FORM 10-Q
                                
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
(Mark One)
   X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES EXCHANGE ACT OF 1934

          For the Quarterly Period Ended September 30, 1995March 31, 1996

          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES EXCHANGE ACT OF 1934

          For the transition period from ______________________ to _____________________

Commission      Registrant, State of Incorporation,    I.R.S. Employer
File Number     Address of Principal Executive         Identification No.
                Offices and Telephone Number
                                                       
1-11299         ENTERGY CORPORATION                    13-555017572-1229752
                (a Delaware corporation)               
                639 Loyola Avenue                      
                New Orleans, Louisiana 70113           
                Telephone (504) 529-5262               
                                                              
1-10764         ENTERGY ARKANSAS, POWER & LIGHT COMPANYINC.                 71-0005900
                (an Arkansas corporation)              
                425 West Capitol Avenue, 40th Floor    
                Little Rock, Arkansas 72201            
                Telephone (501) 377-4000               
                                                              
1-2703          ENTERGY GULF STATES, UTILITIES COMPANYINC.              74-0662730
                (a Texas corporation)                  
                350 Pine Street                        
                Beaumont, Texas  77701                 
                Telephone (409) 838-6631               
                                                              
1-8474          ENTERGY LOUISIANA, POWER & LIGHT COMPANYINC.                72-0245590
                (a Louisiana corporation)              
                639 Loyola Avenue                      
                New Orleans, Louisiana 70113           
                Telephone (504) 529-5262               
                                                              
0-320           ENTERGY MISSISSIPPI, POWER & LIGHT COMPANYINC.              64-0205830
                (a Mississippi corporation)            
                308 East Pearl Street                  
                Jackson, Mississippi 39201             
                Telephone (601) 368-5000               
                                                              
0-5807          ENTERGY NEW ORLEANS, PUBLIC SERVICE INC.              72-0273040
                (a Louisiana corporation)              
                639 Loyola Avenue                      
                New Orleans, Louisiana 70113           
                Telephone (504) 529-5262               
                                                              
1-9067          SYSTEM ENERGY RESOURCES, INC.          72-0752777
                (an Arkansas corporation)              
                Echelon One                            
                1340 Echelon Parkway                   
                Jackson, Mississippi 39213             
                Telephone (601) 368-5000               

       Indicate  by check mark whether the registrants  (1)  have
filed all reports required to be filed by Section 13 or 15(d)  of
the  Securities  Exchange  Act of 1934 during  the  preceding  12
months  (or  for  such shorter period that the  registrants  were
required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days.

Yes     X      No

Common Stock Outstanding            Outstanding at October 31, 1995April 30, 1996
Entergy Corporation    ($0.01 par value)          227,756,167228,043,846

              ENTERGY CORPORATION AND SUBSIDIARIES
             INDEX TO QUARTERLY REPORT ON FORM 10-Q
                         September 30, 1995March 31, 1996

                                                          Page
                                                          Number

Definitions                                                 1
Management's Financial Statements:Discussion and Analysis -
Liquidity and Capital Resources                             3
Management's Financial Discussion and Analysis -
 Significant Factors and Known Trends                       6
Management's Financial Discussion and Analysis for
 Entergy Corporation and Subsidiaries:Subsidiaries                       9
Statements of Consolidated Income 3(Loss) for Entergy
Corporation and Subsidiaries                               13
Statements of Consolidated Cash Flows 4for Entergy
Corporation and Subsidiaries                               14
Consolidated Balance Sheets 6for Entergy Corporation
 and Subsidiaries                                          16
Management's Financial Discussion and Analysis for
 Entergy Arkansas, Power & Light Company:Inc.                                    18
Statements of Income 8
    Statements of Cash Flows                               9
    Balance Sheets                                        10
  Gulf States Utilities Company:
    Statements of Income (Loss)                           12
    Statements of Cash Flows                              13
    Balance Sheets                                        14
  Louisiana Power & Light Company:
    Statements of Income                                  16
    Statements of Cash Flows                              17
    Balance Sheets                                        18
  Mississippi Power & Light Company:
    Statements of Incomefor Entergy Arkansas, Inc.            20
Statements of Cash Flows for Entergy Arkansas, Inc.        21
Balance Sheets for Entergy Arkansas, Inc.                  22
  New Orleans Public Service Inc.:
    Statements of Income                                  24
    Statements of Cash Flows                              25
    Balance Sheets                                        26
  System Energy Resources, Inc.:
    Statements of Income                                  28
    Statements of Cash Flows                              29
    Balance Sheets                                        30
Notes to Financial Statements                             32
Management's Financial Discussion and Analysis for
 Entergy Gulf States, Inc.                                 24
Statements of Income (Loss) for Entergy Gulf States, Inc.  26
Statements of Cash Flows for Entergy Gulf States, Inc.     27
Balance Sheets for Entergy Gulf States, Inc.               28
Management's Financial Discussion and Analysis for
 Entergy Louisiana, Inc.                                   30
Statements of Income for Entergy Louisiana, Inc.           32
Statements of Cash Flows for Entergy Louisiana, Inc.       33
Balance Sheets for Entergy Louisiana, Inc.                 34
Management's Financial Discussion and Analysis for
Entergy Mississippi, Inc.                                  36
Statements of Income for Entergy Mississippi, Inc.         38
Statements of Cash Flows for Entergy Mississippi, Inc.     39
Balance Sheets for Entergy Mississippi, Inc.               40
Management's Financial Discussion and Analysis for
Entergy New Orleans, Inc.                                  42
Statements of Income for Entergy New Orleans, Inc.         44
Statements of Cash Flows for Entergy New Orleans, Inc.     45
Balance Sheets for Entergy New Orleans, Inc.               46
Management's Financial Discussion and Analysis for
System Energy Resources, Inc.                              49
Statements of Income for System Energy Resources, Inc.     50
Statements of Cash Flows for System Energy Resources, Inc. 51
Balance Sheets for System Energy Resources, Inc.           52
Notes to Financial Statements for Entergy Corporation
and Subsidiaries                                           54
Part II:
  Item 1.  Legal Proceedings                               64
  Item 4.  Submission of Matters to a Vote of 
             Security Holders                             6563
  Item 5.  Other Information                               6664
  Item 6.  Exhibits and Reports on Form 8-K                65
Experts                                                    68
Experts                                                   70
Signature                                                  7169

This  combined Quarterly Report on Form 10-Q is separately  filed  by
Entergy  Corporation,  Entergy Arkansas, Power &  Light  Company,Inc., Entergy  Gulf  States,
Utilities  Company,Inc., Entergy Louisiana, Power  &  Light  Company,Inc., Entergy Mississippi, Power  & Light Company,Inc., Entergy New
Orleans,   Public  Service
Inc.,  and  System  Energy  Resources,  Inc.   Information
contained herein relating to any individual company is filed by  such
company  on  its  own  behalf,  and  no  company   makesbehalf.   None of  these  companies  make  any
representationrepresentations  as to information relating to the  other  companies.
This  combined Quarterly Report on Form 10-Q supplements and  updates
the  Annual Report on Form 10-K for the calendar year ended  December
31, 1994, and the Quarterly Reports on Form  10-Q
for the quarters ended March 31, 1995 and June 30, 1995, filed by the individual registrants with the SEC and should
be  read  in  conjunction  therewith.  On  April  22,  1996,  Entergy
Corporation  filed  amendments to its articles  of  incorporation  to
change the names of its operating companies.

                             DEFINITIONS

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

   Abbreviation or Acronym        Term

ALJ                      Administrative Law Judge
ANO                      Arkansas Nuclear One Steam  Electric
                         Generating StationPlant
ANO 2                    Unit No. 2 of ANO
AP&L                     Arkansas Power & Light Company
APSC                     Arkansas Public Service Commission
Cajun                    Cajun Electric Power Cooperative, Inc.
Capital Funds Agreement  Agreement,  dated as of June  21,  1974,  as
                         amended,  between System Energy and  Entergy
                         Corporation, and the assignments thereof
CitiPower                CitiPower  Ltd.  - an electric  distribution
                         company  serving Melbourne,  Australia,  and
                         surrounding  suburbs, which was acquired  by
                         Entergy on January 5, 1996
Council                  Council   of   the  City  of  New   Orleans,
                         Louisiana
D.C. Circuit             United  States Court of Appeals for  the
                         District of Columbia CircuitEntergy Arkansas         Entergy  Arkansas,  Inc., formerly  Arkansas
                         Power & Light
Entergy Corporation      Entergy Corporation, a Delaware corporation,
                         successor to Entergy Corporation, a  Florida
                         Corporation
Entergy Gulf States      Entergy  Gulf  States, Inc.,  formerly  Gulf
                         States  Utilities  (including  wholly  owned
                         subsidiaries  - Varibus Corporation,  GSG&T,
                         Inc.,  Prudential  Oil  &  Gas,  Inc.,   and
                         Southern Gulf Railway Company)
Entergy Louisiana        Entergy  Louisiana, Inc., formerly Louisiana
                         Power & Light
Entergy Mississippi      Entergy    Mississippi,    Inc.,    formerly
                         Mississippi Power & Light
Entergy New Orleans      Entergy  New  Orleans,  Inc.,  formerly  New
                         Orleans Public Service, Inc.
Entergy Operations       Entergy  Operations, Inc., a  subsidiary  of
                         Entergy   Corporation  that  has   operating
                         responsibility for ANO, Grand Gulf 1,  River
                         Bend, and Waterford 3
Entergy or System        Entergy  Corporation and its various  direct
                         and indirect subsidiaries
Entergy Power            Entergy  Power,  Inc., a  subsidiary  of
                         Entergy    Corporation   that    markets
                         capacity   and   energy   from   certain
                         generating facilities to other  parties,
                         principally non-affiliates, for resale
Entergy Services         Entergy Services, Inc.
FASB                     Financial Accounting Standards Board
FERC                     Federal Energy Regulatory Commission
Form 10-K                The  combined Annual Report on Form 10-K for
                         the   year  ended  December  31,  1994,1995,   of
                         Entergy,  AP&L, GSU, LP&L,  MP&L,  NOPSIEntergy  Arkansas,  Entergy   Gulf
                         States,     Entergy    Louisiana,    Entergy
                         Mississippi, Entergy New Orleans, and System
                         Energy
Grand Gulf 1             Unit No. 1 (nuclear) of the Grand Gulf Station
                         (nuclear)
GSU                      Gulf States Utilities Company (including
                         wholly   owned  subsidiaries  -  Varibus
                         Corporation, GSG&T, Inc., Prudential Oil
                         &  Gas,  Inc. and Southern Gulf  Railway
                         Company)
KWH                      Kilowatt-Hour(s)
LP&L                     Louisiana Power & Light CompanyPlant
KWh                      Kilowatt-hour(s)
LPSC                     Louisiana Public Service Commission
Merger                   The combination transaction, consummated  on
                         December  31,  1993, by which  GSUEntergy  Gulf
                         States   became  a  subsidiary  of   Entergy
                         Corporation and Entergy Corporation became a
                         Delaware Corporation
Money Pool               System  Money  Pool,  which  allows  certain
                         System companies to borrow from, or lend to,
                         certain other System companies
MP&L                     Mississippi Power & Light Company
MPSC                     Mississippi Public Service Commission
NOPSI                    New Orleans Public Service Inc.MWh                      Megawatt-hour(s)
NRC                      Nuclear Regulatory Commission
operating companies      Entergy   Arkansas,  Entergy  Gulf   States,
                         Entergy Louisiana, Entergy Mississippi,  and
                         Entergy New Orleans, collectively
Owner Participant        A  corporation that, in connection with  the
                         Waterford 3 sale and leaseback transactions,
                         has  acquired  a beneficial  interest  in  a
                         trust,  the  Owner Trustee of which  is  the
                         owner  and lessor of undivided interests  in
                         Waterford 3
Owner Trustee            Each institution and/or individual acting as
                         Owner  Trustee under a trust agreement  with
                         an Owner Participant in connection  with the
                         Waterford 3 sale and leaseback transactions
PCB                      Polychlorinated biphenyls
PUCT                     Public Utility Commission of Texas
PURPA                    Public Utility Regulatory Policies Act
River Bend               River  Bend  Steam  Electric  Generating
                         Station (nuclear),Nuclear  Plant,  owned  70%  by
                         GSU
RUS                      Rural  Utility  Services  (formerly  the
                         Rural Electrification Administration  or
                         "REA")Entergy Gulf States
SEC                      Securities and Exchange Commission
SFAS                     Statement  of Financial Accounting Standards
                         as  promulgated by the Financial  Accounting
                         Standards Board
System Energy            System Energy Resources, Inc.
System Fuels             System Fuels, Inc.
System operating         AP&L,  GSU, LP&L, MP&L and  NOPSI, 
 companies               collectively
System or Entergy        Entergy  Corporation and its various  direct
                         and indirect subsidiaries
Waterford 3              Unit No. 3 (nuclear) of the Waterford SteamPlant

                 ENTERGY CORPORATION AND SUBSIDIARIES
                                  
           MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                  
                   LIQUIDITY AND CAPITAL RESOURCES


Entergy,  Entergy  Arkansas, Entergy Gulf States, Entergy  Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy

Cash Flows

      Net  cash  flow  from operations for Entergy  Corporation,  the
operating  companies, and System Energy for the  three  months  ended
March 31, 1996 and 1995, was as follows:

                              Three Months     Three Months
          Company            Ended 3/31/96    Ended 3/31/95
                                      (In Millions)
                                            
          Entergy Corporation     $268.3        $275.6
          Entergy Arkansas        $111.8        $124.8
          Entergy Gulf States     $ 34.8        $129.9
          Entergy Louisiana       $ 88.7        $103.7
          Entergy Mississippi     $ 29.7        $ 51.8
          Entergy New Orleans     $ (2.9)       $ 18.6
          System Energy           $ 67.7        $(26.2)

      For the first quarter of 1996, Entergy Gulf States' and Entergy
Louisiana's net cash flow from operations decreased due primarily  to
higher  accounts receivable balances in the three months ended  March
31,  1996  than in the same period in 1995, as a result of  increased
sales in 1996.  In addition, Entergy Gulf States had a greater amount
of  under-recovered fuel costs in the first quarter of 1996  compared
to  the  same  period in 1995.  An increase in Entergy  Mississippi's
under-recovered  Grand Gulf 1 costs slightly offset by  higher  sales
resulted  in an overall decrease in Entergy Mississippi's  cash  flow
from  operations for the first quarter of 1996. Entergy Mississippi's
accounts  receivable balances were higher for the  first  quarter  of
1996  compared to the same period in 1995, also contributing  to  the
decrease.   For  the  first  quarter of 1996,  Entergy  New  Orleans'
prepayment of certain ad valorem taxes, in addition to an increase in
under-recovered fuel cost, resulted in a decrease in  its  cash  flow
from  operations.   System  Energy's net cash  flow  from  operations
increased  for  the first quarter of 1996, due primarily  to  refunds
made  to  associated companies in 1995 resulting from  a  FERC  audit
settlement in 1994.

Financing Sources

      As  discussed  in Note 8, on January 5, 1996, Entergy  acquired
CitiPower for approximately $1.2 billion.  The acquisition was funded
by  a  $294 million equity investment, while the remainder was funded
by the issuance of non-recourse debt.  Entergy funded the majority of
the  equity portion of the investment with funds borrowed from a $300
million  line  of  credit.  Excluding the CitiPower investment,  cash
from operations, supplemented by cash on hand, was sufficient to meet
substantially  all  investing and financing  requirements,  including
capital  expenditures, dividends, and debt/preferred stock maturities
for  the first three months of 1996.  Entergy's ability to fund  most
of  its  capital requirements with cash from operations results  from
continued  efforts to streamline operations and to reduce  costs,  as
well  as  from  collections  under rate phase-in  plans  that  exceed
current  cash  requirements for the related costs.   (In  the  income
statement,  these revenue collections are offset by the  amortization
of  previously  deferred costs so that there  is  no  effect  on  net
income.)  The operating companies and System Energy have the ability,
subject  to regulatory approval, to meet capital requirements through
future  debt  or preferred stock issuances, as discussed  below.   In
addition, to the extent market interest and dividend rates allow, the
operating  companies and System Energy will refinance high-cost  debt
and preferred stock prior to maturity.

                ENTERGY CORPORATION AND SUBSIDIARIES
                                  
           MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                  
                   LIQUIDITY AND CAPITAL RESOURCES


      In April 1996, Entergy Corporation filed for authorization from
the  SEC  to  issue  and sell up to 10 million additional  shares  of
common  stock  through March 2001, under a new dividend  reinvestment
plan.  SEC authorization is not expected until mid-1996.

      Entergy  Corporation periodically reviews its capital structure
to determine its future needs for debt and equity financing.  Certain
agreements  and restrictions limit the amount of mortgage  bonds  and
preferred  stock  that can be issued by the operating  companies  and
System Energy.  Based on the most restrictive applicable tests as  of
March  31,  1996,  and assumed annual interest or dividend  rates  of
8.75%  for bonds and 8.25% for preferred stock, each of the operating
companies  and  System  Energy could have issued  mortgage  bonds  or
preferred stock up to the following amounts:

                                 Mortgage         Preferred
    Company                       Bonds             Stock
    -------------------        ------------     -------------
                                      (In Millions)
                                                      
    Entergy Arkansas           $    354       $       576
    Entergy Gulf States             (a)               (a)
    Entergy Louisiana          $     49       $       821
    Entergy Mississippi        $    261       $       334
    Entergy New Orleans        $     52       $       190
    System Energy              $    121               (b)
          

(a)  Entergy Gulf States was precluded from issuing mortgage bonds  and
     preferred  stock under its earnings coverage tests  at  March  31,
     1996.
(b)  System Energy's charter does not provide for the  issuance 
     of preferred stock.

     In addition to these amounts, the operating companies and System
Energy  have  the  ability, subject to certain conditions,  to  issue
bonds against retired bonds.  Such amounts may be significant and, in
some  cases, no earnings coverage test is required.  As a  result  of
the  River Bend rate deferrals being written off in the first quarter
of 1996 (see Note 7), Entergy Gulf States is currently precluded from
issuing  first  mortgage bonds under its earnings coverage  test  and
issuing  preferred  stock under its charter.  However,  Entergy  Gulf
States  has the ability to issue up to approximately $598 million  of
first mortgage bonds against previously retired bonds.  Entergy  Gulf
States  has  no  earnings coverage limitations  on  the  issuance  of
preference stock.  Entergy Arkansas may also issue preferred stock to
refund  outstanding  preferred  stock  without  meeting  an  earnings
coverage test.

     The operating companies and System Energy have SEC authorization
to  effect short-term borrowings.  See Note 4 to Entergy's Form  10-K
for information on the operating companies' and System Energy's short-
term borrowing authorizations and bank lines of credit.  At March 31,
1996,  outstanding short-term borrowings from the Money Pool were  as
follows (in millions):

            Company                Money Pool
                                   
            Entergy Louisiana       $48.0
            Entergy Mississippi     $17.4
            Entergy Operations      $ 7.6
            Entergy Services        $27.8
            System Fuels            $25.0

                ENTERGY CORPORATION AND SUBSIDIARIES
                                  
           MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                  
                   LIQUIDITY AND CAPITAL RESOURCES

      In  addition, Entergy Services and System Fuels had $22 million
and  $30  million,  respectively,  outstanding  on  their  respective
available  bank  lines of credit of $34 million and  $45  million  at
March 31, 1996.  Entergy Corporation had $270 million outstanding  on
its  $300  million bank credit facility at March 31, 1996,  of  which
$230  million  was used for the acquisition of CitiPower  in  January
1996.

Financing Uses

      As  discussed  in  Part  I  of  Entergy's  Form  10-K,  Entergy
Corporation  has  been  expanding  its  investments  in  nonregulated
business  opportunities overseas and in the  United  States.   As  of
March  31,  1996, Entergy Corporation had invested $865.4 million  in
equity  capital  (reduced by $172 million of accumulated  losses)  in
nonregulated businesses, which includes the acquisition of CitiPower.

      In  addition  to investing in nonregulated businesses,  Entergy
Corporation's capital requirements result from periodically investing
in,  or  making  loans  to,  its  subsidiaries,  and  sustaining  its
dividends.   To  meet such capital requirements, Entergy  Corporation
will   utilize  internally  generated  funds,  cash  on  hand,  funds
remaining  on  its  $300  million credit  facility,  and  other  bank
financings  as  may be required.  Entergy Corporation receives  funds
through  dividend  payments from its domestic  utility  subsidiaries.
During the first quarter of 1996, such common stock dividend payments
from  subsidiaries  totaled  $48.7  million.   Due  to  its  weakened
financial  position, Entergy Gulf States has not  paid  common  stock
dividends  since the third quarter of 1994.  Entergy Gulf  States  is
not  currently  expected to pay common stock dividends  during  1996.
Entergy  Corporation paid $99.7 million of dividends  on  its  common
stock during the first quarter of 1996.  Declarations of dividends on
common  stock  are  made  at the discretion of Entergy  Corporation's
Board  of  Directors.   It is anticipated that  management  will  not
recommend  future  dividend  increases  to  the  Board  unless   such
increases  are  justified  by sustained earnings  growth  of  Entergy
Corporation and its subsidiaries.  See Note 7 to Entergy's Form  10-K
for information on dividend restrictions.

Entergy Corporation and Entergy Gulf States

      See  Notes  1  and  2  regarding River Bend  rate  appeals  and
litigation with Cajun.  Adverse rulings in the River Bend rate appeal
could  result  in approximately $286 million of potential  write-offs
(net  of  tax)  and  $188 million in refunds of previously  collected
revenue.   Such  write-offs and charges could  result  in  additional
substantial  net  losses  being reported in  the  future  by  Entergy
Corporation   and   Entergy  Gulf  States,  with  resulting   adverse
adjustments to common equity of Entergy Corporation and Entergy  Gulf
States.   Adverse resolution of these matters could adversely  affect
Entergy Gulf States' ability to obtain financing, which in turn could
affect  Entergy Gulf States' liquidity and ability to pay  dividends.
Although  Entergy Corporation's common shareholders have  experienced
some dilution in earnings as a result of the Merger, Entergy believes
that  the Merger will ultimately be beneficial to common shareholders
in  terms of strategic benefits as well as economies and efficiencies
produced.

Entergy Corporation and System Energy

      Under  the  Capital  Funds Agreement, Entergy  Corporation  has
agreed  to  supply  to System Energy sufficient capital  to  maintain
System  Energy's  equity capital at a minimum of  35%  of  its  total
capitalization (excluding short-term debt), to permit  the  continued
commercial  operation  of  Grand Gulf 1,  and  to  pay  in  full  all
indebtedness for borrowed money of System Energy when due  under  any
circumstances.  In addition, under supplements to the  Capital  Funds
Agreement  assigning System Energy's rights as security for  specific
debt  of  System Energy, Entergy Corporation has agreed to make  cash
capital  contributions, if required, to enable System Energy to  make
payments on such debt when due.  The Capital Funds Agreement  can  be
terminated  by  the  parties thereto, subject to consent  of  certain
creditors.



                ENTERGY CORPORATION AND SUBSIDIARIES
                                  
           MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                  
                SIGNIFICANT FACTORS AND KNOWN TRENDS


Competition and Industry Challenges

       See   "MANAGEMENT'S  FINANCIAL  DISCUSSION  AND   ANALYSIS   -
SIGNIFICANT FACTORS AND KNOWN TRENDS" in Entergy's Form  10-K  for  a
discussion  of   the increasing competitive pressures facing  Entergy
and the electric utility industry.

      On  April  24,  1996, FERC issued new rules requiring  electric
utilities  to open their transmission lines to other power producers.
The rules will take effect sixty days after they are published in the
Federal Register.

Retail and Wholesale Rate Issues

     See Note 2 to Entergy's Form 10-K and herein for a discussion of
the  ongoing trend of regulatory ordered rate reductions as  well  as
incentive and performance-based regulation.

Potential Changes in the Electric Generating Station (nuclear)Utility Industry

      Refer  to  "MANAGEMENT'S FINANCIAL DISCUSSION  AND  ANALYSIS  -
SIGNIFICANT FACTORS AND KNOWN TRENDS" in Entergy's Form  10-K  for  a
discussion of legislative and regulatory developments relating to the
potential for retail competition in the areas served by the operating
companies.

Significant Industrial Cogeneration Effects

      Cogeneration  projects developed or considered  by  certain  of
Entergy  Gulf  States'  and Entergy Louisiana's industrial  customers
over  the  last  several years have caused Entergy  Gulf  States  and
Entergy  Louisiana to develop and secure approval  for  rate  tariffs
lower  than those previously approved by the PUCT and LPSC  for  such
industrial customers.  In certain cases, contracts or special tariffs
that  use  flexible  pricing  have been  negotiated  with  industrial
customers  to keep these customers on the System.  The contracts  and
tariffs  are not at full cost-of-service rates.  Although  the  rates
may  fully  recover expenses, they provide only a minimal return,  if
any,  on  investment.  In the first quarter of  1996,  KWh  sales  to
Entergy Gulf States' and Entergy Louisiana's industrial customers  at
less  than full cost-of-service rates made up approximately  28%  and
40%  of Entergy Gulf States' and Entergy Louisiana's total industrial
sales, respectively.

      During  1995, Entergy Louisiana received separate notices  from
two  large industrial customers that they will proceed with  proposed
cogeneration  projects  for the purpose of  fulfilling  their  future
electric  energy  needs.  These customers will continue  to  purchase
their   energy  requirements  from  Entergy  Louisiana  until   their
cogeneration  facilities  are completed  and  operational,  which  is
expected  to  occur in 1997-1998.  After that time,  these  customers
will  still purchase energy from Entergy Louisiana, but at a  reduced
level.   During  the  first  quarter of  1996,  these  two  customers
represented  an aggregate of approximately 18% of Entergy Louisiana's
industrial  sales  and  provided 12% of  its  total  industrial  base
revenues.

Domestic and Foreign Energy-Related Investments

      Entergy  Corporation seeks opportunities to expand its domestic
energy-related businesses that are not regulated by state  and  local
utility  regulatory  authorities, as well as  foreign  energy-related
investments.   Such  investments are expected to provide  returns  in
excess  of domestic regulated utility investments.  These investments
include  power development and new technology related to the  utility
business.   Entergy Corporation's strategy is to identify and  pursue
business  opportunities that have the potential  to  earn  a  greater
return than its regulated utility operations.  Refer to "MANAGEMENT'S
FINANCIAL  DISCUSSION ANDANALYSIS - LIQUIDITY AND CAPITAL  RESOURCES"
for a discussion of Entergy Corporation's investments in domestic and
foreign  energy-related businesses.  These investments may involve  a
greater risk than domestically regulated utility enterprises.  In the
first  quarter of 1996, Entergy Corporation's investments in domestic
and  foreign  energy-related  investments  reduced  consolidated  net
income   by   approximately  $2.1  million.   The  power  development
investments  were  profitable during the first quarter  of  1996  and
management  believes  that they will generally  continue  to  provide
profits  in the current year.  However, the income provided by  power
development  investments  was offset by  losses  experienced  by  new
technology investments.

      Refer  to  "MANAGEMENT'S FINANCIAL DISCUSSION  AND  ANALYSIS  -
SIGNIFICANT  FACTORS AND KNOWN TRENDS" in Entergy's  Form  10-K,  and
Note  8,  herein,  for a discussion of Entergy's  major  nonregulated
business opportunities and foreign energy-related investments.

ANO Matters

     Entergy Operations has made inspections and repairs from time to
time  on  the  boiler tubes in ANO 2's steam generators,  which  have
experienced  cracking.   Entergy Operations is gathering  information
and  assessing various options for the repair or replacement  of  ANO
2's steam generators.  See Note 1 for additional information.

Deregulated Utility Operations

       Entergy   Gulf   States  discontinued  regulatory   accounting
principles  in  1989  for  its  wholesale  jurisdiction   and   steam
department and in 1991 for the Louisiana deregulated portion of River
Bend.  The recent improving trend in net income from these operations
continued during the first quarter of 1996 when the related operating
income was $6.2 million compared to $1.2 million for the fiscal  year
ended 1995.

     The improvement in net income from deregulated operations in the
first  quarter  of  1996 was due to increased  revenues  and  reduced
operation  and  maintenance expenses, partially offset  by  increased
income  taxes.   Refer to Entergy Gulf States' Results of  Operations
for discussion of these trends.  The future impact of the deregulated
utility  operations on Entergy's and Entergy Gulf States' results  of
operations  and  financial position will depend on  future  operating
costs,  the  future efficiency and availability of generating  units,
and  the  future market prices for energy over the remaining life  of
the  assets.   Entergy  expects the performance  of  its  deregulated
utility  operations to continue to improve due to on-going reductions
in  operation  and maintenance expenses.  The deregulated  operations
will be subject to the requirements of SFAS 121, as discussed in Note
7, in determining the recognition of any asset impairment.

Property Tax Exemptions

      As discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
- -  SIGNIFICANT  FACTORS  AND KNOWN TRENDS" in  Entergy's  Form  10-K,
Waterford  3's local property tax exemption expired in December  1995
and River Bend's local property tax exemption will expire in December
1996.  In a March 1996 LPSC order, Entergy Louisiana was permitted to
defer  the  estimated  Waterford 3 property  tax  from  January  1996
through June 1996.  The order allows for the recovery of the property
tax  and also for the recovery, from July 1996 through June 1997,  of
the  related  deferral.   In  April 1996, Louisiana  authorities  set
Waterford 3's 1996 property tax at $20.8 million.

                ENTERGY CORPORATION AND SUBSIDIARIES
                                  
           MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                  
                SIGNIFICANT FACTORS AND KNOWN TRENDS


Environmental Issues

     Entergy Gulf States has been notified by the U. S. Environmental
Protection  Agency (EPA) that it has been designated as a potentially
responsible  party  for  the  clean-up  of  certain  hazardous  waste
disposal sites.  See Note 1 for additional information.

      As a consequence of rules for solid waste regulation issued  by
the  Louisiana  Department of Environmental Quality in 1993,  Entergy
Louisiana  is  upgrading  or  closing  certain  of  its  power  plant
wastewater impoundments.  See Note 1 for additional information.

Accounting Issues

      Continued  Application of SFAS 71 - As a result of  the  Energy
Policy Act, the actions of regulatory commissions, and other factors,
the  electric  utility  industry is moving toward  a  combination  of
competition  and  a  modified regulatory environment.   The  System's
financial statements currently reflect, for the most part, assets and
costs   based  on  existing  cost-based  ratemaking  regulations   in
accordance with SFAS 71, "Accounting for the Effects of Certain Types
of  Regulation" (SFAS 71).  Continued applicability of SFAS 71 to the
System's  financial  statements  requires  that  rates  set   by   an
independent  regulator  on a cost-of-service basis  can  actually  be
charged to and collected from customers.

      In  the  event that all or a portion of a utility's  operations
cease   to   meet  those  criteria  for  various  reasons,  including
deregulation, a change in the method of regulation, or  a  change  in
the competitive environment for the utility's regulated services, the
utility  should discontinue application of SFAS 71 for  the  relevant
portion  of its obligations.  The discontinuation should be  reported
by  elimination from the balance sheet of the effects of any  actions
of regulators recorded as regulatory assets and liabilities.

      As  of  March  31,  1996, and for the foreseeable  future,  the
System's financial statements continue to follow SFAS 71, except  for
certain portions of Entergy Gulf States' business.

      Accounting for Decommissioning Costs -.  In February 1996,  the
FASB  issued  an  exposure draft of a proposed  SFAS  addressing  the
accounting for decommissioning costs of nuclear generating  units  as
well  as liabilities related to the closure and removal of all  long-
lived assets.  See Note 1 for a discussion of proposed changes in the
accounting for decommissioning/closure costs and the potential impact
of these changes on Entergy.

                ENTERGY CORPORATION AND SUBSIDIARIES
                                  
           MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                  
                        RESULTS OF OPERATIONS
                                  
ENTERGY

Net Income

      Consolidated  net income decreased for the three  months  ended
March  31, 1996 due to the $174 million net of tax write-off of River
Bend rate deferrals pursuant to SFAS 121 and the cumulative effect of
the  prior  year change in accounting method for incremental  nuclear
refueling outage maintenance costs at Entergy Arkansas. Excluding the
above  mentioned items, net income would have increased $32.4 million
in  the first quarter of 1996 due primarily to increased energy sales
to retail customers.

      Significant  factors affecting the results  of  operations  and
causing variances between the three months ended March 31, 1996,  and
1995 are discussed under "Revenues and Sales" and "Expenses" below.

Revenues and Sales

      Detailed below are Entergy's electric revenues associated  with
its  domestic  regulated operations by source and KWh sales  for  the
three months ended March 31, 1996, and 1995:
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME For the Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months EndedIncrease/ Description 1996 1995 1994(Decrease) % (In Millions) Electric Operating Revenues: Residential $ 507.1 $ 441.5 $ 65.6 15 Commercial 354.5 324.7 29.8 9 Industrial 460.3 414.1 46.2 11 Governmental 38.7 35.1 3.6 10 -------- -------- ------- Total retail 1,360.6 1,215.4 145.2 12 Sales for resale 90.1 70.0 20.1 29 Other (37.6) (7.9) (29.7) 376 -------- -------- ------- Total $1,413.1 $1,277.5 $ 135.6 11 ======== ======== ======= Billed Electric Energy Sales (Millions of KWh): Residential 6,667 5,860 807 14 Commercial 4,792 4,473 319 7 Industrial 10,445 10,035 410 4 Governmental 556 539 17 3 -------- -------- -------- Total retail 22,460 20,907 1,553 7 Sales for resale 2,575 1,844 731 40 -------- -------- -------- Total 25,035 22,751 2,284 10 ======== ======== ========
Electric operating revenues increased for the three months ended March 31, 1996, as a result of higher fuel adjustment revenues, which do not affect net income, and increases in retail sales and sales for resale, partially offset by rate reductions at Entergy Louisiana and Entergy New Orleans. Cold weather in 1996 and non-weather related volume growth contributed to the increase in retail electric operating revenues. The increase in sales for resale was primarily the result of increased energy sales outside of Entergy's service area. ENTERGY CORPORATION AND S.UBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS The changes in electric operating revenues associated with Entergy's domestic regulated operations for the three months ended March 31, 1996, are as follows: Three Months Ended Description Increase/(Decrease) (In Millions) Change in base revenues $(26.0) Rate riders 2.6 Fuel cost recovery 101.5 Sales volume/weather 67.1 Other revenue (including unbilled) (29.7) Sales for resale 20.1 -------- Total $135.6 ======== Gas operating revenues increased for the three months ended March 31, 1996, because of increased sales related to colder than normal winter weather and increased fuel adjustment revenues. Nonregulated and foreign-energy related business revenues increased for the three months ended March 31, 1996, as a result of the January 1996 acquisition of CitiPower. See Note 8 for additional information regarding CitiPower. Expenses Operating expenses for the three months ended March 31, 1996, include the operating expenses of CitiPower, which are not included in the prior year financial statements. See Note 8 for additional information regarding CitiPower. Excluding the operating expenses of CitiPower, Entergy's operating expenses increased for the three months ended March 31, 1996, due primarily to increased fuel and purchased power expenses, depreciation and decommissioning expenses, and higher income tax expense. These increases were offset in part by lower operating and maintenance expenses and the effect of certain rate deferrals. Fuel and purchased power expenses increased as a result of the increase in energy sales as discussed above. Depreciation and decommissioning expenses increased as a result of increased depreciation rates and decommissioning costs as reflected in the 1995 System Energy/FERC rate increase filing. Income tax expenses increased primarily due to higher pretax income excluding the River Bend rate deferral write-off and the prior year change in accounting method. In addition, taxes other than income taxes increased primarily due to the expiration of Waterford 3's local property tax exemption in December 1995. Other operation and maintenance expenses decreased for the three months ended March 31, 1996, due to lower payroll related expenses, resulting from restructuring programs, as discussed in Note 6, in addition to ongoing operating efficiency improvement programs throughout Entergy. The deferral of Waterford 3 local property taxes, the deferral of a portion of the proposed System Energy rate increase at Entergy Mississippi and Entergy New Orleans, and the deferral of least cost planning expenses at Entergy New Orleans resulted in a reduction to Entergy's operating expenses in 1996. Other Income decreased for the three months ended March 31, 1996, as a result of the write-off of River Bend rate deferrals pursuant to SFAS 121, as discussed in Note 7. ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Interest charges increased for the three months ended March 31, 1996, due primarily to interest on long-term debt related to the investment in CitiPower and borrowings by Entergy Corporation from the $300 million line of credit, which were used to fund the acquisition of CitiPower. Excluding these increases, interest expense decreased $4.5 million due to ongoing retirement and refinancing of high cost debt at the operating companies. ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME (LOSS) For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
1996 1995 1994------- ------- (In Thousands, Except Share Data) Operating Revenues: Electric $1,910,287 $1,776,982 $4,744,213 $4,668,907$1,413,068 $1,277,490 Natural gas 15,073 17,107 75,861 93,95257,473 40,670 Steam products 12,095 11,435 35,518 35,002 ---------- ----------15,578 10,632 Nonregulated and foreign energy-related 112,873 8,608 businesses ---------- ---------- Total 1,937,455 1,805,524 4,855,592 4,797,861 ---------- ----------1,598,992 1,337,400 ---------- ---------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 464,751 430,718 1,066,258 1,103,157375,764 288,960 Purchased power 107,262 72,169 285,254 306,798158,157 82,509 Nuclear refueling outage expenses 19,591 15,730 70,554 46,94914,209 19,014 Other operation and maintenance 335,701 468,911 1,032,596 1,172,916353,212 359,593 Depreciation, amortization, and 194,567 170,480 decommissioning 176,093 166,387 515,194 488,052 Taxes other than income taxes 76,209 71,446 226,677 214,36588,971 76,635 Income taxes 180,208 130,795 327,312 254,10162,586 29,621 Rate deferrals (19,802) - Amortization of rate deferrals 131,665 112,757 316,039 295,107 ---------- ----------91,511 81,768 ---------- ---------- Total 1,491,480 1,468,913 3,839,884 3,881,445 ---------- ----------1,319,175 1,108,580 ---------- ---------- Operating Income 445,975 336,611 1,015,708 916,416 ---------- ----------279,817 228,820 ---------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 2,206 2,603 7,053 9,2732,558 2,494 Write-off of River Bend rate deferrals (194,498) - Miscellaneous - net (4,401) (2,900) 11,877 14,99110,778 17,556 Income taxes 1,877 (2,859) 1,068 (14,239) ---------- ----------14,906 (6,619) ---------- ---------- Total (318) (3,156) 19,998 10,025 ---------- ----------(166,256) 13,431 ---------- ---------- Interest Charges: Interest on long-term debt 157,760 167,754 479,433 501,273172,843 160,631 Other interest - net 6,302 4,424 20,954 12,62111,847 8,990 Allowance for borrowed funds used during construction (1,978) (2,228) (6,182) (7,397)(2,138) (2,197) Preferred and preference dividend requirements of subsidiaries and other 20,455 20,306 59,355 61,674 ---------- ----------18,081 19,850 ---------- ---------- Total 182,539 190,256 553,560 568,171200,633 187,274 ---------- ---------- Income (Loss) before the Cumulative Effect of Accounting Change (87,072) 54,977 Cumulative Effect of Accounting Change (net of income taxes) - 35,415 ---------- ------------------ Net Income $263,118 $143,199 $482,146 $358,270(Loss) ($87,072) $90,392 ========== ========== ========== ================== Earnings (Loss) per average common share $1.16 $0.63 $2.12 $1.56before cumulative effect of accounting change ($0.38) $0.24 Earnings (Loss) per average common share ($0.38) $0.40 Dividends declared per common share $0.45 $0.45 $1.35 $1.35$0.90 $0.90 Average number of common shares outstanding 227,751,471 227,470,521 227,639,262 229,154,520227,780,604 227,415,009 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $482,146 $358,270(loss) ($87,072) $90,392 Noncash items included in net income:income (loss): Write-off of River Bend rate deferrals 194,498 - Cumulative effect of a change in accounting principle - (35,415) Change in rate deferrals/excess capacity-net 285,174 307,313105,388 81,057 Depreciation, amortization, and decommissioning 515,194 488,052194,567 170,480 Deferred income taxes and investment tax credits (2,053) 7,582(45,013) (20,030) Allowance for equity funds used during (2,558) (2,494) construction Changes in working capital: Receivables 37,148 104,230 Fuel inventory 23,212 (9,605) Accounts payable (32,984) (70,433) Taxes accrued 65,289 63,030 Interest accrued (65,276) (13,246) Other working capital accounts (81,209) (33,005) Decommissioning trust contributions (12,146) (5,666) Provision for estimated losses and reserves 5,667 11,314 Other (31,202) (55,028) ----------- -------- Net cash flow provided by operating activities 268,309 275,581 ----------- -------- Investing Activities: Construction/capital expenditures (131,435) (108,367) Allowance for equity funds used during construction (7,053) (9,273) Amortization of deferred revenues - (14,632) Changes in working capital: Receivables (188,087) (99,413) Fuel inventory (33,839) 23,910 Accounts payable (70,656) (40,482) Taxes accrued 219,714 112,623 Interest accrued (7,768) (14,278) Reserve for rate refund (51,685) - Other working capital accounts (127,972) 43,981 Decommissioning trust contributions (21,189) (18,215) Provision for estimated losses and reserves 13,425 (6,242) Other 64,092 (18,596) --------- --------- Net cash flow provided by operating activities 1,069,443 1,120,600 --------- --------- Investing Activities: Construction/capital expenditures (401,031) (481,178) Allowance for equity funds used during construction 7,053 9,2732,558 2,494 Nuclear fuel purchases (207,211) (109,838)(65,430) (9,672) Proceeds from sale/leaseback of nuclear fuel 224,265 85,17846,872 39,440 Acquisition of CitiPower (1,156,112) - Investment in nonregulated/nonutility properties (25,979) 199 --------(5,171) (23,246) ----------- -------- Net cash flow used in investing activities (402,903) (496,366) --------(1,308,718) (99,351) ----------- -------- Financing Activities: Proceeds from the issuance of: First mortgage bonds 198,250 - 83,944 General and refunding mortgage bonds 109,28539,608 - OtherBank notes and other long-term debt 43,538 63,590946,167 - Retirement of: First mortgage bonds (45,800) (103,800)(133,687) (20,825) General and refunding mortgage bonds (54,200) (45,000)- (29,200) Other long-term debt (96,949) (45,410) Premium and expense on refinancing sale/leaseback bonds - (47,663) Repurchase of common stock - (119,486)(92,744) (25) Redemption of preferred stock (39,605) (43,860)(19,704) (24,250) Changes in short-term borrowings (171,219) 63,199- net 277,000 (38,625) Common stock dividends paid (306,465) (309,469) --------(99,714) (101,969) ----------- -------- Net cash flow used inprovided by (used in) financing 1,115,176 (214,894) activities (561,415) (503,955)----------- -------- --------Effect of exchange rates on cash and cash equivalents 40 - Net increase (decrease) in cash and cash equivalents 105,125 120,27974,807 (38,664) Cash and cash equivalents at beginning of period 533,590 613,907 563,749 ------------------- -------- Cash and cash equivalents at end of period $719,032 $684,028 ========$608,397 $575,243 =========== ========
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
ENTERGY CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) 1996 1995 -------- -------- (In Thousands) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $476,637 $496,933$239,354 $172,220 Income taxes $161,938 $131,607$12,032 $2,564 Noncash investing and financing activities: Capital lease obligations incurred - $69,520$27,804 Change in unrealized appreciation/depreciation of decommissioning trust assets $13,221 $9,068($4,265) $9,972 See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) ASSETS Utility Plant: Electric $21,603,761 $21,184,013 Plant acquisition adjustment - GSU 475,756 487,955 Electric plant under leases 672,725 668,846 Property under capital leases - electric 151,640 161,950 Natural gas 165,483 164,013 Steam products 77,414 77,307 Construction work in progress 415,242 476,816 Nuclear fuel under capital leases 311,072 265,520 Nuclear fuel 60,633 70,147 ---------- ---------- Total 23,933,726 23,556,567 Less - accumulated depreciation and 8,131,661 7,639,549 amortization ---------- ---------- Utility plant - net 15,802,065 15,917,018 ---------- ---------- Other Property and Investments: Decommissioning trust funds 256,180 207,395 Other 273,883 240,745 ---------- ---------- Total 530,063 448,140 ---------- ---------- Current Assets: Cash and cash equivalents: Cash 97,486 87,700 Temporary cash investments - at cost, which approximates market 621,546 526,207 ---------- ---------- Total cash and cash equivalents 719,032 613,907 Special deposits 5,772 8,074 Notes receivable 15,194 14,446 Accounts receivable: Customer (less allowance for doubtful accounts of $6.7 million in 1995 and 1994) 414,177 336,887 Other 83,314 66,651 Accrued unbilled revenues 334,744 240,610 Deferred fuel 6,495 - Fuel inventory 127,050 93,211 Materials and supplies - at average cost 372,605 365,956 Rate deferrals 412,952 380,612 Prepayments and other 122,494 98,811 ---------- ---------- Total 2,613,829 2,219,165 ---------- ---------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 1,142,811 1,451,926 SFAS 109 regulatory asset - net 1,429,652 1,417,646 Unamortized loss on reacquired debt 223,717 232,420 Other regulatory assets 292,248 316,878 Long-term receivables 224,789 271,097 Other 337,442 339,201 ---------- ---------- Total 3,650,659 4,029,168 ---------- ---------- TOTAL $22,596,616 $22,613,491 ========== ==========
1996 1995 ----------- ----------- (In Thousands) ASSETS Utility Plant: Electric $22,332,245 $21,698,593 Plant acquisition adjustment - GSU 467,623 471,690 Electric plant under leases 676,275 675,425 Property under capital leases - electric 140,400 145,146 Natural gas 167,919 166,872 Steam products 77,558 77,551 Construction work in progress 539,412 482,950 Nuclear fuel under capital leases 296,514 312,782 Nuclear fuel 67,500 49,100 ----------- ----------- Total 24,765,446 24,080,109 Less - accumulated depreciation and 8,413,266 8,259,318 amortization ----------- ----------- Utility plant - net 16,352,180 15,820,791 ----------- ----------- Other Property and Investments: Decommissioning trust funds 295,618 277,716 Other 454,572 434,619 ----------- ----------- Total 750,190 712,335 ----------- ----------- Current Assets: Cash and cash equivalents: Cash 38,979 42,822 Temporary cash investments - at cost, which approximates market 392,248 490,768 Special deposits 177,170 - ----------- ----------- Total cash and cash equivalents 608,397 533,590 Notes receivable 6,087 6,907 Accounts receivable: Customer (less allowance for doubtful accounts of $8.2 million in 1996 and $7.1 million in 1995) 353,939 333,343 Other 67,118 59,176 Accrued unbilled revenues 283,916 293,461 Deferred fuel 70,099 25,924 Fuel inventory - at average cost 98,955 122,167 Materials and supplies - at average cost 355,712 345,330 Rate deferrals 422,760 420,221 Prepayments and other 160,297 175,121 ----------- ----------- Total 2,427,280 2,315,240 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 733,902 1,033,282 SFAS 109 regulatory asset - net 1,199,525 1,279,495 Unamortized loss on reacquired debt 223,187 224,131 Other regulatory assets 376,162 329,397 Long-term receivables 225,130 224,726 Citipower license (net of $3.3 million of 616,947 - amortization) Other 344,750 326,533 ----------- ----------- Total 3,719,603 3,417,564 ----------- ----------- TOTAL $23,249,253 $22,265,930 =========== =========== See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $.01 par value, authorized 500,000,000 shares; issued 230,017,485 shares in 1995 and 1994 $2,300 $2,300 Paid-in capital 4,201,435 4,202,134 Retained earnings 2,396,953 2,223,739 Less - treasury stock (2,261,318 shares in 1995 and 2,608,908 in 1994) 67,122 77,378 ---------- ---------- Total common shareholders' equity 6,533,566 6,350,795 Subsidiary's preference stock 150,000 150,000 Subsidiaries' preferred stock: Without sinking fund 550,955 550,955 With sinking fund 260,342 299,946 Long-term debt 6,749,860 7,093,473 ---------- ---------- Total 14,244,723 14,445,169 ---------- ---------- Other Noncurrent Liabilities: Obligations under capital leases 308,068 273,947 Other 321,247 310,977 ---------- ---------- Total 629,315 584,924 ---------- ---------- Current Liabilities: Currently maturing long-term debt 667,375 349,085 Notes payable 648 171,867 Accounts payable 400,464 471,120 Customer deposits 138,851 134,478 Taxes accrued 312,292 92,578 Accumulated deferred income taxes 60,844 40,313 Interest accrued 187,871 195,639 Dividends declared 12,942 13,599 Deferred fuel cost - 27,066 Obligations under capital leases 152,968 151,904 Reserve for rate refund 5,287 56,972 Other 257,324 327,330 ---------- ---------- Total 2,196,866 2,031,951 ---------- ---------- Deferred Credits: Accumulated deferred income taxes 3,892,970 3,915,138 Accumulated deferred investment tax credits 658,038 649,898 Other 974,704 986,411 ---------- ---------- Total 5,525,712 5,551,447 ---------- ---------- Commitments and Contingencies (Notes 1 and 2) TOTAL $22,596,616 $22,613,491 ========== ==========
1996 1995 ----------- ----------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $.01 par value, authorized 500,000,000 shares; issued 230,017,485 shares $ 2,300 $ 2,300 Paid-in capital 4,201,117 4,201,483 Retained earnings 2,042,902 2,335,579 Cumulative foreign currency translation adjustment 17,255 - Less - treasury stock (1,983,639 shares in 1996 and 2,251,318 in 1995) 59,961 67,642 ----------- ----------- Total common shareholders' equity 6,203,613 6,471,720 Subsidiary's preference stock 150,000 150,000 Subsidiaries' preferred stock: Without sinking fund 550,955 550,955 With sinking fund 233,755 253,460 Long-term debt 7,637,897 6,777,124 ----------- ----------- Total 14,776,220 14,203,259 ----------- ----------- Other Noncurrent Liabilities: Obligations under capital leases 285,717 303,664 Other 348,071 326,804 ----------- ----------- Total 633,788 630,468 ----------- ----------- Current Liabilities: Currently maturing long-term debt 715,568 558,650 Notes payable 322,667 45,667 Accounts payable 468,047 460,379 Customer deposits 146,481 140,054 Taxes accrued 273,117 207,828 Accumulated deferred income taxes 97,427 72,847 Interest accrued 130,321 195,445 Dividends declared 109,970 12,194 Obligations under capital leases 150,799 151,140 Other 210,889 247,039 ----------- ----------- Total 2,625,286 2,091,243 ----------- ----------- Deferred Credits: Accumulated deferred income taxes 3,631,832 3,777,644 Accumulated deferred investment tax credits 605,796 612,701 Other 976,331 950,615 ----------- ----------- Total 5,213,959 5,340,960 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $23,249,253 $22,265,930 ============ ============ See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended March 31, 1996, due primarily to the one-time recording in 1995 of the cumulative effect of the change in accounting method for incremental nuclear refueling outage maintenance costs. Excluding the above mentioned item, net income would have increased $8.6 million for the three months ended March 31, 1996, due primarily to an increase in sales for resale and retail energy sales. Significant factors affecting the results of operations and causing variances between the three months ended March 31, 1996, and 1995 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are Entergy Arkansas' operating revenues by source and KWh sales for the three months ended March 31, 1996, and 1995:
ARKANSAS POWER & LIGHT COMPANY STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended 1995 1994 1995 1994 (In Thousands) Three Monthe Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 132.2 $ 124.2 $ 8.0 6 Commercial 70.6 68.3 2.3 3 Industrial 77.7 77.6 0.1 - Governmental 4.1 4.0 0.1 2 ------- ------- ------- Total retail 284.6 274.1 10.5 4 Sales for resale Associated companies 59.8 29.1 30.7 105 Non-associated companies 48.8 38.6 10.2 26 Other (10.1) (2.2) (7.9) * ------- ------- ------- Total $ 383.1 $ 339.6 $ 43.5 13 ======= ======= ======= Billed Electric Energy Sales (Millions of KWh): Residential 1,571 1,426 145 10 Commercial 996 947 49 5 Industrial 1,525 1,439 86 6 Governmental 56 53 3 6 ------- ------- ------- Total retail 4,148 3,865 283 7 Sales for resale Associated companies 2,654 1,359 1,295 95 Non-associated companies 1,674 956 718 75 ------- ------- ------- Total 8,476 6,180 2,296 37 ======= ======= =======
* Greater than 200%. Electric operating revenues increased for the three months ended March 31, 1996, primarily due to increased sales for resale to associated companies, caused by changes in generation availability and requirements among the operating companies. The increase in retail energy sales resulted from increased customers and associated usage, while the remainder resulted from colder than normal weather. ENTERGY ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS The changes in electric operating revenues for the three months ended March 31, 1996, are as follows: Three Months Ended Description Increase/(Decrease) (In Millions) Change in base revenues $(3.2) Rate riders (1.8) Fuel cost recovery (1.8) Sales volume/weather 12.3 Other revenue (including unbilled) (2.9) Sales for resale 40.9 ----- Total $43.5 ===== Expenses Operating expenses increased for the three months ended March 31, 1996, due to an increase in fuel, purchased power, and income tax expenses partially offset by a decrease in other operation and maintenance expenses. The increase in fuel and purchased power expenses is largely due to an increase in generation and purchases related to the increase in sales for resale in the first three months of 1996. Income tax expense increased because of higher pretax income. The decrease in other operation and maintenance expenses is primarily the result of work and materials associated with non-outage related maintenance during ANO 1's refueling outage, which began in mid-February 1995 and lasted through the first quarter of 1995. In addition, ANO 2 underwent a 30 day mid-cycle outage during the first three months of 1995, which also required additional work and materials. ENTERGY ARKANSAS, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
1996 1995 ------- ------- Operating Revenues $530,448 $470,770 $1,282,208 $1,256,762$383,081 $339,596 -------- -------- ---------- ---------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 77,987 74,050 182,793 205,28365,200 41,167 Purchased power 100,803 80,326 266,726 264,93598,625 81,747 Nuclear refueling outage expenses 7,923 8,059 22,793 25,5327,542 9,185 Other operation and maintenance 92,079 118,413 271,523 288,31183,265 93,658 Depreciation, amortization, and 41,030 39,352 decommissioning 42,603 38,671 121,557 110,929 Taxes other than income taxes 8,546 7,961 28,641 25,5849,018 10,111 Income taxes 38,188 30,569 59,532 45,4873,591 (3,339) Amortization of rate deferrals 68,243 56,558 136,170 130,28336,446 38,033 -------- -------- ---------- ---------- Total 436,372 414,607 1,089,735 1,096,344344,717 309,914 -------- -------- ---------- ---------- Operating Income 94,076 56,163 192,473 160,418 -------- -------- ---------- ----------38,364 29,682 ------- ------- Other Income (Deductions): Allowance for equity funds used during construction 770 894 2,376 2,9441,090 915 Miscellaneous - net 10,036 10,785 36,388 35,3468,239 15,532 Income taxes (3,941) (4,250) (14,279) (13,934)(3,228) (6,097) -------- -------- ---------- ---------- Total 6,865 7,429 24,485 24,3566,101 10,350 -------- -------- ---------- ---------- Interest Charges: Interest on long-term debt 26,566 26,587 80,110 79,28224,835 26,933 Other interest - net 906 1,287 4,646 3,2901,027 3,116 Allowance for borrowed funds used during construction (494) (912) (1,667) (2,579)(665) (731) -------- -------- ---------- ---------- Total 26,978 26,962 83,089 79,99325,197 29,318 -------- -------- ---------- ----------Income before the Cumulative Effect of Accounting Change 19,268 10,714 Cumulative Effect of Accounting Change (net of income taxes) - 35,415 -------- -------- Net Income 73,963 36,630 133,869 104,78119,268 46,129 Preferred Stock Dividend Requirements and Other 4,511 4,781 13,617 14,5304,458 4,561 -------- -------- ---------- ---------- Earnings Applicable to Common Stock $69,452 $31,849 $120,252 $90,251$ 14,810 $ 41,568 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY ARKANSAS, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
ARKANSAS POWER & LIGHT COMPANY STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $133,869 $104,781$19,268 $46,129 Noncash items included in net income: Cumulative effect of a change in accounting principle - (35,415) Change in rate deferrals/excess capacity-net 93,740 77,60735,953 30,665 Depreciation, amortization, and decommissioning 121,557 110,92941,030 39,352 Deferred income taxes and investment tax credits (37,132) (42,973)(18,102) (2,071) Allowance for equity funds used during construction (2,376) (2,944)(1,090) (915) Changes in working capital: Receivables (82,496) (38,663)24,582 37,541 Fuel inventory (32,524) 26,9053,174 (14,460) Accounts payable 34,625 (2,690)(3,762) 32,917 Taxes accrued 51,147 43,22626,025 8,488 Interest accrued 253 460(14,743) 636 Other working capital accounts 3,453 5862,326 (35,323) Decommissioning trust contributions (10,563) (8,525)(4,140) (2,386) Provision for estimated losses and reserves 4,423 5,206529 2,968 Other 4,132 (17,073)733 16,716 -------- -------- Net cash flow provided by operating activities 282,108 256,832111,783 124,842 -------- -------- Investing Activities: Construction expenditures (117,203) (122,279)(32,250) (41,651) Allowance for equity funds used during construction 2,376 2,9441,090 915 Nuclear fuel purchases (41,843) (33,477)(19,081) (76) Proceeds from sale/leaseback of nuclear fuel 41,832 33,47718,470 76 -------- -------- Net cash flow used in investing activities (114,838) (119,335)(31,771) (40,736) -------- -------- Financing Activities: Proceeds from issuance of other long-term debt - 27,992 Retirement of: Firstfirst mortgage bonds (25,800) (800) Other long-term debt84,256 - (28,761)Retirement of first mortgage bonds (30,437) (400) Redemption of preferred stock (7,000) (9,000) Changes in short-term borrowings (34,000) 12,605- (5,000) Dividends paid: Common stock (83,600) (75,000)- (32,800) Preferred stock (13,833) (14,798)(8,917) (4,727) -------- -------- Net cash flow used inprovided by (used in) 44,902 (42,927) financing activities (164,233) (87,762) -------- -------- Net increase in cash and cash equivalents 3,037 49,735124,914 41,179 Cash and cash equivalents at beginning of period 11,798 80,756 1,825 -------- -------- Cash and cash equivalents at end of period $83,793 $51,560$136,712 $121,935 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $74,689 $73,515$37,479 $25,916 Income taxes $55,710 $54,117$6,460 - Noncash investing and financing activities: Capital lease obligations incurred - $41,122$76 Change in unrealized appreciation/depreciation of decommissioning trust assets $6,811 $8,872($4,363) $6,234 See Notes to Financial Statements.
ENTERGY ARKANSAS, POWER & LIGHT COMPANYINC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) ASSETS Utility Plant: Electric $4,421,730 $4,293,097 Property under capital leases 52,802 56,135 Construction work in progress 106,354 136,701 Nuclear fuel under capital lease 107,117 94,628 --------- --------- Total 4,688,003 4,580,561 Less - accumulated depreciation and 1,823,395 1,710,216 amortization --------- --------- Utility plant - net 2,864,608 2,870,345 --------- --------- Other Property and Investments: Investment in subsidiary companies - at 11,215 11,215 equity Decommissioning trust fund 157,741 127,136 Other - at cost (less accumulated 7,578 4,628 depreciation) --------- --------- Total 176,534 142,979 --------- --------- Current Assets: Cash and cash equivalents: Cash 10,724 3,737 Temporary cash investments - at cost, which approximates market: Associated companies 11,051 4,713 Other 62,018 72,306 --------- --------- Total cash and cash equivalents 83,793 80,756 Accounts receivable: Customer (less allowance for doubtful accounts of $2.0 million in 1995 and 1994) 106,652 53,781 Associated companies 36,785 28,506 Other 7,605 11,181 Accrued unbilled revenues 108,785 83,863 Fuel inventory - at average cost 67,085 34,561 Materials and supplies - at average cost 76,527 79,886 Rate deferrals 127,133 113,630 Deferred excess capacity 9,978 8,414 Prepayments and other 15,949 23,867 --------- --------- Total 640,292 518,445 --------- --------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 261,652 360,496 Deferred excess capacity 10,097 20,060 SFAS 109 regulatory asset - net 222,501 227,068 Unamortized loss on reacquired debt 54,846 57,344 Other regulatory assets 45,106 68,813 Other 33,963 26,665 --------- --------- Total 628,165 760,446 --------- --------- TOTAL $4,309,599 $4,292,215 ========= =========
1996 1995 ----------- ----------- (In Thousands) ASSETS Utility Plant: Electric $ 4,445,035 $ 4,438,519 Property under capital leases 46,795 48,968 Construction work in progress 129,400 119,874 Nuclear fuel under capital lease 104,526 98,691 ----------- ----------- Total 4,725,756 4,706,052 Less - accumulated depreciation and 1,876,766 1,846,112 amortization ----------- ----------- Utility plant - net 2,848,990 2,859,940 ----------- ----------- Other Property and Investments: Investment in subsidiary companies - 11,122 11,122 at equity Decommissioning trust fund 173,493 166,832 Other - at cost (less accumulated 5,148 5,085 depreciation) ----------- ----------- Total 189,763 183,039 ----------- ----------- Current Assets: Cash and cash equivalents: Cash 5,221 7,780 Temporary cash investments - at cost, which approximates market: Associated companies 16,524 908 Other 32,797 3,110 Special deposits 82,170 - ----------- ----------- Total cash and cash 136,712 11,798 equivalents Accounts receivable: Customer (less allowance for doubtful accounts of $2.1 million in 1996 and 1995) 67,329 75,445 Associated companies 39,589 40,577 Other 7,418 6,962 Accrued unbilled revenues 77,622 93,556 Fuel inventory - at average cost 54,282 57,456 Materials and supplies - at average cost 76,865 75,030 Rate deferrals 137,011 131,634 Deferred excess capacity 12,295 11,088 Deferred nuclear refueling outage costs 24,213 32,824 Prepayments and other 13,904 15,215 ----------- ----------- Total 647,240 551,585 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 190,105 228,390 Deferred excess capacity 1,732 5,984 SFAS 109 regulatory asset - net 225,281 219,906 Unamortized loss on reacquired debt 57,805 58,684 Other regulatory assets 72,344 68,160 Other 29,741 28,727 ----------- ----------- Total 577,008 609,851 ----------- ----------- TOTAL $ 4,263,001 $ 4,204,415 ============ ============ See Notes to Financial Statements.
ENTERGY ARKANSAS, POWER & LIGHT COMPANYINC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares in 1995 and 1994 $470 $470 Paid-in capital 590,844 590,844 Retained earnings 528,450 491,799 --------- --------- Total common shareholder's equity 1,119,764 1,083,113 Preferred stock: Without sinking fund 176,350 176,350 With sinking fund 51,527 58,527 Long-term debt 1,281,030 1,293,879 --------- --------- Total 2,628,671 2,611,869 --------- --------- Other Noncurrent Liabilities: Obligations under capital leases 102,937 94,534 Other 72,658 68,235 --------- --------- Total 175,595 162,769 --------- --------- Current Liabilities: Currently maturing long-term debt 27,425 28,175 Notes payable 667 34,667 Accounts payable: Associated companies 43,993 17,345 Other 97,306 89,329 Customer deposits 18,237 17,113 Taxes accrued 96,386 45,239 Accumulated deferred income taxes 34,249 25,043 Interest accrued 31,317 31,064 Dividends declared 4,512 4,727 Co-owner advances 37,944 20,639 Deferred fuel cost 14,732 20,254 Nuclear refueling reserve 34,416 37,954 Obligations under capital leases 56,971 56,154 Other 28,439 45,632 --------- --------- Total 526,594 473,335 --------- --------- Deferred Credits: Accumulated deferred income taxes 812,727 859,558 Accumulated deferred investment tax credits 114,253 118,548 Other 51,759 66,136 --------- --------- Total 978,739 1,044,242 --------- --------- Commitments and Contingencies (Note 1) TOTAL $4,309,599 $4,292,215 ========= =========
1996 1995 ----------- ----------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares $ 470 $ 470 Paid-in capital 590,794 590,844 Retained earnings 491,896 492,386 ----------- ----------- Total common shareholder's equity 1,083,160 1,083,700 Preferred stock: Without sinking fund 176,350 176,350 With sinking fund 49,027 49,027 Long-term debt 1,250,122 1,281,203 ----------- ----------- Total 2,558,659 2,590,280 ----------- ----------- Other Noncurrent Liabilities: Obligations under capital leases 96,641 93,574 Other 71,503 67,444 ----------- ----------- Total 168,144 161,018 ----------- ----------- Current Liabilities: Currently maturing long-term debt 115,870 28,700 Notes payable 667 667 Accounts payable: Associated companies 40,880 42,156 Other 117,764 120,250 Customer deposits 19,347 18,594 Taxes accrued 66,184 40,159 Accumulated deferred income taxes 59,814 48,992 Interest accrued 15,497 30,240 Dividends declared 15,300 4,458 Co-owner advances 29,858 34,450 Deferred fuel cost 21,050 17,837 Obligations under capital leases 54,678 54,697 Other 21,103 26,238 ----------- ----------- Total 578,012 467,438 ----------- ----------- Deferred Credits: Accumulated deferred income taxes 801,114 823,471 Accumulated deferred investment tax credits 111,737 112,890 Other 45,335 49,318 ----------- ----------- Total 958,186 985,679 ----------- ----------- Commitments and Contingencies (Note 1) TOTAL $ 4,263,001 $ 4,204,415 ============ ============ See Notes to Financial Statements.
ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income decreased for the three months ended March 31, 1996, due to the $174 million net of tax write-off of River Bend rate deferrals required by the adoption of SFAS 121. Excluding the write- off, net income for the three months ended March 31, 1996, would have increased $19 million primarily due to increased electric retail energy sales, partially offset by increased income tax expenses. Significant factors affecting the results of operations and causing variances between the three months ended March 31, 1996, and 1995 are discussed under "Revenues and Sales," "Expenses," and "Other" below. Revenues and Sales Detailed below are Entergy Gulf States' electric operating revenues by source and KWh sales for the three months ended March 31, 1996, and 1995:
GULF STATES UTILITIES COMPANY STATEMENTS OF INCOME (LOSS) For the Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended 1995 1994 1995 1994 (In Thousands) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Department Operating Revenues: Residential $ 134.7 $ 116.5 $ 18.2 16 Commercial 102.5 92.3 10.2 11 Industrial 160.6 142.3 18.3 13 Governmental 7.0 6.2 0.8 13 --------- -------- -------- Total retail 404.8 357.3 47.5 13 Sales for resale Associated companies 2.8 10.2 (7.4) (73) Non-associated companies 19.0 14.8 4.2 28 Other (0.4) (3.5) 3.1 (89) --------- -------- -------- Total Electric Department $ 426.2 $ 378.8 $ 47.4 13 ======== ======== ======== Billed Electric Energy Sales (Millions of KWh): Residential 1,825 1,561 264 17 Commercial 1,462 1,342 120 9 Industrial 3,901 3,670 231 6 Governmental 92 88 4 5 ------- ------- ----- Total retail 7,280 6,661 619 9 Sales for resale Associated companies 56 501 (445) (89) Non-associated companies 500 473 27 6 ------- ------- ----- Total Electric Department 7,836 7,635 201 3 Steam Department 416 397 19 5 ------- ------- ----- Total 8,252 8,032 220 3 ======= ======= =====
Electric operating revenues increased for the three months ended March 31, 1996, as a result of higher fuel adjustment revenues, which do not affect net income, and increased customer usage, partially attributable to colder winter weather than in the same period of 1995. Other electric revenues decreased due to a settlement with the United States Department of Energy regarding service and pricing arrangements. ENTERGY GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS The changes in electric operating revenues for the three months ended March 31, 1996, are as follows: Three Months Ended Description Increase/(Decrease) (In Millions) Change in base revenues $(2.7) Fuel cost recovery 33.9 Sales volume/weather 26.8 Other revenue (including unbilled (7.4) Sales for resale (3.2) ------ Total $ 47.4 ====== Gas operating revenues increased for the three months ended March 31, 1996, primarily due to an increase in residential sales as a result of colder weather than in the same period of 1995. Expenses Operating expenses increased for the three months ended March 31, 1996, as a result of higher fuel expenses, including purchased power, and higher income taxes. Fuel expenses increased because of higher gas prices and increased energy requirements resulting from higher energy sales. Income taxes increased primarily due to higher pre-tax income for the three months ended March 31, 1996, excluding the net effect of the write-off of River Bend rate deferrals discussed below. Other Other income decreased due to the write-off of River Bend rate deferrals pursuant to the adoption of SFAS 121, which became effective January 1, 1996. See Note 7 for a further discussion. Income taxes on other income decreased as a result of this write-off. ENTERGY GULF STATES, INC. STATEMENTS OF INCOME (LOSS) For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
1996 1995 ------- ------- (In Thousands) Operating Revenues: Electric $524,982 $530,209 $1,366,070 $1,371,328$426,177 $378,791 Natural gas 3,210 3,887 17,654 25,71414,876 9,923 Steam products 12,095 11,435 35,518 35,00215,578 10,632 -------- -------- ---------- ---------- Total 540,287 545,531 1,419,242 1,432,044456,631 399,346 -------- -------- ---------- ---------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 149,535 154,881 391,364 393,240117,409 114,921 Purchased power 47,901 44,330 132,625 159,38967,834 40,557 Nuclear refueling outage expenses 2,580 2,707 8,354 7,7472,360 3,031 Other operation and maintenance 91,939 171,054 295,566 376,61696,741 101,404 Depreciation, amortization, and 51,251 50,339 decommissioning 50,606 48,786 151,337 145,862 Taxes other than income taxes 26,951 24,623 77,082 58,63326,334 25,379 Income taxes 40,737 17,458 63,715 34,21011,983 (162) Amortization of rate deferrals 16,507 16,839 49,519 49,57617,644 16,506 -------- -------- ---------- ---------- Total 426,756 480,678 1,169,562 1,225,273391,556 351,975 -------- -------- ---------- ---------- Operating Income 113,531 64,853 249,680 206,77165,075 47,371 -------- -------- ---------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 253 417 770 1,056493 251 Write-off of River Bend rate deferrals (194,498) - Miscellaneous - net 6,213 (78,886) 17,823 (70,653)4,940 5,914 Income taxes (2,110) 31,590 (5,139) 27,40718,743 (865) ---------- -------- --------Total (170,322) 5,300 ---------- ---------- Total 4,356 (46,879) 13,454 (42,190) -------- -------- ---------- ---------- Interest Charges: Interest on long-term debt 47,426 48,804 144,053 146,55446,488 48,270 Other interest - net 2,588 1,172 4,681 6,409950 1,010 Allowance for borrowed funds used during construction (239) (340) (700) (847)(428) (244) ---------- -------- --------Total 47,010 49,036 ---------- ---------- Total 49,775 49,636 148,034 152,116 -------- -------- ---------- ---------- Net Income (Loss) 68,112 (31,662) 115,100 12,465(152,257) 3,635 Preferred and Preference Stock Dividend Requirements and Other 7,341 7,506 22,357 22,4427,219 7,590 ---------- -------- -------- ---------- ---------- Earnings (Loss)Loss Applicable to Common Stock $60,771 ($39,168) $92,743159,476) ($9,977) ======== ========3,955) ========== ================== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
GULF STATES UTILITIES COMPANY STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) 1996 1995 -------- -------- (In Thousands) Net income (loss) ($152,257) $3,635 Noncash items included in net income: Write-off of River Bend rate deferrals 194,498 - Change in rate deferrals 17,644 16,506 Depreciation, amortization, and 51,251 50,339 decommissioning Deferred income taxes and investment tax (6,812) 914 credits Allowance for equity funds used during (493) (251) construction Changes in working capital: Receivables 8,020 58,324 Fuel inventory 6,822 894 Accounts payable (902) (10,624) Taxes accrued (6,976) 11,043 Interest accrued (21,462) 4,466 Reserve for rate refund - 10,560 Other working capital accounts (56,512) (4,667) Decommissioning trust contributions (1,481) (739) Provision for estimated losses and reserves 2,648 (3,587) Other 777 (6,925) -------- -------- Net cash flow provided by operating activities 34,765 129,888 -------- -------- Investing Activities: Construction expenditures (36,419) (19,136) Allowance for equity funds used during construction 493 251 Nuclear fuel purchases (22,188) - Proceeds from sale/leaseback of nuclear fuel 23,375 - -------- -------- Net cash flow used in investing activities (34,739) (18,885) -------- -------- Financing Activities: Proceeds from the issuance of long-term debt 780 2,277 Retirement of first mortgage bonds (20,000) - Redemption of preferred and preference stock (4,204) (2,250) Dividends paid on preferred and preference (7,132) (7,514) stock -------- -------- Net cash flow used in financing activities (30,556) (7,487) -------- -------- Net increase (decrease) in cash and cash (30,530) 103,516 equivalents Cash and cash equivalents at beginning of period 234,604 104,644 -------- -------- Cash and cash equivalents at end of period $204,074 $208,160 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest - net of amount capitalized $66,212 $41,860 Change in unrealized appreciation/depreciation of decommissioning trust assets - $759 See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS March 31, 1996 and December 31, 1995 (Unaudited)
1996 1995 ----------- ----------- (In Thousands) ASSETS Utility Plant: Electric $ 6,962,426 $ 6,942,983 Natural gas 45,782 45,789 Steam products 77,558 77,551 Property under capital leases 76,617 77,918 Construction work in progress 164,427 148,043 Nuclear fuel under capital lease 66,439 69,853 ----------- ----------- Total 7,393,249 7,362,137 Less - accumulated depreciation and 2,713,779 2,664,943 amortization ----------- ----------- Utility plant - net 4,679,470 4,697,194 ----------- ----------- Other Property and Investments: Decommissioning trust fund 34,859 32,943 Other - at cost (less accumulated depreciation) 29,230 28,626 ----------- ----------- Total 64,089 61,569 ----------- ----------- Current Assets: Cash and cash equivalents: Cash 7,882 13,751 Temporary cash investments - at cost, which approximates market: Associated companies 61,097 46,336 Other 135,095 174,517 ----------- ----------- Total cash and cash equivalents 204,074 234,604 Accounts receivable: Customer (less allowance for doubtful accounts of $1.6 million in 1996 and 1995) 107,171 110,187 Associated companies 1,391 1,395 Other 16,854 15,497 Accrued unbilled revenues 67,024 73,381 Deferred fuel costs 61,887 31,154 Accumulated deferred income taxes 37,721 43,465 Fuel inventory - at average cost 25,319 32,141 Materials and supplies - at average cost 93,097 91,288 Rate deferrals 95,614 97,164 Prepayments and other 9,676 15,566 ----------- ----------- Total 719,828 745,842 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 203,222 419,904 SFAS 109 regulatory asset-net 370,522 453,628 Unamortized loss on reacquired debt 59,475 61,233 Other regulatory assets 26,718 27,836 Long-term receivables 225,130 224,727 Other 168,119 169,125 ----------- ----------- Total 1,053,186 1,356,453 ----------- ----------- TOTAL $ 6,516,573 $ 6,861,058 =========== =========== See Notes to Financial Statements.
ENTERGY GULF STATES, INC. BALANCE SHEETS March 31, 1996 and December 31, 1995 (Unaudited)
1996 1995 ----------- ----------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares $ 114,055 $ 114,055 Paid-in capital 1,152,592 1,152,505 Retained earnings 198,228 357,704 ----------- ----------- Total common shareholder's equity 1,464,875 1,624,264 Preference stock 150,000 150,000 Preferred stock: Without sinking fund 136,444 136,444 With sinking fund 83,450 87,654 Long-term debt 2,141,303 2,175,471 ----------- ----------- Total 3,976,072 4,173,833 ----------- ----------- Other Noncurrent Liabilities: Obligations under capital leases 105,638 108,078 Other 81,636 78,245 ----------- ----------- Total 187,274 186,323 ----------- ----------- Current Liabilities: Currently maturing long-term debt 160,425 145,425 Accounts payable: Associated companies 42,574 31,349 Other 124,401 136,528 Customer deposits 22,179 21,983 Taxes accrued 30,437 37,413 Interest accrued 35,375 56,837 Nuclear refueling reserve 6,193 22,627 Obligations under capital lease 37,418 37,773 Other 73,031 86,653 ----------- ----------- Total 532,033 576,588 ----------- ----------- Deferred Credits: Accumulated deferred income taxes 1,084,204 1,177,144 Accumulated deferred investment tax credits 206,805 208,618 Deferred River Bend finance charges 51,957 58,047 Other 478,228 480,505 ----------- ----------- Total 1,821,194 1,924,314 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $ 6,516,573 $ 6,861,058 =========== =========== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended March 31, 1996, due primarily to increased revenues and decreased other operation and maintenance expenses, partially offset by increased income taxes. Significant factors affecting the results of operations and causing variances between the three months ended March 31, 1996, and 1995 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are Entergy Louisiana's operating revenues by source and KWh sales for the three months ended March 31, 1996, and 1995.
Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 135.3 $ 111.9 $ 23.4 21 Commercial 86.0 76.0 10.0 13 Industrial 175.6 148.9 26.7 18 Governmental 8.5 7.7 0.8 10 ------- ------- ------ Total retail 405.4 344.5 60.9 18 Sales for resale Associated companies 0.2 0.2 - - Non-associated companies 14.5 10.5 4.0 38 Other (2.3) (1.7) (0.6) 35 ------- ------- ------ Total $ 417.8 $ 353.5 $ 64.3 18 ======= ======= ====== Billed Electric Energy Sales (Millions of KWh): Residential 1,826 1,587 239 15 Commercial 1,092 1,019 73 7 Industrial 4,213 4,079 134 3 Governmental 115 110 5 5 ------- ------- ------ Total retail 7,246 6,795 451 7 Sales for resale Associated companies 3 10 (7) (70) Non-associated companies 233 214 19 9 ------- ------- ------ Total 7,482 7,019 463 7 ======= ======= ======
Electric operating revenues increased for the three months ended March 31, 1996, primarily due to higher fuel adjustment revenues, which do not affect net income, and higher retail sales, partially offset by a decrease in rates. Colder weather and increased customer usage in the first three months of 1996 contributed to the increase in retail sales. A base rate reduction ordered in the second quarter of 1995, and a subsequent settlement of related issues during the fourth quarter of 1995, partially offset the effect of these increases. ENTERGY LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS The changes in electric operating revenues for the three months ended March 31, 1996, are as follows: Three Months Ended Description Increase/(Decrease) (In Millions) Change in base revenues $(13.8) Fuel cost recovery 54.3 Sales volume/weather 20.4 Other revenue (including unbilled) (0.6) Sales for resale 4.0 ------ Total $64.3 ====== Expenses Operating expenses increased for the three months ended March 31, 1996, due primarily to an increase in fuel and purchased power expenses, income taxes, and taxes other than income taxes offset by a decrease in other operation and maintenance expenses and the recording of rate deferrals in 1996. The increase in fuel and purchased power is primarily due to increased energy sales as noted in "Revenues and Sales" above. Income taxes increased for the three months ended March 31, 1996, because of higher pre-tax income. Taxes other than income taxes increased as the result of the expiration of Waterford 3's local property tax exemption in December 1995, and was offset by the recording of the LPSC-approved rate deferral for these taxes discussed in Note 2. Other operation and maintenance expenses decreased for the three months of 1996 due to lower payroll expenses. Payroll expenses decreased as a result of the restructuring program announced and accrued for during 1994 and 1995, which included a reduction in the number of Entergy Louisiana employees throughout 1995 and into 1996. ENTERGY LOUISIANA, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
1996 1995 ------- ------- (In Thousands) Operating Revenues $417,767 $353,462 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 90,680 52,050 Purchased power 100,875 74,995 Nuclear refueling outage expenses 4,000 4,517 Other operation and maintenance 65,770 73,004 Depreciation, amortization, and 41,741 38,507 decommissioning Taxes other than income taxes 19,734 15,716 Income taxes 22,528 18,696 Rate deferrals (6,859) - Amortization of rate deferrals 6,660 6,660 -------- -------- Total 345,129 284,145 -------- -------- Operating Income 72,638 69,317 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 277 564 Miscellaneous - net 286 372 Income taxes (26) (25) -------- -------- Total 537 911 -------- -------- Interest Charges: Interest on long-term debt 30,717 32,572 Other interest - net 2,336 2,085 Allowance for borrowed funds used during construction (408) (491) -------- -------- Total 32,645 34,166 -------- -------- Net Income 40,530 36,062 Preferred Stock Dividend Requirements and Other 4,915 5,591 -------- -------- Earnings Applicable to Common Stock $35,615 $ 30,471 ======== ======== See Notes to Financial Statements.
ENTERGY LOUISIANA, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $115,100 $12,465$40,530 $36,062 Noncash items included in net income: Change in rate deferrals 49,519 80,1386,660 6,660 Depreciation, amortization, and decommissioning 151,337 145,86241,741 38,507 Deferred income taxes and investment tax credits 69,060 16,257(4,169) (9,077) Allowance for equity funds used during construction (770) (1,056)(277) (564) Changes in working capital: Receivables 41,808 (50,881) Fuel inventory (3,598) (3,750)6,447 26,639 Accounts payable (21,476) 22,872(2,740) (25,464) Taxes accrued 35,701 14,57940,406 37,282 Interest accrued 4,254 3,792 Reserve for rate refund (51,268) -(17,143) (7,458) Other working capital accounts (53,032) 15,330(11,327) 633 Decommissioning trust contributions (2,959) (2,217)(4,393) (1,204) Other 10,591 24,946(6,997) 1,708 -------- -------- Net cash flow provided by operating activities 344,267 278,33788,738 103,724 -------- -------- Investing Activities: Construction expenditures (112,237) (101,952)(26,235) (20,055) Allowance for equity funds used during 277 564 construction 770 1,056 Nuclear fuel purchases - (25,205) Proceeds from sale/leaseback of nuclear fuel - 25,205 -------- -------- Net cash flow used in investing activities (111,467) (100,896)(25,958) (19,491) -------- -------- Financing Activities: Proceeds from the issuance of otherfirst mortgage bonds 113,994 - Retirement of: First mortgage bonds (35,000) - Other long-term debt 2,277 - Retirement of other long-term debt (50,425) (425)(44) (25) Redemption of preferred stock (4,850) (4,850)(7,500) (7,500) Changes in short-term borrowings - net (28,468) (7,954) Dividends paid: Common stock - (289,100)(14,400) (55,700) Preferred and preference stock (22,208) (22,343)(5,151) (5,491) -------- -------- Net cash flow used inprovided by (used in) financing 23,431 (76,670) activities (75,206) (316,718) -------- -------- Net increase (decrease) in cash and cash equivalents 157,594 (139,277)86,211 7,563 Cash and cash equivalents at beginning of period 104,644 261,34934,370 28,718 -------- -------- Cash and cash equivalents at end of period $262,238 $122,072$120,581 $36,281 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $136,526 $136,957 Income taxes $288 $137$48,555 $40,325 Noncash investing and financing activities: Capital lease obligations incurred - $18,721$75 Change in unrealized appreciation/depreciation of decommissioning trust assets $1,738 ($200)94) $1,294 See Notes to Financial Statements.
GULF STATES UTILITIES COMPANYENTERGY LOUISIANA, INC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) ASSETS Utility Plant: Electric $6,928,954 $6,842,726 Natural gas 44,505 44,505 Steam products 77,414 77,307 Property under capital leases 79,323 82,914 Construction work in progress 118,319 96,176 Nuclear fuel under capital leases 53,102 80,042 --------- --------- Total 7,301,617 7,223,670 Less - accumulated depreciation and 2,645,827 2,504,826 amortization --------- --------- Utility plant - net 4,655,790 4,718,844 --------- --------- Other Property and Investments: Decommissioning trust fund 26,993 21,309 Other - at cost (less accumulated 28,567 29,315 depreciation) --------- --------- Total 55,560 50,624 --------- --------- Current Assets: Cash and cash equivalents: Cash 13,893 8,063 Temporary cash investments - at cost, which approximates market: Associated companies 35,496 5,085 Other 212,849 91,496 --------- --------- Total cash and cash equivalents 262,238 104,644 Accounts receivable: Customer (less allowance for doubtful accounts of $0.7 million in 1995 and 1994) 97,846 167,745 Associated companies 6,908 12,732 Other 11,864 20,706 Accrued unbilled revenues 82,227 39,470 Deferred fuel costs 20,932 6,314 Accumulated deferred income taxes 26,448 49,457 Fuel inventory 29,382 25,784 Materials and supplies - at average cost 101,820 90,054 Rate deferrals 95,469 100,478 Prepayments and other 22,676 13,754 --------- --------- Total 757,810 631,138 --------- --------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 444,195 506,974 SFAS 109 regulatory asset - net 444,420 426,358 Unamortized loss on reacquired debt 62,973 63,994 Other regulatory assets 29,683 35,168 Long-term receivables 254,432 264,752 Other 153,360 145,609 --------- --------- Total 1,389,063 1,442,855 --------- --------- TOTAL $6,858,223 $6,843,461 ========= =========
1996 1995 ----------- ----------- (In Thousands) ASSETS Utility Plant: Electric $ 4,897,057 $ 4,886,898 Property under capital leases 231,121 231,121 Construction work in progress 95,320 87,567 Nuclear fuel under capital lease 63,516 72,864 Nuclear fuel 1,506 1,506 ----------- ----------- Total 5,288,520 5,279,956 Less - accumulated depreciation and 1,774,850 1,742,306 amortization ----------- ----------- Utility plant - net 3,513,670 3,537,650 ----------- ----------- Other Property and Investments: Nonutility property 20,060 20,060 Decommissioning trust fund 43,496 38,560 Investment in subsidiary companies - at equity 14,230 14,230 Other 869 1,113 ----------- ----------- Total 78,655 73,963 ----------- ----------- Current Assets: Cash and cash equivalents: Cash 4,481 3,952 Temporary cash investments - at cost, which approximates market 21,100 30,418 Special deposits 95,000 - ----------- ----------- Total cash and cash equivalents 120,581 34,370 Accounts receivable: Customer (less allowance for doubtful accounts of $1.4 million in 1996 and 1995) 79,780 72,328 Associated companies 1,361 8,033 Other 8,506 8,979 Accrued unbilled revenues 55,378 62,132 Deferred fuel costs 13,984 10,200 Materials and supplies - at average cost 81,375 79,799 Rate deferrals 18,949 25,609 Deferred nuclear refueling outage costs 17,320 21,344 Prepayments and other 9,801 9,118 ----------- ----------- Total 407,035 331,912 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 303,419 301,520 Unamortized loss on reacquired debt 38,474 39,474 Other regulatory assets 31,998 23,935 Other 24,486 23,069 ----------- ----------- Total 398,377 387,998 ----------- ----------- TOTAL $ 4,397,737 $ 4,331,523 =========== =========== See Notes to Financial Statements.
GULF STATES UTILITIES COMPANYENTERGY LOUISIANA, INC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 100 shares in 1995 and 1994 $114,055 $114,055 Paid-in capital 1,152,469 1,152,336 Retained earnings 357,171 264,626 --------- --------- Total common shareholder's equity 1,623,695 1,531,017 Preference stock 150,000 150,000 Preferred stock: Without sinking fund 136,444 136,444 With sinking fund 90,087 94,934 Long-term debt 2,250,420 2,318,417 --------- --------- Total 4,250,646 4,230,812 --------- --------- Other Noncurrent Liabilities: Obligations under capital leases 95,051 125,691 Other 76,170 68,753 --------- --------- Total 171,221 194,444 --------- --------- Current Liabilities: Currently maturing long-term debt 70,425 50,425 Accounts payable: Associated companies 39,388 31,722 Other 111,833 140,975 Customer deposits 21,793 22,216 Taxes accrued 48,179 12,478 Interest accrued 59,581 55,327 Nuclear refueling reserve 21,522 10,117 Obligations under capital leases 37,366 37,265 Reserve for rate refund 5,704 56,972 Other 83,255 111,963 --------- --------- Total 499,046 529,460 --------- --------- Deferred Credits: Accumulated deferred income taxes 1,144,821 1,100,396 Accumulated deferred investment tax credits 220,583 199,428 Deferred River Bend finance charges 64,137 82,406 Other 507,769 506,515 --------- --------- Total 1,937,310 1,888,745 --------- --------- Commitments and Contingencies (Notes 1 and 2) TOTAL $6,858,223 $6,843,461 ========= =========
1996 1995 ----------- ----------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $0.01 par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares $ 1,088,900 $ 1,088,900 Capital stock expense and other (4,880) (4,836) Retained earnings 57,564 72,150 ----------- ----------- Total common shareholder's equity 1,141,584 1,156,214 Preferred stock Without sinking fund 160,500 160,500 With sinking fund 92,509 100,009 Long-term debt 1,389,283 1,385,171 ----------- ----------- Total 2,783,876 2,801,894 ----------- ----------- Other Noncurrent Liabilities: Obligations under capital leases 35,516 43,362 Other 51,840 50,835 ----------- ----------- Total 87,356 94,197 ----------- ----------- Current Liabilities: Currently maturing long-term debt 111,258 35,260 Notes payable Associated companies 47,991 61,459 Other - 15,000 Accounts payable: Associated companies 40,695 37,494 Other 63,981 69,922 Customer deposits 57,275 56,924 Taxes accrued 59,018 18,612 Accumulated deferred income taxes 3,403 3,366 Interest accrued 27,059 44,202 Dividends declared 40,713 5,149 Obligations under capital leases 28,000 28,000 Other 7,738 17,397 ----------- ----------- Total 487,131 392,785 ----------- ----------- Deferred Credits: Accumulated deferred income taxes 806,422 807,278 Accumulated deferred investment tax credits 144,145 145,561 Deferred interest - Waterford 3 lease obligation 24,145 23,947 Other 64,662 65,861 ----------- ----------- Total 1,039,374 1,042,647 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $ 4,397,737 $ 4,331,523 ============ ============ See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended March 31, 1996, primarily due to an increase in electric operating revenues and a decrease in other operation and maintenance expenses, partially offset by an increase in income tax expense. Significant factors affecting the results of operations and causing variances between the three months ended March 31, 1996, and 1995 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are Entergy Mississippi's operating revenues by source and KWh sales for the three months ended March 31, 1996, and 1995:
LOUISIANA POWER & LIGHT COMPANY STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended 1995 1994 1995 1994 (In Thousands) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 77.5 $ 67.1 $ 10.4 15 Commercial 62.3 55.6 6.7 12 Industrial 40.8 40.2 0.6 1 Governmental 6.9 6.5 0.4 6 ------- -------- -------- Total retail 187.5 169.4 18.1 11 Sales for resale Associated companies 13.6 6.6 7.0 106 Non-associated companies 5.3 4.2 1.1 26 Other (2.5) 0.4 (2.9) * ------- -------- -------- Total $ 203.9 $ 180.6 $ 23.3 13 ======== ======== ======== Billed Electric Energy Sales (Millions of KWh): Residential 1,055 933 122 13 Commercial 777 724 53 7 Industrial 694 723 (29) (4) Governmental 81 78 3 4 ------- -------- -------- Total retail 2,607 2,458 149 6 Sales for resale Associated companies 269 159 110 69 Non-associated companies 116 141 (25) (18) ------- -------- -------- Total 2,992 2,758 234 8 ======== ======== ========
* - Greater than 200%. Electric operating revenues increased for the three months ended March 31, 1996, due to an increase in revenues from the Grand Gulf 1 rate rider, the fuel adjustment clause, and electric sales. In connection with an annual MPSC review, in October 1995, Entergy Mississippi's Grand Gulf 1 rate rider was adjusted upward as a result of its undercollection of Grand Gulf 1 costs. Therefore, Grand Gulf 1 rate rider revenues for the three months ended March 31, 1996, were greater than revenues for the same period last year. Fuel adjustment clause revenues increased due to higher fuel costs, as discussed below. The increase in retail sales volume is primarily attributed to colder than normal ENTERGY MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS weather during the first three months of 1996 compared to the same period in 1995. Sales for resale, specifically sales to associated companies, increased primarily due to changes in the generation requirements and availability among the operating companies. The changes in electric operating revenues for the three months ended March 31, 1996, are as follows: Three Months Ended Description Increase/(Decrease) (In Millions) Change in base revenues $(0.8) Grand Gulf rate rider 4.2 Fuel cost recovery 8.4 Sales volume/weather 4.6 Other revenue (including unbilled) (1.2) Sales for resale 8.1 ----- Total $23.3 ===== Expenses Fuel and purchased power expenses increased for the three months ended March 31, 1996, due to an increase in the demand for gas caused by the colder than normal weather and the resulting shortage of this fuel. The gas shortage in combination with Entergy Mississippi's need to burn excess oil inventory resulted in increased oil-fired generation during the first three months of 1996. Oil tends to be a more expensive fuel than gas or coal. Other operation and maintenance expenses decreased for the three months ended March 31, 1996, due to lower payroll expenses. Payroll expenses decreased as a result of the restructuring programs announced and accrued for during 1994 and 1995, which included a reduction in the number of Entergy Mississippi employees throughout 1995 and into 1996. Income taxes increased for the three months ended March 31, 1996, primarily due to a higher pretax income resulting from increased revenue and reduced other operation and maintenance expenses. Rate deferrals charged against operating expenses in 1996 represent the deferral of Entergy Mississippi's portion of the proposed System Energy rate increase. In December 1995, Entergy Mississippi received an order from the MPSC to defer such costs. The deferral will end once a final order is issued by the FERC in the System Energy request for a rate increase. Entergy Mississippi will amortize the deferral of the actual FERC authorized rate increase over 48 months beginning October 1998. The amortization of rate deferrals increased for the three months ended March 31, 1996, in accordance with the Grand Gulf 1 related deferral plan. The plan allows for the recovery of more Grand Gulf 1-related costs in 1996 than in 1995. ENTERGY MISSISSIPPI, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
1996 1995 ------- ------- (In Thousands) Operating Revenues $528,975 $502,458 $1,288,081 $1,327,927$203,902 $180,559 -------- -------- ---------- ---------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 116,015 113,688 227,616 257,31439,746 30,389 Purchased power 92,944 83,942 261,417 289,279 Nuclear refueling outage expenses 4,517 4,195 13,550 13,67167,312 57,044 Other operation and maintenance 70,865 100,800 216,203 260,57527,649 32,218 Depreciation and amortization and decommissioning 42,212 38,499 119,629 113,34210,027 9,397 Taxes other than income taxes 13,133 14,377 43,181 42,7339,585 10,589 Income taxes 56,003 39,015 104,366 80,1716,016 3,363 Rate deferrals (7,151) - Amortization of rate deferrals 8,118 8,118 21,664 21,66426,264 15,289 -------- -------- ---------- ---------- Total 403,807 402,634 1,007,626 1,078,749179,448 158,289 -------- -------- ---------- ---------- Operating Income 125,168 99,824 280,455 249,17824,454 22,270 -------- -------- ---------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 424 766 1,527 2,855273 259 Miscellaneous - net 1,137 (154) 1,718 287(78) 61 Income taxes (319) 150 (307) 19030 (23) -------- -------- ---------- ---------- Total 1,242 762 2,938 3,332225 297 -------- -------- ---------- ---------- Interest Charges: Interest on long-term debt 32,737 32,543 97,821 97,39311,039 11,092 Other interest - net 1,355 1,560 5,100 4,635940 1,906 Allowance for borrowed funds used during construction (501) (546) (1,491) (1,996)(224) (205) -------- -------- ---------- ---------- Total 33,591 33,557 101,430 100,03211,755 12,793 -------- -------- ---------- ---------- Net Income 92,819 67,029 181,963 152,47812,924 9,774 Preferred Stock Dividend Requirements and Other 5,367 5,848 16,177 17,6681,248 1,707 -------- -------- ---------- ---------- Earnings Applicable to Common Stock $87,452 $61,181 $165,786 $134,810$ 11,676 $ 8,067 ======== ======== ========== ========== See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
LOUISIANA POWER & LIGHT COMPANY STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $181,963 $152,478$12,924 $9,774 Noncash items included in net income: Change in rate deferrals 21,664 21,66431,475 14,755 Depreciation and amortization and decommissioning 119,629 113,34210,027 9,397 Deferred income taxes and investment tax credits (22,022) 31,788(7,907) (3,740) Allowance for equity funds used during construction (1,527) (2,855) Amortization of deferred revenues - (14,632)(273) (259) Changes in working capital: Receivables (51,126) (25,193)4,269 14,012 Fuel inventory 1,055 (1,892) Accounts payable (741) (24,406)4,350 10,730 Taxes accrued 84,144 39,867(10,253) (9,035) Interest accrued (5,232) (4,776)(9,419) (7,887) Other working capital accounts (4,885) 17,969 Decommissioning trust contributions (3,611) (3,796)4,977 10,856 Other (10,049) 3,051(11,501) 5,129 -------- -------- Net cash flow provided by operating activities 308,207 304,50129,724 51,840 -------- -------- Investing Activities: Construction expenditures (77,319) (107,708)(19,297) (12,275) Allowance for equity funds used during construction 1,527 2,855 Nuclear fuel purchases (45,493) - Proceeds from sale/seaseback of nuclear fuel 45,493 -273 259 -------- -------- Net cash flow used in investing activities (75,792) (104,853)(19,024) (12,016) -------- -------- Financing Activities: Proceeds from the issuance of other long-term debtRetirement of: General and refunding mortgage bonds - 19,946 Retirement of:(40,000) First mortgage bonds - (25,000) Other long-term debt (239) (240)- Redemption of preferred stock (11,254) (13,510)(8,000) (8,000) Changes in short-term borrowings (27,154) (32,841)- net 17,436 12,319 Dividends paid: Common stock (134,000) (90,400)(7,700) (8,300) Preferred stock (15,896) (17,285)(1,392) (1,790) -------- -------- Net cash flow used in financing activities (188,543) (159,330)(24,656) (45,771) -------- -------- Net increasedecrease in cash and cash equivalents 43,872 40,318(13,956) (5,947) Cash and cash equivalents at beginning of period 28,718 33,48916,945 9,598 -------- -------- Cash and cash equivalents at end of period $72,590 $73,807$2,989 $3,651 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $102,574 $100,081$20,860 $20,278 Income taxes $63,296 $32,400 Noncash investing and financing activities: Capital lease obligations incurred - $9,677 Change in unrealized appreciation/depreciation of decommissioning trust assets $2,043 $184$4,932 $1,600 See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANYENTERGY MISSISSIPPI, INC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) ASSETS Utility Plant: Electric $4,864,083 $4,778,126 Electric plant under lease 229,468 229,468 Construction work in progress 74,130 94,791 Nuclear fuel under capital lease 69,267 44,238 Nuclear fuel 14,049 6,420 --------- --------- Total 5,250,997 5,153,043 Less - accumulated depreciation and 1,706,469 1,600,510 amortization --------- --------- Utility plant - net 3,544,528 3,552,533 --------- --------- Other Property and Investments: Nonutility property 20,060 20,060 Decommissioning trust fund 33,953 27,076 Investment in subsidiary company - at equity 14,230 14,230 Other 1,087 1,078 --------- --------- Total 69,330 62,444 --------- --------- Current Assets: Cash and cash equivalents: Cash 3,720 - Temporary cash investments - at cost, which approximates market: Associated companies 5,880 - Other 62,990 28,718 --------- --------- Total cash and cash equivalents 72,590 28,718 Accounts receivable: Customer (less allowance for doubtful accounts of $1.2 million in 1995 and 1994) 103,913 58,858 Associated companies 8,278 9,827 Other 9,206 11,609 Accrued unbilled revenues 73,132 63,109 Accumulated deferred income taxes 6,079 3,702 Materials and supplies - at average cost 90,342 89,692 Rate deferrals 28,422 28,422 Prepayments and other 14,931 28,528 --------- --------- Total 406,893 322,465 --------- --------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 3,945 25,609 SFAS 109 regulatory asset - net 373,257 379,263 Unamortized loss on reacquired debt 40,508 43,656 Other regulatory assets 23,981 25,736 Other 25,989 23,733 --------- --------- Total 467,680 497,997 --------- --------- TOTAL $4,488,431 $4,435,439 ========= =========
1996 1995 ----------- ----------- (In Thousands) ASSETS Utility Plant: Electric $ 1,563,264 $ 1,559,955 Construction work in progress 63,943 55,443 ----------- ----------- Total 1,627,207 1,615,398 ----------- ----------- Less - accumulated depreciation and 616,324 613,712 amortization ----------- ----------- Utility plant - net 1,010,883 1,001,686 ----------- ----------- Other Property and Investments: Investment in subsidiary companies - at equity 5,531 5,531 Other 5,613 5,615 ----------- ----------- Total 11,144 11,146 ----------- ----------- Current Assets: Cash and cash equivalents: Cash 2,989 2,574 Temporary cash investments - at cost, which approximates market: Associated companies - 3,248 Other - 11,123 ----------- ----------- Total cash and cash equivalents 2,989 16,945 Accounts receivable: Customer (less allowance for doubtful accounts of $1.6 million in 1996 and 1995) 48,090 46,214 Associated companies 4,639 1,134 Other 458 1,967 Accrued unbilled revenues 39,009 47,150 Fuel inventory - at average cost 5,626 6,681 Materials and supplies - at average cost 19,431 19,233 Rate deferrals 134,866 130,622 Prepayments and other 5,682 11,536 ----------- ----------- Total 260,790 281,482 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 211,353 247,072 SFAS 109 regulatory asset - net 8,504 6,445 Unamortized loss on reacquired debt 9,892 10,105 Other regulatory assets 30,164 17,736 Other 6,472 6,311 ----------- ----------- Total 266,385 287,669 ----------- ----------- TOTAL $ 1,549,202 $ 1,581,983 ============ ============ See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANYENTERGY MISSISSIPPI, INC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 250,000,000 shares; issued and outstanding 165,173,180 shares in 1995 and 1994 $1,088,900 $1,088,900 Capital stock expense and other (4,835) (5,367) Retained earnings 145,206 113,420 --------- --------- Total common shareholder's equity 1,229,271 1,196,953 Preferred stock: Without sinking fund 160,500 160,500 With sinking fund 100,009 111,265 Long-term debt 1,368,386 1,403,055 --------- --------- Total 2,858,166 2,871,773 --------- --------- Other Noncurrent Liabilities: Obligations under capital leases 41,267 16,238 Other 53,679 54,216 --------- --------- Total 94,946 70,454 --------- --------- Current Liabilities: Currently maturing long-term debt 110,260 75,320 Notes payable: Associated companies - 7,954 Other - 19,200 Accounts payable: Associated companies 45,239 20,793 Other 57,016 82,203 Customer deposits 56,363 54,934 Taxes accrued 82,284 (1,860) Interest accrued 37,755 42,987 Dividends declared 5,239 5,489 Deferred fuel cost 1,161 13,983 Obligations under capital leases 28,000 28,000 Other 13,718 20,156 --------- --------- Total 437,035 369,159 --------- --------- Deferred Credits: Accumulated deferred income taxes 862,417 883,945 Accumulated deferred investment tax credits 146,977 151,259 Deferred interest - Waterford 3 lease 25,146 26,000 obligation Other 63,744 62,849 --------- --------- Total 1,098,284 1,124,053 --------- --------- Commitments and Contingencies (Notes 1 and 2) TOTAL $4,488,431 $4,435,439 ========= =========
1996 1995 ----------- ----------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares $ 199,326 $ 199,326 Capital stock expense and other (243) (218) Retained earnings 226,139 231,463 ----------- ----------- Total common shareholder's equity 425,222 430,571 Preferred stock Without sinking fund 57,881 57,881 With sinking fund 8,770 16,770 Long-term debt 494,932 494,404 ----------- ----------- Total 986,805 999,626 ----------- ----------- Other Noncurrent Liabilities 10,027 11,625 ----------- ----------- Current Liabilities: Currently maturing long-term debt 36,015 61,015 Notes payable - associated companies 17,436 - Accounts payable: Associated companies 34,581 24,391 Other 26,260 32,100 Customer deposits 24,958 24,339 Taxes accrued 18,386 28,639 Accumulated deferred income taxes 55,713 54,090 Interest accrued 12,415 21,834 Other 14,733 6,875 ----------- ----------- Total 240,497 253,283 ----------- ----------- Deferred Credits: Accumulated deferred income taxes 273,378 278,581 Accumulated deferred investment tax credits 26,553 27,978 Other 11,942 10,890 ----------- ----------- Total 311,873 317,449 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $ 1,549,202 $ 1,581,983 =========== =========== See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income increased for the three months ended March 31, 1996, due primarily to higher electric and gas revenues. Significant factors affecting the results of operations and causing variances between the three months ended March 31, 1996, and 1995 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are Entergy New Orleans' electric operating revenues by source and KWh sales for the three months ended March 31, 1996, and 1995.
MISSISSIPPI POWER & LIGHT COMPANY STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended 1995 1994 1995 1994 (In Thousands) Three Months Ended Increase/ Description 1996 1995 (Decrease) % (In Millions) Electric Operating Revenues $258,848 $234,274 $692,482 $651,481 -------- -------- -------- --------Revenues: Residential $ 27.3 $ 21.8 $ 5.5 25 Commercial 33.2 32.5 0.7 2 Industrial 5.6 5.1 0.5 10 Governmental 12.2 10.7 1.5 14 ------- ------- ------- Total retail 78.3 70.1 8.2 12 Sales for resale Associated companies 1.9 1.3 0.6 46 Non-associated companies 2.5 1.9 0.6 32 Other (2.4) 4.8 (7.2) (150) ------- ------- ------- Total $ 80.3 $ 78.1 $ 2.2 3 ======= ======= ======= Billed Electric Energy Sales (Millions of KWh): Residential 391 352 39 11 Commercial 465 440 25 6 Industrial 111 123 (12) (10) Governmental 212 210 2 1 ------- ------- ------- Total retail 1,179 1,125 54 5 Sales for resale Associated companies 45 66 (21) (32) Non-associated companies 52 60 (8) (13) ------- ------- ------- Total 1,276 1,251 25 2 ======= ======= =======
Electric operating revenues increased for the three months ended March 31, 1996, principally because of an increase in fuel adjustment revenues and retail energy sales. Fuel adjustment revenues increased due to the higher energy sales and higher fuel prices. The majority of the retail sales increase resulted from colder weather in the first three months of 1996 than in the same period in 1995. ENTERGY NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS The changes in electric operating revenues for the three months ended March 31, 1996, are as follows: Three Months Ended Description Increase/(Decrease) (In Millions) Change in base revenues $(5.5) Fuel cost recovery 6.7 Sales volume/weather 3.0 Other revenue (including unbilled) (3.2) Sales for resale 1.2 ----- Total $ 2.2 ===== For the three months ended March 31, 1996, gas operating revenues increased due primarily to increased gas sales as a result of the colder winter and a higher unit purchase price for gas purchased for resale. Expenses Operating expenses increased for the three months ended March 31, 1996, due primarily to increases in fuel expense, gas purchased for resale, and purchased power expense, partially offset by the recording of rate deferrals in 1996. Fuel expense increased due to significantly higher prices for gas used in generation as a result of widespread cold weather in 1996. Gas purchased for resale increased as a result of higher gas sales and a higher unit purchase price, which was caused by the increased demand for gas due to the weather. Purchased power expense increased in the first three months of 1996, as a result of additional power being purchased due primarily to changes in generation availability among the operating companies, partially offset by a decrease in the cost of the power purchased. The rate deferrals recorded were associated with the deferral of costs related to least cost planning, which are expected to be recovered in future rates and the deferral of a portion of the System Energy rate increase being billed to Entergy New Orleans. See Note 2 for a discussion of Entergy New Orleans' deferral of the System Energy rate increase. ENTERGY NEW ORLEANS, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
1996 1995 ------- ------- (In Thousands) Operating Revenues: Electric $80,291 $78,140 Natural gas 42,597 30,746 ------- ------- Total 122,888 108,886 ------- ------- Operating Expenses: Operation and maintenance: Fuel, and fuel-related expenses, 62,557 53,097 130,431 117,710and gas purchased for resale 41,436 30,978 Purchased power 55,696 59,155 183,706 182,03538,739 29,682 Other operation and maintenance 31,815 41,327 103,970 118,54316,424 16,753 Depreciation and amortization 9,614 9,513 28,349 27,2704,971 4,828 Taxes other than income taxes 13,139 11,275 34,222 32,0116,863 7,227 Income taxes 15,928 11,427 30,022 23,2803,985 3,275 Rate deferrals (5,793) - Amortization of rate deferrals 28,310 24,805 84,931 74,414 -------- -------- -------- --------4,496 5,280 ------- ------- Total 217,059 210,599 595,631 575,263 -------- -------- -------- --------111,121 98,023 ------- ------- Operating Income 41,789 23,675 96,851 76,218 -------- -------- -------- --------11,767 10,863 ------- ------- Other Income (Deductions): Allowance for equity funds used during construction 235 365 763 1,38674 26 Miscellaneous - net 413 (337) 1,270 (85)774 416 Income taxes (158) 129 (486) 32 -------- -------- -------- --------(298) (160) ------- ------- Total 490 157 1,547 1,333 -------- -------- -------- --------550 282 ------- ------- Interest Charges: Interest on long-term debt 12,451 11,882 35,399 35,9994,059 4,329 Other interest - net 806 1,330 4,064 3,683282 592 Allowance for borrowed funds used during construction (206) (236) (645) (889) -------- -------- -------- --------(59) (21) ------- ------- Total 13,051 12,976 38,818 38,793 -------- -------- -------- --------4,282 4,900 ------- ------- Net Income 29,228 10,856 59,580 38,7588,035 6,245 Preferred Stock Dividend Requirements and Other 2,917 1,797 6,168 5,827 -------- -------- -------- --------241 400 ------- ------- Earnings Applicable to Common Stock $26,311 $9,059 $53,412 $32,931 ======== ======== ======== ========$ 7,794 $ 5,845 ======= ======= See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
MISSISSIPPI POWER & LIGHT COMPANY STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $59,580 $38,758$8,035 $6,245 Noncash items included in net income: Change in rate deferrals 78,772 92,1357,565 6,382 Depreciation and amortization 28,349 27,2704,971 4,828 Deferred income taxes and investment tax credits (24,436) (22,092)2,270 (3,309) Allowance for equity funds used during (74) (26) Changes in working capital: Receivables 5,675 3,091 Accounts payable (5,397) 3,676 Taxes accrued 2,584 (30) Interest accrued (2,917) (955) Income tax refund - 6,531 Other working capital accounts (18,263) (4,680) Other (7,339) (3,175) -------- -------- Net cash flow provided by (used in) operating (2,890) 18,578 activities -------- -------- Investing Activities: Construction expenditures (7,919) (5,028) Allowance for equity funds used during construction (763) (1,386) Changes in working capital: Receivables (29,362) (12,592) Fuel inventory (3,327) 5,058 Accounts payable 24,505 17,513 Taxes accrued 24,979 9,361 Interest accrued (3,689) (11,213) Other working capital accounts (16,475) 428 Other 1,273 11,129 -------- -------- Net cash flow provided by operating activities 139,406 154,369 -------- -------- Investing Activities: Construction expenditures (55,616) (100,369) Allowance for equity funds used during construction 763 1,38674 26 -------- -------- Net cash flow used in investing activities (54,853) (98,983)(7,845) (5,002) -------- -------- Financing Activities: Proceeds from the issuance of general and refunding mortgage bonds 39,608 - Retirement of: First mortgage bonds (23,250) - General and refunding bonds 79,480 24,534 Other long-term debt - 15,652 Retirement of: General and refunding bonds (30,000) (30,000) First mortgage bonds (20,000) (18,000) Other long-term debt (965) (16,045)- (9,200) Redemption of preferred stock (15,000) (15,000) Changes in short-term borrowings (30,000) 18,432- (1,500) Dividends paid: Common stock (35,400) (28,000)(3,300) - Preferred stock (4,782) (5,851)(482) (413) -------- -------- Net cash flow used inprovided by (used in) financing 12,576 (11,113) activities (56,667) (54,278) -------- -------- Net increase in cash and cash equivalents 27,886 1,1081,841 2,463 Cash and cash equivalents at beginning of period 9,598 7,99949,746 8,031 -------- -------- Cash and cash equivalents at end of period $37,484 $9,107$51,587 $10,494 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $41,304 $48,664 Income taxes $27,413 $19,007$7,054 $5,702 See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANYENTERGY NEW ORLEANS, INC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) ASSETS Utility Plant: Electric $1,543,888 $1,475,322 Construction work in progress 51,336 67,119 --------- --------- Total 1,595,224 1,542,441 Less - accumulated depreciation and 607,407 582,514 amortization --------- --------- Utility plant - net 987,817 959,927 --------- --------- Other Property and Investments: Investment in subsidiary company - at equity 5,531 5,531 Other 5,617 5,624 --------- --------- Total 11,148 11,155 --------- --------- Current Assets: Cash and cash equivalents: Cash 5,770 5,080 Temporary cash investments - at cost, which approximates market Associated companies 4,797 276 Other 26,917 4,242 Total cash and cash equivalents 37,484 9,598 Accounts receivable: Customer (less allowance for doubtful accounts of $2.1 million in 1995 and 1994) 61,911 43,846 Associated companies 4,566 4,680 Other 1,968 2,789 Accrued unbilled revenues 52,105 39,873 Fuel inventory - at average cost 8,107 4,780 Materials and supplies - at average cost 21,237 20,642 Rate deferrals 126,378 106,538 Prepayments and other 7,484 10,672 --------- --------- Total 321,240 243,418 --------- --------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 287,108 385,720 Unamortized loss on reacquired debt 9,557 10,488 Other regulatory assets 9,385 10,168 Other 8,000 8,569 --------- --------- Total 314,050 414,945 --------- --------- TOTAL $1,634,255 $1,629,445 ========= =========
1996 1995 ----------- ----------- (In Thousands) ASSETS Utility Plant: Electric $ 483,427 $ 483,581 Natural gas 122,137 121,083 Construction work in progress 21,850 17,525 ----------- ----------- Total 627,414 622,189 Less - accumulated depreciation and 337,044 335,021 amortization ----------- ----------- Utility plant - net 290,370 287,168 ----------- ----------- Other Property and Investments: Investment in subsidiary companies - at equity 3,259 3,259 ----------- ----------- Current Assets: Cash and cash equivalents: Cash 1,105 1,693 Temporary cash investments - at cost, which approximates market: Associated companies 17,120 10,860 Other 33,362 37,193 ----------- ----------- Total cash and cash equivalents 51,587 49,746 Accounts receivable: Customer (less allowance for doubtful accounts of $0.5 million in 1996 and $0.8 million in 27,761 29,168 1995) Associated companies 149 551 Other 498 843 Accrued unbilled revenues 13,721 17,242 Deferred electric fuel and resale gas costs 14,651 2,647 Materials and supplies - at average cost 9,213 8,950 Rate deferrals 36,320 35,191 Prepayments and other 11,021 4,529 ----------- ----------- Total 164,921 148,867 ----------- ----------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 129,222 137,916 SFAS 109 regulatory asset-net 7,291 6,813 Unamortized loss on reacquired debt 1,825 1,932 Other regulatory assets 10,153 9,204 Other 1,338 1,047 ----------- ----------- Total 149,829 156,912 ----------- ----------- TOTAL $ 608,379 $ 596,206 =========== =========== See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANYENTERGY NEW ORLEANS, INC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 15,000,000 shares; issued and outstanding 8,666,357 shares in 1995 and 1994 $199,326 $199,326 Capital stock expense and other (218) (1,762) Retained earnings 250,023 232,011 --------- --------- Total common shareholder's equity 449,131 429,575 Preferred stock: Without sinking fund 57,881 57,881 With sinking fund 16,770 31,770 Long-term debt 504,358 475,233 --------- --------- Total 1,028,140 994,459 --------- --------- Other Noncurrent Liabilities: Obligations under capital leases 456 552 Other 8,345 8,984 --------- --------- Total 8,801 9,536 --------- --------- Current Liabilities: Currently maturing long-term debt 66,015 65,965 Notes payable - 30,000 Accounts payable: Associated companies 27,340 2,350 Other 29,720 30,205 Customer deposits 24,062 22,793 Taxes accrued 45,800 20,821 Accumulated deferred income taxes 52,426 47,515 Interest accrued 16,688 20,377 Dividends declared 1,468 1,626 Other 8,357 28,692 --------- --------- Total 271,876 270,344 --------- --------- Deferred Credits: Accumulated deferred income taxes 276,791 301,288 Accumulated deferred investment tax credits 28,366 29,528 SFAS 109 regulatory liability - net 9,410 13,099 Other 10,871 11,191 --------- --------- Total 325,438 355,106 --------- --------- Commitments and Contingencies (Notes 1 and 2) TOTAL $1,634,255 $1,629,445 ========= =========
1996 1995 ----------- ----------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares $ 33,744 $ 33,744 Paid-in capital 36,294 36,306 Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 80,155 81,261 ----------- ----------- Total common shareholder's equity 150,193 151,311 Preferred stock - without sinking fund 19,780 19,780 Long-term debt 168,839 155,958 ----------- ----------- Total 338,812 327,049 ----------- ----------- Other Noncurrent Liabilities 18,267 17,745 ----------- ----------- Current Liabilities: Currently maturing long-term debt 42,000 38,250 Accounts payable: Associated companies 7,366 13,851 Other 25,762 24,674 Customer deposits 18,291 18,214 Accumulated deferred income taxes 16,218 9,174 Taxes accrued 8,138 5,554 Interest accrued 2,194 5,111 Dividends declared 5,600 482 Other 14,282 13,863 ----------- ----------- Total 139,851 129,173 ----------- ----------- Deferred Credits: Accumulated deferred income taxes 77,517 81,654 Accumulated deferred investment tax credits 8,459 8,618 Other 25,473 31,967 ----------- ----------- Total 111,449 122,239 ----------- ----------- Commitments and Contingencies (Notes 1 and 2) TOTAL $ 608,379 $ 596,206 =========== =========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net Income Net income for the three months ended March 31, 1996, remained relatively unchanged as compared to the same period for 1995. Significant factors affecting the results of operations and causing variances between the three months ended March 31, 1996, and 1995 are discussed under "Revenues" and "Expenses" below. Revenues Operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1. Operating revenues were higher for the three months ended March 31, 1996, due primarily to increased depreciation, amortization, and decommissioning expenses. The increase was the result of an increase in decommissioning costs and increased depreciation rates as reflected in the 1995 System Energy FERC rate increase filing, subject to refund. See Note 2 for a discussion of the proposed rate increase. Expenses Operating expenses increased for the three months ended March 31, 1996, due to an increase in depreciation, amortization, and decommissioning expenses and income tax expenses, partially offset by a decrease in nuclear refueling outage expenses and other operation and maintenance expenses. Depreciation, amortization, and decommissioning expenses increased for the three months ended March 31, 1996, due to an increase in depreciation of electric plant in service and decommissioning charges as discussed in "Revenues" above. Total income taxes increased for the three months ended March 31, 1996 as a result of higher pre-tax income. The decrease in nuclear refueling outage expense was attributed to the effect of refueling outage expenses incurred in the first quarter of 1995. The decrease in other operation and maintenance expenses is due to timing differences in construction expenditures. SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF INCOME For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
NEW ORLEANS PUBLIC SERVICE INC. STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended 1995 1994 1995 1994 (In Thousands) 1996 1995 ------- ------- (In Thousands) Operating Revenues: Electric $134,855 $120,354 $310,065 $306,826 Natural gas 11,865 13,220 58,207 68,238 -------- -------- -------- -------- Total 146,720 133,574 368,272 375,064 -------- --------Revenues $156,424 $151,664 -------- -------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses and gas purchased for resale 29,649 23,814 75,088 83,773 Purchased power 40,850 42,999 114,777 115,94012,840 12,335 Nuclear refueling outage expenses 308 2,281 Other operation and maintenance 22,409 23,444 56,324 63,40421,433 25,099 Depreciation, amortization, and amortization 4,898 4,903 14,512 14,356decommissioning 31,999 25,398 Taxes other than income taxes 7,425 7,206 21,259 21,1376,906 7,174 Income taxes 9,915 8,829 18,110 17,003 Amortization of rate deferrals 10,489 6,438 23,754 19,171 -------- --------20,692 19,305 -------- -------- Total 125,635 117,633 323,824 334,784 -------- --------94,178 91,592 -------- -------- Operating Income 21,085 15,941 44,448 40,280 -------- --------62,246 60,072 -------- -------- Other Income (Deductions): Allowance for equity funds used during construction 43 60 104 297350 480 Miscellaneous - net 504 499 993 1,483839 725 Income taxes (194) (192) (382) (901) -------- --------(315) 551 -------- -------- Total 353 367 715 879 -------- --------874 1,756 -------- -------- Interest Charges: Interest on long-term debt 4,023 4,148 11,896 12,95737,953 37,434 Other interest - net 588 272 1,555 8651,991 2,333 Allowance for borrowed funds used during construction (35) (45) (83) (221) -------- --------(354) (504) -------- -------- Total 4,576 4,375 13,368 13,601 -------- --------39,590 39,263 -------- -------- Net Income 16,862 11,933 31,795 27,558 Preferred Stock Dividend Requirements and Other 318 329 1,035 1,162 -------- -------- -------- -------- Earnings Applicable to Common Stock $16,544 $11,604 $30,760 $26,396 ======== ========$ 23,530 $ 22,565 ======== ======== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
NEW ORLEANS PUBLIC SERVICE INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) 1996 1995 -------- -------- (In Thousands) Operating Activities: Net income $31,795 $27,558$23,530 $22,565 Noncash items included in net income: Change in rate deferrals 23,211 17,499 Depreciation, amortization, and amortization 14,512 14,356decommissioning 31,999 25,398 Deferred income taxes and investment tax credits (5,853) (15,705)(8,897) (5,501) Allowance for equity funds used during construction (104) (297)(350) (480) Changes in working capital: Receivables (20,681) 1,957(2,870) (95,228) Accounts payable 14,100 (3,718)17,326 39,786 Taxes accrued 11,525 1,67713,735 12,510 Interest accrued (279) (960) Income tax refund 20,172 -(10,825) (2,660) Other working capital accounts (4,328) 13,534(4,711) (23,839) Decommissioning trust contributions (2,131) (1,304) FERC Settlement - refund obligation (956) - Provision for estimated losses and reserves 13,954 - Other (13,380) 5,050(2,137) 2,574 -------- -------- Net cash flow provided by (used in) operating 67,667 (26,179) activities 70,690 60,951 -------- -------- Investing Activities: Construction expenditures (14,637) (16,269)(1,384) (7,734) Allowance for equity funds used during construction 104 297350 480 Nuclear fuel purchases (733) - -------- -------- Net cash flow used in investing activities (14,533) (15,972)(1,767) (7,254) -------- -------- Financing Activities: Proceeds from the issuance of general and refunding bonds 29,805long-term debt 89,192 - Retirement of general and refunding bonds (24,200) (15,000) Redemption of preferred stock (1,500) (1,500) Dividends paid:long-term debt (92,700) - Changes in short-term borrowings - net (2,990) - Common stock (14,100) (14,400) Preferred stock (1,046) (1,220)dividends paid (23,300) - -------- -------- Net cash flow used in financing activities (11,041) (32,120)(29,798) - -------- -------- Net increase (decrease) in cash and cash equivalents 45,116 12,85936,102 (33,433) Cash and cash equivalents at beginning of period 8,031 43,317240 89,703 -------- -------- Cash and cash equivalents at end of period $53,147 $56,176$36,342 $56,270 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $13,173 $14,213 Income taxes (refund)$48,911 $40,903 Noncash investing and financing activities: Capital lease obligation incurred - net ($6,469) $32,115$27,653 Change in unrealized appreciation/depreciation of decommissioning trust assets $192 $1,685 See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICESYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS September 30, 1995March 31, 1996 and December 31, 19941995 (Unaudited) 1995 1994 (In Thousands) ASSETS Utility Plant: Electric $479,206 $470,560 Natural gas 120,977 119,508 Construction work in progress 11,728 7,284 -------- -------- Total 611,911 597,352 Less - accumulated depreciation and 331,185 319,576 amortization -------- -------- Utility plant - net 280,726 277,776 -------- -------- Other Investments: Investment in subsidiary company - at equity 3,259 3,259 -------- -------- Current Assets: Cash and cash equivalents: Cash 2,161 849 Temporary cash investments - at cost, which approximates market: Associated companies 7,711 2,472 Other 43,275 4,710 -------- -------- Total cash and cash equivalents 53,147 8,031 Accounts receivable: Customer (less allowance for doubtful accounts of $0.8 million in 1995 and 1994) 43,856 23,938 Associated companies 150 3,503 Other 516 600 Accrued unbilled revenues 18,495 14,295 Deferred electric fuel and resale gas costs 1,455 856 Materials and supplies - at average cost 9,400 9,676 Rate deferrals 35,549 31,544 Income tax receivable - 20,172 Prepayments and other 7,792 5,636 ------- ------- Total 170,360 118,251 ------- ------- Deferred Debits and Other Assets: Regulatory assets: Rate deferrals 145,911 173,127 SFAS 109 regulatory asset - net 9,463 8,792 Unamortized loss on reacquired debt 2,039 2,361 Other regulatory assets 5,647 5,647 Other 3,890 3,681 ------- ------- Total 166,950 193,608 ------- ------- TOTAL $621,295 $592,894 ======= ======= See Notes to Financial Statements. NEW ORLEANS PUBLIC SERVICE INC. BALANCE SHEETS September 30, 1995 and December 31, 1994 (Unaudited) 1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $4 par value, authorized 10,000,000 shares; issued and outstanding 8,435,900 shares in 1995 and 1994 $33,744 $33,744 Paid-in capital 36,247 36,201 Retained earnings subsequent to the elimination of the accumulated deficit on November 30, 1988 95,545 78,886 ------- ------- Total common shareholder's equity 165,536 148,831 Preferred stock: Without sinking fund 19,780 19,780 With sinking fund 1,950 3,450 Long-term debt 155,946 164,160 ------- ------- Total 343,212 336,221 ------- ------- Other Noncurrent Liabilities 17,336 19,063 ------- ------- Current Liabilities: Currently maturing long-term debt 38,250 24,200 Accounts payable: Associated companies 18,915 6,456 Other 21,143 19,503 Customer deposits 18,396 17,422 Accumulated deferred income taxes 4,980 4,925 Taxes accrued 13,854 2,329 Interest accrued 4,963 5,242 Other 17,159 19,982 ------- ------- Total 137,660 100,059 ------- ------- Deferred Credits: Accumulated deferred income taxes 84,485 89,246 Accumulated deferred investment tax credits 8,775 9,251 Other 29,827 39,054 ------- ------- Total 123,087 137,551 ------- ------- Commitments and Contingencies (Note 1) TOTAL $621,295 $592,894 ======= ======= See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF INCOME For the Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited) Three Months Ended Nine Months Ended 1995 1994 1995 1994 (In Thousands) Operating Revenues $144,758 $150,949 $455,054 $450,015 -------- -------- -------- -------- Operating Expenses: Operation1996 1995 ----------- ----------- (In Thousands) ASSETS Utility Plant: Electric $ 2,983,843 $ 2,977,303 Electric plant under lease 445,155 444,305 Construction work in progress 29,931 35,946 Nuclear fuel under capital lease 62,033 71,374 ----------- ----------- Total 3,520,962 3,528,928 Less - accumulated depreciation and maintenance: Fuel890,222 861,752 amortization ----------- ----------- Utility plant - net 2,630,740 2,667,176 ----------- ----------- Other Property and fuel-related expenses 11,194 11,440 27,090 35,661 Nuclear refueling outage expenses 4,571Investments: Decommissioning trust fund 43,770 40,927 ----------- ----------- Current Assets: Cash and cash equivalents: Cash 192 240 Temporary cash investments - 25,857at cost, which approximates market: Associated companies 12,259 - Other operation23,891 - ----------- ----------- Total cash and maintenance 21,154 26,829 70,056 74,320 Depreciation, amortization,cash equivalents 36,342 240 Accounts receivable: Associated companies 75,532 72,458 Other 4,633 4,837 Materials and decommissioning 24,530 23,026 74,463 68,993 Taxessupplies - at average cost 68,398 67,661 Prepayments and other than income taxes 6,590 5,637 20,788 19,155 Income taxes 19,056 18,148 57,775 55,896 -------- -------- -------- --------19,217 16,050 ----------- ----------- Total 87,095 85,080 276,029 254,025 -------- -------- -------- -------- Operating Income 57,663 65,869 179,025 195,990 -------- -------- -------- --------204,122 161,246 ----------- ----------- Deferred Debits and Other Income (Deductions): Allowance for equity funds used during construction 479 101 1,511 735 Miscellaneous - net 783 2,025 2,525 4,641 Income taxes 448 569 1,500 (470) -------- -------- -------- --------Assets: Regulatory assets: SFAS 109 regulatory asset-net 284,507 291,181 Unamortized loss on reacquired debt 55,716 52,702 Other regulatory assets 203,053 203,731 Other 14,388 14,049 ----------- ----------- Total 1,710 2,695 5,536 4,906 -------- -------- -------- -------- Interest Charges: Interest on long-term debt 34,557 43,790 110,153 129,088 Other interest - net 1,952 18 6,269 1,051 Allowance for borrowed funds used during construction (502) (178) (1,594) (938) -------- -------- -------- -------- Total 36,007 43,630 114,828 129,201 -------- -------- -------- -------- Net Income $23,366 $24,934 $69,733 $71,695 ======== ======== ======== ========557,664 561,663 ----------- ----------- TOTAL $ 3,436,296 $ 3,431,012 =========== =========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30,BALANCE SHEETS March 31, 1996 and December 31, 1995 and 1994 (Unaudited) 1995 1994 (In Thousands) Operating Activities: Net income $69,733 $71,695 Noncash items included in net income: Depreciation, amortization,1996 1995 ----------- ----------- (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 1,000,000 shares; issued and decommissioning 74,463 68,993outstanding 789,350 shares $ 789,350 $ 789,350 Paid-in capital - 7 Retained earnings 75,151 85,920 ----------- ----------- Total common shareholder's equity 864,501 875,277 Long-term debt 1,221,152 1,219,917 ----------- ----------- Total 2,085,653 2,095,194 Other Noncurrent Liabilities: Obligations under capital leases 34,033 44,107 Other 31,767 16,068 ----------- ----------- Total 65,800 60,175 ----------- ----------- Current Liabilities: Currently maturing long-term debt 250,000 250,000 Notes payable-associated companies - 2,990 Accounts payable: Associated companies 16,033 17,458 Other 37,814 19,063 Taxes accrued 86,383 72,648 Interest accrued 25,918 36,743 Dividends declared 11,000 - Obligations under capital lease 28,000 28,000 Other 3,404 4,211 ----------- ----------- Total 458,552 431,113 ----------- ----------- Deferred Credits: Accumulated deferred income taxes and586,471 602,182 Accumulated deferred investment tax credits (11,378) 16,535 Allowance for equity funds used during construction (1,511) (735) Changes in working capital: Receivables (56,341) (3,994) Accounts payable (25,063) 8,469 Taxes accrued 672 4,770 Interest accrued (4,281) (1,457)106,250 107,119 FERC Settlement - refund obligation 55,892 56,848 Other working capital accounts (23,343) (1,474) Recoverable income taxes - 32,940 Decommissioning trust contributions (4,055) (3,764) Other 32,303 14,893 -------- -------- Net cash flow provided by operating activities 51,199 206,871 -------- -------- Investing Activities: Construction expenditures (19,524) (12,254) Allowance for equity funds used during construction 1,511 735 Nuclear fuel purchases (52,188) (54) Proceeds from sale/leaseback of nuclear fuel 52,188 - -------- -------- Net cash flow used in investing activities (18,013) (11,573) -------- -------- Financing Activities: Proceeds from the issuance of: First mortgage bonds - 59,410 Other long-term debt 43,538 - Retirement of: First mortgage bonds - (60,000) Other long-term debt (45,320) - Premium77,678 78,381 ----------- ----------- Total 826,291 844,530 ----------- ----------- Commitments and expenses paid on refinancing sale/leaseback bonds - (47,602) Common stock dividends paid (69,500) (124,300) -------- -------- Net cash flow used in financing activities (71,282) (172,492) -------- -------- Net (decrease)increase in cashContingencies (Notes 1 and cash equivalents (38,096) 22,806 Cash and cash equivalents at beginning of period 89,703 196,132 -------- -------- Cash and cash equivalents at end of period $51,607 $218,938 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest - net of amount capitalized $114,514 $125,519 Income taxes (refund) - net $65,637 ($3,477) Noncash investing and financing activities: Change in unrealized appreciation/depreciation of decommissioning trust assets $2,629 $2122) TOTAL $ 3,436,296 $ 3,431,012 =========== =========== See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS September 30, 1995 and December 31, 1994 (Unaudited) 1995 1994 (In Thousands) ASSETS Utility Plant: Electric $2,969,233 $2,939,384 Electric plant under lease 443,257 439,378 Construction work in progress 32,311 46,547 Nuclear fuel under capital lease 81,586 46,688 Nuclear fuel - 26,360 --------- --------- Total 3,526,387 3,498,357 Less - accumulated depreciation and 828,374 751,717 amortization --------- --------- Utility plant - net 2,698,013 2,746,640 --------- --------- Other Investments: Decommissioning trust fund 38,606 30,359 Current Assets: Cash and cash equivalents: Cash 212 - Temporary cash investments - at cost, which approximates market: Associated companies 7,773 5,489 Other 43,622 84,214 --------- --------- Total cash and cash equivalents 51,607 89,703 Accounts receivable: Associated companies 63,984 7,450 Other 3,219 3,412 Materials and supplies - at average cost 69,178 71,991 Prepayments and other 13,878 5,429 --------- --------- Total 201,866 177,985 --------- --------- Deferred Debits and Other Assets: Regulatory assets: SFAS 109 regulatory asset - net 389,422 389,264 Unamortized loss on reacquired debt 53,793 54,577 Other regulatory assets 201,346 199,080 Other 14,931 15,454 --------- --------- Total 659,492 658,375 --------- --------- TOTAL $3,597,977 $3,613,359 ========= ========= See Notes to Financial Statements. SYSTEM ENERGY RESOURCES, INC. BALANCE SHEETS September 30, 1995 and December 31, 1994 (Unaudited) 1995 1994 (In Thousands) CAPITALIZATION AND LIABILITIES Capitalization: Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 1995 and 1994 $789,350 $789,350 Paid-in capital 7 7 Retained earnings 85,914 85,681 --------- --------- Total common shareholder's equity 875,271 875,038 Long-term debt 1,189,720 1,438,305 --------- --------- Total 2,064,991 2,313,343 --------- --------- Other Noncurrent Liabilities: Obligations under capital leases 53,585 18,688 Other 17,447 14,342 --------- --------- Total 71,032 33,030 --------- --------- Current Liabilities: Currently maturing long-term debt 355,000 105,000 Accounts payable: Associated companies 17,560 32,272 Other 12,853 23,204 Taxes accrued 36,054 35,382 Interest accrued 36,515 40,796 Obligations under capital leases 28,000 28,000 Other 2,087 19,794 --------- --------- Total 488,069 284,448 --------- --------- Deferred Credits: Accumulated deferred income taxes 734,438 746,502 Accumulated deferred investment tax credits 107,977 110,584 FERC Settlement - refund obligation 57,775 60,388 Other 73,695 65,064 --------- --------- Total 973,885 982,538 --------- --------- Commitments and Contingencies (Notes 1 and 2) TOTAL $3,597,977 $3,613,359 ========= ========= See Notes to Financial Statements. ENTERGY CORPORATION AND SUBSIDIARIES ARKANSAS POWER & LIGHT COMPANY GULF STATES UTILITIES COMPANY LOUISIANA POWER & LIGHT COMPANY MISSISSIPPI POWER & LIGHT COMPANY NEW ORLEANS PUBLIC SERVICE INC. SYSTEM ENERGY RESOURCES, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. COMMITMENTS AND CONTINGENCIES Cajun - River Bend (Entergy Corporation and GSU) GSUEntergy Gulf States) Entergy Gulf States has significant business relationships with Cajun, including co-ownership of River Bend (operated by Entergy Gulf States) and Big Cajun 2, Unit 3. GSU3 (operated by Cajun). Entergy Gulf States and Cajun, respectively, own 70% and 30% undivided interests in River Bend and 42% and 58% undivided interests in Big Cajun 2, Unit 3. These relationships have spawned a number of significant and long-standing disputes and claims between the parties. In a recent development, as more fully described below, a preliminary agreement setting forth terms for the resolution of such disputes has been reached by Entergy Gulf States, the Bankruptcy Trustee for Cajun, and the Rural Utilities Service (RUS). In June 1989, Cajun filed a civil action against GSUEntergy Gulf States in the United States District Court for the EasternMiddle District of Louisiana (District Court). Cajun's complaint seeks to annul, rescind, terminate, and/or dissolve the Joint Ownership Participation and Operating Agreement (Operating Agreement) entered into on August 28, 1979 (Operating Agreement) relating to River Bend. The suit also seeks to recover as damages Cajun's alleged $1.6 billion investment in the unit plus attorneys' fees, interest, and costs. Two member cooperatives of Cajun have brought an independent action to declare the Operating Agreement void, based upon their failure to get prior LPSC approval alleged to be necessary. GSUEntergy Gulf States believes the suits are without merit and is contesting them vigorously. A trial on the portion of the suit by Cajun to rescind the Operating Agreement began in April 1994 and was completed in March 1995. On October 24, 1995, the District Court issued a memorandum opinion ruling in favor of Entergy Gulf States. The District Court found that Cajun had not proved that Entergy Gulf States fraudulently induced it to execute the Operating Agreement and that Cajun failed to timely assert its claim. A final judgment on this portion of the suit will not be entered until all claims asserted by Cajun have been heard. The trial of the second portion of the suit was previously scheduled to begin on July 2, 1996. If GSU is ultimately unsuccessful inthe ultimate outcome of this litigation and is requiredrequires Entergy Gulf States to pay substantial damages, GSUit would probably be unable to make such payments and could be forced to seek relief from its creditors under the United States Bankruptcy Code. A trial on the portion of the suit by Cajun to rescind the Operating Agreement which began in April 1994 was completed in March 1995. On October 24, 1995, the District Court issued a memorandum opinion ruling in favor of GSU. The District Court found that Cajun did not prove that GSU fraudulently induced it to execute the Operating Agreement and that Cajun failed to timely assert its claim. A final judgment will be entered when the District Court issues its detailed written opinions. It is uncertain when the District Court Judge's final opinion will be entered, or whether Cajun will appeal the decision. Cajun has not paid its full share of capital costs, operating and maintenance expenses, and other costs for repairs and improvements to River Bend since 1992. Cajun's unpaid portion of River Bend operating and maintenance expenses (including nuclear fuel) and capital costs for the first ninethree months of 19951996 was approximately $42.8$22.1 million. The cumulative cost to GSUEntergy Gulf States resulting from Cajun's failure to pay its full share of River Bend-related costs, reduced by the proceeds from the sale by GSUEntergy Gulf States of Cajun's share of River Bend power, and payments into the registry of the District Court for Entergy Gulf States' portion of expenses for Big Cajun 2, Unit 3, was $59.1$29.1 million as of September 30, 1995,March 31, 1996, compared with $49$31.1 million as of December 31, 1994. These amounts are1995. Cajun's unpaid portion of the River Bend related costs is reflected in long-term receivables with an offsetting reserve in other deferred credits. Cajun's bankruptcy may affect the ultimate collectibility of the amounts owed to GSU,Entergy Gulf States, including any amounts that may be awarded in litigation. Cajun continues to pay its share of decommissioning costs for River Bend. See Note 8 of Entergy Corporation's and GSU'sEntergy's Form 10-K for additional information regarding the Cajun litigation, Cajun's December 21, 1994 bankruptcy filing, related filings, and the ongoing potential effects of these matters upon GSU.Entergy Gulf States. In the bankruptcy proceedings, Cajun filed a motion on January 10, 1995, to reject the Operating Agreement as a burdensome executory contract. GSUEntergy Gulf States responded on January 10, 1995, with a memorandum opposing Cajun's motion. IfShould the District Court were tocourt grant Cajun's motion to reject the Operating Agreement, Cajun would be relieved of its financial obligations under the contract, while GSUEntergy Gulf States would likely have a substantial damage claim arising from any such rejection. Although GSUEntergy Gulf States believes that Cajun's motion to reject the Operating Agreement is without merit, it is not possible to predict the outcome or ultimate impact of these proceedings. On March 8, 1996, Southwestern Electric Power Company (SWEPCO), Entergy Gulf States, and certain member cooperatives of Cajun filed a joint proposal to bring an end to the Cajun bankruptcy proceeding. The proposal was submitted in response to a bid procedure established by the Cajun bankruptcy trustee. On April 22, 1996, the Cajun bankruptcy trustee filed a plan of reorganization with the bankruptcy court based on the proposal of two non-affiliated companies to take over the non-nuclear operations of Cajun. The timing and completion of the reorganization plan depends on bankruptcy court approval and any required regulatory approvals. On April 26, 1996, Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, Cajun's largest creditor, agreed to terms for the settlement of all disputes between Cajun and Entergy Gulf States. The terms include, but are not limited to, the following: (i) Cajuns' interest in River Bend will be turned over to the RUS, which will have the option to retain the interest, sell it to a third party, or transfer it to Entergy Gulf States at no cost; (ii) Cajun will set aside a total of $125 million for the decommissioning of its interest in River Bend; (iii) Cajun will transfer certain transmission assets to Entergy Gulf States; (iv) Cajun will settle transmission disputes and be released from claims for payment under transmission arrangements with Entergy Gulf States as discussed under "Cajun - Transmission Service" below; and (v) all funds paid by Entergy Gulf States into the registry of the District Court will be returned to Entergy Gulf States. The settlement is subject to approvals by the RUS, the Board of Directors of Entergy Corporation and Entergy Gulf States, the U.S. Bankruptcy Court, and appropriate regulatory agencies. Cajun - Transmission Service (Entergy Corporation and GSU) In orders issued on August 3, 1995,Entergy Gulf States) Entergy Gulf States and October 2, 1995, theCajun are parties to FERC affirmed the ALJ's April 1995 ruling in the remanded portion of GSU's and Cajun's ongoingproceedings relating to transmission service charge disputes beforedisputes. See Note 8 in Entergy's Form 10-K for additional information regarding these FERC proceedings, FERC orders issued as a result of such proceedings, and the FERC. Both GSU and Cajun have petitioned for appeal to the D.C Circuit.potential effects of these proceedings upon Entergy Gulf States. Under GSU'sEntergy Gulf States' interpretation of a 1992 FERC order, as modified by itsFERC's August 3, 1995, and October 2, 1995 orders, Cajun would owe GSUEntergy Gulf States approximately $63.3$66.3 million as of September 30, 1995. GSUMarch 31, 1996. Entergy Gulf States further estimates that if it were to prevail in its May 1992 motion for rehearing and on certain other issues decided adversely to GSUEntergy Gulf States in the February 1995, August 1995, and October 1995 FERC orders, which GSUEntergy Gulf States has appealed, Cajun would owe GSUEntergy Gulf States approximately $140.3$146.6 million as of September 30, 1995.March 31, 1996. If Cajun were to prevail in its May 1992 motion for rehearing to FERC, and if GSUEntergy Gulf States were not to prevail in its May 1992 motion for rehearing to FERC, and if Cajun were to prevail in appealing the FERC's August and October 1995 orders, GSUEntergy Gulf States estimates it would owe Cajun approximately $92.1$99.5 million as of September 30, 1995.March 31, 1996. The above amounts are exclusive of a $7.3 million payment by Cajun on December 31, 1990, which the parties agreed to apply to the disputed transmission service charges. Pending FERC's ruling on the May 1992 motions for rehearing, GSUEntergy Gulf States has continued to bill Cajun utilizing the historical billing methodology and has recorded underpaid transmission charges, including interest, in the amount of $169.7$138.9 million as of September 30, 1995.March 31, 1996. This amount is reflected in long-term receivables with an offsetting reserve in other deferred credits. Cajun's bankruptcy may affect GSU'sEntergy Gulf States' collection of the above amounts. The FERC has determined that the collection of the pre-petitionpre- petition debt of Cajun is an issue properly decided in the bankruptcy proceeding. For additional information regarding the GSU and Cajun transmission service charge disputes, see Note 8Refer to Entergy Corporation's and GSU's Form 10-K. Nonregulated Investments (Entergy Corporation) On March 31, 1995, Entergy Corporation, through its subsidiary, Entergy Power Development Company (EPDC), entered into an agreement with Enron Power Development Corporation (Enron),"Cajun - River Bend Litigation" above for a subsidiary of Enron Corporation, to acquire a 20% interest in the Dabhol Power Project (Project), a 695 megawatt combined cycle facility located in the State of Maharashtra, India. Subsequent to entering into the agreement with Enron, the newly-elected Maharashtra state government investigated the Project and its related cost of power. On August 3, 1995, the Chief Minister of Maharashtra stated that the government of Maharashtra had decided to suspend the first phasediscussion of the Project, the 695 megawatt facility, and "scrap" the second phasepotential settlement of the Project, a 1,320 megawatt facility,Cajun and indicated that orders to stop work would be issued. In September 1995, the Maharashtra state government announced its decision to resume discussions with Enron regarding the Project. On September 11, 1995, EPDC and Enron amended their original agreement entered into on March 31, 1995. The amended agreement provides EPDC with an option to participate in the Project under the original terms of the agreement, with the option expiring on May 1, 1996. Enron may sell the 20% interest to any third party provided that EPDC has not notified Enron in writing of its desire to exercise the option. In addition the amended agreement resulted in the return of EPDC's $20.5 million investment previously held in escrow.Entergy Gulf States disputes. Capital Requirements and Financing (Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSIEntergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 8 to Entergy Corporation's, AP&L's, GSU's, LP&L's, MP&L's and NOPSI's Form 10-K and Note 7 to System Energy'sEntergy's Form 10-K for information on the System operating companies' and System Energy's construction expenditures (excluding nuclear fuel) for the years 1995, 1996, and 1997, and long-term1998, and long- term debt and preferred stock maturities and cash sinking fund requirements for the period 1995-1999.1996-1998. Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs (Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSIEntergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) See Note 8 to Entergy Corporation's, AP&L's, GSU's, LP&L's, MP&L's and NOPSI's Form 10-K and Note 7 to System Energy'sEntergy's Form 10-K for information on nuclear liability, property and replacement power insurance, related NRC regulations, the disposal of spent nuclear fuel, other high-level radioactive waste, and decommissioning costs associated with ANO, River Bend, Waterford 3, and Grand Gulf 1. The staff of the SEC has questioned certain of the financial accounting practices of the electric utility industry regarding the recognition, measurement, and classification of decommissioning costs for nuclear generating stationsplants in the financial statements of electric utilities. In response to these questions, the FASB ishas been reviewing the accounting for decommissioning. In June 1995,decommissioning and has expanded the FASB reaffirmedscope of its tentative conclusions onreview to include liabilities related to the closure and removal of all long-lived assets. An exposure draft of the proposed SFAS (which is proposed to be effective in 1997) was issued in February 1996. The proposed SFAS would require measurement issues in accounting forof the liability for the decommissioningclosure and removal of nuclear power plants. The FASB supports measurement of the liabilitylong-lived assets (including decommissioning) based on discounted future cash flows. Those future cash flows should be determined by estimating current costs and adjusting for inflation, efficiencies that may be gained from experience with similar activities, and consideration of reasonable future advances in technology. The FASBIt also concludedwould require that changes in the decommissioningdecommissioning/closure cost liability resulting from changes in assumptions should be recognized with a corresponding adjustment to the plant asset, and depreciation should be revised prospectively. In addition, the FASB concludedThe proposed SFAS states that the initial recognition of the decommissioning/closure cost liability would result in an asset recognized as a result of recognizing the decommissioning liabilitythat should be presented with other plant costs on the financial statements because the cost of decommissioningdecommissioning/closing the plant iswould be recognized as part of the total cost of the plant asset. SubsequentIn addition there would be a regulatory asset recognized on the financial statements to the FASB reachingextent the above tentative conclusions, the scope of the FASB's review was expanded to consider not only the accounting for decommissioning liabilities, but also liabilities relatedinitial decommissioning/closure liability has increased due to the closurepassage of time, and removalsuch costs are probable of all long-lived assets.future recovery. If current electric utility industry accounting practices with respect to nuclear decommissioning and other closure costs are changed, annual provisions for decommissioningsuch costs could increase, the estimated cost for decommissioningdecommissioning/closure could be recorded as a liability rather than as accumulated depreciation, and trust fund income from decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense. ANO Matters (Entergy Corporation and AP&L)Entergy Arkansas) See Note 8 to Entergy Corporation's and AP&L'sEntergy's Form 10-K for information on leakscracks in certain steam generator tubes at ANO 2 that were discovered and repaired during an outage in March 1992. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent refueling outage in October 1995. Beginning in January 1995, ANO 2's output was reduced 15 megawatts or 1.6% due to secondary side fouling, tube plugging and reduction of primary temperature. During the October 1995 inspection, additional cracks in the tubes were discovered. ANO 2's output has been reduced 23 megawatts due to steam generator fouling and tube plugging. The unit may be approaching the current limit for the number of steam generator tubes that can be plugged with the unit in operation. If the currently established limit is reached, Entergy Operations could be required during future outages to insert sleeves in some of the steam generator tubes whichthat were previously plugged. Entergy Operations is in the process of gathering information and assessing various options for the repair or the replacement of ANO 2's steam generators. Certain of these options could, in the future, require significant capital expenditures and result in additional outages. However, a decision as to the repair or replacement of ANO 2's steam generators is not expected prior to 1997. Entergy Operations periodically meets with the NRC to discuss the results of inspections of the generator tubes, as well as the timing of future inspections. Environmental Issues (AP&L)(Entergy Arkansas) In May 1995, AP&LEntergy Arkansas was named as a defendant in a suit by Reynolds Metals Company (Reynolds), seeking to recover a share of the costs associated with the clean-up of hazardous substances at a site south of Arkadelphia, Arkansas. Reynolds alleges that it has spent $11.2 million to clean-up the site, and that the site was contaminated in part with PCBspolychlorinated biphenyls for which AP&LEntergy Arkansas bears some responsibility. AP&L,Entergy Arkansas, voluntarily, at its expense, has already completed remediation at a nearby substation site and believes that it has no liability for contamination at the site that is subject to the Reynolds suit and is contesting the lawsuit. Regardless of the outcome, AP&L doesEntergy Arkansas not believe this matter would have a materially adverse effect on its financial condition or results of operations. See "Environmental Regulation" in Item 1 of Part I of Entergy Corporation's and AP&L'sEntergy's Form 10-K for information on PCBpolychlorinated biphenyls contamination at former Reynolds plant sites in Arkansas to which AP&LEntergy Arkansas had supplied power. (GSU) GSU(Entergy Gulf States) Entergy Gulf States has been designated as a potentially responsible party for the clean-up of certain hazardous waste disposal sites. GSUEntergy Gulf States is currently negotiating with the EPA and state authorities regarding the clean-up of certain of these sites. Through September 30, 1995, $7.7March 31, 1996, $7.9 million has been expended on the clean-up. As of September 30, 1995,March 31, 1996, a remaining recorded liability of $22.1$21.7 million existed relating to the clean-up of the sites at which GSUEntergy Gulf States has been designated a potentially responsible party. See Note 8 to GSU'sEntergy's Form 10-K for additional discussion of the sites where GSUEntergy Gulf States has been designated as a potentially responsible party by the EPA and related litigation. (LP&L)(Entergy Louisiana) During 1993, the Louisiana Department of Environmental Quality issued new rules for solid waste regulation, including regulation of waste water impoundments. LP&LEntergy Louisiana has determined that certain of its power plant waste water impoundments were affected by these regulations and has chosenchose to upgrade or close them. As a result, aA remaining recorded liability in the amount of $12.8$10.2 million existed at September 30, 1995,March 31, 1996, for waste water upgrades and closures to be completed by the end of 1996. Cumulative expenditures relating to the upgrades and closures of waste water impoundments were $4.1$6.3 million as of September 30, 1995.March 31, 1996. See Note 8 to LP&L'sEntergy's Form 10-K for additional discussion of LP&L'sEntergy Louisiana's waste water impoundment upgrades and closures. Waterford 3 Lease Obligations (LP&L) LP&L(Entergy Louisiana) On September 28, 1989, Entergy Louisiana entered into three transactions for the sale and leaseback of undivided interests (aggregating approximately 9.3%) in Waterford 3. Upon the occurrence of certain events, LP&LEntergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from the lease transactions, and LP&LEntergy Louisiana may be required to assume the outstanding bonds issued by the Owner Trustee to finance, in part, its acquisition of the undivided interests in Waterford 3. See Note 9 to LP&L'sEntergy's Form 10- K10-K for further information. Reimbursement Agreement (System Energy) Under the provisions of a bank letter of credit and reimbursement agreement, System Energy has agreed to a number of covenants relating to the maintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the reimbursement agreement, to maintain its equity at not less than 33% of its adjusted capitalization (defined in the reimbursement agreement to include certain amounts not included in capitalization for financial statement purposes). In addition, System Energy must maintain, with respect to each fiscal quarter during the term of the reimbursement agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the reimbursement agreement) of at least 1.60 times earnings. As a result of charges recorded in the fourth quarter of 1994 related to an agreement with FERC which settled a long-standing dispute involving income tax allocation procedures, System Energy has obtained the consent of certain banks to waive temporarily the fixed charge coverage covenant in the letters of credit reimbursement agreement until November 30, 1995. As of September 30, 1995, System Energy's equity approximated 33.66% of its adjusted capitalization, and its fixed charge coverage ratio was 1.24. System Energy expects that upon expiration of the waiver period, it will be in compliance with the fixed charge coverage covenant. See Note 78 to System Energy'sEntergy's Form 10-K for further information on the reimbursement agreement.information. NOTE 2. RATE AND REGULATORY MATTERS River Bend (Entergy Corporation and GSU)Entergy Gulf States) In May 1988, the PUCT granted GSUEntergy Gulf States a permanent increase in annual revenues of $59.9 million resulting from the inclusion in rate base of approximately $1.6 billion of company-wide River Bend plant investment and approximately $182 million of related Texas retail jurisdiction deferred River Bend costs (Allowed Deferrals). In addition, the PUCT disallowed as imprudent $63.5 million of company-wide River Bend plant costs and placed in abeyance, with no finding as to prudence, approximately $1.4 billion of company-wide River Bend plant investment and approximately $157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs.costs (Abeyed Deferrals). As discussed in Note 2 to Entergy Corporation's and GSU'sEntergy's Form 10-K, various appeals of the PUCT's order have been filed. GSU hasfiled (Rate Appeal). Entergy Gulf States filed an appeal with the Texas Supreme Court. TheCourt and, on February 9, 1996, the Texas Supreme Court hasagreed to hear the appeal. Oral arguments were held on March 19, 1996. The timing of a decision by the Texas Supreme Court is not yet accepted the appeal, and no date for oral argument has been set.certain. As of September 30, 1995,March 31, 1996, the River Bend plant costs disallowed for retail ratemaking purposes in Texas and the River Bend plant costs held in abeyance and the related operating and carrying cost deferrals totaled (net of taxes)taxes and depreciation) approximately $13$12 million $277 million (both net of depreciation), and $169$274 million, respectively. Allowed Deferrals were approximately $84$81 million, net of taxes and amortization, as of September 30, 1995. GSUMarch 31, 1996. Entergy Gulf States estimates it has recordedcollected approximately $177$188 million of revenues as of September 30, 1995,March 31, 1996, as a result of the originally ordered rate treatment by the PUCT of these deferred costs. If recovery of the Allowed Deferrals is not upheld, future revenues based upon those allowed deferralsthereon could be lost, and no assurance can be given as to whether or not refunds to customers of revenue received based upon such deferred costs willwould be required. As discussedDuring the first quarter of 1996, Entergy Gulf States wrote off Abeyed Deferrals of $169 million in Note 2 to Entergy Corporation's and GSU's Form 10-K, GSUaccordance with SFAS 121, which became effective January 1, 1996, but it has made no write-offs or reserves for the River Bend-relatedBend plant-related costs. Management believes, basedA general remand by the Texas Supreme Court in the Rate Appeal would enable Entergy Gulf States to seek recovery of the Abeyed Deferrals. Based on advice from Clark, Thomas & Winters, A Professional Corporation, legal counsel of record in the Rate Appeal, management believes that it is reasonably possible that the case will be remanded to the PUCT, and that the PUCT will be allowed to rule on the prudence of the abeyed River Bend plant costs. Management and legal counsel are unable to predict the amount, if any, of abeyed and previously disallowed River Bend plant costs that ultimately maymight be disallowed by the PUCT. As of September 30, 1995,March 31, 1996, a net of tax write-off of up to $290$286 million could be required based onif the PUCT ultimately issues an ultimate adverse ruling by the PUCT on the abeyed and disallowed plant costs. The following factors support management's position that a loss contingency requiring accrual has not occurred, and its belief that all, or substantially all, of the abeyed plant costs will ultimately be recovered: 1. The $1.4 billion of abeyed River Bend plant costs have never been ruled imprudent and disallowed by the PUCT; 2. Analysis by Sandlin Associates, management consultants with expertise in the cost of nuclear power plants, which supports the prudence of substantially all of the abeyed construction costs; 3. Historical inclusion by the PUCT of prudent construction costs in rate base; and 4. The analysis of GSU'sEntergy Gulf States' internal legal counsel,staff, which has considerable experience in Texas rate case litigation. Additionally, management believes, based on advice from Clark, Thomas & Winters, A Professional Corporation, legal counsel of record in the Rate Appeal, management believes that it is reasonably possible that the Allowed Deferrals will continue to be recovered in rates, and that it is reasonably possible that the deferred costs related to the $1.4 billion of abeyed River Bend plant costsAbeyed Deferrals will be recovered in rates to the extent that the $1.4 billion of abeyed River Bend plant is recovered. However, a net of tax write-off of the $169 million of deferred costs related to the $1.4 billion of abeyed River Bend plant costs would be required if they are not allowed to be recovered in rates. The adoption of SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," (SFAS 121) will become effective January 1, 1996. SFAS 121 changes the standard for continued recognition of regulatory assets, and as a result GSU will be required to write-off the $169 million of rate deferrals discussed above, unless there are favorable regulatory or court actions related to the recovery of these costs prior to adoption. The standard also describes circumstances which may result in assets being impaired and provides criteria for recognition and measurement of asset impairment. See Note 7 for further information regarding SFAS 121. Filings with the PUCT and Texas Cities (Entergy Corporation and GSU) On March 20,1995, in connection with the PUCT's investigation of the reasonableness of GSU's rates, the PUCT ordered a $72.9 million annual base rate reduction for the period March 31, 1994 through September 1, 1994, decreasing to an annual base rate reduction of $52.9 million after September 1, 1994. In accordance with the Merger agreement, the rate reduction was applied retroactively to March 31, 1994. ` On May 26, 1995, the PUCT amended its previously issued March 20, 1995 rate order, reducing the $52.9 million annual base rate reduction to an annual level of $36.5 million. The PUCT's action was based, in part, upon a recent Texas Supreme Court decision not to require a utility to use the prospective tax benefits generated by disallowed expenses to reduce rates. The PUCT's May 26, 1995 amended order no longer required GSU to pass such prospective tax benefits on to its customers. The rate refund, retroactive to March 31, 1994, was approximately $61.8 million (including interest) and was refunded to customers in September, October and November 1995. The rate refund was previously reserved, and therefore had no impact to income in the current quarter. GSU and other parties have appealed the PUCT order, but no assurance can be given as to the timing or outcome of the appeal. Filings with the LPSC (Entergy Corporation and GSU) In May 1994, GSU madeEntergy Gulf States) See Note 2 in Entergy's Form 10-K for a discussion of Entergy Gulf States' required earnings analysis filing with the LPSC for the test year preceedingpreceding the Merger (1993). On December 14,Entergy Gulf States has appealed to the Louisiana Supreme Court the 1994 the LPSC ordered a $12.7 millionorder for an annual rate reduction for GSU effective January 1995. GSU received aof $12.7 million. During the appeal, the preliminary injunction Entergy Gulf States received from the District Court, regardingrelating to the $8.3 million earnings effect of the reduction. On January 1, 1995, GSU reduced rates by $4.4 million. GSU filed an appeal of the entire $12.7 million rate reduction with the District Court, which denied the appeala 1994 change in July 1995. GSU has appealed the order to the Louisiana Supreme Court. The preliminary injunction relating to $8.3 million of the reductionaccounting for unbilled revenues, will remain in effect during the appeal.effect. On May 31, 1995, GSUEntergy Gulf States filed its first required post-Merger earnings analysis with the LPSC. Hearings on this review are scheduled to beginwere held in mid-DecemberDecember 1995 and a decision is expected in early 1996.mid-1996. (Entergy Corporation and LP&L)Entergy Louisiana) See Note 2 to Entergy Corporation's and LP&L'sin Entergy's Form 10-K for a discussion of LP&L'sEntergy Louisiana's performance-based formula rate plan filed withapproved in a June 1995 LPSC rate order, Entergy Louisiana's subsequent appeal of the LPSC.LPSC's order, and the final settlement of this appeal. On June 2,April 15, 1996, as required by the performance-based formula rate plan, Entergy Louisiana made its annual earnings filing for the 1995 test year. The filing indicates a required rate reduction due to overearnings in 1995. In addition, rates will be reduced as a result of the LPSC'sexpiration of the Waterford 3 phase-in-plan discussed below. These rate reductions will be largely offset by the recovery of the Waterford 3 property tax. Hearings on these issues are expected to begin in June 1996. The property tax exemption for Waterford 3 ended in December 1995 and Entergy Louisiana will be required to pay $20.8 million in property taxes to St. Charles Parish for the 1996 tax year. In a March 1996 LPSC order, Entergy Louisiana was permitted to defer the rate recovery of these taxes for the period January 1996 through June 1996. The order allows for the recovery of the property tax and also for the recovery, from July 1996 through June 1997, of the related deferral. In addition, Entergy Louisiana's phase-in-plan for Waterford 3 will expire in November 1996. Entergy Louisiana was recovering deferred costs annually of approximately $28.4 million. Filings with the MPSC (Entergy Corporation and Entergy Mississippi) On March 15, 1996, Entergy Mississippi filed its annual earnings review of LP&L's performance-basedwith the MPSC under its formula rate plan,plan. On April 18, 1996, the MPSC issued an order approving and adopting a $49.4joint stipulation and placing the prospective rate reduction of $5.9 million reduction in base rates was ordered. This included $10.5 million of rate reductions previously made through the fuel adjustment clause. The netinto effect of the LPSC order was to reduce rates by $38.9 million. The LPSC approved LP&L's proposed formula rate planon May 1, 1996. Filings with the following modifications. An earnings band is to be established with a range from 10.4% to 12% for return on equity. If LP&L's earnings fall within the bandwidth, no adjustment in rates occurs. If LP&L's earnings are above a 12% return on equity, a 60/40 sharing with customers occursCouncil (Entergy Corporation and customers receive 60% of earnings in excess of the 12% through prospective rate reductions. Alternatively, if LP&L's earnings are below a 10.4% return on equity, customers pay 60% of the difference between the realized return on equity and a 10.4% return on equity through prospective rate increases. The LPSC also reduced LP&L's authorized rate of return from 12.76% to 11.2%. The LPSC rate order is retroactive to April 27, 1995. On June 9, 1995, LP&L appealed the $49.4 million rate reduction. On the same date, LP&L also filed a petition for injunctive relief from implementation of $14.7 million of the $49.4 million rate reduction. The $14.7 million portion of the rate reduction represents revenue made available to LP&L through a previous LPSC order, which in turn allowed LP&L to provide reduced rates to three industrial customers. Subsequently, a request for a $14.7 million rate increase was filed by LP&L. On July 13, 1995, LP&L was granted a preliminary injunction by the District Court on $14.7 million of the rate reduction pending a final LPSC order. No assurance can be given asEntergy New Orleans) Pursuant to the timing or outcome1994 NOPSI Settlement, Entergy New Orleans is required to make earnings filings with the Council for the 1995 and 1996 rate years. A review of Entergy New Orleans' earnings for the appeal ortest year ending September 30, 1995, required Entergy New Orleans to credit customers $6.2 million over a 12-month period which began in March 1996. Hearings before the requested rate increase. The rate refund, retroactive toCouncil on the reasonableness and prudence of Entergy New Orleans' deferred Least Cost Integrated Resource Planning expenses for cost recovery purposes were previously scheduled for April 28, 1995, was approximately $8.2 million and was refunded to customers in the months of September and October 1995. The rate refund was previously reserved, and therefore represents no impact to income in the current quarter.1996, but have been delayed. Proposed Rate Increase (System Energy) System Energy filed an application with FERC on May 12, 1995, with FERC for a $65.5 million rate increase. The request seeks changes to the System EnergyEnergy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation accrual rate, and the rate of return on common equity. On December 12, 1995, System Energy requested that the proposedimplemented a $65.5 million rate increase, become effective subject to refund within 60 days after the filing date, but the effective date was suspended until December 1995.refund. Hearings on System Energy's request are scheduled to beginbegan in January 1996 and were completed in February 1996. (MP&L) MP&L'sThe ALJ's initial decision is expected in the latter part of 1996. (Entergy Mississippi) Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase is $21.6 million. In July 1995, MP&LEntergy Mississippi filed a schedule with the MPSC which will deferthat defers the ultimate amountretail recovery of the System Energy rate increase. The deferral plan, which was approved by the MPSC, in September 1995, will beginbegan in December 1995, the effective date of the System Energy rate increase, and will end after the issuance of a Final Orderfinal order by the FERC. February 1994 Ice Storm/Rate RiderThe deferred rate increase is to be amortized over 48 months beginning October 1998. (Entergy Corporation and MP&L) As discussed in Note 2 toNew Orleans) Entergy Corporation's and MP&L's Form 10-K the MPSC approved a stipulation in September 1994, with respect to the recovery of ice storm costs recorded through April 30, 1994. Under the stipulation, MP&L implemented an ice storm rate rider, which increased rates approximately $8 million for a period of five years beginning on September 29, 1994. This stipulation also stated that at the endNew Orleans' allocation of the five-year period, the revenue requirement associatedproposed System Energy wholesale rate increase is $11.1 million. In February 1996, Entergy New Orleans filed a plan with the undepreciated ice storm capitalized costsCity to defer 50% of the amount of the System Energy rate increase. The deferral began in February 1996 and will be included in MP&L's base rates toend after the extent that this revenue requirement does not result in MP&L's rateissuance of return on rate base being above the benchmark rate of return under MP&L's formula rate plan. In September 1995, the MPSC approved a second joint stipulation which allows for a -$2.5 million rate increase for a period of four years beginning September 28, 1995, to recover costs related to the ice storm that were recorded after April 30, 1994. The stipulation also allows for undepreciated ice storm capital costs recorded after April 30, 1994 to be treated as described above.final order by FERC. LPSC Fuel Cost Review (Entergy Corporation and GSU)Entergy Gulf States) See Note 2 to Entergy Corporation's and GSU'sEntergy's Form 10-K, for a discussion of the LPSC's review of GSU'sEntergy Gulf States' fuel costs for the period October 1988 through September 1991 and GSU'sEntergy Gulf States' subsequent appeal of $13.9 million of fuel costs disallowed by the LPSC. The LPSC is currently conducting the second phase of its review of GSU'sEntergy Gulf States' fuel costs for the period October 1991 through December 1994. On June 30, 1995, the LPSC consultants filed testimony recommending a disallowance of $38.7 million of fuel costs. Hearings are scheduled to beginbegan in December 1995. No assurance can be given as to1995 and were completed in March 1996. A decision is expected in the timing or the outcomesecond quarter of the review.1996. NOTE 3. COMMON STOCK (Entergy Corporation) Entergy Corporation from time to time may make purchases of its outstanding common stock depending upon market conditions and authorization by the Entergy Corporation Board of Directors. During the first nine monthsquarter of 1995, no shares of common stock were repurchased. During the first nine months of 1995,1996, Entergy Corporation issued 347,590267,679 shares of its previously repurchased common stock, reducing the amount held as treasury stock by $10.3$7.7 million. Entergy Corporation issued these shares to meet the requirements of its various stock plans. NOTE 4. LONG-TERM DEBT (MP&L)(Entergy Corporation) An Entergy subsidiary signed an agreement with several banks on January 5, 1996, to obtain a revolving credit facility in the aggregate amount of $1.2 billion Australian dollars ($870 million US dollars) for the acquisition of CitiPower. The facility was drawn down on that same date, bears interest at an average rate of 8.18%, is non-recourse to Entergy, and matures on June 30, 2000. As part of the CitiPower acquisition, a bank letter of credit and other agreements were secured by Entergy Corporation totaling $79 million as of March 31, 1996. (Entergy Arkansas) On October 15, 1995, MP&L retired $15April 26, 1996, Entergy Arkansas redeemed, prior to their maturities, $23.8 million of its 5.95% Series G&R Bonds upon maturity. (System Energy) On October 1, 1995 System Energy retired $105 million of its 6.12%10.375% Series First Mortgage Bonds upon maturity.due October 1, 2020 (all of the outstanding bonds of such series) and $58.4 million of its 10.00% Series First Mortgage Bonds due February 1, 2020, in each case at a price of 100% of their principal amounts, using funds deposited with the mortgage trustee pursuant to the annual maintenance and replacement fund requirement as provided under Entergy Arkansas' mortgage. (Entergy Louisiana) On October 11, 1995, System Energy issuedApril 26, 1996, Entergy Louisiana redeemed, in full, prior to its maturity, $95 million of its 10.125% Series First Mortgage Bonds due April 1, 2020 at a price of 100% of its principal amount, using funds deposited with the mortgage trustee pursuant to the annual replacement fund requirement as provided under Entergy Louisiana's mortgage. (Entergy New Orleans) On May 1, 1996, Entergy New Orleans retired, at 100% of the principal amount thereof, $30 million of its 7.38%10.95% Series DebenturesGeneral & Refunding Mortgage Bonds due 2000.May 1, 1997, $15 million of which was a scheduled sinking fund requirement. NOTE 5. RETAINED EARNINGS (Entergy Corporation) On October 27, 1995,March 24, 1996, Entergy Corporation's Board of Directors declared a common stock dividend of 45 cents per share payable on DecemberJune 1, 1995.1996, to holders of record on May 10, 1996. NOTE 6. RESTRUCTURING COSTS (Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSIEntergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy Services) TheNew Orleans) In 1994 and 1995 Entergy implemented various restructuring programs announced by Entergy in the third quarter of 1994 included anticipated reductions into reduce the number of employees and the consolidation ofconsolidate offices and facilities. ActualThe programs were designed to reduce costs and improve operating efficiencies in order to enable Entergy to become a low-cost producer. The balances as of December 31, 1995, and March 31, 1996, for restructuring chargesliabilities associated with these programs recorded in 1994 and the first nine months of 1995 are shown below by company along with the actual termination benefits paid under the program. Restructuring Restructuring Liability Additional Liability Company December 31, Accruals Payments September 30, 1994 1995 (In Millions) AP&L $ 12.2 $ 9.0 $(16.1) $ 5.1 GSU 6.5 7.2 (11.7) 2.0 LP&L 6.8 5.0 (10.1) 1.7 MP&L 6.2 1.1 (5.9) 1.4 NOPSI 3.4 - (2.2) 1.2 Entergy Services - 6.0 (3.2) 2.8 ------ ----- ------ -------- Total $ 35.1 $28.3 $(49.2) $ 14.2programs.
Restructuring Restructuring Liability as of Adjustments Payments Liability as of December 31, Made in Made in March 31, Company 1995 1996 1996 1996 (In Millions) AP&L $8.3 - ($3.4) $4.9 GSU 5.4 - (2.4) 3.0 LP&L 2.2 - (1.2) 1.0 MP&L 2.5 (0.4) (0.5) 1.6 NOPSI 0.6 - (0.3) 0.3 Other 5.2 0.4 (1.2) 4.4 ------ ---- ----- ----- Total $ 24.2 - ($9.0) $15.2 ====== ==== ===== ===== ====== ========
The restructuring charges shown above primarily includedinclude employee severance costs related to the expected termination of approximately 2,706 employees.2,750 employees in various groups. As of September 30, 1995, 1,807March 31, 1996, 2,350 employees havehad either been terminated or accepted voluntary separation packages under the restructuring plan. Additionally, the System recorded $24.3 million in 1994 (of which $23.8 million was recorded by GSU) for remaining severance and augmented retirement benefits related to the Merger. Actual termination benefits paid under the program during the first nine months of 1995 amounted to $18.5 million. During that same period, adjustments to the allocation of the total liability were made among the System companies. At September 30, 1995, the total remaining System liability for expected future Merger- related outlays was $5.9 million, comprised principally of GSU's and Entergy Services' liabilities of $4.3 million and $1.2 million, respectively. NOTE 7. ACCOUNTING ISSUES New Accounting Standard - In March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of", which became effective January 1, 1996. This standardstatement describes circumstances which may result in assets (including goodwill such as the Merger acquisition adjustment, see Note 1being impaired, in addition to Entergy Corporation's Form 10-K) being impaired. The standard also providesproviding criteria for recognition and measurement of asset impairment. Note 2 describesIn the first quarter of 1996, Entergy Gulf States' regulatory assets of $169 million (net of tax) related to Texas retail deferred River Bend operating and carrying costs. Management believes thesecosts and $5 million (net of tax) related to Louisiana retail deferred River Bend operating costs will be required to bewere written off under the provisions of SFAS 121 unless there are favorable regulatory or court actions related121. See Note 1 to these costs prior to the adoption of the new standard by Entergy. CertainEntergy's Form 10-K for additional details regarding other assets and operations of Entergy totaling approximately $1.7 billion (pre-tax) are most potentially affectedimpacted in the future by the requirements of SFAS 121. Those121 and the process for periodically reviewing those assets include AP&L's and LP&L's retained sharesoperations for impairment. NOTE 8. ENTERGY CORPORATION-CITIPOWER ACQUISITION (Entergy Corporation) On January 5, 1996, Entergy Corporation finalized its acquisition of Grand Gulf 1,CitiPower, an electric distribution company serving Melbourne, Australia, and surrounding suburbs. The purchase price of CitiPower was approximately $1.2 billion, of which $294 million represented an equity investment by Entergy Power's investments inCorporation, and the Independence and Ritchie power plants, GSU's Louisiana deregulated asset plan and Texas jurisdiction abeyedremainder represented debt. Entergy Corporation funded the majority of the equity portion of the River Bend plant, in addition to the FERC jurisdiction and steam department operationsinvestment by using $230 million of GSU. As discussedits $300 million bank revolving credit facility. CitiPower is one of five electric distribution businesses in the Form 10-K, GSU has previously discontinuedstate of Victoria. CitiPower's distribution area accounts for approximately ten percent of Victoria's population. For the applicationfiscal year ended June 30, 1995, CitiPower supplied approximately 4.4 million MWh of SFAS 71electricity to over 230,000 customer sites. Approximately 36,000, or 16%, of these sites were commercial customers. In accordance with the purchase method of accounting, the three month results of operations for Entergy Corporation reported in its Statements of Consolidated Income and Cash Flows do not reflect CitiPower's results of operations for any period prior to January 5, 1996. If the acquisition had occurred on January 1, 1995, Entergy Corporation's operating revenues would have increased by approximately $100 million for the Louisiana deregulated asset plan, and operations underfirst quarter, but the FERC jurisdiction and the steam department. Entergy will periodically review these assets and operations in order to determine if the carrying value of such assets will be recovered. In most cases this determination will be basedeffects on the net cash flows expected to result from suchoverall results of operations and assets. Projected net cash flows will depend on the future operating costs associated with the assets, the efficiency and availabilitywould have been immaterial. This pro forma information is not necessarily indicative of the assets/generating unitsresults of operations that would have occurred had the acquisition been consummated for the period for which it is being given effect. CitiPower's results of operations for the period from January 5, 1996, through March 31, 1996, are included in Entergy Corporation's Consolidated Financial Statements and the future market/price for energy over the remaining life of the assets. __________________________________________is stated separately below: Period from January 5, 1996 to March 31, 1996 (In Thousands) Operating revenues $ 91,636 Operating expenses $ 73,630 Interest charges $ 17,753 Net income $ 253 _________________________________________ In the opinion of Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSIEntergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, the accompanying unaudited condensed financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassifying previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented. However, the business of AP&L, GSU, LP&L, MP&LEntergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and NOPSIEntergy New Orleans is subject to seasonal fluctuations, with the peak period occurring during the summer months. The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year. ENTERGY CORPORATION AND SUBSIDIARIES ARKANSAS POWER & LIGHT COMPANY GULF STATES UTILITIES COMPANY LOUISIANA POWER & LIGHT COMPANY MISSISSIPPI POWER & LIGHT COMPANY NEW ORLEANS PUBLIC SERVICE INC. SYSTEM ENERGY RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Entergy, AP&L, GSU, LP&L, MP&L, NOPSI and System Energy Net cash flow from operations for Entergy Corporation, the System operating companies and System Energy for the nine months ended September 30, 1995 and 1994, was as follows (in millions): Nine Months Nine Months Company Ended 9/30/95 Ended 9/30/94 Entergy Corporation $1,069.4 $1,120.6 AP&L $ 282.1 $ 256.8 GSU $ 344.3 $ 278.3 LP&L $ 308.2 $ 304.5 MP&L $ 139.4 $ 154.4 NOPSI $ 70.7 $ 61.0 System Energy $ 51.2 $ 206.9 For the nine months ended September 30, 1995, AP&L's net cash flow from operations increased because of reduced billings from System Energy resulting from a FERC audit settlement in 1994. Partially offsetting this increase in AP&L's net cash flow was a higher fuel inventory level in 1995 due to the depletion of coal inventory in 1994 when spring flooding disrupted the normal coal delivery schedule. GSU's net cash flow from operations increased for the nine months ended September 30, 1995, due primarily to lower operation and maintenance expenses and higher deferred income taxes. This increase was partially offset by a portion of the Texas retail rate refund made in September 1995, representing $53 million, and a smaller reduction in rate deferrals in 1995 as compared to 1994. MP&L's cash flow from operations decreased for the nine months ended September 30, 1995, as the result of increased accounts receivable balances due to increased sales from warmer weather. In addition, MP&L's share of the System Energy FERC audit settlement was refunded to customers in August 1995, decreasing cash provided by operating activities. System Energy's net cash flow from operations decreased for the nine months ended September 30, 1995, due primarily to refunds to associated companies resulting from a FERC audit settlement in 1994. In the first nine months of 1995, as in recent years, cash from operations, supplemented by cash on hand, was sufficient to meet substantially all investing and financing requirements, including capital expenditures, dividends and debt/preferred stock maturities. Entergy's ability to fund most of its capital requirements with cash from operations results from continued efforts to streamline operations and to reduce costs, as well as from collections under rate phase-in plans that exceed current cash requirements for the related costs. (In the income statement, these revenue collections are offset by the amortization of previously deferred costs so that there is no effect on net income.) The System operating companies and System Energy have the ability, subject to regulatory approval, to meet capital requirements through future debt or preferred stock issuances, as discussed below. Also, to the extent current market interest and dividend rates allow, the System operating companies and System Energy may continue to refinance high-cost debt and preferred stock prior to maturity. Entergy Corporation will consider investing up to approximately $150 million per year for the next several years in nonregulated business opportunities. See Part II for additional discussion of Entergy Corporation's current and future investments in nonregulated businesses. Certain agreements and restrictions limit the amount of mortgage bonds and preferred stock that can be issued by each of the System operating companies and System Energy. Based on the most restrictive applicable tests as of September 30, 1995, and assumed annual interest or dividend rates of 8.25% for bonds and 8.50% for preferred stock, each of the System operating companies and System Energy could have issued mortgage bonds or preferred stock in the following amounts (in millions): Company Mortgage Bonds Preferred Stock AP&L $292 $ 763 GSU $318 $ - LP&L $ 80 $1,100 MP&L $238 $ 253 NOPSI $ 55 $ 50 System Energy $ 52 (a) (a) System Energy's charter does not provide for the issuance of preferred stock. In addition, the System operating companies and System Energy have the ability, subject to certain conditions, to issue bonds against retired bonds, in some cases without meeting an earnings coverage test. In addition to issuable mortgage bonds determined by the above restrictive tests, GSU has the ability to issue up to approximately $578 million of first mortgage bonds against previously retired bonds. AP&L may also issue preferred stock to refund outstanding preferred stock without meeting an earnings coverage test. GSU has no earnings coverage limitations on the issuance of preference stock. See Notes 5 and 6 to Entergy Corporation's, AP&L's, GSU's, LP&L's, MP&L's and NOPSI's Form 10-K and Note 5 to System Energy's Form 10-K for long-term debt and preferred stock issuances and retirements. The System operating companies and System Energy have SEC authorization to effect short-term borrowings. See Note 4 to Entergy Corporation's, AP&L's, GSU's, LP&L's, MP&L's, NOPSI's and System Energy's Form 10-K for information on the System operating companies', System Energy's and Entergy Services' short-term borrowing authorizations and bank lines of credit. At September 30, 1995, Entergy Operations, Entergy Services and System Fuels had outstanding short-term borrowings from the Money Pool as follows (in millions): Company Money Pool Entergy Operations $ 9.3 Entergy Services $56.7 System Fuels $21.6 On July 27, 1995, Entergy Corporation received SEC authorization for a $300 million bank credit facility. In October 1995, a credit agreement was signed with a group of banks to provide up to $300 million in loans to Entergy Corporation. Proceeds from this bank credit facility are expected to be used for common stock repurchases, investments in nonregulated and nonutility businesses and other general corporate activities. Entergy Corporation's current primary capital requirements are to invest periodically in, or make loans to, its subsidiaries. Entergy Corporation expects to meet these requirements in 1995 - 1997 with internally generated funds and cash on hand. Entergy Corporation paid dividends which aggregated $306 million on its common stock in the first nine months of 1995. Declarations of dividends on common stock are made at the discretion of the Board. It is anticipated that management will not recommend future dividend increases to the Board unless such increases are justified by sustained earnings growth of Entergy Corporation and its subsidiaries. Entergy Corporation receives funds through dividend payments from its subsidiaries. Such dividend payments totaled $337 million for the first nine months of 1995. See Note 7 to Entergy Corporation's Form 10-K for information on dividend restrictions. GSU did not make common stock dividend payments to Entergy Corporation in the first nine months of 1995. Recent rate reductions, as discussed in Note 2, as well as any future rate reductions, increase the need for Entergy to continue to reduce costs in order to meet the increasing competition in the utility industry as well as develop additional sources of income. Entergy Corporation and GSU See Notes 1 and 2 regarding litigation with Cajun and River Bend rate appeals. Adverse rulings in the River Bend rate appeal could result in approximately $459 million of potential write- offs (net of tax) and $177 million in refunds of previously collected revenue. Such write-offs and charges as well as the application of SFAS 121 (see Note 7) could result in substantial net losses being reported by Entergy Corporation and GSU in 1995 and subsequent periods, with resulting adverse adjustments to common equity of Entergy Corporation and GSU. Also, adverse resolution of these matters could adversely affect GSU's ability to obtain financing, which could in turn affect GSU's liquidity, and GSU's ability to pay dividends. Entergy Corporation and System Energy Under the Capital Funds Agreement, Entergy Corporation has agreed to supply to System Energy sufficient capital to maintain System Energy's equity capital at an amount equal to a minimum of 35% of its total capitalization (excluding short-term debt), to permit the continuation of commercial operation of Grand Gulf 1 and to pay in full all indebtedness for borrowed money of System Energy when due under any circumstances. In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights as security for specific debt of System Energy, Entergy Corporation has agreed to make cash capital contributions, if required, to enable System Energy to make payments on such debt when due. The Capital Funds Agreement can be terminated by the parties to the agreement, subject to the receipt of consents of certain creditors. RESULTS OF OPERATIONS ENTERGY Net Income Consolidated net income increased for the three and nine months ended September 30, 1995 due primarily to a decrease in other operation and maintenance expense, increased weather related sales, and decreased interest expense, partially offset by the ongoing effect of 1994 and 1995 rate reductions. Significant factors affecting the results of operations and causing variances between the three months and nine months ended September 30, 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are Entergy's electric revenues by source and KWH sales for the three months and nine months ended September 30, 1995 and 1994. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 793.7 $ 726.3 $ 67.4 9 Commercial 451.4 435.8 15.6 4 Industrial 504.3 488.6 15.7 3 Governmental 42.7 42.7 0.0 0 --------- --------- ------- Total retail 1,792.1 1,693.4 98.7 6 Sales for resale 122.0 89.8 32.2 36 Other (3.8) (6.2) 2.4 (39) --------- --------- ------- Total $ 1,910.3 $ 1,777.0 $ 133.3 8 ========= ========= ======= Billed Electric Energy Sales (Millions of KWH): Residential 9,923 8,848 1,075 12 Commercial 6,310 5,916 394 7 Industrial 11,257 10,675 582 5 Governmental 644 609 35 6 --------- --------- ------- Total retail 28,134 26,048 2,086 8 Sales for resale 3,945 2,503 1,442 58 --------- --------- ------- Total 32,079 28,551 3,528 12 ========= ========= ======= Nine Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 1,715.2 $ 1,691.3 $ 23.9 1 Commercial 1,133.4 1,147.2 (13.8) (1) Industrial 1,351.3 1,386.2 (34.9) (3) Governmental 115.4 122.3 (6.9) (6) --------- --------- ------ Total retail 4,315.3 4,347.0 (31.7) (1) Sales for resale 279.2 235.5 43.7 19 Other 149.7 86.4 63.3 73 --------- --------- ------ Total $ 4,744.2 $ 4,668.9 $ 75.3 2 ========= ========= ====== Billed Electric Energy Sales (Millions of KWH): Residential 21,830 20,716 1,114 5 Commercial 15,741 15,135 606 4 Industrial 31,617 30,481 1,136 4 Governmental 1,747 1,688 59 3 --------- --------- ------ Total retail 70,935 68,020 2,915 4 Sales for resale 8,228 6,274 1,954 31 --------- --------- ------ Total 79,163 74,294 4,869 7 ========= ========= ====== Electric operating revenues increased in the three months ended September 30, 1995 as a result of an increase in retail sales and sales for resale, partially offset by rate reductions at GSU, LP&L and NOPSI . Warmer weather and non-weather related volume growth, contributed equally to the increase in retail electric operating revenues. The increase in sales for resale was primarily from increased energy sales outside of Entergy's service area. Electric operating revenues increased for the nine months ended September 30, 1995 due primarily to increased retail sales, increased wholesale revenues from outside Entergy's service area and increased other revenue, partially offset by rate reductions at GSU, LP&L and NOPSI and lower fuel adjustment revenues. Approximately 72 percent of the sales volume/weather increase in electric operating revenue resulted from increased customers and associated usage, while the remainder resulted from warmer weather. Other revenues increased for the nine months ended September 30, 1995 due primarily to an increase in unbilled revenues attributable to warmer weather in the current period and an increase in MP&L's Grand Gulf over/under recovery. For the nine months ended September 30, 1995, MP&L undercollected its share of Grand Gulf 1 related costs due to decreased revenues from its Grand Gulf 1 rate rider. For the same period last year MP&L was in an overcollected position. The increased undercollected position in the current year has resulted in MP&L recording additional other revenue for these undercollected Grand Gulf 1 costs. The Grand Gulf 1 over/under collection has no effect on net income. The changes in electric operating revenue for the three months and nine months ended September 30, 1995 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base rates $(34.9) $(55.6) Rate riders 5.0 (0.6) Fuel cost recovery 42.4 (57.0) Sales volume/weather 91.9 118.0 Other revenue (including unbilled) (4.5) 25.5 Sales for resale 33.4 45.0 ------ ----- Total $133.3 $75.3 ====== ===== Gas operating revenues decreased for the three and nine months ended September 30, 1995 because of milder than normal winter weather, decreased fuel adjustment revenues and gas rate reductions agreed to in the 1994 NOPSI Settlement. Expenses Operating expenses increased for the three months ended September 30, 1995 due primarily to increased purchased power expenses resulting from changes in generation availability and requirements among the System operating companies, increased income taxes due primarily to higher pre-tax book income, and increased amortization of rate deferrals attributable to the collection of more Grand Gulf 1 related costs from customers in 1995 as compared to 1994. Other operation and maintenance expenses decreased due primarily to charges made in September 1994 for Merger-related costs, restructuring costs, increased storm damage costs and increased environmental reserves. Operating expenses decreased for the nine months ended September 30, 1995 as the result of decreased operating and maintenance expenses partially offset by increased nuclear refueling outage expense due to a Grand Gulf 1 refueling outage at System Energy. Income taxes also increased because of higher pretax income, a decrease in tax depreciation at Waterford 3 and River Bend and decreased amortization of investment tax credits related to the 1994 FERC Settlement. Other operation and maintenance expenses decreased due primarily to charges made in September 1994 for Merger-related costs, restructuring costs, increased storm damage costs and increased environmental reserves. Interest charges decreased for the three months and nine months ended September 30, 1995 due primarily to the retirement and refinancing of higher costing long-term debt. AP&L Net Income Net income increased in the three months ended September 30, 1995 due primarily to an increase in revenues from retail energy sales and a decrease in other operation and maintenance expenses partially offset by an increase in income tax expense and the amortization of rate deferrals. Net income increased in the first nine months of 1995 due primarily to higher revenues from retail energy sales partially offset by an increase in depreciation, amortization, and decommissioning expense and an increase in income tax expense. Significant factors affecting the results of operations and causing variances between the three months and nine months ended September 30, 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are AP&L's operating revenues by source and KWH sales for the three months and nine months ended September 30, 1995 and 1994. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 200.1 $ 170.5 $ 29.6 17 Commercial 103.3 95.2 8.1 9 Industrial 111.4 100.5 10.9 11 Governmental 5.1 4.7 0.4 9 ------- ------- ------ Total retail 419.9 370.9 49.0 13 Sales for resale Associated companies 52.1 50.8 1.3 3 Non-associated companies 60.8 49.2 11.6 24 Other (2.4) (0.1) (2.3) * ------- ------- ------ Total $ 530.4 $ 470.8 $ 59.6 13 ======= ======= ====== Billed Electric Energy Sales (Millions of KWH): Residential 2,092 1,802 290 16 Commercial 1,359 1,259 100 8 Industrial 1,752 1,561 191 12 Governmental 70 63 7 11 ------- ------- ------ Total retail 5,273 4,685 588 13 Sales for resale Associated companies 2,484 2,379 105 4 Non-associated companies 1,661 1,324 337 25 ------- ------- ------ Total 9,418 8,388 1,030 12 ======= ======= ====== Nine Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 433.3 $ 402.1 $ 31.2 8 Commercial 245.5 236.3 9.2 4 Industrial 273.9 253.9 20.0 8 Governmental 13.1 12.9 0.2 2 --------- --------- ------ Total retail 965.8 905.2 60.6 7 Sales for resale Associated companies 132.4 178.1 (45.7) (26) Non-associated companies 139.9 135.6 4.3 3 Other 44.1 37.9 6.2 16 --------- --------- ------ Total $ 1,282.2 $ 1,256.8 $ 25.4 2 ========= ========= ====== Billed Electric Energy Sales (Millions of KWH): Residential 4,668 4,381 287 7 Commercial 3,282 3,177 105 3 Industrial 4,706 4,392 314 7 Governmental 189 178 11 6 --------- --------- ------ Total retail 12,845 12,128 717 6 Sales for resale Associated companies 6,239 8,617 (2,378) (28) Non-associated companies 3,830 3,601 229 6 --------- --------- ------ Total 22,914 24,346 (1,432) (6) ========= ========= ====== * - Greater than 200%. Electric operating revenues increased for the three months ended September 30, 1995 as the result of an increase in retail energy sales and fuel adjustment revenues. Approximately 58 percent of the sales volume/weather increase in electric operating revenue resulted from warmer weather in the third quarter of 1995. Electric operating revenues increased for the nine months ended September 30, 1995 due primarily to increased retail energy sales and fuel adjustment revenues partially offset by a decrease in sales for resale to associated companies. Approximately 70 percent of the sales volume/weather increase in electric operating revenue resulted from increased customers and associated usage, while the remainder resulted from warmer weather. The decrease in sales for resale to associated companies is caused by changes in generation availability and requirements among the System operating companies. The changes in electric operating revenue for the three months and nine months ended September 30, 1995 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base rates $(5.2) $(0.9) Rate riders 9.6 13.0 Fuel cost recovery 15.3 26.2 Sales volume/weather 28.7 32.4 Other revenue (including unbilled) (4.3) (5.2) Sales for resale 15.5 (40.1) ----- ----- Total $59.6 $25.4 ===== ===== Expenses Operating expenses increased in the three months ended September 30, 1995 due primarily to an increase in fuel and purchased power expenses, income tax expense, and the amortization of rate deferrals partially offset by a decrease in other operation and maintenance expense. The increase in fuel and purchased power expenses is largely due to a 12% increase in total sales volume. Fuel and purchased power expenses also increased as the result of replacement power purchased during the ANO 2 outage which began in mid September 1995 and is scheduled to end in November 1995. Income tax expense increased because of higher pretax income. The amortization of rate deferrals increased primarily due to the over-recovery of Grand Gulf 1 charges from customers. The decrease in other operation and maintenance expense is largely due to restructuring costs recorded in 1994. Operating expenses decreased for the first nine months of 1995 because of lower fuel and fuel-related expenses offset by an increase in depreciation, decommissioning and amortization expense and income tax expense. Fuel expenses decreased as the result of a decrease in total sales volume of 6%. Depreciation, amortization, and decommissioning expenses increased primarily due to additions and upgrades at ANO and to additions to transmission lines, substations and other equipment. Also, decommissioning expense increased due to the implementation of the decommissioning rate rider which resulted from the decommissioning study performed in 1994. Income tax expense increased primarily due to the write-off in 1994 of investment tax credits in accordance with the FERC Settlement as well as an increase in income taxes due to higher pretax income. GSU Net Income Net income increased for the three months and nine months ended September 30, 1995 primarily due to a decrease in other operation and maintenance expenses and an increase in miscellaneous income, partially offset by an increase in income taxes and taxes other than income taxes. Significant factors affecting the results of operations and causing variances between the three months and nine months ended September 30, 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenue and Sales Detailed below are GSU's operating revenues by source and KWH sales for the three months and nine months ended September 30, 1995 and 1994: Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Department Operating Revenues: Residential $ 198.6 $ 192.2 $ 6.4 3 Commercial 120.3 115.6 4.7 4 Industrial 167.3 162.8 4.5 3 Governmental 5.9 6.4 (0.5) (8) ------- ------- ----- Total retail 492.1 477.0 15.1 3 Sales for resale Associated companies 11.1 19.9 (8.8) (44) Non-associated companies 21.7 16.4 5.3 32 Other 0.1 16.9 (16.8) (99) ------- ------- ----- Total Electric Department $ 525.0 $ 530.2 ($5.2) (1) ======= ======= ===== Billed Electric Energy Sales (Millions of KWH): Residential 2,697 2,502 195 8 Commercial 1,831 1,743 88 5 Industrial 4,153 3,851 302 8 Governmental 80 77 3 4 ------ ------ ---- Total retail 8,761 8,173 588 7 Sales for resale Associated companies 534 1,109 (575) (52) Non-associated companies 722 231 491 * ------ ------ ---- Total Electric Department 10,017 9,513 504 5 Steam Department 459 426 33 8 ------ ------ ---- Total 10,476 9,939 537 5 ====== ====== ==== Nine Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Department Operating Revenues: Residential $ 447.7 $ 448.7 $(1.0) - Commercial 311.9 312.7 (0.8) - Industrial 454.8 475.7 (20.9) (4) Governmental 18.3 19.1 (0.8) (4) -------- -------- ----- Total retail 1,232.7 1,256.2 (23.5) (2) Sales for resale Associated companies 43.9 33.9 10.0 29 Non-associated companies 52.3 41.2 11.1 27 Other 37.2 40.0 (2.8) (7) -------- -------- ----- Total Electric Department $1,366.1 $1,371.3 ($5.2) - ======== ======== ===== Billed Electric Energy Sales (Millions of KWH): Residential 6,012 5,775 237 4 Commercial 4,680 4,512 168 4 Industrial 11,500 11,237 263 2 Governmental 231 225 6 3 ------ ------ ----- Total retail 22,423 21,749 674 3 Sales for resale Associated companies 2,092 2,096 (4) - Non-associated companies 1,744 494 1,250 * ------ ------ ----- Total Electric Department 26,259 24,339 1,920 8 Steam Department 1,308 1,257 51 4 ------ ------ ----- Total 27,567 25,596 1,971 8 ====== ====== ===== * - Greater than 200%. Electric operating revenues remained relatively unchanged for the three months ended September 30, 1995. An increase in sales volume was partially offset by a decrease in base rates and lower sales for resale. Approximately 66 percent and 34 percent of the sales volume/weather increase in electric operating revenue resulted from increased customers and associated usage and warmer summer weather, respectively. Base rates decreased as a result of rate reductions in effect for Texas and Louisiana. Electric operating revenues remained relatively unchanged for the first nine months of 1995 primarily due to lower fuel revenues and a decrease in base rates which were offset by higher sales for resale and an increase in sales volume. Base rates decreased as a result of rate reductions in effect for Texas and Louisiana. Sales for resale increased as a result of changes in generation availability and requirements among the System operating companies. Sales volume increased due to favorable weather and an increase in usage by all customer classes. Approximately 75 percent of the sales volume/weather increase in electric operating revenue resulted from increased customers and associated usage. Gas operating revenues decreased for the three months and nine months ended September 30, 1995 primarily due to a decrease in residential sales. This decrease was the result of a milder winter than in 1994. The changes in electric operating revenue for the three months and nine months ended September 30, 1995 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base rates $(11.8) $(18.4) Fuel cost recovery 5.7 (33.2) Sales volume/weather 21.9 28.0 Other revenue (including unbilled) (17.5) (2.7) Sales for resale (3.5) 21.1 ----- ----- Total $(5.2) $(5.2) ===== ===== Expenses Operating expenses decreased for the three months and nine months ended September 30, 1995 as the result of lower operation and maintenance expenses, partially offset by higher income taxes and taxes other than income taxes. Other operation and maintenance expenses decreased primarily due to charges made in September 1994 for Merger-related costs, restructuring costs and certain pre-acquisition contingencies including unfunded Cajun- River Bend costs and environmental clean-up costs. Taxes other than income taxes increased in 1995 because of a refund of franchise taxes in 1994. Income taxes increased primarily due to higher pre-tax income in 1995 and a decrease in tax depreciation associated with River Bend. Additionally, purchased power expenses decreased for the nine months ending September 30, 1995 due to the availability of less expensive gas fuel for use in electric generation as well as changes in the generation requirements among the System operating companies. Other Miscellaneous income - net increased in the three months and nine months ended September 30, 1995 as the result of certain adjustments made in September 1994 related to pre-acquisition contingencies including Cajun-River Bend litigation and the write- off of previously disallowed rate deferrals. Income taxes on other income increased in the three months and nine months ended September 30, 1995 due to the charges discussed above. LP&L Net Income Net income increased for the three months ended September 30, 1995 due primarily to increased revenue and decreased other operation and maintenance expense, partially offset by an increase in fuel, purchased power and income tax expenses. Net income increased for the nine months ended September 30, 1995 due primarily to a decrease in fuel, purchased power and other operation and maintenance expense, partially offset by a decrease in revenue and increased income tax expense. Significant factors affecting the results of operations and causing variances between the three months and nine months ended September 30, 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are LP&L's operating revenues by source and KWH sales for the three months and nine months ended September 30, 1995 and 1994. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 214.7 $ 196.4 $ 18.3 9 Commercial 105.8 102.6 3.2 3 Industrial 172.7 170.9 1.8 1 Governmental 8.2 8.4 (0.2) (2) ------- ------- ------ Total retail 501.4 478.3 23.1 5 Sales for resale Associated companies 0.6 0.2 0.4 * Non-associated companies 18.5 16.4 2.1 13 Other 8.5 7.6 0.9 12 ------- ------- ------ Total $ 529.0 $ 502.5 $ 26.5 5 ======= ======= ====== Billed Electric Energy Sales (Millions of KWH): Residential 2,812 2,493 319 13 Commercial 1,456 1,356 100 7 Industrial 4,416 4,305 111 3 Governmental 114 112 2 2 ------ ------ ----- Total retail 8,798 8,266 532 6 Sales for resale Associated companies 19 6 13 * Non-associated companies 468 269 199 74 ------ ------ ----- Total 9,285 8,541 744 9 ====== ====== ===== Nine Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 459.5 $ 460.8 $(1.3) - Commercial 267.2 275.4 (8.2) (3) Industrial 475.1 499.9 (24.8) (5) Governmental 23.7 24.2 (0.5) (2) --------- --------- ------ Total retail 1,225.5 1,260.3 (34.8) (3) Sales for resale Associated companies 1.0 0.4 0.6 150 Non-associated companies 42.1 31.9 10.2 32 Other 19.5 35.3 (15.8) (45) --------- --------- ------ Total $ 1,288.1 $ 1,327.9 $(39.8) (3) ========= ========= ====== Billed Electric Energy Sales (Millions of KWH): Residential 6,186 5,864 322 5 Commercial 3,634 3,502 132 4 Industrial 12,742 12,261 481 4 Governmental 332 318 14 4 --------- --------- ------ Total retail 22,894 21,945 949 4 Sales for resale Associated companies 38 10 28 280 Non-associated companies 1,042 610 432 71 --------- --------- ------ Total 23,974 22,565 1,409 6 ========= ========= ====== * - Greater than 200%. Electric operating revenues increased in the three months ended September 30, 1995 primarily due to weather-related sales. Approximately 55 percent of the sales volume/weather increase in electric operating revenue resulted from warmer weather, while the remainder resulted from increased customers and associated usage. Higher fuel adjustment revenues, which do not affect net income, also contributed to the increase. The base rate reduction ordered in the second quarter of 1995, discussed at Note 2, partially reduced the effect of these increases. Electric operating revenues were lower in the nine months ended September 30, 1995 because of lower fuel adjustment revenues, which do not affect net income. Additionally, the base rate reduction ordered in the second quarter of 1995, as discussed in Note 2, and the completion of the amortization of proceeds from litigation with a gas supplier in the second quarter of 1994, resulted in reduced revenues. These decreases were partially offset by increased usage by residential and industrial customers and higher sales to non-associated utilities. The changes in electric operating revenue for the three months and nine months ended September 30, 1995 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base rates $(9.0) $(18.7) Fuel cost recovery 11.2 (55.0) Sales volume/weather 25.6 36.0 Other revenue (including unbilled (3.8) (12.9) Sales for resale 2.5 10.8 ----- ------ Total $26.5 $(39.8) ===== ====== Expenses Operating expenses remained relatively unchanged for the three months ended September 30, 1995. Increases in fuel and purchased power and income taxes were offset by a decrease in other operation and maintenance expenses. The increase in fuel and purchased power is primarily due to increased weather-related energy sales. Income taxes increased as the result of a decrease in tax depreciation associated with Waterford 3 and higher pre- tax income. Other operation and maintenance expenses decreased for the three months ending September 30, 1995 due to waste water site closures in the third quarter of 1994, as discussed in Note 1, lower payroll expenses and reduced legal fees. Payroll expenses decreased as a result of the restructuring program announced during the third quarter of 1994, as discussed in Note 6. During 1994 additional legal fees were incurred relating to litigation with a gas supplier. Operating expenses decreased for the nine months ended September 30, 1995 due to decreases in fuel expense, purchased power and other operation and maintenance expenses partially offset by an increase in income taxes. The decrease in fuel and purchased power expense is due to lower fuel prices partially offset by an increase in generation. Other operation and maintenance expenses decreased for the nine months ending September 30, 1995 due to waste water site closures in the third quarter of 1994, as discussed in Note 1, lower payroll expenses, decreased fossil and nuclear maintenance expenses and reduced legal fees. Payroll expenses decreased as a result of the restructuring program announced during the third quarter of 1994, as discussed in Note 6. During 1994 additional legal fees were incurred relating to litigation with a gas supplier. Income taxes increased primarily due to a decrease in tax depreciation associated with Waterford 3 and higher pre-tax income. MP&L Net Income Net income increased for the three and nine months ended September 30, 1995, primarily due to an increase in revenues and a decrease in other operation and maintenance expense. Cumulative sales for the three and nine months ended September 30, 1995, increased due to warmer weather and greater customer usage. Other operation and maintenance expense decreased for the three months and nine months ended September 30, 1995, due to reduced scheduled maintenance at power plants and a reduction in employees under the restructuring program. In addition, other operation and maintenance expense decreased for the nine months ended September 30, 1995, due to the absence of Merger-related costs. Significant factors affecting the results of operations and causing variances between the three months and nine months ended September 30, 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are MP&L's operating revenues by source and KWH sales for the three months and nine months ended September 30, 1995 and 1994: Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 121.5 $ 115.7 $ 5.8 5 Commercial 78.8 78.1 0.7 1 Industrial 46.2 47.9 (1.7) (4) Governmental 7.2 7.4 (0.2) (3) ------- ------- ------ Total retail 253.7 249.1 4.6 2 Sales for resale Associated companies 15.0 9.1 5.9 65 Non-associated companies 8.3 5.0 3.3 66 Other (18.2) (28.9) 10.7 (37) ------- ------- ------ Total $ 258.8 $ 234.3 $ 24.5 10 ======= ======= ====== Billed Electric Energy Sales (Millions of KWH): Residential 1,524 1,363 161 12 Commercial 1,043 977 66 7 Industrial 792 795 (3) - Governmental 94 90 4 4 ------- ------- ------ Total retail 3,453 3,225 228 7 Sales for resale Associated companies 512 238 274 115 Non-associated companies 278 159 119 75 ------- ------- ------ Total 4,243 3,622 621 17 ======= ======= ====== Nine Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 263.1 $ 266.8 $(3.7) (1) Commercial 197.7 198.4 (0.7) - Industrial 130.1 137.0 (6.9) (5) Governmental 20.5 21.3 (0.8) (4) ------- ------- ------ Total retail 611.4 623.5 (12.1) (2) Sales for resale Associated companies 27.6 25.2 2.4 10 Non-associated companies 17.9 12.5 5.4 43 Other 35.6 (9.7) 45.3 * ------- ------- ------ Total $ 692.5 $ 651.5 $ 41.0 6 ======= ======= ====== Billed Electric Energy Sales (Millions of KWH): Residential 3,341 3,208 133 4 Commercial 2,561 2,409 152 6 Industrial 2,256 2,200 56 3 Governmental 252 254 (2) (1) ------- ------- ------ Total retail 8,410 8,071 339 4 Sales for resale Associated companies 771 594 177 30 Non-associated companies 594 376 218 58 ------- ------- ------ Total 9,775 9,041 734 8 ======= ======= ====== * - Greater than 200%. Electric operating revenues increased in the three months ended September 30, 1995, due to an increase in other revenues, sales volume and sales for resale. Increased unbilled revenues due to warmer weather in the summer months caused an increase in other revenue. Approximately 69 percent of the sales volume/weather increase in electric operating revenue resulted from warmer weather, while the remainder resulted from increased customers and associated usage. Sales for resale, specifically sales to associated companies, increased primarily due to changes in the generation requirements among the System operating companies. Electric operating revenues increased for the nine months ended September 30, 1995, due to an increase in other revenue, sales volume and sales for resale, partially offset by a decrease in revenues from the Grand Gulf 1 rate rider. For the nine months ended September 30, 1995, MP&L undercollected its share of Grand Gulf 1 related costs due to decreased revenues from the Grand Gulf 1 rate rider. For the same period last year MP&L was in an overcollected position. The increased undercollected position in the current year has resulted in MP&L recording additional other revenue for these undercollected Grand Gulf 1 costs. The Grand Gulf 1 over/under collection has no effect on net income. Increased unbilled revenues due to warmer weather and increased sales volume in the summer months of 1995 caused an increase in other revenue. Approximately 57 percent and 43 percent of the sales volume/weather increase in electric operating revenue resulted from increased customers and associated usage and warmer summer weather, respectively. Sales for resale increased primarily due to increases in MP&L's available generation. The changes in electric operating revenue for the three months and nine months ended September 30, 1995 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base rates $2.1 $(3.3) Grand Gulf rate rider (4.5) (13.6) Fuel cost recovery 3.5 5.4 Sales volume/weather 6.8 9.9 Other revenue (including unbilled) 7.4 34.8 Sales for resale 9.2 7.8 ----- ----- Total $24.5 $41.0 ===== ===== Expenses Fuel and fuel-related expenses increased for the three and nine months ended September 30, 1995 due to increased generation requirements resulting from increased energy sales. The increase in fuel and fuel-related expenses was partially offset by lower gas costs. Purchased power expenses decreased for the three months ended September 30, 1995 due to the availability of less expensive gas for the use in electric generation as well as changes in the generation requirements among the System operating companies. Other operation and maintenance expenses decreased for the three months ending September 30, 1995, due to 1994 Merger-related costs allocated to MP&L and payroll expenses. No significant Merger- related costs were allocated to MP&L during the current year. Payroll expenses decreased as a result of the restructuring program announced and accrued for during the third quarter of 1994. The restructuring program included a reduction in the number of MP&L employees during 1995. Other operation and maintenance expenses decreased for the nine months ended September 30, 1995, due to lower maintenance expenses at various power plants, 1994 Merger-related costs and payroll expenses. Income taxes increased for the three months and nine months ended September 30, 1995 primarily due to a higher pretax income resulting from increased revenue and reduced operating and maintenance expense. The amortization of rate deferrals increased for the three and nine months ended September 30, 1995 in accordance with Grand Gulf 1 related deferral plan. The increase in interest on long-term debt for the three months ended September 30, 1995 is due to the increase in the amount of long- term debt partially offset by the maturity of higher interest-bearing debt in February and July 1995. In April 1995, MP&L issued $80 million of 8.8% Series G&R Bonds due in 2005. NOPSI Net Income Net income increased for the three months ended September 30, 1995 due primarily to a September 1994 provision for litigation related to the City of New Orleans street lighting dispute. Net income increased for the nine months ended September 30, 1995 as the result of a decrease in other operation and maintenance expense. Significant factors affecting the results of operations and causing variances between the three months and nine months ended September 30, 1995 and 1994 are discussed under "Revenues and Sales" and "Expenses" below. Revenues and Sales Detailed below are NOPSI's operating revenues by source and KWH sales for the three months and nine months ended September 30, 1995 and 1994. Three Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 58.9 $ 51.4 $ 7.5 15 Commercial 43.2 44.3 (1.1) (2) Industrial 6.7 6.6 0.1 2 Governmental 16.2 15.8 0.4 3 ------- ------- ------ Total retail 125.0 118.1 6.9 6 Sales for resale Associated companies 0.1 0.1 - - Non-associated companies 3.5 2.1 1.4 67 Other 6.3 0.1 6.2 * ------- ------- ------ Total $ 134.9 $ 120.4 $ 14.5 12 ======= ======= ====== Billed Electric Energy Sales (Millions of KWH): Residential 798 688 110 16 Commercial 621 580 41 7 Industrial 144 138 6 4 Governmental 286 268 18 7 ------- ------- ------ Total retail 1,849 1,674 175 10 Sales for resale Associated companies 3 3 - - Non-associated companies 107 58 49 84 ------- ------- ------ Total 1,959 1,735 224 13 ======= ======= ====== Nine Months Ended Increase/ Description 1995 1994 (Decrease) % (In Millions) Electric Operating Revenues: Residential $ 111.7 $ 113.0 $(1.3) (1) Commercial 111.1 124.4 (13.3) (11) Industrial 17.4 19.7 (2.3) (12) Governmental 39.7 44.8 (5.1) (11) ------- ------- ----- Total retail 279.9 301.9 (22.0) (7) Sales for resale Associated companies 1.4 1.0 0.4 40 Non-associated companies 7.8 5.7 2.1 37 Other 21.0 (1.8) 22.8 * ------- ------- ----- Total $ 310.1 $ 306.8 $ 3.3 1 ======= ======= ===== Billed Electric Energy Sales (Millions of KWH): Residential 1,623 1,488 135 9 Commercial 1,583 1,535 48 3 Industrial 413 392 21 5 Governmental 744 713 31 4 ------- ------- ----- Total retail 4,363 4,128 235 6 Sales for resale Associated companies 71 39 32 82 Non-associated companies 243 152 91 60 ------- ------- ----- Total 4,677 4,319 358 8 ======= ======= ===== * - Greater than 200%. Electric operating revenues increased for the three months and nine months ended September 30, 1995 because of an increase in energy sales partially offset by the impact of a permanent rate reduction that took effect on January 1, 1995. The increase in energy sales is due to increased sales volume and increased sales for resale to non- associated utilities. For the three months and nine months ended September 30, 1995, approximately 57 and 73 percent of the sales volume/weather increase in electric operating revenue resulted from increased customers and associated usage, respectively; the remainder increase resulted from warmer weather. The changes in electric operating revenue for the three months and nine months ended September 30, 1995 are as follows: Three Months Ended Nine Months Ended Description Increase/(Decrease) Increase/(Decrease) (In Millions) Change in base rates $(11.0) $(14.3) Fuel cost recovery 6.7 (0.4) Sales volume/weather 9.0 11.7 Other revenue (including unbilled) 8.4 3.8 Sales for resale 1.4 2.5 ----- ----- Total $14.5 $ 3.3 ===== ===== For the three months and nine months ended September 30, 1995, gas operating revenues decreased due primarily to decreased gas sales, the rate reduction agreed to in the 1994 NOPSI Settlement effective January 1, 1995, and a lower unit purchase price for gas purchased for resale. Expenses Operating expenses increased for the three months ended September 30, 1995 as the result of an increase in fuel expenses and the amortization of rate deferrals. The increase in fuel and fuel-related expenses is primarily due to the increase in weather- related energy sales. The amortization of rate deferrals increased primarily as a result of the collection of larger amounts of previously deferred costs under the 1991 NOPSI Settlement. Operating expenses decreased for the nine months ended September 30, 1995 due primarily to a decrease in fuel expenses and other operation and maintenance expenses, partially offset by an increase in the amortization of rate deferrals. The decrease in fuel and fuel-related expenses is primarily due to a decrease in gas purchased for resale as a result of lower gas sales and a lower unit purchase price partially offset by an increase in energy sales. Other operation and maintenance expenses decreased primarily due to a decrease in maintenance activity and lower payroll expenses. The decrease in payroll expenses is the result of the 1994 restructuring and the related decrease in employees. The amortization of rate deferrals increased as the result of the collection of larger amounts of previously deferred costs under the 1991 NOPSI Settlement. SYSTEM ENERGY Net Income Net income decreased for the three months and nine months ended September 1995, as the result of revenues being adversely impacted by a lower Grand Gulf 1 rate base. Significant factors affecting the results of operations and causing variances between the three months and nine months of 1995 and 1994 are discussed under "Revenues" and "Expenses" below. Revenues Operating revenues recover operating expenses, depreciation and capital costs attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1. Operating revenues decreased for the three months ended September 30, 1995, due primarily to a lower return on System Energy's decreasing investment in Grand Gulf 1 (caused by depreciation of the unit and the reclassification of plant costs discussed below), offset by the recovery of increased expenses in connection with a Grand Gulf 1 refueling outage and higher depreciation, amortization and decommissioning expense. Operating revenues for the nine months ended September 30, 1995 increased as a result of the recovery of higher current operating expenses related to the Grand Gulf 1 refueling outage, partially offset by a lower return on System Energy's decreasing investment in Grand Gulf 1. Expenses Nuclear refueling outage expenses increased for the three months and nine months ended September 30, 1995 principally as a result of a refueling outage which began April 15, 1995 and ended June 21, 1995. There was no refueling outage for Grand Gulf 1 in 1994. Fuel expense decreased for the first nine months of 1995 as a result of the refueling outage. Other operation and maintenance expenses decreased for the three months ended September 30, 1995 primarily as a result of lower payroll and overhead expenses and lower payments associated with the sale/leaseback of Grand Gulf 1. Depreciation, amortization and decommissioning expense increased for the three months and nine months ended September 30, 1995, due primarily to increases of $2 million and $7 million, respectively, in amortization expense as a result of the reclassification of $81 million of Grand Gulf 1 costs in accordance with the 1994 FERC Settlement. The increase in amortization expense was partially offset by a decrease in depreciation expense related to the reclassified costs. Interest expense decreased for the three months and nine months ended September 30, 1995 due primarily to the retirement and refinancing of higher costing long-term debt. SIGNIFICANT FACTORS AND KNOWN TRENDS Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSI and System Energy Competition and Industry Challenges See "Significant Factors and Known Trends" in Entergy Corporation's, AP&L's, GSU's, LP&L's, MP&L's, NOPSI's and System Energy's Form 10-K for a discussion of the increasing competitive pressures facing the electric utility industry. Entergy Retail and Wholesale Rate Issues See Note 2 to Entergy Corporation's, AP&L's, GSU's, LP&L's, MP&L's, NOPSI's and System Energy's Form 10-K, for a discussion of the ongoing trend of regulatory ordered rate reductions as well as incentive rate regulation. Potential Changes in the Electric Utility Industry Retail wheeling, the transmission by an electric utility of energy produced by another entity over the utility's transmission and distribution system to a retail customer in the electric utility's area of service, continues to evolve. Approximately 40 states have been or are studying or experimenting with the concept of retail competition. In May 1995, the California Public Utilities Commission adopted a preliminary proposal to create a wholesale power pool (Poolco). Under the proposal the FERC would have exclusive jurisdiction over the Poolco, while an independent operator would manage the transmission network and generation dispatch. Customers would gain access to the Poolco through bilateral contracts at least two years after it begins operation. The Rhode Island Public Utilities Commission has adopted a proposal calling for, among other things, retail wheeling and the unbundling of generation from transmission and distribution services. The Massachusetts Department of Public Utilities has also adopted a similar proposal which is to be in place by mid-1996. Such proposals are indicative of the movement of the retail electric market toward deregulation and increased competition. The retail market for electricity is expected to become more competitive with such moves toward deregulation and with greater focus on customer choice. The movement of the retail electric market toward deregulation and increased competition is also prevalent in areas of the country in which Entergy presently operates. On April 21, 1995, a newly incorporated entity, Crescent City Utilities, Inc., submitted to the Council a draft resolution intended to permit the use of NOPSI's gas and electric transmission and distribution facilities by any other franchised utility to supply electricity and gas to retail customers in New Orleans. The Council has not scheduled hearings relating to this resolution. The Texas legislature has recently revised the Public Utility Regulatory Act, the law regulating electric utilities in Texas. The revised law permits utility and non-utility exempt wholesale generators and power marketers to sell wholesale power in the state. The revised law also allows for flexible pricing but does not change the current law governing retail wheeling or the treatment of federal income taxes. During the second quarter of 1995, the Louisiana legislature considered a bill permitting local retail wheeling. The bill was defeated. The chairman of the PUCT recently introduced a proposal for discussion by the Commission concerning the restructuring of the electric utility industry in Texas. The proposal is designed to implement greater wholesale electric competition in Texas and addresses the issues of transmission service comparability, the unbundling of electric utility operations, market-based pricing, performance-based ratemaking and the recovery of stranded costs as part of the transition to a more competitive electric industry environment. Another indication of the trend toward greater competition in the electric utility industry is the recent surge of utility mergers. This trend is expected to continue. Such mergers are motivated by the drive to lower costs to increase economies of scale and consolidation of administrative functions at the merged entities. The lowered costs achieved will make the merged utilities more formidable competitors in the future. Certain of the proposed merged utilities will likely be in direct competition with Entergy in the future if these mergers are consummated. As discussed in "Significant Factors and Known Trends" in Entergy Corporation's, AP&L's, GSU's, LP&L's, MP&L's and NOPSI's Form 10-K the FERC issued a notice of proposed rulemaking in mid-1994, concerning a regulatory framework for dealing with recovery of stranded costs. On March 29, 1995, the FERC issued a supplemental notice of proposed rulemaking in this proceeding which would require public utilities to provide non-discriminatory open access transmission service to wholesale customers, and would also provide guidance on the recovery of wholesale and retail stranded costs. With regard to pending proceedings, including Entergy's tariff proceeding, FERC directed the parties to proceed with their cases while taking into account FERC's views expressed in the proposed rule. Comments and reply comments on the proposed rulemaking have now been filed with FERC by interested parties. Certain of the parties filing comments have proposed that the FERC should order the immediate unbundling of all retail services as part of the final rulemaking in this proceeding. In early October 1995, the FERC issued an order granting exempt wholesale generator status to Entergy Power Marketing Corporation, a wholly-owned subsidiary of Entergy Enterprises, Inc., which is a wholly-owned subsidiary of Entergy Corporation. Significant Industrial Cogeneration Effects Cogeneration projects developed or considered by certain of GSU's industrial customers over the last several years have resulted in GSU developing and securing approval of rates lower than the rates previously approved by the PUCT and LPSC for such industrial customers. Such rates are designed to retain such customers and to compete for and to develop new loads and do not presently recover GSU's full cost of service. The pricing agreements at non-full cost of service based rates fully recover all related costs but provide only a minimal return on investments. Substantially all of such pricing agreements expire no later than 1997. In the third quarter of 1995, KWH sales to GSU's industrial customers at non-full cost of service rates made up approximately 28% of GSU's total industrial class KWH sales. The Council has recently approved a resolution requiring the prior approval by the Council of regulatory treatment of any lost contribution to fixed costs as a result of incentive rate agreements with large industrial or commercial customers entered into for the purposes of retaining those customers. The resolution also requires prior approval by Council of regulatory treatment of stranded costs which may result from the loss of large customers. During 1995, LP&L received separate notices from two large industrial customers that have decided to proceed with proposed cogeneration projects for the purpose of fulfilling their future electric energy needs. These customers will continue to purchase their energy requirements from LP&L until their cogeneration facilities are completed, which is expected to be between the years 1999 and 2000. During 1994, these two customers combined represented approximately 18% of total LP&L industrial sales, and provided $36 million of base revenue. Public Utility Holding Company Act of 1935 Entergy, along with other electric utility holding companies, recently requested Congress to repeal the Public Utility Holding Company Act of 1935 (HCA). The HCA requires detailed oversight by the SEC of many business practices and activities of utility holding companies and their subsidiaries including, among other things, nonutility activities. In June 1995, the SEC adopted a report proposing options for the repeal or the significant modification of the HCA and proposed rule changes that would reduce the regulations governing utility holding companies. Entergy believes that the HCA inhibits its ability to compete in the evolving electric energy marketplace and largely duplicates the oversight activities already performed by the FERC and state and local regulators. On June 30, 1995, the SEC adopted a rule change under the HCA to eliminate the requirement to receive prior authorization for all capital contributions by a parent company to its subsidiary company. Proposed legislation to reform the HCA in an effort to streamline regulation of utilities recently was introduced in the Senate. The proposed legislation would transfer oversight of public utility holding companies from the SEC to the FERC. Nonregulated Investments As discussed in Note 1 and in "Corporate Development" in Item 1 of Part I of Entergy Corporation's Form 10-K, Entergy Corporation is considering opportunities to expand its utility and utility-related businesses that are not regulated by state and/or local regulatory authorities (nonregulated businesses). As of September 30, 1995, Entergy Corporation's net investment, reduced by accumulated losses, in nonregulated subsidiaries totaled $493.0 million. For the first nine months of 1995, Entergy Corporation's nonregulated investments reduced consolidated net income by approximately $31.8 million. See Part II for additional discussion of Entergy Corporation's investment in nonregulated businesses. ANO Matters Entergy Operations has made inspections and repairs from time to time on ANO 2's steam generators that are owned by AP&L. During the October 1995 inspection, additional cracks in the tubes were discovered. Currently, Entergy Operations is in the process of gathering information and assessing various options for the repair or the replacement of ANO 2's steam generator. See Note 1 for additional information. Deregulated Portion of River Bend As of September 30, 1995, GSU had not recovered a significant amount of its investment in, or received any return associated with, the portion of River Bend included in the deregulated asset plan in Louisiana and the portion of River Bend placed in abeyance as part of the Texas rate order which went into effect in July 1988. See Note 2 for further information. Future earnings will continue to be adversely affected by the lack of full recovery and return on the investment and other costs associated with River Bend. For the nine months ended September 30, 1995, GSU recorded revenues resulting from the sale of electricity from the deregulated asset plan of approximately $26.3 million ($24.5 million represent non-fuel revenue)which, absent the deregulated asset plan, would not have been realized. Operation and maintenance expenses, including fuel, were approximately $23.8 million, and depreciation expense associated with the deregulated asset plan investment was approximately $13.8 million for the nine months ended September 30, 1995. The operation and maintenance expenses and depreciation expense allocated to the deregulated asset plan as detailed above would have been incurred at River Bend with or without the deregulated asset plan. The future impact of the deregulated asset plan on GSU's results of operations and financial position will depend on River Bend's future operating costs, the unit's efficiency and availability and the future market for energy over the remaining life of the unit. In addition, the deregulated asset plan will be subject to the requirements of SFAS 121 as discussed in Note 7 in determining the recognition of any asset impairment. Property Tax Exemptions LP&L and GSU are working with tax authorities to determine the method for calculating the amount of property taxes to be paid when Waterford 3's and River Bend's local property tax exemptions expire in December 1995 and December 1996, respectively. Environmental Issues GSU has been notified by the U. S. Environmental Protection Agency (EPA) that it has been designated as a potentially responsible party for the clean-up of certain hazardous waste disposal sites. GSU is currently negotiating with the EPA and state authorities regarding the clean-up of certain of these sites. See Note 1 for additional information. During 1993, the Louisiana Department of Environmental Quality issued new rules for solid waste regulation, including regulation of waste water impoundments. LP&L has determined that certain of its power plant waste water impoundments were affected by these regulations and has chosen to upgrade or close them. See Note 1 for additional information. Accounting Issues New Accounting Standard - In March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to Be Disposed Of" (SFAS 121) effective January 1, 1996. This standard describes circumstances which may result in assets being impaired and provides criteria for recognition and measurement of asset impairment. See Notes 2 and 7 for information regarding the potential impacts of the new accounting standard on Entergy. Continued Application of SFAS 71 - As a result of the Energy Policy Act of 1992 and actions of regulatory commissions, the electric utility industry is moving toward a combination of competition and a modified regulatory environment. The System's financial statements currently reflect, for the most part, assets and costs based on current cost-based ratemaking regulations, in accordance with SFAS 71, "Accounting for the Effects of Certain Types of Regulation." Continued applicability of SFAS 71 to the System's financial statements requires that rates set by an independent regulator on a cost-of-service basis can actually be charged to and collected from customers. In the event that all or a portion of a utility's operations cease to meet those criteria for various reasons, including deregulation, a change in the method of regulation or a change in the competitive environment for the utility's regulated services, the utility should discontinue application of SFAS 71 for the relevant portion. That discontinuation should be reported by elimination from the balance sheet of the effects of any actions of regulators recorded as regulatory assets and liabilities. As of September 30, 1995, and for the foreseeable future, the System's financial statements continue to follow SFAS 71, except for certain portions of GSU's business. Accounting for Decommissioning Costs - The staff of the SEC has questioned certain of the financial accounting practices of the electric utility industry regarding the recognition, measurement and classification of nuclear decommissioning costs for nuclear generating stations in the financial statements of electric utilities. See Note 1 for the FASB's tentative conclusions regarding changes in the accounting for decommissioning costs and the potential impact of these changes on Entergy. ENTERGY CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Item 1. Legal Proceedings Merger-Related Proceedings (Entergy Corporation and GSU)Entergy Gulf States) See "State Regulation""Nuclear Operations" in Item 1 of Part I of Entergy Corporation'sEntergy's Form 10-K and Part II of Entergy Corporation's Form 10- Q for the quarterly periods ending March 31, 1995 and June 30, 1995, for information relating to the proceeding pending before the NRC Atomic Safety and Licensing Board (ASLB), which was instigated by Cajun and concerns the two Merger-related license amendments issued by the NRC for River Bend. In June 1995,March 1996, the NRC affirmed its original findings that there had been no significant antitrust changes inASLB, responding to Cajun's request, dismissed the positionspending proceedings without prejudice. Cajun - River Bend (Entergy Corporation and Entergy Gulf States) See Note 8 of Entergy's Form 10-K and Note 1 for a discussion of the Cajun litigation and bankruptcy proceedings. On March 8, 1996, SWEPCO, Entergy Gulf States, and certain member cooperatives of Cajun submitted a joint proposal to bring an end to the Cajun bankruptcy proceeding. The proposal was made in response to a bid procedure established by the Cajun bankruptcy trustee. On April 22, 1996, the Cajun bankruptcy trustee filed a plan of reorganization with the bankruptcy court based on a proposal by two non-affiliated companies to take over the non-nuclear operations of Cajun. On April 19, 1996, SWEPCO, Entergy Gulf States and GSU ascertain Cajun member cooperatives filed a resultseparate plan of reorganization with the court based upon their earlier proposal. The timing and completion of the Merger,reorganization plan depends on bankruptcy court approval and therefore, reissuedany required regulatory approvals. On April 26, 1996, Entergy Gulf States, the license amendments approvingCajun bankruptcy trustee, and the Merger.Rural Utilities Service (RUS), Cajun's largest creditor, agreed to terms for the settlement of all disputes between Cajun filedand Entergy Gulf States. The terms include, but are not limited to, the following: (i) Cajuns' interest in River Bend will be turned over to the RUS, which will have the option to retain the interest, sell it to a petitionthird party, or transfer it to Entergy Gulf States; (ii) Cajun will set aside a total of $125 million for reviewthe decommissioning of its interest in River Bend; (iii) Cajun will transfer certain transmission assets to Entergy Gulf States; (iv) Cajun will settle transmission disputes and be released from claims for payment under transmission arrangements with Entergy Gulf States; and (v) all funds paid by Entergy Gulf States into the D.C. Circuit.registry of the District Court will be returned to Entergy Gulf States. The settlement is subject to further approvals by the RUS, the Board of Directors of Entergy Corporation, the U.S. Bankruptcy Court, and appropriate regulatory agencies. Panda Energy Corporation Complaint (Entergy Corporation) See "Other Regulation and Litigation" in Item 1 of Part I of Entergy Corporation'sEntergy's Form 10-K for information regarding other Merger- related suits. Cajun - River Bend (Entergy Corporation and GSU) See Note 8 of Entergy Corporation's and GSU's Form 10-K and Part II of Entergy Corporation's Form 10-Q for the quarterly period ending June 30, 1995, for a discussion of the Cajun litigation. In an order issued by the District Court in August 1995, the U.S. Trustee was directed to appoint a trustee in the Cajun bankruptcy case. A former federal bankruptcy judge, Ralph Mabey, was appointed as trustee to oversee Cajun in bankruptcy. The LPSC and Cajun have appealed the appointment of a trusteerelating to the United States Court of Appeals for the Fifth Circuit. In October 1995, the United States Court of Appeals for the Fifth Circuit affirmed the District Court's preliminary injunction in the Cajun litigation. The preliminary injunction stipulated that GSU should make payments for its portion of expenses for Big Cajun 2, Unit 3 into the registry of the District Court. As of September 30, 1995, $29.6 million had been paidlitigation brought by GSU into the registry of the District Court. A trial on the portion of the suit by Cajun to rescind the Operating Agreement which began in April 1994 was completed in March 1995. On October 24, 1995, the District Court issued a memorandum opinion ruling in favor of GSU. The District Court found that Cajun did not prove that GSU fraudulently induced it to execute the Operating Agreement and Cajun failed to timely assert its claim. A final judgment will be entered when the District Court issues its detailed written reasons. It is uncertain when the District Court Judge's final opinion will be entered, or whether Cajun will appeal the decision. Cajun-Transmission Services (EntergyPanda Energy Corporation and GSU) See Note 1 and also see Note 8 of(Panda) naming Entergy Corporation's and GSU's Form 10-K for a discussion of FERC proceedings relating to GSU and Cajun transmission service charge disputes. In orders issued on August 3, 1995, and October 2, 1995, the FERC affirmed the ALJ's April 1995, ruling in the remanded portion of GSU's and Cajun's ongoing transmission service charge disputes before the FERC. Both GSU and Cajun have petitioned for appeal to the D.C Circuit. Cajun-Service Dispute (Entergy Corporation, and GSU) See "Other Regulation and Litigation " in Item 1 of Part I of Entergy Corporation's Form 10-K for a discussion of the transmission service dispute in which Cajun requested that GSU provide the transmission of power over GSU's transmission system to certain industrial customers in Lake Charles, Louisiana. In October 1995, the D.C. Circuit affirmed the FERC's previous opinion in its entirety. The FERC held that GSU properly exercised its contractual right to refuse to provide transmission service to Cajun. Filings with the APSC (Entergy Corporation, AP&L and Entergy Power) In September 1995, the APSC approved a waiver application filed byEnterprises, Entergy Power, which would enable Entergy Power to make sales to wholesale entities in Arkansas which are not currently served by AP&L. In response to a request by certain Arkansas cities, the APSC agreed to decide whether Entergy Power can also sell to the wholesale entities that currently are served by AP&L. Mississippi Cities Complaint (Entergy Corporation and MP&L) As discussed in "Significant Factors and Known Trends" of MP&L's Form 10-K, in October 1994 certain Mississippi cities filed a complaint in state court against MP&L and eight other power associations requesting the repeal of certain amendments to the Mississippi Public Utilities Act that prevent municipalities from acquiring a utility's facilities that are located in municipalities where the utility holds a certificate to serve. In October 1995, the state court dismissed the complaint. Plaintiffs have until November 27, 1995, to appeal to the Mississippi Supreme Court. City of New Orleans Complaint (Entergy Corporation, AP&L, LP&L, MP&L, NOPSI and System Energy) As discussed in "Wholesale Rate Matters" in Item 1 of Part I of Entergy Corporation's Form 10-K, in August 1990, the City of New Orleans filed a complaint against Entergy Corporation, AP&L, LP&L, MP&L, NOPSI and System Energy requesting that the FERC investigate AP&L's transfer of its interest in Independence 2 and Ritchie 2 to Entergy Power and the effect of the transfer on AP&L, LP&L, MP&L and NOPSI and their ratepayers. On October 20, 1995, the D.C. Circuit affirmed the FERC's original orders. The FERC's original orders held that the transfer and its effect on current rates were prudent. However, the prudency of the transfer on future replacement costs was deferred until a time when the need for such replacement capacity occurs. Crown Vista Energy Project (Entergy CorporationAsia, Ltd., and Entergy Power Development Corporation) EPDCCorporation as defendants. Panda was seeking damages of $4.8 billion. Entergy believes that this litigation is unfounded, but entered into a joint venture, known as Crown Vista Energy Project (Crown Vista), with Mission Energy and Ahlstrom Developmentarrangements on April 30, 1996, to provide power to Jersey Central Power & Light (JCP&L). In August 1995 Mission Energy filed a complaint againstsettle the matter for $350,000. Yet, the settlement provided that it may be revoked by Entergy Corporation and EPDC alleging that EPDC improperly failed to pay at least $1.4 million in certain project development costs to Mission Energy. Mission Energy seeks to recoup these payments. The complaint also seeks declaratory relief regarding Mission Energy's obligation to reimburse EPDC for previously incurred development expensesif the court rules in the eventcase. On the same day, the judge advised that Mission Energy sells, disposes of or transfers any of its interest in Crown Vista to another party. It is believed that Mission Energy has reached a settlement with General Public Utilities Corporation, parent of JCP&L, which provides for a payment to Mission Energy in considerationhe would grant summary judgment for the cessation of development of Crown Vista. Crown Vista's purchased power agreements with JCP&L have been sold and Mission Energydefendants, because he does not believe that the plaintiff has paid a portionsustained any provable damages. Entergy will consider whether to revoke the settlement in this case in light of the sales proceeds to Ahlstrom Development. However, Mission Energy has made no settlement with EPDC. EPDC anticipates filing claims against Mission Energy to obtain reimbursement of the approximately $8.7 million in Crown Vista development costs incurred to date by EPDC. Management believes it has valid grounds to recover its investment in Crown Vista. No assurances can be given as to the timing or outcome of this matter.judge's determination. Item 4. Submission of Matters to a Vote of Security Holders RedemptionAmended and Restated Articles of Preferred StockIncorporation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and NOPSI)Entergy New Orleans) A consent in lieu of a special meeting of NOPSI common stockholders was executed on July 14, 1995.April 22, 1996. The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of NOPSIEntergy Arkansas', Entergy Gulf States', Entergy Louisiana's, Entergy Mississippi's, and Entergy New Orleans' common stock. The common stockholder by such consent, approved the redemptionamendment of its Amended and Restated Articles of Incorporation to change the remaining outstanding shares (19,495 shares)name of NOPSI's 15.44% Series Preferred Stock, Cumulative, $100 Par Value.Arkansas Power & Light to Entergy Arkansas, Inc., the name of Gulf States Utilities Company to Entergy Gulf States, Inc., the name of Louisiana Power & Light to Entergy Louisiana, Inc., the name of Mississippi Power & Light to Entergy Mississippi, Inc., and the name of New Orleans Public Service, Inc. to Entergy New Orleans, Inc. Item 5. Other Information Nonregulated Investments (Entergy Corporation and Entergy, S.A.) As discussed in "Corporate Development" in Item 1 of Part I of Entergy Corporation's Form 10-K, Entergy Corporation's subsidiary, Entergy, S.A., acquired a 10% interest in a consortium with other nonaffiliated companies that acquired a 60% interest in Central Costanera, S.A. (Costanera), a steam electric generating facility located in Argentina. During the three months ending September 30, 1995, Entergy, S.A. purchased 3.9% of the outstanding stock of the Central Buenos Aires Project (the CBA Project) for $1.7 million. Through Entergy, S.A.'s interest in Costanera, Entergy, S.A. indirectly purchased an additional 3% of the outstanding stock of the CBA Project. In October 1995, Entergy Power Holding Limited, a wholly owned subsidiary of Entergy Corporation, purchased Entergy, S.A.'s interest in the CBA Project and purchased an additional 3.9% of the outstanding stock of the CBA Project for $1.9 million. The CBA Project includes the addition of a 220 megawatt combustion turbine and heat recovery boiler to a generating unit at the Costanera steam electric generating facility. This addition will provide electricity to the Argentina transmission grid and steam to the Costanera generating unit. The open cycle portion of the CBA Project, which will provide electricity to the Argentina transmission grid, is expected to be in commercial operation by the end of October 1995. The steam recovery portion, which will provide steam to the Costanera generating unit, is expected to be in operation in October 1996. Labor Contract Negotiations (Entergy Corporation AP&L, GSU and MP&L) As discussed in Part II of Entergy Corporation's Form 10-Q for the quarterly periods ending March 31, 1995 and June 30, 1995, the labor union contract between GSU and the International Brotherhood of Electrical Workers (IBEW) expired on June 24, 1995. The labor contract covers approximately 1,900 GSU employees in Southeast Texas and Southwest Louisiana. Negotiators for GSU and the IBEW have been unsuccessful in negotiating a new agreement for the non River Bend portion of the IBEW. A federal mediator was called in on July 9, 1995, to assist the parties in resolving their differences, but the mediation effort was unsuccessful. In subsequent meetings, the IBEW voted to reject GSU's settlement offer as well as a contingent offer and authorized the union leadership to call a strike if necessary. In August 1995, GSU implemented its last, best and final offer, but there has been no acceptance of this offer. The IBEW employees continue to work without a contract. If a strike should occur, GSU intends to continue its operations with the assistance of management and supervisory personnel and outside contractors. The River Bend bargaining unit of the IBEW signed a new two year contract on August 3, 1995. On October 12 and 14, 1995, the IBEW voted to accept a new three- year collective bargaining agreement with AP&L and MP&L, respectively. Earnings Ratios (AP&L, GSU, LP&L, MP&L, NOPSI(Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy) The System operating companies and System Energy have calculated ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends pursuant to Item 503 of Regulation S-KS- K of the SEC as follows: Ratios of Earnings to Fixed Charges Twelve Months Ended December 31, September 30, 1990 1991 1992 1993 1994 1995 AP&L 2.16 2.25 2.28 3.11(b) 2.32 2.63 GSU .80(c) 1.56 1.72 1.54 .36(c) 1.09 LP&L 2.32 2.40 2.79 3.06 2.91 3.26 MP&L 2.42 2.36 2.37 3.79(b) 2.12 2.63 NOPSI 2.73 5.66 2.66 4.68(b) 1.91 2.19 System Energy 2.10 1.74 2.04 1.87 1.23 1.24 Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, September 30, 1990 1991 1992 1993 1994 1995 AP&L 1.81 1.87 1.86 2.54(b) 1.97 2.24 GSU (a) .59(c) 1.19 1.37 1.21 .29(c) .96(c) LP&L 1.87 1.95 2.18 2.39 2.43 2.73 MP&L 1.93 1.94 1.97 3.08(b) 1.81 2.29 NOPSI 2.36 4.97 2.36 4.12(b) 1.73 2.01
Ratios of Earnings to Fixed Charges Twelve Months Ended December 31, March 31, ------------------------------------------------ --------- 1991 1992 1993 1994 1995 1996 ------ ------ ------ ------ ------ ------ Entergy Arkansas 2.25 2.28 3.11(c) 2.32 2.56 2.70 Entergy Gulf States 1.56 1.72 1.54 .36(d) 1.86 1.11 Entergy Louisiana 2.40 2.79 3.06 2.91 3.18 3.26 Entergy Mississippi 2.36 2.37 3.79(c) 2.12 2.92 3.07 Entergy New Orleans 5.66(b) 2.66 4.68(c) 1.91 3.93 4.18 System Energy 1.74 2.04 1.87 1.23 2.07 2.08
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends Twelve Months Ended December 31, March 31, ---------------------------------------------------- --------- 1991 1992 1993 1994 1995 1996 ------- ------ ------ ------- ------ ------ Entergy Arkansas 1.87 1.86 2.54(c) 1.97 2.12 2.23 Entergy Gulf States 1.19 1.37 1.21 .29(d) 1.54 0.92(d) (a) Entergy Louisiana 1.95 2.18 2.39 2.43 2.60 2.66 Entergy Mississippi 1.94 1.97 3.08(c) 1.81 2.51 2.64 Entergy New Orleans 4.97(b) 2.36 4.12(c) 1.73 3.56 3.80
(a) "Preferred Dividends" in the case of GSUEntergy Gulf States also include dividends on preference stock. (b) Earnings for the year ended December 31, 1991, include the $90 million effect of the 1991 NOPSI Settlement. (c) Earnings for the year ended December 31, 1993, include $81 million, $52 million, and $18 million for AP&L, MP&L,Entergy Arkansas, Entergy Mississippi, and NOPSI,Entergy New Orleans, respectively, related to the change in accounting principle to provide for the accrual of estimated unbilled revenues. (c)(d) Earnings of GSU for the yearsyear ended December 31, 1994, and 1990,for Entergy Gulf States were not adequate to cover fixed charges by $144.8 million and $60.6 million, respectively.million. Earnings of GSU for the years ended December 31, 1994, and 1990,March 31, 1996, for Entergy Gulf States were not adequate to cover combined fixed charges and preferred dividends by $197.1 million and $165.1$22.0 million, respectively. Earnings of GSU for the twelve months ended September 30, 1995 were not adequate to cover combined fixed charges and preferred dividends by $10 million. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits* 3(a) - Amended and Restated Articles of Incorporation of Entergy Arkansas and amendments thereto through April 22, 1996, 3(b) - Restated Articles of Incorporation of Entergy Gulf States and amendments thereto through April 22, 1996. 3(c) - Restated Articles of Incorporation of Entergy Louisiana and amendments thereto through April 22, 1996. 3(d) - Restated Articles of Incorporation of Entergy Mississippi and amendments thereto through April 22, 1996. 3(e) - Restatement of Articles of Incorporation of Entergy New Orleans and amendments thereto through April 22, 1996. **4(a) Credit- Amended and Restated Installment Sale Agreement, dated as of October 10, 1995, among Entergy, the Banks (Bank of America National Trust & Savings Association, The Bank of New York, Chemical Bank, Citibank, N.A., Union Bank of Switzerland, ABN AMRO Bank N.V., The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Bank, N.A., First National Bank of Commerce,February 15, 1996, between System Energy and Whitney National Bank) and Citibank, N.A.,as AgentClaiborne County, Mississippi (filed as Exhibit BB-6(a) to Rule 24 Certificate dated October 20, 1995March 4, 1996 in File No. 70- 8149)70-8511). **4(b) - Sixth Supplemental Indenture, dated as of SeptemberMarch 1, 1995, between System Energy Resources, Inc.1996, to Entergy New Orleans' Mortgage and Chemical BankDeed of Trust, dated as of May 1, 1987 (filed as Exhibit B-10(a)4(a) to Form 8-K dated March 22, 1996 in File No. 0-5807). ** 4(c) - Fifty-third Supplemental Indenture, dated as of March 1, 1996, to Entergy Arkansas' Mortgage and Deed of Trust, dated as of October 1, 1944 (filed as Exhibit C- 2 to Form U5S for the year ended December 31, 1995). ** 4(d) - Fifty-first Supplemental Indenture, dated as of March 1, 1996, to Entergy Louisiana's Mortgage and Deed of Trust, dated as of April 1, 1944 (filed as Exhibit A- 2(a) to Rule 24 Certificate dated October 20,April 4, 1996 in File No. 70-8487). ** 4(e) - Share Sale Agreement (Revised) of December 12, 1995, relating to acquisition of CitiPower Limited, among State Electricity Commission of Victoria, the State of Victoria, Entergy Victoria LDC, Entergy Victoria Holding LDC and Entergy Corporation (filed as Exhibit C-1(o) to Form U5S for the year ended December 31, 1995 pursuant to Rule 104). ** 4(f) - Multi-Option Syndicated Facility Agreement, dated as of January 5, 1996, among CitiPower Limited as Borrower, Commonwealth Bank of Australia as Facility Agent, Bank of America N.T. & S.A. as Arranger, and Commonwealth Bank of Australia as Security Trustee (filed as Exhibit C-1(p) to Form U5S for the year ended December 31, 1995). ** 4(g) - Undertaking Agreement, dated as of March 7, 1996, of Entergy Corporation to Commonwealth Bank of Australia as Facility-Agent, of CitiPower Limited's obligations up to maximum of $7,367,000 under the Multi-Option Syndicated Facility Agreement (filed as Exhibit C-1(q) to Form U5S for the year ended December 31, 1995). 23(a) - Consent of Clark, Thomas & Winters (A Professional Corporation). 23(b) - Consent of Sandlin Associates. 27(a) - Financial Data Schedule for Entergy Corporation and Subsidiaries as of September 30, 1995.March 31, 1996. 27(b) - Financial Data Schedule for AP&LEntergy Arkansas as of September 30, 1995.March 31, 1996. 27(c) - Financial Data Schedule for GSUEntergy Gulf States as of September 30, 1995.March 31, 1996. 27(d) - Financial Data Schedule for LP&LEntergy Louisiana as of September 30, 1995.March 31, 1996. 27(e) - Financial Data Schedule for MP&LEntergy Mississippi as of September 30, 1995.March 31, 1996. 27(f) - Financial Data Schedule for NOPSIEntergy New Orleans as of September 30, 1995.March 31, 1996. 27(g) - Financial Data Schedule for System Energy as of September 30, 1995.March 31, 1996. 99(a) - AP&L'sEntergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(b) - GSU'sEntergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(c) - LP&L'sEntergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(d) - MP&L'sEntergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(e) - NOPSI'sEntergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined. 99(f) - System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined. ** 99(g) - Annual Reports on Form 10-K of Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSI,Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy for the fiscal year ended December 31, 1994, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0- 320, 0-5807, and 1-9067, respectively). ** 99(h) - Quarterly Report on Form 10-Q of Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy for the quarter ended March 31, 1995, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703,1- 2703, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ** 99(i) - Quarterly Report on Form 10-Q of Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy for the quarter ended June 30, 1995, portions of which are incorporated herein by reference as described elsewhere in this document (filed with the SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-5807, and 1-9067, respectively). ** 99(j)99(h) - Opinion of Clark, Thomas & Winters, a professional corporation, dated September 30, 1992 regarding the effect of the October 1, 1991 judgment in GSUEntergy Gulf States v. PUCT in the District Court of Travis County, Texas (99-1 in Registration No. 33-48889). ** 99(k)99(i) - Opinion of Clark, Thomas & Winters, a professional corporation, dated August 8, 1994 regarding recovery of costs deferred pursuant to PUCT order in Docket 6525 (filed as Exhibit 99(j) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 in File No. 1-2703). 99(l)99(j) - Opinion of Clark, Thomas & Winters, a professional corporation, confirming its opinions dated September 30, 1992 and August 8, 1994. ___________________________ * Reference is made to a duplicate list of exhibits being filed as a part of Form 10-Q for the quarter ended September 30, 1995,March 31, 1996, which list, prepared in accordance with Item 102 of Regulation S-T of the Securities and Exchange Commission, immediately precedes the exhibits being filed with Form 10-Q for the quarter ended September 30, 1995.March 31, 1996. ** Incorporated herein by reference as indicated. (b) Reports on Form 8-K Entergy New Orleans A current report on Form 8-K, dated October 25, 1995,March 20, 1996, was filed with the SEC on October 25, 1995,March 22, 1996, reporting information under Item 5. "Other Events." GSUEntergy and Entergy Gulf States A current report on Form 8-K, dated October 25, 1995,March 22, 1996, was filed with the SEC on October 25, 1995,March 22, 1996, reporting information under Item 5. "Other Events." Entergy and Entergy Gulf States A current report on Form 8-K, dated April 19, 1996, was filed with the SEC on April 22, 1996, reporting information under Item 5. "Other Events." and Item 7. "Financial Statements and Exhibits." Entergy and Entergy Gulf States A current report on Form 8-K, dated April 29, 1996, was filed with the SEC on April 30, 1996, reporting information under Item 5. "Other Events." EXPERTS The statements attributed to Clark, Thomas & Winters, A Professional Corporation, as to legal conclusions with respect to GSU'sEntergy Gulf States' rate regulation in Texas in Note 2 to Entergy Corporation and Subsidiaries Consolidated Financial Statements, "Rate and Regulatory Matters," have been reviewed by such firm and are included herein upon the authority of such firm as experts. The statements attributed to Sandlin Associates regarding the analysis of River Bend construction costs of GSUEntergy Gulf States in Note 2 to Entergy Corporation and Subsidiaries Consolidated Financial Statements, "Rate and Regulatory Matters," have been reviewed by such firm and are included herein upon the authority of such firm as experts. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries. ENTERGY CORPORATION ENTERGY ARKANSAS, POWER & LIGHT COMPANYINC. ENTERGY GULF STATES, UTILITIES COMPANYINC. ENTERGY LOUISIANA, POWER & LIGHT COMPANYINC. ENTERGY MISSISSIPPI, POWER & LIGHT COMPANYINC. ENTERGY NEW ORLEANS, PUBLIC SERVICE INC. SYSTEM ENERGY RESOURCES, INC. /s/ Louis E. Buck, Jr. Louis E. Buck, Jr. Vice President, Chief Accounting Officer and Assistant Secretary (For each Registrant and for each as Principal Accounting Officer) Date: NovemberMay 6, 19951996