UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

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. YesÖ No ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [Ö]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

The aggregate market value of Entergy Corporation Common Stock, $0.01 Par Value, held by non-affiliates as of the end of the second quarter of 2002,2004, was $9.4$12.7 billion based on the reported last sale price of $42.44$56.01 per share for such stock on the New York Stock Exchange on June 28, 2002.30, 2004. Entergy Corporation is directly or indirectly the sole holder of the common stock of Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources, Inc.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders, to be held May 9, 2003,13, 2005, are incorporated by reference into Parts I and III hereof.

TABLE OF CONTENTS

This combined Form 10-K 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 makes representations only as to itself and makes no other representations whatsoever as to any other company.

The report should be read in its entirety as it pertains to each respective registrant. No one section of the report deals with all aspects of the subject matter. Separate Item 6, 7, and 8 sections are provided for each registrant, except for the Notes to the financial statements. The Entergy Corporation Notes to the financial statements are separately presented, but the Notes to the financial statements for the other registrants are combined. These two sets of Notes are marked by headers. All other Items are combined for the registrants. Item 1 is marked by a header to indicate where it applies only to Entergy Corporation and where it applies to one or more of the registrants.

FORWARD-LOOKING INFORMATION

From            In this filing and from time to time, Entergy makes statements concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although Entergy believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements involve a number of risks and uncertainties, and there are factors that could cause actual results to differ materially from those expressed or implied in the statements. Some of those factors (in addition to others described elsewhere in this report and in subsequent securities filings) include:

• resolution of pending and future rate cases and negotiations, including the Entergy New Orleans rate case and various performance-based rate discussions, and other regulatory decisions,proceedings, including those related to Entergy's System Agreement and Entergy's utility supply plan
• Entergy's ability to reducemanage its operation and maintenance costs, particularly at its Non-Utility Nuclear generating facilities including the uncertainty of negotiations with unions to agree to such reductions

• the performance of Entergy's generating plants, and particularly the capacity factorfactors at its nuclear generating facilities
• prices for power generated by Entergy's unregulated generating facilities, - particularly the ability to extend or replace the existing purchased power purchase agreements for those facilities, including the Non-Utility Nuclear plants, - and the prices and availability of power Entergy must purchase for its utility customers
• Entergy's ability to develop and execute on a point of view regarding prices of electricity, natural gas, and other energy-related commodities
• Entergy-Koch's profitability in trading electricity, natural gas, and other energy-related commodities
• changes in the number of participants in the energy trading market, and in their creditworthiness and risk profile
• changes in the financial markets, particularly those affecting the availability of capital and Entergy's ability to refinance existing debt, execute its share repurchase program, and to fund investments and acquisitions
• actions of rating agencies, including changes in the ratings of debt and preferred stock, and changes in the rating agencies' ratings criteria
• changes in inflation and interest rates
• Entergy's ability to purchase and sell assets at attractive prices and on other attractive terms
• volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities
• changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, and the establishment of SeTrans or anothera regional transmission organization that includes Entergy's utility service territory, and the application of market power criteria by the FERC
• changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of Indian Point or other nuclear generating facilities
• uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel storage and disposal
• resolution of pending or future applications for license extensions or modifications of nuclear generating facilities
• changes in law resulting from proposed energy legislation
• changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, mercury, and other substances
• the economic climate, and particularly growth in Entergy's service territory
• variations in weather and the occurrence of hurricanes and other storms and disasters
• advances in technology
• the potential impactseffects of threatened or actual terrorism and war
• the successeffects of Entergy's strategies to reduce taxescurrent tax payments
• the effects of litigation and government investigations
• changes in accounting standards,
• changes in corporate governance, and securities law requirements and
• Entergy's ability to attract and retain talented management and directors.directors

DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:

Abbreviation or AcronymTerm

DEFINITIONS (Continued)

DEFINITIONS (Concluded)

ENTERGY'S BUSINESS

Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail electric distribution operations, energy marketing and trading, and gas transportation.operations. Entergy owns and operates power plants with approximately 30,000 MW of electric generating capacity, and it is the second-largest nuclear power generator in the United States. Entergy delivers electricity to 2.62.7 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Through Entergy-Koch, Entergy is a leading provider of wholesale energy marketing and trading services, as well as an operator of natural gas pipeline and storage facilities. Entergy hadgenerated annual revenues of over $8$10 billion in 20022004 and more than 15,000had approximately 14,400 employees as of December 31, 2002.2004.

Entergy operates primarily through three business segments: U.S. Utility, Non-Utility Nuclear, and Energy Commodity Services.

• U.S. Utilitygenerates, transmits, distributes, and sells electric power within a four-state service territory that includes portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small amount of natural gas distribution.distribution business.
• Non-Utility Nuclearowns and operates five nuclear power plants located in the northeastern United States and is primarily focused on sellingsells the electric power produced by those plants to wholesale customers. This business also provides services to other nuclear power plant owners.
• Energy Commodity Servicesis focused almost exclusively on providingServicesincludes Entergy-Koch and Entergy's non-nuclear wholesale assets business. Entergy-Koch engaged in two major businesses: energy commodity marketing and trading through Entergy-Koch Trading, and gas transportation and storage services through Gulf South Pipeline. Entergy-Koch L.P. Energy Commodity Services also includes Entergy'ssold both of these businesses in the fourth quarter of 2004, and Entergy-Koch is no longer an operating entity. The non-nuclear wholesale asset business.

Followingassets business sells to wholesale customers the electric power produced by power plants that it owns while it focuses on improving performance and exploring sales or restructuring opportunities for its power plants. Such opportunities are the percentages ofevaluated consistent with Entergy's consolidated revenues and net income generated by these segments and the percentage of totalmarket-based point-of-view. The non-nuclear wholesale assets held by them:

The net income figures in 2002 include a $238 million net of tax charge in the Energy Commodity Services segment. If this charge were excluded, the percentages would be 70% for U.S. Utility, 23% for Non-Utility Nuclear, 11% for Energy Commodity Services, and (4%) for Parent & Other.

                Entergy's business has traditionally operated primarily through its regulated utility subsidiaries in its four-state service territory. Entergy has reshaped its non-utility business through the sale of its international electric distribution businesses in 1998, the growth of its non-utility nuclear business in the northeastern United States beginning in 1999, and the termination of itsterminated new greenfield power development businessactivity in 2002. With the start of the Entergy-Koch venture in early 2001, Entergy expanded its business opportunities into new areas. The trading activities of Entergy-Koch extend to various parts of the United States, as well as the United Kingdom, Western Europe, and Canada. Entergy-Koch's Gulf South Pipeline system covers the Gulf Coast region of the United States. Entergy's financial interest in the Entergy-Koch venture allows it to appoint four of the eight members of the general partner's board of directors. Operating decisions for Entergy-Koch are made by Entergy-Koch management.

The following shows the principal subsidiaries and affiliates within Entergy's business segments. Companies that file reports and other information with the SEC under the Securities Exchange Act of 1934 are identified in bold-faced type.

                The following is a brief summaryIn addition to its three primary operating segments, Entergy's Competitive Retail Services business markets and sells electricity, thermal energy, and related services in competitive markets, primarily the ERCOT region in Texas, where it has over 105,000 customers. Competitive Retail Services contributed approximately 5% of Entergy's business segments. More detailed information on eachrevenue in 2004, but does not currently have significant levels of Entergy's businesses can be found in theU.S. Utility, Non-Utility Nuclear,andEnergy Commodity Services sections, including certain business segment financial information.

                TheU.S. Utility is Entergy's predominant business segment, with five wholly-owned retail electric utility subsidiaries: Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,net income or loss, or total assets, and Entergy New Orleans. These companies generate, transmit, distribute,reports this business as part of All Other in its segment disclosures.

Strategy

Entergy aspires to achieve industry leading total shareholder returns by leveraging the scale and sell electric power to retailexpertise inherent in its core nuclear and wholesale customers primarily in Arkansas, Louisiana, Mississippi,utility operations. Entergy's scope includes electricity generation, transmission and Texas.

                Entergy Gulf States and Entergy New Orleans also providedistribution as well as natural gas utility services to customers in and around Baton Rouge, Louisiana and New Orleans, Louisiana, respectively. Also included in the U.S. Utility is System Energy, a wholly-owned subsidiary that owns or leases 90 percent of Grand Gulf 1. System Energy sells all the power and capacity from Grand Gulf 1 at wholesale to four of the domestic utility companies. As a registered public utility holding company under the Public Utility Holding Company Act of 1935, Entergy and its subsidiaries are subject to the broad regulatory provisions of PUHCA. Rates and other activities of the domestic utility companies are each regulated by state utility commissions, or in the case of Entergy New Orleans, the City Council. System Energy is regulated by the FERC as all of its transactions are at the wholesale level. Entergy's U.S. Utility continues to operate as a regulated monopoly as efforts toward deregulation in the jurisdictions it serves have either been delayed, abandoned, or not yet initiated.

                The primary objective of the U.S. Utility is to provide reliable and cost-effective electricity and gas service while creating a work environment that provides the highest level of safety for its employees. Since 1998 the U.S. Utility has significantly improved key customer service, reliability, and safety metrics. The overall generation portfolio of the U.S. Utility, which is primarily made up of natural gas and nuclear generation, is consistent with Entergy's strong support for environmental stewardship.

                TheNon-Utility Nuclear business andEnergy Commodity Services are referred to as Entergy's competitive businesses. These businesses, unlike the U.S. Utility, are not subject to cost-based rate regulation by state or local utility commissions. Primary oversight for these operations comes from the NRC and the FERC.

                Entergy's Non-Utility Nuclear business is focused on acquiring, owning, operating, and selling power from nuclear power plants and providing operations and management services to nuclear power plants owned by other utilities in the United States. Non-Utility Nuclear sells all of its power to wholesale customers. Operations and management services, including decommissioning services, are provided through Entergy's wholly-owned subsidiary, Entergy Nuclear, Inc.

                Entergy's Non-Utility Nuclear business currently owns assets located in the northeastern portion of the United States as shown on the map below:

                The Energy Commodity Services segment includes the operations of Entergy-Koch (50% owned by Entergy) and Entergy's non-nuclear wholesale asset business. Entergy-Koch is engaged in two major businesses: energy commodity marketing and trading that includes power, gas, weather derivatives, emissions, and cross-commodities through Entergy-Koch Trading and gas transportation and storage through Gulf South Pipeline. Entergy's non-nuclear wholesale asset business owns and operates power plants capable of generating about 1,400 MW of electricity for sale in the wholesale market.

Strategy and Performance

                Entergy's strategy is to create value by focusingdistribution. Entergy focuses on asset management and strong operational execution,excellence with a particularan emphasis on service reliability and nuclear excellence.  Entergy continually evaluates its business position, with a view toward enhancing the company's scale, scope, and skill advantages. It applies a well-developed point of view of the marketplace and strong risk management to manage its asset portfolio and customer relationships. Entergy benchmarks its operational performance against industry and competitor standards on measures such as safety, reliability, customer service, sustainability, cost efficiency and cost efficiency.

                The following graph compares the performancerisk management. Entergy also focuses on portfolio management to make periodic buy, build, hold, or sell decisions based upon its analytically-derived points of Entergy common stock to the S&P 500 Index and Philadelphia Utility Index (each ofview which includes Entergy) for the last five years:

1. Assumes $100 invested at the closing price on December 31, 1997, in Entergy common stock, the S&P 500, and the Philadelphia Utility Index, and reinvestment of all dividends.
2. Cumulative total returns calculated from the S&P 500 Index and Philadelphia Utility Index maintained by Standard & Poor's Corporation.

                Selected Entergy financial data obtained from Entergy's consolidated financial statements for the past three years is reflected on the charts below.

                A more detailed discussion of Entergy's operations is set forth below in"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS."

Significant Business Issues

Rate Regulation and Fuel-Cost Recovery

               The rates that the domestic utility companies and System Energy charge for their services are a very important item influencing Entergy's financial position, results of operations, and liquidity. SeeRate Regulation and Fuel-Cost Recoveryin"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS"and "Rate Matters" in Part I, Item 1 for discussion of this issue.

Utility Restructuring

                Utility restructuring in Entergy's retail service territories has either been delayed, abandoned, or not pursued; however, major changes are occurring in the wholesale and retail electric utility business, including in the transmission business. SeeUtility Restructuringin"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS"for discussion of these issues.

Nuclear Matters

                The domestic utility companies, System Energy, and the Non-Utility Nuclear subsidiaries own and operate, through affiliates, ten nuclear power plants. SeeNuclear Matters in"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS"for discussion of the risks inherent in owning and operating nuclear power plants.

Price of Power Sales

                The sale of capacity and energy from the power generation plants owned by the Non-Utility Nuclear business and the non-nuclear wholesale asset business is subject to fluctuations in thecontinuously updated as market price for power. SeeMarket and Credit Risksin"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS"for a discussion of the market risk associated with these businesses.

Energy Trading

                Entergy owns a 50% interest in Entergy-Koch. Entergy-Koch, through its Entergy-Koch Trading subsidiary, buys and sells natural gas, power, and other energy-related services and commodities, including weather derivatives. Prices of these commodities may fluctuate over relatively short periods of time and expose Entergy-Koch to commodity price risk. SeeMarket and Credit Risksin"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS"for a discussion of the market risk associated with the energy trading business.

Financing

                Entergy relies on access to both short-term money markets and longer-term capital markets as a source of liquidity for capital requirements and refinancing not satisfied by the cash flow from its operations. SeeLiquidity and Capital Resources in"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS"for a discussion of these matters.

Litigation

                Entergy and its subsidiaries are involved in the ordinary course of business in a substantial amount of employment, asbestos, hazardous material and other environmental and rate-related, proceedings and litigation, a significant portion of which originates in Louisiana, Mississippi, and Texas. Entergy uses legal and appropriate means to contest litigation threatened or filed against it, but the litigation environment in these states poses a significant business risk. See "Litigation" below in Part I, Item 1 for additional discussion of significant litigation involving Entergy.

Other Regulation

                In addition to the regulation of rates that the domestic utility companies and System Energy charge for sales of electric power, there are three additional primary areas of regulation: federal regulation of the utility business, regulation of nuclear power, and environmental regulation. The regulation of nuclear power and environmental regulation are discussed in detail in the description of theU.S. Utility BusinessandNon-Utility NuclearBusiness sections of Part I, Item 1.

PUHCA

                The Public Utility Holding Company Act of 1935, as amended, regulates companies like Entergy Corporation that serve as holding companies to domestic operating utilities. Some of the more significant impacts of PUHCA are that it:

• limits the operations of a registered holding company system to a single, integrated public utility system, plus related systems and businesses;
• regulates transactions among affiliates within a holding company system;
• governs the issuance, acquisition, and disposition of securities and assets by registered holding companies and their subsidiaries;
• limits the entry by registered holding companies and their subsidiaries into businesses other than electric and/or gas utility businesses; and
• requires SEC approval for certain utility mergers and acquisitions.

                Entergy continues to support the broad industry effort to pass legislation in the United States Congress to repeal PUHCA and transfer certain aspects of the oversight of public utility holding companies from the SEC to FERC. Entergy believes that PUHCA inhibits its ability to compete in the evolving electric energy marketplace and largely duplicates the oversight activities otherwise performed by FERC, other federal regulators, and state and local regulators. In June 1995, the SEC adopted a report proposing options for the repeal or significant modification of PUHCA, which it continues to support.

Federal Power Act

                The Federal Power Act regulates:

• the transmission and wholesale sale of electric energy in interstate commerce;
• the licensing of certain hydroelectric projects; and
• certain other activities, including accounting policies and practices of electric and gas utilities.

                The Federal Power Act gives FERC jurisdiction over the rates charged by System Energy for Grand Gulf 1 capacity and energy provided to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans and over some of the rates charged by Entergy Arkansas and Entergy Gulf States. FERC also regulates the rates charged for intrasystem sales pursuant to the System Agreement.

                Entergy Arkansas holds a FERC license for two hydroelectric projects totaling 70 MW of capacity that was to expire on February 28, 2003. In December 2002, FERC issued an order approving Entergy Arkansas' application to renew the license for these two facilities. The license gives Entergy Arkansas permission to operate the projects for another 50 years.

Employees

                Employees are an integral part of Entergy's commitment to serving its customers. As of December 31, 2002, Entergy employed 15,601 people.

                Approximately 5,100 employees are represented by the International Brotherhood of Electrical Workers Union, the Utility Workers Union of America, and the International Brotherhood of Teamsters Union.

conditions evolve.

Availability of SEC filings and other information on Entergy's website

Entergy's internet address is www.entergy.com. Entergy's annual reportreports on Form 10-K, for the year ended December 31, 2002, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to any of these reports, are available free of charge through Entergy's web site,website as soon as reasonably practicable after filing with the SEC. Financial presentations and news releases are also available through Entergy's website. Additionally, Entergy's Corporate Governance Guidelines, Board Committee Charters for the Corporate Governance, Audit, and Personnel Committees, and Entergy's Codes of Conduct are posted on Entergy's website. This information is also available in print to any shareholderinvestor that requests it.

In June 2004, Entergy's chief executive officer certified to the New York Stock Exchange that he was not aware of any violation by Entergy of the New York Stock Exchange corporate governance listing standards.

Part I, Item 1 is continued on page 97.

105.

ENTERGY CORPORATION AND SUBSIDIARIES

REPORT OF MANAGEMENT

Management of Entergy Corporation and its subsidiaries has prepared and is responsible for the financial statements and related financial information included herein. The financial statements are based on accounting principles generally accepted in the United States of America. Financial information included elsewhere in this report is consistent with the financial statements.

document. To meet their responsibilities with respect to financial information,this responsibility, management maintainsestablishes and enforcesmaintains a system of internal accounting controlscontrol designed to provide reasonable assurance on a cost-effective basis, as toregarding the integrity, objectivity,preparation and reliabilityfair presentation of the financial records, and as to the protection of assets.statements in accordance with generally accepted accounting principles. This system includes communication through written policies and procedures, an employee Code of Entegrity, and an organizational structure that provides for appropriate division of responsibility and the training of personnel. This system is also tested by a comprehensive internal audit program.

Entergy management assesses the effectiveness of its internal control over financial reporting on an annual basis. In making this assessment, management uses the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Management acknowledges, however, that all internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance with respect to financial statement preparation and presentation.

                TheAs a supplement to management's assessment, Entergy's independent auditors conduct an objective assessment of the degree to which management meets its responsibility for fairness of financial reporting and issue an attestation report on the adequacy of management's assessment. They evaluate Entergy's internal control over financial reporting and perform such tests and other procedures as they deem necessary to reach and express an opinion on the fairness of the financial statements.

In addition, the Audit Committee of the Board of Directors, composed solely of independent Directors, who are not employees of Entergy, meets with the independent auditors, internal auditors, management, and internal accountants periodically to discuss internal accounting controls, and auditing and financial reporting matters. The Audit Committee appoints the independent auditors annually, and reviews with the independent auditors the scope and results of the audit effort. The Committee also meets periodically with the independent auditors and the chief internal auditor without management, providing free access to the Committee.

                Independent public accountants provide an objectiveBased on management's assessment of internal controls using the degree to whichCOSO criteria, management meets its responsibility for fairness of financial reporting. They regularly evaluate the system of internal accounting controls and perform such tests and other procedures as they deem necessary to reach and express an opinion on the fairness of the financial statements.

                Management believes that theseEntergy maintained effective internal control over financial reporting as of December 31, 2004. Management further believes that this assessment, combined with the policies and procedures noted above provide reasonable assurance that its operationsEntergy's financial statements are carried outfairly and accurately presented in accordance with a high standard of business conduct.generally accepted accounting principles.

ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Entergy Corporation is an investor-owned public utility holding company that operates primarily through three business segments.

• U.S. Utility generates,Utilitygenerates, transmits, distributes, and sells electric power within a four-state service territory that includes portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small amount of natural gas distribution.distribution business.
• Non-Utility Nuclearowns and operates five nuclear power plants located in the northeastern United States and is primarily focused on sellingsells the electric power produced by those plants to wholesale customers. This business also provides services to other nuclear power plant owners.
• Energy Commodity Servicesis focused almost exclusively on providingServicesincludes Entergy-Koch and Entergy's non-nuclear wholesale assets business. Entergy-Koch engaged in two major businesses: energy commodity marketing and trading through Entergy-Koch Trading, and gas transportation and storage services through Gulf South Pipeline. Entergy-Koch L.P. Energy Commodity Services also includes Entergy'ssold both of these businesses in the fourth quarter of 2004, and Entergy-Koch is no longer an operating entity. The non-nuclear wholesale assets business.business sells to wholesale customers the electric power produced by power plants that it owns while it focuses on improving performance and exploring sales or restructuring opportunities for its power plants. Such opportunities are evaluated consistent with Entergy's market-based point-of-view. The non-nuclear wholesale assets business terminated new greenfield power development activity in 2002.

Following are the percentages of Entergy's consolidated revenues and net income generated by these segments and the percentage of total assets held by them:

Results of Operations

Earnings applicable to common stock for the years ended December 31, 2002, 2001,2004, 2003, and 20002002 by operating segment are as follows:

Following is a discussion of Entergy's income before taxes according to the business segments listed above. Earnings for 2004 include a $97 million tax benefit that resulted from the sale of preferred stock and less than 1% of the common stock in a subsidiary in the non-nuclear wholesale assets business; and a $36 million net-of-tax impairment charge in the non-nuclear wholesale assets business, both of which are discussed below.

                ResultsEarnings for 2003 include the $137.1 million net-of-tax cumulative effect of changes in accounting principle that increased earnings in the first quarter of 2003, almost entirely resulting from the implementation of SFAS 143. Earnings were negatively affected in the fourth quarter of 2003 by voluntary severance program expenses of $122.8 million net-of-tax. As part of an initiative to achieve productivity improvements with a goal of reducing costs, primarily in the Non-Utility Nuclear and U.S. Utility businesses, in the second half of 2003 Entergy offered a voluntary severance program to employees in various departments. Approximately 1,100 employees, including 650 employees in nuclear operations from the Non-Utility Nuclear and U.S. Utility businesses, accepted the offers.

Earnings for 2002 were negatively affected by net charges ($238.3 million after-tax)net-of-tax) reflecting the effect of Entergy's decision to discontinue additional greenfield power plant development and asset impairments resulting from the deteriorating economics of wholesale power markets principally in the United States and the United Kingdom. The net charges are discussed more fully below in the Energy Commodity Services discussion.

                Entergy's income before taxes is discussed according to the business segments listed above. See Note 1211 to the consolidated financial statements for further discussion of Entergy's business segments and their financial results in 2002, 2001,2004, 2003, and 2000.2002.

Refer to"SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, INC., ENTERGY GULF STATES, INC. AND SUBSIDIARIES, ENTERGY LOUISIANA, INC., ENTERGY MISSISSIPPI, INC., ENTERGY NEW ORLEANS, INC., AND SYSTEM ENERGY RESOURCES, INC."SUBSIDIARIES" which accompany each company'saccompanies Entergy Corporation's consolidated financial statements in this report for further information with respect to operating statistics.

U.S. UtilityUTILITY

The increase in earnings for the U.S. Utility in 2002for 2004 from $550$469 million to $583$643 million was primarily due to the following:

• the $107.7 million ($65.6 million net-of-tax) accrual in 2003 of the loss that would be associated with a decreasefinal, non-appealable decision disallowing abeyed River Bend plant costs. Refer to Note 2 to the consolidated financial statements for more details regarding the River Bend abeyed plant costs;
• lower other operation and maintenance expenses primarily due to $99.8 million ($70.1 million net-of-tax) of charges recorded in interest charges combined2003 in connection with an increasethe voluntary severance program;
• the $21.3 million net-of-tax cumulative effect of a change in accounting principle that reduced earnings at Entergy Gulf States in the first quarter of 2003 upon implementation of SFAS 143. See "Critical Accounting Estimates - SFAS 143" below for discussion of the implementation of SFAS 143;
• miscellaneous other income partially offset by decreasesof $27.7 million (pre-tax) in operating income2004 resulting from a revision of the decommissioning liability for River Bend, as discussed in Note 8 to the consolidated financial statements;
• higher net revenue; and
• lower interest income.
  charges.

The decrease in earnings for the U.S. Utility in 2001for 2003 from $587$583 million to $550$469 million was primarily due to:

• the $107.7 million ($65.6 million net-of-tax) accrual in 2003 of the loss that would be associated with a final, non-appealable decision disallowing abeyed River Bend plant costs;
• $99.8 million ($70.1 million net-of-tax) of charges recorded in 2003 in connection with the voluntary severance program; and
• the $21.3 million net-of-tax cumulative effect of a change in accounting principle that reduced earnings at Entergy Gulf States in the first quarter of 2003 upon implementation of SFAS 143. See "Critical Accounting Estimates - SFAS 143" below for discussion of the implementation of SFAS 143.

Partially offsetting the decrease in earnings in 2003 were higher net revenue and lower interest charges.

Net Revenue

2004 Compared to 2003

Net revenue, which is Entergy's measure of gross margin, consists of operating revenues net of: 1) fuel, fuel-related, and purchased power expenses and 2) other regulatory credits. Following is an analysis of the change in net revenue comparing 2004 to 2003.

The volume/weather variance resulted primarily from increased usage, partially offset by the effect of milder weather on sales during 2004 compared to 2003. Billed usage increased a total of 2,261 GWh in the industrial and commercial sectors.

The summer capacity charges variance was due to the amortization in 2003 at Entergy Gulf States and Entergy Louisiana of deferred capacity charges for the summer of 2001. Entergy Gulf States' amortization began in June 2002 and ended in May 2003. Entergy Louisiana's amortization began in August 2002 and ended in July 2003.

Base rates increased net revenue due to a base rate increase at Entergy New Orleans that became effective in June 2003.

The deferred fuel cost revisions variance resulted primarily from a revision in 2003 to an unbilled sales pricing estimate to more closely align the fuel component of that pricing with expected recoverable fuel costs at Entergy Louisiana. Deferred fuel cost revisions also decreased net revenue due to a revision in 2004 to the estimate of fuel costs filed for recovery at Entergy Arkansas in the March 2004 energy cost recovery rider.

The price applied to unbilled sales variance resulted from a decrease in fuel price in 2004 caused primarily by the effect of nuclear plant outages in 2003 on average fuel costs.

Gross operating incomerevenues and increased interest charges, partially offset byregulatory credits

Gross operating revenues include an increase in interestfuel cost recovery revenues of $475 million and $18 million in electric and gas sales, respectively, primarily due to higher fuel rates in 2004 resulting from increases in the market prices of purchased power and natural gas. As such, this revenue increase is offset by increased fuel and purchased power expenses.

Other regulatory credits increased primarily due to the following:

• cessation of the Grand Gulf Accelerated Recovery Tariff that was suspended in July 2003;
• the amortization in 2003 of deferred capacity charges for summer 2001 power purchases at Entergy Gulf States and Entergy Louisiana;
• the deferral in 2004 of $14.3 million of capacity charges related to generation resource planning as allowed by the LPSC;
• the deferral in 2004 by Entergy Louisiana of $11.4 million related to the voluntary severance program, in accordance with a proposed stipulation entered into with the LPSC staff; and
• the deferral in August 2004 of $7.5 million of fossil plant maintenance and voluntary severance program costs at Entergy New Orleans as a result of a stipulation approved by the City Council.

2003 Compared to 2002

Net revenue, which is Entergy's measure of gross margin, consists of operating revenues net of: 1) fuel, fuel-related, and purchased power expenses and 2) other regulatory credits. Following is an analysis of the change in net revenue comparing 2003 to 2002.

Base rates increased net revenue due to base rate increases at Entergy Mississippi and Entergy New Orleans that became effective in January 2003 and June 2003, respectively. Entergy Gulf States implemented base rate decreases in its Louisiana jurisdiction effective June 2002 and January 2003. The January 2003 base rate decrease of $22.1 million had a minimal impact on net income due to a corresponding reduction in nuclear depreciation and decommissioning expenses associated with the change in accounting estimate to reflect an assumed extension of River Bend's useful life.

The deferred fuel cost revisions variance was due to a revised unbilled sales pricing estimate made in December 2002 and further revision of that estimate in the first quarter of 2003 to more closely align the fuel component of that pricing with expected recoverable fuel costs at Entergy Louisiana.

The asset retirement obligation variance was due to the implementation of SFAS 143, "Accounting for Asset Retirement Obligations," adopted in January 2003. See"Critical Accounting Estimates - - Nuclear Decommissioning Costs" for more details on SFAS 143. The increase was offset by increased depreciation and decommissioning expenses and had an insignificant effect on net income.

Operating Income

2002 Compared to 2001

                Operating income decreased by $43.6 millionThe increase in 2002net wholesale revenue was primarily due to:

• to an increase in sales volume to municipal and cooperative customers.

  The March 2002 settlement agreement variance reflects the absence in 2003 of the effect of recording the ice storm settlement approved by the APSC in 2002. This settlement resulted in previously deferred revenues at Entergy Arkansas per the transition cost account mechanism being recorded in net revenue in the second quarter of 2002. The decrease was offset by a corresponding decrease in other operation and maintenance expenses of $273.2 million. $159.9 million of this increase is offset in otherand had a minimal effect on net income.

  Gross operating revenues and regulatory credits

  Gross operating revenues include an increase in fuel cost recovery revenues of $682 million and relates$53 million in electric and gas sales, respectively, primarily due to ahigher fuel rates in 2003 resulting from increases in the market prices of purchased power and natural gas. As such, this revenue increase was offset by increased fuel and purchased power expenses.

  Other regulatory credits decreased primarily due to the APSC-approved March 2002 settlement agreement mentioned above, which increased other regulatory credits in 2002 to offset other operation and 2001 earnings reviewmaintenance expenses of $159.9 million related to the December 2000 ice storms. The decrease was partially offset by the asset retirement obligation mentioned above, which increased other regulatory credits in 2003 to offset the increases in depreciation and decommissioning expenses.

  Other Income Statement Variances

  2004 Compared to 2003

  Other operation and maintenance expenses decreased from $1.613 billion in 2003 to $1.569 billion in 2004 primarily due to voluntary severance program accruals of $99.8 million in 2003 partially offset by an increase of $30.5 million as a result of higher customer service support costs in 2004 and an increase of approximately $33 million as a result of higher benefits costs in 2004. Entergy expects benefit costs to continue to increase in 2005. See"Critical Accounting Estimates - - Pension and Other Retirement Benefits" and Note 10 to the consolidated financial statements for further discussion of benefit costs.

  Depreciation and amortization expenses increased from $797.6 million in 2003 to $823.7 million in 2004 primarily due to higher depreciation of Grand Gulf due to a higher scheduled sale-leaseback principal payment in addition to an increase in plant in service.

  Other income (deductions) changed from ($36.0 million) in 2003 to $108.9 million in 2004 primarily due to the following:

  • the $107.7 million accrual in the second quarter of 2003 for the loss that would be associated with a final, non-appealable decision disallowing abeyed River Bend plant costs. See Note 2 to the consolidated financial statements for more details regarding the River Bend abeyed plant costs;
  • a reduction in the decommissioning liability for River Bend in 2004, as discussed in Note 8 to the consolidated financial statements; and
  • a $10 million reduction in the loss provision for an environmental clean-up site.

  Interest on long-term debt decreased from $433.5 million in 2003 to $390.7 million in 2004 primarily due to the net retirement and refinancing of long-term debt in 2003 and the first six months of 2004. See Note 5 to the consolidated financial statements for details on long-term debt.

  2003 Compared to 2002

  Other operation and maintenance expenses decreased from $1.679 billion in 2002 to $1.613 billion in 2003 primarily due to decreased expenses at Entergy Arkansas. The March 2002 settlement agreement that became final in the second quarter of 2002, allowing Entergy Arkansas to recover a large majority of 2000 and 2001 ice storm repair expenses through the previously-collected transition cost account (TCA) amounts. The remainingamounts, increased Entergy Arkansas' expenses by $159.9 million in 2002. This increase in expenses in 2002 was offset by a regulatory credit resulting in no effect on net income. The decrease was partially offset by an increase of $99.8 million in benefit costs as a result of voluntary severance program accruals in 2003.

  Decommissioning expense increased from $30.5 million in 2002 to $92.5 million in 2003 primarily due to the implementation of SFAS 143, "Accounting for Asset Retirement Obligations." The increase in decommissioning expense was offset by increases in other operationregulatory credits and maintenanceinterest and dividend income and had an insignificant effect on net income.

  Depreciation and amortization expenses is explained below; and

• increased from $769.8 million in 2002 to $797.6 million in 2003 primarily due to an increase in plant in service. The increase was also due to the implementation of SFAS 143. The increase in depreciation and amortization expenses of $105.7 million primarilyexpense due to the effects in 2001 of the final FERC order addressing System Energy's 1995 rate filing.

Partially offsetting these decreases in operating income were the following:

• increased revenues of $155.7 million due to increased electricity usage in the service territories;
• an increase in revenue of $94.3 million due to an increase in the price applied to unbilled sales; and

• an increaseSFAS 143 implementation was offset by increases in other regulatory credits of $121.3 million primarily due to a March 2002 settlement agreement allowing Entergy Arkansas to recover a large majority of 2000 and 2001 ice storm repair expenses through the previously-collected TCA amounts. This increase is offset in other operationinterest and maintenance expenses.

dividend income and has an insignificant effect on net income.

                In addition to the effect of the March 2002 settlement agreement, the increase in other operation and maintenance expenses was primarily due to:

• an increase of $51.2Other income (deductions) changed from $47.6 million in benefit costs;
• increased expenses of $24.5 million at Entergy Arkansas due2002 to the reversal($36.0 million) in 2001 of ice storm costs previously charged to expense in December 2000;
• an increase of $14.6 million in fossil plant expenses due to maintenance outages and turbine inspection costs at various plants;
• an increase of $10.9 million to reflect the current estimate of the liability for the future disposal of low-level radioactive waste materials; and
• lower nuclear insurance refunds of $6.7 million.

                Fuel recovery mechanisms at the domestic utility companies generally provide for the deferral of fuel and purchased power costs above the amounts included in existing rates. Operating revenues include a decrease in fuelcost recovery revenue of $897.4 million and $60.5 million related to electric sales and gas sales, respectively,2003 primarily due to lower fuel recovery factors resulting from decreases in the market prices of natural gas and purchased power in 2002. As such, this revenue decrease is offset by decreased fuel and purchased power expenses. Also contributing to the decrease in fuel cost recovery revenue was a lower fuel recovery surcharge in 2002 in the Texas jurisdiction of Entergy Gulf States.

2001 Compared to 2000

                Operating income decreased $125.6 million in 2001 primarily due to:

• decreased revenues of $161.9 million due to decreased electricity usage in the service territories;

• a decrease in revenue of $161.7 million due to a decrease in the price applied to unbilled sales; and
• the"miscellaneous - net" as a result of a $107.7 million accrual of $26.8 million in the transition cost account at Entergy Arkansas.

Partially offsetting these decreases in operating income weresecond quarter of 2003 for the following:

• loss that would be associated with a decrease in other operation and maintenance expenses of $95.6 million, which is explained below;
• a decrease in depreciation and amortization expense at System Energy of $74.5 million primarily resulting fromfinal, non-appealable decision disallowing abeyed River Bend plant costs. See Note 2 to the final resolution of its 1995 rate filing; and
• a decrease in decommissioning expense at System Energy of $32.4 million resulting fromconsolidated financial statements for more details regarding the final resolution of the FERC order addressing the 1995 rate increase filing.

River Bend abeyed plant costs. The decrease in other operation and maintenance expenses in 2001 was primarily due to:

• a decrease in property damage expenses of $49.7 million primarily due to a reversal of $24.5 million in June 2001, upon recommendation from the APSC, of ice storm costs previously charged to expense in December 2000. The effect of the reversal of the ice storm costs on net income was largelypartially offset by the adjustment to the transition cost accountan increase in interest and dividend income as a result of the 2000 earnings review in 2001;
• decreases in expenses of $9.3 million at Entergy Arkansas due to decreased transition to competition support costs and $11.0 million at Entergy Louisiana due to decreased legal fees; and

• decreases of $10.7 million and $14.6 million at Entergy Louisiana and Entergy Mississippi, respectively, because of maintenance and planned maintenance outages at certain fossil plants in 2000.

                Operating revenues include an increase in fuel cost recovery revenue of $462.7 million related to electric sales primarily due to increased fuel recovery factors at Entergy Arkansas, Entergy Gulf States in the Texas jurisdiction, and Entergy Mississippi, combined with higher fuel and purchased power costs recovered through fuel recovery mechanisms at Entergy Gulf States in the Louisiana jurisdiction and Entergy New Orleans due to the increased market prices of natural gas and purchased power early in 2001. As such, this revenue increase is offset by increased fuel and purchased power expenses.

Other Impacts on Results of Operations

2002 Compared to 2001

                Results for the year ended December 31, 2002 for U.S. Utility were also affected by the following:

• a decrease in interest income of $56.5 million, which is explained below;
• an increase in "miscellaneous - net" in other income of $26.7 million due to the cessation of amortization of goodwill in January 2002 upon implementation of SFAS 142 and settlement of liability insurance coverage at Entergy Gulf States; and
• a decrease in interest charges of $111.0143.

  Interest on long-term debt decreased from $462.0 million which is explained below.

                The decrease in interest income in 2002 was primarily due to:

• interest recognized in 2001 on Grand Gulf 1's decommissioning trust funds resulting from the final order addressing System Energy's rate proceeding;
• interest recognized in 2001 at Entergy Mississippi and Entergy New Orleans on the deferred System Energy costs that were not being recovered through rates; and
• lower interest earned on declining deferred fuel balances.

                The decrease in interest charges in 2002 is primarily due to:

• a decrease of $31.9to $433.5 million in interest on long-term debt2003 primarily due to the retirementredemption and refinancing of long-term debt in late 2001 and early 2002; and
• a decrease of $76.0 million in other interest expense primarily due to interest recorded on System Energy's reserve for rate refund in 2001. The refund was made in December 2001.
debt.

2001 Compared to 2000

                Results for the year ended December 31, 2001 for U.S. Utility were also affected by an increase in interest charges of $61.5 million primarily due to:

• the final FERC order addressing the 1995 System Energy rate filing;
• debt issued at Entergy Arkansas in July 2001, at Entergy Gulf States in June 2000 and August 2001, at Entergy Mississippi in January 2001, and at Entergy New Orleans in July 2000 and February 2001; and
• borrowings under credit facilities during 2001, primarily at Entergy Arkansas.

Non-Utility Nuclear

                The increase in earnings in 2002 for Non-Utility Nuclear from $128 million to $201 million was primarily due to the operation of Indian Point 2 and Vermont Yankee, which were purchased in September 2001 and July 2002, respectively.

                The increase in earnings in 2001 for Non-Utility Nuclear from $49 million to $128 million was primarily due to the operation of FitzPatrick and Indian Point 3 for a full year, as each was purchased in November 2000, and the operation of Indian Point 2, which was purchased in September 2001.

Following are key performance measures for Non-Utility Nuclear:

20022004 Compared to 20012003

The following fluctuationsdecrease in the results of operationsearnings for Non-Utility Nuclear in 2002 were primarily caused by the acquisitions of Indian Point 2 and Vermont Yankee (except as otherwise noted):

• operating revenues increased $411.0from $300.8 million to $1.2 billion;
$245.0 million was primarily due to the $154.5 million net-of-tax cumulative effect of a change in accounting principle that increased earnings in the first quarter of 2003 upon implementation of SFAS 143. See "Critical Accounting Estimates - SFAS 143" below for discussion of the implementation of SFAS 143. Earnings before the cumulative effect of accounting change increased by $98.7 million primarily due to the following:
• otherlower operation and maintenance expenses, which decreased from $681.8 million in 2003 to $595.7 million in 2004, primarily resulting from charges recorded in 2003 in connection with the voluntary severance program;
• higher revenues, which increased $201.8from $1.275 billion in 2003 to $1.342 billion in 2004, primarily resulting from higher contract pricing. The addition of a support services contract for the Cooper Nuclear Station and increased generation in 2004 due to power uprates completed in 2003 and fewer planned and unplanned outages in 2004 also contributed to the higher revenues; and
• miscellaneous income resulting from a reduction in the decommissioning liability for a plant, as discussed in Note 8 to the consolidated financial statements.

Partially offsetting this increase were the following:

• higher income taxes, which increased from $88.6 million in 2003 to $596.3 million;$142.6 million in 2004; and
• higher depreciation and amortization expensesexpense, which increased $25.1from $34.3 million in 2003 to $42.8 million;
• fuel expenses increased $29.4$48.9 million in 2004, due to $105.2 million;
• nuclear refueling outage expenses increased $23.9 millionadditions to $46.8 million, which was due primarily to afull year of amortization of Pilgrim and Indian Point 3 expenses;plant in service.
• interest income increased $17.2 million to $71.3 million; and

• interest expense increased $12.1 million to $93.3 million.

20012003 Compared to 20002002

The following fluctuationsincrease in the results of operationsearnings for Non-Utility Nuclear in 2001 were primarily caused by the acquisition of FitzPatrick, Indian Point 3, and Indian Point 2:

• operating revenues increased $491.1from $200.5 million to $789.2 million;
• other$300.8 million was primarily due to the $154.5 million net-of-tax cumulative effect of a change in accounting principle recognized in the first quarter of 2003 upon implementation of SFAS 143. See "Critical Accounting Estimates - SFAS 143" below for discussion of the implementation of SFAS 143. Income before the cumulative effect of accounting change decreased by $54.2 million. The decrease was primarily due to $83.0 million ($50.6 million net-of-tax) of charges recorded in connection with the voluntary severance program. Except for the effect of the voluntary severance program, operation and maintenance expenses increased $217.6in 2003 per MWh of generation were in line with 2002 operation and maintenance expenses.

  ENERGY COMMODITY SERVICES

  Sales of Entergy-Koch Businesses

  In the fourth quarter of 2004, Entergy-Koch sold its energy trading and pipeline businesses to third parties. The sales came after a review of strategic alternatives for enhancing the value of Entergy-Koch, LP. Entergy received $862 million of cash distributions in 2004 from Entergy-Koch after the business sales, and Entergy ultimately expects to $394.5 million;

• interest expense, primarily relatedreceive total net cash distributions exceeding $1 billion, comprised of the after-tax cash from the distributions of the sales proceeds and the eventual liquidation of Entergy-Koch. Entergy currently expects that it will receive the remaining cash distributions in 2006, and expects that the net cash distributions will exceed its equity investment in Entergy-Koch. Entergy expects to debt incurredrecord a $60 million net-of-tax gain when the remainder of the proceeds are received in 2006.

  In the purchase agreements for the energy trading and the pipeline business sales, Entergy-Koch has agreed to indemnify the respective purchasers for certain potential losses relating to any breaches of the sellers' representations, warranties, and obligations under each of the purchase agreements. Entergy Corporation has guaranteed up to 50% of Entergy-Koch's indemnification obligations to the plants, increased $47.9 millionpurchasers. Entergy does not expect any material claims under these indemnification obligations, but to $81.1 million;

• fuel expenses increased $51.0 millionthe extent that any are asserted and paid, the gain that Entergy expects to $75.8 million; and
• taxes other than income taxes increased $30.9 millionrecord in 2006 may be reduced.

  Results of Operations

  2004 Compared to $40.1 million.

2003

Energy Commodity Services

The decrease in earnings for Energy Commodity Services in 2002 from $106$180.5 million to a $146$3.5 million loss was primarily due toto:

• earnings from Entergy's investment in Entergy-Koch were $254 million lower in 2004, primarily as a result of Entergy-Koch's trading business reporting a loss from its operations in 2004; and
• Entergy recorded a charge in 2004 of approximately $55 million ($36 million net-of-tax) as a result of an impairment of the impairment chargesvalue of the Warren Power plant, which is owned in the non-nuclear wholesale assets business. Entergy concluded that arethe plant is impaired based on valuation studies prepared in connection with the Entergy Asset Management stock sale discussed below.

Partially offsetting the decrease in earnings is a tax benefit resulting from the sale of preferred stock and less than 1% of the common stock of Entergy Asset Management, an Entergy subsidiary. In December 2004, an Entergy subsidiary sold the stock to a third party for $29.75 million. The sale resulted in a capital loss for tax purposes of $370 million, producing a net tax benefit of $97 million that Entergy recorded in the fourth quarter of 2004.

2003 Compared to 2002

The increase in earnings for Energy Commodity Services in 20012003 from $55a $145.8 million loss to $106$180.5 million in earnings was primarily due to the strong performance of the trading and gas pipeline businesses of Entergy-Koch.

2002 Comparednet charges recorded to 2001

                The decrease in earnings for Energy Commodity Servicesoperating expenses in 2002, was primarily dueas discussed below. Higher earnings from Entergy's investment in Entergy-Koch also contributed to the increase in earnings. The income from Entergy's investment in Entergy-Koch was $73 million higher in 2003 primarily as a result of higher earnings in its trading business.

In 2002, Entergy recorded charges to reflect the effect of Entergy's decision to discontinue additional greenfield power plant development and to reflect asset impairments resulting from the deteriorating economics of wholesale power markets principally in the United States and the United Kingdom. Entergy recordedThe net charges of $428.5 million ($238.3 million net of tax) to operating expenses. The net charges consistnet-of-tax) consisted of the following:

• The power development business obtained contracts in October 1999 to acquire 36 turbines from General Electric. Entergy's rights and obligations under the contracts for 22 of the turbines were sold to an independent special-purpose entity in May 2001. $178.0 million of the charges, including an offsetting net of taxnet-of-tax benefit of $18.5 million related to the subsequent sale of four turbines to a third party, iswas a provision for the net costs resulting from cancellation or sale of the turbines subject to purchase commitments with the special-purpose entity;
• $204.4 million of the charges resultsresulted from the write-off of Entergy Power Development Corporation's equity investment in the Damhead Creek project and the impairment of the values of its Warren Power power plant and its Crete and RS Cogen projects. This portion of the charges reflectsreflected Entergy's estimate of the effects of reduced spark spreads in the United States and the United Kingdom. Damhead Creek was sold in December 2002, , resulting in an after-tax gainnet income of $31.4 million;
• $39.1 million of the charges relatesrelated to the restructuring of the non-nuclear wholesale assets business, which iswas comprised of $22.5 million of impairments of administrative fixed assets, $10.7 million of estimated sublease losses, and $5.9 million of employee-related costs;
• $32.7 million of the charges resultsresulted from the write-off of capitalized project development costs for projects that willwould not be completed; and
• a gain of $25.7 million ($15.9 million net of tax)net-of-tax) realized on the sale in August 2002 of an interest in projects under development in Spain.

                Also, in the first quarter of 2002, Energy Commodity Services sold its interests in projects in Argentina, Chile, and Peru for net proceeds of $135.5 million. After impairment provisions recorded for theseLatin Americaninterests in 2001, the net loss realized on the sale in 2002 is insignificant.

                Revenues and fuel and purchased power expenses decreased for Energy Commodity Services by $1,075.8 million and $876.9 million, respectively, in 2002 primarily due to:

• a decrease of $542.9 million in revenues and $539.6 million in fuel and purchased power expenses resulting from the sale of Highland Energy in the fourth quarter of 2001;
• a decrease of $161.7 million in revenues resulting from the sale of the Saltend plant in August 2001; and
• a decrease of $139.1 million in revenues and $133.5 million in purchased power expenses due to the contribution of substantially all of Entergy's power marketing and trading business to Entergy-Koch in February 2001. Earnings from Entergy-Koch are reported as equity in earnings of unconsolidated equity affiliates in the financial statements. The net income effect of the lower revenues was more than offset by the income from Entergy's investment in Entergy-Koch. The income from Entergy's investment in Entergy-Koch was $31.9 million higher in 2002 primarily as a result of earnings at Entergy-Koch Trading (EKT) and higher earnings at Gulf South Pipeline due to more favorable transportation contract pricing. Although the gain/loss days ratio reported below declined in 2002, EKT made relatively more money on the gain days than the loss days, and thus had an increase in earnings for the year.

Following are key performance measures for Entergy-Koch's operations for 2002 and 2001:

		2002		2001
Entergy-Koch Trading
Gas volatility		61%		72%
Electricity volatility		48%		78%
Gas marketed (BCF/D) (1)		5.8		3.0
Electricity marketed (GWh) (1)		408,038		180,893
Gain/loss days		1.8		2.8
Gulf South Pipeline
Throughput (BCF/D)		2.40		2.45
Production cost ($/MMBtu)		$0.094		$0.093

1. Previously reported volumes, which included only U.S. trading, have been adjusted to reflect both U.S. and Europe volumes traded.

Entergy accounts for its 50% share in Entergy-Koch under the equity method of accounting. Certain terms of the partnership arrangement allocate income from various sources, and the taxes on that income, on a significantly disproportionate basis through 2003. Losses and distributions from operations are allocated to the partners equally. Substantially all of Entergy-Koch's profits were allocated to Entergy in 2002. Effective January 1, 2004, a revaluation of Entergy-Koch's assets for legal capital account purposes will occur, and future profit allocations will change after the revaluation. The profit allocations other than for weather trading and international trading are expected to become equal, unless special allocations are necessary to equalize the partners' legal capital accounts. Profit allocations for weather trading and international trading remain disproportionate to the ownership interests. Earnings allocated under the terms of the partnership agreement constitute equity, n ot subject to reallocation, for the partners.PARENT & OTHER

20012004 Compared to 20002003

The increase in earnings for Energy Commodity Services in 2001 was primarily due to:

• the gain on the sale of the Saltend plant discussed below;
• the favorable resultsParent & Other from Entergy-Koch discussed below;
• the $33.5a $23.4 million ($23.5loss to $17.6 million net of tax) cumulative effect of an accounting change marking to market the Damhead Creek gas contract;
• liquidated damages of $13.9 million ($9.7 million net of tax) received in 2001 from the Damhead Creek construction contractor as compensation for lost operating margin from the plant due to construction delays; and
• a $12.2 million ($7.9 million net of tax) gain on the sale of a permitted site in Desoto County, Florida, in May 2001.

                Partially offsetting the increase in earnings for Energy Commodity Services in 2001 was the following:

• $60.1 million ($49.9 million net of tax) of losses or asset impairments recorded on Latin American investments and other development projects;
• a $9.8 million ($6.4 million net of tax) loss recorded primarily because of the pending cancellation of four gas turbines scheduled for delivery in 2004;

• liquidated damages of $55.1 million ($38.6 million net of tax) received in 2000 from the Saltend contractor as compensation for lost operating margin from the plant due to construction delays;
• a $19.7 million ($12.8 million net of tax) gain on the sale of the Freestone project located in Fairfield, Texas, in June 2000;
• increased depreciation expense of $23.6 million in 2001, primarily due to the commencementfollowing:
  • realization of the commercial operation$16.7 million of the Saltend and Damhead Creek plants; and
  • increased interest expense of $78.7 million in 2001, primarily because of the commencement of commercial operation of the Saltend and Damhead Creek plants.

                Revenues decreased for Energy Commodity Services by $983.3 million in 2001, primarily duetax benefits related to the contribution of substantially all of Entergy-Koch investment; and

• Entergy's power marketing and tradingcompetitive retail business to Entergy-Kochearned a very small profit in 2001. As a result, in 2001, revenues from this activity were lower by $1,957.0 million2004 compared to 2000 revenue for Entergy's power marketing and trading segment, and purchased power expenses were lower by $1,830.0 million. The net income effectreporting a $14.4 million loss in 2001 of the lower revenue was more than offset by the equity in earnings from Entergy's interest in Entergy-Koch. Entergy's earnings from this activity increased in 2001 as a result of increased electricity and gas trading volumes as well as a broader range of commodity sources and options provided2003.

2003 Compared to customers by the joint venture than provided previously by Entergy.2002

                The decrease in revenues in 2001 was partially offset by an increase in operating revenues primarily due to an increase of $409.8 million from Highland Energy and an increase of $450.1 million from the Saltend and Damhead Creek plants. Highland Energy was acquired in June 2000, and the Saltend and Damhead Creek plants began commercial operation in late November 2000 and early 2001, respectively. Highland Energy was sold in the fourth quarter of 2001. The increase in revenues from Highland Energy, Damhead Creek, and Saltend is largely offset by increased fuel and purchased power expenses of $644.1 million and increased other operation and maintenance expenses of $94.6 million.

                Entergy sold the Saltend plant in August 2001 and revenues include the $88.1 million ($57.2 million net of tax) gain on the sale.

Parent & Other

The loss from Parent & Other decreased in 20022003 from $58$38.6 million to $39$23.4 million primarily due to:

• a decrease into lower income tax expense of $12.1 million resulting from the allocation of intercompany tax benefits; and
• a decrease in interest charges of $6.0 million.

                The loss from Parent & Other increased in 2001 from $11 million to $58 million primarily due to:

• a decrease in interest income of $41.2 million;
• $21.8 million ($14.1 million net of tax) of merger-related expenses incurred by Entergy Corporation in the first quarter of 2001; and
• an increase in interest charges of $19.5 million.

The increased loss in 2001 was partially offset by the write-down in 2000 of investments in Latin American projects to their estimated fair values.expense.

Income Taxes

The effective income tax rates for 2004, 2003, and 2002 2001, and 2000 were 32.1%28.2%, 38.3%37.9%, and 40.3%32.1%, respectively. See Note 3 to the consolidated financial statements for a reconciliation of the federal statutory rate of 35.0% to the effective income tax rates. The lower effective income tax rate in 2004 is primarily due to the tax benefits resulting from the Entergy Asset Management stock sale discussed above.

Liquidity and Capital Resources

This section discusses Entergy's capital structure, capital spending plans and other uses of capital, sources of capital, and the cash flow activity presented in the cash flow statement.

Capital Structure

Entergy's capitalization is balanced between equity and debt, as shown in the following table. The reduction in the debt to capital percentage forfrom 2002 to 2003 is primarily the result of reduced debt outstanding in the sale of Damhead CreekU.S. Utility and Non-Utility Nuclear businesses, and an increase in December 2002. Debt outstanding on the Damhead Creek facility was $458 million as of December 31, 2001.shareholders' equity, primarily due to increased retained earnings.

		2002		2001		2000
Net debt to net capital at the end of the year		46.3%		49.7%		49.8%

		2004		2003		2002
Net debt to net capital at the end of the year		44.7%		45.3%		47.7%
Effect of subtracting cash from debt		2.7%		2.2%		4.1%
Debt to capital at the end of the year		47.4%		47.5%		51.8%

Net debt consists of gross debt less cash and cash equivalents. Gross debtDebt consists of notes payable, capital lease obligations, preferred stock with sinking fund, and long-term debt, including the currently maturing portion. Net capitalCapital consists of net debt, common shareholders' equity, and preferred stock without sinking fund. Net capital consists of capital less cash and securities.cash equivalents. The preferred stock with sinking fund is included in debt pursuant to SFAS 150, which Entergy implemented in the third quarter of 2003. The 2002 ratio does not reflect that type of security as debt, but does include it in net capital, which is how Entergy presented those securities prior to implementation of SFAS 150. Entergy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy's financial condition.

Long-term debt, including the currently maturing portion, makes up over 90% of Entergy's total debt outstanding. Following are Entergy's long-term debt principal maturities as of December 31, 20022003 and 2004 by operating segment. TheseThe figures below include principal payments on the Entergy Louisiana and System Energy sale-leaseback transactions, which are included in long-term debt on the balance sheet.

Long-term debt maturities		2004		2005		2006		2007		2008-2009		after 2009
		(In Millions)
As of December 31, 2003
U.S. Utility		$450		$355		$28		$573		$721		$4,305
Non-Utility Nuclear		74		72		76		80		40		173
Energy Commodity Services		-		-		-		-		-		-
Parent and Other		-		60		-		-		539		301
Total		$524		$487		$104		$653		$1,300		$4,779
As of December 31, 2004
U.S. Utility		-		$359		$27		$98		$749		$4,880
Non-Utility Nuclear		-		77		76		80		40		173
Energy Commodity Services		-		-		-		-		-		-
Parent and Other		-		60		-		50		539		301
Total		-		$496		$103		$228		$1,328		$5,354

Long-term debt maturities (in millions)	2003		2004		2005		2006-2007		after 2007
U. S. Utility	$1,111		$855		$470		$466		$3,751
Non-Utility Nuclear	$87		$91		$95		$205		$205
Energy Commodity Services	$79		-		-		-		-
Parent and Other	-		$595		-		-		$267

                In the fourth quarter of 2002, the U.S. Utility issued $640 million of debt with maturities ranging from 2007 to 2032. Approximately $71 million of the proceeds of the debt issued in the fourth quarter were used to retire, in 2002, debt that was scheduled to mature in 2003, and the remainder will be used to meet certain 2003 maturities as they occur. Entergy Mississippi issued an additional $100 million of debt in January 2003 that matures in 2013. The proceeds will be used to repay, prior to maturity, debt of Entergy Mississippi that is scheduled to mature in 2003 and 2004. Note 75 to the consolidated financial statements provides more detail concerning long-term debt.

In May 2004, Entergy Corporation replaced its 364-day bank credit facility with two separate facilities, a new 364-day credit facility and a three-year credit facility. The three-year credit facility, which expires in May 2007, has a borrowing capacity of $965 million, of which $50 million was outstanding at December 31, 2004.

In December 2004, Entergy Corporation refinanced the 364-day bank credit facility by entering into a five-year credit facility. The Energy Commodity Services debtfive-year credit facility, which expires in December 2009, has a borrowing capacity of $500 million, none of which was paidoutstanding at maturity in January 2003 using money drawn on December 31, 2004.

Entergy also has the ability to issue letters of credit against the total borrowing capacity of both credit facilities, and $50 million of letters of credit had been issued against the three-year facility at December 31, 2004.

Entergy Corporation's 364-day credit facility.facilities require it to maintain a consolidated debt ratio of 65% or less of its total capitalization, and maintain an interest coverage ratio of 2 to 1. If Entergy fails to meet these limits, or if Entergy or the domestic utility companies default on other indebtedness or are in bankruptcy or insolvency proceedings, an acceleration of the credit facilities' maturity dates may occur.

Capital lease obligations, including nuclear fuel leases, are a minimal part of Entergy's overall capital structure, and are discussed further in Note 109 to the consolidated financial statements. Following are Entergy's payment obligations under those leases:

	2005		2006		2007		2008-2009		after 2009
	(In Millions)
Capital lease payments, including nuclear fuel leases	$136		$143		$3		$2		$3

	2003		2004		2005		2006-2007		after 2007
Capital lease payments, including nuclear fuel leases (in millions)	$160		$137		$10		$9		$5

Notes payable, which include borrowings outstanding on credit facilities with original maturities of less than one year, were less than $1 million as of December 31, 2002. Entergy Corporation,2004. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy MississippiNew Orleans each have 364-day credit facilities available as follows:

Company		Expiration Date		Amount of Facility		Amount Drawn as of Dec. 31, 20022004
Entergy Corporation		May 2003		$1.450 billion		$535 million
Entergy Arkansas		May 2003April 2005		$6385 million		-
Entergy Louisiana		May 2003April 2005		$15 million (a)		-
Entergy Mississippi		May 20032005		$25 million		-
Entergy New Orleans		April 2005		$2514 million (a)		-

Although the(a) The combined amount borrowed by Entergy Corporation credit line expires in May 2003,Louisiana and Entergy has the discretionary option to extend the period to repay the amount then outstanding for an additional 364-day term. Because of this option, which Entergy intends to exercise if it does not renew the credit line or obtain an alternative source of financing, the debt outstandingNew Orleans under the credit line is reflected in long-term debt on the balance sheet. The credit line is reflected as notes payablethese facilities at December 31, 2001.

any one time cannot exceed $15 million.

Operating Lease Obligations and Guarantees of Unconsolidated Obligations

                In addition to the obligations listed above that are reflected on the balance sheet, Entergy has a minimal amount of operating leaseslease obligations and guarantees in support of unconsolidated obligations. Entergy's guarantees in support of unconsolidated obligations that are not reflected as liabilitieslikely to have a material effect on the balance sheet. These items are not on the balance sheet in accordance with generally accepted accounting principles.

Entergy's financial condition or results of operations. Following are Entergy's payment obligations as of December 31, 2004 on noncancelablenon-cancelable operating leases with a term over one year as of December 31, 2002:year:

	2003		2004		2005		2006-2007		after 2007
Operating lease payments (in millions)	$98		$91		$73		$98		$140

	2005		2006		2007		2008-2009		after 2009
	(In Millions)
Operating lease payments	$99		$86		$69		$100		$210

The operating leases are discussed more thoroughly in Note 109 to the consolidated financial statements.

Summary of Contractual Obligations of Consolidated Entities

Contractual Obligations		2005		2006-2007		2008-2009		after 2009		Total
		(In Millions)
Long-term debt (1)		$496		$331		$1,328		$5,354		$7,509
Capital lease payments (2)		$136		$146		$2		$3		$287
Operating leases (2)		$99		$155		$100		$210		$564
Purchase obligations (3)		$1,160		$1,402		$962		$1,156		$4,680

(1)	Long-term debt is discussed in Note 5 to the consolidated financial statements.
(2)	Capital lease payments include nuclear fuel leases. Lease obligations are discussed in Note 9 to the consolidated financial statements.
(3)	Purchase obligations represent the minimum purchase obligation or cancellation charge for contractual obligations to purchase goods or services. Approximately 99% of the total pertains to fuel and purchased power obligations that are recovered in the normal course of business through various fuel cost recovery mechanisms in the U.S. Utility business.

                Entergy's guarantees of unconsolidated obligations outstanding as of December 31, 2002 total a maximum amount of $267.5 million. In August 2001, EntergyShaw entered into a turnkey construction agreement with an Entergy subsidiary, Entergy Power Ventures, L.P. (EPV), and with Northeast Texas Electric Cooperative, Inc. (NTEC), providing for the construction by EntergyShaw of a 550 MW electric generating station to be located in Harrison County, Texas. Entergy has guaranteed the obligations of EntergyShaw to construct the plant, which will be 70% owned by EPV. Entergy's maximum liability on the guarantee is $232.5 million. In additionone of the contracts transferred to Entergy-Koch by Entergy's power marketingthese contractual obligations, Entergy expects to contribute $185.9 million to its pension plans and trading business is backed by an Entergy Corporation guarantee authorized$63.3 million to other postretirement plans in the amount of $35 million.2005.

Capital Funds Agreement

Pursuant to an agreement with certain creditors, Entergy Corporation has agreed to supply System Energy with sufficient capital to:

• maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt);
• permit the continued commercial operation of Grand Gulf 1;Gulf;
• pay in full all System Energy indebtedness for borrowed money when due; and
• enable System Energy to make payments on specific System Energy debt, under supplements to the agreement assigning System Energy's rights in the agreement as security for the specific debt.

Capital Expenditure Plans and Other Uses of Capital

Following are the amounts of Entergy's planned construction and other capital investments by operating segment for 20032005 through 2005 (in millions):2007:

Planned construction and capital investments			2005		2006		2007
			(In Millions)
Maintenance Capital:
	U.S. Utility		$734		$699		$763
	Non-Utility Nuclear		72		72		60
	Energy Commodity Services		3		4		6
	Parent and Other		11		19		11
			820		794		840
Capital Commitments:
	U.S. Utility		571		349		201
	Non-Utility Nuclear		90		67		43
	Energy Commodity Services		-		-		-
	Parent and Other		-		-		-
			661		416		244
Total			$1,481		$1,210		$1,084

Planned construction and capital investment		2003		2004		2005
U.S. Utility		$924		$915		$965
Non-Utility Nuclear		$201		$142		$109
Energy Commodity Services		$24		$76		$3
Other		$7		$7		$9

                TheMaintenance Capital refers to amounts Entergy plans to spend on routine capital plan for the U.S. Utility primarily consistsprojects that are necessary to support reliability of spending for maintenance capital, supporting continued reliability improvements,its service, equipment, or systems and to support normal customer growth. Also included

Capital Commitments refers to non-routine capital investments for which Entergy is either contractually obligated, has Board-approval, or is otherwise required to make pursuant to a regulatory agreement or existing rule or law. Amounts reflected in this category include the replacementfollowing:

• Replacement of the ANO 1 steamgeneratorsteam generators and reactor vessel closure head. EntergyManagement estimates the cost of the fabrication and replacementANO 1 project to be approximately $235 million, of which approximately $135$96 million willhas been incurred through 2004. $115 million is expected to be incurred through 2004.in 2005, with the remainder expected to be spent in 2006. Entergy expects the replacement to occur during a planned refueling outage in 2005. Entergy Arkansas filed with the APSC in January 2003 a request for a declaratory order by the APSC that the investment in the replacement is in the public interestinterest. The APSC issued the requested order in May 2003. This order is analogous to the order received in 1998 prior to the replacement of the ANO 2 steam generatorgenerators.
• Purchase of the Perryville power plant in Louisiana.In January 2004, Entergy Louisiana signed a definitive agreement to acquire the 718 MW Perryville power plant for ANO 2. Receipt$170 million. The agreement has subsequently been amended to allow the current plant owner to retain the interconnection facilities associated with the plant, resulting in a decrease in the acquisition price to $162 million. As a result of the amended terms, the FERC issued an order relatingin October 2004 disclaiming jurisdiction over the acquisition. This order currently is subject to rehearing by the FERC. The plant is owned by a subsidiary of Cleco Corporation, which subsidiary submitted a bid in response to Entergy's Fall 2002 request for proposals for supply-side resources. The signing of the agreement followed a voluntary Chapter 11 bankruptcy filing by the plant's owner. Entergy expects that Entergy Louisiana will own 100 percent of the Perryville plant, and that Entergy Louisiana will sell 75 percent of the outpu t to Entergy Gulf States under a long-term cost-of-service power purchase agreement. In addition, Entergy Louisiana and Entergy Gulf States executed an interim power purchase agreement with the plant's owner through the date of the acquisition's closing (as long as that occurs by December 2005) for 100 percent of the output of the Perryville power plant. In April 2004, the bankruptcy court approved Entergy Louisiana's agreement to acquire the plant. In March 2004, Entergy Gulf States and Entergy Louisiana filed with the LPSC for its approval of the acquisition and long-term cost-of-service power purchase agreement. Entergy is seeking approval from the LPSC of cost recovery for the acquisition, giving consideration to the replacement at ANO 1 would provide additional supportneed for the inclusionpower and the prudence of these costsEntergy Louisiana and Entergy Gulf States in a future general rate case; however, management cannot predict the outcome of either the request for a declaratory order or a general rate proceeding.

                  The capital plan for Non-Utility Nuclear primarily consists of spending for maintenance capital. Entergy also includes some spending for power uprate projectsengaging in the estimate.

                  The capital plantransaction. Hearings are scheduled for Energy Commodity Services primarily consistsMarch 2005. Assuming regulatory approval by the LPSC, Entergy Louisiana expects the Perryville acquisition to close in mid-2005.

• Transmission expansion designed to address immediate load growth needs and to provide improved transmission flexibility for the southeastern Louisiana and Texas regions of Entergy's obligation to make a $73 million cash contribution to Entergy-Koch in January 2004. The completion of the Harrison County project is also included in the plan. The plant has been under construction since 2001. Entergy will own approximately 385 MW once construction is completed and operation has begun, whichservice territory. Entergy expects to occurspend $170 million on high voltage transmission infrastructure to be completed in June 2003.
  phases between mid-2005 to mid-2007.
• Purchase of additional generation supply sources within the U.S. Utility's service territory.
• Nuclear power plant uprates, dry cask spent fuel storage, and license renewals.

                The planned construction andFrom time to time, Entergy considers other capital investments do not include potentialas potentially being necessary or desirable in the future, including additional nuclear plant power uprates, generation supply assets, various transmission upgrades, environmental compliance expenditures, or investments in new businesses or assets. The estimatedBecause no contractual obligation, commitment, or Board-approval exists to pursue these investments, they are not included in Entergy's planned construction and capital investments. These potential investments are also subject to evaluation and approval in accordance with Entergy's policies before amounts may be spent. In addition, Entergy's capital spending plans do not include spending for transmission upgrades requested by merchant generators, other than projects currently underway.

Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of business restructuring, regulatory constraints, environmental regulations, business opportunities, market volatility, economic trends, and the ability to access capital.

Dividends and Stock Repurchases

Declarations of dividends on Entergy's common stock are made at the discretion of the Board. Among other things, the Board evaluates the level of Entergy's common stock dividends based upon Entergy's earnings, financial strength, and future investment opportunities. At its October 20022004 meeting, the Board increased Entergy's quarterly dividend per share by 6%20%, to $0.35.$0.54. In 2002,2004, Entergy paid $299approximately $428 million in cash dividends on its common stock.

In accordance with Entergy's stock option plans,stock-based compensation plan, Entergy periodically grants stock options to its employees, which may be exercised to obtain shares of Entergy's common stock. In orderAccording to reduce the potential increase in outstanding commonplan, these shares created bycan be newly issued shares, treasury stock, or shares purchased on the open market. Entergy's management has been authorized to repurchase on the open market shares up to an amount sufficient to fund the exercise of stock options,grants under the plans. In addition to this authority, the Board has approved a program under which Entergy plans to purchasewill repurchase up to 10 million shares$1.5 billion of its common stock through mid-2004 on2006. The amount of repurchases under the program may vary as a discretionary basis through open market purchasesresult of material changes in business results or privately negotiated transactions.capital spending, or as a result of material new investment opportunities. In 2004, Entergy repurchased 2,885,00016,631,800 shares of common stock under both programs for a total purchase price of $118.5 million in 2002.

System Energy Letters of Credit

                System Energy had three-year letters of credit in place that were scheduled to expire in March 2003 securing certain of its obligations related to the sales/leaseback of a portion of Grand Gulf 1. System Energy replaced the letters of credit with new three-year letters of credit totaling approximately $192 million that are backed by cash collateral. System Energy used approximately $192 million in March 2003 to provide this cash collateral.

$1.018 billion.

PUHCA Restrictions on Uses of Capital

Entergy's ability to invest in domesticelectric wholesale generators and foreign generation businessesutility companies is subject to the SEC's regulations under PUHCA. As authorized by the SEC, Entergy is allowed to invest earnings in electric wholesale generators and foreign utility companies in an amount equal to 100% of its average consolidated retained earnings in domestic and foreign generation businesses.earnings. As of December 31, 2002,2004, Entergy's investments subject to this rule totaled $1.97$2.7 billion constituting 52.5%55.9% of Entergy's average consolidated retained earnings.

Entergy's ability to guarantee obligations of Entergy's non-utility subsidiaries is also limited by SEC regulations under PUHCA. In August 2000, the SEC issued an order, effective through December 31, 2005, that allows Entergy to issue up to $2 billion of guarantees for the benefit of its non-utility companies. In February 2005, Entergy requested that the SEC increase this limit to $4 billion.

Under PUHCA, the SEC imposes a limit equal to 15% of consolidated capitalization on the amount that may be invested in "energy-related" businesses without specific SEC approval. Entergy has made investments in energy-related businesses, including power marketing and trading. Entergy's available capacity to make additional investments at December 31, 20022004 was approximately $1.8$1.9 billion.

Sources of Capital

Entergy's sources to meet its capital requirements and to fund potential investments include:

• internally generated funds, which have been the source of the majority of Entergy's capital;funds;
• cash on hand ($1.3 billion808 million as of December 31, 2002)2004);
• securities issuances;
• bank financing under new or existing facilities; and
• sales of assets.

The majority of Entergy's internally generated funds come from the domestic utility companies and System Energy.U.S. Utility. Circumstances such as weather patterns, price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the level of internally generated funds in the future. In the following section, Entergy's cash flow activity for the previous three years is discussed.

Provisions within the Articles of Incorporation or pertinent indentures and various other agreements relating to the long-term debt and preferred stock of certain of Entergy Corporation's subsidiaries restrict the payment of cash dividends or other distributions on their common and preferred stock. As of December 31, 2002,2004, Entergy Arkansas and Entergy Mississippi had restricted retained earnings unavailable for distribution to Entergy Corporation of $296.1$394.9 million and $36.2$68.5 million, respectively. Additionally, PUHCA prohibits Entergy Corporation's subsidiaries from making loans or advances to Entergy Corporation.

                Short-term borrowings All debt and common and preferred stock issuances by the domestic utility companies and System Energy includingrequire prior regulatory approval and their preferred stock and debt issuances are also subject to issuance tests set forth in corporate charters, bond indentures, and other agreements. The domestic utility companies and System Energy have sufficient capacity under these tests to meet foreseeable capital needs.

The short-term borrowings under the intra-company money pool,of Entergy's subsidiaries are limited to amounts authorized by the SEC. The current limits authorized are effective through November 30, 2007. In addition to borrowing from commercial banks, Entergy's subsidiaries are authorized under the SEC order to borrow from Entergy's money pool. The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' dependence on external short-term borrowings. Borrowings from the money pool and external borrowings combined may not exceed the SEC authorized limits. As of December 31, 2004, Entergy's subsidiaries' aggregate authorized limit was $1.6 billion and the aggregate outstanding borrowing from the money pool was $151.6 million. There were no borrowings outstanding from external sources. Under the SEC order authorizing the short-term borrowing limits,and without further SEC authorization, the domestic utility companies and System Energy cannot incurissue new short-term indebtedness ifunless (a) Entergy Corporation and the issuer'sissuer each maintain common equity would comprise less thanof at least 30% of its capital. In addition, this order restrictscapital and (b) with the exception of money pool borrowings, the debt security to be issued (if rated) and all outstanding securities of the issuer and Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, or System Energy from issuing long-term debt unlessCorporation that debt willare rated must be rated as investment grade. See Note 4 to the consolidated financial statements for further discussion of Entergy's short-term borrowing limits.

The short and long-term securities issuances of Entergy Corporation also are limited to amounts authorized by the SEC. Under its current SEC order, and without further SEC authorization, Entergy Corporation cannot incur additional indebtedness or issue other securities unless (a) Entergy Corporation and each of its public utility subsidiaries maintain common equity ratios of at least 30% and (b) the security to be issued (if rated) and all outstanding securities of Entergy Corporation that are rated, are rated investment grade.

The long-term securities issuances of Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and System Energy also are limited to amounts authorized by the SEC. Under the current SEC orders of Entergy Gulf States, Entergy Louisiana, and Entergy Mississippi, and without further SEC authorization, the issuer cannot incur additional indebtedness or issue other securities unless (a) it and Entergy Corporation maintain a common equity ratio of at least 30% and (b) the security to be issued (if rated) and all outstanding securities of the issuer (other than preferred stock of Entergy Gulf States), as well as all outstanding securities of Entergy Corporation, that are rated, are rated investment grade.

Cash Flow Activity

As shown in Entergy's Statements of Cash Flows, cash flows for the years ended December 31, 2002, 2001,2004, 2003, and 20002002 were as follows:

		2002		2001		2000			2004		2003		2002
		(In Millions)							(In Millions)
Cash and cash equivalents at beginning of period		$ 752		$ 1,382		$ 1,214	Cash and cash equivalents at beginning of period		$692		$1,335		$752
Cash flow provided by (used in):							Cash flow provided by (used in):
Operating activities		2,181		2,216		1,968
Investing activities		(1,388)		(2,224)		(1,814)
Financing activities		(213)		(622)		20
							Operating activities		2,929		2,006		2,181
							Investing activities		(1,140)		(1,783)		(1,388)
							Financing activities		(1,672)		(869)		(213)
Effect of exchange rates on cash and cash equivalents		3		-		(6)	Effect of exchange rates on cash and cash equivalents		(1)		3		3
Net increase (decrease) in cash and cash equivalents		583		(630)		168
							Net increase (decrease) in cash and cash equivalents		116		(643)		583
Cash and cash equivalents at end of period		$ 1,335		$ 752		$ 1,382	Cash and cash equivalents at end of period		$808		$692		$1,335

Operating Cash Flow Activity

20022004 Compared to 20012003

Entergy's cash flow provided by operating activities increased in 2004 primarily due to the following:

• The U.S. Utility provided $2,208 million in cash from operating activities compared to providing $1,675 million in 2003. The increase resulted primarily from the receipt of intercompany income tax refunds from the parent company, Entergy Corporation. Income tax refunds/payments contributed approximately $400 million of the increase in cash from operating activities in 2004. Improved recovery of fuel costs and a reduction in interest paid also contributed to the increase in 2004.
• The Non-Utility Nuclear business provided $415 million in cash from operating activities compared to providing $183 million in 2003. The increase resulted primarily from lower intercompany income tax payments and increases in generation and contract pricing that led to an increase in revenues.
• Entergy's investment in Entergy-Koch, LP provided $526 million in cash from operating activities compared to using $41 million in 2003. Entergy received dividends from Entergy-Koch of $529 million in 2004 compared to $100 million in 2003. In addition, tax payments related to the investment were higher in 2003 because the investment had higher net income in 2003.
• The non-nuclear wholesale asset business used $46 million in cash from operating activities compared to using $70 million in 2003. The decrease in cash used resulted primarily from a one-time $33 million payment in 2003 related to a generation contract in the non-nuclear wholesale assets business.
• The parent company, Entergy Corporation, used $146 million in cash from operating activities in 2004 compared to providing $209 million in 2003 primarily due to higher intercompany income tax payments.

As discussed in Note 3 to the consolidated financial statements, in 2003, the domestic utility companies and System Energy filed, with the IRS, a change in tax accounting method notification for their respective calculations of cost of goods sold. The cash benefit from the method change was $74 million on a consolidated basis in 2004. This accounting method change is an issue across the utility industry and will likely be challenged by the IRS on audit. As of December 31, 2004, Entergy has a consolidated net operating loss (NOL) carryforward for tax purposes of $2.9 billion, principally resulting from the change in tax accounting method related to cost of goods sold. If the tax accounting method change is sustained, Entergy expects to fully utilize the NOL carryforward through 2006.

2003 Compared to 2002

Entergy's cash flow provided by operating activities decreased slightly in 20022003 primarily due to:

to the following:

• The U.S. Utility provided $2,341$1,675 million in operating cash flow an increase of $693 millionin 2003 compared to 2001.providing $2,341 million in 2002. The increasedecrease primarily resulted from the tax accounting election made by Entergy Louisiana, that isas discussed below. Also contributing to the decrease were higher payments for fuel during the period, which also significantly increased the amount of deferred fuel costs.
• The parent companynon-nuclear wholesale assets business used $439$70 million in operating cash flow in 2003 compared to providing $407$43 million in 2001. 2002 primarily due to a decrease of $64 million in the income tax refund received in 2003 compared to 2002. Also contributing to the increase in cash used was a one-time $33 million payment in 2003 related to a generation contract in the non-nuclear wholesale assets business.
• The Non-Utility Nuclear segment provided $183 million in operating cash flow in 2003 compared to providing $282 million in 2002 primarily due to higher tax payments and unplanned outages.
• Operating cash flow used by the investment in Entergy-Koch, LP decreased by $6 million in 2003. This decrease in cash flow used was due to the receipt of $100 million in dividends from Entergy-Koch in 2003. Almost entirely offsetting the dividends received was an increase in tax payments related to Entergy's investment in Entergy-Koch due to increased income from the investment.

Partially offsetting the decrease in cash flow in 2003 was an increase due to the parent company providing $209 million in operating cash flow in 2003 compared to using $439 million in 2002 primarily resulted fromdue to the payment that Entergy Corporation made to Entergy Louisiana in 2002 pursuant to the tax accounting election made by Entergy Louisiana that is discussed below.

• The Non-Utility Nuclear business provided $282 million in operating cash flow, an increase of $18 million compared to 2001.
• Entergy's investment in Entergy-Koch used $47 million in operating cash flow in 2002, a decrease of $8 million compared to 2001. The use of cash primarily relates to tax payments on Entergy's share of the partnership income. Entergy did not receive a dividend from Entergy-Koch in 2002 or in 2001 because the joint ventu re is retaining capital for business opportunities.
• The non-nuclear wholesale asset business provided $43 million in operating cash flow in 2002, compared to using $73 million in 2001.