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 March 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 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
1-10764 ENTERGY ARKANSAS, INC. 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-2703 ENTERGY GULF STATES, INC. 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 ENTERGY LOUISIANA, INC. 72-0245590
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
0-320 ENTERGY MISSISSIPPI, INC. 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
Indicate by check mark whether the registrants (1) have
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrants were
required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days.
Yes X No
Common Stock Outstanding Outstanding at April 30, 1996
Entergy Corporation ($0.01 par value) 228,043,846
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 1996
Page
Number
Definitions 1
Management's Financial Discussion and Analysis -
Liquidity and Capital Resources 3
Management's Financial Discussion and Analysis -
Significant Factors and Known Trends 6
Management's Financial Discussion and Analysis for
Entergy Corporation and Subsidiaries 9
Statements of Consolidated Income (Loss) for Entergy
Corporation and Subsidiaries 13
Statements of Consolidated Cash Flows for Entergy
Corporation and Subsidiaries 14
Consolidated Balance Sheets for Entergy Corporation
and Subsidiaries 16
Management's Financial Discussion and Analysis for
Entergy Arkansas, Inc. 18
Statements of Income for Entergy Arkansas, Inc. 20
Statements of Cash Flows for Entergy Arkansas, Inc. 21
Balance Sheets for Entergy Arkansas, Inc. 22
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 63
Item 5. Other Information 64
Item 6. Exhibits and Reports on Form 8-K 65
Experts 68
Signature 69
This combined Quarterly Report on Form 10-Q is separately filed by
Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States,
Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New
Orleans, Inc., and System Energy Resources, Inc. Information
contained herein relating to any individual company is filed by such
company on its own behalf. None of these companies make any
representations as to information relating to the other companies.
This combined Quarterly Report on Form 10-Q supplements and updates
the Annual Report on Form 10-K for the calendar year ended December
31, 1995, filed by the individual registrants with the SEC and should
be read in conjunction therewith. On April 22, 1996, 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 Plant
ANO 2 Unit No. 2 of ANO
Cajun Cajun Electric Power Cooperative, Inc.
Capital Funds Agreement Agreement, dated as of June 21, 1974, as
amended, between System Energy and Entergy
Corporation, and the assignments thereof
CitiPower CitiPower Ltd. - an electric distribution
company serving Melbourne, Australia, and
surrounding suburbs, which was acquired by
Entergy on January 5, 1996
Council Council of the City of New Orleans,
Louisiana
Entergy Arkansas Entergy Arkansas, Inc., formerly Arkansas
Power & Light
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 Services Entergy Services, Inc.
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
Form 10-K The combined Annual Report on Form 10-K for
the year ended December 31, 1995, of
Entergy, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System
Energy
Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant
KWh Kilowatt-hour(s)
LPSC Louisiana Public Service Commission
Merger The combination transaction, consummated on
December 31, 1993, by which Entergy Gulf
States became a subsidiary of Entergy
Corporation and Entergy Corporation became a
Delaware Corporation
Money Pool System Money Pool, which allows certain
System companies to borrow from, or lend to,
certain other System companies
MPSC Mississippi Public Service Commission
MWh Megawatt-hour(s)
NRC Nuclear Regulatory Commission
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
PUCT Public Utility Commission of Texas
PURPA Public Utility Regulatory Policies Act
River Bend River Bend Nuclear Plant, owned 70% by
Entergy Gulf States
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards
as promulgated by the Financial Accounting
Standards Board
System Energy System Energy Resources, Inc.
System Fuels System Fuels, Inc.
System or Entergy Entergy Corporation and its various direct
and indirect subsidiaries
Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy
Cash Flows
Net cash flow from operations for Entergy Corporation, the
operating companies, and System Energy for the 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 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:
Three Months Ended Increase/
Description 1996 1995 (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
------- -------
(In Thousands, Except
Share Data)
Operating Revenues:
Electric $1,413,068 $1,277,490
Natural gas 57,473 40,670
Steam products 15,578 10,632
Nonregulated and foreign energy-related 112,873 8,608
businesses
---------- ----------
Total 1,598,992 1,337,400
---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 375,764 288,960
Purchased power 158,157 82,509
Nuclear refueling outage expenses 14,209 19,014
Other operation and maintenance 353,212 359,593
Depreciation, amortization, and 194,567 170,480
decommissioning
Taxes other than income taxes 88,971 76,635
Income taxes 62,586 29,621
Rate deferrals (19,802) -
Amortization of rate deferrals 91,511 81,768
---------- ----------
Total 1,319,175 1,108,580
---------- ----------
Operating Income 279,817 228,820
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 2,558 2,494
Write-off of River Bend rate deferrals (194,498) -
Miscellaneous - net 10,778 17,556
Income taxes 14,906 (6,619)
---------- ----------
Total (166,256) 13,431
---------- ----------
Interest Charges:
Interest on long-term debt 172,843 160,631
Other interest - net 11,847 8,990
Allowance for borrowed funds used
during construction (2,138) (2,197)
Preferred and preference dividend
requirements of
subsidiaries and other 18,081 19,850
---------- ----------
Total 200,633 187,274
---------- ----------
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 (Loss) ($87,072) $90,392
========== ========
Earnings (Loss) per average common share
before cumulative effect of
accounting change ($0.38) $0.24
Earnings (Loss) per average common share ($0.38) $0.40
Dividends declared per common share $0.90 $0.90
Average number of common shares
outstanding 227,780,604 227,415,009
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)
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income (loss) ($87,072) $90,392
Noncash items included in net 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 105,388 81,057
Depreciation, amortization, and decommissioning 194,567 170,480
Deferred income taxes and investment tax credits (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 2,558 2,494
Nuclear fuel purchases (65,430) (9,672)
Proceeds from sale/leaseback of nuclear fuel 46,872 39,440
Acquisition of CitiPower (1,156,112) -
Investment in nonregulated/nonutility properties (5,171) (23,246)
----------- --------
Net cash flow used in investing activities (1,308,718) (99,351)
----------- --------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds 198,250 -
General and refunding mortgage bonds 39,608 -
Bank notes and other long-term debt 946,167 -
Retirement of:
First mortgage bonds (133,687) (20,825)
General and refunding mortgage bonds - (29,200)
Other long-term debt (92,744) (25)
Redemption of preferred stock (19,704) (24,250)
Changes in short-term borrowings - net 277,000 (38,625)
Common stock dividends paid (99,714) (101,969)
----------- --------
Net cash flow provided by (used in) financing 1,115,176 (214,894)
activities
----------- --------
Effect of exchange rates on cash and cash equivalents 40 -
Net increase (decrease) in cash and cash equivalents 74,807 (38,664)
Cash and cash equivalents at beginning of period 533,590 613,907
----------- --------
Cash and cash equivalents at end of period $608,397 $575,243
=========== ========
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
-------- --------
(In Thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $239,354 $172,220
Income taxes $12,032 $2,564
Noncash investing and financing activities:
Capital lease obligations incurred - $27,804
Change in unrealized appreciation/depreciation of
decommissioning trust assets ($4,265) $9,972
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
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
March 31, 1996 and December 31, 1995
(Unaudited)
1996 1995
----------- -----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $.01 par value, authorized 500,000,000
shares; issued 230,017,485 shares $ 2,300 $ 2,300
Paid-in capital 4,201,117 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:
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 $383,081 $339,596
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 65,200 41,167
Purchased power 98,625 81,747
Nuclear refueling outage expenses 7,542 9,185
Other operation and maintenance 83,265 93,658
Depreciation, amortization, and 41,030 39,352
decommissioning
Taxes other than income taxes 9,018 10,111
Income taxes 3,591 (3,339)
Amortization of rate deferrals 36,446 38,033
-------- --------
Total 344,717 309,914
-------- --------
Operating Income 38,364 29,682
------- -------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,090 915
Miscellaneous - net 8,239 15,532
Income taxes (3,228) (6,097)
-------- --------
Total 6,101 10,350
-------- --------
Interest Charges:
Interest on long-term debt 24,835 26,933
Other interest - net 1,027 3,116
Allowance for borrowed funds used
during construction (665) (731)
-------- --------
Total 25,197 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 19,268 46,129
Preferred Stock Dividend Requirements
and Other 4,458 4,561
-------- --------
Earnings Applicable to Common Stock $ 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)
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $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 35,953 30,665
Depreciation, amortization, and decommissioning 41,030 39,352
Deferred income taxes and investment tax credits (18,102) (2,071)
Allowance for equity funds used during construction (1,090) (915)
Changes in working capital:
Receivables 24,582 37,541
Fuel inventory 3,174 (14,460)
Accounts payable (3,762) 32,917
Taxes accrued 26,025 8,488
Interest accrued (14,743) 636
Other working capital accounts 2,326 (35,323)
Decommissioning trust contributions (4,140) (2,386)
Provision for estimated losses and reserves 529 2,968
Other 733 16,716
-------- --------
Net cash flow provided by operating activities 111,783 124,842
-------- --------
Investing Activities:
Construction expenditures (32,250) (41,651)
Allowance for equity funds used during construction 1,090 915
Nuclear fuel purchases (19,081) (76)
Proceeds from sale/leaseback of nuclear fuel 18,470 76
-------- --------
Net cash flow used in investing activities (31,771) (40,736)
-------- --------
Financing Activities:
Proceeds from issuance of first mortgage bonds 84,256 -
Retirement of first mortgage bonds (30,437) (400)
Redemption of preferred stock - (5,000)
Dividends paid:
Common stock - (32,800)
Preferred stock (8,917) (4,727)
-------- --------
Net cash flow provided by (used in) 44,902 (42,927)
financing activities
-------- --------
Net increase in cash and cash equivalents 124,914 41,179
Cash and cash equivalents at beginning of period 11,798 80,756
-------- --------
Cash and cash equivalents at end of period $136,712 $121,935
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $37,479 $25,916
Income taxes $6,460 -
Noncash investing and financing activities:
Capital lease obligations incurred - $76
Change in unrealized appreciation/depreciation of
decommissioning trust assets ($4,363) $6,234
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
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, INC.
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
1996 1995
----------- -----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $0.01 par value, authorized
325,000,000 shares; issued and outstanding
46,980,196 shares $ 470 $ 470
Paid-in capital 590,794 590,844
Retained earnings 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:
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 $426,177 $378,791
Natural gas 14,876 9,923
Steam products 15,578 10,632
-------- --------
Total 456,631 399,346
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 117,409 114,921
Purchased power 67,834 40,557
Nuclear refueling outage expenses 2,360 3,031
Other operation and maintenance 96,741 101,404
Depreciation, amortization, and 51,251 50,339
decommissioning
Taxes other than income taxes 26,334 25,379
Income taxes 11,983 (162)
Amortization of rate deferrals 17,644 16,506
-------- --------
Total 391,556 351,975
-------- --------
Operating Income 65,075 47,371
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 493 251
Write-off of River Bend rate deferrals (194,498) -
Miscellaneous - net 4,940 5,914
Income taxes 18,743 (865)
---------- --------
Total (170,322) 5,300
---------- --------
Interest Charges:
Interest on long-term debt 46,488 48,270
Other interest - net 950 1,010
Allowance for borrowed funds used
during construction (428) (244)
---------- --------
Total 47,010 49,036
---------- --------
Net Income (Loss) (152,257) 3,635
Preferred and Preference Stock
Dividend Requirements and Other 7,219 7,590
---------- --------
Loss Applicable to Common Stock ($159,476) ($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)
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 $40,530 $36,062
Noncash items included in net income:
Change in rate deferrals 6,660 6,660
Depreciation, amortization, and decommissioning 41,741 38,507
Deferred income taxes and investment tax credits (4,169) (9,077)
Allowance for equity funds used during construction (277) (564)
Changes in working capital:
Receivables 6,447 26,639
Accounts payable (2,740) (25,464)
Taxes accrued 40,406 37,282
Interest accrued (17,143) (7,458)
Other working capital accounts (11,327) 633
Decommissioning trust contributions (4,393) (1,204)
Other (6,997) 1,708
-------- --------
Net cash flow provided by operating activities 88,738 103,724
-------- --------
Investing Activities:
Construction expenditures (26,235) (20,055)
Allowance for equity funds used during 277 564
construction
-------- --------
Net cash flow used in investing activities (25,958) (19,491)
-------- --------
Financing Activities:
Proceeds from the issuance of first mortgage bonds 113,994 -
Retirement of:
First mortgage bonds (35,000) -
Other long-term debt (44) (25)
Redemption of preferred stock (7,500) (7,500)
Changes in short-term borrowings - net (28,468) (7,954)
Dividends paid:
Common stock (14,400) (55,700)
Preferred stock (5,151) (5,491)
-------- --------
Net cash flow provided by (used in) financing 23,431 (76,670)
activities
-------- --------
Net increase in cash and cash equivalents 86,211 7,563
Cash and cash equivalents at beginning of period 34,370 28,718
-------- --------
Cash and cash equivalents at end of period $120,581 $36,281
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $48,555 $40,325
Noncash investing and financing activities:
Capital lease obligations incurred - $75
Change in unrealized appreciation/depreciation of
decommissioning trust assets ($94) $1,294
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
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.
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
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:
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 $203,902 $180,559
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 39,746 30,389
Purchased power 67,312 57,044
Other operation and maintenance 27,649 32,218
Depreciation and amortization 10,027 9,397
Taxes other than income taxes 9,585 10,589
Income taxes 6,016 3,363
Rate deferrals (7,151) -
Amortization of rate deferrals 26,264 15,289
-------- --------
Total 179,448 158,289
-------- --------
Operating Income 24,454 22,270
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 273 259
Miscellaneous - net (78) 61
Income taxes 30 (23)
-------- --------
Total 225 297
-------- --------
Interest Charges:
Interest on long-term debt 11,039 11,092
Other interest - net 940 1,906
Allowance for borrowed funds used
during construction (224) (205)
-------- --------
Total 11,755 12,793
-------- --------
Net Income 12,924 9,774
Preferred Stock Dividend Requirements
and Other 1,248 1,707
-------- --------
Earnings Applicable to Common Stock $ 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)
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $12,924 $9,774
Noncash items included in net income:
Change in rate deferrals 31,475 14,755
Depreciation and amortization 10,027 9,397
Deferred income taxes and investment tax credits (7,907) (3,740)
Allowance for equity funds used during construction (273) (259)
Changes in working capital:
Receivables 4,269 14,012
Fuel inventory 1,055 (1,892)
Accounts payable 4,350 10,730
Taxes accrued (10,253) (9,035)
Interest accrued (9,419) (7,887)
Other working capital accounts 4,977 10,856
Other (11,501) 5,129
-------- --------
Net cash flow provided by operating activities 29,724 51,840
-------- --------
Investing Activities:
Construction expenditures (19,297) (12,275)
Allowance for equity funds used during construction 273 259
-------- --------
Net cash flow used in investing activities (19,024) (12,016)
-------- --------
Financing Activities:
Retirement of:
General and refunding mortgage bonds - (40,000)
First mortgage bonds (25,000) -
Redemption of preferred stock (8,000) (8,000)
Changes in short-term borrowings - net 17,436 12,319
Dividends paid:
Common stock (7,700) (8,300)
Preferred stock (1,392) (1,790)
-------- --------
Net cash flow used in financing activities (24,656) (45,771)
-------- --------
Net decrease in cash and cash equivalents (13,956) (5,947)
Cash and cash equivalents at beginning of period 16,945 9,598
-------- --------
Cash and cash equivalents at end of period $2,989 $3,651
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $20,860 $20,278
Income taxes $4,932 $1,600
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
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.
ENTERGY MISSISSIPPI, 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
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.
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating 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, fuel-related expenses,
and gas purchased for resale 41,436 30,978
Purchased power 38,739 29,682
Other operation and maintenance 16,424 16,753
Depreciation and amortization 4,971 4,828
Taxes other than income taxes 6,863 7,227
Income taxes 3,985 3,275
Rate deferrals (5,793) -
Amortization of rate deferrals 4,496 5,280
------- -------
Total 111,121 98,023
------- -------
Operating Income 11,767 10,863
------- -------
Other Income (Deductions):
Allowance for equity funds used
during construction 74 26
Miscellaneous - net 774 416
Income taxes (298) (160)
------- -------
Total 550 282
------- -------
Interest Charges:
Interest on long-term debt 4,059 4,329
Other interest - net 282 592
Allowance for borrowed funds used
during construction (59) (21)
------- -------
Total 4,282 4,900
------- -------
Net Income 8,035 6,245
Preferred Stock Dividend Requirements
and Other 241 400
------- -------
Earnings Applicable to Common Stock $ 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)
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $8,035 $6,245
Noncash items included in net income:
Change in rate deferrals 7,565 6,382
Depreciation and amortization 4,971 4,828
Deferred income taxes and investment tax credits 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 74 26
-------- --------
Net cash flow used in investing activities (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 mortgage bonds - (9,200)
Redemption of preferred stock - (1,500)
Dividends paid:
Common stock (3,300) -
Preferred stock (482) (413)
-------- --------
Net cash flow provided by (used in) financing 12,576 (11,113)
activities
-------- --------
Net increase in cash and cash equivalents 1,841 2,463
Cash and cash equivalents at beginning of period 49,746 8,031
-------- --------
Cash and cash equivalents at end of period $51,587 $10,494
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $7,054 $5,702
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
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.
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
1996 1995
----------- -----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $4 par value, authorized
10,000,000 shares; issued and outstanding
8,435,900 shares $ 33,744 $ 33,744
Paid-in capital 36,294 36,306
Retained earnings subsequent to the elimination of
the accumulated deficit on November 30, 1988 80,155 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)
1996 1995
------- -------
(In Thousands)
Operating Revenues $156,424 $151,664
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 12,840 12,335
Nuclear refueling outage expenses 308 2,281
Other operation and maintenance 21,433 25,099
Depreciation, amortization, and decommissioning 31,999 25,398
Taxes other than income taxes 6,906 7,174
Income taxes 20,692 19,305
-------- --------
Total 94,178 91,592
-------- --------
Operating Income 62,246 60,072
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 350 480
Miscellaneous - net 839 725
Income taxes (315) 551
-------- --------
Total 874 1,756
-------- --------
Interest Charges:
Interest on long-term debt 37,953 37,434
Other interest - net 1,991 2,333
Allowance for borrowed funds used
during construction (354) (504)
-------- --------
Total 39,590 39,263
-------- --------
Net Income $ 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)
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $23,530 $22,565
Noncash items included in net income:
Depreciation, amortization, and decommissioning 31,999 25,398
Deferred income taxes and investment tax credits (8,897) (5,501)
Allowance for equity funds used during construction (350) (480)
Changes in working capital:
Receivables (2,870) (95,228)
Accounts payable 17,326 39,786
Taxes accrued 13,735 12,510
Interest accrued (10,825) (2,660)
Other working capital accounts (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 (2,137) 2,574
-------- --------
Net cash flow provided by (used in) operating 67,667 (26,179)
activities
-------- --------
Investing Activities:
Construction expenditures (1,384) (7,734)
Allowance for equity funds used during construction 350 480
Nuclear fuel purchases (733) -
-------- --------
Net cash flow used in investing activities (1,767) (7,254)
-------- --------
Financing Activities:
Proceeds from the issuance of long-term debt 89,192 -
Retirement of long-term debt (92,700) -
Changes in short-term borrowings - net (2,990) -
Common stock dividends paid (23,300) -
-------- --------
Net cash flow used in financing activities (29,798) -
-------- --------
Net increase (decrease) in cash and cash equivalents 36,102 (33,433)
Cash and cash equivalents at beginning of period 240 89,703
-------- --------
Cash and cash equivalents at end of period $36,342 $56,270
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $48,911 $40,903
Noncash investing and financing activities:
Capital lease obligation incurred - $27,653
Change in unrealized appreciation/depreciation of
decommissioning trust assets $192 $1,685
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
1996 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 890,222 861,752
amortization
----------- -----------
Utility plant - net 2,630,740 2,667,176
----------- -----------
Other Property and Investments:
Decommissioning trust fund 43,770 40,927
----------- -----------
Current Assets:
Cash and cash equivalents:
Cash 192 240
Temporary cash investments - at cost,
which approximates market:
Associated companies 12,259 -
Other 23,891 -
----------- -----------
Total cash and cash equivalents 36,342 240
Accounts receivable:
Associated companies 75,532 72,458
Other 4,633 4,837
Materials and supplies - at average cost 68,398 67,661
Prepayments and other 19,217 16,050
----------- -----------
Total 204,122 161,246
----------- -----------
Deferred Debits and Other 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 557,664 561,663
----------- -----------
TOTAL $ 3,436,296 $ 3,431,012
=========== ===========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, 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
1,000,000 shares; issued and outstanding
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 586,471 602,182
Accumulated deferred investment tax credits 106,250 107,119
FERC Settlement - refund obligation 55,892 56,848
Other 77,678 78,381
----------- -----------
Total 826,291 844,530
----------- -----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $ 3,436,296 $ 3,431,012
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. COMMITMENTS AND CONTINGENCIES
Cajun - River Bend (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States has significant business relationships with
Cajun, including co-ownership of River Bend (operated by Entergy Gulf
States) and Big Cajun 2, Unit 3 (operated by Cajun). Entergy Gulf
States and Cajun, respectively, own 70% and 30% undivided interests
in River Bend and 42% and 58% undivided interests in Big Cajun 2,
Unit 3. These relationships have spawned a number of significant and
long-standing disputes and claims between the parties. 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 Entergy Gulf
States in the United States District Court for the Middle 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 relating to River Bend. The suit also seeks to recover
Cajun's alleged $1.6 billion investment in the unit plus attorneys'
fees, interest, and costs. Two member cooperatives of Cajun have
brought an independent action to declare the Operating Agreement
void, based upon their failure to get prior LPSC approval alleged to
be necessary. Entergy Gulf States believes the suits are without
merit and is contesting them vigorously.
A trial on the portion of the suit by Cajun to rescind the
Operating Agreement began in April 1994 and was completed in March
1995. On October 24, 1995, the District Court issued a memorandum
opinion ruling in favor of Entergy Gulf States. The District Court
found that Cajun had not proved that Entergy Gulf States fraudulently
induced it to execute the Operating Agreement and that Cajun failed
to timely assert its claim. A final judgment on this portion of the
suit will not be entered until all claims asserted by Cajun have been
heard. The trial of the second portion of the suit was previously
scheduled to begin on July 2, 1996. If the ultimate outcome of this
litigation requires Entergy Gulf States to pay substantial damages,
it would probably be unable to make such payments and could be forced
to seek relief from its creditors under the United States Bankruptcy
Code.
Cajun has not paid its full share of capital costs, operating
and maintenance expenses, and other costs for repairs and
improvements to River Bend since 1992. Cajun's unpaid portion of
River Bend operating and maintenance expenses (including nuclear
fuel) and capital costs for the first three months of 1996 was
approximately $22.1 million. The cumulative cost to Entergy Gulf
States resulting from Cajun's failure to pay its full share of River
Bend-related costs, reduced by the proceeds from the sale by Entergy
Gulf States of Cajun's share of River Bend power, and payments into
the registry of the District Court for Entergy Gulf States' portion
of expenses for Big Cajun 2, Unit 3, was $29.1 million as of March
31, 1996, compared with $31.1 million as of December 31, 1995.
Cajun's unpaid portion of the River Bend related costs is reflected
in long-term receivables with an offsetting reserve in other deferred
credits. Cajun's bankruptcy may affect the ultimate collectibility
of the amounts owed to Entergy Gulf States, including any amounts
that may be awarded in litigation. Cajun continues to pay its share
of decommissioning costs for River Bend.
See Note 8 of Entergy'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 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. Entergy Gulf States responded on January 10, 1995, with a
memorandum opposing Cajun's motion. Should the court grant Cajun's
motion to reject the Operating Agreement, Cajun would be relieved of
its financial obligations under the contract, while Entergy Gulf
States would likely have a substantial damage claim arising from any
such rejection. Although Entergy Gulf States believes that Cajun's
motion to reject the Operating Agreement is without merit, it is not
possible to predict the outcome of these proceedings.
On March 8, 1996, Southwestern Electric Power Company (SWEPCO),
Entergy Gulf States, and certain member cooperatives of Cajun filed a
joint proposal to bring an end to the Cajun bankruptcy proceeding.
The proposal was submitted in response to a bid procedure established
by the Cajun bankruptcy trustee. On April 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 Entergy Gulf
States)
Entergy Gulf States and Cajun are parties to FERC proceedings
relating to transmission service charge disputes. 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 potential effects of these proceedings upon Entergy Gulf States.
Under Entergy Gulf States' interpretation of a 1992 FERC order,
as modified by FERC's August 3, 1995, and October 2, 1995 orders,
Cajun would owe Entergy Gulf States approximately $66.3 million as of
March 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 Entergy Gulf States in the February 1995,
August 1995, and October 1995 FERC orders, which Entergy Gulf States
has appealed, Cajun would owe Entergy Gulf States approximately
$146.6 million as of March 31, 1996. If Cajun were to prevail in its
May 1992 motion for rehearing to FERC, and if Entergy Gulf States
were not to prevail in its May 1992 motion for rehearing to FERC, and
if Cajun were to prevail in appealing FERC's August and October 1995
orders, Entergy Gulf States estimates it would owe Cajun
approximately $99.5 million as of 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, Entergy Gulf States has continued to bill Cajun utilizing
the historical billing methodology and has recorded underpaid
transmission charges, including interest, in the amount of $138.9
million as of March 31, 1996. This amount is reflected in long-term
receivables with an offsetting reserve in other deferred credits.
Cajun's bankruptcy may affect Entergy Gulf States' collection of the
above amounts. FERC has determined that the collection of the pre-
petition debt of Cajun is an issue properly decided in the bankruptcy
proceeding. Refer to "Cajun - River Bend Litigation" above for a
discussion of the potential settlement of the Cajun and Entergy Gulf
States disputes.
Capital Requirements and Financing (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
See Note 8 to Entergy's Form 10-K for information on the
operating companies' and System Energy's construction expenditures
(excluding nuclear fuel) for the years 1996, 1997, and 1998, and long-
term debt and preferred stock maturities and cash sinking fund
requirements for the period 1996-1998.
Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs
(Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy)
See Note 8 to Entergy'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 SEC has questioned certain of the financial accounting
practices of the electric utility industry regarding the recognition,
measurement, and classification of decommissioning costs for nuclear
plants in the financial statements of electric utilities. In
response to these questions, the FASB has been reviewing the
accounting for decommissioning and has expanded the scope of its
review to include liabilities related to the closure and removal of
all long-lived assets. An exposure draft of the proposed SFAS (which
is proposed to be effective in 1997) was issued in February 1996.
The proposed SFAS would require measurement of the liability for
closure and removal of long-lived assets (including decommissioning)
based on discounted future cash flows. Those future cash flows
should be determined by estimating current costs and adjusting for
inflation, efficiencies that may be gained from experience with
similar activities, and consideration of reasonable future advances
in technology. It also would require that changes in the
decommissioning/closure cost liability resulting from changes in
assumptions should be recognized with a corresponding adjustment to
the plant asset, and depreciation should be revised prospectively.
The proposed SFAS states that the initial recognition of the
decommissioning/closure cost liability would result in an asset that
should be presented with other plant costs on the financial
statements because the cost of decommissioning/closing the plant
would be recognized as part of the total cost of the plant asset. In
addition there would be a regulatory asset recognized on the
financial statements to the extent the initial
decommissioning/closure liability has increased due to the passage of
time, and such costs are probable of future recovery.
If current electric utility industry accounting practices with
respect to nuclear decommissioning and other closure costs are
changed, annual provisions for such costs could increase, the
estimated cost for decommissioning/closure could be recorded as a
liability rather than as accumulated depreciation, and trust fund
income from decommissioning trusts could be reported as investment
income rather than as a reduction to decommissioning expense.
ANO Matters (Entergy Corporation and Entergy Arkansas)
See Note 8 to Entergy's Form 10-K for information on cracks 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. 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 established
limit is reached, Entergy Operations could be required during future
outages to insert sleeves in some of the steam generator tubes that
were previously plugged. Entergy Operations is in the process of
gathering information and assessing various options for the repair or
the replacement of ANO 2's steam generators. Certain of these
options could, in the future, require significant capital
expenditures and result in additional outages. 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
(Entergy Arkansas)
In May 1995, Entergy Arkansas was named as a defendant in a suit
by Reynolds Metals Company (Reynolds), seeking to recover a share of
the costs associated with the clean-up of hazardous substances at a
site south of Arkadelphia, Arkansas. Reynolds alleges that it has
spent $11.2 million to clean-up the site, and that the site was
contaminated with polychlorinated biphenyls for which Entergy
Arkansas bears some responsibility. Entergy Arkansas, voluntarily,
at its expense, 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, Entergy 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's Form 10-K for information on polychlorinated
biphenyls contamination at former Reynolds plant sites in Arkansas to
which Entergy Arkansas had supplied power.
(Entergy Gulf States)
Entergy Gulf States has been designated as a potentially
responsible party for the clean-up of certain hazardous waste
disposal sites. Entergy Gulf States is currently negotiating with the
EPA and state authorities regarding the clean-up of certain of these
sites.
Through March 31, 1996, $7.9 million has been expended on the
clean-up. As of March 31, 1996, a remaining recorded liability of
$21.7 million existed relating to the clean-up of the sites at which
Entergy Gulf States has been designated a potentially responsible
party. See Note 8 to Entergy's Form 10-K for additional discussion
of the sites where Entergy Gulf States has been designated as a
potentially responsible party by the EPA and related litigation.
(Entergy Louisiana)
During 1993, the Louisiana Department of Environmental Quality
issued new rules for solid waste regulation, including regulation of
waste water impoundments. Entergy Louisiana has determined that
certain of its power plant waste water impoundments were affected by
these regulations and chose to upgrade or close them. A remaining
recorded liability in the amount of $10.2 million existed at 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 $6.3 million as of
March 31, 1996. See Note 8 to Entergy's Form 10-K for additional
discussion of Entergy Louisiana's waste water impoundment upgrades
and closures.
Waterford 3 Lease Obligations (Entergy Louisiana)
On September 28, 1989, Entergy Louisiana entered into three
transactions for the sale and leaseback of undivided interests
(aggregating approximately 9.3%) in Waterford 3. Upon the occurrence
of certain events, Entergy Louisiana may be obligated to pay amounts
sufficient to permit the Owner Participants to withdraw from the
lease transactions, and Entergy Louisiana may be required to assume
the outstanding bonds issued by the Owner Trustee to finance, in
part, its acquisition of the undivided interests in Waterford 3. See
Note 9 to Entergy's Form 10-K for further information.
Reimbursement Agreement (System Energy)
Under a bank letter of credit and reimbursement agreement,
System Energy has agreed to a number of covenants relating to the
maintenance of certain capitalization and fixed charge coverage
ratios. System Energy agreed, during the term of the agreement, to
maintain its equity at not less than 33% of its adjusted
capitalization (defined in the agreement to include certain amounts
not included in capitalization for financial statement purposes). In
addition, System Energy must maintain, with respect to each fiscal
quarter during the term of the agreement, a ratio of adjusted net
income to interest expense (calculated, in each case, as specified in
the agreement) of at least 1.60 times earnings. See Note 8 to
Entergy's Form 10-K for further information.
NOTE 2. RATE AND REGULATORY MATTERS
River Bend (Entergy Corporation and Entergy Gulf States)
In May 1988, the PUCT granted Entergy Gulf States a permanent
increase in annual revenues of $59.9 million resulting from the
inclusion in rate base of approximately $1.6 billion of company-wide
River Bend plant investment and approximately $182 million of related
Texas retail jurisdiction deferred River Bend costs (Allowed
Deferrals). In addition, the PUCT disallowed as imprudent $63.5
million of company-wide River Bend plant costs and placed in
abeyance, with no finding as to prudence, approximately $1.4 billion
of company-wide River Bend plant investment and approximately $157
million of Texas retail jurisdiction deferred River Bend operating
and carrying costs (Abeyed Deferrals).
As discussed in Note 2 to Entergy's Form 10-K, various appeals
of the PUCT's order have been filed (Rate Appeal). Entergy Gulf
States filed an appeal with the Texas Supreme Court and, on February
9, 1996, the Texas Supreme Court agreed to hear the appeal. Oral
arguments were held on March 19, 1996. The timing of a decision by
the Texas Supreme Court is not certain.
As of March 31, 1996, the River Bend plant costs disallowed for
retail ratemaking purposes in Texas and the River Bend plant costs
held in abeyance totaled (net of taxes and depreciation)
approximately $12 million and $274 million, respectively. Allowed
Deferrals were approximately $81 million, net of taxes and
amortization, as of March 31, 1996. Entergy Gulf States estimates it
has collected approximately $188 million of revenues as of 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 thereon could be lost, and no
assurance can be given as to whether or not refunds to customers of
revenue received based upon such deferred costs would be required.
During the first quarter of 1996, Entergy Gulf States wrote off
Abeyed Deferrals of $169 million in accordance with SFAS 121, which
became effective January 1, 1996, but it has made no write-offs or
reserves for the River Bend plant-related costs. A general remand by
the Texas Supreme Court in the Rate Appeal would enable Entergy Gulf
States to seek recovery of the Abeyed Deferrals. Based on advice
from Clark, Thomas & Winters, A Professional Corporation, legal
counsel of record in the Rate Appeal, management believes that it is
reasonably possible that the case will be remanded to the PUCT, and
that the PUCT will be allowed to rule on the prudence of the abeyed
River Bend plant costs. Management and legal counsel are unable to
predict the amount, if any, of abeyed and previously disallowed River
Bend plant costs that ultimately might be disallowed by the PUCT. As
of March 31, 1996, a net of tax write-off of up to $286 million could
be required if the PUCT ultimately issues an adverse ruling on the
abeyed and disallowed plant costs.
The following factors support management's position that a loss
contingency requiring accrual has not occurred, and its belief that
all, or substantially all, of the abeyed plant costs will ultimately
be recovered:
1. The $1.4 billion of abeyed River Bend plant costs have never
been ruled imprudent and disallowed by the PUCT;
2. Analysis by Sandlin Associates, which supports the prudence
of substantially all of the abeyed construction costs;
3. Historical inclusion by the PUCT of prudent construction
costs in rate base; and
4. The analysis of Entergy Gulf States' internal legal staff,
which has considerable experience in Texas rate case
litigation.
Additionally, based on advice from Clark, Thomas & Winters, 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 Abeyed Deferrals will be recovered in
rates to the extent that the $1.4 billion of abeyed River Bend plant
is recovered.
Filings with the LPSC
(Entergy Corporation and Entergy Gulf States)
See Note 2 in Entergy's Form 10-K for a discussion of Entergy
Gulf States' required earnings analysis filing with the LPSC for the
test year preceding the Merger (1993). Entergy Gulf States has
appealed to the Louisiana Supreme Court the 1994 LPSC order for an
annual rate reduction of $12.7 million. During the appeal, the
preliminary injunction Entergy Gulf States received from the District
Court, relating to the $8.3 million earnings effect of a 1994 change
in accounting for unbilled revenues, will remain in effect.
On May 31, 1995, Entergy Gulf States filed its first required
post-Merger earnings analysis with the LPSC. Hearings on this review
were held in December 1995 and a decision is expected in mid-1996.
(Entergy Corporation and Entergy Louisiana)
See Note 2 in Entergy's Form 10-K for a discussion of Entergy
Louisiana's performance-based formula rate plan approved in a June
1995 LPSC rate order, Entergy Louisiana's subsequent appeal of the
LPSC's order, and the final settlement of this appeal. On 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
expiration 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 with the MPSC under its formula rate plan. On April 18, 1996,
the MPSC issued an order approving and adopting a joint stipulation
and placing the prospective rate reduction of $5.9 million into
effect on May 1, 1996.
Filings with the Council (Entergy Corporation and Entergy New
Orleans)
Pursuant to the 1994 NOPSI Settlement, Entergy New Orleans is
required to make earnings filings with the Council for the 1995 and
1996 rate years. A review of Entergy New Orleans' earnings for the
test year ending September 30, 1995, required Entergy New Orleans to
credit customers $6.2 million over a 12-month period which began in
March 1996. Hearings before the Council on the reasonableness and
prudence of Entergy New Orleans' deferred Least Cost Integrated
Resource Planning expenses for cost recovery purposes were previously
scheduled for April 1996, but have been delayed.
Proposed Rate Increase
(System Energy)
System Energy filed an application with FERC on May 12, 1995,
for a $65.5 million rate increase. The request seeks changes to
System Energy's rate schedule, including increases in the revenue
requirement associated with decommissioning costs, the depreciation
rate, and the rate of return on common equity. On December 12, 1995,
System Energy implemented a $65.5 million rate increase, subject to
refund. Hearings on System Energy's request began in January 1996
and were completed in February 1996. The 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, Entergy
Mississippi filed a schedule with the MPSC that defers the retail
recovery of the System Energy rate increase. The deferral plan,
which was approved by the MPSC, began in December 1995, the effective
date of the System Energy rate increase, and will end after the
issuance of a final order by FERC. The deferred rate increase is to
be amortized over 48 months beginning October 1998.
(Entergy New Orleans)
Entergy New Orleans' allocation of the proposed System Energy
wholesale rate increase is $11.1 million. In February 1996, Entergy
New Orleans filed a plan with the City to defer 50% of the amount of
the System Energy rate increase. The deferral began in February 1996
and will end after the issuance of a final order by FERC.
LPSC Fuel Cost Review (Entergy Corporation and Entergy Gulf States)
See Note 2 to Entergy's Form 10-K, for a discussion of the
LPSC's review of Entergy Gulf States' fuel costs for the period
October 1988 through September 1991 and Entergy Gulf States'
subsequent appeal of $13.9 million of fuel costs disallowed by the
LPSC.
The LPSC is currently conducting the second phase of its review
of Entergy Gulf States' fuel costs for the period October 1991
through December 1994. On June 30, 1995, the LPSC consultants filed
testimony recommending a disallowance of $38.7 million of fuel costs.
Hearings began in December 1995 and were completed in March 1996. A
decision is expected in the second quarter of 1996.
NOTE 3. COMMON STOCK (Entergy Corporation)
During the first quarter of 1996, Entergy Corporation issued
267,679 shares of its previously repurchased common stock, reducing
the amount held as treasury stock by $7.7 million. Entergy
Corporation issued these shares to meet the requirements of its
various stock plans.
NOTE 4. LONG-TERM DEBT
(Entergy Corporation)
An Entergy subsidiary signed an agreement with several banks on
January 5, 1996, to obtain a revolving credit facility in the
aggregate amount of $1.2 billion Australian dollars ($870 million US
dollars) for the acquisition of CitiPower. The facility was 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 April 26, 1996, Entergy Arkansas redeemed, prior to their
maturities, $23.8 million of its 10.375% Series First Mortgage Bonds
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 April 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 10.95% Series General &
Refunding Mortgage Bonds due May 1, 1997, $15 million of which was a
scheduled sinking fund requirement.
NOTE 5. RETAINED EARNINGS (Entergy Corporation)
On March 24, 1996, Entergy Corporation's Board of Directors
declared a common stock dividend of 45 cents per share payable on
June 1, 1996, to holders of record on May 10, 1996.
NOTE 6. RESTRUCTURING COSTS (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
In 1994 and 1995 Entergy implemented various restructuring
programs to reduce the number of employees and consolidate offices
and facilities. The programs were designed to reduce costs and
improve operating efficiencies in order to enable Entergy to become a
low-cost producer. The balances as of December 31, 1995, and March
31, 1996, for restructuring liabilities associated with these
programs are shown below by company along with the actual termination
benefits paid under the programs.
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 include employee
severance costs related to the expected termination of approximately
2,750 employees in various groups. As of March 31, 1996, 2,350
employees had either been terminated or accepted voluntary separation
packages under the restructuring plan.
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 statement describes circumstances which may result in
assets being impaired, in addition to providing criteria for
recognition and measurement of asset impairment. In the first
quarter of 1996, Entergy Gulf States' regulatory assets of $169
million (net of tax) related to Texas retail deferred River Bend
operating and carrying costs and $5 million (net of tax) related to
Louisiana retail deferred River Bend operating costs were written off
under the provisions of SFAS 121. See Note 1 to Entergy's Form 10-K
for additional details regarding other assets and operations
potentially impacted in the future by the requirements of SFAS 121
and the process for periodically reviewing those assets and
operations for impairment.
NOTE 8. ENTERGY CORPORATION-CITIPOWER ACQUISITION (Entergy
Corporation)
On January 5, 1996, Entergy Corporation finalized its
acquisition of CitiPower, an electric distribution company serving
Melbourne, Australia, and surrounding suburbs. The purchase price of
CitiPower was approximately $1.2 billion, of which $294 million
represented an equity investment by Entergy Corporation, and the
remainder represented debt. Entergy Corporation funded the majority
of the equity portion of the investment by using $230 million of its
$300 million bank revolving credit facility.
CitiPower is one of five electric distribution businesses in the
state of Victoria. CitiPower's distribution area accounts for
approximately ten percent of Victoria's population. For the fiscal
year ended June 30, 1995, CitiPower supplied approximately 4.4
million MWh of electricity 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 first quarter, but the effects on
the overall results of operations would have been immaterial. This
pro forma information is not necessarily indicative of the results of
operations that would have occurred had the acquisition been
consummated for the period for which it is being given effect.
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 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, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy, the accompanying unaudited condensed
financial statements contain all adjustments (consisting primarily of
normal recurring accruals and reclassifying previously reported
amounts to conform to current classifications) necessary for a fair
statement of the results for the interim periods presented. However,
the business of Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans is subject to
seasonal fluctuations, with the peak period occurring during the
summer months. The results for the interim periods presented should
not be used as a basis for estimating results of operations for a
full year.
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Merger-Related Proceedings (Entergy Corporation and Entergy Gulf
States)
See "Nuclear Operations" in Item 1 of Part I of Entergy's Form
10-K 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 March 1996, the ASLB, responding to
Cajun's request, dismissed the pending 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 certain
Cajun member cooperatives filed a separate plan of reorganization
with the court based upon their earlier proposal. 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 Rural Utilities Service (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; (ii) Cajun will set aside a total of $125 million for the
decommissioning of its interest in River Bend; (iii) Cajun will
transfer certain transmission assets to Entergy Gulf States; (iv)
Cajun will settle transmission disputes and be released from claims
for payment under transmission arrangements with Entergy Gulf States;
and (v) all funds paid by Entergy Gulf States into the registry of
the District Court will be returned to Entergy Gulf States. The
settlement is subject to further approvals by the RUS, the Board of
Directors of Entergy Corporation, 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's Form 10-K for information relating to the litigation
brought by Panda Energy Corporation (Panda) naming Entergy
Corporation, Entergy Enterprises, Entergy Power, Entergy Power Asia,
Ltd., and Entergy Power Development Corporation as defendants. Panda
was seeking damages of $4.8 billion. Entergy believes that this
litigation is unfounded, but entered into arrangements on April 30,
1996, to settle the matter for $350,000. Yet, the settlement
provided that it may be revoked by Entergy if the court rules in the
case. On the same day, the judge advised that he would grant summary
judgment for the defendants, because he does not believe that the
plaintiff has sustained any provable damages. Entergy will consider
whether to revoke the settlement in this case in light of the judge's
determination.
Item 4. Submission of Matters to a Vote of Security Holders
Amended and Restated Articles of Incorporation (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
A consent in lieu of a special meeting of common stockholders
was executed on April 22, 1996. The consent was signed on behalf of
Entergy Corporation, the holder of all issued and outstanding shares
of Entergy Arkansas', Entergy Gulf States', Entergy Louisiana's,
Entergy Mississippi's, and Entergy New Orleans' common stock. The
common stockholder by such consent, approved the amendment of its
Amended and Restated Articles of Incorporation to change the name of
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
Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy)
The operating companies and System Energy have calculated ratios
of earnings to fixed charges and ratios of earnings to combined fixed
charges and preferred dividends pursuant to Item 503 of Regulation S-
K of the SEC as follows:
Ratios of Earnings to Fixed Charges
Twelve Months Ended
December 31, 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 Entergy Gulf
States also include dividends on preference stock.
(b) Earnings for the year ended December 31, 1991,
include the $90 million effect of the 1991 NOPSI
Settlement.
(c) Earnings for the year ended December 31, 1993,
include $81 million, $52 million, and $18 million
for Entergy Arkansas, Entergy Mississippi, and
Entergy New Orleans, respectively, related to the
change in accounting principle to provide for the
accrual of estimated unbilled revenues.
(d) Earnings for the year ended December 31, 1994, for
Entergy Gulf States were not adequate to cover fixed
charges by $144.8 million. Earnings for the years
ended December 31, 1994, and March 31, 1996, for
Entergy Gulf States were not adequate to cover
combined fixed charges and preferred dividends by
$197.1 million and $22.0 million, respectively.
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) - Amended and Restated Installment Sale Agreement, dated
as of February 15, 1996, between System Energy and
Claiborne County, Mississippi (filed as Exhibit B-6(a)
to Rule 24 Certificate dated March 4, 1996 in File No.
70-8511).
** 4(b) - Sixth Supplemental Indenture, dated as of March 1,
1996, to Entergy New Orleans' Mortgage and Deed of
Trust, dated as of May 1, 1987 (filed as Exhibit 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 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 March 31, 1996.
27(b) - Financial Data Schedule for Entergy Arkansas as of
March 31, 1996.
27(c) - Financial Data Schedule for Entergy Gulf States as of
March 31, 1996.
27(d) - Financial Data Schedule for Entergy Louisiana as of
March 31, 1996.
27(e) - Financial Data Schedule for Entergy Mississippi as of
March 31, 1996.
27(f) - Financial Data Schedule for Entergy New Orleans as of
March 31, 1996.
27(g) - Financial Data Schedule for System Energy as of March
31, 1996.
99(a) - Entergy Arkansas' Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(b) - Entergy Gulf States' Computation of Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(c) - Entergy Louisiana's Computation of Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(d) - Entergy Mississippi's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Combined
Fixed Charges and Preferred Dividends, as defined.
99(e) - Entergy New Orleans' Computation of Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(f) - System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
** 99(g) - Annual Reports on Form 10-K of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy for the fiscal year ended December
31, 1995, portions of which are incorporated herein by
reference as described elsewhere in this document
(filed with the SEC in File Nos. 1-11299, 1-10764, 1-
2703, 1-8474, 0-320, 0-5807, and 1-9067,
respectively).
** 99(h) - Opinion of Clark, Thomas & Winters, a professional
corporation, dated September 30, 1992 regarding the
effect of the October 1, 1991 judgment in Entergy Gulf
States v. PUCT in the District Court of Travis County,
Texas (99-1 in Registration No. 33-48889).
** 99(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(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 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 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 March 20, 1996,
was filed with the SEC on March 22, 1996, reporting
information under Item 5. "Other Events."
Entergy and Entergy Gulf States
A current report on Form 8-K, dated March 22, 1996,
was filed with the SEC on 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
Entergy Gulf States' rate regulation in Texas in Note 2 to Entergy
Corporation and Subsidiaries Consolidated Financial Statements, "Rate
and Regulatory Matters," have been reviewed by such firm and are
included herein upon the authority of such firm as experts.
The statements attributed to Sandlin Associates regarding the
analysis of River Bend construction costs of Entergy Gulf States in
Note 2 to Entergy Corporation and Subsidiaries Consolidated Financial
Statements, "Rate and Regulatory Matters," have been reviewed by such
firm and are included herein upon the authority of such firm as
experts.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, each registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized. The signature
for each undersigned company shall be deemed to relate only to
matters having reference to such company or its subsidiaries.
ENTERGY CORPORATION
ENTERGY ARKANSAS, INC.
ENTERGY GULF STATES, INC.
ENTERGY LOUISIANA, INC.
ENTERGY MISSISSIPPI, INC.
ENTERGY NEW ORLEANS, INC.
SYSTEM ENERGY RESOURCES, INC.
/s/ Louis E. Buck, Jr.
Louis E. Buck, Jr.
Vice President, Chief Accounting
Officer and Assistant Secretary
(For each Registrant and for each as
Principal Accounting Officer)
Date: May 6, 1996