FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1994
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 and Telephone Number Identification No.
1-11299 ENTERGY CORPORATION 13-5550175
(a Delaware corporation)
225 Baronne Street
New Orleans, Louisiana 70112
Telephone (504) 529-5262
1-10764 ARKANSAS POWER & LIGHT COMPANY 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-2703 GULF STATES UTILITIES COMPANY 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 LOUISIANA POWER & LIGHT COMPANY 72-0245590
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70112
Telephone (504) 569-4000
0-320 MISSISSIPPI POWER & LIGHT COMPANY 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 969-2311
0-5807 NEW ORLEANS PUBLIC SERVICE INC. 72-0273040
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70112
Telephone (504) 569-4000
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 984-9000
<PAGE>
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, 1994
Entergy Corporation ($0.01 par value) 230,024,379
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 1994
Page
Number
Definitions 1
Financial Statements:
Entergy Corporation and Subsidiaries:
Consolidated Balance Sheets 4
Statements of Consolidated Income 6
Statements of Consolidated Cash Flows 7
Selected Operating Results 9
Arkansas Power & Light Company:
Balance Sheets 10
Statements of Income 12
Statements of Cash Flows 13
Selected Operating Results 14
Gulf States Utilities Company:
Balance Sheets 15
Statements of Income 17
Statements of Cash Flows 18
Selected Operating Results 19
Louisiana Power & Light Company:
Balance Sheets 20
Statements of Income 22
Statements of Cash Flows 23
Selected Operating Results 24
Mississippi Power & Light Company:
Balance Sheets 25
Statements of Income 27
Statements of Cash Flows 28
Selected Operating Results 29
New Orleans Public Service Inc.:
Balance Sheets 30
Statements of Income 32
Statements of Cash Flows 33
Selected Operating Results 34
System Energy Resources, Inc.:
Balance Sheets 35
Statements of Income 37
Statements of Cash Flows 38
Notes to Financial Statements 39
Management's Financial Discussion and Analysis 54
Part II:
Item 1. Legal Proceedings 67
Item 4. Submission of Matters to a Vote
of Security Holders 73
Item 5. Other Information 75
Item 6. Exhibits and Reports on Form 8-K 77
Experts 80
Signature 81
<PAGE>
This combined Form 10-Q is separately filed by Entergy
Corporation, Arkansas Power & Light Company, Gulf States
Utilities Company, Louisiana Power & Light Company, Mississippi
Power & Light Company, New Orleans Public Service Inc., and
System Energy Resources, Inc. Information contained herein
relating to any individual company is filed by such company on
its own behalf. Each company makes no representation as to
information relating to the other companies. This combined Form
10-Q supplements and updates the Form 10-K, for the calendar year
ended December 31, 1993, filed by the individual registrants with
the SEC on March 17, 1994, and must be read in conjunction
therewith.
DEFINITIONS
Certain abbreviations or acronyms used in the text are defined
below:
Abbreviation or Acronym Term
ALJ Administrative Law Judge
ANO Arkansas Nuclear One Steam Electric
Generating Station
ANO 2 Unit No. 2 of ANO
AP&L Arkansas Power & Light Company
APSC Arkansas Public Service Commission
Availability
Agreement Agreement, dated as of June 21, 1974,
as amended, among System Energy and
AP&L, LP&L, MP&L, and NOPSI, and the
assignments thereof
Capital Funds Agreement Agreement, dated as of June 21, 1974,
as amended, between System Energy and
Entergy Corporation, and the assignments
thereof
CCLM Customer-Controlled Load Management (a
DSM activity utilizing residential time-
of-use rates)
City of New Orleans
or City New Orleans, Louisiana
Council Council of the City of New Orleans,
Louisiana
D.C. Circuit United States Court of Appeals for the
District of Columbia Circuit
DSM Demand-Side Management (Least Cost Plan
activities that influence electricity
usage by customers)
Entergy Corporation Entergy Corporation, a Delaware
corporation, successor to Entergy
Corporation, a Florida Corporation
Entergy Operations Entergy Operations, Inc., a subsidiary
of Entergy Corporation that has
operating responsibility for Grand Gulf
1, Waterford 3, and ANO
Entergy or System Entergy Corporation and its various
direct and indirect subsidiaries
Entergy Power Entergy Power, Inc., a subsidiary of
Entergy Corporation that markets
capacity and energy from certain
generating facilities to other parties,
principally non-affiliates, for resale
Entergy Services Entergy Services, Inc.
FERC Federal Energy Regulatory Commission
Form 10-K The combined Annual Report on Form 10-K
for the year ended December 31, 1993, of
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI,
and System Energy
G&R Bonds General and Refunding Mortgage Bonds
issued and issuable by MP&L and NOPSI
Grand Gulf Station Grand Gulf Steam Electric Generating
Station
Grand Gulf 1 Unit No. 1 of the Grand Gulf Station
GSU Gulf States Utilities Company
KWH Kilowatt-Hour(s)
Least Cost Plan Least Cost Integrated Resource Plan
(combination of demand- and supply-side
resources to be used by Entergy to
satisfy electricity demand
LP&L Louisiana Power & Light Company
LPSC Louisiana Public Service Commission
Merger The combination transaction,
consummated on December 31, 1993, by
which GSU became a subsidiary of Entergy
Corporation and Entergy Corporation
became a Delaware Corporation
Money Pool System Money Pool, which allows certain
System companies to borrow from, or lend
to, certain other System companies
MP&L Mississippi Power & Light Company
MPSC Mississippi Public Service Commission
1991 NOPSI Settlement Agreement, retroactive to October 4,
1991, among NOPSI, the Council and the
Alliance for Affordable Energy, Inc.
that settled certain Grand Gulf 1
prudence issues and pending litigation
related to a resolution adopted by the
Council disallowing the recovery by
NOPSI of $135 million of previously
deferred Grand Gulf 1-related costs
NOPSI New Orleans Public Service Inc.
NRC Nuclear Regulatory Commission
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
Rate Cap The level of GSU's retail electric base
rates in effect at December 31, 1993,
for the Louisiana retail jurisdiction,
and the level in effect prior to the
Texas Cities Rate Settlement for the
Texas retail jurisdiction, that may not
be exceeded for the five years following
December 31, 1993
Reallocation Agreement 1981 Agreement, superseded in part by a
June 13, 1985 decision of the FERC,
among AP&L, LP&L, MP&L, NOPSI, and
System Energy relating to the sale and
capacity of energy from the Grand Gulf
Station
River Bend River Bend Steam Electric Generating
Station, owned 70% by GSU
Revised Plan MP&L's Grand Gulf 1-related rate phase-
in plan, originally approved by the MPSC
in an order issued on September 16,
1985, as modified by the MPSC order
issued September 29, 1988, to bring such
plan into compliance with the
requirements of SFAS No. 92
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting
Standards as promulgated by the
Financial Accounting Standards Board
SFAS 109 SFAS No. 109, "Accounting for Income
Taxes"
System Agreement Agreement, effective January 1, 1983,
as modified by a June 13, 1985, decision
of the FERC, among the System operating
companies relating to the sharing of
generating capacity and other power
resources
System Energy System Energy Resources, Inc.
System Fuels System Fuels, Inc.
System operating
companies AP&L, GSU, LP&L, MP&L, and NOPSI,
collectively
System or Entergy Entergy Corporation and its various
direct and indirect subsidiaries
Unit Power Sales
Agreement Agreement, dated as of June 10,
1982, as amended, among AP&L, LP&L,
MP&L, NOPSI, and System Energy, relating
to the sale of capacity and energy from
System Energy's share of Grand Gulf 1
Waterford 3 Unit No. 3 of the Waterford Steam
Electric Generating Station
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
----------- -----------
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $20,878,026 $20,848,844
Plant acquisition adjustment - GSU 377,052 380,117
Electric plant under leases 664,806 663,024
Property under capital leases - electric 173,954 175,276
Natural gas 190,621 156,452
Steam products 43,176 75,689
Construction work in progress 651,028 533,112
Nuclear fuel under capital leases 321,253 329,433
Nuclear fuel 24,901 17,760
----------- -----------
Total 23,324,817 23,179,707
Less - accumulated depreciation and amortization 7,296,056 7,157,981
----------- -----------
Utility plant - net 16,028,761 16,021,726
----------- -----------
Other Property and Investments:
Decommissioning trust funds 197,532 172,960
Other 185,612 183,597
----------- -----------
Total 383,144 356,557
----------- -----------
Current Assets:
Cash and cash equivalents:
Cash 169,935 27,345
Temporary cash investments - at cost,
which approximates market 324,990 536,404
----------- -----------
Total cash and cash equivalents 494,925 563,749
Special deposits 9,247 36,612
Notes receivable 17,076 17,710
Accounts receivable:
Customer (less allowance for doubtful accounts of
$8.6 million in 1994 and $8.8 million in 1993) 296,603 315,796
Other 61,544 81,931
Accrued unbilled revenues 207,053 257,321
Fuel inventory 86,582 110,204
Materials and supplies - at average cost 359,209 360,353
Rate deferrals 345,622 333,311
Prepayments and other 95,960 98,144
----------- -----------
Total 1,973,821 2,175,131
----------- -----------
Deferred Debits and Other Assets:
Rate deferrals 1,785,163 1,876,051
SFAS 109 regulatory asset - net 1,220,674 1,385,824
Long-term receivables 235,546 228,030
Unamortized loss on reacquired debt 246,673 210,698
Other 640,825 622,680
----------- -----------
Total 4,128,881 4,323,283
----------- -----------
TOTAL $22,514,607 $22,876,697
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
----------- -----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, $0.01 par value, authorized 500,000,000
shares; issued 231,219,737 shares in 1994 and 1993 $2,312 $2,312
Paid-in capital 4,224,207 4,223,682
Retained earnings 2,172,493 2,310,082
Less - treasury stock (1,001,243 shares in 1994) 35,456 -
----------- -----------
Total common shareholders' equity 6,363,556 6,536,076
Preference stock 150,000 150,000
Subsidiaries' preferred stock:
Without sinking fund 550,955 550,955
With sinking fund 324,803 349,053
Long-term debt 7,309,630 7,355,962
----------- -----------
Total 14,698,944 14,942,046
----------- -----------
Other Noncurrent Liabilities:
Obligations under capital leases 310,508 322,867
Other 294,907 270,318
----------- -----------
Total 605,415 593,185
----------- -----------
Current Liabilities:
Currently maturing long-term debt 371,210 322,010
Notes payable 43,667 43,667
Accounts payable 310,136 413,727
Customer deposits 129,365 127,524
Taxes accrued 135,207 118,267
Accumulated deferred income taxes 80,312 44,637
Interest accrued 201,505 210,894
Dividends declared 117,881 13,404
Deferred revenue - gas supplier judgment proceeds 4,349 14,632
Deferred fuel cost 9,251 4,528
Obligations under capital leases 185,603 194,015
Other 202,616 240,471
----------- -----------
Total 1,791,102 1,747,776
----------- -----------
Deferred Credits:
Accumulated deferred income taxes 3,831,036 3,849,439
Accumulated deferred investment tax credits 777,123 802,273
Other 810,987 941,978
----------- -----------
Total 5,419,146 5,593,690
----------- -----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $22,514,607 $22,876,697
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
----------- -----------
(In Thousands)
<S> <C> <C>
Operating Revenues:
Electric $1,340,252 $897,266
Natural gas 54,079 29,146
Steam products 11,708 -
----------- -----------
Total 1,406,039 926,412
----------- -----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 314,728 176,935
Purchased power 124,796 56,813
Nuclear refueling outage expenses 16,825 17,099
Other operation and maintenance 334,932 231,069
Depreciation and decommissioning 160,809 110,130
Taxes other than income taxes 72,852 48,410
Income taxes 33,553 31,786
Rate deferrals:
Rate deferrals - (1,313)
Amortization of rate deferrals 93,674 62,740
----------- -----------
Total 1,152,169 733,669
----------- -----------
Operating Income 253,870 192,743
----------- -----------
Other Income (Deductions):
Allowance for equity funds used
during construction 3,535 2,152
Miscellaneous - net 14,362 15,387
Income taxes (8,197) (9,577)
----------- -----------
Total 9,700 7,962
----------- -----------
Interest and Other Charges:
Interest on long-term debt 160,395 123,719
Other interest - net 14,140 6,614
Allowance for borrowed funds used
during construction (2,642) (1,526)
Preferred and preference dividend
requirements of subsidiaries and other 20,942 14,585
----------- -----------
Total 192,835 143,392
----------- -----------
Income before Cumulative Effect of
a Change in Accounting Principle 70,735 57,313
Cumulative effect to January 1, 1993,
of Accruing Unbilled Revenues (net
of income taxes of $57,188) - 93,841
----------- -----------
Net Income $70,735 $151,154
=========== ===========
Earnings per average common share
before cumulative effect of a
change in accounting principle $0.31 $0.33
Earnings per average common share $0.31 $0.86
Dividends declared per common share $0.90 $0.80
Average number of common shares
outstanding 230,584,786 175,108,922
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $70,735 $151,154
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (93,841)
Change in rate deferrals/excess capacity-net 80,768 36,290
Depreciation and decommissioning 160,809 110,130
Deferred income taxes and investment tax credits 1,064 (8,218)
Allowance for equity funds used during construction (3,535) (2,152)
Amortization of deferred revenues (10,283) (9,311)
Provision for estimated losses and reserves (13,503) 9,934
Changes in working capital:
Receivables 89,848 35,943
Fuel inventory 23,622 4,065
Accounts payable (103,591) (48,034)
Taxes accrued 16,940 9,505
Interest accrued (9,389) (8,124)
Other working capital accounts 36 (770)
Refunds to customers - gas contract settlement - (56,027)
Decommissioning trust contributions (5,516) (5,706)
Other 24,426 30,796
-------- --------
Net cash flow provided by operating activities 322,431 155,634
-------- --------
Investing Activities:
Construction/capital expenditures (175,107) (86,836)
Allowance for equity funds used during construction 3,535 2,152
Nuclear fuel purchases (9,344) (17,015)
Proceeds from sale/leaseback of nuclear fuel 1,035 -
Investment in nonregulated/nonutility properties 240 (58,229)
Decrease in other temporary investments - 9,012
-------- --------
Net cash flow used in investing activities (179,641) (150,916)
-------- --------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds - 100,000
General and refunding mortgage bonds - 195,000
Bank notes and other long term debt - 788
Premium and expense on refinancing sale/leaseback bond (47,602) -
Retirement of:
First mortgage bonds (400) (88,585)
General and refunding mortgage bonds - (84,400)
Bank notes and other long-term debt (44) -
Repurchase of common stock (35,590) (6,524)
Redemption of preferred stock (24,250) (22,000)
Common stock dividends paid (103,728) (69,629)
-------- --------
Net cash flow provided by (used in) financing activities (211,614) 24,650
-------- --------
Net increase (decrease) in cash and cash equivalents (68,824) 29,368
Cash and cash equivalents at beginning of period 563,749 379,792
-------- --------
Cash and cash equivalents at end of period $494,925 $409,160
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $169,748 $134,450
Income taxes $(6,070) $14,197
Noncash investing and financing activities:
Capital lease obligations incurred $20,547 $232
Excess of fair value of decommissioning trust
assets over amount invested $15,634 -
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- -----------------------------------------------------------------------------------
(In Millions)
<S> <C> <C> <C>
Electric Operating Revenues:
Residential $ 476.0 $ 323.1 $ 152.9 47
Commercial 339.1 227.0 112.1 49
Industrial 436.1 268.5 167.6 62
Governmental 38.9 31.1 7.8 25
--------- ------- -------
Total retail 1,290.1 849.7 440.4 52
Sales for resale 69.4 58.2 11.2 19
Other (19.3) (10.6) (8.7) (82)
--------- ------- -------
Total $ 1,340.2 $ 897.3 $ 442.9 49
========= ======= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 6,062 4,072 1,990 49
Commercial 4,406 2,884 1,522 53
Industrial 9,728 5,853 3,875 66
Governmental 525 433 92 21
--------- ------- -------
Total retail 20,721 13,242 7,479 56
Sales for resale 1,736 1,704 32 2
--------- ------- -------
Total 22,457 14,946 7,511 50
========= ======= =======
Note: On December 31, 1993, GSU became a wholly-owned subsidiary of Entergy
Corporation. In accordance with the purchase method of accounting, the 1993
first quarter operating results does not include GSU's operating results.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARKANSAS POWER & LIGHT COMPANY
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $4,107,725 $4,098,355
Property under capital leases 61,608 62,139
Construction work in progress 221,518 197,005
Nuclear fuel under capital lease 96,411 93,606
---------- ----------
Total 4,487,262 4,451,105
Less - accumulated depreciation and amortization 1,634,841 1,604,318
---------- ----------
Utility plant - net 2,852,421 2,846,787
---------- ----------
Other Property and Investments:
Investment in subsidary companies - at equity 11,232 11,232
Decommissioning trust fund 126,294 108,192
Other - at cost (less accumulated depreciation) 4,337 4,257
---------- ----------
Total 141,863 123,681
---------- ----------
Current Assets:
Cash 33,223 1,825
Accounts receivable:
Customer (less allowance for doubtful
accounts of $2.1 million in 1994 and 1993) 58,607 65,641
Associated companies 25,140 18,312
Other 12,177 20,817
Accrued unbilled revenues 70,290 83,378
Fuel inventory - at average cost 39,225 51,920
Materials and supplies - at average cost 81,266 81,398
Rate deferrals 97,080 92,592
Deferred excess capacity 9,210 9,115
Prepayments and other 23,184 28,303
---------- ----------
Total 449,402 453,301
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 446,832 475,387
Deferred excess capacity 26,180 28,465
SFAS 109 regulatory asset - net 243,924 234,015
Unamortized loss on reaquired debt 59,346 60,169
Other 114,333 112,300
---------- ----------
Total 890,615 910,336
---------- ----------
TOTAL $4,334,301 $4,334,105
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARKANSAS POWER & LIGHT COMPANY
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, $0.01 par value, authorized
325,000,000 shares; issued and outstanding
46,980,196 shares in 1994 and 1993 $470 $470
Paid-in capital 590,844 590,844
Retained earnings 452,416 448,811
---------- ----------
Total common shareholder's equity 1,043,730 1,040,125
Preferred stock:
Without sinking fund 176,350 176,350
With sinking fund 65,027 70,027
Long-term debt 1,315,548 1,313,315
---------- ----------
Total 2,600,655 2,599,817
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 97,082 94,861
Other 51,871 59,750
---------- ----------
Total 148,953 154,611
---------- ----------
Current Liabilities:
Currently maturing long-term debt 3,020 3,020
Notes payable:
Associated companies 31,992 21,395
Other 667 667
Accounts payable:
Associated companies 38,122 45,177
Other 74,941 93,611
Customer deposits 15,234 15,241
Taxes accrued 63,180 43,013
Accumulated deferred income taxes 33,469 32,367
Interest accrued 31,076 31,410
Dividends declared 4,883 5,049
Nuclear refueling reserve 5,024 3,070
Co-owner advances 39,438 39,435
Deferred fuel cost 15,951 16,130
Obligations under capital leases 60,937 60,883
Other 24,158 29,789
---------- ----------
Total 442,092 440,257
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 876,561 876,618
Accumulated deferred investment tax credits 151,798 154,723
Other 114,242 108,079
---------- ----------
Total 1,142,601 1,139,420
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,334,301 $4,334,105
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARKANSAS POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Revenues: $371,091 $346,740
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel related expenses 63,474 58,952
Purchased power 91,182 81,670
Nuclear refueling outage expenses 8,634 12,485
Other operation and maintenance 80,526 84,755
Depreciation and decommissioning 35,718 33,431
Taxes other than income taxes 9,115 7,380
Income taxes (2,405) (3,115)
Amortization of rate deferrals 40,173 34,221
-------- --------
Total 326,417 309,779
-------- --------
Operating Income 44,674 36,961
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,154 1,279
Miscellaneous - net 14,659 15,172
Income taxes (5,771) (10,239)
-------- --------
Total 10,042 6,212
-------- --------
Interest Charges:
Interest on long-term debt 25,233 27,269
Other interest - net 3,915 917
Allowance for borrowed funds used
during construction (820) (907)
-------- --------
Total 28,328 27,279
-------- --------
Income before Cumulative Effect of
a Change in Accounting Principle 26,388 15,894
Cumulative Effect to January 1, 1993,
of Accruing Unbilled Revenues (net
of income taxes of $31,140) - 50,187
-------- --------
Net Income 26,388 66,081
Preferred Stock Dividend Requirements
and Other 4,883 5,262
-------- --------
Earnings Applicable to Common Stock $21,505 $60,819
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARKANSAS POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
------- -------
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $26,388 $66,081
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (50,187)
Change in rate deferrals/excess capacity-net 26,257 19,878
Depreciation and decommissioning 35,718 33,431
Deferred income taxes and investment tax credits (11,751) (16,374)
Allowance for equity funds used during construction (1,154) (1,279)
Changes in working capital:
Receivables 21,934 26,478
Fuel inventory 12,695 163
Accounts payable (25,725) (15,703)
Taxes accrued 20,167 17,638
Interest accrued (334) 1,893
Other working capital accounts 1,391 (5,316)
Decommissioning trust contributions (2,545) (3,195)
Other (14,857) 11,412
------- -------
Net cash flow provided by operating activities 88,184 84,920
------- -------
Investing Activities:
Construction expenditures (40,188) (30,908)
Allowance for equity funds used during construction 1,154 1,279
------- -------
Net cash flow used in investing activities (39,034) (29,629)
------- -------
Financing Activities:
Retirement of first mortgage bonds (400) (15,400)
Redemption of preferred stock (5,000) (5,000)
Change in short-term borrowings 10,597 (4,000)
Dividends paid:
Common stock (17,900) (6,000)
Preferred stock (5,049) (5,481)
------- -------
Net cash flow used in financing activities (17,752) (35,881)
------- -------
Net increase in cash and cash equivalents 31,398 19,410
Cash and cash equivalents at beginning of period 1,825 -
------- -------
Cash and cash equivalents at end of period $33,223 $19,410
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $24,655 $24,976
Income taxes $(242) $11,252
Noncash investing and financing activities:
Capital lease obligations incurred $14,313 $232
Excess of fair value of decommissionning trust
assets over amount invested $13,463 -
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARKANSAS POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- ----------------------------------------------------------------------------------
(In Millions)
<S> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $ 123.3 $ 118.9 $ 4.4 4
Commercial 66.3 63.8 2.5 4
Industrial 72.8 70.4 2.4 3
Governmental 4.1 3.8 0.3 8
------- ------- ------
Total retail 266.5 256.9 9.6 4
Sales for resale 110.9 95.8 15.1 16
Other (6.3) (6.0) (0.3) (5)
------- ------- ------
Total $ 371.1 $ 346.7 $ 24.4 7
======= ======= ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,438 1,370 68 5
Commercial 931 888 43 5
Industrial 1,364 1,295 69 5
Governmental 58 55 3 5
------- ------- ------
Total retail 3,791 3,608 183 5
Sales for resale 4,454 3,972 482 12
------- ------- ------
Total 8,245 7,580 665 9
======= ======= ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GULF STATES UTILITIES COMPANY
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $6,836,203 $6,825,989
Natural gas 43,176 42,786
Steam products 75,720 75,689
Property under capital leases 86,382 86,039
Construction work in progress 58,018 50,080
Nuclear fuel under capital leases 87,372 94,828
---------- ----------
Total 7,186,871 7,175,411
Less - accumulated depreciation and amortization 2,367,935 2,323,804
---------- ----------
Utility plant - net 4,818,936 4,851,607
---------- ----------
Other Property and Investments:
Decommissioning trust fund 19,050 17,873
Other - at cost (less accumulated depreciation) 29,070 29,360
---------- ----------
Total 48,120 47,233
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 43,505 3,012
Temporary cash investments - at cost,
which approximates market:
Associated companies 58,651 -
Other 80,239 258,337
---------- ----------
Total cash and cash equivalents 182,395 261,349
Accounts receivable:
Customer (less allowance for doubtful accounts
of $2.2 million in 1994 and $2.4 million in 1993) 118,476 117,369
Associated companies 6,642 -
Other 21,083 18,371
Accrued unbilled revenues 28,199 32,572
Deferred fuel costs - 5,883
Fuel inventory 18,902 23,448
Materials and supplies - at average cost 88,863 86,831
Rate deferrals 92,593 90,775
Prepayments and other 28,724 48,948
---------- ----------
Total 585,877 685,546
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 614,210 638,015
SFAS 109 regulatory asset - net 435,767 432,411
Long-term receivables 227,237 218,079
Unamortized loss on reacquired debt 69,248 70,970
Other 198,673 193,490
---------- ----------
Total 1,545,135 1,552,965
---------- ----------
TOTAL $6,998,068 $7,137,351
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GULF STATES UTILITIES COMPANY
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
100 shares in 1994 and 1993 $114,055 $114,055
Paid-in capital 1,152,344 1,152,304
Retained earnings 569,951 666,401
---------- ----------
Total common shareholder's equity 1,836,350 1,932,760
Preference stock 150,000 150,000
Preferred stock:
Without sinking fund 136,444 136,444
With sinking fund 98,754 101,004
Long-term debt 2,368,715 2,368,639
---------- ----------
Total 4,590,263 4,688,847
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 142,841 152,359
Other 45,686 47,107
---------- ----------
Total 188,527 199,466
---------- ----------
Current Liabilities:
Currently maturing long-term debt 425 425
Accounts payable:
Associated companies 13,318 2,745
Other 68,649 109,840
Customer deposits 22,443 21,958
Taxes accrued 29,658 22,856
Interest accrued 65,891 59,516
Nuclear refueling reserve 23,902 22,356
Obligations under capital leases 33,416 41,713
Other 66,261 98,074
---------- ----------
Total 323,963 379,483
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 1,226,373 1,222,999
Accumulated deferred investment tax credits 93,333 94,455
Deferred River Bend finance charges 100,675 106,765
Other 474,934 445,336
---------- ----------
Total 1,895,315 1,869,555
---------- ----------
Commitments and Contingencies (Note 1 and 2)
TOTAL $6,998,068 $7,137,351
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GULF STATES UTILITIES COMPANY
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Revenues:
Electric $402,104 $381,531
Natural gas 15,846 12,524
Steam products 11,708 10,123
-------- --------
Total 429,658 404,178
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel related expenses, and
gas purchased for resale 119,018 118,369
Purchased power 60,220 36,271
Nuclear refueling outage expenses 3,600 4,800
Other operation and maintenance 100,970 93,468
Depreciation and decommissioning 47,867 47,277
Taxes other than income taxes 24,346 24,904
Income taxes (821) (4,822)
Amortization of rate deferrals 15,897 14,503
-------- --------
Total 371,097 334,770
-------- --------
Operating Income 58,561 69,408
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 260 113
Miscellaneous - net 4,443 3,989
Income taxes (1,972) (4,751)
-------- --------
Total 2,731 (649)
-------- --------
Interest Charges:
Interest on long-term debt 48,980 51,604
Other interest - net 1,475 2,375
Allowance for borrowed funds used
during construction (206) (227)
-------- --------
Total 50,249 53,752
-------- --------
Income before the Cumulative Effect of
Accounting Changes 11,043 15,007
Cumulative Effect to January 1, 1993,
of Accruing Unbilled Revenues (net
of income taxes of $6,940) - 10,660
-------- --------
Net Income 11,043 25,667
Preferred and Preference Stock
Dividend Requirements and Other 7,407 9,891
-------- --------
Earnings Applicable to Common Stock $3,636 $15,776
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GULF STATES UTILITIES COMPANY
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $11,043 $25,667
Noncash items included in net income:
Cumulative effect of accounting changes - (10,660)
Change in rate deferrals 15,897 14,503
Depreciation and decommissioning 47,867 47,277
Deferred income taxes and investment tax credits 1,150 (52)
Allowance for equity funds used during construction (260) (113)
Changes in working capital:
Receivables (6,088) 12,893
Fuel inventory 4,546 1,615
Accounts payable (30,618) (36,739)
Taxes accrued 6,802 9,935
Interest accrued 6,375 7,276
Other working capital accounts (8,093) 3,945
Decommissioning trust contributions (493) (739)
Purchased power settlement - (124,300)
Other 5,648 19,083
-------- --------
Net cash flow provided by (used in) operating activities 53,776 (30,409)
-------- --------
Investing Activities:
Construction expenditures (20,824) (21,564)
Allowance for equity funds used during construction 260 113
Nuclear fuel purchases (3,538) (2,118)
Proceeds from sale/leaseback of nuclear fuel 1,035 2,118
Refund of escrow account and other property - 8,503
-------- --------
Net cash flow used in investing activities (23,067) (12,948)
Financing Activities:
Proceeds from issuance of other long-term debt - 21,440
Retirement of other long-term debt - (17,974)
Redemption of preferred stock (2,250) (4,500)
Dividends paid:
Common stock (100,000) -
Preferred and preference stock (7,413) (9,922)
-------- --------
Net cash flow used in financing activities (109,663) (10,956)
-------- --------
Net decrease in cash and cash equivalents (78,954) (54,313)
Cash and cash equivalents at beginning of period 261,349 197,741
-------- --------
Cash and cash equivalents at end of period $182,395 $143,428
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for
interest - net of amount capitalized $40,192 $42,038
Excess of fair value of decommissioning
trust assets over amount invested $390 -
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GULF STATES UTILITIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- ----------------------------------------------------------------------------------
(In Millions)
<S> <C> <C> <C> <C>
Electric Department
Operating revenues:
Residential $ 123.8 $ 117.2 $ 6.6 6
Commercial 94.7 91.4 3.3 4
Industrial 153.0 154.7 (1.7) (1)
Governmental 6.3 6.7 (0.4) (6)
------- ------- ------
Total retail 377.8 370.0 7.8 2
Sales for resale 18.4 6.3 12.1 192
Other 5.9 5.2 0.7 13
------- ------- ------
Total Electric Department $ 402.1 $ 381.5 $ 20.6 5
======= ======= ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,601 1,418 183 13
Commercial 1,307 1,207 100 8
Industrial 3,575 3,411 164 5
Governmental 74 74 0 0
------- ------- ------
Total retail 6,557 6,110 447 7
Sales for resale 541 127 414 326
------- ------- ------
Total Electric Department 7,098 6,237 861 14
Steam Department 410 377 33 9
------- ------- ------
Total 7,508 6,614 894 14
======= ======= ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA POWER & LIGHT COMPANY
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $4,652,930 $4,646,020
Electric plant under lease 226,395 225,083
Construction work in progress 163,492 133,536
Nuclear fuel under capital lease 66,415 61,375
Nuclear fuel 5,065 3,823
---------- ----------
Total 5,114,297 5,069,837
Less - accumulated depreciation and amortization 1,529,189 1,496,107
---------- ----------
Utility plant - net 3,585,108 3,573,730
---------- ----------
Other Property and Investments:
Nonutility property 20,060 20,060
Decommissioning trust fund 24,452 22,109
Investment in subsidiary company - at equity 14,230 14,230
Other 1,000 984
---------- ----------
Total 59,742 57,383
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 6,436 -
Temporary cash investments - at cost,
which approximates market 27,770 33,489
---------- ----------
Total cash and cash equivalents 34,206 33,489
Special deposits 3,149 19,077
Accounts receivable:
Customer (less allowance for doubtful
accounts of $1.1 million in 1994 and 1993) 55,416 66,575
Associated companies 5,866 2,952
Other 8,891 10,656
Accrued unbilled revenues 50,948 64,314
Deferred fuel costs 7,212 -
Accumulated deferred income taxes 3,393 6,031
Materials and supplies - at average cost 84,065 87,204
Rate deferrals 28,422 28,422
Prepayments and other 24,393 16,510
---------- ----------
Total 305,961 335,230
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 47,372 54,031
SFAS 109 regulatory asset - net 350,157 349,703
Unamortized loss on reaquired debt 46,804 47,853
Other 48,181 46,068
---------- ----------
Total 492,514 497,655
---------- ----------
TOTAL $4,443,325 $4,463,998
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA POWER & LIGHT COMPANY
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, no par value, authorized
250,000,000 shares; issued and outstanding
165,173,180 shares in 1994 and 1993 $1,088,900 $1,088,900
Capital stock expense and other (5,771) (6,109)
Retained earnings 103,006 89,849
---------- ----------
Total common shareholder's equity 1,186,135 1,172,640
Preferred stock:
Without sinking fund 160,500 160,500
With sinking fund 118,802 126,302
Long-term debt 1,457,751 1,457,626
---------- ----------
Total 2,923,188 2,917,068
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 32,082 27,508
Other 29,600 27,672
---------- ----------
Total 61,682 55,180
---------- ----------
Current Liabilities:
Currently maturing long-term debt 25,315 25,315
Notes payable-associated companies 24,893 52,041
Accounts payable:
Associated companies 41,911 33,523
Other 56,928 76,284
Customer deposits 53,022 52,234
Taxes accrued 28,505 15,110
Interest accrued 36,118 42,141
Dividends declared 5,701 5,938
Deferred revenue - gas supplier judgment
proceeds 4,349 14,632
Deferred fuel cost - 605
Obligations under capital leases 33,867 33,867
Other 8,382 9,741
---------- ----------
Total 318,991 361,431
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 845,538 834,899
Accumulated deferred investment tax credits 187,128 188,843
Deferred interest - Waterford 3 lease obligation 25,530 25,372
Other 81,268 81,205
---------- ----------
Total 1,139,464 1,130,319
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,443,325 $4,463,998
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Revenues: $383,826 $357,856
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 58,108 62,596
Purchased power 103,496 85,661
Nuclear refueling outage expenses 4,591 4,567
Other operation and maintenance 73,632 75,883
Depreciation and decommissioning 37,392 35,388
Taxes other than income taxes 14,437 11,552
Income taxes 16,843 18,675
Amortization of rate deferrals 6,659 6,659
-------- --------
Total 315,158 300,981
-------- --------
Operating Income 68,668 56,875
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,111 603
Miscellaneous - net 607 457
Income taxes (10) 2,285
-------- --------
Total 1,708 3,345
-------- --------
Interest Charges:
Interest on long-term debt 31,197 31,112
Other interest - net 2,884 3,777
Allowance for borrowed funds used
during construction (801) (402)
-------- --------
Total 33,280 34,487
-------- --------
Net Income 37,096 25,733
Preferred Stock Dividend Requirements
and Other 6,119 6,456
-------- --------
Earnings Applicable to Common Stock $30,977 $19,277
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
------- -------
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $37,096 $25,733
Noncash items included in net income:
Change in rate deferrals 6,659 6,659
Depreciation and decommissioning 37,392 35,388
Deferred income taxes and investment tax credits 11,147 9,133
Allowance for equity funds used during construction (1,111) (603)
Amortization of deferred revenues (10,283) (9,311)
Changes in working capital:
Receivables 23,376 12,076
Accounts payable (10,968) (34,287)
Taxes accrued 13,395 14,069
Interest accrued (6,023) (3,986)
Other working capital accounts 2,796 13,481
Refunds to customers - gas contract settlement - (56,027)
Decommissioning trust contributions (1,204) (1,000)
Other (2,755) 4,119
------- -------
Net cash flow provided by operating activities 99,517 15,444
------- -------
Investing Activities:
Construction expenditures (41,381) (37,935)
Allowance for equity funds used during construction 1,111 603
------- -------
Net cash flow used in investing activities (40,270) (37,332)
------- -------
Financing Activities:
Proceeds from the issuance of first mortgage bonds - 100,000
Change in short-term borrowings (27,148) -
Retirement of other long-term debt (44) -
Redemption of preferred stock (7,500) (7,500)
Dividends paid:
Common stock (17,900) (30,600)
Preferred stock (5,938) (6,675)
------- -------
Net cash flow provided by (used in) financing activities (58,530) 55,225
------- -------
Net increase in cash and cash equivalents 717 33,337
Cash and cash equivalents at beginning of period 33,489 22,782
------- -------
Cash and cash equivalents at end of period $34,206 $56,119
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $37,730 $37,425
Income taxes - $2,016
Noncash investing and financing activities:
Capital lease obligations incurred $9,677 -
Excess of fair value of decommissioning trust
assets over amount invested $843 -
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- -----------------------------------------------------------------------------------
(In Millions)
<S> <C> <C> <C>
Electric Operating Revenues:
Residential $ 124.9 $ 109.6 $ 15.3 14
Commercial 80.8 73.2 7.6 10
Industrial 159.9 152.4 7.5 5
Governmental 7.9 7.5 0.4 5
------- ------- ------
Total retail 373.5 342.7 30.8 9
Sales for resale 6.9 6.3 0.6 10
Other 3.4 8.9 (5.5) (62)
------- ------- ------
Total $ 383.8 $ 357.9 $ 25.9 7
======= ======= ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,680 1,484 196 13
Commercial 1,028 935 93 10
Industrial 3,977 3,825 152 4
Governmental 107 102 5 5
------- ------- ------
Total retail 6,792 6,346 446 7
Sales for resale 128 140 (12) (9)
------- ------- ------
Total 6,920 6,486 434 7
======= ======= ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER & LIGHT COMPANY
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $1,394,289 $1,389,229
Construction work in progress 104,201 62,699
---------- ----------
Total 1,498,490 1,451,928
Less - accumulated depreciation and amortization 573,732 577,728
---------- ----------
Utility plant - net 924,758 874,200
---------- ----------
Other Property and Investments:
Investment in subsidiary company - at equity 5,531 5,531
Other 4,758 4,760
---------- ----------
Total 10,289 10,291
---------- ----------
Current Assets:
Cash 41,876 7,999
Notes receivable 6,939 7,118
Accounts receivable:
Customer (less allowance for doubtful
accounts of $2.5 million in 1994 and 1993) 32,900 33,155
Associated companies 5,022 7,342
Other 3,318 3,672
Accrued unbilled revenues 42,124 57,414
Fuel inventory - at average cost 8,987 8,652
Materials and supplies - at average cost 20,893 20,886
Rate deferrals 101,459 96,935
Prepayments and other 8,102 13,763
---------- ----------
Total 271,620 256,936
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 479,043 504,428
Notes receivable 8,309 9,951
Other 32,928 20,931
---------- ----------
Total 520,280 535,310
---------- ----------
TOTAL $1,726,947 $1,676,737
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER & LIGHT COMPANY
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, no par value, authorized
15,000,000 shares; issued and outstanding
8,666,357 shares in 1994 and 1993 $199,326 $199,326
Capital stock expense and other (1,762) (1,864)
Retained earnings 235,921 236,337
---------- ----------
Total common shareholder's equity 433,485 433,799
Preferred stock:
Without sinking fund 57,881 57,881
With sinking fund 38,770 46,770
Long-term debt 476,194 516,156
---------- ----------
Total 1,006,330 1,054,606
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 654 686
Other 8,935 6,231
---------- ----------
Total 9,589 6,917
---------- ----------
Current Liabilities:
Currently maturing long-term debt 88,250 48,250
Notes payable - associated companies 71,589 11,568
Accounts payable:
Associated companies 35,272 29,181
Other 23,855 12,157
Customer deposits 21,687 21,474
Taxes accrued 10,106 24,252
Accumulated deferred income taxes 43,099 41,758
Interest accrued 16,215 23,171
Dividends declared 1,955 1,985
Obligations under capital leases 148 156
Other 15,900 17,147
---------- ----------
Total 328,076 231,099
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 310,783 311,616
Accumulated deferred investment tax credits 36,734 37,193
SFAS 109 regulatory liability - net 23,466 23,626
Other 11,969 11,680
---------- ----------
Total 382,952 384,115
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $1,726,947 $1,676,737
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Revenues: $187,417 $179,467
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 22,795 9,933
Purchased power 64,322 75,389
Other operation and maintenance 36,573 33,404
Depreciation and amortization 8,706 8,018
Taxes other than income taxes 10,276 10,011
Income taxes 1,225 990
Amortization of rate deferrals 24,805 17,588
-------- --------
Total 168,702 155,333
-------- --------
Operating Income 18,715 24,134
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 576 169
Miscellaneous - net 94 502
Income taxes (36) (187)
-------- --------
Total 634 484
-------- --------
Interest Charges:
Interest on long-term debt 12,037 13,922
Other interest - net 1,430 741
Allowance for borrowed funds used
during construction (367) (121)
-------- --------
Total 13,100 14,542
-------- --------
Income before Cumulative Effect of
a Change in Accounting Principle 6,249 10,076
Cumulative Effect to January 1, 1993,
of Accruing Unbilled Revenues (net
of income taxes of $19,456) - 32,706
-------- --------
Net Income 6,249 42,782
Preferred Stock Dividend Requirements
and Other 2,075 2,395
-------- --------
Earnings Applicable to Common Stock $4,174 $40,387
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
------- -------
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $6,249 $42,782
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (32,706)
Change in rate deferrals 20,861 9,791
Depreciation and amortization 8,706 8,018
Deferred income taxes and investment tax credits 673 (2,531)
Allowance for equity funds used during construction (576) (169)
Changes in working capital:
Receivables 18,219 16,686
Fuel inventory (335) 349
Accounts payable 17,789 5,679
Taxes accrued (14,146) (16,511)
Interest accrued (6,956) (7,670)
Other working capital accounts 4,799 (3,317)
Other (8,419) 1,688
------- -------
Net cash flow provided by operating activities 46,864 22,089
------- -------
Investing Activities:
Construction expenditures (58,989) (10,854)
Allowance for equity funds used during construction 576 169
------- -------
Net cash flow used in investing activities (58,413) (10,685)
------- -------
Financing Activities:
Proceeds from issuance of general and refunding bonds - 125,000
Retirement of:
First mortgage bonds - (73,185)
General and refunding bonds - (55,000)
Redemption of preferred stock (8,000) (8,000)
Dividends paid:
Common stock (4,600) (13,000)
Preferred stock (1,995) (2,427)
Change in short-term borrowings 60,021 -
------- -------
Net cash flow provided by (used in) financing activities 45,426 (26,612)
------- -------
Net increase (decrease) in cash and cash equivalents 33,877 (15,208)
Cash and cash equivalents at beginning of period 7,999 34,008
------- -------
Cash and cash equivalents at end of period $41,876 $18,800
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $19,590 $22,211
Income taxes $(1,532) $3,428
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MISSISSIPPI POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- -----------------------------------------------------------------------------------
(In Millions)
<S> <C> <C> <C>
Electric Operating Revenues:
Residential $ 76.1 $ 70.0 $ 6.1 9
Commercial 58.4 53.4 5.0 9
Industrial 44.1 40.0 4.1 10
Governmental 6.6 6.4 0.2 3
------ ------ -----
Total retail 185.2 169.8 15.4 9
Sales for resale 8.1 5.6 2.5 45
Other (5.9) 4.1 (10.0) (244)
------ ------ -----
Total $187.4 $179.5 $ 7.9 4
====== ====== =====
Billed Electric Energy
Sales (Millions of KWH):
Residential 976 890 86 10
Commercial 683 624 59 9
Industrial 692 623 69 11
Governmental 77 74 3 4
------ ------ -----
Total retail 2,428 2,211 217 10
Sales for resale 132 51 81 159
------ ------ -----
Total 2,560 2,262 298 13
====== ====== =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ORLEANS PUBLIC SERVICE INC.
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $478,873 $476,976
Natural gas 114,902 113,666
Construction work in progress 17,726 15,205
-------- --------
Total 611,501 605,847
Less - accumulated depreciation and amortization 334,716 330,268
-------- --------
Utility plant - net 276,785 275,579
-------- --------
Other Investments:
Investment in subsidiary company - at equity 3,259 3,259
-------- --------
Current Assets:
Cash and cash equivalents:
Cash 2,597 1,176
Temporary cash investments - at cost,
which approximates market:
Associated companies 27,764 10,034
Other 31,972 32,107
-------- --------
Total cash and cash equivalents 62,333 43,317
Accounts receivable:
Customer (less allowance for doubtful
accounts of $0.8 million in 1994 and 1993) 31,203 35,801
Associated companies 1,166 1,378
Other 774 876
Accrued unbilled revenues 15,492 19,643
Deferred electric fuel and resale gas costs 1,141 6,323
Materials and supplies - at average cost 9,203 11,885
Rate deferrals 26,068 24,587
Prepayments and other 10,732 2,994
-------- --------
Total 158,112 146,804
-------- --------
Deferred Debits and Other Assets:
Rate deferrals 197,706 204,190
SFAS 109 regulatory asset - net 9,164 9,004
Other 9,349 8,769
-------- --------
Total 216,219 221,963
-------- --------
TOTAL $654,375 $647,605
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ORLEANS PUBLIC SERVICE INC.
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, $4 par value, authorized
10,000,000 shares; issued and outstanding
8,435,900 shares in 1994 and 1993 $33,744 $33,744
Paid-in capital 36,201 36,156
Retained earnings subsequent to the elimination
of the accumulated deficit of $13.9 million on
November 30, 1988 101,911 100,556
-------- --------
Total common shareholder's equity 171,856 170,456
Preferred stock:
Without sinking fund 19,780 19,780
With sinking fund 3,450 4,950
Long-term debt 179,124 188,312
-------- --------
Total 374,210 383,498
-------- --------
Other Noncurrent Liabilities:
Accumulated provision for losses 18,022 18,022
Other 5,561 3,351
-------- --------
Total 23,583 21,373
-------- --------
Current Liabilities:
Currently maturing long-term debt 24,200 15,000
Accounts payable:
Associated companies 18,635 23,080
Other 19,697 22,011
Customer deposits 16,978 16,617
Accumulated deferred income taxes 3,880 4,968
Taxes accrued 11,018 5,161
Interest accrued 4,754 5,472
Dividends declared 374 432
Other 16,174 6,935
-------- --------
Total 115,710 99,676
Deferred Credits:
Accumulated deferred income taxes 102,265 105,096
Accumulated deferred investment tax credits 11,406 11,592
Other 27,201 26,370
-------- --------
Total 140,872 143,058
-------- --------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $654,375 $647,605
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Revenues:
Electric $78,855 $79,419
Natural gas 38,233 29,147
-------- --------
Total 117,088 108,566
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 33,915 26,133
Purchased power 37,732 37,013
Other operation and maintenance 19,671 21,971
Depreciation and amortization 4,710 4,292
Taxes other than income taxes 7,054 6,270
Income taxes 619 1,101
Rate deferrals:
Rate deferrals - (1,313)
Amortization of rate deferrals 6,928 4,271
-------- --------
Total 110,629 99,738
-------- --------
Operating Income 6,459 8,828
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 113 -
Miscellaneous - net 510 378
Income taxes (525) 192
-------- --------
Total 98 570
-------- --------
Interest Charges:
Interest on long-term debt 4,369 5,044
Other interest - net 459 374
Allowance for borrowed funds used
during construction (84) (2)
-------- --------
Total 4,744 5,416
-------- --------
Income before Cumulative Effect of
a Change in Accounting Principle 1,813 3,982
Cumulative Effect to January 1, 1993,
of Accruing Unbilled Revenues (net
of income taxes of $6,592) - 10,948
-------- --------
Net Income 1,813 14,930
Preferred Stock Dividend Requirements
and Other 458 471
-------- --------
Earnings Applicable to Common Stock $ 1,355 $14,459
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
------- -------
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $1,813 $14,930
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (10,948)
Change in rate deferrals 5,003 2,056
Depreciation and amortization 4,710 4,292
Deferred income taxes and investment tax credits (4,254) (1,384)
Allowance for equity funds used during construction (113) -
Changes in working capital:
Receivables 9,063 2,483
Accounts payable (6,759) (3,521)
Taxes accrued 5,857 2,909
Interest accrued (718) 471
Other working capital accounts 9,726 (4,746)
Other 2,180 1,097
------- -------
Net cash flow provided by operating activities 26,508 7,639
------- -------
Investing Activities:
Construction expenditures (5,634) (3,779)
Allowance for equity funds used during construction 113 -
------- -------
Net cash flow used in investing activities (5,521) (3,779)
------- -------
Financing Activities:
Proceeds from the issuance of general and refunding bonds - 70,000
Retirement of general and refunding bonds - (29,400)
Redemption of preferred stock (1,500) (1,500)
Preferred stock dividend payments (471) (490)
------- -------
Net cash flow provided by (used in) financing activities (1,971) 38,610
------- -------
Net increase in cash and cash equivalents 19,016 42,470
Cash and cash equivalents at beginning of period 43,317 46,070
------- -------
Cash and cash equivalents at end of period $62,333 $88,540
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $5,244 $4,820
Income taxes - $2,386
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ORLEANS PUBLIC SERVICE INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- ----------------------------------------------------------------------------------
(In Millions)
<S> <C> <C> <C> <C>
Electric operating Revenues:
Residential $ 28.0 $ 24.6 $ 3.4 14
Commercial 39.0 36.5 2.5 7
Industrial 6.3 5.8 0.5 9
Governmental 13.9 13.4 0.5 4
------ ------ ------
Total retail 87.2 80.3 6.9 9
Sales for resale 1.4 2.5 (1.1) (44)
Other (9.7) (3.4) (6.3)(185)
------ ------ ------
Total $ 78.9 $ 79.4 $ (0.5) (1)
====== ====== ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 367 327 40 12
Commercial 457 437 20 5
Industrial 119 110 9 8
Governmental 210 202 8 4
------ ------ ------
Total retail 1,153 1,076 77 7
Sales for resale 29 81 (52) (64)
------ ------ ------
Total 1,182 1,157 25 2
====== ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $3,027,642 $3,027,537
Electric plant under lease 438,411 437,941
Construction work in progress 42,665 41,442
Nuclear fuel under capital lease 71,055 79,625
---------- ----------
Total 3,579,773 3,586,545
Less - accumulated depreciation 694,415 669,666
---------- ----------
Utility plant - net 2,885,358 2,916,879
---------- ----------
Other Investments:
Decommissioning trust fund 27,736 24,787
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 10,783 2,424
Temporary cash investments - at cost,
which approximates market:
Associated companies 61,078 46,601
Other 70,336 147,107
---------- ----------
Total cash and cash equivalents 142,197 196,132
Accounts receivable:
Associated companies 63,077 57,216
Other 2,752 2,057
Materials and supplies - at average cost 70,296 69,765
Recoverable income taxes 64,600 63,400
Prepayments and other 7,893 4,835
---------- ----------
Total 350,815 393,405
---------- ----------
Deferred Debits and Other Assets:
Recoverable income taxes 9,356 29,289
SFAS 109 regulatory asset - net 385,098 384,317
Unamortized loss on reacquired debt 57,279 17,258
Other 127,219 125,131
---------- ----------
Total 578,952 555,995
---------- ----------
TOTAL $3,842,861 $3,891,066
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, no par value, authorized
1,000,000 shares; issued and outstanding
789,350 shares in 1994 and 1993 $789,350 $789,350
Paid-in capital 7 7
Retained earnings 192,323 228,574
---------- ----------
Total common shareholder's equity 981,680 1,017,931
Long-term debt 1,512,298 1,511,914
---------- ----------
Total 2,493,978 2,529,845
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 16,109 24,679
Other 18,229 18,229
---------- ----------
Total 34,338 42,908
---------- ----------
Current Liabilities:
Currently maturing long-term debt 230,000 230,000
Accounts payable:
Associated companies 1,557 1,928
Other 20,481 18,223
Taxes accrued 7,274 20,952
Interest accrued 47,178 48,929
Obligations under capital leases 55,000 55,000
Other 2,528 2,805
---------- ----------
Total 364,018 377,837
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 779,171 775,630
Accumulated deferred investment tax credits 112,980 113,849
Other 58,376 50,997
---------- ----------
Total 950,527 940,476
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $3,842,861 $3,891,066
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Revenues: $147,847 $164,630
-------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 11,987 15,113
Nuclear refueling outage expenses - 47
Other operation and maintenance 21,540 21,050
Depreciation and decommissioning 22,969 22,676
Taxes other than income taxes 6,873 6,219
Income taxes 20,136 23,194
-------- --------
Total 83,505 88,299
-------- --------
Operating Income 64,342 76,331
-------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 322 101
Miscellaneous - net 1,837 1,666
Income taxes (1,720) 1,337
-------- --------
Total 439 3,104
-------- --------
Interest Charges:
Interest on long-term debt 41,177 46,362
Other interest - net 2,435 1,383
Allowance for borrowed funds used
during construction (380) (92)
-------- --------
Total 43,232 47,653
-------- --------
Net Income $21,549 $31,782
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $21,549 $31,782
Noncash items included in net income:
Depreciation and decommissioning 22,969 22,676
Deferred income taxes and investment tax credits 5,705 5,946
Allowance for equity funds used during construction (322) (101)
Amortization of debt discount 1,685 1,106
Changes in working capital:
Receivables (6,556) 4,540
Accounts payable 1,887 (7,554)
Taxes accrued (13,678) (9,856)
Interest accrued (1,751) 1,167
Other working capital accounts (3,866) (5,039)
Recoverable income taxes 18,733 14,663
Decommissioning trust contributions (1,241) (1,511)
Other 8,285 (384)
-------- --------
Net cash flow provided by operating activities 53,399 57,435
-------- --------
Investing Activities:
Construction expenditures (2,254) (1,850)
Allowance for equity funds used during construction 322 101
-------- --------
Net cash flow used in investing activities (1,932) (1,749)
-------- --------
Financing Activities:
Premium and expenses paid on refinancing sale/leaseback
bonds (47,602) -
Common stock dividend payments (57,800) (32,000)
-------- --------
Net cash flow used in financing activities (105,402) (32,000)
-------- --------
Net increase (decrease) in cash and cash equivalents (53,935) 23,686
Cash and cash equivalents at beginning of period 196,132 181,795
-------- --------
Cash and cash equivalents at end of period $142,197 $205,481
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $42,561 $46,578
Income taxes $(3,278) $(4,388)
Noncash investing and financing activities:
Excess of fair value of decommissioning trust
assets over amount invested $938 -
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. COMMITMENTS AND CONTINGENCIES
Cajun - River Bend
Entergy Corporation and GSU
GSU has significant business relationships with Cajun Electric
Power Cooperative, Inc. (Cajun), including co-ownership of River
Bend and Big Cajun 2 Unit 3. GSU and Cajun own 70% and 30% of
River Bend, respectively, while Big Cajun 2 Unit 3 is owned 42%
and 58% by GSU and Cajun, respectively. GSU operates River Bend,
and Cajun operates Big Cajun 2 Unit 3.
In June 1989, Cajun filed a civil action against GSU in the U.
S. District Court for the Middle District of Louisiana. Cajun
stated in its complaint that the object of the suit is to annul,
rescind, terminate, and/or dissolve the Joint Ownership
Participation and Operating Agreement entered into on August 28,
1979 (Operating Agreement) relating to River Bend. Cajun alleges
fraud and error by GSU, breach of its fiduciary duties owed to
Cajun, and/or GSU's repudiation, renunciation, abandonment, or
dissolution of its core obligations under the Operating
Agreement, as well as the lack or failure of cause and/or
consideration for Cajun's performance under the Operating
Agreement. The suit seeks to recover Cajun's alleged $1.6
billion investment in the unit as damages, plus attorneys' fees,
interest, and costs. Two member cooperatives of Cajun have
brought an independent action to declare the River Bend Operating
Agreement void, based upon failure to get prior LPSC approval
alleged to be necessary. GSU believes the suits are without
merit and is contesting them vigorously.
A trial without jury began on April 12, 1994, on the portion
of the suit by Cajun to rescind the Operating Agreement, and is
continuing. No assurance can be given as to the outcome of this
litigation. If GSU were ultimately unsuccessful in this
litigation and were required to make substantial payments, GSU
would probably be unable to make such payments and would probably
have to seek relief from its creditors under the Bankruptcy Code.
If GSU prevails in this litigation, no assurance can be provided
that Cajun's weak financial condition will allow funding of all
required costs of Cajun's ownership in River Bend.
See pages 103 and 180 of the Form 10-K for the accounting
treatment of preacquisition contingencies in connection with the
Merger, including any charge resulting from an adverse resolution
in the Cajun - River Bend litigation.
In July 1992, Cajun notified GSU that it would fund a limited
amount of costs related to the fourth refueling outage at River
Bend, completed in September 1992. Cajun has also not funded its
share of the costs associated with certain additional repairs and
improvements at River Bend completed during the refueling outage.
GSU has paid the costs associated with such repairs and
improvements without waiving any rights against Cajun. GSU
believes that Cajun is obligated to pay its share of such costs
under the terms of the applicable contract. Cajun has filed a
suit seeking a declaration that it does not owe such funds and
seeking injunctive relief against GSU. GSU is contesting such
suit and is reviewing its available legal remedies.
In September 1992, GSU received a letter from Cajun alleging
that the operating and maintenance costs for River Bend are "far
in excess of industry averages" and that "it would be imprudent
for Cajun to fund these excessive costs." Cajun further stated
that until it is satisfied it would fund a maximum of $700,000
per week under protest for the remainder of 1992. In a December
1992 letter, Cajun stated that it would also withhold costs
associated with certain additional repairs, of which the majority
will be incurred during a refueling outage that began April 15,
1994. GSU believes that Cajun's allegations are without merit
and is considering its legal and other remedies available with
respect to the underpayments by Cajun. The total resulting from
Cajun's failure to fund repair projects, Cajun's funding
limitation on the fourth refueling outage, and the weekly funding
limitation by Cajun was $36.7 million as of March 31, 1994,
compared with a $33.3 million unfunded balance as of December 31,
1993. These amounts are reflected in long-term receivables.
During 1994, and for the next several years, it is expected
that Cajun's share of River Bend-related costs will be in the
range of $60 million to $70 million per year. Cajun's weak
financial condition could have a material adverse effect on GSU,
including a possible NRC action with respect to the operation of
River Bend and a need to bear additional costs associated with
the co-owned facilities. If GSU is required to fund Cajun's
share of costs, there can be no assurance that such payments will
be recovered. Cajun's weak financial condition could also affect
the ultimate collectibility of amounts owed to GSU, including any
amounts awarded in litigation.
Cajun - Transmission Service
Entergy Corporation and GSU
GSU and Cajun are parties to FERC proceedings related to
transmission service charge disputes. In April 1992, FERC issued
a final order. In May 1992, GSU and Cajun filed motions for
rehearings which are pending consideration by FERC. In June
1992, GSU filed a petition for review in the United States Court
of Appeals regarding certain of the issues decided by FERC. In
August 1993, the United States Court of Appeals rendered an
opinion reversing the FERC order regarding the portion of such
disputes relating to the calculations of certain credits and
equalization charges under GSU's service schedules with Cajun.
The opinion remanded the issues to FERC for further proceedings
consistent with its opinion. In January 1994, FERC denied GSU's
request to collect a surcharge while FERC considers the court's
remand.
GSU interprets the FERC order and the court of appeals'
decision to mean that Cajun would owe GSU approximately $86
million as of March 31, 1994. GSU further estimates that if it
prevails in its May 1992 motion for rehearing, Cajun would owe
GSU approximately $119 million as of March 31, 1994. If Cajun
were to prevail in its May 1992 motion for rehearing to FERC, and
if GSU were not to prevail in its May 1992 motion for rehearing
to FERC, and if FERC does not implement the court's remand as GSU
contends is required, GSU estimates it would owe Cajun ap
proximately $77 million as of March 31, 1994. 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. GSU and Cajun further agreed that
their positions at FERC would remain unaffected by the $7.3
million. Pending FERC's ruling on the May 1992 motions for
rehearing, GSU has continued to bill Cajun utilizing the
historical billing methodology and has booked underpaid
transmission charges, including interest, in the amount of $145.8
million as of March 31, 1994. This amount is reflected in long-
term receivables and in other deferred credits, with no effect on
net income.
Financial Condition
GSU
Although GSU received partial rate relief relating to River
Bend, GSU's financial position was strained from 1986 to 1990 by
its inability to earn a return on and fully recover its
investment and other costs associated with River Bend. GSU's
financial position has continued to improve; however, issues to
be finally resolved in PUCT rate proceedings and appeals thereof,
as discussed in Note 2, combined with the application of
accounting standards, may result in substantial write-offs and
charges that could result in substantial net losses being
reported in 1994, and subsequent periods, with resulting
substantial adverse adjustments to common shareholder's equity.
Future earnings will continue to be adversely affected by the
lack of full recovery and return on the investment and other
costs associated with River Bend.
Capital Requirements and Financing
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
Construction expenditures (excluding nuclear fuel) for the
years 1994, 1995, and 1996, and long-term debt and preferred
stock maturities and cash sinking fund requirements for the
period 1994-1996, are estimated to total (in millions):
Long-term
Debt and
Preferred
Stock
Maturities
and Cash
Sinking Fund
Construction Expenditures Requirements
1994 1995 1996 1994-1996
Entergy $629 $560 $550 $1,413
AP&L $181 $172 $175 $ 83
GSU $140 $128 $119 $ 215
LP&L $134 $143 $142 $ 162
MP&L $130 $ 63 $ 63 $ 228
NOPSI $ 25 $ 26 $ 26 $ 81
$ 18 $ 22 $ 23 $ 645
The System plans to meet the above requirements with
internally generated funds, including collections under the
System operating companies' rate phase-in plans, and cash on
hand, supplemented by the issuance of long-term debt and
preferred stock. See pages 130-131, 205-206, 240-241, 271-272,
and 301 of the Form 10-K and Notes 3 and 4 for information on the
possible issuance of preferred stock, common stock, and long-term
debt, and the possible retirement, redemption, purchase, or other
acquisition of outstanding securities by the System operating
companies and System Energy.
Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs
Entergy Corporation, AP&L, GSU, LP&L, and System Energy
See pages 96-97, 133-134, 174-175, 208, and 304 of the
Form 10-K for information on nuclear liability, property and
replacement power insurance, and related NRC regulations.
See pages 97-98, 134, 175, 208-209, and 304-305 of the Form
10-K for information on 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.
Decommissioning costs for ANO and Waterford 3 are currently
estimated to be approximately $806.3 million (based on a recent
interim update to the 1992 update of the original cost study) and
$320.1 million (based on a recently completed 1993 update to the
original cost study), respectively. In March 1994, AP&L filed
with the APSC this interim update of the ANO cost study, which
reflected significant increases in costs of low-level radioactive
waste disposal. AP&L expects to include the updated costs in the
annual decommissioning cost rate rider filing with the APSC
during the fourth quarter of 1994. As of January 1994, LP&L
began funding $4.8 million annually to fund the increased
estimated costs for decommissioning Waterford 3.
ANO Matters
Entergy Corporation and AP&L
See pages 30, 77, and 123 of the Form 10-K for information
on leaks in certain steam generator tubes at ANO 2 that were
discovered and repaired during an outage in March 1992. During a
refueling outage in September 1992, a comprehensive inspection of
all steam generator tubing was conducted and necessary repairs
were made. During a mid-cycle outage in May 1993, a scheduled
special inspection of certain steam generator tubing was
conducted by Entergy Operations and additional repairs were made.
Entergy Operations operated ANO 2 with no further steam generator
inspections until the refueling outage which was completed on
April 23, 1994. Inspections during the outage revealed
additional cracks, however most were smaller than those seen in
earlier inspections except for one relatively large crack. Based
upon results of these inspections and an inconclusive pressure
test, Entergy Operations plans to inspect the steam generator
tubes during a mid-cycle outage tentatively scheduled for January
1995. The operations and power output of the unit have not been
materially adversely affected.
Environmental Issues
GSU
GSU has been notified by the U. S. Environmental Protection
Agency (EPA) that it has been designated as a potentially
responsible party for the cleanup of sites on which GSU and
others have or have been alleged to have disposed of material
designated as hazardous waste. GSU is currently negotiating with
the EPA and state authorities regarding the cleanup of some of
these sites. Several class action and other suits have been
filed in state and federal courts seeking relief from GSU and
others for damages caused by the disposal of hazardous waste and
for asbestos-related disease allegedly resulted from exposure on
GSU premises. While the amounts at issue in the cleanup efforts
and suits may be substantial, GSU believes that its results of
operations and financial condition will not be materially
affected by the outcome of the suits.
As of March 31, 1994, GSU has accrued cumulative amounts
related to the cleanup of six sites at which GSU has been
designated a potentially responsible party, totaling $25.2
million since 1990. Through March 31, 1994, GSU has expensed
$7.4 million cumulatively on the cleanup, resulting in a
remaining liability of $17.8 million as of March 31, 1994.
Waterford 3 Lease Obligations
LP&L
In September 1989, LP&L entered into three substantially
identical, but entirely separate, transactions for the sale and
leaseback of three undivided portions (aggregating approximately
9.3%) of its 100% ownership interest in Waterford 3. See pages
210-211 of the Form 10-K and Note 4 below for information.
Upon the occurrence of certain events, LP&L may be obligated
to pay amounts sufficient to permit the Owner Participants to
withdraw from the lease transactions, and LP&L 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. These events include failure, at specified dates,
to maintain equity capital of at least 30% of adjusted
capitalization and a fixed charge coverage ratio of at least
1.50. As of March 31, 1994, LP&L's total equity capital
(including preferred stock) was 48.62% of adjusted
capitalization, and its fixed charge coverage ratio was 3.27.
Reimbursement Agreement
System Energy
Under the provisions of the Reimbursement Agreement, as
amended, and letters of credit related to the Grand Gulf 1 sale
and leaseback transactions, System Energy has agreed to a number
of covenants relating to the maintenance of equity at not less
than 33%, and common equity at not less than 29%, of adjusted
capitalization, and a fixed charge coverage ratio of at least
1.60. As of March 31, 1994, System Energy's equity and common
equity, in each case, approximated 34.03% of its adjusted
capitalization, and its fixed charge coverage ratio was 1.86.
Failure by System Energy to perform its covenants under the
Reimbursement Agreement could give rise to a draw under the
letters of credit and/or an early termination of the letters of
credit. If such letters of credit were not replaced in a timely
manner, a default under System Energy's related leases could
result.
See Note 2 "FERC Audit" below for information on a FERC
order, that, if ultimately sustained and implemented, could cause
System Energy to fall below the required equity and fixed charge
coverage covenant levels. System Energy has obtained the consent
of the banks to waive these covenants, for the 12-month period
beginning with the earlier of the write-off or the first refund,
if the August 4 Order is implemented prior to December 31, 1994.
The waiver is conditioned upon System Energy not paying any
common stock dividends to Entergy Corporation until the equity
ratio covenant is once again met. Also see pages 296-297 of the
Form 10-K for further information.
System Fuels
AP&L, LP&L, MP&L, NOPSI, and System Energy
See pages 133, 207, 242-243, 274, and 305 of the Form 10-K
for information on certain commitments and contingencies of
System Fuels, and related commitments and contingencies of AP&L,
LP&L, MP&L, NOPSI, and System Energy, respectively, in connection
with System Fuels' fuel procurement programs.
Other
Entergy Corporation and System Energy
See pages 96 and 302 of the Form 10-K for information on
Entergy Corporation's commitments to System Energy under the
Capital Funds Agreement.
AP&L, LP&L, MP&L, NOPSI, and System Energy
See pages 302-303 of the Form 10-K for information on System
Energy relating to the Unit Power Sales, Availability, and
Reallocation Agreements. See also pages 132-133, 206-207, 242,
and 273-274 of the Form 10-K for information on commitments and
potential liabilities of AP&L, LP&L, MP&L, and NOPSI,
respectively, relating to these agreements.
NOTE 2. RATE AND REGULATORY MATTERS
River Bend
Entergy Corporation and GSU
In May 1988, the PUCT granted GSU 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 of prudency, 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. The PUCT affirmed that the
ultimate rate treatment of such amounts would be subject to
future demonstration of the prudency of such costs. GSU and
intervening parties appealed this order (Rate Appeal) and GSU
filed a separate rate case asking that the abeyed River Bend
plant costs be found prudent (Separate Rate Case). Intervening
parties filed suit in a Texas district court to prohibit the
Separate Rate Case. The district court's decision was ultimately
appealed to the Texas Supreme Court, which ruled in 1990 that the
prudence of the purported abeyed costs could not be relitigated
in a separate rate proceeding. The Texas Supreme Court's
decision stated that all issues relating to the merits of the
original PUCT order, including the prudence of all River Bend-
related costs, should be addressed in the Rate Appeal.
In October 1991, the Texas district court in the Rate Appeal
issued an order holding that, while it was clear the PUCT made an
error in assuming it could set aside $1.4 billion of the total
costs of River Bend and consider them in a later proceeding, the
PUCT, nevertheless, found that GSU had not met its burden of
proof related to the amounts placed in abeyance. The court also
ruled that the Allowed Deferrals should not be included in rate
base under a 1991 decision regarding El Paso Electric Company's
similar deferred costs (El Paso Case). The court further stated
that the PUCT had erred in reducing GSU's deferred costs by $1.50
for each $1.00 of revenue collected under the interim rate
increases authorized in 1987 and 1988. The court remanded the
case to the PUCT with instructions as to the proper handling of
the Allowed Deferrals. GSU's motion for rehearing was denied
and, in December 1991, GSU filed an appeal of the October 1991
district court order. The PUCT also appealed the October 1991
district court order, which served to supersede the district
court's judgment, rendering it unenforceable under Texas law.
In August 1992, the court of appeals in the El Paso Case
handed down its second opinion on rehearing modifying its
previous opinion on deferred accounting. The court's second
opinion concluded that the PUCT may lawfully defer operating and
maintenance costs and subsequently include them in rate base, but
that the Public Utility Regulatory Act prohibits such rate base
treatment for deferred carrying costs. The court stated that its
opinion would not preclude the recovery of deferred carrying
costs. The August 1992 court of appeals opinion was appealed to
the Texas Supreme Court where arguments were heard in September
1993. The matter is pending.
In September 1993, the Texas Third District Court of Appeals
(the Appellate Court) remanded the October 1991 district court
decision to the PUCT "to reexamine the record evidence to
whatever extent necessary to render a final order supported by
substantial evidence and not inconsistent with our opinion." The
Appellate Court specifically addressed the PUCT's treatment of
certain costs, stating that the PUCT's order was not based on
substantial evidence. The Appellate Court also applied its most
recent ruling in the El Paso Case to the deferred costs
associated with River Bend. However, the Appellate Court
cautioned the PUCT to confine its deliberations to the evidence
addressed in the original rate case. Certain parties to the case
have indicated their position that, on remand, the PUCT may
change its original order only with respect to matters
specifically discussed by the Appellate Court which, if allowed,
would increase GSU's allowed River Bend investment, net of
accumulated depreciation and related taxes, by approximately $47
million as of March 31, 1994. GSU believes that under the
Appellate Court's decision, the PUCT would be free to reconsider
any aspect of its order concerning the abeyed $1.4 billion River
Bend investment. GSU has filed a motion for rehearing asking the
Appellate Court to modify its order so as to permit the PUCT to
take additional evidence on remand. The PUCT and other parties
have also moved for rehearing on various grounds. The Appellate
Court has not yet ruled on any of these motions.
As of March 31, 1994, the River Bend plant costs disallowed
for retail ratemaking purposes in Texas, and the River Bend plant
costs held in abeyance, and the related cost deferrals totaled
(net of taxes) approximately $14 million, $298 million (both net
of depreciation), and $170 million, respectively. Allowed
Deferrals were approximately $93 million, net of taxes and
amortization, as of March 31, 1994. GSU estimates it has
collected approximately $146 million of revenues as of March 31,
1994, as a result of the originally ordered rate treatment of
these deferred costs. However, if the PUCT adopts the most
recent decision in the El Paso Case, the possible refunds
approximate $28 million as a result of the inclusion of deferred
carrying costs in rate base for the period July 1988 through
December 1990. However, if the PUCT reverses its decision to
reduce GSU's deferred costs by $1.50 for each $1.00 of revenue
collected under the interim rate increases authorized in 1987 and
1988, the potential refund of amounts described above could be
reduced by an amount ranging from $7 million to $19 million.
No assurance can be given as to the timing or outcome of the
remands or appeals described above. Pending further developments
in these cases, GSU has made no write-offs for the River Bend-
related costs. Management believes, based on advice from Clark,
Thomas & Winters, a Professional Corporation, legal counsel of
record in the Rate Appeal, that it is reasonably possible that
the case will be remanded to the PUCT, and the PUCT will be
allowed to rule on the prudence of the abeyed River Bend plant
costs. Rate Caps imposed by the PUCT's regulatory approval of
the Merger could result in GSU being unable to use the full
amount of a favorable decision to immediately increase rates;
however, a favorable decision could permit some increases and/or
limit or prevent decreases during the period the Rate Caps are in
effect. At this time, management and legal counsel are unable to
predict the amount, if any, of the abeyed and previously
disallowed River Bend plant costs that ultimately may be
disallowed by the PUCT. A net of tax write-off as of March 31,
1994, of up to $312 million could be required based on the PUCT's
ultimate ruling.
In prior proceedings, the PUCT has held that the original
cost of nuclear power plants will be included in rates to the
extent those costs were prudently incurred. Based upon the
PUCT's prior decisions, management believes that its River Bend
construction costs were prudently incurred and that it is
reasonably possible that it will recover in rate base, or
otherwise through means such as a deregulated asset plan, all or
substantially all of the abeyed River Bend plant costs. However,
management also recognizes that it is reasonably possible that
not all of the abeyed River Bend plant costs may ultimately be
recovered.
As part of its direct case in the Separate Rate Case, GSU
filed a cost reconciliation study prepared by Sandlin Associates,
management consultants with expertise in the cost analysis of
nuclear power plants, which supports the reasonableness of the
River Bend costs held in abeyance by the PUCT. This
reconciliation study determined that approximately 82% of the
River Bend cost increase above the amount included by the PUCT in
rate base was a result of changes in federal nuclear safety
requirements and provided other support for the remainder of the
abeyed amounts.
There have been four other rate proceedings in Texas
involving nuclear power plants. Investment in the plants
ultimately disallowed ranged from 0% to 15%. Each case was
unique, and the disallowances in each were made on a case-by-case
basis for different reasons. Appeals of most, if not all, of
these PUCT decisions are currently pending.
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. Sandlin Associates' analysis 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.
4. The analysis of GSU's internal legal staff, which has
considerable experience in Texas rate case litigation.
Additionally, management believes, based on advice from
Clark, Thomas & Winters, a Professional Corporation, legal
counsel of record in the Rate Appeal, that it is probable that
the deferred costs will be allowed. However, assuming the August
1992 court of appeals' opinion in the El Paso Case is upheld and
applied to GSU and the deferred River Bend costs currently held
in abeyance are not allowed to be recovered in rates as allowable
costs, a net of tax write-off of up to $170 million could be
required. In addition, future revenues based upon the deferred
costs previously allowed in rate base could also be lost and no
assurance can be given as to whether or not refunds (up to $28
million as of March 31, 1994) of revenue received based upon such
deferred costs previously recorded will be required.
See pages 103 and 180 of the Form 10-K for the accounting
treatment of preacquisition contingencies, including any River
Bend write-down.
FERC Audit
Entergy Corporation and System Energy
In December 1990, the FERC Division of Audits issued a
report for System Energy for the years 1986 through 1988. The
report recommended, among other things, that System Energy (1)
write off and not recover in rates approximately $95 million of
Grand Gulf 1 costs included in utility plant related to certain
System income tax allocation procedures alleged to be
inconsistent with FERC's accounting requirements, and (2) compute
refunds for the years 1987 to date to correct for resulting
overcollections from AP&L, LP&L, MP&L, and NOPSI.
In August 1992, FERC issued an opinion and order (August 4
Order) which found that System Energy overstated its Grand Gulf 1
utility plant account by approximately $95 million as indicated
in FERC's report. The order required System Energy to make
adjusting accounting entries and refunds, with interest, to AP&L,
LP&L, MP&L, and NOPSI within 90 days from the date of the order.
System Energy filed a request for rehearing and, in October 1992,
FERC issued an order allowing additional time for its
consideration of the request. In addition, it deferred System
Energy's refund obligation until 30 days after FERC issues an
order on rehearing. Should such refunds and adjusting entries be
necessary, System Energy estimates that as of March 31, 1994, its
net income would be reduced by approximately $155.3 million.
This amount includes System Energy's potential refund obligation,
which is estimated to be $118.9 million (including interest) as
of March 31, 1994. The ongoing effect of this order, if
implemented, would be to reduce System Energy's revenues by
approximately $21.4 million during the first twelve months
following the write-off and by a comparable amount (but
decreasing by approximately $0.4 million per year) in each
subsequent year.
Assuming AP&L, LP&L, MP&L, and NOPSI are required to refund
or credit to their customers all of the System Energy refund
(except for those portions attributable to AP&L's and LP&L's
retained share of Grand Gulf 1 costs), implementation of the
August 4 Order would result in a reduction in Entergy's
consolidated net income of approximately $149.1 million as of
March 31, 1994. However, this reduction could be partially
offset by (1) the write-off by AP&L, LP&L, MP&L, and NOPSI of
unamortized balances of corresponding deferred credits
(approximately $65.3 million as of March 31, 1994), and (2) any
recovery from ratepayers of deferred credits that have been
previously amortized and passed on to ratepayers (approximately
$26.1 million as of March 31, 1994). The amount of such recovery
would depend on the associated retail rate treatment.
If the August 4 Order is implemented, System Energy would
need the consent of certain banks to temporarily waive the fixed
charge coverage and equity ratio covenants in the letters of
credit and reimbursement agreement related to the Grand Gulf 1
sale and leaseback transaction in order to avoid violation of the
covenants (see "Reimbursement Agreement" above). System Energy
has obtained the consent of the banks to waive these covenants,
for the 12-month period beginning with the earlier of the write-
off or the first refund, if the August 4 Order is implemented
prior to December 31, 1994. The waiver is conditioned upon
System Energy not paying any common stock dividends to Entergy
Corporation until the equity ratio covenant is once again met.
Absent a waiver, System Energy's failure to perform these
covenants could cause a draw under the letters of credit and/or
early termination of the letters of credit. If the letters of
credit were not replaced in a timely manner, a default or early
termination of System Energy's leases could result.
System Energy believes that its consolidated income tax
accounting procedures and related rate treatment are in
compliance with SEC and FERC requirements and is vigorously
contesting this issue. The ultimate resolution of this matter
cannot be predicted.
Texas Cities Rate Settlement
Entergy Corporation and GSU
In June 1993, 13 cities within GSU's Texas service area
instituted an investigation to determine whether GSU's current
rates were justified. In October 1993, the general counsel of
the PUCT instituted an inquiry into the reasonableness of GSU's
rates. In November 1993, a settlement agreement was filed with
the PUCT which provides for an initial reduction in GSU's annual
retail base revenues in Texas of approximately $22.5 million
effective for electric usage on or after November 1, 1993, and a
second reduction of $20 million to be effective September 1994.
Further, the settlement provided for GSU to reduce rates with a
$20 million one-time bill credit in December 1993, and to refund
approximately $3 million to Texas retail customers on bills
rendered in December 1993. The cities' rate inquiries had been
settled earlier on the same terms.
While no parties to the PUCT rate inquiry now oppose the
settlement agreement which has been filed in that case, the
settlement agreement is subject to review by the PUCT. The
presiding officer in the PUCT rate inquiry has set a June 8, 1994
hearing to consider the merits of the settlement agreement. The
cities, who are parties to the PUCT rate inquiry, have filed
testimony with the PUCT expressing their reservations about
certain aspects of the settlement. However, the cities have
announced that those reservations will not cause the cities to
oppose the settlement agreement. GSU believes that the PUCT will
ultimately issue an order consistent with the settlement
agreement, but there can be no assurance in this regard.
In March 1994 the Texas Office of Public Utility Counsel and
certain cities served by GSU instituted a second investigation of
the reasonableness of GSU's rates. See Part II, Item 1. "Legal
Proceedings," for additional information.
Louisiana
GSU
Previous rate orders of the LPSC have been appealed, and
pending resolution of various appellate proceedings, GSU has made
no write-off for the disallowance of $30.6 million of rate
deferrals that GSU recorded for the period December 16, 1987
through February 18, 1988.
LPSC Investigation
Entergy Corporation, GSU, and LP&L
In response to a preliminary report of the LPSC indicating
that the rates of return on equity of several electric utilities
subject to the LPSC's jurisdiction may be too high, GSU provided
the LPSC with information GSU believes supports the current rate
level. In September 1993, the LPSC deferred review of GSU's base
rates until the first post-Merger earnings analysis is filed in
accordance with the LPSC Merger approval (scheduled for mid-
1994).
Recognizing that LP&L was subject to a rate freeze until
March 1994, the LPSC requested LP&L to explain its "relatively
high cost of debt" compared to other electric utilities subject
to LPSC jurisdiction. LP&L responded to this request, and in an
August 1993 report to the LPSC, the LPSC's legal consultants
acknowledged LP&L's rationale for its cost of debt in comparison
to two other utilities subject to the LPSC's jurisdiction. In
October 1993, the LPSC approved a schedule to conduct a review of
LP&L's rates and rate structure upon the expiration of LP&L's
rate freeze. The LPSC is currently scheduled to review LP&L's
rates and rate structure in May 1994, which may result in a
further decrease in rates.
February 1994 Ice Storm
Entergy Corporation, AP&L, and MP&L
In early February 1994, an ice storm left more than 221,000
Entergy customers without electric power across the System's four-
state service area. The storm was the most severe natural
disaster ever to affect the System, causing damage to
transmission and distribution lines, equipment, poles, and
facilities in certain areas, primarily in Mississippi. Repair
costs are currently estimated to be $107.0 million, $26.3
million, and $70.8 million for the System, AP&L, and MP&L,
respectively with $75.1 million, $15.4 million, and $57.5 million
of these amounts estimated to be capitalized as plant-related
costs. The remaining balances have been charged against the
respective companies' regulatory storm damage reserves, except
for MP&L which recorded a deferred debit. On April 15, 1994,
MP&L filed for rate recovery of the non-plant costs related to
the ice storm. See Part II, Item 1. "Legal Proceedings," for
additional information on this filing. Estimated construction
expenditures (see Note 1) reflect the above amounts.
Louisiana Supreme Court Ruling/Refund
GSU
In 1988, GSU entered into a joint venture with Conoco, Inc.,
Citgo Petroleum Corporation, and Vista Chemical Company
(Industrial Participants) whereby GSU's Nelson Units 1 and 2 were
sold to a partnership (NISCO) consisting of the Industrial
Participants and GSU. The sale of the units by GSU to NISCO was
for an amount in excess of the units' depreciated cost. The
Industrial Participants are supplying the fuel for the units,
while GSU operates the units at the discretion of the Industrial
Participants and purchases the electricity produced by the units.
In February 1990, the LPSC disallowed the pass-through to
ratepayers for the portion of GSU's cost to purchase power from
NISCO representing the excess of NISCO's purchase price of the
units over GSU's depreciated cost of the units. GSU appealed the
1990 order. In March 1994, the Louisiana Supreme Court ruled in
favor of the LPSC, and GSU recorded an estimated refund provision
of $10.1 million, before related income taxes of $4.1 million.
Reserve for Revenue Reduction
Entergy Corporation and NOPSI
See pages 27 and 266-268 of the Form 10-K for information
regarding the 1991 NOPSI Settlement and a 1992 gas rate
settlement. Under the terms of the 1991 NOPSI Settlement and a
1992 gas rate settlement, NOPSI agreed that during the period
October 1, 1992 through October 31, 1996, the Council will have
the right to investigate the appropriateness of NOPSI's rates if
NOPSI's return on equity on its operations (calculated in
accordance with the applicable provisions of the 1991 NOPSI
Settlement and a 1992 gas rate settlement) for twelve month
periods subsequent to September 30, 1992, were to exceed 13.76%,
and after rate hearing(s), to impose a credit on NOPSI's
customers' bills over the ensuing twelve month period in an
amount that would have allowed NOPSI, during the relevant test
year, to earn a return on equity incident to its operations of no
less than 12.76%.
A review by the Council's advisors of NOPSI's return on
equity for the twelve month period ended September 30, 1993,
indicates that NOPSI may be required to credit $21.5 million to
its customers. In early May 1994, NOPSI determined it was likely
that a credit to customers would be required, however, NOPSI
estimates that the actual amount of the revenue reduction will be
approximately $14.3 million. In the first quarter of 1994, NOPSI
recorded a reserve for this revenue reduction which reduced net
income by $8.8 million (net of taxes). The Council is expected
to order a hearing in the second quarter of 1994 to render a
final decision on the actual amount, method, and timing of the
credit.
LPSC Fuel Cost Review
GSU
In November 1993, the LPSC ordered a review of GSU's fuel
costs. The LPSC stated that fuel costs for the period October
1988 through September 1991 would be reviewed based on the number
of outages at River Bend and the findings in the June 1993 PUCT
fuel reconciliation case. Hearings began in March 1994 and are
continuing. For information on the June 1993 PUCT fuel
reconciliation case, see page 165 of the Form 10-K.
NOTE 3. PREFERRED AND COMMON STOCK
Entergy Corporation
Entergy Corporation has a program to repurchase shares of
its outstanding common stock either on the open market or through
negotiated purchases or tender offers. Stock repurchases are
made from time to time depending upon market conditions and
authorization of the Entergy Corporation Board of Directors.
During the first three months of 1994, 1,005,000 shares of common
stock were repurchased and were accounted for as treasury stock
using the average cost method, at a cost of $35.6 million.
AP&L
On January 3, 1994, AP&L redeemed, pursuant to sinking fund
requirements, 200,000 shares of its 13.28% Series Preferred
Stock, $25 par value.
GSU
GSU has requested, but has not yet received, SEC
authorization to issue and sell, through December 31, 1995, up to
$700 million aggregate principal amount of preferred stock and/or
first mortgage bonds and medium term notes. The proceeds will be
used for general corporate purposes and the repayment and/or
redemption of certain outstanding securities. On March 15, 1994,
GSU redeemed, pursuant to sinking fund requirements, 22,500
shares of its Adjustable Rate Series B Preferred Stock, $100 par
value.
LP&L
On February 1, 1994, LP&L redeemed, pursuant to sinking fund
requirements, 300,000 shares of its 12.64% Series Preferred
Stock, $25 par value. On May 2, 1994, LP&L redeemed, pursuant to
sinking fund requirements, 416 shares of its 14.72% Series
Preferred Stock, $25 par value, which represented the remaining
outstanding shares of this series.
MP&L
On January 3, 1994, MP&L redeemed 70,000 shares of its 9.76%
Series Preferred Stock, $100 par value. On March 1, 1994, MP&L
redeemed 10,000 shares of its 12.00% Series Preferred Stock, $100
par value.
NOPSI
On March 1, 1994, NOPSI redeemed 15,000 shares of its 15.44%
Series Preferred Stock, $100 par value.
NOTE 4. LONG-TERM DEBT
AP&L
AP&L has requested, but has not yet received, SEC
authorization to enter into arrangements for the issuance and
sale, through December 31, 1996, of up to $200 million aggregate
principal amount of tax-exempt bonds. The proceeds of the sale
will be used to acquire and construct certain pollution control
or sewage and solid waste disposal facilities at AP&L's
generating plants or to refinance outstanding tax-exempt bonds
issued for that purpose. On February 1, 1994, AP&L redeemed,
pursuant to sinking fund requirements, $0.4 million of its 8.75%
Series First Mortgage Bonds due 1998.
GSU
GSU has requested, but has not yet received, SEC
authorization to issue and sell, through December 31, 1995, up to
$700 million aggregate principal amount of its first mortgage
bonds, medium term notes and/or preferred stock. The proceeds
will be used for general corporate purposes and the repayment or
redemption of certain outstanding securities. GSU has also
requested SEC authorization to enter into arrangements for the
issuance and sale, through December 31, 1995, of up to $250
million aggregate principal amount of tax-exempt bonds for the
financing or refinancing of certain sewage and/or solid waste
disposal facilities. The proceeds from the sale of tax-exempt
bonds will be used to finance certain sewage and/or solid waste
disposal or pollution control facilities or to refinance
outstanding tax-exempt bonds issued for that purpose. In
addition, GSU has requested, but has not yet received, SEC
authorization to redeem, purchase, or otherwise acquire its
outstanding pollution control revenue bonds and/or industrial
development revenue bonds through December 31, 1995.
LP&L
LP&L has requested, but not yet received, SEC authorization
to undertake, should LP&L decide to do so, the refunding of
approximately $310 million of intermediate-term and long-term
bonds issued by the Owner Trustee when it acquired interests in
Waterford 3 in 1989. Such bonds became optionally redeemable in
July 1994.
MP&L
On April 20, 1994, MP&L entered into arrangements with
Warren County, Mississippi and Washington County, Mississippi for
the issuance of an aggregate of $16.0 million principal amount of
7% Pollution Control Revenue Refunding Bonds due 2022, the
proceeds of which were used to redeem $8.1 million principal
amount of 8.5% Warren County pollution control revenue bonds and
$7.9 million principal amount of 7.5% Washington County
pollution control revenue bonds issued in 1974.
NOPSI
On May 2, 1994, NOPSI redeemed, pursuant to sinking fund
requirements, $15 million of its 10.95% Series G&R Bonds.
System Energy
On January 11, 1994, System Energy refinanced $435 million
aggregate principal amount of secured lease obligation bonds
originally issued as part of the financing for the sale and
leaseback of undivided portions of Grand Gulf 1. The secured
lease obligation bonds of $356 million, 7.43% series due 2011 and
$79 million, 8.2% series due 2014 are indirectly secured by liens
on, and a security interest in, certain ownership interests and
the respective leases relating to Grand Gulf 1. On April 28,
1994, System Energy issued $60 million of its 7-5/8% Series First
Mortgage Bonds due 1999. On May 2, 1994, System Energy redeemed,
pursuant to mandatory and optional sinking fund requirements, $60
million of its 11% Series First Mortgage Bonds due 2000.
NOTE 5. RETAINED EARNINGS
On January 29, 1994, Entergy Corporation's Board of
Directors declared a common stock dividend of 45 cents per share
which was paid on March 1, 1994. In addition, on March 25, 1994,
Entergy Corporation's Board of Directors declared a common stock
dividend of 45 cents per share payable on June 1, 1994. On
January 28, 1994, the Boards of Directors of the respective
companies listed below declared common stock dividends payable to
Entergy Corporation in the following amounts (in millions):
Date
Company Payable Amount
AP&L 2/1/94 $ 17.9
GSU * 2/1/94 $100.0
LP&L 2/1/94 $ 17.9
MP&L 2/1/94 $ 4.6
System 2/1/94 $ 57.8
Energy
* Prior to the February 1, 1994, dividend payment, GSU had not
paid a common dividend since June 1986.
NOTE 6. FAIR VALUE DISCLOSURE
The System adopted the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities," effective January 1, 1994. As a result the System
has recorded on the balance sheet an additional $15.6 million in
decommissioning trust funds, representing the amount by which the
fair value of the securities held in such funds exceeds the
amounts recovered in rates and deposited in the funds and the
related earnings on the amounts deposited. Due to the regulatory
treatment for decommissioning trust funds, the System recorded an
offsetting amount in unrealized gains on investment securities as
a regulatory liability in other deferred credits.
NOTE 7. LINES OF CREDIT AND RELATED BORROWINGS
See pages 89, 129, 169, 203, 239, 270, and 300 of the Form
10-K for information on Entergy Corporation's, the System
operating companies', and System Energy's short-term borrowing
authorizations, including the Money Pool, and certain limitations
thereon, and lines of credit with banks. As of March 31, 1994,
AP&L, GSU, LP&L, and MP&L had unused lines of credit for short-
term borrowings of $34.0 million, $3.2 million, $20.2 million,
and $30.0 million, respectively. On March 25, 1994, GSU received
SEC authorization to participate in the Money Pool. GSU is
authorized to effect short-term borrowings of up to $125 million,
subject to increase to as much as $455 million after further SEC
approval. On April 21, 1994, AP&L, LP&L, and MP&L received SEC
approval to increase their short-term borrowing limits to $200
million (from $125 million), $200 million (from $125 million),
and $113 million (from $100 million), respectively. As of March
31, 1994, Entergy Corporation and the System
operating companies had outstanding short-term borrowings from
the Money Pool and/or from banks as follows (in millions):
Company Money Banks
Pool
Entergy - $43
Corporation
AP&L $32 $0.6
LP&L $24.9 -
MP&L $71.6 -
__________________________________________
In the opinion of Entergy Corporation, AP&L, GSU, LP&L,
MP&L, NOPSI, and System Energy, the accompanying unaudited
condensed financial statements contain all adjustments
(consisting primarily of normal recurring accruals and
reclassifying previously reported amounts to conform to current
classifications) necessary for a fair statement of the results
for the interim periods presented. However, the business of
AP&L, GSU, LP&L, MP&L, and NOPSI 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.
In accordance with the purchase method of accounting, the
1993 first quarter results of operations for Entergy Corporation
reported in its Statements of Consolidated Income and Cash Flows,
do not include GSU's results of operations. However, the Results
of Operations discussion in "Management's Financial Discussion &
Analysis" is presented with GSU's 1993 results of operations
included for comparative purposes. This information is not
necessarily indicative of the results of operations that would
have occurred had the Merger been consummated for the period for
which it is being given effect, nor is it necessarily indicative
of future operating results.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
Liquidity is important to Entergy due to the capital
intensive nature of its business, which requires large
investments in long-lived assets. While large capital
expenditures for the construction of new generating capacity are
not currently planned, the System nevertheless requires
significant capital resources for the periodic maturity of
certain series of debt and preferred stock. See Note 1 for
additional information on the System's capital and refinancing
requirements in 1994 - 1996. Net cash flow from operations for
Entergy, the System operating companies, and System Energy for
the three months ended March 31, 1994 and 1993, was as follows
(in millions):
Three Months Three Months
Company Ended 3/31/94 Ended 3/31/93
Entergy * $322.4 $155.6
AP&L $ 88.2 $ 84.9
GSU $ 53.8 $(30.4)
LP&L $ 99.5 $ 15.4
MP&L $ 46.9 $ 22.1
NOPSI $ 26.5 $ 7.6
System Energy $ 53.4 $ 57.4
* Entergy's net cash flow from operations for the three months
ended March 31, 1993, excludes GSU because the Merger was not
yet consummated.
In the first quarter of 1994, as in recent years, cash from
operations, supplemented by cash on hand, was sufficient to meet
substantially all investing and financing requirements, including
capital expenditures, dividends, and debt/preferred stock
maturities. (However, MP&L required significant external funds in
the form of short-term borrowings because of unexpected costs
incurred as a result of an ice storm.) Entergy's ability to fund
most of its capital requirements with cash from operations
results, in part, from our continued efforts to streamline
operations and reduce costs as well as collections under the
Grand Gulf 1 rate phase-in plans, which exceed current cash
requirements for Grand Gulf 1-related costs. (In the income
statement, these revenue collections are offset by the
amortization of previously deferred costs; therefore, there is no
effect on net income.) The System operating companies and System
Energy have the ability, subject to regulatory approval, to meet
future capital requirements through future debt or preferred
stock issuances, as discussed below. Also, in order to take
advantage of lower interest and dividend rates, Entergy
Corporation's subsidiaries may continue to refinance high-cost
debt and preferred stock prior to maturity.
Productive investment of excess funds is necessary to
enhance the long-term value of Entergy Corporation's common
stock. Entergy Corporation expects to invest approximately $150
million per year in nonregulated and nonutility businesses. See
"Significant Factors and Known Trends - Nonregulated Investments"
for additional information.
Entergy Corporation's current primary capital requirements
are to periodically invest in, or make loans to, its
subsidiaries. Entergy Corporation expects to meet these
requirements in 1994 - 1996 with internally generated funds and
cash on hand. Entergy Corporation also pays dividends on its
common stock, which aggregated $103.7 million in the first three
months of 1994. Entergy Corporation receives funds through
dividend payments from its subsidiaries. During the first
quarter of 1994, these common stock dividend payments totaled
$198.2 million, including a $100 million dividend paid by GSU.
Certain restrictions may limit the amount of these distributions
(see page 94 of the Form 10-K and Note 2 ). See Note 5 for
information on dividends declared by Entergy Corporation, the
System operating companies, and System Energy in the first
quarter of 1994.
Entergy Corporation has a program to repurchase shares of
its outstanding common stock. The occurrence and amount of such
repurchase depend upon market conditions and authorization from
Entergy Corporation's Board of Directors. See Note 3 for
additional information. Entergy Corporation has requested SEC
authorization for a $300 million bank line of credit, the
proceeds of which are expected to be used for common stock
repurchases, investments in non-regulated and non-utility
businesses, and other activities.
Certain agreements and restrictions limit the amount of
mortgage bonds and preferred stock that can be issued by the
System operating companies and System Energy. Based on the most
restrictive applicable tests as of March 31, 1994, and an assumed
annual interest or dividend rate of 8.5%, the System operating
companies and System Energy could have issued bonds or preferred
stock in the following amounts (in millions):
Company Bonds Preferred Stock
AP&L $ 860 $697
GSU $ 407 $ -
LP&L $ 69 $750
MP&L $ 237 $231
NOPSI $ 72 $184
System $1,030 *
Energy
* System Energy's charter does not provide for the issuance of
preferred stock.
In addition, the System operating companies and System
Energy have the conditional ability to issue bonds against the
retirement of bonds, in some cases without meeting an earnings
coverage test. AP&L may also issue preferred stock to refund
outstanding preferred stock without meeting an earnings coverage
test. GSU has no limitations on the issuance of preference
stock. For information on the System operating companies' and
System Energy's regulatory authorizations to issue and acquire
securities, see Notes 3 and 4, and pages 90-94, 129-131, 170-172,
204-206, 239-241, 271-272, and 301 of the Form 10-K. See Note 7
for information on the System's short-term borrowings.
Entergy Corporation and GSU
See Notes 1 and 2, and Part II, Item 1. "Legal
Proceedings," regarding litigation with Cajun and River Bend rate
appeals. Substantial write-offs or charges resulting from
adverse rulings in these matters could adversely affect GSU's
ability to continue to pay dividends and obtain financing, which
could in turn affect GSU's liquidity.
Entergy Corporation and System Energy
In connection with the financing of Grand Gulf 1, Entergy
Corporation has undertaken, to provide to System Energy
sufficient capital to (1) maintain System Energy's equity capital
at an amount equal to at least 35% of System Energy's total
capitalization (excluding short-term debt), (2) permit the
continuation of commercial operation of Grand Gulf 1, and (3)
enable System Energy to pay in full all borrowings of System
Energy, whether at maturity, on prepayment, on acceleration or
otherwise. In addition, Entergy Corporation has agreed to make
certain cash capital contributions, if required, to enable System
Energy to make payments when due on its long-term debt.
System Energy
The financial condition of System Energy significantly
depends on the continued commercial operation of Grand Gulf 1 and
on the receipt of payments from AP&L, LP&L, MP&L, and NOPSI.
Such payments are System Energy's only source of operating
revenues.
In addition, System Energy's financial condition could be
affected by the outcome of a pending FERC audit matter. In
December 1990, FERC Division of Audits issued a report that
recommended that System Energy write off and not recover in rates
approximately $95 million of Grand Gulf 1 costs included in
utility plant, and compute refunds for over collections from
AP&L, LP&L, MP&L, and NOPSI. In August 1992, FERC issued an
opinion and order (August 4 Order) affirming an initial decision
by a FERC ALJ. System Energy filed a Request for Rehearing, and
in October 1992, FERC issued an order allowing additional time
for its consideration of the request, and it deferred System
Energy's refund obligation until 30 days after FERC issues an
order on rehearing. If the decision is implemented, System
Energy estimates that as of March 31, 1994, net income would be
reduced by $155.3 million. This amount includes refund
obligations of approximately $118.9 million (including interest).
See Note 2 for additional information.
RESULTS OF OPERATIONS
ENTERGY
On December 31, 1993, GSU became a subsidiary of Entergy
Corporation. In accordance with the purchase method of
accounting, the 1993 first quarter results of operations for
Entergy Corporation and subsidiaries reported in its Statements
of Consolidated Income and Cash Flows do not include GSU's
results of operations. However, the following discussion is
presented with GSU's 1993 results of operations included for
comparative purposes.
Net Income
Consolidated net income decreased in the first quarter of
1994 due primarily to the one-time recording in the first quarter
of 1993 of the cumulative effect of the change in accounting
principle for unbilled revenues for AP&L, GSU, MP&L, and NOPSI
and the effect of implementing SFAS 109. Excluding these items,
net income for the first quarter of 1994 decreased by
approximately $3.0 million. This decrease was due primarily to
the recording of a reserve for revenue reduction by NOPSI as a
result of a review of NOPSI's return on equity in accordance with
the 1991 Settlement Agreement and a 1992 gas rate settlement (see
Note 2). This decrease was partially offset by increased retail
operating revenues caused by increased energy sales resulting
from colder than normal winter weather in 1994 and from non-
weather related growth. In addition, interest on long-term debt
and preferred dividend requirements decreased by approximately
$18.5 million as a result of continued debt refinancing and stock
redemption activities.
Significant factors affecting the results of operations and
causing variances between the first quarter of 1994 and 1993 are
discussed under "Revenues and Sales," "Expenses," and "Other"
below.
Revenues and Sales
See Entergy's "Selected Operating Results" for information
on operating revenues by source and KWH sales.
Electric operating revenues increased by approximately $62.1
million in the first quarter of 1994 due primarily to improving
market conditions and increased retail energy sales resulting
from colder than normal winter weather as compared to milder
weather in 1993. Additionally, revenues were higher due to
increased collections of Grand Gulf 1-related costs and increased
fuel adjustment revenues, which do not affect net income. The
increase in fuel adjustment revenues was due to increased gas
generation resulting from scheduled nuclear refueling outages at
Waterford 3 and ANO 2 during the first quarter of 1994. A $14.3
million reduction in revenues, as discussed in "Net Income"
above, partially offset these increases.
Gas operating revenues increased by approximately $12.4
million in the first quarter of 1994 due primarily to increased
retail sales resulting from colder than normal winter weather in
1994.
Expenses
Purchased power increased by approximately $32.3 million in
the first quarter of 1994 due primarily to increased power
purchased from nonassociated utilities due to changes in
generation requirements for the System operating companies
resulting primarily from increased energy sales and fuel-related
costs. In addition, purchased power increased in 1994 as a
result of nuclear refueling outages at Waterford 3 and ANO 2.
Nuclear refueling outage expenses decreased by approximately
$5.1 million in the first quarter of 1994 due primarily to a
reduction in AP&L's monthly nuclear refueling outage accrual
resulting from revisions in estimated outage expenses. The lower
monthly accrual began in the fourth quarter of 1993.
The amortization of rate deferrals increased by
approximately $16.4 million in the first quarter of 1994 due
primarily to collection of more Grand Gulf 1-related costs from
customers in 1994 as compared to 1993.
Other
Other interest increased by approximately $5.2 million due
to increased amortization of debt expense resulting from
continued refinancing of debt.
AP&L
Net Income
Net income decreased in the first quarter of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues and the effect of implementing SFAS 109.
Excluding the effects of the change in accounting principle and
SFAS 109, net income increased $7.9 million. This increase is
due primarily to increased energy sales.
Significant factors affecting the results of operations and
causing variances between the first quarter of 1994 and 1993 are
discussed under "Revenues and Sales" and "Expenses" below.
Revenues and Sales
See AP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues and sales increased in the first
quarter of 1994 due primarily to an increase in sales for resale
to associated companies caused by changes in generation
availability and requirements among the System operating
companies. Further, retail energy sales increased as a result of
non-weather related growth. The increase in energy sales was
partially offset by milder weather in 1994 and the loss of sales
due to an ice storm in February 1994. Additionally, revenues
were higher due to increased collections of Grand Gulf 1-related
costs and increased recovery of fuel-related costs, which do not
affect net income.
Expenses
Fuel and fuel-related expenses increased in the first
quarter of 1994 primarily due to higher energy sales. Purchased
power increased in the first quarter of 1994 as a result of
changes in generation availability and requirements among the
System operating companies and lower nuclear generation as a
result of ANO 2's refueling outage in mid-March 1994.
The amortization of rate deferrals increased due to
increased collection of previously deferred Grand Gulf 1-related
costs pursuant to the step-up provisions of AP&L's rate phase-in
plan.
Nuclear refueling outage expenses decreased in the first
quarter of 1994 due primarily to a reduction in AP&L's monthly
nuclear refueling outage accrual resulting from revisions in
estimated outage expenses. The lower monthly accrual began in
the fourth quarter of 1993.
Total income taxes decreased in the first quarter of 1994
due primarily to the cumulative effect of the change in
accounting principle for unbilled revenues and the effect of
implementation of SFAS 109 in the first quarter of 1993.
GSU
Net Income
Net income decreased in the first quarter of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues. Excluding the effect of the change in
accounting principle, net income decreased $4.0 million. This
decrease is due primarily to a $6.0 million net of tax refund
provision made in March 1994 (see Note 2), and increased
operations expense, partially offset by increased energy sales.
Significant factors affecting the results of operations and
causing variances between the first quarter of 1994 and 1993 are
discussed under "Revenues and Sales" and "Expenses" below.
Revenues and Sales
See GSU's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Operating revenues increased in the first quarter of 1994
due primarily to increased retail energy sales resulting from
colder than normal winter weather and from non-weather related
growth, and increased sales for resale as a result of GSU's
participation in the System power pool.
Expenses
Purchased power increased in the first quarter of 1994 due
to participation in joint dispatching through the System power
pool resulting from increased energy sales as discussed above.
Operation expense increased due to one-time costs associated
with safety and performance improvements at River Bend.
LP&L
Net Income
Net income increased in the first quarter of 1994.
Excluding the effect of implementing SFAS 109 in the first
quarter of 1993, net income increased by $5.6 million. This
increase is due primarily to increased operating revenues
partially offset by increased other operation and maintenance
expenses.
Significant factors affecting the results of operations and
causing variances between the first quarter of 1994 and 1993 are
discussed under "Revenues and Sales" and "Expenses" below.
Revenues and Sales
See LP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues increased in the first quarter
of 1994 due primarily to increased fuel adjustment revenues,
which do not affect net income, to increased retail energy sales
resulting from colder than normal winter weather in 1994 and from
non-weather related growth.
Expenses
Purchased power increased in the first quarter of 1994 due
primarily to increased power purchased from nonassociated
utilities resulting from a scheduled refueling outage at
Waterford 3 during the first quarter of 1994, and also due to
increased retail energy sales as discussed above.
MP&L
Net Income
Net income decreased in the first quarter of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues and the effect of implementing SFAS 109.
Excluding the effects of the change in accounting principle and
implementing SFAS 109, net income decreased by $5.6 million.
This decrease is due primarily to a decrease in accrued unbilled
revenues and increased operation and maintenance expenses,
partially offset by an increase in operating revenues.
Significant factors affecting the results of operations and
causing variances between the first quarter of 1994 and 1993 are
discussed under "Revenues and Sales" and "Expenses" below.
Revenues and Sales
See MP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues increased in the first quarter
of 1994 due to increased retail energy sales resulting from
colder than normal winter weather in 1994 and from non-weather
related growth, and increased sales for resale to associated and
nonassociated companies. These increases were partially offset
by a decrease in unbilled revenues.
Expenses
Fuel for electric generation and fuel-related expenses
increased in the first quarter of 1994 due primarily to an
increase in generation requirements resulting primarily from
increased energy sales as discussed in "Revenues and Sales"
above.
Purchased power expense decreased in the first quarter of
1994 due primarily to changes in generation availability and
requirements among the System operating companies.
The amortization of rate deferrals increased in the first
three months of 1994 reflecting the fact that MP&L, based on the
Revised Plan, collected more Grand Gulf 1-related costs from its
customers in the first quarter of 1994 than it recovered in the
same period in 1993.
NOPSI
Net Income
Net income decreased in the first quarter of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues offset by the effect of implementing SFAS
109. Excluding the effects of the change in accounting principle
and implementing SFAS 109, net income decreased $1.9 million.
This decrease is due primarily to the recording of a reserve for
revenue reduction as a result of a review of NOPSI's return on
equity in accordance with the 1991 NOPSI Settlement and a 1992
gas rate settlement (see Note 2).
Significant factors affecting the results of operations and
causing variances between the first quarter of 1994 and 1993 are
discussed under "Revenues and Sales" and "Expenses" below.
Revenues and Sales
See NOPSI's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Operating revenues decreased in the first quarter of 1994
due to the recording of a reserve for revenue reduction of $14.3
million as discussed above. This decrease was partially offset
by increased retail energy sales resulting from colder than
normal winter weather in 1994 and from non-weather related
growth, increased fuel adjustment revenues, and accrued unbilled
revenues.
Expenses
Fuel and fuel-related expenses and gas purchased for resale
increased in the first quarter of 1994 due primarily to an
increase in the amount of gas purchased for resale and an
increase in deferred gas costs due to higher gas sales.
The increase in amortization of rate deferrals in the first
quarter of 1994 is primarily a result of the collection of larger
amounts of previously deferred costs under the 1991 NOPSI
Settlement.
SYSTEM ENERGY
Net Income
Net income decreased in the first quarter of 1994 due
primarily to a lower rate of return on equity (reduced from 13%
to 11%) in System Energy's formula wholesale rates as a result of
an August 1993 settlement of a rate proceeding with FERC. This
decrease in revenue was partially offset by a reduction in
interest expense due to the refinancing of high-cost debt.
Significant factors affecting the results of operations and
causing variances between the first quarter of 1994 and 1993 are
discussed under "Revenues and Sales" and "Expenses" below.
Revenues
Operating revenues recover operating expenses, depreciation
and capital costs attributable to Grand Gulf 1. The capital
costs are computed by allowing a return on System Energy's common
equity funds allocable to its investment in Grand Gulf 1 and
adding to such amount System Energy's effective interest cost for
its debt allocable to its investment in Grand Gulf 1.
Operating revenues decreased in the first quarter of 1994
due primarily to the reduction in System Energy's rate of return
on equity as discussed above, a lower return on System Energy's
decreasing investment in Grand Gulf 1 (caused by depreciation of
the unit), and a decrease in operating expenses.
Expenses
Interest expense decreased in the first quarter of 1994 due
primarily to the refinancing of high-cost long-term debt.
SIGNIFICANT FACTORS AND KNOWN TRENDS
Entergy Corporation and GSU
Entergy Corporation-GSU Merger
On December 31, 1993, Entergy completed the Merger and
became one of the nation's largest electric utilities. With GSU
as its fifth retail operating company, Entergy gains size,
expanded market area, economies of scale, an additional nuclear
unit (River Bend), and a more price-competitive fuel mix. As a
result of the Merger, Entergy estimates $850 million in fuel cost
savings and $670 million in operation and maintenance expense
savings over the next decade. It is possible that common
shareholders may experience some dilution in earnings in the
short term as a result of the Merger. However, Entergy
Corporation believes that the Merger will be beneficial to common
shareholders over the longer term, both in terms of the strategic
benefits and the economies and efficiencies expected to be
produced. For further information, see pages 103-104 and 180 of
the Form 10-K and "Litigation and Regulatory Proceedings" below.
Entergy Corporation, AP&L, GSU, LP&L, MP&L, and NOPSI
Competition
Entergy welcomes competition in the electric energy business
and believes that a more competitive environment should benefit
our shareholders, customers, and employees. However, competition
presents Entergy with many challenges. The following have been
identified by Entergy as its major competitive challenges.
Retail and Wholesale Rate Issues
Increasing competition in the utility industry brings an
increased need to stabilize or reduce retail rates. The retail
regulatory environment is shifting from traditional rate-base
regulation to incentive rate regulation. Incentive rate and
performance-based plans encourage efficiencies and productivity
while permitting utilities to share in the results. Retail
wheeling, which requires utilities to "wheel" or move power from
third parties to their own retail customers, is evolving. As a
result, the retail market is expected to become more competitive.
In the wholesale rate area, FERC approved in 1992, with certain
modifications, the proposal of AP&L, LP&L, MP&L, NOPSI, and
Entergy Power to sell wholesale power at market-based rates and
to provide to electric utilities "open access" to the System's
transmission system (subject to certain requirements). GSU was
later added to this filing. Various intervenors in the
proceeding filed petitions for review with the United States
Court of Appeals for the District of Columbia Circuit. FERC's
order, once it takes effect, will increase marketing
opportunities for the System, but will also expose the System to
the risk of loss of load or reduced revenues due to competition
with alternative suppliers.
In connection with the Merger, AP&L agreed with its retail
regulator not to request any general retail rate increases that
would take effect before November 1998, with certain exceptions.
For further information, see pages 82-83 and 125-126 of the Form
10-K.
On March 31, 1994, North Little Rock, Arkansas, awarded AP&L
a wholesale electric contract which will provide estimated
revenues of $347 million over 11 years. Under the contract, the
price per KWH was reduced 18%, retroactive to March 1, 1994, with
increases in price through the year 2004. AP&L, which has been
serving North Little Rock for over 40 years, was awarded the
contract after intense bidding with three competitors. On April
29, 1994, one of AP&L's competitors filed a motion with FERC to
intervene in the approval process for the contract. See Part II,
Item 5. "Other Information" for additional information.
In connection with the merger, GSU agreed with the LPSC and
PUCT to a five-year Rate Cap on retail electric rates, and to
pass through to retail customers the fuel savings and a certain
percentage of the nonfuel savings created by the Merger. GSU's
base rates will be reviewed by the LPSC during the first post-
Merger earnings analysis, scheduled for mid-1994, for
reasonableness of its return on equity. The PUCT will also
review GSU's base rates in accordance with its Merger approval
plan in mid-1994. For further information, see pages 82-83 and
163-164 of the Form 10-K. See Note 2 for information on recent
filings by certain Texas cities seeking a reduction in GSU's
rates.
Cogeneration projects developed or considered by certain of
GSU's industrial customers over the last several years have
resulted in GSU developing and securing approval of rates lower
than the rates previously approved by the PUCT and LPSC for such
industrial customers. Such rates are designed to retain such
customers, and to compete for and develop new loads, and do not
presently recover GSU's full cost of service. The pricing
agreements at non-full cost of service based rates fully recover
all related costs but provide only a minimal return.
Substantially all of such pricing agreements expire no later than
1997. During the first quarter of 1994, KWH sales to industrial
customers at less than full cost of service, which make up
approximately 30% of the total industrial class, increased 24%.
Sales to the remaining industrial customers decreased 2%.
LP&L's five year rate freeze expired in March 1994. At the
same time, approximately $46 million of rate relief that was
included in LP&L's retail rates also expired. The LPSC is
scheduled to begin a review of LP&L's rates and rate structure in
May 1994, which may result in a further decrease in rates. See
Note 2 for additional information.
In February 1994, the MPSC conducted a general review of
MP&L's current rates and in March 1994, the MPSC issued a final
order adopting a formula rate plan for MP&L that will allow for
periodic small adjustments in rates based on a comparison of
earned to benchmark returns and upon certain performance factors.
The order also adopted previously agreed-upon stipulations of a
required return on equity of 11% and certain accounting
adjustments that result in a 4.3% ($28.1 million) reduction in
MP&L's June 30, 1993, test-year operating revenues. Pursuant to
the MPSC's order, on March 18, 1994, MP&L filed rates designed to
provide for this reduction in operating revenues for the test
year. These rates are effective for service rendered on or after
March 25, 1994. See pages 83-84 and 235-236 of the Form 10-K for
further information.
In connection with the Merger, MP&L agreed with its retail
regulator not to request any general retail rate increases that
would take effect before November 1998, with certain exceptions.
For further information, see pages 82-83 and 236 of the Form 10-
K, and Part II, Item 1. "Legal Proceedings."
In connection with the Merger, NOPSI agreed with the Council
to reduce its annual electric base rates by $4.8 million
effective for bills rendered on or after November 1, 1993. NOPSI
is currently operating under electric and gas base rate freezes
through October 31, 1996. For further information, see pages 82-
83 and 266-268 of the Form 10-K.
See pages 27 and 266-268 of the Form 10-K for information
regarding the 1991 NOPSI Settlement and a 1992 gas rate
settlement. Under the terms of the 1991 NOPSI Settlement and a
1992 gas rate settlement, NOPSI agreed that during the period
October 1, 1992 through October 31, 1996, the Council will have
the right to investigate the appropriateness of NOPSI's rates if
NOPSI's return on equity on its operations (calculated in
accordance with the applicable provisions of the 1991 NOPSI
Settlement and a 1992 gas rate settlement) for twelve month
periods subsequent to September 30, 1992, were to exceed 13.76%,
and after rate hearing(s), to impose a credit on NOPSI's
customers' bills over the ensuing twelve month period in an
amount that would have allowed NOPSI, during the relevant test
year, to earn a return on equity incident to its operations of no
less than 12.76%.
A review by the Council's advisors of NOPSI's return on
equity for the twelve month period ended September 30, 1993,
indicates that NOPSI may be required to credit $21.5 million to
its customers. In early May 1994, NOPSI determined it was likely
that a credit to customers would be required, however, NOPSI
estimates that the actual amount of the revenue reduction will be
approximately $14.3 million. In the first quarter of 1994, NOPSI
recorded a reserve for this revenue reduction which reduced net
income by $8.8 million (net of taxes). The Council is expected
to order a hearing in the second quarter of 1994 to render a
final decision on the actual amount, method, and timing of the
credit. NOPSI's future earnings may also be limited by the 1991
NOPSI Settlement and a 1992 gas rate settlement, as discussed
above, which may not allow NOPSI to earn a return on equity in
excess of 13.76%.
In light of the rate issues discussed above, Entergy is
aggressively reducing costs to avoid potential earnings erosions
that might result as well as to successfully compete by becoming
a low-cost producer. To help minimize future costs, Entergy
remains committed to least cost planning. In December 1992,
AP&L, LP&L, MP&L, and NOPSI each filed a Least Cost Integrated
Resource Plan (Least Cost Plan) with their respective retail
regulators. GSU is currently working with the PUCT regarding
integrated resource planning. Integrated resource or least cost
planning includes demand-side measures such as customer energy
conservation and supply-side measures such as more efficient
power plants. These measures are designed to delay the building
of new power plants for the next 20 years. The System operating
companies plan to periodically file revised Least Cost Plans.
See pages 8-9, 19, 23-24, 25 and 26-27 of the Form 10-K, and Part
II, Item 1. "Legal Proceedings" for further information.
The Energy Policy Act of 1992
The Energy Policy Act of 1992 (Energy Act) is changing the
business of transmitting and distributing electricity. The
Energy Act encourages competition and affords utilities the
opportunities, and the risks, associated with an open and more
competitive market environment. The Energy Act increases
competition in the wholesale energy market through the creation
of exempt wholesale generators (EWGs). Entergy is competing in
this market through its independent power subsidiary, Entergy
Power Development Corporation. The Energy Act also gives FERC
the authority to order investor-owned utilities to provide
transmission access to or for other utilities, including EWGs.
In addition, the Energy Act allows utilities to own and operate
foreign generation, transmission, and distribution facilities.
See "Nonregulated Investments" below for further information.
Entergy Corporation and GSU
Litigation and Regulatory Proceedings
See Note 1 and Part II, Item 1. "Legal Proceedings," for
information on litigation with Cajun concerning Cajun's ownership
interest in River Bend and the possible material adverse effects
on GSU's financial condition in the event that GSU is ultimately
unsuccessful in this litigation, including a possible filing
under the bankruptcy laws.
See Note 2 for information on the possibility of material
adverse effects on GSU's financial condition and results of
operations as a result of substantial write-offs and/or refunds
in connection with outstanding appeals and remands regarding
approximately $1.4 billion of abeyed company-wide River Bend
plant costs and approximately $187 million of Texas retail
jurisdiction deferred River Bend operating and carrying costs.
System Energy
See Note 2 for information with respect to possible write-
offs and refunds by System Energy which may result from a
decision issued by FERC.
Entergy Corporation
Nonregulated Investments
Entergy Corporation continues to seek new opportunities to
expand its electric energy business, including expansion into
related nonutility businesses. These opportunities include new
domestic ventures such as Entergy Systems and Service, Inc.
(Entergy SASI), the region's only full-service provider of energy-
efficient lighting and related services, previously established
ventures in Argentina, and planned investments in Asia, Central
America and South America. Entergy Corporation expects to invest
approximately $150 million per year in nonregulated business
opportunities. Additional shareholder and/or regulatory
approvals may be required for such acquisitions to take place.
In the first quarter of 1994, Entergy Corporation's
nonregulated investments reduced consolidated net income by
approximately $6.9 million. In the near term, these investments
are not likely to have a positive effect on earnings; but
management believes that these investments could contribute to
future earnings growth. See Part II, Item 1. "Legal
Proceedings," for information on a petition filed with the SEC by
the APSC, the Council, and the MPSC alleging that Entergy
Corporation has failed to comply with the terms of a 1992
settlement agreement relating to certain non-regulated
investments and Item 5. "Other Information" with respect to a new
Entergy Corporation subsidiary that is seeking exempt wholesale
generation status.
Entergy Corporation and AP&L
ANO Matters
See pages 30, 77, and 123 of the Form 10-K for information
on leaks in certain steam generator tubes at ANO 2 that were
discovered and repaired during an outage in March 1992. During a
refueling outage in September 1992, a comprehensive inspection of
all steam generator tubing was conducted and necessary repairs
were made. During a mid-cycle outage in May 1993, a scheduled
special inspection of certain steam generator tubing was
conducted by Entergy Operations and additional repairs were made.
Entergy Operations operated ANO 2 with no further steam generator
inspections until the refueling outage which was completed on
April 23, 1994. Inspections during the outage revealed
additional cracks, however most were smaller than those seen in
earlier inspections except for one relatively large crack.
Based upon results of these inspections and an inconclusive
pressure test, Entergy Operations plans to inspect the steam
generator tubes during a mid-cycle outage tentatively scheduled
for January 1995. The operations and power output of the unit
have not been materially adversely affected.
GSU
Deregulated Portion of River Bend
As of March 31, 1994, GSU had not recovered a significant
amount of its investment in, or received any return associated
with, the portion of River Bend included in the deregulated asset
plan in Louisiana and the portion of River Bend placed in
abeyance as part of the Texas rate order which went into effect
in July 1988. See pages 157 and 165 of the Form 10-K for further
information. Future earnings will continue to be limited as long
as the limited recovery of the investment and lack of return
continues.
For the three months ended March 31, 1994, GSU recorded
revenues resulting from the sale of electricity from the
deregulated asset plan of approximately $8.9 million. Operations
and maintenance expenses, including fuel, were approximately
$10.6 million, and depreciation expense associated with the
deregulated asset plan investment was approximately $4.1 million
for the three months ended March 31, 1994. For the first quarter
of 1994, GSU recorded nonfuel revenue of $8.0 million (included
in the $8.9 million of total deregulated asset plan revenue
discussed above) which, absent the deregulated asset plan, would
not have been realized. The operations and maintenance expenses
and depreciation expense allocated to the deregulated asset plan
as detailed above would have been incurred at River Bend with or
without the deregulated asset plan. The future impact of the
deregulated asset plan on GSU's results of operations and
financial position will depend on River Bend's future operating
costs, the unit's efficiency and availability, and the future
market for energy over the remaining life of the unit. Based on
current estimates of the factors discussed above, GSU anticipates
that future revenues from the deregulated asset plan will fully
recover all related costs.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Least Cost Planning
AP&L, GSU, LP&L, MP&L, and NOPSI
As discussed on pages 8-9, 19, 23, 25-27, 76, 122, 197, 232,
and 264 of the Form 10-K, AP&L, LP&L, MP&L, and NOPSI have filed
a Least Cost Plan with their respective retail regulators, and
GSU is currently working with the PUCT regarding integrated
resource planning.
Several of the APSC public forum meetings were delayed into
1994. The public forum series is now expected to be completed in
May 1994.
On March 30, 1994, the LPSC extended the current overall
discovery, hearing and briefing schedule to provide that such
schedule will conclude with the report of the LPSC special
counsel on September 16, 1994 rather than on June 14, 1994. The
LPSC could render a decision on the basis of this report.
On April 7, 1994, the Council issued its resolution with
regard to the final phase (Phase III) of the Least Cost Plans
initially filed by LP&L and NOPSI with the Council in December
1992. The Council stated that it believes the Least Cost Plans
will result in benefits to the community and that the framework
followed in the plans is consistent with that contemplated in an
ordinance adopted by the Council in 1991 mandating implementation
of least cost planning. The Council rejected the 20-year Least
Cost Plan of LP&L and NOPSI because it was filed before the
Merger and directed the next Least Cost Plan filing (scheduled
for December 1994) to include the effects of the Merger. (LP&L
and NOPSI believe the Merger will have little, if any, impact on
the Least Cost Plan.) Further, the resolution directed LP&L and
NOPSI to correct in the next Least Cost Plan filing what the
Council regarded as deficiencies, and to address certain issues
with regard to certain load-building and supply-side matters.
The Council also approved, with certain refinements, LP&L's and
NOPSI's demand-side implementation plans. The Council also
recognized, but did not rule upon, the separate settlement among
Entergy and a contractors' association of certain competition
issues raised by contractors, approved the concept of (1) a rider
mechanism for recovery of lost contributions and incentives and
(2) the commencement of such recovery on January 1, 1996, and
directed the opening of a separate docket "to consider
alternative industrial rates."
LP&L and NOPSI plan to make, in early or mid-May, a CCLM
filing in the new docket established by the Council to address
the Entergy-proposed pilot CCLM and Council authorization of a
fiber optics/coaxial cable network.
System Agreement
Entergy Corporation, AP&L, LP&L, MP&L, and NOPSI
a) As discussed on page 17 of the Form 10-K, on August 20,
1990, the City filed a complaint against Entergy Corporation,
AP&L, LP&L, MP&L, NOPSI, and System Energy requesting that FERC
investigate AP&L's transfer of generating capacity to Entergy
Power and the effect of the transfer on AP&L, LP&L, MP&L, and
NOPSI and their ratepayers. On December 15, 1993, FERC issued an
opinion declining to address the issue of whether the transfer
was prudent until a future time when replacement capacity has
been added or planned and finding that, until such time, billings
under the System Agreement as affected by the transfer are
reasonable. The Entergy parties and the City each filed a
request for rehearing of this order, which was denied by FERC on
February 28, 1994. The Entergy parties and the City each filed
an appeal of the FERC's orders with the D. C. Circuit.
b) In the December 15, 1993 order approving the Merger, the
FERC also initiated a new proceeding to consider whether the
System Agreement permits certain out-of-service generating units
to be included in reserve equalization calculations under Service
Schedule MSS-1 of that agreement. FERC established March 8, 1994
as the refund effective date.
On February 16, 1994, Entergy Corporation filed an Offer of
Settlement to amend the System Agreement prospectively to make it
explicit that certain out-of-service generating units may be
included in reserve equalization calculations under Service
Schedule MSS-1. The LPSC and MPSC contested certain provisions
in the proposal, and also argued that LP&L and MP&L were entitled
to refunds for MSS-1 payments made in the past. Subsequently,
the LPSC and MPSC submitted testimony based on estimates, seeking
refunds estimated at $22.6 million and $13.2 million,
respectively.
On March 14, 1994, Entergy Corporation submitted a motion to
the presiding ALJ seeking to limit the scope of the proceeding to
prospective issues and to exclude the issue of past refunds. On
March 31, 1994, the ALJ limited the scope of the hearing to
exclude any claims for retroactive refunds. Thereafter, it was
agreed by the parties that the procedural schedule in the case
would be stayed until at least May 10, 1994. The LPSC and MPSC
stated that they would file complaints with FERC asserting their
claims for retroactive refunds, and Entergy Corporation agreed to
answer those complaints within three weeks.
On April 5, 1994, the LPSC, Mississippi Attorney General
(MAG), and MPSC filed a complaint with FERC claiming that
Entergy's past reserve equalization charges under System
Agreement Schedule MSS-1 violated the System Agreement, sought
refunds and requested FERC to hold a hearing to consider this
claim. They also asked FERC to expedite its consideration of
their complaints and to consolidate any hearings it deems
appropriate with these proceedings. Responses by Entergy
Corporation and other parties were filed on April 26, 1994. No
date has been set for a FERC determination as to whether to set
the LPSC, MAG and MPSC complaint for hearing. FERC estimates
that it will not be able to render a decision finally concluding
all of the issues in these proceedings until November 30, 1995.
The amounts potentially subject to refund will continue to accrue
at least until FERC issues a final order in the proceedings.
Entergy's position is that its MSS-1 charges have been, and
will continue to be, in compliance with the System Agreement.
Therefore, it is Entergy's position that no refunds are
warranted. However, if refunds are ordered for one or more
System operating companies on the grounds that their MSS-1
payments were too high, it has not yet been determined whether
the revenues for such refunds could or would be obtained through
corresponding revised charges to the System operating companies
whose MSS-1 charges were too low. Any such revised charges would
be subject to FERC approval.
Nonregulated Investments
Entergy Corporation
In April 1994, the APSC, the Council, and the MPSC filed a
petition with the SEC alleging that Entergy Corporation has
failed to comply with the terms of a 1992 settlement agreement
with such parties executed in conjunction with the resolution of
various matters pending before the SEC. Specifically, the
petitioners contend that Entergy Corporation has failed to
provide them with financial statements and other documentation
relating to its non-regulated businesses, to submit to an audit
of all transactions among Entergy Corporation, its regulated
utilities and its non-regulated businesses, and to use its best
efforts to obtain SEC approval of specified pricing methods for
certain transactions between its regulated and non-regulated
businesses. The petitioners assert that, because the SEC's
orders approving Entergy Corporation's investments in Entergy
SASI and in certain generating and distribution facilities in
Argentina (see pages 3-4 of the Form 10-K) were issued in
reliance on Entergy Corporation's undertakings in the settlement
agreement, the SEC should order Entergy Corporation to comply
with the agreement or, alternatively, withdraw its prior
approvals of these investments until Entergy Corporation so
complies. On May 3, 1994, Entergy Corporation filed with the SEC
a response to the petition asserting that it has substantially
complied, and is in the process of complying, with the 1992
settlement agreement and requesting the SEC to dismiss the
petition. The matter is pending.
Merger Related Proceedings
Entergy Corporation and GSU
a) As discussed on pages 42 and 43 of the Form 10-K,
purported class action complaints were filed against GSU and its
directors relating to the then proposed merger with Entergy
Corporation. GSU executed a Memorandum of Understanding with the
counsel for the plaintiffs in these suits agreeing in principle
to settle such actions subject to execution of an appropriate
stipulation of settlement, approval by the court, and certain
other conditions. On March 9, 1994, GSU executed a Stipulation
of Settlement Agreement agreeing to settle such actions. The
Stipulation was approved by the court on March 23, 1994. The
Settlement is subject to certain conditions and entry of a final
order by the court after notice and hearing presently scheduled
for May 31, 1994.
b) As discussed on pages 19, 83, and 163 of the Form 10-K,
the settlement agreement that led to the 1993 approval of the
Merger by the PUCT required that GSU file a cost-of-service study
for informational purposes with the PUCT as soon as possible
following closing. GSU is preparing to make that filing in June
1994. The settlement agreement also provided that if an action
to reduce GSU's rates were initiated between December 31, 1993
and the time GSU files its first post-closing rate case (as
provided in the settlement agreement), the effect of any order
actually reducing rates would relate back to the date the action
was filed. Pursuant to that provision, the Texas Office of
Public Utility Counsel and certain cities served by GSU have
instituted actions at the PUCT and at the city level to
investigate further the reasonableness of GSU's rates. The PUCT
proceeding has been abated pending resolution of the proceedings
before the cities. The current schedule for the cases before the
cities contemplates final city action on or about August 18,
1994. GSU intends to vigorously oppose any reduction of its
rates in these cases.
c) As discussed on page 38 of the Form 10-K, on December
28, 1993, Houston Industries Incorporated and Houston Lighting &
Power Company filed a petition for reconsideration of the SEC
order approving the Merger. By order dated April 28, 1994, the
SEC denied the petition, stating that the petition raises no
legal or factual issues that would alter the conclusions reached
in the order approving the Merger.
As also discussed on page 38 of the Form 10-K, 14 parties
requested rehearing of certain aspects of FERC's December 1993
order approving the Merger. On May 11, 1994, FERC reaffirmed its
approval of the Merger, denied, for the most part, the requests
for rehearing, and confirmed its findings that the Merger would
result in significant benefits. FERC's orders on the Merger may
be subject to appeal to the courts.
d) As discussed on page 38 of the Form 10-K, appeals
seeking to set aside the LPSC order related to the Merger were
filed in the 19th Judicial District Court for the Parish of East
Baton Rouge, Louisiana, by Houston Lighting & Power Company on
August 13, 1993, and by the Alliance for Affordable Energy, Inc.
on August 20, 1993. On February 9, 1994, Houston Lighting &
Power Company filed a motion voluntarily dismissing its appeal,
which motion was granted on February 27, 1994.
NRC Fines
Entergy Corporation and GSU
a) The NRC staff informed Entergy Operations on April 11,
1994 that it proposes to fine GSU $100,000 for apparent fire-
protection program violations at River Bend. During a 1993
reassessment of the plant's ability to safely shut down the
facility in the event of a fire, GSU found five fire-protection
deficiencies that were reported to the NRC. The NRC acknowledged
that operator action in most cases could have overcome the fire
protection deficiencies and shut down the reactor, and that the
probability of these accidents was low. The NRC further
recognized that each of the deficiencies was promptly resolved,
bringing the program into compliance.
b) On April 20, 1994, the NRC fined Entergy Operations
$112,500 for security violations at River Bend. The fine was
based on security violations identified as a result of
inspections conducted by the NRC between April 1992 and August
1993. The NRC acknowledged that Entergy Operations had taken
remedial steps and plans other corrective measures to prevent
similar violations in the future. Entergy Operations does not
plan to contest the fine.
Cajun
Entergy Corporation and GSU
a) As discussed on pages 40-42, 94-95, and 172-173 of the
Form 10-K, Cajun filed a civil action against GSU in the U. S.
District Court, Middle District of Louisiana, which suit began on
April 12, 1994 and is continuing. Cajun alleges fraud and error
by GSU, breach of its fiduciary duties owed to Cajun, and/or
GSU's repudiation, renunciation, abandonment or dissolution of
its core obligations under the operating agreement for the unit,
as well as the lack or failure of cause and/or consideration for
Cajun's performance under the operating agreement. The suit
seeks to recover Cajun's alleged $1.6 billion investment in the
unit as damages, plus attorneys' fees, interest, and costs. GSU
believes the suits are without merit and is contesting them
vigorously. No assurance can be given as to the outcome of this
litigation. If GSU were ultimately unsuccessful in this
litigation and were required to make substantial payments, GSU
would probably be unable to make such payments and would probably
have to seek relief from its creditors under the Bankruptcy Code.
b) As discussed on page 31 of the Form 10-K, GSU filed two
applications with the NRC to amend the River Bend operating
license, and these amendments were issued in December 1993. On
February 16, 1994, Cajun filed with the D. C. Circuit petitions
for review of the two license amendments issued by the NRC. On
March 14, 1994, Entergy Corporation, Entergy Operations, and GSU
filed motions to intervene in the D.C. Circuit proceedings. On
March 21, 1994, Cajun indicated that it will contend that the NRC
erred by deciding that evidentiary hearings were not warranted on
antitrust issues, on various issues concerning the Atomic Energy
Act, and on certain ongoing litigation between Cajun and GSU
regarding River Bend. Cajun will also argue that the NRC erred
in failing to find adverse effects on certain alleged Cajun
contract rights.
NISCO
Entergy Corporation and GSU
In 1988, GSU entered into a joint venture with Conoco, Inc.,
Citgo Petroleum Corporation, and Vista Chemical Company
(Industrial Participants) whereby GSU's Nelson Units 1 and 2 were
sold to a partnership (NISCO) consisting of the Industrial
Participants and GSU. The sale of the units by GSU to NISCO was
for an amount in excess of the units' depreciated cost. The
Industrial Participants are supplying the fuel for the units,
while GSU operates the units at the discretion of the Industrial
Participants and purchases the electricity produced by the units.
In February 1990, the LPSC disallowed the pass-through to
ratepayers for the portion of GSU's cost to purchase power from
NISCO, representing the excess of NISCO's purchase price of the
units over GSU's depreciated cost of the units. GSU appealed the
1990 order. In March 1994, the Louisiana Supreme Court ruled in
favor of the LPSC, and GSU recorded a estimated refund provision
of approximately $10.1 million, before related income taxes of
$4.1 million.
GSU Asbestos Suits
Entergy Corporation and GSU
As discussed on pages 39-40 of the Form 10-K, in October
1989, an amended lawsuit petition was filed on behalf of 985
plaintiffs in the District Court of Jefferson County, Texas, 60th
Judicial District in Beaumont, Texas, naming 55 defendants
including GSU. In February 1990, another amended lawsuit
petition was filed in a different state District Court in
Jefferson County, Texas, on behalf of over 200 plaintiffs
(subsequently amended to include a total of 674) naming 127
defendants including GSU. Possibly 300 to 400 or more of the
plaintiffs in Texas may have worked at GSU's premises. At least
nine other individual suits have been filed in Beaumont against
GSU and others, seeking damages for alleged asbestos exposure.
All of the plaintiffs in such suits are also suing GSU and all
other defendants on a conspiracy count. Two similar suits have
also been filed in Texas on behalf of approximately 220
plaintiffs. There are 39 asbestos-related law suits filed in the
14th Judicial District Court of Calcasieu Parish in Lake Charles,
Louisiana, on behalf of an aggregate of 91 plaintiffs naming from
16 to 24 defendants including GSU, and GSU is aware of as many as
61 additional cases that may be filed. The suits allege that
each plaintiff contracted an asbestos-related disease from
exposure to asbestos insulation products on the premises of such
defendants. Management believes that GSU has meritorious
defenses, but there can be no assurance as to the outcome of
these cases or that additional claims may not be asserted. In
asbestos-related suits against the manufacturers, very
substantial recoveries have been achieved by large groups of
claimants. GSU does not presently believe that the ultimate
resolution of these cases will materially adversely affect its
financial position or results of operations.
LPSC Investigation
Entergy Corporation and LP&L
As discussed on pages 75, 84, and 199 of the Form 10-K the
LPSC is currently scheduled to begin to review LP&L's rates and
rate structure in May 1994.
February 1994 Ice Storm
Entergy Corporation and MP&L
As discussed on pages 104 and 245 of the Form 10-K and Note
2, a February 1994 ice storm left more than 80,000 customers
without electric power in MP&L's service area. Current estimates
of repair costs are $70.8 million, of which $57.5 million is
expected to be capitalized as plant related costs. The remaining
balance has been recorded by MP&L as a deferred debit. On April
15, 1994, MP&L filed a Notice of Intent to Change Rates with the
MPSC under which MP&L proposed to recover certain expenditures
associated with the ice storm. MP&L proposes to recover its ice
storm costs through a rider schedule ("Storm Damage Rider").
Under the proposed Storm Damage Rider, the initial rate
adjustment would occur on August 15, 1994, and would recover ice
storm costs incurred by MP&L through May 31, 1994. On or before
February 15, 1995, revised rate adjustments reflecting the total
ice storm costs would be submitted to the MPSC for review and
verification. The revised rate adjustments are proposed to
become effective March 15, 1995, and remain in effect until
August 15, 1999, at which time MP&L would file revised base rates
reflecting the annual revenue requirement associated with the
then remaining capital related costs.
The MPSC is expected to hold a hearing on the filing and
could order a method or level of recovery of ice storm costs
different from that proposed by MP&L.
The Ice Storm Rider is proposed to operate independently and
separately from MP&L's formulary incentive rate plan. See pages
25-26, 83-84, and 235-236 of the Form 10-K for additional
information.
Livingston Parish Hazardous Waste Suits
GSU and LP&L
As discussed on pages 39 and 43 of the Form 10-K, various
suits have been filed concerning a hazardous waste disposal site
in Livingston Parish, Louisiana. At an April 28, 1994 status
conference, the United States District Court for the Middle
District of Louisiana (Federal District Court) judge stated that
he intended to adopt the Federal magistrate's recommendation that
the class action not be remanded to the Livingston Parish,
Louisiana District Court (State District Court). Further, the
judge will review, among other matters, the State District Court
class certification to determine whether such certification
should be maintained in Federal District Court. The April 11,
1994 State District Court trial date was not met. The matter is
pending.
Decommissioning Costs
Entergy Corporation, AP&L, and LP&L
As discussed on pages 29 and 134 of the Form 10-K, estimated
decommissioning costs are regularly reviewed and updated. In
March 1994, AP&L filed with the APSC an interim update of the ANO
cost study, which reflected significant increases in costs of low-
level radioactive waste disposal. AP&L expects to include the
updated costs in the annual decommissioning cost rate rider
filing with the APSC during the fourth quarter of 1994. See Note
1 for additional information on updated decommissioning cost
estimates.
Reserve for Revenue Reduction
Entergy Corporation and NOPSI
See pages 27 and 266-268 of the Form 10-K for information
regarding the 1991 NOPSI Settlement and a 1992 gas rate
settlement. Under the terms of the 1991 NOPSI Settlement and a
1992 gas rate settlement, NOPSI agreed that during the period
October 1, 1992 through October 31, 1996, the Council will have
the right to investigate the appropriateness of NOPSI's rates if
NOPSI's return on equity on its operations (calculated in
accordance with the applicable provisions of the 1991 NOPSI
Settlement and a 1992 gas rate settlement) for twelve month
periods subsequent to September 30, 1992, were to exceed 13.76%,
and after rate hearing(s), to impose a credit on NOPSI's
customers' bills over the ensuing twelve month period in an
amount that would have allowed NOPSI, during the relevant test
year, to earn a return on equity incident to its operations of no
less than 12.76%.
A review by the Council's advisors of NOPSI's return on
equity for the twelve month period ended September 30, 1993,
indicates that NOPSI may be required to credit $21.5 million to
its customers. In early May 1994, NOPSI determined it was likely
that a credit to customers would be required, however, NOPSI
estimates that the actual amount of the revenue reduction will be
approximately $14.3 million. In the first quarter of 1994, NOPSI
recorded a reserve for this revenue reduction which reduced net
income by $8.8 million (net of taxes). The Council is expected
to order a hearing in the second quarter of 1994 to render a
final decision on the actual amount, method, and timing of the
credit.
Item 4. Submission of Matters to a Vote of Security Holders
Entergy Corporation
The annual meeting of stockholders of Entergy Corporation was
held on May 6, 1994. The following matters were voted on and
received the specified number of votes for, abstentions, votes
withheld (against), and broker non-votes:
1. Election of Directors:
Votes Broker
Name of Nominee Votes For Abstentions Withheld Non-Votes
W. Frank Blount 205,283,455 N/A 1,021,762 N/A
John A. Cooper, Jr. 205,371,312 N/A 933,905 N/A
Lucie J. Fjeldstad 205,274,082 N/A 1,031,135 N/A
Norman C. Francis 205,136,089 N/A 1,169,128 N/A
Kaneaster Hodges, Jr. 205,267,089 N/A 1,038,128 N/A
Robert v. d. Luft 205,251,205 N/A 1,054,012 N/A
Edwin Lupberger 205,155,974 N/A 1,149,243 N/A
Kinnaird R. McKee 205,296,006 N/A 1,009,211 N/A
Paul W. Murrill 205,090,093 N/A 1,215,124 N/A
James R. Nichols 205,371,894 N/A 933,323 N/A
Eugene H. Owen 205,209,580 N/A 1,095,637 N/A
John N. Palmer, Sr. 205,388,740 N/A 916,477 N/A
Robert D. Pugh 205,336,833 N/A 968,384 N/A
H. Duke Shackelford 205,338,305 N/A 966,912 N/A
Wm. Clifford Smith 205,351,721 N/A 953,496 N/A
Bismark A. Steinhagen 205,317,947 N/A 987,270 N/A
2. Appointment of independent public accountants, Coopers &
Lybrand, for the year 1994: 204,765,999 votes for; 600,386 votes
against; 938,832 abstentions; and broker non-votes are not
applicable.
AP&L
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to an Arkansas statute that
permits such a procedure. The consent was signed on behalf of
Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, and R. Drake Keith.
GSU
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to a Texas statute that
permits such a procedure. The consent was signed on behalf of
Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, and Frank F. Gallaher.
LP&L
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to a Louisiana statute that
permits such a procedure. The consent was signed on behalf of
Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, and John J. Cordaro.
MP&L
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to a Mississippi statute
that permits such a procedure. The consent was signed on behalf
of Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, and Donald E. Meiners.
NOPSI
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to a Louisiana statute that
permits such a procedure. The consents were signed on behalf of
Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Jerry D. Jackson, Edwin Lupberger, Jerry L. Maulden, and John J.
Cordaro.
System Energy
A consent in lieu of the annual meeting of common stockholders
was executed on April 29, 1994, pursuant to an Arkansas statute
that permits such a procedure. The consent was signed on behalf
of Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Donald C. Hintz, Jerry D. Jackson, Edwin Lupberger, and Jerry L.
Maulden.
Item 5. Other Information
ANO Matters
Entergy Corporation and AP&L
As discussed on pages 30, 77, and 123 of the Form 10-K leaks
in certain steam generator tubes at ANO 2 were discovered and
repaired during an outage in March 1992. During a refueling
outage in September 1992, a comprehensive inspection of all steam
generator tubing was conducted and necessary repairs were made.
During a mid-cycle outage in May 1993, a scheduled special
inspection of certain steam generator tubing was conducted by
Entergy Operations and additional repairs were made. Entergy
Operations operated ANO 2 with no further steam generator
inspections until the refueling outage that was completed on
April 23, 1994. Inspections during the outage revealed numerous
cracks, however most were smaller than those seen in earlier
inspections except for one relatively large crack. Based upon
results of these inspections and an inconclusive pressure test,
Entergy Operations plans to inspect the steam generator tubes
during a mid-cycle outage tentatively scheduled for January 1995.
The operations and power output of the unit have not been
materially adversely affected.
Nonregulated Investments
Entergy Corporation
As discussed on page 3 of the Form 10-K, Entergy continues
to consider opportunities to expand its business, including
opportunities in overseas power development. On April 28,
1994, Entergy Power Asia Ltd., an Entergy Corporation subsidiary,
filed an application with the FERC requesting exempt wholesale
generation status under the Public Utility Holding Company Act of
1935 for one existing 1200-megawatt generating plant and four
planned generating plants in China.
Wholesale Contract
AP&L
On March 31, 1994, North Little Rock, Arkansas awarded AP&L
a wholesale electric contract which will provide estimated
revenues of $347 million to AP&L over its 11-year life. AP&L
which has been serving North Little Rock for over 40 years, was
awarded the contract after intense bidding with three
competitors. The price per KWH was reduced 18%, retroactive to
March 1, 1994, with increases in price through the year 2004.
On April 29, 1994, Power Systems Ltd. (PSL), one of AP&L's
competitors, filed a motion with FERC to intervene in the
approval process for AP&L's contract with North Little Rock. PSL
alleges that the rates in the contract fail to meet FERC's
criteria for below-market prices and unlawfully prohibit other
power suppliers from participating in the North Little Rock power
market. FERC has until June 1, 1994, to decide whether it will
hold hearings on the matter or approve the power supply contract.
Common Stock Price Range and Dividends
Entergy Corporation
The shares of Entergy Corporation's common stock are listed
on the New York, Chicago, and Pacific Stock Exchanges. The high
and low sales prices of Entergy Corporation's common stock for
the first quarter of 1994, as reported by The Wall Street Journal
as composite transactions, were $37 3/8 and $31 1/8,
respectively, per share.
For the twelve months ended March 31, 1994, Entergy
Corporation paid common stock dividends in an aggregate amount of
$1.70 per share. As of March 31, 1994, the consolidated book
value of a share of Entergy Corporation's common stock was $28.24
and the last reported sale price of Entergy Corporation's common
stock on March 31, 1994, was $31 3/4 per share.
Earnings Ratios
AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
The System operating companies and System Energy have
calculated ratios of earnings to fixed charges and ratios of
earnings to fixed charges and preferred dividends pursuant to
Item 503 of Regulation S-K of the SEC as follows:
Twelve Months Ended
December 31, March 31,
1989 1990 1991 1992 1993 1994
Ratios of
Earnings to
Fixed Charges
(a)
AP&L 2.31 2.16 2.25 2.28 3.11(h) 2.68
GSU 1.16 .80(i) 1.56 1.72 1.54 1.54
LP&L 1.79 2.32 2.40 2.79 3.06 3.16
MP&L 1.04(e) 2.42 2.36 2.37 3.79(h) 2.84
NOPSI 1.89 2.73 5.66(g) 2.66 4.68(h) 3.84
System Energy -(f) 2.10 1.74 2.04 1.87 1.84
Twelve Months Ended
December 31, March 31,
1989 1990 1991 1992 1993 1994
Ratios of
Earnings to
Fixed Charges
and Preferred
Dividends
(a)(b)(c)
AP&L 1.88 1.81 1.87 1.86 2.54(h) 2.22
GSU (d) .66(i) .59(i) 1.19 1.37 1.21 1.21
LP&L 1.39 1.87 1.95 2.18 2.39 2.51
MP&L 1.00(e) 1.93 1.94 1.97 3.08(h) 2.28
NOPSI 1.62 2.36 4.97(g) 2.36 4.12(h) 3.38
(a) "Earnings," as defined by SEC Regulation S-K, represent the
aggregate of (1) net income, (2) taxes based on income, (3)
investment tax credit adjustments - net, and (4) fixed
charges. "Fixed Charges" include interest (whether expensed
or capitalized), related amortization, and interest
applicable to rentals charged to operating expenses.
(b) "Preferred Dividends," as defined by SEC Regulation S-K, are
computed by dividing the preferred dividend requirement by
one hundred percent (100%) minus the effective income tax
rate.
(c) System Energy's Amended and Restated Articles of
Incorporation do not currently provide for the issuance of
preferred stock.
(d) "Preferred Dividends" in the case of GSU also include
dividends on preference stock.
(e) Earnings for the twelve months ended December 31, 1989
include the impact of the write-off of $60 million of
deferred Grand Gulf 1-related costs pursuant to an agreement
between MP&L and the MPSC.
(f) Earnings for the year ended December 31, 1989 were
inadequate to cover fixed charges due to System Energy's
cancellation and write-off of its investment in Grand Gulf 2
in September 1989. The amount of the coverage deficiency
for fixed charges was $745.2 million.
(g) Earnings for the year ended December 31, 1991 include the
$90 million effect of the 1991 NOPSI Settlement.
(h) Earnings for the year ended December 31, 1993 include the
$81 million, $52 million, and $18 million for AP&L, MP&L,
and NOPSI, respectively, related to the change in accounting
principle to provide for the accrual of estimated unbilled
revenues.
(i) Earnings for the year ended December 31, 1990 for GSU were
not adequate to cover fixed charges by $60.6 million.
Earnings for the years ended December 31, 1990 and 1989,
were not adequate to cover fixed charges and preferred
dividends by $165.1 million and $190.8 million,
respectively. Earnings in 1990 include a $205 million
charge for the settlement of a purchase power dispute.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
**4(a) - Nineteenth Supplemental Indenture to System Energy's
Mortgage and Deed of Trust (filed as Exhibit A-2(g)
to Rule 24 Certificate dated May 6, 1994 in File No.
70-7946 and incorporated herein by reference).
**10(a) - Twenty-ninth Assignment of Availability Agreement,
Consent and Agreement, dated as of April 1, 1994,
among AP&L, LP&L, MP&L, NOPSI, System Energy, and
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (filed as Exhibit B-2(f) to Rule
24 Certificate dated May 6, 1994 in File No. 70-7946
and incorporated herein by reference).
**10(b) - Twenty-ninth Supplementary Capital Funds Agreement,
dated as of April 1, 1994, among Entergy Corporation,
System Energy and United States Trust Company of New
York and Gerard F. Ganey, as Trustees (filed as
Exhibit B-3 (f) to Rule 24 Certificate dated May 6,
1994 in File No. 70-7946 and incorporated herein by
reference).
23(a) - Consent of Friday, Eldredge & Clark.
23(b) - Consent of Monroe & Lemann (A Professional
Corporation).
23(c) - Consent of Wise Carter Child & Caraway, Professional
Association.
23(d) - Consent of Clark, Thomas & Winters.
23(e) - Consent of Sandlin Associates.
99(a) - AP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Fixed Charges and
Preferred Dividends, as defined.
99(b) - GSU's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Fixed Charges and
Preferred Dividends, as defined.
99(c) - LP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Fixed Charges and
Preferred Dividends, as defined.
99(d) - MP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Fixed Charges and
Preferred Dividends, as defined.
99(e) - NOPSI's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Fixed Charges and Pre
ferred Dividends, as defined.
99(f) - System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
**99(g) - Annual Reports on Form 10-K of Entergy Corporation,
AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy for
the fiscal year ended December 31, 1993, 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) - Earnings statement of AP&L for the twelve month
period ended March 31, 1994, made generally available
to security holders pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(i) - Earnings statement of LP&L for the twelve month
period ended March 31, 1994, made generally available
to security holders pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(j) - Earnings statement of MP&L for the twelve month
period ended March 31, 1994, made generally available
to security holders pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(k) - Earnings statement of NOPSI for the twelve month
period ended March 31, 1994, made generally available
to security holders pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(l) - Earnings statement of System Energy for the twelve
month period ended March 31, 1994, made generally
available to security holders pursuant to Section
11(a) of the Securities Act of 1933, as amended.
___________________________
* Reference is made to a duplicate list of exhibits being
filed as a part of Form 10-Q for the quarter ended March 31,
1994, 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, 1994.
** Incorporated herein by reference as indicated.
(b) Reports on Form 8-K
GSU
A current report on Form 8-K, dated March 31, 1994, was
filed with the SEC on April 6, 1994, reporting information
under Item 5. "Other Materially Important Events".
Entergy Corporation, AP&L, LP&L, MP&L, NOPSI and System Energy
A current report on Form 8-K, dated March 16, 1994, was
filed with the SEC on March 21, 1994, reporting
information under Item 4. "Changes in Registrant's
Certifying Accountant".
<PAGE>
EXPERTS
All statements in Part II of this Quarterly Report on Form
10-Q as to matters of law and legal conclusions, based on the
belief or opinion of AP&L, LP&L, MP&L, NOPSI, and System Energy
or otherwise, pertaining to the titles to properties, franchises
and other operating rights of certain of the registrants filing
this Quarterly Report on Form 10-Q, and their subsidiaries, the
regulations to which they are subject and any legal proceedings
to which they are parties are made on the authority of Friday,
Eldredge & Clark, 2000 First Commercial Building, 400 West
Capitol, Little Rock, Arkansas, as to AP&L; Monroe & Lemann (A
Professional Corporation), 201 St. Charles Avenue, Suite 3300,
New Orleans, Louisiana, as to LP&L and NOPSI; and Wise Carter
Child & Caraway, Professional Association, Heritage Building,
Jackson, Mississippi, as to MP&L and System Energy.
The statements attributed to Clark, Thomas & Winters, a
professional corporation, as to legal conclusions with respect to
GSU's 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 GSU 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.
<PAGE>
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
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
/s/Lee W. Randall
Lee W. Randall
Vice President and
Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer)
Date: May 16, 1994
<PAGE>
Exhibit 23(a)
[Letterhead of Friday, Eldredge & Clark]
May 10, 1994
Entergy Corporation
225 Baronne Street
New Orleans, Louisiana 70112
Gentlemen:
We consent to the reference to our firm under the heading
"Experts" in the Quarterly Report on Form 10-Q being filed on or
about the date hereof by Entergy Corporation, Arkansas Power &
Light Company ("AP&L"), Gulf States Utilities Company, Louisiana
Power & Light Company, Mississippi Power & Light Company, New
Orleans Public Service Inc. and System Energy Resources, Inc. We
further consent to the incorporation by reference of such
reference to our firm into AP&L's Registration Statements (Form S-
3, File Nos. 33-36149, 33-48356 and 33-50289), and related
Prospectuses pertaining to AP&L's First Mortgage Bonds and/or
Preferred Stock and First Mortgage Bonds, respectively.
Very truly yours,
/s/FRIDAY, ELDREDGE & CLARK
FRIDAY, ELDREDGE & CLARK
<PAGE>
Exhibit 23(b)
[Letterhead of Monroe & Lemann]
May 10, 1994
Entergy Corporation
225 Baronne Street
New Orleans, Louisiana 70112
Gentlemen:
We consent to the reference to our firm under the heading
"Experts" in the Quarterly Report on Form 10-Q being filed on or
about the date hereof by Entergy Corporation, Arkansas Power &
Light Company, Gulf States Utilities Company, Louisiana Power &
Light Company ("LP&L"), Mississippi Power & Light Company, New
Orleans Public Service Inc. ("NOPSI") and System Energy
Resources, Inc. We further consent to the incorporation by
reference of such reference to our firm into LP&L's Registration
Statements on Form S-3, and the related prospectuses (File Nos.
33-50937, 33-46085 and 33-39221) pertaining to LP&L's First
Mortgage Bonds and Preferred Stock, and into NOPSI's Registration
Statement on Form S-3, and the related prospectus (File No. 33-
57926) pertaining to NOPSI's General and Refunding Mortgage
Bonds.
Very truly yours,
/s/MONROE & LEMANN
MONROE & LEMANN
<PAGE>
Exhibit 23(c)
[Letterhead of Wise Carter Child & Caraway]
May 10, 1994
Entergy Corporation
225 Baronne Street
New Orleans, Louisiana 70112
Gentlemen:
We consent to the reference to our firm under the heading
"Experts" in the Quarterly Report on Form 10-Q being filed on or
about the date hereof by Entergy Corporation, Arkansas Power &
Light Company, Gulf States Utilities Company, Louisiana Power &
Light Company, Mississippi Power & Light Company ("MP&L"), New
Orleans Public Service Inc., and System Energy Resources, Inc.
("System Energy"). We further consent to the incorporation by
reference of such reference to our firm into System Energy's
Registration Statement on Form S-3, and the related prospectus
(File No. 33-47662) pertaining to System Energy's First Mortgage
Bonds, and into MP&L's Registration Statements on Form S-3, and
the related prospectuses (File Nos. 33-53004, 33-55826 and
33-50507) pertaining to MP&L's Preferred Stock.
Very truly yours,
/s/WISE CARTER CHILD & CARAWAY,
WISE CARTER CHILD & CARAWAY,
Professional Association
<PAGE>
Exhibit 23(d)
[Letterhead of Clark, Thomas & Winters]
CONSENT
We consent to the reference to our firm under the heading
"Experts" in the Quarterly Report on Form 10-Q being filed on or
about the date hereof of by Entergy Corporation, Arkansas Power
and Light Company, Gulf States Utilities Company, Louisiana Power
& Light Company, New Orleans Public Service Inc., and System
Energy Resources, Inc. We further consent to the incorporation
by reference in the registration statements of GSU on Form S-3
and Form S-8 (File Numbers 2-76551, 2-98011, 33-49739, and 33-
51181) of such reference and Statements of Legal Conclusions.
/s/CLARK, THOMAS & WINTERS
CLARK, THOMAS & WINTERS
A Professional Corporation
Austin, Texas
May 10, 1994
<PAGE>
Exhibit 23(e)
CONSENT
We consent to the reference to our firm under the heading
"Experts" in the Quarterly Report on Form 10-Q being filed on or
about the date hereof by Entergy Corporation, Arkansas Power &
Light Company, Gulf States Utilities Company ("GSU"), Louisiana
Power & Light Company, Mississippi Power & Light Company, New
Orleans Public Service Inc. and System Energy Resources, Inc. We
further consent to the incorporation by reference of such
reference to our firm into GSU's Registration Statements on Form
S-3 and Form S-8 (File Numbers 2-76551, 2-98011, 33-49739 and 33-
51181) of such reference and Statements.
/s/SANDLIN ASSOCIATES
SANDLIN ASSOCIATES
Management Consultants
Pasco, Washington
May 10, 1994
<PAGE>
<TABLE>
<CAPTION>
Exhibit 99(a)
Arkansas Power and Light Company
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges and Preferred Dividends
Twelve Months Ended
------------------------------------------------
December 31, March 31,
1989 1990 1991 1992 1993 1994
----------------------------------------------------------
(In Thousands, Except for Ratios)
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $89,027 $101,412 $100,533 $89,317 $77,980 $76,388
Interest on long-term debt - other 31,138 31,195 33,321 31,000 29,791 29,346
Interest on notes payable 828 1,027 -- 117 349 580
Amortization of expense and premium on debt-net(cr) 1,557 1,792 1,112 1,359 2,702 3,286
Other interest (6,295) 1,567 1,303 2,308 8,769 1,484
Interest applicable to rentals 22,349 24,233 21,969 17,657 16,860 15,493
Total fixed charges, as defined 138,604 161,226 158,238 141,758 136,451 126,577
Preferred dividends, as defined (a) 31,298 30,851 31,458 32,195 30,334 26,370
Fixed charges and preferred dividends, as defined $169,902 $192,077 $189,696 $173,953 $166,785 $152,947
Earnings as defined:
Net Income $131,979 $129,765 $143,451 $130,529 $205,297 $165,604
Add:
Provision for income taxes:
Federal & State 8,440 50,921 44,418 57,089 58,162 49,779
Deferred - net 37,268 17,943 11,048 3,490 34,748 8,224
Investment tax credit adjustment - net 3,543 (12,022) (1,600) (9,989) (10,573) (10,566)
Fixed charges as above 138,604 161,226 158,238 141,758 136,451 126,577
Total earnings, as defined $319,834 $347,833 $355,555 $322,877 $424,085 $339,619
Ratio of earnings to fixed charges, as defined 2.31 2.16 2.25 2.28 3.11 2.68
Ratio of earnings to fixed charges and
preferred dividends, as defined 1.88 1.81 1.87 1.86 2.54 2.22
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
requirement by one hundred percent (100%) minus the income tax rate.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 99(b)
Gulf States Utilities Company
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges and Preferred Dividends
Twelve Months Ended
-----------------------------------------------------
December 31, March 31,
1989 1990 1991 1992 1993 1994
----------------------------------------------------------------
(In Thousands, Except for Ratios)
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $231,170 $218,462 $201,335 $197,218 $172,494 $171,804
Interest on notes payable 33,185 24,295 8,446 - - -
Interest on long-term debt - other 19,495 12,668 19,507 21,155 19,440 19,440
Other interest 13,331 18,380 29,169 26,564 10,561 6,109
Amortization of expense and premium on debt-net(cr) 2,280 2,192 1,999 3,479 8,104 8,368
Interest applicable to rentals 23,244 23,761 24,049 23,759 23,455 21,918
Total fixed charges, as defined 322,705 299,758 284,505 272,175 234,054 227,639
Preferred dividends, as defined (a) 241,829 104,484 90,146 69,617 65,299 62,674
Fixed charges and preferred dividends, as defined $564,534 $404,242 $374,651 $341,792 $299,353 $290,313
Earnings as defined:
Income (loss) from continuing operations before
extrodinary items and the cumulative effect of
accounting changes $13,251 ($36,399) $112,391 $139,413 $69,462 $65,498
Add:
Income taxes 37,744 (24,216) 48,250 55,860 58,016 58,532
Fixed charges as above 322,705 299,758 284,505 272,175 234,054 227,639
Total earnings, as defined $373,700 $239,143 $445,146 $467,448 $361,532 $351,669
Ratio of earnings to fixed charges, as defined 1.16 0.80 1.56 1.72 1.54 1.54
Ratio of earnings to fixed charges and
preferred dividends, as defined 0.66 0.59 1.19 1.37 1.21 1.21
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
requirement by one hundred percent (100%) minus the income tax rate.
(b) Earnings for the year ended December 31, 1990, for GSU were not adequate to cover fixed charges
by $60.6 million. Earnings for the years ended December 31, 1990 and 1989, were not adequate
adequate to cover fixed charges and preferred and preference dividends by $165.1 million
and $190.8 million, respectively. Earnings in 1990 include a $205 million charge for the
settlement of a purchased power dispute.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 99(c)
Louisiana Power and Light Company
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges and Preferred Dividends
Twelve Months Ended
-------------------------------------------
December 31, March 31,
1989 1990 1991 1992 1993 1994
------------------------------------------------------
(In Thousands, Except for Ratios)
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on mortgage bonds $155,640 $101,996 $97,324 $68,247 $60,939 $60,130
Interest on long-term debt - other 25,400 52,361 61,492 60,425 63,694 64,587
Interest on notes payable -- 87 -- 150 898 984
Interest on lease (nuclear) 9,475 8,756 7,086 5,092 4,574 4,588
Other interest charges 11,300 6,378 5,924 5,591 5,706 4,345
Amortization of expense and premium on debt - net(cr) 2,260 3,397 3,282 7,100 5,720 5,069
Interest applicable to rentals 4,415 4,150 4,295 4,271 3,945 4,410
Total fixed charges, as defined 208,490 177,125 179,403 150,876 145,476 144,113
Preferred dividends, as defined (a) 59,009 42,365 41,212 42,026 40,779 37,508
Fixed charges and preferred dividends, as defined $267,499 $219,490 $220,615 $192,902 $186,255 $181,621
Earnings as defined:
Net Income $106,613 $155,049 $166,572 $182,989 $188,808 $200,171
Add:
Provision for income taxes:
Federal and State 29,069 62,236 8,684 36,465 70,552 69,001
Deferred Federal and State - net 7,840 (9,655) 67,792 51,889 43,017 44,615
Investment tax credit adjustment - net 20,822 26,646 8,244 (1,317) (2,756) (2,740)
Fixed charges as above 208,490 177,125 179,403 150,876 145,476 144,113
Total earnings, as defined $372,834 $411,401 $430,695 $420,902 $445,097 $455,160
Ratio of earnings to fixed charges, as defined 1.79 2.32 2.40 2.79 3.06 3.16
Ratio of earnings to fixed charges and
preferred dividends, as defined 1.39 1.87 1.95 2.18 2.39 2.51
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
requirement by one hundred percent (100%) minus the income tax rate.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 99(d)
Mississippi Power and Light Company
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges and Preferred Dividends
Twelve Months Ended
-----------------------------------------------
December 31, March 31,
1989 1990 1991 1992 1993 1994
---------------------------------------------------------
(In Thousands, Except for Ratios)
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $60,995 $59,675 $59,440 $56,646 $48,029 $46,144
Interest on long-term debt - other 4,325 4,300 4,188 4,063 4,070 4,071
Interest on notes payable 1,031 1,512 953 36 7 270
Other interest charges 1,591 1,494 1,444 1,636 1,795 2,087
Amortization of expense and premium on debt-net(cr) 1,548 1,737 1,617 1,685 1,458 1,593
Interest applicable to rentals 533 596 574 521 1,264 1,213
Total fixed charges, as defined 70,023 69,314 68,216 64,587 56,623 55,378
Preferred dividends, as defined (a) 2,584 17,584 14,962 12,823 12,990 13,648
Fixed charges and preferred dividends, as defined $72,607 $86,898 $83,178 $77,410 $69,613 $69,026
Earnings as defined:
Net Income $12,419 $60,830 $63,088 $65,036 $101,743 $65,210
Add:
Provision for income taxes:
Federal and State 370 4,027 (1,001) 4,463 54,418 51,297
Deferred Federal and State - net (8,636) 35,721 32,491 20,430 539 (15,721)
Investment tax credit adjustment - net (1,523) (1,835) (1,634) (1,746) 1,036 1,043
Fixed charges as above 70,023 69,314 68,216 64,587 56,623 55,378
Total earnings, as defined $72,653 $168,057 $161,160 $152,770 $214,359 $157,207
Ratio of earnings to fixed charges, as defined 1.04 2.42 2.36 2.37 3.79 2.84
Ratio of earnings to fixed charges and
preferred dividends, as defined 1.00 1.93 1.94 1.97 3.08 2.28
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
requirement by one hundred percent (100%) minus the income tax rate.
(b) Earnings for the twelve months ended December 31, 1989 include the impact of the write-off of $60 million
of deferred Grand Gulf 1 - related costs pursuant to an agreement between MP&L and the MPSC.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 99(e)
New Orleans Public Service Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges and Preferred Dividends
Twelve Months Ended
-----------------------------------------------
December 31, March 31,
1989 1990 1991 1992 1993 1994
------------------------------------------------------------
(In Thousands, Except for Ratios)
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on mortgage bonds $24,472 $24,472 $23,865 $22,934 $19,478 $18,803
Interest on notes payable -- -- -- -- -- 25
Other interest charges 2,422 831 793 1,714 1,016 1,020
Amortization of expense and premium on debt-net(cr) 579 579 565 576 598 654
Interest applicable to rentals 603 160 517 444 544 652
Total fixed charges, as defined 28,076 26,042 25,740 25,668 21,636 21,154
Preferred dividends, as defined (a) 4,633 4,020 3,582 3,214 2,952 2,935
Fixed charges and preferred dividends, as defined $32,709 $30,062 $29,322 $28,882 $24,588 $24,089
Earnings as defined:
Net Income $14,464 $27,542 $74,699 $26,424 $47,709 $34,592
Add:
Provision for income taxes:
Federal and State 848 134 8,885 16,575 27,479 30,585
Deferred Federal and State - net 9,296 17,370 36,947 (340) 5,203 (4,274)
Investment tax credit adjustment - net 444 (75) (591) (170) (744) (729)
Fixed charges as above 28,076 26,042 25,740 25,668 21,636 21,154
Total earnings, as defined $53,128 $71,013 $145,680 $68,157 $101,283 $81,328
Ratio of earnings to fixed charges, as defined 1.89 2.73 5.66 2.66 4.68 3.84
Ratio of earnings to fixed charges and
preferred dividends, as defined 1.62 2.36 4.97 2.36 4.12 3.38
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend
requirement by one hundred percent (100%) minus the income tax rate.
(b) Earnings for the twelve months ended December 31, 1991 include the $90 million effect of the
1991 NOPSI Settlement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit 99 (f)
System Energy Resources, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges
Twelve Months Ended
---------------------------------------------------
December 31, March 31,
1989 1990 1991 1992 1993 1994
--------------------------------------------------------------
(In Thousands, Except for Ratios)
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on mortgage bonds $148,402 $138,689 $126,351 $104,429 $91,472 $89,777
Interest on other long-term debt 91,295 91,955 92,187 92,189 93,346 89,856
Interest on lease nuclear 18,298 13,830 10,007 6,265 6,790 6,875
Interest on notes payable -- -- -- -- -- 13
Amortization of expense and premium on debt-net 7,326 10,532 7,495 6,417 4,520 3,920
Other interest charges 2,790 1,460 3,617 1,506 1,600 2,061
Total fixed charges, as defined $268,111 $256,466 $239,657 $210,806 $197,728 $192,502
Earnings as defined:
Net Income ($655,524) $168,677 $104,622 $130,141 $93,927 $83,694
Add:
Provision for income taxes:
Federal and State (168,440) 4,620 (26,848) 35,082 48,314 62,960
Deferred Federal and State - net 93,048 52,962 37,168 23,648 60,690 45,972
Investment tax credit adjustment - net (14,321) 56,320 63,256 30,123 (30,452) (30,381)
Fixed charges as above 268,111 256,466 239,657 210,806 197,728 192,502
Total earnings, as defined ($477,126) $539,045 $417,855 $429,800 $370,207 $354,747
Ratio of earnings to fixed charges, as defined (a) 2.10 1.74 2.04 1.87 1.84
- ------------------------
(a) Earnings for the twelve months ended December 31, 1989 were inadequate to cover fixed charges due to
System Energy's cancellation and write-off of its investment in Grand Gulf 2 in September 1989.
The amount of the coverage deficiency for fixed charges was $745.2 million.
</TABLE>
Exhibit 99(h)
ARKANSAS POWER & LIGHT COMPANY
STATEMENT OF INCOME
Twelve Months Ended March 31, 1994
(In Thousands)
(Unaudited)
Operating Revenues: $1,615,919
----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 262,505
Purchased power 359,230
Nuclear refueling outage expenses 35,428
Other operation and maintenance 360,319
Depreciation and decommissioning 137,817
Taxes other than income taxes 30,361
Income taxes 19,456
Amortization of rate deferrals 166,868
----------
Total 1,371,984
----------
Operating Income 243,935
----------
Other Income (Deductions):
Allowance for equity funds used
during construction 3,502
Miscellaneous - net 64,371
Income taxes (27,983)
----------
Total 39,890
Interest Charges:
Interest on long-term debt 105,735
Other interest - net 14,817
Allowance for borrowed funds used
during construction (2,331)
----------
Total 118,221
Net Income 165,604
Preferred Stock Dividend Requirements and Other 20,498
----------
Earnings Applicable to Common Stock $145,106
==========
Exhibit 99(i)
LOUISIANA POWER & LIGHT COMPANY
STATEMENT OF INCOME
Twelve Months Ended March 31, 1994
(In Thousands)
(Unaudited)
Operating Revenues: $1,755,636
----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 334,182
Purchased power 399,087
Nuclear refueling outage expenses 18,404
Other operation and maintenance 338,069
Depreciation and decommissioning 144,055
Taxes other than income taxes 53,276
Income taxes 106,736
Amortization of rate deferrals 28,422
----------
Total 1,422,231
----------
Operating Income 333,405
----------
Other Income (Deductions):
Allowance for equity funds used
during construction 3,089
Miscellaneous - net 2,219
Income taxes (4,540)
----------
Total 768
Interest Charges:
Interest on long-term debt 124,717
Other interest - net 11,432
Allowance for borrowed funds used
during construction (2,147)
----------
Total 134,002
----------
Net Income 200,171
Preferred Stock Dividend Requirements and Other 24,417
----------
Earnings Applicable to Common Stock $175,754
==========
Exhibit 99(j)
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENT OF INCOME
Twelve Months Ended March 31, 1994
(In Thousands)
(Unaudited)
Operating Revenues: $903,756
--------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 153,253
Purchased power 277,949
Other operation and maintenance 159,574
Depreciation and amortization 32,840
Taxes other than income taxes 42,143
Income taxes 33,309
Amortization of rate deferrals 84,787
--------
Total 783,855
--------
Operating Income 119,901
--------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,335
Miscellaneous - net 540
Income taxes (3,311)
--------
Total (1,436)
--------
Interest Charges:
Interest on long-term debt 50,215
Other interest - net 3,949
Allowance for borrowed funds used
during construction (909)
--------
Total 53,255
--------
Net Income 65,210
Preferred Stock Dividend Requirements and Other 8,840
--------
Earnings Applicable to Common Stock $56,370
========
Exhibit 99(k)
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENT OF INCOME
Twelve Months Ended March 31, 1994
(In Thousands)
(Unaudited)
Operating Revenues:
Electric $423,266
Natural gas 100,078
--------
Total 523,344
--------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 120,233
Purchased power 166,682
Other operation and maintenance 85,497
Depreciation and amortization 17,702
Taxes other than income taxes 27,427
Income taxes 23,750
Rate deferrals:
Rate deferrals (338)
Amortization of rate deferrals 25,008
--------
Total 465,961
--------
Operating Income 57,383
--------
Other Income (Deductions):
Allowance for equity funds used
during construction 254
Miscellaneous - net (923)
Income taxes (1,832)
--------
Total (2,501)
--------
Interest Charges:
Interest on long-term debt 18,803
Other interest - net 1,699
Allowance for borrowed funds used
during construction (212)
--------
Total 20,290
--------
Net Income 34,592
Preferred Stock Dividend Requirements and Other 1,755
--------
Earnings Applicable to Common Stock $32,837
========
Exhibit 99(l)
SYSTEM ENERGY RESOURCES, INC.
STATEMENT OF INCOME
Twelve Months Ended March 31, 1994
(In Thousands)
(Unaudited)
Operating Revenues: $633,985
--------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 39,170
Nuclear refueling outage expenses 20,602
Other operation and maintenance 115,190
Depreciation and decommissioning 91,213
Taxes other than income taxes 27,243
Income taxes 80,354
--------
Total 373,772
--------
Operating Income 260,213
--------
Other Income:
Allowance for equity funds used
during construction 993
Miscellaneous - net 6,689
Income taxes 1,802
--------
Total 9,484
--------
Interest Charges:
Interest on long-term debt 179,633
Other interest - net 7,172
Allowance for borrowed funds used
during construction (802)
--------
Total 186,003
--------
Net Income $83,694
========
