SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 000-20371
GULF STATES UTILITIES COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
(Full title of the plan)
ENTERGY CORPORATION
639 Loyola Avenue
New Orleans, Louisiana 70113
(Issuer and address of principal executive office)
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GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
Table of Contents
Page
Number
Herein
(a)Financial Statements:
Report of Independent Accountants 2
Statement of Net Assets Available for Benefits
as of December 31, 1997 3
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 1998 4
Notes to Financial Statements 5
(b)Supplemental Schedule:
Item 27d - Schedule of Reportable Transactions
for the Year Ended December 31, 1998 9
Signature 10
(c)Exhibit:
Consent of PricewaterhouseCoopers LLP 11
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Participants of the Gulf States
Utilities Company Employee Stock Ownership Plan
In our opinion, the accompanying statement of net assets available
for benefits and the related statement of changes in net assets
available for benefits present fairly, in all material respects, the
net assets available for benefits of the Gulf States Utilities Company
Employee Stock Ownership Plan (the "Plan") at December 31, 1997, and
the changes in net assets available for benefits for the year ended
December 31, 1998 in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing
standards which require that we plan and perform the 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental
schedule of Item 27(d)-Schedule of Reportable Transactions is presented
for the purpose of additional analysis and is not a required part of
the basic financial statements but is 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. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
June 23, 1999
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GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 1997
Cash $ -
Investment in Entergy Corporation common stock,
at a fair value of 240,516 shares (cost of $5,328,304) $7,200,450
----------
Net Assets Available for Benefits $7,200,450
==========
See Notes to 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 Year Ended December 31, 1998
Net Assets Available for Benefits -
Beginning of Year $ 7,200,450
Increases:
Investment income:
Dividends 462,151
Contributions:
Employee 2,549,866
Employer 7,670,913
Net realized and unrealized appreciation
in market value of investments 522,039
------------
Total increases 11,204,969
------------
Decreases:
Distributions to withdrawing participants -
securities withdrawn in kind 1,207,254
Transfer to an affiliated plan 17,198,165
------------
Total decreases 18,405,419
------------
Net decrease (7,200,450)
------------
Net Assets Available for Benefits - End of Year $ -
============
See Notes to Financial Statements
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GULF STATES UTILITIES COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
1. GSU ESOP and Entergy Savings Plan Merger
Effective December 31, 1998, the Gulf States Utilities Company
Employee Stock Ownership Plan (the Plan) was merged into the
Entergy Savings Plan. As of that date, the Plan transferred all
assets into the Entergy Savings Plan, and there was no loss of
benefit options to participants or reduction of accrued benefits as
a result of the plan merger. The Entergy Savings Plan was amended
on December 16, 1998, to add certain provisions related to the GSU
ESOP in anticipation of the upcoming merger.
2. Summary of Significant Accounting Policies
Basis of presentation: The accompanying financial statements have
been prepared on the accrual basis and present the Statement of Net
Assets Available for Benefits and the Statement of Changes in Net
Assets Available for Benefits for the Gulf States Utilities Company
Employee Stock Ownership Plan. There is no Statement of Net Assets
Available for Plan Benefits presented as of December 31, 1998 due to
the merger of the Plan into the Entergy Savings Plan efffective
December 31, 1998.
Benefits payable for terminations and withdrawals are included in
net assets available for benefits and are charged against net
assets when paid. This accounting method differs from that
required in the Internal Revenue Service and Department of Labor
Form 5500 which requires benefits payable to be accrued and charged
against net assets in the period the liability arises. However,
there was no difference between net assets available for benefits
at December 31, 1998 and 1997 and the net increase in net assets
available for benefits for the year ended December 31, 1998 from
that reported in the Form 5500.
The Plan presents in the Statement of Changes in Net Assets
Available for Benefits the net appreciation (depreciation) in the
fair value of its investments which consists of the realized gains
or losses and the unrealized appreciation (depreciation) on those
investments.
Investments: Investments in common stock are stated at their fair
value as determined by quoted market prices on the valuation date,
in compliance with the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 (ERISA), as amended. Dividend income is
accrued on the ex-dividend date and subsequently reinvested to
purchase additional common stock for the participants' accounts.
Cash equivalents are valued at cost, which approximates fair value.
Purchases and sales of securities are accounted for on the trade
date.
Expenses: All administrative expenses incurred by the Plan are
borne by Entergy Gulf States, Inc. (formerly Gulf States Utilities
Company, a wholly-owned subsidiary of Entergy Corporation and
referred to herein as the Company). Brokerage commissions, transfer
taxes, fees and other similar expenses arising in connection with
stock purchases are charged to the accounts of the affected
participants. However, the Company reserves the right to have
future administrative expenses paid from certain Plan assets in
accordance with the terms of the Plan and applicable law.
Tax status: The Internal Revenue Service issued a favorable
determination letter on July 15, 1996 stating that the Plan
qualifies under the provisions of Section 401(a) of the Internal
Revenue Code (Code) and is exempt from federal income taxes under
Section 501(a) of the Code. Accordingly, no provisions for federal
income taxes have been made in the accompanying financial
statements.
Use of estimates in the preparation of financial statements: The
preparation of the Plan financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect reported amounts in the
Statement of Net Assets Available for Benefits and the Statement of
Changes in Net Assets Available for Benefits. Adjustments to the
reported amounts may be necessary in the future to the extent that
future estimates or actual results are different from the estimates
used in the 1998 Plan financial statements.
3. Summary of Plan Provisions
The following description of the Plan is provided for general
information purposes only. Plan participants should refer to the
Plan document for a more complete description of the Plan's
provisions.
General: The Plan is a defined contribution plan sponsored by the
Company and is subject to the provisions of ERISA. The ERISA
provisions set forth certain requirements for participation,
vesting of benefits, fiduciary conduct for administering and
handling Plan assets, and for disclosure of Plan information.
Effective December 17, 1997, T. Rowe Price Retirement Plan Services
(T. Rowe Price) became the Trustee and record keeper for the Plan.
Prior to December 17, 1997, First National Bank of Commerce was the
Plan Trustee and the Kwasha Lipton Group was the plan record
keeper.
Eligibility: The Plan is available to all Company employees, pre-
merger Company employees and post-merger employees of Entergy
Operations, Inc. whose primary work location is the River Bend
nuclear plant. Employees become eligible to participate on the day
on which the earlier of the following occurs: (a) the end of the
12-month period following commencement of employment during which
the employee performs 1,000 or more hours of service; or (b) the
completion of 1,000 hours of service by the employee in a 12-month
period measured from the anniversary date of commencement of
employment.
Contributions: All contributions to the Plan are invested in
shares of Entergy Corporation common stock. 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 eligible participants' accounts in the
form of cash and/or common stock, based on a proportion of the
participant's eligible compensation during the year as compared to
the eligible 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.
In 1998, the Company and eligible participants made contributions
of $7.7 million and $2.5 million, respectively.
The Company may also elect to contribute to the Plan for each 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 Entergy 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, no Voluntary Contributions will be permitted
for that Plan year.
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 except for qualified
transitional investments. At December 31, 1997, the Company had
unused 1% and 1/2% additional investment tax credits which were
generated prior to December 31, 1983, of approximately $5.5 million
and $2.7 million, respectively. In 1998, under the provisions of
ERTA, the Company fully utilized such credits to reduce the
Company's tax liability.
Vesting: Amounts contributed by participants and the Company are
fully vested at the time of deposit.
Plan termination: 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,
participants would receive the total share balance of their
accounts. See disclosure regarding plan merger in footnote 1.
In-Service withdrawals: While employed, participants may, with
certain restrictions, withdraw a portion of their account after the
participant completes an 84-month holding period or after the
participant reaches age 55 and completes 10 years of participation.
The amount of in-service withdrawal is limited by provisions of the
Internal Revenue Code of 1986, as amended (the Code), applicable to
the Plan and may be subject to an additional 10% premature
distribution tax unless the participant is age 59-1/2 or older.
Withdrawals from the Plan are in the form of stock certificates,
plus cash for the value of any fractional share.
Distributions upon separation from service: Upon leaving the
Company, participants become eligible to receive a single-sum
distribution of the entire share balance of their Plan account,
with certain additional provisions regarding distribution deferral
of account balances in excess of $3,500 and mandatory distribution
upon attaining age 70-1/2. Generally, there are tax consequences
associated with receiving a distribution from the Plan, unless the
taxable portion is rolled over to an individual retirement account
or another retirement plan account which qualifies under Sections
401(a) or 408(a) of the Code. Additionally, a 10% penalty tax for
early withdrawal applies, unless the distribution is received after
age 55 or the participant satisfies one of the legal exemptions to
such tax. Distributions from the Plan are in the form of stock
certificates, plus cash for the value of any fractional share.
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SUPPLEMENTAL SCHEDULE
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<TABLE>
<CAPTION>
GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
ITEM 27 (d) - SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1998
E.I.N. 74-0662730 (Plan No. 003)
Selling or
Number of Purchase Redemption
Description Transactions Price Price Cost Gain/(Loss)
<S> <C> <C> <C> <C> <C>
Purchase Transactions:
Purchase of 249,659 shares of Entergy
Corporation common stock* 1 $7,670,913 - - -
* Denotes a party-in-interest to the Plan
</TABLE>
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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.
GULF STATES UTILITIES COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
By: /s/ Darrell A. Guidroz
Darrell A. Guidroz
Director, HR Compensation
and Benefits
Date: June 28, 1999
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
registration statement on Form S-8 (File No. 2-98011) of Entergy Gulf
States, Inc. (formerly Gulf States Utilities Company) of our report
dated June 23, 1999, related to the financial statements and
supplemental schedule of the Gulf States Utilities Company Employee
Stock Ownership Plan, which appears in this Form 11-K.
New Orleans, Louisiana
June 24, 1999
