FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 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 Offices Identification No.
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 July 31, 1996
Entergy Corporation ($0.01 par value) 228,042,517
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 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 6
Financial Statements and Results of Operations:
Entergy Corporation and Subsidiaries:
Results of Operations 10
Statements of Consolidated Income 12
Statements of Consolidated Cash Flows 13
Consolidated Balance Sheets 15
Selected Operating Results 17
Entergy Arkansas, Inc.:
Results of Operations 19
Statements of Income 21
Statements of Cash Flows 22
Balance Sheets 23
Selected Operating Results 25
Entergy Gulf States, Inc.:
Results of Operations 27
Statements of Income (Loss) 29
Statements of Cash Flows 30
Balance Sheets 31
Selected Operating Results 33
Entergy Louisiana, Inc.:
Results of Operations 34
Statements of Income 35
Statements of Cash Flows 36
Balance Sheets 37
Selected Operating Results 39
Entergy Mississippi, Inc.:
Results of Operations 41
Statements of Income 43
Statements of Cash Flows 44
Balance Sheets 45
Selected Operating Results 47
Entergy New Orleans, Inc.:
Results of Operations 48
Statements of Income 49
Statements of Cash Flows 50
Balance Sheets 51
Selected Operating Results 53
System Energy Resources, Inc.:
Results of Operations 54
Statements of Income 55
Statements of Cash Flows 56
Balance Sheets 57
Notes to Financial Statements for Entergy Corporation
and Subsidiaries 59
Part II:
Item 1. Legal Proceedings 70
Item 4. Submission of Matters to a Vote of Security Holders 71
Item 5. Other Information 73
Item 6. Exhibits and Reports on Form 8-K 74
Experts 76
Signature 77
<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. None of these companies make any
representations as to information relating to the other companies.
This combined Quarterly Report on Form 10-Q supplements and updates
the Annual Report on the Form 10-K for the calendar year ended
December 31, 1995, filed by the individual registrants with the SEC
and should be read in conjunction therewith. On April 22, 1996, the
operating companies of Entergy Corporation filed amendments to their
articles of incorporation to change their names.
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.
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.
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
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
Money Pool System Money Pool, which allows certain
System companies to borrow from, or lend to,
certain other System companies
MPSC Mississippi Public Service Commission
MWh Megawatt-hour(s)
NRC Nuclear Regulatory Commission
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
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
Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy
Cash Flows
- ----------
Net cash flow from operations for Entergy Corporation, the
operating companies, and System Energy for the six months ended June
30, 1996, and 1995, was as follows:
Six Months Six Months
Company Ended 6/30/96 Ended 6/30/95
------- ------------- -------------
(In Millions)
Entergy Corporation $590.0 $449.7
Entergy Arkansas $157.8 $141.3
Entergy Gulf States $113.6 $100.4
Entergy Louisiana $155.9 $159.7
Entergy Mississippi $ 80.7 $ 74.8
Entergy New Orleans $ 15.0 $ 14.5
System Energy $129.3 $ 51.4
Entergy Arkansas' cash flow from operations increased for the six
months ended June 30, 1996, due to an increase in retail energy
sales. Entergy Gulf States' cash flow from operations increased for
the six months ended June 30, 1996, due to an increase in retail
energy sales partially offset by increased income taxes. System
Energy's net cash flow from operations increased for the six months
ended June 30, 1996, due primarily to refunds made to associated
companies in 1995 resulting from a FERC audit settlement in 1994.
Financing Sources
- -----------------
As discussed in Note 9, on January 5, 1996, Entergy acquired
CitiPower for approximately $1.2 billion. The acquisition was funded
by a $294 million equity investment, with the balance funded by the
issuance of debt. Entergy funded the majority of the equity portion
of the investment with funds borrowed from a $300 million line of
credit. Excluding the CitiPower investment, cash from operations,
supplemented by cash on hand, was sufficient to meet substantially
all investing and financing requirements, including capital
expenditures, dividends, and debt/preferred stock maturities for the
first six months of 1996. Entergy's current ability to fund most of
its capital requirements 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 ability, subject to regulatory approval, 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
high-cost debt and preferred stock prior to maturity. The operating
companies may 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 by Entergy Louisiana Capital I, a financing subsidiary of
Entergy Louisiana. See Note 5 for a further discussion.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
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.
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 June 30, 1996, and assumed annual interest or
dividend rates of 8.5% for bonds and 7.8% 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 $ 820 $ 759
Entergy Gulf States (b) $ 645 $ -
Entergy Louisiana $ 676 $ 972
Entergy Mississippi $ 502 $ 433
Entergy New Orleans $ 93 $ 249
System Energy $ 150 (c)
(a)Includes bonds issuable based on retired bond credits.
(b)Entergy Gulf States was precluded from issuing mortgage bonds and
preferred stock under its earnings coverage tests at June 30,
1996, due to the write-off of River Bend rate deferrals in the
first quarter of 1996, as discussed in Note 8. Amount reflected
above is the amount issuable based on retired bond credits.
(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. At June 30,
1996, Entergy Louisiana and Entergy Mississippi had outstanding short-
term borrowings from the Money Pool of $49.1 million and $2.2
million, respectively.
In addition, Entergy Services and System Fuels had available bank
lines of credit of $34 million and $45 million, respectively, at June
30, 1996. Entergy Corporation had $270 million outstanding under its
$300 million bank credit facility at June 30, 1996, of which $230
million was used for the acquisition of CitiPower in January 1996.
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 June 30,
1996, Entergy Corporation had invested $869.6 million in equity
capital (reduced by $180 million of accumulated losses) in
nonregulated businesses, including CitiPower.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
In addition to investing in nonregulated businesses, Entergy
Corporation's capital requirements result from periodically investing
in, or making loans to, its subsidiaries, and sustaining its
dividends. To meet such capital requirements, Entergy Corporation
will utilize internally generated funds, cash on hand, funds
remaining on its $300 million credit facility, funds received from
its new dividend reinvestment plan, and other bank financings as may
be required. Entergy Corporation receives funds through dividend
payments from its domestic utility subsidiaries. During the first
six months of 1996, such dividend payments from subsidiaries totaled
$147.7 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
1996. Entergy Corporation paid $199.5 million of dividends on its
common stock during the first six 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. An adverse ruling in the River Bend rate
appeal could result in approximately $284 million of potential write-
offs (net of tax) and $193 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.
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,
the 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.
Concurrently 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-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.
As noted in the Form 10-K, Entergy proposed that FERC serve in a
federal "back-stop" role for stranded cost recovery in a holding
company or other multi-state situation. FERC's final rule 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.
Entergy plans to begin discussions with its state and local
regulators regarding the orderly transition to a more competitive
market for electricity. Entergy will be making a series of filings
with regulators during the remainder of the year.
On August 2, 1996, Entergy Mississippi filed with the MPSC a
proposal 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 the area
certificated to Entergy Mississippi 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.
Retail and Wholesale Rate Issues
See Note 2 to the Form 10-K and herein for a discussion of the
ongoing trend of regulatory-ordered rate reductions as well as
incentive and performance-based regulation.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
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 only
a minimal return on investment. During the six months ended June 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 40% of total industrial sales, respectively.
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 still purchase energy from Entergy Louisiana, but at a reduced
level. During the six months ended June 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 energy-related 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.
Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY
AND CAPITAL RESOURCES" for a discussion of Entergy Corporation's
investments in domestic and foreign energy-related businesses. These
investments may involve a greater risk than domestic regulated
utility enterprises. In the six months ended June 30, 1996, Entergy
Corporation's domestic and foreign energy-related investments reduced
consolidated net income by approximately $10.3 million. The power
development investments, in the aggregate, were profitable during the
six months ended June 30, 1996, and management believes that they
will generally 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.
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.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
ANO Matters
- -----------
Entergy Operations has made periodic inspections and repairs on the
boiler tubes in ANO 2's steam generators, which have experienced
cracking. Entergy Operations is gathering information and assessing
various options for the repair or replacement of ANO 2's steam
generators. See Note 1 for additional information.
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 six months ended June 30, 1996, when the related
operating income was $1.8 million and $8.0 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 six months ended June 30, 1996, was due to increased
revenues and reduced operation and maintenance expenses, partially
offset by increased income taxes. Refer to Entergy Gulf States'
Results of Operations for discussion of these trends. 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, the future efficiency and availability of
generating units, and the 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 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 at $21.5 million.
Environmental Issues
- --------------------
Entergy Gulf States has been notified by the U. S. Environmental
Protection Agency (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.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
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.
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 should
discontinue application of SFAS 71 for the relevant portion of its
obligations. The discontinuation should be reported 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 its 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 June 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,
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 six months ended
June 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 June
30, 1996, primarily due to lower other operation and maintenance
expenses for domestic regulated operations as a result of
restructuring programs, as discussed in Note 7, and ongoing operating
efficiency improvement programs throughout Entergy. Consolidated net
income decreased for the six months ended June 30, 1996, 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.
Excluding the above mentioned items, net income would have increased
$57 million for the six months ended June 30, 1996, primarily due to
lower other operation and maintenance expenses as discussed above and
higher retail energy sales.
Significant factors affecting the results of operations and causing
variances between the three months and six months ended June 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 six
months ended June 30, 1996, are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
---------------- ------------------- -------------------
(In Millions)
Change in base revenues $(26.3) $(52.3)
Rate riders 11.0 13.6
Fuel cost recovery 126.6 228.1
Sales volume/weather 35.3 102.4
Other revenue (including (14.8) (44.5)
unbilled)
Sales for resale 25.3 45.4
------ ------
Total $157.1 $292.7
====== ======
Electric operating revenues increased for the three and six months
ended June 30, 1996, as a result of higher fuel adjustment revenues,
which do not affect net income, and increases in retail sales and
sales for resale, partially offset by rate reductions at various
operating companies. More severe weather in 1996 and non-weather
related volume growth contributed to the increase in retail electric
operating revenues for the six months ended June 30, 1996. The
increase in sales for resale was primarily the result of increased
energy sales outside of Entergy's service area.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Gas operating revenues increased for the three months and six
months ended June 30, 1996, because of increased sales related to
colder than normal winter weather in the first quarter of 1996 and a
higher unit purchase price for gas purchased for resale.
Nonregulated and foreign-energy related business revenues increased
for the three months and six months ended June 30, 1996, as a result
of the January 1996 acquisition of CitiPower. See Note 9 for
additional information regarding CitiPower.
Expenses
- --------
Operating expenses for the three months and six months ended June
30, 1996, include the operating expenses of CitiPower, which were not
included in the prior year financial statements. See Note 9 for
additional information regarding CitiPower. Excluding the operating
expenses of CitiPower, Entergy's operating expenses increased for the
three months and six months ended June 30, 1996. The following
discussion excludes the impact of the acquisition of CitiPower.
Fuel and purchased power expenses increased as a result of the
increase in energy sales as discussed above and higher fuel costs.
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 three months and six months ended June 30,
1996, due to lower payroll related expenses, resulting from
restructuring programs 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, the deferral of a
portion of the proposed System Energy rate increase at Entergy
Mississippi and Entergy New Orleans, and the deferral of least cost
planning expenses at Entergy New Orleans. Nuclear refueling outage
expenses decreased primarily due to a 1995 refueling outage at Grand
Gulf 1.
Interest charges increased for the three months and six months
ended June 30, 1996, due primarily to interest on long-term debt
related to the investment in CitiPower and borrowings by Entergy
Corporation from a $300 million line of credit. Excluding this
increase, interest expense decreased $6.1 million and $11.6 million
for the three months and six months ended June 30, 1996, due to
ongoing retirement and refinancing of high cost debt at the operating
companies and System Energy.
Other
- -----
Other Income decreased for the three months and six months ended
June 30, 1996, primarily due to a decrease in interest income as a
result of lower balances in temporary cash investments, and a
decrease in Grand Gulf 1 carrying charges at Entergy Arkansas because
of a decline in the deferral balance. In addition, Other Income
decreased for the six months ended June 30, 1996, as a result of the
write-off of River Bend rate deferrals pursuant to SFAS 121, as
discussed in Note 8.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Three and Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In Thousands, Except Share Data)
Operating Revenues:
Electric $1,674,610 $1,517,488 $3,087,678 $2,794,978
Natural gas 28,991 20,118 86,464 60,788
Steam products 15,214 12,791 30,792 23,423
Nonregulated and foreign energy-related business 133,710 14,520 246,583 23,128
--------- --------- --------- ---------
Total 1,852,525 1,564,917 3,451,517 2,902,317
--------- --------- --------- ---------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 405,549 308,612 781,313 597,572
Purchased power 189,153 89,234 347,310 171,743
Nuclear refueling outage expenses 13,739 34,167 27,948 53,181
Other operation and maintenance 380,085 376,840 733,297 736,433
Depreciation, amortization, and decommissioning 195,100 170,932 389,667 341,412
Taxes other than income taxes 89,942 73,887 178,913 150,522
Income taxes 121,920 107,522 184,506 137,143
Rate deferrals (11,273) - (31,075) -
Amortization of rate deferrals 90,213 76,622 181,724 158,390
--------- --------- --------- ---------
Total 1,474,428 1,237,816 2,793,603 2,346,396
--------- --------- --------- ---------
Operating Income 378,097 327,101 657,914 555,921
--------- --------- --------- ---------
Other Income (Deductions):
Allowance for equity funds used
during construction 2,796 2,353 5,354 4,847
Write-off of River Bend rate deferrals - - (194,498) -
Miscellaneous - net 13,834 20,277 24,613 37,833
Income taxes (5,553) (3,281) 9,353 (9,900)
--------- --------- --------- ---------
Total 11,077 19,349 (155,178) 32,780
--------- --------- --------- ---------
Interest Charges:
Interest on long-term debt 174,704 161,042 347,547 321,673
Other interest - net 10,098 5,662 21,945 14,652
Allowance for borrowed funds used
during construction (2,329) (2,007) (4,467) (4,204)
Preferred and preference dividend requirements of
subsidiaries and other 18,378 19,050 36,459 38,900
--------- --------- --------- ---------
Total 200,851 183,747 401,484 371,021
--------- --------- --------- ---------
Income before the Cumulative Effect of
Accounting Change 188,323 162,703 101,252 217,680
Cumulative Effect of Accounting
Change (net of income taxes) - - - 35,415
--------- --------- --------- ---------
Net Income $188,323 $162,703 $101,252 $253,095
=========== =========== =========== ===========
Earnings per average common share before
cumulative effect of accounting change $0.83 $0.71 $0.44 $0.96
Earnings per average common share $0.83 $0.71 $0.44 $1.11
Dividends declared per common share - - $0.90 $0.90
Average number of common shares outstanding 228,036,032 227,747,609 227,908,318 227,582,228
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $101,252 $253,095
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 210,399 162,963
Depreciation, amortization, and decommissioning 390,038 339,101
Deferred income taxes and investment tax credits (49,738) (2,091)
Allowance for equity funds used during construction (5,354) (4,847)
Changes in working capital:
Receivables (101,595) (91,462)
Fuel inventory 7,348 (37,175)
Accounts payable 7,740 (74,712)
Taxes accrued 63,797 77,924
Interest accrued (6,238) (7,924)
Other working capital accounts (132,057) (170,930)
Decommissioning trust contributions (26,157) (12,653)
Provision for estimated losses and reserves 15,753 16,451
Other (79,674) 37,422
-------- --------
Net cash flow provided by operating activities 590,012 449,747
-------- --------
Investing Activities:
Construction/capital expenditures (285,411) (243,061)
Allowance for equity funds used during construction 5,354 4,847
Nuclear fuel purchases (73,782) (177,776)
Proceeds from sale/leaseback of nuclear fuel 54,241 210,265
Acquisition of CitiPower (1,156,112) -
Investment in nonregulated/nonutility properties (6,426) (46,243)
Other (20,752) -
--------- --------
Net cash flow used in investing activities (1,482,888) (251,968)
--------- --------
Financing Activities:
Proceeds from the issuance of:
General and refunding mortgage bonds 39,608 109,285
First mortgage bonds 198,250 -
Bank notes and other long-term debt 947,443 43,538
Retirement of:
First mortgage bonds (357,016) (96,025)
General and refunding mortgage bonds (30,000) (44,200)
Other long-term debt (93,373) (45,404)
Redemption of preferred stock (25,580) (26,250)
Changes in short-term borrowings - net 225,025 (103,534)
Common stock dividends paid (199,493) (204,267)
--------- --------
Net cash flow provided by (used in) financing activities 704,864 (366,857)
--------- --------
Effect of exchange rates on cash and cash equivalents 73 -
--------- --------
Net decrease in cash and cash equivalents (187,939) (169,078)
Cash and cash equivalents at beginning of period 533,590 613,907
--------- --------
Cash and cash equivalents at end of period $345,651 $444,829
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $354,051 $323,218
Income taxes $159,719 $86,327
Noncash investing and financing activities:
Capital lease obligations incurred $16,358 -
Change in unrealized appreciation/depreciation of
decommissioning trust assets ($11,103) $17,521
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $22,449,711 $21,698,593
Plant acquisition adjustment - Entergy Gulf States 463,557 471,690
Electric plant under leases 677,821 675,425
Property under capital leases - electric 153,166 145,146
Natural gas 167,927 166,872
Steam products 77,541 77,551
Construction work in progress 541,001 482,950
Nuclear fuel under capital leases 266,970 312,782
Nuclear fuel 69,091 49,100
---------- ----------
Total 24,866,785 24,080,109
Less - accumulated depreciation and amortization 8,564,155 8,259,318
---------- ----------
Utility plant - net 16,302,630 15,820,791
---------- ----------
Other Property and Investments:
Decommissioning trust funds 305,546 277,716
Other 456,538 434,619
---------- ----------
Total 762,084 712,335
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 51,666 42,822
Temporary cash investments - at cost,
which approximates market 293,985 490,768
---------- ----------
Total cash and cash equivalents 345,651 533,590
Notes receivable 5,397 6,907
Accounts receivable:
Customer (less allowance for doubtful accounts of
$8.6 million in 1996 and $7.1 million in 1995) 381,297 333,343
Other 74,105 59,176
Accrued unbilled revenues 389,655 293,461
Deferred fuel 99,064 25,924
Fuel inventory 114,969 122,167
Materials and supplies - at average cost 351,919 345,330
Rate deferrals 431,950 420,221
Prepayments and other 160,485 175,121
---------- ----------
Total 2,354,492 2,315,240
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 620,647 1,033,282
SFAS 109 regulatory asset - net 1,205,370 1,279,495
Unamortized loss on reacquired debt 221,161 224,131
Other regulatory assets 386,677 329,397
Long-term receivables 221,206 224,726
CitiPower license (net of $7.7 million of amortization) 620,988 -
Other 350,476 326,533
---------- ----------
Total 3,626,525 3,417,564
---------- ----------
TOTAL $23,045,731 $22,265,930
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $.01 par value, authorized 500,000,000
shares; issued 230,017,485 shares $2,300 $2,300
Paid-in capital 4,200,883 4,201,483
Retained earnings 2,231,591 2,335,579
Cumulative foreign currency translation adjustment 19,344 -
Less - treasury stock (1,976,132 shares in 1996 and
2,251,318 in 1995) 59,772 67,642
---------- ----------
Total common shareholders' equity 6,394,346 6,471,720
Subsidiary's preference stock 150,000 150,000
Subsidiaries' preferred stock:
Without sinking fund 550,955 550,955
With sinking fund 227,985 253,460
Long-term debt 7,853,286 6,777,124
---------- ----------
Total 15,176,572 14,203,259
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 271,192 303,664
Other 349,155 326,804
---------- ----------
Total 620,347 630,468
---------- ----------
Current Liabilities:
Currently maturing long-term debt 257,603 558,650
Notes payable 270,692 45,667
Accounts payable 509,916 460,379
Customer deposits 149,080 140,054
Taxes accrued 271,625 207,828
Accumulated deferred income taxes 105,685 72,847
Interest accrued 189,678 195,445
Dividends declared 11,655 12,194
Obligations under capital leases 149,812 151,140
Other 182,228 247,039
---------- ----------
Total 2,097,974 2,091,243
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 3,631,027 3,777,644
Accumulated deferred investment tax credits 600,656 612,701
Other 919,155 950,615
---------- ----------
Total 5,150,838 5,340,960
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $23,045,731 $22,265,930
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months and Six Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 516.5 $ 480.0 $ 36.5 8
Commercial 380.1 357.3 22.8 6
Industrial 497.0 433.0 64.0 15
Governmental 41.2 37.5 3.7 10
--------- --------- -------
Total retail 1,434.8 1,307.8 127.0 10
Sales for resale 103.4 78.2 25.2 32
Other 136.4 131.5 4.9 4
--------- --------- -------
Total $ 1,674.6 $ 1,517.5 $ 157.1 10
========= ========= =======
Billed Electric Energy
Sales (Millions of KWh):
Residential 6,305 6,047 258 4
Commercial 5,084 4,958 126 3
Industrial 10,984 10,325 659 6
Governmental 591 564 27 5
--------- --------- -------
Total retail 22,964 21,894 1,070 5
Sales for resale 3,235 2,404 831 35
--------- --------- -------
Total 26,199 24,298 1,901 8
========= ========= =======
Six Months Ended Increase/
Description 1996 1995 (Decreas) %
(In Millions)
Electric Operating Revenues:
Residential $ 1,023.5 $ 921.5 $ 102.0 11
Commercial 734.6 682.0 52.6 8
Industrial 957.3 847.0 110.3 13
Governmental 80.0 72.7 7.3 10
--------- --------- -------
Total retail 2,795.4 2,523.2 272.2 11
Sales for resale 193.6 148.2 45.4 31
Other 98.7 123.6 (24.9) (20)
--------- --------- -------
Total $ 3,087.7 $ 2,795.0 $ 292.7 10
========= ========= =======
Billed Electric Energy
Sales (Millions of KWh):
Residential 12,972 11,907 1,065 9
Commercial 9,877 9,431 446 5
Industrial 21,429 20,360 1,069 5
Governmental 1,147 1,103 44 4
--------- --------- -------
Total retail 45,425 42,801 2,624 6
Sales for resale 5,809 4,248 1,561 37
--------- --------- -------
Total 51,234 47,049 4,185 9
========= ========= =======
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
- ----------
Net income increased for the three months ended June 30, 1996, as a
result of increased retail energy sales due to extreme weather in the
current year.
Net income decreased for the six months ended June 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 $16.4 million for the six months ended
June 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 six months ended June 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
six months ended June 30, 1996, are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
------------ ------------------- -------------------
(In Millions)
Change in base revenues $(5.8) $(9.0)
Rate riders 2.1 0.3
Fuel cost recovery 7.3 5.5
Sales volume/weather 12.2 24.5
Other revenue (including (1.9) (4.8)
unbilled)
Sales for resale 41.9 82.8
----- -----
Total $55.8 $99.3
===== =====
Electric operating revenues increased for the three months and six
months ended June 30, 1996, primarily due to increased retail energy
sales and sales for resale. The increase in sales for resale is due
to higher generation availability than in the same period of 1995.
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.
Expenses
- --------
Operating expenses increased for the three months and six months
ended June 30, 1996, due to an increase in fuel, purchased power, and
income tax expense. 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 because of higher pretax income.
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The increase in operating expenses for the six months ended June
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 in the three months and
six months ended June 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 Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In Thousands) (In Thousands)
Operating Revenues $467,990 $412,164 $851,071 $751,760
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 66,475 63,639 131,675 104,806
Purchased power 121,631 84,176 220,256 165,923
Nuclear refueling outage expenses 7,541 7,903 15,083 17,088
Other operation and maintenance 85,871 85,786 169,136 179,444
Depreciation, amortization, and decommissioning 40,786 39,602 81,816 78,954
Taxes other than income taxes 10,425 9,984 19,443 20,095
Income taxes 29,714 23,813 33,305 20,474
Amortization of rate deferrals 30,024 29,894 66,470 67,927
-------- -------- -------- --------
Total 392,467 344,797 737,184 654,711
-------- -------- -------- --------
Operating Income 75,523 67,367 113,887 97,049
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,061 691 2,151 1,606
Miscellaneous - net 7,891 10,820 16,130 26,352
Income taxes (3,205) (4,241) (6,433) (10,338)
-------- -------- -------- --------
Total 5,747 7,270 11,848 17,620
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 24,932 26,611 49,767 53,544
Other interest - net 1,260 624 2,287 3,740
Allowance for borrowed funds used
during construction (634) (442) (1,299) (1,173)
-------- -------- -------- --------
Total 25,558 26,793 50,755 56,111
-------- -------- -------- --------
Income before the Cumulative Effect of
Accounting Change 55,712 47,844 74,980 58,558
Cumulative Effect of Accounting
Change (net of income taxes) - - - 35,415
-------- -------- -------- --------
Net Income 55,712 47,844 74,980 93,973
Preferred Stock Dividend Requirements
and Other 4,426 4,545 8,884 9,106
-------- -------- -------- --------
Earnings Applicable to Common Stock $51,286 $43,299 $66,096 $84,867
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $74,980 $93,973
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (35,415)
Change in rate deferrals/excess capacity-net 69,808 61,207
Depreciation, amortization, and decommissioning 81,816 78,954
Deferred income taxes and investment tax credits (28,555) (11,005)
Allowance for equity funds used during construction (2,151) (1,606)
Changes in working capital:
Receivables (28,948) (41,124)
Fuel inventory 23 (34,626)
Accounts payable (7,352) 33,684
Taxes accrued 15,028 28,691
Interest accrued (3,500) (759)
Other working capital accounts 2,254 (29,974)
Decommissioning trust contributions (7,530) (6,071)
Provision for estimated losses and reserves 2,362 3,522
Other (10,471) 1,829
-------- --------
Net cash flow provided by operating activities 157,764 141,280
-------- --------
Investing Activities:
Construction expenditures (67,212) (78,692)
Allowance for equity funds used during construction 2,151 1,606
Nuclear fuel purchases (26,049) (32,874)
Proceeds from sale/leaseback of nuclear fuel 25,437 32,831
-------- --------
Net cash flow used in investing activities (65,673) (77,129)
-------- --------
Financing Activities:
Proceeds from issuance of first mortgage bonds 84,256 -
Retirement of first mortgage bonds (112,807) (25,600)
Redemption of preferred stock (4,000) (7,000)
Changes in short-term borrowings - net (34,000)
Dividends paid:
Common stock (15,300) (40,300)
Preferred stock (8,983) (9,321)
-------- --------
Net cash flow used in financing activities (56,834) (116,221)
-------- --------
Net increase (decrease) in cash and cash equivalents 35,257 (52,070)
Cash and cash equivalents at beginning of period 11,798 80,756
-------- --------
Cash and cash equivalents at end of period $47,055 $28,686
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $49,169 $51,392
Income taxes $56,452 $13,843
Noncash investing and financing activities:
Capital lease obligations incurred $16,358 -
Change in unrealized appreciation/depreciation of
decommissioning trust assets ($7,482) $11,347
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $4,472,179 $4,438,519
Property under capital leases 60,287 48,968
Construction work in progress 131,685 119,874
Nuclear fuel under capital lease 99,235 98,691
---------- ----------
Total 4,763,386 4,706,052
Less - accumulated depreciation and amortization 1,911,817 1,846,112
---------- ----------
Utility plant - net 2,851,569 2,859,940
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 11,122 11,122
Decommissioning trust fund 174,615 166,832
Other - at cost (less accumulated depreciation) 4,976 5,085
---------- ----------
Total 190,713 183,039
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 5,787 7,780
Temporary cash investments - at cost,
which approximates market:
Associated companies 20,913 908
Other 20,355 3,110
---------- ----------
Total cash and cash equivalents 47,055 11,798
Accounts receivable:
Customer (less allowance for doubtful accounts
of $2.1 million in 1996 and 1995) 75,038 75,445
Associated companies 43,477 40,577
Other 7,687 6,962
Accrued unbilled revenues 119,286 93,556
Fuel inventory - at average cost 57,433 57,456
Materials and supplies - at average cost 77,108 75,030
Rate deferrals 142,388 131,634
Deferred excess capacity 13,081 11,088
Deferred nuclear refueling outage costs 16,975 32,824
Prepayments and other 11,805 15,215
---------- ----------
Total 611,333 551,585
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 151,819 228,390
Deferred excess capacity - 5,984
SFAS 109 regulatory asset - net 228,887 219,906
Unamortized loss on reacquired debt 58,448 58,684
Other regulatory assets 78,101 68,160
Other 29,886 28,727
---------- ----------
Total 547,141 609,851
---------- ----------
TOTAL $4,200,756 $4,204,415
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
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 543,182 492,386
---------- ----------
Total common shareholder's equity 1,134,446 1,083,700
Preferred stock:
Without sinking fund 176,350 176,350
With sinking fund 45,027 49,027
Long-term debt 1,253,743 1,281,203
---------- ----------
Total 2,609,566 2,590,280
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 106,862 93,574
Other 73,336 67,444
---------- ----------
Total 180,198 161,018
---------- ----------
Current Liabilities:
Currently maturing long-term debt 32,900 28,700
Notes payable 667 667
Accounts payable:
Associated companies 40,283 42,156
Other 114,771 120,250
Customer deposits 19,811 18,594
Taxes accrued 55,187 40,159
Accumulated deferred income taxes 61,755 48,992
Interest accrued 26,740 30,240
Dividends declared 4,359 4,458
Co-owner advances 24,331 34,450
Deferred fuel cost 15,024 17,837
Obligations under capital leases 52,660 54,697
Other 23,026 26,238
---------- ----------
Total 471,514 467,438
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 793,757 823,471
Accumulated deferred investment tax credits 110,584 112,890
Other 35,137 49,318
---------- ----------
Total 939,478 985,679
---------- ----------
Commitments and Contingencies (Note 1)
TOTAL $4,200,756 $4,204,415
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY ARKANSAS, INC.
SELECTED OPERATING RESULTS
For the Three Months and Six Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 118.3 $ 109.0 $ 9.3 9
Commercial 77.4 73.9 3.5 5
Industrial 87.2 84.9 2.3 3
Governmental 4.1 4.0 0.1 2
------- ------- ------
Total retail 287.0 271.8 15.2 6
Sales for resale
Associated companies 75.5 51.2 24.3 47
Non-associated companies 58.1 40.5 17.6 43
Other 47.4 48.7 (1.3) (3)
------- ------- ------
Total $ 468.0 $ 412.2 $ 55.8 14
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 1,274 1,149 125 11
Commercial 1,038 976 62 6
Industrial 1,566 1,515 51 3
Governmental 57 66 (9) (14)
------- ------- ------
Total retail 3,935 3,706 229 6
Sales for resale
Associated companies 3,113 2,396 717 30
Non-associated companies 2,035 1,243 792 64
------- ------- ------
Total 9,083 7,345 1,738 24
======= ======= ======
Six Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 250.5 $ 233.2 $ 17.3 7
Commercial 147.9 142.2 5.7 4
Industrial 165.0 162.5 2.5 2
Governmental 8.2 8.0 0.2 2
------- ------- ------
Total retail 571.6 545.9 25.7 5
Sales for resale
Associated companies 135.4 80.3 55.1 69
Non-associated companies 106.9 79.1 27.8 35
Other 37.2 46.5 (9.3) (20)
------- ------- ------
Total $ 851.1 $ 751.8 $ 99.3 13
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 2,845 2,576 269 10
Commercial 2,034 1,923 111 6
Industrial 3,092 2,954 138 5
Governmental 113 119 (6) (5)
------- ------- ------
Total retail 8,084 7,572 512 7
Sales for resale
Associated companies 5,767 3,755 2,012 54
Non-associated companies 3,708 2,199 1,509 69
------- ------- ------
Total 17,559 13,526 4,033 30
======= ======= ======
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
- ----------
Net income increased for the three months ended June 30, 1996, due
primarily to lower other operation and maintenance expenses,
partially offset by increased income tax expense.
Net income decreased for the six months ended June 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, net
income for the six months ended June 30, 1996, would have increased
$22 million primarily due to increased electric retail energy sales
and lower other operation and maintenance expenses, partially offset
by increased income tax expense.
Significant factors affecting the results of operations and causing
variances between the three months and six months ended June 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
six months ended June 30, 1996, are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
----------- ------------------- -------------------
(In Millions)
Change in base revenues $(16.6) $(19.2)
Fuel cost recovery 57.3 91.3
Sales volume/weather 19.8 46.5
Other revenue (including (4.9) (12.3)
unbilled)
Sales for resale (14.4) (17.7)
------ ------
Total $41.2 $88.6
====== ======
Electric operating revenues increased for the three and six months
ended June 30, 1996, as a result of higher fuel adjustment revenues,
which do not affect net income, and increased customer usage,
partially attributable to more severe winter and summer weather than
in the same periods in 1995. 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 six months ended June 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 six months
ended June 30, 1996, as a result of higher fuel expenses, including
purchased power, and higher income taxes. These increases were
partially offset by a decrease in other operation and maintenance
expenses. Fuel and purchased power expenses, taken together,
increased because of higher gas prices and increased energy
requirements resulting from higher energy sales. 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.
Other operation and maintenance expenses decreased for the three
months and six months ended June 30, 1996, principally due to lower
payroll-related expenses associated with restructuring programs
accrued for in 1995.
Other
- -----
Other income decreased for the six months ended June 30, 1996, 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. Income taxes on other income for the
same period decreased as a result of this write-off.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF INCOME (LOSS)
For the Three and Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In Thousands) (In Thousands)
Operating Revenues:
Electric $503,490 $462,297 $929,667 $841,088
Natural gas 6,863 4,521 21,739 14,444
Steam products 15,214 12,791 30,792 23,423
-------- -------- -------- --------
Total 525,567 479,609 982,198 878,955
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 125,057 126,908 242,466 241,829
Purchased power 86,760 37,918 154,594 78,475
Nuclear refueling outage expenses 2,572 2,743 4,932 5,774
Other operation and maintenance 97,730 108,472 194,471 209,876
Depreciation, amortization, and decommissioning 51,504 50,392 102,755 100,731
Taxes other than income taxes 25,205 24,752 51,539 50,131
Income taxes 28,870 23,140 40,853 22,978
Amortization of rate deferrals 18,319 16,506 35,963 33,012
-------- -------- -------- --------
Total 436,017 390,831 827,573 742,806
-------- -------- -------- --------
Operating Income 89,550 88,778 154,625 136,149
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 739 266 1,232 517
Write-off of River Bend rate deferrals - - (194,498) -
Miscellaneous - net 5,690 5,696 10,630 11,610
Income taxes (2,032) (2,164) 16,711 (3,029)
-------- -------- -------- --------
Total 4,397 3,798 (165,925) 9,098
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 46,476 48,357 92,964 96,627
Other interest - net 959 1,083 1,909 2,093
Allowance for borrowed funds used
during construction (628) (217) (1,056) (461)
-------- -------- -------- --------
Total 46,807 49,223 93,817 98,259
-------- -------- -------- --------
Net Income (Loss) 47,140 43,353 (105,117) 46,988
Preferred and Preference Stock
Dividend Requirements and Other 7,066 7,426 14,285 15,016
-------- -------- -------- --------
Earnings (Loss) Applicable to Common Stock $40,074 $35,927 ($119,402) $31,972
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income (loss) ($105,117) $46,988
Noncash items included in net income (loss):
Write-off of River Bend rate deferrals 194,498 -
Change in rate deferrals 35,963 33,012
Depreciation, amortization, and decommissioning 102,755 101,113
Deferred income taxes and investment tax credits 23,368 25,403
Allowance for equity funds used during construction (1,232) (517)
Changes in working capital:
Receivables (17,731) (7,940)
Fuel inventory (4,962) (1,894)
Accounts payable 6,912 (34,007)
Taxes accrued 1,869 24,832
Interest accrued (16,162) (9,334)
Reserve for rate refund 2,381
Other working capital accounts (79,869) (87,395)
Decommissioning trust contributions (2,961) (1,478)
Provision for estimated losses and reserves (8,222) 4,232
Other (15,525) 4,954
-------- --------
Net cash flow provided by operating activities 113,584 100,350
-------- --------
Investing Activities:
Construction expenditures (84,521) (53,779)
Allowance for equity funds used during construction 1,232 517
Nuclear fuel purchases (21,580) -
Proceeds from sale/leaseback of nuclear fuel 23,375 -
-------- --------
Net cash flow used in investing activities (81,494) (53,262)
-------- --------
Financing Activities:
Proceeds from the issuance of long-term debt 780 2,277
Retirement of:
First mortgage bonds (65,959) -
Other long-term debt (425) -
Redemption of preferred and preference stock (4,204) (2,250)
Dividends paid on preferred and preference stock (14,198) (14,917)
-------- --------
Net cash flow used in financing activities (84,006) (14,890)
-------- --------
Net increase (decrease) in cash and cash equivalents (51,916) 32,198
Cash and cash equivalents at beginning of period 234,604 104,644
-------- --------
Cash and cash equivalents at end of period $182,688 $136,842
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $105,598 $102,618
Income taxes $70 $77
Noncash investing and financing activities:
Change in unrealized appreciation/depreciation of
decommissioning trust assets ($752) $1,651
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $6,984,549 $6,942,983
Natural gas 45,789 45,789
Steam products 77,541 77,551
Property under capital leases 76,108 77,918
Construction work in progress 185,676 148,043
Nuclear fuel under capital lease 59,666 69,853
---------- ----------
Total 7,429,329 7,362,137
Less - accumulated depreciation and amortization 2,758,105 2,664,943
---------- ----------
Utility plant - net 4,671,224 4,697,194
---------- ----------
Other Property and Investments:
Decommissioning trust fund 36,067 32,943
Other - at cost (less accumulated depreciation) 23,392 28,626
---------- ----------
Total 59,459 61,569
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 15,182 13,751
Temporary cash investments - at cost,
which approximates market:
Associated companies 75,232 46,336
Other 92,274 174,517
---------- ----------
Total cash and cash equivalents 182,688 234,604
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1.6 million in 1996 and 1995) 114,364 110,187
Associated companies 1,301 1,395
Other 18,662 15,497
Accrued unbilled revenues 83,864 73,381
Deferred fuel costs 79,825 31,154
Accumulated deferred income taxes 30,737 43,465
Fuel inventory - at average cost 37,103 32,141
Materials and supplies - at average cost 91,576 91,288
Rate deferrals 101,542 97,164
Prepayments and other 18,337 15,566
---------- ----------
Total 759,999 745,842
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 172,886 419,904
SFAS 109 regulatory asset - net 376,103 453,628
Unamortized loss on reacquired debt 57,087 61,233
Other regulatory assets 24,935 27,836
Long-term receivables 221,207 224,727
Other 174,614 169,125
---------- ----------
Total 1,026,832 1,356,453
---------- ----------
TOTAL $6,517,514 $6,861,058
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
100 shares $114,055 $114,055
Paid-in capital 1,152,592 1,152,505
Retained earnings 238,301 357,704
---------- ----------
Total common shareholder's equity 1,504,948 1,624,264
Preference stock 150,000 150,000
Preferred stock:
Without sinking fund 136,444 136,444
With sinking fund 83,450 87,654
Long-term debt 2,093,682 2,175,471
---------- ----------
Total 3,968,524 4,173,833
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 98,295 108,078
Other 70,767 78,245
---------- ----------
Total 169,062 186,323
---------- ----------
Current Liabilities:
Currently maturing long-term debt 160,425 145,425
Accounts payable:
Associated companies 42,638 31,349
Other 132,151 136,528
Customer deposits 23,187 21,983
Taxes accrued 39,282 37,413
Interest accrued 40,675 56,837
Nuclear refueling reserve 7,026 22,627
Obligations under capital leases 38,086 37,773
Other 72,911 86,653
---------- ----------
Total 556,381 576,588
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 1,114,218 1,177,144
Accumulated deferred investment tax credits 205,709 208,618
Deferred River Bend finance charges 45,868 58,047
Other 457,752 480,505
---------- ----------
Total 1,823,547 1,924,314
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $6,517,514 $6,861,058
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY GULF STATES, INC.
SELECTED OPERATING RESULTS
For the Three Months and Six Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Department Operating Revenues:
Residential $ 141.9 $ 132.6 $ 9.3 7
Commercial 109.4 99.3 10.1 10
Industrial 177.0 145.2 31.8 22
Governmental 7.8 6.2 1.6 26
------- ------- ------
Total retail 436.1 383.3 52.8 14
Sales for resale
Associated companies 2.8 22.6 (19.8) (88)
Non-associated companies 21.2 15.8 5.4 34
Other 43.4 40.6 2.8 7
------- ------- ------
Total Electric Department $ 503.5 $ 462.3 $ 41.2 9
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 1,821 1,754 67 4
Commercial 1,556 1,507 49 3
Industrial 4,163 3,677 486 13
Governmental 110 63 47 75
------- ------- ------
Total retail 7,650 7,001 649 9
Sales for resale
Associated companies 84 1,057 (973) (92)
Non-associated companies 678 548 130 24
------- ------- ------
Total Electric Department 8,412 8,606 (194) (2)
Steam Department 437 452 (15) (3)
------- ------- ------
Total 8,849 9,058 (209) (2)
======= ======= ======
Six Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Department Operating Revenues:
Residential $ 276.6 $ 249.1 $ 27.5 11
Commercial 211.9 191.6 20.3 11
Industrial 337.6 287.5 50.1 17
Governmental 14.8 12.4 2.4 19
------- ------- ------
Total retail 840.9 740.6 100.3 14
Sales for resale
Associated companies 5.5 32.8 (27.3) (83)
Non-associated companies 40.2 30.6 9.6 31
Other 43.1 37.1 6.0 16
------- ------- ------
Total Electric Department $ 929.7 $ 841.1 $ 88.6 11
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 3,645 3,315 330 10
Commercial 3,018 2,849 169 6
Industrial 8,064 7,347 717 10
Governmental 203 151 52 34
------- ------- ------
Total retail 14,930 13,662 1,268 9
Sales for resale
Associated companies 140 1,558 (1,418) (91)
Non-associated companies 1,178 1,021 157 15
------- ------- ------
Total Electric Department 16,248 16,241 7 -
Steam Department 853 849 4 -
------- ------- ------
Total 17,101 17,090 11 -
======= ======= ======
<PAGE>
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
- ----------
Net income increased for the three months ended June 30, 1996, due
primarily to a decrease in other operation and maintenance expenses.
Net income increased for the six months ended June 30, 1996, as the
result of an increase in retail energy sales and a decrease in other
operation and maintenance expenses and interest on long-term debt,
partially offset by increased income taxes.
Significant factors affecting the results of operations and causing
variances between the three months and six months ended June 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
six months ended June 30, 1996, are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
----------- ------------------- -------------------
(In Millions)
Change in base revenues $(4.7) $(18.5)
Fuel cost recovery 51.4 105.7
Sales volume/weather 2.4 22.9
Other revenue (including 0.9 0.3
unbilled)
Sales for resale 1.2 5.2
----- ------
Total $51.2 $115.6
===== ======
Electric operating revenues increased for the three months and six
months ended June 30, 1996, primarily due to higher fuel adjustment
revenues, which do not affect net income, and 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. A
base rate reduction ordered in the second quarter of 1995 and a
subsequent 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 six months
ended June 30, 1996, due primarily to an increase in fuel and
purchased power expenses and higher taxes other than income taxes
partially offset by a decrease in other operation and maintenance
expenses and the recording of rate deferrals in 1996. The increase
in fuel and purchased power is primarily the result of increased
energy sales. See discussion in "Revenues and Sales" above. Higher
gas costs also contributed to the increase in fuel expenses. Taxes
other than income taxes increased for the three months and six months
ended June 30, 1996, largely as a result of the expiration of
Waterford 3's local property tax exemption in December 1995, and was
offset by the recording of the LPSC-approved rate deferral for these
taxes as discussed in Note 2. Other operation and maintenance
expenses decreased due to lower payroll expenses partially offset by
a 1995 court settlement that reduced legal expenses. Higher pretax
income resulted in increased income tax expenses for the six months
ended June 30, 1996.
Interest on long-term debt decreased for the six months ended June
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 Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In Thousands) (In Thousands)
Operating Revenues $457,847 $406,575 $875,614 $760,037
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 100,662 59,551 191,342 111,601
Purchased power 100,062 93,478 200,937 168,473
Nuclear refueling outage expenses 3,933 4,516 7,933 9,033
Other operation and maintenance 70,907 73,265 136,677 146,269
Depreciation, amortization, and decommissioning 41,931 38,910 83,672 77,417
Taxes other than income taxes 18,246 14,332 37,980 30,048
Income taxes 32,165 29,667 54,693 48,363
Rate deferrals (4,516) - (11,375) -
Amortization of rate deferrals 6,886 6,886 13,546 13,546
-------- -------- -------- --------
Total 370,276 320,605 715,405 604,750
-------- -------- -------- --------
Operating Income 87,571 85,970 160,209 155,287
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 249 539 526 1,103
Miscellaneous - net 442 209 728 581
Income taxes (75) 37 (101) 12
-------- -------- -------- --------
Total 616 785 1,153 1,696
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 31,062 32,512 61,779 65,084
Other interest - net 2,163 1,660 4,499 3,745
Allowance for borrowed funds used
during construction (423) (499) (831) (990)
-------- -------- -------- --------
Total 32,802 33,673 65,447 67,839
-------- -------- -------- --------
Net Income 55,385 53,082 95,915 89,144
Preferred Stock Dividend Requirements
and Other 5,253 5,219 10,168 10,810
-------- -------- -------- --------
Earnings Applicable to Common Stock $50,132 $47,863 $85,747 $78,334
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $95,915 $89,144
Noncash items included in net income:
Change in rate deferrals 13,546 13,546
Depreciation, amortization, and decommissioning 83,672 77,417
Deferred income taxes and investment tax credits (12,206) (10,535)
Allowance for equity funds used during construction (526) (1,103)
Changes in working capital:
Receivables (25,733) (7,873)
Accounts payable 3,694 5,084
Taxes accrued 40,291 27,686
Interest accrued (5,901) (2,216)
Other working capital accounts (14,593) (30,279)
Decommissioning trust contributions (6,593) (2,408)
Other (15,684) 1,264
-------- --------
Net cash flow provided by operating activities 155,882 159,727
-------- --------
Investing Activities:
Construction expenditures (53,592) (43,559)
Allowance for equity funds used during construction 526 1,103
Nuclear fuel purchases (40,493)
Proceeds from sale/leaseback of nuclear fuel 40,493
-------- --------
Net cash flow used in investing activities (53,066) (42,456)
-------- --------
Financing Activities:
Proceeds from the issuance of first mortgage bonds 113,994 -
Retirement of:
First mortgage bonds (130,000) -
Other long-term debt (233) (69)
Redemption of preferred stock (7,500) (7,500)
Changes in short-term borrowings - net (27,386) (9,344)
Dividends paid:
Common stock (50,200) (86,200)
Preferred stock (10,072) (10,743)
-------- --------
Net cash flow used in financing activities (111,397) (113,856)
-------- --------
Net increase (decrease) in cash and cash equivalents (8,581) 3,415
Cash and cash equivalents at beginning of period 34,370 28,718
-------- --------
Cash and cash equivalents at end of period $25,789 $32,133
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $68,870 $67,432
Income taxes $48,729 $43,623
Noncash investing and financing activities:
Change in unrealized appreciation/depreciation of
decommissioning trust assets ($1,814) $1,934
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $4,927,904 $4,886,898
Property under capital leases 231,121 231,121
Construction work in progress 84,337 87,567
Nuclear fuel under capital lease 54,405 72,864
Nuclear fuel 1,507 1,506
---------- ----------
Total 5,299,274 5,279,956
Less - accumulated depreciation and amortization 1,808,944 1,742,306
---------- ----------
Utility plant - net 3,490,330 3,537,650
---------- ----------
Other Property and Investments:
Nonutility property 20,060 20,060
Decommissioning trust fund 44,844 38,560
Investment in subsidiary companies - at equity 14,230 14,230
Other - 1,113
---------- ----------
Total 79,134 73,963
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 4,415 3,952
Temporary cash investments - at cost,
which approximates market 21,374 30,418
---------- ----------
Total cash and cash equivalents 25,789 34,370
Accounts receivable:
Customer (less allowance for doubtful accounts of
$1.4 million in 1996 and 1995) 89,606 72,328
Associated companies 5,719 8,033
Other 8,625 8,979
Accrued unbilled revenues 73,255 62,132
Deferred fuel costs 18,958 10,200
Materials and supplies - at average cost 80,959 79,799
Rate deferrals 12,063 25,609
Deferred nuclear refueling outage costs 13,251 21,344
Prepayments and other 13,111 9,118
---------- ----------
Total 341,336 331,912
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 304,955 301,520
Unamortized loss on reacquired debt 39,596 39,474
Other regulatory assets 36,099 23,935
Other 24,247 23,069
---------- ----------
Total 404,897 387,998
---------- ----------
TOTAL $4,315,697 $4,331,523
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
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 (4,542) (4,836)
Retained earnings 107,696 72,150
---------- ----------
Total common shareholder's equity 1,192,054 1,156,214
Preferred stock:
Without sinking fund 160,500 160,500
With sinking fund 92,509 100,009
Long-term debt 1,391,058 1,385,171
---------- ----------
Total 2,836,121 2,801,894
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 26,405 43,362
Other 53,292 50,835
---------- ----------
Total 79,697 94,197
---------- ----------
Current Liabilities:
Currently maturing long-term debt 16,263 35,260
Notes payable:
Associated companies 49,073 61,459
Other - 15,000
Accounts payable:
Associated companies 32,137 37,494
Other 78,973 69,922
Customer deposits 57,797 56,924
Taxes accrued 58,903 18,612
Accumulated deferred income taxes 348 3,366
Interest accrued 38,301 44,202
Dividends declared 4,907 5,149
Obligations under capital leases 28,000 28,000
Other 7,749 17,397
---------- ----------
Total 372,451 392,785
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 804,676 807,278
Accumulated deferred investment tax credits 142,728 145,561
Deferred interest - Waterford 3 lease obligation 24,344 23,947
Other 55,680 65,861
---------- ----------
Total 1,027,428 1,042,647
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,315,697 $4,331,523
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY LOUISIANA, INC.
SELECTED OPERATING RESULTS
For the Three Months and Six Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 139.9 $ 132.9 $ 7.0 5
Commercial 90.5 85.4 5.1 6
Industrial 182.5 153.5 29.0 19
Governmental 8.3 7.8 0.5 6
------- ------- ------
Total retail 421.2 379.6 41.6 11
Sales for resale
Associated companies 0.5 0.2 0.3 150
Non-associated companies 15.0 14.1 0.9 6
Other 21.1 12.7 8.4 66
------- ------- ------
Total $ 457.8 $ 406.6 $ 51.2 13
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 1,788 1,787 1 -
Commercial 1,156 1,159 (3) -
Industrial 4,399 4,247 152 4
Governmental 110 108 2 2
------- ------- ------
Total retail 7,453 7,301 152 2
Sales for resale
Associated companies 15 9 6 67
Non-associated companies 280 360 (80) (22)
------- ------- ------
Total 7,748 7,670 78 1
======= ======= ======
Six Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 275.2 $ 244.8 $ 30.4 12
Commercial 176.5 161.4 15.1 9
Industrial 358.1 302.4 55.7 18
Governmental 16.8 15.5 1.3 8
------- ------- ------
Total retail 826.6 724.1 102.5 14
Sales for resale
Associated companies 0.7 0.4 0.3 75
Non-associated companies 29.4 24.5 4.9 20
Other 18.9 11.0 7.9 72
------- ------- ------
Total $ 875.6 $ 760.0 $115.6 15
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 3,613 3,374 239 7
Commercial 2,248 2,178 70 3
Industrial 8,613 8,326 287 3
Governmental 225 218 7 3
------- ------- ------
Total retail 14,699 14,096 603 4
Sales for resale
Associated companies 18 19 (1) (5)
Non-associated companies 513 574 (61) (11)
------- ------- ------
Total 15,230 14,689 541 4
======= ======= ======
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
- ----------
Net income increased for the three months and six months ended June
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 six months ended June 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
six months ended June 30, 1996, are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
----------- ------------------- -------------------
(In Millions)
Change in base revenues $(1.4) $(2.2)
Grand Gulf rate rider 9.0 13.3
Fuel cost recovery 3.3 11.7
Sales volume/weather 4.1 8.7
Other revenue (including 1.2 -
unbilled)
Sales for resale 8.1 16.2
----- -----
Total $24.3 $47.7
===== =====
Electric operating revenues increased for the three months and six
months ended June 30, 1996, due to increases in revenues from the
Grand Gulf 1 rate rider, the fuel adjustment clause, and electric
sales. Revenues from the Grand Gulf I rate rider and the fuel
adjustment clause do not affect net income. 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 six months ended June 30, 1996, were greater
than revenues for the same period last year. Fuel adjustment clause
revenues increased due to higher fuel costs, as discussed below.
The increase in retail sales volume is primarily attributed to more
severe weather in 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
- --------
Fuel and purchased power expenses, taken together, increased for
the three months and six months ended June 30, 1996. Fuel expenses
increased for the period due to higher gas prices and higher
generation requirements resulting from increased energy sales.
However, as the result of the lower cost of purchased power, more
power was purchased to meet the increased sales demand.
Other operation and maintenance expenses decreased for the three
months and six months ended June 30, 1996, as a result of lower
payroll, contract work, and materials and supplies expenses. Payroll
expenses decreased as a result of the restructuring program accrual
made in June 1995. This restructuring program has resulted in a
reduction in the number of Entergy Mississippi employees throughout
1995 and 1996. Contract work and materials and supplies expenses
decreased because of the turbine repairs at some of Entergy
Mississippi's generating plants in 1995.
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Income taxes increased for the three months and six months ended
June 30, 1996, primarily due to the higher pretax income resulting
from increased revenue and reduced other operation and maintenance
expenses.
Rate deferrals charged against operating expenses in 1996 represent
the deferral of Entergy Mississippi's portion of the proposed System
Energy rate increase. See Note 2 for a discussion of Entergy
Mississippi's deferral of the System Energy rate increase.
The amortization of rate deferrals increased for the three months
and six months ended June 30, 1996, in accordance with the Grand Gulf
1 related deferral plan. The plan allows for the recovery of more
Grand Gulf 1-related costs in 1996 than in 1995.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In Thousands) (In Thousands)
Operating Revenues $247,479 $223,156 $451,381 $403,715
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 48,080 33,550 87,826 63,939
Purchased power 68,732 70,966 136,044 128,010
Other operation and maintenance 28,828 39,937 56,477 72,155
Depreciation and amortization 10,052 9,338 20,079 18,735
Taxes other than income taxes 11,148 10,494 20,733 21,083
Income taxes 16,196 10,731 22,212 14,094
Rate deferrals (5,372) - (12,523) -
Amortization of rate deferrals 28,728 15,348 54,992 30,637
-------- -------- -------- --------
Total 206,392 190,364 385,840 348,653
-------- -------- -------- --------
Operating Income 41,087 32,792 65,541 55,062
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 370 269 643 528
Miscellaneous - net 847 796 769 857
Income taxes (331) (305) (301) (328)
-------- -------- -------- --------
Total 886 760 1,111 1,057
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 11,517 11,856 22,556 22,948
Other interest - net 934 1,352 1,874 3,258
Allowance for borrowed funds used
during construction (297) (234) (521) (439)
-------- -------- -------- --------
Total 12,154 12,974 23,909 25,767
-------- -------- -------- --------
Net Income 29,819 20,578 42,743 30,352
Preferred Stock Dividend Requirements
and Other 1,392 1,544 2,640 3,251
-------- -------- -------- --------
Earnings Applicable to Common Stock $28,427 $19,034 $40,103 $27,101
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $42,743 $30,352
Noncash items included in net income:
Change in rate deferrals 62,928 29,566
Depreciation and amortization 20,079 18,735
Deferred income taxes and investment tax credits (15,472) (7,196)
Allowance for equity funds used during construction (643) (528)
Changes in working capital:
Receivables (25,853) (19,922)
Fuel inventory 1,752 (4,448)
Accounts payable 15,136 23,540
Taxes accrued 1,132 (4,239)
Interest accrued (2,646) 903
Other working capital accounts 2,985 (3,864)
Other (21,405) 11,856
-------- --------
Net cash flow provided by operating activities 80,736 74,755
-------- --------
Investing Activities:
Construction expenditures (42,256) (34,388)
Allowance for equity funds used during construction 643 528
-------- --------
Net cash flow used in investing activities (41,613) (33,860)
-------- --------
Financing Activities:
Proceeds from the issuance of
general and refunding mortgage bonds - 79,480
Retirement of:
General and refunding mortgage bonds - (20,000)
First mortgage bonds (25,000) (20,000)
Other long-term debt (15) (15)
Redemption of preferred stock (9,876) (8,000)
Changes in short-term borrowings - net 2,209 (30,000)
Dividends paid:
Common stock (17,000) (16,400)
Preferred stock (2,630) (3,343)
-------- --------
Net cash flow used in financing activities (52,312) (18,278)
-------- --------
Net increase (decrease) in cash and cash equivalents (13,189) 22,617
Cash and cash equivalents at beginning of period 16,945 9,598
-------- --------
Cash and cash equivalents at end of period $3,756 $32,215
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $25,928 $24,066
Income taxes $23,973 $15,431
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $1,571,591 $1,559,955
Construction work in progress 68,110 55,443
---------- ----------
Total 1,639,701 1,615,398
Less - accumulated depreciation and amortization 615,636 613,712
---------- ----------
Utility plant - net 1,024,065 1,001,686
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 5,531 5,531
Other 5,605 5,615
---------- ----------
Total 11,136 11,146
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 3,756 2,574
Temporary cash investments - at cost,
which approximates market:
Associated companies - 3,248
Other - 11,123
---------- ----------
Total cash and cash equivalents 3,756 16,945
Accounts receivable:
Customer (less allowance for doubtful accounts of
$1.6 million in 1996 and 1995) 50,600 46,214
Associated companies 6,780 1,134
Other 2,948 1,967
Accrued unbilled revenues 61,990 47,150
Fuel inventory - at average cost 4,929 6,681
Materials and supplies - at average cost 19,658 19,233
Rate deferrals 139,110 130,622
Prepayments and other 7,046 11,536
---------- ----------
Total 296,817 281,482
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 175,656 247,072
SFAS 109 regulatory asset - net 10,231 6,445
Unamortized loss on reacquired debt 9,679 10,105
Other regulatory assets 37,167 17,736
Other 6,635 6,311
---------- ----------
Total 239,368 287,669
---------- ----------
TOTAL $1,571,386 $1,581,983
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
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 254,566 231,463
---------- ----------
Total common shareholder's equity 453,749 430,571
Preferred stock:
Without sinking fund 57,881 57,881
With sinking fund 7,000 16,770
Long-term debt 494,963 494,404
---------- ----------
Total 1,013,593 999,626
---------- ----------
Other Noncurrent Liabilities 8,891 11,625
---------- ----------
Current Liabilities:
Currently maturing long-term debt 36,015 61,015
Notes payable - associated companies 2,209 -
Accounts payable:
Associated companies 26,167 24,391
Other 45,460 32,100
Customer deposits 25,530 24,339
Taxes accrued 29,771 28,639
Accumulated deferred income taxes 57,335 54,090
Interest accrued 19,188 21,834
Other 4,407 6,875
---------- ----------
Total 246,082 253,283
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 266,369 278,581
Accumulated deferred investment tax credits 26,176 27,978
Other 10,275 10,890
---------- ----------
Total 302,820 317,449
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $1,571,386 $1,581,983
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY MISSISSIPPI, INC.
SELECTED OPERATING RESULTS
For the Three Months and Six Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 82.7 $ 74.5 $ 8.2 11
Commercial 66.8 63.3 3.5 6
Industrial 44.0 43.7 0.3 1
Governmental 7.1 6.8 0.3 4
------- ------- ------
Total retail 200.6 188.3 12.3 7
Sales for resale
Associated companies 13.0 6.0 7.0 117
Non-associated companies 6.4 5.4 1.0 19
Other 27.5 23.5 4.0 17
------- ------- ------
Total $ 247.5 $ 223.2 $ 24.3 11
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 972 884 88 10
Commercial 830 794 36 5
Industrial 736 740 (4) (1)
Governmental 83 80 3 4
------- ------- ------
Total retail 2,621 2,498 123 5
Sales for resale
Associated companies 301 100 201 201
Non-associated companies 167 176 (9) (5)
------- ------- ------
Total 3,089 2,774 315 11
======= ======= ======
Six Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 160.2 $ 141.6 $ 18.6 13
Commercial 129.0 118.8 10.2 9
Industrial 84.8 83.9 0.9 1
Governmental 14.0 13.3 0.7 5
------- ------- ------
Total retail 388.0 357.6 30.4 9
Sales for resale
Associated companies 26.8 12.6 14.2 113
Non-associated companies 11.7 9.6 2.1 22
Other 24.9 23.9 1.0 4
------- ------- ------
Total $ 451.4 $ 403.7 $ 47.7 12
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 2,027 1,817 210 12
Commercial 1,608 1,518 90 6
Industrial 1,429 1,464 (35) (2)
Governmental 164 158 6 4
------- ------- ------
Total retail 5,228 4,957 271 5
Sales for resale
Associated companies 570 259 311 120
Non-associated companies 284 316 (32) (10)
------- ------- ------
Total 6,082 5,532 550 10
======= ======= ======
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
- ----------
Net income increased for the three months ended June 30, 1996, due
primarily to higher gas revenues and for the six months ended June
30, 1996, principally due to the recording of additional rate
deferrals.
Significant factors affecting the results of operations and causing
variances between the three months ended and six months ended June
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
six months ended June 30, 1996, are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
----------- ------------------- -------------------
(In Millions)
Change in base revenues $2.1 $(3.4)
Fuel cost recovery 7.2 13.9
Sales volume/weather (3.2) (0.2)
Other revenue (including 1.6 (1.6)
unbilled)
Sales for resale 0.9 2.1
----- -----
Total $8.6 $10.8
===== =====
Electric operating revenues increased for the three months and six
months ended June 30, 1996, mainly due to the increase in fuel
adjustment revenues. Fuel adjustment revenues increased due to
higher fuel prices during the first six months of 1996 and higher
purchased power expenses during the first three months of the year.
Retail sales decreased for both the three months and six months
primarily as the result of decreases in industrial sales due
principally to a significant reduction in electricity usage by a
large customer. For the six months ended June 30, 1996, this
decrease was partially offset by an increase in sales due to colder
weather.
For the three months and six months ended June 30, 1996, gas
operating revenues increased due primarily to increased gas sales as
a result of the colder winter and a higher unit purchase price for
gas purchased for resale.
Expenses
- --------
Operating expenses increased for the three months ended June 30,
1996, due primarily to increases in fuel expenses and gas purchased
for resale, partially offset by the recording of rate deferrals and
the reduced amortization of previous deferrals in 1996. These same
factors together with higher purchased power expenses in the first
three months of 1996 are the principal reasons for the increases in
operating expenses for the six months ended June 30, 1996. Fuel
expenses increased due to significantly higher prices for gas used in
generation as a result of widespread cold weather in the first few
months of 1996. Gas purchased for resale increased as a result of
higher gas sales and a higher unit purchase price, which was caused
by the increased demand for gas due to the weather. Purchased power
expenses decreased for the three months ended June 30, 1996, as a
result of a decrease in the price of power purchased. The rate
deferrals recorded were associated with the deferral of a portion of
the System Energy rate increase being billed to Entergy New Orleans
and the deferral of costs related to least cost planning, which are
expected to be recovered in future rates. See Note 2 for a
discussion of Entergy New Orleans' deferral of the System Energy rate
increase.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In Thousands) (In Thousands)
Operating Revenues:
Electric $105,701 $97,070 $185,992 $175,210
Natural gas 22,128 15,596 64,725 46,342
-------- -------- -------- --------
Total 127,829 112,666 250,717 221,552
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 31,584 14,461 73,020 45,439
Purchased power 41,302 44,245 80,041 73,927
Other operation and maintenance 19,065 17,162 35,489 33,915
Depreciation and amortization 5,011 4,786 9,982 9,614
Taxes other than income taxes 6,757 6,607 13,620 13,834
Income taxes 5,296 4,920 9,281 8,195
Rate deferrals (1,384) - (7,177) -
Amortization of rate deferrals 5,886 7,985 10,382 13,265
-------- -------- -------- --------
Operating Income 14,312 12,500 26,079 23,363
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 81 35 155 61
Miscellaneous - net 288 73 1,062 489
Income taxes (111) (28) (409) (188)
-------- -------- -------- --------
Total 258 80 808 362
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 3,953 3,544 8,012 7,873
Other interest - net 320 375 602 967
Allowance for borrowed funds used
during construction (63) (27) (122) (48)
-------- -------- -------- --------
Total 4,210 3,892 8,492 8,792
-------- -------- -------- --------
Net Income 10,360 8,688 18,395 14,933
Preferred Stock Dividend Requirements
and Other 241 317 482 717
-------- -------- -------- --------
Earnings Applicable to Common Stock $10,119 $8,371 $17,913 $14,216
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $18,395 $14,933
Noncash items included in net income:
Change in rate deferrals 15,972 13,452
Depreciation and amortization 9,982 9,614
Deferred income taxes and investment tax credits 1,167 (1,202)
Allowance for equity funds used during construction (155) (61)
Changes in working capital:
Receivables 1,102 (7,972)
Accounts payable (3,571) 13,145
Taxes accrued 2,295 (999)
Interest accrued (501) (594)
Income tax refund - 704
Other working capital accounts (19,728) (16,015)
Other (9,992) (10,465)
-------- --------
Net cash flow provided by operating activities 14,966 14,540
-------- --------
Investing Activities:
Construction expenditures (17,991) (8,738)
Allowance for equity funds used during construction 155 61
-------- --------
Net cash flow used in investing activities (17,836) (8,677)
-------- --------
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 (18,900) (5,800)
Preferred stock (482) (775)
-------- --------
Net cash flow used in financing activities (33,024) (2,470)
-------- --------
Net increase (decrease) in cash and cash equivalents (35,894) 3,393
Cash and cash equivalents at beginning of period 49,746 8,031
-------- --------
Cash and cash equivalents at end of period $13,852 $11,424
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $8,698 $9,056
Income Taxes $6,299 $10,465
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEET
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $493,007 $483,581
Natural gas 122,138 121,083
Construction work in progress 19,080 17,525
---------- ----------
Total 634,225 622,189
Less - accumulated depreciation and amortization 340,587 335,021
---------- ----------
Utility plant - net 293,638 287,168
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 3,259 3,259
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 2,332 1,693
Temporary cash investments - at cost,
which approximates market:
Associated companies 5,838 10,860
Other 5,682 37,193
---------- ----------
Total cash and cash equivalents 13,852 49,746
Accounts receivable:
Customer (less allowance for doubtful accounts
of $0.5 million in 1996 and $0.8 million in 1995) 27,046 29,168
Associated companies 36 551
Other 711 843
Accrued unbilled revenues 18,909 17,242
Deferred electric fuel and resale gas costs 12,954 2,647
Materials and supplies - at average cost 9,512 8,950
Rate deferrals 36,849 35,191
Prepayments and other 9,941 4,529
---------- ----------
Total 129,810 148,867
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 120,286 137,916
SFAS 109 regulatory asset - net 7,941 6,813
Unamortized loss on reacquired debt 1,776 1,932
Other regulatory assets 11,576 9,204
Other 1,352 1,047
---------- ----------
Total 142,931 156,912
---------- ----------
TOTAL $569,638 $596,206
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
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 80,274 81,261
---------- ----------
Total common shareholder's equity 150,312 151,311
Preferred stock - without sinking fund 19,780 19,780
Long-term debt 168,855 155,958
---------- ----------
Total 338,947 327,049
---------- ----------
Other Noncurrent Liabilities 17,700 17,745
---------- ----------
Current Liabilities:
Currently maturing long-term debt 12,000 38,250
Accounts payable:
Associated companies 15,077 13,851
Other 19,877 24,674
Customer deposits 18,496 18,214
Accumulated deferred income taxes 16,984 9,174
Taxes accrued 7,849 5,554
Interest accrued 4,610 5,111
Other 10,375 14,345
---------- ----------
Total 105,268 129,173
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 76,496 81,654
Accumulated deferred investment tax credits 8,300 8,618
Other 22,927 31,967
---------- ----------
Total 107,723 122,239
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $569,638 $596,206
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY NEW ORLEANS, INC.
SELECTED OPERATING RESULTS
For the Three Months and Six Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 33.8 $ 31.0 $ 2.8 9
Commercial 36.1 35.4 0.7 2
Industrial 6.2 5.6 0.6 11
Governmental 13.8 12.8 1.0 8
------- ------- ------
Total retail 89.9 84.8 5.1 6
Sales for resale
Associated companies 0.5 0.0 0.5 -
Non-associated companies 2.9 2.4 0.5 21
Other 12.4 9.9 2.5 25
------- ------- ------
Total $ 105.7 $ 97.1 $ 8.6 9
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 451 473 (22) (5)
Commercial 504 521 (17) (3)
Industrial 120 146 (26) (18)
Governmental 230 248 (18) (7)
------- ------- ------
Total retail 1,305 1,388 (83) (6)
Sales for resale
Associated companies 14 2 12 600
Non-associated companies 74 76 (2) (3)
------- ------- ------
Total 1,393 1,466 (73) (5)
======= ======= ======
Six Months Ended Increase/
Description 1996 1995 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 61.1 $ 52.8 $ 8.3 16
Commercial 69.3 67.9 1.4 2
Industrial 11.8 10.7 1.1 10
Governmental 26.1 23.5 2.6 11
------- ------- ------
Total retail 168.3 154.9 13.4 9
Sales for resale
Associated companies 2.3 1.3 1.0 77
Non-associated companies 5.4 4.3 1.1 26
Other 10.0 14.7 (4.7) (32)
------- ------- ------
Total $ 186.0 $ 175.2 $ 10.8 6
======= ======= ======
Billed Electric Energy
Sales (Millions of KWh):
Residential 842 825 17 2
Commercial 969 962 7 1
Industrial 231 269 (38) (14)
Governmental 442 458 (16) (3)
------- ------- ------
Total retail 2,484 2,514 (30) (1)
Sales for resale
Associated companies 59 68 (9) (13)
Non-associated companies 126 136 (10) (7)
------- ------- ------
Total 2,669 2,718 (49) (2)
======= ======= ======
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
- ----------
Net income for the three months and six months ended June 30, 1996,
remained relatively unchanged as compared to the same period in 1995.
Significant factors affecting the results of operations and causing
variances between the three months and six months ended June 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 six
months ended June 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. The increase in
fuel and fuel-related expenses is due to a refueling outage in 1995.
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.
Expenses
- --------
Operating expenses increased for the three months and six months
ended June 30, 1996, due to an increase in fuel and fuel-related
expenses and depreciation, amortization, and decommissioning
expenses. These increases were offset by a decrease in nuclear
refueling outage expenses. Fuel and fuel-related expenses, as well
as depreciation, amortization, and decommissioning expenses increased
for the reasons stated above. 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 to
date in 1996. Other operation and maintenance expenses increased for
the three months ended June 30, 1996, primarily due to timing
differences in accounting for maintenance expenditures.
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In Thousands) (In Thousands)
Operating Revenues $160,369 $158,632 $316,793 $310,296
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 12,171 3,561 25,011 15,896
Nuclear refueling outage expenses - 19,005 - 21,286
Other operation and maintenance 26,591 23,803 48,332 48,902
Depreciation, amortization, and decommissioning 32,014 24,535 64,013 49,933
Taxes other than income taxes 6,699 7,024 13,605 14,198
Income taxes 21,192 19,414 41,884 38,719
-------- -------- -------- --------
Total 98,667 97,342 192,845 188,934
-------- -------- -------- --------
Operating Income 61,702 61,290 123,948 121,362
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 297 552 647 1,032
Miscellaneous - net 627 1,017 1,466 1,742
Income taxes 201 501 (114) 1,052
-------- -------- -------- --------
Total 1,125 2,070 1,999 3,826
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 37,021 38,162 74,974 75,596
Other interest - net 2,707 1,984 4,698 4,317
Allowance for borrowed funds used
during construction (283) (588) (637) (1,092)
-------- -------- -------- --------
Total 39,445 39,558 79,035 78,821
-------- -------- -------- --------
Net Income $23,382 $23,802 $46,912 $46,367
========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
-------- --------
(In Thousands)
Operating Activities:
Net income $46,912 $46,367
Noncash items included in net income:
Depreciation, amortization, and decommissioning 64,013 49,933
Deferred income taxes and investment tax credits (16,354) (7,335)
Allowance for equity funds used during construction (647) (1,032)
Changes in working capital:
Receivables (2,835) (60,206)
Accounts payable (967) (181)
Taxes accrued 17,497 14,062
Interest accrued 9,192 3,127
Other working capital accounts (3,531) (22,710)
Decommissioning trust contributions (9,073) (2,696)
FERC Settlement - refund obligation (1,942) -
Provision for estimated losses and reserves 23,932 -
Other 3,151 32,074
-------- --------
Net cash flow provided by operating activities 129,348 51,403
-------- --------
Investing Activities:
Construction expenditures (3,624) (17,178)
Allowance for equity funds used during construction 647 1,032
Nuclear fuel purchases (1,135) (52,188)
Proceeds from sale/leaseback of nuclear fuel 402 52,188
-------- --------
Net cash flow used in investing activities (3,710) (16,146)
-------- --------
Financing Activities:
Proceeds from the issuance of long-term debt 89,192 43,538
Retirement of long-term debt (92,700) (45,320)
Changes in short-term borrowings - net (2,990) -
Common stock dividends paid (46,300) (47,600)
-------- --------
Net cash flow used in financing activities (52,798) (49,382)
-------- --------
Net increase (decrease) in cash and cash equivalents 72,840 (14,125)
Cash and cash equivalents at beginning of period 240 89,703
-------- --------
Cash and cash equivalents at end of period $73,080 $75,578
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $66,790 $72,647
Income taxes $30,944 $23,659
Noncash investing and financing activities:
Change in unrealized appreciation/depreciation of
decommissioning trust assets ($1,055) $2,589
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $2,997,125 $2,977,303
Electric plant under lease 446,701 444,305
Construction work in progress 15,958 35,946
Nuclear fuel under capital lease 53,664 71,374
---------- ----------
Total 3,513,448 3,528,928
Less - accumulated depreciation and amortization 917,387 861,752
---------- ----------
Utility plant - net 2,596,061 2,667,176
---------- ----------
Other Property and Investments:
Decommissioning trust fund 50,020 40,927
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 141 240
Temporary cash investments - at cost,
which approximates market:
Associated companies 36,963 -
Other 35,976 -
---------- ----------
Total cash and cash equivalents 73,080 240
Accounts receivable:
Associated companies 76,969 72,458
Other 3,161 4,837
Materials and supplies - at average cost 66,651 67,661
Prepayments and other 19,065 16,050
---------- ----------
Total 238,926 161,246
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 277,253 291,181
Unamortized loss on reacquired debt 54,574 52,702
Other regulatory assets 200,001 203,731
Other 14,607 14,049
---------- ----------
Total 546,435 561,663
---------- ----------
TOTAL $3,431,442 $3,431,012
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<S> <C> <C>
1996 1995
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
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 86,532 85,920
---------- ----------
Total common shareholder's equity 875,882 875,277
Long-term debt 1,471,336 1,219,917
---------- ----------
Total 2,347,218 2,095,194
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 25,664 44,107
Other 41,745 16,068
---------- ----------
Total 67,409 60,175
---------- ----------
Current Liabilities:
Currently maturing long-term debt - 250,000
Notes payable - associated companies - 2,990
Accounts payable:
Associated companies 24,248 17,458
Other 11,305 19,063
Taxes accrued 90,145 72,648
Interest accrued 45,935 36,743
Obligations under capital lease 28,000 28,000
Other 2,688 4,211
---------- ----------
Total 202,321 431,113
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 571,846 602,182
Accumulated deferred investment tax credits 105,381 107,119
FERC Settlement - refund obligation 54,906 56,848
Other 82,361 78,381
---------- ----------
Total 814,494 844,530
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $3,431,442 $3,431,012
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<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 has significant business relationships with
Cajun, including co-ownership of River Bend (operated by Entergy Gulf
States) and Big Cajun 2, Unit 3 (operated by Cajun). Entergy Gulf
States and Cajun, respectively, own 70% and 30% undivided interests
in River Bend, and 42% and 58% undivided interests in Big Cajun 2,
Unit 3. These relationships have spawned a number of significant and
long-standing disputes and claims between the parties. A preliminary
agreement setting forth terms for the resolution of such disputes has
been reached by Entergy Gulf States, the Bankruptcy Trustee for
Cajun, and the Rural Utilities Service (RUS).
In June 1989, Cajun filed a civil action against Entergy Gulf
States in the United States District Court for the Middle District of
Louisiana (District Court). Cajun's complaint seeks to rescind or
terminate the Joint Ownership Participation and Operating Agreement
(Operating Agreement) entered into on August 28, 1979, relating to
River Bend. The suit also seeks to recover Cajun's alleged $1.6
billion investment in the unit plus attorneys' fees, interest, and
costs. Two member cooperatives of Cajun have brought an independent
action to declare the Operating Agreement void, based upon their
failure to get prior LPSC approval alleged to be necessary. Entergy
Gulf States believes the suits are without merit and is contesting
them vigorously.
A trial on the portion of the suit by Cajun to rescind the
Operating Agreement began in April 1994 and was completed in March
1995. On October 24, 1995, the District Court issued a memorandum
opinion ruling in favor of Entergy Gulf States. The District Court
found that Cajun had not proved that Entergy Gulf States fraudulently
induced it to execute the Operating Agreement and that Cajun failed
to timely assert its claim. A final judgment on this portion of the
suit will not be entered until all claims asserted by Cajun in the
case have been heard. The trial of the second portion of the suit
was previously scheduled to begin on July 2, 1996 but was postponed
due to the proposed settlement of the Cajun and Entergy Gulf States
disputes. If the ultimate outcome of this litigation requires
Entergy Gulf States to pay substantial damages, it would probably be
unable to make such payments and could be forced to seek relief from
its creditors under the United States Bankruptcy Code.
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 six months ended June 30, 1996, was
approximately $32.1 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 $22.8 million as of June 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. Cajun's bankruptcy may affect the ultimate collectibility
of the amounts owed to Entergy Gulf States, including any amounts
that may be awarded in litigation. Cajun continues to pay its share
of decommissioning costs for River Bend.
See Note 8 of the Form 10-K for additional information regarding
the Cajun litigation, Cajun's bankruptcy proceedings, related
filings, and the ongoing potential effects of these matters upon
Entergy Gulf States.
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. Should the court grant Cajun's
motion to reject the Operating Agreement, Cajun would be relieved of
its financial obligations under the contract, while Entergy Gulf
States would likely have a substantial damage claim arising from any
such rejection. Although Entergy Gulf States believes that Cajun's
motion to reject the Operating Agreement is without merit, it is not
possible to predict the outcome of these proceedings.
On March 8, 1996, Southwestern Electric Power Company (SWEPCO),
Entergy Gulf States, and certain member cooperatives of Cajun filed 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. The timing and completion of the reorganization
plan depends on bankruptcy court approval and any required regulatory
approvals.
On April 26, 1996, Entergy Gulf States, the Cajun bankruptcy
trustee, and the RUS, Cajun's largest creditor, agreed in principle
to a settlement of all disputes between Cajun and Entergy Gulf
States. 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 the decommissioning of its
interest in 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; and (v) all funds paid by
Entergy Gulf States into the registry of the District Court will be
returned to Entergy Gulf States. The settlement is subject to
approvals by the RUS, the Board of Directors of Entergy Corporation
and Entergy Gulf States, the U.S. Bankruptcy Court, and appropriate
regulatory agencies.
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. See Note 8 in the
Form 10-K for additional information regarding these FERC
proceedings, FERC orders issued as a result of such proceedings, and
the potential effects of these proceedings upon Entergy Gulf States.
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, Cajun would owe Entergy Gulf States approximately $67.4 million
as of June 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 $151.0 million as of June 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 $103.1 million as of June 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 $140.6
million as of June 30, 1996. This amount is reflected in long-term
receivables with an offsetting reserve in other deferred credits.
Cajun's bankruptcy may affect Entergy Gulf States' collection of the
above amounts. 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 potential settlement of the Cajun and Entergy Gulf States
disputes.
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) for the years 1996, 1997, and 1998, and long-term debt
and 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
is proposed to be effective in 1997) 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 also would require that changes in the
decommissioning/closure cost liability resulting from changes in
assumptions should 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.
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, Entergy Operations could be required during future
outages to insert sleeves in steam generator tubes that were
previously plugged. Entergy Operations is in the process of
gathering information and assessing various options for the repair or
the replacement of ANO 2's steam generators. Certain of these
options could, in the future, require significant capital
expenditures and result in additional outages. A decision as to the
repair or replacement of ANO 2's steam generators is anticipated in
late 1996 or early 1997. Entergy Operations periodically meets with
the NRC to discuss the results of inspections of the 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 this site and at a nearby substation site.
Entergy Arkansas believes that it has no liability for contamination
at 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 June 30, 1996, $8.0 million has been expended on the clean-
up. As of June 30, 1996, a remaining recorded liability of $21.6
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 $9.8 million existed at June 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 $6.7 million as of June 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
was advised 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 Environmental
Protection Agency 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 June 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 June 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 $272 million, respectively. Allowed
Deferrals were approximately $80 million, net of taxes and
amortization, as of June 30, 1996. Entergy Gulf States estimates it
has collected approximately $193 million of revenues as of June 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 June 30, 1996, a net of tax write-off of up to
$284 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, a preliminary
injunction Entergy Gulf States received from the 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 first required post-
Merger earnings analysis with the LPSC. Hearings on this review were
held in December 1995. The ALJ issued a preliminary decision on May
28, 1996, and a decision is expected from the LPSC in the third
quarter of 1996.
On May 31, 1996, Entergy Gulf States filed its second required post-
Merger earnings analysis with the LPSC. On June 1, 1996, a $5
million annual rate reduction based on the earnings filing went into
effect. Hearings on this filing are scheduled for November 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.
Other issues under the formula rate plan remain unresolved and
could result in an additional rate reduction retroactive to July 1,
1996, that is not expected to exceed $10 million. Additionally, the
LPSC has indicated that it will initiate a review of Entergy
Louisiana's allowed return on equity. No procedural schedule has
been established for this review.
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 are scheduled
to begin in August 1996. 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. Management is unable to
predict the final outcome of this proceeding.
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 1994 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. 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 elected 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 and Entergy Gulf States' subsequent appeal of
$13.9 million of fuel costs disallowed by the LPSC. On April 15,
1996, the district court affirmed the LPSC decision. Entergy Gulf
States intends to appeal this decision to the Louisiana Supreme
Court.
The LPSC is currently conducting the second phase of its review of
Entergy Gulf States' fuel costs for the period October 1991 through
December 1994. On June 30, 1995, the LPSC consultants filed
testimony recommending a disallowance of $38.7 million of fuel costs.
Hearings began in December 1995 and were completed in March 1996. A
decision is expected in the third quarter of 1996.
NOTE 3. COMMON STOCK (Entergy Corporation)
During the first six months of 1996, Entergy Corporation issued
275,186 shares of its previously repurchased common stock, reducing
the amount held as treasury stock by $7.9 million. Entergy
Corporation issued these shares to meet the requirements of its
various stock plans.
NOTE 4. LONG-TERM DEBT
(Entergy Corporation)
An Entergy 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 8.43%,
and is non-recourse to Entergy. 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, totaling approximately $79 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 June 30, 1996. At June 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 July 1, 1996, Entergy Gulf States redeemed, pursuant to sinking
fund requirements, $50 million of its 9.72% Series Debentures due
1998.
(Entergy Mississippi)
On July 15, 1996, Entergy Mississippi retired $26 million of its
11.18% Series General and Refunding Bonds upon maturity.
(System Energy)
On August 1, 1996, System Energy issued $100 million of its 7.28%
Series First Mortgage Bonds due 1999 and $135 million of its 7.71%
Series First Mortgage Bonds due 2001.
NOTE 5. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES (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 July 26, 1996, Entergy Corporation's Board of Directors declared
a common stock dividend of 45 cents per share payable on September 1,
1996, to holders of record on August 7, 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 June
30, 1996, for restructuring liabilities associated with these
programs are shown below by company along with the actual termination
benefits paid under the programs.
<TABLE>
<CAPTION>
Liability as of Adjustments Payments Liability as of
December 31, Made in Made in June 30,
Company 1995 1996 1996 1996
(In Millions)
<S> <C> <C> <C> <C>
Entergy Arkansas $8.3 $0.1 ($6.5) $1.9
Entergy Gulf States 5.4 0.3 (4.1) 1.6
Entergy Louisiana 2.2 0.2 (2.2) 0.2
Entergy Mississippi 2.5 (1.2) (0.7) 0.6
Entergy New Orleans 0.6 0.2 (0.6) 0.2
Other 5.2 0.4 (4.0) 1.6
----- ------ ------ ----
Total $24.2 - ($18.1) $6.1
===== ====== ====== ====
</TABLE>
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 June 30, 1996,
approximately 2,575 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 using $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 accounts for
approximately 10% of Victoria's population. For the fiscal year
ended June 30, 1996, CitiPower supplied approximately 4.5 million MWh
of electricity to over 237,000 customer sites. Approximately 36,000,
or 16%, of these sites were commercial customers.
The CitiPower license is being amortized on a straight-line basis
over a 40 year period beginning January 5, 1996. As of June 30,
1996, the unamortized balance of the license was $621 million.
In accordance with the purchase method of accounting, the three
months and six 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 Six Months
Ended Ended
June 30, 1995 June 30, 1995
--------------- ---------------
(In Thousands of U.S. dollars,
Except Share Data)
Operating revenues $1,667,117 $3,104,317
Net income $ 150,583 $ 239,995
Earnings per verage common share
before cumulative effect of
accounting change $ 0.66 $ 0.90
Earnings per average common share $ 0.66 $ 1.05
CitiPower's results of operations for the three months and six
months ended June 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 Six Months Ended
June 30, 1996 June 30, 1996
-------------------- -------------------
(In Thousands of U.S. dollars)
Operating revenues $ 103,803 $ 195,439
Operating expenses $ 90,189 $ 163,819
Interest charges $ 19,742 $ 37,495
Net income $ (6,128) $ (5,875)
_________________________________________
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.
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 between 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, SWEPCO, Entergy Gulf States, and certain member
cooperatives of Cajun, submitted a joint proposal to bring an end to
the Cajun bankruptcy proceeding. The proposal was made 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 a proposal by two non-affiliated companies to take
over the non-nuclear operations of Cajun. The timing and completion
of the reorganization plan depends on bankruptcy court approval and
any required regulatory approvals.
On April 26, 1996, Entergy Gulf States, the Cajun bankruptcy
trustee, and the RUS, Cajun's largest creditor, agreed in principle
to a settlement of all litigation and bankruptcy disputes between
Cajun and Entergy Gulf States. 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 the decommissioning of its interest in 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; and (v) all funds paid by Entergy Gulf States into the
registry of the District Court will be returned to Entergy Gulf
States. The settlement is subject to further approvals by the RUS,
the Board of Directors of Entergy Corporation and Entergy Gulf
States, the U.S. Bankruptcy Court, and appropriate regulatory
agencies.
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' believes 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.
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. Panda has filed
an appeal of the court's order for dismissal.
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.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Amended and Restated Articles of Incorporation (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
A consent in lieu of a special meeting of common stockholders was
executed on April 22, 1996. The consent was signed on behalf of
Entergy Corporation, the holder of all issued and outstanding common
stock shares of Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans. The common
stockholder, by such consent, approved the amendment of each of the
companies' Amended and Restated Articles of Incorporation to change
the name of Arkansas Power & Light Company to Entergy Arkansas, Inc.,
the name of Gulf States Utilities Company to Entergy Gulf States,
Inc., the name of Louisiana Power & Light Company to Entergy
Louisiana, Inc., the name of Mississippi Power & Light Company to
Entergy Mississippi, Inc., and the name of New Orleans Public
Service, Inc. to Entergy New Orleans, Inc.
Election of Board of Directors
- ------------------------------
Entergy Corporation
The annual meeting of stockholders of Entergy Corporation was held
on May 17, 1996. The following matters were voted on and received
the specified number of votes for, abstentions, votes withheld
(against), and broker non-votes:
1. Election of Directors:
Votes Broker
Name of Nominee Votes For Abstentions Withheld Non-Votes
- --------------- --------- ----------- -------- ---------
W. Frank Blount 195,919,979 N/A 1,691,068 N/A
John A. Cooper, Jr. 195,943,790 N/A 1,677,257 N/A
Lucie J. Fjeldstad 190,211,582 N/A 5,860,333 N/A
Norman C. Francis 195,790,417 N/A 1,820,630 N/A
Kaneaster Hodges, Jr. 195,932,515 N/A 1,678,532 N/A
Robert v. d. Luft 195,928,122 N/A 1,682,925 N/A
Edwin Lupberger 195,848,707 N/A 1,762,340 N/A
Kinnaird R. McKee 195,870,455 N/A 1,740,592 N/A
Paul W. Murrill 195,902,712 N/A 1,708,335 N/A
James R. Nichols 195,960,486 N/A 1,650,560 N/A
Eugene H. Owen 195,878,399 N/A 1,732,648 N/A
John N. Palmer, Sr. 195,995,619 N/A 1,615,428 N/A
Robert D. Pugh 195,879,738 N/A 1,731,309 N/A
H. Duke Shackelford 195,883,250 N/A 1,727,797 N/A
Wm. Clifford Smith 195,966,191 N/A 1,644,856 N/A
Bismark A. Steinhagen 195,956,688 N/A 1,654,379 N/A
2. Appointment of independent public accountants, Coopers & Lybrand
L.L.P., for the year 1996: 194,722,004 votes for; 2,008,535 votes
against; 830,508 abstentions; and broker non-votes are not
applicable.
3. Entergy will discontinue the use of all options, rights, stock
appreciation rights, etc., after termination of existing agreements
with management and directors: 158,298,995 votes against; 20,468,816
broker non-votes, 14,606,438 votes for; and 4,236,798 abstentions.
(Entergy Arkansas)
A consent in lieu of the annual meeting of common stockholders was
executed on May 13, 1996. The consent was signed on behalf of
Entergy Corporation, the holder of all issued and outstanding shares
of common stock. The common stockholder, by such consent, elected
the following individuals to serve as directors constituting the
Board of Directors of Entergy Arkansas: Michael B. Bemis, Donald C.
Hintz, Jerry D. Jackson, R. Drake Keith, Edwin Lupberger, Jerry L.
Maulden, and Gerald D. McInvale.
(Entergy Gulf States)
A consent in lieu of the annual meeting of common stockholders was
executed on May 13, 1996. The consent was signed on behalf of
Entergy Corporation, the holder of all issued and outstanding shares
of common stock. The common stockholder, by such consent, elected
the following individuals to serve as directors constituting the
Board of Directors of Entergy Gulf States: Michael B. Bemis, John J.
Cordaro, Frank F. Gallaher, Donald C. Hintz, Jerry D. Jackson, Karen
R. Johnson, Edwin Lupberger, Jerry L. Maulden, and Gerald D.
McInvale.
(Entergy Louisiana)
A consent in lieu of the annual meeting of common stockholders was
executed on May 13, 1996. The consent was signed on behalf of
Entergy Corporation, the holder of all issued and outstanding shares
of common stock. The common stockholder, by such consent, elected
the following individuals to serve as directors constituting the
Board of Directors of Entergy Louisiana: Michael B. Bemis, John J.
Cordaro, Donald C. Hintz, Jerry D. Jackson, Edwin Lupberger, Jerry L.
Maulden, and Gerald D. McInvale.
(Entergy Mississippi)
A consent in lieu of the annual meeting of common stockholders was
executed on May 13, 1996. The consent was signed on behalf of
Entergy Corporation, the holder of all issued and outstanding shares
of common stock. The common stockholder, by such consent, elected
the following individuals to serve as directors constituting the
Board of Directors of Entergy Mississippi: Michael B. Bemis, Donald
C. Hintz, Jerry D. Jackson, Edwin A. Lupberger, Jerry L. Maulden,
Gerald D. McInvale, and Donald E. Meiners.
(Entergy New Orleans)
A consent in lieu of the annual meeting of common stockholders was
executed on May 13, 1996. The consent was signed on behalf of
Entergy Corporation, the holder of all issued and outstanding shares
of common stock. The common stockholder, by such consent, elected
the following individuals to serve as directors constituting the
Board of Directors of Entergy New Orleans: Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, Gerald D. McInvale, and Daniel F.
Packer.
(System Energy)
A consent in lieu of the annual meeting of common stockholders was
executed on May 13, 1996. The consent was signed on behalf of
Entergy Corporation, the holder of all issued and outstanding shares
of common stock. The common stockholder, by such consent, elected
the following individuals to serve as directors constituting the
Board of Directors of System Energy: Donald C. Hintz, Edwin
Lupberger, Gerald D. McInvale, and Jerry L. Maulden.
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:
<TABLE>
<CAPTION>
Ratios of Earnings to Fixed Charges
-------------------------------------
Twelve Months Ended
-------------------------------------
December 31, June 30,
------------------------------------- ---------
<S> C<> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Entergy Arkansas 2.25 2.28 3.11(c) 2.32 2.56 2.81
Entergy Gulf States 1.56 1.72 1.54 .36(d) 1.86 1.15
Entergy Louisiana 2.40 2.79 3.06 2.91 3.18 3.30
Entergy Mississippi 2.36 2.37 3.79(c) 2.12 2.92 3.38
Entergy New Orleans 5.66(b) 2.66 4.68(c) 1.91 3.93 4.23
System Energy 1.74 2.04 1.87 1.23 2.07 2.09
</TABLE>
<TABLE>
<CAPTION>
Ratios of Earnings to Combined Fixed
Charges and Preferred Dividends
--------------------------------------
Twelve Months Ended
--------------------------------------
December 31, June 30,
------------------------------------- --------
<S> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Entergy Arkansas 1.87 1.86 2.54(c) 1.97 2.12 2.32
Entergy Gulf States(a) 1.19 1.37 1.21 .29(d) 1.54 0.95(d)
Entergy Louisiana 1.95 2.18 2.39 2.43 2.60 2.70
Entergy Mississippi 1.94 1.97 3.08(c) 1.81 2.51 2.93
Entergy New Orleans 4.97(b) 2.36 4.12(c) 1.73 3.56 3.89
</TABLE>
(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 by $144.8 million. Earnings for the years ended
December 31, 1994, and June 30, 1996, for Entergy Gulf
States were not adequate to cover combined fixed charges
and preferred dividends by $197.1 million and $12.7
million, respectively.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
** 4(a) - Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities, dated as
of July 1, 1996 (filed as Exhibit A-14(a) to Rule
24 Certificate dated July 25, 1996 in File No. 70-
8487).
** 4(b) - Amended and Restated Trust Agreement of Entergy
Louisiana Capital I dated July 16, 1996 of Series A
Preferred Securities (filed as Exhibit A-16(a) to
Rule 24 Certificate dated July 25, 1996 in File No.
70-8487).
** 4(c) - Guarantee Agreement between Entergy Louisiana, Inc.
(as Guarantor) and The Bank of New York (as
Trustee) dated as of July 16, 1996 with respect to
Entergy Louisiana Capital I's obligation on its 9%
Cumulative Quarterly Income Preferred Securities,
Series A (filed as Exhibit A-19(a) to Rule 24
Certificate dated July 25, 1996 in File No. 70-
8487).
4(d) - Agreement as to Expenses and Liabilities between
Entergy Louisiana, Inc. and Entergy Louisiana
Capital I dated July 16, 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 June 30, 1996.
27(b) - Financial Data Schedule for Entergy Arkansas as of
June 30, 1996.
27(c) - Financial Data Schedule for Entergy Gulf States as
of June 30, 1996.
27(d) - Financial Data Schedule for Entergy Louisiana as of
June 30, 1996.
27(e) - Financial Data Schedule for Entergy Mississippi as
of June 30, 1996.
27(f) - Financial Data Schedule for Entergy New Orleans as
of June 30, 1996.
27(g) - Financial Data Schedule for System Energy as of
June 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 Report 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) - 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(j) - 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 Quarterly
Report on Form 10-Q for the quarter ended June 30,
1994, in File No. 1-2703).
99(k) - 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 June 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 June 30, 1996.
** Incorporated herein by reference as indicated.
(b) Reports on Form 8-K
None.
<PAGE>
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, Jr.
Louis E. Buck, Jr.
Vice President, Chief Accounting
Officer and Assistant Secretary
(For each Registrant and for each as
Principal Accounting Officer)
Date: August 5, 1996
Exhibit 4(d)
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of July 16, 1996, between Entergy
Louisiana, Inc., a Louisiana corporation ("Entergy Louisiana"),
and Entergy Louisiana 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 Louisiana and to issue its 9% 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 July 16, 1996 as the same may
be amended from time to time (the "Trust Agreement");
WHEREAS, Entergy Louisiana 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
Louisiana hereby agrees shall benefit Entergy Louisiana and which
purchase Entergy Louisiana acknowledges will be made in reliance
upon the execution and delivery of this Agreement, Entergy
Louisiana, 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 Louisiana. Subject
to the terms and conditions hereof, Entergy Louisiana 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 Louisiana 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 Louisiana
hereby waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and Entergy
Louisiana 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 Louisiana 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 Louisiana with respect to
the happening of any of the foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce
this Agreement directly against Entergy Louisiana and Entergy
Louisiana 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 Louisiana.
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
Louisiana 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 Louisiana Capital I
c/o Steve C. McNeal, Administrative Trustee
639 Loyola Avenue
New Orleans, Louisiana 70113
Facsimile No.: (504) 576-4455
Entergy Louisiana, 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 LOUISIANA, INC.
By:______________________________
Name: William J. Regan, Jr.
Title: Vice President and Treasurer
ENTERGY LOUISIANA 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
August 5, 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
August 5, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
Entergy Corporation financial statements for the quarter ended
June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 16,302,630
<OTHER-PROPERTY-AND-INVEST> 762,084
<TOTAL-CURRENT-ASSETS> 2,354,492
<TOTAL-DEFERRED-CHARGES> 3,626,525
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 23,045,731
<COMMON> 2,300
<CAPITAL-SURPLUS-PAID-IN> 4,200,883
<RETAINED-EARNINGS> 2,231,591
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,394,346
227,985
550,955
<LONG-TERM-DEBT-NET> 7,853,286
<SHORT-TERM-NOTES> 270,692
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 257,603
0
<CAPITAL-LEASE-OBLIGATIONS> 271,192
<LEASES-CURRENT> 149,812
<OTHER-ITEMS-CAPITAL-AND-LIAB> 7,029,432
<TOT-CAPITALIZATION-AND-LIAB> 23,045,731
<GROSS-OPERATING-REVENUE> 3,451,517
<INCOME-TAX-EXPENSE> 184,506
<OTHER-OPERATING-EXPENSES> 2,609,097
<TOTAL-OPERATING-EXPENSES> 2,793,603
<OPERATING-INCOME-LOSS> 657,914
<OTHER-INCOME-NET> (155,178)
<INCOME-BEFORE-INTEREST-EXPEN> 502,736
<TOTAL-INTEREST-EXPENSE> 401,484
<NET-INCOME> 101,252
0
<EARNINGS-AVAILABLE-FOR-COMM> 101,252
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 590,012
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
AP&L'S financial statements for the quarter ended June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,851,569
<OTHER-PROPERTY-AND-INVEST> 190,713
<TOTAL-CURRENT-ASSETS> 611,333
<TOTAL-DEFERRED-CHARGES> 547,141
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,200,756
<COMMON> 470
<CAPITAL-SURPLUS-PAID-IN> 590,794
<RETAINED-EARNINGS> 543,182
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,134,446
45,027
176,350
<LONG-TERM-DEBT-NET> 1,253,743
<SHORT-TERM-NOTES> 667
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 32,900
0
<CAPITAL-LEASE-OBLIGATIONS> 106,862
<LEASES-CURRENT> 52,660
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,398,101
<TOT-CAPITALIZATION-AND-LIAB> 4,200,756
<GROSS-OPERATING-REVENUE> 851,071
<INCOME-TAX-EXPENSE> 33,305
<OTHER-OPERATING-EXPENSES> 703,879
<TOTAL-OPERATING-EXPENSES> 737,184
<OPERATING-INCOME-LOSS> 113,887
<OTHER-INCOME-NET> 11,848
<INCOME-BEFORE-INTEREST-EXPEN> 125,735
<TOTAL-INTEREST-EXPENSE> 50,755
<NET-INCOME> 74,980
8,884
<EARNINGS-AVAILABLE-FOR-COMM> 66,096
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 157,764
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
GSU'S financial statements for the quarter ended June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4,671,224
<OTHER-PROPERTY-AND-INVEST> 59,459
<TOTAL-CURRENT-ASSETS> 759,999
<TOTAL-DEFERRED-CHARGES> 1,026,832
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 6,517,514
<COMMON> 114,055
<CAPITAL-SURPLUS-PAID-IN> 1,152,592
<RETAINED-EARNINGS> 238,301
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,504,948
83,450
136,444
<LONG-TERM-DEBT-NET> 2,093,682
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 160,425
0
<CAPITAL-LEASE-OBLIGATIONS> 98,295
<LEASES-CURRENT> 38,086
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,402,184
<TOT-CAPITALIZATION-AND-LIAB> 6,517,514
<GROSS-OPERATING-REVENUE> 982,198
<INCOME-TAX-EXPENSE> 40,853
<OTHER-OPERATING-EXPENSES> 786,720
<TOTAL-OPERATING-EXPENSES> 827,573
<OPERATING-INCOME-LOSS> 154,625
<OTHER-INCOME-NET> (165,925)
<INCOME-BEFORE-INTEREST-EXPEN> (11,300)
<TOTAL-INTEREST-EXPENSE> 93,817
<NET-INCOME> (105,117)
14,285
<EARNINGS-AVAILABLE-FOR-COMM> (119,402)
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 113,584
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
LP&L'S financial statements for the quarter ended June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,490,330
<OTHER-PROPERTY-AND-INVEST> 79,134
<TOTAL-CURRENT-ASSETS> 341,336
<TOTAL-DEFERRED-CHARGES> 404,897
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,315,697
<COMMON> 1,088,900
<CAPITAL-SURPLUS-PAID-IN> (4,542)
<RETAINED-EARNINGS> 107,696
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,192,054
92,509
160,500
<LONG-TERM-DEBT-NET> 1,391,058
<SHORT-TERM-NOTES> 49,073
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 16,263
0
<CAPITAL-LEASE-OBLIGATIONS> 26,405
<LEASES-CURRENT> 28,000
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,359,835
<TOT-CAPITALIZATION-AND-LIAB> 4,315,697
<GROSS-OPERATING-REVENUE> 875,614
<INCOME-TAX-EXPENSE> 54,693
<OTHER-OPERATING-EXPENSES> 660,712
<TOTAL-OPERATING-EXPENSES> 715,405
<OPERATING-INCOME-LOSS> 160,209
<OTHER-INCOME-NET> 1,153
<INCOME-BEFORE-INTEREST-EXPEN> 161,362
<TOTAL-INTEREST-EXPENSE> 65,447
<NET-INCOME> 95,915
10,168
<EARNINGS-AVAILABLE-FOR-COMM> 85,747
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 155,882
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
MP&L'S financial statements for the quarter ended June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,024,065
<OTHER-PROPERTY-AND-INVEST> 11,136
<TOTAL-CURRENT-ASSETS> 296,817
<TOTAL-DEFERRED-CHARGES> 239,368
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,571,386
<COMMON> 199,326
<CAPITAL-SURPLUS-PAID-IN> (143)
<RETAINED-EARNINGS> 254,566
<TOTAL-COMMON-STOCKHOLDERS-EQ> 453,749
7,000
57,881
<LONG-TERM-DEBT-NET> 494,963
<SHORT-TERM-NOTES> 2,209
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 36,015
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 519,569
<TOT-CAPITALIZATION-AND-LIAB> 1,571,386
<GROSS-OPERATING-REVENUE> 451,381
<INCOME-TAX-EXPENSE> 20,733
<OTHER-OPERATING-EXPENSES> 365,107
<TOTAL-OPERATING-EXPENSES> 385,840
<OPERATING-INCOME-LOSS> 65,541
<OTHER-INCOME-NET> 1,111
<INCOME-BEFORE-INTEREST-EXPEN> 66,652
<TOTAL-INTEREST-EXPENSE> 23,909
<NET-INCOME> 42,743
2,640
<EARNINGS-AVAILABLE-FOR-COMM> 40,103
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 80,736
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
NOPSI'S financial statements for the quarter ended June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 293,638
<OTHER-PROPERTY-AND-INVEST> 3,259
<TOTAL-CURRENT-ASSETS> 129,810
<TOTAL-DEFERRED-CHARGES> 142,931
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 569,638
<COMMON> 33,744
<CAPITAL-SURPLUS-PAID-IN> 36,294
<RETAINED-EARNINGS> 80,274
<TOTAL-COMMON-STOCKHOLDERS-EQ> 150,312
0
19,780
<LONG-TERM-DEBT-NET> 168,855
<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> 218,691
<TOT-CAPITALIZATION-AND-LIAB> 569,638
<GROSS-OPERATING-REVENUE> 250,717
<INCOME-TAX-EXPENSE> 9,281
<OTHER-OPERATING-EXPENSES> 215,357
<TOTAL-OPERATING-EXPENSES> 224,638
<OPERATING-INCOME-LOSS> 26,079
<OTHER-INCOME-NET> 808
<INCOME-BEFORE-INTEREST-EXPEN> 26,887
<TOTAL-INTEREST-EXPENSE> 8,492
<NET-INCOME> 18,395
482
<EARNINGS-AVAILABLE-FOR-COMM> 17,913
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 14,966
<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 June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,596,061
<OTHER-PROPERTY-AND-INVEST> 50,020
<TOTAL-CURRENT-ASSETS> 238,926
<TOTAL-DEFERRED-CHARGES> 546,435
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,431,442
<COMMON> 789,350
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 86,532
<TOTAL-COMMON-STOCKHOLDERS-EQ> 875,882
0
0
<LONG-TERM-DEBT-NET> 1,471,336
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 25,664
<LEASES-CURRENT> 28,000
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,030,560
<TOT-CAPITALIZATION-AND-LIAB> 3,431,442
<GROSS-OPERATING-REVENUE> 316,793
<INCOME-TAX-EXPENSE> 41,884
<OTHER-OPERATING-EXPENSES> 150,961
<TOTAL-OPERATING-EXPENSES> 192,845
<OPERATING-INCOME-LOSS> 123,948
<OTHER-INCOME-NET> 1,999
<INCOME-BEFORE-INTEREST-EXPEN> 125,947
<TOTAL-INTEREST-EXPENSE> 79,035
<NET-INCOME> 46,912
0
<EARNINGS-AVAILABLE-FOR-COMM> 46,912
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 129,348
<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
June 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 $98,465
Interest on notes payable -- 117 349 1,311 678 657
Amortization of expense and premium on debt-net(cr) 1,112 1,359 2,702 4,563 4,514 4,612
Other interest 1,303 2,308 8,769 3,501 7,806 6,374
Interest applicable to rentals 21,969 17,657 16,860 19,140 18,158 19,372
----------------------------------------------------------
Total fixed charges, as defined 158,238 141,758 136,451 129,954 133,495 129,480
Preferred dividends, as defined (a) 31,458 32,195 30,334 23,234 27,636 27,328
----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $189,696 $173,953 $166,785 $153,188 $161,131 $156,808
==========================================================
Earnings as defined:
Net Income $143,451 $130,529 $205,297 $142,263 $136,666 $153,086
Add:
Provision for income taxes:
Federal & State 44,418 57,089 58,162 83,300 105,964 132,440
Deferred - net 11,048 3,490 34,748 (17,939) (28,225) (46,190)
Investment tax credit adjustment - net (1,600) (9,989) (10,573) (36,141) (5,658) (5,243)
Fixed charges as above 158,238 141,758 136,451 129,954 133,495 129,480
----------------------------------------------------------
Total earnings, as defined $355,555 $322,877 $424,085 $301,437 $342,242 $363,573
==========================================================
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
June 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 $178,499
Interest on notes payable 27,953 21,155 19,440 20,203 810 862
Other interest 29,169 26,564 10,561 7,957 8,074 7,839
Amortization of expense and premium on debt-net(cr) 1,999 3,479 8,104 8,892 9,346 9,177
Interest applicable to rentals 24,049 23,759 23,455 21,539 16,648 15,015
----------------------------------------------------------
Total fixed charges, as defined 284,505 272,175 234,054 225,673 216,872 211,392
Preferred dividends, as defined (a) 90,146 69,617 65,299 52,210 44,651 44,912
----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $374,651 $341,792 $299,353 $277,883 $261,523 $256,304
==========================================================
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 ($29,186)
Add:
Income Taxes 48,250 55,860 58,016 (62,086) 63,244 61,378
Fixed charges as above 284,505 272,175 234,054 225,673 216,872 211,392
----------------------------------------------------------
Total earnings, as defined (b) $445,146 $467,448 $361,532 $80,832 $403,035 $243,584
==========================================================
Ratio of earnings to fixed charges, as defined 1.56 1.72 1.54 0.36 1.86 1.15
==========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.19 1.37 1.21 0.29 1.54 0.95
==========================================================
(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 by $144.8 million. Earnings for the year ended
December 31, 1994, and June 30, 1996 for GSU were not adequate to cover
fixed charges and preferred dividends by $197.1 million and $12.7 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
June 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 $121,348
Interest on notes payable -- 150 898 1,948 1,932 2,498
Other interest charges 5,924 5,591 5,706 4,546 5,278 5,466
Amortization of expense and premium on debt - net(cr) 3,282 7,100 5,720 5,130 5,184 5,037
Interest applicable to rentals 11,381 9,363 8,519 8,332 9,332 9,678
-----------------------------------------------------------
Total fixed charges, as defined 179,403 150,876 145,476 144,776 146,233 144,027
Preferred dividends, as defined (a) 41,212 42,026 40,779 29,171 32,847 32,075
-----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $220,615 $192,902 $186,255 $173,947 $179,080 $176,102
===========================================================
Earnings as defined:
Net Income $166,572 $182,989 $188,808 $213,839 $201,537 $208,308
Add:
Provision for income taxes:
Federal and State 8,684 36,465 70,552 79,260 114,665 122,779
Deferred Federal and State - net 67,792 51,889 43,017 21,580 8,148 6,599
Investment tax credit adjustment - net 8,244 (1,317) (2,756) (37,552) (5,699) (5,821)
Fixed charges as above 179,403 150,876 145,476 144,776 146,233 144,027
-----------------------------------------------------------
Total earnings, as defined $430,695 $420,902 $445,097 $421,903 $464,884 $475,892
===========================================================
Ratio of earnings to fixed charges, as defined 2.40 2.79 3.06 2.91 3.18 3.30
===========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.95 2.18 2.39 2.43 2.60 2.70
===========================================================
- ------------------------
(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
June 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 $46,021
Interest on notes payable 953 36 7 1,348 474 899
Other interest charges 1,444 1,636 1,795 3,581 4,164 2,356
Amortization of expense and premium on debt-net(cr) 1,617 1,685 1,458 1,754 756 584
Interest applicable to rentals 574 521 1,264 1,716 2,173 2,220
----------------------------------------------------------
Total fixed charges, as defined 68,216 64,587 56,623 54,480 53,808 52,080
Preferred dividends, as defined (a) 14,962 12,823 12,990 9,447 9,004 8,039
----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $83,178 $77,410 $69,613 $63,927 $62,812 $60,119
==========================================================
Earnings as defined:
Net Income $63,088 $65,036 $101,743 $48,779 $68,667 $81,058
Add:
Provision for income taxes:
Federal and State (1,001) 4,463 54,418 46,884 71,651 88,019
Deferred Federal and State - net 32,491 20,430 539 (26,763) (35,224) (41,555)
Investment tax credit adjustment - net (1,634) (1,746) 1,036 (7,645) (1,550) (3,495)
Fixed charges as above 68,216 64,587 56,623 54,480 53,808 52,080
-----------------------------------------------------------
Total earnings, as defined $161,160 $152,770 $214,359 $115,735 $157,352 $176,107
===========================================================
Ratio of earnings to fixed charges, as defined 2.36 2.37 3.79 2.12 2.92 3.38
===========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.94 1.97 3.08 1.81 2.51 2.93
===========================================================
- ------------------------
(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
June 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 $15,504
Interest on notes payable -- -- -- 153 130 133
Other interest charges 793 1,714 1,016 1,027 1,723 1,354
Amortization of expense and premium on debt-net(cr) 565 576 598 710 619 584
Interest applicable to rentals 517 444 544 1,245 916 876
-------------------------------------------------------
Total fixed charges, as defined 25,740 25,668 21,636 19,517 18,718 18,451
Preferred dividends, as defined (a) 3,582 3,214 2,952 2,071 1,964 1,641
-------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $29,322 $28,882 $24,588 $21,588 $20,682 $20,092
=======================================================
Earnings as defined:
Net Income $74,699 $26,424 $47,709 $13,211 $34,386 $37,848
Add:
Provision for income taxes:
Federal and State 8,885 16,575 27,479 22,606 22,465 21,404
Deferred Federal and State - net 36,947 (340) 5,203 (15,674) (1,364) 1,044
Investment tax credit adjustment - net (591) (170) (744) (2,332) (634) (673)
Fixed charges as above 25,740 25,668 21,636 19,517 18,718 18,451
--------------------------------------------------------
Total earnings, as defined $145,680 $68,157 $101,283 $37,328 $73,571 $78,074
========================================================
Ratio of earnings to fixed charges, as defined 5.66 2.66 4.68 1.91 3.93 4.23
========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 4.97 2.36 4.12 1.73 3.56 3.89
========================================================
- ------------------------
(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
June 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 $136,288
Interest on notes payable -- -- -- 88 473 571
Amortization of expense and premium on debt-net 7,495 6,417 4,520 6,731 6,104 6,109
Interest applicable to rentals 10,007 6,265 6,790 7,546 6,475 8,394
Other interest charges 3,617 1,506 1,600 7,168 8,019 8,301
----------------------------------------------------------
Total fixed charges, as defined $239,657 $210,806 $197,728 $184,050 $157,987 $159,663
==========================================================
Earnings as defined:
Net Income $104,622 $130,141 $93,927 $5,407 $93,039 $93,584
Add:
Provision for income taxes:
Federal and State (26,848) 35,082 48,314 67,477 120,830 134,180
Deferred Federal and State - net 37,168 23,648 60,690 (27,374) (41,871) (50,890)
Investment tax credit adjustment - net 63,256 30,123 (30,452) (3,265) (3,466) (3,466)
Fixed charges as above 239,657 210,806 197,728 184,050 157,987 159,663
----------------------------------------------------------
Total earnings, as defined $417,855 $429,800 $370,207 $226,295 $326,519 $333,071
==========================================================
Ratio of earnings to fixed charges, as defined 1.74 2.04 1.87 1.23 2.07 2.09
==========================================================
</TABLE>
Exhibit 99(k)
[LETTERHEAD OF CLARK, THOMAS & WINTERS]
August 5, 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 June 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.
