------------------------- Total retail 263.7 269.2 (5.5) (2) Sales for resale Associated companies 60.8 25.4 35.4 139 Non-associated companies 49.3 54.0 (4.7) (9) Other 13.4 42.8 (29.4) (69) ----------------------------- Total $ 387.2 $ 391.4 ($4.2) (1) ============================= Billed Electric Energy Sales (GWH): Residential 1,310 1,358 (48) (4) Commercial 1,128 1,116 12 1 Industrial 1,694 1,641 53 3 Governmental 57 56 1 2 ----------------------------- Total retail 4,189 4,171 18 - Sales for resale Associated companies 2,734 863 1,871 217 Non-associated companies 1,295 1,236 59 5 ----------------------------- Total 8,218 6,270 1,948 31 ============================= Six Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 227.6 $ 239.2 ($11.6) (5) Commercial 128.1 128.3 (0.2) - Industrial 151.4 150.8 0.6 - Governmental 6.9 7.0 (0.1) (1) ----------------------------- Total retail 514.0 525.3 (11.3) (2) Sales for resale Associated companies 90.3 59.6 30.7 52 Non-associated companies 85.8 98.1 (12.3) (13) Other 9.1 38.2 (29.1) (76) ----------------------------- Total $ 699.2 $ 721.2 ($22.0) (3) ============================= Billed Electric Energy Sales (GWH): Residential 2,865 2,861 4 - Commercial 2,187 2,119 68 3 Industrial 3,300 3,208 92 3 Governmental 112 111 1 1 ----------------------------- Total retail 8,464 8,299 165 2 Sales for resale Associated companies 4,270 2,500 1,770 71 Non-associated companies 2,116 2,409 (293) (12) ----------------------------- Total 14,850 13,208 1,642 12 ============================= ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and six months ended June 30, 1999 compared to the three and six months ended June 30, 1998 primarily due to increased operating revenues and other income and decreased interest expense, partially offset by increased operating expenses and income taxes. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the three and six months ended June 30, 1999 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues $127.1 $94.1 Fuel cost recovery 12.7 4.3 Sales volume/weather 2.5 10.0 Other revenue (including unbilled) 5.6 10.3 Sales for resale (19.4) (18.2) ------ ------ Total $128.5 $100.5 ====== ====== Base revenues Base revenues increased for the three and six months ended June 30, 1999 primarily due to: o a $93.6 million reversal of regulatory reserves associated with the accelerated amortization of accounting order deferrals in conjunction with the Texas rate settlement, the net income effect of which is largely offset by the amortization of rate deferrals discussed below; and o reserves of $33 million recorded for actual and potential refunds to Louisiana and Texas retail customers during the three and six months ended June 30, 1999 compared to $101 million of reserves recorded during the same periods in 1998 for the anticipated effects of the rate proceedings in Texas. Partially offsetting these increases were: o annual base rate reductions in the Louisiana jurisdiction of $87 million and $18 million that were implemented in February and August 1998, respectively; and o Texas retail annual base rate reductions of $69 million and $4.2 million in December 1998 and March 1999, respectively. Fuel cost recovery Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel cost recovery revenues increased for the three and six months ended June 30, 1999 due to: o a higher fuel factor in 1999; and o a fuel surcharge implemented in the Texas jurisdiction in February 1999. The increase was partially offset by reduced fuel recovery in the Louisiana jurisdiction due to lower fuel prices and decreased generation for the period included in fuel cost recovery revenues. Sales volume/weather Sales volume increased for the three and six months ended June 30, 1999 due to an increase in usage and the number of customers in the higher margin residential and commercial customer classes, partially offset by decreased usage in the lower margin industrial customer class. Other revenue Other revenue for the three and six months ended June 30, 1999 increased primarily due to a change in estimated unbilled revenues. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. This increase was partially offset by milder weather in 1999. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Sales for resale Sales for resale revenues decreased for the three and six months ended June 30, 1999 due to less generation available for sale because of the extended refueling outage at River Bend which began in early April 1999. River Bend was brought back on-line at full power on July 14, 1999. Gas operating revenues Gas operating revenues decreased for the six months ended June 30, 1999 primarily due to lower prices of gas purchased for resale as well as decreased usage as a result of warmer winter weather, especially in the residential and commercial sectors. Steam operating revenues Steam operating revenues decreased for the three and six months ended June 30, 1999 due to a new lease arrangement for Louisiana Station 1 that began in June 1999. Less revenue will be realized under the new lease arrangement compared to the previous arrangement with the steam customer. Expenses Fuel and purchased power Fuel and purchased power expenses increased for the three months ended June 30, 1999 primarily due to a shift to gas generation and purchased power from associated companies because of the reduced availability of Nelson 6 and the extended River Bend nuclear refueling outage. Fuel and purchased power expenses also increased due to reduced fuel cost deferrals as a result of the higher fuel factor and fuel surcharge in the Texas jurisdiction in 1999. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Other operation and maintenance Other operation and maintenance expenses increased for the three and six months ended June 30, 1999 principally due to increases in employee benefit expense, casualty reserve accruals, and maintenance of general plant. Taxes other than income taxes Taxes other than income taxes decreased for the three and six months ended June 30, 1999 principally due to reduced local franchise taxes as a result of less revenue being subject to the tax in 1999. Depreciation and amortization Depreciation and amortization decreased for the three and six months ended June 30, 1999 due to: o reduced transmission and distribution depreciation rates as a result of compliance with PUCT and LPSC rate orders; and o reduced amortization of the River Bend 2 cancellation loss as a result of the completion of amortization for the Louisiana portion of the loss and the reduction in amortization of the Texas portion in accordance with a PUCT rate order. These factors were partially offset by an increase in the River Bend depreciation rate as a result of compliance with PUCT and LPSC rate orders. Amortization of rate deferrals The amortization of rate deferrals increased for the three and six months ended June 30, 1999 primarily due to the PUCT's approval in June 1999 of the settlement agreement in Entergy Gulf States' November 1998 rate filing. This agreement calls for an increased rate of amortization of the Texas portion of the River Bend accounting order deferrals over a period ending December 31, 2001. The previous amortization period for these deferrals was scheduled to run through late 2009. Partially offsetting this increase for the six month period was a reduction in the amortization of rate deferrals due to the completion of the Louisiana retail rate phase-in plan for River Bend in February 1998. Other Other income Other income increased for the three and six months ended June 30, 1999 primarily due to income recognized as the result of the previously estimated regulatory reserve for the abeyed River Bend plant costs being greater than the actual required writedown. Interest charges Interest charges decreased for the three months and six months ended June 30, 1999 primarily due to the retirement, redemption, or refinancing of certain long-term debt in 1998 and the first quarter of 1999. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Income taxes The effective income tax rates for the three months ended June 30, 1999 and 1998 were 48.6% and 16.1%, respectively. The increase in 1999 was primarily due to a net loss in 1998 compared to net income in 1999. The effective income tax rates for the six months ended June 30, 1999 and 1998 were 49.0% and 55.7%, respectively. The decrease in 1999 was primarily due to increased pre-tax income reducing the impact of permanent differences and flow-through items.
ENTERGY GULF STATES, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited) Three Months Ended Six Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $534,022 $405,476 $937,828 $837,339 Natural gas 5,267 6,055 16,984 23,300 Steam products 7,254 12,125 15,550 20,525 -------- -------- -------- -------- TOTAL 546,543 423,656 970,362 881,164 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 132,690 128,968 271,265 247,254 Purchased power 86,937 80,972 132,529 159,632 Nuclear refueling outage expenses 2,678 3,675 5,357 8,224 Other operation and maintenance 106,500 98,160 206,055 196,700 Decommissioning 1,510 1,969 4,790 3,848 Taxes other than income taxes 26,085 28,057 55,810 58,968 Depreciation and amortization 49,325 51,257 99,832 104,120 Other regulatory credits (2,892) (3,201) (12,287) (9,983) Amortization of rate deferrals 82,124 2,269 84,393 17,210 -------- -------- -------- -------- TOTAL OPERATING EXPENSES 484,957 392,126 847,744 785,973 -------- -------- -------- -------- OPERATING INCOME 61,586 31,530 122,618 95,191 -------- -------- -------- -------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 1,091 688 2,317 1,300 Gain/(loss) on sale of assets 462 394 909 774 Miscellaneous - net 5,957 2,143 6,554 5,723 -------- -------- -------- -------- TOTAL 7,510 3,225 9,780 7,797 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 34,288 38,717 69,528 77,088 Other interest - net 888 971 1,572 1,715 Dividends on preferred securities of subsidiaries 1,859 1,859 3,719 3,719 Allowance for borrowed funds used during construction (1,026) (547) (2,135) (1,014) -------- -------- -------- -------- TOTAL 36,009 41,000 72,684 81,508 -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES 33,087 (6,245) 59,714 21,480 Income taxes 16,065 (1,004) 29,255 11,965 -------- -------- -------- -------- CONSOLIDATED NET INCOME (LOSS) 17,022 (5,241) 30,459 9,515 Preferred dividend requirements of subsidiaries and others 4,115 4,774 8,666 9,588 -------- -------- -------- -------- EARNINGS (LOSS) APPLICABLE TO COMMON STOCK $12,907 ($10,015) $21,793 ($73) ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES: Net income $30,459 $9,515 Noncash items included in net income: Amortization of rate deferrals 84,393 17,210 Reserve for regulatory adjustments (53,479) 101,255 Other regulatory credits (12,287) (9,983) Depreciation, amortization, and decommissioning 104,622 107,968 Deferred income taxes and investment tax credits 367 (29,286) Allowance for equity funds used during construction (2,317) (1,300) Gain/loss on sale of assets (909) (774) Changes in working capital: Receivables (36,193) (14,082) Fuel inventory (13,939) 2,910 Accounts payable (2,652) (10,274) Taxes accrued 26,997 28,932 Interest accrued (754) (209) Deferred fuel costs (10,501) (23,103) Other working capital accounts (15,889) (7,269) Decommissioning trust contributions and realized change in trust assets (5,866) (7,466) Provision for estimated losses and reserves 2,694 (3,443) Changes in other regulatory assets 13,228 2,299 Other (26,190) (1,245) -------- -------- Net cash flow provided by operating activities 81,784 161,655 -------- -------- INVESTING ACTIVITIES: Construction expenditures (77,340) (52,288) Allowance for equity funds used during construction 2,317 1,300 Nuclear fuel purchases (37,930) (200) Proceeds from sale/leaseback of nuclear fuel 37,930 193 -------- -------- Net cash flow used in investing activities (75,023) (50,995) -------- -------- FINANCING ACTIVITIES: Proceeds from issuance of: Other long-term debt 21,775 21,600 Retirement of: First mortgage bonds (25,000) (25,000) Other long-term debt (22,095) (25) Redemption of preferred and preference stock (24,731) (2,250) Dividends paid: Common stock - (80,315) Preferred stock (8,758) (9,588) -------- -------- Net cash flow used in financing activities (58,809) (95,578) -------- -------- Net increase (decrease) in cash and cash equivalents (52,048) 15,082 Cash and cash equivalents at beginning of period 131,432 165,164 -------- -------- Cash and cash equivalents at end of period $79,384 $180,246 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $72,247 $79,147 Income taxes $10,934 $22,532 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $9,658 $3,154 See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 ASSETS (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $7,756 $11,629 Temporary cash investments - at cost, which approximates market: Associated companies 11,601 15,696 Other 60,027 104,107 ---------- ---------- Total cash and cash equivalents 79,384 131,432 ---------- ---------- Accounts receivable: Customer 74,226 78,961 Allowance for doubtful accounts (1,735) (1,735) Associated companies 8,682 7,554 Other 25,129 28,265 Accrued unbilled revenues 102,505 59,569 ---------- ---------- Total receivables 208,807 172,614 ---------- ---------- Deferred fuel costs 143,397 132,896 Fuel inventory - at average cost 44,140 30,201 Materials and supplies - at average cost 108,004 108,345 Rate deferrals 5,607 9,077 Prepayments and other 23,123 20,495 ---------- ---------- TOTAL 612,462 605,060 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 225,294 209,770 Non-utility property - at cost (less accumulated depreciation) 175,991 165,272 Other - at cost (less accumulated depreciation) 13,315 12,427 ---------- ---------- TOTAL 414,600 387,469 ---------- ---------- UTILITY PLANT Electric 7,307,565 7,250,789 Property under capital lease 50,794 54,427 Natural gas 51,553 51,053 Steam products 81,549 80,537 Construction work in progress 106,382 105,121 Nuclear fuel under capital lease 86,345 46,572 ---------- ---------- TOTAL UTILITY PLANT 7,684,188 7,588,499 Less - accumulated depreciation and amortization (3,543,569) (3,141,518) ---------- ---------- UTILITY PLANT - NET 4,140,619 4,446,981 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 8,410 89,333 SFAS 109 regulatory asset - net 364,048 376,406 Unamortized loss on reacquired debt 40,379 42,879 Other regulatory assets 89,044 89,914 Long-term receivables 33,474 34,617 Other 21,904 221,085 ---------- ---------- TOTAL 557,259 854,234 ---------- ---------- TOTAL ASSETS $5,724,940 $6,293,744 ========== ========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $46,025 $71,515 Accounts payable Associated companies 57,303 60,932 Other 92,079 91,102 Customer deposits 32,191 31,462 Taxes accrued 82,777 55,780 Accumulated deferred income taxes 30,827 21,260 Nuclear refueling outage costs 4,036 16,991 Interest accrued 41,878 42,631 Obligations under capital leases 34,859 34,343 Other 15,149 16,325 ---------- ---------- TOTAL 437,124 442,341 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 1,072,541 1,081,598 Accumulated deferred investment tax credits 181,679 193,509 Obligations under capital leases 102,280 66,656 Other regulatory liabilities 23,647 30,287 Regulatory reserves 139,341 515,023 Accumulated provisions 63,594 60,899 Other 259,606 455,996 ---------- ---------- TOTAL 1,842,688 2,403,968 ---------- ---------- Long-term debt 1,632,264 1,631,658 Preferred stock with sinking fund 35,850 60,497 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 SHAREHOLDERS' 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 223,940 202,206 ---------- ---------- TOTAL 1,542,014 1,520,280 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,724,940 $6,293,744 ========== ========== See Notes To Financial Statements.
ENTERGY GULF STATES, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 1999 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 137.2 $ 139.5 ($2.3) (2) Commercial 103.0 103.2 (0.2) - Industrial 170.4 174.6 (4.2) (2) Governmental 6.8 10.6 (3.8) (36) ------------------------------ Total retail 417.4 427.9 (10.5) (2) Sales for resale Associated companies 0.9 8.3 (7.4) (89) Non-associated companies 15.3 27.3 (12.0) (44) Other 100.4 (58.0) 158.4 273 ------------------------------ Total $ 534.0 $ 405.5 $ 128.5 32 ============================== Billed Electric Energy Sales (GWH): Residential 2,039 1,947 92 5 Commercial 1,784 1,646 138 8 Industrial 4,442 4,615 (173) (4) Governmental 102 166 (64) (39) ------------------------------ Total retail 8,367 8,374 (7) - Sales for resale Associated companies 17 205 (188) (92) Non-associated companies 428 946 (518) (55) ------------------------------ Total 8,812 9,525 (713) (7) ============================== Six Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 253.4 $ 267.8 ($14.4) (5) Commercial 194.5 203.5 (9.0) (4) Industrial 326.6 350.2 (23.6) (7) Governmental 13.3 21.3 (8.0) (38) ------------------------------ Total retail 787.8 842.8 (55.0) (7) Sales for resale Associated companies 4.7 10.1 (5.4) (53) Non-associated companies 36.0 48.8 (12.8) (26) Other 109.3 (64.4) 173.7 270 ------------------------------ Total $ 937.8 $ 837.3 $ 100.5 12 ============================== Billed Electric Energy Sales (GWH): Residential 3,842 3,668 174 5 Commercial 3,384 3,088 296 10 Industrial 8,556 8,962 (406) (5) Governmental 202 319 (117) (37) ------------------------------ Total retail 15,984 16,037 (53) - Sales for resale Associated companies 170 262 (92) (35) Non-associated companies 1,413 1,447 (34) (2) ------------------------------ Total 17,567 17,746 (179) (1) ============================== ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and six months ended June 30, 1999 compared to the three and six months ended June 30, 1998 primarily due to an increase in operating revenue and a decrease in interest charges, partially offset by an increase in operating expenses and higher income taxes. Revenues and Sales The changes in electric operating revenues for the three and six months ended June 30, 1999 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($7.8) ($6.3) Fuel cost recovery 37.0 21.9 Sales volume/weather 5.8 7.4 Other revenue (including unbilled) 53.1 59.4 Sales for resale (6.6) (4.9) ----- ----- Total $81.5 $77.5 ===== ===== Fuel cost recovery Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs. Fuel cost recovery revenues increased for the three and six months ended June 30, 1999 primarily due to a shift from lower priced nuclear fuel to higher priced gas due to the nuclear refueling outage at Waterford 3. Other revenue Other revenue for the three and six months ended June 30, 1999 increased primarily due to a change in estimated unbilled revenues. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. This increase was partially offset by milder weather in 1999. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Expenses Fuel and purchased power Fuel and purchased power expenses increased for the three and six months ended June 30, 1999 due to a shift from lower priced nuclear fuel to higher priced gas due to nuclear outages at Waterford 3. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Fuel and purchased power expenses also increased for the three months ended June 30, 1999 due to increased deferred fuel cost recovery in 1999 as a result of a settlement refund in 1998. These increases were partially offset by a decrease in purchased power expenses as a result of lower unit prices of purchased power from affiliated companies. Other operation and maintenance Other operation and maintenance expenses decreased for the three and six months ended June 30, 1999 primarily due insurance settlement proceeds and the capitalization of costs associated with return to service projects. Other Interest charges Interest on long-term debt decreased for the three and six months ended June 30, 1999 primarily due to the redemption, retirement, or refinancing of certain long-term debt during 1999. Income taxes The effective income tax rates for the three months ended June 30, 1999 and 1998 were 39.4% and 40.1%, respectively. The effective income tax rates for the six months ended June 30, 1999 and 1998 were 40.0% and 42.2%, respectively. These decreases were due to increases in pretax income reducing the impact of permanent differences and flow through items.
ENTERGY LOUISIANA, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited) Three Months Ended Six Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $505,601 $424,115 $857,736 $780,153 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 104,399 71,008 162,623 145,710 Purchased power 92,119 101,358 184,582 189,355 Nuclear refueling outage expenses 3,487 5,435 8,923 10,870 Other operation and maintenance 65,511 72,486 133,315 143,510 Decommissioning 2,197 2,197 4,393 4,393 Taxes other than income taxes 18,426 17,013 36,670 35,471 Depreciation and amortization 40,184 40,955 81,963 82,837 Other regulatory charges (credits) - (877) - (1,755) -------- -------- -------- -------- TOTAL OPERATING EXPENSES 326,323 309,575 612,469 610,391 -------- -------- -------- -------- OPERATING INCOME 179,278 114,540 245,267 169,762 -------- -------- -------- -------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 1,732 459 2,493 820 Gain/(loss) on sale of assets - - - 2,340 Miscellaneous - net 621 229 579 29 -------- -------- -------- -------- TOTAL 2,353 688 3,072 3,189 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 26,691 28,848 53,744 57,610 Other interest - net 1,041 1,511 2,212 3,017 Dividends on preferred securities of subsidiaries 1,575 1,575 3,150 3,150 Allowance for borrowed funds used during construction (1,716) (417) (2,367) (750) -------- -------- -------- -------- TOTAL 27,591 31,517 56,739 63,027 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 154,040 83,711 191,600 109,924 Income taxes 60,669 34,165 76,742 46,461 -------- -------- -------- -------- NET INCOME 93,371 49,546 114,858 63,463 Preferred dividend requirements of subsidiaries and others 2,378 3,254 5,048 6,507 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $90,993 $46,292 $109,810 $56,956 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $114,858 $63,463 Noncash items included in net income: Other regulatory charges - (1,755) Depreciation, amortization, and decommissioning 86,356 87,230 Deferred income taxes and investment tax credits 8,042 1,866 Allowance for equity funds used during construction (2,493) (820) Gain/loss on sale of assets - (2,340) Changes in working capital: Receivables (67,181) (22,000) Fuel inventory (489) - Accounts payable (16,718) (8,329) Taxes accrued 79,628 39,707 Interest accrued (23,195) (1,036) Deferred fuel costs (17,934) (5,491) Other working capital accounts (11,062) (221) Decommissioning trust contributions and realized change in trust assets (8,497) (6,001) Provision for estimated losses and reserves 112 2,962 Changes in other regulatory assets 13,901 10,169 Other (16,283) (28,716) -------- -------- Net cash flow provided by operating activities 139,045 128,688 -------- -------- INVESTING ACTIVITIES Construction expenditures (55,932) (42,204) Allowance for equity funds used during construction 2,493 820 Nuclear fuel purchases (11,308) - Proceeds from sale/leaseback of nuclear fuel 11,308 - -------- -------- Net cash flow used in investing activities (53,439) (41,384) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: First mortgage bonds 74,691 112,556 Other long-term debt 113,535 - Retirement of: First mortgage bonds (122,600) (150,561) Other long-term debt (6,547) (115) Redemption of preferred stock (50,000) - Dividends paid: Common stock (31,900) (24,300) Preferred stock (5,632) (6,507) -------- -------- Net cash flow used in financing activities (28,453) (68,927) -------- -------- Net increase in cash and cash equivalents 57,153 18,377 Cash and cash equivalents at beginning of period 96,710 49,749 -------- -------- Cash and cash equivalents at end of period $153,863 $68,126 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $76,443 $59,040 Income taxes $12,270 $25,657 Noncash investing and financing activities: Change in unrealized appreciation of decommissioning trust assets $2,389 $2,991 See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 ASSETS (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $10,298 $10,187 Temporary cash investments - at cost, which approximates market: Associated companies 6,552 13,680 Other 22,013 72,843 Special deposits 115,000 - ---------- ---------- Total cash and cash equivalents 153,863 96,710 ---------- ---------- Accounts receivable: Customer 80,198 65,262 Allowance for doubtful accounts (1,164) (1,164) Associated companies 15,444 20,095 Other 8,641 19,305 Accrued unbilled revenues 118,100 50,540 ---------- ---------- Total receivables 221,219 154,038 ---------- ---------- Deferred fuel costs 10,136 - Accumulated deferred income taxes 1,781 13,331 Fuel inventory - at average cost 489 - Materials and supplies - at average cost 80,745 82,220 Deferred nuclear refueling outage costs 18,538 6,498 Prepayments and other 12,731 11,566 ---------- ---------- TOTAL 499,502 364,363 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 14,230 14,230 Decommissioning trust funds 93,567 82,680 Non-utility property - at cost (less accumulated depreciation) 21,475 21,460 ---------- ---------- TOTAL 129,272 118,370 ---------- ---------- UTILITY PLANT Electric 5,146,329 5,095,278 Property under capital lease 234,339 234,339 Construction work in progress 97,373 85,565 Nuclear fuel under capital lease 65,083 75,814 ---------- ---------- TOTAL UTILITY PLANT 5,543,124 5,490,996 Less - accumulated depreciation and amortization (2,241,337) (2,158,800) ---------- ---------- UTILITY PLANT - NET 3,301,787 3,332,196 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 259,018 270,068 Unamortized loss on reacquired debt 28,885 30,629 Other regulatory assets 46,748 49,599 Other 17,641 15,816 ---------- ---------- TOTAL 352,292 366,112 ---------- ---------- TOTAL ASSETS $4,282,853 $4,181,041 ========== ========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Currently maturing long-term debt $231,985 $6,772 Accounts payable: Associated companies 36,582 43,051 Other 80,216 90,465 Customer deposits 55,663 55,966 Taxes accrued 97,831 18,203 Interest accrued 30,107 53,302 Deferred fuel cost - 7,798 Obligations under capital leases 32,539 32,539 Other 9,607 7,644 ---------- ---------- TOTAL 574,530 315,740 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 829,724 840,931 Accumulated deferred investment tax credits 125,922 128,689 Obligations under capital leases 32,545 43,275 Other regulatory liabilities 13,225 10,836 Accumulated provisions 52,757 52,645 Other 41,012 39,791 ---------- ---------- TOTAL 1,095,185 1,116,167 ---------- ---------- Long-term debt 1,168,410 1,332,315 Preferred stock with sinking fund 35,000 85,000 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated deferrable debentures 70,000 70,000 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 100,500 100,500 Common stock, no par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares 1,088,900 1,088,900 Capital stock expense and other (2,321) (2,320) Retained earnings 152,649 74,739 ---------- ---------- TOTAL 1,339,728 1,261,819 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,282,853 $4,181,041 ========== ========== See Notes To Financial Statements.
ENTERGY LOUISIANA, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 1999 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 145.2 $ 126.9 $ 18.3 14 Commercial 94.0 83.8 10.2 12 Industrial 156.3 136.4 19.9 15 Governmental 8.2 7.4 0.8 11 ------------------------------- Total retail 403.7 354.5 49.2 14 Sales for resale Associated companies 5.4 9.3 (3.9) (42) Non-associated companies 13.1 15.8 (2.7) (17) Other 83.4 44.5 38.9 87 ------------------------------- Total $ 505.6 $ 424.1 $ 81.5 19 =============================== Billed Electric Energy Sales (GWH): Residential 1,971 1,905 66 3 Commercial 1,287 1,275 12 1 Industrial 3,777 3,674 103 3 Governmental 115 114 1 1 ------------------------------- Total retail 7,150 6,968 182 3 Sales for resale Associated companies 142 207 (65) (31) Non-associated companies 233 260 (27) (10) ------------------------------- Total 7,525 7,435 90 1 =============================== Six Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 257.4 $ 241.0 $ 16.4 7 Commercial 173.2 162.5 10.7 7 Industrial 294.6 286.0 8.6 3 Governmental 16.0 15.8 0.2 1 ------------------------------- Total retail 741.2 705.3 35.9 5 Sales for resale Associated companies 7.9 10.3 (2.4) (23) Non-associated companies 24.3 26.8 (2.5) (9) Other 84.3 37.8 46.5 123 ------------------------------- Total $ 857.7 $ 780.2 $ 77.5 10 =============================== Billed Electric Energy Sales (GWH): Residential 3,661 3,562 99 3 Commercial 2,418 2,364 54 2 Industrial 7,403 7,315 88 1 Governmental 230 238 (8) (3) ------------------------------- Total retail 13,712 13,479 233 2 Sales for resale Associated companies 240 235 5 2 Non-associated companies 477 412 65 16 ------------------------------- Total 14,429 14,126 303 2 ============================== ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three and six months ended June 30, 1999 compared to the three and six months ended June 30, 1998 primarily due to a decrease in electric operating revenues, partially offset by a decrease in operating expenses and lower income taxes. Revenues and Sales The changes in electric operating revenues for the three and six months ended June 30, 1999 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($1.8) ($2.5) Grand Gulf rate rider (28.2) (53.8) Fuel cost recovery (2.2) (4.1) Sales volume/weather 2.0 3.9 Other revenue (including unbilled) (25.3) (26.6) Sales for resale (18.8) (13.7) ------ ------ Total ($74.3) ($96.8) ====== ====== Grand Gulf rate rider revenues Rate rider revenues do not affect net income because they are offset by specific incurred expenses. Grand Gulf rate rider revenue decreased for the three and six months ended June 30, 1999 as a result of a new rider which became effective October 1, 1998. This new rider eliminated revenues attributable to the Grand Gulf phase-in plan, which was completed in September 1998. However, this decrease was partially offset by the Grand Gulf Accelerated Recovery Tariff, which became effective October 1, 1998. This tariff provides for accelerated recovery of a portion of Entergy Mississippi's Grand Gulf purchased power obligation. Other revenue Other revenue for the three and six months ended June 30, 1999 decreased primarily due to a change in estimated unbilled revenues. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. Milder weather in 1999 also contributed to this decrease. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Sales for resale Sales for resale decreased for the three and six months ended June 30, 1999 primarily due to a decrease in sales to associated companies due to changes in generation requirements and availability among the domestic utility companies. ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Fuel and purchased power expenses Fuel and purchased power expenses decreased for the three and six months ended June 30, 1999 due to a decrease in total generation requirements. The decrease for the three months ended June 30, 1999 was partially offset by a shift from lower priced fuel to higher priced purchased power from affiliates as a result of plant outages in 1999. Other operation and maintenance Other operation and maintenance expenses increased for the three and six months ended June 30, 1999 principally due to plant outages in 1999, adjustments to compensation accruals, and an increase in casualty reserves. Amortization of rate deferrals Amortization of rate deferrals decreased for the three and six months ended June 30, 1999 due to the completion of the Grand Gulf 1 rate phase-in plan in September 1998. Other Income taxes The effective income tax rates for the three months ended June 30, 1999 and 1998 remained relatively unchanged at 35.1% and 35.9%, respectively. The effective income tax rates for the six months ended June 30, 1999 and 1998 also remained relatively unchanged at 33.7% and 34.1%, respectively.
ENTERGY MISSISSIPPI, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited) Three Months Ended Six Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $194,637 $268,908 $377,080 $473,925 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 37,341 59,089 96,775 110,401 Purchased power 79,804 72,031 148,269 138,626 Other operation and maintenance 41,795 32,407 72,913 61,253 Taxes other than income taxes 11,042 11,043 21,744 22,198 Depreciation and amortization 10,984 11,078 22,500 22,394 Other regulatory credits (6,958) (7,451) (17,971) (22,029) Amortization of rate deferrals - 34,990 - 69,979 -------- -------- -------- -------- TOTAL OPERATING EXPENSES 174,008 213,187 344,230 402,822 -------- -------- -------- -------- OPERATING INCOME 20,629 55,721 32,850 71,103 -------- -------- -------- -------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 225 (20) 368 - Gain on sale of assets - - - 1,024 Miscellaneous - net 1,872 1,004 3,490 2,031 -------- -------- -------- -------- TOTAL 2,097 984 3,858 3,055 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 9,800 9,885 19,022 19,461 Other interest - net 601 865 1,444 2,159 Allowance for borrowed funds used during construction (341) (92) (696) (132) -------- -------- -------- -------- TOTAL 10,060 10,658 19,770 21,488 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 12,666 46,047 16,938 52,670 Income taxes 4,444 16,534 5,701 17,962 -------- -------- -------- -------- NET INCOME 8,222 29,513 11,237 34,708 Preferred dividend requirements of subsidiaries and others 842 842 1,685 1,685 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $7,380 $28,671 $9,552 $33,023 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $11,237 $34,708 Noncash items included in net income: Amortization of rate deferrals - 69,979 Other regulatory charges (17,971) (22,029) Depreciation, amortization, and decommissioning 22,500 22,394 Deferred income taxes and investment tax credits 16,220 (15,721) Allowance for equity funds used during construction (368) - Gain/loss on sale of assets - (1,024) Changes in working capital: Receivables 20,306 (29,623) Fuel inventory (2,837) (532) Accounts payable 1,060 15,398 Taxes accrued 149 20,395 Interest accrued (3,108) (244) Deferred fuel costs (1,341) (1,618) Other working capital accounts 5,988 (254) Provision for estimated losses and reserves 848 (3,299) Changes in other regulatory assets (34,867) (40,825) Other 17,079 25,642 -------- -------- Net cash flow provided by operating activities 34,895 73,347 -------- -------- INVESTING ACTIVITIES Construction expenditures (34,622) (18,641) Allowance for equity funds used during construction 368 - -------- -------- Net cash flow used in investing activities (34,254) (18,641) -------- -------- FINANCING ACTIVITIES Proceeds from issuance of: G&R mortgage bonds 124,192 78,703 Other long-term debt 29,570 - Retirement of: G&R mortgage bonds (132,412) (80,000) Other long-term debt (865) (20) Changes in short-term borrowing, net 20,576 (35,521) Dividends paid: Common stock (9,100) (16,900) Preferred stock (1,685) (1,685) -------- -------- Net cash flow provided (used) in financing activities 30,276 (55,423) -------- -------- Net increase (decrease) in cash and cash equivalents 30,917 (717) Cash and cash equivalents at beginning of period 2,640 6,816 -------- -------- Cash and cash equivalents at end of period $33,557 $6,099 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $22,648 $21,100 Income taxes $23,711 $1,054 See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 ASSETS (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $3,557 $2,640 Special deposits 30,000 - ---------- ---------- Total cash and cash equivalents 33,557 2,640 ---------- ---------- Accounts receivable: Customer 32,409 39,701 Allowance for doubtful accounts (1,217) (1,217) Associated companies 1,428 5,703 Other 531 1,267 Accrued unbilled revenues 37,900 45,904 ---------- ---------- Total receivables 71,051 91,358 ---------- ---------- Deferred fuel costs 3,449 2,108 Accumulated deferred income taxes 651 665 Fuel inventory - at average cost 5,840 3,002 Materials and supplies - at average cost 16,301 17,149 Prepayments and other 10,011 12,256 ---------- ---------- TOTAL 140,860 129,178 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 5,531 5,531 Non-utility property - at cost (less accumulated depreciation) 7,029 7,056 Other - at cost (less accumulated depreciation) - 13 ---------- ---------- TOTAL 12,560 12,600 ---------- ---------- UTILITY PLANT Electric 1,747,498 1,718,426 Property under capital lease 430 477 Construction work in progress 38,765 35,317 ---------- ---------- TOTAL UTILITY PLANT 1,786,693 1,754,220 Less - accumulated depreciation and amortization (705,150) (685,214) ---------- ---------- UTILITY PLANT - NET 1,081,543 1,069,006 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 25,449 25,515 Unamortized loss on reacquired debt 14,945 7,981 Other regulatory assets 135,533 100,601 Other 6,914 6,048 ---------- ---------- TOTAL 182,841 140,145 ---------- ---------- TOTAL ASSETS $1,417,804 $1,350,929 ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) CURRENT LIABILITIES Currently maturing long-term debt $30,000 $20 Notes payable 21,027 451 Accounts payable: Associated companies 38,919 43,640 Other 24,225 18,444 Customer deposits 20,907 18,265 Taxes accrued 6,161 6,013 Interest accrued 11,524 14,632 Obligations under capital leases 92 92 Other 2,572 2,319 ---------- ---------- TOTAL 155,427 103,876 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 298,181 281,017 Accumulated deferred investment tax credits 21,658 22,408 Obligations under capital leases 338 384 Accumulated provisions 4,049 3,200 Other 2,823 4,331 ---------- ---------- TOTAL 327,049 311,340 ---------- ---------- Long-term debt 462,778 463,616 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 50,381 50,381 Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares 199,326 199,326 Capital stock expense and other (59) (59) Retained earnings 222,902 222,449 ---------- ---------- TOTAL 472,550 472,097 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,417,804 $1,350,929 ========== ========== See Notes To Financial Statements.
ENTERGY MISSISSIPPI, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 1999 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 70.1 $ 83.0 ($12.9) (16) Commercial 60.1 69.7 (9.6) (14) Industrial 36.7 43.5 (6.8) (16) Governmental 5.9 6.8 (0.9) (13) ----------------------------- Total retail 172.8 203.0 (30.2) (15) Sales for resale Associated companies 8.4 24.7 (16.3) (66) Non-associated companies 6.6 9.1 (2.5) (27) Other 6.8 32.1 (25.3) (79) ----------------------------- Total $ 194.6 $ 268.9 ($74.3) (28) ============================= Billed Electric Energy Sales (GWH): Residential 1,028 1,005 23 2 Commercial 986 938 48 5 Industrial 787 790 (3) - Governmental 88 83 5 6 ----------------------------- Total retail 2,889 2,816 73 3 Sales for resale Associated companies 188 693 (505) (73) Non-associated companies 89 146 (57) (39) ----------------------------- Total 3,166 3,655 (489) (13) ============================= Six Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 132.4 $ 157.9 ($25.5) (16) Commercial 115.2 132.5 (17.3) (13) Industrial 72.9 84.9 (12.0) (14) Governmental 11.6 13.2 (1.6) (12) ----------------------------- Total retail 332.1 388.5 (56.4) (15) Sales for resale Associated companies 30.3 42.0 (11.7) (28) Non-associated companies 13.3 15.3 (2.0) (13) Other 1.4 28.1 (26.7) (95) ----------------------------- Total $ 377.1 $ 473.9 ($96.8) (20) ============================= Billed Electric Energy Sales (GWH): Residential 2,032 2,010 22 1 Commercial 1,875 1,774 101 6 Industrial 1,542 1,529 13 1 Governmental 170 159 11 7 ----------------------------- Total retail 5,619 5,472 147 3 Sales for resale Associated companies 1,165 1,233 (68) (6) Non-associated companies 201 211 (10) (5) ----------------------------- Total 6,985 6,916 69 1 ============================= ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three and six months ended June 30, 1999 compared to the three and six months ended June 30, 1998 primarily due to a decrease in operating expenses and an increase in other income, partially offset by a decrease in operating revenues and an increase in income taxes. Revenues and Sales Electric operating revenues The changes in electric operating revenues for the three and six months ended June 30, 1999 are as follows: Three Months Ended Six Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Base revenues ($1.7) ($3.9) Fuel cost recovery (6.2) (9.3) Sales volume/weather 2.8 5.1 Other revenue (including unbilled) 3.4 4.4 Sales for resale (0.9) 0.7 ----- ----- Total ($2.6) ($3.0) ===== ===== Fuel cost recovery revenues Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs. Fuel cost recovery revenues decreased for the three and six months ended June 30, 1999 primarily due to a shift in generation mix to lower priced fossil fuel. Sales volume/weather Sales volume/weather increased for the six months ended June 30, 1999 primarily due to increased sales to commercial and governmental customers. Other revenue Other revenue for the three and six months ended June 30, 1999 increased primarily due to a change in estimated unbilled revenues. The changed estimate more closely aligns the fuel component of unbilled revenues with regulatory treatment. This increase was partially offset by milder weather in 1999. The change in estimate is expected to affect comparisons of quarterly and year-to-date revenue to applicable prior period amounts through the first quarter of 2000. Comparative impacts are also affected by seasonal variations in demand. Gas Operating Revenues Gas operating revenues decreased for the three and six months ended June 30, 1999 primarily due to lower fuel prices and milder weather. ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Expenses Fuel and purchased power Fuel and purchased power expenses decreased for the three and six months ended June 30, 1999 due to a shift from purchased power and oil to gas because of lower gas unit prices, and due to a plant outage in April 1999. The decrease in fuel and purchased power expenses for the three months ended June 30, 1999 was partially offset by increased recovery of deferred fuel expenses as a result of the shift in generation mix. Fuel and purchased power expenses also decreased for the six months ended June 30, 1999 due to an under recovery of deferred fuel expenses in the gas operation resulting from decreased gas revenue coupled with increased fuel cost. Other operation and maintenance Other operation and maintenance expenses decreased for the three months ended June 30, 1999 primarily due to the capitalization of costs associated with return to service projects for certain fossil plants. Other operation and maintenance expense increased for the six months ended June 30, 1999 due to an increase in environmental reserve provisions and adjustments to compensation accruals. Amortization of rate deferrals Amortization of rate deferrals decreased for the three and six months ended June 30, 1999 primarily due to a schedule rate change in the amortization of Grand Gulf 1 phase-in expenses. Other Income taxes For the three months ended June 30, 1999 and 1998, the effective income tax rates were 39.6% and 41.0%, respectively. For the six months ended June 30, 1999 and 1998, the effective income tax rates were 41.1% and 44.9%, respectively. The decrease in tax rates for the three and six months ended June 30, 1999 was primarily due to the increase in allowance for equity funds used during construction.
ENTERGY NEW ORLEANS, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited) Three Months Ended Six Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $104,404 $106,975 $184,446 $187,457 Natural gas 16,882 18,132 42,897 51,312 -------- -------- -------- -------- TOTAL 121,286 125,107 227,343 238,769 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 20,140 16,793 51,076 55,684 Purchased power 41,464 52,067 77,916 86,829 Other operation and maintenance 17,293 19,944 40,272 37,086 Taxes other than income taxes 10,519 9,237 18,137 18,725 Depreciation and amortization 5,300 5,298 10,928 11,079 Other regulatory credits (2,162) (2,449) (6,610) (4,845) Amortization of rate deferrals 6,643 8,750 12,786 16,852 -------- -------- -------- -------- TOTAL OPERATING EXPENSES 99,197 109,640 204,505 221,410 -------- -------- -------- -------- OPERATING INCOME 22,089 15,467 22,838 17,359 -------- -------- -------- -------- OTHER INCOME (DEDUCTIONS) Allowance for equity funds used during construction 217 (9) 423 89 Gain/(loss) on sale of assets - - - 458 Miscellaneous - net 559 (644) 972 (336) -------- -------- -------- -------- TOTAL 776 (653) 1,395 211 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 3,319 3,430 6,638 6,859 Other interest - net 333 234 654 477 Allowance for borrowed funds used during construction (156) 8 (311) (68) -------- -------- -------- -------- TOTAL 3,496 3,672 6,981 7,268 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 19,369 11,142 17,252 10,302 Income taxes 7,675 4,565 7,092 4,627 -------- -------- -------- -------- NET INCOME 11,694 6,577 10,160 5,675 Preferred dividend requirements of subsidiaries and others 241 241 482 482 -------- -------- -------- -------- EARNINGS APPLICABLE TO COMMON STOCK $11,453 $6,336 $9,678 $5,193 ======== ======== ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $10,160 $5,675 Noncash items included in net income: Amortization of rate deferrals 12,786 16,852 Other regulatory credits (6,610) (4,845) Depreciation, amortization, and decommissioning 10,928 11,079 Deferred income taxes and investment tax credits 1,819 (2,745) Allowance for equity funds used during construction (423) (89) Gain/loss on sale of assets - (458) Changes in working capital: Receivables (6,185) (7,563) Fuel inventory 1,229 2,611 Accounts payable 5,798 (885) Taxes accrued 6,587 2,825 Interest accrued (412) (384) Deferred fuel costs (12,050) (8,061) Other working capital accounts (718) (6,420) Provision for estimated losses and reserves (1,568) (2,247) Changes in other regulatory assets (7,499) (3,577) Other 5,956 4,538 ------- ------ Net cash flow provided by operating activities 19,798 6,306 ------- ------ INVESTING ACTIVITIES Construction expenditures (25,718) (7,688) Allowance for equity funds used during construction 423 89 ------- ------ Net cash flow used in investing activities (25,295) (7,599) ------- ------ FINANCING ACTIVITIES Preferred stock dividends paid (723) (482) ------- ------ Net cash flow used in financing activities (723) (482) ------- ------ Net decrease in cash and cash equivalents (6,220) (1,775) Cash and cash equivalents at beginning of period 19,667 11,376 ------- ------ Cash and cash equivalents at end of period $13,447 $9,601 ======= ====== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid (received) during the period for: Interest - net of amount capitalized $7,524 $7,568 Income taxes - net ($4,644) $4,802 See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 ASSETS (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $3,116 $3,769 Temporary cash investments - at cost, which approximates market: Associated companies 2,370 2,514 Other 7,961 13,384 -------- -------- Total cash and cash equivalents 13,447 19,667 -------- -------- Accounts receivable: Customer 21,987 24,355 Allowance for doubtful accounts (761) (761) Associated companies 660 806 Other 4,484 3,835 Accrued unbilled revenues 24,304 16,254 -------- -------- Total receivables 50,674 44,489 -------- -------- Deferred fuel costs 13,241 1,191 Fuel inventory - at average cost 2,243 3,472 Materials and supplies - at average cost 8,735 8,845 Rate deferrals 28,120 28,430 Prepayments and other 7,990 6,686 -------- -------- TOTAL 124,450 112,780 -------- -------- OTHER PROPERTY AND INVESTMENTS Investment in subsidiary companies - at equity 3,259 3,259 -------- -------- UTILITY PLANT Electric 527,837 514,685 Natural gas 134,246 132,568 Construction work in progress 29,952 20,184 -------- -------- TOTAL UTILITY PLANT 692,035 667,437 Less - accumulated depreciation and amortization (380,567) (371,558) -------- -------- UTILITY PLANT - NET 311,468 295,879 -------- -------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: Rate deferrals 23,286 35,762 Unamortized loss on reacquired debt 1,293 1,399 Other regulatory assets 29,056 21,558 Other 1,269 1,267 -------- -------- TOTAL 54,904 59,986 -------- -------- TOTAL ASSETS $494,081 $471,904 ======== ======== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 LIABILITIES AND SHAREHOLDERS' EQUITY (In Thousands) CURRENT LIABILITIES Accounts payable: Associated companies $17,902 $18,283 Other 17,187 11,008 Customer deposits 17,975 18,083 Taxes accrued 6,587 - Accumulated deferred income taxes 10,320 6,284 Interest accrued 4,507 4,919 Other 2,126 1,782 -------- -------- TOTAL 76,604 60,359 -------- -------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 53,608 57,214 Accumulated deferred investment tax credits 6,635 6,894 SFAS 109 regulatory liability - net 2,781 942 Other regulatory liabilities 2,520 3,146 Accumulated provisions 7,799 9,367 Other 8,559 8,116 -------- -------- TOTAL 81,902 85,679 -------- -------- Long-term debt 169,051 169,018 SHAREHOLDERS' EQUITY Preferred stock without sinking fund 19,780 19,780 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 36,293 36,294 Retained earnings 76,707 67,030 -------- -------- TOTAL 166,524 156,848 -------- -------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $494,081 $471,904 ======== ======== See Notes To Financial Statements.
ENTERGY NEW ORLEANS, INC. SELECTED OPERATING RESULTS For the Three and Six Months Ended June 30, 1999 (Unaudited) Three Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 34.4 $ 36.0 ($1.6) (4) Commercial 33.3 35.4 (2.1) (6) Industrial 5.5 6.4 (0.9) (14) Governmental 13.8 14.3 (0.5) (3) ----------------------------- Total retail 87.0 92.1 (5.1) (6) Sales for resale Associated companies 1.6 1.8 (0.2) (11) Non-associated companies 2.5 3.2 (0.7) (22) Other 13.3 9.9 3.4 34 ----------------------------- Total $ 104.4 $ 107.0 ($2.6) (2) ============================= Billed Electric Energy Sales (GWH): Residential 502 481 21 4 Commercial 556 521 35 7 Industrial 127 133 (6) (5) Governmental 263 250 13 5 ----------------------------- Total retail 1,448 1,385 63 5 Sales for resale Associated companies 56 57 (1) (2) Non-associated companies 49 57 (8) (14) ----------------------------- Total 1,553 1,499 54 4 ============================= Six Months Ended Increase/ Description 1999 1998 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 59.0 $ 60.9 ($1.9) (3) Commercial 64.1 66.7 (2.6) (4) Industrial 10.8 12.3 (1.5) (12) Governmental 26.6 26.9 (0.3) (1) ----------------------------- Total retail 160.5 166.8 (6.3) (4) Sales for resale Associated companies 6.7 5.2 1.5 29 Non-associated companies 4.5 5.3 (0.8) (15) Other 12.7 10.1 2.6 26 ----------------------------- Total $ 184.4 $ 187.4 ($3.0) (2) ============================= Billed Electric Energy Sales (GWH): Residential 866 836 30 4 Commercial 1,046 980 66 7 Industrial 242 251 (9) (4) Governmental 498 469 29 6 ----------------------------- Total retail 2,652 2,536 116 5 Sales for resale Associated companies 288 180 108 60 Non-associated companies 96 95 1 1 ----------------------------- Total 3,036 2,811 225 8 ============================= SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended June 30, 1999 primarily due to lower income taxes. Net income decreased for the six months ended June 30, 1999 primarily as a result of the additional reserves recorded for the potential refund of System Energy's proposed rate increase, partially offset by lower income taxes. Revenues Operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt. Operating revenues increased for the three and six months ended June 30, 1999 due to the implementation of the Grand Gulf Accelerated Recovery Tariff (GGART) at Entergy Arkansas and Entergy Mississippi. The tariff was designed to allow Entergy Arkansas and Entergy Mississippi to pay down a portion of their Grand Gulf purchased power obligation in advance of the implementation of retail access. It became effective on January 1, 1999 and October 1, 1998 for Entergy Arkansas and Entergy Mississippi, respectively. The GGART is discussed in Note 2 to the financial statements in the Form 10K. Expenses Fuel expenses Fuel expenses do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs. Fuel expenses increased for the three and six months ended June 30, 1999 as a result of greater nuclear fuel generation due to a scheduled nuclear refueling outage in April and May 1998. Other regulatory charges The GGART does not affect net income because it is an increase to revenues that is offset by specific incurred expenses. The increase in other regulatory charges for the three and six months ended June 30, 1999 reflects the implementation of the GGART at Entergy Arkansas and Entergy Mississippi, as discussed above. Other Other income Other income increased for the three and six months ended June 30, 1999 due to additional interest income earned on larger short- term cash equivalent investments. SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Interest charges Interest on long-term debt decreased for the three and six months ended June 30, 1999 as a result of the refinancing of pollution control revenue bonds in November 1998, the redemption of a series of first mortgage bonds in April 1999, and the refinancing of pollution control revenue bonds in May and June 1999. Other interest increased for the three and six months ended June 30, 1999 due to an adjustment to interest on the potential refund of System Energy's proposed rate increase. Income taxes The effective income tax rates for the three months ended June 30, 1999 and 1998 were 31.1% and 45.2%, respectively. The effective tax rates for the six months ended June 30, 1999 were 38.8% and 45.2%. The decrease in 1999 was primarily due to the amortization of investment tax credits related to Grand Gulf Unit 2.
SYSTEM ENERGY RESOURCES, INC. INCOME STATEMENTS For the Three and Six Months Ended June 30, 1999 and 1998 (Unaudited) Three Months Ended Six Months Ended 1999 1998 1999 1998 (In Thousands) (In Thousands) OPERATING REVENUES Domestic electric $159,505 $144,336 $300,122 $292,942 -------- -------- -------- -------- OPERATING EXPENSES Operating and Maintenance: Fuel, fuel related expenses, and gas purchased for resale 12,157 6,183 20,793 17,030 Nuclear refueling outage expenses 3,505 4,177 7,011 8,776 Other operation and maintenance 22,547 22,491 40,992 43,772 Decommissioning 4,736 4,736 9,472 9,472 Taxes other than income taxes 6,767 6,876 13,518 13,638 Depreciation and amortization 27,559 27,696 56,419 56,118 Other regulatory charges 13,540 - 29,385 - -------- -------- -------- -------- TOTAL OPERATING EXPENSES 90,811 72,159 177,590 148,806 -------- -------- -------- -------- OPERATING INCOME 68,694 72,177 122,532 144,136 -------- -------- -------- -------- OTHER INCOME Allowance for equity funds used during construction 648 528 1,313 1,081 Miscellaneous - net 4,145 2,507 8,204 5,612 -------- -------- -------- -------- TOTAL 4,793 3,035 9,517 6,693 -------- -------- -------- -------- INTEREST AND OTHER CHARGES Interest on long-term debt 25,270 28,875 51,099 58,451 Other interest - net 5,891 1,614 32,642 3,267 Allowance for borrowed funds used during construction (466) (470) (1,017) (946) -------- -------- -------- -------- TOTAL 30,695 30,019 82,724 60,772 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 42,792 45,193 49,325 90,057 Income taxes 13,309 20,414 19,142 40,691 -------- -------- -------- -------- NET INCOME $29,483 $24,779 $30,183 $49,366 ======== ======== ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1999 and 1998 (Unaudited) 1999 1998 (In Thousands) OPERATING ACTIVITIES Net income $30,183 $49,366 Noncash items included in net income: Reserve for regulatory adjustments 82,492 37,647 Other regulatory charges 29,385 - Depreciation, amortization, and decommissioning 65,891 65,590 Deferred income taxes and investment tax credits (62,462) (16,796) Allowance for equity funds used during construction (1,313) (1,081) Changes in working capital: Receivables (21,918) 195 Accounts payable 25,103 (9,692) Taxes accrued 45,944 (7,374) Interest accrued (7,686) (7,559) Other working capital accounts 3,149 (9,376) Decommissioning trust contributions and realized change in trust assets (11,264) (11,528) Provision for estimated losses and reserves (228) (501) Changes in other regulatory assets 11,889 10,299 Other 12,630 (6,019) --------- -------- Net cash flow provided by operating activities 201,795 93,171 --------- -------- INVESTING ACTIVITIES Construction expenditures (11,200) (19,472) Allowance for equity funds used during construction 1,313 1,081 Nuclear fuel purchases - (30,476) Proceeds from sale/leaseback of nuclear fuel - 30,476 --------- -------- Net cash flow used in investing activities (9,887) (18,391) --------- -------- FINANCING ACTIVITIES Proceeds from issuance of: Other long-term debt 101,862 - Retirement of: First mortgage bonds (60,000) (60,000) Other long-term debt (122,884) - Common stock dividends paid (32,500) (47,800) --------- -------- Net cash flow used in financing activities (113,522) (107,800) --------- -------- Net increase (decrease) in cash and cash equivalents 78,386 (33,020) Cash and cash equivalents at beginning of period 281,299 206,410 --------- -------- Cash and cash equivalents at end of period $359,685 $173,390 ========= ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $70,231 $65,226 Income taxes $19,744 $54,956 Noncash investing and financing activities Change in unrealized appreciation ($792) $1,662 (depreciation) of trust assets See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 ASSETS (In Thousands) CURRENT ASSETS Cash and cash equivalents: Cash $63 $120 Temporary cash investments - at cost, which approximates market: Associated companies 82,496 44,458 Other 277,126 236,721 ---------- ---------- Total cash and cash equivalents 359,685 281,299 ---------- ---------- Accounts receivable: Associated companies 79,861 80,713 Other 27,202 4,431 ---------- ---------- Total receivables 107,063 85,144 ---------- ---------- Materials and supplies - at average cost 62,844 62,203 Deferred nuclear refueling outage costs 6,406 12,853 Prepayments and other 5,292 2,592 ---------- ---------- TOTAL 541,290 444,091 ---------- ---------- OTHER PROPERTY AND INVESTMENTS Decommissioning trust funds 123,754 113,282 ---------- ---------- UTILITY PLANT Electric 3,034,167 3,031,340 Property under capital lease 441,614 440,394 Construction work in progress 60,360 57,076 Nuclear fuel under capital lease 71,302 64,621 ---------- ---------- TOTAL UTILITY PLANT 3,607,443 3,593,431 Less - accumulated depreciation and amortization (1,252,532) (1,198,266) ---------- ---------- UTILITY PLANT - NET 2,354,911 2,395,165 ---------- ---------- DEFERRED DEBITS AND OTHER ASSETS Regulatory assets: SFAS 109 regulatory asset - net 208,795 221,996 Unamortized loss on reacquired debt 57,770 57,150 Other regulatory assets 189,567 188,256 Other 12,737 11,265 ---------- ---------- TOTAL 468,869 478,667 ---------- ---------- TOTAL ASSETS $3,488,824 $3,431,205 ========== ========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) 1999 1998 (In Thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Currently maturing long-term debt $102,947 $175,820 Accounts payable: Associated companies 47,186 25,975 Other 23,311 19,420 Taxes accrued 122,750 76,806 Accumulated deferred income taxes 2,542 5,022 Interest accrued 34,337 42,022 Obligations under capital leases 41,835 41,835 Other 1,585 1,543 ---------- ---------- TOTAL 376,493 388,443 ---------- ---------- DEFERRED CREDITS AND OTHER LIABILITIES Accumulated deferred income taxes 452,016 506,727 Accumulated deferred investment tax credits 94,957 96,695 Obligations under capital leases 29,466 22,786 FERC settlement - refund obligation 40,338 43,159 Other regulatory liabilities 76,373 43,309 Decommissioning 118,630 107,365 Regulatory reserves 241,779 159,287 Accumulated provisions 1,744 1,971 Other 18,273 17,524 ---------- ---------- TOTAL 1,073,576 998,823 ---------- ---------- Long-term debt 1,156,963 1,159,830 SHAREHOLDERS' EQUITY Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares 789,350 789,350 Retained earnings 92,442 94,759 ---------- ---------- TOTAL 881,792 884,109 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,488,824 $3,431,205 ========== ========== See Notes To Financial Statements.
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 actions filed by Entergy Gulf States in the U.S. Bankruptcy Court in which the Cajun bankruptcy case is pending. The appeals of the bankruptcy judge's rulings in the declaratory judgment actions have been stayed pending a resolution of the plan of reorganization confirmation process in the bankruptcy case. Capital Requirements and Financing (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 Entergy's estimated construction expenditures (excluding nuclear fuel) for the years 1999, 2000, and 2001 and long-term debt and preferred stock maturities and cash sinking fund requirements for the period 1999- 2001. Sales Warranties and Indemnities (Entergy Corporation) See Note 9 in the Form 10-K for information on certain warranties made by Entergy or its subsidiaries in the Entergy London and CitiPower sales transactions. Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 9 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. In July 1999, Entergy's non-utility nuclear power business purchased the 670 MW Pilgrim Nuclear Station (Pilgrim) from Boston Edison (BECO). As discussed in the Form 10-K, the Price-Anderson Act assessment exposure for Pilgrim is $88.1 million per nuclear incident. With the addition of Pilgrim, the private insurance program providing coverage for worker tort claims discussed in the Form 10-K provides for a maximum assessment of approximately $18.6 million for Entergy's six nuclear units. Pilgrim is insured for $1.15 billion in property damages under the insurance programs discussed in the Form 10-K. Pilgrim's assessment maximum under the property damage and replacement power/business interruption insurance programs discussed in the Form 10-K is $7.3 million. The spent fuel storage facility at Pilgrim is expected to provide storage capacity until approximately 2003. The facility will be modified to provide sufficient capacity through approximately 2012. As part of the Pilgrim purchase, BECO has funded a $471 million decommissioning trust fund, which based on Entergy's estimate is adequate to cover future decomissioning costs. ANO Matters (Entergy Corporation and Entergy Arkansas) See Note 9 to the financial statements in the Form 10-K for information on cracks in a number of steam generator tubes at ANO 2 that were discovered and repaired during an outage in March 1992, and the replacement of the steam generators scheduled in 2000. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent outage in February 1999. Environmental Issues (Entergy Gulf States) Entergy Gulf States has been designated as a potentially responsible party (PRP) for the cleanup of certain hazardous waste disposal sites. Entergy Gulf States is currently negotiating with the EPA and state authorities regarding the clean up of certain of these sites. As of June 30, 1999, a remaining recorded liability of approximately $20 million existed relating to the clean up of the remaining sites at which Entergy Gulf States has been designated a PRP. See "Environmental Regulation" in Item 1 of Part I of the Form 10-K for additional discussion of Entergy Gulf States environmental clean-up activity and related litigation. (Entergy Louisiana and Entergy New Orleans) During 1993, the Louisiana Department of Environmental Quality (LDEQ) issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana and Entergy New Orleans have determined that certain of their power plant wastewater impoundments were affected by these regulations and chose to upgrade or close them. Cumulative expenditures relating to the upgrades and closures of wastewater impoundments were $7.1 million as of June 30, 1999. At June 30, 1999, remaining recorded liabilities in the amount of $5.4 million and $0.5 million existed for wastewater upgrades and closures for Entergy Louisiana and Entergy New Orleans, respectively. Completion of this work is pending LDEQ approval. 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, which were refinanced in 1997. Entergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from these lease transactions. Additionally, Entergy Louisiana may be required to assume the outstanding bonds issued by the Owner Trustee under these leases to finance, in part, its acquisition of the undivided interests in Waterford 3. See Note 10 to the Form 10-K for further information. Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans) Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are defendants in numerous lawsuits filed by former employees asserting that they were wrongfully terminated and/or discriminated against due to age, race, and/or sex. Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are vigorously defending these suits and deny any liability to the plaintiffs. However, no assurance can be given as to the outcome of these cases. Reimbursement Agreement (System Energy) Under a bank letter of credit and reimbursement agreement, System Energy has agreed to a number of covenants relating to the maintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the agreement, to maintain its equity at not less than 33% of its adjusted capitalization (defined in the agreement to include certain amounts not included in capitalization for financial statement purposes). In addition, System Energy must maintain, with respect to each fiscal quarter during the term of the agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the agreement) of at least 1.60 times earnings. System Energy was in compliance with the above covenants at June 30, 1999. See Note 9 to the Form 10-K for further information. Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans) In addition to those discussed above, Entergy and the domestic utility companies are involved in a number of legal proceedings and claims in the ordinary course of their business. While management is unable to predict the outcome of such litigation, it is not expected that the ultimate resolution of these matters will have a material adverse effect on results of operations, cash flows, or financial condition of these entities. NOTE 2. RATE AND REGULATORY MATTERS Retail Rate Proceedings Filings with the APSC (Entergy Corporation and Entergy Arkansas) Entergy Arkansas' rate schedules include an Energy Cost Recovery Rider to recover the costs of fuel and purchased energy costs. The rider utilizes projected energy costs for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over-recovery or under-recovery of the energy cost for the prior calendar year. In March 1999, Entergy Arkansas filed its annually redetermined energy cost rate with the APSC in accordance with the Energy Cost Recovery Rider formula and special circumstance agreement. The filing reflected that an increase was warranted to offset an under- recovery of the energy costs for 1998. The increased energy cost rate is effective April 1999 through March 2000. See Note 2 to the Form 10-K for information regarding the settlement agreement filed with the APSC and the establishment of a transition cost account. The estimated transition cost account reserve recorded for Entergy Arkansas in 1998 was adjusted in June 1999 as a result of the final 1998 APSC order on the transition cost account for a negative net income impact of $.9 million. The results of operations reflect these charges in operating expenses. As of June 30, 1999, the transition cost account balance was $94.6 million. Filings with the PUCT (Entergy Corporation and Entergy Gulf States) Previous developments and information related to Entergy Gulf States' retail rate proceedings are presented in Note 2 to the Form 10-K. In June 1999, the PUCT issued its final order approving the settlement agreement that Entergy Gulf States had entered into in February 1999. On July 20, 1999, intervenor Office of Public Utility Counsel (OPC) filed a motion for rehearing, addressing limited portions of the discussion included in the final order. On August 5, 1999, the PUCT voted not to hear the OPC's motion for rehearing. The OPC then filed a notice to withdraw from the settlement alleging that the PUCT order was not materially consistent with the settlement agreement and that the withdrawal rendered the agreement null and void. The PUCT is expected to consider the matter in mid-August. Entergy Gulf States cannot predict the impact of OPC's notice to withdraw on this proceeding. The settlement agreement resolves the pending appeal of Entergy Gulf States' 1996 rate proceedings as well as its 1998 rate proceedings and all of the settling parties' pending appeals in other matters, except for the appeal in the River Bend abeyed cost recovery proceeding. The settlement agreement provides for the following: o an annual $4.2 million base rate reduction, effective March 1, 1999, which is in addition to the annual $69 million base rate reduction (net of River Bend accounting order deferrals) in the PUCT's second order on rehearing in October 1998; o a methodology for semi-annual revisions of the fixed fuel factor based on the market price of natural gas; o a base rate freeze through June 1, 2000; o amortization of the remaining River Bend accounting order deferrals as of January 1, 1999, over three years on a straight-line basis, provided that such accounting order deferrals shall not be recognized in any subsequent base rate case or stranded cost calculation; o the dismissal of all pending appeals of the settling parties relating to Entergy Gulf States' proceedings with the PUCT, except the River Bend appeal discussed in Note 2 to the Form 10-K; and o the potential recovery in the River Bend appeal is limited to $115 million net plant in service as of January 1, 2002, less depreciation over the remaining life of the plant beginning January 1, 2002 through the date the plant costs are included in rate base, provided that any such recovery shall not be used to increase rates above the level agreed to in the settlement agreement. As a result of the settlement agreement, in June 1999, Entergy Gulf States o removed a $207.3 million deferred debit and the associated provision recorded for unrecovered purchased power costs and deferred revenue from Nelson Industrial Steam Company from its balance sheet, which had no net income impact on Entergy Gulf States; o removed the reserve for River Bend plant costs held in abeyance and reduced the plant asset, resulting in other income of $4.8 million; and o removed the $93.9 million reserve for the amortization of River Bend accounting order deferrals to reflect the three year amortization schedule detailed in the agreement. The income impact of this removal was largely offset by an increase in the rate of amortization of the accounting order deferrals. In December 1998, the PUCT issued an order approving the implementation of a revised fixed fuel factor and fuel and purchased power surcharge that would result in increased revenues of $42.4 million annually and recovery of $112.1 million of under-recovered fuel costs, inclusive of interest, over a 24-month period. These increases were implemented in the first billing cycle in February 1999. In March 1999, North Star Steel Texas, Inc. and certain cities served by Entergy Gulf States appealed the PUCT's order to the State District Court in Travis County, Texas. Entergy Gulf States cannot predict the outcome of such appeals, although these cities have agreed to dismiss their appeal upon approval of the settlement agreement described above. Based on the settlement agreement discussed above, Entergy Gulf States has adopted a methodology for calculating its fixed fuel factor based on the market price of natural gas. This calculation and any necessary adjustments to the fuel factor will be made semi- annually effective March 1, 1999. The calculation for March 1, 1999 showed that the fuel factor adopted in the December 1998 PUCT order discussed above should be reduced. This fuel factor reduction was approved by the PUCT in February 1999. The amounts at issue in this proceeding will be the subject of fuel reconciliation proceedings before the PUCT, including a fuel reconciliation case filed by Entergy Gulf States on July 15, 1999, in which the PUCT will consider the reasonableness of Entergy Gulf States' fuel and purchased power expenses incurred between July 1, 1996 and February 28, 1999. Management cannot predict the ultimate outcome of the fuel reconciliation proceedings. In June 1999, the PUCT instituted a proceeding to consider the final adjustment of the rate refunds that were ordered in the PUCT's October 1998 second order on rehearing described in Note 2 to the Form 10-K. These refunds were required to occur over the fourteen- month period of August 1998 through September 1999. The PUCT issued an order on July 16, 1999 adopting a methodology which requires Entergy Gulf States to refund approximately an additional $24 million. This refund was recorded in the second quarter of 1999 and is reflected as a reduction in operating revenues. Further proceedings before the PUCT will be required to determine the precise amount of the refund. Filings with the LPSC (Entergy Corporation, Entergy Gulf States and Entergy Louisiana) In September 1996, the LPSC completed the second phase of its review of Entergy Gulf States' fuel costs, which covered the period October 1991 through December 1994. In October 1996, the LPSC issued an order requiring a $34.2 million refund. The refund includes a disallowance of $14.3 million of capital costs (including interest) related to certain gas transportation and storage facilities, which were recovered through the fuel clause, and which have been refunded pursuant to the October 1996 LPSC Settlement. Entergy Gulf States will be permitted to recover these costs in the future through base rates. Subsequently, Entergy Gulf States appealed and received an injunction to stay this order, except insofar as the order required the $14.3 million refund. In January 1999, the Louisiana Supreme Court affirmed the LPSC's October 1996 order. Pursuant to this decision, Entergy Gulf States expects to refund $26.2 million, including interest, in the third quarter of 1999. Management reserved for this refund in 1998 in connection with estimates of the probable outcome of this proceeding and the annual earnings reviews discussed in Note 2 to the Form 10-K. In March 1999, the LPSC deferred making a decision on whether electric industry restructuring is in the public interest. Anticipating that retail competition will be in the public interest at some future date, the LPSC approved the development of a Louisiana specific plan for possible future implementation. The LPSC staff, outside consultants, and counsel were directed to work together to analyze and resolve outstanding issues and recommend a plan for the implementation of retail competition for consideration by the LPSC on or before January 1, 2001. Once the Louisiana specific plan is presented to the LPSC, and if it is determined that retail competition is in the public interest, the LPSC staff, outside consultants, counsel, and industry members will work together to refine the submitted plan in order that it can be implemented at a future date. In April 1999, Entergy Louisiana submitted its fourth annual performance-based formula rate plan filing for the 1998 test year. The filing indicated that a $20.7 million base rate reduction might be appropriate, for implementation on August 2, 1999. Based on Entergy Louisiana's filing and on subsequent comments filed by Entergy Louisiana, the LPSC staff, and other parties, Entergy Louisiana implemented an interim rate reduction of approximately $15.0 million, effective August 1, 1999. Entergy Louisiana's filing will then be subject to further review by the LPSC, which may result in an additional change in rates. No procedural schedule has been established by the LPSC. Also in April 1999, the Louisiana Supreme Court rendered a decision in the second post-Merger earnings review of Entergy Gulf States. Previous developments and information related to Entergy Gulf States' post-Merger earnings reviews are presented in Note 2 to the financial statements to the Form 10-K. In this most recent decision, the Louisiana Supreme Court decided in favor of Entergy Gulf States on two of the issues raised in its appeal, one of which will reduce the refund that Entergy Gulf States will be required to make from $9.6 million to $6.0 million. The case has been remanded to the LPSC, and management is continuing to evaluate the implications of this decision. In May 1999, Entergy Gulf States filed its sixth required post- Merger earnings analysis with the LPSC. This filing will be subject to review by the LPSC, which may result in a change in rates. In June 1999, Entergy Gulf States recorded an additional $8.8 million reserve for management's updated estimates of the outcomes of the annual earnings reviews and fuel cost review in Louisiana. This reserve is reflected as a reduction of Entergy Gulf States' operating revenues. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) In March 1999, Entergy Mississippi submitted its annual performance-based formula rate plan filing for the 1998 test year. In April 1999, the MPSC issued an order approving a prospective rate reduction of $13.3 million. This rate reduction went into effect May 1, 1999. In June 1999, Entergy Mississippi revised its March 1999 filing to include a portion of refinanced long-term debt not included in the original filing. This revision resulted in an additional rate reduction of approximately $1.5 million, effective July 1999. Filings with the Council (Entergy Corporation and Entergy New Orleans) In April 1999, Entergy New Orleans filed, in compliance with directives of the Council, a plan that would allow for gas retail open access in New Orleans. The plan outlines the conditions under which Entergy New Orleans could support retail open access should the Council find it in the public interest. It is anticipated that a hearing process on the public interest issue will be completed by December 1999. Proposed Rate Increase (System Energy) As reported in the Form 10-K, System Energy filed an application with FERC in 1995 requesting a rate increase of $65.5 million. The rate increase was put into effect, subject to refund, in December 1995. After holding hearings in 1996, a FERC ALJ found that portions of System Energy's request should be rejected, including a proposed increase in return on common equity from 11% to 13% and a requested change in decommissioning cost methodology. The ALJ recommended a decrease in the return on common equity from 11% to 10.86%. Other portions of System Energy's request for a rate increase were approved by the ALJ. All of the ALJ's findings are advisory, and may be accepted, modified or rejected by FERC in a final order. No such order has been forthcoming. If the FERC were to approve the ALJ's findings, System Energy would be required to make a refund of money collected under its proposed tariff in the amount of $212 million as of June 30, 1999, together with interest in the amount of $29.8 million. As of June 30, 1999, System Energy has provided reserves for such refund and interest thereon in the aggregate amount of $241.8 million. It is not certain when FERC may issue a final order in this rate proceeding or whether FERC will accept, modify, or reject the ALJ's findings. Although management believes that the reserves discussed above are adequate to reflect the probable outcome of this proceeding, additional reserves or write-offs could be required in the future. NOTE 3. COMMON STOCK (Entergy Corporation) During the six months ended June 30, 1999, Entergy Corporation repurchased 505,550 shares of common stock in the open market. These shares will be used to fulfill the requirements of various compensation and benefit plans. Entergy Corporation issued 585,398 shares of its previously repurchased common stock to satisfy stock options exercised and employee stock purchases. In addition, Entergy Corporation received proceeds of $3.8 million from the issuance of 125,330 shares of common stock under its dividend reinvestment and stock purchase plan. In addition, on July 30, 1999, the Board approved the commitment of up to $750 million in funds towards the repurchase of Entergy common stock. These purchases will be made on a discretionary basis, utilizing internal funds. NOTE 4. LONG-TERM DEBT (Entergy Mississippi) On July 1, 1999 Entergy Mississippi redeemed, prior to maturity, Pollution Control Revenue Bonds totaling $30 million with rates and maturity dates of 7.625% due 2012, 9.0% and 9.5% due 2013, and 9.5% due 2014. Proceeds from the issuance on May 28, 1999 of $30 million of Pollution Control Revenue Refunding Bonds, accruing interest at a variable rate, initially 3.25%, due 2022, were used for these redemptions. (Entergy Louisiana) On July 6, 1999, Entergy Louisiana redeemed, prior to maturity, $115 million of 8.25% Pollution Control Revenue Bonds due 2014. Proceeds from the issuance on June 25, 1999 of $55 million of Pollution Control Revenue Refunding Bonds, accruing interest at a rate of 4.85% per annum for the first three years, due 2030 and $60 million of Pollution Control Revenue Refunding Bonds, accruing interest at a variable rate, initially 3.75%, due 2030 were used for this redemption. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On July 30, 1999, Entergy Corporation's Board of Directors declared a common stock dividend of $.30 per share, payable on September 1, 1999, to holders of record on August 11, 1999. NOTE 6. BUSINESS SEGMENT INFORMATION (Entergy Corporation) See Note 14 to the financial statements in the Form 10-K for information regarding Entergy's adoption of SFAS 131 and its operating segments. Entergy's segment financial information for the three months ended June 30, 1999 and 1998 is as follows (in thousands):
Domestic Power Entergy CitiPower* All Other* Eliminations Consolidated Utility and Marketing London* System and Energy Trading* 1999 Operating Revenues $1,646,026 $669,027 $ - $ - $9,638 ($8,287) $2,316,404 ------------------------------------------------------------------------------------- Operating Expenses: Fuel & gas purch. for resale 391,581 101,630 - - (2,340) - 490,871 Purchased power 134,380 547,921 - - (273) (5,201) 676,827 Nuclear refueling outages 17,135 - - - - - 17,135 Other operation & maint. 333,614 17,776 - - 52,847 (3,531) 400,706 Deprec, amort. & decomm. 185,514 1,205 - - 1,220 - 187,939 Taxes other than income 82,097 215 - - 741 - 83,053 Other regulatory credits (2,845) - - - - - (2,845) Amort. of rate deferrals 88,767 - - - - - 88,767 ------------------------------------------------------------------------------------- Total oper. expenses 1,230,243 668,747 - - 52,195 (8,732) 1,942,453 ------------------------------------------------------------------------------------- Operating Income 415,783 280 - - (42,557) 445 373,951 Other Income (Deductions) 18,562 716 - - 59,442 (590) 78,130 Interest Charges 151,574 (49) - - 4,510 (145) 155,890 ------------------------------------------------------------------------------------- Income Before Income Taxes 282,771 1,045 - - 12,375 - 296,191 Income Taxes 107,903 1,187 - - (22,657) - 86,433 ------------------------------------------------------------------------------------- Net Income (Loss) $174,868 ($142) $ - $ - $35,032 $ - $209,758 ===================================================================================== 1998 Operating Revenues $1,542,426 $389,142 $479,001 $85,771 $23,837 ($11,363) $2,508,814 ------------------------------------------------------------------------------------- Operating Expenses: Fuel & gas purch. for resale 311,216 18,632 - - (1,994) - 327,854 Purchased power 189,401 318,229 296,339 27,623 (14,498) (8,830) 808,264 Nuclear refueling outages 21,015 - - - - - 21,015 Other operation & maint. 331,690 14,410 73,179 23,921 60,283 (2,978) 500,505 Deprec, amort. & decomm. 189,473 1,290 35,275 7,031 12,020 - 245,089 Taxes other than income 82,005 305 - 7,341 667 - 90,318 Other regulatory credits (25,017) - - - - - (25,017) Amort. of rate deferrals 68,076 - - - - - 68,076 ------------------------------------------------------------------------------------- Total oper. expenses 1,167,859 352,866 404,793 65,916 56,478 (11,808) 2,036,104 ------------------------------------------------------------------------------------- Operating Income 374,567 36,276 74,208 19,855 (32,641) 445 472,710 Other Income (Deductions) 7,850 2,080 8,818 136 3,282 (684) 21,482 Interest Charges 136,566 94 49,568 13,758 11,884 (239) 211,631 ------------------------------------------------------------------------------------- Income Before Income Taxes 245,851 38,262 33,458 6,233 (41,243) - 282,561 Income Taxes 99,988 14,972 10,409 1,916 (60,703) - 66,582 ------------------------------------------------------------------------------------- Net Income (Loss) $145,863 $23,290 $23,049 $4,317 $19,460 $ - $215,979 ===================================================================================== Entergy's segment financial information for the six months ended June 30, 1999 is as follows: Domestic Power Entergy CitiPower* All Other* Eliminations Consolidated Utility Marketing London* and System and Energy Trading* 1999 Operating Revenues $2,932,729 $1,013,465 $ - $ - $21,734 ($11,602) $3,956,326 ------------------------------------------------------------------------------------ Operating Expenses: Fuel & gas purch. for resale 736,178 160,006 - - (2,340) - 893,844 Purchased power 215,728 842,234 - - (273) (7,063) 1,050,626 Nuclear refueling outages 36,820 - - - - - 36,820 Other operation & maint. 651,640 31,785 - - 90,609 (5,696) 768,338 Deprec, amort. & decomm. 377,672 2,328 - - 4,981 - 384,981 Taxes other than income 164,393 399 - - 1,329 - 166,121 Other regulatory credits (18,970) - - - - - (18,970) Amort. of rate deferrals 97,180 - - - - - 97,180 ------------------------------------------------------------------------------------ Total oper. expenses 2,260,641 1,036,752 - - 94,306 (12,759) 3,378,940 ------------------------------------------------------------------------------------ Operating Income 672,088 (23,287) - - (72,572) 1,157 577,386 Other Income (Deductions) 29,675 1,983 - - 93,887 (1,469) 124,076 Interest Charges 276,822 (113) - - 10,795 (312) 287,192 ------------------------------------------------------------------------------------ Income Before Income Taxes 424,941 (21,191) - - 10,520 - 414,270 Income Taxes 167,497 (7,036) - - (28,855) - 131,606 ------------------------------------------------------------------------------------ Net Income (Loss) $257,444 ($14,155) $ - $ - $39,375 $ - $282,664 ==================================================================================== 1998 Operating Revenues $2,923,472 $657,558 $1,029,791 $157,501 $69,169 ($15,585) $4,821,906 ------------------------------------------------------------------------------------ Operating Expenses: Fuel & gas purch. for resale 651,477 27,334 - - (1,994) - 676,817 Purchased power 326,750 569,475 663,235 54,010 (14,498) (12,034) 1,586,938 Nuclear refueling outages 43,689 - - - - - 43,689 Other operation & maint. 649,340 21,485 167,365 33,071 117,373 (4,441) 984,193 Deprec, amort. & decomm. 383,362 2,540 69,020 14,442 28,183 - 497,547 Taxes other than income 169,103 510 - 15,121 1,378 - 186,112 Other regulatory credits (59,783) - - - - - (59,783) Amort. of rate deferrals 148,176 - - - - - 148,176 ------------------------------------------------------------------------------------ Total oper. expenses 2,312,114 621,344 899,620 116,644 130,442 (16,475) 4,063,689 ------------------------------------------------------------------------------------ Operating Income 611,358 36,214 130,171 40,857 (61,273) 890 758,217 Other Income (Deductions) 25,887 4,224 17,557 145 8,921 (1,330) 55,404 Interest Charges 275,603 94 97,142 28,339 21,869 (440) 422,607 ------------------------------------------------------------------------------------ Income Before Income Taxes 361,642 40,344 50,586 12,663 (74,221) - 391,014 Income Taxes 151,776 15,827 15,660 2,491 (70,773) - 114,981 ------------------------------------------------------------------------------------ Net Income (Loss) $209,866 $24,517 $34,926 $10,172 ($3,448) $ - $276,033 ====================================================================================
Businesses marked with * are referred to as the "competitive businesses," with the exception of the parent company, Entergy Corporation, which is also included in the "All Other" column. Reconciling items are principally intersegment activity. __________________________________ In the opinion of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, the accompanying unaudited condensed financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented. However, the business of the domestic utility companies and System Energy is subject to seasonal fluctuations with the peak periods occurring during the third quarter. The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year. ENTERGY CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Item 1. Legal Proceedings See "PART I, Item 1, Other Regulation and Litigation" in the Form 10-K for a discussion of legal proceedings affecting Entergy. Set forth below are updates to the information contained in the Form 10-K. 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 actions 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. This proceeding was dismissed in March 1999 in accordance with the settlement agreement discussed in the Form 10-K. Ratepayer Lawsuits (Entergy Corporation, Entergy Louisiana, and Entergy New Orleans) See "Ratepayer Lawsuits" in Item 1 of Part I of the Form 10-K and in Item 1 of Part II of the 1999 first quarter Form 10-Q for a discussion of the lawsuits filed by ratepayers with the LPSC and in Louisiana state courts in Orleans and East Baton Rouge Parishes. The plaintiffs in the fuel adjustment clause proceeding before the LPSC have filed testimony in which they purport to quantify many of their claims in an amount totaling $488 million, plus interest. Entergy Louisiana believes that this case is without merit and is vigorously defending itself in the lawsuit. The plaintiffs in the fuel adjustment clause case against Entergy New Orleans, Entergy Corporation, Entergy Services, Inc. and Entergy Power, Inc. pending in state court in Orleans Parish have filed a similar complaint with the New Orleans City Council against the same defendants named in the state court case. Entergy New Orleans believes that this case is without merit and is vigorously defending itself in the lawsuit. Fiber Optic Cable Litigation (Entergy Corporation, Entergy Gulf States) See "Fiber Optic Cable Litigation" in Item 1 of Part II of the 1999 first quarter Form 10-Q for information relating to the lawsuit filed by a group of property owners against Entergy Corporation, Entergy Gulf States, Entergy Services, and ETHC. Franchise Service Area Litigation (Entergy Gulf States) See "Franchise Service Area Litigation" in Item 1 of Part 1 of the Form 10-K for information relating to the request filed by Beaumont Power and Light Company (BP&L) with the PUCT to obtain a certificate of convenience and necessity for those portions of Jefferson County outside the boundaries of any municipality for which Entergy Gulf States provides retail electric service. In March 1999 in a similar proceeding involving Corpus Christi Power & Light Company (CCP&L), the ALJ issued an interim order finding that CCP&L has not demonstrated that it is a public utility. The PUCT's General Counsel and CCP&L have filed appeals of the interim order, and the appeal was heard by the PUCT in April 1999. CCP&L has filed, at the request of the PUCT, a list of assets it intends to own and operate as an electric utility. The BP&L proceeding is abated pending resolution of this phase of the CCP&L proceeding. Litigation Environment (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) The four states in which Entergy and the domestic utility companies operate, and in particular Louisiana and Texas, have proven to be unusually litigious environments. Judges and juries in Louisiana and Texas have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. Entergy uses all means appropriate to contest litigation threatened or filed against it, but the litigation environment in the states referred to poses a significant business risk. Environmental Matters (Entergy Louisiana and Entergy New Orleans) Entergy New Orleans is currently involved in the stabilization and abatement of asbestos containing material at the A. B. Paterson Generating Plant, located in New Orleans, Louisiana. Entergy has notified the Louisiana Department of Environmental Quality of its intent to repair and remove insulation and machinery gaskets. On- site abatement of gaskets and insulating material is scheduled to be completed during the third quarter of 1999. The cost incurred through June 30, 1999 is approximately $1.1 million, and future costs are not expected to exceed the existing provision of approximately $1.1 million. During 1993, the LDEQ issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana and Entergy New Orleans have determined that certain of their power plant wastewater impoundments were affected by these regulations and have chosen to upgrade or close them. As a result, a remaining recorded liability in the amount of $5.4 million for Entergy Louisiana and $500,000 for Entergy New Orleans existed at June 30, 1999 for wastewater upgrades and closures. Completion of this work is awaiting the LDEQ's approval. Ice Storm Litigation (Entergy Corporation and Entergy Gulf States) In January 1997, a group of Entergy Gulf States customers in Texas filed a lawsuit against Entergy Corporation, Entergy Gulf States, and other Entergy subsidiaries in state court in Jefferson County, Texas purportedly on behalf of all Entergy Gulf States customers in Texas who sustained outages in a January 1997 ice storm. The lawsuit alleges that Entergy failed to properly maintain its electrical distribution system and respond to the ice storm. The district court certified the class in April 1999. Entergy has appealed the class certification, and is vigorously defending itself in the lawsuit. Entergy believes that the lawsuit is without merit. A similar lawsuit was filed in Louisiana in 1997, in which class certification was denied. Item 4. Submission of Matters to a Vote of Security Holders Election of Board of Directors Entergy Corporation The annual meeting of stockholders of Entergy Corporation was held on May 14, 1999. The following matters were voted on and received the specified number of votes for, abstentions, votes withheld (against), and broker non-votes: 1. Election of Directors: Broker Non- Name of Nominee Votes For Abstentions Votes Withheld Votes W. Frank Blount 211,606,931 N/A 3,033,455 N/A John A. Cooper, Jr. 211,627,403 N/A 3,012,983 N/A George W. Davis 211,505,984 N/A 3,134,402 N/A Norman C. Francis 211,519,801 N/A 3,120,585 N/A J. Wayne Leonard 208,600,306 N/A 6,040,080 N/A Robert v.d. Luft 211,596,589 N/A 3,043,797 N/A Kinnaird R. McKee 211,522,279 N/A 3,118,107 N/A Thomas F. McLarty, III 208,060,960 N/A 6,579,426 N/A Paul W. Murrill 211,467,129 N/A 3,173,257 N/A James R. Nichols 211,597,601 N/A 3,042,785 N/A Eugene H. Owen 211,583,650 N/A 3,056,736 N/A John N. Palmer, Sr. 211,677,291 N/A 2,963,095 N/A D. H. Reilley 208,580,920 N/A 6,059,466 N/A Wm. Clifford Smith 211,642,696 N/A 2,997,690 N/A Bismark A. Steinhagen 211,653,251 N/A 2,987,135 N/A 2. Stockholder proposal that Entergy discontinue bonuses immediately and discontinue the use of options, rights, stock appreciation rights, etc., after termination of any existing programs for top management: 186,828,055 votes against; 15,234,036 broker non-votes; 10,314,168 votes for; and 2,264,127 abstentions. 3. Stockholder proposal that beginning with fiscal year 2000, Entergy policy shall be to tie at least half of Executive Management's compensation to the amount of common stockholder's dividend paid out each year: 185,955,883 votes against; 15,224,046 broker non-votes; 11,468,143 votes for; and 1,992,314 abstentions. 4. Stockholder proposal that Entergy be compelled to resume issuing Quarterly Stockholders Reports: 189,041,197 votes against; 15,175,042 broker non-votes; 7,661,850 votes for; and 2,762,297 abstentions. 5. Ratify the appointment of independent public accountants, PricewaterhouseCoopers LLP for the year 1999: 212,809,750 votes for; 916,286 votes against; 914,350 abstentions; and broker non-votes are not applicable. (Entergy Arkansas) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Arkansas: Thomas J. Wright, Donald C. Hintz, and C. John Wilder. (Entergy Gulf States) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Gulf States: Jerry D. Jackson, Joseph F. Domino, Donald C. Hintz, and C. John Wilder. (Entergy Louisiana) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Louisiana: Jerry D. Jackson, Donald C. Hintz, and C. John Wilder. (Entergy Mississippi) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Mississippi: Carolyn C. Shanks, Donald C. Hintz, and C. John Wilder. (Entergy New Orleans) A consent in lieu of the annual meeting of common stockholders was executed on July 7, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy New Orleans: Daniel F. Packer, Donald C. Hintz, and C. John Wilder. (System Energy) A consent in lieu of the annual meeting of common stockholders was executed on July 30, 1999. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock. The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of System Energy: Jerry W. Yelverton, Donald C. Hintz, and C. John Wilder. Item 5. Other Information Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) The domestic utility companies and System Energy have calculated ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends pursuant to Item 503 of Regulation S-K of the SEC as follows: Ratios of Earnings to Fixed Charges Twelve Months Ended December 31, June 30, 1994 1995 1996 1997 1998 1999 Entergy Arkansas 2.32 2.56 2.93 2.54 2.63 2.49 Entergy Gulf States (b)- 1.86 1.47 1.42 1.40 1.62 Entergy Louisiana 2.91 3.18 3.16 2.74 3.18 3.91 Entergy Mississippi 2.12 2.92 3.40 2.98 3.04 2.23 Entergy New Orleans 1.91 3.93 3.51 2.70 2.59 3.02 System Energy 1.23 2.07 2.21 2.31 2.52 2.00 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, June 30, 1994 1995 1996 1997 1998 1999 Entergy Arkansas 1.97 2.12 2.44 2.24 2.28 2.19 Entergy Gulf States (a) (b)- 1.54 1.19 1.23 1.20 1.41 Entergy Louisiana 2.43 2.60 2.64 2.36 2.75 3.43 Entergy Mississippi 1.81 2.51 2.95 2.69 2.73 2.00 Entergy New Orleans 1.73 3.56 3.22 2.44 2.36 2.75 (a) "Preferred Dividends" in the case of Entergy Gulf States also include dividends on preference stock. (b) 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. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* ** 4(a) - Thirteenth Supplemental Indenture, dated as of May 1, 1999, to Entergy Mississippi's Mortgage and Deed of Trust, dated as of February 1, 1988 (filed as Exhibit A- 2(c) to Rule 24 Certificate dated May 12, 1999 in File No. 70-8719). ** 4(b) - Fourteenth Supplemental Indenture, dated as of May 1, 1999, to Entergy Mississippi's Mortgage and Deed of Trust, dated as of February 1, 1988 (filed as Exhibit A- 3(a) to Rule 24 Certificate dated June 8, 1999 in File No. 70-8719). ** 4(c) Fifty-fourth Supplemental Indenture, dated as of June 1, 1999, to Entergy Louisiana's Mortgage and Deed of Trust, dated as of April 1, 1944 (filed as Exhibit A-3(a) to Rule 24 Certificate dated July 6, 1999 in File No. 70- 9141). 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of June 30, 1999. 27(b) - Financial Data Schedule for Entergy Arkansas as of June 30, 1999. 27(c) - Financial Data Schedule for Entergy Gulf States as of June 30, 1999. 27(d) - Financial Data Schedule for Entergy Louisiana as of June 30, 1999. 27(e) - Financial Data Schedule for Entergy Mississippi as of June 30, 1999. 27(f) - Financial Data Schedule for Entergy New Orleans as of June 30, 1999. 27(g) - Financial Data Schedule for System Energy as of June 30, 1999. 99(a) - Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. ** 99(g) - Annual Reports on Form 10-K of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the fiscal year ended December 31, 1998, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0- 5807, and 1-9067, respectively). ** 99(h) - Quarterly Reports on Form 10-Q of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the quarter ended March 31, 1999, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ___________________________ Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of Entergy Corporation and its subsidiaries on a consolidated basis. * Reference is made to a duplicate list of exhibits being filed as a part of this report on Form 10-Q for the quarter ended June 30, 1999, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being filed with this report on Form 10-Q for the quarter ended June 30, 1999. ** 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 April 27, 1999, was filed with the SEC on April 27, 1999, reporting information under Item 5. "Other Events". A Current Report on Form 8-K, dated July 23, 1999, was filed with the SEC on July 23, 1999, 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. /s/ Nathan E. Langston Nathan E. Langston Vice President and Chief Accounting Officer (For each Registrant and for each as Principal Accounting Officer) Date: August 13, 1999 EX-27 2
UT This schedule contains summary financial information extracted from Entergy Corporation and Subsidiaries financial statements for the quarter ended June 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000065984 ENTERGY CORPORATION AND SUBSIDIARIES 023 ENTERGY CORPORATION AND SUBSIDIARIES 1,000 6-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 15,170,927 1,280,234 4,083,332 2,549,239 0 23,083,732 2,470 4,632,526 2,640,373 7,223,933 305,850 488,454 6,458,758 60,593 0 0 411,297 0 252,717 176,247 7,705,883 23,083,732 3,956,326 131,606 3,378,940 3,378,940 577,386 124,076 701,462 287,192 282,664 20,706 261,958 144,059 319,456 555,550 1.06 1.06
EX-27 3
UT This schedule contains summary financial information extracted from Entergy Arkansas, Inc. financial statements for the quarter ended June 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000007323 ENTERGY ARKANSAS, INC. 001 ENTERGY ARKANSAS, INC. 1,000 6-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 2,831,868 343,765 411,154 438,918 0 4,025,705 470 590,134 514,731 1,105,335 80,000 116,350 1,127,404 667 0 0 340 0 84,410 63,679 1,447,520 4,025,705 699,160 16,559 606,788 606,788 92,372 6,587 98,959 42,460 39,940 4,824 35,116 8,200 41,712 102,600 0 0
EX-27 4
UT This schedule contains summary financial information extracted from Entergy Gulf States, Inc. financial statements for the quarter ended June 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000044570 ENTERGY GULF STATES, INC. 006 ENTERGY GULF STATES, INC. 1,000 6-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 4,140,619 414,600 612,462 557,259 0 5,724,940 114,055 1,152,575 223,940 1,490,570 120,850 201,444 1,632,264 0 0 0 46,025 0 102,280 34,859 2,096,648 5,724,940 970,362 30,459 847,744 847,744 122,618 9,780 132,398 72,684 30,459 8,666 21,793 0 72,247 81,784 0 0
EX-27 5
UT This schedule contains summary financial information extracted from Entergy Louisiana, Inc. financial statements for the quarter ended June 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000060527 ENTERGY LOUISIANA, INC. 012 ENTERGY LOUISIANA, INC. 1,000 6-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 3,301,787 129,272 499,502 352,292 0 4,282,853 1,088,900 0 152,649 1,239,228 105,000 100,500 1,168,410 0 0 0 231,985 0 32,545 32,539 1,372,646 4,282,853 857,736 76,742 612,469 612,469 245,267 3,072 248,339 56,739 114,858 5,048 109,810 31,900 76,443 139,045 0 0
EX-27 6
UT This schedule contains summary financial information extracted from Entergy Mississippi, Inc. financial statements for the quarter ended June 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000066901 ENTERGY MISSISSIPPI, INC. 016 ENTERGY MISSISSIPPI, INC. 1,000 6-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 1,081,543 12,560 140,860 182,841 0 1,417,804 199,326 0 222,902 422,169 0 50,381 462,778 21,027 0 0 30,000 0 338 92 431,019 1,417,804 377,080 5,701 344,230 344,230 32,850 3,858 36,708 19,770 11,237 1,685 9,552 9,100 22,648 34,895 0 0
EX-27 7
UT This schedule contains summary financial information extracted from Entergy New Orleans, Inc. financial statements for the quarter ended June 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000071508 ENTERGY NEW ORLEANS, INC. 017 ENTERGY NEW ORLEANS, INC. 1,000 6-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 311,468 3,259 124,450 54,904 0 494,081 33,744 36,293 76,707 146,744 0 19,780 169,051 0 0 0 0 0 0 0 158,506 494,081 227,343 7,092 204,505 204,505 22,838 1,395 24,233 6,981 10,160 482 9,678 0 7,524 19,798 0 0
EX-27 8
UT This schedule contains summary financial information extracted from System Energy Resources, Inc. financial statements for the quarter ended June 30, 1999 and is qualified in its entirety by reference to such financial statements. 0000202584 SYSTEM ENERGY RESOURCES, INC. 018 SYSTEM ENERGY RESOURCES, INC. 1,000 6-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 2,354,911 123,754 541,290 468,869 0 3,488,824 789,350 0 92,442 881,792 0 0 1,156,963 0 0 0 102,947 0 29,466 41,835 1,275,821 3,488,824 300,122 19,142 177,590 177,590 122,532 9,517 132,049 82,724 30,183 0 30,183 32,500 70,231 201,795 0 0
EX-99 9
Exhibit 99(a) Entergy Arkansas, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 June-99 Fixed charges, as defined: Total Interest Charges $110,814 $115,337 $106,716 $104,165 $96,685 $93,992 Interest applicable to rentals 19,140 18,158 19,121 17,529 15,511 16,159 ------------------------------------------------------ Total fixed charges, as defined 129,954 133,495 125,837 121,694 112,196 110,151 Preferred dividends, as defined (a) 23,234 27,636 24,731 16,073 16,763 15,048 ------------------------------------------------------ Combined fixed charges and preferred dividends, as defined $153,188 $161,131 $150,568 $137,767 $128,959 $125,199 ====================================================== Earnings as defined: Net Income $142,263 $136,666 $157,798 $127,977 $110,951 $105,301 Add: Provision for income taxes: Total 29,220 72,081 84,445 59,220 71,374 58,932 Fixed charges as above 129,954 133,495 125,837 121,694 112,196 110,151 ------------------------------------------------------ Total earnings, as defined $301,437 $342,242 $368,080 $308,891 $294,521 $274,384 ====================================================== Ratio of earnings to fixed charges, as defined 2.32 2.56 2.93 2.54 2.63 2.49 ====================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.97 2.12 2.44 2.24 2.28 2.19 ====================================================== - ------------------------ (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 10
Exhibit 99(b) Entergy Gulf States, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 June 1999 Fixed charges, as defined: Total Interest charges $204,134 $200,224 $193,890 $180,073 $178,220 $170,517 Interest applicable to rentals 21,539 16,648 14,887 15,747 16,927 17,041 ---------------------------------------------------------- Total fixed charges, as defined 225,673 216,872 208,777 195,820 195,147 187,558 Preferred dividends, as defined (a) 52,210 44,651 48,690 30,028 32,031 27,376 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $277,883 $261,523 $257,467 $225,848 $227,178 $214,934 ========================================================== Earnings as defined: Income (loss) from continuing operations before extraordinary items and the cumulative effect of accounting changes ($82,755) $122,919 ($3,887) $59,976 $46,393 $67,336 Add: Income Taxes (62,086) 63,244 102,091 22,402 31,773 49,064 Fixed charges as above 225,673 216,872 208,777 195,820 195,147 187,558 ---------------------------------------------------------- Total earnings, as defined (b) $80,832 $403,035 $306,981 $278,198 $273,313 $303,958 ========================================================== Ratio of earnings to fixed charges, as defined 0.36 1.86 1.47 1.42 1.40 1.62 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 0.29 1.54 1.19 1.23 1.20 1.41 ========================================================== (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 11
Exhibit 99(c) Entergy Louisiana, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 June 99 Fixed charges, as defined: Total Interest $136,444 $136,901 $132,412 $128,900 $122,890 $118,219 Interest applicable to rentals 8,332 9,332 10,601 9,203 9,564 8,877 ---------------------------------------------------------- Total fixed charges, as defined 144,776 146,233 143,013 138,103 132,454 127,096 Preferred dividends, as defined (a) 29,171 32,847 28,234 22,103 20,925 18,075 ---------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $173,947 $179,080 $171,247 $160,206 $153,379 $145,171 ========================================================== Earnings as defined: Net Income $213,839 $201,537 $190,762 $141,757 $179,487 $230,882 Add: Provision for income taxes: Total Taxes 63,288 117,114 118,559 98,965 109,104 139,385 Fixed charges as above 144,776 146,233 143,013 138,103 132,454 127,096 ---------------------------------------------------------- Total earnings, as defined $421,903 $464,884 $452,334 $378,825 $421,045 $497,363 ========================================================== Ratio of earnings to fixed charges, as defined 2.91 3.18 3.16 2.74 3.18 3.91 ========================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 2.43 2.60 2.64 2.36 2.75 3.43 ========================================================== - ------------------------ (a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one hundred percent (100%) minus the income tax rate.
EX-99 12
Exhibit 99(d) Entergy Mississippi, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 June 1999 Fixed charges, as defined: Total Interest $52,764 $51,635 $48,007 $45,274 $40,927 $39,773 Interest applicable to rentals 1,716 2,173 2,165 1,947 1,864 2,145 -------------------------------------------------------- Total fixed charges, as defined 54,480 53,808 50,172 47,221 42,791 41,918 Preferred dividends, as defined (a) 9,447 9,004 7,610 5,123 4,878 4,861 -------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $63,927 $62,812 $57,782 $52,344 $47,669 $46,779 ======================================================== Earnings as defined: Net Income $48,779 $68,667 $79,210 $66,661 $59,268 $35,797 Add: Provision for income taxes: Total income taxes 12,476 34,877 41,107 26,744 28,031 15,770 Fixed charges as above 54,480 53,808 50,172 47,221 42,791 41,918 -------------------------------------------------------- Total earnings, as defined $115,735 $157,352 $170,489 $140,626 $130,090 $93,485 ======================================================== Ratio of earnings to fixed charges, as defined 2.12 2.92 3.40 2.98 3.04 2.23 ======================================================== Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.81 2.51 2.95 2.69 2.73 2.00 ======================================================== - ------------------------ (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(e) Entergy New Orleans, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges and Preferred Dividends 12 months 1994 1995 1996 1997 1998 June 1999 Fixed charges, as defined: Total Interest $18,272 $17,802 $16,304 $15,287 $14,792 $14,748 Interest applicable to rentals 1,245 916 831 911 1,045 1,173 --------------------------------------------------------- Total fixed charges, as defined 19,517 18,718 17,135 16,198 15,837 15,921 Preferred dividends, as defined (a) 2,071 1,964 1,549 1,723 1,566 1,592 --------------------------------------------------------- Combined fixed charges and preferred dividends, as defined $21,588 $20,682 $18,684 $17,921 $17,403 $17,513 ========================================================= Earnings as defined: Net Income $13,211 $34,386 $26,776 $15,451 $15,172 $19,657 Add: Provision for income taxes: Total 4,600 20,467 16,216 12,142 10,042 12,507 Fixed charges as above 19,517 18,718 17,135 16,198 15,837 15,921 --------------------------------------------------------- Total earnings, as defined $37,328 $73,571 $60,127 $43,791 $41,051 $48,085 ========================================================= Ratio of earnings to fixed charges, as defined 1.91 3.93 3.51 2.70 2.59 3.02 ========================================================= Ratio of earnings to combined fixed charges and preferred dividends, as defined 1.73 3.56 3.22 2.44 2.36 2.75 ========================================================= - ------------------------ (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.
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Exhibit 99(f) System Energy Resources, Inc. Computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges 12 months 1994 1995 1996 1997 1998 June 1999 Fixed charges, as defined: Total Interest $176,504 $151,512 $143,720 $128,653 $116,060 $138,083 Interest applicable to rentals 7,546 6,475 6,223 6,065 5,189 5,539 ---------------------------------------------------------- Total fixed charges, as defined $184,050 $157,987 $149,943 $134,718 $121,249 $143,622 ========================================================== Earnings as defined: Net Income $5,407 $93,039 $98,668 $102,295 $106,476 $87,293 Add: Provision for income taxes: Total 36,838 75,493 82,121 74,654 77,263 55,714 Fixed charges as above 184,050 157,987 149,943 134,718 121,249 143,622 ---------------------------------------------------------- Total earnings, as defined $226,295 $326,519 $330,732 $311,667 $304,988 $286,629 ========================================================== Ratio of earnings to fixed charges, as defined 1.23 2.07 2.21 2.31 2.52 2.00 ==========================================================
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