SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date earliest event reported) December 4, 1998
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-11299 ENTERGY CORPORATION 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 4, 1998, Entergy Corporation ("Entergy") sold its indirect
ownership interest in Entergy London Investments PLC (ELI) whose principal
asset is London Electricity. London Electricity is a regional electric
distribution company in London, England serving customers in the London
metropolitan area. The business was sold to Electricite' de France,
France's national electrical utility, for approximately $3.185 billion.
Entergy expects to realize approximately $1.00 in earnings per share
in calendar 1998 as a result of the sale. The net cash proceeds from the
transaction after the repayment of outstanding acquisition-related debt are
approximately $860 million. Entergy has invested net proceeds from this
transaction in short-term investments.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(b) Pro Forma Financial Information
The accompanying unaudited pro forma financial information has been
prepared in accordance with U.S. generally accepted accounting principles
and should be read in conjunction with the related notes and the
consolidated financial statements of Entergy and ELI. The most recent
financial statements of Entergy and ELI are included in their respective
Annual Reports on Form 10-K for the year ended December 31, 1997 and
Quarterly Reports on Form 10-Q for the quarter ended September 30, 1998.
Pro Forma Condensed Consolidated Balance Sheet
The accompanying unaudited pro forma condensed consolidated balance
sheet gives effect to the sale of ELI as if the transaction had been
consummated on September 30, 1998. Accordingly, the pro forma adjustments
include the proceeds from the sale of ELI, which were denominated in
British Pounds Sterling (BPS) and converted to U.S. dollars using the
exchange rate as of September 30, 1998 (1BPS equals U.S. $1.70).
Pro Forma Condensed Statements of Consolidated Income
The accompanying unaudited pro forma condensed statements of consolidated
income give effect to the sale of ELI as if the transaction had been
consummated on January 1, 1997. Accordingly, ELI's historical results have
been adjusted out of the pro forma financial statements for the year ended
December 31, 1997 and the nine months ended September 30, 1998. The gain
on the sale of ELI and the related income tax effects have been excluded
from the pro forma adjustments on the condensed statements of consolidated
income. The pro forma income statements reflect the following:
- Reduction in interest expense due to the assumed repayment of
acquisition indebtedness.
- Reduction in interest expense due to assumed repayment of Entergy
revolving debt with remaining proceeds.
- Assumed interest rate on Entergy revolving debt of 8%.
- Assumed income tax rate of 35% on pro forma adjustments.
The pro forma information is presented for illustrative purposes only
and is not necessarily indicative of the operating results that would have
occurred if the sale of ELI had taken place at the beginning of the period
specified, nor is it necessarily indicative of future operating results.
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<TABLE>
<CAPTION>
Entergy Corporation and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1998
(in thousands)
(Unaudited)
Entergy
Corporation and Entergy London Pro Forma Entergy Corporation and
Subsidiaries Investments, PLC Adjustments Subsidiaries
Historical Historical (Note 1) and Eliminations Pro Forma
<S> <C> <C> <C> <C>
Current assets $3,474,092 $488,648 $976,000 (2) $3,961,444
Other property and investments 1,392,819 18,649 1,374,170
Utility plant, net 18,181,705 2,411,695 15,770,010
Deferred debits and other assets 4,321,643 1,653,837 2,667,806
------------------------------------------- -----------
Total assets $27,370,259 $4,572,829 $976,000 $23,773,430
=========================================== ===========
Current liabilities $3,184,299 $820,908 $260,000 (3) $2,623,391
Deferred credits and other liabilities 7,163,274 1,255,953 5,907,321
Long term debt 8,942,186 1,729,691 7,212,495
Preferred securities 1,178,210 300,000 878,210
Common shareholders' equity 6,902,290 466,277 $716,000 7,152,013
------------------------------------------- -----------
Total liabilities and shareholders' equity $27,370,259 $4,572,829 $976,000 $23,773,430
=========================================== ===========
</TABLE>
The pro forma condensed consolidated balance sheet reflects the
following adjustments in order to present the pro forma financial
position of Entergy Corporation and Subsidiaries after giving effect to
the sale of ELI as if the transaction had been consummated on September
30, 1998:
(1) To eliminate ELI's historical balances as of September 30,
1998.
(2) To record net proceeds from the sale of ELI after repayment
of related acquisition debt.
(3) To record accruals for settlement costs related to the sale
of ELI and estimated income taxes on pro forma adjustments
at an assumed effective rate of 35%.
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<TABLE>
<CAPTION>
Entergy Corporation and Subsidiaries
Pro Forma Condensed Statement of Consolidated Income
For the nine months ended September 30, 1998
(in thousands, except share data)
(Unaudited)
Entergy Entergy London Pro Forma Entergy Corporation
Corporation and Investments, Adjustments and Subsidiaries
Subsidiaries PLC Historical and Pro Forma
Historical (Note 1) Eliminations
<S> <C> <C> <C> <C>
Operating revenues $9,409,353 $1,494,552 - $7,914,801
Operating expenses 8,060,463 1,269,380 - 6,791,083
------------------------------------- ----------
Operating income 1,348,890 225,172 - 1,123,718
Other income (deductions) 9,500 24,970 (15,470)
Interest charges 626,941 147,589 (57,000) (2) 422,352
------------------------------------- ----------
Income before income taxes 731,449 102,553 57,000 685,896
Income taxes 192,820 22 19,950 (3) 212,748
------------------------------------- ----------
Net income before preferred dividend
requirements and other 538,629 102,531 37,050 473,148
Preferred and preference dividend
requirements of subsidiaries and other 35,091 - - 35,091
------------------------------------- ----------
Consolidated net income 503,538 102,531 37,050 438,057
Foreign currency translation adjustment (18,556) 24,974 - (43,530)
------------------------------------- ----------
Comprehensive net income $484,982 $127,505 $37,050 $394,527
===================================== ==========
Earnings per average common share:
Basic and diluted $2.04 $1.78
Average number of common shares outstanding:
Basic 246,331,931 246,331,931
Diluted 246,432,782 246,432,782
</TABLE>
The pro forma condensed statement of consolidated income reflects the
following adjustments in order to present the historical results of
operations of Entergy after giving effect to the sale of ELI as if the
transaction had been consummated on January 1, 1997:
(1) To eliminate ELI's historical results of operations for the nine
months ended September 30, 1998.
(2) To reflect the assumed retirement of additional Entergy and
subsidiary debt with remaining proceeds from the sale of ELI
after the liquidation of outstanding acquisition-related debt at
an assumed interest rate of 8.0%.
(3) To record impact of assumed income tax rate of 35% on pro forma
adjustments.
<PAGE>
<TABLE>
<CAPTION>
Entergy Corporation and Subsidiaries
Pro Forma Condensed Statement of Consolidated Income
For the year ended December 31, 1997
(in thousands, except share data)
(Unaudited)
Entergy Entergy London Pro Forma Entergy Corporation
Corporation and Investments, Adjustments and
Subsidiaries PLC Historical and Subsidiaries
Historical (Note 1) Eliminations Pro Forma
<S> <C> <C> <C> <C>
Operating revenues $9,561,721 $1,847,042 - $7,714,679
Operating expenses 7,704,563 1,660,232 - 6,044,331
------------------------------------- ----------
Operating income 1,857,158 186,810 - 1,670,348
Other income (deductions) (222,646) 21,525 (244,171)
Interest charges 862,272 178,647 (76,000)(2) 607,625
------------------------------------- ----------
Income before income taxes 772,240 29,688 76,000 818,552
Income taxes 471,341 177,023 26,600 (3) 320,918
------------------------------------- ----------
Net income (loss) before preferred
dividend requirements and other 300,899 (147,335) 49,400 497,634
Preferred and preference dividend requirements
of subsidiaries and other 53,216 - - 53,216
------------------------------------- ----------
Consolidated net income (loss) 247,683 (147,335) 49,400 444,418
Foreign currency translation adjustment - - - -
------------------------------------- ----------
Comprehensive net income (loss) $247,683 ($147,335) $49,400 $444,418
===================================== ==========
Earnings per average common share:
Basic and diluted $1.03 $1.85
Average number of common shares outstanding:
Basic 240,207,539 240,207,539
Diluted 240,297,842 240,297,842
</TABLE>
The pro forma condensed statement of consolidated income reflects the
following adjustments in order to present the historical results of
operations of Entergy after giving effect to the sale of ELI as if the
transaction had been consummated on January 1, 1997:
(1) To eliminate ELI's historical results of operations for the year
ended December 31, 1997.
(2) To reflect the assumed retirement of additional Entergy and
subsidiary debt with remaining proceeds from the sale of ELI
after the liquidation of outstanding acquisition-related debt at
an assumed interest rate of 8.0%.
(3) To record impact of assumed income tax rate of 35% on pro forma
adjustments.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ENTERGY CORPORATION
By: /s/Nathan E. Langston
Nathan E. Langston
Vice President and Chief
Accounting Officer
Dated: December 21, 1998
