_____________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address of Principal Executive Identification No.
Offices and Telephone Number
1-11299 ENTERGY CORPORATION 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
1-10764 ENTERGY ARKANSAS, INC. 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-2703 ENTERGY GULF STATES, INC. 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 ENTERGY LOUISIANA, INC. 72-0245590
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
0-320 ENTERGY MISSISSIPPI, INC. 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
_____________________________________________________________________
<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 October 31, 1996
Entergy Corporation ($0.01 par value) 230,922,289
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 1996
Page Number
Definitions 1
Management's Financial Discussion and Analysis - Liquidity
and Capital Resources 3
Management's Financial Discussion and Analysis - Significant
Factors and Known Trends 7
Results of Operations and Financial Statements:
Entergy Corporation and Subsidiaries:
Results of Operations 12
Statements of Consolidated Income 15
Statements of Consolidated Cash Flows 16
Consolidated Balance Sheets 18
Selected Operating Results 20
Entergy Arkansas, Inc.:
Results of Operations 22
Statements of Income 24
Statements of Cash Flows 25
Balance Sheets 26
Selected Operating Results 28
Entergy Gulf States, Inc.:
Results of Operations 30
Statements of Income (Loss) 32
Statements of Cash Flows 33
Balance Sheets 34
Selected Operating Results 36
Entergy Louisiana, Inc.:
Results of Operations 37
Statements of Income 38
Statements of Cash Flows 39
Balance Sheets 40
Selected Operating Results 42
Entergy Mississippi, Inc.:
Results of Operations 44
Statements of Income 46
Statements of Cash Flows 47
Balance Sheets 48
Selected Operating Results 50
Entergy New Orleans, Inc.:
Results of Operations 52
Statements of Income 54
Statements of Cash Flows 55
Balance Sheets 56
Selected Operating Results 58
System Energy Resources, Inc.:
Results of Operations 59
Statements of Income 60
Statements of Cash Flows 61
Balance Sheets 62
Notes to Financial Statements for Entergy Corporation and
Subsidiaries 64
Part II:
Item 1. Legal Proceedings 76
Item 5. Other Information 77
Item 6. Exhibits and Reports on Form 8-K 79
Experts 81
Signature 82
<PAGE>
This combined Quarterly Report on Form 10-Q is separately filed
by Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States,
Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New
Orleans, Inc., and System Energy Resources, Inc. Information
contained herein relating to any individual company is filed by such
company on its own behalf. Each company makes representations only
as to itself and makes no other representations whatsoever as to any
other company. This combined Quarterly Report on Form 10-Q
supplements and updates the Annual Report on Form 10-K for the
calendar year ended December 31, 1995, and the Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996,
filed by the individual registrants with the SEC and should 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 Plant
ANO 1 Unit No. 1 of ANO
ANO 2 Unit No. 2 of ANO
Cajun Cajun Electric Power Cooperative, Inc.
Capital Funds Agreement Agreement, dated as of June 21, 1974, as
amended, between System Energy and Entergy
Corporation, and the assignments thereof
CitiPower CitiPower Ltd. - an electric distribution
company serving Melbourne, Australia, and
surrounding suburbs, which was acquired by
Entergy on January 5, 1996
Council Council of the City of New Orleans,
Louisiana
Entergy Arkansas Entergy Arkansas, Inc., formerly Arkansas
Power & Light Company
Entergy Corporation Entergy Corporation, a Delaware corporation,
successor to Entergy Corporation, a Florida
corporation
Entergy Enterprises Entergy Enterprises, Inc.
EIS Entergy Integrated Solutions, Inc.,
formerly Entergy Systems & Service, Inc.
Entergy Gulf States Entergy Gulf States, Inc., formerly Gulf
States Utilities Company (including wholly
owned subsidiaries - Varibus Corporation,
GSG&T, Inc., Prudential Oil & Gas, Inc., and
Southern Gulf Railway Company)
Entergy Louisiana Entergy Louisiana, Inc., formerly Louisiana
Power & Light Company
Entergy Mississippi Entergy Mississippi, Inc., formerly
Mississippi Power & Light Company
Entergy New Orleans Entergy New Orleans, Inc., formerly New
Orleans Public Service Inc.
Entergy Operations Entergy Operations, Inc., a subsidiary of
Entergy Corporation that has operating
responsibility for ANO, Grand Gulf 1, River
Bend, and Waterford 3
Entergy or System Entergy Corporation and its various direct
and indirect subsidiaries
Entergy Services Entergy Services, Inc.
EPA U.S. Environmental Protection Agency
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
Form 10-K The combined Annual Report on Form 10-K for
the year ended December 31, 1995, of
Entergy, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System
Energy
Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant
ISES Independence Steam Electric Generating
Station
KWh Kilowatt-hour(s)
LPSC Louisiana Public Service Commission
Merger The combination transaction, consummated on
December 31, 1993, by which Entergy Gulf
States became a subsidiary of Entergy
Corporation and Entergy Corporation became a
Delaware corporation
MPSC Mississippi Public Service Commission
MWh Megawatt-hour(s)
1991 NOPSI Settlement Settlement retroactive to October 4, 1991,
among Entergy New Orleans, the Council, and
the Alliance for Affordable Energy, Inc. (local
customer advocate group), which settled certain
Grand Gulf 1 prudence issues and certain
litigation related to the February 4 Resolution
NRC Nuclear Regulatory Commission
NSS National Security Systems, Inc.
N/A Not applicable
operating companies Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans, collectively
Owner Participant A corporation that, in connection with the
Waterford 3 sale and leaseback transactions,
has acquired a beneficial interest in a
trust, the Owner Trustee of which is the
owner and lessor of undivided interests in
Waterford 3
Owner Trustee Each institution and/or individual acting as
Owner Trustee under a trust agreement with
an Owner Participant in connection with the
Waterford 3 sale and leaseback transactions
PCBs Polychlorinated biphenyls
PUCT Public Utility Commission of Texas
PURPA Public Utility Regulatory Policies Act
River Bend River Bend Nuclear Plant, owned 70% by
Entergy Gulf States
RUS Rural Utilities Service
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards
as promulgated by the Financial Accounting
Standards Board
System Energy System Energy Resources, Inc.
System Fuels System Fuels, Inc.
System or Entergy Entergy Corporation and its various direct
and indirect subsidiaries
Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Net cash flow from operations for Entergy, the operating
companies, and System Energy for the nine months ended September 30,
1996, and 1995, was as follows:
Nine Months Nine Months
Company Ended Ended
9/30/96 9/30/95
(In Millions)
Entergy $1,213.9 $1,088.7
Entergy Arkansas $344.2 $282.1
Entergy Gulf States $263.4 $344.3
Entergy Louisiana $284.6 $308.2
Entergy Mississippi $146.6 $139.4
Entergy New Orleans $27.0 $ 70.7
System Energy $223.7 $ 51.2
Entergy Arkansas' cash flow from operations increased for the
nine months ended September 30, 1996, due to an increase in retail
energy sales and decreased other operations and maintenance expenses.
Lower fuel inventory levels in 1996 also contributed to the increase.
Entergy Gulf States' cash flow from operations decreased for the nine
months ended September 30, 1996, due to increased accounts receivable
balances resulting from higher energy sales, and greater amounts of
under-recovered fuel costs over the same period in 1995. Entergy
Louisiana's cash flow from operations decreased due to a decrease in
retail base revenues. Entergy New Orleans' cash flow from operations
decreased for the nine months ended September 30, 1996, largely as a
result of an income tax refund received in 1995 and lower accounts
payable balances in 1996 compared to the same period in 1995. System
Energy's net cash flow from operations increased for the nine months
ended September 30, 1996, due primarily to refunds made to associated
companies in 1995 resulting from a FERC audit settlement in 1994, and
lower income tax payments made in 1996 compared to the same period in
1995.
Financing Sources
System Energy issued two series of first mortgage bonds in
August 1996 totaling $235 million, of which $210 million was used to
meet a scheduled September 1, 1996 System Energy debt maturity.
Excluding this, cash from operations, supplemented by cash on hand,
was sufficient to meet substantially all investing and financing
requirements of the operating companies and System Energy, including
capital expenditures, dividends, and debt/preferred stock maturities
for the first nine months of 1996. Entergy's investments in
nonregulated energy-related businesses in 1996 were funded with debt
and equity capital.
Entergy's current ability to fund most of the capital
requirements for its domestic utility businesses with cash from
operations results from continued efforts to streamline operations
and to reduce costs, as well as from collections under rate phase-in
plans that exceed current cash requirements for the related costs.
(In the income statement, these revenue collections are offset by the
amortization of previously deferred costs so that there is no effect
on net income.) These phase-in plans will continue to contribute to
Entergy's cash position for the next several years. Specifically, the
Grand Gulf 1 phase-in plans will expire in 1998 for Entergy Arkansas
and Entergy Mississippi, and in 2001 for Entergy New Orleans.
Entergy Gulf States' phase-in plan for River Bend will expire in
1998, and Entergy Louisiana's phase-in plan for Waterford 3 expires
in November 1996. Should additional cash be needed for investing and
financing requirements, the operating companies and System Energy
have the
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
ability, subject to regulatory approval and compliance with issuance
tests, to issue debt or preferred securities to meet such
requirements, as discussed below. In addition, to the extent market
interest and dividend rates allow, the operating companies and System
Energy will continue to refinance higher cost debt and preferred
stock prior to maturity. The operating companies may continue to
establish special purpose trusts as financing subsidiaries for the
purpose of issuing preferred trust securities, such as the 9%
Cumulative Quarterly Income Preferred Securities, issued in 1996 by
Entergy Louisiana Capital I, a financing subsidiary of Entergy
Louisiana, and the 8.5% Cumulative Quarterly Income Preferred
Securities, issued in 1996 by Entergy Arkansas Capital I, a financing
subsidiary of Entergy Arkansas. See Note 5 for a further discussion.
In May 1996, Entergy Corporation registered 10 million
additional shares of common stock pursuant to a new dividend
reinvestment and stock purchase plan. The plan became effective in
July 1996. See Note 3 for a further discussion.
Entergy periodically reviews its capital structure to determine
its future needs for debt and equity financing. Certain agreements
and restrictions limit the amount of mortgage bonds and preferred
stock that can be issued by the operating companies and System
Energy. Based on the most restrictive applicable tests and available
retired bond credits as of September 30, 1996, and assumed annual
interest or dividend rates of 8.5% for bonds and 8.0% for preferred
stock, each of the operating companies and System Energy could have
issued mortgage bonds or preferred stock up to the following amounts:
Mortgage Preferred
Company Bonds (a) Stock
(In Millions)
Entergy Arkansas $784 $660
Entergy Gulf States $867 (b)
Entergy Louisiana $745 $828
Entergy Mississippi $504 $451
Entergy New Orleans $ 92 $228
System Energy $161 (c)
(a)Includes bonds issuable based on retired bond credits.
(b)Entergy Gulf States was precluded from issuing preferred stock
under its earnings coverage tests at September 30, 1996.
(c)System Energy's charter does not provide for the issuance
of preferred stock.
Entergy Gulf States has no earnings coverage limitations on the
issuance of preference stock. Entergy Arkansas may also issue
preferred stock to refund outstanding preferred stock without meeting
an earnings coverage test.
The operating companies and System Energy have SEC authorization
to effect short-term borrowings. See Note 4 to the Form 10-K for
information on the operating companies' and System Energy's short-
term borrowing authorizations and bank lines of credit.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
In addition, Entergy Services and System Fuels had available
bank lines of credit of $70 million and $45 million, respectively, at
September 30, 1996. Entergy Corporation had $120 million outstanding
under its $300 million bank credit facility at September 30, 1996.
$230 million was drawn on this facility for the acquisition of
CitiPower in January 1996.
On September 13, 1996, Entergy Technology Holding Company (ETHC)
obtained a $100 million bank line of credit, which can be drawn on by
either ETHC or Entergy Corporation, the proceeds of which are to be
used exclusively for exempt telecommunication investments. As of
September 30, 1996, no borrowings were outstanding under this
facility.
Financing Uses
As discussed in Part I of the Form 10-K, Entergy Corporation has
been expanding its investments in energy-related business
opportunities overseas and in the United States. As of September 30,
1996, Entergy Corporation's net equity investment was $814.6 million
(reduced by $178 million of accumulated losses) in nonregulated
businesses, including CitiPower.
In addition to investing in nonregulated businesses, Entergy
Corporation's capital requirements result from periodically investing
in, or making loans to, its subsidiaries, as well as paying its
dividends. To meet such capital requirements, Entergy Corporation
will utilize internally generated funds, cash on hand, funds
available under its $300 million credit facility, funds received from
its dividend reinvestment and stock purchase plan, and other bank
financings as may be required. Entergy Corporation receives funds
through dividend payments from its domestic utility subsidiaries.
During the first nine months of 1996, such dividend payments from
subsidiaries totaled $316 million. Due to its financial position,
Entergy Gulf States has not paid common stock dividends since the
third quarter of 1994 and is not currently expected to pay common
stock dividends during the remainder of 1996. Entergy Corporation
paid $301.7 million of dividends on its common stock during the first
nine months of 1996. Declarations of dividends on common stock are
made at the discretion of Entergy Corporation's Board of Directors.
Management will not recommend future dividend increases to the Board
unless such increases are justified by adequate earnings growth of
Entergy Corporation and its subsidiaries. See Note 7 to the Form 10-
K for information on dividend restrictions.
Entergy Corporation and Entergy Gulf States
See Notes 1 and 2 regarding the River Bend rate appeal and
litigation with Cajun, including the Cajun Settlement. An adverse
ruling in this appeal could result in approximately $280 million of
potential write-offs (net of tax) and $199 million in refunds of
previously collected revenue. Such write-offs and charges could
result in additional substantial net losses being reported in the
future by Entergy Corporation and Entergy Gulf States, with resulting
adverse adjustments to common equity of Entergy Corporation and
Entergy Gulf States. Adverse resolution of these matters could
adversely affect Entergy Gulf States' ability to obtain financing,
which in turn could affect Entergy Gulf States' liquidity and ability
to pay dividends. Although Entergy Corporation's common shareholders
have experienced some dilution in earnings as a result of the Merger,
Entergy believes that the Merger will ultimately be beneficial to
common shareholders in terms of strategic benefits as well as
economies and efficiencies produced.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy Corporation and System Energy
Under the Capital Funds Agreement, Entergy Corporation has
agreed to supply to System Energy sufficient capital to maintain
System Energy's equity capital at a minimum of 35% of its total
capitalization (excluding short-term debt), to permit the continued
commercial operation of Grand Gulf 1, and to pay in full all
indebtedness for borrowed money of System Energy when due under any
circumstances. In addition, under supplements to the Capital Funds
Agreement assigning System Energy's rights as security for specific
debt of System Energy, Entergy Corporation has agreed to make cash
capital contributions, if required, to enable System Energy to make
payments on such debt when due. The Capital Funds Agreement may be
terminated by the parties thereto, subject to the consent of certain
creditors.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Competition and Industry Challenges
See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -
SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a
discussion of the increasing competitive pressures facing Entergy and
the electric utility industry.
On April 24, 1996, FERC issued Order No. 888 affirming its
initial proposal that all public utilities subject to its
jurisdiction provide comparable wholesale transmission access through
the filing of a single open access tariff. FERC established the
minimum conditions that must be included in such open access tariffs
and also set forth certain provisions concerning the structuring of
transactions within power pools, public utility holding companies,
and bilateral coordination arrangements. The rules took effect sixty
days after they were published in the Federal Register. In addition,
FERC ruled that public utilities are entitled to full recovery of
prudently incurred costs allocable to FERC jurisdictional customers.
If the costs are stranded by retail wheeling, public utilities should
first seek recovery of these costs from the appropriate state or
local regulators.
Concurrent with the issuance of Order No. 888, FERC issued Order
No. 889 which prescribes the requirements and procedures for the
implementation and maintenance of an open access same-time
information system by each public utility. In addition, FERC issued
a Notice of Proposed Rulemaking concerning capacity reservation
tariffs as the next phase of FERC's efforts to promote wholesale
competition. On July 9, 1996, Entergy filed, on behalf of the
operating companies, an open access proforma tariff.
On September 20, 1996, FERC issued an order revising the
original requirement in Order No. 889 that open access same-time
information service sites and Standards of Conduct be in place for
all transmission providers by November 1, 1996. The Commission has
now scheduled a two-step compliance procedure where the operation of
open access same-time information service sites must begin on a test
basis starting on December 2, 1996, with full commercial operations
and compliance with the Standards of Conduct to begin January 3,
1997.
As noted in the Form 10-K, Entergy proposed that FERC serve in a
federal "back-stop" role for wholesale stranded cost recovery in a
holding company or other multi-state situation. FERC's final rule in
Order No. 888 recognized that denial of retail stranded cost recovery
by a state regulatory authority could inappropriately shift the
disallowed costs to affiliated operating companies in other states.
FERC encouraged the affected state regulators in such situations to
seek a mutually agreeable approach to this potential problem. If the
approach results in a filing to modify a jurisdictional agreement,
FERC could agree with such a proposal, particularly if other
interested parties support the filing. In the event the state or
local regulators cannot reach a consensus, FERC would ultimately have
to resolve the appropriate treatment of such stranded costs.
As discussed in more detail below, Entergy has initiated
discussions with its state and local regulators regarding an orderly
transition to a more competitive market for electricity. Entergy
Mississippi, Entergy Gulf States, Entergy Louisiana, and Entergy
Arkansas have made filings with their state and local regulators.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
On August 2, 1996, Entergy Mississippi filed a proposal with the
MPSC for a rate rider to assure cost recovery. The rider, which does
not change current rates for electric service provided by Entergy
Mississippi, would apply to customers within Entergy Mississippi's
service area who obtain electricity in the future from a source other
than Entergy Mississippi. In order to protect its core customers
against the effects of retail access, were that to become available,
Entergy Mississippi has designed this rider to assure that
commitments made under the current system of regulation are honored
and that cost burdens are not unfairly transferred from departing
customers to those who remain on the Entergy Mississippi system. On
August 22, 1996, the MPSC remanded the Entergy Mississippi proposal
and established a generic docket to consider competition for retail
electric service.
On October 5, 1996, Entergy Gulf States and Entergy Louisiana
filed proposals with the LPSC designed to achieve an orderly
transition to retail electric competition in Louisiana, while
protecting certain classes of ratepayers from unfairly bearing the
burden of cost shifting. The proposals do not increase rates for any
customer class. However, these proposals do provide for a universal
service charge for customers that remain connected to Entergy Gulf
States' or Entergy Louisiana's electric facilities and choose to
purchase their electricity from another source. In addition, the
proposals include a base rate freeze, which would be put into effect
for seven years in the Louisiana areas serviced by Entergy Gulf
States and Entergy Louisiana. These proposals also allow for the
complete amortization of the remaining plant investment associated
with River Bend and Waterford 3 over a seven year period.
On October 24, 1996, Entergy Arkansas filed a proposal with the
Arkansas Public Service Commission designed to achieve an orderly
transition to retail electric competition in Arkansas. The proposal
includes a rate decrease totaling $123 million over a three year
period beginning in mid-1997 and the complete amortization of the
remaining plant investment associated with ANO and Entergy Arkansas'
portion of Grand Gulf 1 over a seven year period. In addition, the
proposal provides for a universal service charge for customers that
remain connected to Entergy Arkansas's electric facilities and choose
to purchase their electricity from another source.
Retail and Wholesale Rate Issues
See Note 2 to the Form 10-K and herein for a discussion of (i)
the ongoing trend of regulatory-ordered rate reductions including
recent LPSC orders for Entergy Gulf States and (ii) incentive and
performance-based regulation including a base rate reduction of $16.5
million for Entergy Louisiana.
Potential Changes in the Electric Utility Industry
Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -
SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K for a
discussion of legislative and regulatory developments relating to the
potential for retail competition in the areas served by the operating
companies.
Significant Industrial Cogeneration Effects
The development of proposals for cogeneration projects by
certain industrial customers of Entergy Gulf States and Entergy
Louisiana over the last several years has caused Entergy Gulf States
and Entergy Louisiana to develop and secure approval for rate tariffs
lower than those previously approved by the PUCT and LPSC for such
industrial customers. In certain cases, contracts or special tariffs
that use flexible pricing have been negotiated with industrial
customers to keep these customers on the System. The contracts and
tariffs are not at full cost-of-service rates. Although the rates
fully recover operating expenses and depreciation, they provide no
more than a minimal return on investment. During the nine months
ended September 30, 1996, KWh sales to industrial customers of
Entergy Gulf States and Entergy Louisiana at less than full cost-of-
service rates made up approximately 30% and 38% of total industrial
sales, respectively.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
During 1995, Entergy Louisiana received separate notices from
two large industrial customers that they will proceed with proposed
cogeneration projects for the purpose of fulfilling most of their
future electric energy needs. These customers will continue to
purchase their energy requirements from Entergy Louisiana until their
cogeneration facilities are completed and operational, which is
expected to occur in 1997-1998. After that time, these customers
will purchase energy from Entergy Louisiana at a reduced level.
During the nine months ended September 30, 1996, these two customers
represented an aggregate of approximately 18% of Entergy Louisiana's
industrial sales and provided 12% of its total industrial base
revenues.
Domestic and Foreign Energy-Related Investments
Entergy Corporation continues to seek opportunities to expand
its domestic and foreign businesses that are not regulated by state
and local utility regulatory authorities. These investments
encompass power development (including investments in foreign
utilities) and new technology. Entergy Corporation's strategy is to
identify and pursue business opportunities that have the potential to
earn a greater return than its domestic regulated utility operations.
These investments may involve a greater risk than domestic regulated
utility enterprises. In the nine months ended September 30, 1996,
Entergy Corporation's domestic and foreign energy-related investments
reduced consolidated net income by approximately $8.0 million. The
power development investments, in the aggregate, were profitable
during the nine months ended September 30, 1996, and management
believes that they will continue to provide profits in the current
year. However, the income provided by power development investments
was offset by losses experienced by new technology investments.
In May 1996, Entergy Corporation filed for SEC authorization to
provide nuclear plant operations, management, and related services to
non-affiliated companies. Entergy Corporation proposes to provide
these services through a new subsidiary, Entergy Nuclear, Inc.
On August 20, 1996, Entergy Power, Inc. sold 84 megawatts of its
interest in Unit No. 2 of ISES and related assets to City Water &
Light Plant of Jonesboro, Arkansas, a co-owner of ISES. The sale
resulted in a gain of approximately $1 million.
On October 3, 1996, Entergy indirectly acquired NSS, a full-
service security monitoring company, for $32 million of debt.
Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -
SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K, and Note 9,
herein, for a discussion of Entergy's major nonregulated business
opportunities and foreign energy-related investments.
ANO Matters
Entergy Operations has made periodic inspections and repairs on
the tubes in ANO 2's steam generator, which have experienced
cracking. On October 25, 1996, Entergy Corporation's Board of
Directors authorized Entergy Operations to negotiate a contract, with
appropriate cancellation provisions, for the fabrication and
replacement of the steam generator at ANO 2. See Note 1 for
additional information.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Deregulated Utility Operations
Entergy Gulf States discontinued regulatory accounting
principles in 1989 for its wholesale jurisdiction and steam
department and in 1991 for the Louisiana deregulated portion of River
Bend. The recent improving trend in net income from these operations
continued during the three months and nine months ended September 30,
1996, when the related operating income was $3.3 million and $11.3
million, respectively, compared to $1.2 million for the fiscal year
ended 1995.
The improvement in net income from deregulated operations in the
three months and nine months ended September 30, 1996, was
principally due to increased revenues, partially offset by increased
income taxes. The future impact of the deregulated utility
operations on Entergy's and Entergy Gulf States' results of
operations and financial position will depend on future operating
costs, future efficiency and availability of generating units, and
future market prices for energy over the remaining life of the
assets. Entergy expects the performance of its deregulated utility
operations to continue to improve due to ongoing reductions in
operation and maintenance expenses.
Property Tax Exemptions
As discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
- - SIGNIFICANT FACTORS AND KNOWN TRENDS" in the Form 10-K, Waterford
3's local property tax exemption expired in December 1995, and River
Bend's local property tax exemption will expire in December 1996. In
a March 1996 LPSC order, Entergy Louisiana was permitted to defer
recovery of the estimated Waterford 3 property tax from January 1996
through June 1996. The order allows for the recovery of the property
tax and also for the recovery, from July 1996 through June 1997, of
the related deferral. In April 1996, Louisiana authorities set
Waterford 3's 1996 property tax assessment at $21.5 million. Entergy
Gulf States is working with tax authorities to determine the method
for calculating the amount of property taxes to be paid when River
Bend's local property tax exemption expires in December 1996.
Environmental Issues
Entergy Gulf States has been notified by the EPA that it has
been designated as a potentially responsible party for the clean-up
of certain hazardous waste disposal sites. See Note 1 for additional
information.
As a consequence of solid waste regulations issued by the
Louisiana Department of Environmental Quality in 1993, Entergy
Louisiana is upgrading or closing certain of its power plant
wastewater impoundments. See Note 1 for additional information.
Accounting Issues
Continued Application of SFAS 71 - As a result of the 1992
Energy Policy Act, the actions of regulatory commissions, and other
factors, the electric utility industry is moving toward a combination
of competition and a modified regulatory environment. The operating
companies' and System Energy's financial statements currently
reflect, for the most part, assets and costs based on existing cost-
based ratemaking regulations in accordance with SFAS 71, "Accounting
for the Effects of Certain Types of Regulation" (SFAS 71). Continued
applicability of SFAS 71 to the operating companies' and System
Energy's financial statements requires that rates set by an
independent regulator on a cost-of-service basis be charged to and
collected from customers.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
In the event that all or a portion of a utility's operations
cease to meet those criteria for various reasons, including
deregulation, a change in the method of regulation, or a change in
the competitive environment for the utility's regulated services, the
utility shall discontinue application of SFAS 71 for the relevant
portion of its operations by eliminating from the balance sheet the
effects of any actions of regulators recorded as regulatory assets
and liabilities.
The operating companies' and System Energy's financial
statements continue to follow SFAS 71 for their regulated operations,
except for those portions of Entergy Gulf States' business described
in "Deregulated Utility Operations" above.
Accounting for Decommissioning Costs - In February 1996, the
FASB issued an exposure draft of a proposed SFAS addressing the
accounting for decommissioning costs of nuclear generating units as
well as liabilities related to the closure and removal of all long-
lived assets. See Note 1 for a discussion of proposed changes in the
accounting for decommissioning/closure costs and the potential impact
of these changes on Entergy.
Financial Derivatives
Derivative instruments have been used by Entergy on a limited
basis. Entergy has a policy that financial derivatives are to be
used only to mitigate business risks and not for speculative
purposes. At September 30, 1996, Entergy had an insignificant amount
of derivative instruments outstanding.
_________________________________________
Investors are cautioned that forward-looking statements
contained herein with respect to the revenues, earnings, competitive
performance, or other prospects for the business of Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy,
or their affiliated companies may be influenced by factors that could
cause actual outcomes and results to be materially different than
projected. Such factors include, but are not limited to, the effects
of weather, the performance of generating units, fuel prices and
availability, regulatory decisions and the effects of changes in law,
capital spending requirements, the evolution of competition, changes
in accounting standards, and other factors.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
On January 5, 1996, Entergy Corporation finalized its
acquisition of CitiPower. In accordance with the purchase method of
accounting, the results of operations for the three months and nine
months ended September 30, 1995, of Entergy Corporation and
subsidiaries reported in its Statements of Consolidated Income and
Cash Flows do not include CitiPower's results of operations. See
Note 9 for additional information regarding CitiPower.
Net Income
Consolidated net income increased for the three months ended
September 30, 1996, primarily due to the reversal of a Cajun-River
Bend litigation accrual at Entergy Gulf States, as discussed in Note
1. Excluding this item, net income decreased 5% principally due to
higher other operation and maintenance expenses for domestic
regulated operations as a result of the recording of additional
litigation reserves at Entergy Gulf States and Entergy Louisiana.
Consolidated net income decreased for the nine months ended
September 30, 1996, primarily due to the $174 million net of tax
write-off of River Bend rate deferrals pursuant to SFAS 121 and the
one-time recording in 1995 of the cumulative effect of the change in
accounting method for incremental nuclear refueling outage
maintenance costs at Entergy Arkansas. The effect of these items was
partially offset by the reversal of a litigation accrual at Entergy
Gulf States, as discussed above. Excluding these items, net income
would have increased 9% for the nine months ended September 30, 1996,
due to higher energy sales, decreased other operation and maintenance
expenses for domestic regulated operations as a result of
restructuring programs implemented in 1995, as discussed in Note 7,
and ongoing operating efficiency improvement programs throughout
Entergy.
Significant factors affecting the results of operations and
causing variances between the three months and nine months ended
September 30, 1996, and 1995 are discussed under "Revenues and
Sales," "Expenses," and "Other" below.
Revenues and Sales
The changes in electric operating revenues associated with
Entergy's domestic regulated operations for the three months and nine
months ended September 30, 1996, are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base revenues $(25.5) $(77.8)
Rate riders (3.0) 10.6
Fuel cost recovery 106.4 334.5
Sales volume/weather .1 102.5
Other revenue (including unbilled) (20.7) (65.2)
Sales for resale (6.7) 38.7
----- ------
Total $50.6 $343.3
===== ======
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Electric operating revenues increased for the three months and
nine months ended September 30, 1996, as a result of higher fuel
adjustment revenues, which do not affect net income, partially offset
by rate reductions at various operating companies. Higher retail
sales and an increase in sales for resale also contributed to the
increase for the nine months ended September 30, 1996. The increase
in sales for resale was primarily the result of increased energy
sales outside of Entergy's service area. Higher retail sales for the
nine months ended September 30, 1996, was principally caused by non-
weather related volume growth.
Gas operating revenues increased for the three months and nine
months ended September 30, 1996, due to a higher unit purchase price
for gas purchased for resale. In addition, increased gas sales
contributed to the increase in revenues for the nine months ended
September 30, 1996, largely due to the colder than normal winter
weather in the first quarter of 1996.
Nonregulated and foreign energy related business revenues
increased for the three months and nine months ended September 30,
1996, due mainly to the January 1996 acquisition of CitiPower.
Expenses
Operating expenses for the three months and nine months ended
September 30, 1996, include the operating expenses of CitiPower,
which were not included in the prior year's financial statements.
Excluding the operating expenses of CitiPower, Entergy's operating
expenses increased for the three months and nine months ended
September 30, 1996, as discussed below. The following discussion
excludes the impact of the acquisition of CitiPower.
For the three months ended September 30, 1996, fuel and
purchased power expenses increased as a result of higher gas prices.
Income tax expense increased primarily due to higher pretax income
excluding the River Bend rate deferral write-off and the prior year
change in accounting method. Other operation and maintenance
expenses increased for the three months ended September 30, 1996,
largely due to an increase in litigation reserves at Entergy Gulf
States and Entergy Louisiana. Nuclear refueling outage expenses
decreased primarily due to the absence in 1996 of a refueling outage
at Grand Gulf 1.
For the nine months ended September 30, 1996, fuel and purchased
power expenses increased as a result of higher gas prices as
discussed above and an increase in energy sales. Income tax expense
increased primarily due to higher pretax income excluding the River
Bend rate deferral write-off and the prior year change in accounting
method. Other operation and maintenance expenses decreased for the
nine months ended September 30, 1996, due to lower payroll related
expenses, resulting from restructuring programs implemented in 1995
as discussed in Note 7, in addition to ongoing operating efficiency
improvement programs throughout Entergy. Rate deferrals charged
against operating expenses in 1996 represent the deferral of
Waterford 3 local property taxes and the deferral of a portion of the
proposed System Energy rate increase at Entergy Mississippi and
Entergy New Orleans. Nuclear refueling outage expenses decreased
primarily due to the absence in 1996 of a refueling outage at Grand
Gulf 1. The increase in decommissioning costs and depreciation rates
is partially attributable to the 1995 System Energy FERC rate
increase filing, subject to refund. See Note 2 for a discussion of
the System Energy proposed rate increase.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Excluding CitiPower, interest on long-term debt decreased for
the three months and nine months ended September 30, 1996, due
primarily to ongoing retirement and refinancing of higher cost debt
at the operating companies and System Energy. Other interest - net
increased for the three months ended September 30, 1996, as a result
of interest charges recorded by Entergy Gulf States in connection
with a fuel cost refund. Borrowings by Entergy Corporation from a
$300 million line of credit related to the CitiPower investment
contributed to the increase in other interest - net for the nine
months ended September 30, 1996.
Other
Other income increased for the three months ended September 30,
1996, primarily due to the Entergy Gulf States' reversal of a Cajun-
River Bend litigation accrual, as discussed in Note 1.
Other income decreased for the nine months ended September 30,
1996, as a result of the write-off of River Bend rate deferrals
pursuant to SFAS 121, as discussed in Note 8, and a decrease in Grand
Gulf 1 carrying charges at Entergy Arkansas due to a decline in the
deferral balance, partially offset by the Entergy Gulf States'
reversal of a Cajun-River Bend litigation accrual.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Three and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands, Except Share Data)
Operating Revenues:
Electric $1,966,969 $1,916,364 $5,054,647 $4,711,342
Natural gas 21,402 15,073 107,866 75,861
Steam products 15,144 12,095 45,936 35,518
Nonregulated and foreign energy-related businesses 134,758 11,487 381,341 34,615
----------- ----------- ----------- -----------
Total 2,138,273 1,955,019 5,589,790 4,857,336
----------- ----------- ----------- -----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 527,769 465,126 1,309,082 1,062,698
Purchased power 177,824 104,159 525,134 275,902
Nuclear refueling outage expenses 12,196 19,591 40,144 72,772
Other operation and maintenance 394,526 353,563 1,127,823 1,089,996
Depreciation, amortization, and decommissioning 196,937 177,482 586,604 518,894
Taxes other than income taxes 90,572 76,213 269,485 226,735
Income taxes 168,384 172,057 352,890 309,200
Rate deferrals (3,767) - (34,842) -
Amortization of rate deferrals 142,512 152,781 324,236 311,171
----------- ----------- ----------- -----------
Total 1,706,953 1,520,972 4,500,556 3,867,368
----------- ----------- ----------- -----------
Operating Income 431,320 434,047 1,089,234 989,968
--------- --------- --------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 2,399 2,206 7,753 7,053
Write-off of River Bend rate deferrals - - (194,498) -
Miscellaneous - net 72,389 15,678 97,002 53,511
Income taxes (25,011) (6,274) (15,658) (16,174)
--------- --------- --------- ---------
Total 49,777 11,610 (105,401) 44,390
--------- --------- --------- ---------
Interest Charges:
Interest on long-term debt 164,795 157,760 512,342 479,433
Other interest - net 17,221 6,302 39,166 20,954
Distributions on preferred securities 1,947 - 1,947 -
Allowance for borrowed funds used
during construction (2,032) (1,978) (6,499) (6,182)
Preferred and preference dividend requirements of
subsidiaries and other 19,286 20,455 55,745 59,355
--------- --------- --------- ---------
Total 201,217 182,539 602,701 553,560
--------- --------- --------- ---------
Income before the Cumulative Effect of
Accounting Change 279,880 263,118 381,132 480,798
Cumulative Effect of Accounting
Change (net of income taxes) - - - 35,415
--------- --------- --------- ---------
Net Income $279,880 $263,118 $381,132 $516,213
========= ========= ========= =========
Earnings per average common share before
cumulative effect of accounting change $1.22 $1.16 $1.67 $2.11
Earnings per average common share $1.22 $1.16 $1.67 $2.27
Dividends declared per common share $0.45 $0.45 $1.35 $1.35
Average number of common shares outstanding 228,603,813 227,751,471 228,141,842 227,639,262
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ---------
(In Thousands)
Operating Activities:
Net income $381,132 $516,213
Noncash items included in net income:
Write-off of River Bend rate deferrals 194,498 -
Cumulative effect of a change in accounting principle - (35,415)
Change in rate deferrals/excess capacity-net 316,184 285,174
Depreciation, amortization, and decommissioning 586,604 518,894
Deferred income taxes and investment tax credits (57,324) (2,923)
Allowance for equity funds used during construction (7,753) (7,053)
Changes in working capital:
Receivables (160,616) (188,087)
Fuel inventory (260) (33,839)
Accounts payable (73,293) (70,656)
Taxes accrued 226,147 219,714
Interest accrued (14,350) (7,768)
Other working capital accounts (131,331) (129,399)
Decommissioning trust contributions (36,675) (21,189)
Provision for estimated losses and reserves 45,729 (38,260)
Other (54,747) 83,253
--------- ---------
Net cash flow provided by operating activities 1,213,945 1,088,659
--------- ---------
Investing Activities:
Construction/capital expenditures (425,652) (401,031)
Allowance for equity funds used during construction 7,753 7,053
Nuclear fuel purchases (118,958) (207,211)
Proceeds from sale/leaseback of nuclear fuel 107,035 224,265
Acquisition of CitiPower (1,156,112) -
Investment in nonregulated/nonutility properties (4,151) (25,979)
Proceeds from sale of Hub River stock 16,503 -
Proceeds from sale of ISES 39,398 -
Other (31,285) (19,216)
--------- ---------
Net cash flow used in investing activities (1,565,469) (422,119)
--------- ---------
Financing Activities:
Proceeds from the issuance of:
General and refunding mortgage bonds 39,608 109,285
First mortgage bonds 431,906 -
Bank notes and other long-term debt 1,004,243 43,538
Common stock 36,869 -
Preferred securities of subsidiaries' trusts 125,963 -
Retirement of:
First mortgage bonds (695,392) (45,800)
General and refunding mortgage bonds (56,000) (54,200)
Other long-term debt (143,373) (96,949)
Redemption of preferred stock (91,879) (39,605)
Changes in short-term borrowings - net 75,025 (171,219)
Common stock dividends paid (301,675) (306,465)
--------- ---------
Net cash flow provided by (used in) financing activities 425,295 (561,415)
--------- ---------
Effect of exchange rates on cash and cash equivalents 66 -
--------- ---------
Net increase in cash and cash equivalents 73,837 105,125
Cash and cash equivalents at beginning of period 533,590 613,907
--------- ---------
Cash and cash equivalents at end of period $607,427 $719,032
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ---------
(In Thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized 526,252 476,637
Income taxes 236,288 161,938
Noncash investing and financing activities:
Capital lease obligations incurred 16,358 -
Change in unrealized appreciation (depreciation) of
decommissioning trust assets (12,460) 13,221
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $22,588,066 $21,698,593
Plant acquisition adjustment - Entergy Gulf States 459,492 471,690
Electric plant under leases 678,658 675,425
Property under capital leases - electric 149,863 145,146
Natural gas 168,136 166,872
Steam products 79,701 77,551
Construction work in progress 464,888 482,950
Nuclear fuel under capital leases 276,308 312,782
Nuclear fuel 61,212 49,100
----------- -----------
Total 24,926,324 24,080,109
Less - accumulated depreciation and amortization 8,699,397 8,259,318
----------- -----------
Utility plant - net 16,226,927 15,820,791
----------- -----------
Other Property and Investments:
Decommissioning trust funds 318,088 277,716
Other 459,489 434,619
----------- -----------
Total 777,577 712,335
----------- -----------
Current Assets:
Cash and cash equivalents:
Cash 99,309 42,822
Temporary cash investments - at cost,
which approximates market 447,294 490,768
Special deposits 60,824 -
----------- -----------
Total cash and cash equivalents 607,427 533,590
Notes receivable 1,332 6,907
Accounts receivable:
Customer (less allowance for doubtful accounts of
$8.4 million in 1996 and $7.1 million in 1995) 458,357 333,343
Other 73,380 59,176
Accrued unbilled revenues 373,114 293,461
Deferred fuel 92,543 25,924
Fuel inventory 122,610 122,167
Materials and supplies - at average cost 345,833 345,330
Rate deferrals 440,816 420,221
Prepayments and other 129,810 175,121
----------- -----------
Total 2,645,222 2,315,240
----------- -----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 507,824 1,033,282
SFAS 109 regulatory asset - net 1,206,786 1,279,495
Unamortized loss on reacquired debt 222,264 224,131
Other regulatory assets 378,088 350,601
Long-term receivables 218,246 224,726
CitiPower license (net of $11.5 million of amortization) 609,027 -
Other 352,129 305,329
----------- -----------
Total 3,494,364 3,417,564
----------- -----------
TOTAL $23,144,090 $22,265,930
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, $.01 par value, authorized 500,000,000
shares; issued 231,455,342 shares in 1996 and
230,017,485 shares in 1995 $2,315 $2,300
Paid-in capital 4,240,038 4,201,483
Retained earnings 2,406,339 2,335,579
Cumulative foreign currency translation adjustment 20,670 -
Less - treasury stock (1,973,468 shares in 1996
and 2,251,318 in 1995) 59,627 67,642
----------- -----------
Total common shareholders' equity 6,609,735 6,471,720
Subsidiary's preference stock 150,000 150,000
Subsidiaries' preferred stock:
Without sinking fund 490,955 550,955
With sinking fund 221,986 253,460
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts holding
solely junior subordinated deferrable debentures 130,000 -
Long-term debt 7,642,768 6,777,124
----------- -----------
Total 15,245,444 14,203,259
----------- -----------
Other Noncurrent Liabilities:
Obligations under capital leases 275,323 303,664
Other 372,787 326,804
----------- -----------
Total 648,110 630,468
----------- -----------
Current Liabilities:
Currently maturing long-term debt 355,305 558,650
Notes payable 120,692 45,667
Accounts payable 429,018 460,379
Customer deposits 152,551 140,054
Taxes accrued 433,975 207,828
Accumulated deferred income taxes 85,186 72,847
Interest accrued 181,394 195,445
Dividends declared 10,475 12,194
Obligations under capital leases 151,204 151,140
Other 132,127 247,039
----------- -----------
Total 2,051,927 2,091,243
----------- -----------
Deferred Credits:
Accumulated deferred income taxes 3,649,399 3,777,644
Accumulated deferred investment tax credits 594,969 612,701
Other 954,241 950,615
----------- -----------
Total 5,198,609 5,340,960
----------- -----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $23,144,090 $22,265,930
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease %
(In Millions)
Electric Operating Revenues:
Residential $ 800.6 $ 793.7 $ 6.9 1
Commercial 473.7 451.4 22.3 5
Industrial 548.6 504.3 44.3 9
Governmental 48.5 42.7 5.8 14
--------- --------- ------
Total retail 1,871.4 1,792.1 79.3 4
Sales for resale 106.7 113.3 (6.6) (6)
Other (11.1) 11.0 (22.1) (201)
--------- --------- ------
Total $ 1,967.0 $ 1,916.4 $ 50.6 3
========= ========= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 9,631 9,923 (292) (3)
Commercial 6,378 6,310 68 1
Industrial 11,716 11,257 459 4
Governmental 703 644 59 9
--------- --------- ------
Total retail 28,428 28,134 294 1
Sales for resale 3,007 3,945 (938) (24)
--------- --------- ------
Total 31,435 32,079 (644) (2)
========= ========= ======
Nine Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 1,824.1 $ 1,715.2 $ 108.9 6
Commercial 1,208.3 1,133.4 74.9 7
Industrial 1,505.9 1,351.3 154.6 11
Governmental 128.5 115.4 13.1 11
--------- --------- -------
Total retail 4,666.8 4,315.3 351.5 8
Sales for resale 300.2 261.5 38.7 15
Other 87.6 134.5 (46.9) (35)
--------- --------- -------
Total $ 5,054.6 $ 4,711.3 $ 343.3 7
========= ========= =======
Billed Electric Energy
Sales (Millions of KWh):
Residential 22,603 21,830 773 4
Commercial 16,254 15,741 513 3
Industrial 33,145 31,617 1,528 5
Governmental 1,850 1,747 103 6
--------- --------- ------
Total retail 73,852 70,935 2,917 4
Sales for resale 8,817 7,482 1,335 18
--------- --------- ------
Total 82,669 78,417 4,252 5
========= ========= ======
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income for the three months ended September 30, 1996,
remained relatively unchanged as compared to the same period in 1995.
Net income decreased for the nine months ended September 30,
1996, due primarily to the one-time recording in 1995 of the
cumulative effect of the change in accounting method for incremental
nuclear refueling outage maintenance costs. Excluding the above
mentioned item, net income would have increased $13.3 million for the
nine months ended September 30, 1996, due primarily to increased
retail energy sales and decreased other operation and maintenance
expense.
Significant factors affecting the results of operations and
causing variances between the three months and nine months ended
September 30, 1996, and 1995 are discussed under "Revenues and
Sales," "Expenses," and "Other" below.
Revenues and Sales
The changes in electric operating revenues for the three months
and nine months ended September 30, 1996, are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base revenues $(1.5) $(10.5)
Rate riders (7.2) (6.9)
Fuel cost recovery 1.0 6.5
Sales volume/weather (7.0) 17.5
Other revenue (including unbilled) (3.2) (8.0)
Sales for resale 16.7 99.5
----- -----
Total $(1.2) $98.1
===== =====
Electric operating revenues decreased slightly for the three
months ended September 30, 1996, primarily due to milder weather as
compared to the same period in 1995 and a decrease in Grand Gulf 1
rate rider revenues, partially offset by an increase in sales for
resale due to changing generation availability and requirements among
the operating companies.
Electric operating revenues increased for the nine months ended
September 30, 1996, primarily due to increased retail energy sales
and sales for resale. The increase in retail energy sales resulted
from increased customer usage, partially attributable to more severe
weather as compared to the same period in 1995. The increase in sales
for resale is due to higher generation availability compared to the
same period of 1995.
Expenses
Operating expenses increased for the three months and nine
months ended September 30, 1996, due to an increase in fuel,
purchased power, and income tax expense, partially offset by reduced
amortization of previous rate deferrals. The increase in fuel and
purchased power expenses is largely due to an increase in generation
and purchases related to the increase in sales for resale in 1996.
Income tax expense increased for the nine months ended September 30,
1996, because of higher pretax income.
The increase in operating expenses for the nine months ended
September 30, 1996, was partially offset by a decrease in other
operation and maintenance expenses resulting from non-outage related
maintenance performed during ANO 1's refueling outage in the first
quarter of 1995. In addition, ANO 2 underwent a 30 day mid-cycle
outage during the first three months of 1995 that also required
additional non-outage related maintenance.
Other
Miscellaneous other income - net decreased for the three months
and nine months ended September 30, 1996, due to reduced Grand Gulf 1
carrying charges as a result of a decline in the deferral balance.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands)
Operating Revenues $529,276 $530,448 $1,380,347 $1,282,208
--------- --------- ----------- -----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 84,869 77,987 216,544 182,793
Purchased power 114,106 100,803 334,362 266,726
Nuclear refueling outage expenses 7,087 7,923 22,170 25,011
Other operation and maintenance 88,629 92,079 257,765 271,523
Depreciation, amortization, and decommissioning 42,112 42,603 123,928 121,557
Taxes other than income taxes 8,546 8,546 27,989 28,641
Income taxes 40,343 38,188 73,648 58,662
Amortization of rate deferrals 52,608 68,243 119,078 136,170
--------- --------- ----------- -----------
Total 438,300 436,372 1,175,484 1,091,083
--------- --------- ----------- -----------
Operating Income 90,976 94,076 204,863 191,125
--------- --------- --------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 875 770 3,026 2,376
Miscellaneous - net 7,735 10,036 23,865 36,388
Income taxes (3,059) (3,941) (9,492) (14,279)
--------- --------- --------- ---------
Total 5,551 6,865 17,399 24,485
--------- --------- --------- ---------
Interest Charges:
Interest on long-term debt 24,395 26,566 74,162 80,110
Other interest - net 1,211 906 3,498 4,646
Distributions on preferred securities of subsidiary 652 - 652 -
Allowance for borrowed funds used
during construction (522) (494) (1,821) (1,667)
--------- --------- --------- ---------
Total 25,736 26,978 76,491 83,089
--------- --------- --------- ---------
Income before the Cumulative Effect of
Accounting Change 70,791 73,963 145,771 132,521
Cumulative Effect of Accounting
Change (net of income taxes) - - - 35,415
--------- --------- --------- ---------
Net Income 70,791 73,963 145,771 167,936
Preferred Stock Dividend Requirements
and Other 4,359 4,511 13,243 13,617
--------- --------- --------- ---------
Earnings Applicable to Common Stock $66,432 $69,452 $132,528 $154,319
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ---------
(In Thousands)
Operating Activities:
Net income $145,771 $167,936
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (35,415)
Change in rate deferrals/excess capacity-net 104,544 93,740
Depreciation, amortization, and decommissioning 123,928 121,557
Deferred income taxes and investment tax credits (50,194) (38,002)
Allowance for equity funds used during construction (3,026) (2,376)
Changes in working capital:
Receivables (37,379) (82,496)
Fuel inventory 427 (32,524)
Accounts payable (13,901) 34,625
Taxes accrued 54,444 51,147
Interest accrued (1,418) 253
Other working capital accounts 25,140 (17,191)
Decommissioning trust contributions (11,831) (10,563)
Provision for estimated losses and reserves 4,069 4,423
Other 3,633 26,994
--------- ---------
Net cash flow provided by operating activities 344,207 282,108
--------- ---------
Investing Activities:
Construction expenditures (102,709) (117,203)
Allowance for equity funds used during construction 3,026 2,376
Nuclear fuel purchases (26,064) (41,843)
Proceeds from sale/leaseback of nuclear fuel 25,437 41,832
--------- ---------
Net cash flow used in investing activities (100,310) (114,838)
--------- ---------
Financing Activities:
Proceeds from issuance of first mortgage bonds 84,256 -
Proceeds from issuance of preferred securities of subsidiary trust 58,168 -
Retirement of first mortgage bonds (112,807) (25,800)
Redemption of preferred stock (4,000) (7,000)
Changes in short-term borrowings - net - (34,000)
Dividends paid:
Common stock (66,600) (83,600)
Preferred stock (13,342) (13,833)
--------- ---------
Net cash flow used in financing activities (54,325) (164,233)
--------- ---------
Net increase in cash and cash equivalents 189,572 3,037
Cash and cash equivalents at beginning of period 11,798 80,756
--------- ---------
Cash and cash equivalents at end of period $201,370 $83,793
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized 69,503 74,689
Income taxes 77,041 55,710
Noncash investing and financing activities:
Capital lease obligations incurred 16,358 -
Change in unrealized appreciation/depreciation of
decommissioning trust assets (8,645) 6,811
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $4,526,314 $4,438,519
Property under capital leases 59,496 48,968
Construction work in progress 95,417 119,874
Nuclear fuel under capital lease 87,696 98,691
---------- ----------
Total 4,768,923 4,706,052
Less - accumulated depreciation and amortization 1,937,335 1,846,112
---------- ----------
Utility plant - net 2,831,588 2,859,940
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 11,169 11,122
Decommissioning trust fund 179,624 166,832
Other - at cost (less accumulated depreciation) 5,017 5,085
---------- ----------
Total 195,810 183,039
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 19,856 7,780
Temporary cash investments - at cost,
which approximates market:
Associated companies 32,028 908
Other 88,662 3,110
Special deposits 60,824 -
---------- ----------
Total cash and cash equivalents 201,370 11,798
Accounts receivable:
Customer (less allowance for doubtful accounts
of $2.1 million in 1996 and 1995) 92,599 75,445
Associated companies 45,466 40,577
Other 7,288 6,962
Accrued unbilled revenues 108,566 93,556
Fuel inventory - at average cost 57,029 57,456
Materials and supplies - at average cost 74,112 75,030
Rate deferrals 147,765 131,634
Deferred excess capacity 8,822 11,088
Deferred nuclear refueling outage costs 14,009 32,824
Prepayments and other 7,620 15,215
---------- ----------
Total 764,646 551,585
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 113,534 228,390
Deferred excess capacity 2,431 5,984
SFAS 109 regulatory asset - net 231,155 219,906
Unamortized loss on reacquired debt 57,556 58,684
Other regulatory assets 73,655 68,160
Other 31,671 28,727
---------- ----------
Total 510,002 609,851
---------- ----------
TOTAL $4,302,046 $4,204,415
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(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 $470 $470
Paid-in capital 590,794 590,844
Retained earnings 558,314 492,386
---------- ----------
Total common shareholder's equity 1,149,578 1,083,700
Preferred stock:
Without sinking fund 176,350 176,350
With sinking fund 45,027 49,027
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 60,000 -
Long-term debt 1,256,206 1,281,203
---------- ----------
Total 2,687,161 2,590,280
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 94,431 93,574
Other 75,043 67,444
---------- ----------
Total 169,474 161,018
---------- ----------
Current Liabilities:
Currently maturing long-term debt 32,150 28,700
Notes payable 667 667
Accounts payable:
Associated companies 58,389 42,156
Other 90,116 120,250
Customer deposits 20,846 18,594
Taxes accrued 94,603 40,159
Accumulated deferred income taxes 60,606 48,992
Interest accrued 28,822 30,240
Dividends declared 4,359 4,458
Co-owner advances 32,013 34,450
Deferred fuel cost 16,106 17,837
Obligations under capital leases 52,747 54,697
Other 25,966 26,238
---------- ----------
Total 517,390 467,438
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 776,534 823,471
Accumulated deferred investment tax credits 109,431 112,890
Other 42,056 49,318
---------- ----------
Total 928,021 985,679
---------- ----------
Commitments and Contingencies (Note 1)
TOTAL $4,302,046 $4,204,415
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY ARKANSAS, INC.
SELECTED OPERATING RESULTS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 187.0 $ 200.1 ($13.1) (7)
Commercial 102.4 103.3 (0.9) (1)
Industrial 109.6 111.4 (1.8) (2)
Governmental 5.0 5.1 (0.1) (2)
------- ------- -----
Total retail 404.0 419.9 (15.9) (4)
Sales for resale
Associated companies 68.9 52.1 16.8 32
Non-associated companies 60.7 60.8 (0.1) -
Other (4.3) (2.3) (2.0) 87
------- ------- -----
Total $ 529.3 $ 530.5 ($1.2) -
======= ======= =====
Billed Electric Energy
Sales (Millions of KWh):
Residential 1,971 2,092 (121) (6)
Commercial 1,353 1,359 (6) -
Industrial 1,759 1,752 7 -
Governmental 66 70 (4) (6)
------- ------- -----
Total retail 5,149 5,273 (124) (2)
Sales for resale
Associated companies 2,855 2,484 371 15
Non-associated companies 1,726 1,661 65 4
------- ------- -----
Total 9,730 9,418 312 3
======= ======= =====
Nine Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 437.4 $ 433.3 $ 4.1 1
Commercial 250.4 245.5 4.9 2
Industrial 274.6 273.9 0.7 -
Governmental 13.2 13.1 0.1 1
--------- --------- ------
Total retail 975.6 965.8 9.8 1
Sales for resale
Associated companies 204.2 132.4 71.8 54
Non-associated companies 167.6 139.9 27.7 20
Other 32.9 44.1 (11.2) (25)
--------- --------- ------
Total $ 1,380.3 $ 1,282.2 $ 98.1 8
========= ========= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 4,816 4,668 148 3
Commercial 3,387 3,282 105 3
Industrial 4,850 4,706 144 3
Governmental 180 189 (9) (5)
--------- --------- ------
Total retail 13,233 12,845 388 3
Sales for resale
Associated companies 8,622 6,239 2,383 38
Non-associated companies 5,434 3,860 1,574 41
--------- --------- ------
Total 27,289 22,944 4,345 19
========= ========= ======
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased for the three months ended September 30,
1996, primarily due to the reversal of an accrual for the Cajun-River
Bend litigation. In September 1994, Entergy Gulf States recorded a
reserve for the anticipated costs of the Cajun-River Bend litigation.
Based on the Bankruptcy Court's approval of the settlement (refer to
Note 1), the litigation accrual was reversed resulting in miscellaneous
income. Excluding the effects of the reversal of the litigation
reserve, net income for the three months ended September 30, 1996
would have decreased approximately 11% due to an increase in other
operation and maintenance expenses and other interest expense.
Net income decreased for the nine months ended September 30,
1996, due to the $174 million net of tax write-off of River Bend rate
deferrals required by the adoption of SFAS 121. Excluding the write-
off and the third quarter reversal of the Cajun-River Bend
litigation accrual, net income for the nine months ended September
30, 1996, would have increased due to reduced other operation and
maintenance expenses.
Significant factors affecting the results of operations and
causing variances between the three months and nine months ended
September 30, 1996, and 1995 are discussed under "Revenues and
Sales," "Expenses," and "Other" below.
Revenues and Sales
The changes in electric operating revenues for the three months
and nine months ended September 30, 1996, are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base revenues $(11.2) $(30.4)
Fuel cost recovery 44.1 135.4
Sales volume/weather 13.8 60.2
Other revenue (including unbilled) 4.0 (8.3)
Sales for resale (3.6) (21.3)
----- ------
Total $47.1 $135.6
===== ======
Electric operating revenues increased for the three months and
nine months ended September 30, 1996, as a result of higher fuel
adjustment revenues, which do not affect net income, increased number
of customers, and increased customer usage. These increases were
partially offset by a rate reduction ordered for Texas in 1995 and
lower sales for resale to associated companies, due to changing
generation availability and requirements among the operating
companies.
Gas operating revenues and steam operating revenues increased
for the three months and nine months ended September 30, 1996,
primarily due to higher fuel prices and increased usage.
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Expenses
Operating expenses increased for the three months and nine
months ended September 30, 1996, as a result of higher fuel expenses,
including purchased power, and higher income taxes. Fuel and
purchased power expenses, taken together, increased because of higher
gas prices. In addition, increased energy requirements resulting from
higher energy sales contributed to the increase in fuel and purchased
power for the nine months ended September 30, 1996. Income taxes
increased primarily due to higher pre-tax income, excluding the net
effect of the write-off of River Bend rate deferrals discussed below.
For the three months ended September 30, 1996, other operation and
maintenance expenses increased as a result of increased litigation
reserves and higher lease expenses relating to computer equipment.
These increases were partially offset by lower payroll-related
expenses due to employee attrition. Other operation and maintenance
expenses decreased for the nine months ended September 30, 1996,
principally due to lower payroll-related expenses associated with
restructuring programs recorded in 1995.
Other interest charges increased for the three months and nine
months ended September 30, 1996 due to interest charges recorded in
connection with a fuel cost refund.
Other
Other income increased for the three months ended September 30,
1996, due to the reversal of the Cajun-River Bend litigation accrual,
as discussed above.
Other income decreased for the nine months ended September 30,
1996, primarily due to the write-off of River Bend rate deferrals
pursuant to the adoption of SFAS 121, which became effective January
1, 1996. See Note 8 for further discussion. This decrease was
partially offset by the reversal of the Cajun-River Bend litigation
accrual, as discussed above.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF INCOME (LOSS)
For the Three and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
1996 1995 1996 1995
--------- --------- ----------- -----------
(In Thousands)
Operating Revenues:
Electric $572,040 $524,982 $1,501,707 $1,366,070
Natural gas 4,946 3,210 26,685 17,654
Steam products 15,144 12,095 45,936 35,518
--------- --------- ----------- -----------
Total 592,130 540,287 1,574,328 1,419,242
--------- --------- ----------- -----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 171,451 149,535 413,917 391,364
Purchased power 68,619 44,798 223,213 123,273
Nuclear refueling outage expenses 1,132 2,580 6,064 8,354
Other operation and maintenance 102,333 95,042 296,805 304,918
Depreciation, amortization, and decommissioning 51,417 50,606 154,172 151,337
Taxes other than income taxes 26,837 26,951 78,376 77,082
Income taxes 44,582 40,737 85,435 63,715
Amortization of rate deferrals 18,319 16,507 54,281 49,519
--------- --------- ----------- -----------
Total 484,690 426,756 1,312,263 1,169,562
--------- --------- ----------- -----------
Operating Income 107,440 113,531 262,065 249,680
--------- --------- --------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 705 253 1,937 770
Write-off of River Bend rate deferrals - - (194,498) -
Miscellaneous - net 55,140 6,213 65,770 17,823
Income taxes (17,988) (2,110) (1,277) (5,139)
--------- --------- --------- ---------
Total 37,857 4,356 (128,068) 13,454
--------- --------- --------- ---------
Interest Charges:
Interest on long-term debt 44,583 47,426 137,547 144,053
Other interest - net 10,349 2,588 12,258 4,681
Allowance for borrowed funds used
during construction (600) (239) (1,656) (700)
--------- --------- --------- ---------
Total 54,332 49,775 148,149 148,034
--------- --------- --------- ---------
Net Income (Loss) 90,965 68,112 (14,152) 115,100
Preferred and Preference Stock
Dividend Requirements and Other 7,212 7,341 21,497 22,357
--------- --------- --------- ---------
Earnings (Loss) Applicable to Common Stock $83,753 $60,771 ($35,649) $92,743
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ---------
(In Thousands)
Net income (loss) ($14,152) $115,100
Noncash items included in net income (loss):
Write-off of River Bend rate deferrals 194,498 -
Change in rate deferrals 54,281 49,519
Depreciation, amortization, and decommissioning 154,172 151,337
Deferred income taxes and investment tax credits 86,063 69,060
Allowance for equity funds used during construction (1,937) (770)
Changes in working capital:
Receivables (24,352) 41,808
Fuel inventory (11,734) (3,598)
Accounts payable (35,908) (21,476)
Taxes accrued 12,664 35,701
Interest accrued 3,591 4,254
Reserve for rate refund - (51,268)
Other working capital accounts (123,596) (53,032)
Decommissioning trust contributions (4,442) (2,959)
Provision for estimated losses and reserves (3,085) 7,417
Other (22,663) 3,174
--------- ---------
Net cash flow provided by operating activities 263,400 344,267
--------- ---------
Investing Activities:
Construction expenditures (122,349) (112,237)
Allowance for equity funds used during construction 1,937 770
Nuclear fuel purchases (22,193) -
Proceeds from sale/leaseback of nuclear fuel 23,592 -
--------- ---------
Net cash flow used in investing activities (119,013) (111,467)
--------- ---------
Financing Activities:
Proceeds from the issuance of long-term debt 780 2,277
Retirement of:
First mortgage bonds (79,234) -
Other long-term debt (50,425) (50,425)
Redemption of preferred and preference stock (10,179) (4,850)
Dividends paid on preferred and preference stock (21,328) (22,208)
--------- ---------
Net cash flow used in financing activities (160,386) (75,206)
--------- ---------
Net increase (decrease) in cash and cash equivalents (15,999) 157,594
Cash and cash equivalents at beginning of period 234,604 104,644
--------- ---------
Cash and cash equivalents at end of period $218,605 $262,238
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized 128,496 136,526
Income taxes 80 288
Noncash investing and financing activities:
Change in unrealized appreciation (depreciation) of
decommissioning trust assets (765) 1,738
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $7,037,184 $6,942,983
Natural gas 45,435 45,789
Steam products 79,701 77,551
Property under capital leases 74,384 77,918
Construction work in progress 166,053 148,043
Nuclear fuel under capital lease 53,737 69,853
---------- ----------
Total 7,456,494 7,362,137
Less - accumulated depreciation and amortization 2,802,750 2,664,943
---------- ----------
Utility plant - net 4,653,744 4,697,194
---------- ----------
Other Property and Investments:
Decommissioning trust fund 37,753 32,943
Other - at cost (less accumulated depreciation) 26,804 28,626
---------- ----------
Total 64,557 61,569
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 22,504 13,751
Temporary cash investments - at cost,
which approximates market:
Associated companies 47,980 46,336
Other 148,121 174,517
---------- ----------
Total cash and cash equivalents 218,605 234,604
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1.6 million in 1996 and 1995) 121,376 110,187
Associated companies 1,158 1,395
Other 21,442 15,497
Accrued unbilled revenues 80,836 73,381
Deferred fuel costs 84,692 31,154
Accumulated deferred income taxes 58,324 43,465
Fuel inventory - at average cost 43,875 32,141
Materials and supplies - at average cost 90,117 91,288
Rate deferrals 103,498 97,164
Prepayments and other 23,215 15,566
---------- ----------
Total 847,138 745,842
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 146,522 419,904
SFAS 109 regulatory asset - net 378,843 453,628
Unamortized loss on reacquired debt 55,570 61,233
Other regulatory assets 23,072 27,836
Long-term receivables 218,246 224,727
Other 180,883 169,125
---------- ----------
Total 1,003,136 1,356,453
---------- ----------
TOTAL $6,568,575 $6,861,058
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
100 shares $114,055 $114,055
Paid-in capital 1,152,689 1,152,505
Retained earnings 322,054 357,704
---------- ----------
Total common shareholder's equity 1,588,798 1,624,264
Preference stock 150,000 150,000
Preferred stock:
Without sinking fund 136,444 136,444
With sinking fund 77,460 87,654
Long-term debt 2,030,294 2,175,471
---------- ----------
Total 3,982,996 4,173,833
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 88,778 108,078
Other 75,904 78,245
---------- ----------
Total 164,682 186,323
---------- ----------
Current Liabilities:
Currently maturing long-term debt 160,865 145,425
Accounts payable:
Associated companies 39,146 31,349
Other 92,823 136,528
Customer deposits 24,479 21,983
Taxes accrued 50,077 37,413
Interest accrued 60,428 56,837
Nuclear refueling reserve 8,544 22,627
Obligations under capital leases 39,343 37,773
Other 34,660 86,653
---------- ----------
Total 510,365 576,588
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 1,207,996 1,177,144
Accumulated deferred investment tax credits 204,612 208,618
Deferred River Bend finance charges 39,778 58,047
Other 458,146 480,505
---------- ----------
Total 1,910,532 1,924,314
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $6,568,575 $6,861,058
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY GULF STATES, INC.
SELECTED OPERATING RESULTS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Department Operating Revenues:
Residential $ 211.4 $ 198.6 $ 12.8 6
Commercial 128.7 120.3 8.4 7
Industrial 186.7 167.3 19.4 12
Governmental 8.7 5.9 2.8 47
------- ------- ------
Total retail 535.5 492.1 43.4 9
Sales for resale
Associated companies 8.0 11.1 (3.1) (28)
Non-associated companies 21.1 21.7 (0.6) (3)
Other 7.5 0.1 7.4 -
------- ------- ------
Total Electric Department $ 572.1 $ 525.0 $ 47.1 9
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 2,751 2,697 54 2
Commercial 1,887 1,831 56 3
Industrial 4,393 4,153 240 6
Governmental 127 80 47 59
------- ------- ------
Total retail 9,158 8,761 397 5
Sales for resale
Associated companies 259 534 (275) (51)
Non-associated companies 535 722 (187) (26)
------- ------- ------
Total Electric Department 9,952 10,017 (65) (1)
Steam Department 514 459 55 12
------- ------- ------
Total 10,466 10,476 (10) -
======= ======= ======
Nine Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Department Operating Revenues:
Residential $ 488.0 $ 447.7 $ 40.3 9
Commercial 340.5 311.9 28.6 9
Industrial 524.3 454.8 69.5 15
Governmental 23.5 18.3 5.2 28
-------- --------- -------
Total retail 1,376.3 1,232.7 143.6 12
Sales for resale
Associated companies 13.6 43.9 (30.3) (69)
Non-associated companies 61.3 52.3 9.0 17
Other 50.5 37.2 13.3 36
--------- --------- -------
Total Electric Department $ 1,501.7 $ 1,366.1 $ 135.6 10
========= ========= =======
Billed Electric Energy
Sales (Millions of KWh):
Residential 6,396 6,012 384 6
Commercial 4,905 4,680 225 5
Industrial 12,457 11,500 957 8
Governmental 329 231 98 42
-------- --------- -------
Total retail 24,087 22,423 1,664 7
Sales for resale
Associated companies 399 2,092 (1,693) (81)
Non-associated companies 1,714 1,744 (30) (2)
-------- --------- -------
Total Electric Department 26,200 26,259 (59) -
Steam Department 1,367 1,308 59 5
-------- --------- -------
Total 27,567 27,567 - -
======== ========= =======
<PAGE>
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the three months ended September 30,
1996, primarily due to an increase in other operation and maintenance
expenses and lower retail base revenues, which were partially offset
by a decrease in income tax expense.
Net income decreased for the nine months ended September 30,
1996, as the result of a decrease in retail base revenues, partially
offset by decreases in income taxes and interest on long-term debt.
Significant factors affecting the results of operations and
causing variances between the three months and nine months ended
September 30, 1996, and 1995 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
The changes in electric operating revenues for the three months
and nine months ended September 30, 1996, are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base revenues $(10.7) $(29.2)
Fuel cost recovery 39.2 144.9
Sales volume/weather (3.7) 19.2
Other revenue (including unbilled) (1.2) (.9)
Sales for resale (3.8) 1.4
----- ------
Total $19.8 $135.4
===== ======
Electric operating revenues increased for the three months and
nine months ended September 30, 1996, primarily due to higher fuel
adjustment revenues, which do not affect net income, and, for the
nine months ended period, higher retail sales, partially offset by a
decrease in rates. Colder weather in the first three months of 1996
contributed to the increase in retail sales for the nine months ended
September 30, 1996. Base rate reductions ordered in the second
quarters of 1995 and 1996 and a settlement of related issues during
the fourth quarter of 1995 partially offset the effect of these
increases.
Expenses
Operating expenses increased for the three months and nine
months ended September 30, 1996, due primarily to increases in fuel
and purchased power expenses, higher other operation and maintenance
expenses and higher taxes other than income taxes. These increases
were partially offset by the recording of rate deferrals in 1996, as
discussed below. The increase in fuel and purchased power expenses
for the three months ended September 30, 1996, is primarily the
result of higher gas costs, while the increase in those expenses for
the nine months ended September 30, 1996, is due to both higher gas
costs and increased energy sales. See discussion in "Revenues and
Sales" above. Taxes other than income taxes increased for the three
months and nine months ended September 30, 1996, largely as a result
of the expiration of Waterford 3's local property tax exemption in
December 1995. This increase was offset for the first six months of
1996 by the recording of the LPSC-approved rate deferral for these
taxes as discussed in Note 2. Other operation and maintenance
expenses increased due to expenses related to a forced maintenance
outage at Waterford 3 and an increase in litigation reserves. Lower
pretax income resulted in decreased income tax expenses.
Interest charges on long-term debt decreased for the three and
nine months ended September 30, 1996, due to the retirement and
refinancing of higher-cost long-term debt during the current year.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands)
Operating Revenues $549,295 $529,458 $1,424,909 $1,289,495
--------- --------- --------- ---------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 125,447 116,015 316,789 227,616
Purchased power 113,676 92,944 314,613 261,417
Nuclear refueling outage expenses 3,977 4,517 11,910 13,550
Other operation and maintenance 82,838 71,348 219,515 217,617
Depreciation, amortization, and decommissioning 41,857 42,212 125,529 119,629
Taxes other than income taxes 19,001 13,133 56,981 43,181
Income taxes 46,584 56,003 101,277 104,366
Rate deferrals 607 - (10,768) -
Amortization of rate deferrals 6,137 8,118 19,683 21,664
--------- --------- --------- ---------
Total 440,124 404,290 1,155,529 1,009,040
--------- --------- --------- ---------
Operating Income 109,171 125,168 269,380 280,455
--------- --------- --------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 186 424 712 1,527
Miscellaneous - net 614 1,137 1,342 1,718
Income taxes (114) (319) (215) (307)
--------- --------- --------- ---------
Total 686 1,242 1,839 2,938
--------- --------- --------- ---------
Interest Charges:
Interest on long-term debt 30,411 32,737 92,190 97,821
Other interest - net 1,222 1,355 5,721 5,100
Distributions on preferred securities of subsidiary 1,295 - 1,295 -
Allowance for borrowed funds used
during construction (373) (501) (1,204) (1,491)
--------- --------- --------- ---------
Total 32,555 33,591 98,002 101,430
--------- --------- --------- ---------
Net Income 77,302 92,819 173,217 181,963
Preferred Stock Dividend Requirements
and Other 6,289 5,367 16,457 16,177
--------- --------- --------- ---------
Earnings Applicable to Common Stock $71,013 $87,452 $156,760 $165,786
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ---------
(In Thousands)
Operating Activities:
Net income $173,217 $181,963
Noncash items included in net income:
Change in rate deferrals 16,991 21,664
Depreciation, amortization, and decommissioning 125,291 119,629
Deferred income taxes and investment tax credits (24,518) (22,022)
Allowance for equity funds used during construction (712) (1,527)
Changes in working capital:
Receivables (50,545) (51,126)
Accounts payable (8,083) (741)
Taxes accrued 79,301 84,144
Interest accrued (10,461) (5,232)
Other working capital accounts 301 (4,885)
Decommissioning trust contributions (6,593) (3,611)
Provision for estimated Losses and reserves 6,526 (537)
Other (16,148) (9,512)
--------- ---------
Net cash flow provided by operating activities 284,567 308,207
--------- ---------
Investing Activities:
Construction expenditures (75,574) (77,319)
Allowance for equity funds used during construction 712 1,527
Nuclear fuel purchases - (45,493)
Proceeds from sale/leaseback of nuclear fuel - 45,493
--------- ---------
Net cash flow used in investing activities (74,862) (75,792)
--------- ---------
Financing Activities:
Proceeds from the issuance of first mortgage bonds 113,994 -
Proceeds from issuance of preferred securities of subsidiary trust 67,795 -
Retirement of:
First mortgage bonds (130,000) -
Other long-term debt (233) (239)
Redemption of preferred stock (67,824) (11,254)
Changes in short-term borrowings - net (75,381) (27,154)
Dividends paid:
Common stock (100,300) (134,000)
Preferred stock (15,584) (15,896)
--------- ---------
Net cash flow used in financing activities (207,533) (188,543)
--------- ---------
Net increase in cash and cash equivalents 2,172 43,872
Cash and cash equivalents at beginning of period 34,370 28,718
--------- ---------
Cash and cash equivalents at end of period $36,542 $72,590
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized 103,434 102,574
Income taxes 81,700 63,296
Noncash investing and financing activities:
Change in unrealized appreciation (depreciation) of
decommissioning trust assets (2,077) 2,043
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $4,967,444 $4,886,898
Property under capital leases 231,121 231,121
Construction work in progress 60,623 87,567
Nuclear fuel under capital lease 47,062 72,864
Nuclear fuel 1,507 1,506
---------- ----------
Total 5,307,757 5,279,956
Less - accumulated depreciation and amortization 1,844,292 1,742,306
---------- ----------
Utility plant - net 3,463,465 3,537,650
---------- ----------
Other Property and Investments:
Nonutility property 20,060 20,060
Decommissioning trust fund 45,220 38,560
Investment in subsidiary companies - at equity 14,230 14,230
Other - 1,113
---------- ----------
Total 79,510 73,963
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 14,888 3,952
Temporary cash investments - at cost,
which approximates market:
Other 21,654 30,418
---------- ----------
Total cash and cash equivalents 36,542 34,370
Accounts receivable:
Customer (less allowance for doubtful accounts of
$1.4 million in 1996 and 1995) 118,512 72,328
Associated companies 8,488 8,033
Other 4,080 8,979
Accrued unbilled revenues 70,937 62,132
Deferred fuel costs 15,189 10,200
Accumulated deferred income taxes 4,089 -
Materials and supplies - at average cost 79,197 79,799
Rate deferrals 8,618 25,609
Deferred nuclear refueling outage costs 9,274 21,344
Prepayments and other 10,284 9,118
---------- ----------
Total 365,210 331,912
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 304,978 301,520
Unamortized loss on reacquired debt 38,574 39,474
Other regulatory assets 32,992 23,935
Other 26,729 23,069
---------- ----------
Total 403,273 387,998
---------- ----------
TOTAL $4,311,458 $4,331,523
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(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 $1,088,900 $1,088,900
Capital stock expense and other (2,659) (4,836)
Retained earnings 128,610 72,150
---------- ----------
Total common shareholder's equity 1,214,851 1,156,214
Preferred stock:
Without sinking fund 100,500 160,500
With sinking fund 92,500 100,009
Company obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 70,000 -
Long-term debt 1,373,114 1,385,171
---------- ----------
Total 2,850,965 2,801,894
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 19,062 43,362
Other 58,982 50,835
---------- ----------
Total 78,044 94,197
---------- ----------
Current Liabilities:
Currently maturing long-term debt 34,275 35,260
Notes payable:
Associated companies 1,078 61,459
Other - 15,000
Accounts payable:
Associated companies 36,805 37,494
Other 62,528 69,922
Customer deposits 58,537 56,924
Taxes accrued 97,913 18,612
Accumulated deferred income taxes - 3,366
Interest accrued 33,741 44,202
Dividends declared 3,486 5,149
Obligations under capital leases 28,000 28,000
Other 9,568 17,397
---------- ----------
Total 365,931 392,785
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 798,087 807,278
Accumulated deferred investment tax credits 141,311 145,561
Deferred interest - Waterford 3 lease obligation 20,576 23,947
Other 56,544 65,861
---------- ----------
Total 1,016,518 1,042,647
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,311,458 $4,331,523
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY LOUISIANA, INC.
SELECTED OPERATING RESULTS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 215.7 $ 214.7 $ 1.0 -
Commercial 112.5 105.8 6.7 6
Industrial 194.3 172.7 21.6 13
Governmental 9.2 8.2 1.0 12
------- ------- ------
Total retail 531.7 501.4 30.3 6
Sales for resale
Associated companies 0.1 0.6 (0.5) (83)
Non-associated companies 15.7 19.0 (3.3) (17)
Other 1.8 8.5 (6.7) (79)
------- ------- ------
Total $ 549.3 $ 529.5 $ 19.8 4
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 2,681 2,812 (131) (5)
Commercial 1,449 1,456 (7) -
Industrial 4,602 4,416 186 4
Governmental 121 114 7 6
------- ------- ------
Total retail 8,853 8,798 55 1
Sales for resale
Associated companies 2 20 (18) (90)
Non-associated companies 258 468 (210) (45)
------- ------- ------
Total 9,113 9,286 (173) (2)
======= ======= ======
Nine Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 490.9 $ 459.5 $ 31.4 7
Commercial 289.0 267.2 21.8 8
Industrial 552.4 475.1 77.3 16
Governmental 26.0 23.7 2.3 10
--------- --------- -------
Total retail 1,358.3 1,225.5 132.8 11
Sales for resale
Associated companies 0.8 1.0 (0.2) (20)
Non-associated companies 45.1 43.5 1.6 4
Other 20.7 19.5 1.2 6
--------- --------- -------
Total $ 1,424.9 $ 1,289.5 $ 135.4 11
========= ========= =======
Billed Electric Energy
Sales (Millions of KWh):
Residential 6,294 6,186 108 2
Commercial 3,697 3,634 63 2
Industrial 13,215 12,742 473 4
Governmental 346 332 14 4
--------- --------- -------
Total retail 23,552 22,894 658 3
Sales for resale
Associated companies 20 38 (18) (47)
Non-associated companies 770 1,042 (272) (26)
--------- --------- -------
Total 24,342 23,974 368 2
========= ========= =======
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income for the three months ended September 30, 1996,
remained relatively unchanged as compared to the same period in 1995.
Net income increased for the nine months ended September 30,
1996, primarily due to an increase in electric operating revenues and
a decrease in other operation and maintenance expenses, partially
offset by an increase in income tax expense.
Significant factors affecting the results of operations and
causing variances between the three months and nine months ended
September 30, 1996, and 1995 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
The changes in electric operating revenues for the three months
and nine months ended September 30, 1996, are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base revenues $(0.7) $(2.9)
Grand Gulf rate rider 4.2 17.5
Fuel cost recovery 14.4 26.0
Sales volume/weather 0.4 9.1
Other revenue (including unbilled) (3.2) (3.2)
Sales for resale 1.7 17.9
----- -----
Total $16.8 $64.4
===== =====
Electric operating revenues increased for the three months and
nine months ended September 30, 1996, due to increases in revenues
from the fuel adjustment clause and the Grand Gulf 1 rate rider,
which do not affect net income. Fuel adjustment clause revenues
increased due to higher fuel costs, as discussed below. In
connection with an annual MPSC review, in October 1995, Entergy
Mississippi's Grand Gulf 1 rate rider was adjusted upward as a result
of its undercollection of Grand Gulf 1 costs. Therefore, Grand Gulf
1 rate rider revenues for the three months and nine months ended
September 30, 1996, were greater than revenues for the same period
last year.
In addition, electric operating revenues increased for the nine
months ended September 30, 1996, due to increases in sales volume and
sales for resale. The increase in retail sales volume is primarily
attributed to more severe weather in first quarter of 1996, compared
to the same period in 1995. Sales for resale, specifically sales to
associated companies, increased primarily due to changes in the
generation requirements and availability among the operating
companies.
Expenses
Operating expenses increased for the three months and nine
months ended September 30, 1996, due to an increase in fuel,
purchased power, and rate deferral amortization. Fuel and purchased
power expenses increased as a result of higher fuel costs for the
three months ended September 30, 1996. Fuel and purchased power
expenses increased as a result of higher fuel costs and an increase
in energy sales for the nine months ended September 30, 1996. The
amortization of rate deferrals increased in accordance with the Grand
Gulf 1 related deferral plan. In addition, income taxes increased for
the nine months ended September 30, 1996, as a result of higher
pretax income.
The increase in operating expenses for the nine months ended
September 30, 1996, was partially offset by a decrease in other
operation and maintenance expenses as a result of lower payroll,
contract work, and materials and supplies expenses. Payroll expenses
decreased as a result of restructuring programs recorded in 1995.
Contract work and materials and supplies expenses decreased because
of the turbine repairs at some of Entergy Mississippi's generating
plants in 1995.
Rate deferrals reducing operating expenses in 1996 represent the
deferral of Entergy Mississippi's portion of the proposed System
Energy rate increase. See Note 2 for a further discussion.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands)
Operating Revenues $297,118 $280,339 $748,499 $684,054
--------- --------- --------- ---------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 73,838 62,932 161,664 126,871
Purchased power 66,875 55,696 202,919 183,706
Other operation and maintenance 30,702 31,815 87,179 103,970
Depreciation and amortization 10,007 9,614 30,086 28,349
Taxes other than income taxes 11,965 13,139 32,698 34,222
Income taxes 15,327 15,928 37,539 30,022
Rate deferrals (6,971) - (19,494) -
Amortization of rate deferrals 56,006 49,426 110,998 80,063
--------- --------- --------- ---------
Total 257,749 238,550 643,589 587,203
--------- --------- --------- ---------
Operating Income 39,369 41,789 104,910 96,851
--------- --------- --------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 369 235 1,012 763
Miscellaneous - net 145 413 914 1,270
Income taxes (49) (158) (350) (486)
--------- --------- --------- ---------
Total 465 490 1,576 1,547
--------- --------- --------- ---------
Interest Charges:
Interest on long-term debt 10,905 12,451 33,461 35,399
Other interest - net 1,021 806 2,895 4,064
Allowance for borrowed funds used
during construction (297) (206) (818) (645)
--------- --------- --------- ---------
Total 11,629 13,051 35,538 38,818
--------- --------- --------- ---------
Net Income 28,205 29,228 70,948 59,580
Preferred Stock Dividend Requirements
and Other 1,185 2,917 3,825 6,168
--------- --------- --------- ---------
Earnings Applicable to Common Stock $27,020 $26,311 $67,123 $53,412
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ---------
(In Thousands)
Operating Activities:
Net income $70,948 $59,580
Noncash items included in net income:
Change in rate deferrals 94,908 78,772
Depreciation and amortization 30,086 28,349
Deferred income taxes and investment tax credits (33,412) (24,436)
Allowance for equity funds used during construction (1,012) (763)
Changes in working capital:
Receivables (27,423) (29,362)
Fuel inventory 5 (3,327)
Accounts payable 3,093 24,505
Taxes accrued 17,582 24,979
Interest accrued (5,693) (3,689)
Other working capital accounts 3,856 (16,475)
Other (6,304) 1,273
--------- ---------
Net cash flow provided by operating activities 146,634 139,406
--------- ---------
Investing Activities:
Construction expenditures (63,291) (55,616)
Allowance for equity funds used during construction 1,012 763
--------- ---------
Net cash flow used in investing activities (62,279) (54,853)
--------- ---------
Financing Activities:
Proceeds from the issuance of
general and refunding mortgage bonds - 79,480
Retirement of:
General and refunding mortgage bonds (26,000) (30,000)
First mortgage bonds (25,000) (20,000)
Other long-term debt (15) (965)
Redemption of preferred stock (9,876) (15,000)
Changes in short-term borrowings - net 15,308 (30,000)
Dividends paid:
Common stock (45,400) (35,400)
Preferred stock (3,815) (4,782)
--------- ---------
Net cash flow used in financing activities (94,798) (56,667)
--------- ---------
Net increase (decrease) in cash and cash equivalents (10,443) 27,886
Cash and cash equivalents at beginning of period 16,945 9,598
--------- ---------
Cash and cash equivalents at end of period $6,502 $37,484
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized 40,296 41,304
Income taxes 48,092 27,413
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $1,606,090 $1,559,955
Construction work in progress 57,457 55,443
---------- ----------
Total 1,663,547 1,615,398
Less - accumulated depreciation and amortization 627,929 613,712
---------- ----------
Utility plant - net 1,035,618 1,001,686
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 5,531 5,531
Other 5,597 5,615
---------- ----------
Total 11,128 11,146
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 6,502 2,574
Temporary cash investments - at cost,
which approximates market:
Associated companies - 3,248
Other - 11,123
---------- ----------
Total cash and cash equivalents 6,502 16,945
Accounts receivable:
Customer (less allowance for doubtful accounts of
$1.6 million in 1996 and 1995) 62,589 46,214
Associated companies 2,354 1,134
Other 2,111 1,967
Accrued unbilled revenues 56,834 47,150
Fuel inventory - at average cost 6,676 6,681
Materials and supplies - at average cost 19,384 19,233
Rate deferrals 143,353 130,622
Prepayments and other 5,856 11,536
---------- ----------
Total 305,659 281,482
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 139,433 247,072
SFAS 109 regulatory asset - net 12,012 6,445
Unamortized loss on reacquired debt 9,467 10,105
Other regulatory assets 27,791 17,736
Other 6,472 6,311
---------- ----------
Total 195,175 287,669
---------- ----------
TOTAL $1,547,580 $1,581,983
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(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 $199,326 $199,326
Capital stock expense and other (143) (218)
Retained earnings 253,186 231,463
---------- ----------
Total common shareholder's equity 452,369 430,571
Preferred stock:
Without sinking fund 57,881 57,881
With sinking fund 7,000 16,770
Long-term debt 399,008 494,404
---------- ----------
Total 916,258 999,626
---------- ----------
Other Noncurrent Liabilities 8,398 11,625
---------- ----------
Current Liabilities:
Currently maturing long-term debt 106,015 61,015
Notes payable - associated companies 15,308 -
Accounts payable:
Associated companies 26,249 24,391
Other 33,335 32,100
Customer deposits 25,983 24,339
Taxes accrued 46,221 28,639
Accumulated deferred income taxes 58,959 54,090
Interest accrued 16,141 21,834
Other 3,361 6,875
---------- ----------
Total 331,572 253,283
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 248,970 278,581
Accumulated deferred investment tax credits 25,799 27,978
Other 16,583 10,890
---------- ----------
Total 291,352 317,449
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $1,547,580 $1,581,983
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY MISSISSIPPI, INC.
SELECTED OPERATING RESULTS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 127.4 $ 121.5 $ 5.9 5
Commercial 86.3 78.8 7.5 10
Industrial 51.2 46.2 5.0 11
Governmental 8.2 7.2 1.0 14
------- ------- ------
Total retail 273.1 253.7 19.4 8
Sales for resale
Associated companies 18.5 15.1 3.4 23
Non-associated companies 6.5 8.3 (1.8) (22)
Other (1.0) 3.2 (4.2) (131)
------- ------- ------
Total $ 297.1 $ 280.3 $ 16.8 6
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 1,479 1,524 (45) (3)
Commercial 1,076 1,043 33 3
Industrial 831 792 39 5
Governmental 100 94 6 6
------- ------- ------
Total retail 3,486 3,453 33 1
Sales for resale
Associated companies 502 512 (10) (2)
Non-associated companies 149 278 (129) (46)
------- ------- ------
Total 4,137 4,243 (106) (2)
======= ======= ======
Nine Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 287.6 $ 263.1 $ 24.5 9
Commercial 215.3 197.7 17.6 9
Industrial 136.0 130.1 5.9 5
Governmental 22.3 20.5 1.8 9
------- ------- ------
Total retail 661.2 611.4 49.8 8
Sales for resale
Associated companies 45.2 27.6 17.6 64
Non-associated companies 18.2 17.9 0.3 2
Other 23.9 27.2 (3.3) (12)
------- ------- ------
Total $ 748.5 $ 684.1 $ 64.4 9
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 3,506 3,341 165 5
Commercial 2,684 2,561 123 5
Industrial 2,260 2,256 4 -
Governmental 263 252 11 4
------- ------- ------
Total retail 8,713 8,410 303 4
Sales for resale
Associated companies 1,073 771 302 39
Non-associated companies 433 594 (161) (27)
------- ------- ------
Total 10,219 9,775 444 5
======= ======= ======
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the three months ended September 30,
1996, due primarily to the write-off of previously recorded rate
deferrals associated with least cost planning charges, and decreased
other income, partially offset by a decrease in other operation and
maintenance expenses.
Net income increased for the nine months ended September 30,
1996, as a result of higher gas sales and lower other operation and
maintenance expenses.
Significant factors affecting the results of operations and
causing variances between the three months and nine months ended
September 30, 1996, and 1995 are discussed under "Revenues and
Sales," "Expenses," and "Other" below.
Revenues and Sales
The changes in electric operating revenues for the three months
and nine months ended September 30, 1996, are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base revenues $(1.5) $(4.8)
Fuel cost recovery 7.8 21.7
Sales volume/weather (3.3) (3.5)
Other revenue (including unbilled) (1.0) (2.8)
Sales for resale (0.8) 1.3
---- -----
Total $1.2 $11.9
==== =====
Electric operating revenues increased for the three months and
nine months ended September 30, 1996, mainly due to an increase in
fuel adjustment revenues, caused by higher fuel prices, which do not
affect net income. This increase was partially offset by lower
industrial sales due to a significant reduction in electricity usage
by a large customer.
For the three and nine months ended September 30, 1996, gas
operating revenues increased due to higher gas prices. In addition,
increased gas sales contributed to the increase in revenues for the
nine months ended September 30, 1996, as a result of more severe
weather in the first quarter of 1996.
Expenses
Operating expenses increased for the three months ended
September 30, 1996, as a result of higher fuel expenses, including
purchased power and gas purchased for resale, and the reversal of
rate deferrals recorded previously, partially offset by lower other
operation and maintenance expenses. Fuel-related expenses increased
due to significantly higher gas prices. Rate deferrals recorded in
connection with the deferral of least cost planning charges in the
amount of $4.4 million were written off in the third quarter,
contributing to the increase in operating expenses. Other operation
and maintenance expenses decreased because of decreased transmission
maintenance and lower regulatory commission expenses in 1996 compared
to the same period in 1995.
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Operating expenses increased for the nine months ended September
30, 1996, as a result of higher fuel expenses, including purchased
power and gas purchased for resale, partially offset by the recording
of rate deferrals and the reduced amortization of previous deferrals
in 1996. Fuel expenses increased due to significantly higher gas
prices. Gas purchased for resale increased as a result of higher gas
sales and a higher unit purchase price. The rate deferrals recorded
represent 50% of Entergy New Orleans' portion of the proposed System
Energy rate increase (see Note 2). In addition, lower other operation
and maintenance expenses, principally due to lower payroll expenses
as a result of restructuring, partially offset the increase.
Other
Other income decreased for the three and nine months ended
September 30, 1996 due to the write-off of transmission substation
equipment.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands)
Operating Revenues:
Electric $136,018 $134,855 $322,010 $310,065
Natural gas 14,919 11,865 79,644 58,207
--------- --------- --------- ---------
Total 150,937 146,720 401,654 368,272
--------- --------- --------- ---------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 37,080 29,649 110,100 75,088
Purchased power 44,904 40,850 124,945 114,777
Other operation and maintenance 16,404 22,409 51,893 56,324
Depreciation and amortization 4,931 4,898 14,913 14,512
Taxes other than income taxes 7,445 7,425 21,065 21,259
Income taxes 8,893 9,915 18,174 18,110
Rate deferrals 2,597 - (4,580) -
Amortization of rate deferrals 9,257 10,489 19,639 23,754
--------- --------- --------- ---------
Total 131,511 125,635 356,149 323,824
--------- --------- --------- ---------
Operating Income 19,426 21,085 45,505 44,448
--------- --------- --------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 79 43 234 104
Miscellaneous - net (652) 504 410 993
Income taxes 236 (194) (173) (382)
--------- --------- --------- ---------
Total (337) 353 471 715
--------- --------- --------- ---------
Interest Charges:
Interest on long-term debt 3,632 4,023 11,644 11,896
Other interest - net 298 588 900 1,555
Allowance for borrowed funds used
during construction (62) (35) (184) (83)
--------- --------- --------- ---------
Total 3,868 4,576 12,360 13,368
--------- --------- --------- ---------
Net Income 15,221 16,862 33,616 31,795
Preferred Stock Dividend Requirements
and Other 241 318 723 1,035
--------- --------- --------- ---------
Earnings Applicable to Common Stock $14,980 $16,544 $32,893 $30,760
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ---------
(In Thousands)
Operating Activities:
Net income $33,616 $31,795
Noncash items included in net income:
Change in rate deferrals 27,189 23,211
Depreciation and amortization 14,913 14,512
Deferred income taxes and investment tax credits (2,269) (5,853)
Allowance for equity funds used during construction (234) (104)
Changes in working capital:
Receivables (11,732) (20,681)
Accounts payable (8,004) 14,100
Taxes accrued 2,243 11,525
Interest accrued (1,902) (279)
Income tax refund - 20,172
Other working capital accounts (16,611) (4,328)
Other (10,241) (13,380)
--------- ---------
Net cash flow provided by operating activities 26,968 70,690
--------- ---------
Investing Activities:
Construction expenditures (22,009) (14,637)
Allowance for equity funds used during construction 234 104
--------- ---------
Net cash flow used in investing activities (21,775) (14,533)
--------- ---------
Financing Activities:
Proceeds from the issuance of general and refunding mortgage bonds 39,608 29,805
Retirement of:
First mortgage bonds (23,250) -
General and refunding mortgage bonds (30,000) (24,200)
Redemption of preferred stock - (1,500)
Dividends paid:
Common stock (34,000) (14,100)
Preferred stock (724) (1,046)
--------- ---------
Net cash flow used in financing activities (48,366) (11,041)
--------- ---------
Net increase (decrease) in cash and cash equivalents (43,173) 45,116
Cash and cash equivalents at beginning of period 49,746 8,031
--------- ---------
Cash and cash equivalents at end of period $6,573 $53,147
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized 13,875 13,173
Income taxes (refund) - net 18,752 (6,469)
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEET
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $499,400 $483,581
Natural gas 122,701 121,083
Construction work in progress 16,971 17,525
-------- --------
Total 639,072 622,189
Less - accumulated depreciation and amortization 343,979 335,021
-------- --------
Utility plant - net 295,093 287,168
-------- --------
Other Property and Investments:
Investment in subsidiary companies - at equity 3,259 3,259
-------- --------
Current Assets:
Cash and cash equivalents:
Cash 2,609 1,693
Temporary cash investments - at cost,
which approximates market:
Associated companies 1,052 10,860
Other 2,912 37,193
-------- --------
Total cash and cash equivalents 6,573 49,746
Accounts receivable:
Customer (less allowance for doubtful accounts of
$0.5 million and $0.8 million in 1996 and 1995) 39,694 29,168
Associated companies 59 551
Other 1,876 843
Accrued unbilled revenues 17,907 17,242
Deferred electric fuel and resale gas costs 5,942 2,647
Materials and supplies - at average cost 10,141 8,950
Rate deferrals 37,583 35,191
Prepayments and other 8,012 4,529
-------- --------
Total 127,787 148,867
-------- --------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 108,335 137,916
SFAS 109 regulatory asset-net 8,601 6,813
Unamortized loss on reacquired debt 1,712 1,932
Other regulatory assets 13,443 9,204
Other 777 1,047
-------- --------
Total 132,868 156,912
-------- --------
TOTAL $559,007 $596,206
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(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 $33,744 $33,744
Paid-in capital 36,294 36,306
Retained earnings subsequent to the elimination of
the accumulated deficit on November 30, 1988 80,153 81,261
-------- --------
Total common shareholder's equity 150,191 151,311
Preferred stock without sinking fund 19,780 19,780
Long-term debt 168,871 155,958
-------- --------
Total 338,842 327,049
-------- --------
Other Noncurrent Liabilities 15,759 17,745
-------- --------
Current Liabilities:
Currently maturing long-term debt 12,000 38,250
Accounts payable:
Associated companies 19,472 13,851
Other 11,049 24,674
Customer deposits 18,724 18,214
Accumulated deferred income taxes 16,046 9,174
Taxes accrued 7,797 5,554
Interest accrued 3,209 5,111
Other 5,193 14,345
-------- --------
Total 93,490 129,173
-------- --------
Deferred Credits:
Accumulated deferred income taxes 74,821 81,654
Accumulated deferred investment tax credits 8,142 8,618
Other 27,953 31,967
-------- --------
Total 110,916 122,239
-------- --------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $559,007 $596,206
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY NEW ORLEANS, INC.
SELECTED OPERATING RESULTS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 59.1 $ 58.9 $ 0.2 -
Commercial 43.8 43.2 0.6 1
Industrial 6.8 6.7 0.1 1
Governmental 17.4 16.2 1.2 7
------- ------- -----
Total retail 127.1 125.0 2.1 2
Sales for resale
Associated companies 0.2 0.1 0.1 100
Non-associated companies 2.6 3.5 (0.9) (26)
Other 6.1 6.2 (0.1) (2)
------- ------- -----
Total $ 136.0 $ 134.8 $ 1.2 1
======= ======= =====
Billed Electric Energy
Sales (Millions of KWh):
Residential 749 798 (49) (6)
Commercial 612 621 (9) (1)
Industrial 131 144 (13) (9)
Governmental 290 286 4 1
------- ------- -----
Total retail 1,782 1,849 (67) (4)
Sales for resale
Associated companies 5 3 2 67
Non-associated companies 52 107 (55) (51)
------- ------- -----
Total 1,839 1,959 (120) (6)
======= ======= =====
Nine Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 120.2 $ 111.7 $ 8.5 8
Commercial 113.1 111.1 2.0 2
Industrial 18.6 17.4 1.2 7
Governmental 43.5 39.7 3.8 10
------- ------- ------
Total retail 295.4 279.9 15.5 6
Sales for resale
Associated companies 2.5 1.4 1.1 79
Non-associated companies 8.0 7.8 0.2 3
Other 16.1 21.0 (4.9) (23)
------- ------- ------
Total $ 322.0 $ 310.1 $ 11.9 4
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 1,591 1,623 (32) (2)
Commercial 1,581 1,583 (2) -
Industrial 363 413 (50) (12)
Governmental 732 744 (12) (2)
------- ------- -----
Total retail 4,267 4,363 (96) (2)
Sales for resale
Associated companies 63 71 (8) (11)
Non-associated companies 178 243 (65) (27)
------- ------- -----
Total 4,508 4,677 (169) (4)
======= ======= =====
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased slightly for the three months and nine
months ended September 30, 1996, as compared to the same period in
1995 primarily as a result of lower interest charges.
Significant factors affecting the results of operations and
causing variances between the three months and nine months ended
September 30, 1996, and 1995 are discussed under "Revenues" and
"Expenses" below.
Revenues
Operating revenues recover operating expenses, depreciation, and
capital costs attributable to Grand Gulf 1. Capital costs are
computed by allowing a return on System Energy's common equity funds
allocable to its net investment in Grand Gulf 1 and adding to such
amount System Energy's effective interest cost for its debt allocable
to its investment in Grand Gulf 1.
Operating revenues increased slightly for the three months and
nine months ended September 30, 1996, due primarily to an increase in
fuel and fuel-related expenses and increased depreciation,
amortization, and decommissioning expenses offset by a decrease in
nuclear refueling outage expenses as discussed under "Expenses"
below.
Expenses
Operating expenses increased for the three months and nine
months ended September 30, 1996, due to increases in fuel and fuel-
related expenses, and higher depreciation, amortization, and
decommissioning expenses. The increase in fuel and fuel-related
expenses is due to a refueling outage in 1995 which caused these
expenses to be relatively low for that period. The increase in
decommissioning costs and depreciation rates is reflected in the 1995
System Energy FERC rate increase filing, subject to refund. See Note
2 for a discussion of the proposed rate increase. These increases
were offset by a decrease in nuclear refueling outage expenses. The
decrease in nuclear refueling outage expenses was attributed to the
effect of refueling outage expenses incurred in 1995 and the absence
of a refueling outage in 1996. Other operation and maintenance
expenses increased for the three months and nine months ended
September 30, 1996, primarily due to timing differences of
maintenance expenditures between the current and prior year periods.
Interest charges decreased for the three months and nine months
ended September 30, 1996, due primarily to the refinancing of higher
cost long-term debt.
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
1996 1995 1996 1995
--------- --------- --------- ---------
(In Thousands)
Operating Revenues $154,467 $144,758 $471,260 $455,054
--------- --------- --------- ---------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 12,148 11,194 37,159 27,090
Nuclear refueling outage expenses - 4,571 - 25,857
Other operation and maintenance 28,231 21,154 76,563 70,056
Depreciation, amortization, and decommissioning 32,212 24,530 96,225 74,463
Taxes other than income taxes 6,606 6,590 20,211 20,788
Income taxes 20,618 19,056 62,502 57,775
--------- --------- --------- ---------
Total 99,815 87,095 292,660 276,029
--------- --------- --------- ---------
Operating Income 54,652 57,663 178,600 179,025
--------- --------- --------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 184 479 831 1,511
Miscellaneous - net 2,540 783 4,006 2,525
Income taxes (222) 448 (336) 1,500
--------- --------- ----------- -----------
Total 2,502 1,710 4,501 5,536
--------- --------- ----------- -----------
Interest Charges:
Interest on long-term debt 30,759 34,557 105,733 110,153
Other interest - net 1,824 1,952 6,522 6,269
Allowance for borrowed funds used
during construction (178) (502) (815) (1,594)
--------- --------- --------- ---------
Total 32,405 36,007 111,440 114,828
--------- --------- --------- ---------
Net Income $24,749 $23,366 $71,661 $69,733
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ---------
(In Thousands)
Operating Activities:
Net income $71,661 $69,733
Noncash items included in net income:
Depreciation, amortization, and decommissioning 96,225 74,463
Deferred income taxes and investment tax credits (20,929) (11,378)
Allowance for equity funds used during construction (831) (1,511)
Changes in working capital:
Receivables (16,001) (56,341)
Accounts payable 19,152 (25,063)
Taxes accrued 52,537 672
Interest accrued (6,458) (4,281)
Other working capital accounts 6,977 (23,343)
Decommissioning trust contributions (13,809) (4,055)
FERC Settlement - refund obligation (2,959) -
Provision for estimated losses and reserves 36,922 -
Other 1,260 32,303
--------- ---------
Net cash flow provided by operating activities 223,747 51,199
--------- ---------
Investing Activities:
Construction expenditures (14,316) (19,524)
Allowance for equity funds used during construction 831 1,511
Nuclear fuel purchases (44,554) (52,188)
Proceeds from sale/leaseback of nuclear fuel 43,971 52,188
--------- ---------
Net cash flow used in investing activities (14,068) (18,013)
--------- ---------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds 233,656 -
Other long-term debt 133,933 43,538
Retirement of:
First mortgage bonds (325,101) -
Other long-term debt (92,700) (45,320)
Changes in short-term borrowings - net (2,990) -
Common stock dividends paid (69,700) (69,500)
--------- ---------
Net cash flow used in financing activities (122,902) (71,282)
--------- ---------
Net increase (decrease) in cash and cash equivalents 86,777 (38,096)
Cash and cash equivalents at beginning of period 240 89,703
--------- ---------
Cash and cash equivalents at end of period $87,017 $51,607
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized 113,251 114,514
Income taxes 26,523 65,637
Noncash investing and financing activities:
Change in unrealized appreciation/depreciation of
decommissioning trust assets (973) 2,629
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
1996 1995
(In Thousands)
ASSETS
<S> <C> <C>
Utility Plant:
Electric $2,994,821 $2,977,303
Electric plant under lease 447,539 444,305
Construction work in progress 25,946 35,946
Nuclear fuel under capital lease 87,813 71,374
---------- ----------
Total 3,556,119 3,528,928
Less - accumulated depreciation and amortization 944,026 861,752
---------- ----------
Utility plant - net 2,612,093 2,667,176
---------- ----------
Other Property and Investments:
Decommissioning trust fund 55,490 40,927
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 4,719 240
Temporary cash investments - at cost,
which approximates market:
Associated companies 21,840 -
Other 60,458 -
---------- ----------
Total cash and cash equivalents 87,017 240
Accounts receivable:
Associated companies 91,040 72,458
Other 2,256 4,837
Materials and supplies - at average cost 66,997 67,661
Prepayments and other 7,304 16,050
---------- ----------
Total 254,614 161,246
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 271,196 291,181
Unamortized loss on reacquired debt 59,385 52,702
Other regulatory assets 204,704 203,731
Other 15,701 14,049
---------- ----------
Total 550,986 561,663
---------- ----------
TOTAL $3,473,183 $3,431,012
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
September 31, 1996 and December 31, 1995
(Unaudited)
1996 1995
(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 $789,350 $789,350
Paid-in capital - 7
Retained earnings 87,881 85,920
---------- ----------
Total common shareholder's equity 877,231 875,277
Long-term debt 1,418,770 1,219,917
---------- ----------
Total 2,296,001 2,095,194
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 59,963 44,107
Other 54,735 16,068
---------- ----------
Total 114,698 60,175
---------- ----------
Current Liabilities:
Currently maturing long - term debt 10,000 250,000
Notes payable-associated companies - 2,990
Accounts payable:
Associated companies 45,513 17,458
Other 10,160 19,063
Taxes accrued 125,185 72,648
Interest accrued 30,285 36,743
Obligations under capital lease 28,000 28,000
Other 1,778 4,211
---------- ----------
Total 250,921 431,113
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 560,870 602,182
Accumulated deferred investment tax credits 104,512 107,119
FERC Settlement - refund obligation 53,889 56,848
Other 92,292 78,381
---------- ----------
Total 811,563 844,530
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $3,473,183 $3,431,012
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. COMMITMENTS AND CONTINGENCIES
Cajun - River Bend (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States and Cajun, respectively, own 70% and 30%
undivided interests in River Bend (operated by Entergy Gulf States),
and 42% and 58% undivided interests in Big Cajun 2, Unit 3 (operated
by Cajun). These relationships have spawned a number of long-
standing disputes and claims between the parties. An agreement
setting forth terms for the resolution of all such disputes has been
reached by Entergy Gulf States, the Cajun bankruptcy trustee, and the
RUS, and approved by the United States District Court for the Middle
District of Louisiana (District Court) on August 26, 1996 (Cajun
Settlement). On September 6, 1996, the Committee of Unsecured
Creditors in the Cajun bankruptcy proceeding filed a Notice of Appeal
to the United States Court of Appeals for the Fifth Circuit (Fifth
Circuit), objecting that the order approving the settlement was
separate from the approval of a plan of reorganization and therefore,
improper. The Cajun Settlement is subject to this appeal and
approvals by the appropriate regulatory agencies. Management believes
that it is probable that the Cajun Settlement will ultimately be
approved and consummated.
The Cajun Settlement resolved Cajun's civil action against
Entergy Gulf States in which Cajun sought to rescind or terminate the
Joint Ownership Participation and Operating Agreement (Operating
Agreement) entered into on August 28, 1979, relating to River Bend.
In that suit, Cajun also sought to recover its alleged $1.6 billion
investment in the unit plus attorneys' fees, interest, and costs. A
trial on the portion of the suit by Cajun to rescind the Operating
Agreement was completed in March 1995. On October 24, 1995, the
District Court issued a memorandum opinion rejecting Cajun's fraud
claims and denying rescission. An appeal to the Fifth Circuit by the
Cajun bankruptcy trustee was stayed pending the Court's trial of the
breach of contract phase of the case. The Cajun Settlement resolves
both the issues on appeal and the breach of contract claims which
have not been tried.
In 1992, two member cooperatives of Cajun brought an additional
independent action to declare the Operating Agreement null and void,
based upon Entergy Gulf States failure to get prior LPSC approval
alleged to be necessary. Prior to the bankruptcy proceedings, Cajun
intervened as a plaintiff in this action. The nullity claim of Cajun
in this action is encompassed in the Cajun Settlement. Entergy Gulf
States believes the suits are without merit and believes these cases
are resolved by the Cajun Settlement.
The Cajun Settlement, agreed to in principle on April 26, 1996,
by Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS,
Cajun's largest creditor, was approved by the District Court on August 26,
1996. The terms include, but are not limited to, the following: (i)
Cajun's interest in River Bend will be turned over to the RUS, which
will have the option to retain the interest, sell it to a third
party, or transfer it to Entergy Gulf States at no cost; (ii) Cajun
will set aside a total of $125 million for its share of the
decommissioning costs of River Bend; (iii) Cajun will transfer
certain transmission assets to Entergy Gulf States; (iv) Cajun will
settle transmission disputes and be released from claims for payment
under transmission arrangements with Entergy Gulf States as discussed
under "Cajun - Transmission Service" below; (v) all funds paid by
Entergy Gulf States into the registry of the District Court will be
returned to Entergy Gulf States; (vi) Cajun will be released from its
unpaid past, present, and future liability for River Bend costs and
expenses; and (vii) all litigation between Cajun and Entergy Gulf
States will be dismissed. Based on the District Court's approval
of the Cajun Settlement, the litigation accrual established in 1994
for possible losses associated with the Cajun-River Bend litigation
was reversed in September 1996.
Cajun has not paid its full share of capital costs, operating
and maintenance expenses, and other costs for repairs and
improvements to River Bend since 1992. Cajun's unpaid portion of
River Bend operating and maintenance expenses (including nuclear
fuel) and capital costs for the nine months ended September 30, 1996,
was approximately $42.9 million. The cumulative cost to Entergy Gulf
States resulting from Cajun's failure to pay its full share of River
Bend-related costs, reduced by the proceeds from the sale by Entergy
Gulf States of Cajun's share of River Bend power, and payments into
the registry of the District Court for Entergy Gulf States' portion
of expenses for Big Cajun 2, Unit 3, was $17.0 million as of
September 30, 1996, compared with $31.1 million as of December 31,
1995. Cajun's unpaid portion of the River Bend related costs is
reflected in long-term receivables with an offsetting reserve in
other deferred credits. As discussed above, the Cajun Settlement
will conclude all disputes regarding the non-payment by Cajun
operating and maintenance expenses. Cajun continues to pay its share
of decommissioning costs for River Bend.
In its bankruptcy proceedings, Cajun filed a motion on January
10, 1995, to reject the Operating Agreement as a burdensome executory
contract. Entergy Gulf States responded on January 10, 1995, with a
memorandum opposing Cajun's motion. As discussed above, this matter
will be ended as a result of the Cajun Settlement.
On March 8, 1996, Southwestern Electric Power Company (SWEPCO),
Entergy Gulf States, and certain member cooperatives of Cajun filed
with the Bankruptcy Court a joint proposal to bring an end to the
Cajun bankruptcy proceeding. The proposal was submitted in response
to a bid procedure established by the Cajun bankruptcy trustee. On
April 19, 1996, SWEPCO, Entergy Gulf States, and certain Cajun member
cooperatives filed a separate plan of reorganization with the court
based upon their earlier proposal. On April 22, 1996, the Cajun
bankruptcy trustee filed a plan of reorganization with the Bankruptcy
Court based on the proposal of two non-affiliated companies to take
over the non-nuclear operations of Cajun. All of the plans of
reorganization submitted to the Bankruptcy Court have incorporated
the Cajun Settlement as an integral condition to the effectiveness of
their plan. The timing and completion of the reorganization plan
depends on Bankruptcy Court approval and any required regulatory
approvals.
See Note 8 of the Form 10-K for additional information regarding
the Cajun litigation, Cajun's bankruptcy proceedings, and related
filings.
Cajun - Transmission Service (Entergy Corporation and Entergy Gulf
States)
Entergy Gulf States and Cajun are parties to FERC proceedings
relating to transmission service charge disputes. As discussed
above, these disputes will end upon the implementation of the Cajun
Settlement. See Note 8 in the Form 10-K for additional information
regarding these FERC proceedings and FERC orders issued as a result
of such proceedings.
Under Entergy Gulf States' interpretation of a 1992 FERC order,
as modified by FERC's orders issued on August 3, 1995, and October 2,
1995, and as agreed to by the Cajun bankruptcy trustee, Cajun would
owe Entergy Gulf States approximately $68.8 million as of September
30, 1996. Entergy Gulf States further estimates that if it were to
prevail in its May 1992 motion for rehearing and on certain other
issues decided adversely to Entergy Gulf States in the February 1995,
August 1995, and October 1995 FERC orders, which Entergy Gulf States
has appealed, Cajun would owe Entergy Gulf States approximately
$154.1 million as of September 30, 1996. If Cajun were to prevail in
its May 1992 motion for rehearing to FERC, and if Entergy Gulf States
were not to prevail in its May 1992 motion for rehearing to FERC, and
if Cajun were to prevail in appealing FERC's August and October 1995
orders, Entergy Gulf States estimates it would owe Cajun
approximately $107.6 million as of September 30, 1996. The above
amounts are exclusive of a $7.3 million payment by Cajun on December
31, 1990, which the parties agreed to apply to the disputed
transmission service charges. Pending FERC's ruling on the May 1992
motions for rehearing, Entergy Gulf States has continued to bill
Cajun utilizing the historical billing methodology and has recorded
underpaid transmission charges, including interest, in the amount of
$142.3 million as of September 30, 1996. This amount is reflected in
long-term receivables with an offsetting reserve in other deferred
credits. FERC has determined that the collection of the pre-petition
debt of Cajun is an issue properly decided in the bankruptcy
proceeding. Refer to "Cajun - River Bend" above for a discussion of
the Cajun Settlement.
Capital Requirements and Financing (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
See Note 8 to the Form 10-K for information on the operating
companies' and System Energy's construction expenditures (excluding
nuclear fuel), and long-term debt & preferred stock maturities and
cash sinking fund requirements for the period 1996-1998.
Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs
(Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy)
See Note 8 to the Form 10-K for information on nuclear
liability, property and replacement power insurance, related NRC
regulations, the disposal of spent nuclear fuel, other high-level
radioactive waste, and decommissioning costs associated with ANO,
River Bend, Waterford 3, and Grand Gulf 1.
The SEC has questioned certain of the financial accounting
practices of the electric utility industry regarding the recognition,
measurement, and classification of decommissioning costs for nuclear
plants in the financial statements of electric utilities. In
response to these questions, the FASB has been reviewing the
accounting for decommissioning and has expanded the scope of its
review to include liabilities related to the closure and removal of
all long-lived assets. An exposure draft of the proposed SFAS (which
proposed a 1997 effective date) was issued in February 1996. The
proposed SFAS would require measurement of the liability for closure
and removal of long-lived assets (including decommissioning) based on
discounted future cash flows. Those future cash flows should be
determined by estimating current costs and adjusting for inflation,
efficiencies that may be gained from experience with similar
activities, and consideration of reasonable future advances in
technology. It would also require that changes in the
decommissioning/closure cost liability resulting from changes in
assumptions be recognized with a corresponding adjustment to the
plant asset, and depreciation should be revised prospectively. The
proposed SFAS states that the initial recognition of the
decommissioning/closure cost liability would result in an asset that
should be presented with other plant costs on the financial
statements because the cost of decommissioning/closing the plant
would be recognized as part of the total cost of the plant asset. In
addition, there would be a regulatory asset recognized on the
financial statements to the extent the initial
decommissioning/closure liability has increased due to the passage of
time, and such costs are probable of future recovery.
After receiving comments on the exposure draft, the FASB has
decided that the effective date for the proposed SFAS will be later
than 1997, although a final effective date has not yet been
announced. If current electric utility industry accounting practices
with respect to nuclear decommissioning and other closure costs are
changed, annual provisions for such costs could increase, the
estimated cost for decommissioning/closure could be recorded as a
liability rather than as accumulated depreciation, and trust fund
income from decommissioning trusts could be reported as investment
income rather than as a reduction to decommissioning expense.
ANO Matters (Entergy Corporation and Entergy Arkansas)
Cracks in certain steam generator tubes at ANO 2 were discovered
and repaired during an outage in March 1992. Further inspections and
repairs were conducted at subsequent refueling and mid-cycle outages,
including the most recent refueling outage in October 1995. During
the October 1995 inspection, additional cracks in the tubes were
discovered. ANO 2's output has been reduced by 23 megawatts due to
steam generator fouling and tube plugging. The unit may be
approaching the current limit for the number of steam generator tubes
that can be plugged with the unit in operation. If the established
limit is reached during a future outage, Entergy Operations could be
required to insert sleeves in steam generator tubes that were
previously plugged. On October 25, 1996, Entergy Corporation's Board
of Directors authorized Entergy Operations to negotiate a contract,
with appropriate cancellation provisions, for the fabrication and
replacement of the steam generator at ANO 2. Entergy estimates the
cost of fabrication and replacement of the steam generator to be
approximately $150 million. If the contract to purchase the steam
generator is not canceled, the steam generator will be installed
during a planned refueling outage in 2000. Entergy Operations
periodically meets with the NRC to discuss the results of inspections
of the steam generator tubes, as well as the timing of future
inspections.
Environmental Issues
(Entergy Arkansas)
In May 1995, Entergy Arkansas was named as a defendant in a suit
by Reynolds Metals Company (Reynolds), seeking to recover a share of
the costs associated with the clean-up of hazardous substances at a
site south of Arkadelphia, Arkansas. Reynolds alleges that it has
spent $11.2 million to clean-up the site, and that the site was
contaminated with PCBs for which Entergy Arkansas bears some
responsibility. Entergy Arkansas, voluntarily, at its expense,
completed remediation at a portion of this site and at a nearby
substation site. Entergy Arkansas believes that it has no liability
for contamination at that portion of the site that is subject to the
Reynolds suit and is contesting the lawsuit. Regardless of the
outcome, Entergy Arkansas does not believe this matter would have a
materially adverse effect on its financial condition or results of
operations. See "Environmental Regulation" in Item 1 of Part I of
the Form 10-K for additional information on the PCB contamination at
the two former Reynolds plant sites in Arkansas to which Entergy
Arkansas had supplied power.
(Entergy Gulf States)
Entergy Gulf States has been designated as a potentially
responsible party for the clean-up of certain hazardous waste
disposal sites. Entergy Gulf States is currently negotiating with the
EPA and state authorities regarding the clean-up of certain of these
sites.
Through September 30, 1996, $8.2 million has been expended on the
clean-up. As of September 30, 1996, a remaining recorded liability
of $21.5 million existed relating to the clean-up of the sites at
which Entergy Gulf States has been designated a potentially
responsible party. See "Environmental Regulation" in Item 1 of Part
I of the Form 10-K for additional discussion of the sites where
Entergy Gulf States has been designated as a potentially responsible
party by the EPA and related litigation.
(Entergy Louisiana)
During 1993, the Louisiana Department of Environmental Quality
issued new rules for solid waste regulation, including regulation of
wastewater impoundments. Entergy Louisiana has determined that
certain of its power plant waste water impoundments were affected by
these regulations and chose to upgrade or close them. A remaining
recorded liability in the amount of $8.7 million existed at September
30, 1996, for waste water upgrades and closures to be completed by
the end of 1996. Cumulative expenditures relating to the upgrades
and closures of waste water impoundments were $7.0 million as of
September 30, 1996.
(Entergy Integrated Solutions, Inc.)
In June 1996, EIS closed its Pelzer, South Carolina facility,
which had been leased from a third party since June 1995. EIS
subsequently learned that solid wastes were improperly buried on the
leased property. EIS conducted an investigation which confirmed the
presence of buried lighting ballasts on adjacent property and
disclosed the possible burial of light bulb waste containing
hazardous substances under the building on the leased property. It
appears that the material was buried prior to the time that EIS
leased the premises. A report has been provided to the EPA and to
the South Carolina Department of Health and Environmental Control.
Based on its investigation, EIS does not believe that it is liable
for costs of remediating the leased premises. Preliminary estimates
of the cost of remediation range from $600,000 to $880,000.
Waterford 3 Lease Obligations (Entergy Louisiana)
On September 28, 1989, Entergy Louisiana entered into three
transactions for the sale and leaseback of undivided interests
(aggregating approximately 9.3%) in Waterford 3. Upon the occurrence
of certain events, Entergy Louisiana may be obligated to pay amounts
sufficient to permit the Owner Participants to withdraw from the
lease transactions, and Entergy Louisiana may be required to assume
the outstanding bonds issued by the Owner Trustee to finance, in
part, its acquisition of the undivided interests in Waterford 3. See
Note 9 to the Form 10-K for further information.
Reimbursement Agreement (System Energy)
Under a bank letter of credit and reimbursement agreement,
System Energy has agreed to a number of covenants relating to the
maintenance of certain capitalization and fixed charge coverage
ratios. System Energy agreed, during the term of the agreement, to
maintain its equity at not less than 33% of its adjusted
capitalization (defined in the agreement to include certain amounts
not included in capitalization for financial statement purposes). In
addition, System Energy must maintain, with respect to each fiscal
quarter during the term of the agreement, a ratio of adjusted net
income to interest expense (calculated, in each case, as specified in
the agreement) of at least 1.60 times earnings. System Energy was in
compliance with the above covenants at September 30, 1996. See Note
8 to the Form 10-K for further information.
NOTE 2. RATE AND REGULATORY MATTERS
River Bend (Entergy Corporation and Entergy Gulf States)
In May 1988, the PUCT granted Entergy Gulf States a permanent
increase in annual revenues of $59.9 million resulting from the
inclusion in rate base of approximately $1.6 billion of company-wide
River Bend plant investment and approximately $182 million of related
Texas retail jurisdiction deferred River Bend costs (Allowed
Deferrals). In addition, the PUCT disallowed as imprudent $63.5
million of company-wide River Bend plant costs and placed in
abeyance, with no finding as to prudence, approximately $1.4 billion
of company-wide River Bend plant investment and approximately $157
million of Texas retail jurisdiction deferred River Bend operating
and carrying costs (Abeyed Deferrals).
As discussed in Note 2 to the Form 10-K, various appeals of the
PUCT's order have been filed (Rate Appeal). Entergy Gulf States
filed an appeal with the Texas Supreme Court and, on February 9,
1996, the Texas Supreme Court agreed to hear the appeal. Oral
arguments were held on March 19, 1996. The timing of a decision by
the Texas Supreme Court is not certain.
As of September 30, 1996, the River Bend plant costs disallowed
for retail ratemaking purposes in Texas and the River Bend plant
costs held in abeyance totaled (net of taxes and depreciation)
approximately $12 million and $268 million, respectively. Allowed
Deferrals were approximately $78 million, net of taxes and
amortization, as of September 30, 1996. Entergy Gulf States
estimates it has collected approximately $199 million of revenues as
of September 30, 1996, as a result of the originally ordered rate
treatment by the PUCT of these deferred costs. If recovery of the
Allowed Deferrals is not upheld, future revenues based thereon could
be lost, and no assurance can be given as to whether or not refunds
to customers of revenue received based upon such deferred costs would
be required.
During the first quarter of 1996, Entergy Gulf States wrote off
Abeyed Deferrals of $169 million, net of tax, in accordance with SFAS
121, which became effective January 1, 1996, but it has made no write-
offs or reserves for the River Bend plant-related costs. A general
remand by the Texas Supreme Court in the Rate Appeal would enable
Entergy Gulf States to seek recovery of the Abeyed Deferrals. Based
on advice from Clark, Thomas & Winters, A Professional Corporation,
legal counsel of record in the Rate Appeal, management believes that
it is reasonably possible that the case will be remanded to the PUCT
and that the PUCT will be allowed to rule on the prudence of the
abeyed River Bend plant costs. Management and legal counsel are
unable to predict the amount, if any, of abeyed and previously
disallowed River Bend plant costs that ultimately might be disallowed
by the PUCT. As of September 30, 1996, a net of tax write-off of up
to $280 million could be required if the PUCT ultimately issues an
adverse ruling on the abeyed and disallowed plant costs.
The following factors support management's position that a loss
contingency requiring accrual has not occurred, and its belief that
all, or substantially all, of the abeyed plant costs will ultimately
be recovered:
1. The $1.4 billion of abeyed River Bend plant costs have never
been ruled imprudent and disallowed by the PUCT;
2. Analysis by Sandlin Associates, which supports the prudence
of substantially all of the abeyed construction costs;
3. Historical inclusion by the PUCT of prudent construction
costs in rate base; and
4. The analysis of Entergy Gulf States' internal legal staff,
which has considerable experience in Texas rate case
litigation.
Additionally, based on advice from Clark, Thomas & Winters,
management believes that it is reasonably possible that the Allowed
Deferrals will continue to be recovered in rates, and that it is
reasonably possible that the Abeyed Deferrals will be recovered in
rates to the extent that the $1.4 billion of abeyed River Bend plant
is recovered.
Filings with the LPSC
(Entergy Corporation and Entergy Gulf States)
See Note 2 in the Form 10-K for a discussion of Entergy Gulf
States' required earnings analysis filing with the LPSC for the test
year preceding the Merger (1993). Entergy Gulf States appealed to
the Louisiana Supreme Court the 1994 LPSC order for an annual rate
reduction of $12.7 million. During the appeal, Entergy Gulf States'
preliminary injunction from the appropriate state District Court,
relating to the $8.3 million earnings effect of a 1994 change in
accounting for unbilled revenues, remained in effect. On July 2, 1996,
the Louisiana Supreme Court ruled on the appeal. The Court found that
the LPSC ruled incorrectly on the treatment of the initial balance of
unbilled revenues and the revenue annualization adjustment. As a
result, Entergy Gulf States will not be required to refund the $8.3
million. The case, which included other disputed matters, was
remanded to the LPSC for further proceedings.
On May 31, 1995, Entergy Gulf States filed its second required
post-Merger earnings analysis with the LPSC. Hearings on this review
were held in December 1995. On October 4, 1996, the LPSC issued an
order requiring a $33.3 million annual base rate reduction and a $9.6
million refund. One component of the rate reduction removes from
base rates approximately $13.4 million annually of costs that will be
recovered in the future through the fuel adjustment clause. On
October 23, 1996, Entergy Gulf States obtained an injunction to stay
this order, except insofar as the order requires the $13.4 million
reduction, which Entergy Gulf States has agreed to implement.
Entergy Gulf States plans to appeal the order to the appropriate
state District Court. In addition, the LPSC order provides for the
recovery of $6.8 million annually related to certain gas
transportation and storage facilities costs (see "LPSC Fuel Cost
Review" below).
On May 31, 1996, Entergy Gulf States filed its third required
post-Merger earnings analysis with the LPSC. Based on this earnings
filing, on June 1, 1996, a $5.3 million annual rate reduction went
into effect. Hearings on this filing are scheduled for December
1996.
(Entergy Corporation and Entergy Louisiana)
See Note 2 in the Form 10-K for a discussion of Entergy
Louisiana's performance-based formula rate plan approved in a June
1995 LPSC rate order, Entergy Louisiana's subsequent appeal of the
LPSC's order, and the final settlement of this appeal.
The property tax exemption for Waterford 3 ended in December
1995 and Entergy Louisiana will be required to pay $21.5 million in
property taxes to St. Charles Parish for the 1996 tax year. In a
March 1996 LPSC order, Entergy Louisiana was permitted to defer the
rate recovery of these taxes for the period January 1996 through June
1996. The order allowed for the recovery of the property tax and
also for the recovery, from July 1996 through June 1997, of the
related deferral. In addition, Entergy Louisiana's phase-in-plan for
Waterford 3 will expire in November 1996. Entergy Louisiana is
recovering deferred costs annually of approximately $28.4 million.
On April 15, 1996, Entergy Louisiana filed its performance based
formula rate plan for the 1995 test year with the LPSC. On June 19,
1996, the LPSC approved a $12 million annual reduction in base rates
effective July 1, 1996. This reduction was based upon the 1995 test
year results under the formula rate plan and the expiration of the
Waterford 3 phase-in-plan discussed above, partially offset by the
recovery of the property taxes on Waterford 3 and the related
deferral discussed above. Subsequently, the LPSC staff identified
cost issues which were resolved by means of a settlement conference
and increased the base rate reduction from $12 million to $16.5
million. Additionally, the LPSC has indicated that it will initiate
a review of Entergy Louisiana's allowed return on equity. Hearings
are scheduled to begin in November 1996.
Filings with the PUCT (Entergy Corporation and Entergy Gulf States)
On December 6, 1995, Entergy Gulf States filed a petition with
the PUCT for reconciliation of fuel and purchased power expenses for
the period January 1, 1994, through June 30, 1995. Entergy Gulf
States believes that there was an under-recovered fuel balance,
including interest, of $22.4 million as of June 1995. Hearings began
in September 1996, and a final action by the PUCT is not expected
until January 1997. Management is unable to predict the final
outcome of this proceeding.
In accordance with the Merger agreement, Entergy Gulf States is
required to file a rate proceeding with the PUCT in November 1996.
However, in April 1996, certain cities served by Entergy Gulf States
(Cities) instituted investigations of the reasonableness of Entergy
Gulf States' rates. In May 1996, the Cities agreed to forego their
investigation based on the assurance that any rate decrease ordered
in the November 1996 filing will be retroactive to June 1, 1996, and
accrue interest until refunded. The agreement further provides that
no base rate increase will be retroactive.
Filings with the MPSC (Entergy Corporation and Entergy Mississippi)
On March 15, 1996, Entergy Mississippi filed its annual earnings
review with the MPSC under its formula rate plan. On April 18, 1996,
the MPSC issued an order approving and adopting a joint stipulation
and placing the prospective rate reduction of $5.9 million into
effect on May 1, 1996.
Filings with the Council (Entergy Corporation and Entergy New
Orleans)
Pursuant to the 1991 NOPSI Settlement, Entergy New Orleans is
required to make earnings filings with the Council for the 1995 and
1996 rate years. A review of Entergy New Orleans' earnings for the
test year ending September 30, 1995, required Entergy New Orleans to
credit customers $6.2 million over a 12-month period which began in
March 1996.
On October 31, 1996, Entergy New Orleans filed with the Council
a recently completed analysis of its earnings for the test year ended
September 30, 1996. The analysis indicated that Entergy New Orleans'
earnings for the test period exceeded Entergy New Orleans' allowed
rate of return on common equity by $15.6 million. In accordance with
the 1991 NOPSI Settlement, Entergy New Orleans is required to lower
base rates for the following twelve months through a credit to
customers. The Council is expected to conduct hearings on this
matter in the fourth quarter. At this time, Entergy New Orleans is
unable to predict the final amount of, or ultimate method for,
implementing this rate reduction.
Hearings before the Council on the reasonableness and prudence
of Entergy New Orleans' deferred Least Cost Integrated Resource
Planning expenses for cost recovery purposes were previously
scheduled for April 1996, but have been delayed.
Proposed Rate Increase
(System Energy)
System Energy filed an application with FERC on May 12, 1995,
for a $65.5 million rate increase. The request seeks changes to
System Energy's rate schedule, including increases in the revenue
requirement associated with decommissioning costs, the depreciation
rate, and the rate of return on common equity. On December 12, 1995,
System Energy implemented a $65.5 million rate increase, subject to
refund. Management has decided to record a reserve for a portion of
the rate increase. Hearings on System Energy's request began in
January 1996 and were completed in February 1996. On July 11, 1996,
the ALJ issued an initial decision in this proceeding that agreed
with certain of System Energy's proposals, while rejecting a proposed
increase in return on common equity and recommending a slight
decrease. The ALJ also rejected the proposed change in the
decommissioning cost methodology. The decision of the ALJ is
preliminary and may be modified in the final decision from FERC which
is expected in the first quarter of 1997. Management is unable
predict the final outcome of the rate increase request or the amount
of any refunds in excess of reserves that may be required.
(Entergy Mississippi)
Entergy Mississippi's allocation of the proposed System Energy
wholesale rate increase is $21.6 million annually. In July 1995,
Entergy Mississippi filed a schedule with the MPSC that defers the
retail recovery of the System Energy rate increase. The deferral
plan, which was approved by the MPSC, began in December 1995, the
effective date of the System Energy rate increase, and will end after
the issuance of a final order by FERC. The final amount of the
deferred rate increase is to be amortized over 48 months beginning in
October 1998.
(Entergy New Orleans)
Entergy New Orleans' allocation of the proposed System Energy
wholesale rate increase is $11.1 million annually. In February 1996,
Entergy New Orleans filed a plan with the Council to defer 50% of the
amount of the System Energy rate increase. The deferral began in
February 1996 and will end after the issuance of a final order by
FERC.
LPSC Fuel Cost Review (Entergy Corporation and Entergy Gulf States)
See Note 2 to the Form 10-K, for a discussion of the LPSC's
review of Entergy Gulf States' fuel costs for the period October 1988
through September 1991 (Phase I) and Entergy Gulf States' subsequent
appeal of $13.9 million of fuel costs disallowed by the LPSC. On
April 15, 1996, the appropriate state District Court affirmed the
LPSC decision. Entergy Gulf States has appealed this decision to
the Louisiana Supreme Court. Entergy Gulf States has reached a
settlement with the LPSC on one of the components of the disallowed
fuel costs. See "October 1996 LPSC Settlement" below.
In September 1996, the LPSC completed the second phase of their
review of Entergy Gulf States' fuel costs, which review covered the
period October 1991 through December 1994 (Phase II). On October 7,
1996, the LPSC issued an order requiring a $34.2 million refund. The
ordered refund includes a disallowance of $14.3 million of capital
costs (including interest) related to certain gas transportation and
storage facilities, which were recovered through the fuel clause.
However, the LPSC order provides that Entergy Gulf States may recover
these costs in the future through base rates by establishing a
regulatory asset. As discussed above, the LPSC order in the second
post-Merger earnings analysis provides for the recovery of $6.8
million annually related to gas transportation and storage facilities
costs through base rates. On October 23, 1996, Entergy Gulf States
received an injunction to stay this order, except insofar as the
order requires the $14.3 million refund, and plans to appeal the
order to the appropriate state District Court. See "October 1996 LPSC
Settlement" below.
October 1996 LPSC Settlement (Entergy Corporation and Entergy Gulf
States)
In October 1996, Entergy Gulf States and the LPSC reached an
agreement whereby Entergy Gulf States agreed to (i) refund certain
capital costs related to gas transportation and storage facilities
that were at issue in the Phase I and Phase II fuel cost reviews and
(ii) refund similar costs recovered subsequent to the Phase II fuel
cost review. This will result in a total refund to customers of
approximately $32.1 million including interest. In the future,
Entergy Gulf States will be permitted to recover through base rates
the capital costs related to such gas transportation and storage
facilities. As a part of the settlement, which covered post-Phase II
costs of such facilities in addition to the costs addressed by the
LPSC's order for the second post-Merger earnings analysis, Entergy
Gulf States will be permitted to recover through base rates $1.3
million annually in addition to the $6.8 million annual recovery
discussed above for a total annual recovery of $8.1 million. The
settlement provides that this amount will be applied as an offset
against a refund, if any, required by a final judgment in Entergy
Gulf States' appeal of the second post-Merger earnings review order.
NOTE 3. COMMON STOCK (Entergy Corporation)
During the first nine months of 1996, Entergy Corporation issued
277,850 shares of its previously repurchased common stock, reducing
the amount held as treasury stock by $8.0 million. Entergy
Corporation issued these shares to meet the requirements of its
various stock plans. In addition, Entergy Corporation received
proceeds of $36.9 million from the issuance of 1,437,857 shares of
common stock under its new dividend reinvestment and stock purchase
plan during the three months ended September 30, 1996.
NOTE 4. LONG-TERM DEBT
(Entergy Corporation)
An Entergy Corporation subsidiary signed an agreement with
several banks on January 5, 1996, to obtain a revolving credit
facility in the aggregate amount of $1.2 billion Australian dollars
($870 million US dollars) for the acquisition of CitiPower. The
facility was partially drawn down on the same date, bears interest at
an average rate of 8.31%, and is non-recourse to Entergy Corporation.
The maturity date of the credit facility is June 30, 2000, unless
certain events occur which would cause the maturity date to be
extended to a date no later than December 31, 2000. As part of the
CitiPower acquisition, Entergy Corporation provided credit support,
in the form of a bank letter of credit and other agreements, of
approximately $77.4 million.
The subsidiary entered into several interest rate swaps to
reduce the impact of interest rate changes on its debt related to the
CitiPower acquisition. The interest rate swap agreements involve
exchanges of floating rate interest payments for fixed rate interest
payments without the exchange of the underlying notional amounts.
Market risks arise from the movements in interest rates. If the
counterparties to an interest rate swap agreement were to default on
contractual payments, the subsidiary could be exposed to increased
costs related to replacing the original agreement. However, the
subsidiary does not anticipate nonperformance by any counterparty to
any interest rate swap in effect at September 30, 1996. At September
30, 1996, this subsidiary was a party to a notional amount of $900
million Australian dollars of interest rate swaps with maturity dates
ranging from February 1999 to December 2000.
(Entergy Gulf States)
On November 1, 1996, Entergy Gulf States retired $75 million of
its 6.67% Series First Mortgage Bonds upon maturity.
(Entergy Mississippi)
On November 1, 1996, Entergy Mississippi retired $10 million of
its 6.375% Series First Mortgage Bonds upon maturity.
NOTE 5. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES
(Entergy Arkansas)
Entergy Arkansas Capital I (Trust) was established as a
financing subsidiary of Entergy Arkansas for the purpose of issuing
common and preferred securities. On August 14, 1996, the Trust
issued $60 million in aggregate liquidation preference amount of 8.5%
Cumulative Quarterly Income Preferred Securities (Preferred
Securities) in a public offering and $1.9 million of common
securities to Entergy Arkansas. The Trust used the proceeds from the
sale of the Preferred Securities and the common securities to
purchase from Entergy Arkansas 8.5% junior subordinated deferrable
interest debentures in the amount of $61.9 million (Debentures). The
Debentures held by the Trust are its only asset and the Trust will
use interest payments received on the Debentures to make cash
distributions on the Preferred Securities.
The Preferred Securities of the Trust, as well as the
Debentures, mature on September 30, 2045. The Preferred Securities
are redeemable, however, at the option of Entergy Arkansas beginning
in 2001 at 100% of their principal amount, or earlier under certain
limited circumstances, including the loss of the tax deduction
arising out of the interest paid on the Debentures. Entergy Arkansas
has, pursuant to certain agreements taken together, fully and
unconditionally guaranteed payment of distributions on the Preferred
Securities. Entergy Arkansas is the owner of all of the common
securities of the Trust, which constitute 3% of the Trust's total
capital.
Entergy Arkansas used the proceeds received from the Debentures
to redeem, on October 1, 1996, $50 million of its $0.01 par value,
$2.40 cumulative preferred stock and $10 million of its $25 par
value, 8.84% cumulative preferred stock.
(Entergy Louisiana)
Entergy Louisiana Capital I (Trust) was established as a
financing subsidiary of Entergy Louisiana for the purpose of issuing
common and preferred securities. On July 16, 1996, the Trust issued
$70 million in aggregate liquidation preference amount of 9%
Cumulative Quarterly Income Preferred Securities (Preferred
Securities) in a public offering and $2.2 million of common
securities to Entergy Louisiana. The Trust used the proceeds from
the sale of the Preferred Securities and the common securities to
purchase from Entergy Louisiana 9% junior subordinated deferrable
interest debentures in the amount of $72.2 million (Debentures). The
Debentures held by the Trust are its only asset and the Trust will
use interest payments received on the Debentures to make cash
distributions on the Preferred Securities.
The Preferred Securities of the Trust, as well as the
Debentures, mature on September 30, 2045. The Preferred Securities
are redeemable, however, at the option of Entergy Louisiana beginning
in 2001 at 100% of their principal amount, or earlier under certain
limited circumstances, including the loss of the tax deduction
arising out of the interest paid on the Debentures. Entergy
Louisiana has, pursuant to certain agreements taken together, fully
and unconditionally guaranteed payment of distributions on the
Preferred Securities. Entergy Louisiana is the owner of all of the
common securities of the Trust, which constitute 3% of the Trust's
total capital.
NOTE 6. RETAINED EARNINGS (Entergy Corporation)
On October 25, 1996, Entergy Corporation's Board of Directors
declared a common stock dividend of 45 cents per share payable on
December 1, 1996, to holders of record on November 6, 1996.
NOTE 7. RESTRUCTURING COSTS (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
In 1994 and 1995, Entergy implemented various restructuring
programs to reduce the number of employees and consolidate offices
and facilities. The programs were designed to reduce costs and
improve operating efficiencies in order to enable Entergy to become a
low-cost producer. The balances as of December 31, 1995, and
September 30, 1996, for restructuring liabilities associated with
these programs are shown below by company along with the actual
termination benefits paid under the programs.
Liability Liability
as of Adjustments Payments as of
December 31, Made in Made in September 30,
Company 1995 1996 1996 1996
(In Millions)
Entergy Arkansas $8.3 $0.3 $(7.4) $1.2
Entergy Gulf States 5.4 0.8 (5.2) 1.0
Entergy Louisiana 2.2 0.4 (2.5) 0.1
Entergy Mississippi 2.5 (1.6) (0.8) 0.1
Entergy New Orleans 0.6 0.1 (0.6) 0.1
Other 5.2 0.3 (4.9) 0.6
----- ---- ------ ----
Total $24.2 $0.3 $(21.4) $3.1
===== ==== ====== ====
The restructuring charges shown above primarily include employee
severance costs related to the expected termination of approximately
2,750 employees in various groups. As of September 30, 1996,
approximately 2,615 employees had either been terminated or accepted
voluntary separation packages under the restructuring plan.
NOTE 8. ACCOUNTING ISSUES (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy
New Orleans, and System Energy)
New Accounting Standard - In March 1995, the FASB issued SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of", which became effective January 1,
1996. This statement describes circumstances which may result in
assets being impaired, in addition to providing criteria for
recognition and measurement of asset impairment. In the first
quarter of 1996, Entergy Gulf States' regulatory assets of $169
million (net of tax) related to Texas retail deferred River Bend
operating and carrying costs and $5 million (net of tax) related to
Louisiana retail deferred River Bend operating costs were written off
under the provisions of SFAS 121. See Note 1 to the Form 10-K for
additional details regarding other assets and operations potentially
impacted in the future by the requirements of SFAS 121 and the
process for periodically reviewing those assets and operations for
impairment.
NOTE 9. ENTERGY CORPORATION-CITIPOWER ACQUISITION (Entergy
Corporation)
On January 5, 1996, Entergy Corporation finalized its
acquisition of CitiPower, an electric distribution company serving
Melbourne, Australia, and surrounding suburbs. The purchase price of
CitiPower was approximately $1.2 billion US dollars, of which $294
million US dollars represented an equity investment by Entergy
Corporation, and the remainder represented debt. Entergy Corporation
funded the majority of the equity portion of the investment by
drawing down $230 million of its $300 million bank revolving credit
facility.
CitiPower is one of five electric distribution businesses in the
state of Victoria. CitiPower's distribution area covers
approximately 10% of Victoria's population. During the nine months
ended September 30, 1996, CitiPower supplied approximately 3.3
million MWh of electricity to over 238,000 customer sites.
Approximately 37,000, or 15%, of these sites were commercial
customers.
The cost of the CitiPower license is being amortized on a
straight-line basis over a 40 year period beginning January 5, 1996.
As of September 30, 1996, the unamortized balance of the license was
$609 million.
In accordance with the purchase method of accounting, the three
months and nine months results of operations for Entergy Corporation
reported in its Statements of Consolidated Income and Cash Flows do
not reflect CitiPower's results of operations for any period prior to
January 5, 1996. The pro forma combined revenues, net income,
earnings per common share before the cumulative effect of accounting
change, and earnings per common share of Entergy Corporation
presented below give effect to the acquisition as if it had occurred
at January 1, 1995. This pro forma information is not necessarily
indicative of the results of operations that would have occurred had
the acquisition been consummated for the period for which it is being
given effect.
Three Months Ended Nine Months Ended
September 30, 1995 September 30, 1995
(In Thousands of U.S. dollars,
Except Per Share Data)
Operating revenues $2,059,419 $5,163,736
Net income $ 261,368 $ 501,363
Earnings per average common share
before cumulative effect of
accounting change $ 1.15 $ 2.05
Earnings per average common share $ 1.15 $ 2.20
CitiPower's results of operations for the three months and nine
months ended September 30, 1996, (beginning on January 5, 1996, at
the date of acquisition) are included in Entergy Corporation's
Consolidated Financial Statements and are stated separately below:
Three Months Ended Nine Months Ended
September 30, 1996 September 30, 1996
(In Thousands of U.S. dollars)
Operating revenues $ 98,175 $ 293,614
Operating expenses $ 73,280 $ 237,099
Interest charges $ 20,110 $ 57,605
Net income (loss) $ 4,784 $ (1,091)
_________________________________________
In the opinion of Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy, the accompanying unaudited condensed
financial statements contain all adjustments (consisting primarily of
normal recurring accruals and reclassifying previously reported
amounts to conform to current classifications) necessary for a fair
statement of the results for the interim periods presented. However,
the business of Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans is subject to
seasonal fluctuations, with the peak period occurring during the
summer months. The results for the interim periods presented should
not be used as a basis for estimating results of operations for a
full year.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Merger-Related Proceedings (Entergy Corporation and Entergy Gulf
States)
See "Nuclear Operations" in Item 1 of Part I of the Form 10-K
for information relating to the Merger related proceedings before the
D.C. Circuit and the proceeding pending before the NRC Atomic Safety
and Licensing Board (ASLB), which was instigated by Cajun and
concerns the two Merger-related license amendments issued by the NRC
for River Bend. In March 1996, the ASLB, responding to Cajun's
request, dismissed the pending proceedings without prejudice.
On an unopposed motion from the parties to the proceedings
before the D.C. Circuit, who requested a continuance in light of the
pending settlement among Entergy Gulf States, the Cajun bankruptcy
trustee, and the RUS, the D.C. Circuit ordered that the cases be
removed from oral argument and held in abeyance pending a further
order of the court.
Cajun - River Bend (Entergy Corporation and Entergy Gulf States)
See Note 8 of the Form 10-K and Note 1 for a discussion of the
Cajun litigation and bankruptcy proceedings.
On March 8, 1996, Southwestern Electric Power Company (SWEPCO),
Entergy Gulf States, and certain member cooperatives of Cajun filed
with the Bankruptcy Court a joint proposal to bring an end to the
Cajun bankruptcy proceeding. The proposal was submitted in response
to a bid procedure established by the Cajun bankruptcy trustee. On
April 19, 1996, SWEPCO, Entergy Gulf States, and certain Cajun member
cooperatives filed a separate plan of reorganization with the court
based upon their earlier proposal. On April 22, 1996, the Cajun
bankruptcy trustee filed a plan of reorganization with the Bankruptcy
Court based on the proposal of two non-affiliated companies to take
over the non-nuclear operations of Cajun. All of the plans of
reorganization submitted to the Bankruptcy Court have incorporated
the Cajun Settlement as an integral condition to the effectiveness of
their plan. The timing and completion of the reorganization plan
depends on Bankruptcy Court approval and any required regulatory
approvals.
The Cajun Settlement, agreed to in principle on April 26, 1996,
by Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS,
Cajun's largest creditor, was approved by the District Court on August 26,
1996. The terms include, but are not limited to, the following: (i)
Cajun's interest in River Bend will be turned over to the RUS, which
will have the option to retain the interest, sell it to a third
party, or transfer it to Entergy Gulf States at no cost; (ii) Cajun
will set aside a total of $125 million for its share of the
decommissioning costs of River Bend; (iii) Cajun will transfer
certain transmission assets to Entergy Gulf States; (iv) Cajun will
settle transmission disputes and be released from claims for payment
under transmission arrangements with Entergy Gulf States; (v) all
funds paid by Entergy Gulf States into the registry of the District
Court will be returned to Entergy Gulf States; (vi) Cajun will be
released from its unpaid past, present, and future liability for
River Bend costs and expenses; and (vii) all litigation between Cajun
and Entergy Gulf States will be dismissed. Based on the District
Court's approval of the Cajun Settlement, the litigation accrual
established in 1994 for possible losses associated with the Cajun-River
Bend litigation was reversed in September 1996.
Catalyst Technologies, Inc. (Entergy Corporation)
See "Other Regulation and Litigation" in Item 1 of Part I of the
Form 10-K for information relating to the petition filed by Catalyst
Technologies, Inc. (CTI) against Electec, Inc. (Electec), the
predecessor to Entergy Enterprises.
The petition alleges breach of contract, breach of the
obligation of good-faith and fair dealing, and bad-faith breach of
contract against Electec. It was originally believed CTI was
claiming damages of approximately $36 million from Entergy
Enterprises. It now appears that CTI will allege damages ranging
from $231 million to $258 million. Entergy Enterprises' position is
that CTI is not entitled to any damages, and that even if damages
were sustained, they would not exceed $600,000.
The case is scheduled for a jury trial beginning on December 2,
1996, in Civil District Court for the Parish of Orleans, Louisiana.
Entergy Enterprises is vigorously contesting these claims.
Panda Energy Corporation Complaint (Entergy Corporation)
See "Other Regulation and Litigation" in Item 1 of Part I of the
Form 10-K for information relating to the litigation brought by Panda
Energy Corporation (Panda) naming Entergy Corporation, Entergy
Enterprises, Entergy Power, Entergy Power Asia, Ltd., and Entergy
Power Development Corporation as defendants. Panda was seeking
damages of $4.8 billion. Entergy believes that this litigation is
unfounded, but entered into arrangements on April 30, 1996, to settle
the matter for $350,000. The settlement provided that it could be
revoked by Entergy if the court ruled on the case.
Thereafter, the Dallas District Court entered an order of
dismissal because the plaintiff was unable to show any damages and
the facts did not support a cause of action against the defendants.
As a result, Entergy revoked the $350,000 settlement agreement. In
late May of 1996, Panda filed an appeal of the court's order for
dismissal. While a briefing schedule on appeal has been set, no date
has yet been designated for oral argument.
System Agreement (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans)
See "Rate Matters and Regulation" in Item 1 of Part I of the
Form 10-K for information relating to a complaint filed with FERC by
the Arkansas Public Service Commission alleging that FERC's
allocation of nuclear decommissioning costs in the System is no
longer just and reasonable. A prehearing conference was held on July
30, 1996, and a procedural schedule was adopted which provides for
hearings to begin on February 18, 1997.
See "Rate Matters and Regulation" in Item 1 of Part I of the
Form 10-K for information relating to a complaint filed with FERC by
the LPSC alleging that the System Agreement results in unjust and
unreasonable rates. On July 31, 1996, FERC dismissed the LPSC's
complaint in this matter. On September 30, 1996, FERC issued an
order granting the LPSC's request for a rehearing.
Item 5. Other Information
Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy)
The operating companies and System Energy have calculated ratios
of earnings to fixed charges and ratios of earnings to combined fixed
charges and preferred dividends pursuant to Item 503 of Regulation S-
K of the SEC as follows:
Ratios of Earnings to Fixed Charges
Twelve Months Ended
December 31, September 30,
1991 1992 1993 1994 1995 1996
Entergy Arkansas 2.25 2.28 3.11(c) 2.32 2.56 2.81(e)
Entergy Gulf States 1.56 1.72 1.54 .36(d) 1.86 1.34
Entergy Louisiana 2.40 2.79 3.06 2.91 3.18 3.13(e)
Entergy Mississippi 2.36 2.37 3.79(c) 2.12 2.92 3.41
Entergy New Orleans 5.66(b) 2.66 4.68(c) 1.91 3.93 4.19
System Energy 1.74 2.04 1.87 1.23 2.07 2.14
Ratios of Earnings to Combined Fixed
Charges and Preferred Dividends
Twelve Months Ended
December 31, September 30,
1991 1992 1993 1994 1995 1996
Entergy Arkansas 1.87 1.86 2.54(c) 1.97 2.12 2.32(e)
Entergy Gulf States (a) 1.19 1.37 1.21 .29(d) 1.54 1.11
Entergy Louisiana 1.95 2.18 2.39 2.43 2.60 2.59(e)
Entergy Mississippi 1.94 1.97 3.08(c) 1.81 2.51 2.97
Entergy New Orleans 4.97(b) 2.36 4.12(c) 1.73 3.56 3.86
(a) "Preferred Dividends" in the case of Entergy Gulf States
also include dividends on preference stock.
(b) Earnings for the year ended December 31, 1991, include the
$90 million effect of the 1991 NOPSI Settlement.
(c) Earnings for the year ended December 31, 1993, include $81
million, $52 million, and $18 million for Entergy Arkansas,
Entergy Mississippi, and Entergy New Orleans, respectively,
related to the change in accounting principle to provide
for the accrual of estimated unbilled revenues.
(d) Earnings for the year ended December 31, 1994, for Entergy
Gulf States were not adequate to cover fixed charges and
combined fixed charges and preferred dividends by $144.8
million and $197.1 million, respectively.
(e) Includes distributions on company-obligated mandatorily
redeemable preferred securities of $0.7 million and $1.3
million for Entergy Arkansas and Entergy Louisiana,
respectively.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
** 4(a) - Twentieth Supplemental Indenture, dated as of August
1, 1996, to System Energy's Mortgage and Deed of
Trust, dated as of June 15, 1977 (filed as Exhibit A-
2(a)(1) to Rule 24 Certificate dated August 8, 1996 in
File No. 70-8511).
** 4(b) - Twenty-first Supplemental Indenture, dated as of
August 1, 1996, to System Energy's Mortgage and Deed
of Trust, dated as of June 15, 1977 (filed as Exhibit
A-2(a)(2) to Rule 24 Certificate dated August 8, 1996
in File No. 70-8511).
** 4(c) - Thirtieth Assignment of Availability Agreement,
Consent and Agreement, dated as of August 1, 1996,
among System Energy, Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New
Orleans, and United States Trust Company of New York
and Gerard F. Ganey, as Trustees (filed as Exhibit B-
2(a) to Rule 24 Certificate dated August 8, 1996 in
File No. 70-8511).
** 4(d) - Thirty-first Assignment of Availability Agreement,
Consent and Agreement, dated as of August 1, 1996,
among System Energy, Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New
Orleans, and United States Trust Company of New York
and Gerard F. Ganey, as Trustees (filed as Exhibit B-
2(b) to Rule 24 Certificate dated August 8, 1996 in
File No. 70-8511).
** 4(e) - Thirtieth Supplementary Capital Funds Agreement and
Assignment, dated as of August 1, 1996, among Entergy
Corporation, System Energy and United States Trust
Company of New York and Gerard F. Ganey, as Trustees
(filed as Exhibit B-3(a) to Rule 24 Certificate dated
August 8, 1996 in File No. 70-8511).
** 4(f) - Thirty-first Supplementary Capital Funds Agreement and
Assignment, dated as of August 1, 1996. among Entergy
Corporation, System Energy and United States Trust
Company of New York and Gerard F. Ganey, as Trustees
(filed as Exhibit B-3(b) to Rule 24 Certificate dated
August 8, 1996 in File No. 70-8511).
** 4(g) - Indenture for Unsecured Subordinated Debt Securities
relating to Trust Securities between Entergy Arkansas
and Bank of New York (as Trustee), dated as of August
1, 1996 (filed as Exhibit A-1(a) to Rule 24
Certificate dated August 26, 1996 in File No. 70-
8723).
** 4(h) - Amended and Restated Trust Agreement of Entergy
Arkansas Capital I, dated as of August 14, 1996 (filed
as Exhibit A-3(a) to Rule 24 Certificate dated August
26, 1996 in File No. 70-8723).
** 4(i) - Guarantee Agreement between Entergy Arkansas (as
Guarantor) and The Bank of New York (as Trustee),
dated as of August 14, 1996, with respect to Entergy
Arkansas Capital I's obligations on its 8 1/2%
Cumulative Quarterly Income Preferred Securities,
Series A (filed as Exhibit A-4(a) to Rule 24
Certificate dated August 26, 1996 in File No. 70-
8723).
4(j) - Agreement as to Expenses and Liabilities between
Entergy Arkansas and Entergy Arkansas Capital I, dated
as of August 14, 1996.
23(a)- Consent of Clark, Thomas & Winters (A Professional
Corporation).
23(b)- Consent of Sandlin Associates.
27(a)- Financial Data Schedule for Entergy Corporation and
Subsidiaries as of September 30, 1996.
27(b)- Financial Data Schedule for Entergy Arkansas as of
September 30, 1996.
27(c)- Financial Data Schedule for Entergy Gulf States as of
September 30, 1996.
27(d)- Financial Data Schedule for Entergy Louisiana as of
September 30, 1996.
27(e)- Financial Data Schedule for Entergy Mississippi as of
September 30, 1996.
27(f)- Financial Data Schedule for Entergy New Orleans as of
September 30, 1996.
27(g)- Financial Data Schedule for System Energy as of
September 30, 1996.
99(a)- Entergy Arkansas Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(b)- Entergy Gulf States Computation of Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(c)- Entergy Louisiana Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(d)- Entergy Mississippi Computation of Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(e)- Entergy New Orleans Computation of Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(f)- System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
** 99(g)- Annual Reports on Form 10-K of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy for the fiscal year ended December
31, 1995, portions of which are incorporated herein by
reference as described elsewhere in this document
(filed with the SEC in File Nos. 1-11299, 1-10764, 1-
2703, 1-8474, 0-320, 0-5807, and 1-9067,
respectively).
** 99(h)- Quarterly Reports on Form 10-Q of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy for the quarter ended March 31,
1996, 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(i)- Quarterly Reports on Form 10-Q of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy for the quarter ended June 30, 1996,
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(j)- Opinion of Clark, Thomas & Winters, A Professional
Corporation, dated September 30, 1992, regarding the
effect of the October 1, 1991, judgment in Entergy
Gulf States v. PUCT in the District Court of Travis
County, Texas (99-1 in Registration No. 33-48889).
** 99(k)- Opinion of Clark, Thomas & Winters, A Professional
Corporation, dated August 8, 1994, regarding recovery
of costs deferred pursuant to PUCT order in Docket
6525 (filed as Exhibit 99(j) to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 1994, in
File No. 1-2703).
99(l)- Opinion of Clark, Thomas & Winters, A Professional
Corporation, confirming its opinions dated September
30, 1992, and August 8, 1994.
___________________________
* Reference is made to a duplicate list of exhibits being
filed as a part of this report on Form 10-Q for the quarter
ended September 30, 1996, which list, prepared in
accordance with Item 102 of Regulation S-T of the SEC,
immediately precedes the exhibits being filed with this
report on Form 10-Q for the quarter ended September 30,
1996.
** Incorporated herein by reference as indicated.
(b) Reports on Form 8-K
Entergy Corporation and Entergy Gulf States
A current report on Form 8-K, dated August 26, 1996,
was filed with the SEC on August 28, 1996, reporting
information under Item 5. "Other Events."
Entergy Corporation and Entergy Mississippi
A current report on Form 8-K, dated August 22, 1996,
was filed with the SEC on August 28, 1996, reporting
information under Item 5. "Other Events."
Entergy Corporation, Entergy Gulf States, and Entergy
Louisiana
A current report on Form 8-K, dated September 5,
1996, was filed with the SEC on September 6, 1996,
reporting information under Item 5. "Other Events."
Entergy Corporation
A current report on Form 8-K, dated October 11, 1996,
was filed with the SEC on October 11, 1996, reporting
information under Item 5. "Other Events."
Entergy Corporation and Entergy Arkansas
A current report on Form 8-K, dated October 24, 1996,
was filed with the SEC on October 29, 1996, reporting
information under Item 5. "Other Events."
EXPERTS
The statements attributed to Clark, Thomas & Winters, A
Professional Corporation, as to legal conclusions with respect to
Entergy Gulf States' rate regulation in Texas in Note 2 to Entergy
Corporation and Subsidiaries Consolidated Financial Statements, "Rate
and Regulatory Matters," have been reviewed by such firm and are
included herein upon the authority of such firm as experts.
The statements attributed to Sandlin Associates regarding the
analysis of River Bend construction costs of Entergy Gulf States in
Note 2 to Entergy Corporation and Subsidiaries Consolidated Financial
Statements, "Rate and Regulatory Matters," have been reviewed by such
firm and are included herein upon the authority of such firm as
experts.
<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
ENTERGY ARKANSAS, INC.
ENTERGY GULF STATES, INC.
ENTERGY LOUISIANA, INC.
ENTERGY MISSISSIPPI, INC.
ENTERGY NEW ORLEANS, INC.
SYSTEM ENERGY RESOURCES, INC.
/s/ Louis E. Buck
Louis E. Buck
Vice President, Chief Accounting
Officer and Assistant Secretary
(For each Registrant and for each as
Principal Accounting Officer)
Date: November 4, 1996
Exhibit 4(j)
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of August 14, 1996, between Entergy
Arkansas, Inc., an Arkansas corporation ("Entergy Arkansas"), and
Entergy Arkansas Capital I, a Delaware business trust (the
"Trust").
WHEREAS, the Trust intends to issue its Common
Securities (the "Common Securities") to and receive Debentures
from Entergy Arkansas and to issue its 8-1/2% Cumulative Quarterly
Income Preferred Securities, Series A (the "Preferred
Securities") with such powers, preferences and special rights and
restrictions as are set forth in the Amended and Restated Trust
Agreement of the Trust dated as of August 14, 1996 as the same
may be amended from time to time (the "Trust Agreement");
WHEREAS, Entergy Arkansas will directly own all of the
Common Securities and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by
each holder of the Preferred Securities, which purchase Entergy
Arkansas hereby agrees shall benefit Entergy Arkansas and which
purchase Entergy Arkansas acknowledges will be made in reliance
upon the execution and delivery of this Agreement, Entergy
Arkansas, including in its capacity as holder of the Common
Securities, and the Trust hereby agree as follows:
ARTICLE I
Section 1.01. Guarantee by Entergy Arkansas. Subject
to the terms and conditions hereof, Entergy Arkansas hereby
irrevocably and unconditionally guarantees the full payment, when
and as due, of any and all Obligations (as hereinafter defined)
to each person or entity to whom the Trust is now or hereafter
becomes indebted or liable (the "Beneficiaries"). As used
herein, "Obligations" means any indebtedness, expenses or
liabilities of the Trust, other than (i) obligations of the Trust
to pay to holders of any Preferred Securities or other similar
interests in the Trust the amounts due such holders pursuant to
the terms of the Preferred Securities or such other similar
interests, as the case may be and (ii) obligations arising out of
the negligence, willful misconduct or bad faith of the Trustees
of the Trust. This Agreement is intended to be for the benefit
of, and to be enforceable by, all such Beneficiaries, whether or
not such Beneficiaries have received notice hereof.
Section 1.02. Term of Agreement. This Agreement shall
terminate and be of no further force and effect upon the date on
which there are no Beneficiaries remaining; provided, however,
that this Agreement shall continue to be effective or shall be
reinstated, as the case may be, if at any time any holder of
Preferred Securities or any Beneficiary must restore payment of
any sums paid under the Preferred Securities, under any
Obligation, under the Guarantee Agreement dated the date hereof
by Entergy Arkansas and The Bank of New York, as guarantee
trustee, or under this Agreement for any reason whatsoever. This
Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.03. Waiver of Notice. Entergy Arkansas
hereby waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and Entergy Arkansas
hereby waives presentment, demand for payment, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
Section 1.04. No Impairment. The obligations,
covenants, agreements and duties of Entergy Arkansas under this
Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust
of all or any portion of the Obligations or for the performance
of any other obligation under, arising out of, or in connection
with, the Obligations;
(b) any failure, omission, delay or lack of diligence
on the part of the Beneficiaries to enforce, assert or exercise
any right, privilege, power or remedy conferred on the
Beneficiaries with respect to the Obligations or any action on
the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Trust or any of
the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice
to, or obtain the consent of, Entergy Arkansas with respect to
the happening of any of the foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce
this Agreement directly against Entergy Arkansas and Entergy
Arkansas waives any right or remedy to require that any action be
brought against the Trust or any other person or entity before
proceeding against Entergy Arkansas.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and
agreements contained in this Agreement shall bind the successors,
assigns, receivers, trustees and representatives of Entergy
Arkansas and shall inure to the benefit of the Beneficiaries.
Section 2.02. Amendment. So long as there remains any
Beneficiary or any Preferred Securities of any series are
outstanding, this Agreement shall not be modified or amended in
any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.
Section 2.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall
be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or
by registered or certified mail, addressed as follows (and if so
given, shall be deemed given when mailed or upon receipt of an
answer-back, if sent by telex), to wit:
Entergy Arkansas Capital I
c/o Steve C. McNeal, Administrative Trustee
639 Loyola Avenue
New Orleans, Louisiana 70113
Facsimile No.: (504) 576-4455
Entergy Arkansas, Inc.
639 Loyola Avenue
New Orleans, Louisiana 70113
Facsimile No.: (504) 576-4455
Attention: Treasurer
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES).
THIS EXPENSE AGREEMENT is executed as of the day and
year first above
written.
ENTERGY ARKANSAS, INC.
By:______________________________
Name: William J. Regan, Jr.
Title: Vice President and Treasurer
ENTERGY ARKANSAS CAPITAL I
By: ______________________________
Frank Williford IV
not in his individual capacity, but solely
as Administrative Trustee
Exhibit 23(a)
[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 by Entergy Corporation, Entergy Arkansas,
Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy
Mississippi, Inc., Entergy New Orleans, Inc., and System Energy
Resources, Inc. We further consent to the incorporation by
reference in the registration statements of Entergy Gulf States,
Inc. 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
A Professional Corporation
CLARK, THOMAS & WINTERS,
A Professional Corporation
Austin, Texas
November 4, 1996
Exhibit 23(b)
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,
Entergy Arkansas, Inc., Entergy Gulf States, Inc. ("Entergy
Gulf States"), Entergy Louisiana, Inc., Entergy Mississippi,
Inc., Entergy New Orleans, Inc., and System Energy
Resources, Inc. We further consent to the incorporation by
reference of such reference to our firm into Entergy Gulf
States' 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/ L. S. Sandlin
SANDLIN ASSOCIATES
Management Consultants
Pasco, Washington
November 4, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
Entergy Corporation financial statements for the quarter ended
September 30, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 017
<NAME> ENTERGY CORPORATION AND SUBSIDIARIES
<CIK> 0000065984
<NAME> ENTERGY CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 16,226,927
<OTHER-PROPERTY-AND-INVEST> 777,577
<TOTAL-CURRENT-ASSETS> 2,645,222
<TOTAL-DEFERRED-CHARGES> 3,494,364
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 23,144,090
<COMMON> 2,315
<CAPITAL-SURPLUS-PAID-IN> 4,240,038
<RETAINED-EARNINGS> 2,406,339
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,609,735
221,986
490,955
<LONG-TERM-DEBT-NET> 7,642,768
<SHORT-TERM-NOTES> 120,692
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 355,305
0
<CAPITAL-LEASE-OBLIGATIONS> 275,323
<LEASES-CURRENT> 151,204
<OTHER-ITEMS-CAPITAL-AND-LIAB> 7,087,165
<TOT-CAPITALIZATION-AND-LIAB> 23,144,090
<GROSS-OPERATING-REVENUE> 5,589,790
<INCOME-TAX-EXPENSE> 352,890
<OTHER-OPERATING-EXPENSES> 4,147,666
<TOTAL-OPERATING-EXPENSES> 4,500,556
<OPERATING-INCOME-LOSS> 1,089,234
<OTHER-INCOME-NET> (105,401)
<INCOME-BEFORE-INTEREST-EXPEN> 983,833
<TOTAL-INTEREST-EXPENSE> 602,701
<NET-INCOME> 381,132
0
<EARNINGS-AVAILABLE-FOR-COMM> 381,132
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 1,213,845
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
Entergy Arkansas' financial statements for the quarter ended
September 30, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 001
<NAME> ENTERGY ARKANSAS, INC.
<CIK> 0000007323
<NAME> ENTERGY ARKANSAS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,831,588
<OTHER-PROPERTY-AND-INVEST> 195,810
<TOTAL-CURRENT-ASSETS> 764,646
<TOTAL-DEFERRED-CHARGES> 510,002
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,302,046
<COMMON> 470
<CAPITAL-SURPLUS-PAID-IN> 590,794
<RETAINED-EARNINGS> 558,314
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,149,578
45,027
176,350
<LONG-TERM-DEBT-NET> 1,256,206
<SHORT-TERM-NOTES> 667
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 32,150
0
<CAPITAL-LEASE-OBLIGATIONS> 94,431
<LEASES-CURRENT> 52,747
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,494,890
<TOT-CAPITALIZATION-AND-LIAB> 4,302,046
<GROSS-OPERATING-REVENUE> 1,380,347
<INCOME-TAX-EXPENSE> 73,648
<OTHER-OPERATING-EXPENSES> 1,101,836
<TOTAL-OPERATING-EXPENSES> 1,175,484
<OPERATING-INCOME-LOSS> 204,863
<OTHER-INCOME-NET> 17,399
<INCOME-BEFORE-INTEREST-EXPEN> 222,262
<TOTAL-INTEREST-EXPENSE> 76,491
<NET-INCOME> 145,771
13,243
<EARNINGS-AVAILABLE-FOR-COMM> 132,528
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 344,207
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
Entergy Gulf States' financial statements for the quarter ended
September 30, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 003
<NAME> ENTERGY GULF STATES, INC.
<CIK> 0000044570
<NAME> ENTERGY GULF STATES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4,653,744
<OTHER-PROPERTY-AND-INVEST> 64,557
<TOTAL-CURRENT-ASSETS> 847,138
<TOTAL-DEFERRED-CHARGES> 1,003,136
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 6,568,575
<COMMON> 114,055
<CAPITAL-SURPLUS-PAID-IN> 1,152,689
<RETAINED-EARNINGS> 322,054
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,588,798
77,460
136,444
<LONG-TERM-DEBT-NET> 2,030,294
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 160,865
0
<CAPITAL-LEASE-OBLIGATIONS> 88,778
<LEASES-CURRENT> 39,343
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,446,593
<TOT-CAPITALIZATION-AND-LIAB> 6,568,575
<GROSS-OPERATING-REVENUE> 1,574,328
<INCOME-TAX-EXPENSE> 85,435
<OTHER-OPERATING-EXPENSES> 1,226,828
<TOTAL-OPERATING-EXPENSES> 1,312,263
<OPERATING-INCOME-LOSS> 262,065
<OTHER-INCOME-NET> (128,068)
<INCOME-BEFORE-INTEREST-EXPEN> 133,997
<TOTAL-INTEREST-EXPENSE> 148,149
<NET-INCOME> (14,152)
21,497
<EARNINGS-AVAILABLE-FOR-COMM> (35,649)
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 263,400
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
Entergy Louisiana's financial statements for the quarter ended
September 30, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 009
<NAME> ENTERGY LOUISIANA, INC.
<CIK> 0000060527
<NAME> ENTERGY LOUISIANA, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,463,465
<OTHER-PROPERTY-AND-INVEST> 79,510
<TOTAL-CURRENT-ASSETS> 365,210
<TOTAL-DEFERRED-CHARGES> 403,273
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,311,458
<COMMON> 1,088,900
<CAPITAL-SURPLUS-PAID-IN> (2,659)
<RETAINED-EARNINGS> 128,610
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,214,851
92,500
100,500
<LONG-TERM-DEBT-NET> 1,373,114
<SHORT-TERM-NOTES> 1,078
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 34,275
0
<CAPITAL-LEASE-OBLIGATIONS> 19,062
<LEASES-CURRENT> 28,000
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,448,078
<TOT-CAPITALIZATION-AND-LIAB> 4,311,458
<GROSS-OPERATING-REVENUE> 1,424,909
<INCOME-TAX-EXPENSE> 101,277
<OTHER-OPERATING-EXPENSES> 1,054,252
<TOTAL-OPERATING-EXPENSES> 1,155,529
<OPERATING-INCOME-LOSS> 269,380
<OTHER-INCOME-NET> 1,839
<INCOME-BEFORE-INTEREST-EXPEN> 271,219
<TOTAL-INTEREST-EXPENSE> 98,002
<NET-INCOME> 173,217
16,457
<EARNINGS-AVAILABLE-FOR-COMM> 156,760
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 284,567
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
Entergy Mississippi's financial statements for the quarter ended
September 30, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 010
<NAME> ENTERGY MISSISSIPPI, INC.
<CIK> 0000066901
<NAME> ENTERGY MISSISSIPPI, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,035,618
<OTHER-PROPERTY-AND-INVEST> 11,128
<TOTAL-CURRENT-ASSETS> 305,659
<TOTAL-DEFERRED-CHARGES> 195,175
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,547,580
<COMMON> 199,326
<CAPITAL-SURPLUS-PAID-IN> (143)
<RETAINED-EARNINGS> 253,186
<TOTAL-COMMON-STOCKHOLDERS-EQ> 452,369
7,000
57,881
<LONG-TERM-DEBT-NET> 399,008
<SHORT-TERM-NOTES> 15,308
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 106,015
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 509,999
<TOT-CAPITALIZATION-AND-LIAB> 1,547,580
<GROSS-OPERATING-REVENUE> 748,499
<INCOME-TAX-EXPENSE> 37,539
<OTHER-OPERATING-EXPENSES> 606,050
<TOTAL-OPERATING-EXPENSES> 643,589
<OPERATING-INCOME-LOSS> 104,910
<OTHER-INCOME-NET> 1,576
<INCOME-BEFORE-INTEREST-EXPEN> 106,486
<TOTAL-INTEREST-EXPENSE> 35,538
<NET-INCOME> 70,948
3,825
<EARNINGS-AVAILABLE-FOR-COMM> 67,123
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 146,634
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
Entergy New Orleans' financial statements for the quarter ended
September 30, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 011
<NAME> ENTERGY NEW ORLEANS, INC.
<CIK> 0000071508
<NAME> ENTERGY NEW ORLEANS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 295,093
<OTHER-PROPERTY-AND-INVEST> 3,259
<TOTAL-CURRENT-ASSETS> 127,787
<TOTAL-DEFERRED-CHARGES> 132,868
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 559,007
<COMMON> 33,744
<CAPITAL-SURPLUS-PAID-IN> 36,294
<RETAINED-EARNINGS> 80,153
<TOTAL-COMMON-STOCKHOLDERS-EQ> 150,191
0
19,780
<LONG-TERM-DEBT-NET> 168,871
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 12,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 208,165
<TOT-CAPITALIZATION-AND-LIAB> 559,007
<GROSS-OPERATING-REVENUE> 401,654
<INCOME-TAX-EXPENSE> 18,174
<OTHER-OPERATING-EXPENSES> 337,975
<TOTAL-OPERATING-EXPENSES> 356,149
<OPERATING-INCOME-LOSS> 45,505
<OTHER-INCOME-NET> 471
<INCOME-BEFORE-INTEREST-EXPEN> 45,976
<TOTAL-INTEREST-EXPENSE> 12,360
<NET-INCOME> 33,616
723
<EARNINGS-AVAILABLE-FOR-COMM> 32,893
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 26,968
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
System Energy's financial statements for the quarter ended September 30,
1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 012
<NAME> SYSTEM ENERGY RESOURES, INC.
<CIK> 0000202584
<NAME> SYSTEM ENERGY RESOURCES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,612,093
<OTHER-PROPERTY-AND-INVEST> 55,490
<TOTAL-CURRENT-ASSETS> 254,614
<TOTAL-DEFERRED-CHARGES> 550,986
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,473,183
<COMMON> 789,350
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 87,881
<TOTAL-COMMON-STOCKHOLDERS-EQ> 877,231
0
0
<LONG-TERM-DEBT-NET> 1,418,770
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 59,963
<LEASES-CURRENT> 28,000
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,089,219
<TOT-CAPITALIZATION-AND-LIAB> 3,473,183
<GROSS-OPERATING-REVENUE> 471,260
<INCOME-TAX-EXPENSE> 62,502
<OTHER-OPERATING-EXPENSES> 230,158
<TOTAL-OPERATING-EXPENSES> 292,660
<OPERATING-INCOME-LOSS> 178,600
<OTHER-INCOME-NET> 4,501
<INCOME-BEFORE-INTEREST-EXPEN> 183,101
<TOTAL-INTEREST-EXPENSE> 111,440
<NET-INCOME> 71,661
0
<EARNINGS-AVAILABLE-FOR-COMM> 71,661
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 223,747
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99(a)
Entergy Arkansas, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
September 30,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $133,854 $120,317 $107,771 $101,439 $102,339 $96,254
Interest on notes payable -- 117 349 1,311 678 685
Amortization of expense and premium on debt-net(cr) 1,112 1,359 2,702 4,563 4,514 4,651
Other interest 1,303 2,308 8,769 3,501 7,806 6,652
Dividends on preferred securities of subsidiary trust -- -- -- -- -- 652
Interest applicable to rentals 21,969 17,657 16,860 19,140 18,158 19,081
----------------------------------------------------------
Total fixed charges, as defined 158,238 141,758 136,451 129,954 133,495 127,975
Preferred dividends, as defined (a) 31,458 32,195 30,334 23,234 27,636 27,444
----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $189,696 $173,953 $166,785 $153,188 $161,131 $155,419
==========================================================
Earnings as defined:
Net Income $143,451 $130,529 $205,297 $142,263 $136,666 $149,916
Add:
Provision for income taxes:
Federal & State 44,418 57,089 58,162 83,300 105,964 128,355
Deferred - net 11,048 3,490 34,748 (17,939) (28,225) (41,098)
Investment tax credit adjustment - net (1,600) (9,989) (10,573) (36,141) (5,658) (4,976)
Fixed charges as above 158,238 141,758 136,451 129,954 133,495 127,975
----------------------------------------------------------
Total earnings, as defined $355,555 $322,877 $424,085 $301,437 $342,242 $360,172
==========================================================
Ratio of earnings to fixed charges, as defined 2.25 2.28 3.11 2.32 2.56 2.81
==========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.87 1.86 2.54 1.97 2.12 2.32
==========================================================
- ------------------------
(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>
<TABLE>
<CAPTION>
Exhibit 99(b)
Entergy Gulf States, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
September 30,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $201,335 $197,218 $172,494 $167,082 $181,994 $175,679
Interest on notes payable 27,953 21,155 19,440 20,203 810 922
Other interest 29,169 26,564 10,561 7,957 8,074 6,115
Amortization of expense and premium on debt-net(cr) 1,999 3,479 8,104 8,892 9,346 9,156
Interest applicable to rentals 24,049 23,759 23,455 21,539 16,648 14,601
----------------------------------------------------------
Total fixed charges, as defined 284,505 272,175 234,054 225,673 216,872 206,473
Preferred dividends, as defined (a) 90,146 69,617 65,299 52,210 44,651 42,625
----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $374,651 $341,792 $299,353 $277,883 $261,523 $249,098
==========================================================
Earnings as defined:
Income (loss) from continuing operations before extraordinary items
and the cumulative effect of accounting changes $112,391 $139,413 $69,462 ($82,755) $122,919 ($718)
Add:
Income Taxes 48,250 55,860 58,016 (62,086) 63,244 71,595
Fixed charges as above 284,505 272,175 234,054 225,673 216,872 206,473
----------------------------------------------------------
Total earnings, as defined (b) $445,146 $467,448 $361,532 $80,832 $403,035 $277,350
==========================================================
Ratio of earnings to fixed charges, as defined 1.56 1.72 1.54 0.36 1.86 1.34
==========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.19 1.37 1.21 0.29 1.54 1.11
==========================================================
- ----------------------
(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, 1994, for GSU were not adequate
to cover fixed charges combined fixed charges and preferred dividends
by $144.8 million and $197.1 million, respectively.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99(c)
Entergy Louisiana, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
September 30,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $158,816 $128,672 $124,633 $124,820 $124,507 $119,230
Interest on notes payable -- 150 898 1,948 1,932 2,324
Other interest charges 5,924 5,591 5,706 4,546 5,278 5,507
Dividends on preferred securities of subsidiary trust 1,295
Amortization of expense and premium on debt - net(cr) 3,282 7,100 5,720 5,130 5,184 4,830
Interest applicable to rentals 11,381 9,363 8,519 8,332 9,332 10,701
-----------------------------------------------------------
Total fixed charges, as defined 179,403 150,876 145,476 144,776 146,233 143,887
Preferred dividends, as defined (a) 41,212 42,026 40,779 29,171 32,847 30,310
-----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $220,615 $192,902 $186,255 $173,947 $179,080 $174,197
===========================================================
Earnings as defined:
Net Income $166,572 $182,989 $188,808 $213,839 $201,537 $192,790
Add:
Provision for income taxes:
Federal and State 8,684 36,465 70,552 79,260 114,665 113,981
Deferred Federal and State - net 67,792 51,889 43,017 21,580 8,148 5,776
Investment tax credit adjustment - net 8,244 (1,317) (2,756) (37,552) (5,699) (5,822)
Fixed charges as above 179,403 150,876 145,476 144,776 146,233 143,887
-----------------------------------------------------------
Total earnings, as defined $430,695 $420,902 $445,097 $421,903 $464,884 $450,612
===========================================================
Ratio of earnings to fixed charges, as defined 2.40 2.79 3.06 2.91 3.18 3.13
===========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.95 2.18 2.39 2.43 2.60 2.59
===========================================================
- ------------------------
(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>
<TABLE>
<CAPTION>
Exhibit 99(d)
Entergy Mississippi, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
September 30,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $63,628 $60,709 $52,099 $46,081 $46,241 $44,573
Interest on notes payable 953 36 7 1,348 474 1,266
Other interest charges 1,444 1,636 1,795 3,581 4,164 2,203
Amortization of expense and premium on debt-net(cr) 1,617 1,685 1,458 1,754 756 487
Interest applicable to rentals 574 521 1,264 1,716 2,173 2,167
----------------------------------------------------------
Total fixed charges, as defined 68,216 64,587 56,623 54,480 53,808 50,696
Preferred dividends, as defined (a) 14,962 12,823 12,990 9,447 9,004 7,587
----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $83,178 $77,410 $69,613 $63,927 $62,812 $58,283
==========================================================
Earnings as defined:
Net Income $63,088 $65,036 $101,743 $48,779 $68,667 $80,035
Add:
Provision for income taxes:
Federal and State (1,001) 4,463 54,418 46,884 71,651 88,009
Deferred Federal and State - net 32,491 20,430 539 (26,763) (35,224) (42,259)
Investment tax credit adjustment - net (1,634) (1,746) 1,036 (7,645) (1,550) (3,491)
Fixed charges as above 68,216 64,587 56,623 54,480 53,808 50,696
-----------------------------------------------------------
Total earnings, as defined $161,160 $152,770 $214,359 $115,735 $157,352 $172,990
===========================================================
Ratio of earnings to fixed charges, as defined 2.36 2.37 3.79 2.12 2.92 3.41
===========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.94 1.97 3.08 1.81 2.51 2.97
===========================================================
- ------------------------
(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>
<TABLE>
<CAPTION>
Exhibit 99(e)
Entergy New Orleans, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
September 30,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $23,865 $22,934 $19,478 $16,382 $15,330 $15,164
Interest on notes payable -- -- -- 153 130 143
Other interest charges 793 1,714 1,016 1,027 1,723 1,056
Amortization of expense and premium on debt-net(cr) 565 576 598 710 619 532
Interest applicable to rentals 517 444 544 1,245 916 825
-----------------------------------------------------------
Total fixed charges, as defined 25,740 25,668 21,636 19,517 18,718 17,720
Preferred dividends, as defined (a) 3,582 3,214 2,952 2,071 1,964 1,507
-----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $29,322 $28,882 $24,588 $21,588 $20,682 $19,227
===========================================================
Earnings as defined:
Net Income $74,699 $26,424 $47,709 $13,211 $34,386 $36,208
Add:
Provision for income taxes:
Federal and State 8,885 16,575 27,479 22,606 22,465 18,735
Deferred Federal and State - net 36,947 (340) 5,203 (15,674) (1,364) 2,264
Investment tax credit adjustment - net (591) (170) (744) (2,332) (634) (677)
Fixed charges as above 25,740 25,668 21,636 19,517 18,718 17,720
------------------------------------------------------------
Total earnings, as defined $145,680 $68,157 $101,283 $37,328 $73,571 $74,250
============================================================
Ratio of earnings to fixed charges, as defined 5.66 2.66 4.68 1.91 3.93 4.19
============================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 4.97 2.36 4.12 1.73 3.56 3.86
============================================================
- ------------------------
(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>
<TABLE>
<CAPTION>
Exhibit 99(f)
System Energy Resources, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges
September 30,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Interest on long-term debt $218,538 $196,618 $184,818 $162,517 $136,916 $132,443
Interest on notes payable -- -- -- 88 473 564
Amortization of expense and premium on debt-net 7,495 6,417 4,520 6,731 6,104 6,156
Interest applicable to rentals 10,007 6,265 6,790 7,546 6,475 7,475
Other interest charges 3,617 1,506 1,600 7,168 8,019 8,179
----------------------------------------------------------
Total fixed charges, as defined $239,657 $210,806 $197,728 $184,050 $157,987 $154,817
==========================================================
Earnings as defined:
Net Income $104,622 $130,141 $93,927 $5,407 $93,039 $94,968
Add:
Provision for income taxes:
Federal and State (26,848) 35,082 48,314 67,477 120,830 136,945
Deferred Federal and State - net 37,168 23,648 60,690 (27,374) (41,871) (51,422)
Investment tax credit adjustment - net 63,256 30,123 (30,452) (3,265) (3,466) (3,466)
Fixed charges as above 239,657 210,806 197,728 184,050 157,987 154,817
----------------------------------------------------------
Total earnings, as defined $417,855 $429,800 $370,207 $226,295 $326,519 $331,842
==========================================================
Ratio of earnings to fixed charges, as defined 1.74 2.04 1.87 1.23 2.07 2.14
==========================================================
</TABLE>
Exhibit 99(l)
[LETTERHEAD OF CLARK, THOMAS & WINTERS]
November 4, 1996
Entergy Gulf States, Inc.
639 Loyola Avenue
New Orleans, LA 70112
Attn: Chris Barrilleaux
Re: SEC Form 10-Q of Entergy Gulf States, Inc. (the
"Company") for the quarter ending September 30,
1996
Dear Mr. Barrilleaux:
Our firm has rendered to the Company two opinion letters
dated September 30, 1992 and August 8, 1994, concerning
certain issues presented in the appeal of PUCT Docket No.
7195 now pending in the Supreme Court of Texas. In
connection with the above-referenced Form 10-Q, we confirm to
you as of the date hereof that we continue to hold the
opinions set forth in the letter dated August 8, 1994 and in
the September 30, 1992 letter which addressed the recovery of
$1.45 billion of abeyed construction costs.<FN1>
CLARK, THOMAS & WINTERS
A Professional Corporation
/s/ Clark, Thomas & Winters,
A Professional Corporation
_______________________________
<FN1> The opinion letters dated September 30, 1992 indicate that
the amount of River Bend plant costs held in abeyance was
$1.45 billion. The more correct amount, as indicated by the
Company in its securities filings to which those opinions
related, is $1.4 billion.
