GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
WITH REPORT OF INDEPENDENT ACCOUNTANTS
for the years ended December 31, 1993 and 1992
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GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
INDEX OF FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Page
Report of Independent Accountants 2
Financial Statements:
Statement of Net Assets Available for Benefits 3
as of December 31, 1993 and 1992
Statement of Changes in Net Assets Available for 4
Benefits for the years ended December 31, 1993
and 1992
Notes to Financial Statements 5
Supplemental Schedules:
Item 27 (a) - Schedule of Assets Held for Investment 10
Purposes as of December 31, 1993
Item 27 (d) - Schedule of Reportable Transactions 11
for the year ended December 31, 1993
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Employee Benefits Committee of
Entergy Corporation:
We have audited the accompanying statements of net assets
available for benefits of Gulf States Utilities Company Employee
Stock Ownership Plan (the Plan) as of December 31, 1993 and 1992,
and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements
are the responsibility of the Employee Benefits Committee. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform our audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 1993 and
1992, and the changes in net assets available for benefits for
the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules listed in the index on page 1 are
presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The
supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial
statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/ Coopers & Lybrand
Coopers & Lybrand
Houston, Texas
June 23, 1994
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GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
as of December 31
1993 1992
Cash $39 $5
Investment in Entergy Corporation common stock, at
market value, 319,995 shares (cost of $7,314,085) 11,519,820
Investment in Gulf States Utilities Company common
stock, at market value, 650,586 shares (cost of 10,572,023
$8,297,918)
Due from employees 31,318
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Net Assets Available for Benefits $11,519,859 $10,603,346
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The accompanying notes are an integral part of the financial statements.
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GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the years ended December 31
1993 1992
Net Appreciation in Market Value of Investments $1,931,978 $4,021,728
----------- -----------
Distributions:
Cash (1,095) (574)
Securities withdrawn in kind (983,052) (606,758)
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(984,147) (607,332)
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Other (31,318)
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Increase in Net Assets Available for Benefits 916,513 3,414,396
Net Assets Available for Benefits, Beginning of Year 10,603,346 7,188,950
----------- -----------
Net Assets Available for Benefits, End of Year $11,519,859 $10,603,346
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The accompanying notes are an integral part of the financial statements.
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GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description:
The following brief description of the Gulf States Utilities
Company Employee Stock Ownership Plan (the "Plan") is provided
for general information purposes only. Participants should refer
to the Plan document for more complete information.
General. The Plan is a defined contribution plan of Gulf
States Utilities Company (the "Company") designed to enable
eligible employees of the Company to acquire shares of the
Company's common stock. Participation in the Plan is available
to all employees of the Company who have completed one year
of service during which they worked 1,000 or more hours. The
Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). At December 31, 1993
all assets of the Plan were held by Texas Commerce Bank -
Beaumont, N.A., as Trustee for the Plan.
Contributions. The Company's "Basic Contribution" to the
Plan for each plan year is an amount equivalent to the
additional 1% investment tax credit claimed by the Company on
its federal income tax return. The Company's Basic
Contribution is allocated to participants accounts in the form
of common stock, based on a proportion of the participant's
compensation during the plan year as compared to the total
compensation of all eligible participants (up to $100,000 per
participant). No contributions of any type are required of a
participant in order for the participant to receive his or her
proportionate share of the Company's Basic Contribution.
The Company may also elect to contribute to the Plan for
each plan year an amount equivalent to an additional 1/2%
investment tax credit, to the extent that the Company's
contribution is matched by participants' contributions. For
purposes of the Plan, the Company's contribution is the
"Matching Contribution" and the participants' contributions
are the "Voluntary Contributions." The Voluntary
Contributions are also invested in common stock and credited
to the participants' accounts along with common stock
attributable to the Matching Contribution. The Plan allows
employees to make Voluntary Contributions to the Plan for
those plan years in which the Company elects to make a
Matching Contribution. In the event the Company does not
elect to make a Matching Contribution, then no Voluntary
Contributions will be permitted for that plan year. For the
plan year ended December 31, 1993, 4,711 employees would have
been eligible to participate in the Plan if the Company were
to make a 1% contribution.
As required by the Economic Recovery Tax Act of 1981 ("ERTA"),
the 1% and the additional 1/2% investment tax credits, which
formed the basis of the Plan, are not available to the Company
for qualified investments made after December 31, 1982. At
December 31, 1993, the Company had unused 1% and 1/2%
additional investment tax credits which were generated prior
to December 31, 1982, of approximately $12.9 million and $7.1
million, respectively. Under the provisions of ERTA, the
Company will be allowed to carryforward such credits until
such time as they are fully utilized to reduce the Company's
tax liability, but only through 1998. Of these amounts, $4.3
million and $2.8 million, respectively, represent a reversal
of tax credits which were utilized by the Company and served
as the basis for its contributions to the Plan for 1982. Such
reversal was necessitated by the carryback of a net operating
loss generated for tax purposes during 1985 by the Company.
The Company's contributions for 1982 have been, and will
remain, allocated to the participants' accounts under the
Plan. Accordingly, no additional contributions will be made
by the Company to the Plan until the Company is able to re-
utilize the reversed tax credits.
The Internal Revenue Code of 1986, as amended (the
"Code"), limits the total amount of all contributions which
highly compensated employees may make to the Plan as a
percentage of all contributions made by all other employees.
Moreover, the Code also limits the total amount of all
contributions which can be made for an employee who is a
participant not only in the Plan but also in the Company's
Trusteed Retirement Plan and the Employees' Thrift Plan.
Vesting Provisions. All Basic, Matching, and Voluntary
Contributions are 100% vested as of the date of deposit to a
participant's account and are nonforfeitable.
Payment of Benefits. Each participant will be entitled to
receive distribution of the full value of his or her Plan
account if the participant terminates service with the Company
for any reason. In addition, a participant may withdraw a
portion of his or her account after the participant completes
an 84-month holding period or after the participant reaches
age 55 and completes 10 years of Plan participation. The
amount of in-service withdrawal is limited by provisions of
the Internal Revenue Code applicable to the Plan and may be
subject to a 10% penalty unless the participant is age 59 1/2
or older. All distributions from the Plan are in the form of
stock certificates, plus cash for the value of any fractional
share.
Termination of the Plan. Although it has not expressed any
intent to do so, the Company has the right under the Plan to
discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan
termination, each participant or his or her beneficiary would
be entitled to receive distribution of the full value of the
participant's account.
2. Summary of Significant Accounting Policies:
Basis of Presentation. The financial statements of the Plan
are prepared on the accrual basis in accordance with generally
accepted accounting principles. The following are significant
accounting policies followed by the Plan:
Investments. Investments in common stock are valued at the
closing price on the New York Stock Exchange on the last
business day of the plan year. Purchases of common stock are
valued and purchased in the open market through a broker on a
national or regional securities exchange. Any brokerage
commissions, transfer taxes, fees and other similar expenses
arising in connection with stock purchases are charged to the
accounts of the affected participants. Dividend income is
accrued on the ex-dividend date and subsequently reinvested to
purchase additional common stock for the employees' accounts.
Contributions. Contributions are accrued by the Plan in
accordance with Plan provisions. Accrued estimates are
adjusted to the actual additional investment tax credit
included by the Company in its Federal income tax return and
attributable to the Plan at the date such return is filed,
generally September 15 of the year following the plan year.
Expenses. Presently, all expenses of the Plan are paid
directly by the Company, although the Company reserves the
right to have any future expenses paid from the Plan assets or
withheld out of the Company's contribution.
Net Appreciation (Depreciation). The Plan presents in the
Statement of Changes in Net Assets Available for Benefits the
net appreciation (depreciation) in the market value of its
investments which consists of the realized gains or losses and
the unrealized appreciation (depreciation) on those
investments.
3. Tax Status:
The Internal Revenue Service ("IRS") advised the Company
on August 7, 1986, that the Plan, as amended effective January
1, 1984, constitutes a qualified plan and trust under Section
401(a) of the Code and is, therefore, exempt from Federal
income taxes under provisions of Section 501(a). As a part of
the Tax Reform Act of 1986 and subsequent legislation, certain
changes have also been enacted in the Code which became
applicable to the Plan effective as of January 1, 1989 and
January 1, 1993. The Company believes it has made all
necessary amendments to maintain the Plan's qualified status
under the Code and the Company will apply for a determination
letter from the IRS that the amended and restated Plan remains
qualified under the Code and ERISA. However, there can be no
assurance that a favorable determination letter will be issued
by the IRS.
4. Entergy Corporation/Gulf States Utilities Company Business
Combination:
On June 5, 1992, the Company entered into an Agreement and
Plan of Reorganization with Entergy Corporation providing for
a combination of the companies pursuant to which common
shareholders of the Company would, upon consummation of the
transaction, receive $20 in cash or .558 shares of common
stock of Entergy Corporation for each share of Gulf States
Utilities common stock. All necessary regulatory and
shareholders approvals were received and the merger became
effective on December 31, 1993. Accordingly, 573,468 shares
of Gulf States Utilities common stock were converted to
Entergy Corporation common stock effective December 31, 1993.
Also effective with the signing of the merger, the Plan was
amended to redefine certain terms used in the Plan and to
establish the Employee Benefits Committee of Entergy
Corporation as the administrator of the Plan. All references
to common stock after the effective time of the merger refer
to common stock of Entergy Corporation.
5. Subsequent Event:
The market value of Entergy Corporation common stock decreased
from $36.00 per share at December 31, 1993 to $25.375 per
share at June 22, 1994.
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SUPPLEMENTAL SCHEDULES
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GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27 (a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
as of December 31, 1993
Description of Investment Shares Cost Current Value
Entergy Corporation, common stock 319,995 $7,314,085 $11,519,820
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GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27 (d) - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1993
Purchase or
Description Sale Price Cost Gain/Loss
Aggregate of transactions with Texas Commerce
Bank - Beaumont, N.A., Trustee:
Distribution of 77,054 shares of Gulf States
Utilities Company common stock to 114
participants - $983,052 -
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SIGNATURE
The Plan. Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Employee Benefits Committee has duly caused
this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
EMPLOYEE STOCK OWNERSHIP PLAN OF
GULF STATES UTILITIES COMPANY
By: /s/ William O. VanAs
William O. VanAs
Director of
Employee Benefits
Date: July 6, 1994
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Gulf States Utilities Company on Form S-8 (File No. 2-
98011) of our report dated June 23, 1994, on our audits of the
financial statements of Gulf States Utilities Company Employee Stock
Ownership Plan as of December 31, 1993 and 1992, and for the years
then ended, and the supplemental schedules as of and for the year
ended December 31, 1993, which report is included in this Annual
Report on Form 11-K.
/s/ Coopers & Lybrand
COOPERS & LYBRAND
Houston, Texas
June 23, 1994
