___________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
OR
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, IRS Employer
File Number Address of Principal Executive Identification No.
Offices and Telephone Number
1-11299 ENTERGY CORPORATION 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
1-10764 ENTERGY ARKANSAS, INC. 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-2703 ENTERGY GULF STATES, INC. 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 ENTERGY LOUISIANA, INC. 72-0245590
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
0-320 ENTERGY MISSISSIPPI, INC. 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
333-33331 ENTERGY LONDON INVESTMENTS PLC N/A
(England and Wales)
Templar House
81-87 High Holborn
London WC1V 6NU England
Telephone 011-44-171-242-9050
___________________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Registrant Title of Class on Which Registered
<S> <C> <C>
Entergy Corporation Common Stock, $0.01 Par Value - 245,880,306 New York Stock Exchange, Inc.
Shares outstanding at February 27, 1998 Chicago Stock Exchange Inc.
Pacific Exchange Inc.
Entergy Arkansas Capital I 8-1/2% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value:
$4.40 Dividend Series New York Stock Exchange, Inc.
$4.52 Dividend Series New York Stock Exchange, Inc.
$5.08 Dividend Series New York Stock Exchange, Inc.
$8.80 Dividend Series New York Stock Exchange, Inc.
Adjustable Rate Series B (Depository Receipts) New York Stock Exchange, Inc.
Preference Stock, Cumulative, without Par Value New York Stock Exchange, Inc.
$1.75 Dividend Series
Entergy Gulf States Capital I 8.75% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
Entergy Louisiana Capital I 9% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
Entergy London Capital, L.P. 8-5/8% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Class
Entergy Arkansas, Inc. Preferred Stock, Cumulative, $100 Par Value
Preferred Stock, Cumulative, $25 Par Value
Preferred Stock, Cumulative, $0.01 Par Value
Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value
Entergy Louisiana, Inc. Preferred Stock, Cumulative, $100 Par Value
Preferred Stock, Cumulative, $25 Par Value
Entergy Mississippi, Inc. Preferred Stock, Cumulative, $100 Par Value
Entergy New Orleans, Inc. Preferred Stock, Cumulative, $100 Par Value
<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 ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants' knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of Entergy Corporation Common Stock, $0.01
Par Value, held by non-affiliates, was $7.1 billion based on the reported
last sale price of such stock on the New York Stock Exchange on February 27,
1998. Entergy Corporation is directly or indirectly the sole holder of the
common stock of Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy
Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc.,
System Energy Resources, Inc., and Entergy London Investments plc.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of Entergy Corporation to be filed in
connection with its Annual Meeting of Stockholders, to be held May 15,
1998, are incorporated by reference into Parts I and III hereof.
<PAGE>
TABLE OF CONTENTS
Page
Number
Definitions i
Part I
Item 1. Business 1
Item 2. Properties 35
Item 3. Legal Proceedings 35
Item 4. Submission of Matters to a Vote of Security Holders 35
Directors and Executive Officers of Entergy Corporation 36
Part II
Item 5. Market for Registrants' Common Equity and Related
Stockholder Matters 41
Item 6. Selected Financial Data 42
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 43
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 43
Item 8. Financial Statements and Supplementary Data 44
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 223
Part III
Item 10. Directors and Executive Officers of the Registrants 223
Item 11. Executive Compensation 227
Item 12. Security Ownership of Certain Beneficial Owners and
Management 234
Item 13. Certain Relationships and Related Transactions 238
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 239
Signatures 240
Report of Independent Accountants on Financial Statement Schedules 249
Index to Financial Statement Schedules S-1
Exhibit Index E-1
This combined Form 10-K is separately filed by Entergy Corporation,
Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc.,
Entergy Mississippi, Inc., Entergy New Orleans, Inc., System Energy
Resources, Inc., and Entergy London Investments plc. Information contained
herein relating to any individual company is filed by such company on its
own behalf. Each company makes representations only as to itself and makes
no other representations whatsoever as to any other company.
This report should be read in its entirety. No one section of the
report deals with all aspects of the subject matter.
EXCHANGE RATES
For the convenience of the reader, this Form 10-K contains
translations of certain British pounds sterling (BPS) amounts into U.S.
dollars at specified rates, or, if not so specified, the noon buying rate
in New York City for cable transfers in BPS as certified for customs
purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate")
on December 31, 1997 of $1.6454 = BPS1.00. No representation is made that
the BPS amounts have been, could have been or could be converted into U.S.
dollars at the rates indicated or at any other rates.
The following table sets out, for the periods indicated, certain
information concerning the exchange rates between BPS and U.S. dollars
based on the Noon Buying Rate in New York City for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve
Bank of New York.
Fiscal Year Ending (1) Period End Average(2) High Low
($ per BPS1.00)
March 31, 1994 1.49 1.50 1.57 1.48
March 31, 1995 1.62 1.57 1.64 1.51
March 31, 1996 1.53 1.56 1.61 1.51
Period from April 1, 1996 to 1.60 1.58 1.71 1.49
January 31, 1997
December 31, 1997 1.65 1.64 1.71 1.58
(1) London Electricity plc, the predecessor company of Entergy London
Investments plc (Entergy London), had a fiscal year ending March 31
and Entergy London, the successor company, has a fiscal year ending
December 31. Effective February 1, 1997, Entergy London acquired
London Electricity plc.
(2) The average of the Noon Buying Rates in effect on the last business
day of each month during the relevant period.
FORWARD LOOKING STATEMENTS
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, Entergy London, or their affiliated companies may
be influenced by factors that could cause actual outcomes and results to be
materially different than projected. Such factors include, but are not
limited to, the effects of weather, the performance of generating units,
fuel prices and availability, regulatory decisions and the effects of
changes in law, capital spending requirements, the evolution of
competition, changes in accounting standards, and other factors.
<PAGE>
DEFINITIONS
Certain abbreviations or acronyms used in the text and notes are
defined below:
Abbreviation or Acronym Term
AFUDC Allowance for Funds Used During Construction
Algiers 15th Ward of the City of New Orleans, Louisiana
ALJ Administrative Law Judge
ANO 1 and 2 Units 1 and 2 of Arkansas Nuclear One Steam Electric
Generating Station (nuclear), owned by Entergy Arkansas
APB Accounting Principles Board
APSC Arkansas Public Service Commission
Arkansas Cities and
Cooperatives Cities of Benton, North Little Rock, Prescott and
Osceola; the Conway Corporation, the West Memphis
Utilities Commission and the Farmers' Electric
Cooperative
Availability
Agreement Agreement, dated as of June 21, 1974, as amended, among
System Energy and Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans, and the
assignments thereof
BPS British pounds sterling
Cajun Cajun Electric Power Cooperative, Inc. (currently in
chapter 11 bankruptcy reorganization)
Capital Funds
Agreement Agreement, dated as of June 21, 1974, as amended,
between System Energy and Entergy Corporation, and the
assignments thereof
CitiPower CitiPower Pty.
Council Council of the City of New Orleans, Louisiana
D.C. Circuit United States Court of Appeals for the District of
Columbia Circuit
DOE United States Department of Energy
domestic utility
companies Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New
Orleans, collectively
EMF Electromagnetic fields
EPA Environmental Protection Agency
EPAct Energy Policy Act of 1992
EPDC Entergy Power Development Corporation
EPMC Entergy Power Marketing Corp.
ETC Exempt telecommunications company under PUHCA
ETHC Entergy Technology Holding Company
EWG Exempt wholesale generator under PUHCA
Electricity Act Electricity Act 1989
Electricity Pool Wholesale electricity market in England and Wales
Entergy Entergy Corporation and its various direct and indirect
subsidiaries
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.
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 London Entergy London Investments plc, formerly Entergy Power
UK plc (including its wholly owned subsidiary, London
Electricity plc)
Entergy Louisiana Entergy Louisiana, Inc., formerly Louisiana Power &
Light Company
<PAGE>
DEFINITIONS (Continued)
Abbreviation or Acronym Term
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.
Entergy Power Entergy Power, Inc.
Entergy Services Entergy Services, Inc.
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
FUCO an exempt foreign utility company under PUHCA
G&R Mortgage Bonds General and Refunding Mortgage Bonds
Grand Gulf 1 and 2 Units 1 and 2 of Grand Gulf Steam Electric Generating
Station (nuclear), 90% owned by System Energy
GWH one million kilowatt-hours
Independence Independence Steam Electric Station (coal), owned 16%
by Entergy Arkansas, 25% by Entergy Mississippi, and
11% by Entergy Power
IRS Internal Revenue Service
KPL Kingsnorth Power Ltd.
KV kilovolt
KW kilowatt
KWH kilowatt-hour(s)
London Electricity London Electricity plc - a regional electric company
serving London, England, which was acquired by Entergy
London Investments plc effective February 1, 1997
LDEQ Louisiana Department of Environmental Quality
LPSC Louisiana Public Service Commission
MCF 1,000 cubic feet of gas
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
MGP Manufactured gas plant
MCEQ Mississippi Commission on Environmental Quality
MMC UK Monopolies and Mergers Commission
MPSC Mississippi Public Service Commission
MW Megawatt(s)
N/A Not applicable
Nelson Unit 6 Unit No. 6 (coal) of the Nelson Steam Electric
Generating Station, owned 70% by Entergy Gulf States
NISCO Nelson Industrial Steam Company
1991 NOPSI
Settlement Agreement, retroactive to October 4, 1991, among
Entergy New Orleans, the Council, and the Alliance for
Affordable Energy, Inc. (local consumer advocate
group), which settled certain Grand Gulf 1 prudence
issues and certain litigation related to the resolution
adopted by the Council on February 4, 1988, disallowing
Entergy New Orleans' recovery of $135 million of
previously deferred Grand Gulf 1-related costs
1994 NOPSI
Settlement Settlement effective January 1, 1995, between Entergy
New Orleans and the Council in which Entergy New
Orleans agreed to implement a permanent reduction in
electric and gas rates and resolve disputes with the
Council in the interpretation of the 1991 NOPSI
Settlement
<PAGE>
DEFINITIONS (Concluded)
Abbreviation or Acronym Term
NPL Superfund National Priorities List
NRC Nuclear Regulatory Commission
PES License Public Electricity Supply License in the UK
PRP Potentially Responsible Party (a person or entity that
may be responsible for remediation of environmental
contamination)
PUCT Public Utility Commission of Texas
PUHCA Public Utility Holding Company Act of 1935, as amended
PURPA Public Utility Regulatory Policies Act of 1978
Rate Cap The level of Entergy Gulf States' retail electric base
rates in effect at December 31, 1993, for the Louisiana
retail jurisdiction, and the level of such rates in
effect prior to the settlement agreement with the PUCT
on July 21, 1994, for the Texas retail jurisdiction,
which may not be exceeded before December 31, 1998
Reallocation
Agreement 1981 Agreement, superseded in part by a June 13, 1985
decision of FERC, among Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy relating to the sale of capacity and
energy from Grand Gulf
REC Regional Electricity Company - UK
Regulator Director General of Electricity Supply for the UK
Ritchie 2 Unit 2 of the R. E. Ritchie Steam Electric Generating
Station (gas/oil)
River Bend River Bend Steam Electric Generating Station (nuclear)
RUS Rural Utility Services (formerly the Rural
Electrification Administration or "REA")
SCC Saltend Cogeneration Company
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards,
promulgated by the Financial Accounting Standards Board
SMEPA South Mississippi Electric Power Agency
System Agreement Agreement, effective January 1, 1983, as modified,
among the domestic utility companies relating to the
sharing of generating capacity and other power
resources
System Energy System Energy Resources, Inc.
System Fuels System Fuels, Inc.
UK The United Kingdom of Great Britain and Northern
Ireland
Unit Power Sales
Agreement Agreement, dated as of June 10, 1982, as amended and
approved by FERC, among Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy, relating to the sale of capacity and
energy from System Energy's share of Grand Gulf 1
Waterford 3 Unit No. 3 (nuclear) of the Waterford Steam Electric
Generating Station, owned 90.7% by Entergy Louisiana.
The remaining 9.3% undivided interest is leased by
Entergy Louisiana.
White Bluff White Bluff Steam Electric Generating Station 57% owned
by Entergy Arkansas
<PAGE>
PART I
Item 1. Business
BUSINESS OF ENTERGY
General
Entergy Corporation is a Delaware corporation which, through its
direct and indirect subsidiaries, engages in the domestic and foreign
electric utility business, other domestic and foreign energy-related
enterprises, and telecommunications-based businesses. It has no
significant assets other than the stock of its subsidiaries. Entergy
Corporation is registered as a public utility holding company under PUHCA.
As such, Entergy Corporation and its various direct and indirect
subsidiaries (with the exception of its EWG, FUCO, and ETC subsidiaries)
are subject to the broad regulatory provisions of PUHCA. PUHCA
historically limited the operations of registered holding companies to a
single, integrated public utility system and functionally related
activities. However, more recently, PUHCA has been amended or interpreted
to permit limited entry by registered public utility holding companies into
domestic and foreign electric generation ventures, foreign utility
ownership, telecommunications and information service businesses, and other
domestic energy related businesses.
Domestic Operations and Investments
Entergy Corporation has five wholly-owned domestic retail electric
utility subsidiaries: Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans. As of December
31, 1997, these utility companies provided retail electric service to
approximately 2.5 million customers primarily in portions of the states of
Arkansas, Louisiana, Mississippi, and Texas. In addition, Entergy Gulf
States furnishes natural gas utility service in and around Baton Rouge,
Louisiana, and Entergy New Orleans furnishes natural gas utility service in
New Orleans, Louisiana. The business of the domestic utility companies is
subject to seasonal fluctuations, with the peak sales period occurring
during the third quarter of each year. During 1997, the domestic utility
companies' combined retail electric sales as a percentage of total electric
sales were: residential - 26.5%; commercial - 20.3%; and industrial -
41.8%. Retail electric revenues from these sectors as a percentage of
total electric revenues were: residential - 35.1%; commercial - 24.4%; and
industrial - 31.2%. Sales to governmental and municipal sectors and to
nonaffiliated utilities accounted for the balance of energy sales. The
major industrial customers of the domestic utility companies are in the
chemical processing, petroleum refining, paper products, and food products
industries. The retail rates and services of Entergy's domestic retail
utility subsidiaries are regulated by state and/or local regulatory
authorities.
Entergy Corporation owns all of the common stock of Entergy Power, a
Delaware corporation and domestic power producer that owns 725 MW of fossil-
fueled generating assets located in Arkansas. Entergy Power markets
electric capacity and energy in the wholesale market. Entergy Corporation
also owns 100% of the voting stock of System Energy, an Arkansas
corporation that owns and leases an aggregate 90% undivided interest in
Grand Gulf. System Energy sells the capacity and energy from its interest
in Grand Gulf 1 at wholesale to its only customers, Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (see
"CAPITAL REQUIREMENTS AND FUTURE FINANCING - Certain System Financial and
Support Agreements - Unit Power Sales Agreement," below). Both Entergy
Power's and System Energy's wholesale power sales are subject to the
jurisdiction of FERC.
Entergy Services, Inc., a Delaware corporation wholly-owned by Entergy
Corporation, provides general executive, advisory, administrative,
accounting, legal, engineering, and other services primarily to the
domestic utility subsidiaries of Entergy Corporation, but also to Entergy
Enterprises. Entergy Operations, a Delaware corporation, is also wholly-
owned by Entergy Corporation and provides nuclear management, operations
and maintenance services under contract for ANO, River Bend, Waterford 3,
and Grand Gulf 1, subject to the owner oversight of Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, and System Energy, respectively.
Entergy Services and Entergy Operations provide their services to the
domestic utility companies, on an "at cost" basis, pursuant to service
agreements approved by the SEC under PUHCA.
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans own 35%, 33%, 19%, and 13%, respectively, of the common stock
of System Fuels, a Louisiana corporation that implements and manages
certain programs to procure, deliver, and store fuel supplies for those
companies.
Entergy Gulf States has wholly-owned subsidiaries that (i) operate
intrastate gas pipelines in Louisiana used primarily to transport fuel to
two of Entergy Gulf States' generating stations; (ii) own the Lewis Creek
Station, a gas-fired generating plant, which is leased to and operated by
Entergy Gulf States; and (iii) own several miles of railroad track
constructed in Louisiana primarily for the purpose of transporting coal for
use as boiler fuel at Entergy Gulf States' Nelson Unit 6 generating
facility.
Entergy Enterprises, a wholly-owned nonutility subsidiary of Entergy
Corporation incorporated under Louisiana law, invests in and develops
energy-related projects and businesses. Entergy Enterprises, directly or
through subsidiaries, markets energy-related expertise, products, and
services to third parties and provides a variety of services to certain
nonutility companies owned by Entergy. Services provided to third-parties
include (i) energy management; (ii) management, operations and maintenance
services for fossil and nuclear generating plants; and (iii) energy
efficient lighting, heating, and cooling systems.
EPMC, a Delaware corporation, is a wholly-owned subsidiary of Entergy
Corporation that is in the business of marketing electricity, gas, other
generating fuels, and financial instruments to third parties. It has
received authority from the SEC to deal in a wide range of energy
commodities and related financial products.
ETHC, a wholly-owned subsidiary of Entergy Corporation, engages in a
variety of telecommunications and information based enterprises that are
exempt from regulation under PUHCA. ETHC has acquired security monitoring
firms operating primarily in North and South Carolina, Alabama, Florida,
Georgia, Mississippi, Louisiana, and Texas. ETHC participates with
Hyperion Telecommunications in a joint venture that operates three
Competitive Local Exchange Carriers (CLECs) in Little Rock, Arkansas;
Jackson, Mississippi; and Baton Rouge, Louisiana. These CLECs provide long
distance carrier access and local exchange services. ETHC also currently
operates 1,500 miles of fiber optic cable in Arkansas, Louisiana,
Mississippi, and Texas that provide long haul telecommunications to
wholesale telecommunication carriers. ETHC has made a limited investment
in a personal communication services company which will be located in the
southeastern United States.
Foreign Operations and Investments
Since 1993, Entergy Corporation has directly or indirectly acquired
interests in a number of foreign utility businesses. Entergy Corporation
owns indirectly all of the outstanding shares of Entergy London which was
incorporated as a public limited company under the laws of England and
Wales in October 1996. Entergy Corporation, through Entergy London, gained
effective control of London Electricity in February 1997. London
Electricity is Entergy London's sole asset. London Electricity is a
regional electric company that is principally engaged in the distribution
and supply of electricity to approximately 2 million customers in and
around London, England. London Electricity's retail service area currently
covers approximately 257 square miles in the central portion of
metropolitan London and includes commercial, residential, and industrial
customers. London Electricity also engages in other business activities,
including ownership of an interest in a 1,000 MW gas-fired combined cycle
generating station and several private electric distribution systems.
Entergy Corporation's indirect wholly-owned Australian subsidiary,
CitiPower, was acquired in 1996. CitiPower is principally engaged in the
electric distribution business in Melbourne, Australia, where it serves
approximately 242,000 customers. Entergy Corporation also indirectly owns
a 5% interest in Edesur, S.A., which is the retail electric distribution
company for about 1.9 million customers in the southern part of Buenos
Aires, Argentina.
EPDC, a wholly-owned subsidiary of Entergy Corporation, owns an
interest in the following foreign electric generation assets:
Investment Percent Ownership Status
Argentina - Costanera, 1,260 MW 6% operational
Argentina - Costanera expansion, 220 MW 10% operational
Chile - San Isidro, 370 MW 25% under construction
Pakistan - Hub River, 1,292 MW 5% operational
Peru - Edegel - 793 MW 21% operational
United Kingdom - Saltend, 1,200 MW 100% under construction
United Kingdom - Damhead Creek, 770 MW 100% in development
In addition, Entergy Corporation, through another wholly-owned
subsidiary, owns 92% of Nantong Entergy Heat & Power, which has a 24MW
facility under construction.
As of December 31, 1997, Entergy Corporation had a net investment of
$1.3 billion in equity capital in businesses other than the domestic
utility businesses. Entergy Corporation continues to seek opportunities to
expand its domestic and foreign businesses that are not regulated by
domestic state and local utility regulatory authorities. Entergy
Corporation's continued acquisition of and investments in certain foreign
and domestic businesses is subject to regulation (including the effect of
exemptive provisions) under PUHCA. Rule 53 under PUHCA limits the
aggregate investment by a registered public utility holding company in EWGs
and FUCOs without SEC approval to 50% of the holding company's consolidated
retained earnings averaged over a running four quarter period. Entergy's
aggregate investment in EWGs and FUCOs is such that no further EWG or FUCO
investments can be made with funds provided from securities issued by
Entergy unless SEC approval is obtained or Entergy's consolidated retained
earnings increase.
International operations are subject to the risks inherent in
conducting business abroad, including possible nationalization or
expropriation, price and currency exchange controls, limitations on foreign
participation in local energy-related enterprises, and other restrictions.
Changes in the relative value of currencies occur from time to time, and
may favorably or unfavorably affect the results of operations and
statements of cash flows of Entergy's non-U.S. businesses. In addition,
there are exchange control restrictions in certain countries relating to
the repatriation of earnings.
Selected Data
Selected customer and sales data for 1997 are summarized in the
following tables:
<TABLE>
<CAPTION>
Customers as of
December 31, 1997
Area Served Electric Gas
(In thousands)
<S> <C> <C> <C>
Entergy Arkansas Portions of Arkansas and Tennessee 620 -
Entergy Gulf States Portions of Texas and Louisiana 641 88
Entergy Louisiana Portions of Louisiana 623 -
Entergy Mississippi Portions of Mississippi 382 -
Entergy New Orleans City of New Orleans, except Algiers, which
is provided electric service by Entergy Louisiana 189 151
----- ---
Total domestic 2,455 239
customers
CitiPower Melbourne, Australia and surrounding suburbs 242 -
London Electricity Primarily the majority of metropolitan
London, England 1,995 -
----- ---
Total customers 4,692 239
===== ===
</TABLE>
1997 - Selected Electric Energy Sales Data
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Mississippi New Orleans Energy Total (a)
<S> <C> <C> <C> <C> <C> <C> <C>
DOMESTIC (GWH)
Electric Department:
Sales to retail
customers 17,319 33,272 29,582 11,418 5,521 - 97,113
Sales for resale:
- Affiliates 9,557 414 104 1,918 316 9,735 -
- Others 6,828 1,503 805 412 160 - 9,707
------------------------------------------------------------------------------
Total 33,704 35,189 30,491 13,748 5,997 9,735 106,820
Steam Department:
- Sales to steam
products customer - 1,626 - - - - 1,626
------------------------------------------------------------------------------
TOTAL 33,704 36,815 30,491 13,748 5,997 9,735 108,446
==============================================================================
Average use per
residential customer
(KWH) 11,313 14,615 14,311 13,314 11,618 - 13,279
==============================================================================
</TABLE>
(a) Includes the effect of intercompany eliminations.
FOREIGN
In 1997, Entergy London had 19,546 GWH of sales to its distribution
customers and 18,023 GWH of sales to its supply customers.
1997 - Selected Natural Gas Sales Data
Entergy New Orleans and Entergy Gulf States sold 16,754,253 and
6,944,026 MCF, respectively, of natural gas to retail customers in 1997.
Revenues from natural gas operations for each of the three years in the
period ended December 31, 1997, were not material for Entergy Gulf States.
See "INDUSTRY SEGMENTS" below for a description of Entergy New Orleans'
business segments.
See "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED FINANCIAL DATA -
FIVE-YEAR COMPARISON," and "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
OF ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY
MISSISSIPPI, ENTERGY NEW ORLEANS, SYSTEM ENERGY, and ENTERGY LONDON" which
follow each company's financial statements in this report, for further
information with respect to operating statistics.
Employees
As of January 31, 1998, Entergy had 17,288 employees as follows:
Full-time:
Entergy Corporation -
Entergy Arkansas 1,416
Entergy Gulf States 1,456
Entergy Louisiana 721
Entergy Mississippi 700
Entergy New Orleans 301
System Energy -
Entergy London 3,759
Entergy Operations 3,662
Entergy Services 3,131
Other subsidiaries 1,962
------
Total Full-time 17,108
Part-time 180
------
Total Entergy 17,288
======
Competition
Refer to Note 2 herein for a detailed discussion of competitive
challenges Entergy faces in the utility industry, including the filings of
the domestic utility companies with their respective state and local
regulatory authorities addressing transition to competition.
CAPITAL REQUIREMENTS AND FUTURE FINANCING
Construction expenditures for the domestic utility companies, System
Energy, and Entergy London, including environmental expenditures (which are
immaterial) and AFUDC, but excluding nuclear fuel, for the period 1998-2000
are estimated as follows:
1998 1999 2000 Total
(In Millions)
Entergy Arkansas $201 $156 $204 $561
Entergy Gulf States 150 145 147 442
Entergy Louisiana 107 90 86 283
Entergy Mississippi 70 48 49 167
Entergy New Orleans 21 16 15 52
System Energy 24 26 21 71
Entergy London 161 163 158 482
With the exception of Entergy Arkansas, no significant construction
costs are expected in connection with the domestic utility companies'
generating facilities. Projected construction expenditures for the
replacement of ANO 2's steam generators are included in Entergy Arkansas'
estimated figures above. See Note 9 for additional information. Actual
construction costs may vary from these estimates for a number of reasons,
including changes in load growth estimates, changes in environmental
regulations, modifications to nuclear units to meet regulatory
requirements, increasing costs of labor, equipment and materials, and cost
of capital. In addition to construction expenditure requirements, Entergy
must meet scheduled long-term debt and preferred stock maturities and cash
sinking fund requirements. See Notes 4, 5, 6, and 7 for further capital
requirements and financing information.
London Electricity's capital expenditures are primarily related to its
distribution business and include expenditures for load-related, non-load-
related and non-operational capital assets. Load-related capital
expenditures are largely required by new business growth. Customer
contributions are normally received when capital expenditures are made to
extend or upgrade service to customers (except to the extent that such
capital expenditures are made to enhance London Electricity's distribution
network generally). Non-load-related capital expenditures include asset
replacement which is expected to continue until at least the next decade.
Other non-load-related expenditures include system upgrade work that
provides for load growth and has the additional benefit of improving
network security and reliability. Non-operational capital expenditures are
for assets such as fixtures and equipment. London Electricity is required
to file five-year projections with the Regulator for capital expenditures
related to its regulated distribution network and annual updates of such
projections. The most recent projection was for the five-year period ended
March 31, 2000, and was filed in July 1997. This filing reflected London
Electricity's current projection of approximately $793 million
(approximately BPS482 million) for the five-year period, and expenditures
have thus far been substantially in accordance with the projection.
London Electricity is a member of the City of Greenwich Lewisham Rail
Link plc which will require expenditures of approximately $10 million
(approximately BPS6 million) in the next two years. London Electricity
maintains the distribution networks at Heathrow, Gatwick, and Stansted
airports for the British Airport Authority and expects to spend
approximately $59 million (approximately BPS36 million) on these networks
over the next six years.
In December 1997, SCC, a wholly-owned subsidiary of EPDC, entered into
a BPS646 million (approximately $1.07 billion) nonrecourse credit facility
with an international bank group for the construction of a 1,200 MW gas-
fired power plant in Hull, England. The power plant will sell power into
the UK power pool at prices established by the market. SCC entered into a
lump-sum contract with a major international contractor to build the power
plant. SCC has also entered into a series of contracts, including a long-
term ground lease for the site; a long-term gas supply agreement with take-
or-pay obligations, and a long-term steam and power supply agreement with
the industrial host. The total cost of this project currently is
estimated to be approximately $875 million and the project is expected
to be operational by January 2000.
In September 1997, EPDC acquired KPL for $67 million. KPL owns land
in Southeast England and certain rights to build a power station. The
acquisition of KPL was financed by borrowings under a BPS50 million ($82
million) credit facility with an international bank. In December 1997,
EPDC amended this credit facility and increased the amount of the revolver
to BPS100 million ($165 million). In early October 1997, EPDC announced
construction of a 770 MW combined cycle gas turbine merchant power plant
to be known as Damhead Creek on the KPL site. Construction is scheduled
to begin in late 1998, at an estimated cost of $625 million. The target
date for commercial operation is the second quarter of 2000. Financing
and other project requirements are currently in the final stages of
development.
Entergy Corporation's primary capital requirements are to invest
periodically in, or make loans to, its subsidiaries and to invest in new
enterprises. See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -
LIQUIDITY AND CAPITAL RESOURCES," and "BUSINESS OF ENTERGY" for additional
discussion of Entergy Corporation's current and future planned investments
in its subsidiaries and financial sources for such investments. The
principal sources of funds for Entergy Corporation are dividend
distributions from its subsidiaries, funds available under its bank credit
facilities, and funds received from its dividend reinvestment and stock
purchase plan. Certain events, such as the River Bend issues discussed in
Notes 2 and 9, could limit the amount of these distributions. Substantial
write-offs or charges resulting from adverse rulings in this matter could
adversely affect Entergy Gulf States' ability to pay dividends.
Certain System Financial and Support Agreements
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The Unit Power Sales Agreement allocates capacity and energy from
System Energy's 90% ownership and leasehold interests in Grand Gulf 1 (and
the related costs) to Entergy Arkansas (36%), Entergy Louisiana (14%),
Entergy Mississippi (33%), and Entergy New Orleans (17%). Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans
make payments to System Energy for their respective entitlements of
capacity and energy on a full cost-of-service basis regardless of the
quantity of energy delivered, so long as Grand Gulf 1 remains in commercial
operation. Payments under the Unit Power Sales Agreement are System
Energy's only source of operating revenues. The financial condition of
System Energy depends upon the continued commercial operation of Grand Gulf
1 and the receipt of payments from Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans. Payments made by Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans
under the Unit Power Sales Agreement are generally recovered through rates.
In the case of Entergy Arkansas and Entergy Louisiana, payments are also
recovered through sales of electricity from their respective retained
shares of Grand Gulf 1. See Note 2 for further information regarding
retained shares.
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The Availability Agreement among System Energy and Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans was entered
into in 1974 in connection with the financing by System Energy of Grand
Gulf. The Availability Agreement provided that System Energy would join in
the System Agreement on or before the date on which Grand Gulf 1 was placed
in commercial operation and would make available to Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans all
capacity and energy available from System Energy's share of Grand Gulf.
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans also agreed severally to pay System Energy monthly for the
right to receive capacity and energy available from Grand Gulf in amounts
that (when added to any amounts received by System Energy under the Unit
Power Sales Agreement, or otherwise) would at least equal System Energy's
total operating expenses for Grand Gulf (including depreciation at a
specified rate) and interest charges. Under the Availability Agreement,
the sale of capacity and energy generated by Grand Gulf is governed by the
Unit Power Sales Agreement. The September 1989 write-off of System
Energy's investment in Grand Gulf 2, amounting to approximately $900
million, is being amortized for Availability Agreement purposes over 27
years rather than in the month the write-off was recognized on System
Energy's books. The allocation percentages under the Availability
Agreement are fixed as follows: Entergy Arkansas - 17.1%; Entergy Louisiana
- - 26.9%; Entergy Mississippi - 31.3%; and Entergy New Orleans - 24.7%.
The allocation percentages under the Availability Agreement remain in
effect and would govern payments made under such agreement in the event of
a shortfall of funds available to System Energy from other sources,
including payments by Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans to System Energy under the Unit Power
Sales Agreement.
System Energy has assigned its rights to payments and advances from
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans under the Availability Agreement as security for its first mortgage
bonds and reimbursement obligations to certain banks providing the letters
of credit in connection with the equity funding of the sale and leaseback
transactions described in Note 10 under "Sale and Leaseback Transactions -
Grand Gulf 1 Lease Obligations." In these assignments, Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans further
agreed that, in the event they were prohibited by governmental action from
making payments under the Availability Agreement (if, for example, FERC
reduced or disallowed such payments as constituting excessive rates), they
would then make subordinated advances to System Energy in the same amounts
and at the same times as the prohibited payments. System Energy would not
be allowed to repay these subordinated advances so long as it remained in
default under the related indebtedness or in other similar circumstances.
Each of the assignment agreements relating to the Availability
Agreement provides that Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans shall make payments directly to System
Energy. However, if there is an event of default, Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans must make
those payments directly to the holders of indebtedness that are the
beneficiaries of such assignment agreements. The payments must be made pro
rata according to the amount of the respective obligations secured.
The obligations of Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans to make payments under the
Availability Agreement are subject to the receipt and continued
effectiveness of all necessary regulatory approvals. Sales of capacity and
energy under the Availability Agreement would require that the Availability
Agreement be submitted to FERC for approval with respect to the terms of
such sale. No such filing with FERC has been made because sales of
capacity and energy from Grand Gulf are being made pursuant to the Unit
Power Sales Agreement. Other aspects of the Availability Agreement,
including the obligations of Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans to make subordinated advances, are
subject to the PUHCA jurisdiction of the SEC, whose approval has been
obtained. If, for any reason, sales of capacity and energy are made in the
future pursuant to the Availability Agreement, the jurisdictional portions
of the Availability Agreement would be submitted to FERC for approval.
Since commercial operation of Grand Gulf 1 began, payments under the
Unit Power Sales Agreement to System Energy have exceeded the amounts
payable under the Availability Agreement, and no payments under the
Availability Agreement have ever been required. In the event such payments
were required, the ability of Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans to recover from their customers
amounts paid under the Availability Agreement, or under the assignments
thereof, would depend upon the outcome of rate proceedings before state and
local regulatory authorities. In view of the controversies that arose over
the allocation of capacity and energy from Grand Gulf 1 pursuant to the
Unit Power Sales Agreement, opposition to full recovery would be likely and
the outcome of such proceedings, should they occur, is not predictable.
The Availability Agreement may be terminated, amended, or modified by
mutual agreement of the parties thereto, upon obtaining the consent, if
required, of those holders of System Energy's indebtedness then outstanding
who are the beneficiaries of the assignments of the Availability Agreement.
Capital Funds Agreement (Entergy Corporation and System Energy)
System Energy and Entergy Corporation have entered into the Capital
Funds Agreement whereby Entergy Corporation has agreed to supply System
Energy with sufficient capital to (i) maintain System Energy's equity
capital at an amount equal to a minimum of 35% of its total capitalization
(excluding short-term debt) and (ii) permit the continued commercial
operation of Grand Gulf 1 and pay in full all indebtedness for borrowed
money of System Energy when due.
Entergy Corporation has entered into various supplements to the
Capital Funds Agreement, and System Energy has assigned its rights under
such supplements as security for its first mortgage bonds and for
reimbursement obligations to certain banks providing letters of credit in
connection with the equity funding of the sale and leaseback transactions
described in Note 10 under "Sale and Leaseback Transactions - Grand Gulf 1
Lease Obligations." Each such supplement provides that permitted
indebtedness for borrowed money incurred by System Energy in connection
with the financing of Grand Gulf may be secured by System Energy's rights
under the Capital Funds Agreement on a pro rata basis (except for the
Specific Payments, as defined below). In addition, in the supplements to
the Capital Funds Agreement relating to the specific indebtedness being
secured, Entergy Corporation has agreed to make cash capital contributions
directly to System Energy sufficient to enable System Energy to make
payments when due on such indebtedness (Specific Payments). However, if
there is an event of default, Entergy Corporation must make those payments
directly to the holders of indebtedness benefiting from the supplemental
agreements. The payments (other than the Specific Payments) must be made
pro rata according to the amount of the respective obligations benefiting
from the supplemental agreements.
The Capital Funds Agreement may be terminated, amended, or modified by
mutual agreement of the parties thereto, upon obtaining the consent, if
required, of those holders of System Energy's indebtedness then outstanding
who have received the assignments of the Capital Funds Agreement.
RATE MATTERS AND REGULATION
Rate Matters
The domestic utility companies' retail rates are regulated by state
and/or local regulatory authorities, as described below. FERC regulates
their wholesale rates (including intrasystem sales pursuant to the System
Agreement) and interstate transmission of electricity, as well as rates for
System Energy's sales of capacity and energy from Grand Gulf 1 to Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans
pursuant to the Unit Power Sales Agreement.
Wholesale Rate Matters
System Energy
As described above under "CAPITAL REQUIREMENTS AND FUTURE FINANCING -
Certain System Financial and Support Agreements," System Energy recovers
costs related to its interest in Grand Gulf 1 through rates charged to
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans for capacity and energy under the Unit Power Sales Agreement.
On December 12, 1995, System Energy implemented a $65.5 million rate
increase, subject to refund. Refer to Note 2 for a discussion of the rate
increase request filed by System Energy with FERC.
System Agreement (Energy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy)
The domestic utility companies engage in the coordinated planning,
construction, and operation of generation and transmission facilities
pursuant to the terms of the System Agreement as described under "PROPERTY
- - Generating Stations," below.
In connection with the Merger, FERC approved certain rate schedule
changes to integrate Entergy Gulf States into the System Agreement.
Certain commitments were also adopted to assure that the ratepayers of
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans will not be allocated higher costs. Such commitments included:
(i) a tracking mechanism to protect these companies from certain unexpected
increases in fuel costs; (ii) the exclusion of Entergy Gulf States from the
distribution of profits from power sales contracts entered into prior to
the Merger; (iii) a methodology to estimate the cost of capital in future
FERC proceedings; and (iv) a stipulation that these companies be insulated
from certain direct effects on capacity equalization payments if Entergy
Gulf States were to acquire Cajun's 30% share in River Bend, which it
acquired on December 23, 1997. See "Regulation - Other Regulation and
Litigation" for information on appeals of FERC Merger orders and related
pending rate schedule changes and "Cajun-River Bend Litigation" in Note 9
herein for a discussion of the transfer of Cajun's 30% share in River Bend
to Entergy Gulf States.
In approving the Merger, FERC also initiated a new proceeding to
consider whether the System Agreement permits certain out-of-service
generating units to be included in reserve equalization calculations under
Service Schedule MSS-1 of that agreement. The LPSC and the MPSC submitted
testimony in this proceeding seeking retroactive refunds for Entergy
Louisiana and Entergy Mississippi (estimated at $22.6 million and $13.2
million, respectively). The FERC staff subsequently submitted testimony
concluding that Entergy's treatment was reasonable. However, because it
concluded that Entergy's treatment violated the tariff, the FERC staff
maintained that refunds of approximately $7.2 million should be ordered.
On March 3, 1995, a FERC ALJ issued an opinion holding that the practice of
including the out-of-service units in the reserve equalization calculations
during the period 1987 through 1993 was not permitted by Service Schedule
MSS-1 and, therefore, constituted a violation of the System Agreement.
However, the ALJ found that the violation was in good faith and had
benefited the customers of Entergy as a whole. Accordingly, the ALJ
recommended that no retroactive refunds should be ordered. The ALJ also
held that the System Agreement should be amended to allow out-of-service
units to be included in reserve equalization as proposed in an offer of
settlement filed by Entergy on February 16, 1994. On August 5, 1997, the
FERC issued an Opinion and Order affirming the initial decision of the ALJ.
On September 3, 1997, the LPSC and the MPSC filed a request for rehearing
of FERC's August 5, 1997 decision. On February 3, 1998, FERC denied the
request for rehearing.
On March 14, 1995, the LPSC filed a complaint with FERC alleging that
the System Agreement results in unjust and unreasonable rates and requested
FERC to modify the System Agreement to exclude curtailable load from the
cost allocation determination and to permit Entergy's domestic utility
companies that engage in real-time pricing at the retail level to be
assessed only the marginal cost for energy sold among the domestic utility
companies. In May 1995, the LPSC amended its original complaint to request
an additional System Agreement modification to allocate costs on the basis
of a four-month coincident peak methodology. On August 5, 1996, FERC
dismissed the LPSC's complaint and amended complaint, finding the LPSC's
claim that the System Agreement is unjust and unreasonable to be without
merit. The FERC confirmed this finding in a September 12, 1997 order
denying the LPSC's request for rehearing. The LPSC has appealed FERC's
dismissal of its complaint to the D. C. Circuit.
Open Access Transmission (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans)
On August 2, 1991, Entergy Services, as agent for Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy
Power, submitted to FERC (i) proposed tariffs that, subject to certain
conditions, would provide to electric utilities "open access" to Entergy's
integrated transmission system, and (ii) rate schedules providing for sales
of wholesale power at market-based rates. FERC approved the filing in
August 1992, and various parties filed appeals with the D.C. Circuit. The
case was remanded to FERC in July 1994 for further proceedings. On October
31, 1994, Entergy Services, as agent for Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans,
filed revised transmission tariffs. On January 6, 1995, FERC made the
transmission tariffs effective, subject to refund, and ordered an
investigation of Entergy Power's market pricing authority, thereby making
Entergy Power's market price rate schedules subject to refund. An order in
the market price rate investigation is expected in 1998, but Entergy
expects that no refunds will be required.
On March 29, 1995, FERC issued a supplemental notice of proposed
rulemaking (Mega-NOPR) which would require public utilities to provide non-
discriminatory open access transmission service to wholesale customers and
which would also provide guidance on the recovery of wholesale and retail
stranded costs. Under the proposal, public utilities would be required to
file transmission tariffs for both point-to-point and network service.
Model transmission tariffs were included in the proposal. In September
1995 and January 1996, Entergy Services filed offers of partial settlement
accepting certain provisions of the transmission tariffs contained in the
Mega-NOPR and resolving certain rate issues. Hearings relating to Entergy
Services' open access tariffs concluded on February 22, 1996, and an
initial decision was issued by the ALJ on May 21, 1996. The initial
decision and offers of partial settlement are now pending before FERC
awaiting a final decision.
In August 1995, EPMC filed an application for permission to make
market-based sales. On December 13, 1995, Entergy Services filed revised
transmission tariffs in a separate proceeding proposing terms and
conditions for open access transmission service that are substantially
identical to the terms and conditions contained in the Mega-NOPR
transmission tariffs with rates to be the same as those determined in the
pending proceeding. On February 14, 1996, FERC accepted for filing the
revised transmission tariffs subject to the outcome of the pending
proceeding and conditionally accepted EPMC's application for market-based
sales. Subsequently, FERC accepted EPMC's application without condition.
In April 1996 FERC issued its final rule (Order No. 888) on open
access, nondiscriminatory transmission, and stranded costs, and a companion
final rule (Order No. 889) relating to codes of conduct and the mechanism
by which the open access transactions were to be made. In July 1996, in
response to this FERC order, Entergy Services filed, on behalf of the
domestic utility companies, its open access pro forma tariff. This tariff,
which supersedes the tariffs previously filed, is currently pending before
FERC with respect to the rates for transmission service. The rates set
forth in the July 1996 tariff are subject to the outcome of FERC action on
the May 21, 1996 initial decision and the offers of partial settlement. On
January 29, 1997, FERC accepted the non-rate terms and conditions of the
July 1996 tariff, subject to limited modifications.
In a March 1997 order (Order No. 888-A), FERC directed public
utilities to file revised tariffs to reflect changes resulting from
rehearing of Order No. 888. On July 14, 1997, Entergy Services filed with
the FERC its wholesale transmission access compliance tariff incorporating
the requirements of FERC Order No. 888-A. The filing supersedes the July
1996 tariff and the rates remain subject to the outcome of FERC action on
the May 21, 1996 initial decision and the offers of partial settlement.
Retail Rate Matters
General (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
Certain costs related to Grand Gulf 1, Waterford 3, and River Bend
were phased into retail rates over a period of years in order to avoid the
"rate shock" associated with increasing rates to reflect all such costs at
once. The deferral period in which costs are incurred but not currently
recovered has expired for all of these programs, and Entergy Arkansas,
Entergy Gulf States, Entergy Mississippi, and Entergy New Orleans are now
recovering those costs that were previously deferred. Entergy Louisiana
has fully recovered the deferred Waterford 3 costs. Entergy Gulf States
has pending several rate proceedings and some rate relief has been
received. Rate proceedings and appeals relating to these issues are
discussed in "Entergy Gulf States" below.
The retail regulatory philosophy is shifting in some jurisdictions
from traditional cost-of-service regulation to incentive-rate regulation.
Management believes incentive and performance-based rate plans encourage
efficiencies and productivity while permitting utilities and their
customers to share in the resulting benefits. As a means of minimizing the
need for retail rate increases, Entergy is committed to containing costs to
the greatest degree practicable. Entergy Mississippi and Entergy Louisiana
have implemented incentive rate plans. Recognizing that many industrial
customers have energy alternatives, Entergy continues to work with these
customers to address their needs. In certain cases, competitive prices are
negotiated using variable-rate designs.
The domestic utility companies have initiated proceedings with state
and local regulators regarding an orderly transition to a more competitive
market for electricity. See "MANAGEMENT'S FINANCIAL DISCUSSION AND
ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS," for a discussion of the
transition to competition filings made by Entergy Mississippi, Entergy Gulf
States, Entergy Louisiana, Entergy New Orleans and Entergy Arkansas with
their state and local regulators.
Entergy Arkansas
Rate Freeze
In connection with the settlement of various issues related to the
Merger, Entergy Arkansas agreed that it would not, except in response to
certain circumstances that are largely out of its control, request any
general retail rate increase to take effect before November 3, 1998. See
Note 2 for a discussion of the rate freeze as well as other aspects of the
settlement agreement between Entergy Arkansas and the APSC.
Recovery of Grand Gulf 1 Costs
Under the settlement agreement entered into with the APSC in 1985 and
amended in 1988, Entergy Arkansas agreed to forego recovery of a portion of
its Grand Gulf l-related costs, recover a portion of such costs currently,
and defer a portion of such costs for future recovery. In the future,
Entergy Arkansas will recover 78% of its allocated share of Grand Gulf 1
costs, but will not recover the remaining 22%. Deferrals ceased in l990,
and Entergy Arkansas is recovering a portion of the previously deferred
costs each year through l998. As of December 31, l997, the balance of
deferred costs was $75 million. Entergy Arkansas is permitted to recover
on a current basis the incremental costs of financing the unrecovered
deferrals.
Entergy Arkansas has the right to sell capacity and energy from its
retained share of Grand Gulf 1 to third parties and to sell such energy to
its retail customers at a price equal to Entergy Arkansas' avoided energy
cost. Proceeds of sales to third parties of Entergy Arkansas' retained
share of Grand Gulf l capacity and energy accrue to the benefit of Entergy
Corporation, as Entergy Arkansas' sole stockholder.
Fuel Adjustment Clause
In its October 1996 rate filing, Entergy Arkansas proposed an
alternative fuel adjustment clause, the Energy Cost Recovery Rider Energy
Cost Rate (ECR Rider ), which was approved by the APSC. Entergy Arkansas'
ECR Rider utilizes projected energy costs (i.e., fuel and purchased power
costs) for the coming calendar year to develop an Energy Cost Rate. The
Energy Cost Rate is revised annually and includes a true-up adjustment
reflecting the over-recovery or under-recovery of the energy cost for the
prior year. Under the ECR Rider, the nuclear refueling reserve fund
provision, which was no longer necessary due to the annual revision, was
eliminated. In addition, the nuclear incentive provision associated with
ANO was eliminated.
Entergy Gulf States
Rate Cap and Other Merger-Related Rate Agreements
In 1993, the LPSC and the PUCT approved separate regulatory proposals,
which included the implementation of a five-year Rate Cap on Entergy Gulf
States' retail electric base rates in the respective states, and provisions
for fuel and nonfuel savings created by the Merger to accrue to the benefit
of ratepayers. See Note 2 for a discussion of the Rate Cap as well as
other aspects of the settlement agreement between Entergy Gulf States and
the LPSC and the PUCT.
Recovery of River Bend Costs
Entergy Gulf States deferred approximately $369 million of River Bend
operating and purchased power costs, depreciation, and accrued carrying
charges, pursuant to a 1986 PUCT accounting order. Approximately $182
million of these costs are being amortized over a 20-year period, and the
remaining $187 million was written off in the first quarter of 1996 in
accordance with SFAS 121. Also, in accordance with a phase-in plan
approved by the LPSC, Entergy Gulf States deferred $294 million of its
River Bend costs related to the period February 1988 through February 1991.
See "River Bend Cost Deferrals" in Note 2 herein for a discussion of the
unamortized balances of these deferrals as of December 31, 1997.
Texas Jurisdiction - River Bend
In 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). At the
same time, 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 a result of the application of the company's long-lived
asset impairment policy, Entergy Gulf States wrote off Abeyed Deferrals
of $169 million, net of tax, effective January 1, 1996.
The PUCT's order has been the subject of several appellate
proceedings, culminating in an appeal to the Texas Supreme Court
(Supreme Court). On January 31, 1997, the Supreme Court issued an
opinion reversing the PUCT's order and remanding the case to the PUCT
for further proceedings.
On January 14, 1998, the commissioners of the PUCT voted by a 2 to
1 majority to disallow recovery of $1.4 billion of company-wide abeyed
plant costs. The Texas share of these costs, which is not currently in
rates, is approximately $624 million, based on 1988 costs and the
jurisdictional allocation included in current rates. The PUCT is
expected to enter an order pursuant to its vote, but has not yet done
so. As of December 31, 1997, 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 $252 million, respectively. See Note 2 for information
related to additional rulings by the PUCT and other retail rate
proceedings as well as the proposed agreement in principle between the
parties to the Entergy Gulf States rate proceedings in Texas.
NISCO Unrecovered Costs
In 1986, the PUCT ordered that the purchased power costs from NISCO in
excess of Entergy Gulf States' avoided costs be disallowed. The PUCT
disallowance resulted in approximately $12 million to $15 million of
unrecovered purchased power costs on an annual basis, which Entergy Gulf
States continued to expense as the costs were incurred. In April 1991, the
Texas Supreme Court, on the appeal of such order, ordered the PUCT to allow
Entergy Gulf States to recover purchased power payments in excess of its
avoided cost in future proceedings if Entergy Gulf States established to
the PUCT's satisfaction that the payments were reasonable and necessary
expenses.
In January 1992, Entergy Gulf States applied to the PUCT for a new
fixed fuel factor and requested a final reconciliation of fuel and
purchased power costs incurred between December 1, 1986 and September 30,
1991. Entergy Gulf States proposed to recover net under-recoveries and
interest (including under-recoveries related to NISCO) over a twelve-month
period. In June 1993, the PUCT concluded that the purchased power payments
made to NISCO in excess of Entergy Gulf States' avoided cost were not
reasonably incurred. In October 1993, Entergy Gulf States appealed the
PUCT's order to the Travis County District Court where the matter is still
pending. As of December 31, 1997, Entergy Gulf States had expensed $182
million of unrecovered purchased power costs and deferred revenue pending
the appeal to the District Court. No assurance can be given as to the
timing or outcome of the appeal.
Retail Rate Proceedings
In addition to the January 14, 1998 ruling discussed above in "Texas
Jurisdiction - River Bend," the PUCT upheld an ALJ's ruling disallowing
recovery of approximately $40 million of Entergy Services' affiliate costs
allocated to Entergy Gulf States in Texas. Entergy Services is responsible
for managing Entergy Gulf States' fossil generating plants and transmission
and distribution systems, as well as providing human resources, accounting,
and other necessary services to Entergy Gulf States and Entergy
Corporation's other electric utility subsidiaries. In another matter, the
PUCT also issued an order establishing service quality standards and rate
of return adjustments for Entergy Gulf States and its Texas retail service
territory. A portion of the adjustments will be retroactive and a portion
will be prospective. The PUCT will evaluate Entergy Gulf States' future
performance based on several criteria including feeder reliability, billing
error rates, customer call center performance, service installation
performance, line extension performance and street light replacements.
In March 1998, the parties to the Entergy Gulf States rate proceedings
in Texas reached an agreement in principle, subject to approval by the PUCT
and certain cities served by Entergy Gulf States, which would resolve all
of the pending rate issues. The proposed agreement in principle would
include a base rate reduction of $40 million on an annual basis, with a refund
retroactive to June 1, 1996; additionally it would provide for a
recovery of $25 million of deferred fuel costs; the base rates would remain
at the same level for the next four years after the reduction; a total
service quality credit of $9 million retroactive to June 1996; and the
recovery of a portion of the abeyed portion of River Bend such that at the
end of the four year rate freeze there will remain $125 million of net
plant related to that abeyed portion. Entergy Gulf States has established
reserves for the probable effects of this agreement in principle based on
management's estimates of the terms thereof. These reserves of
approximately $381 million (or $227 million net of taxes) were recorded in
the fourth quarter of 1997. The results of operations of Entergy Gulf
States for the year ended December 31, 1997, reflect corresponding charges
to operating revenues and other income (deductions) of $70 million and $311
million, respectively. The parties are working to finalize a definitive
agreement. Entergy Gulf States has agreed to implement the refunds and
rate reductions, subject to final approval of the agreement in principle.
Final approval of the agreement in principle would resolve all pending
regulatory issues. Refer to Note 2 for a discussion of other Entergy Gulf
States retail rate proceedings that were resolved during the past year
and/or are currently pending.
Fuel Recovery
Entergy Gulf States' Texas rate schedules include a fixed fuel factor
to recover fuel and purchased power costs not recovered in base rates. The
fixed factor may be revised every six months in accordance with a schedule
set by the PUCT. To the extent actual costs vary from the fixed factor,
refunds or surcharges are required or permitted. Fuel costs are also
subject to reconciliation proceedings every three years. Entergy Gulf
States' Louisiana electric rate schedules include a fuel adjustment clause
designed to recover the cost of fuel and purchased power costs, adjusted by
a surcharge (or credit) for deferred fuel expense arising from the monthly
reconciliation of actual fuel cost incurred with fuel revenues billed to
customers. See Note 2 for a discussion of the LPSC fuel cost reviews.
Entergy Gulf States' Louisiana gas rates include a purchased gas
adjustment to recover the cost of purchased gas.
Steam Customer Contract
In August 1996, Entergy Gulf States entered into agreements with its
only steam customer whereby a generating facility was leased to such
customer beginning in August 1997, the expiration date of the previous
contract. As a result of these arrangements, Entergy Gulf States' annual
revenues are expected to decrease by approximately $33 million, and its net
income is expected to be reduced by approximately $15 million annually.
See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS
AND KNOWN TRENDS," for a further discussion.
Entergy Louisiana
Recovery of Grand Gulf 1 Costs
In a series of LPSC orders, court decisions, and agreements from late
1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to
costs associated with Waterford 3 and Entergy Louisiana's share of capacity
and energy from Grand Gulf l, subject to certain terms and conditions.
With respect to Waterford 3, Entergy Louisiana was granted an increase
aggregating $170.9 million over the period 1985-1988, and Entergy Louisiana
agreed to permanently absorb, and not recover from retail ratepayers, $284
million of its investment in the unit and to defer $266 million of its
costs related to the years 1985-1988 to be recovered from April 1988
through June 1997.
With respect to Grand Gulf 1, Entergy Louisiana agreed to retain, and
not recover from retail ratepayers, approximately 2.52% of the costs of
Grand Gulf 1's capacity and energy. Non-fuel operation and maintenance
costs for Grand Gulf 1 are recovered through Entergy Louisiana's base
rates. Additionally, Entergy Louisiana is allowed to recover, through the
fuel adjustment clause, 4.6 cents per KWH for the energy related to its
retained portion of these costs. Alternatively, Entergy Louisiana may sell
such energy to nonaffiliated parties at prices above the fuel adjustment
clause recovery amount, subject to the LPSC's approval.
Performance-Based Formula Rate Plan
In June 1995, in conjunction with the LPSC's rate review, a
performance-based formula rate plan previously proposed by Entergy
Louisiana was approved with certain modifications. See Note 2 for a
discussion of Entergy Louisiana's performance-based formula rate plan.
Fuel Adjustment Clause
Entergy Louisiana's rate schedules include a fuel adjustment clause to
recover the cost of fuel and purchased power. The fuel adjustment also
includes a surcharge (or credit) for deferred fuel expense arising from the
monthly reconciliation of actual fuel cost incurred with fuel revenues
billed to customers.
Entergy Mississippi
Retail Rate Proceedings
Refer to Note 2 for a discussion of Entergy Mississippi's retail rate
proceedings that were resolved during the past year and/or are currently
pending.
Rate Freeze
In connection with the settlement of various issues related to the
Merger, Entergy Mississippi agreed that it will not, except in response to
certain circumstances that are largely beyond its control, request any
general retail rate increase to take effect before November 3, 1998. See
Note 2 for a discussion of the rate freeze and other aspects of the
settlement agreement between Entergy Mississippi and the MPSC.
Recovery of Grand Gulf 1 Costs
In September 1985, the MPSC granted Entergy Mississippi an annual base
rate increase of approximately $326.5 million in connection with its
allocated share of Grand Gulf 1 costs. The MPSC also provided for the
deferral of a portion of such costs that were incurred each year through
1992, and recovery of these deferrals over a period of six years ending in
1998. As of December 31, 1997, the uncollected balance of Entergy
Mississippi's deferred costs was approximately $127 million. Entergy
Mississippi is permitted to recover the carrying charges on all deferred
amounts on a current basis.
Formula Rate Plan
Under a formulary incentive-rate plan (Formula Rate Plan) effective
March 25, 1994, Entergy Mississippi's earned rate of return is calculated
automatically every 12 months and compared to and adjusted against a
benchmark rate of return (calculated under a separate formula within the
Formula Rate Plan). The Formula Rate Plan allows for periodic small
adjustments in rates based on a comparison of actual earned returns to
benchmark returns and upon certain performance factors. Refer to Note 2
for a discussion of the formula rate plan filing for the 1996 test year.
The formula rate plan filing for the 1997 test year will be filed in March
1998.
Fuel Adjustment Clause
In March 1997, Entergy Mississippi proposed an alternative fuel cost
recovery mechanism, the ECR Rider, which became effective May 1997.
Entergy Mississippi's ECR Rider utilizes projected energy costs (i.e., fuel
and purchased energy costs) for the coming calendar year to develop an
Energy Cost Rate. The Energy Cost Rate is revised annually and includes a
true-up adjustment reflecting the over-recovery or under-recovery of the
energy cost for the prior year.
Entergy New Orleans
Earnings Analysis Filings
Refer to Note 2 for a discussion of the Entergy New Orleans earnings
analysis filings that have been resolved during the past year and/or are
currently outstanding.
Recovery of Grand Gulf 1 Costs
Under Entergy New Orleans' various rate settlements with the Council
in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not
recover from ratepayers a total of $96.2 million of its Grand Gulf 1 costs.
Entergy New Orleans was permitted to implement annual rate increases in
decreasing amounts each year through 1995, and to defer certain costs and
related carrying charges for recovery on a schedule extending from 1991
through 2001. As of December 31, 1997, the uncollected balance of Entergy
New Orleans' deferred costs was $99 million.
Fuel Adjustment Clause
Entergy New Orleans' electric rate schedules include a fuel adjustment
clause designed to recover the cost of fuel in the second prior month,
adjusted by a surcharge (or credit) for deferred fuel expense arising from
the monthly reconciliation of actual fuel incurred with fuel cost revenues
billed to customers. The adjustment also includes the difference between
nonfuel Grand Gulf 1 costs paid by Entergy New Orleans and the estimate of
such costs provided in Entergy New Orleans' Grand Gulf 1 rate settlements.
Entergy New Orleans' gas rate schedules include an adjustment to reflect
gas costs in excess of those collected in base rates, adjusted by a
surcharge (or credit) similar to that included in the electric fuel
adjustment clause.
Regulation
Federal Regulation (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy)
PUHCA
Entergy Corporation and its various direct and indirect subsidiaries
(with the exception of its EWG, FUCO, and ETHC subsidiaries) are subject to
the broad regulatory provisions of PUHCA. Except with respect to
investments in certain domestic power projects, foreign utility company
projects, and telecommunication projects, PUHCA limits the operations of a
registered holding company system to a single, integrated public utility
system, plus certain additional systems and businesses, regulates certain
transactions among affiliates within a holding company system, and
regulates the acquisition and sale of securities and assets by registered
holding companies and their subsidiaries.
Entergy Corporation and other electric utility holding companies have
supported legislation in the United States Congress to repeal PUHCA and
transfer certain aspects of the oversight of public utility holding
companies from the SEC to FERC. Entergy believes that PUHCA inhibits its
ability to compete in the evolving electric energy marketplace and largely
duplicates the oversight activities already performed by FERC and state and
local regulators. In June 1995, the SEC adopted a report proposing options
for the repeal or significant modification of PUHCA. In 1997, the SEC
issued Rule 58 under PUHCA, which allows registered public utility holding
companies to enter a range of energy related businesses.
Federal Power Act
The domestic utility companies, System Energy, Entergy Power, and EPMC
are subject to the Federal Power Act as administered by FERC and the DOE.
The Federal Power Act provides for regulatory jurisdiction over the
licensing of certain hydroelectric projects, the transmission and wholesale
sale of electric energy in interstate commerce, and certain other
activities, including accounting policies and practices. Such regulation
includes jurisdiction over the rates charged by System Energy for capacity
and energy provided to Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans from Grand Gulf 1.
Entergy Arkansas holds a FERC license for two hydroelectric projects
(70 MW), which was renewed on July 2, 1980 and expires in February 2003.
Regulation of the Nuclear Power Industry (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)
Regulation of Nuclear Power
Under the Atomic Energy Act of 1954 and the Energy Reorganization Act
of 1974, the operation of nuclear plants is heavily regulated by the NRC,
which has broad power to impose licensing and safety-related requirements.
In the event of non-compliance, the NRC has the authority to impose fines
or shut down a unit, or both, depending upon its assessment of the severity
of the situation, until compliance is achieved. Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, and System Energy, as owners of all or
portions of ANO, River Bend, Waterford 3, and Grand Gulf 1, respectively,
and Entergy Operations, as the licensee and operator of these units, are
subject to the jurisdiction of the NRC. Revised safety requirements
promulgated by the NRC have, in the past, necessitated substantial capital
expenditures at these nuclear plants, and additional such expenditures
could be required in the future. See "MANAGEMENT'S FINANCIAL DISCUSSION
AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS," for a discussion of
Waterford 3's Systematic Assessment of License Performance (SALP) report
issued by the NRC on January 6,1997.
The nuclear power industry faces uncertainties with respect to the
cost and long-term availability of sites for disposal of spent nuclear fuel
and other radioactive waste, nuclear plant operations, the technological
and financial aspects of decommissioning plants at the end of their
licensed lives, and requirements relating to nuclear insurance. These
matters are briefly discussed below.
Regulation of Spent Fuel and Other High-Level Radioactive Waste
Under the Nuclear Waste Policy Act of 1982, the DOE is required, for a
specified fee, to construct storage facilities for, and to dispose of, all
spent nuclear fuel and other high-level radioactive waste generated by
domestic nuclear power reactors. However, the DOE has not yet identified a
permanent storage repository and, as a result, future expenditures may be
required to increase spent fuel storage capacity at nuclear plant sites.
For further information concerning spent fuel disposal contracts with the
DOE, schedules for initial shipments of spent nuclear fuel, current on-site
storage capacity, and costs of providing additional on-site storage, see
Note 9.
Regulation of Low-Level Radioactive Waste
The availability and cost of disposal facilities for low-level
radioactive waste resulting from normal nuclear plant operations are
subject to a number of uncertainties. Under the Low-Level Radioactive
Waste Policy Act of 1980, as amended, each state is responsible for
disposal of waste originating in that state, and states may participate in
regional compacts to fulfill their responsibilities jointly. The States of
Arkansas and Louisiana participate in the Central Interstate Low Level
Radioactive Waste Compact (Central States Compact), and the State of
Mississippi participates in the Southeast Low Level Radioactive Waste
Compact (Southeast Compact). Two disposal sites are currently operating in
the United States, but only one site, the Barnwell Disposal Facility
(Barnwell) located in South Carolina and operated by the Southeast Compact,
is open to out-of-region generators. The availability of Barnwell provides
only temporary relief for low-level radioactive waste storage and does not
alleviate the need to develop new disposal capacity.
Both the Central States Compact and the Southeast Compact are working
to establish additional disposal sites. Entergy, along with other waste
generators, funds the development costs for new disposal facilities. To
date, Entergy's expenditures for the development of new disposal facilities
total approximately $50 million. During the fourth quarter of 1997,
Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States expensed $17.4
million, $12.3 million, and $13.8 million, respectively, related to
previously deferred radioactive waste facility costs incurred in connection
with the Central States Compact. Future levels of expenditures are
difficult to predict. The current schedule for the site development in
both the Central States Compact and the Southeast Compact projects that the
new facilities will not be operational before 2001. Due to the political
nature of siting low-level radioactive waste disposal facilities, future
delays can be anticipated. Until long-term disposal facilities are
established, Entergy will seek continued access to existing facilities. If
such access is unavailable, Entergy will store low-level waste at its
nuclear plant sites.
Regulation of Nuclear Plant Decommissioning
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy are recovering from ratepayers portions of the estimated
decommissioning costs for ANO, River Bend, Waterford 3, and Grand Gulf 1,
respectively. These amounts are deposited in trust funds that, together
with the related earnings, can only be used for future decommissioning
costs. Estimated decommissioning costs are periodically reviewed and
updated to reflect inflation and changes in regulatory requirements and
technology, and applications are periodically made to appropriate
regulatory authorities to reflect in rates any future changes in projected
decommissioning costs. For additional information with respect to
decommissioning costs for ANO, River Bend, Waterford 3, and Grand Gulf 1,
see Note 9.
The EPAct requires all electric utilities (including Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, and System Energy) that purchased
uranium enrichment services from the DOE to contribute up to a total of
$150 million annually over approximately 15 years (adjusted for inflation,
up to a total of $2.25 billion) for decontamination and decommissioning of
enrichment facilities. In accordance with the EPAct, contributions to
decontamination and decommissioning funds are recovered through rates in
the same manner as other fuel costs. See Note 9 for the estimated annual
contributions by Entergy for decontamination and decommissioning fees.
Nuclear Insurance
The Price-Anderson Act limits public liability for a single nuclear
incident to approximately $8.92 billion. Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and System Energy have protection with respect
to this liability through a combination of private insurance and an
industry assessment program, as well as insurance for property damage,
costs of replacement power, and other risks relating to nuclear generating
units. For a discussion of insurance applicable to the nuclear programs of
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy, see Note 9.
Nuclear Operations
General (Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and System Energy)
Entergy Operations operates ANO, River Bend, Waterford 3, and Grand
Gulf 1, subject to the owner oversight of Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and System Energy, respectively. Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, System Energy, and the
Grand Gulf 1 co-owner, have retained their ownership interests in their
respective nuclear generating units. Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and System Energy have also retained their
associated capacity and energy entitlements, and pay directly or reimburse
Entergy Operations at cost for its operation of the units.
ANO Matters (Entergy Corporation and Entergy Arkansas)
See "ANO Matters" in Note 9 herein for a discussion of the replacement
of steam generators at ANO 2.
River Bend (Entergy Corporation and Entergy Gulf States)
In connection with the Merger, Entergy Gulf States filed two
applications with the NRC in January 1993 to amend the River Bend operating
license. The applications sought the NRC's consent to the Merger and to a
change in the licensed operator of the facility from Entergy Gulf States to
Entergy Operations. The NRC Staff issued the two license amendments for
River Bend, which were effective immediately upon consummation of the
Merger. On February 14, 1994, Cajun filed with the D.C. Circuit petitions
for review of the two license amendments for River Bend. In March 1995,
the D.C. Circuit ordered that the NRC order and license amendments be set
aside, and remanded the case to the NRC for further consideration.
Subsequently, the NRC affirmed its original findings and reissued the two
license amendments. Cajun and the Arkansas Cities and Cooperatives filed
petitions for review of those NRC orders with the D. C. Circuit. On May 8,
1997, the D.C. Circuit granted Cajun's motion to dismiss its appeal.
Arkansas Cities and Cooperatives' appeal has been briefed and remains
pending. The two license amendments are currently in full force and
effect.
State Regulation (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans)
General
Entergy Arkansas is subject to regulation by the APSC, which includes
the authority to set rates, determine reasonable and adequate service,
require proper accounting, control leasing, control the acquisition or sale
of any public utility plant or property constituting an operating unit or
system, set rates of depreciation, issue certificates of convenience and
necessity and certificates of environmental compatibility and public need,
and regulate the issuance and sale of certain securities.
Entergy Gulf States is subject to the jurisdiction of the municipal
authorities of incorporated cities in Texas as to retail rates and service
within their boundaries, with appellate jurisdiction over such matters
residing in the PUCT. Entergy Gulf States is also subject to regulation by
the PUCT as to retail rates and service in rural areas, certification of
new generating plants, and extensions of service into new areas. Entergy
Gulf States is subject to regulation by the LPSC as to electric and gas
service, rates and charges, certification of generating facilities and
power or capacity purchase contracts, depreciation, accounting, and other
matters.
Entergy Louisiana is subject to regulation by the LPSC as to electric
service, rates and charges, certification of generating facilities and
power or capacity purchase contracts, depreciation, accounting, and other
matters. Entergy Louisiana is also subject to the jurisdiction of the
Council with respect to such matters within Algiers.
Entergy Mississippi is subject to regulation as to service, service
areas, facilities, and retail rates by the MPSC. Entergy Mississippi is
also subject to regulation by the APSC as to the certificate of
environmental compatibility and public need for the Independence Station.
Entergy New Orleans is subject to regulation by the Council as to
electric and gas service, rates and charges, standards of service,
depreciation, accounting, issuance of certain securities, and other
matters.
Franchises
Entergy Arkansas holds exclusive franchises to provide electric
service in approximately 300 incorporated cities and towns in Arkansas.
These franchises are unlimited in duration and continue until such a time
when the municipalities purchase the utility property. In Arkansas,
franchises are considered to be contracts and, therefore, are terminable
upon breach of the contract.
Entergy Gulf States holds non-exclusive franchises, permits, or
certificates of convenience and necessity to provide electric and gas
service in approximately 55 incorporated municipalities in Louisiana and
approximately 63 incorporated municipalities in Texas. Entergy Gulf States
typically is granted 50-year franchises in Texas and 60-year franchises in
Louisiana. Entergy Gulf States' current electric franchises will expire
during 2007 - 2036 in Texas and during 2015 - 2046 in Louisiana. The
natural gas franchise in the City of Baton Rouge will expire in 2015. In
addition, Entergy Gulf States has received from the PUCT a certificate of
convenience and necessity to provide electric service to areas within 21
counties in eastern Texas.
Entergy Louisiana holds non-exclusive franchises to provide electric
service in approximately 116 incorporated municipalities. Most of these
franchises have 25-year terms, although six municipalities have granted
Entergy Louisiana 60-year franchises. Entergy Louisiana also supplies
electric service in approximately 353 unincorporated communities, all of
which are located in parishes in which Entergy Louisiana holds non-
exclusive franchises.
Entergy Mississippi has received from the MPSC certificates of public
convenience and necessity to provide electric service to areas within 45
counties, including a number of municipalities, in western Mississippi.
Under Mississippi statutory law, such certificates are exclusive. Entergy
Mississippi may continue to serve in such municipalities upon payment of a
statutory franchise fee, regardless of whether an original municipal
franchise is still in existence.
Entergy New Orleans provides electric and gas service in the City of
New Orleans pursuant to city ordinances, which state, among other things,
that the City has a continuing option to purchase Entergy New Orleans'
electric and gas utility properties.
The business of System Energy is limited to wholesale power sales and
has no distribution franchises.
Regulation under the Electricity Act (Entergy London)
The Regulator
The principal legislation governing the structure and regulation of
the electricity industry in Great Britain is the Electricity Act. The
Electricity Act established the industry structure to enable privatization
of the UK electric system. The Electricity Act also created the office of
the Regulator, who is appointed by the Secretary of State for Trade and
Industry. The present Regulator, Professor Stephen Littlechild, was
appointed for a five year term ending on August 31, 1999.
The Regulator's functions include, among other things, granting
licenses to generate, transmit, distribute or supply electricity; proposing
modifications to licenses and making license modification references to the
MMC; enforcing compliance with license conditions; advising the Secretary
of State for Trade and Industry relating to the approval of each non-fossil
fuel source; calculating the Fossil Fuel Levy rate and collecting the levy;
resolving certain disputes between electricity licensees and customers; and
setting standards of performance for electricity licensees.
The Regulator exercises concurrently with the Director General of Fair
Trading certain functions relating to monopoly situations under the Fair
Trading Act 1973 and certain functions relating to activities that have, or
are intended or likely to have, the effect of restricting, distorting or
preventing competition in the generation, transmission or supply of
electricity under the Competition Act 1980.
The Electricity Act requires the Regulator and the Secretary of State
to exercise their functions to ensure that all reasonable demands for
electricity are satisfied; to assure that license holders are able to
finance their licensed activities; and to promote competition in the
generation and supply of electricity. Subject to these duties, the
Secretary of State and the Regulator are required to exercise their
functions in a manner calculated to protect the interests of consumers of
electricity in respect of price, continuity of supply, and the quality of
electricity supply services; to promote efficiency and economy on the part
of licensed electricity suppliers and the efficient use of electricity
supplied to consumers; to promote research and development by persons
authorized to generate, transmit or supply electricity; to protect the
public from the dangers arising from the generation, transmission or supply
of electricity, and to act for the protection of the health and safety of
workers in the electricity industry. The Secretary of State and the
Regulator also have a duty to consider the environmental activities
connected with the generation, transmission, distribution or supply of
electricity. The Secretary of State and the Regulator have a duty to
consider, in particular, the interests of consumers in rural areas in
respect of prices and other terms of supply. With regard to the quality of
electricity supply services, they also have a duty to consider in
particular the interests of those who are disabled or of pensionable age.
PES License
London Electricity has a PES license for its franchise area and is
required to supply electricity upon request to any premises in that area,
except in specified circumstances. Like all PES license holders, it may
not discriminate between its own supply business and other users of its
distribution system. The PES license also prohibits cross-subsidization
among the various regulated businesses. PES license holders, including
London Electricity, are subject to separate price controls on the amounts
they may charge for the supply of electricity to Franchise Supply
Customers. A PES license also requires a licensee, including London
Electricity, to procure electricity at the best price reasonably obtainable
from all available sources, including London Electricity.
In England and Wales, each PES license limits the extent of the
generation capacity in which the relevant REC may hold an interest without
the prior consent of the Regulator ("own-generation limits"). In the case
of London Electricity, the own-generation limit is fixed at 700 MW. After
taking into account London Electricity's current ownership interest in a
generation facility, the amount of additional generation investment which
could be made by London Electricity is 565 MW. Investments by affiliates
of Entergy in generating assets in the UK would be counted towards this own-
generation limit under London Electricity's PES license. London
Electricity has applied for and has been granted by the Regulator an
exception from the own-generation limit, subject to certain conditions, for
EPDC investments in the SCC and KPL projects. The most significant of
these conditions, to which London Electricity has agreed, is that
generating capacity from these projects will not be acquired by London
Electricity for purposes of its supply business.
Second Tier Supply Licenses
Other than a PES license holder in its franchise area and subject to
certain other exceptions, a supplier of electricity to premises in Great
Britain must possess a second tier supply license. Subject to certain
restrictions, second tier licensees may compete for the supply of
electricity with one another and with the PES license holder in the
relevant area. There are currently 34 second tier supply license holders
for England and Wales.
Modifications to Licenses
Following the acquisition of London Electricity by Entergy London,
London Electricity's PES License was modified during October 1997 to
provide that, with a few minor exceptions, the only business activities
which London Electricity is permitted to undertake directly are its first
tier and second tier supply businesses and its distribution business.
These modifications by the Regulator are intended to place financial
protections around the licensed activities of London Electricity as a
safeguard against financial pressures which might affect its ability to
continue to finance its statutory and licensed functions, including
necessary investment in its distribution businesses. Among other things,
the modifications restrict the businesses in which London Electricity can
participate, other than the licensed businesses, and regulates dealings
between London Electricity and other companies (particularly affiliated
companies). The modifications also require London Electricity to secure
that it has sufficient management and financial resources to conduct its
licensed businesses, give the Regulator an annual certificate of the
adequacy of its financial resources, and maintain an investment grade
rating for its debt as defined by Moody's and Standard & Poor's.
Term and Revocation of Licenses
London Electricity's PES license will continue in effect until at
least 2025 unless revoked. Under ordinary circumstances, the license may
not be revoked except on 25 years' prior notice, which notice may not be
given until 2000. Otherwise, the Secretary of State may revoke a PES
license by not less than 30 days' notice in writing to the licensee in
certain specified circumstances, including, among other things, the failure
to comply with a final order of the Regulator or the insolvency of the
licensee.
Other Regulatory Matters ( Entergy London)
On June 30, 1997, the UK government announced a review of the
regulatory framework governing the utilities, including electricity supply
and distribution. This review is currently being undertaken.
In October 1997, the UK government asked the Regulator to review
electricity trading arrangements. This review is focusing on the wholesale
electricity market in England and Wales and covers existing trading
arrangements within the Electricity Pool, trading arrangements outside the
Electricity Pool, and price setting mechanisms.
Environmental Regulation
General
In the areas of air quality, water quality, control of toxic
substances and hazardous and solid wastes, and other environmental matters,
the facilities and operations of Entergy are subject to regulation by
various governmental authorities. Entergy believes that its affected
subsidiaries are in substantial compliance with environmental regulations
currently applicable to their respective facilities and operations.
Because environmental regulations are subject to change, future compliance
costs cannot be precisely estimated. However, management currently
estimates that future capital expenditures for environmental compliance
purposes, including those discussed under "Clean Air Legislation," below,
will not be material for Entergy as a whole, or for any of its reporting
subsidiaries.
Clean Air Legislation
The Clean Air Act Amendments of 1990 (the Act) established the
following three programs that affect Entergy's fossil-fueled generation
now or may affect it in the future: (i) an acid rain program for control of
sulfur dioxide (SO2) and nitrogen oxides (NOx); (ii) an ozone nonattainment
area program for control of NOx and volatile organic compounds; and (iii)
an operating permits program for administration and enforcement of these
and other Act programs.
Under the acid rain program, no additional control equipment is
expected to be required by Entergy to control SO2. The Act provides
"allowances" to most of the affected Entergy generating units for emissions
based upon past emission levels and operating characteristics. Each
allowance is an entitlement to emit one ton of SO2 per year. Under the
Act, utilities are or will be required to possess allowances for SO2
emissions from affected generating units. All Entergy fossil-fueled
generating units are classified as "Phase II" units under the Act and are
subject to SO2 allowance requirements beginning in the year 2000. Based on
operating history, the domestic utility companies have been allocated more
allowances than are currently necessary for normal operations. Management
believes that it will be able to operate the domestic utility companies'
generating units efficiently without installing scrubbers or purchasing
allowances from outside sources, and that one or more of the domestic
utility companies may have excess allowances.
Control equipment may eventually be required for certain of the
domestic utility companies' generating units to achieve NOx reductions due
to the ozone nonattainment status of the areas served by Entergy Gulf
States in and around Beaumont and Houston, Texas. Texas environmental
authorities are studying the causes of ozone pollution and have deferred
NOx controls on power plants until at least 1999. If Texas decides to
regulate NOx, the aggregate cost of such control equipment for the affected
Entergy Gulf States plants is estimated to be $1.5 million through the year
2000. It is expected that Texas, in conjunction with the EPA, will publish
future control strategies during 1998 and 1999. Depending on the
strategies developed by Texas, additional costs may be incurred between
2000 and 2007, but these costs cannot be reasonably estimated until the
strategies have been published.
Other Environmental Matters
The provisions of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (CERCLA), authorize the
EPA and, indirectly, the states, to require generators and certain
transporters of certain hazardous substances released from or at a site,
and the owners or operators of any such site, to cleanup the site or
reimburse such clean-up costs. CERCLA has been interpreted to impose joint
and several liability on responsible parties. Entergy's domestic utility
companies have sent waste materials to various disposal sites over the
years. Also, certain operating procedures and maintenance practices
employed by Entergy's domestic utility companies, which historically were
not subject to regulation, now are regulated by environmental laws. Some
of these sites have been the subject of governmental action under CERCLA,
as a result of which the domestic utility companies have become involved
with site clean-up activities. They have participated to various degrees in
accordance with their respective potential liabilities in such site clean-
ups and have developed experience with clean-up costs. The domestic
utility companies have established reserves for such environmental clean-
up/restoration activities. In the aggregate, the cost of such remediation
is not considered material to Entergy or to any of its reporting
subsidiaries.
Entergy Arkansas
Entergy Arkansas has received notices from time to time from the EPA,
the Arkansas Department of Pollution Control & Ecology (ADPC&E), and others
alleging that Entergy Arkansas, along with others, may be a PRP for clean-
up costs associated with various sites in Arkansas. Most of these sites
are neither owned nor operated by any Entergy company. Contaminants at the
sites include polychlorinated biphenyls (PCBs), lead, and other hazardous
substances.
At the EPA's request, Entergy Arkansas voluntarily performed
stabilization activities at the Benton Salvage site in Saline County,
Arkansas. While the EPA has not named PRPs for this site, Entergy Arkansas
has attempted to negotiate a settlement with the EPA. Entergy Arkansas and
the EPA were unable to reach an agreement satisfactory to both parties.
EPA initiated its own clean-up of the site in October 1996. Entergy
Arkansas does not believe that its potential liability, if any, with
respect to this site will be material.
In May 1995, Entergy Arkansas was named as a defendant in a suit
brought by Reynolds Metals Company (Reynolds) in the U.S. District Court
for the Eastern District of Arkansas, seeking to recover a share of the
costs associated with the clean-up of hazardous substances at Reynolds
former Patterson plant site. Reynolds alleged that it spent $11.2 million
to clean up the site, and that the site was contaminated with PCBs for
which Entergy Arkansas bore some responsibility. In July 1997, the Court
granted Entergy Arkansas' Motion for Summary Judgment and dismissed
Reynolds lawsuit.
Entergy Arkansas entered into a Consent Administrative Order, dated
February 21, 1991, with the ADPC&E that named Entergy Arkansas as a PRP for
the initial stabilization associated with contamination at the Utilities
Services, Inc. state Superfund site located near Rison, Arkansas. This
site was found to have soil contaminated by PCBs and pentachlorophenol (a
wood preservative). Containers and drums that contained PCBs and other
hazardous substances were found at the site. Entergy Arkansas' share of
total remediation costs is estimated not to exceed $5.0 million. Entergy
Arkansas is attempting to identify and notify other PRPs with respect to
this site. Entergy Arkansas has received assurances that the ADPC&E will
use its enforcement authority to allocate remediation expenses among
Entergy Arkansas and any other PRPs that can be identified. Approximately
20 PRPs have been identified to date. Entergy Arkansas has performed the
activities necessary to stabilize the site, at a cost of approximately
$400,000.
Entergy Gulf States
Entergy Gulf States has been designated by the EPA as a PRP 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 these sites. Several class action and other suits have been
filed in state and federal courts seeking relief from Entergy Gulf States
and others for damages caused by the disposal of hazardous waste and for
asbestos-related disease allegedly resulting from exposure on Entergy Gulf
States premises (see "Other Regulation and Litigation" below). As of
December 31, 1997, a remaining recorded liability of $23.8 million existed
relating to the clean-up of seven sites at which Entergy Gulf States has
been designated as a PRP.
In 1971, Entergy Gulf States purchased property near its Sabine
generating station, known as the Bailey site, for possible expansion of
cooling water facilities. Entergy Gulf States sold the property in 1984.
In October 1984, an abandoned waste site on the property was included on
the NPL by the EPA. Entergy Gulf States negotiated with the EPA and is a
member of a task force with other PRPs for the voluntary clean-up of the
waste site. A consent decree has been signed by all PRPs for the voluntary
clean-up of the Bailey site. On-site remediation was completed during
1997. Total remediation costs are currently expected to be approximately
$33 million; however, federal and state agencies are still examining
potential liabilities associated with natural resource damage. Entergy
Gulf States is expected to be responsible for 2.26% of the estimated clean-
up cost, but Entergy Gulf States does not expect that its remaining
responsibility with respect to this site will be material after allowance
for its existing provision for clean-up in the amount of $300,000.
Entergy Gulf States is currently involved in a multi-phased remedial
investigation of an abandoned MGP site, known as the Lake Charles Service
Center, located in Lake Charles, Louisiana, which is thought to have
operated as an MGP from approximately 1916 to 1931. Coal tar, a by-product
of the distillation process employed at MGPs, was apparently routed to a
portion of the property for disposal. The same area has also been used as
a landfill. Under an order, which is currently stayed, issued by the LDEQ,
Entergy Gulf States was required to investigate and, if necessary, take
remedial action at the site. Preliminary estimates of remediation costs
are approximately $20 million. On February 13, 1995, the EPA published a
proposed rule adding the Lake Charles Service Center to the NPL. Another
PRP has been identified that may have had a role in the ownership and
operation of the MGP. Negotiations with that company for joint
participation and possible remedial action are ongoing. Entergy Gulf
States has signed an Administrative Order on Consent negotiated with the
EPA. Entergy Gulf States does not presently expect that its ultimate
responsibility for this site will materially exceed its existing clean-up
provision of $20 million.
Entergy Gulf States is currently involved in an initial investigation
of an MGP site, known as the Old Jennings Ice Plant, located in Jennings,
Louisiana. The MGP site is believed to have operated from approximately
1909 to 1926, and is now occupied by an electrical substation and used for
storage of transmission and distribution equipment. In July 1996, a
petroleum-like substance was discovered on the surface soil, and
notification was made to the LDEQ. The LDEQ was aware of this site based
upon a survey performed by an environmental consultant for the EPA.
Entergy Gulf States obtained the services of an environmental consultant to
collect core samples and to perform a search of historical records to
determine what activities occurred at Jennings. Results of the core
sampling, which found limited amounts of contamination on-site, were
submitted to the LDEQ. Entergy Gulf States is awaiting the LDEQ's comment
on the submission, and does not expect that its ultimate financial
responsibility with respect to this site will be material. The amount of
its existing provision for clean-up is $500,000.
Entergy Gulf States, along with Entergy Louisiana, has been named as a
PRP for an abandoned waste oil recycling plant site in Livingston Parish,
Louisiana, known as Combustion, Inc., which is included on the NPL.
Entergy Gulf States has settled its alleged involvement in the Combustion
Inc. site in a court approved settlement involving a payment of $161,000.
Entergy Gulf States has also agreed to pay a portion of any future clean-up
costs related to residual ground water, but does not expect that any such
costs will be incurred.
Entergy Gulf States, along with Entergy Arkansas and Entergy
Louisiana, has been notified of its potential liability with respect to the
Benton Salvage site located in Saline County, Arkansas. Although Entergy
Gulf States and Entergy Louisiana have had minor involvement in the Benton
Salvage site, no remediation is expected to be required of these companies.
See "Entergy Arkansas" above for a discussion of the Benton Salvage site.
Entergy Louisiana, Entergy New Orleans, and System Energy
Entergy Louisiana, Entergy New Orleans, and System Energy have
received notices from the EPA and/or the states of Louisiana and
Mississippi that one or more of them may be a PRP for the following
disposal sites that are neither owned nor operated by any Entergy
subsidiary:
- Entergy Louisiana, along with Entergy Arkansas and Entergy Gulf
States, was notified in 1990 of its potential liability relating to the
Benton Salvage site located in Saline County, Arkansas. Although Entergy
Gulf States and Entergy Louisiana have been involved in the Benton Salvage
site, their contributions are considered minor. Therefore, no remediation
action is required by these companies. See "Entergy Arkansas" above for a
discussion of the Benton Salvage site.
- The MCEQ issued an order on October 13, 1997 ordering Entergy
Louisiana to implement a remedial action work plan that had been prepared
by a PRP committee for Disposal Systems, Inc. sites at Fifth Street (Clay
Point) and Lee Street in Biloxi, Mississippi, and at Woolmarket,
Mississippi. Entergy Louisiana filed a petition with the MCEQ denying that
it had sent any wastes to the Lee Street or Woolmarket sites and alleging
that wastes that had been transported by its contractor to Clay Point are
not pollutants within the meaning of the Mississippi statutes or
regulations, that any wastes at that site had been cleaned up under a
consent decree between the EPA and the PRPs, approved by the U. S. District
Court for the Southern District of Mississippi, Southern Division, and had
been stored at a warehouse on the site, and, further, that the State of
Mississippi has no jurisdiction in view of the consent decree of the
federal court. The petition further requested a hearing before the MCEQ.
No hearing date has been set. A PRP committee is attempting to draft a
settlement proposal for all of the PRPs on sharing clean-up costs. The MCEQ
issued a similar order on the same date to Entergy Louisiana's contractors,
Ebasco Services, Inc., which Entergy Louisiana has agreed to defend and
indemnify. The MCEQ issued a similar order on the same date to Bechtel
Power, the contractor for System Energy on the Grand Gulf plant. System
Energy was not named as a defendant in the order. Bechtel has filed a
petition asking for a hearing. Entergy Louisiana's remediation costs at
the site are not expected to be material.
- From 1992 to 1994, Entergy Louisiana performed site assessments and
remedial activities at three retired power plants, known as the Homer,
Jonesboro, and Thibodaux municipal sites, previously owned and operated by
Louisiana municipalities. Entergy Louisiana purchased power plants at
these sites as part of the acquisition of municipal electric systems. The
site assessments indicated some subsurface contamination from fuel oil.
Remediation of the Homer and Jonesboro sites has been completed at an
aggregate cost of approximately $180,000, and remediation of the Thibodaux
site is expected to continue through 2000. The cost incurred through
December 31, 1997 for the Thibodaux site is $305,000, and future costs are
not expected to exceed the existing provision of $530,000.
Entergy Louisiana and Entergy New Orleans have been named by the EPA
as PRPs for associated clean-up costs for certain Louisiana disposal sites.
Such sites include Combustion Inc., an abandoned waste oil recycling plant
site located in Livingston Parish (involving at least 70 PRPs, including
Entergy Gulf States, but not Entergy New Orleans), and the Dutchtown site
(also included on the NPL and involving 57 PRPs). Entergy Louisiana has
settled its alleged involvement in the Combustion Inc. site in a court
approved settlement for a payment of $225,000. Entergy Louisiana has also
agreed to pay a portion of any future clean-up costs related to residual
ground water, but does not expect that any such costs will be incurred.
With respect to the Dutchtown site, Entergy New Orleans believes it has no
liability because the material it sent to this site was not a hazardous
substance.
During 1993, the LDEQ issued new rules for solid waste regulation,
including regulation of waste water impoundments. Entergy Louisiana has
determined that certain of its power plant waste water impoundments were
affected by these regulations and has chosen to upgrade or close them. As
a result, a remaining recorded liability in the amount of $6.7 million
existed at December 31, 1997 for waste water upgrades and closures.
Completion of this work is awaiting the LDEQ's approval. Cumulative
expenditures relating to the upgrades and closures of waste water
impoundments are $7.1 million as of December 31, 1997.
UK Environmental Regulation (Entergy London)
London Electricity's businesses are subject to numerous regulatory
requirements with respect to the protection of the environment. The
Electricity Act obligates the UK Secretary of State for Trade and Industry
(the "Secretary of State") to consider the effect of electricity
generation, transmission, and supply activities upon the environment in
approving applications for the construction of generating facilities and
the location of overhead power lines. The Electricity Act requires London
Electricity to have regard to the desirability of preserving natural beauty
and the conservation of natural and man-made features of particular
interest when it formulates proposals for development of certain of its
activities. London Electricity mitigates the effects of its proposals on
natural and man-made features and is required to carry out an environmental
assessment before laying cables, constructing overhead lines, or carrying
out any other development in connection with its licensed activities.
London Electricity also has produced an Environmental Policy Statement that
sets forth its plans for compliance with its environmental obligations
under the Electricity Act.
The Environmental Protection Act 1990 addresses waste management
issues and imposes certain obligations and duties on companies that handle
and dispose of waste. Some of London Electricity's distribution activities
produce waste, but London Electricity believes that it is in compliance
with the applicable standards.
Possible adverse health effects of EMFs from various sources,
including transmission and distribution lines, have been the subject of a
number of studies and increasing public discussion. The scientific research
currently is inconclusive as to whether EMFs cause adverse health effects.
The only UK standards for exposure to power frequency EMFs are those
promulgated by the National Radiological Protection Board and relate to the
levels above which non-reversible physiological effects may be observed.
London Electricity fully complies with these standards. However, the
possibility exists that passage of legislation and change of regulatory
standards could require measures to mitigate EMFs, with resulting increases
in capital and operating costs. In addition, the potential exists for
public liability with respect to lawsuits brought by plaintiffs alleging
damages caused by EMFs.
London Electricity has approximately 677 miles of oil-filled
underground cables that operate at 33kV and 132kV. These cables generally
supply substantial amounts of electricity to large substations in urban
areas and to large customers. The majority of these cables are between 30
and 50 years old. London Electricity operates these cables in accordance
with the "Environment Agency and Electricity Companies (in England and
Wales) Operating Code on the Management of Fluid-Filled Cables," monitoring
and repairing both gradual and substantial leaks, which arise through age
deterioration and third party damage. London Electricity has a program to
minimize oil leakage and reduce the possibility of pollution to
watercourses and ground water. This program includes a plan for gradual
replacement of these cables with more modern solid cables. London
Electricity believes that the existing monitoring systems and planned
replacement program are sufficient to avoid major environmental incidents
or unnecessary replacement expenditures. London Electricity could incur
significant expenditures if it were required to replace all or
substantially all of its fluid-filled cables, other than in the ordinary
course of business, pursuant to new or existing legislation.
Other Regulation and Litigation
Merger (Entergy Corporation and Entergy Gulf States)
In July and August 1992, applications were filed with FERC, the LPSC,
the PUCT, and the SEC under PUHCA, seeking authorization of various aspects
of the Merger. In January 1993, Entergy Gulf States filed two applications
with the NRC seeking approval of the change in ownership of Entergy Gulf
States and an amendment to the operating license for River Bend to reflect
its operation by Entergy Operations. All regulatory approvals were
obtained in 1993 and the Merger was consummated on December 31, 1993.
FERC's orders approving the Merger were appealed to the D.C. Circuit
by Entergy Services, the City of New Orleans, the Arkansas Electric Energy
Consumers (AEEC), the APSC, Cajun, the MPSC, the American Forest and Paper
Association, the State of Mississippi, the City of Benton and other cities,
and Occidental Chemical Corporation (Occidental). Entergy Services sought
review of FERC's deletion of a 40% cap on the amount of fuel savings
Entergy Gulf States may be required to transfer to other Entergy domestic
utility companies under a tracking mechanism designed to protect the other
companies from certain unexpected increases in fuel costs. The other
parties sought to overturn FERC's decisions on various grounds, including
issues as to whether FERC appropriately conditioned the Merger to protect
various interested parties from alleged harm and FERC's reliance on
Entergy's transmission tariff to mitigate any potential anticompetitive
impacts of the Merger. On November 18, 1994, the D.C. Circuit denied
motions filed by Cajun, Occidental, and AEEC for a remand to FERC and a
partial summary grant of the petitions for review. At the same time, the
D.C. Circuit ordered that the cases be held in abeyance pending FERC's
issuance of (i) a final order on remand in the proceedings on Entergy's
transmission tariff (see discussion of tariff case in "RATE MATTERS AND
REGULATION - Rate Matters - Wholesale Rate Matters - Open Access
Transmission" above), and (ii) a final order on competition issues in the
proceedings on the Merger.
On December 30, 1993, Entergy Services submitted to FERC tariff
revisions to comply with FERC's order dated December 15, 1993, approving
the Merger. On February 4, 1994, the APSC and AEEC filed with FERC a joint
protest, alleging that Entergy should be required to insulate the
ratepayers of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans from all litigation liabilities related to Entergy Gulf
States' River Bend nuclear facility. In a May 17, 1994, order on
rehearing, FERC addressed Entergy's commitment to insulate the customers of
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans against liability resulting from certain litigation involving River
Bend. In response to FERC's clarification of Entergy's commitment, Entergy
Services filed a new compliance filing on June 16, 1994. The APSC and AEEC
subsequently filed protests questioning the adequacy of Entergy's June 16,
1994, compliance filing. FERC has not yet acted on the compliance filings.
Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and Entergy New Orleans)
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans are defendants in numerous lawsuits that
have been filed by former employees asserting that they were wrongfully
terminated and/or discriminated against due to age, race, and/or sex.
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans are vigorously defending these suits and
deny any liability to the plaintiffs. However, no assurance can be given
as to the outcome of these cases, and an adverse outcome in one or more
cases could have a material adverse financial effect on any of the Entergy
defendants. See "Employment Litigation" in Note 9 for information
regarding these lawsuits.
Asbestos and Hazardous Waste Suits
(Entergy Gulf States and Entergy Louisiana)
A number of plaintiffs who allegedly suffered damage or injury, or are
survivors of persons who died, allegedly as a result of exposure to
"hazardous toxic waste" that emanated from a site in Livingston Parish,
Louisiana, sued Entergy Gulf States and approximately 70 other defendants,
including Entergy Louisiana, in 17 suits filed in the Livingston Parish
District Court. The plaintiffs alleged that the defendants generated,
transported, or participated in the storage of such wastes at the facility,
which was previously operated as a waste oil recycling facility. These
suits, and three federal suits in three states other than Louisiana
involving issues arising from the same facility, were consolidated in the
U.S. District Court for the Middle District of Louisiana. Entergy Gulf
States and Entergy Louisiana have settled all claims against them in the
suits and the settlements were approved by court order on February 7, 1996
and June 4, 1997, respectively. Entergy Gulf States' and Entergy
Louisiana's shares of the settlements of these cases is not material to
their financial position or results of operations.
(Entergy Gulf States)
A total of 25 suits have been filed on behalf of approximately 1,200
plaintiffs in state and federal courts in Jefferson and Orange Counties,
Texas. These suits seek relief from Entergy Gulf States as well as
numerous other defendants for damages caused to the plaintiffs or others by
the alleged exposure to hazardous waste and asbestos on the defendants'
premises. The plaintiffs in some of these suits are also suing Entergy Gulf
States and all other defendants on a conspiracy claim. There are ten
asbestos-related lawsuits filed in the District Court of Calcasieu Parish
in Lake Charles, Louisiana, on behalf of approximately fifteen plaintiffs
naming numerous defendants including Entergy Gulf States. The suits allege
that each plaintiff contracted an asbestos-related disease from exposure to
asbestos insulation products on the premises of the defendants. A total of
eighteen lawsuits have been filed in Louisiana on behalf of 24 plaintiffs
in state courts in East Baton Rouge, Iberville, and Ascension Parishes.
These suits seek relief from Entergy Gulf States and numerous other
defendants for damages caused to the plaintiffs or others by alleged
exposure to hazardous waste and asbestos on the defendants' premises. It
is not known yet how many of the plaintiffs in any of the foregoing cases
worked on Entergy Gulf States' premises. Settlements with approximately
800 of the Jefferson County plaintiffs and with approximately 100 of the
Calcasieu Parish plaintiffs are in the process of being consummated.
Entergy Gulf States' share of the settlements of these cases is not
material to its financial position or results of operations.
Cajun - River Bend Litigation (Entergy Corporation and Entergy Gulf States)
See "Cajun - River Bend Litigation" in Note 9 herein for a discussion
of this litigation.
Cajun - Transmission Service (Entergy Corporation and Entergy Gulf States)
See "Cajun - River Bend Litigation" in Note 9 herein for a discussion
of this litigation.
Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States)
See "Cajun-Coal Contracts" in Note 9 herein for a discussion of this
litigation.
Service Area Dispute (Entergy Corporation and Entergy Mississippi)
In October 1994, twelve Mississippi cities filed a complaint in state
court against Entergy Mississippi and eight electric power associations
seeking a judgment declaring unconstitutional certain Mississippi statutes
relating to the acquisition by a municipality of facilities and certificate
rights of a utility serving in the municipality. The suit requests that
the court declare unconstitutional certain 1987 amendments to the
Mississippi Public Utilities Act that require that the MPSC cancel a
utility's certificate to serve in the municipality before a municipality
may acquire a utility's facilities located in the municipality. The suit
also requests that the court find that Mississippi municipalities can serve
any consumer in the boundaries of the municipality and within one mile
thereof. Entergy Mississippi and the other defendants filed motions to
dismiss, which were granted in October 1995. The plaintiffs appealed the
dismissal to the Mississippi Supreme Court. In September 1997, the
Mississippi Supreme Court affirmed the decision of the lower court finding
in favor of Entergy Mississippi and dismissing the municipalities'
complaint. A petition for rehearing filed by the municipalities was denied
by the Mississippi Supreme Court in November 1997.
Taxes Paid Under Protest (Entergy Corporation and Entergy Louisiana)
Since the mid-1980's, Entergy Louisiana and the tax authorities of St.
Charles Parish, Louisiana (Parish), where Waterford 3 is located, have
disputed use taxes on nuclear fuel paid under protest by Entergy Louisiana,
and lease tax issues pertaining to fuel financing arrangements. In May
1997, the Parish and Entergy Louisiana settled all pending use and lease
tax litigation. This settlement includes the return to Entergy Louisiana
of tax payments made under protest and the dismissal of nuclear fuel
related suits against Entergy Louisiana and/or the fuel lessors.
Since 1990, Entergy Louisiana and the state tax authority have
disputed state use tax paid under protest on nuclear fuel ($8.8 million at
December 31, 1997) by Entergy Louisiana. The fuel was purchased for
Waterford 3. Entergy Louisiana has filed lawsuits to recover these taxes,
and certain of these suits involve additional legal issues related to an
exemption for boiler fuel. The suits regarding these disputes have been
consolidated for trial, but a trial date has not been set.
Catalyst Technologies, Inc. (Entergy Corporation)
In June 1993, Catalyst Technologies, Inc. (CTI) filed a petition in
the Civil District Court for the Parish of Orleans, Louisiana (CDC),
against Electec, Inc., now named Entergy Enterprises, Inc. (EEI), which is
a wholly-owned non-utility subsidiary of Entergy Corporation. The petition
alleged, among other things, breach of contract, and breach of the
obligation of good-faith and fair dealing. On August 8, 1997, a jury in
the CDC returned a verdict against EEI in the amount of $346 million plus
interest of approximately $118 million. On November 15, 1997, the trial
judge entered a judgment notwithstanding the verdict in the CTI lawsuit.
Finding as a matter of law that the jury's verdict was incorrect, the judge
ruled that no contract ever existed between CTI and Entergy Enterprises,
and that the verdict was contrary to the law and the evidence. CTI has
appealed this ruling to the Louisiana Court of Appeal for the Fourth
Circuit. No date for the filing of appellate briefs or oral argument has
been set.
On September 30, 1997, CTI filed another lawsuit against Entergy
Corporation, Entergy Services, Entergy Enterprises and certain individuals
who are, or at one time were, directors of those corporations. The suit
claims, among other things, that CTI suffered damages as a result of
actions on the part of Entergy that allegedly caused the individual
defendants to breach their fiduciary duties owed to Entergy Enterprises
and, indirectly, to CTI as Entergy Enterprises' judgment creditor. After
the decision of the trial judge in the original CTI suit, CTI voluntarily
moved to dismiss this proceeding, and it was dismissed without prejudice on
January 16, 1998.
Union Pacific Railroad (Entergy Corporation and Entergy Arkansas)
In October 1997, Entergy Arkansas and Entergy Services filed a civil
suit against Union Pacific Railroad Company (Union Pacific) in the United
States District Court for the Middle District of Louisiana. This suit,
which seeks damages and the termination of coal shipping contracts with
Union Pacific, maintains that Union Pacific has failed to meet its
contractual obligations to ship coal to Entergy Arkansas' two large coal-
fired plants and that such failure has impaired Entergy Arkansas' ability
to generate and sell electricity from these plants.
EARNINGS RATIOS OF DOMESTIC UTILITY COMPANIES, SYSTEM ENERGY, AND
ENTERGY LONDON
The domestic utility companies', System Energy's, and Entergy London's
ratios of earnings to fixed charges and ratios of earnings to combined
fixed charges and preferred dividends pursuant to Item 503 of SEC
Regulation S-K are as follows:
Ratios of Earnings to Fixed Charges
Years Ended December 31,
1993 1994 1995 1996 1997
Entergy Arkansas 3.11(b) 2.32 2.56 2.93 2.54
Entergy Gulf States 1.54 (c)- 1.86 1.47 1.42
Entergy Louisiana 3.06 2.91 3.18 3.16 2.74
Entergy Mississippi 3.79(b) 2.12 2.92 3.40 2.98
Entergy New Orleans 4.68(b) 1.91 3.93 3.51 2.70
System Energy 1.87 1.23 2.07 2.21 2.31
Entergy London N/A N/A N/A N/A (d)-
Ratios of Earnings to Combined Fixed
Charges and Preferred Dividends
Years Ended December 31,
1993 1994 1995 1996 1997
Entergy Arkansas 2.54(b) 1.97 2.12 2.44 2.24
Entergy Gulf States(a) 1.21 (c)- 1.54 1.19 1.23
Entergy Louisiana 2.39 2.43 2.60 2.64 2.36
Entergy Mississippi 3.08(b) 1.81 2.51 2.95 2.69
Entergy New Orleans 4.12(b) 1.73 3.56 3.22 2.44
(a) "Preferred Dividends" in the case of Entergy Gulf States also include
dividends on preference stock.
(b) Earnings for the year ended December 31, 1993, include approximately
$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.
(c) Earnings for the year ended December 31, 1994, for Entergy Gulf States
were not adequate to cover fixed charges and combined fixed charges
and preferred dividends by $144.8 million and $197.1 million,
respectively.
(d) As a result of the windfall profits tax of $234 million, earnings for
the twelve months ended December 31, 1997, for Entergy London were
insufficient to cover fixed charges by $204 million.
INDUSTRY SEGMENTS
Entergy New Orleans
Narrative Description of Entergy New Orleans Industry Segments
Electric Service
Entergy New Orleans supplied retail electric service to approximately
189,000 customers as of December 31, 1997. During 1997, 39% of electric
operating revenues was derived from residential sales, 38% from commercial
sales, 7% from industrial sales, and 16% from sales to governmental and
municipal customers.
Natural Gas Service
Entergy New Orleans supplied retail natural gas service to
approximately 151,000 customers as of December 31, 1997. During 1997, 55%
of gas operating revenues was derived from residential sales, 19% from
commercial sales, 11% from industrial sales, and 15% from sales to
governmental and municipal customers. (See "FUEL SUPPLY - Natural Gas
Purchased for Resale.")
Selected Financial Information Relating to Industry Segments
For selected financial information relating to Entergy New Orleans'
industry segments, see Entergy New Orleans' financial statements and Note
15.
Entergy Gulf States
For the year ended December 31, 1997, 96% of Entergy Gulf States'
operating revenues was derived from the electric utility business. Of the
remaining operating revenues, 2% was derived from the steam business and 2%
from the natural gas business.
Entergy London
Entergy London's distribution and supply businesses both served
approximately 2.0 million customers as of December 31, 1997. During 1997,
operating revenues derived from the distribution and supply business were
22% and 74%, respectively. The remaining 4% of operating revenues was
derived from Entergy London's investment in private distribution networks,
electricity contracting services, and investments in generating assets.
PROPERTY
Generating Stations
The total capability of Entergy's owned and leased generating stations
as of December 31, 1997, by company and by fuel type, is indicated below:
Owned and Leased Capability MW(1)
Gas
Turbine
and
Internal
Company Total Fossil Nuclear Combustion Hydro
Entergy Arkansas 4,373 (2) 2,379 1,694 230 (4) 70
Entergy Gulf States 6,854 (2) 5,843 936 75 -
Entergy Louisiana 5,423 (2) 4,329 1,075 19 -
Entergy Mississippi 3,063 (2) 3,052 - 11 -
Entergy New Orleans 934 (2) 918 - 16 -
System Energy 1,080 - 1,080 - -
-------------------------------------------------
Total 21,727 (3) 16,521 (3) 4,785 351 70
=================================================
(1) "Owned and Leased Capability" is the dependable load carrying
capability as demonstrated under actual operating conditions based on
the primary fuel (assuming no curtailments) that each station was
designed to utilize.
(2) Excludes the capacity of fossil-fueled generating stations placed on
extended reserve as follows: Entergy Arkansas - 506 MW; Entergy Gulf
States - 405 MW; Entergy Louisiana - 157 MW; Entergy Mississippi - 73
MW; Entergy New Orleans - 143 MW. Generating stations that are not
expected to be utilized in the near-term to meet load requirements are
placed in extended reserve shutdown in order to minimize operating
expenses.
(3) Excludes net capability of generating facilities owned by Entergy
Power, which owns 725 MW of fossil-fueled capacity.
(4) Includes 188 MW of capacity leased by Entergy Arkansas through 1999.
Load and capacity projections are reviewed periodically to assess the
need and timing of additional generating capacity and of interconnections
in light of the availability of power, the location of new loads, and
maximum economy to Entergy. Domestically, based on load and capability
projections and bulk power availability, Entergy has no current plans to
install new generating capacity. When new generation resources are needed,
Entergy expects to meet this need by means other than construction of new
base load generating capacity. Entergy expects to meet future capacity
needs by, among other things, purchasing power in the wholesale power
market and/or removing generating stations from extended reserve shutdown.
Under the terms of the System Agreement, certain generating capacity
and other power resources are shared among the domestic utility companies.
The System Agreement provides, among other things, that parties having
generating reserves greater than their load requirements (long companies)
shall receive payments from those parties having deficiencies in generating
reserves (short companies) and an amount sufficient to cover certain of the
long companies' costs, including operating expenses, fixed charges on debt,
dividend requirements on preferred and preference stock, and a fair rate of
return on common equity investment. Under the System Agreement, these
charges are based on costs associated with the long companies' steam
electric generating units fueled by oil or gas. In addition, for all
energy exchanged among the domestic utility companies under the System
Agreement, the short companies are required to pay the cost of fuel
consumed in generating such energy plus a charge to cover other associated
costs (see "RATE MATTERS AND REGULATION - Rate Matters - Wholesale Rate
Matters - System Agreement," above, for a discussion of FERC proceedings
relating to the System Agreement).
Entergy's domestic business is subject to seasonal fluctuations, with
the peak period occurring in the summer months. The 1997 peak demand of
19,545 MW occurred on August 19, 1997. The total operational system
capability at the time of peak was 21,446 MW. This gives a reserve margin
at the time of the peak of approximately 8.9%. This does not include
capacity owned by Entergy Power. London Electricity and CitiPower both
normally have peak activity in their winter months.
Interconnections
The electric generating facilities of Entergy's domestic utility
companies consist principally of steam-electric production facilities
strategically located with reference to availability of fuel, protection of
local loads, and other controlling economic factors. These are
interconnected by a transmission system operating at various voltages up to
500 kV. Generally, with the exception of Grand Gulf 1, Entergy Power's
capacity and a small portion of Entergy Mississippi's capacity, operating
facilities or interests therein are owned by the domestic utility company
serving the area in which the facilities are located. All of Entergy's
generating facilities are centrally dispatched and operated in order to
obtain low cost sources of energy with a minimum of investment and
efficient use of plant.
In addition to the many neighboring utilities with which the domestic
utility companies interconnect, the domestic utility companies are members
of the Southeastern Electric Reliability Council, the primary purpose of
which is to ensure the reliability and adequacy of the electric bulk power
supply in the southeast region of the United States. The Southeastern
Electric Reliability Council is a member of the North American Electric
Reliability Council.
Gas Property
As of December 31, 1997, Entergy New Orleans distributed and
transported natural gas for distribution solely within the limits of the
City of New Orleans through a total of 1487 miles of gas distribution mains
and 62 miles of gas transmission pipelines. Koch Gateway Pipeline Company
is a principal supplier of natural gas to Entergy New Orleans, delivering
to six of Entergy New Orleans' thirteen delivery points.
As of December 31, 1997, the gas properties of Entergy Gulf States
were not material to Entergy Gulf States.
Titles
Entergy's generating stations are generally located on properties
owned in fee simple. The greater portion of the transmission and
distribution lines of the domestic utility companies have been constructed
over property of private owners pursuant to easements or on public highways
and streets pursuant to appropriate franchises, and pursuant to statute in
the case of Entergy London. The rights of such company in the property on
which its facilities are located are considered by each such company to be
adequate for its use in the conduct of its business. Minor defects and
irregularities customarily found in properties of like size and character
exist, but such defects and irregularities do not materially impair the use
of the properties affected thereby. The domestic utility companies
generally have the right of eminent domain, whereby they may, if necessary,
perfect or secure titles to, or easements or servitudes on, privately held
lands used in or reasonable necessary for their utility operations.
Substantially all the physical properties owned by each domestic
utility company, and System Energy, are subject to the lien of mortgages
securing the first mortgage bonds of such company. The Lewis Creek
generating station is owned by GSG&T, Inc., a subsidiary of Entergy Gulf
States, and is not subject to the lien of the Entergy Gulf States mortgage
securing the first mortgage bonds of Entergy Gulf States, but is leased to
and operated by Entergy Gulf States. In the case of Entergy Louisiana,
certain properties are also subject to the lien of a second mortgage
securing other obligations of Entergy Louisiana. In the case of Entergy
Mississippi, substantially all of its properties and assets are also
subject to the second mortgage lien of its general and refunding mortgage
bond indenture.
FUEL SUPPLY
The sources of generation and average fuel cost per KWH for the
domestic utility companies and System Energy for the years 1995-1997 were:
Natural Gas Fuel Oil Nuclear Fuel Coal
% Cents % Cents % Cents % Cents
of per of per of Per of Per
Year Gen KWH Gen KWH Gen KWH Gen KWH
1997 39 2.97 4 3.11 41 .54 16 1.73
1996 42 2.99 1 3.03 41 .56 16 1.73
1995 50 1.99 - - 35 .60 15 1.73
Actual 1997 and projected 1998 sources of generation for the domestic
utility companies and System Energy are:
Natural Gas Fuel Oil Nuclear Coal
1997 1998 1997 1998 1997 1998 1997 1998
Entergy Arkansas 5% 8% - - 62% 51% 32% 40%
Entergy Gulf States 65% 64% - - 19% 21% 16% 15%
Entergy Louisiana 63% 47% 1% - 36% 53% - -
Entergy Mississippi 38% 69% 33% - - - 29% 31%
Entergy New Orleans 89% 100% 11% - - - - -
System Energy - - - - 100%(a) 100%(a) - -
Total 39% 40% 4% - 41% 41% 16% 19%
(a)Capacity and energy from System Energy's interest in Grand Gulf 1 is
allocated as follows: Entergy Arkansas - 36%; Entergy Louisiana - 14%;
Entergy Mississippi - 33%; and Entergy New Orleans - 17%.
The balance of generation, which was immaterial, was provided by
hydroelectric power.
Natural Gas
The domestic utility companies have long-term firm and short-term
interruptible gas contracts. Long-term firm contracts comprise less than
30% of the domestic utility companies' total requirements but can be called
upon, if necessary, to satisfy a significant percentage of the domestic
utility companies' needs. Additional gas requirements are satisfied by
short-term contracts and spot-market purchases. Entergy Gulf States has a
transportation service agreement with a gas supplier that provides flexible
natural gas service to certain generating stations by using such supplier's
pipeline and gas storage facility.
Many factors, including wellhead deliverability, storage and pipeline
capacity, and demand requirements of end users, influence the availability
and price of natural gas supplies for power plants. Demand is tied to
weather conditions as well as to the prices of other energy sources.
Supplies of natural gas are expected to be adequate in 1998. However,
pursuant to federal and state regulations, gas supplies to power plants may
be interrupted during periods of shortage. To the extent natural gas
supplies may be disrupted, the domestic utility companies will use
alternate fuels, such as oil, or rely on coal and nuclear generation.
Coal
Entergy Arkansas has long-term contracts with suppliers for the supply
of low-sulfur coal from mines in the State of Wyoming for White Bluff and
Independence. These contracts, which expire in 2002 and 2011, provide for
approximately 85% of Entergy Arkansas' expected annual coal requirements
through 2002. Additional requirements are satisfied by annual spot market
purchases. Entergy Gulf States has a contract for a supply of low-sulfur
Wyoming coal for Nelson Unit 6, which should be sufficient to satisfy its
fuel requirements for that unit through 2010. Cajun has advised Entergy
Gulf States that Cajun has contracts that should provide an adequate supply
of coal until 1999 for the operation of Big Cajun 2, Unit 3.
Nuclear Fuel
The nuclear fuel cycle involves the mining and milling of uranium ore
to produce a concentrate, the conversion of the concentrate to uranium
hexafluoride gas, enrichment of that gas, fabrication of nuclear fuel
assemblies for use in fueling nuclear reactors, and disposal of the spent
fuel.
System Fuels is responsible for contracts to acquire nuclear material
to be used in fueling Entergy Arkansas', Entergy Louisiana's, and System
Energy's nuclear units and maintaining inventories of such materials during
the various stages of processing. Each of these companies contracts for
the fabrication of its own nuclear fuel and purchases the required enriched
uranium hexafluoride from System Fuels. The requirements for Entergy Gulf
States' River Bend plant are covered by contracts made by Entergy Gulf
States. Entergy Operations acts as agent for System Fuels and Entergy Gulf
States in negotiating and/or administering nuclear fuel contracts.
Based upon currently planned fuel cycles, Entergy's nuclear units have
existing contracts and inventory to provide adequate materials and
services. Current contracts for uranium concentrate and conversion of the
concentrate to uranium hexafluoride will provide a significant percentage
of these materials and services through termination dates ranging from 1998-
2002. Additional materials and services required beyond these dates are
expected to be available for the foreseeable future.
Current contracts for enrichment will provide a significant percentage
of these materials and services through approximately 2002. Current
fabrication contracts will provide a significant percentage of these
materials and services for termination dates ranging from 2000-2002. The
Nuclear Waste Policy Act of 1982 provides for the disposal of spent nuclear
fuel or high level waste by the DOE. See Note 9, COMMITMENTS AND
CONTINGENCIES, Spent Nuclear Fuel and Decommissioning Costs for additional
discussion of spent nuclear fuel disposal.
Entergy will enter into additional arrangements to acquire nuclear
fuel beyond the dates shown above. Except as noted above, Entergy cannot
predict the ultimate cost of such arrangements.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy have made arrangements to lease nuclear fuel and related equipment
and services. The lessors finance the acquisition and ownership of nuclear
fuel through credit agreements and the issuance of notes. These agreements
are subject to annual renewal with, in Entergy Louisiana's and Entergy Gulf
States' case, the consent of the lenders. See Note 10 for further
discussion of nuclear fuel leases.
Entergy Gulf States received nuclear fuel as part of the settlement of
the Cajun litigation. This nuclear fuel is currently owned by Entergy Gulf
States and is not under lease.
Natural Gas Purchased for Resale
Entergy New Orleans has several suppliers of natural gas for resale.
Its system is interconnected with three interstate and three intrastate
pipelines. Presently, Entergy New Orleans' primary suppliers are Koch
Energy Trading Company (KET), an interstate gas marketer, Bridgeline and
Pontchartrain via Louisiana Gas Services (LGS). Entergy New Orleans has a
"no-notice" service gas purchase contract with KET. The KET gas supply is
transported to Entergy New Orleans pursuant to a transportation service
agreement with Koch Gateway Pipeline Company (KGPC). This service is
subject to FERC-approved rates. Entergy New Orleans has firm contracts
with its two intrastate suppliers and also makes interruptible spot market
purchases. In recent years, natural gas deliveries have been subject
primarily to weather-related curtailments. However, Entergy New Orleans
has experienced no such curtailments.
After the implementation of FERC-mandated interstate pipeline
restructuring in 1993, curtailments of interstate gas supply could occur if
Entergy New Orleans' suppliers failed to perform their obligations to
deliver gas under their supply agreements. KGPC could curtail
transportation capacity only in the event of pipeline system constraints.
Based on the current supply of natural gas, and absent extreme weather-
related curtailments, Entergy New Orleans does not anticipate any
interruptions in natural gas deliveries to its customers.
Entergy Gulf States purchases natural gas for resale under an
agreement with Mid Louisiana Gas Company. Abandonment of service by the
present supplier would be subject to abandonment proceedings by FERC.
Research
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans are members of the Electric Power
Research Institute (EPRI). EPRI conducts a broad range of research in
major technical fields related to the electric utility industry. Entergy
participates in various EPRI projects based on Entergy's needs and
available resources. During each of the years 1997, 1996, and 1995,
Entergy contributed approximately $9 million for EPRI and other research
programs.
Item 2. Properties
Refer to Item 1. "Business - PROPERTY," for information regarding the
properties of the registrants.
Item 3. Legal Proceedings
Refer to Item 1. "Business - RATE MATTERS AND REGULATION," for details
of the registrants' material rate proceedings, environmental regulation and
proceedings, and other regulatory proceedings and litigation that are
pending or that terminated in the fourth quarter of 1997.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1997, no matters were submitted to a vote
of the security holders of Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
System Energy, or Entergy London.
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF ENTERGY CORPORATION
Directors
Information required by this item concerning directors of Entergy
Corporation is set forth under the heading "Proposal 1--Election of
Directors" contained in the Proxy Statement of Entergy Corporation, (the
"Proxy Statement"), to be filed in connection with its Annual Meeting of
Stockholders to be held May 15, 1998, ("Annual Meeting"), and is
incorporated herein by reference. Information required by this item
concerning officers and directors of the remaining registrants is reported
in Part III of this document.
Executive Officers
<TABLE>
<CAPTION>
Name Age Position Period
<S> <C> <C> <C>
Edwin Lupberger (a) 61 Chairman of the Board, Chief 1985-Present
Executive Officer, and Director of
Entergy Corporation
Chairman of the Board and Chief 1993-Present
Executive Officer of Entergy
Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Chairman of the Board, Chief 1994-Present
Executive Officer, and Director of
Entergy Gulf States
Chairman of the Board and Director of 1996-Present
Entergy Integrated Solutions, Inc.
Chairman of the Board of System 1986-Present
Energy and Entergy Enterprises
Chairman of the Board of Entergy 1990-Present
Operations
Chairman of the Board of Entergy 1985-Present
Services
Chief Executive Officer of Entergy 1991-Present
Services
Chief Executive Officer of Entergy 1993-Present
Power, EPDC, and Entergy-Richmond
Power Corporation
Chief Executive Officer of Entergy 1994-Present
Pakistan, Ltd. and Entergy Power
Asia, Ltd.
Chief Executive Officer of EP Edegel, 1995-Present
Inc., Entergy Power Holding II,
Ltd., EPMC, Entergy Power Operations
Corporation, Entergy Power
Operations Holdings, Ltd., Entergy
Power Operations Pakistan LDC,
Entergy Victoria LDC, Entergy
Victoria Holdings LDC, EPG Cayman
Holding I, EPG Cayman Holding II,
Entergy Power CBA Holding, Ltd., and
Entergy Power Edesur Holding, Ltd.
Chief Executive Officer of Entergy 1995-1997
Power Development International
Corporation
Chief Executive Officer of Entergy 1996-Present
Power International Holdings
Corporation and Entergy Mexico Ltd.
Chief Executive Officer of Entergy 1997-Present
London Limited, Entergy London, and
Entergy Power Chile, Inc.
President of Entergy Corporation 1995-Present
President of Entergy Services and 1994-Present
Entergy Enterprises
General Manager of Entergy Power 1997-Present
Chile, S.A.
Director and Chairman of the Board of 1997-Present
Entergy Nuclear, Inc., Entergy
Technology Company, ETHC, Entergy
London Limited and Entergy London
Director of Entergy Arkansas, Entergy 1986-Present
Louisiana, Entergy Mississippi,
Entergy New Orleans, and System
Energy
Director of Entergy Operations and 1994-Present
Entergy Services
Director of Entergy Enterprises 1984-Present
Chief Executive Officer of Entergy 1995-1996
Edegel I, Inc., Entergy Power
Holding I, Ltd., and Entergy
Yacyreta I, Inc.
Chairman of the Board of Entergy 1990-1993
Power
Chief Executive Officer of Entergy 1991-1994
Enterprises
Jerry L. Maulden 61 Vice Chairman of Entergy Corporation 1995-Present
Vice Chairman and Chief Operating 1993-Present
Officer of Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy
New Orleans
Vice Chairman of Entergy Services 1992-Present
Director of Entergy Arkansas 1979-Present
Director of Entergy Gulf States 1993-Present
Director of Entergy Louisiana and 1991-Present
Entergy New Orleans
Director of Entergy Mississippi 1988-Present
Director of Entergy Operations 1990-Present
Director of System Energy 1987-Present
Director of Entergy Services 1979-Present
Director of Entergy Nuclear, Inc. 1997-Present
Chairman of the Board of Entergy 1989-1993
Arkansas
Chairman of the Board and Chief 1991-1993
Executive Officer of Entergy
Louisiana and Entergy New Orleans
Chairman of the Board and Chief 1989-1993
Executive Officer of Entergy
Mississippi
Chief Executive Officer of Entergy 1979-1993
Arkansas
President and Chief Operating Officer 1993-1995
of Entergy Corporation
Group President, System Executive - 1991-1993
Transmission, Distribution, and
Customer Service of Entergy
Corporation
Jerry D. Jackson 53 Chief Administrative Officer of 1997-Present
Entergy Corporation, Entergy
Services, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New
Orleans
Executive Vice President - External 1994-Present
Affairs of Entergy Corporation and
Entergy Services
Executive Vice President - External 1995-Present
Affairs of Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New
Orleans
Director of Entergy Arkansas, Entergy 1992-Present
Louisiana, Entergy Mississippi, and
Entergy New Orleans
Director of Entergy Gulf States 1994-Present
Director of Entergy Services 1990-Present
Director of Entergy Enterprises 1996-Present
Executive Vice President of Marketing 1994-1995
of Entergy Corporation
Executive Vice President - Marketing 1995-1995
of Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Executive Vice President - Marketing 1994-1995
of Entergy Services
President and Chief Administrative 1992-1994
Officer of Entergy Services
Executive Vice President - Finance 1990-1994
and External Affairs of Entergy
Corporation
Executive Vice President - Finance 1992-1994
and External Affairs and Secretary
of Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and
Entergy New Orleans
Executive Vice President - Finance 1993-1994
and External Affairs of Entergy Gulf
States
Secretary of Entergy Corporation 1991-1994
Secretary of Entergy Gulf States 1994-1995
Director of System Energy 1993-1995
Donald C. Hintz 55 Group President and Chief Nuclear 1997-Present
Operating Officer of Entergy
Corporation, Entergy Services,
Entergy Arkansas, Entergy Gulf
States, and Entergy Louisiana
Executive Vice President and Chief 1994-1997
Nuclear Officer of Entergy
Corporation
Executive Vice President - Nuclear of 1994-1997
Entergy Arkansas, Entergy Gulf
States, and Entergy Louisiana
Executive Vice President of Nuclear 1996-1997
of Entergy Services
Chief Executive Officer and President 1992-Present
of System Energy and Entergy
Operations
Director of Entergy Arkansas, Entergy 1992-Present
Louisiana, Entergy Mississippi,
System Energy, System Fuels, and
Entergy Services
Director of Entergy Gulf States 1993-Present
Director of Entergy Operations 1990-Present
Director of GSG&T, Prudential Oil & 1994-Present
Gas, Southern Gulf Railway, and
Varibus Corporation
Senior Vice President and Chief 1993-1994
Nuclear Officer of Entergy
Corporation
Senior Vice President - Nuclear of 1990-1994
Entergy Arkansas
Senior Vice President - Nuclear of 1993-1994
Entergy Gulf States
Senior Vice President - Nuclear of 1992-1994
Entergy Louisiana
Director of Entergy New Orleans 1992-1994
Chief Executive Officer, President, 1997-Present
and Director of Entergy Nuclear,
Inc.
Gerald D. McInvale 54 Vice Chairman and Chief Financial 1997-1997
Officer of Entergy Corporation
Executive Vice President and Chief 1995-1997
Financial Officer of Entergy
Corporation, Entergy Services,
Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
System Energy, Entergy Enterprises,
Entergy Operations, System Fuels
Inc., Entergy Integrated Solutions,
Inc., GSG&T, Prudential Oil & Gas,
Southern Gulf Railway, and Varibus
Corporation
Executive Vice President, Chief 1996-1997
Financial Officer, and Director of
ETHC
Executive Vice President and Chief 1996-1997
Financial Officer of Entergy
Operations Services, Inc.
Senior Vice President, Treasurer, and 1994-1997
Director of Entergy Pakistan, Ltd.
and Entergy Power Asia, Ltd.
Senior Vice President, Treasurer, and 1993-1997
Director of EPDC and Entergy-
Richmond Power Corporation
Senior Vice President, Treasurer, and 1995-1997
Director of EP Edegel, Inc., Entergy
Power Development International
Corporation, Entergy Power Holding
II, Ltd., EPMC, Entergy Power
Operations Corporation, Entergy
Power Operations Holdings, Ltd.,
Entergy Power Operations Pakistan
LDC, Entergy Victoria LDC, Entergy
Victoria Holdings LDC, EPG Cayman
Holding I, EPG Cayman Holding II,
Entergy Power CBA Holding, Ltd., and
Entergy Power Edesur Holding, Ltd.
Senior Vice President, Treasurer, and 1996-1997
Director of Entergy Power
International Holdings Corporation
Senior Vice President, Treasurer, and 1993-1997
Director of Entergy Power
Senior Vice President and Director of 1996-1997
Entergy Mexico Ltd.
Senior Vice President and Treasurer 1996-1997
of Entergy Power Peru, S.A.
Director of Entergy Arkansas, Entergy 1995-1997
Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New
Orleans, Entergy Services, System
Energy, Entergy Operations, GSG&T,
Prudential Oil & Gas, Southern Gulf
Railway, and Varibus Corporation
Director of System Fuels 1992-1997
Director of Entergy Integrated 1993-1997
Solutions, Inc.
Director of Entergy Power 1996-1997
International Corporation
Senior Vice President, Treasurer, and 1995-1996
Director of Entergy Edegel I, Inc.,
Entergy Power Holding I, Ltd., and
Entergy Yacyreta I, Inc.
Chairman of the Board of Entergy 1994-1995
Integrated Solutions, Inc.
Senior Vice President and Chief 1991-1995
Financial Officer of Entergy
Corporation, Entergy Arkansas,
Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
System Energy, Entergy Operations,
Entergy Services, and Entergy
Enterprises
Senior Vice President and Chief 1993-1995
Financial Officer of Entergy Gulf
States
Senior Vice President and Chief 1994-1995
Financial Officer of System Fuels
Director and Acting Chief Operating 1994-1995
Officer of Entergy Enterprises
Treasurer of Entergy Enterprises 1992-1996
Michael G. Thompson 57 Senior Vice President and General 1992-Present
Counsel of Entergy Corporation and
Entergy Services
Senior Vice President, General 1995-Present
Counsel, and Secretary of Entergy
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Senior Vice President - Law and 1992-Present
Secretary of Entergy Enterprises
Senior Vice President, Secretary, and 1994-Present
Director of Entergy Pakistan, Ltd.
and Entergy Power Asia, Ltd.
Senior Vice President, Secretary, and 1994-Present
Director of EPMC, Entergy Power
Operations Holdings, Ltd., and EP
Edegel, Inc.
Senior Vice President, Secretary, and 1995-1997
Director of Entergy Power
Development International
Corporation
Senior Vice President, Secretary, and 1995-Present
Director of Entergy Power Holding
II, Ltd., Entergy Power Operations
Corporation, and Entergy Power
Operations Pakistan LDC
Senior Vice President, Secretary, and 1996-Present
Director of Entergy Victoria LDC,
Entergy Victoria Holdings LDC, EPG
Cayman Holding I, EPG Cayman Holding
II, Entergy Power CBA Holding, Ltd.,
and Entergy Power Edesur Holding,
Ltd.
Senior Vice President, Secretary, and 1996-Present
Director of Entergy Power
International Holdings Corporation
Senior Vice President and Secretary 1997-Present
of Entergy London, Entergy London
Limited, Entergy Nuclear, Inc.,
Entergy Technology Company, ETHC,
and Entergy Power Generation Corporation
Senior Vice President, Secretary, and 1997-Present
Director of Entergy Electric Asia,
Ltd., Entergy Power Kingsnorth
Ltd., and Entergy Power Chile, Inc.
Manager, Secretary, and Director of 1997-Present
Entergy Power Chile, S.A.
Director of Entergy Power Peru, S.A. 1997-Present
Senior Vice President, Secretary, and 1992-Present
Director of EPDC
Senior Vice President, Secretary and 1992-1997
Director of Entergy-Richmond Power
Corporation
Vice President, Secretary, and 1994-Present
Director of Entergy Power
Vice President of Entergy Integrated 1994-Present
Solutions, Inc.
Secretary of Entergy Integrated 1993-Present
Solutions, Inc.
Director of ETHC and Entergy 1997-Present
Technology Company
Secretary of Entergy Corporation 1994-Present
Director of Entergy Integrated 1992-1996
Solutions, Inc.
Director of Entergy Operations 1996-Present
Services, Inc., and Entergy Power
Generation Corporation
Secretary of Entergy Services 1996-Present
Senior Vice President, Chief Legal 1993-1994
Officer, Director, and Secretary of
Entergy Power
Assistant Secretary of Entergy 1993-1994
Corporation
S. M. Henry Brown, Jr. 59 Vice President - Federal Governmental 1989-Present
Affairs of Entergy Corporation and
Entergy Services
William J. Regan, Jr. 51 Vice President of Entergy Services 1995-Present
Vice President and Treasurer of 1995-1998
Entergy Corporation, Entergy
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
System Energy, Entergy Operations,
Entergy Services, System Fuels Inc.,
GSG&T, Prudential Oil & Gas,
Southern Gulf Railway, and Varibus
Corporation
Vice President and Treasurer of ETHC, 1996-1998
Entergy Operations Services, Inc.,
and Entergy Enterprises
Vice President and Treasurer of 1997-1998
Entergy Nuclear, Inc., Entergy
Technology Company, and Entergy
Integrated Solutions, Inc.
Vice President and Treasurer of 1997-1998
Entergy Electric Asia, Ltd.
Vice President and Treasurer of 1997-Present
Entergy Power Chile, Inc., Entergy Power
International Holdings Corporation,
Entergy Power Kingsnorth Ltd.,
Entergy Pakistan, Ltd., EP Edegel,
Inc., Entergy Power Chile, S.A.,
Entergy Power Asia, Inc. and Entergy
Power Generation Corporation
Vice President and Treasurer of 1996-Present
EPDC, EPMC, Entergy Power Operations
Corporation, Entergy Power, and
Entergy- Richmond Power Corporation
Treasurer of Entergy London Limited 1997-Present
and Entergy London
Treasurer of Entergy Mexico Ltd. 1996-Present
Senior Vice President and Corporate 1989-1995
Treasurer of United Services
Automobile Association
Louis E. Buck, Jr. 49 Vice President and Chief Accounting 1995-Present
Officer and Assistant Secretary of
Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans,
System Energy, Entergy Operations,
and Entergy Services
Audit Controller of Entergy London 1997-Present
and Entergy London Limited
Assistant Secretary of Entergy 1995-Present
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
Entergy Operations, and Entergy
Services
Director of Entergy Operations 1996-Present
Services, Inc.
Assistant Secretary of Entergy 1996-Present
Corporation and System Energy
Vice President and Chief Operating 1997-Present
Officer of Entergy International
Holdings Ltd., LLC, Entergy
International Ltd., LLC, Entergy
International Investments No. 1 LLC,
and Entergy International
Investments No. 2 LLC
Vice President and Chief Financial 1992-1995
Officer of North Carolina Electric
Membership Corporation
Michael B. Bemis (b) 50 Director and President of Entergy 1997-Present
London, Entergy London Limited,
London Electricity and CitiPower
Executive Vice President - 1997-Present
International Retail Operations of
Entergy Corporation and Entergy
Services
Executive Vice President - Retail 1992-1997
Services and Director of Entergy
Arkansas, Entergy Louisiana, and
Entergy Mississippi
Executive Vice President - Retail 1996-1997
Services of Entergy Corporation
Executive Vice President - Retail 1993-1997
Services of Entergy Gulf States
Executive Vice President - Retail 1992-1997
Services of Entergy New Orleans
Director of Entergy Gulf States 1994-1997
Director of Entergy New Orleans 1992-1994
Director of System Fuels 1992-1997
Director of Varibus Corporation, 1994-1997
Prudential Oil & Gas, Inc., GSG&T,
and Southern Gulf Railway Company
Director of Entergy Services and 1996-Present
Entergy Integrated Solutions, Inc.
Director of Entergy Enterprises 1996-1997
Frank F. Gallaher 52 Group President and Chief Utility 1997-Present
Operating Officer of Entergy
Corporation and Entergy Services
Director, Group President and Chief 1997-Present
Utility Operating Officer of Entergy
Arkansas, Entergy Louisiana, and Entergy
Mississippi
Group President and Chief Utility 1997-Present
Operating Officer of Entergy New Orleans
Group President and Chief Utility 1997-Present
Operating Officer of Entergy Gulf
States
Executive Vice President of 1996-1997
Operations of Entergy Corporation
Chairman of the Board of System Fuels 1992-Present
Chairman of the Board and Director of 1993-Present
Varibus Corporation, Prudential Oil
& Gas, Inc., GSG&T, and Southern
Gulf Railway Company
Chairman of the Board and Director of 1996-Present
Entergy Operations Services, Inc.
Executive Vice President - Operations 1993-1997
of Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi,
Entergy New Orleans, and Entergy
Services
President of Entergy Gulf States 1994-1996
Director of Entergy Gulf States 1993-Present
Director of Entergy Services and 1992-Present
System Fuels
Senior Vice President - Fossil 1992-1993
Operations of Entergy Arkansas,
Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
and Entergy Services
Naomi A. Nakagama 32 Senior Vice President-Finance and Treasurer 1998-Present
of Entergy Corporation
Senior Vice President and Treasurer of 1998-Present
Entergy Enterprises and Entergy
Integrated Solutions, Inc.
Vice President, Treasurer and Director 1998-Present
of Entergy Electric Asia, Ltd.
Vice President and Sector Manager of 1990-1997
Banque Nationale de Paris (financial
institution)
</TABLE>
(a) Mr. Lupberger is a director of First Commerce Corporation, New
Orleans, LA, International Shipholding Corporation, New Orleans,
LA, and First National Bank of Commerce, New Orleans, LA.
(b) Mr. Bemis is an advisory director of Deposit Guaranty National
Bank, Jackson, MS.
Each officer of Entergy Corporation is elected yearly by the Board of
Directors.
Directorships shown in footnotes (a) and (b) above are generally
limited to entities subject to Section 12 or 15(d) of the Securities and
Exchange Act of 1934 or to the Investment Company Act of 1940.
PART II
Item 5. Market for Registrants' Common Equity and Related Stockholder
Matters
Entergy Corporation
The shares of Entergy Corporation's common stock are listed on the New
York Stock, Chicago Stock, and Pacific Exchanges.
The high and low prices of Entergy Corporation's common stock for each
quarterly period in 1997 and 1996 were as follows:
1997 1996
High Low High Low
(In Dollars)
First 28 3/8 24 30 3/8 26 3/8
Second 27 1/2 22 3/8 28 1/2 25 1/4
Third 28 24 1/16 28 5/8 24 7/8
Fourth 30 1/4 23 29 26 3/4
Dividends of 45 cents per share were paid on Entergy Corporation's
common stock in each of the quarters of 1997 and 1996.
As of February 28, 1998, there were 88,685 stockholders of record
of Entergy Corporation.
For information with respect to Entergy Corporation's future ability
to pay dividends, refer to Note 8, "DIVIDEND RESTRICTIONS." In addition to
the restrictions described in Note 8, PUHCA provides that, without approval
of the SEC, the unrestricted, undistributed retained earnings of any
Entergy Corporation subsidiary are not available for distribution to
Entergy Corporation's common stockholders until such earnings are made
available to Entergy Corporation through the declaration of dividends by
such subsidiaries.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Energy, and Entergy London
There is no market for the common stock of Entergy Corporation's
wholly owned subsidiaries. Cash dividends on common stock paid by the
subsidiaries to Entergy Corporation during 1997 and 1996, were as follows:
1997 1996
(In Millions)
Entergy Arkansas $128.6 $142.8
Entergy Gulf States $ 77.2 --
Entergy Louisiana $145.4 $179.2
Entergy Mississippi $ 59.2 $ 79.9
Entergy New Orleans $ 26.0 $ 34.0
System Energy $113.8 $112.5
Entergy London -- --
Entergy S.A. -- $ 0.7
Entergy Transener S.A. -- $ 1.7
Entergy Argentina S.A. -- $ 0.3
Entergy Argentina S.A. Ltd. -- $ 3.1
In January and February 1998, Entergy Corporation received common
stock dividend payments from its subsidiaries totaling $103.9 million.
For information with respect to restrictions that limit the ability of
System Energy, the domestic utility companies and Entergy London to pay
dividends, see Note 8. In order to improve its capital structure, Entergy
Gulf States ceased paying common stock dividends after the third quarter
of 1994. However, such dividends were resumed in the third quarter
of 1997. (See "Management's Financial Discussion and Analysis - Liquidity
and Capital Resources.")
Item 6. Selected Financial Data
Entergy Corporation.. Refer to information under the heading "ENTERGY
CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA - FIVE-YEAR
COMPARISON."
Entergy Arkansas. Refer to information under the heading "ENTERGY
ARKANSAS, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."
Entergy Gulf States. Refer to information under the heading "ENTERGY
GULF STATES, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."
Entergy Louisiana. Refer to information under the heading "ENTERGY
LOUISIANA, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."
Entergy Mississippi. Refer to information under the heading "ENTERGY
MISSISSIPPI, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."
Entergy New Orleans. Refer to information under the heading "ENTERGY
NEW ORLEANS, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."
System Energy. Refer to information under the heading "SYSTEM ENERGY
RESOURCES, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."
Entergy London (Successor Company). Refer to information under the
headings "ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY SELECTED FINANCIAL
DATA" AND "LONDON ELECTRICITY PLC AND SUBSIDIARIES SELECTED FINANCIAL DATA
- - FOUR-YEAR COMPARISON."
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Entergy Corporation and Subsidiaries. Refer to information under the
heading "ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL
DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES," " - SIGNIFICANT
FACTORS AND KNOWN TRENDS," and "- RESULTS OF OPERATIONS."
Entergy Arkansas. Refer to information under the heading "ENTERGY
ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF
OPERATIONS."
Entergy Gulf States. Refer to information under the heading "ENTERGY
GULF STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS
OF OPERATIONS."
Entergy Louisiana. Refer to information under the heading "ENTERGY
LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF
OPERATIONS."
Entergy Mississippi. Refer to information under the heading "ENTERGY
MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS
OF OPERATIONS."
Entergy New Orleans. Refer to information under the heading "ENTERGY
NEW ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS
OF OPERATIONS."
System Energy. Refer to information under the heading "SYSTEM ENERGY
RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF
OPERATIONS."
Entergy London (Successor Company). Refer to information under the
headings "ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY MANAGEMENT'S
FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF OPERATIONS" AND "LONDON
ELECTRICITY PLC AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND
ANALYSIS - RESULTS OF OPERATIONS."
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Entergy Corporation and Subsidiaries. Refer to information under the
heading "ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL
DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS."
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS
Entergy Corporation and Subsidiaries:
Report of Management 46
Audit Committee Chairperson's Letter 47
Management's Financial Discussion and Analysis 48
Report of Independent Accountants 62
Management's Financial Discussion and Analysis 63
Statements of Consolidated Income For the Years Ended December 31, 67
1997, 1996, and 1995
Statements of Consolidated Cash Flows For the Years Ended December 68
31, 1997, 1996, and 1995
Consolidated Balance Sheets, December 31, 1997 and 1996 70
Statements of Consolidated Retained Earnings and Paid-In Capital 72
for the Years Ended December 31, 1997, 1996, and 1995
Selected Financial Data - Five-Year Comparison 73
Entergy Arkansas, Inc.:
Report of Independent Accountants 75
Management's Financial Discussion and Analysis 76
Statements of Income For the Years Ended December 31, 1997, 1996, 78
and 1995
Statements of Cash Flows For the Years Ended December 31, 1997, 79
1996, and 1995
Balance Sheets, December 31, 1997 and 1996 80
Statements of Retained Earnings for the Years Ended December 31, 82
1997, 1996, and 1995
Selected Financial Data - Five-Year Comparison 83
Entergy Gulf States, Inc.:
Report of Independent Accountants 85
Management's Financial Discussion and Analysis 86
Statements of Income (Loss) For the Years Ended December 31, 1997, 88
1996, and 1995
Statements of Cash Flows For the Years Ended December 31, 1997, 89
1996, and 1995
Balance Sheets, December 31, 1997 and 1996 90
Statements of Retained Earnings for the Years Ended December 31, 92
1997, 1996, and 1995
Selected Financial Data - Five-Year Comparison 93
Entergy Louisiana, Inc.:
Report of Independent Accountants 95
Management's Financial Discussion and Analysis 96
Statements of Income For the Years Ended December 31, 1997, 1996, 98
and 1995
Statements of Cash Flows For the Years Ended December 31, 1997, 99
1996, and 1995
Balance Sheets, December 31, 1997 and 1996 100
Statements of Retained Earnings for the Years Ended December 31, 102
1997, 1996, and 1995
Selected Financial Data - Five-Year Comparison 103
Entergy Mississippi, Inc.:
Report of Independent Accountants 105
Management's Financial Discussion and Analysis 106
Statements of Income For the Years Ended December 31, 1997, 1996, 108
and 1995
Statements of Cash Flows For the Years Ended December 31, 1997, 109
1996, and 1995
Balance Sheets, December 31, 1997 and 1996 110
Statements of Retained Earnings for the Years Ended December 31, 112
1997, 1996, and 1995
Selected Financial Data - Five-Year Comparison 113
Entergy New Orleans, Inc.:
Report of Independent Accountants 115
Management's Financial Discussion and Analysis 116
Statements of Income For the Years Ended December 31, 1997, 1996, 118
and 1995
Statements of Cash Flows For the Years Ended December 31, 1997, 119
1996, and 1995
Balance Sheets, December 31, 1997 and 1996 120
Statements of Retained Earnings for the Years Ended December 31, 122
1997, 1996, and 1995
Selected Financial Data - Five-Year Comparison 123
System Energy Resources, Inc.:
Report of Independent Accountants 124
Management's Financial Discussion and Analysis 125
Statements of Income For the Years Ended December 31, 1997, 1996, 126
and 1995
Statements of Cash Flows For the Years Ended December 31, 1997, 127
1996, and 1995
Balance Sheets, December 31, 1997 and 1996 128
Statements of Retained Earnings for the Years Ended December 31, 130
1997, 1996, and 1995
Selected Financial Data - Five-Year Comparison 131
Entergy London Investments plc and Subsidiary (Successor Company):
Report of Independent Accountants 132
Management's Financial Discussion and Analysis 133
Consolidated Statement of Loss For the Year Ended December 31, 1997 138
Consolidated Statement of Cash Flows For the Year Ended December 139
31, 1997
Consolidated Balance Sheet, December 31, 1997 140
Consolidated Statement of Changes in Shareholder's Equity for the 142
Year Ended December 31, 1997
Selected Financial Data 143
Notes to Financial Statements for Entergy Corporation and 144
Subsidiaries
London Electricity plc (Predecessor Company):
Report of Independent Accountants 201
Management's Financial Discussion and Analysis 202
Consolidated Statement of Operations For the Period from April 1, 206
1996 to January 31, 1997 and the Year Ended March 31, 1996
Consolidated Statement of Cash Flows For the Period from April 1, 207
1996 to January 31, 1997 and the Year Ended March 31, 1996
Consolidated Balance Sheet, March 31, 1996 208
Consolidated Statement of Changes in Shareholder's Equity for the 210
Period from April 1, 1996 to January 31, 1997 and the Year Ended
March 31, 1996
Selected Financial Data - Four-Year Comparison 211
Notes to Financial Statements 212
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
REPORT OF MANAGEMENT
The management of Entergy Corporation and subsidiaries has prepared
and is responsible for the financial statements and related financial
information included herein. The financial statements are based on
generally accepted accounting principles in the United States. Financial
information included elsewhere in this report is consistent with the
financial statements.
To meet its responsibilities with respect to financial information,
management maintains and enforces a system of internal accounting controls
that is designed to provide reasonable assurance, on a cost-effective
basis, as to the integrity, objectivity, and reliability of the financial
records, and as to the protection of assets. This system includes
communication through written policies and procedures, an employee Code of
Conduct, and an organizational structure that provides for appropriate
division of responsibility and the training of personnel. This system is
also tested by a comprehensive internal audit program.
The independent public accountants provide an objective assessment of
the degree to which management meets its responsibility for fairness of
financial reporting. They regularly evaluate the system of internal
accounting controls and perform such tests and other procedures as they
deem necessary to reach and express an opinion on the fairness of the
financial statements.
Management believes that these policies and procedures provide
reasonable assurance that its operations are carried out with a high
standard of business conduct.
/s/ Ed Lupberger /s/ Louis E. Buck
ED LUPBERGER LOUIS E. BUCK
Chairman of the Board and Chief Vice President, Chief Accounting
Executive Officer of Entergy Officer and Assistant Secretary
Corporation, Entergy Arkansas, (Principal Accounting Officer)
Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans,
and Entergy London
/s/ Donald C. Hintz
DONALD C. HINTZ
President and Chief Executive Officer of System Energy
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
AUDIT COMMITTEE CHAIRPERSON'S LETTER
The Entergy Corporation Board of Directors' Audit Committee is
comprised of five directors who are not officers of Entergy Corporation:
Dr. Paul W. Murrill, Chairperson, Lucie J. Fjeldstad, James R. Nichols,
Eugene H. Owen, and Bismark A. Steinhagen. The committee held three
meetings during 1997.
The Audit Committee oversees Entergy Corporation's financial reporting
process on behalf of the Board of Directors and provides reasonable
assurance to the Board that sufficient operating, accounting, and financial
controls are in existence and are adequately reviewed by programs of
internal and external audits.
The Audit Committee discussed with Entergy's internal auditors and the
independent public accountants (Coopers & Lybrand L.L.P.) the overall scope
and specific plans for their respective audits, as well as Entergy
Corporation's financial statements and the adequacy of Entergy
Corporation's internal controls. The committee met, together and
separately, with Entergy's internal auditors and independent public
accountants, without management present, to discuss the results of their
audits, their evaluation of Entergy Corporation's internal controls, and
the overall quality of Entergy Corporation's financial reporting. The
meetings were designed to facilitate and encourage private communication
between the committee and the internal auditors and independent public
accountants.
/s/ Dr. Paul W. Murrill
DR. PAUL W. MURRILL
Chairperson, Audit Committee
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Net cash flow from operations for Entergy, the domestic utility
companies and System Energy for the years ended December 31, 1997, 1996,
and 1995, and for Entergy London for the year ended December 31, 1997, was
as follows:
1997 1996 1995
(In Millions)
Entergy $1,725 $1,528 $1,504
Entergy Arkansas $ 434 $ 377 $ 338
Entergy Gulf States $ 466 $ 322 $ 401
Entergy Louisiana $ 341 $ 352 $ 385
Entergy Mississippi $ 159 $ 182 $ 185
Entergy New Orleans $ 49 $ 44 $ 99
System Energy $ 278 $ 287 $ 96
Entergy London $ 51 N/A N/A
The positive cash flow from operations for the domestic utility
companies 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; thus, there is no effect on net income. These
phase-in plans will continue to contribute to Entergy's cash position in
the immediate future. Specifically, the Grand Gulf 1 phase-in plans will
expire in September 1998 for Entergy Arkansas and Entergy Mississippi, and
in 2001 for Entergy New Orleans. Entergy Gulf States' phase-in plan for
River Bend expired in February 1998, and Entergy Louisiana's phase-in plan
for Waterford 3 expired in June 1997. Competitive growth businesses
contributed $104 million to Entergy Corporation's cash flow from operations
in 1997. In accordance with the purchase method of accounting, London
Electricity's results of operations are not included in Entergy Corporation
and Subsidiaries' Statements of Consolidated Cash Flows prior to February
1, 1997, the effective date of the acquisition of London Electricity.
Financing Sources
As discussed in Note 13, Entergy London acquired London Electricity
for $2.1 billion in February 1997. The acquisition was financed with $1.7
billion of debt that is non-recourse to Entergy Corporation, and $392
million of equity provided by Entergy Corporation from available cash and
borrowings under its $300 million line of credit. Entergy London
refinanced a portion of this debt during the fourth quarter of 1997 through
the issuance of $300 million of quarterly income preferred securities.
Subsequent to the refinancing, the debt is now an obligation of Entergy
UK Limited, an indirect, wholly-owned subsidiary of Entergy Corporation.
However, the obligation is reflected in the financial statements of Entergy
London, because the facility is guaranteed by Entergy London, Entergy UK
Limited's indirect, wholly-owned subsidiary. Entergy London recognizes
the interest expense associated with this debt in its financial statements,
with a credit to shareholder's equity for the same amount. This credit
to shareholder's equity offsets dividends as they are declared from Entergy
London to Entergy UK Limited. These dividends are the funding mechanism
for Entergy UK Limited to service this debt. Management intends to
declare future dividends from Entergy London to enable Entergy UK Limited
to continue to service this debt.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
London Electricity is Entergy London's sole investment and only asset.
Entergy London is therefore dependent upon dividends from London
Electricity for all of its cash flow. In addition to London Electricity's
cash flow from operations, Entergy London has other primary sources of
liquidity including London Electricity's several uncommitted credit lines
provided by banking institutions, and London Electricity's commercial paper
program. In addition, London Electricity intends to use availability under
existing facilities, or replacements thereof, to finance its remaining
payment of windfall profits taxes in December 1998, which will total
approximately $117 million (approximately BPS70 million).
Management believes that cash flow from operations, together with
Entergy London's existing sources of credit and the restructuring of its
credit facilities in November 1997, will result in sufficient financial
resources being available to meet Entergy London's projected capital needs
and other expenditure requirements for the foreseeable future. London
Electricity has represented to the Regulator, in connection with its PES
license, that it will use all reasonable endeavors to maintain an
investment grade rating on its long-term debt.
Entergy Mississippi issued a series of general and refunding mortgage
bonds in June 1997 totaling $65 million, the proceeds of which were used to
meet a scheduled July 1, 1997 debt maturity. Excluding the London
Electricity investment and the Entergy Mississippi bond issuance, cash from
operations, supplemented by cash on hand, was sufficient to meet
substantially all investing and financing requirements of the domestic
utility companies, System Energy, and Entergy London, including capital
expenditures, dividends, and debt/preferred stock maturities during 1997.
Entergy's domestic utility companies other than Entergy Mississippi
have been able to fund their capital requirements with cash from operations
as discussed above in "Cash Flow." Should additional cash be needed to
fund investments or to retire debt, the domestic utility companies and
System Energy each have the ability, subject to regulatory approval and
compliance with issuance tests, to issue debt or preferred securities to
meet such requirements. In addition, to the extent market conditions and
interest and dividend rates allow, the domestic utility companies, System
Energy, and Entergy London will continue to refinance and/or redeem higher
cost debt and preferred stock prior to maturity. See Note 10 for a
discussion of the refinancing by Entergy Louisiana. Entergy's domestic
utility companies and Entergy London may continue to establish special
purpose trusts or limited partnerships as financing subsidiaries for the
purpose of issuing quarterly income preferred securities, such as those
issued in 1996 by Entergy Louisiana Capital I and Entergy Arkansas Capital
I, and those issued in 1997 by Entergy Gulf States Capital I and Entergy
London Capital L.P. Entergy Corporation, the domestic utility companies,
System Energy, and Entergy London also have the ability to effect short-
term borrowings. See Notes 4, 5, 6, 7, and 9 for additional information on
Entergy's capital and refinancing requirements in 1998-2002 and available
lines of credit.
Financing Uses
Management believes that productive investment by Entergy is integral
to enhancing the long-term value of its common stock. Entergy has been
expanding its investments in business opportunities overseas as well as in
the United States. As of December 31, 1997, Entergy had acquired or
participated in foreign electric ventures in Australia, Argentina, Chile,
China, Pakistan, Peru, and the UK and had acquired several
telecommunications-based businesses in the United States. The ability of
Entergy Corporation to provide additional capital to exempt wholesale
generators or foreign utility companies currently is subject to the SEC's
regulations under PUHCA. Absent SEC approval, these regulations limit the
aggregate amount that Entergy may invest in foreign utility companies and
exempt wholesale generators to 50% of consolidated retained earnings at the
time an investment is made. As of November 1997, Entergy Corporation no
longer had capacity to make additional investments under these regulations
without SEC approval. Entergy has applied to the SEC to obtain additional
authority to make such investments, and is also exploring means of raising
capital for other foreign investments in a manner not inconsistent with
these regulations. As of December 31, 1997, Entergy Corporation had a net
investment of $1.3 billion in equity capital in competitive growth
businesses. See Note 13 for a discussion of Entergy London's acquisition
of London Electricity effective February 1, 1997.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
To make capital investments, fund its subsidiaries, and pay dividends,
Entergy Corporation will utilize internally generated funds, cash on hand,
funds available under its bank credit facilities, funds received from its
dividend reinvestment and stock purchase plan, and bank financings, as
required. See Note 5 for information regarding proceeds from the issuance
of common stock under Entergy Corporation's dividend reinvestment and stock
purchase plan during 1997. See Note 9 for a discussion of capital
requirements. Entergy Corporation receives funds through dividend payments
from its subsidiaries. During 1997, such dividend payments from
subsidiaries totaled $550.2 million. Entergy Gulf States resumed paying
common stock dividends in the third quarter of 1997. In 1997, Entergy
Corporation paid $438 million of cash dividends on its common stock.
Declarations of dividends on Entergy's common stock are made at the
discretion of its Board of Directors. See Note 8 for information on
dividend restrictions.
Entergy London's primary need for liquidity is to pay interest on its
debt, and management believes that it will receive sufficient dividends
from London Electricity to make such payments. Entergy London believes
that London Electricity will be able to distribute all cash flow generated
in excess of amounts necessary for London Electricity to conduct its
business in compliance with its PES License.
Entergy Corporation and Entergy Gulf States
See Notes 2 and 9 regarding River Bend and Cajun litigation. During
the fourth quarter of 1997, Entergy Gulf States established reserves of
$381 million ($227 million net of tax) for the probable effects of the
agreement in principle as discussed in Note 2. Final resolution of these
matters could negatively affect Entergy Gulf States' ability to obtain
financing, which in turn could affect Entergy Gulf States' liquidity and
ability to pay common stock dividends to Entergy Corporation. See Note 2
for information related to the proposed agreement in principle between the
parties to the Entergy Gulf States rate proceedings in Texas.
Entergy Corporation and System Energy
Under the Capital Funds Agreement, Entergy Corporation has agreed to
supply System Energy with 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. In addition, under supplements to the Capital Funds
Agreement assigning System Energy's rights thereunder as security for
specific debt of System Energy, Entergy Corporation has committed 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 consent of certain creditors.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Domestic Competition and Industry Challenges
The electric utility industry traditionally has operated as a
regulated monopoly in which there was little opportunity for direct
competition in the provision of electric service. The industry is now
undergoing a transition to an environment of increased retail and wholesale
competition. The causes of the movement toward competition are numerous
and complex. They include legislative and regulatory changes,
technological advances, consumer demands, relative cost and availability of
natural gas and other fuels, environmental regulations, and other factors.
The increasingly competitive environment presents opportunities to compete
for new customers, as well as the risk of loss of existing customers. The
following issues have been identified by Entergy as its major competitive
challenges.
Open Access Transmission
In response to FERC Order No. 888, which was issued in 1996 and
requires that all public utilities subject to FERC jurisdiction provide
comparable wholesale transmission access through the filing of a single
open access tariff, Entergy Services filed on behalf of the domestic
utility companies a request for clarification and rehearing of the
following four issues: (i) the special nature and treatment of stranded
nuclear decommissioning costs; (ii) the reciprocity rules applicable to
rural electric cooperatives; (iii) the functional unbundling requirements
for registered holding companies; and (iv) the nature of network service.
The request for rehearing remains pending.
FERC also issued Order No. 889 in 1996, prescribing the requirements
and procedures for the implementation and maintenance of an open access
same-time information system by each public utility. In addition, FERC
issued a notice of proposed rulemaking concerning capacity reservation
tariffs as the next phase of its efforts to promote wholesale competition.
In July 1996, Entergy Services filed an open access pro forma tariff on
behalf of the domestic utility companies.
In September 1996, FERC issued an order revising the original
requirement that open access same-time information service sites and
standards of conduct be in place for all transmission providers by November
1, 1996. FERC scheduled the operation of open access same-time information
service sites to begin on a test basis in December 1996, with full
commercial operation and compliance with the standards of conduct beginning
in January 1997. In January 1997, Entergy Services filed its standards of
conduct with FERC and an open access same-time information site was
established. In July 1997, Entergy Services filed its wholesale
transmission open access compliance tariff incorporating the requirements
of FERC Order No. 888-A.
Transition to Competition Filings
Entergy has initiated discussions with its state and local regulators
regarding an orderly transition to a more competitive market for
electricity. As discussed in more detail in Note 2, each of the domestic
utility companies made filings in 1996 or 1997 with their respective state
or local regulators concerning the transition to competition. These
filings called for the accelerated recovery of the companies' nuclear
investment and nuclear-related purchase obligations over a seven-year
period and for the protection of certain classes of ratepayers from
possibly unfairly bearing the burden of cost shifting which may result from
competition. The majority of the domestic utility companies' current net
investment in nuclear generation shown in Note 1 was included in the
proposals for accelerated recovery filed with state and local regulators.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Retail and Wholesale Rate Issues
The retail regulatory philosophy is shifting in some jurisdictions
from traditional cost-of-service regulation to incentive-rate regulation.
Incentive and performance-based rate plans encourage efficiencies and
productivity while permitting utilities and their customers to share in the
results. Entergy Mississippi and Entergy Louisiana have implemented
incentive-rate plans, although Entergy Louisiana's plan has now expired.
Several of the domestic utility companies have recently been ordered
to grant base rate reductions and have refunded or credited customers for
previous overcollections of rates. The continuing pattern of rate
reductions reflects both lower costs of service ordered by regulators and
the competitive environment in which the domestic utilities operate. See
Note 2 for additional discussion of rate reductions and incentive-rate
regulation, as well as a proposed System Energy rate increase.
Legislative Activity
Retail wheeling is the transmission and/or distribution by an electric
utility of energy produced by another entity over the utility's
transmission and distribution system to a retail customer in the electric
utility's area of service. California, Rhode Island, New Hampshire,
Massachusetts, Montana, Oklahoma, Illinois, and Pennsylvania, among others,
have begun the restructuring of the utility industry within their
respective states. Most other states have initiated studies of industry
restructuring. Included in many of these restructuring plans and studies
are provisions or proposals allowing utilities to have a reasonable
opportunity to recover investments in utility plant that have previously
been determined to be prudently incurred. However, some states have not
allowed full recovery of such investments. Within the areas served by the
domestic utility companies, formal proceedings to study retail
competition/industry restructuring are being conducted by the LPSC, the
MPSC, the PUCT, and the Council.
A number of bills have been introduced in the U.S. Congress calling
for deregulation of the electric power industry. Included among these are
some that would amend or repeal PUHCA and/or PURPA. These bills generally
have provisions that would give consumers the ability to choose their own
electricity service provider. The Energy and Power Subcommittee of the
Commerce Committee of the U.S. House of Representatives held hearings on
this issue in October 1997, at which it was agreed that a consensus
approach to electricity deregulation was needed. However, no agreement
has been reached as to a specific approach.
Entergy Gulf States was an active participant in discussions aimed at
developing legislation relating to electric utility industry restructuring
and competition in the Texas Legislature. However, no such legislation was
passed before the Legislature adjourned in June 1997. The legislature will
not reconvene until January 1999, by which time Entergy Gulf States expects
that the PUCT will have acted on the transition to competition filing of
Entergy Gulf States.
The Arkansas Senate has passed a resolution requesting a study of the
impact of electric utility industry competition on the citizens of
Arkansas, the electric utility industry, and the regulatory authority of
the APSC. This study, to be performed by a joint legislative committee of
the Arkansas General Assembly, began in December 1997, and is expected to
conclude prior to the 1999 legislative session.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
The SEC issued Rule 58 under PUHCA, which became effective on March
22, 1997, permitting registered public utility holding companies such as
Entergy to enter into an array of energy-related businesses for which
specific approval had previously been required. These businesses include,
among other things, management, operations and maintenance contracting for
energy-related facilities, energy efficiency contracting, and the sale and
servicing of a range of electric appliances and equipment. EPMC and
Entergy Holdings, Inc., wholly-owned subsidiaries of Entergy, now operate
pursuant to Rule 58. EPMC terminated its EWG status shortly after Rule 58
became effective.
Municipalization
In some areas of the country, municipalities whose residents are
served at retail by investor-owned utilities are exploring the possibility
of establishing new electric distribution systems, or extending existing
ones. In some cases, municipalities are also seeking new delivery points
in order to serve retail customers, especially large industrial customers,
that currently receive service from an investor-owned utility. Where
successful, the establishment of a municipal system or the acquisition by
a municipal system of a utility's customers could result in the utility's
inability to recover costs that it has incurred for the purpose of serving
those customers.
Industry Consolidation
Another factor in the transition to competition nationwide is the
continuing and accelerating trend of utility mergers and joint ventures.
A significant trend over the last several years has been the combination
of electric utilities and gas pipeline and/or distribution companies.
Such mergers and joint ventures for the same purpose are expected to
continue.
Functional Unbundling
An additional trend is the unbundling of traditional utility
functions. In some areas of the country, utilities have either sold or
are attempting to sell all or a substantial portion of their generation
assets and will become, in large part, suppliers of transmission and/or
distribution services only.
Effects of Alternate Energy Sources on Retail Electric Sales to Industrial
and Large Commercial Customers
Many industrial and large commercial customers of the domestic utility
companies have energy intensive needs. These customers are exploring
available energy alternatives such as fuel switching, cogeneration, self-
generation, production shifting, and efficiency measures in an effort to
reduce their energy costs. To the extent that customers avail themselves
of these options, the domestic utility companies may suffer a loss of load.
Recognizing the options that customers might pursue, the domestic
utility companies, in particular, Entergy Gulf States and Entergy
Louisiana, have negotiated electric service contracts with large industrial
and commercial customers for the purpose of retaining the load represented
by these customers. Electric service under such agreements may be provided
at tariffed rates lower than would otherwise be applicable. While the
results of operations of the domestic utility companies have not thus far
been materially adversely affected as a result of the negotiation of retail
electric service agreements with industrial and large commercial customers,
this has been due in large measure to the utilities' success in reducing
costs, overall load growth, increasing sales to all customer classes, and
the regulatory treatment accorded to negotiated electric service
agreements. In view of the likelihood of increased competition in the
electric utility business in the future, there can be no assurance that
at risk industrial and large commercial customers will continue to be
retained by the domestic utility companies.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
In 1995, Entergy Louisiana received separate notices from two large
industrial customers that they were proceeding with proposed cogeneration
projects for the purpose of fulfilling their future electric energy needs.
In 1997, net income decreased by approximately $6 million and sales
declined by 1,662 megawatt hours from the prior year, as a result of these
customers proceeding with their proposed cogeneration projects. These
customers will continue to purchase energy from Entergy Louisiana, but at a
reduced level.
Change in Contract with Steam Customer
In 1996, Entergy Gulf States entered into agreements concerning a
steam generating station that historically had been dedicated to providing
steam and cogenerated electricity for a large industrial customer. Under
these agreements, the generating facility was leased to the customer, but
Entergy Gulf States continues to operate the facility. The customer is
spending approximately $190 million to make major improvements to the
facility, including a new 150 MW gas turbine generator. As a result of
these agreements, which were entered into with the expectation that the
customer otherwise would terminate its contracts with Entergy Gulf States
and construct its own generating facilities, Entergy Gulf States' revenues
from this customer are being reduced by approximately $33 million annually
from the 1996 level of revenues, beginning in August 1997, and Entergy Gulf
States' net income is being reduced by approximately $15 million annually.
Revenue from this customer amounted to $44 million and $59 million in 1997
and 1996, respectively.
Domestic and Foreign Competitive Growth Businesses
Entergy Corporation seeks opportunities to expand its foreign
businesses and its domestic businesses that are not regulated by state and
local regulatory authorities. Such business ventures currently include
power development and operations and retail services related to the utility
business. Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -
LIQUIDITY AND CAPITAL RESOURCES" for a discussion of Entergy Corporation's
1997 investments in domestic and foreign nonregulated businesses. These
investments may involve a greater risk than domestically regulated utility
enterprises. In 1997, Entergy Corporation's competitive growth businesses
reduced consolidated net income by approximately $139 million principally
due to the impact of a windfall profits tax in the UK, which was partially
offset by a reduction in the UK corporation tax rate, as discussed in more
detail below in "Windfall Profits Tax". Excluding the impact of these
and other non-recurring items, the competitive growth businesses
contributed $51 million to consolidated net income during 1997.
In an effort to expand into new energy-related businesses, Entergy has
begun to commercialize the fiber optic telecommunications network that
connects its facilities and supports its internal business needs. Entergy
provides long-haul fiber optic capacity to major telecommunications
carriers which, in turn, market that service to third parties. The
Telecommunications Act of 1996 permits a company such as Entergy to market
such a service, subject to state and local regulatory approval. This law
contains an exemption from PUHCA that will permit registered utility
holding companies to form and capitalize subsidiaries to engage in
telephone, telecommunications, and information service businesses without
SEC approval. However, the law requires that such telecommunications
subsidiaries file for exemption from regulation with the Federal
Communications Commission, and that they not engage in transactions with
utility affiliates within their holding company systems or acquire utility
affiliates' rate-based property without state or local regulatory approval.
EPMC, which was created in 1995 to become a buyer and seller of
electric energy and generating fuels, operates pursuant to Rule 58 under
PUHCA. In February 1996, FERC approved sales of electricity by EPMC at
market-based rates. Such approval allows EPMC to provide wholesale
customers with a variety of services, including physical trading. An
application before the SEC seeking additional authority for EPMC to
purchase and sell derivative contracts relating to electricity, gas, and
fuels was approved in January 1998.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
On December 18, 1996, Entergy made a formal cash offer to acquire
London Electricity for $2.1 billion. London Electricity is an REC serving
approximately two million customers in the metropolitan area of London,
England. The offer was approved by authorities in the UK and was made
unconditional on February 7, 1997. Entergy subsequently gained control of
100% of the common shares of London Electricity. The acquisition was
financed with $1.7 billion of debt that is non-recourse to Entergy
Corporation, and $392 million of equity provided by Entergy Corporation
from available cash and borrowings under its $300 million line of credit,
which has since been refinanced (see Note 7). Entergy has accounted for
the transaction as a purchase and accordingly has included the results of
London Electricity in its consolidated results of operations effective
February 1, 1997.
Through its London Electricity acquisition, Entergy expects to gain
valuable experience in the deregulated UK electricity market, in
anticipation of the deregulation of the electricity market in the United
States. London Electricity has already experienced seven years of a
partially competitive supply environment and expects to be in a fully
competitive supply market beginning in late 1998. In conjunction with the
acquisition of London Electricity, Entergy established an international
retail operations group to coordinate retail electric operations in the UK,
Australia, and Argentina.
In September 1997, EPDC acquired KPL for $67 million. KPL owns land
in Southeast England and certain rights to build a power station. The
acquisition of KPL was financed by borrowings under a BPS50 million ($82
million) credit facility with an international bank, which has since been
increased to BPS100 million ($165 million). In early October 1997, EPDC
announced construction of a 770 MW combined cycle gas turbine merchant
power plant on the KPL site to be known as Damhead Creek. Construction is
scheduled to begin in April 1998, at an estimated cost of $625 million.
The target date for commercial operation is the second quarter of 2000.
Financing and other project requirements are currently in the final stages
of development
In December 1997, SCC, a wholly-owned subsidiary of EPDC, entered into
a BPS646 million ($1.07 billion) nonrecourse credit facility with an
international bank group for the construction of 1,200 MW gas-fired power
plant in Hull, England. The power plant will sell power into the UK power
pool at prices established by the market. SCC entered into a lump-sum
contract to build the power plant with a major international contractor.
SCC has also entered into a series of contracts including a long-term
ground lease for the site, a long-term gas supply agreement including take-
or-pay obligations, and a long-term power supply with the industrial host.
In connection with an equity contribution obligation to SCC, EPDC provided
a BPS48 million ($79 million) letter of credit under a BPS100 million ($165
million) revolving credit facility. Entergy Corporation has issued a $170
million guaranty of EPDC's obligations under the revolving credit facility.
The total cost of this project currently is estimated to be approximately
$875 million and the project is expected to be operational by January 2000.
In 1997, Entergy continued to expand and diversify its domestic and
foreign businesses. Such efforts included the formation of a joint venture
(Entergy Hyperion Telecommunications) to offer competitive local access
telephone services to business customers in the metropolitan areas of
Little Rock, Arkansas, Jackson, Mississippi, and Baton Rouge, Louisiana.
Entergy Nuclear, Inc., a wholly-owned subsidiary of Entergy Enterprises,
entered into an agreement to provide management services for initial
decommissioning activities (through September 30, 1998) at the Maine Yankee
nuclear plant, owned by the Maine Yankee Atomic Power Company, whose board
of directors announced in August 1997 the permanent closure of the plant.
Entergy also continued its expansion into the electronic security
service field in 1997 through the acquisition by Entergy Security Company
(a wholly-owned subsidiary of ETHC) of the Ranger American group of
companies, a leading provider of electronic security services in the
largest cities in Texas and in Atlanta, Georgia, which has approximately
140,000 customers and annual revenues of approximately $53 million. The
aggregate purchase price (comprised of Entergy common stock and cash) was
approximately $61 million.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
As a part of its efforts to reposition itself in the evolving
international power market, Entergy sold all or part of its interests in
various power development projects for proceeds of $64 million, realizing
after-tax gains of $17.6 million. Entergy Power Chile, S.A., an indirect
wholly-owned subsidiary of Entergy Power purchased a 25% interest in the
San Isidro project, a 370 MW gas-fired, combined cycle generating facility
under construction in Chile. Entergy also announced in 1997 that, through
a joint venture entered into by a subsidiary, it commenced construction of
a 24 MW cogeneration plant in Nantong, China.
Foreign Distribution and Supply
On April 1, 1995, 1996, and 1997 certain reductions in London
Electricity's allowed distribution revenues were made by the Regulator.
Such allowed distribution revenues were reduced by 14% and 11% on April 1,
1995 and April 1, 1996, respectively, following reviews by the Regulator.
On April 1, 1997, London Electricity's allowed distribution revenues were
further decreased by 3%, with further annual reductions of 3% to occur on
April 1, 1998 and 1999. London Electricity is pursuing a number of cost
efficiency initiatives in an attempt to partially offset the expected price
decreases. Such efficiencies will include voluntary early retirement
programs, work force reductions, and labor cost realignment, and are
expected to generate substantial cost savings when fully implemented by
fiscal year 2001. The one-time cost of such savings will be approximately
$58 million, which has been provided for by London Electricity.
At present, London Electricity has an exclusive right in its franchise
area to supply electricity to customers with demand of less than 100 KW.
In late 1998, this segment of the supply business will become open to
competition, subject to a six-month transition period. See Note 2 for
additional information related to expanded competition in the supply
business and London Electricity's expected expenditures in preparation for
full competition in supply by June 1999 and the Regulator's proposals
regarding recovery of such costs.
On July 1 in each of the years 1997 through 2000 certain adjustments
to Entergy's Australian subsidiary's (CitiPower's) allowed distribution
revenues have been made by CitiPower's regulator. Such distribution
revenues have been and will be adjusted by 1% less than the change in the
consumer price index for each of the respective years. CitiPower has
implemented certain cost efficiency and marketing initiatives to mitigate
the impact of such revenue adjustments.
At present, CitiPower has an exclusive right in its franchise area to
supply electricity to customers with annual usage of less than 750 MWH. In
July 1998 and January 2001, CitiPower customers with annual usage of
between 160 MWH to 750 MWH and less than 160 MWH, respectively, will become
open to supply business competition.
Retail prices for CitiPower non-franchise supply customers are subject
to competitive market forces and are not regulated except for network
tariffs, which are based on a maximum average charge incorporating annual
price changes of 1.5% less than the change in the consumer price index plus
full recovery of transmission charges. These controls will apply through
the year 2000.
The London Electricity and CitiPower supply businesses generally
involve entering into fixed price contracts to supply electricity to
customers who have become subject to competition. The electricity is
obtained primarily by purchases on a spot basis in which prices can be
volatile. London Electricity and CitiPower are exposed to risks arising
from differences between the fixed prices at which they sell electricity
and the fluctuating prices at which electricity is purchased unless such
exposure can be effectively hedged. This risk will be extended to
additional supply business customers as described above as they become
subject to competition.
To mitigate its exposure to volatility, London Electricity utilizes
contracts for differences ("CFDs") and power purchase contracts with
certain UK generators to fix the price of electricity for a contracted
quantity over a specific period of time. As of December 31, 1997, London
Electricity had outstanding CFDs and power purchase contracts for
approximately 40,000 GWH of electricity. These include a long term power
purchase contract with an affiliate, which is based on 27.5% of the
affiliate's capacity from its 1000 MW facility through the year 2010.
London Electricity's sales volumes were approximately 18,000 GWH for 1997.
Management's estimate of the fair value of London Electricity's CFDs
outstanding at December 31, 1997 is that fair value approximates contract
value.
In accordance with the debt covenants included in the financing
provisions of the CitiPower acquisition, CitiPower must hedge at least 80%
of its energy purchases. CitiPower's current strategy is to hedge
approximately 100% of its forecasted energy purchases through energy
trading swaps entered into with certain generators. At December 31, 1997
CitiPower has outstanding energy trading swaps totaling a notional amount
of 38,372 MW of average daily load of electricity. These contracts mature
through the year 2000. Management's estimate of the fair value of such
swaps outstanding at December 31, 1997 is a net liability of approximately
$86.1 million.
The potential exists for additional distribution price reductions in
both the UK and Australia. Cost efficiency initiatives may not result in
sufficient savings to offset price reductions. Price reductions are
mitigated by the inclusion of the general index for inflation in the
determination of allowed revenues.
Windfall Profits Tax
As a result of Parliamentary elections held on May 1, 1997, the Labour
Party gained control of the UK Government. On July 31, 1997, the British
government enacted a one-time "windfall profits tax" on privatized
industries, including regional electric utilities such as London
Electricity. London Electricity's windfall profits tax liability is
approximately BPS140 million (approximately $234 million), which will not
be deductible for UK corporation tax purposes. Payment of the tax is
required in two equal installments, the first of which was paid on December
1, 1997, and the second due on December 1, 1998.
The UK Government also decreased the UK corporation tax rate from 33%
to 31%, effective April 1, 1997. In accordance with SFAS 109, "Accounting
for Income Taxes", this reduction resulted in a one-time reduction in
income tax expense of approximately BPS38 million (approximately $65
million).The liability for the windfall profits tax (with a corresponding
increase in income tax expense) and the reduction in London Electricity's
deferred income tax liability (with a corresponding reduction in income tax
expense) were recorded in July 1997.
Waterford 3
On January 6, 1997, Waterford 3 received from the NRC its SALP report
for the period April 29, 1995 through November 30, 1996. During this
period, observed performance declined from the previous SALP report, and
three of the four functional areas received lower ratings. Waterford 3
personnel are meeting with NRC personnel periodically, and significant
Waterford 3 management changes have been effected in order to address these
matters. Additionally, Waterford 3 has instituted a multi-year program to
improve performance and is incurring additional costs in doing so.
A scheduled 45-day refueling outage for the Waterford 3 nuclear plant
began on April 12, 1997. Additional work and two minor incidents caused
the outage to be extended from May 27 to mid-June. On May 28, 1997, a
start-up transformer at Waterford 3 failed due to an internal fault. A
replacement transformer was located and shipped to Waterford 3, where
certain plant configuration changes were made to facilitate its
installation. After installation of the replacement transformer, the
plant was restarted on July 29, 1997.
Cajun - River Bend
On October 7, 1997, the RUS elected not to become the transferee of
Cajun's 30% interest in River Bend. Accordingly, under the terms of the
Cajun Settlement, Cajun's interest in River Bend was transferred by Cajun's
Trustee in Bankruptcy to Entergy Gulf States on December 23, 1997. As a
result, Entergy Gulf States recorded this 30% interest at $139 million
based on management's estimate of the fair value of the asset at the time
of transfer. Entergy Gulf States recorded a corresponding gain of $139
million in its results of operations in 1997 to reflect this transfer.
This portion of River Bend will not be subject to cost of service
regulation. In connection with the transfer, Cajun established a trust
fund in the amount of $132 million to satisfy its obligation for
decommissioning its 30% share of the plant. See Note 9 for additional
information.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Labor Agreements
In April 1997, Entergy Gulf States and a union representing 1,000
employees in Texas and Louisiana signed a two-year labor contract (expiring
August 14, 1999). The contract stipulates that no layoffs will occur in
the next two years and wages will be increased 3% per year in 1997 and
1998.
In July 1997, Entergy Operations and the union representing 317
employees at River Bend and Entergy Mississippi and the union representing
400 of its employees signed two-year labor contracts for the period from
October 1998 to October 2000 which stipulate that no layoffs of covered
employees will occur over the next two years and that wages will be
increased 3% in each of the next two years.
Deregulated Utility Operations
Entergy Gulf States discontinued regulatory accounting principles for
its wholesale jurisdiction and steam department and the Louisiana
deregulated portion of River Bend during 1989 and 1991, respectively. The
operating income from these operations was $19.7 million in 1997, $13.9
million in 1996, and $1.2 million in 1995.
The increase in 1997 net income from deregulated operations was
primarily due to decreased steam department expenses, partially offset by
reduced wholesale jurisdiction revenues. The increase in 1996 net income
from such operations was principally due to increased revenues, partially
offset by increased depreciation. The future impact of the deregulated
utility operations on Entergy and Entergy Gulf States' results of
operations and financial position will depend on future operating costs,
the efficiency and availability of generating units, the future market for
energy over the remaining life of the assets, the operation of the steam
generating station leased to a large industrial customer described above in
"Change in Contract with Steam Customer", and the recoverability through
nonregulated power sales of the $139 million of net book value of the 30%
of River Bend previously owned by Cajun. See "Cajun - River Bend" above.
Property Tax Exemptions
Waterford 3's local property tax exemptions expired in December 1995.
In a March 1996 LPSC order, Entergy Louisiana was permitted to defer
recovery of the estimated Waterford 3 property tax from January 1996
through June 1996. The order allowed the recovery of the property tax
beginning in July 1996 and for recovery, from July 1996 through June 1997,
of the related deferral. Entergy Louisiana paid property taxes of $18.9
million on Waterford 3 in 1997.
River Bend's local property tax exemptions expired in December 1996.
The 1997 property tax was approximately $12.9 million. The portion of the
property tax related to the Texas jurisdiction was included in the rate
proceeding filed with the PUCT in November 1996 and in the fourth required
Merger-related earnings review filed with the LPSC in May 1997.
Accounting Issues
Continued Application of SFAS 71
The electric utility industry is moving toward a combination of
competition and a modified regulatory environment. The domestic utility
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 domestic utility 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 for the foreseeable
future.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
In the event that all or a portion of a utility's operations cease to
meet those criteria for various reasons, including deregulation, a change
in the method of regulation, or a change in the competitive environment
for the utility's regulated services, the utility is required to
discontinue application of SFAS 71 for the relevant portion of its
operations by eliminating from the balance sheet the effects of any
actions of regulators recorded as regulatory assets and liabilities.
Discontinuation of the application of SFAS 71 could have a material
adverse impact on Entergy's financial statements.
The SEC has expressed concern regarding the continued applicability of
SFAS 71 to the financial statements of electric utilities that have been
ordered by regulators to adopt transition to competition plans or are in
the process of participating with the state legislatures and/or regulators
in the development of such plans. While such plans may call for rate caps
or decreases, they generally provide for recovery of investments in
uneconomic or noncompetitive generating plants and other regulatory assets
(together defined as stranded costs). The SEC is concerned that portions
of entities subject to such plans may not meet the criteria for the
continued application of SFAS 71.
During 1997, EITF 97-4: "Deregulation of the Pricing of Electricity -
Issues Related to the Application of FASB Statements No. 71 and 101" was
issued, specifying that SFAS 71 should be discontinued at a date no later
than when the details of the transition to competition plan for all or a
portion of the entity subject to such plan are known. However, other
factors could cause the discontinuation of SFAS 71 before that date.
Additionally, EITF 97-4 promulgates that regulatory assets to be recovered
through cash flows derived from another portion of the entity which
continues to apply SFAS 71 should not be written off; rather, they should
be considered regulatory assets of the segment which will continue to apply
SFAS 71.
The domestic utility companies' and System Energy's financial
statements continue to apply SFAS 71 for their regulated operations, except
for those portions of Entergy Gulf States' business described in
"Deregulated Utility Operations" above. Although discussions with
regulatory authorities regarding retail competition have occurred and are
expected to continue, definitive outcomes have not yet been determined;
therefore, the regulated operations continue to apply SFAS 71. See Note 1
for additional discussion of Entergy's application of SFAS 71.
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 9 for a discussion of proposed changes
in the accounting for decommissioning/closure costs and the potential
impact of these changes on Entergy.
Year 2000 Issues
Like many companies, Entergy is currently evaluating its computer
software, databases, embedded microprocessors, suppliers, and other
constituent relationships to determine the extent to which modifications
are required to prevent problems related to the year 2000, and the
resources which will be required to make such modifications. These
problems could result in malfunctions in certain software applications,
databases, computer equipment, and supplier performance with respect to
dates on or after January 1, 2000, unless corrected. Entergy has been
working on the above mentioned modifications and contingencies throughout
most of 1997, and will continue these efforts throughout 1998 and into
1999. Preliminary estimates of the total costs to be incurred by
Entergy's global enterprises in 1998 through mid-2000 are approximately
$95 million. Maintenance or modification costs will be expensed as
incurred, while the costs of new software will be capitalized and
amortized over the software's useful life in accordance with EITF 96-14:
"Accounting for the Costs Associated with Modifying Computer Software
for the Year 2000."
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Market Risks
Entergy uses derivative instruments to manage the interest rate risk
associated with certain of its variable rate credit facilities, the
currency exchange rate risk for interest payments associated with its
Entergy London Perpetual Junior Subordinated Debentures (Debentures), and
the commodity price risk associated with its foreign electricity supply and
domestic energy marketing businesses.
Entergy uses interest rate swaps to reduce the impact of interest rate
changes on its CitiPower and Entergy London variable rate credit
facilities. The interest rate swap agreements involve the exchange of
floating rate interest payments for fixed rate interest payments over the
life of the agreements. As of December 31, 1997, 77% of the outstanding
variable interest rate borrowings on these credit facilities were converted
to fixed interest rates through interest rate swaps. The potential loss in
fair value from these positions resulting from a hypothetical 10% adverse
movement in base interest rates is estimated at $29 million as of December
31, 1997. See Note 7 for further discussion of these swaps.
Entergy London's cash flows are predominately denominated in BPS.
Entergy London has entered a U.S. dollar denominated obligation through
issuance of the Perpetual Junior Subordinate Debentures (Debentures). To
hedge currency exposure on the Debentures, Entergy London has entered
foreign currency swap agreements to fix the British pound sterling
equivalent which will be required to service interest on the Debentures for
the next seven years. See Note 6 for further discussion of these swaps.
Entergy's UK and Australian electricity supply businesses utilize
fixed price contracts to supply electricity to their customers. The
electricity is obtained primarily by purchases from the spot market.
Because the price of electricity purchased from the market can be volatile,
Entergy's UK and Australian electricity supply businesses are exposed to
risks arising from differences between the fixed prices at which they sell
electricity and the fluctuating prices at which they purchase electricity.
To mitigate exposure to volatility, Entergy's UK and Australian electricity
supply businesses utilize contracts for differences (CFDs) and energy
trading swaps to fix the price of their electricity purchases. The
potential loss in fair value of these CFDs and energy trading swaps
resulting from a hypothetical 10% adverse movement in future electricity
prices is estimated at $103 million. Management, however, believes that
any loss actually realized would be substantially offset by the effects of
electricity price movements on the respective underlying hedged
electricity supply contracts. See Note 9 for further discussion of the
CFDs and energy trading swaps.
Entergy's domestic energy and natural gas marketing business enters
into sales and purchases of electricity and natural gas for delivery up to
twelve months into the future. Because the market prices of electricity
and natural gas can be volatile, Entergy's domestic energy and natural gas
marketing business is exposed to risk arising from differences between the
fixed prices in its commitments and fluctuating market prices. To mitigate
its exposure, Entergy's domestic energy and natural gas marketing business
enters into electricity and natural gas futures and option contracts. This
business utilizes a value-at-risk model to assess the market risk of its
derivative financial instruments. Value-at-risk represents the potential
losses for an instrument or portfolio from adverse changes in market
factors for a specified time period and confidence level. The value-at-
risk was estimated using historical simulation calculated on a daily basis
over a thirty-day period with a 95% confidence level and a holding period
of one business day. Based on these assumptions, the business's
value-at-risk as of December 31, 1997 was not material to Entergy.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Management's calculation of value-at-risk exposure represents an
estimate of reasonably possible net losses that would be recognized on its
portfolio of derivative financial instruments, assuming hypothetical
movements in future market rates, and is not necessarily indicative of
actual future results. It does not represent the maximum possible loss or
an expected loss that may occur, because actual future gains and losses
will differ from those estimated, based upon actual fluctuations in market
rates, operating exposures, and the timing thereof, and changes in the
portfolio of derivative financial instruments during the year.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Corporation
We have audited the accompanying consolidated balance sheets of
Entergy Corporation and Subsidiaries as of December 31, 1997 and 1996, and
the related statements of consolidated income, retained earnings and paid
in capital and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Entergy Corporation and Subsidiaries as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, at
January 1, 1996 the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of". Also, as discussed in Note 1 to
the consolidated financial statements, in 1996, one of the Corporation's
subsidiaries changed its method of accounting for incremental nuclear plant
outage maintenance costs.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
On February 7, 1997, Entergy Corporation, through its wholly-owned
subsidiary, Entergy London, made unconditional its offer to acquire 100%
ownership of London Electricity. In accordance with the purchase method of
accounting, the results of operations for 1996 and 1995 of Entergy
Corporation and Subsidiaries do not include London Electricity's results of
operations. Consolidated net income for 1997 reflects London Electricity's
results subsequent to February 1, 1997. See Note 13 for additional
information regarding London Electricity.
On January 5, 1996, Entergy Corporation finalized its acquisition of
CitiPower. In accordance with the purchase method of accounting, the
results of operations for 1995 of Entergy Corporation and Subsidiaries do
not include CitiPower's results of operations.
Net Income
Consolidated net income decreased in 1997 primarily due to the
recording of a one-time windfall profits tax at Entergy London, a reserve
for regulatory adjustments at Entergy Gulf States, the write-off of the
radioactive waste facility deferrals at Entergy Arkansas, Entergy Gulf
States, and Entergy Louisiana, and the reversal of the Cajun-River Bend
litigation accrual at Entergy Gulf States in September 1996. The decrease
in net income was partially offset by the one-time write-off of River Bend
rate deferrals pursuant to SFAS 121 at Entergy Gulf States in January 1996,
by the 1997 one-time reduction in income tax expense for London Electricity
due to a reduction in the UK corporation tax rate from 33% to 31%, and by
the Cajun litigation settlement at Entergy Gulf States in December 1997.
Excluding these items, net income would have decreased 8% due to a decrease
in the earnings from domestic regulated operations offset by increased
earnings from competitive growth businesses, primarily London Electricity.
Consolidated net income decreased in 1996 primarily due to the $174
million net of tax write-off of River Bend rate deferrals pursuant to SFAS
121 and the one-time recording in 1995 of the cumulative effect of the
change in accounting method for incremental nuclear refueling outage
maintenance costs at Entergy Arkansas. The effect of these items was
partially offset by the reversal of a Cajun-River Bend litigation accrual
at Entergy Gulf States. Excluding these items, net income would have
increased 17% due to decreased other operation and maintenance expenses for
domestic regulated operations as a result of restructuring programs and
ongoing efficiency improvement programs throughout Entergy.
Significant factors affecting the results of operations and causing
variances between the years 1997 and 1996, and between the years 1996 and
1995, are discussed under "Revenues and Sales", "Expenses", and "Other"
below.
Revenues and Sales
See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following the
financial statements, for information on operating revenues by source and
KWH sales.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The changes in electric operating revenues for Entergy's domestic
utility companies for the twelve months ended December 31, 1997 and 1996
are as follows:
Increase/(Decrease)
Description 1997 1996
(In Millions)
Change in base revenues ($189.1) ($117.5)
Rate riders (3.6) 1.8
Fuel cost recovery 90.1 382.3
Sales volume/weather 31.3 108.0
Other revenue (including unbilled) 147.3 (49.3)
Sales for resale (16.6) 37.6
----- ------
Total $59.4 $362.9
===== ======
Electric operating revenues for Entergy's domestic utility companies
increased slightly in 1997 as a result of increased other revenues, fuel
adjustment revenues, which do not affect net income, and higher sales
volume/weather. These increases were partially offset by a decrease in
base revenues and sales for resale to non-associated utilities. Other
revenue increased due to the gain on the Cajun Settlement for Cajun's 30%
interest in the property associated with River Bend. Fuel adjustment
revenues increased in 1997 due to a PUCT order that approved recovery of
$18.5 million of previously under-recovered fuel expenses by Entergy Gulf
States. Sales volume/weather increased primarily due to an increase in
sales to industrial customers, particularly, certain cogeneration customers
who purchased replacement electricity from Entergy Gulf States offset by a
decrease due to milder weather in 1997. Base rate revenues decreased
primarily due to the reserve for regulatory adjustments at Entergy Gulf
States, rate reductions for Louisiana retail customers, aggressive pricing
strategies for targeted customer segments, and a change in sales mix from
residential and commercial customers to industrial customers at Entergy
Gulf States. Sales for resale to non-associated utilities decreased due to
changes in generation requirements and availability among the domestic
utility companies, primarily Entergy Arkansas and Entergy Gulf States.
During the fourth quarter of 1997, Entergy Gulf States established reserves
for potential regulatory adjustments based on management's estimates of the
financial effect of potential adverse rulings in connection with the River
Bend plant-related costs and pending rate proceedings in Texas. See Note 2
for further discussion of the PUCT order related to under-recovered fuel
expenses, the River Bend plant-related costs, and other pending rate
proceedings.
Electric operating revenues increased in 1996 as a result of higher
fuel adjustment revenues, which do not affect net income, and higher sales
volume, partially offset by rate reductions at the domestic utility
companies. The increase in sales volume was primarily the result of
increases in customers and in customer usage.
Gas operating revenues increased in 1996 due to higher unit purchase
prices for gas purchased for resale and colder than normal weather in the
first quarter of 1996.
Competitive growth business revenues increased by $2.3 billion in 1997
primarily due to the February 1997 acquisition of London Electricity by
Entergy London. London Electricity generated revenues of $1.8 billion
during the eleven months it is included in 1997 results of operations.
Also contributing to the increase in competitive growth business revenues
was an increase in revenue at EPMC of $427 million. After obtaining the
appropriate regulatory and board approvals, EPMC began trading in late May
1996. EPMC's increased revenues in 1997 are primarily due to full year of
trading in 1997 as compared to six months in 1996 coupled with an
aggressive marketing effort in 1997. These increases were offset by
increased power purchased for resale as discussed below. The increase of
$501 million in competitive growth business revenues in 1996 was due
primarily to the acquisition of CitiPower.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Expenses
Operating expenses for 1997 include Entergy London's operating
expenses of $1.7 billion for the year ended December 31, 1997, which were
not included in the prior year's financial statements. Operating expenses,
excluding Entergy London, increased primarily due to increases in nuclear
refueling outage expenses, depreciation, amortization, and decommissioning
expenses, increases in the amortization of rate deferrals, and increases in
power purchased for resale by EPMC. These increases in operating expenses
were partially offset by a decrease in other operation and maintenance
expenses. The increase in purchased power is primarily the result of a
higher level of power purchased for resale by EPMC. The increase in
nuclear refueling outage expenses is primarily due to the amortization of
previously deferred November 1996 outage expenses at System Energy, which
are now being amortized over an 18-month period that began in December
1996. Prior to this outage, such costs were expensed as incurred and no
such expenses were incurred in 1996. The increase in depreciation,
amortization, and decommissioning is primarily due to the reduction of the
regulatory asset established at System Energy to defer the depreciation
associated with the sale and leaseback in 1989 of a portion of Grand Gulf
1. An increase in plant additions and improvements also contributed to the
increase in depreciation, amortization, and decommissioning. The increase
in rate deferral amortization is primarily due to greater Grand Gulf 1 rate
deferral amortization at Entergy Arkansas and Entergy New Orleans, as
prescribed in the Grand Gulf 1 rate phase-in plan and, for Entergy
Arkansas, the December 1997 APSC Stipulation and Settlement Agreements.
The decrease in other operation and maintenance expenses was primarily due
to the Cajun litigation settlement at Entergy Gulf States in December 1997.
This decrease was partially offset by the write-off of the radioactive
waste facility deferrals at Entergy Arkansas, Entergy Gulf States, and
Entergy Louisiana.
Operating expenses for 1996 include the operating expenses of
CitiPower, which were not included in the 1995 financial statements.
Excluding the operating expenses of CitiPower, Entergy's operating expenses
increased in 1996. The following discussion excludes the impact of the
acquisition of CitiPower. In 1996, fuel and purchased power expenses
increased as a result of higher fuel costs and an increase in sales volume.
Other operation and maintenance expenses decreased in 1996 due to lower
payroll-related expenses, resulting from restructuring programs in addition
to ongoing operating efficiency improvement programs throughout Entergy.
Other regulatory credits reducing operating expenses in 1996 represent the
deferral of Waterford 3 local property taxes and the deferral of a portion
of the proposed System Energy rate increase at Entergy Mississippi and
Entergy New Orleans. Nuclear refueling outage expenses decreased primarily
due to the effect of deferring the nuclear refueling outage expenses at
Grand Gulf 1 in the fourth quarter of 1996 rather than recognizing those
expenses as incurred. The majority of 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.
Other
Other income decreased in 1997 primarily due to the reserve for
regulatory adjustments at Entergy Gulf States, offset by interest income on
the Cajun Settlement in December 1997, the write-off of River Bend rate
deferrals pursuant to SFAS 121 at Entergy Gulf States in January 1996 and
the Cajun litigation reversal in 1996.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other income decreased in 1996 as a result of the write-off of River
Bend rate deferrals pursuant to SFAS 121, and a decrease in Grand Gulf 1
carrying charges at Entergy Arkansas due to a decline in the deferral
balance, partially offset by Entergy Gulf States' reversal of a Cajun-River
Bend litigation accrual. Interest on long-term debt, excluding Entergy
London, decreased in 1997 due primarily to ongoing retirement and
refinancing of higher cost debt. Distributions on preferred securities of
subsidiaries increased due to the issuance of Cumulative Income Preferred
Securities at Entergy Arkansas in August 1996, Entergy Louisiana in July
1996, at Entergy Gulf States in January 1997, and Entergy London in
November 1997.
Excluding CitiPower, interest on long-term debt decreased in 1996 due
primarily to ongoing retirement and refinancing of higher cost debt.
Borrowings by Entergy Corporation from a $300 million line of credit
related to the CitiPower investment contributed to the increase in other
interest-net in 1996.
Preferred dividend requirements decreased in 1997 and 1996 due to
stock redemption activities.
The effective income tax rates for 1997, 1996, and 1995 were 61.0%,
46.2%, and 37.5% respectively. The effective income tax rate was higher in
1997 primarily due to the one-time windfall profits tax at Entergy London
in 1997 and the tax effects of the Cajun litigation settlement and the 1996
SFAS 121 write-off at Entergy Gulf States, which included AFUDC which was
originally recorded net of its related income tax benefits. In 1996, the
effective income tax rate increased primarily due to higher state income
taxes, depreciation related taxes, and the SFAS 121 write-off at Entergy
Gulf States. For a further discussion of income taxes, see Note 3.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Years Ended December 31,
1997 1996 1995
(In Thousands, Except Share Data)
<S> <C> <C> <C>
Operating Revenues:
Domestic electric $6,538,831 $6,450,940 $6,088,018
Natural gas 137,345 134,456 103,992
Steam products 43,664 59,143 49,295
Competitive growth businesses 2,841,881 533,118 31,767
---------- ---------- ----------
Total 9,561,721 7,177,657 6,273,072
---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 1,677,041 1,635,885 1,395,889
Purchased power 2,318,811 704,744 356,596
Nuclear refueling outage expenses 73,857 55,148 84,972
Other operation and maintenance 1,886,149 1,577,383 1,528,351
Depreciation, amortization, and decommissioning 980,008 790,948 695,865
Taxes other than income taxes 365,439 353,270 300,120
Other regulatory charges (credits) (18,545) (47,542) 29,311
Amortization of rate deferrals 421,803 414,969 378,776
---------- ---------- ----------
Total 7,704,563 5,484,805 4,769,880
---------- ---------- ----------
Operating Income 1,857,158 1,692,852 1,503,192
---------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 10,057 9,951 9,629
Write-off of River Bend rate deferrals - (194,498) -
Miscellaneous - net (232,703) 123,452 45,127
---------- ---------- ----------
Total (222,646) (61,095) 54,756
---------- ---------- ----------
Interest Charges:
Interest on long-term debt 797,266 674,532 633,851
Other interest - net 51,624 49,053 33,749
Distributions on preferred securities of subsidiaries 21,319 4,797 -
Allowance for borrowed funds used
during construction (7,937) (8,347) (8,368)
---------- ---------- ----------
Total 862,272 720,035 659,232
---------- ---------- ----------
Income Before Income Taxes 772,240 911,722 898,716
Income Taxes 471,341 421,159 336,182
---------- ---------- ----------
Income before the Cumulative Effect
of Accounting Changes 300,899 490,563 562,534
Cumulative Effect of Accounting
Changes (net of income taxes) - - 35,415
---------- ---------- ----------
Net Income 300,899 490,563 597,949
Preferred and Preference Dividend Requirements of
Subsidiaries and Other 53,216 70,536 77,969
---------- ---------- ----------
Earnings Applicable to Common Stock $247,683 $420,027 $519,980
========== ========== ==========
Earnings per average common share before
cumulative effect of accounting changes:
Basic and diluted $1.03 $1.83 $2.13
Earnings per average common share:
Basic and diluted $1.03 $1.83 $2.28
Dividends declared per common share $1.80 $1.80 $1.80
Average number of common shares outstanding:
Basic 240,207,539 229,084,241 227,669,970
Diluted 240,297,842 229,175,392 227,729,975
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $300,899 $490,563 $597,949
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)
Gain on Cajun Settlement (246,022) - -
Reserve for regulatory adjustments 381,285 - -
Amortization of rate deferrals 421,803 414,969 378,776
Other regulatory charges (credits) (18,545) (47,542) 29,311
Depreciation, amortization, and decommissioning 980,008 790,948 695,865
Deferred income taxes and investment tax credits (252,955) 76,920 (31,006)
Allowance for equity funds used during construction (10,057) (9,951) (9,629)
Changes in working capital:
Receivables (99,411) (30,322) (30,550)
Fuel inventory 20,272 (17,220) (28,956)
Accounts payable 181,243 4,011 (19,124)
Taxes accrued 143,151 (27,488) 115,250
Interest accrued (9,849) 7,176 (194)
Other working capital accounts (130,715) (121,692) (85,454)
Changes in other regulatory assets 28,016 (85,051) (3,876)
Decommissioning trust contributions and realized change in trust (68,139) (52,204) (37,756)
assets
Proceeds from settlement of Cajun litigation 102,299 - -
Other 1,349 (59,566) (31,509)
---------- ---------- ----------
Net cash flow provided by operating activities 1,724,632 1,528,049 1,503,682
---------- ---------- ----------
Investing Activities:
Construction/capital expenditures (847,223) (571,890) (618,436)
Allowance for equity funds used during construction 10,057 9,951 9,629
Nuclear fuel purchases (89,237) (123,929) (207,501)
Proceeds from sale/leaseback of nuclear fuel 144,442 109,980 226,607
Acquisition of London Electricity, net of cash acquired (1,951,701) - -
Acquisition of CitiPower - (1,156,112) -
Acquisition of security companies (87,669) (83,000) -
Investment in other nonregulated/nonutility properties 1,322 - (172,814)
Proceeds from sale of Hub Power and Transener stock 54,153 26,955 -
Proceeds from sale of Independence 2 - 39,398 -
Other (17,288) (25,710) (28,982)
---------- ---------- ----------
Net cash flow used in investing activities (2,783,144) (1,774,357) (791,497)
---------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Financing Activities
Proceeds from the issuance of:
General and refunding mortgage bonds 64,827 39,608 109,285
First mortgage bonds 129,564 431,906 -
Bank notes and other long-term debt 1,852,891 1,066,858 273,542
Preferred securities of subsidiary trusts and partnership 382,323 125,963 -
Common stock 305,379 118,087 -
Retirement of:
First mortgage bonds (402,692) (821,575) (225,800)
General and refunding mortgage bonds (7,622) (56,000) (69,200)
Other long-term debt (341,355) (145,110) (221,043)
Redemption of preferred stock (124,367) (157,503) (46,564)
Changes in short-term borrowings - net 142,025 (24,981) (126,200)
Preferred stock dividends paid (51,270) (70,536) (77,969)
Common stock dividends paid (438,183) (405,346) (408,553)
---------- ---------- ----------
Net cash flow provided by (used in) financing activities 1,511,520 101,371 (792,502)
---------- ---------- ----------
Effect of exchange rates on cash and cash equivalents (11,164) 50 -
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 441,844 (144,887) (80,317)
Cash and cash equivalents at beginning of period 388,703 533,590 613,907
---------- ---------- ----------
Cash and cash equivalents at end of period $830,547 $388,703 $533,590
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $858,871 $677,535 $626,531
Income taxes $390,238 $373,247 $285,738
Noncash investing and financing activities:
Capital lease obligations incurred - $16,358 -
Change in unrealized appreciation of
decommissioning trust assets $30,951 $7,803 $16,614
Acquisition of nuclear fuel - $47,695 -
Treasury shares issued to acquire Ranger American $21,464 - -
Net assets acquired from Cajun settlement $319,056 - -
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $85,067 $34,807
Temporary cash investments - at cost,
which approximates market 700,431 346,782
Special deposits 45,049 7,114
----------- -----------
Total cash and cash equivalents 830,547 388,703
Notes receivable 8,157 1,384
Accounts receivable:
Customer (less allowance for doubtful accounts of
$31.7 million in 1997 and $9.2 million in 1996) 458,085 324,687
Other 225,523 99,066
Accrued unbilled revenues 580,194 351,429
Deferred fuel 150,596 122,184
Fuel inventory - at average cost 119,331 139,603
Materials and supplies - at average cost 367,870 339,622
Rate deferrals 259,628 444,543
Prepayments and other 171,391 151,312
----------- -----------
Total 3,171,322 2,362,533
----------- -----------
Other Property and Investments:
Decommissioning trust funds 589,050 357,962
Non-regulated investments 568,951 513,058
Other 225,818 59,053
----------- -----------
Total 1,383,819 930,073
----------- -----------
Utility Plant:
Electric 25,310,122 22,739,797
Plant acquisition adjustment - Entergy Gulf States 439,160 455,425
Electric plant under leases 674,483 679,991
Property under capital leases - electric 134,278 147,277
Natural gas 169,964 168,143
Steam products 82,289 81,743
Construction work in progress 565,667 401,676
Nuclear fuel under capital leases 269,011 250,651
Nuclear fuel 72,875 112,625
----------- -----------
Total 27,717,849 25,037,328
Less - accumulated depreciation and amortization 9,585,021 8,866,764
----------- -----------
Utility plant - net 18,132,828 16,170,564
----------- -----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 162,602 399,493
SFAS 109 regulatory asset - net 1,174,187 1,196,041
Unamortized loss on reacquired debt 196,891 217,664
Other regulatory assets 466,780 477,942
Long-term receivables 36,984 216,082
CitiPower license (net of amortization of $25.6 million in 1997
and $15.6 million in 1996) 486,153 606,214
London Electricity license (net of $31.1 million of amortization) 1,327,312 -
Other 461,822 379,419
----------- -----------
Total 4,312,731 3,492,855
----------- -----------
TOTAL $27,000,700 $22,956,025
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $390,674 $345,620
Notes payable 428,964 20,686
Accounts payable 915,800 554,558
Customer deposits 178,162 155,534
Taxes accrued 359,996 180,340
Accumulated deferred income taxes 56,524 78,010
Interest accrued 214,763 203,425
Dividends declared 8,166 8,950
Obligations under capital leases 167,700 151,287
Other 81,303 184,157
----------- -----------
Total 2,802,052 1,882,567
----------- -----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 4,567,052 3,760,491
Accumulated deferred investment tax credits 587,781 607,641
Obligations under capital leases 236,000 247,360
Other 1,857,514 1,298,306
----------- -----------
Total 7,248,347 5,913,798
----------- -----------
Long-term debt 9,068,325 7,590,804
Subsidiaries' preferred stock with sinking fund 185,005 216,986
Subsidiary's preference stock 150,000 150,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts holding
solely junior subordinated deferrable debentures 215,000 130,000
Company-obligated redeemable preferred securities of subsidiary
partnership holding solely junior subordinated deferrable debentures 300,000 -
Shareholders' Equity:
Subsidiaries' preferred stock without sinking fund 338,455 430,955
Common stock, $.01 par value, authorized 500,000,000
shares; issued 246,149,198 shares in 1997 and 234,456,457
shares in 1996 2,461 2,345
Paid-in capital 4,613,572 4,320,591
Retained earnings 2,157,912 2,341,703
Cumulative foreign currency translation adjustment (69,817) 21,725
Less - treasury stock (306,852 shares in 1997 and
1,496,118 shares in 1996) 10,612 45,449
----------- -----------
Total 7,031,971 7,071,870
----------- -----------
Commitments and Contingencies (Notes 2, 9, and 10)
TOTAL $27,000,700 $22,956,025
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS AND
PAID-IN CAPITAL
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $2,341,703 $2,335,579 $2,223,739
Add:
Earnings applicable to common stock 247,683 420,027 519,980
Deduct:
Dividends declared on common stock 432,268 412,250 409,801
Capital stock and other expenses (794) 1,653 (1,661)
---------- ---------- ----------
Total 431,474 413,903 408,140
---------- ---------- ----------
Retained Earnings, December 31 $2,157,912 $2,341,703 $2,335,579
========== ========== ==========
Paid-in Capital, January 1 $4,320,591 $4,201,483 $4,202,134
Add:
Gain (loss) on reacquisition of
subsidiaries' preferred stock 273 1,795 (26)
Common stock issuances related to stock plans 292,870 117,560 (3,002)
---------- ---------- ----------
Total 293,143 119,355 (3,028)
---------- ---------- ----------
Deduct:
Capital stock discounts and other expenses 162 247 (2,377)
---------- ---------- ----------
Paid-in Capital, December 31 $4,613,572 $4,320,591 $4,201,483
========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1997 (4) 1996 (3) 1995 1994 1993
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Operating revenues $ 9,561,721 $ 7,177,657 $ 6,273,072 $ 5,981,820 $ 4,475,224
Income before cumulative
effect of a change in
accounting principle $ 300,899 $ 490,563 $ 562,534 $ 423,559 $ 514,648
Earnings per share before
cumulative effect of accounting
changes
Basic $ 1.03 $ 1.83 $ 2.13 $ 1.49 $ 2.62
Diluted $ 1.03 $ 1.83 $ 2.13 $ 1.49 $ 2.62
Dividends declared per share $ 1.80 $ 1.80 $ 1.80 $ 1.80 $ 1.65
Return on average common equity 3.71% 6.41% 8.11% 5.31% 12.58%
Book value per share, year-end (2) $ 27.23 $ 28.51 $ 28.41 $ 27.93 $ 28.27
Total assets (2) $27,000,700 $22,956,025 $22,265,930 $ 22,621,874 $22,876,697
Long-term obligations (1)(2) $10,154,330 $ 8,335,150 $ 7,484,248 $ 7,817,366 $ 8,177,882
</TABLE>
(1) Includes long-term debt (excluding currently maturing debt), preferred
and preference stock with sinking fund, preferred securities of
subsidiary trusts and partnership, and noncurrent capital lease
obligations.
(2) 1993 amounts include the effects of the Merger in accordance with the
purchase method of accounting for combinations.
(3) 1996 amounts include the effects of the CitiPower acquisition.
(4) 1997 amounts include the effects of the London Electricity acquisition
as of February 7, 1997 (see Note 13).
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Domestic Utility Electric (In Thousands)
Operating Revenues:
Residential $2,271,363 $2,277,647 $2,177,348 $2,127,820 $1,594,515
Commercial 1,581,878 1,573,251 1,491,818 1,500,462 1,071,070
Industrial 2,018,625 1,987,640 1,810,045 1,834,155 1,197,695
Governmental 171,773 169,287 154,032 159,840 136,471
--------------------------------------------------------------------
Total retail 6,043,639 6,007,825 5,633,243 5,622,277 3,999,751
Sales for resale 359,881 376,011 334,874 293,702 280,505
Other (1) 135,311 67,104 119,901 (123,569) 88,713
--------------------------------------------------------------------
Total $6,538,831 $6,450,940 $6,088,018 $5,792,410 $4,368,969
====================================================================
Billed Electric Energy
Sales (GWH):
Residential 28,286 28,303 27,704 26,231 18,946
Commercial 21,671 21,234 20,719 20,050 13,420
Industrial 44,649 44,340 42,260 41,030 24,889
Governmental 2,507 2,449 2,311 2,233 1,887
--------------------------------------------------------------------
Total retail 97,113 96,326 92,994 89,544 59,142
Sales for resale 9,707 10,583 10,471 7,908 8,291
--------------------------------------------------------------------
Total 106,820 106,909 103,465 97,452 67,433
====================================================================
</TABLE>
(1) 1994 includes the effects of the FERC Settlement, the 1994 NOPSI
Settlement, and an Entergy Gulf States reserve for rate refund.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Arkansas, Inc.
We have audited the accompanying balance sheets of Entergy Arkansas,
Inc. (formerly Arkansas Power & Light Company) as of December 31, 1997 and
1996, and the related statements of income, retained earnings and cash
flows for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as
of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 1997 primarily due to decreases in electric
operating revenues and Grand Gulf 1 carrying charges, partially offset by
lower income taxes.
Net income decreased in 1996 due primarily to the one-time recording
of the cumulative effect of the change in accounting method in 1995 for
incremental nuclear refueling outage maintenance costs. Excluding the above
mentioned item, net income would have increased $21.1 million in 1996
primarily due to a decrease in other operation and maintenance expenses.
Significant factors affecting the results of operations and causing
variances between the years 1997 and 1996, and between the years 1996 and
1995, are discussed under "Revenues and Sales", "Expenses", and "Other"
below.
Revenues and Sales
See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON," following the
financial statements, for information on operating revenues by source and
KWH sales.
The changes in electric operating revenues for the twelve months ended
December 31, 1997 and 1996 are as follows:
Increase/(Decrease)
Description 1997 1996
(In Millions)
Change in base revenues ($8.1) ($10.1)
Rate riders 15.4 (5.3)
Fuel cost recovery 10.3 8.0
Sales volume/weather 5.9 19.5
Other revenue (including unbilled) (24.2) (7.1)
Sales for resale (27.0) 90.2
------ -----
Total ($27.7) $95.2
====== =====
Electric operating revenues decreased in 1997 due primarily to
decreases in sales for resale and other revenue, partially offset by an
increase in rate rider revenues and higher fuel adjustment revenues, which
do not affect net income. The decrease in sales for resale resulted from a
decrease in sales to associated companies primarily due to changes in
generation requirements and availability among the domestic utility
companies. Other revenue (primarily unbilled revenue) decreased primarily
as a result of the volume difference in the unbilled beginning of year
amount and due to the $10.6 million impact of a rate reduction implemented
in 1997 related to the transition to competition filing with the APSC. The
increase in rate rider revenues was due to an increase in Grand Gulf 1 rate
rider revenues as a result of warmer weather during the second half of the
year.
Electric operating revenues increased in 1996 due primarily to
increased sales for resale and higher sales volume. Sales for resale
increased due to an increase in sales to associated companies primarily due
to changes in generation requirements and availability among the domestic
utility companies. The increase in sales volume resulted from increased
customer usage, partially attributable to more severe weather as compared
to 1995.
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Expenses
Operating expenses increased in 1997 primarily due to the recognition
of additional regulatory liabilities related to the APSC settlement
agreement and the write-off of previously deferred radioactive waste
facility costs, partially offset by a decrease in fuel and purchased power
expenses. The increase in the amortization of rate deferrals is due to an
increase in amortization prescribed in the Grand Gulf 1 rate phase-in plan
and the Stipulation and Settlement Agreement with the APSC. See Note 2 for
further discussion of the APSC agreement. Fuel and purchased power
expenses decreased primarily as a result of significantly lower prices.
Operating expenses increased in 1996 primarily due to an increase in
fuel and purchased power expenses, partially offset by reduced other
regulatory charges and decreased other operation and maintenance expenses.
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. The decrease in other operation and maintenance expenses resulted
from lower payroll expenses. Payroll expenses decreased as a result of
restructuring costs recorded in 1995 and the resulting decrease in
employees.
Other
Miscellaneous other income - net decreased in 1997 and 1996 due to
reduced Grand Gulf 1 carrying charges as a result of a decline in the
deferral balance which does not impact net income.
The effective income tax rates for 1997, 1996, and 1995 were 31.6%,
34.9%, and 34.5%, respectively. The decrease in 1997 is primarily due to
the impact of recording the tax benefit of Entergy Corporation's expenses
as prescribed by the tax allocation agreement. The effective income tax
rate for 1996 was relatively unchanged from 1995.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Revenues $1,715,714 $1,743,433 $1,648,233
---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 254,703 257,008 231,619
Purchased power 419,128 432,825 363,199
Nuclear refueling outage expenses 27,969 29,365 31,754
Other operation and maintenance 360,860 358,789 375,059
Depreciation, amortization, and decommissioning 166,652 167,878 162,087
Taxes other than income taxes 36,700 37,688 38,319
Other regulatory charges (credits) 29,686 18,096 60,227
Amortization of rate deferrals 153,141 131,634 114,102
---------- ---------- ----------
Total 1,448,839 1,433,283 1,376,366
---------- ---------- ----------
Operating Income 266,875 310,150 271,867
---------- ---------- ----------
Other Income:
Allowance for equity funds used
during construction 3,563 3,886 3,567
Miscellaneous - net 18,663 32,591 46,227
---------- ---------- ----------
Total 22,226 36,477 49,794
---------- ---------- ----------
Interest Charges:
Interest on long-term debt 95,122 98,531 106,853
Other interest - net 3,943 6,257 8,485
Distributions on preferred securities of subsidiary trust 5,100 1,927 -
Allowance for borrowed funds used
during construction (2,261) (2,330) (2,424)
---------- ---------- ----------
Total 101,904 104,385 112,914
---------- ---------- ----------
Income Before Income Taxes 187,197 242,242 208,747
Income Taxes 59,220 84,444 72,082
---------- ---------- ----------
Income before the Cumulative Effect
of Accounting Changes 127,977 157,798 136,665
Cumulative Effect of Accounting
Changes (net of income taxes) - - 35,415
---------- ---------- ----------
Net Income 127,977 157,798 172,080
Preferred Stock Dividend Requirements
and Other 10,988 16,110 18,093
---------- ---------- ----------
Earnings Applicable to Common Stock $116,989 $141,688 $153,987
========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $127,977 $157,798 $172,080
Noncash items included in net income:
Cumulative effect of a change in accounting principle - - (35,415)
Amortization of rate deferrals 153,141 139,701 125,504
Other regulatory charges (credits), net 29,686 18,096 60,227
Depreciation, amortization, and decommissioning 166,652 167,878 162,087
Deferred income taxes and investment tax credits (77,814) (46,026) (33,882)
Allowance for equity funds used during construction (3,563) (3,886) (3,567)
Changes in working capital:
Receivables 9,099 (4,292) (39,209)
Fuel inventory 29,150 137 (22,895)
Accounts payable (25,451) (1,112) 55,732
Taxes accrued 23,133 14,035 (5,080)
Interest accrued 1,201 (2,615) (824)
Other working capital accounts (10,220) (7,529) (28,375)
Decommissioning trust contributions and realized
change in trust assets (24,956) (30,474) (30,568)
Provision for estimated losses and reserves 9,594 4,125 2,849
Other 26,111 (29,258) (40,306)
---------- ---------- ----------
Net cash flow provided by operating activities 433,740 376,578 338,358
---------- ---------- ----------
Investing Activities:
Construction expenditures (140,913) (145,529) (165,071)
Allowance for equity funds used during construction 3,563 3,886 3,567
Nuclear fuel purchases (59,104) (26,084) (41,219)
Proceeds from sale/leaseback of nuclear fuel 59,065 25,451 41,832
---------- ---------- ----------
Net cash flow used in investing activities (137,389) (142,276) (160,891)
---------- ---------- ----------
Financing Activities:
Proceeds from issuance of:
First mortgage bonds 84,064 84,256 -
Other long-term debt 45,500 - 118,662
Preferred securities of subsidiary trust - 58,168 -
Retirement of:
First mortgage bonds (117,587) (112,807) (25,800)
Other long-term debt - (1,700) (124,025)
Redemption of preferred stock (9,000) (69,624) (9,500)
Changes in short-term borrowings - net - - (34,000)
Dividends paid:
Common stock (128,600) (142,800) (153,400)
Preferred stock (11,194) (17,736) (18,362)
---------- ---------- ----------
Net cash flow used in financing activities (136,817) (202,243) (246,425)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 159,534 32,059 (68,958)
Cash and cash equivalents at beginning of period 43,857 11,798 80,756
---------- ---------- ----------
Cash and cash equivalents at end of period $203,391 $43,857 $11,798
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $101,839 $94,662 $102,851
Income taxes $111,394 $110,211 $113,080
Noncash investing and financing activities:
Capital lease obligations incurred - $16,358 -
Acquisition of nuclear fuel - $27,500 -
Change in unrealized appreciation of
decommissioning trust assets $22,343 $5,968 $9,128
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
ASSETS
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $6,076 $5,117
Temporary cash investments - at cost,
which approximates market:
Associated companies 41,389 17,462
Other 110,877 21,278
Special deposits 45,049 -
----------- -----------
Total cash and cash equivalents 203,391 43,857
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1.8 million in 1997 and $2.3 million in 1996) 71,910 71,144
Associated companies 46,166 45,303
Other 10,282 5,862
Accrued unbilled revenues 89,616 104,764
Fuel inventory - at average cost 28,169 57,319
Materials and supplies - at average cost 79,692 72,976
Rate deferrals 75,249 153,141
Deferred nuclear refueling outage costs 24,335 24,534
Prepayments and other 8,647 16,496
----------- -----------
Total 637,457 595,396
----------- -----------
Other Property and Investments:
Investment in subsidiary companies - at equity 11,213 11,211
Decommissioning trust fund 250,573 203,274
Other - at cost (less accumulated depreciation) 4,939 5,058
----------- -----------
Total 266,725 219,543
----------- -----------
Utility Plant:
Electric 4,650,065 4,578,728
Property under capital leases 53,843 57,869
Construction work in progress 123,087 83,524
Nuclear fuel under capital lease 92,621 79,103
Nuclear fuel - 27,500
----------- -----------
Total 4,919,616 4,826,724
Less - accumulated depreciation and amortization 2,116,826 1,976,204
----------- -----------
Utility plant - net 2,802,790 2,850,520
----------- -----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals - 75,249
SFAS 109 regulatory asset - net 252,712 244,767
Unamortized loss on reacquired debt 53,780 56,664
Other regulatory assets 79,461 80,257
Other 13,952 31,421
----------- -----------
Total 399,905 488,358
----------- -----------
TOTAL $4,106,877 $4,153,817
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $60,650 $32,465
Notes payable 667 667
Accounts payable:
Associated companies 59,438 91,205
Other 76,405 97,589
Customer deposits 23,437 21,800
Taxes accrued 77,327 54,194
Accumulated deferred income taxes 32,239 70,506
Interest accrued 28,826 27,625
Co-owner advances 7,666 33,873
Deferred fuel cost 16,244 6,955
Obligations under capital leases 62,623 53,012
Other 21,696 17,967
----------- -----------
Total 467,218 507,858
----------- -----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 759,489 785,994
Accumulated deferred investment tax credits 103,899 108,307
Obligations under capital leases 83,841 83,940
Other 169,884 113,998
----------- -----------
Total 1,117,113 1,092,239
----------- -----------
Long-term debt 1,244,860 1,255,388
Preferred stock with sinking fund 31,027 40,027
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 60,000 60,000
Shareholder's Equity:
Preferred stock without sinking fund 116,350 116,350
Common stock, $0.01 par value, authorized
325,000,000 shares; issued and outstanding
46,980,196 shares 470 470
Additional Paid-in capital 590,134 590,169
Retained earnings 479,705 491,316
----------- -----------
Total 1,186,659 1,198,305
----------- -----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $4,106,877 $4,153,817
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $491,316 $492,386 $491,799
Add:
Net income 127,977 157,798 172,080
Increase in investment in subsidiary - 42 -
-------- -------- --------
Total 127,977 157,840 172,080
-------- -------- --------
Deduct:
Dividends declared:
Preferred stock 10,988 16,110 18,093
Common stock 128,600 142,800 153,400
-------- -------- --------
Total 139,588 158,910 171,493
-------- -------- --------
Retained Earnings, December 31 (Note 8) $479,705 $491,316 $492,386
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $1,715,714 $1,743,433 $1,648,233 $1,590,742 $1,591,568
Income before cumulative
effect of accounting changes $ 127,977 $ 157,798 $ 136,665 $ 142,263 $ 155,110
Total assets $4,106,877 $4,153,817 $4,204,415 $4,292,215 $4,334,105
Long-term obligations (1) $1,419,728 $1,439,355 $1,423,804 $1,446,940 $1,478,203
</TABLE>
(1) Includes long-term debt (excluding currently maturing debt), preferred
stock with sinking fund, preferred securities of subsidiary trust, and
noncurrent capital lease obligations.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $551,821 $546,100 $542,862 $506,160 $528,734
Commercial 332,715 323,328 318,475 307,296 306,742
Industrial 372,083 364,943 362,854 338,988 336,856
Governmental 18,200 16,989 17,084 16,698 16,670
--------------------------------------------------------------------
Total retail 1,274,819 1,251,360 1,241,275 1,169,142 1,189,002
Sales for resale
Associated companies 213,845 248,211 178,885 212,314 175,784
Non-associated companies 215,249 207,887 195,844 182,920 203,696
Other 11,801 35,975 32,229 26,366 23,086
--------------------------------------------------------------------
Total $1,715,714 $1,743,433 $1,648,233 $1,590,742 $1,591,568
====================================================================
Billed Electric Energy
Sales (GWH):
Residential 5,988 6,023 5,868 5,522 5,680
Commercial 4,445 4,390 4,267 4,147 4,067
Industrial 6,647 6,487 6,314 5,941 5,690
Governmental 239 234 243 231 230
--------------------------------------------------------------------
Total retail 17,319 17,134 16,692 15,841 15,667
Sales for resale
Associated companies 9,557 10,471 8,386 10,591 8,307
Non-associated companies 6,828 6,720 5,066 4,906 5,643
--------------------------------------------------------------------
Total 33,704 34,325 30,144 31,338 29,617
====================================================================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Gulf States, Inc.
We have audited the accompanying balance sheets of Entergy Gulf
States, Inc. (formerly Gulf States Utilities Company) as of December 31,
1997 and 1996, and the related statements of income (loss), retained
earnings and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as
of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, at
January 1, 1996 the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of".
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased in 1997 due to (i) the $146 million net of tax
receipt of funds and property resulting from the settlement of the Cajun
litigation, and (ii) the 1996 net of tax write-off of $174 million of River
Bend rate deferrals required by the adoption of SFAS 121. These increases
were partially offset by (i) the 1997 $227 million net of tax reserve for
regulatory adjustments; (ii) the 1997 net of tax write-off of $7.4 million
of previously deferred radioactive waste facility costs; and (iii) the 1996
reversal of the Cajun-River Bend litigation accrual. Excluding the effects
of the settlement of the Cajun litigation, the 1997 and 1996 write-offs,
the reserve for regulatory adjustments, and the accrual reversal, net
income for 1997 would have increased approximately $11 million due to an
increase in electric operating revenues.
Net income decreased in 1996 primarily due to the write-off of rate
deferrals, offset by the reversal of the Cajun-River Bend litigation
accrual as discussed above. Excluding the River Bend rate deferrals and
the Cajun-River Bend litigation accrual, net income for 1996 would have
increased slightly due to an increase in electric operating revenues and a
decrease in other operation and maintenance expenses.
Significant factors affecting the results of operations and causing
variances between the years 1997 and 1996, and between the years 1996 and
1995, are discussed under "Revenues and Sales", "Expenses", and "Other"
below.
Revenues and Sales
See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following the
financial statements, for information on operating revenues by source and
KWH sales.
The changes in electric operating revenues for the twelve months ended
December 31, 1997 and 1996 are as follows:
Increase/(Decrease)
Description 1997 1996
(In Millions)
Change in base revenues ($103.8) ($60.3)
Fuel cost recovery 66.8 152.0
Sales volume/weather 46.2 65.1
Other revenue (including unbilled) 151.1 12.8
Sales for resale (24.8) (32.6)
------ ------
Total $135.5 $137.0
====== ======
Electric operating revenues increased in 1997 as a result of increased
other revenue, increased fuel adjustment revenues, which do not affect net
income, and increased sales volume. These increases were partially offset
by a decrease in base revenues and sales for resale. Other revenue
increased due to the gain on the Cajun Settlement for Cajun's 30% of
property associated with River Bend. Fuel adjustment revenues increased
due to a PUCT order that approved recovery of under-recovered fuel
expenses. Sales volume increased primarily due to an increase in sales to
industrial customers, in particular, certain cogeneration customers who
purchased electricity from Entergy Gulf States for less than their
production cost. Base revenues decreased in 1997 due to the reserve for
regulatory adjustments, the provision for rate reductions implemented for
Louisiana retail customers in November 1996 and February 1997, aggressive
pricing strategies for targeted customer segments, and a change in the
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
sales mix from residential customers to industrial customers. Sales for
resale decreased due to decreased sales to both associated and non-associated
companies. During the fourth quarter of 1997, Entergy Gulf States
established reserves for potential regulatory adjustments based on
management's estimates of the financial effect of potential adverse rulings
in connection with the River Bend plant-related costs and pending rate
proceedings in Texas. See Note 2 for further discussion of the PUCT order
related to under-recovered fuel expenses, the River Bend plant-related
costs, and other pending rate proceedings.
Gas operating revenues increased in 1997 due to an increase in the
fuel factor granted by the LPSC. This increase permits recovery of
previously deferred gas costs. The increase in gas operating revenues was
offset by a decrease in steam operating revenues due to a change in a
customer contract in 1997 and an increase in customer requirements in 1996.
Electric operating revenues increased in 1996 primarily due to
increased fuel adjustment revenues, which do not affect net income,
increased customers, and increased customer usage. These increases were
partially offset by rate reductions in effect for both Texas and Louisiana
retail customers and increased base revenues for 1995. Base revenues also
increased in 1995 as a result of rate refund reserves established in 1994,
which were subsequently reduced as a result of an amended PUCT order.
Sales for resale to associated companies decreased as a result of changes
in generation availability and requirements among the domestic utility
companies.
Gas operating revenues and steam operating revenues increased for 1996
primarily due to higher fuel prices and increased usage.
Expenses
Operating expenses increased slightly in 1997 due to increases in fuel
and purchased power expenses and in the amortization of rate deferrals,
partially offset by decreased other operation and maintenance expenses
resulting from the Cajun settlement. Fuel and purchased power expenses
increased due to increased gas usage and increased energy requirements
resulting from higher sales volume. Amortization of rate deferrals
increased based on the LPSC-approved River Bend phase-in plan. See Note 2
for further discussion. The decrease in other operation and maintenance
expenses was partially offset by the write-off of radioactive waste
facility costs.
Operating expenses increased in 1996 as a result of higher fuel
expenses, including purchased power, partially offset by lower other
operation and maintenance expenses. Fuel and purchase power expenses,
taken together, increased because of higher gas prices and increased energy
requirements resulting from higher sales volume. Other operation and
maintenance expenses decreased primarily due to lower payroll-related
expenses associated with restructuring programs accrued for in 1995.
Other
Other income decreased in 1997 due to the reserve for other regulatory
adjustments, partially offset by the 1997 settlement of the Cajun
litigation and the 1996 write-off of River Bend rate deferrals. Interest
expense decreased in 1997 due to the retirement of long-term debt.
Other income decreased in 1996 due to the write-off of River Bend
rate deferrals pursuant to the adoption of SFAS 121. See Note 2 for
further discussion. This decrease was partially offset by the Cajun-River
Bend litigation accrual reversal.
The effective income tax rates for 1997, 1996, and 1995 were 27.2%,
104.0%, and 35.3%, respectively. The decrease in the effective income tax
rate in 1997 is due to a decrease in regulatory operating reserves which
receive flow through treatment in 1997 and the $194.5 million River Bend
SFAS 121 write-off in 1996. The change in effective income tax rates in
1996 is primarily due to the River Bend SFAS 121 write-off of $194.5
million in January 1996.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF INCOME (LOSS)
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Revenues:
Electric $2,061,511 $1,925,988 $1,788,964
Natural gas 42,654 34,050 23,715
Steam products 43,664 59,143 49,295
---------- ---------- ----------
Total 2,147,829 2,019,181 1,861,974
---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 560,104 520,065 516,812
Purchased power 327,037 295,960 169,767
Nuclear refueling outage expenses 10,829 8,660 10,607
Other operation and maintenance 316,253 402,719 432,647
Depreciation, amortization, and decommissioning 214,644 206,070 202,224
Taxes other than income taxes 109,572 102,170 102,228
Other regulatory charges (credits) (26,611) (25,317) (24,359)
Amortization of rate deferrals 105,455 96,956 90,384
---------- ---------- ----------
Total 1,617,283 1,607,283 1,500,310
---------- ---------- ----------
Operating Income 530,546 411,898 361,664
---------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 2,211 2,618 1,125
Write-off of River Bend rate deferrals - (194,498) -
Miscellaneous - net (272,135) 69,841 22,573
---------- ---------- ----------
Total (269,924) (122,039) 23,698
---------- ---------- ----------
Interest Charges:
Interest on long-term debt 163,146 181,071 191,341
Other interest - net 10,026 12,819 8,884
Distributions on preferred securities of subsidiary trust 6,901 - -
Allowance for borrowed funds used
during construction (1,829) (2,235) (1,026)
---------- ---------- ----------
Total 178,244 191,655 199,199
---------- ---------- ----------
Income Before Income Taxes 82,378 98,204 186,163
Income Taxes 22,402 102,091 63,244
---------- ---------- ----------
Net Income (Loss) 59,976 (3,887) 122,919
Preferred and Preference Stock
Dividend Requirements and Other 23,865 28,505 29,643
---------- ---------- ----------
Earnings (Loss) Applicable to Common Stock $36,111 ($32,392) $93,276
========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income (loss) $59,976 ($3,887) $122,919
Noncash items included in net income (loss):
Write-off of River Bend rate deferrals - 194,498 -
Gain on Cajun Settlement (246,022) - -
Reserve for regulatory adjustments 381,285 - -
Amortization of rate deferrals 105,455 96,956 90,384
Other regulatory charges (credits) (26,611) (25,317) (24,359)
Depreciation, amortization, and decommissioning 214,644 206,070 202,224
Deferred income taxes and investment tax credits (52,486) 101,380 63,231
Allowance for equity funds used during construction (2,211) (2,618) (1,125)
Changes in working capital:
Receivables (19,679) 3,691 40,193
Fuel inventory 7,382 (12,868) (6,357)
Accounts payable 16,999 (26,706) (4,820)
Taxes accrued 12,171 (1,266) 24,935
Interest accrued (4,497) (7,186) 1,510
Reserve for rate refund - - (56,972)
Deferred fuel (46,254) (68,349) (24,840)
Other working capital accounts (11,765) (70,775) (16,079)
Decommissioning trust contributions and realized
change in trust assets (9,540) (7,436) (9,513)
Provision for estimated losses and reserves (5,852) (1,885) 10,119
Proceeds from settlement of Cajun litigation 102,299 - -
Other (8,970) (51,947) (10,696)
---------- ---------- ----------
Net cash flow provided by operating activities 466,324 322,355 400,754
---------- ---------- ----------
Investing Activities:
Construction expenditures (132,566) (154,993) (185,944)
Allowance for equity funds used during construction 2,211 2,618 1,125
Nuclear fuel purchases (25,522) (25,124) (1,425)
Proceeds from sale/leaseback of nuclear fuel 25,522 26,523 542
---------- ---------- ----------
Net cash flow used in investing activities (130,355) (150,976) (185,702)
---------- ---------- ----------
Financing Activities:
Proceeds from the issuance of:
Long-term debt - 780 2,277
Preferred securities of subsidiary trust 82,323 - -
Retirement of:
First mortgage bonds (132,240) (195,417) -
Other long-term debt (50,865) (50,425) (50,425)
Redemption of preferred and preference stock (93,367) (10,179) (7,283)
Dividends paid:
Common stock (77,200) - -
Preferred and preference stock (21,862) (28,336) (29,661)
---------- ---------- ----------
Net cash flow used in financing activities (293,211) (283,577) (85,092)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 42,758 (112,198) 129,960
Cash and cash equivalents at beginning of period 122,406 234,604 104,644
---------- ---------- ----------
Cash and cash equivalents at end of period $165,164 $122,406 $234,604
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $167,642 $189,962 $187,918
Income taxes $50,477 $285 $208
Noncash investing and financing activities:
Change in unrealized appreciation of
decommissioning trust assets $3,939 $1,604 $2,121
Net assets acquired from Cajun settlement $319,056 - -
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
ASSETS
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $10,549 $6,573
Temporary cash investments - at cost,
which approximates market:
Associated companies 37,389 45,234
Other 117,226 70,599
---------- ----------
Total cash and cash equivalents 165,164 122,406
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1.8 million in 1997 and $2.0 million in 1996) 99,762 87,883
Associated companies 9,024 2,777
Other 32,837 30,758
Accrued unbilled revenues 74,825 75,351
Deferred fuel costs 145,757 99,503
Accumulated deferred income taxes 22,093 56,714
Fuel inventory - at average cost 37,627 45,009
Materials and supplies - at average cost 104,690 86,157
Rate deferrals 21,749 105,456
Prepayments and other 21,680 16,321
---------- ----------
Total 735,208 728,335
---------- ----------
Other Property and Investments:
Decommissioning trust fund 187,462 41,983
Other - at cost (less accumulated depreciation) 176,953 38,358
---------- ----------
Total 364,415 80,341
---------- ----------
Utility Plant:
Electric 7,168,668 7,040,654
Natural Gas 47,656 45,443
Steam products 82,289 81,743
Property under capital leases 67,946 72,800
Construction work in progress 90,333 112,137
Nuclear fuel under capital lease 54,390 49,833
Nuclear fuel 23,051 -
---------- ----------
Total 7,534,333 7,402,610
Less - accumulated depreciation and amortization 2,996,147 2,827,275
---------- ----------
Utility plant - net 4,538,186 4,575,335
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 98,410 120,158
SFAS 109 regulatory asset - net 376,275 372,817
Unamortized loss on reacquired debt 48,417 54,761
Other regulatory assets 86,819 87,429
Long-term receivables 36,984 216,082
Other 203,923 185,921
---------- ----------
Total 850,828 1,037,168
---------- ----------
TOTAL $6,488,637 $6,421,179
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $190,890 $160,865
Accounts payable:
Associated companies 48,726 55,630
Other 109,444 85,541
Customer deposits 30,311 25,572
Taxes accrued 48,318 36,147
Interest accrued 45,154 49,651
Nuclear refueling reserve 3,386 12,354
Obligations under capital leases 30,280 39,110
Other 17,646 18,186
---------- ----------
Total 524,155 483,056
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,124,644 1,190,666
Accumulated deferred investment tax credits 215,438 219,188
Obligations under capital leases 92,055 83,524
Deferred River Bend finance charges 9,330 33,688
Other 914,079 539,752
---------- ----------
Total 2,355,546 2,066,818
---------- ----------
Long-term debt 1,702,719 1,915,346
Preferred stock with sinking fund 68,978 77,459
Preference stock 150,000 150,000
Company - obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 85,000 -
Shareholder's Equity:
Preferred stock without sinking fund 51,444 136,444
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
100 shares 114,055 114,055
Additional paid-in capital 1,152,575 1,152,689
Retained earnings 284,165 325,312
---------- ----------
Total 1,602,239 1,728,500
---------- ----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $6,488,637 $6,421,179
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $325,312 $357,704 $264,626
Add:
Net income (loss) 59,976 (3,887) 122,919
Deduct:
Dividends declared:
Preferred and preference stock 21,862 28,336 29,482
Common stock 77,200 - -
Preferred and preference stock
redemption and other 2,061 169 359
-------- -------- --------
Total 101,123 28,505 29,841
-------- -------- --------
Retained Earnings, December 31 (Note 8) $284,165 $325,312 $357,704
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $2,147,829 $2,019,181 $ 1,861,974 $1,797,365 $1,827,620
Net income (loss) $ 59,976 $ (3,887) $ 122,919 $ (82,755) $ 69,461
Total assets $6,488,637 $6,421,179 $ 6,861,058 $6,843,461 $7,137,351
Long-term obligations (1) $2,098,752 $2,226,329 $ 2,521,203 $2,689,042 $2,772,002
</TABLE>
(1) Includes long-term debt (excluding currently maturing debt), preferred
and preference stock with sinking fund, preferred securities of
subsidiary trust, and noncurrent capital lease obligations.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $624,862 $612,398 $573,566 $569,997 $585,799
Commercial 452,724 444,133 412,601 414,929 415,267
Industrial 740,418 685,178 604,688 626,047 650,230
Governmental 33,774 31,023 25,042 25,242 26,118
----------------------------------------------------------------
Total retail 1,851,778 1,772,732 1,615,897 1,636,215 1,677,414
Sales for resale
Associated companies 14,260 20,783 62,431 45,263 -
Non-associated companies 57,936 76,173 67,103 52,967 31,898
Other (1) 137,537 56,300 43,533 (15,244) 38,649
----------------------------------------------------------------
Total $2,061,511 $1,925,988 $1,788,964 $1,719,201 $1,747,961
================================================================
Billed Electric Energy
Sales (GWH):
Residential 8,178 8,035 7,699 7,351 7,192
Commercial 6,575 6,417 6,219 6,089 5,711
Industrial 18,038 16,661 15,393 15,026 14,294
Governmental 481 438 311 297 296
----------------------------------------------------------------
Total retail 33,272 31,551 29,622 28,763 27,493
Sales for resale
Associated companies 414 656 2,935 1,866 -
Non-associated companies 1,503 2,148 2,212 1,650 666
----------------------------------------------------------------
Total Electric Department 35,189 34,355 34,769 32,279 28,159
================================================================
(1) 1994 includes the effects of an Entergy Gulf States reserve for rate
refund.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Louisiana, Inc.
We have audited the accompanying balance sheets of Entergy Louisiana,
Inc. (formerly Louisiana Power & Light Company) as of December 31, 1997 and
1996, and the related statements of income, retained earnings and cash
flows for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as
of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 1997 primarily due to a decrease in electric
operating revenues and an increase in other operation and maintenance
expenses, partially offset by lower income taxes.
Net income decreased in 1996 primarily due to a decrease in base rate
revenues, partially offset by decreases in other operation and maintenance
expenses and lower interest charges.
Significant factors affecting the results of operations and causing
variances between the years 1997 and 1996, and between the years 1996 and
1995, are discussed under "Revenues and Sales", "Expenses", and "Other"
below.
Revenues and Sales
See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following the
financial statements, for information on operating revenues by source and
KWH sales.
The changes in electric operating revenues for the twelve months ended
December 31, 1997 and 1996 are as follows:
Increase/(Decrease)
Description 1997 1996
(In Millions)
Change in base revenues ($26.9) ($36.4)
Fuel cost recovery 29.7 160.2
Sales volume/weather (23.8) 19.7
Other revenue (including unbilled) - 3.9
Sales for resale (4.6) 6.6
------ ------
Total ($25.6) $154.0
====== ======
Electric operating revenues decreased in 1997 primarily as a result of
a decrease in base revenues and lower sales volume, partially offset by
higher fuel adjustment revenues, which do not affect net income. Base
revenues decreased due to base rate reductions that became effective in the
third quarters of 1996 and 1997. Sales volume decreased because of milder
weather during the first half of 1997 and the loss of a large industrial
customer as well as substantially lower sales to another large industrial
customer in 1997 due to customer cogeneration. Fuel adjustment revenues
increased due to shifting generation requirements as a result of the
extended Waterford 3 refueling outage.
Electric operating revenues increased in 1996 due primarily to higher
fuel adjustment revenues, which do not affect net income, and to higher
sales volume, primarily due to modest growth in the number of customers.
These increases were partially offset by the impact of base rate reductions
ordered in the second quarters of 1995 and 1996, and by a settlement of
related rate issues during the fourth quarter of 1995.
<PAGE>
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Expenses
Operating expenses increased in 1997 primarily due to increases in
fuel and purchased power expenses and other operation and maintenance
expenses. Fuel and purchased power expenses increased primarily due to
shifting generation requirements resulting from the extended refueling
outage at the Waterford 3 nuclear plant, partially offset by lower fuel
prices. Other operation and maintenance expenses increased due primarily
to the write-off of previously deferred radioactive waste facility costs.
Also contributing to the increase in other operation and maintenance
expenses were nonfueling outage related contract work at Waterford 3 as
well as maintenance performed at Waterford 3 and expenses related to fire
damage sustained at the Little Gypsy fossil plant in September 1997.
Operating expenses increased in 1996 primarily due to increases in
fuel and purchased power expenses, higher depreciation, and higher taxes
other than income taxes. These increases were partially offset by a
decrease in other operation and maintenance expenses as a result of
restructuring charges recorded in 1995 and by the recording of rate
deferrals in 1996, as discussed below. The increase in fuel and purchased
power expenses is due to both higher gas costs and higher sales volume.
Depreciation expense increased due to capital improvements to transmission
lines and substations and due to an increase in the depreciation rate
associated with Waterford 3. Taxes other than income taxes increased
largely as a result of the expiration of Waterford 3's local property tax
exemption in December 1995. This increase was offset for the first six
months of 1996 by the recording of the LPSC-approved rate deferral for
these taxes as discussed in Note 2.
Other
Interest charges on long-term debt decreased for 1996 and 1997 due to
the retirement and refinancing of higher-cost long-term debt.
The effective income tax rates for 1997, 1996, and 1995 were 41.1%,
38.3%, and 36.8%, respectively. The increase in 1997 is primarily due to
decreased amortization of deferred income taxes on property fully
depreciated for income tax purposes. The effective income tax rate for
1996 was relatively unchanged from 1995.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Revenues $1,803,272 $1,828,867 $1,674,875
---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 429,823 419,331 300,015
Purchased power 413,532 403,322 351,583
Nuclear refueling outage expenses 18,634 15,885 17,675
Other operation and maintenance 318,856 297,667 311,535
Depreciation, amortization, and decommissioning 172,035 167,779 161,023
Taxes other than income taxes 71,558 72,329 55,867
Other regulatory charges (credits) 5,505 (3,752) -
Amortization of rate deferrals 5,749 19,860 28,422
---------- ---------- ----------
Total 1,435,692 1,392,421 1,226,120
---------- ---------- ----------
Operating Income 367,580 436,446 448,755
---------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,149 862 1,950
Miscellaneous - net (517) 2,933 2,831
---------- ---------- ----------
Total 632 3,795 4,781
---------- ---------- ----------
Interest Charges:
Interest on long-term debt 116,715 122,604 129,691
Other interest - net 5,885 6,938 7,210
Distributions on preferred securities of subsidiary trust 6,300 2,870 -
Allowance for borrowed funds used
during construction (1,410) (1,493) (2,016)
---------- ---------- ----------
Total 127,490 130,919 134,885
---------- ---------- ----------
Income Before Income Taxes 240,722 309,322 318,651
Income Taxes 98,965 118,560 117,114
---------- ---------- ----------
Net Income 141,757 190,762 201,537
Preferred Stock Dividend Requirements
and Other 13,355 19,947 21,307
---------- ---------- ----------
Earnings Applicable to Common Stock $128,402 $170,815 $180,230
========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $141,757 $190,762 $201,537
Noncash items included in net income:
Amortization of rate deferrals 5,749 19,860 28,422
Other regulatory charges (credits) 5,505 (3,752) -
Depreciation, amortization, and decommissioning 172,035 167,779 161,023
Deferred income taxes and investment tax credits (15,456) 18,809 2,450
Allowance for equity funds used during construction (1,149) (862) (1,950)
Changes in working capital:
Receivables 2,445 (4,889) (8,069)
Accounts payable 9,140 22,838 4,420
Taxes accrued 17,853 (11,222) 20,472
Interest accrued (14,678) 5,047 1,215
Other working capital accounts 19,329 (26,831) (16,993)
Decommissioning trust contributions and realized
change in trust assets (11,191) (11,620) (9,180)
Provision for estimated losses and reserves 3,986 3,240 (1,996)
Other 5,801 (17,488) 3,306
---------- ---------- ----------
Net cash flow provided by operating activities 341,126 351,671 384,657
---------- ---------- ----------
Investing Activities:
Construction expenditures (84,767) (103,187) (120,244)
Allowance for equity funds used during construction 1,149 862 1,950
Nuclear fuel purchases (43,332) - (44,707)
Proceeds from sale/leaseback of nuclear fuel 43,332 - 47,293
---------- ---------- ----------
Net cash flow used in investing activities (83,618) (102,325) (115,708)
---------- ---------- ----------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds - 113,994 -
Other long-term debt - - 16,577
Preferred securities of subsidiary trust - 67,795 -
Retirement of:
First mortgage bonds (34,000) (130,000) (75,000)
Other long-term debt (288) (270) (308)
Redemption of preferred stock (7,500) (67,824) (11,256)
Changes in short-term borrowings - net (31,066) (45,393) 49,305
Dividends paid:
Common stock (145,400) (179,200) (221,500)
Preferred stock (13,251) (19,072) (21,115)
---------- ---------- ----------
Net cash flow used in financing activities (231,505) (259,970) (263,297)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 26,003 (10,624) 5,652
Cash and cash equivalents at beginning of period 23,746 34,370 28,718
---------- ---------- ----------
Cash and cash equivalents at end of period $49,749 $23,746 $34,370
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $132,199 $118,007 $128,485
Income taxes $68,323 $125,924 $96,066
Noncash investing and financing activities:
Acquisition of nuclear fuel $32,685
- -
Change in unrealized appreciation of
decommissioning trust assets $3,432 $301 $2,304
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
ASSETS
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $5,148 $1,804
Temporary cash investments - at cost,
which approximates market 44,601 21,942
---------- ----------
Total cash and cash equivalents 49,749 23,746
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1.2 million in 1997 and $1.4 million in 1996) 69,566 73,823
Associated companies 15,035 11,606
Other 7,441 7,053
Accrued unbilled revenues 61,874 63,879
Deferred fuel costs - 18,347
Accumulated deferred income taxes 10,994 1,465
Materials and supplies - at average cost 82,850 78,449
Rate deferrals - 5,749
Deferred nuclear refueling outage costs 27,176 5,300
Prepaid income tax - 24,651
Prepayments and other 10,793 10,234
---------- ----------
Total 335,478 324,302
---------- ----------
Other Property and Investments:
Nonutility property 22,525 22,525
Decommissioning trust fund 65,104 50,481
Investment in subsidiary companies - at equity 14,230 14,230
---------- ----------
Total 101,859 87,236
---------- ----------
Utility Plant:
Electric 5,058,130 4,997,456
Property under capital leases 233,513 232,582
Construction work in progress 52,632 56,180
Nuclear fuel under capital lease 57,811 38,157
Nuclear fuel 1,560 34,191
---------- ----------
Total 5,403,646 5,358,566
Less - accumulated depreciation and amortization 2,021,392 1,881,847
---------- ----------
Utility plant - net 3,382,254 3,476,719
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 278,234 295,836
Unamortized loss on reacquired debt 33,468 37,552
Other regulatory assets 29,991 30,320
Other 14,116 27,313
---------- ----------
Total 355,809 391,021
---------- ----------
TOTAL $4,175,400 $4,279,278
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $35,300 $34,275
Notes payable - associated companies - 31,066
Accounts payable:
Associated companies 43,508 73,389
Other 95,886 89,550
Customer deposits 55,331 59,070
Taxes accrued 25,243 7,390
Interest accrued 34,571 49,249
Dividends declared 3,253 3,489
Deferred fuel costs 3,268 -
Obligations under capital leases 29,232 28,000
Other 8,578 4,940
---------- ----------
Total 334,170 380,418
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 813,748 831,093
Accumulated deferred investment tax credits 134,276 139,899
Obligations under capital leases 28,579 10,156
Deferred interest - Waterford 3 lease obligation 17,799 16,809
Other 119,519 114,665
---------- ----------
Total 1,113,921 1,112,622
---------- ----------
Long-term debt 1,338,464 1,373,233
Preferred stock with sinking fund 85,000 92,500
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 70,000 70,000
Shareholder's Equity:
Preferred stock without sinking fund 100,500 100,500
Common stock, no par value, authorized
250,000,000 shares; issued and outstanding
165,173,180 shares 1,088,900 1,088,900
Capital stock expense and other (2,321) (2,659)
Retained earnings 46,766 63,764
---------- ----------
Total 1,233,845 1,250,505
---------- ----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $4,175,400 $4,279,278
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $63,764 $72,150 $113,420
Add:
Net income 141,757 190,762 201,537
Deduct:
Dividends declared:
Preferred stock 13,016 17,412 20,775
Common stock 145,400 179,200 221,500
Capital stock expenses 339 2,536 532
-------- -------- --------
Total 158,755 199,148 242,807
-------- -------- --------
Retained Earnings, December 31 (Note 8) $46,766 $63,764 $72,150
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $1,803,272 $ 1,828,867 $1,674,875 $1,710,415 $1,731,541
Net income $ 141,757 $ 190,762 $ 201,537 $ 213,839 $ 188,808
Total assets $4,175,400 $ 4,279,278 $4,331,523 $4,435,439 $4,463,998
Long-term obligations (1) $1,522,043 $ 1,545,889 $1,528,542 $1,530,558 $1,611,436
</TABLE>
(1) Includes long-term debt (excluding currently maturing debt), preferred
stock with sinking fund, preferred securities of subsidiary trust, and
noncurrent capital lease obligations.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $606,173 $609,308 $583,373 $577,084 $572,738
Commercial 379,131 374,515 353,582 358,672 345,254
Industrial 708,356 727,505 641,196 659,061 652,574
Governmental 34,171 33,621 31,616 31,679 29,723
--------------------------------------------------------------------
Total retail 1,727,831 1,744,949 1,609,767 1,626,496 1,600,289
Sales for resale
Associated companies 3,817 5,065 1,178 352 4,849
Non-associated companies 55,345 58,685 48,987 36,928 46,414
Other 16,279 20,168 14,943 46,639 79,989
--------------------------------------------------------------------
Total $1,803,272 $1,828,867 $1,674,875 $1,710,415 $1,731,541
====================================================================
Billed Electric Energy
Sales (GWH):
Residential 7,826 7,893 7,855 7,449 7,368
Commercial 4,906 4,846 4,786 4,631 4,435
Industrial 16,390 17,647 16,971 16,561 15,914
Governmental 460 457 439 423 398
--------------------------------------------------------------------
Total retail 29,582 30,843 30,051 29,064 28,115
Sales for resale
Associated companies 104 143 44 10 112
Non-associated companies 805 982 1,293 776 1,213
--------------------------------------------------------------------
Total 30,491 31,968 31,388 29,850 29,440
====================================================================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Mississippi, Inc.
We have audited the accompanying balance sheets of Entergy
Mississippi, Inc. (formerly Mississippi Power & Light Company) as of
December 31, 1997 and 1996, and the related statements of income, retained
earnings and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as
of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 1997 as a result of a decrease in electric
operating revenues and an increase in other operation and maintenance
expenses, partially offset by lower income taxes.
Net income increased in 1996 primarily due to reduced other operation
and maintenance expenses, partially offset by higher income taxes.
Significant factors affecting the results of operations and causing
variances between the years 1997 and 1996, and between the years 1996 and
1995, are discussed under "Revenues and Sales", "Expenses", and "Other"
below.
Revenues and Sales
See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following the
financial statements, for information on operating revenues by source and
KWH sales.
The changes in electric operating revenues for the twelve months ended
December 31, 1997 and 1996 are as follows:
Increase/(Decrease)
Description 1997 1996
(In Millions)
Change in base revenues ($7.7) ($2.2)
Grand Gulf rate rider (19.0) 7.1
Fuel cost recovery (14.5) 33.6
Sales volume/weather 3.8 8.5
Other revenue (including unbilled) (1.6) (2.1)
Sales for resale 18.0 23.7
------ -----
Total ($21.0) $68.6
====== =====
Electric operating revenues decreased in 1997 primarily due to a
decrease in the Grand Gulf 1 rate rider and fuel adjustment revenues, which
do not affect net income, partially offset by an increase in sales for
resale. In connection with an annual MPSC review, in October 1996, Entergy
Mississippi's Grand Gulf 1 rate rider was decreased based on the estimate
of costs over the next year. Therefore, Grand Gulf 1 rate rider revenues
for 1997 were lower than those in 1996. The decrease in fuel adjustment
revenues is due to an MPSC order, effective May 1, 1997, that changed fuel
recovery pricing to a fixed fuel factor. Sales for resale increased
because of an increase in sales to associated companies due to changes in
generation requirements and availability among the domestic utility
companies.
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Electric operating revenues increased in 1996 primarily due to
increases in fuel adjustment revenues, the Grand Gulf 1 rate rider, sales
for resale, and higher sales volume. Fuel adjustment revenues increased in
response to higher fuel costs. 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. The fuel
adjustment clause and the Grand Gulf 1 rate rider do not affect net income.
Sales for resale increased because of an increase in sales to associated
companies due to changes in generation requirements and availability among
the domestic utility companies. The increase in sales volume is primarily
due to increased customer usage.
Expenses
Operating expenses increased in 1997 due to an increase in purchased
power expenses and other operation and maintenance expenses, partially
offset by decreases in fuel expense and net rate deferral activity. The
increase in purchased power expenses in 1997 compared to 1996 is due both
to the shift in use from higher priced fuel to lower priced purchased power
and to an increase in generation and purchases related to increases in
sales volume and sales for resale. The increase in other operation and
maintenance expenses is due to increases in contract labor and loss
reserves. Contract labor increased because of maintenance and plant outage
expenses in 1997. Loss reserves expense increased as a result of increased
litigation reserves.
The other regulatory credits reducing operating expenses in 1996 and
1997 principally represents the deferral of Entergy Mississippi's portion
of the proposed System Entergy rate increase. See Note 2 for further
discussion.
Operating expenses increased in 1996 due to an increase in fuel and
purchased power expenses, partially offset by a decrease in other operation
and maintenance expenses. Fuel and purchased power expenses increased as a
result of higher fuel costs and higher sales volume. Other operation and
maintenance expenses decreased as a result of lower payroll, contract work,
and materials and supplies expenses. Payroll expenses decreased due to
restructuring costs recorded in 1995 and the resulting decrease in
employees. Contract work and materials and supplies expenses decreased
because of the turbine repairs at some of Entergy Mississippi's generating
plants in 1995.
Other
The effective income tax rates for 1997, 1996, and 1995 were 28.6%,
34.2%, and 33.7% respectively. The decrease in 1997 is primarily due to
the impact of recording the tax benefit of Entergy Corporation's expenses
as prescribed by the tax allocation agreement. The effective income tax
rate for 1996 was relatively unchanged from 1995.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Revenues $937,395 $958,430 $889,843
-------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses 199,880 207,116 163,198
Purchased power 285,447 272,812 240,519
Other operation and maintenance 129,812 122,628 144,183
Depreciation and amortization 43,300 40,313 38,197
Taxes other than income taxes 43,142 43,389 46,019
Other regulatory charges (credits) (20,731) (23,026) (6,965)
Amortization of rate deferrals 119,797 130,602 114,304
-------- -------- --------
Total 800,647 793,834 739,455
-------- -------- --------
Operating Income 136,748 164,596 150,388
-------- -------- --------
Other Income:
Allowance for equity funds used
during construction 543 1,143 950
Miscellaneous - net 919 1,662 3,036
-------- -------- --------
Total 1,462 2,805 3,986
-------- -------- --------
Interest Charges:
Interest on long-term debt 40,791 44,137 46,998
Other interest - net 4,483 3,870 4,638
Allowance for borrowed funds used
during construction (469) (923) (806)
-------- -------- --------
Total 44,805 47,084 50,830
-------- -------- --------
Income Before Income Taxes 93,405 120,317 103,544
Income Taxes 26,744 41,106 34,877
-------- -------- --------
Net Income 66,661 79,211 68,667
Preferred Stock Dividend Requirements
and Other 4,044 5,010 7,515
-------- -------- --------
Earnings Applicable to Common Stock $62,617 $74,201 $61,152
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $66,661 $79,211 $68,667
Noncash items included in net income:
Amortization of rate deferrals 119,797 130,602 114,304
Other regulatory charges (credits) (20,731) (23,026) (6,965)
Depreciation and amortization 43,300 40,313 38,197
Deferred income taxes and investment tax credits (32,204) (32,887) (36,774)
Allowance for equity funds used during construction (543) (1,143) (950)
Changes in working capital:
Receivables 2,978 (4,123) (5,277)
Fuel inventory 3,275 20 (1,901)
Accounts payable (9,246) 88 15,553
Taxes accrued 5,832 (2,157) 7,818
Interest accrued (6,600) (925) 1,457
Other working capital accounts (12,283) 4,074 (21,108)
Other (1,150) (8,081) 11,922
---------- ---------- ----------
Net cash flow provided by operating activities 159,086 181,966 184,943
---------- ---------- ----------
Investing Activities:
Construction expenditures (50,334) (85,018) (79,146)
Allowance for equity funds used during construction 543 1,143 950
---------- ---------- ----------
Net cash flow used in investing activities (49,791) (83,875) (78,196)
---------- ---------- ----------
Financing Activities:
Proceeds from the issuance of general and refunding
mortgage bonds 64,827 - 79,480
Retirement of:
General and refunding mortgage bonds (96,000) (26,000) (45,000)
First mortgage bonds - (35,000) (20,000)
Other long-term debt (15) (15) (965)
Redemption of preferred stock (14,500) (9,876) (15,000)
Changes in short-term borrowings - net (3,091) 50,253 (30,000)
Dividends paid:
Common stock (59,200) (79,900) (61,700)
Preferred stock (3,998) (5,000) (6,215)
---------- ---------- ----------
Net cash flow used in financing activities (111,977) (105,538) (99,400)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents (2,682) (7,447) 7,347
Cash and cash equivalents at beginning of period 9,498 16,945 9,598
---------- ---------- ----------
Cash and cash equivalents at end of period $6,816 $9,498 $16,945
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $50,194 $46,769 $48,617
Income taxes $51,598 $73,687 $67,746
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
ASSETS
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $6,816 $2,384
Special deposits - 7,114
---------- ----------
Total cash and cash equivalents 6,816 9,498
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1 million in 1997 and $1.4 million and 1996) 36,636 44,809
Associated companies 6,842 4,382
Other 4,139 2,014
Accrued unbilled revenues 49,993 49,383
Fuel inventory - at average cost 3,386 6,661
Materials and supplies - at average cost 17,657 17,567
Rate deferrals 127,295 142,504
Prepayments and other 17,537 7,434
---------- ----------
Total 270,301 284,252
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 5,531 5,531
Other - at cost (less accumulated depreciation) 7,757 7,923
---------- ----------
Total 13,288 13,454
---------- ----------
Utility Plant:
Electric 1,687,400 1,633,484
Construction work in progress 22,960 47,373
---------- ----------
Total 1,710,360 1,680,857
Less - accumulated depreciation and amortization 656,828 635,754
---------- ----------
Utility plant - net 1,053,532 1,045,103
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals - 104,588
SFAS 109 regulatory asset - net 22,993 11,813
Unamortized loss on reacquired debt 8,404 9,254
Other regulatory assets 64,827 46,309
Other 6,216 6,693
---------- ----------
Total 102,440 178,657
---------- ----------
TOTAL $1,439,561 $1,521,466
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $20 $96,015
Notes payable - associated companies 47,162 50,253
Accounts payable:
Associated companies 36,057 32,878
Other 11,276 23,701
Customer deposits 24,084 26,258
Taxes accrued 32,314 26,482
Accumulated deferred income taxes 44,277 58,634
Interest accrued 14,309 20,909
Other 2,806 3,065
---------- ----------
Total 212,305 338,195
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 244,464 249,522
Accumulated deferred investment tax credits 23,915 25,422
Other 15,892 19,445
---------- ----------
Total 284,271 294,389
---------- ----------
Long-term debt 464,156 399,054
Preferred stock with sinking fund - 7,000
Shareholder's Equity:
Preferred stock without sinking fund 50,381 57,881
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 (59) (143)
Retained earnings 229,181 225,764
---------- ----------
Total 478,829 482,828
---------- ----------
Commitments and Contingencies (Notes 2 and 9)
TOTAL $1,439,561 $1,521,466
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $225,764 $231,463 $232,011
Add:
Net income 66,661 79,211 68,667
Deduct:
Dividends declared:
Preferred stock 3,656 4,803 5,971
Common stock 59,200 79,900 61,700
Preferred stock expenses 388 207 1,544
-------- -------- --------
Total 63,244 84,910 69,215
-------- -------- --------
Retained Earnings, December 31 (Note 8) $229,181 $225,764 $231,463
======== ======== ========
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $ 937,395 $ 958,430 $ 889,843 $ 859,845 $ 883,818
Net Income $ 66,661 $ 79,211 $ 68,667 $ 48,779 $ 69,037
Total assets $1,439,561 $1,521,466 $1,581,983 $1,637,828 $1,681,992
Long-term obligations (1) $ 464,156 $ 406,054 $ 511,613 $ 507,555 $ 563,612
</TABLE>
(1) Includes long-term debt (excluding currently maturing debt) and
preferred stock with sinking fund.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $342,818 $358,264 $336,194 $332,567 $341,620
Commercial 274,195 281,626 262,786 257,154 251,285
Industrial 173,152 185,351 178,466 184,637 182,060
Governmental 26,882 29,093 27,410 27,495 28,530
---------------------------------------------------
Total retail 817,047 854,334 804,856 801,853 803,495
Sales for resale
Associated companies 78,233 58,749 35,928 37,747 34,640
Non-associated companies 21,276 22,814 21,906 16,728 21,100
Other 20,839 22,533 27,153 3,517 24,583
---------------------------------------------------
Total $937,395 $958,430 $889,843 $859,845 $883,818
===================================================
Billed Electric Energy
Sales (GWH):
Residential 4,323 4,355 4,233 4,014 3,983
Commercial 3,673 3,508 3,368 3,151 2,928
Industrial 3,089 3,063 3,044 2,985 2,787
Governmental 333 346 336 330 336
---------------------------------------------------
Total retail 11,418 11,272 10,981 10,480 10,034
Sales for resale
Associated companies 1,918 1,368 959 1,079 758
Non-associated companies 412 521 692 512 670
---------------------------------------------------
Total 13,748 13,161 12,632 12,071 11,462
===================================================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy New Orleans, Inc.
We have audited the accompanying balance sheets of Entergy New
Orleans, Inc. (formerly New Orleans Public Service Inc.) as of December 31,
1997 and 1996, and the related statements of income, retained earnings and
cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as
of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 1997 primarily due to an increase in taxes
other than income taxes, partially offset by lower income taxes.
Net income decreased in 1996 primarily due to the electric and gas
rate refund recorded in December 1996, based on the Council's review of
Entergy New Orleans' 1996 earnings. This decrease in net income was
partially offset by reduced other operation and maintenance expenses.
Significant factors affecting the results of operations and causing
variances between the years 1997 and 1996, and between the years 1996 and
1995, are discussed under "Revenues and Sales", "Expenses", and "Other"
below.
Revenues and Sales
See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following the
financial statements, for information on electric operating revenues by
source and KWH sales.
The changes in electric operating revenues for the twelve months
ended December 31, 1997 and 1996 are as follows:
Increase/(Decrease)
Description 1997 1996
(In Millions)
Change in base revenues ($13.6) ($8.5)
Fuel cost recovery (2.2) 28.5
Sales volume/weather (0.8) (4.8)
Other revenue (including unbilled) 16.7 (1.4)
Sales for resale 6.8 (0.5)
------ -----
Total $6.9 $13.3
====== =====
Electric operating revenues increased in 1997 primarily due to
increases in other revenue and sales for resale, partially offset by a
decrease in base revenues. Other revenue increased as a result of a rate
refund recorded in 1996. Sales for resale increased as a result of an
increase in electric sales to associated companies primarily due to
changes in generation requirements and availability among the domestic
utility companies. The decrease in base revenues is caused by 1996 and
1997 reductions in residential and commercial rates. Electric operating
revenues increased in 1996 primarily due to higher fuel adjustment
revenues, as a result of higher fuel prices, which do not affect net
income. This increase was partially offset by a rate refund recorded in
1996, as discussed in "Net Income" above, and lower sales attributable to
a significant reduction in electricity usage by a large industrial
customer.
Gas operating revenues decreased in 1997 primarily due to lower gas
prices. Gas operating revenues increased in 1996 primarily due to higher
gas prices. This increase was partially offset by the rate refund
recorded in 1996, as discussed in "Net Income" above.
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Expenses
Operating expenses increased in 1997 due primarily to increases in
taxes other than income taxes and lower other regulatory credits. These
increases were partially offset by a decrease in total fuel expenses,
including purchased power and gas purchased for resale. Taxes other than
income taxes increased because of higher franchise taxes resulting from a
December 1996 Council order increasing Entergy New Orleans' annual
franchise fee from 2.5% to 5% of gross revenues. The decrease in other
regulatory credits is primarily a result of the 1996 deferral of Entergy
New Orleans' portion of the proposed System Energy rate increase. See
Note 2 for further discussion. Fuel and purchased power expenses
decreased in 1997 primarily due to a shift from higher priced purchased
power to lower priced fuel.
Operating expenses increased in 1996 primarily due to higher fuel
expenses, including purchased power and gas purchased for resale and
increased amortization of rate deferrals, partially offset by an increase
in other regulatory credits and a decrease in other operation and
maintenance expenses. Fuel expenses, including gas purchased for resale,
increased as a result of significantly higher unit prices. Purchased
power increased due to changes in generation availability and requirements
among the domestic utility companies. Other regulatory credits increased
due to the deferral of a portion of the System Energy rate increase being
billed to Entergy New Orleans, as discussed in Note 2. Other operation
and maintenance expenses decreased primarily due to lower payroll expenses
as a result of restructuring and reduced regulatory commission expenses.
Other
The effective income tax rates for 1997, 1996, and 1995 were 44.0%,
37.7%, and 37.3%, respectively. The increase in 1997 is primarily due to
decreased amortization of deferred income taxes on property fully
depreciated for federal income tax purposes. The effective income tax
rate for 1996 was relatively unchanged from 1995.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Revenues:
Electric $410,131 $403,254 $390,002
Natural gas 94,691 101,023 80,276
-------- -------- --------
Total 504,822 504,277 470,278
-------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 141,902 129,059 102,314
Purchased power 156,542 176,450 145,920
Other operation and maintenance 72,748 71,421 76,510
Depreciation and amortization 21,107 20,007 19,420
Taxes other than income taxes 38,964 27,388 27,805
Other regulatory charges (credits) (6,394) (13,543) (3,985)
Amortization of rate deferrals 37,662 35,917 31,564
-------- -------- --------
Total 462,531 446,699 399,548
-------- -------- --------
Operating Income 42,291 57,578 70,730
-------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 380 321 158
Miscellaneous - net (77) 1,146 1,639
-------- -------- --------
Total 303 1,467 1,797
-------- -------- --------
Interest Charges:
Interest on long-term debt 13,918 15,268 15,948
Other interest - net 1,369 1,036 1,853
Allowance for borrowed funds used
during construction (286) (252) (127)
-------- -------- --------
Total 15,001 16,052 17,674
-------- -------- --------
Income Before Income Taxes 27,593 42,993 54,853
Income Taxes 12,142 16,217 20,467
-------- -------- --------
Net Income 15,451 26,776 34,386
Preferred Stock Dividend Requirements
and Other 965 965 1,411
-------- -------- --------
Earnings Applicable to Common Stock $14,486 $25,811 $32,975
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $15,451 $26,776 $34,386
Noncash items included in net income:
Amortization of rate deferrals 37,662 35,917 31,564
Other regulatory charges (credits) (6,394) (13,543) (3,985)
Depreciation and amortization 21,107 20,007 19,420
Deferred income taxes and investment tax credits (1,957) (12,274) (1,998)
Allowance for equity funds used during construction (380) (321) (158)
Changes in working capital:
Receivables (1,260) 832 (5,468)
Accounts payable 540 (5,638) 12,566
Taxes accrued 4,066 (4,350) 3,225
Interest accrued (276) 214 (131)
Income tax refund - - 20,172
Other working capital accounts (18,148) (5,216) (4,803)
Other (1,823) 1,602 (5,515)
---------- ---------- ----------
Net cash flow provided by operating activities 48,588 44,006 99,275
---------- ---------- ----------
Investing Activities:
Construction expenditures (16,137) (27,956) (27,836)
Allowance for equity funds used during construction 380 321 158
---------- ---------- ----------
Net cash flow used in investing activities (15,757) (27,635) (27,678)
---------- ---------- ----------
Financing Activities:
Proceeds from the issuance of general and refunding mortgage bonds - 39,608 29,805
Retirement of:
First mortgage bonds (12,000) (23,250) -
General and refunding mortgage bonds - (30,000) (24,200)
Redemption of preferred stock - - (3,525)
Dividends paid:
Common stock (26,000) (34,000) (30,600)
Preferred stock (965) (965) (1,362)
---------- ---------- ----------
Net cash flow used in financing activities (38,965) (48,607) (29,882)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents (6,134) (32,236) 41,715
Cash and cash equivalents at beginning of period 17,510 49,746 8,031
---------- ---------- ----------
Cash and cash equivalents at end of period $11,376 $17,510 $49,746
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $14,951 $15,357 $17,187
Income taxes - net $10,981 $31,870 ($941)
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
ASSETS
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $4,321 $1,015
Temporary cash investments - at cost,
which approximates market:
Associated companies 1,918 7,435
Other 5,137 9,060
-------- --------
Total cash and cash equivalents 11,376 17,510
Accounts receivable:
Customer (less allowance for doubtful accounts
of $0.7 million in 1997 and 1996) 26,913 27,430
Associated companies 1,081 714
Other 4,155 1,764
Accrued unbilled revenues 16,083 17,064
Deferred electric fuel and resale gas costs 9,384 7,290
Materials and supplies - at average cost 9,389 9,904
Rate deferrals 35,336 37,692
Prepayments and other 6,087 7,157
-------- --------
Total 119,804 126,525
-------- --------
Other Property and Investments:
Investment in subsidiary companies - at equity 3,259 3,259
-------- --------
Utility Plant:
Electric 508,338 503,061
Natural gas 122,308 122,700
Construction work in progress 19,184 18,247
-------- --------
Total 649,830 644,008
Less - accumulated depreciation and amortization 355,854 347,790
-------- --------
Utility plant - net 293,976 296,218
-------- --------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 64,192 99,498
SFAS 109 regulatory asset - net 1,202 6,051
Unamortized loss on reacquired debt 1,435 1,647
Other regulatory assets 13,392 15,908
Other 890 890
-------- --------
Total 81,111 123,994
-------- --------
TOTAL $498,150 $549,996
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $- $12,000
Accounts payable:
Associated companies 15,922 18,757
Other 17,505 14,130
Customer deposits 16,982 18,974
Taxes accrued 5,270 1,204
Accumulated deferred income taxes 11,544 5,584
Interest accrued 5,049 5,325
Provision for rate refund 3,108 19,465
Other 2,231 1,521
-------- --------
Total 77,611 96,960
-------- --------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 61,000 72,895
Accumulated deferred investment tax credits 7,396 7,984
Accumulated provision for property insurance 15,487 15,666
Other 16,327 24,713
-------- --------
Total 100,210 121,258
-------- --------
Long-term debt 168,953 168,888
Shareholder's Equity:
Preferred stock without sinking fund 19,780 19,780
Common Shareholder's Equity:
Common stock, $4 par value, authorized
10,000,000 shares; issued and outstanding
8,435,900 shares 33,744 33,744
Additional paid-in capital 36,294 36,294
Retained earnings subsequent to the elimination of
the accumulated deficit on November 30, 1988 61,558 73,072
-------- --------
Total 151,376 162,890
-------- --------
Commitments and Contingencies (Notes 2 and 9)
TOTAL $498,150 $549,996
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $73,072 $81,261 $78,886
Add:
Net income 15,451 26,776 34,386
Deduct:
Dividends declared:
Preferred stock 965 965 1,231
Common stock 26,000 34,000 30,600
Capital stock expenses - - 180
-------- -------- --------
Total 26,965 34,965 32,011
-------- -------- --------
Retained Earnings, December 31 (Note 8) $61,558 $73,072 $81,261
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $504,822 $ 504,277 $470,278 $447,787 $ 514,822
Net Income $ 15,451 $ 26,776 $ 34,386 $ 13,211 $ 36,761
Total assets $498,150 $ 549,996 $596,206 $592,894 $ 647,605
Long-term obligations (1) $168,953 $ 168,888 $155,958 $167,610 $ 193,262
</TABLE>
(1) Includes long-term debt (excluding currently maturing debt).
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $145,688 $151,577 $141,353 $142,013 $151,423
Commercial 143,113 149,649 144,374 162,410 167,788
Industrial 24,616 24,663 22,842 25,422 26,205
Governmental 58,746 58,561 52,880 58,726 61,548
---------------------------------------------------
Total retail 372,163 384,450 361,449 388,571 406,964
Sales for resale
Associated companies 10,342 2,649 3,217 2,061 2,487
Non-associated companies 8,996 9,882 9,864 7,512 9,291
Other (1) 18,630 6,273 15,472 (37,714) 5,088
---------------------------------------------------
Total $410,131 $403,254 $390,002 $360,430 $423,830
===================================================
Billed Electric Energy
Sales (GWH):
Residential 1,971 1,998 2,049 1,896 1,914
Commercial 2,072 2,073 2,079 2,031 1,989
Industrial 484 481 537 518 499
Governmental 994 974 983 951 924
---------------------------------------------------
Total retail 5,521 5,526 5,648 5,396 5,326
Sales for resale
Associated companies 316 66 149 92 89
Non-associated companies 160 212 297 202 262
---------------------------------------------------
Total 5,997 5,804 6,094 5,690 5,677
===================================================
</TABLE>
(1) 1994 includes the effects of the 1994 NOPSI Settlement.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
System Energy Resources, Inc.
We have audited the accompanying balance sheets of System Energy
Resources, Inc. as of December 31, 1997 and 1996, and the related
statements of income, retained earnings and cash flows for each of the
three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as
of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in
1996 the Company changed its method of accounting for incremental nuclear
plant outage maintenance costs.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased slightly in 1997 and 1996 primarily due to lower
interest charges attributed to the refinancing of higher-cost debt.
Significant factors affecting the results of operations and causing
variances between the years 1997 and 1996, and between the years 1996 and
1995, are discussed under "Revenues", "Expenses", and "Other" 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. See Note 2 herein for a discussion of System Energy's proposed
rate increase.
Expenses
Operating expenses increased in 1997 due to higher nuclear refueling
outage expenses and higher depreciation, amortization, and decommissioning
expenses. Nuclear refueling outage expenses increased due to costs that
were deferred from the November 1996 outage, which are now being amortized
over an 18-month period that began in December 1996. Prior to this
outage, such costs were expensed as incurred and no such expenses were
incurred in 1996. The increase in depreciation, amortization, and
decommissioning expense is due to the reduction of the regulatory asset
set up to defer the depreciation associated with the sale and leaseback in
1989 of a portion of Grand Gulf 1. The depreciation was deferred to match
the collection of lease principal and revenues with the depreciation of
the asset. Grand Gulf 1 was on-line for 365 days in 1997 as compared to
322 days in 1996.
Operating expenses increased in 1996 due primarily to increases in
other operation and maintenance expenses, and depreciation, amortization,
and decommissioning expenses. Other operation and maintenance expenses
increased primarily because of higher waste disposal costs and medical
benefit charges for the year. 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). These increases were
partially offset by a decrease in nuclear refueling outage expenses. The
decrease in nuclear outage expenses was primarily due to the effect of
deferring the nuclear refueling outage expenses in the fourth quarter of
1996 rather than recognizing those expenses as incurred (see Note 1).
Grand Gulf 1 was on-line for 322 days in 1996 as compared with 285 days in
1995. The increase in the on-line days was primarily due to the unit's
shorter eighth refueling outage that lasted from October 19, 1996 to
November 30, 1996 (41 days), compared to a 68-day outage in 1995, and to a
lesser extent, unplanned outages in 1996 totaling 3 days, compared to 12
days for 1995.
Other
Interest charges decreased in both 1997 and in 1996 due primarily to
the retirement and refinancing of higher-cost long-term debt.
The effective income tax rates in 1997, 1996, and 1995 were 42.2%,
45.4%, and 44.8%, respectively. The decrease in 1997 is primarily due to
the impact of recording the tax benefit of Entergy Corporation's expenses
as prescribed by the tax allocation agreement. The effective income tax
rate for 1996 was relatively unchanged from 1995.
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Revenues $633,698 $623,620 $605,639
-------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 48,475 43,761 40,262
Nuclear refueling outage expenses 16,425 1,239 24,935
Other operation and maintenance 101,269 105,453 98,441
Depreciation, amortization, and decommissioning 147,859 128,474 100,747
Taxes other than income taxes 26,477 27,654 27,549
-------- -------- --------
Total 340,505 306,581 291,934
-------- -------- --------
Operating Income 293,193 317,039 313,705
-------- -------- --------
Other Income:
Allowance for equity funds used
during construction 2,209 1,122 1,878
Miscellaneous - net 8,517 5,234 2,492
-------- -------- --------
Total 10,726 6,356 4,370
-------- -------- --------
Interest Charges:
Interest on long-term debt 121,633 135,376 143,020
Other interest - net 7,020 8,344 8,491
Allowance for borrowed funds used
during construction (1,683) (1,114) (1,968)
-------- -------- --------
Total 126,970 142,606 149,543
-------- -------- --------
Income Before Income Taxes 176,949 180,789 168,532
Income Taxes 74,654 82,121 75,493
-------- -------- --------
Net Income $102,295 $98,668 $93,039
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $102,295 $98,668 $93,039
Noncash items included in net income:
Depreciation, amortization, and decommissioning 147,859 128,474 100,747
Deferred income taxes and investment tax credits (39,370) 48,975 (45,337)
Allowance for equity funds used during construction (2,209) (1,122) (1,878)
Changes in working capital:
Receivables (9,543) 3,436 (66,433)
Accounts payable 11,172 560 (18,955)
Taxes accrued 7,852 (4,825) 37,266
Interest accrued 8,127 (2,548) (4,053)
Other working capital accounts 19,054 (13,430) (21,874)
Decommissioning trust contributions and realized
change in trust assets (22,452) (21,366) (7,507)
FERC Settlement - refund obligation (4,539) (4,009) (3,540)
Provision for estimated losses and reserves 43,216 46,919 3,167
Other 16,684 7,125 31,818
---------- ---------- ----------
Net cash flow provided by operating activities 278,146 286,857 96,460
---------- ---------- ----------
Investing Activities:
Construction expenditures (35,141) (29,469) (21,747)
Allowance for equity funds used during construction 2,209 1,122 1,878
Nuclear fuel purchases (16,524) (44,704) (51,455)
Proceeds from sale/leaseback of nuclear fuel 16,524 43,971 52,188
---------- ---------- ----------
Net cash flow used in investing activities (32,932) (29,080) (19,136)
---------- ---------- ----------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds - 233,656 -
Other long-term debt - 133,933 73,343
Retirement of:
First mortgage bonds (10,000) (325,101) (105,000)
Other long-term debt (7,319) (92,700) (45,320)
Changes in short-term borrowings - net - (2,990) 2,990
Common stock dividends paid (113,800) (112,500) (92,800)
---------- ---------- ----------
Net cash flow used in financing activities (131,119) (165,702) (166,787)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 114,095 92,075 (89,463)
Cash and cash equivalents at beginning of period 92,315 240 89,703
---------- ---------- ----------
Cash and cash equivalents at end of period $206,410 $92,315 $240
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $103,684 $138,483 $147,492
Income taxes $105,621 $36,397 $87,016
Noncash investing and financing activities:
Change in unrealized appreciation (depreciation) of
decommissioning trust assets $1,237 ($70) $3,061
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $792 $26
Temporary cash investments - at cost,
which approximates market:
Associated companies 55,891 41,600
Other 149,727 50,689
---------- ----------
Total cash and cash equivalents 206,410 92,315
Accounts receivable:
Associated companies 79,262 71,337
Other 4,140 2,522
Materials and supplies - at average cost 63,782 66,302
Deferred nuclear refueling outage costs 7,777 24,005
Prepayments and other 3,658 4,929
---------- ----------
Total 365,029 261,410
---------- ----------
Other Property and Investments:
Decommissioning trust fund 85,912 62,223
---------- ----------
Utility Plant:
Electric 3,025,389 2,994,445
Electric plant under leases 440,970 447,409
Construction work in progress 36,445 41,362
Nuclear fuel under capital lease 64,190 83,558
---------- ----------
Total 3,566,994 3,566,774
Less - accumulated depreciation and amortization 1,086,820 974,472
---------- ----------
Utility plant - net 2,480,174 2,592,302
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 243,027 264,758
Unamortized loss on reacquired debt 51,386 57,785
Other regulatory assets 192,290 207,214
Other 14,213 15,601
---------- ----------
Total 500,916 545,358
---------- ----------
TOTAL $3,432,031 $3,461,293
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
1997 1996
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $70,000 $10,000
Accounts payable:
Associated companies 29,131 18,245
Other 19,122 18,836
Taxes accrued 75,675 67,823
Interest accrued 42,322 34,195
Obligations under capital leases 41,977 28,000
Other 1,341 2,306
---------- ----------
Total 279,568 179,405
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 562,051 624,020
Accumulated deferred investment tax credits 100,171 103,647
Obligations under capital leases 22,213 55,558
FERC Settlement - refund obligation 48,300 52,839
Other 227,847 165,517
---------- ----------
Total 960,582 1,001,581
---------- ----------
Long-term debt 1,341,948 1,418,869
Common Shareholder's Equity:
Common stock, no par value, authorized
1,000,000 shares; issued and outstanding
789,350 shares 789,350 789,350
Retained earnings 60,583 72,088
---------- ----------
Total 849,933 861,438
---------- ----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $3,432,031 $3,461,293
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $72,088 $85,920 $85,681
Add:
Net income 102,295 98,668 93,039
Deduct:
Dividends declared 113,800 112,500 92,800
-------- -------- --------
Retained Earnings, December 31 (Note 8) $60,583 $72,088 $85,920
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1997 1996 1995 1994 1993
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $ 633,698 $ 623,620 $ 605,639 $ 474,963 $ 650,768
Net income $ 102,295 $ 98,668 $ 93,039 $ 5,407 $ 93,927
Total assets $3,432,031 $3,461,293 $3,431,012 $3,613,359 $ 3,891,066
Long-term obligations (1) $1,364,161 $1,474,427 $1,264,024 $1,456,993 $ 1,536,593
Electric energy sales (GWH) 9,735 8,302 7,212 8,653 7,113
(1) Includes long-term debt (excluding current maturities) and noncurrent
capital lease obligations.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy London Investments plc
We have audited the accompanying consolidated balance sheet of Entergy
London Investments plc and Subsidiary as of December 31, 1997, and the
related consolidated statements of loss, retained earnings and cash flows
for the year ended December 31, 1997. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Entergy London Investments plc and Subsidiary as of December 31, 1997, and
the results of their operations and their cash flows for the year ended
December 31, 1997 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Background
Entergy London (formerly Entergy Power UK plc) was incorporated as a
public limited company under the laws of England and Wales in October 1996,
as a vehicle for the acquisition of London Electricity. In February 1997,
Entergy London gained effective control of London Electricity, having
acquired over 90% of its shares. In May 1997, Entergy London acquired the
remaining shares of London Electricity. Total consideration for the
acquisition was approximately $2.0 billion, based on the exchange rate at
the time of the acquisition. Entergy London's sole significant asset is
the stock of London Electricity. Entergy London has no operations outside
of its investment in London Electricity.
Accounting for the Acquisition
Entergy London's acquisition of London Electricity effective February
1, 1997 was accounted for as a purchase in accordance with US GAAP.
Accordingly, the results of operations of London Electricity have been
consolidated into the results of operations for Entergy London beginning on
such date. In accordance with the purchase method of accounting, Entergy
London has allocated the price paid for London Electricity to London
Electricity's assets and liabilities based on their estimated fair market
values with the remainder allocated to London Electricity's distribution
license which represents an other identifiable intangible asset. The
assets and liabilities acquired as of February 1, 1997 were as follows (in
millions):
Current assets $ 518.2
Network assets 2,134.3
Other long term assets 1,601.2
Current liabilities (614.8)
Long term debt (333.9)
Other long term liabilities (1,285.9)
--------
Total purchase price $2,019.1
========
The principal adjustments to London Electricity's historical cost of
its assets and liabilities include: (a) increase in the value of network
assets ($782.9 million); (b) increase in pension asset for defined benefit
pension plan under US GAAP ($108.6 million); (c) recordation of
distribution license ($1,335.8 million); and (d) recordation of liability
for unfavorable long term contracts ($159.4 million). Additionally, the
Company provided for the deferred income tax effect of these adjustments at
a rate of 33%, which is included in other long term liabilities. Entergy
London is amortizing the adjustments for network assets and the
distribution license over estimated useful lives of 40 years and the
adjustment for unfavorable long term contracts over their remaining lives
ranging from 14 to 18 years. Entergy London's asset recorded for the
defined benefit pension plan will be increased or decreased on a
prospective basis based on future actuarial studies of the plan's projected
benefit obligation and fair value of pension plan assets. The liability
for unfavorable long term contracts is based on the estimated fair market
value of these contracts over the present value of the future cash flows
under the contracts at the applicable discount rates and prices. Although
amortization of the liability for unfavorable long-term contracts will
reduce the expense related to these contracts, it will not impact Entergy
London's actual payments or cash flow obligations.
London Electricity has utilized a portion of the pension plan surplus
to increase benefits to members and reduce employer and employee
contributions. A recent court ruling in the UK upheld such uses of pension
surplus. However, the decision is under appeal and should the decision be
reversed on appeal, Entergy London could be required to repay pension
surplus utilized and recompute Entergy London's prepaid pension asset,
which was $241 million at December 31, 1997.
<PAGE>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - Successor Company
The following discussion compares the results of operations for the
year ended December 31, 1997 for Entergy London with the results of
operations of London Electricity for the ten month period ended January 31,
1997 (London Electricity's fiscal year ended on March 31, prior to its
acquisition). The year ended December 31, 1997 for Entergy London includes
eleven months results for London Electricity due to its acquisition on
February 1, 1997. Periods prior to February 1, are included for
comparative purposes, however, they do not include the effects of
acquisition adjustments described above under "Accounting for the
Acquisition".
Operating Income
Operating income was $187 million for the year ended December 31, 1997
which included London Electricity for the eleven month period from February
1, 1997 through December 31, 1997. This represented an increase of $18
million compared to the historical London Electricity results for the ten
month period from April 1, 1996 through January 31, 1997. This increase
was due principally to higher revenue from an additional month's results of
operations in the later period and restructuring charges of $19 million
during the earlier period. Partially offsetting this were increases of $59
million in depreciation and amortization expense due principally to
acquisition adjustments and $17 million in other operation and maintenance
costs. The above variances were all impacted by an increase in the US
dollar to BPS average exchange rate from 1.58 to 1.00 in the ten month
period from April 1, 1996 through January 31, 1997 to 1.64 to 1.00 for the
eleven month period ending December 31, 1997.
Operating income by segments for the year ended December 31, 1997 was
$141 million, $15 million, and $31 million for the distribution, supply,
and other segments, respectively. Income (loss) from those segments for
the ten month period from April 1, 1996 through January 31, 1997 was $159
million, $(1) million, and $11 million, respectively.
The decrease in distribution operating income was principally due to
additional depreciation and amortization expense of $59 million in the
later period attributable to acquisition adjustments for fixed assets and
the distribution license based on 40-year useful lives partially offset by
one additional month of operations in the later period. Increases in the
supply and other segments are due principally to one additional month of
operations in the later period and improved margins in the non-Franchise
supply market and one-time charges in the period ending January 31, 1997
relating to the disposal of certain subsidiaries and associated
undertakings.
Net Income
Net income decreased by $245 million, from $98 million during the
period from April 1, 1996 to January 31, 1997, to a loss of $147 million
for the year ended December 31, 1997. The net loss for the later period
includes a one-time charge of $234 million (reflected in income taxes) for
the windfall profits tax enacted by the UK government in July 1997. The
windfall profits tax is not deductible for UK corporation tax purposes.
This charge was partially offset by a reduction of $65 million in the
Company's deferred income tax liability, in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," due
to the UK government also reducing the UK corporation tax rate from 33% to
31%, effective April 1, 1997. Acquisition related adjustments including
increased depreciation and amortization of approximately $59 million ($41
million after tax effect) and increased interest expense, principally on
acquisition debt, of approximately $152 million ($105 million after tax
effect) also contributed to the reduction in net income. The increase in
operating income of $18 million ($12 million after tax effect) and an
increase in interest and dividend income of $17 million ($12 million after
tax effect) partially offset the above impacts.
<PAGE>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Revenues
Operating revenues increased by $82 million (5%) from $1,765 million
during the ten month period from April 1, 1996 to January 31, 1997 to
$1,847 million for the year ended December 31, 1997, as follows:
Operating Revenues
Increase (Decrease)
from ten-month Period
from April 1, 1996
through January 31,
1997 to the year ended
December 31, 1997
(In millions)
Electricity distribution $64
Electricity supply 26
Other (4)
Intra-business (4)
---
Total operating revenues $82
===
Two principal factors determine the amount of revenues produced by the
main electricity distribution business: the unit price of the electricity
distributed (which is controlled by the Distribution Price Control Formula)
and the number of electricity units distributed which depends on the demand
of London Electricity's customers for electricity within its Franchise
Area. Demand varies based upon weather conditions and economic activity.
Following London Electricity's regulatory distribution price review in
1994, London Electricity's allowable expected distribution revenues were
reduced by 14%, during the fiscal year ended March 31, 1996. Subsequently,
the Regulator announced a further allowed distribution price reduction of
11% beginning April 1, 1996, and an additional 3%, beginning April 1, 1997.
These price reductions have reduced and will continue to reduce London
Electricity's distribution revenues.
Revenues from the distribution business increased by $64 million (15%)
from $435 million for the ten month period from April 1, 1996 to January
31, 1997 to $499 million for the year ended December 31, 1997, principally
due to an 11% increase in units distributed as a result of there being
eleven months of London Electricity operations in the year ended December
31, 1997 compared to only ten months in the earlier period. Also
contributing to the total increase was the increase in the U.S. dollars to
BPS exchange rate during the year ended December 31, 1997.
Two principal factors determine the amount of revenues produced by the
supply business: the unit price of the electricity supplied (which, in the
case of the franchise supply customers, is controlled by the Supply Price
Control Formula) and the number of electricity units supplied. London
Electricity is expected to have the exclusive right to supply all franchise
supply customers in its Franchise Area until late 1998.
Franchise supply customers, who are generally residential and small
commercial customers, comprised 56% of total sales volume for the February
1, 1997 through December 31, 1997 period of London Electricity's inclusion
in Entergy London's 1997 results of operations. The volume of unit sales
of electricity for franchise supply customers is influenced largely by the
number of customers in London Electricity's Franchise Area, weather
conditions and prevailing economic conditions. Unit sales to non-franchise
supply customers, who are typically large commercial and industrial
businesses, constituted 44% of total sales volume for the period from
<PAGE>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
February 1, 1997 through December 31, 1997. Sales to non-franchise supply
customers are determined primarily by the success of the supply business
in contracting to supply customers with electricity who are located both
inside and outside London Electricity's Franchise Area.
During the February 1, 1997 through December 31, 1997 period that
London Electricity was included in Entergy London's 1997 results of
operations, the number of electricity units supplied increased by 5% while
total revenues produced by the supply business increased by 2% ($26
million) to $1,689 million from $1,663 million for the ten month period
from April 1, 1996 to January 31, 1997. While volume increased for both
Franchise Supply Customers and Non-Franchise Supply Customers due to the
additional month included in the later period, this was partially offset by
lower average unit prices for both customer categories. Reductions in
prices for Franchise Supply Customers are due primarily to pass-through of
reduced costs of purchased power. Reductions in prices for Non-Franchise
Supply Customers are due primarily to competitive pressures in this market
as purchased power costs decline.
Other revenues for the February 1, 1997 through December 31, 1997
period that London Electricity was included in Entergy London's 1997
results of operations were $103 million, a decrease of $4 million compared
to the ten month period from April 1, 1996 to January 31, 1997. This was
due principally to reduced revenues in the contracting business and the
exclusion of revenues from subsidiaries disposed of in the period ending
January 31, 1997.
Expenses
Operating expenses increased by $64 million (4%) from $1,596 million
in the ten month period from April 1, 1996 to January 31, 1997 to $1,660
million in the February 1, 1997 through December 31, 1997 period that
London Electricity was included in Entergy London's 1997 results of
operations. This increase was due principally to one additional month's
operations in the later period and to increases of $59 million in
depreciation and amortization expense related to the acquisition
adjustments for fixed assets and distribution license based on 40-year
useful lives and of $17 million in other operation and maintenance costs.
These increases were partially offset by restructuring charges of $19
million during the earlier period and a decrease in purchase power costs
due to a decline in the average purchase price per unit which was offset
by an increase in the exchange rate. Also contributing to the total
increase was the increase in the U.S. dollars to BPS exchange rate during
the year ended December 31, 1997.
Other
Interest Expense, Net
Interest expense, net increased by $152 million from $27 million
during the ten month period from April 1, 1996 to January 31, 1997 to $179
million for the year ended December 31, 1997. This increase was
principally as a result of the financing costs associated with the debt
facilities entered into to finance the acquisition of London Electricity,
effective February 1, 1997.
<PAGE>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Income Taxes
Entergy London's effective income tax rate was approximately 596% and
34% for the year ended December 31, 1997, and for the ten month period from
April 1, 1996 to January 31, 1997, respectively. The effective rate in the
1997 period was affected by the recording of a one-time charge of $234
million during the year ended December 31, 1997 for the windfall profits
tax enacted by the UK government in July 1997 and the non-deductibility,
for UK corporation tax purposes, of this charge. This impact was partially
offset by the $65 million favorable impact of the reduction in the UK
corporation tax rate from 33% to 31%, as discussed above.
Entergy London's 34% effective income tax rate for the ten month
period from April 1, 1996 to January 31, 1997, approximated the statutory
rate of 33%.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
CONSOLIDATED STATEMENT OF LOSS
For the Year Ended
December 31, 1997
(In Thousands)
<S> <C>
Operating Revenues $1,847,042
Operating Expenses:
Purchased power 1,222,034
Depreciation and amortization 121,365
Other operation and maintenance costs 316,833
----------
Total 1,660,232
----------
Operating Income 186,810
----------
Other income (deductions):
Interest and dividend income 22,328
Miscellaneous - net (803)
----------
Total 21,525
----------
Interest Charges:
Distributions on preferred securities of subsidiaries 3,019
Other interest - net 175,628
----------
Total 178,647
----------
Income Before Income Taxes 29,688
Income tax expense 177,023
----------
Net Loss ($147,335)
==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended
December 31, 1997
(In Thousands)
<S> <C>
Operating Activities:
Net loss ($147,335)
Noncash items included in net income:
Depreciation and amortization 121,365
Deferred income taxes (56,217)
Changes in assets and liabilities:
Inventory 375
Accounts receivable and unbilled revenue (66,019)
Other receivables 42,506
Prepayments and other (4,340)
Long-term receivables and other 4,546
Accounts payable 116,091
Income taxes accrued 81,568
Interest accrued (8,270)
Deferred revenue and other current liabilities (32,383)
Other liabilities (37,002)
Other 36,372
----------
Net cash flow provided by operating activities 51,257
----------
Investing Activities:
Construction expenditures (181,165)
Acquisition of London Electricity, net of cash acquired (1,951,701)
Other investments 1,321
----------
Net cash flow used in investing activities (2,131,545)
----------
Financing Activities:
Proceeds from the issuance of:
Bank notes and other long-term debt 1,559,748
Common Stock 505,953
Preferred securities of subsidiary partnership 300,000
Payment of long-term debt (259,428)
Changes in short-term borrowings - net (25,460)
----------
Net cash flow provided by financing activities 2,080,813
----------
Effect of exchange rates on cash and cash equivalents (10,615)
----------
Net decrease in cash and cash equivalents (10,090)
Cash and cash equivalents at beginning of period 54,478
----------
Cash and cash equivalents at end of period $44,388
==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $139,578
Cash paid for income taxes $127,585
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
ASSETS
December 31, 1997
(In Thousands)
<S> <C>
Current Assets:
Cash and cash equivalents
Cash $ -
Temporary cash investments 44,388
----------
Total cash and cash equivalents 44,388
Notes receivable 7,364
Accounts receivable:
Customer (less allowance for doubtful accounts of $21.9 million) 139,265
Other 39,764
Accrued unbilled revenue 262,818
Accumulated deferred income taxes 12,401
Inventory 1,976
Prepayments and other 13,623
----------
Total 521,599
----------
Property, Plant, and Equipment:
Property, plant and equipment 2,283,549
Construction work in progress 81,306
----------
Total 2,364,855
Less - accumulated depreciation and amortization 90,021
----------
Property, plant, and equipment - net 2,274,834
----------
Other Property, Investments, and Assets:
Investments, long-term 11,413
Distribution license (net of accumulated amortization of $31.1 million) 1,327,312
Long-term receivables 17,172
Prepaid pension asset 241,216
Other 10,079
----------
Total 1,607,192
----------
TOTAL $4,403,625
==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, 1997
(In Thousands)
<S> <C>
Current Liabilities:
Currently maturing long-term debt $33,814
Notes payable 240,794
Accounts payable 349,821
Customer deposits 24,946
Taxes accrued 120,981
Interest accrued 14,201
Other 805
----------
Total 785,362
----------
Other Liabilities:
Accumulated deferred income taxes 995,865
Other 250,470
----------
Total 1,246,335
----------
Long-term debt 1,706,096
Company-obligated redeemable preferred securities
of subsidiary partnership holding solely junior subordinated
deferrable debentures 300,000
Shareholders' Equity:
Common stock, BPS1 par value, authorized, issued,
and outstanding 50,000 shares 114,081
Paid-in capital 391,900
Accumulated deficit (132,390)
Cumulative foreign currency translation adjustment (7,759)
----------
Total 365,832
----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $4,403,625
==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
STATEMENT OF CONSOLIDATED RETAINED EARNINGS
For the Year Ended
December 31, 1997
(In Thousands)
<S> <C>
Retained Earnings, January 1 $ -
Add:
Net loss (147,335)
Imputed interest on parent company debt 14,945
---------
Accumulated Deficit, December 31 ($132,390)
=========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
SELECTED FINANCIAL DATA
1997
(In Thousands)
Operating revenues $1,847,042
Net loss $(147,335)
Total assets $4,403,625
Long-term obligations (1) $2,006,096
(1) Includes long-term debt (excluding currently maturing debt) and
preferred securities of subsidiary partnership.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Energy, and Entergy London)
The accompanying consolidated financial statements include the
accounts of Entergy Corporation and its direct and indirect subsidiaries,
including the domestic utility companies, System Energy, and Entergy
London, whose financial statements are included in this document. Except
for London Electricity, which was the predecessor company to Entergy London
(see Note 13), the financial statements presented herein result from these
companies having registered securities with the SEC.
All significant intercompany transactions have been eliminated.
Entergy Corporation's domestic utility subsidiaries maintain accounts in
accordance with FERC and other regulatory guidelines. Certain previously
reported amounts have been reclassified to conform to current
classifications, with no effect on net income or shareholders' equity.
Use of Estimates in the Preparation of Financial Statements
The preparation of Entergy Corporation and its subsidiaries' financial
statements, in conformity with generally accepted accounting principles,
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities, and the reported amounts of revenues and expenses.
Adjustments to the reported amounts of assets and liabilities may be
necessary in the future to the extent that future estimates or actual
results are different from the estimates used.
Revenues and Fuel Costs
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi generate,
transmit, and distribute electricity (primarily to retail customers) in
Arkansas, Louisiana, and Mississippi, respectively. Entergy Gulf States
generates, transmits, and distributes electricity primarily to retail
customers in Texas and Louisiana; distributes gas at retail primarily in
Baton Rouge, Louisiana, and also sells steam to a large refinery complex in
Baton Rouge. Entergy New Orleans sells both electricity and gas to retail
customers in the City of New Orleans (except for Algiers, where Entergy
Louisiana is the electricity supplier). London Electricity, Entergy
London's sole asset, distributes and supplies electricity to customers in
the London metropolitan area.
System Energy's operating revenues recover operating expenses,
depreciation, and capital costs attributable to Grand Gulf 1 from Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.
Capital costs are computed by allowing a return on System Energy's common
equity funds allocable to its net investment in Grand Gulf 1, plus System
Energy's effective interest cost for its debt allocable to its investment
in Grand Gulf 1. See Note 2 for a discussion of System Energy's proposed
rate increase.
A portion of Entergy Arkansas' and Entergy Louisiana's purchase of
power from Grand Gulf has not been included in the determination of the
cost of service to retail customers by the APSC and LPSC, respectively, as
described in Note 2.
The domestic utility companies and Entergy London accrue estimated
revenues for energy delivered since the latest billings. Entergy London
records revenue net of value-added tax.
The domestic utility companies' rate schedules include either fuel
adjustment clauses or fixed fuel factors, both of which allow either
current recovery or deferrals of fuel costs until such costs are reflected
in the related revenues. Fixed fuel factors remain in effect until changed
as part of a general rate case, fuel reconciliation, or fixed fuel factor
filing.
Entergy London purchases power primarily from the wholesale trading
market for electricity in England and Wales (Electricity Pool). The
Electricity Pool monitors supply and demand between generators and
suppliers, sets prices for generation, and provides centralized settlement
of amounts due between generators and suppliers.
Price Control
Certain supply customers of Entergy London are subject to price
control formulas through December 1998 which allow a maximum charge per
unit of electricity. Distribution customers are subject to price control
formulas which allow a maximum charge per unit of electricity. Differences
in the charges, or in the purchase cost of electricity, can result in the
under or over-recovery of revenues in a particular year.
Where there is an over-recovery of supply or distribution business
revenues against the regulated maximum allowable amount, revenues are
deferred in an amount equivalent to the over-recovered amount. The
deferred amount is deducted from operating revenues and included in other
liabilities. Where there is an under-recovery, no asset is recorded in
anticipation of any potential future recovery.
Utility Plant
Utility plant is stated at original cost. The original cost of
utility plant retired or removed, plus the applicable removal costs, less
salvage, is charged to accumulated depreciation. Maintenance, repairs, and
minor replacement costs are charged to operating expenses. Substantially
all of the utility plant is subject to liens from mortgage bond indentures.
Utility plant includes the portions of Grand Gulf 1 and Waterford 3
that have been sold and leased back. For financial reporting purposes,
these sale and leaseback arrangements are reflected as financing
transactions.
Net utility plant, by company and functional category, as of December
31, 1997 is shown below (in millions):
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System Entergy
Production Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nuclear $ 7,559 $ 951 $ 2,312 $ 1,940 $ - $ - $2,356 $ -
Other 1,538 366 631 224 213 14 -
Transmission 1,703 450 467 329 304 21 10 -
Distribution 5,370 916 788 731 424 162 - 1,976
Other 859 131 189 107 90 17 13 218
Plant acquisition adjustment-
Entergy Gulf States 439 - - - - - - -
Other 93 - 32 - - 61 - -
Construction Work
in Progress 566 123 90 52 23 19 37 81
Nuclear Fuel
(leased and owned) 342 93 78 59 - - 64 -
Accumulated Provision
For Decommissioning (1) (336) (227) (49) (60) - - - -
----------------------------------------------------------------------------------------
Utility Plant - Net $18,133 $ 2,803 $ 4,538 $ 3,382 $ 1,054 $ 294 $2,480 $ 2,275
========================================================================================
(1) System Energy's decommissioning liability is recorded on the Balance
Sheet in "Deferred Credits and Other Liabilities - Other"
Depreciation is computed on the straight-line basis at rates based on
the estimated service lives and costs of removal of the various classes of
property. Depreciation rates on average depreciable property are shown
below:
</TABLE>
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System Entergy
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 3.2% 3.1% 2.8% 3.0% 2.5% 3.1% 3.4% 4.4%
1996 3.0% 3.2% 2.7% 3.0% 2.4% 3.1% 3.3% N/A
1995 2.9% 3.3% 2.7% 3.0% 2.4% 3.1% 2.9% N/A
</TABLE>
AFUDC represents the approximate net composite interest cost of
borrowed funds and a reasonable return on the equity funds used for
construction. Although AFUDC increases both utility plant and earnings, it
is only realized in cash through depreciation provisions included in rates.
Jointly-Owned Generating Stations
Certain Entergy Corporation subsidiaries jointly own electric
generating facilities with third parties, and record the investments and
expenses associated with these generating stations to the extent of their
respective undivided ownership interests. As of December 31, 1997, the
subsidiaries' investment and accumulated depreciation in each of these
generating stations were as follows:
<TABLE>
<CAPTION>
Total
Megawatt Accumulated
Generating Stations Fuel Capability Ownership Investment Depreciation
Type
(In Thousands)
<S> <C> <C> <C> <C>
Entergy Arkansas
Independence Unit 1 Coal 836 31.50% $117,515 $45,471
Common Facilities Coal 15.75% 29,568 10,591
White Bluff Units 1 and 2 Coal 1,659 57.00% 397,304 174,227
Entergy Gulf States (1)
Roy S. Nelson Unit 6 Coal 550 70.00% 400,409 177,305
Big Cajun 2 Unit 3 Coal 540 42.00% 222,957 92,960
Entergy Mississippi -
Independence Units 1 and 2 Coal 1,678 25.00% 224,081 85,860
System Energy -
Grand Gulf Unit 1 Nuclear 1,200 90.00%(2) 3,454,067 1,086,820
Entergy Power -
Independence Unit 2 Coal 842 21.50% 121,138 41,883
</TABLE>
(1)On December 23, 1997, Cajun's 30% ownership interest in River Bend Unit
1, a 936 MW nuclear unit located near St. Francisville, Louisiana, was
transferred to Entergy Gulf States, which previously had owned the
other 70% of the unit. See Note 9.
(2)Includes an 11.5% leasehold interest held by System Energy. See Note
10.
Income Taxes
Entergy Corporation and its subsidiaries file a U.S. consolidated
federal income tax return. Income taxes are allocated to the subsidiaries
in proportion to their contribution to consolidated taxable income. SEC
regulations require that no Entergy Corporation subsidiary pay more taxes
than it would have paid if a separate income tax return had been filed.
Entergy London, as a member of an affiliated group in the UK, is eligible
for group relief. Group relief enables current losses to be surrendered by
one affiliated company to another affiliated company. It is the policy of
Entergy London's affiliated group to apply the group relief provisions in
order to minimize the UK corporation income tax of the group. In
accordance with SFAS 109, "Accounting for Income Taxes", deferred income
taxes are recorded for all temporary differences between the book and tax
basis of assets and liabilities, and for certain credits available for
carryforward.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion of the
deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Investment tax credits are deferred and amortized based upon the
average useful life of the related property, in accordance with rate
treatment.
Distribution Licenses
Distribution licenses represent the identifiable intangible assets
related to Entergy London and CitiPower which exclusively permit
distribution services to be provided within defined territories. These
licenses are being amortized over 40 years using the straight-line method.
Entergy's future net cash flows are expected to be sufficient to recover
the amortization of the cost of the CitiPower and Entergy London licenses.
Reacquired Debt
The premiums and costs associated with reacquired debt of the domestic
utility companies and System Energy (except that allocable to the
deregulated operations of Entergy Gulf States) are being amortized over the
life of the related new issuances, in accordance with ratemaking treatment.
Cash and Cash Equivalents
Entergy considers all unrestricted highly liquid debt instruments
purchased with an original maturity of three months or less to be cash
equivalents.
Investments
Entergy applies the provisions of SFAS 115, "Accounting for
Investments for Certain Debt and Equity Securities", in accounting for
investments. As a result, Entergy has recorded on the consolidated balance
sheet an additional $53 million in decommissioning trust funds of the
domestic utility companies. Such increase represents the amount by which
the fair value of the securities held in such funds exceeds the amounts
deposited from rate recovery, plus the related earnings on the amounts
deposited. In accordance with the regulatory treatment for decommissioning
trust funds, Entergy has recorded an offsetting amount in unrealized gains
on investment securities as a regulatory liability in other deferred
credits.
Entergy London accounts for investments whose fair market values are
readily determinable in accordance with SFAS 115. These securities are
considered available-for-sale securities under SFAS 115 and their fair
values approximate cost. Other securities whose fair market values are not
readily determinable and in which Entergy London does not have a
significant interest are recorded at cost.
Investments in which Entergy London's ownership interest ranges from
20% to 50%, or which are less than 20% owned but over which Entergy London
exercises significant influence over operating and financial policies, are
accounted for using the equity method. The following are Entergy London's
principal equity method investments as of December 31, 1997:
Investment Percentage Ownership
Thames Valley Power Ltd 50%
London Total Energy Ltd 50%
Barking Power Limited 13.5%
These investments were acquired effective February 1, 1997, as part of
Entergy's acquisition of London Electricity.
Foreign Currency Translation
In accordance with SFAS 52, "Foreign Currency Translation," all assets
and liabilities of Entergy's foreign subsidiaries are translated into U.S.
dollars at the exchange rate in effect at the end of the period, and
revenues and expenses are translated at average exchange rates prevailing
during the period. The resulting translation adjustments are reflected in
a separate component of shareholders' equity. Current exchange rates are
used for U.S. dollar disclosures of future obligations denominated in
foreign currencies. No representation is made that the foreign currency
denominated amounts have been, could have been, or could be converted into
U.S. dollars at the rates indicated or at any other rates.
Earnings per Share - SFAS 128
The FASB issued SFAS 128, "Earnings per Share", in February 1997,
effective for calendar year-end 1997 financial statements. Entergy adopted
SFAS 128 and has included a dual presentation of basic and diluted earnings
per share on its consolidated statement of income. The average number of
common shares outstanding for the presentation of diluted earnings per
share for the years 1997, 1996, and 1995 were greater by approximately
90,000, 91,000, and 60,000 shares, respectively, than the number of such
shares for the presentation of basic earnings per share due to Entergy's
stock option and other stock compensation plans discussed more fully in
Note 5.
Options to purchase approximately 120,000, 235,000, and 155,000 shares
of common stock at various prices were outstanding at the end of 1997,
1996, and 1995, respectively, but were not included in the computation of
diluted earnings per share because the options' exercise prices were
greater than the market price of the common shares at the end of each of
the years presented.
Application of SFAS 71
The domestic utility companies and System Energy currently account for
the effects of regulation pursuant to SFAS 71, "Accounting for the Effects
of Certain Types of Regulation". This statement applies to the financial
statements of a rate-regulated enterprise that meets three criteria. The
enterprise must have rates that (i) are approved by the regulator; (ii) are
cost-based; and (iii) can be charged to and collected from customers.
These criteria may also be applied to separable portions of a utility's
business, such as the generation or transmission functions, or to specific
classes of customers. If an enterprise meets these criteria, it may
capitalize costs that would otherwise be charged to expense if the rate
actions of its regulator make it probable that those costs will be
recovered in future revenue. Such capitalized costs are reflected as
regulatory assets in the accompanying financial statements. SFAS 71
requires that rate-regulated enterprises assess the probability of
recovering their regulatory assets at each balance sheet date. When an
enterprise concludes that recovery of a regulatory asset is no longer
probable, the regulatory asset must be removed from the entity's balance
sheet.
SFAS 101, "Accounting for the Discontinuation of Application of FASB
Statement No. 71", specifies how an enterprise that ceases to meet the
criteria for application of SFAS 71 for all or part of its operations
should report that event in its financial statements. In general, SFAS 101
requires that the enterprise report the discontinuation of the application
of SFAS 71 by eliminating from its balance sheet all regulatory assets and
liabilities related to the applicable segment. Additionally, if it is
determined that a regulated enterprise is no longer recovering all of its
costs and therefore no longer qualifies for SFAS 71 accounting, it is
possible that an impairment (see further discussion below) may exist which
could require further write-offs of plant assets.
During 1997, EITF 97-4: "Deregulation of the Pricing of Electricity -
Issues Related to the Application of FASB Statements No. 71 and 101" was
issued and specifies that SFAS 71 should be discontinued at a date no later
than when the details of the transition to competition plan for all or a
portion of the entity subject to such plan are known. However, other
factors could cause the discontinuation of SFAS 71 before that date.
Additionally, EITF 97-4 promulgates that regulatory assets to be recovered
through cash flows derived from another portion of the entity which
continues to apply SFAS 71 should not be written off; rather, they should
be considered regulatory assets of the segment which will continue to apply
SFAS 71.
As of December 31, 1997, the majority of the domestic utility
companies' and System Energy's operations continue to meet each of the
criteria required for the use of SFAS 71, and the companies have recorded
significant regulatory assets.
During 1996, FERC issued Orders No. 888 and 889, which require
utilities to provide open access to their transmission system to promote a
more competitive market for wholesale power sales. As described in Note 2,
the domestic utility companies have filed transition to competition
proposals with their regulators providing, among other things, for
accelerated recovery of certain capitalized costs to facilitate for an
orderly transition to a competitive retail power market. In response to
these filings, certain regulatory commissions have begun proceedings to
consider retail competition in their jurisdictions.
Regulators have generally deferred action on the plans in lieu of
their general proceedings on competition. Entergy cannot, at this time,
predict the completion dates or ultimate outcome of all of these
proceedings. Accordingly, the domestic utility companies and System Energy
anticipate that they will continue to meet the criteria for the application
of SFAS 71 in the foreseeable future.
Entergy's foreign utility operations are not subject to cost-based
rate regulation in the jurisdictions in which they operate, but rather are
subject to price cap regulation in certain instances and to competitive
market forces in other instances. Therefore, the provisions of SFAS 71 do
not apply to Entergy's foreign utility operations.
Domestic Deregulated Operations
Entergy Gulf States discontinued regulatory accounting principles for
its wholesale jurisdiction and its steam department during 1989 and for the
Louisiana retail deregulated portion of River Bend in 1991. The results of
these deregulated operations (before interest charges) for the years ended
December 31, 1997, 1996, and 1995 are as follows:
1997 1996 1995
(In Thousands)
Operating Revenues $155,471 $174,751 $141,171
Operating Expenses:
Fuel, operating, and maintenance 89,987 119,784 115,799
Depreciation 36,351 31,455 31,129
------- ------- -------
Total Operating Expenses 126,338 151,239 146,928
Income Taxes 9,416 9,598 (6,979)
------- ------- -------
Net Income from Deregulated Utility $19,717 $13,914 $1,222
Operations ======= ======= =======
The net investment associated with these deregulated operations was
approximately $964 million as of December 31, 1997, which includes Cajun's
interest in River Bend which was transferred by Cajun's Trustee in
Bankruptcy to Entergy Gulf States in late 1997 at a fair value of $139
million, based on management's estimate of such value at the time of
transfer.
Impairment of Long-Lived Assets
Note 2 describes regulatory assets of $169 million (net of tax)
related to Texas retail deferred River Bend
operating and carrying costs which were written off upon the adoption of
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of" (SFAS 121), in the first quarter of 1996.
In accordance with the provisions of SFAS 121, Entergy periodically
reviews long-lived assets whenever events or changes in circumstances
indicate that recoverability of these assets is uncertain. Generally, the
determination of recoverability is based on the net cash flows expected to
result from such operations and assets. Projected net cash flows depend on
the future operating costs associated with the assets, the efficiency and
availability of the assets and generating units, and the future market and
price for energy over the remaining life of the assets. Based on current
estimates of future cash flows, management anticipates that future revenues
from such assets and operations of Entergy will fully recover all related
costs.
Assets regulated under traditional cost-of-service ratemaking, and
thereby subject to SFAS 71 accounting, are generally not subject to
impairment, because this form of regulation is designed to assure that all
allowed costs are subject to recovery. However, certain deregulated assets
and other operations of the domestic utility companies totaling
approximately $1.5 billion (pre-tax) could be affected in the future.
Those assets include Entergy Arkansas' and Entergy Louisiana's retained
shares of Grand Gulf 1, Entergy Gulf States' Louisiana deregulated asset
plan, the Texas jurisdiction abeyed portion of the River Bend plant, and
wholesale jurisdiction and steam department operations.
Change in Accounting for Nuclear Refueling Outage Costs (Entergy
Corporation, Entergy Arkansas, and System Energy)
In December 1995, at the recommendation of FERC, Entergy Arkansas
changed its method of accounting for nuclear refueling outage costs. The
change, effective January 1, 1995, results in Entergy Arkansas deferring
incremental maintenance costs incurred during an outage and amortizing
those costs over the operating period immediately following the nuclear
refueling outage, which is the period when the charges are billed to
customers. Previously, estimated costs of refueling outages were accrued
over the period (generally 18 months) preceding each scheduled outage. The
effect of the change for the year ended December 31, 1995, was to decrease
net income by $5.1 million (net of income taxes of $3.3 million) or $.02
per share. The cumulative effect of the change was to increase net income
$35.4 million (net of income taxes of $22.9 million) or $.15 per share.
System Energy filed a rate increase request with FERC in May 1995 (see
Note 2), which, among other things, proposed a change in the accounting
recognition of nuclear refueling outage costs from that of expensing those
costs as incurred to the deferral and amortization method described above
with respect to Entergy Arkansas. As described in Note 2, the FERC ALJ
issued an initial decision in this proceeding in July 1996, agreeing to the
change in recognition of outage costs proposed by System Energy.
Accordingly, System Energy deferred the refueling outage costs incurred in
the fourth quarter of 1996. As of December 31, 1996, System Energy's
current assets included $24.0 million in deferred nuclear refueling outage
costs which are being amortized over the next fuel cycle (approximately 18
months). Amortization of these costs in the fourth quarter of 1996 and in
1997 amounted to $1.2 million and $16.4 million, respectively, and the
deferred outage costs amounted to $7.8 million as of December 31, 1997.
This change has no impact on the net income of either Entergy or System
Energy because System Energy will recover the refueling outage costs from
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans, and these companies, in turn, will recover these costs from their
ratepayers.
Derivative Financial Instruments
Entergy uses a variety of derivative financial instruments, including
interest rate and foreign currency swaps, natural gas and electricity
futures, natural gas and electricity options, and energy trading swaps and
contracts for differences, as a part of its overall risk management
strategy. Entergy accounts for its derivative financial instruments in
accordance with SFAS No. 80, "Accounting for Futures Contracts," SFAS No.
52, "Foreign Currency Translation," and various EITF pronouncements. If
the interest rate swaps were to be sold or terminated, any gain or loss
would be deferred and amortized over the remaining life of the debt
instrument being hedged by the interest rate swap. If the debt instrument
being hedged by the interest rate swaps were to be extinguished, any gain
or loss attributable to the swap would be recognized in the period of the
transaction.
Entergy uses energy trading swaps and contracts for differences
primarily to hedge its UK and Australian supply businesses against the
price risk of electricity purchases. Use of these instruments is carried
out within the framework of Entergy's purchasing strategy and hedging
guidelines. Risk of loss is monitored through establishment of approved
counterparties and maximum counterparty limits and minimum credit ratings.
Entergy recognizes gains or losses on these instruments when settlement is
made on a basis consistent with the treatment of the underlying energy
customer contract being hedged.
Entergy's domestic energy and natural gas marketing business enters
into sales and purchases of electricity and natural gas for delivery up to
12 months in the future. To hedge price risk on such transactions, this
business utilizes natural gas and electricity futures and option contracts.
Gains or losses are recognized on such instruments when settlement is made
on a basis consistent with treatment of the underlying sales and purchases
of electricity and natural gas.
See Notes 6, 7, and 9 for additional information concerning Entergy's
derivative instruments outstanding as of December 31, 1997.
Fair Value Disclosures
The estimated fair value of financial instruments was determined using
bid prices reported by dealer markets and by nationally recognized
investment banking firms. The estimated fair value of derivative financial
instruments is based on market quotes of the applicable interest or foreign
currency exchange rates, or a survey of foreign Electricity Pool forward
prices. Considerable judgment is required in developing the estimates of
fair value. Therefore, estimates are not necessarily indicative of the
amounts that Entergy could realize in a current market exchange. In
addition, gains or losses realized on financial instruments held by
regulated businesses may be reflected in future rates and therefore not
accrue to the benefit or detriment of stockholders.
Entergy considers the carrying amounts of financial instruments
classified as current assets and liabilities to be a reasonable estimate of
their fair value because of the short maturity of these instruments. In
addition, Entergy does not expect that performance of its obligations will
be required in connection with certain off-balance sheet commitments and
guarantees considered financial instruments. For these reasons, and
because of the related-party nature of these commitments and guarantees,
determination of fair value is not considered practicable. See Notes 5, 7,
and 9 for additional disclosure.
NOTE 2. RATE AND REGULATORY MATTERS
River Bend (Entergy Corporation and Entergy Gulf States)
In 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). At the same time, 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 a result of the application of the
company's long-lived asset impairment policy, Entergy Gulf States wrote off
Abeyed Deferrals of $169 million, net of tax, effective January 1, 1996.
The PUCT's order has been the subject of several appellate
proceedings, culminating in an appeal to the Texas Supreme Court (Supreme
Court). On January 31, 1997, the Supreme Court issued an opinion reversing
the PUCT's order and remanding the case to the PUCT for further
proceedings.
On January 14, 1998, the commissioners of the PUCT voted by a 2 to 1
majority to disallow recovery of $1.4 billion of company-wide abeyed plant
costs. The Texas share of these costs, which is not currently in rates, is
approximately $624 million, based on 1988 costs and the jurisdictional
allocation included in current rates. The PUCT is expected to enter an
order pursuant to its vote, but has not yet done so. As of December 31,
1997, 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 $252 million,
respectively. See "Filings with the PUCT and Texas Cities" below for
information related to additional rulings by the PUCT and other retail rate
proceedings as well as the proposed agreement in principle between the
parties to the Entergy Gulf States rate proceedings in Texas.
Retail Rate Proceedings
Filings with the APSC (Entergy Corporation and Entergy Arkansas)
On December 12, 1997, the APSC resolved the rate application that
Entergy Arkansas filed in October 1996 by approving the settlement
agreement among Entergy Arkansas and four other parties that was filed with
the APSC on October 9, 1997. The settlement agreement as approved provides
for accelerated amortization of Entergy Arkansas' Grand Gulf purchased
power obligation in an amount totaling $165.3 million over the period
January 1, 1999 through June 30, 2004, and the establishment of a
transition cost account to collect earnings in excess of 11% return on
equity through a streamlined annual earnings review for offset against
stranded costs when retail access is implemented. Rates will be frozen for
at least a three-year period. As of December 31, 1997, Entergy Arkansas
established an estimated reserve of $16.6 million in the transition cost
account. This estimated reserve will be trued up once the APSC has
determined, in a mid-year streamlined earnings review procedure, the actual
amount of 1997 overearnings that should go towards the transition cost
account. The APSC's Order also established four generic dockets to address
competition and transition issues that must be resolved prior to retail
access. Finally, the APSC Order approved the rate decreases agreed to in
the settlement agreement totaling $200 million over the two-year period
1998-1999, most involving the ending of the Grand Gulf deferrals and other
mechanisms, such that the net income effect from these reductions is only
approximately $22 million. In management's opinion, Entergy Arkansas
continues to meet each of the criteria required for the application of SFAS
71. Refer to "Application of SFAS 71" in Note 1 for a discussion of SFAS
71 and 101, as well as EITF 97-4.
Filings with the PUCT and Texas Cities (Entergy Corporation and Entergy
Gulf States)
In March 1994, the Texas Office of Public Utility Counsel and certain
cities served by Entergy Gulf States instituted an investigation of the
reasonableness of Entergy Gulf States' rates. On March 20, 1995, the PUCT
ordered a retroactive annual base rate reduction of $52.9 million, which
was amended to an annual level of $36.5 million. The PUCT's action was
based, in part, upon a Texas Supreme Court decision not to require a
utility to use the prospective tax benefits generated by disallowed
expenses to reduce rates. The May 26, 1995, amended order no longer
required Entergy Gulf States to pass such prospective tax benefits on to
its customers. The rate refund ordered by the PUCT in its March 20, 1995,
order, retroactive to March 31, 1994, was approximately $61.8 million
(including interest) and was refunded to customers in September, October,
and November 1995. Entergy Gulf States and other parties have appealed the
PUCT order, but no assurance can be given as to the timing or outcome of
the appeal.
In December 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 were concluded in October 1996, and in
April 1997 the PUCT issued an order which approved recovery of
approximately $18.8 million of the under-recovered fuel balance, including
interest. In June 1997, the PUCT issued a subsequent order based on a
rehearing, which reduced the approved recovery to $18.5 million. Entergy
Gulf States has appealed portions of the PUCT's order to the Texas District
Court. No assurance can be given as to the timing or outcome of these
appeals.
In accordance with the Merger agreement, Entergy Gulf States filed a
rate proceeding with the PUCT in November 1996. 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 pending investigation based on the assurance that
any rate decrease ordered in the November 1996 filing would be retroactive
to June 1, 1996, with accrued interest until refunded. The agreement
further provides that no base rate increase will be retroactive.
Subsequent to the November 1996 filing, the Cities passed ordinances
reducing Entergy Gulf States' rates by $43.6 million. Entergy Gulf States
has appealed these ordinances to the PUCT, and these appeals have been
consolidated in the pending rate proceeding. Included in the November 1996
filing was a proposal to achieve an orderly transition to retail electric
competition in Texas, similar to the filing described below that Entergy
Gulf States made with the LPSC. This filing with the PUCT was litigated in
four phases as follows: (i) fuel factor/fuel reconciliation phase, of which
Entergy Gulf States believes there was an under-recovered fuel balance of
$41.4 million, including interest, for the period July 1, 1995 through June
30, 1996; (ii) revenue requirement phase; (iii) cost allocation/rate design
phase; and (iv) competitive issues phase. Hearings on all of the phases
have been completed. A supplemental filing with respect to the fourth
phase was made with the PUCT on April 4, 1997, outlining a comprehensive
market reform proposal calling for the establishment of retail competition,
service quality standards, a regional power exchange, and an independent
system operator. Entergy Gulf States requested from the PUCT a reciprocal
commitment to provide an opportunity for the full recovery of prudently
incurred investments previously approved by regulators. The rebuttal
testimony of Entergy Gulf States in the competition phase of the case
modified its position to include elements from the 1997 proposed Texas
legislation addressing retail access. Most notable were the provisions
calling for a transition period through the year 2001 and rate reductions
for residential and most commercial customers. The PUCT has not issued an
order with respect to the completed phases.
In addition to the January 14, 1998 ruling discussed above in "River
Bend," the PUCT upheld an ALJ's ruling disallowing recovery of
approximately $40 million of Entergy Services' affiliate costs allocated to
Entergy Gulf States in Texas. Entergy Services is responsible for managing
Entergy Gulf States' fossil generating plants and transmission and
distribution systems, as well as providing human resources, accounting, and
other necessary services to Entergy Gulf States and Entergy Corporation's
other electric utility subsidiaries. In another matter, the PUCT also
issued an order establishing service quality standards and rate of return
adjustments for Entergy Gulf States and its Texas retail service territory.
A portion of the adjustments will be retroactive and a portion will be
prospective. The PUCT will evaluate Entergy Gulf States' future
performance based on several criteria including feeder reliability, billing
error rates, customer call center performance, service installation
performance, line extension performance and street light replacements.
In March 1998, the parties to the Entergy Gulf States rate proceedings
in Texas reached an agreement in principle, subject to approval by the PUCT
and the Cities, which would resolve all of the pending rate issues. The
proposed agreement in principle would include a base rate reduction of
$40 million on an annual basis, with a refund retroactive to June 1,
1996; additionally it would provide for a recovery of $25 million
of deferred fuel costs; the base rates would remain at the same level for
the next four years after the reduction; a total service quality credit
of $9 million retroactive to June 1996; and the recovery of a portion of
the abeyed portion of River Bend such that at the end of the four year
rate freeze there will remain $125 million of net plant related to that
abeyed portion. Entergy Gulf States has established reserves for the
probable effects of this agreement in principle based on management's
estimates of the terms thereof. These reserves of approximately
$381 million (or $227 million net of taxes) were recorded in the fourth
quarter of 1997. The results of operations of Entergy Gulf States for
the year ended December 31, 1997, reflect corresponding charges to operating
revenues and other income (deductions) of $70 million and $311 million,
respectively. The parties are working to finalize a definitive agreement.
Entergy Gulf States has agreed to implement the refunds and rate
reductions, subject to final approval of the agreement in principle.
Final approval of the agreement in principle would resolve all regulatory
issues discussed above.
Filings with the LPSC
(Entergy Corporation and Entergy Gulf States)
Annual Earnings Reviews
On May 31, 1995, Entergy Gulf States filed its second required post-
Merger earnings analysis with the LPSC. Hearings on this review were held
in December 1995. On October 4, 1996, the LPSC issued an order requiring a
$33.3 million annual base rate reduction and a $9.6 million refund. One
component of the rate reduction removes from base rates approximately $13.4
million annually of costs that will be recovered in the future through the
fuel adjustment clause. On October 23, 1996, Entergy Gulf States appealed
the LPSC's order and obtained an injunction to stay the order, except
insofar as it requires the $13.4 million reduction, which Entergy Gulf
States implemented in November 1996. In addition, pursuant to an October
1996 settlement with the LPSC, Entergy Gulf States will be allowed to
recover $8.1 million annually related to certain gas transportation and
storage facilities costs. This amount will be applied as an offset against
any refund that may be required by a final judgment in Entergy Gulf States'
appeal of the second post-Merger earnings review order.
On May 31, 1996, Entergy Gulf States filed its third required post-
Merger earnings analysis with the LPSC. Based on this earnings filing, on
June 1, 1996, Entergy Gulf States implemented a $5.3 million annual rate
reduction. Hearings on this filing concluded in March 1997. An additional
rate reduction may be required upon the issuance by the LPSC of a final
rate order, which is expected in early 1998.
On May 30, 1997, Entergy Gulf States filed its fourth post-Merger
earnings analysis with the LPSC. This filing showed a revenue deficiency
such that no rate reduction is warranted. Entergy Gulf States' filing will
be subject to further review by the LPSC. Hearings are scheduled to begin
in March 1998.
LPSC Fuel Cost Review
In September 1996, the LPSC completed the second phase of its review
of Entergy Gulf States' fuel costs, which covered the period October 1991
through December 1994 (Phase II). On October 7, 1996, the LPSC issued an
order requiring a $34.2 million refund. The ordered refund includes a
disallowance of $14.3 million of capital costs (including interest) related
to certain gas transportation and storage facilities, which were recovered
through the fuel clause, and which have been refunded pursuant to the
October 1996 LPSC Settlement. Entergy Gulf States will be permitted to
recover these costs in the future through base rates. On October 23, 1996,
Entergy Gulf States appealed and received an injunction to stay this order,
except insofar as the order requires the $14.3 million refund. On
September 19, 1997, the 19th Judicial District Court of Louisiana reversed
the LPSC's order with respect to several disallowances associated with the
operation of River Bend, affirmed the LPSC's order with respect to the
remainder of the ordered disallowances, and ordered a refund of $8.8
million, plus interest from December 31, 1995 until payment to the
ratepayers. Pleadings seeking appeals to the Louisiana Supreme Court have
been filed.
(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)
In September 1996, Entergy Gulf States and Entergy Louisiana filed
proposals with the LPSC designed to achieve an orderly transition to retail
electric competition in Louisiana, while protecting certain classes of
ratepayers from bearing the burden of cost shifting. The proposals do not
increase rates for any customer class. However, these proposals do provide
for a universal service charge for customers that remain connected to
Entergy Gulf States' or Entergy Louisiana's electric facilities but choose
to purchase their electricity from another source. In addition, the
proposals include a base rate freeze, which would be put into effect for
seven years in the Louisiana areas serviced by Entergy Gulf States and
Entergy Louisiana. Although these proposals allow for the complete
recovery, over a seven-year period, of the remaining plant investment
associated with River Bend and Waterford 3 as of December 31, 1995, the NRC
operating licenses for these plants permit continued operation until the
years 2025 and 2024, respectively. Hearings on these proposals have been
delayed until 1998.
In February 1997, the LPSC identified certain issues embodied in the
Entergy Gulf States and Entergy Louisiana proposals that will be addressed
in those companies' existing rate dockets, and other issues that will be
addressed in an ongoing generic regulatory proceeding examining electric
utility industry restructuring.
(Entergy Corporation and Entergy Louisiana)
On April 15, 1996, Entergy Louisiana made its first annual performance-
based formula rate plan filing based on the 1995 test year. 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 reflected the expiration of the
Waterford 3 phase-in plan discussed below, which was partially offset by
the recovery of the property taxes on Waterford 3 and the related deferral
discussed below. Subsequently, additional issues were resolved by means of
a settlement conference, increasing the base rate reduction from $12
million to $16.5 million. Hearings have been conducted to review Entergy
Louisiana's allowed return on equity and to address certain other disputed
issues. This may result in an additional rate reduction, which would be
prospective only.
On May 30, 1997, Entergy Louisiana made its annual formula rate plan
filing with the LPSC for the 1996 test year. This filing showed the
necessity to reduce rates by approximately $27.8 million. Additionally, in
order to reflect certain Waterford 3 related items (property tax and
termination of the phase-in plan) that are addressed outside the formula
rate plan, the filing showed the necessity to reduce rates further by
approximately $26.7 million. These two reductions produced a total
reduction of approximately $54.5 million, which was implemented beginning
in the first filing cycle of July 1997. The May 30 filing is the final
filing in the two-year period of the formula rate plan. There has been no
determination to date by the LPSC as to whether the formula rate plan
should be extended, modified, or terminated. On January 21, 1998, the LPSC
approved a $4 million refund to reflect lower rates effective July 1, 1997,
as well as an $8 million prospective annual rate reduction.
Filings with the MPSC (Entergy Corporation and Entergy Mississippi)
On March 15, 1997, Entergy Mississippi filed its annual earnings
review with the MPSC under its formula rate plan for the 1996 test year.
In April 1997, the MPSC issued an order approving a prospective rate
reduction of $11.2 million. This rate reduction went into effect May 1,
1997.
Entergy Mississippi initiated discussions with the MPSC regarding an
orderly transition to a more competitive market for electricity. In August
1996, Entergy Mississippi filed a proposal with the MPSC for a rate rider
to assure recovery of all Grand Gulf costs incurred to serve customers.
The rider would maintain current rates for electric service provided by
Entergy Mississippi and would apply to customers within Entergy
Mississippi's service area who obtain electricity in the future from a
source other than Entergy Mississippi. Entergy Mississippi designed this
rider to assure that commitments made under the current system of
regulation are honored and that cost burdens are not unfairly transferred
from departing customers to those who remain on the Entergy Mississippi
system. On August 22, 1996, the MPSC remanded this proposal and
established a generic docket to consider competition for retail electric
service. Hearings on this docket concluded in April 1997. In early July
1997 the MPSC issued an order directing the Mississippi Public Utilities
Staff to submit a report outlining a plan for restructuring the electric
utility industry in Mississippi. On November 3, 1997, the Mississippi
Public Utilities Staff submitted to the MPSC a proposed transition plan for
retail competition in the electric industry in Mississippi. The plan
represents the staff's current position on how retail competition can be
implemented in Mississippi and includes an implementation schedule in which
retail competition would begin on January 1, 2001. The plan assumes the
passage of necessary enabling legislation in 1999. The plan also provides
for a transition period, from January 1, 2001, through December 31, 2004,
for the recovery of any allowed stranded costs through a non-bypassable
charge. Parties filed comments on the plan during January and February of
1998 and a hearing is scheduled to be conducted by the MPSC in April 1998.
Filings with the Council (Entergy Corporation and Entergy New Orleans)
In March 1997, the Council established new dockets regarding electric
and gas utility service competition in the City of New Orleans. The
dockets will address competitive issues, including competition, stranded
costs, consumer savings, cost shifting, and potential conflicts among
federal, state, and local regulators, as such issues relate to electric and
gas service. Comments were filed by interested parties in April 1997.
Public hearings on these issues were held in May, July, and October of
1997.
The Council issued a resolution in February 1997 indicating that it
will conduct an investigation of Entergy New Orleans' allowed rate of
return, base rates, and adjustment clauses. The Council conducted hearings
in April 1997 on the issue of rate of return, and directed Entergy New
Orleans to make a cost of service and revenue requirement filing on May 1,
1997. That filing was later deferred until September 1997. In July 1997,
Entergy New Orleans and the Council agreed to implement an $18 million
annual reduction in base rates effective May 1, 1997, even though an
allowed rate of return had not yet been determined by the Council.
Entergy New Orleans made its cost of service and revenue requirement
filing in conjunction with its transition to competition plan on September
17, 1997. On November 6, 1997, the Council severed the traditional
ratemaking issues from the transition filings and established a procedural
schedule for the second phase of the rate proceeding, pursuant to which
hearings will be conducted in July 1998. Additionally, the Council ordered
Entergy New Orleans to file unbundled gas rates, in preparation for an
investigation of issues relating to gas industry competition. The electric
transition to competition filing is generally similar to those filed for
the other domestic utility companies. It includes a rate cap coupled with
a continuing right of the Council to conduct reviews of Entergy New
Orleans' earnings, an offer to seek authority from FERC for accelerated
recovery of Grand Gulf purchased power obligations, and implementation of a
non-bypassable universal service charge for all existing customers,
together with functional unbundling of electric rates. Entergy New
Orleans' transition filing will be subject to further review by the
Council. A procedural schedule on that filing has not been set, although
public comment has been requested by the Council.
Deregulated Asset Plan (Entergy Corporation and Entergy Gulf States)
A deregulated asset plan representing an unregulated portion
(approximately 25%) of River Bend (plant costs, generation, revenues, and
expenses) was established pursuant to a January 1992 LPSC order. The plan
allows Entergy Gulf States to sell such generation to Louisiana retail
customers at 4.6 cents per KWH or off-system at higher prices, with certain
provisions for sharing such incremental revenue above 4.6 cents per KWH
between ratepayers and shareholders.
River Bend Cost Deferrals (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States deferred approximately $369 million of River Bend
operating and purchased power costs, depreciation, and accrued carrying
charges, pursuant to a 1986 PUCT accounting order. Approximately $182
million of these costs are being amortized over a 20-year period, and the
remaining $187 million was written off in the first quarter of 1996 in
accordance with SFAS 121, as discussed above. As of December 31, 1997, the
unamortized balance of the remaining costs was $107 million. Entergy Gulf
States deferred approximately $400.4 million of similar costs pursuant to a
1986 LPSC accounting order, which is being amortized over a 10-year period
ending in February 1998. Approximately $5 million was unamortized as of
December 31, 1997.
In accordance with a phase-in plan approved by the LPSC, Entergy Gulf
States deferred $294 million of its River Bend costs related to the period
February 1988 through February 1991. Entergy Gulf States has amortized
$286 million through December 31, 1997. The remaining $8 million will be
recovered in the first quarter of 1998. In connection with the completion
of the phase-in plan, on February 18, 1998, the LPSC approved an annual
prospective rate reduction of $87 million.
Grand Gulf 1 and Waterford 3 Deferrals
(Entergy Corporation and Entergy Arkansas)
Under the settlement agreement entered into with the APSC in 1985 and
amended in 1988, Entergy Arkansas agreed to retain a portion of its Grand
Gulf l-related costs, recover a portion of such costs currently, and defer
a portion of such costs for future recovery. In 1996 and subsequent years,
Entergy Arkansas retains 22% of its 36% share (approximately 7.92%) of
Grand Gulf 1 costs and recovers the remaining 78%. The deferrals ceased in
l990, and Entergy Arkansas is recovering a portion of the previously
deferred costs each year through 1998. As of December 31, l997, the
balance of deferred costs was $75 million. Entergy Arkansas is permitted
to recover on a current basis the incremental costs of financing the
unrecovered deferrals. In the event Entergy Arkansas is not able to sell
its retained share to third parties, it may sell such energy to its retail
customers at a price equal to its avoided energy cost, which is currently
less than Entergy Arkansas' cost of energy from its retained share.
(Entergy Corporation and Entergy Louisiana)
In a series of LPSC orders, court decisions, and agreements from late
1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to
costs associated with Waterford 3 and Entergy Louisiana's share of capacity
and energy from Grand Gulf l, subject to certain terms and conditions.
With respect to Waterford 3, Entergy Louisiana was granted an increase
aggregating $170.9 million over the period 1985-1988, and agreed to
permanently absorb, and not recover from retail ratepayers, $284 million of
its investment in the unit and to defer $266 million of its costs related
to the years 1985-1988, which was recovered from April 1988 through June
1997.
With respect to Grand Gulf l, in November 1988, Entergy Louisiana
agreed to retain and not recover from retail ratepayers, 18% of its 14%
share (approximately 2.52%) of the costs of Grand Gulf l capacity and
energy. Entergy Louisiana is allowed to recover through the fuel
adjustment clause 4.6 cents per KWH for the energy related to its retained
portion of these costs. Alternatively, Entergy Louisiana may sell such
energy to nonaffiliated parties at prices above the fuel adjustment clause
recovery amount, subject to the LPSC's approval.
(Entergy Corporation and Entergy Mississippi)
Entergy Mississippi entered into a plan with the MPSC that provides,
among other things, for the recovery by Entergy Mississippi, in equal
annual installments over 10 years beginning October 1, 1988, of all Grand
Gulf 1-related costs deferred through September 30, 1988, pursuant to a
final order by the MPSC. Additionally, the plan provided that Entergy
Mississippi would defer, in decreasing amounts, a portion of its Grand
Gulf 1-related costs over four years beginning October 1, 1988. These
deferrals are being recovered by Entergy Mississippi over a six-year period
that began in October 1992 and will end in September 1998. As of December
31, 1997, the uncollected balance of Entergy Mississippi's deferred costs
was approximately $127 million. The plan also allows for the current
recovery of carrying charges on all deferred amounts.
(Entergy Corporation and Entergy New Orleans)
Under Entergy New Orleans' various rate settlements with the Council
in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not
recover from ratepayers a total of $96.2 million of its Grand Gulf 1 costs.
Entergy New Orleans was permitted to implement annual rate increases in
decreasing amounts each year through 1995, and to defer certain costs and
related carrying charges for recovery on a schedule extending from 1991
through 2001. As of December 31, 1997, the uncollected balance of Entergy
New Orleans' deferred costs was $99 million.
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. The request also includes a proposed change in the
accounting recognition of nuclear refueling outage costs from that of
expensing those costs as incurred to the deferral and amortization method
described in Note 1 with respect to Entergy Arkansas. On December 12, 1995,
System Energy implemented the $65.5 million rate increase, subject to
refund, for which a portion has been reserved. 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, including the change in
accounting for nuclear refueling outage costs, 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 by FERC. Management is unable to 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 deferral period ends September 1998, and the deferred amount 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.
FERC Settlement (Entergy Corporation and System Energy)
In November 1994, FERC approved an agreement settling a long-standing
dispute involving income tax allocation procedures of System Energy. In
accordance with the agreement, System Energy will refund a total of
approximately $62 million, plus interest, to Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans through June 2004.
System Energy also reclassified from utility plant to other deferred debits
approximately $81 million of other Grand Gulf 1 costs. Although such costs
are excluded from rate base, System Energy is recovering them over a 10-
year period. Interest on the $62 million refund and the loss of the return
on the $81 million of other Grand Gulf 1 costs will reduce Entergy's and
System Energy's net income by approximately $10 million annually until
2004.
Entergy London Regulatory Matters (Entergy Corporation and Entergy London)
Distribution Business
The distribution business of London Electricity is regulated under its
PES license, pursuant to which revenue of the distribution business is
controlled by the Distribution Price Control Formula (DPCF). The DPCF
determines the maximum average price per unit of electricity (expressed in
kilowatt hours) that a REC may charge. The elements used in the DPCF are
established for a five-year period and are subject to review by the
Regulator at the end of each period and at other times at the discretion of
the Regulator. At each review the Regulator can adjust the value of
certain elements in the DPCF. Following a review by the Regulator in
August 1994, a 14% price reduction was set for London Electricity,
effective April 1, 1995. In July 1995, a further review of distribution
prices was concluded by the Regulator for fiscal years 1997 to 2000. As a
result of this further review, London Electricity's distribution prices
were reduced an additional 11% effective April 1, 1996; 3% effective April
1, 1997; and will be reduced by a further 3% on both April 1, 1998 and
1999.
Supply Business
The supply business of London Electricity is also regulated by the
Regulator, and prices are established based upon the Supply Price Control
Formula (SPCF) which is similar to the DPCF; however, the SPCF currently
allows full pass through for all properly incurred costs and is set for a
four-year period by the Regulator.
At present, London Electricity has an exclusive right to supply
electricity to residential and small industrial and commercial customers in
its franchise area with demand of less than 100 KW. In late 1998, this
segment of the supply business will become open to competition, subject to
a six-month transition period. This means the market will be fully opened
with all customers having access to competition by June 1999. Although the
advent of competition for all customers will permit all RECs to compete on
a national level, London Electricity may be more sensitive to competition
from its neighboring RECs due to its high customer concentration. London
Electricity is in the process of developing its strategy to meet expanded
competition in its supply business, which will focus on active marketing
and customer service to defend its residential customer base and expanding
product offerings to larger business customers. Such strategy may include
the development of strategic alliances in the provision of energy and
related services and the increased use of hedging of electricity prices to
mitigate the increased risk from the expansion of competition. There can
be no assurance that this strategy will be successful in avoiding a
significant loss of customers of London Electricity's supply business.
On October 16, 1997, the Regulator published final proposals for new
supply price restraints to apply for two years beginning April 1, 1998.
The proposals were accepted on November 16, 1997. Among other things,
these proposals implement a price reduction for London Electricity's
domestic and small business supply customers of 11.8% compared to the
supply price tariff in effect in August 1997. A further 3% reduction is
proposed to be effective on April 1, 1999. The 11.8% price reduction to be
effective on April 1, 1998, would be decreased by the supply tariff
reductions announced by London Electricity on September 29, 1997, and
effective from October 1, 1997, which will return over-recoveries
experienced under the current SPCF. The license modifications which took
effect December 31, 1997, discontinued the automatic pass-through of all
costs previously passed through to domestic and small business customers,
including purchased power costs from the Electricity Pool.
London Electricity expects to incur approximately $49 million (a
portion of which is expected to be capitalized) in fiscal year 1998 for re-
engineering and technology costs to prepare infrastructure services for
full competition in supply beginning September 1998. London Electricity,
along with the other PES license-holders, petitioned the Regulator to
recover such costs from customers. In the Regulator's supply price
restraint proposals published on October 16, 1997, the Regulator proposed,
within the SPCF, to provide for an annual allowance of $7.6 million for
each PES license-holder over the 5 years ending March 31, 2003, to cover
data management services set-up costs plus an annual allowance of $1.6
million plus $1.60 per customer to cover operating costs for the period
1998 through 2000. London Electricity estimates that these proposals will
result in an aggregate allowance for London Electricity of approximately
$12.6 million per annum for the period 1998 through 2000. On November 16,
1997, London Electricity accepted the Regulator's new SPCF to be applied
beginning April 1, 1998. In its fiscal year 1998 (ends March 31, 1998),
London Electricity also expects to incur a total of $8.2 million to procure
settlement software for the Electricity Pool designed to interface with
RECs' data management software. These costs are expected to be recouped
through Electricity Pool settlement charges.
The non-franchise supply market, which typically includes larger
commercial and industrial customers, was opened to competition for all
customers with usage above 1 MW upon privatization of the industry in 1990.
The non-franchise supply markets of 100 KW or more were opened to full
competition starting in April 1994.
NOTE 3. INCOME TAXES
Entergy and its registrant subsidiaries' income tax expenses for
1997, 1996, and 1995 consist of the following (in thousands):
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System Entergy
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current:
Federal $433,444 $113,278 $ 68,881 $ 94,448 $ 49,472 $12,003 $98,428 $ -
Foreign 237,337 - - - - - - 234,080
State 76,905 23,756 6,007 19,974 9,476 2,096 15,596 -
--------------------------------------------------------------------------------------------
Total 747,686 137,034 74,888 114,422 58,948 14,099 114,024 234,080
Deferred -- net (312,691) (73,406) (104,435) (9,833) (30,697) (1,369) (35,894) (57,057)
Investment tax credit
adjustments -- net 36,346 (4,408) 51,949 (5,624) (1,507) (588) (3,476) -
--------------------------------------------------------------------------------------------
Recorded income $471,341 $ 59,220 $ 22,402 $ 98,965 $ 26,744 $ 12,142 $74,654 $177,023
tax expense ============================================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Current:
Federal $272,036 $ 108,583 $ 510 $ 78,629 $ 64,358 $ 23,860 $ 19,637
State 72,204 21,888 201 21,122 9,635 4,631 13,508
----------------------------------------------------------------------------------
Total 344,240 130,471 711 99,751 73,993 28,491 33,145
Deferred -- net 100,572 (41,261) 106,715 24,656 (29,390) (11,587) 52,447
Investment tax credit
adjustments -- net (23,653) (4,766) (5,335) (5,847) (3,497) (687) (3,471)
----------------------------------------------------------------------------------
Recorded income tax $421,159 $ 84,444 $ 102,091 $ 118,560 $ 41,106 $ 16,217 $ 82,121
expense ==================================================================================
</TABLE>
<TABLE>
<CAPTION>
1995 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Current:
Federal $ 306,910 $ 87,937 $ 13 $ 93,670 $ 62,436 $ 19,071 $108,920
State 60,278 18,027 - 20,994 9,215 3,394 11,910
--------------------------------------------------------------------------------------
Total 367,188 105,964 13 114,664 71,651 22,465 120,830
Deferred -- net 13,333 (5,363) 67,703 8,148 (35,224) (1,364) (41,871)
Investment tax credit
adjustments -- net (21,478) (5,658) (4,472) (5,698) (1,550) (634) (3,466)
--------------------------------------------------------------------------------------
Recorded income tax $ 359,043 $ 94,943 $ 63,244 $117,114 $ 34,877 $ 20,467 $ 75,493
expense ======================================================================================
Charged to cumulative $ 22,861 $ 22,861 $ - $ - $ - $ - $ -
effect ======================================================================================
</TABLE>
Entergy and its registrant subsidiaries' total income taxes differ
from the amounts computed by applying the statutory income tax rate to
income before taxes. The reasons for the differences for the years 1997,
1996, and 1995 are (amounts in thousands):
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System Entergy
1997 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Computed at statutory rate (35%) (31% $ 270,284 $ 64,470 $ 28,833 $ 84,253 $ 32,691 $ 9,658 $ 61,932 $ 9,196
for Entergy London)
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 33,272 8,382 1,274 12,106 3,110 1,191 7,209 -
Depreciation 25,471 (2,784) (3,670) 13,162 964 2,236 15,563 -
Rate deferrals - net 3,484 1,543 5,575 (526) (3,504) 396 - -
Amortization of investment
tax credits (19,592) (4,404) (3,981) (5,627) (1,512) (589) (3,479) -
Flow-through/permanent
differences (6,537) (308) (6,133) 47 (78) (65) - -
UK windfall profits tax 234,080 - - - - - - 234,080
Change in UK statutory rate (64,670) - - - - - - (64,670)
Non-deductible franchise fees 17,234
Interest on perpetual instruments (9,094)
Benefit of Entergy Corporation
expenses - (4,920) - (4,788) (2,704) (831) (4,037) -
Other -- net (12,591) (2,759) 504 338 (2,223) 146 (2,534) (1,583)
--------------------------------------------------------------------------------------------
Total income taxes $ 471,341 $ 59,220 $ 22,402 $ 98,965 $ 26,744 $ 12,142 $ 74,654 $ 177,023
============================================================================================
Effective Income Tax Rate 61.0% 31.6% 27.2% 41.1% 28.6% 44.0% 42.2% 596.8%
</TABLE>
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System
1996 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Computed at statutory rate (35%) $ 319,103 $ 84,785 $ 34,371 $ 108,262 $ 42,111 $ 15,048 $ 63,626
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 54,801 10,796 19,389 11,535 4,188 1,449 7,444
Depreciation 15,829 (2,102) (6,305) 6,722 1,604 402 15,508
Rate deferrals - net 1,973 1,115 5,537 (1,829) (3,430) 580 -
Amortization of investment
tax credits (20,349) (4,608) (4,380) (5,664) (1,582) (635) (3,480)
Flow-through/permanent
differences 1,059 (845) 2,792 (449) (275) (164) -
SFAS 121 write-off 48,265 - 48,265 - - - -
Other -- net 478 (4,697) 2,422 (17) (1,510) (463) (977)
-------------------------------------------------------------------------------------
Total income taxes $ 421,159 $ 84,444 $ 102,091 $ 118,560 $ 41,106 $ 16,217 $ 82,121
=====================================================================================
Effective Income Tax Rate 46.2% 34.9% 104.0% 38.3% 34.2% 37.7% 45.4%
</TABLE>
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System
1995 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Computed at statutory rate (35%) $ 334,944 $ 93,458 $ 65,157 $ 111,528 $ 36,240 $ 19,198 $ 58,986
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 42,599 11,551 8,375 11,532 3,344 1,971 7,036
Depreciation 1,670 (1,510) (13,073) 2,693 739 (661) 13,482
Rate deferrals - net 1,699 975 6,240 (2,626) (3,465) 575 -
Amortization of investment
tax credits (20,549) (5,658) (4,475) (5,711) (1,548) (634) (3,480)
Other -- net (1,320) (3,873) 1,020 (302) (433) 18 (531)
-----------------------------------------------------------------------------------
Total income taxes $ 359,043 $ 94,943 $ 63,244 $ 117,114 $ 34,877 $ 20,467 $ 75,493
===================================================================================
Effective Income Tax Rate 37.5% 35.5% 34.0% 36.7% 33.7% 37.3% 44.8%
</TABLE>
Significant components of Entergy and its registrant subsidiaries'
net deferred tax liabilities as of December 31, 1997 and 1996, are as
follows (in thousands):
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System Entergy
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Deferred Tax Liabilities:
Net regulatory assets/
(liabilities) (1,378,858) $(293,433) $ (437,397) $ (329,903) $ (32,140) $ (4,642) $(281,343) $ -
Plant-related basis differences (3,574,260) (475,950) (991,253) (716,512) (192,402) (52,295) (494,564) (572,896)
Rate deferrals (177,609) (26,164) (33,665) - (74,427) (43,353) - -
Pension-related items (74,777) - - - - - - (74,777)
Distribution License (411,467) - - - - - - (411,467)
Other (181,306) (53,666) (66,995) (32,101) (7,494) (4,336) (16,714) -
------------------------------------------------------------------------------------------------
Total $(5,798,277) $(849,213) (1,529,310) $(1,078,516) $(306,463) $(104,626) $(792,621) $(1,059,140)
================================================================================================
Deferred Tax Assets:
Accumulated deferred investment
tax credit 204,414 40,721 61,122 51,669 9,147 3,440 38,315 -
Investment tax credit
carryforwards 83,080 - 83,080 - - - - -
NOL carryforwards 2,137 - 2,137 - - - - -
Foreign tax credits (including
foreign tax on unremitted
earnings) 248,897 - - - - - - -
Alternative minimum tax credit 40,658 - 40,658 - - - - -
Sale and leaseback 235,668 - - 108,944 - - 126,724 -
Removal cost 105,477 1,198 27,027 63,759 2,590 10,903 - -
Unbilled revenues 45,505 - 23,848 16,970 (1,195) 5,882 - -
Pension-related items 33,724 - 12,897 9,653 1,801 6,097 3,276 -
Rate refund 195,484 6,504 154,153 - - - 34,827 -
FERC Settlement 17,193 - - - - - 17,193 -
Other 211,361 9,062 21,837 24,767 5,379 5,760 10,235 75,676
Valuation Allowance (248,897) - - - - - - -
------------------------------------------------------------------------------------------------
Total $ 1,174,701 $ 57,485 $ 426,759 $ 275,762 $ 17,722 $ 32,082 $ 230,570 $ 75,676
================================================================================================
Net deferred tax liability $(4,623,576) $ (791,728) $(1,102,551) $(802,754) $ (288,741) $(72,544) $(562,051) $(983,464)
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Deferred Tax Liabilities:
Net regulatory assets/ $(1,406,921) $(287,217) $ (434,380) $(349,667) $ (21,537) $ (9,717) $(304,403)
(liabilities)
Plant-related basis differences (2,976,724) (476,364) (1,006,347) (716,974) (185,038) (50,435) (512,519)
Rate deferrals (322,530) (84,826) (68,282) (2,839) (113,669) (52,914) -
Other (143,792) (59,592) (9,243) (31,433) (7,604) (6,193) (24,917)
-----------------------------------------------------------------------------------------
Total $(4,849,967) $(907,999) $(1,518,252) $(1,100,913) $ (327,848) $(119,259) $(841,839)
=========================================================================================
Deferred Tax Assets:
Accumulated deferred investment
tax credit 210,879 42,450 61,563 53,831 9,724 3,666 39,645
Investment tax credit 138,779 - 138,779 - - - -
carryforwards
NOL carryforwards 24,990 - 24,990 - - - -
Alternative minimum tax credit 40,658 - 40,658 - - - -
Sale and leaseback 233,823 - - 108,390 - - 125,433
Removal cost 102,268 - 27,391 61,716 2,454 10,707 -
Unbilled revenues 37,692 - 17,824 14,965 (343) 5,246 -
Pension-related items 30,869 - 11,291 8,838 2,008 5,987 2,745
Rate refund 25,409 - - - - 7,077 18,332
FERC Settlement 19,079 - - - - - 19,079
Other 147,020 9,049 61,804 23,545 5,849 8,097 12,585
-----------------------------------------------------------------------------------------
Total $ 1,011,466 $ 51,499 $ 384,300 $ 271,285 $ 19,692 $ 40,780 $ 217,819
=========================================================================================
Net deferred tax liability $(3,838,501) $(856,500) $(1,133,952) $ (829,628) $ (308,156) $ (78,479) $(624,020)
=========================================================================================
As of December 31, 1997, Entergy has investment tax credit (ITC)
carryforward of $83.1 million and state net operating loss carryforward of
$26.7 million, all related to Entergy Gulf States operations. The ITC
carryforwards include the 35% reduction required by the Tax Reform Act of
1986 and may be applied solely against federal income tax liability of
Entergy Gulf States and, if not utilized, will expire between 1998 and
2002. The alternative minimum tax (AMT) credit carryforwards as of
December 31, 1997 were $40.7 million, all related to Entergy Gulf States
operations. This AMT credit can be carried forward indefinitely and may be
applied solely against the federal income tax liability of Entergy Gulf
States.
The valuation allowance is provided primarily against foreign tax
credit carryforwards and foreign tax credits on unremitted earnings which
can be utilized against future taxable income in the United States.
NOTE 4. LINES OF CREDIT AND RELATED SHORT-TERM BORROWINGS (Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, System Energy, and Entergy
London)
In November 1996, SEC authorization was received by Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy increasing short-term borrowing limits to $235
million, $340 million, $225 million, $103 million, $35 million, and $140
million, respectively (for a total of $1.078 billion). These authorizations
are effective through November 30, 2001. Of these companies, only Entergy
Mississippi had borrowings outstanding as of December 31, 1997. Entergy
Mississippi had $47.2 million of borrowings outstanding under the money
pool, an inter-company borrowing arrangement designed to reduce the
domestic utility companies' dependence on external short-term borrowings.
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi had undrawn
lines of credit as of December 31, 1997, of $18 million, $64.2 million, and
$24 million, respectively.
In July 1995, Entergy Corporation obtained a $300 million bank credit
facility. Thereafter, a three-year credit agreement was signed with a
group of banks in October 1995 to provide up to $300 million of loans to
Entergy Corporation. As of December 31, 1997, $75 million was outstanding
against this facility. In January 1997, the SEC authorized an increase in
borrowings under Entergy's bank credit facilities from $300 million to a
maximum of $500 million.
On September 13, 1996 Entergy Corporation and ETHC obtained a three-
year $100 million bank line of credit which was increased to $250 million
in 1997, and that can be drawn by either Entergy Corporation or ETHC (with
a guarantee from Entergy Corporation). The proceeds are to be used
exclusively for exempt telecommunication investments. As of December 31,
1997, $111 million borrowed by Entergy Corporation was outstanding under
this facility.
Other Entergy companies have SEC authorization to borrow through the
money pool, from Entergy Corporation, and from commercial banks in the
aggregate principal amounts up to $265 million, of which $98.2 million was
outstanding as of December 31, 1997. Some of these borrowings are
restricted as to use, and are secured by certain assets.
In total, Entergy had short-term commitments in the amount of $1,029.7
million as of December 31, 1997, of which $745.2 million was unused. The
weighted-average interest rate on the outstanding borrowings of Entergy as
of December 31, 1997 and 1996, was 7.09% and 6.10%, respectively. Included
in these short-term commitments is $452.5 million of London Electricity's
commitments, which had an outstanding balance of $82.3 million of short-
term borrowings through committed facilities as of December 31, 1997. The
weighted average interest rate incurred on Entergy London's short-term
borrowings was 7.64% for the period from February 1, 1997 to December 31,
1997. Commitment fees on the lines of credit for Entergy Arkansas, Entergy
Louisiana, and Entergy Mississippi are .125% of the undrawn amounts. The
commitment fees for Entergy Corporation's $300 million credit facility and
ETHC's $250 million credit facility are currently .17%, but can fluctuate
depending on the senior debt ratings of the domestic utility companies.
The commitment fees for Entergy London's $452.5 million credit facility
range from .03% to .125% of the undrawn balance. See Note 7 for a
discussion of commitments for long-term financing arrangements.
NOTE 5. PREFERRED, PREFERENCE, AND COMMON STOCK (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
The number of shares, authorized and outstanding, and dollar value of
preferred and preference stock for Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans as of December 31, 1997, and 1996 were:
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C>
Entergy Arkansas Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.32% Series 70,000 70,000 $ 7,000 $ 7,000 $103.65
4.72% Series 93,500 93,500 9,350 9,350 $107.00
4.56% Series 75,000 75,000 7,500 7,500 $102.83
4.56% 1965 Series 75,000 75,000 7,500 7,500 $102.50
6.08% Series 100,000 100,000 10,000 10,000 $102.83
7.32% Series 100,000 100,000 10,000 10,000 $103.17
7.80% Series 150,000 150,000 15,000 15,000 $103.25
7.40% Series 200,000 200,000 20,000 20,000 $102.80
7.88% Series 150,000 150,000 15,000 15,000 $103.00
Cumulative, $0.01 par value:
$1.96 Series (a)(b) 600,000 600,000 15,000 15,000 -
--------- --------- -------- --------
Total without sinking fund 1,613,500 1,613,500 $116,350 $116,350
========= ========= ======== ========
With sinking fund:
Cumulative, $100 par value
8.52% Series 250,000 300,000 $ 25,000 $ 30,000 $104.26
Cumulative, $25 par value
9.92% Series 241,085 401,085 6,027 10,027 $26.32
--------- --------- -------- --------
Total with sinking fund 491,085 701,085 $ 31,027 $ 40,027
========= ========= ======== ========
Fair Value of Preferred Stock with sinking fund (d) $ 32,018 $ 41,835
======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C>
Entergy Gulf States Preferred and Preference Stock
Preference Stock
Cumulative, without par value
7% Series (a)(b) 6,000,000 6,000,000 $150,000 $150,000 -
========= ========= ======== ========
Preferred Stock
Authorized 6,000,000, $100 par
value, cumulative
Without sinking fund:
4.40% Series 51,173 51,173 $ 5,117 $ 5,117 $108.00
4.50% Series 5,830 5,830 583 583 $105.00
4.40%-1949 Series 1,655 1,655 166 166 $103.00
4.20% Series 9,745 9,745 975 975 $102.82
4.44% Series 14,804 14,804 1,480 1,480 $103.75
5.00% Series 10,993 10,993 1,099 1,099 $104.25
5.08% Series 26,845 26,845 2,685 2,685 $104.63
4.52% Series 10,564 10,564 1,056 1,056 $103.57
6.08% Series 32,829 32,829 3,283 3,283 $103.34
7.56% Series 350,000 350,000 35,000 35,000 $101.80
8.52% Series - 500,000 - 50,000 -
9.96% Series - 350,000 - 35,000 -
--------- --------- -------- --------
Total without sinking fund 514,438 1,364,438 $ 51,444 $136,444
========= ========= ======== ========
With sinking fund:
8.80% Series 162,283 184,595 $ 16,228 $ 18,459 $100.00
8.64% Series 112,000 140,000 11,200 14,000 $101.00
Adjustable Rate - A, 7.42%(c) 168,000 180,000 16,800 18,000 $100.00
Adjustable Rate - B, 7.47%(c) 247,500 270,000 24,750 27,000 $100.00
--------- --------- -------- --------
Total with sinking fund 689,783 774,595 $ 68,978 $ 77,459
========= ========= ======== ========
Fair Value of Preference Stock and
Preferred Stock with sinking fund (d) $220,413 $214,475
======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C>
Entergy Louisiana Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.96% Series 60,000 60,000 $ 6,000 $ 6,000 $104.25
4.16% Series 70,000 70,000 7,000 7,000 $104.21
4.44% Series 70,000 70,000 7,000 7,000 $104.06
5.16% Series 75,000 75,000 7,500 7,500 $104.18
5.40% Series 80,000 80,000 8,000 8,000 $103.00
6.44% Series 80,000 80,000 8,000 8,000 $102.92
7.84% Series 100,000 100,000 10,000 10,000 $103.78
7.36% Series 100,000 100,000 10,000 10,000 $103.36
Cumulative, $25 par value:
8.00% Series (b) 1,480,000 1,480,000 37,000 37,000 -
--------- --------- -------- --------
Total without sinking fund 2,115,000 2,115,000 $100,500 $100,500
========= ========= ======== ========
With sinking fund:
Cumulative, $100 par value
7.00% Series (b) 500,000 500,000 $ 50,000 $ 50,000 -
8.00% Series (b) 350,000 350,000 35,000 35,000 -
Cumulative, $25 par value
12.64% Series - 300,000 - 7,500 -
--------- --------- -------- --------
Total with sinking fund 850,000 1,150,000 $ 85,000 $ 92,500
========= ========= ======== ========
Fair Value of Preferred Stock with sinking fund (d) $ 87,288 $ 93,825
======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C>
Entergy Mississippi Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.36% Series 59,920 59,920 $ 5,992 $ 5,992 $103.86
4.56% Series 43,888 43,888 4,389 4,389 $107.00
4.92% Series 100,000 100,000 10,000 10,000 $102.88
7.44% Series 100,000 100,000 10,000 10,000 $102.81
8.36% Series(b) 200,000 200,000 20,000 20,000 -
9.16% Series - 75,000 - 7,500 -
--------- --------- -------- --------
Total without sinking fund 503,808 578,808 $ 50,381 $ 57,881
========= ========= ======== ========
With sinking fund:
Cumulative, $100 par value
9.76% Series - 70,000 $ - $ 7,000 -
--------- --------- -------- --------
Total with sinking fund - 70,000 $ - $ 7,000
========= ========= ======== ========
Fair Value of Preferred Stock with sinking fund (d) $ 7,000
========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C>
Entergy New Orleans Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.75% Series 77,798 77,798 $ 7,780 $ 7,780 $105.00
4.36% Series 60,000 60,000 6,000 6,000 $104.57
5.56% Series 60,000 60,000 6,000 6,000 $102.59
--------- --------- -------- --------
Total without sinking fund 197,798 197,798 $ 19,780 $ 19,780
========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C>
Entergy Corporation
Subsidiary's Preference Stock
(a)(b) 6,000,000 6,000,000 $150,000 $150,000 -
========= ========= ======== ========
Subsidiaries' Preferred Stock
Without sinking fund 4,944,544 5,869,544 $338,455 $430,955
========= ========= ======== ========
With sinking fund 2,030,868 2,695,680 $185,005 $216,986
========= ========= ======== ========
Fair Value of Preference Stock
and Preferred Stock with
sinking fund (d) $339,719 $357,135
======== ========
(a) The total dollar value represents the involuntary liquidation value of
$25 per share.
(b) These series are not redeemable as of December 31, 1997.
(c) Represents weighted-average annualized rates for 1997.
(d) Fair values were determined using bid prices reported by dealer
markets and by nationally recognized investment banking firms. See
Note 1 for additional disclosure of fair value of financial
instruments.
Changes in the preferred stock, with and without sinking fund,
preference stock, and common stock of Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans
during the last three years were:
Number of Shares
1997 1996 1995
Preferred stock retirements
Entergy Arkansas
$100 par value (50,000) (50,000) (25,000)
$25 par value (160,000) (560,000) (280,000)
$0.01 par value - (2,000,000) -
Entergy Gulf States
$100 par value (934,812) (101,943) (72,834)
Entergy Louisiana
$100 par value - (100,000) -
$25 par value (300,000) (2,300,370) (450,211)
Entergy Mississippi
$100 par value (145,000) (97,700) (150,000)
Entergy New Orleans
$100 par value - - (34,495)
Cash sinking fund requirements and mandatory redemptions for the next
five years for preferred and preference stock, outstanding as of December
31, 1997, are:
Entergy
Entergy Gulf Entergy
Entergy Arkansas States Louisiana
(In Thousands)
1998 $14,225 $4,500 $5,966 $3,759
1999 60,466 4,500 5,966 50,000
2000 160,466 4,500 155,966 -
2001 45,466 4,500 5,966 35,000
2002 10,466 4,500 5,966 -
Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana have the
annual noncumulative option to redeem, at par, additional amounts of
certain series of their outstanding preferred stock.
Entergy Corporation from time to time reissues treasury shares to meet
the requirements of the Stock Plan for Outside Directors (Directors' Plan),
the Equity Ownership Plan of Entergy Corporation and Subsidiaries (Equity
Plan), and certain other stock benefit plans. The Directors' Plan awards
to nonemployee directors a portion of their compensation in the form of a
fixed number of shares of Entergy Corporation common stock. Shares awarded
under the Directors' Plan were 9,104, 6,750, and 9,251 during 1997, 1996,
and 1995, respectively.
During 1997, Entergy Corporation issued 1,189,266 shares of its
previously repurchased common stock, reducing the amount held as treasury
stock by $34.8 million. Included in the foregoing were 813,161 shares of
common stock issued at a value of $21.5 million in connection with the
acquisition of the security monitoring company, Ranger American, during
1997. Entergy Corporation issued the remaining shares to meet the
requirements of its various stock plans. In addition, Entergy Corporation
received proceeds of $297 million from the issuance of 11,692,741 shares of
common stock under its dividend reinvestment and stock purchase plan during
1997.
The Equity Plan grants stock options, equity awards, and incentive
awards to key employees of the domestic utility companies. The costs of
awards are charged to income over the period of the grant or restricted
period, as appropriate. Amounts charged to compensation expense in 1997
were immaterial. Stock options, which comprise 50% of the shares targeted
for distribution under the Equity Plan, are granted at exercise prices not
less than market value on the date of grant. The options are generally
exercisable six months from the date of grant, with the exception of
250,000 options granted on March 31, 1995, which are not exercisable until
March 31, 1998, but not more than 10 years after the date of grant.
Entergy applies APB Opinion 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for stock options.
Accordingly, no compensation cost is required to be recognized until such
options are exercised because the exercise prices are not less than market
price on the date of grant. The impact on Entergy's net income would have
been $296,000, $166,000, and $374,000 in 1997, 1996, and 1995,
respectively, had compensation cost for the stock options been determined
based on the fair value at the grant date for awards under the option plan
consistent with the method prescribed by SFAS 123.
In applying the disclosure provisions of SFAS 123, the fair value of
each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with expected stock price volatility of 19% in 1997
and 1996 and 18% in 1995 and additional assumptions for each of those
years as follows: risk-free interest rates of 6.3%, 5.4%, and 7.2% in
1997, 1996, and 1995, respectively, average expected lives of five years,
and dividends of $1.80 per share.
Nonstatutory stock option transactions are summarized as follows:
</TABLE>
<TABLE>
<CAPTION> 1997 1996 1995
Average Average Average
Number Option Number Option Number Option
of Options Price of Options Price of Options Price
<S> <C> <C> <C> <C> <C> <C>
Beginning-of-year balance 527,909 $26.42 457,909 $25.94 170,409 $34.86
Options granted 255,000 25.84 82,500 29.38 315,000 21.39
Options exercised (2,500) 23.38 (7,500) 23.38 (12,500) 23.38
Options forfeited (107,500) 25.43 (5,000) 35.88 (15,000) 33.79
------- ------- -------
End-of-year balance 672,909 $26.37 527,909 $26.42 457,909 $25.94
======= ======= =======
Options exercisable at year-end 422,909 277,909 207,909
Weighted average fair value of $ 4.49 $ 3.51 $ 2.48
options granted
</TABLE>
The following table summarizes information about stock options
outstanding as of December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------- ------------------------
Weighted-Avg
Remaining Weighted- Weighted
Range of As of Contractual Avg. Exercise As of Avg. Exercise
Exercise Prices 12/31/97 Life-Yrs. Price 12/31/97 Price
<S> <C> <C> <C> <C> <C>
$20 - $30 554,302 7.7 $24.29 304,302 $27.09
$30 - $40 118,607 5.6 $36.10 118,607 $36.10
------- -------
$20 - $40 672,909 7.3 $26.37 422,909 $29.62
======= =======
</TABLE>
To meet the requirements of the Employee Stock Investment Plan (ESIP),
Entergy Corporation was authorized to issue or acquire, through March 31,
1997, up to 2,000,000 shares of its common stock to be held as treasury
shares. In February 1997, Entergy received authority from the SEC to
extend the ESIP for an additional three years ending on March 31, 2000.
Under the extended plan, Entergy Corporation may issue either treasury
shares or previously authorized but unissued shares. Under the terms of
the ESIP, employees can choose each year to have up to 10% of their
regular annual salary (not to exceed $25,000) withheld to purchase the
Company's common stock at a purchase price equal to 85% of the lower of
the market value on the first or last business day of the plan year. The
1997 plan year runs from April 1, 1997, to March 31, 1998. Under the plan,
the number of subscribed shares was 319,457, 327,017, and 247,122 in
1997, 1996, and 1995, respectively.
The fair value of shares granted was estimated on the date of the
grant using the Black-Scholes option-pricing model with expected stock
price volatility of 19% in 1997 and 1995 and 18% in 1996 and additional
assumptions for each of those years as follows: risk-free interest rates
of 6.1%, 5.4%, and 6.3% in 1997, 1996, and 1995, respectively, an
average expected life of one year, and dividends of $1.80 per share. The
weighted-average fair value of those purchase rights granted was $4.75,
$5.41, and $4.02, in 1997, 1996, and 1995, respectively. The impact on
Entergy's net income would have been $48,000, $894,000, and ($315,000) in
1997, 1996, and 1995, respectively, had compensation cost for the ESIP
been determined based on the fair value at the grant date for awards under
the ESIP consistent with the method prescribed by SFAS 123.
Entergy sponsors the Employee Stock Ownership Plan of Entergy
Corporation and Subsidiaries (ESOP) and the Savings Plan of Entergy
Corporation and Subsidiaries (Savings Plan). Both plans are defined
contribution plans covering eligible employees of Entergy and its
subsidiaries who have completed certain service requirements. Entergy's
subsidiaries' contributions to the ESOP and the Savings Plan, and any
income thereon, are invested in shares of Entergy Corporation common
stock. The allowed contributions to the ESOP are accrued based on the
expected utilization of additional investment tax credits in the applicable
federal income tax return of Entergy and its subsidiaries, and on expected
voluntary participant contributions. Entergy's subsidiaries contributed
$22.8 million to the ESOP for the year ended December 31, 1995. There were
no contributions in the years ended December 31, 1996 and 1997.
The Savings Plan provides that the employing Entergy subsidiary may
make matching contributions to the plan in an amount equal to 50% of the
participant's basic contribution up to 6% of their salary. In 1997, 1996,
and 1995, Entergy's subsidiaries contributed $13.2 million annually to the
Entergy Savings Plan.
Entergy Gulf States sponsors the Gulf States Utilities Company
Employee Stock Ownership Plan (GSU ESOP) and the Gulf States Utilities
Company Employees' Thrift Plan (GSU Thrift Plan), which are both defined
contribution plans. The GSU ESOP is available to all Entergy Gulf States
employees, pre-Merger Entergy Gulf States employees, and post-Merger
employees of Entergy Operations, whose primary work location is River Bend,
upon completion of certain eligibility requirements. All contributions to
the plan are invested in shares of Entergy Corporation common stock.
Entergy Gulf States makes contributions to the GSU ESOP based on expected
utilization of additional investment tax credits in the Entergy Gulf States
federal tax return and on expected participants' contributions. No
additional contributions were made to the GSU ESOP during 1997, 1996, and
1995. The GSU Thrift Plan is available to certain Entergy Operations
employees whose primary work location is River Bend. Entergy Gulf States
makes matching contributions to the GSU Thrift Plan equal to 50% of a
participant's basic contribution which may be invested, at the
participant's discretion, in shares of Entergy Corporation common stock.
Entergy Gulf States' contributions to the GSU Thrift Plan for the years
ended December 31, 1997, 1996, and 1995 were $306,000, $300,000, and $1.1
million, respectively.
NOTE 6. COMPANY-OBLIGATED REDEEMABLE PREFERRED SECURITIES
(Entergy Arkansas, Entergy Louisiana, Entergy Gulf States)
Entergy Arkansas Capital I, Entergy Louisiana Capital I, and Entergy
Gulf States Capital I (Trusts) were established as financing subsidiaries
of Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States,
respectively, for the purpose of issuing common and preferred securities.
The Trusts issued Cumulative Quarterly Income Preferred Securities
(Preferred Securities) to the public and common securities to their
respective parent companies and used the proceeds from the sale to
purchase, from their respective parent company, junior subordinated
deferrable interest debentures (Debentures). The Debentures held by each
Trust are its only assets and each Trust will use interest payments
received on the Debentures owned by it to make cash distributions on the
Preferred Securities.
<TABLE>
<CAPTION>
Fair Market
Interest Trust's Value of
Preferred Common Rate Investment Preferred
Date Securities Securities Securities in Securities at
Trusts of Issue Issued Issued Debentures Debentures 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Arkansas Capital I 8-14-96 $60.0 $1.9 8.50% $61.9 $62.0
Louisiana Capital I 7-16-96 $70.0 $2.2 9.00% $72.2 $74.0
Gulf States Capital I 1-28-97 $85.0 $2.6 8.75% $87.6 $88.6
</TABLE>
The Preferred Securities of the Trusts of Entergy Arkansas and Entergy
Louisiana will mature on September 30, 2045 and will mature on March 31,
2046 for Entergy Gulf States. The Preferred Securities are redeemable at
100% of their principal amount at the option of Entergy Arkansas and
Entergy Louisiana beginning in 2001, and at the option of Entergy Gulf
States beginning in 2002, or earlier under certain limited circumstances,
including the loss of the tax deduction arising out of the interest paid on
the Debentures. Entergy Arkansas, Entergy Louisiana, and Entergy Gulf
States have, pursuant to certain agreements, fully and unconditionally
guaranteed payment of distributions on the Preferred Securities issued by
their respective trusts. Entergy Arkansas, Entergy Louisiana, and Entergy
Gulf States are the owners of all of the common securities of their
individual Trusts, which constitute 3% of each Trust's total capital.
(Entergy London)
Entergy London Capital, L.P. (Entergy London Capital), a limited
partnership, was established as a financing subsidiary of Entergy London
for the purpose of issuing preferred securities. On November 19, 1997, the
limited partnership issued $300 million in aggregate liquidation preference
amount of 8.625% Cumulative Quarterly Income Preferred Securities in a
public offering. All of the proceeds from the sale of these preferred
securities were invested by Entergy London Capital in the Perpetual Junior
Subordinated Debentures issued by Entergy London to Entergy London Capital.
Entergy London used the net proceeds from such investment, together with
other funds available to Entergy London, to repay a portion of
indebtedness incurred in connection with the acquisition of London
Electricity. These debentures will be payable in U.S. dollars.
Management's estimate of the fair value of these preferred securities as of
December 31, 1997, was $303 million, based on the New York Stock Exchange
closing price.
Entergy London has entered into currency exchange rate swap agreements
to hedge the risk associated with exchange rate fluctuations. The exchange
rate swap agreements hedging this risk involve the exchange of fixed rate
U.S. dollars and BPS interest payments periodically over seven years.
Management's estimate of the fair value of the currency swaps outstanding
as of December 31, 1997, based on quoted interest and currency exchange
rates, is a net asset of approximately $2.0 million.
The preferred securities of the partnership, as well as the
debentures, have no stated date of maturity. The preferred securities are
redeemable at the option of Entergy London on or after November 19, 2002,
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 London is the sole General
Partner in Entergy London Capital, and has agreed to maintain ownership of
1% of all capital of Entergy London Capital.
NOTE 7. LONG - TERM DEBT (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy
New Orleans, System Energy, and Entergy London)
The long-term debt of Entergy Corporation's subsidiaries, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, System Energy, and Entergy London as of December
31, 1997, was:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maturities Interest Entergy Entergy Entergy Entergy Entergy System Entergy
From To From To Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
(In Thousands)
First Mortgage Bonds
1998 1999 6.000% 11.375% $491,000 $15,000 $211,000 $35,000 $230,000
2000 2004 6.000% 8.250% 1,435,270 265,000 603,750 361,520 205,000
2005 2009 6.650% 7.500% 313,000 215,000 98,000
2010 2019 9.750% 75,000 75,000
2020 2026 7.000% 10.000% 939,011 289,061 444,950 205,000
G&R Bonds
2000 2023 6.625% 8.800% 590,000 $420,000 $170,000
Governmental Obligations(a)
1998 2008 5.900% 8.750% 104,617 47,190 45,010 11,532 885
2009 2026 5.600% 9.875% 1,596,735 286,200 435,735 412,170 46,030 416,600
Debentures
1998 2000 7.380% 9.720% 125,000 50,000 75,000
Eurobonds
2003 2005 8.000% 8.625% 325,940 $325,940
Loan Notes Due 2003(b) 33,814 33,814
Revolving Bank Debt Facility:
Facility A, avg rate 8.789% due 2002 1,332,774 1,332,774
Facility B,(Entergy International Ltd LLC) 117,000
EPDC Revolving Credit Facility due 2000 70,307
Saltend Project Senior Credit Facility/2014 39,610
Long-Term DOE Obligation (Note 9) 123,506 123,506
Waterford 3 Lease Obligation 8.09% (Note 10) 353,600 353,600
Grand Gulf Lease Obligation 7.02% (Note 10) 489,162 489,162
EP Edegel, Inc. Note Payable, due 2000 67,000
CitiPower Crt Line avg rate 8.31% due 2000 715,330
Other Long-Term Debt 149,201 9,937 47,382
Unamortized Premium and Discount - Net (27,878) (10,447) (4,773) (5,058) (2,739) (1,047) (3,814)
--------------------------------------------------------------------------------------
Total Long-Term Debt 9,458,999 1,305,510 1,893,609 1,373,764 464,176 168,953 1,411,948 1,739,910
Less Amount Due Within One Year 390,674 60,650 190,890 35,300 20 - 70,000 33,814
--------------------------------------------------------------------------------------
Long-Term Debt Excluding Amount Due
Within One Year $9,068,325 $1,244,860 $1,702,719 $1,338,464 $464,156 $168,953 $1,341,948 $1,706,096
=======================================================================================
Fair Value of Long-Term Debt (c) $8,635,583 $1,223,591 $1,990,881 $1,074,053 $488,145 $171,199 $969,724 $1,708,743
=======================================================================================
</TABLE>
The long-term debt of Entergy Corporation's subsidiaries, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy, as of December 31, 1996, was:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maturities Interest Entergy Entergy Entergy Entergy System
From To From To Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
First Mortgage Bonds
1997 1999 5.375% 11.375% $687,000 $45,000 $321,000 $69,000 $12,000 $240,000
2000 2004 6.000% 8.250% 1,355,270 180,000 608,750 361,520 205,000
2005 2009 6.650% 7.500% 325,000 215,000 110,000
2010 2019 9.750% 75,000 75,000
2020 2026 7.000% 10.000% 1,031,648 376,648 450,000 205,000
G&R Bonds
1997 1999 6.950% 11.2% 96,000 $ 96,000
2000 2023 6.625% 8.800% 525,000 355,000 170,000
Governmental Obligations (a)
1997 2008 5.900% 10.000% 108,267 49,655 45,875 11,837 900
2009 2026 5.950% 9.875% 1,551,235 240,700 435,735 412,170 46,030 416,600
Debentures
1997 2000 7.380% 9.720% 175,000 100,000 75,000
Long-Term DOE Obligation (Note9) 117,270 117,270
Waterford 3 Lease Obligation
8.76% (Note 10) 353,600 353,600
Grand Gulf Lease Obligation
7.02% (Note 10) 496,480 496,480
Line of Credit, variable rate
due 1998 65,000
CitiPower Credit Line
avg.rate 8.31% due 2000 921,553
Other Long-Term Debt 83,411 9,938
Unamortized Premium and Discount-Net (30,310) (11,420) (5,087) (5,619) (2,861) (1,112) (4,211)
-------------------------------------------------------------------------------------
Total Long-Term Debt 7,936,424 1,287,853 2,076,211 1,407,508 495,069 180,888 1,428,869
Less Amount Within One Year 345,620 32,465 160,865 34,275 96,015 12,000 10,000
-------------------------------------------------------------------------------------
Long-Term Debt Excluding Amount
Due Within One Year $7,590,804 $1,255,388 $1,915,346 $1,373,233 $399,054 $168,888 $1,418,869
======================================================================================
Fair Value of Long-Term Debt (c) $7,087,027 $1,160,377 $2,142,389 $1,104,891 $503,461 $175,566 $ 982,423
======================================================================================
</TABLE>
(a) Consists of pollution control bonds, certain series of which are
secured by non-interest bearing first mortgage bonds.
(b) Loan notes are included as current maturities of long-term debt
based on the option of the holders to redeem such notes on March
31 of each year until their final maturity on March 31, 2003.
(c) The fair value excludes lease obligations, long-term DOE
obligations, and other long-term debt and includes debt due within
one year. It is determined using bid prices reported by dealer
markets and by nationally recognized investment banking firms.
See Note 1 for additional information.
The annual long-term debt maturities (excluding lease obligations)
and annual cash sinking fund requirements for debt outstanding as of
December 31, 1997, for the next five years are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Entergy Entergy Entergy Entergy System Entergy
Entergy(a) Arkansas(b) Gulf States(c) Louisiana(d) Mississippi Energy London
(In Thousands)
1998 $ 390,674 $60,650 $190,890 $35,300 $ 20 $70,000 $33,814
1999 232,538 365 71,915 238 20 160,000 -
2000 1,029,047 220 945 100,225 20 75,000 -
2001 277,710 35 123,725 18,925 25 135,000 -
2002 1,946,328 110,135 151,010 217,484 65,025 70,000 1,332,774
</TABLE>
(a) Not included are other sinking fund requirements of approximately
$15.8 million annually, which may be satisfied by cash or by
certification of property additions at the rate of 167% of such
requirements.
(b) Not included are other sinking fund requirements of approximately
$0.79 million annually, which may be satisfied by cash or by
certification of property additions at the rate of 167% of such
requirements.
(c) Not included are other sinking fund requirements of approximately
$11.6 million annually, which may be satisfied by cash or by
certification of property additions at the rate of 167% of such
requirements.
(d) Not included are other sinking fund requirements of approximately
$3.41 million annually, which may be satisfied by cash or by
certification of property additions at the rate of 167% of such
requirements.
Entergy Gulf States has two outstanding series of pollution
control bonds collateralized by irrevocable letters of credit, which
are scheduled to expire before the scheduled maturity of the bonds.
The letter of credit collateralizing the $28.4 million variable-rate
series, due December 1, 2015, expires in September 1999 and the letter
of credit collateralizing the $20 million variable-rate series, due
April 1, 2016, expires in February 1999.
Entergy's subsidiary, CitiPower, established a variable rate
revolving credit facility in the aggregate amount of 1.2 billion
Australian dollars ($780 million) on January 5, 1996. The facility is
fully collateralized by all of CitiPower's assets and is non-recourse
to Entergy. Borrowings have maturities of 30 to 185 days, and are
continuously renewable for 30 to 185 day periods at CitiPower's option
until the facility matures on June 30, 2000. As of December 31, 1997,
the facility was drawn down to 1.1 billion Australian dollars ($715.3
million) at an average interest rate of 5.30%. Credit support is
provided to facility banks in the form of a subordinated letter of
credit supplied by the Commonwealth Bank of Australia. The letter of
credit matures on January 21, 1999, and is for an amount of 70 million
Australian dollars ($45.5 million). The letter of credit is fully
collateralized by a second-ranking security interest in all of
CitiPower's assets and is non-recourse to Entergy.
CitiPower entered into several interest rate swaps to reduce the
impact of interest rate changes on the borrowings under its variable
rate line of credit. The interest rate swap agreements which hedge
this debt involve the exchange of fixed and floating rate interest
payments periodically over the life of the agreements. Interest is
recognized currently based on the fixed rate of interest resulting from
use of these swap agreements. 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, CitiPower does not anticipate nonperformance by
any counterparty to any interest rate swap in effect as of December 31,
1997. As of December 31, 1997, CitiPower was a party to interest rate
swaps having a notional amount of 900 million Australian dollars with
maturity dates ranging from February 1999 to December 2000, which
effectively fixed the rate of interest on the CitiPower credit line at
7.70%. CitiPower is also a party to an additional swap with a notional
amount of 32 million Australian dollars and a maturity date of December
2009. The estimated fair value of the interest rate swaps, which
represents the estimated amount CitiPower would pay to terminate the
swaps at December 31, 1997, based on quoted interest rates, is a net
liability of $28 million. See Note 1 for a discussion of Entergy
accounting policies regarding interest rate swaps.
Entergy London executed a credit facility with several banks on
December 17, 1996, to obtain credit facilities in the aggregate amount
of approximately BPS1.25 billion ($2.1 billion). Proceeds of this
facility, which were in three tranches, were used, together with $392
million of cash provided by Entergy, to fund the acquisition of, and to
provide working capital for, London Electricity. The facilities were
refinanced in November 1997. New or restated borrowing facilities were
negotiated and Cumulative Quarterly Income Preferred Securities were
issued (see Note 6 for more information) to partially replace one of
the tranches. The restated credit facility is non-recourse to Entergy
and is collateralized by certain assets of Entergy London, consisting
of 65% of the shares of London Electricity. The maturity dates of the
various tranches of the credit facility range from December 17, 2001,
to October 31, 2002. The interest rate on these facilities is the
London Interbank Offered Rate plus up to 1.00%, depending on the
capitalization ratio of Entergy London and its subsidiaries.
A portion of the amended and restated facility ($1.3 billion), and
related interest rate swaps, are now obligations of Entergy UK Limited,
an indirect, wholly-owned subsidiary of Entergy Corporation. These
obligations are still reflected in the financial statements of Entergy
London, however, because the facility is guaranteed by Entergy London,
Entergy UK Limited's indirect, wholly-owned subsidiary. Entergy London
recognizes the interest expense associated with this debt in its
financial statements, with a credit to shareholder's equity for the
same amount. This credit to shareholder's equity offsets dividends as
they are declared from Entergy London to Entergy UK Limited. These
dividends are the funding mechanism for Entergy UK Limited to service
this debt. Management intends to declare future dividends from Entergy
London to enable Entergy UK Limited to continue to service this debt.
Entergy London entered into interest rate swaps to reduce the
impact of interest rate changes on its debt related to the London
Electricity acquisition. The interest rate swap agreements involve the
exchange of floating rate interest payments for fixed rate interest
payments over the life of the agreements. Entergy London recognizes
interest expense currently based on the fixed rate of interest
resulting from use of these swap agreements. If the counterparties to
an interest rate swap agreement were to default on contractual
payments, Entergy London could be exposed to increased costs related to
replacing the original agreement. However, management does not
anticipate nonperformance by any counterparty to any interest rate swap
in effect as of December 31, 1997. As of December 31, 1997, Entergy
London was party to interest rate swaps having a notional amount of
BPS600 million with maturity dates ranging from March 1999 to September
2001, which effectively fixed the rate of interest at 7.48%. The
estimated fair value of the interest rate swaps, which represents the
estimated amount Entergy London would pay to terminate the swaps as of
December 31, 1997, based on quoted interest rates, is a net liability
of $11 million. See Note 1 for a discussion of Entergy's accounting
policies regarding interest rate swaps.
In August 1997, EPDC entered into a BPS50 million ($82.5 million)
credit facility to finance the acquisition of the Damhead Creek
project. In December 1997, EPDC amended the credit facility and
increased the amount of the revolver to BPS100 million ($165 million).
As of December 31, 1997, approximately BPS97.4 million ($160.2 million)
was outstanding under this facility. The interest rate on the
outstanding borrowings was 7.84% at December 31, 1997.
In December 1997, Saltend Cogeneration Company (SCC), an
indirect wholly-owned subsidiary of EPDC, entered into a BPS646 million
($1.07 billion) non-recourse senior credit facility (Senior Credit
Facility) to finance the construction of a 1200 MW gas-fired power
plant in Hull, England. Borrowings under the Senior Credit Facility
are payable after completion of construction over a 15-year period
beginning December 31, 2000. SCC also entered into a BPS72 million
($118 million) Subordinated Credit Facility that provides funding upon
the earlier of completion of construction or July 31, 2000. The
proceeds of borrowings under this facility will be used to repay a
portion of the Senior Credit Facility. The Subordinated Credit
Facility is payable over a 10-year period beginning December 31, 2000.
The Senior Credit Facility is collateralized by all of the assets
of SCC. Furthermore, the credit facilities require SCC to enter into
interest rate hedges for a significant portion of the project debt.
Certain cash balances, primarily related to SCC, are restricted from
being used to make loans and advances or to pay dividends to EPDC by
the amount required for debt payments, letter of credit expenses, and
permitted project costs. The total restricted cash was $2.6 million as
of December 31, 1997.
On January 16, 1998, Entergy Arkansas redeemed, in full at par,
prior to its maturity, $45.5 million of its 1977 6 1/8% Series
Jefferson County pollution control revenue bonds due October 1, 2007,
with proceeds of 5.6% pollution control revenue bonds, due October 1,
2017, issued in December 1997.
NOTE 8. DIVIDEND RESTRICTIONS (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy
New Orleans, System Energy, and Entergy London)
Provisions within the Articles of Incorporation or pertinent
indentures and various other agreements relating to the long-term debt
and preferred stock of certain of Entergy Corporation's subsidiaries
restrict the payment of cash dividends or other distributions on their
common and preferred stock. Additionally, PUHCA prohibits Entergy
Corporation's subsidiaries from making loans or advances to Entergy
Corporation. Detailed below are the restricted retained earnings
unavailable for distribution to Entergy Corporation by subsidiary.
Restricted
Earnings
(in millions)
Entergy Arkansas $291.3
Entergy Mississippi 15.8
During 1997, cash dividends paid to Entergy Corporation by its
subsidiaries totaled $550.2 million. In February 1998, Entergy
Corporation received common stock dividend payments from its
subsidiaries totaling $103.9 million.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Cajun - River Bend Litigation (Entergy Corporation and Entergy Gulf
States)
Entergy Gulf States and Cajun, respectively, owned 70% and 30%
undivided interests in River Bend (operated by Entergy Gulf States),
and own 42% and 58% undivided interests in Big Cajun 2, Unit 3
(operated by Cajun). These relationships spawned a number of long-
standing disputes and claims between the parties. An agreement setting
forth terms for the resolution of all such disputes was reached by
Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, and was
approved by the United States District Court for the Middle District of
Louisiana (District Court) on August 26, 1996 (Cajun Settlement). The
Cajun Settlement was consummated on December 23, 1997.
The Cajun Settlement includes, but is not limited to, the
following elements: (i) Cajun's 30% interest in River Bend was
transferred, at the behest of the RUS, by Cajun's Trustee in
Bankruptcy to Entergy Gulf States; (ii) Cajun set aside in trust a
total of $132 million for its share of the decommissioning costs of
River Bend; (iii) Cajun transferred certain transmission assets to
Entergy Gulf States; (iv) Cajun and Entergy Gulf States settled
transmission disputes and released each other from claims for payment
under transmission arrangements; (v) all funds paid by Entergy Gulf
States into the registry of the District Court, which totaled over $102
million on December 23, 1997, were returned to Entergy Gulf States;
(vi) Cajun was released from its unpaid past, present, and future
liability to Entergy Gulf States for River Bend costs and expenses; and
(vii) all remaining litigation between Cajun and Entergy Gulf States
was dismissed. Based on the District Court's approval of the Cajun
Settlement, a litigation accrual established in 1994 for possible
losses associated with the Cajun-River Bend litigation was reversed in
September 1996. The consummation of the Cajun Settlement resulted in
an addition to net income for Entergy Gulf States of $146 million in
1997.
Proponents of all of the plans of reorganization submitted to the
Bankruptcy Court in the Cajun bankruptcy case have incorporated the
Cajun Settlement as an integral condition to the effectiveness of their
plans. The Bankruptcy Court has approved proposals by three groups
seeking to acquire the non-nuclear assets of Cajun and has signed an
order that establishes rules for how Cajun's creditors will vote on the
three plans. On December 16, 1996, the Bankruptcy Court began hearings
on the balloting and the plan that will be adopted. Additional hearings
are scheduled for 1998.
Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States)
On January 13, 1997, Entergy Gulf States filed a declaratory
judgment action in the U.S. Bankruptcy Court in which the Cajun
bankruptcy is pending, seeking a ruling that Entergy Gulf States would
not be liable for damages to certain coal suppliers for Big Cajun 2,
Unit 3, if the Cajun bankruptcy trustee were to reject their coal
contracts as a part of a plan of reorganization in the bankruptcy
proceeding. In its pleading, Entergy Gulf States took the position
that it was not a party to, and had no liability under, those coal
contracts. On February 12, 1997, the coal suppliers and the Cajun
bankruptcy trustee filed a response in the declaratory judgment action
and made certain counterclaims and crossclaims. The coal suppliers
contended that Entergy Gulf States' declaratory judgment action should
be dismissed and, in the alternative, argued that Cajun was Entergy
Gulf States' agent in the procurement of coal for Big Cajun 2, Unit 3,
and that Entergy Gulf States was a party to and had liability under the
coal supply contracts. On September 4, 1997, the U.S. Bankruptcy Court
ruled that Entergy Gulf States was not liable for the Cajun coal
contracts. The coal suppliers have subsequently appealed this decision
to the District Court, and oral argument on the appeal is set for April
1998.
Capital Requirements and Financing (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, Entergy London, and System Energy)
Construction expenditures (excluding nuclear fuel) for the
domestic utility companies, System Energy, and Entergy London for the
years 1998, 1999, and 2000 are estimated to total $734 million, $644
million, and $680 million, respectively. Entergy will also require
$1.887 billion during the period 1998-2000 to meet long-term debt and
preferred stock maturities and cash sinking fund requirements. Entergy
plans to meet these requirements primarily with internally generated
funds and cash on hand, supplemented by proceeds of the issuance of
debt and company-obligated mandatorily redeemable preferred securities
and from outstanding credit facilities. Certain domestic utility
companies and System Energy may also continue with the acquisition or
refinancing of all or a portion of certain outstanding series of
preferred stock and long-term debt. See Notes 5, 6, and 7 for further
information.
Grand Gulf 1-Related Agreements
Capital Funds Agreement (Entergy Corporation and System Energy)
Entergy Corporation has agreed to supply System Energy with
sufficient capital to (i) maintain System Energy's equity capital at an
amount equal to a minimum of 35% of its total capitalization (excluding
short-term debt), and (ii) permit the continued commercial operation of
Grand Gulf 1 and pay in full all indebtedness for borrowed money of
System Energy when due. 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 to enable System Energy to make payments on
such debt when due.
System Energy has entered into agreements with Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans whereby
they are obligated to purchase their respective entitlements of
capacity and energy from System Energy's 90% ownership and leasehold
interest in Grand Gulf 1, and to make payments that, together with
other available funds, are adequate to cover System Energy's operating
expenses. System Energy would have to secure funds from other sources,
including Entergy Corporation's obligations under the Capital Funds
Agreement, to cover any shortfalls from payments received from Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans under these agreements.
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy has agreed to sell all of its 90% owned and leased
share of capacity and energy from Grand Gulf 1 to Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans in
accordance with specified percentages (Entergy Arkansas-36%, Entergy
Louisiana-14%, Entergy Mississippi-33%, and Entergy New Orleans-17%) as
ordered by FERC. Charges under this agreement are paid in
consideration for the purchasing companies' respective entitlement to
receive capacity and energy and are payable irrespective of the
quantity of energy delivered so long as the unit remains in commercial
operation. The agreement will remain in effect until terminated by the
parties and approved by FERC, most likely upon Grand Gulf 1's
retirement from service. Monthly obligations for payments, including
the rate increase that was placed into effect in December 1995, subject
to refund, under the agreement are approximately $21 million, $8
million, $19 million, and $10 million for Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans, respectively.
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans are individually obligated to make payments or
subordinated advances to System Energy in accordance with stated
percentages (Entergy Arkansas-17.1%, Entergy Louisiana-26.9%, Entergy
Mississippi-31.3%, and Entergy New Orleans-24.7%) in amounts that, when
added to amounts received under the Unit Power Sales Agreement or
otherwise, are adequate to cover all of System Energy's operating
expenses as defined, including an amount sufficient to amortize the
cost of Grand Gulf 2 over 27 years. (See Reallocation Agreement terms
below.) System Energy has assigned its rights to payments and advances
to certain creditors as security for certain obligations. Since
commercial operation of Grand Gulf 1, payments under the Unit Power
Sales Agreement have exceeded the amounts payable under the
Availability Agreement. Accordingly, no payments under the
Availability Agreement have ever been required. If Entergy Arkansas or
Entergy Mississippi fails to make its Unit Power Sales Agreement
payments, and System Energy is unable to obtain funds from other
sources, Entergy Louisiana and Entergy New Orleans could become subject
to claims or demands by System Energy or its creditors for payments or
advances under the Availability Agreement (or the assignments thereof)
equal to the difference between their required Unit Power Sales
Agreement payments and their required Availability Agreement payments.
Reallocation Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
System Energy, Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans entered into the Reallocation
Agreement relating to the sale of capacity and energy from Grand Gulf
and the related costs, in which Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans agreed to assume all of Entergy Arkansas'
responsibilities and obligations with respect to Grand Gulf under the
Availability Agreement. FERC's decision allocating a portion of Grand
Gulf 1 capacity and energy to Entergy Arkansas supersedes the
Reallocation Agreement as it relates to Grand Gulf 1. Responsibility
for any Grand Gulf 2 amortization amounts has been individually
allocated (Entergy Louisiana-26.23%, Entergy Mississippi-43.97%, and
Entergy New Orleans-29.80%) under the terms of the Reallocation
Agreement. However, the Reallocation Agreement does not affect Entergy
Arkansas' obligation to System Energy's lenders under the assignments
referred to in the preceding paragraph. Entergy Arkansas would be
liable for its share of such amounts if Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans were unable to meet their
contractual obligations. No payments of any amortization amounts will
be required so long as amounts paid to System Energy under the Unit
Power Sales Agreement, including other funds available to System
Energy, exceed amounts required under the Availability Agreement, which
is expected to be the case for the foreseeable future.
Reimbursement Agreement (System Energy)
In December 1988, System Energy entered into two entirely
separate, but identical, arrangements for the sale and leaseback of an
approximate aggregate 11.5% ownership interest in Grand Gulf 1 (see
Note 10). In connection with the equity funding of the sale and
leaseback arrangements, letters of credit are required to be maintained
to secure certain amounts payable for the benefit of the equity
investors by System Energy under the leases. The current letters of
credit are effective until January 15, 2000.
Under the provisions of a bank letter of credit 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 reimbursement
agreement, to maintain its equity at not less than 33% of its adjusted
capitalization (defined in the reimbursement 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 reimbursement agreement, a
ratio of adjusted net income to interest expense (calculated, in each
case, as specified in the reimbursement agreement) of at least 1.60
times earnings. As of December 31, 1997, System Energy's equity
approximated 34.80% of its adjusted capitalization, and its fixed
charge coverage ratio was 2.43.
Fuel Purchase Agreements
(Entergy Arkansas and Entergy Mississippi)
Entergy Arkansas has long-term contracts with mines in the State
of Wyoming for the supply of low-sulfur coal for White Bluff and
Independence (which is 25% owned by Entergy Mississippi). These
contracts, which expire in 2002 and 2011, provide for approximately 85%
of Entergy Arkansas' expected annual coal requirements. Additional
requirements are satisfied by spot market purchases.
(Entergy Gulf States)
Entergy Gulf States has a contract for a supply of low-sulfur
Wyoming coal for Nelson Unit 6, which should be sufficient to satisfy
the fuel requirements at Nelson Unit 6 through 2010. Cajun has advised
Entergy Gulf States that Cajun has contracts that should provide an
adequate supply of coal until 1999 for the operation of Big Cajun 2,
Unit 3.
Entergy Gulf States has long-term gas contracts which will satisfy
approximately 21% of its annual requirements, which is the minimum
volume Entergy Gulf States is required to purchase under the contracts.
Additional gas requirements are satisfied under less expensive short-
term contracts. Entergy Gulf States has a transportation service
agreement with a gas supplier that provides flexible natural gas
service to the Sabine and Lewis Creek generating stations. This
service is provided by the supplier's pipeline and salt dome gas
storage facility, which has a present capacity of 12.7 billion cubic
feet.
(Entergy Louisiana)
In June 1992, Entergy Louisiana agreed to a renegotiated 20-year
natural gas supply contract. Entergy Louisiana agreed to purchase
natural gas in annual amounts equal to approximately one-third of its
projected annual fuel requirements for certain generating units.
Annual demand charges associated with this contract are estimated to be
$8.6 million through 1997, and a total of $116.6 million for the years
1998 through 2012. Entergy Louisiana recovers the cost of fuel
consumed during the generation of electricity through its fuel
adjustment clause.
Sales Agreements/Power Purchases
(Entergy Gulf States)
In 1988, Entergy Gulf States entered into a joint venture with a
primary term of 20 years with Conoco, Inc., Citgo Petroleum
Corporation, and Vista Chemical Company (collectively the Industrial
Participants), whereby Entergy Gulf States' Nelson Units 1 and 2 were
sold to a partnership (NISCO) consisting of the Industrial Participants
and Entergy Gulf States. The Industrial Participants supply the fuel
for the units, while Entergy Gulf States operates the units at the
discretion of the Industrial Participants and purchases the electricity
produced by the units. Entergy Gulf States is continuing to sell
electricity to the Industrial Participants. For the years ended
December 31, 1997, 1996, and 1995, the purchases by Entergy Gulf States
of electricity from the joint venture totaled $70.7 million, $62.0
million, and $58.5 million, respectively.
(Entergy Louisiana)
Entergy Louisiana has an agreement extending through the year 2031
to purchase energy generated by a hydroelectric facility. During 1997,
1996, and 1995, Entergy Louisiana made payments under the contract of
approximately $64.6 million, $56.3 million, and $55.7 million,
respectively. If the maximum percentage (94%) of the energy is made
available to Entergy Louisiana, current production projections would
require estimated payments of approximately $61.0 million in 1998, and
a total of $3.7 billion for the years 1999 through 2031. Entergy
Louisiana recovers the costs of purchased energy through its fuel
adjustment clause.
(Entergy London)
London Electricity uses CFDs and power purchase contracts with
certain UK generators to fix the price of electricity for a contracted
quantity over a specific period of time. As of December 31, 1997,
London Electricity has outstanding CFDs and power purchase contracts
for approximately 40,000 GWH of electricity. These include a long term
power purchase contract with an affiliate which is based on 27.5% of
the affiliate's capacity from its 1000 MW facility through the year
2010. London Electricity's sales volume was approximately 18,000 GWH in
the year ended 1997. Management's estimate of the fair value of London
Electricity's CFDs outstanding as of December 31, 1997, is that fair
value approximates contract value.
(Entergy Corporation)
In accordance with the debt covenants included in the financing
provisions of the CitiPower acquisition, CitiPower must hedge at least
80% of its energy purchases. CitiPower's current strategy is to hedge
approximately 100% of its forecasted energy purchases through energy
trading swaps entered into with certain generators. As of December 31,
1997, CitiPower has outstanding energy trading swaps totaling a
notional amount of 38,372 MW of average daily load of electricity.
These contracts mature through the year 2000. Management's estimate of
the fair value of such swaps outstanding at December 31, 1997, is a net
liability of approximately $86.1 million.
System Fuels (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans have interests in System Fuels of 35%, 33%, 19%,
and 13%, respectively. The parent companies of System Fuels have
agreed to make loans to System Fuels to finance its fuel procurement,
delivery, and storage activities. As of December 31, 1997, Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans had, respectively, approximately $11 million, $14.2 million,
$5.5 million, and $3.3 million in loans outstanding to System Fuels,
which loans mature in 2008.
Nuclear Insurance (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy)
The Price-Anderson Act limits public liability for a single
nuclear incident to approximately $8.92 billion. Protection for this
liability is provided through a combination of private insurance
(currently $200 million each for Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and System Energy) and an industry assessment
program. Under the assessment program, the maximum payment requirement
for each nuclear incident would be $79.3 million per reactor, payable
at a rate of $10 million per licensed reactor per incident per year.
Entergy has five licensed reactors. As a co-licensee of Grand Gulf 1
with System Energy, SMEPA would share 10% of this obligation. In
addition, each owner/licensee of Entergy's five nuclear units
participates in a private insurance program that provides coverage for
worker tort claims filed for bodily injury caused by radiation
exposure. The program provides for a maximum assessment of
approximately $16 million for the five nuclear units in the event
losses exceed accumulated reserve funds.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy are also members of certain insurance programs that
provide coverage for property damage, including decontamination and
premature decommissioning expense, to members' nuclear generating
plants. As of December 31, 1997, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and System Energy each was insured against
such losses up to $2.3 billion. In addition, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans are members of an insurance program that covers
certain replacement power and business interruption costs incurred due
to prolonged nuclear unit outages. Under the property damage and
replacement power/business interruption insurance programs, these
Entergy subsidiaries could be subject to assessments if losses exceed
the accumulated funds available to the insurers. As of December 31,
1997, the maximum amounts of such possible assessments were: Entergy
Arkansas - $25.3 million; Entergy Gulf States - $8.8 million; Entergy
Louisiana - $19.9 million; Entergy Mississippi - $1.0 million; Entergy
New Orleans - $0.5 million; and System Energy - $17.0 million. Under
its agreement with System Energy, SMEPA would share in System Energy's
obligation.
The amount of property insurance maintained for each Entergy
nuclear unit exceeds the NRC's minimum requirement for nuclear power
plant licensees of $1.06 billion per site. NRC regulations provide
that the proceeds of this insurance must be used, first, to place and
maintain the reactor in a safe and stable condition and, second, to
complete decontamination operations. Only after proceeds are dedicated
for such use and regulatory approval is secured would any remaining
proceeds be made available for the benefit of plant owners or their
creditors.
Spent Nuclear Fuel and Decommissioning Costs (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy)
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy provide for estimated future disposal costs for spent
nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982.
The affected Entergy companies entered into contracts with the DOE,
whereby the DOE will furnish disposal service at a cost of one mill per
net KWH generated and sold after April 7, 1983, plus a one time fee for
generation prior to that date. Entergy Arkansas, the only Entergy
company that generated electricity with nuclear fuel prior to that
date, elected to pay the one-time fee plus accrued interest, no earlier
than 1998, and has recorded a liability as of December 31, 1997, of
approximately $122 million for generation prior to 1983. The fees
payable to the DOE may be adjusted in the future to assure full
recovery. Entergy considers all costs incurred or to be incurred,
except accrued interest, for the disposal of spent nuclear fuel to be
proper components of nuclear fuel expense, and provisions to recover
such costs have been or will be made in applications to regulatory
authorities.
Delays have occurred in the DOE's program for the acceptance and
disposal of spent nuclear fuel at a permanent repository. In a
statement released February 17, 1993, the DOE asserted that it did not
have a legal obligation to accept spent nuclear fuel without an
operational repository for which it has not yet arranged. Entergy
Operations and System Fuels joined in lawsuits against the DOE, seeking
clarification of the DOE's responsibility to receive spent nuclear fuel
beginning in 1998. The original suits, filed June 20, 1994, asked for
a ruling stating that the Nuclear Waste Policy Act requires the DOE to
begin taking title to the spent fuel and to start removing it from
nuclear power plants in 1998, a mandate for the DOE's nuclear waste
management program to begin accepting fuel in 1998 and for court
monitoring of the program, and the potential for escrow of payments to
a nuclear waste fund instead of directly to the DOE. Argument in the
case before a three-judge panel of the U.S. Court of Appeals was made
on January 17, 1996. On July 23, 1996, the court reversed the DOE's
interpretation of the 1998 obligation and unanimously ruled that the
Nuclear Waste Policy Act creates an unconditional obligation to begin
acceptance of spent fuel by 1998, but did not make a ruling on the
remedies.
On December 17, 1996, the DOE notified contract holders that it
anticipated it would not be able to begin such acceptance until after
that date. Subsequently, on January 31, 1997, Entergy Operations and a
coalition of 36 electric utilities and 46 state agencies filed lawsuits
to suspend payments to the Nuclear Waste Fund. The lawsuits ask the
court to (i) find that the December 17, 1996, DOE letter demonstrates
breach of contract on the part of the DOE; (ii) order utilities to
place the Nuclear Waste Fund payments in an escrow account and not
provide the funds to the DOE until it fulfills its obligation, (iii)
prevent the DOE from taking adverse action against utilities that
withhold payments; and (iv) order the DOE to submit a plan to the court
describing how the agency intends to fulfill its obligation on an
ongoing basis. On November 14, 1997, the court reaffirmed the DOE's
unconditional obligation to begin accepting spent fuel by January 31,
1998, and ordered the DOE to proceed with contractual remedies
consistent with the DOE's unconditional obligation. Nevertheless, the
ruling did not address the plaintiffs' request for authority to
withhold payments to the DOE. Therefore, on December 11, 1997, Entergy
Operations and a coalition of 27 utilities petitioned the DOE to
suspend and escrow future payments to the DOE's waste fund beginning
February 1, 1998. On January 12, 1998, the DOE rejected the
coalition's petition. On February 19, 1998, Entergy Operations and the
coalition of 36 electric utilities filed a motion with the court
seeking enforcement of its November 14, 1997 order and other relief.
In the meantime, all Entergy companies are responsible for their
spent fuel storage. Current on-site spent fuel storage capacity at
River Bend, Waterford 3, and Grand Gulf 1 is estimated to be sufficient
until 2003, 2000, and 2004, respectively. Thereafter, the affected
companies will provide additional storage. Current on-site spent fuel
storage capacity at ANO is estimated to be sufficient until 2000. An
ANO storage facility using dry casks began operation in 1996. This
facility may be expanded further as required. The initial cost of
providing the additional on-site spent fuel storage capability required
at ANO, River Bend, Waterford 3, and Grand Gulf 1 is expected to be
approximately $5 million to $10 million per unit. In addition, about
$3 million to $5 million per unit will be required every two to three
years subsequent to 2000 for ANO and every four to five years
subsequent to 2003, 2000, and 2004 for River Bend, Waterford 3, and
Grand Gulf 1, respectively, until the DOE's repository or storage
facility begins accepting such units' spent fuel.
Total decommissioning costs as of December 31, 1997, for the Entergy
nuclear power plants, excluding co-owner shares, have been estimated as
follows:
Total Estimated
Decommissioning Costs
(In Millions)
ANO 1 and ANO 2 (based on a 1994 interim update to the $ 806.3
1992 cost study)
River Bend (based on a 1996 cost study reflecting 1996 dollars) 419.0
Waterford 3 (based on a 1994 updated study in 1993 dollars) 320.1
Grand Gulf 1 (based on a 1994 cost study using 1993 dollars) 365.9
--------
$1,911.3
========
The estimate for River Bend includes the decommissioning costs
related to the 30% share of River Bend formerly owned by Cajun. The
30% share was acquired by Entergy Gulf States in connection with the
Cajun Settlement. As a part of the Cajun Settlement, Cajun placed in
trust a total of $132 million for its share of the decommissioning
costs of River Bend. See "Cajun - River Bend Litigation" above for
further discussion regarding the Cajun Settlement.
Entergy Arkansas and Entergy Louisiana are authorized to recover
in rates amounts that, when added to estimated investment income,
should be sufficient to meet the above estimated decommissioning costs
for ANO and Waterford 3, respectively. In the Texas retail
jurisdiction, Entergy Gulf States is recovering in rates River Bend
decommissioning costs (based on the 1991 cost study that totaled $267.8
million) that, with adjustments, total $204.9 million. Entergy Gulf
States included decommissioning costs based on the 1996 study in the
PUCT rate review filed in November 1996. That review is ongoing. In
the Louisiana retail jurisdiction, Entergy Gulf States is currently
recovering in rates decommissioning costs (based on a 1985 cost study)
which total $141 million. Entergy Gulf States included decommissioning
costs (based on the 1991 study) in the LPSC rate review filed in May
1995. In October 1996, the LPSC approved Entergy Gulf States rates
that include decommissioning costs based on the 1991 study. The
October 1996 LPSC order has been appealed and the decommissioning costs
based on the 1991 study have not yet been implemented. Entergy Gulf
States included decommissioning costs, based on the 1996 study, in the
LPSC rate review filed in May 1996. The LPSC's review is ongoing.
However, in June of 1996, a rate decrease was implemented that included
decommissioning revenue requirements based on the 1996 study. System
Energy was previously recovering in rates amounts sufficient to fund
$198 million (in 1989 dollars) of its Grand Gulf 1 decommissioning
costs. System Energy included decommissioning costs (based on the 1994
study) in its rate increase filing with FERC. Rates requested in this
proceeding were placed into effect in December 1995, subject to refund.
FERC has not yet issued an order in the System Energy rate case.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy periodically review and update estimated decommissioning
costs. Although Entergy is presently underrecovering for Grand Gulf
and River Bend based on the above estimates, applications have been and
will continue to be made to the appropriate regulatory authorities to
reflect in rates any future change in projected decommissioning costs.
The amounts recovered in rates are deposited in trust funds and
reported at market value as quoted on nationally traded markets or as
determined by widely used pricing services. These trust fund assets
largely offset the accumulated decommissioning liability that is
recorded as accumulated depreciation for Entergy Arkansas, Entergy Gulf
States, and Entergy Louisiana, and as other deferred credits for System
Energy and the trust funds received with the transfer of Cajun's 30%
share of River Bend.
The cumulative liabilities and actual decommissioning expenses
recorded in 1997 by Entergy were as follows:
<TABLE>
<CAPTION>
Cumulative 1997 Cumulative
Liabilities as of 1997 Trust Decommissioning Liabilities as of
December 31, 1996 Earnings Expenses Other December 31, 1997
(In Millions)
<S> <C> <C> <C> <C> <C>
ANO 1 and ANO 2 $ 200.6 $ 9.1 $ 17.3 $ - $ 227.0
River Bend 39.2 2.0 7.5 132.0 $ 180.7
Waterford 3 49.0 2.4 8.8 - $ 60.2
Grand Gulf 1 60.7 3.5 19.0 - $ 83.2
-------- ------- ------- ------ --------
$ 349.5 $ 17.0 $ 52.6 $132.0 $ 551.1
======== ======= ======= ====== ========
</TABLE>
In 1996 and 1995, ANO's decommissioning expense was $20.1 million
and $17.7 million, respectively; River Bend's decommissioning expense
was $6.0 million and $8.1 million, respectively; Waterford 3's
decommissioning expense was $8.8 million and $7.5 million,
respectively; and Grand Gulf 1's decommissioning expense was $19.0
million and $5.4 million, respectively. The actual decommissioning
costs may vary from the estimates because of regulatory requirements,
changes in technology, and increased costs of labor, materials, and
equipment. Management believes that actual decommissioning costs are
likely to be higher than the estimated amounts presented above.
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. 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 and 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.
The EPAct has a provision that assesses domestic nuclear utilities
with fees for the decontamination and decommissioning of the DOE's past
uranium enrichment operations. The decontamination and decommissioning
assessments are being used to set up a fund into which contributions
from utilities and the federal government will be placed. Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy's
annual assessments, which will be adjusted annually for inflation, are
approximately $3.7 million, $0.9 million, $1.4 million, and $1.5
million (in 1997 dollars), respectively, for approximately 15 years.
As of December 31, 1997, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and System Energy had recorded liabilities of $33.4 million,
$5.8 million, $12.7 million, and $12.5 million, respectively, for
decontamination and decommissioning fees in other current liabilities
and other noncurrent liabilities, and these liabilities were offset in
the consolidated financial statements by regulatory assets. FERC
requires that utilities treat these assessments as costs of fuel as
they are amortized and recover these costs through rates in the same
manner as other fuel costs.
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 May 1997. Turbine
modifications were installed in May 1997 to restore most of the output
lost due to steam generator fouling and tube plugging. The unit may be
approaching the current limit for the number of steam generator tubes
that can be plugged with the unit in operation. If the established
limit is reached during a future outage, it could become necessary for
Entergy Operations to insert sleeves in steam generator tubes that were
previously plugged. On October 25, 1996, Entergy Corporation's Board
of Directors authorized Entergy Arkansas and Entergy Operations to
negotiate a contract for the fabrication and replacement of the steam
generators at ANO 2. Entergy estimates the cost of fabrication and
replacement of the steam generators to be approximately $150 million.
Entergy Operations has entered into a contract, with certain
cancellation provisions, for the design and fabrication of replacement
steam generators. A letter of intent has been issued for the
installation of the replacement steam generators. It is anticipated
that the steam generators will be installed during a planned refueling
outage in 2000. Entergy Operations periodically meets with the NRC to
discuss the results of inspections of the steam generator tubes, as
well as the timing of future inspections.
Environmental Issues
(Entergy Gulf States)
Entergy Gulf States has been designated as a PRP 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 these sites. Several class action and other suits have
been filed in state and federal courts seeking relief from Entergy Gulf
States and others for damages caused by the disposal of hazardous waste
and for asbestos-related disease allegedly resulting from exposure on
Entergy Gulf States premises. While the amounts at issue in the clean-
up efforts and suits may be substantial, Entergy Gulf States believes
that its results of operations and financial condition will not be
materially adversely affected by the outcome of the suits. As of
December 31, 1997, a remaining recorded provision of $23.8 million
existed relating to the clean-up of seven sites at which Entergy Gulf
States has been designated a PRP.
(Entergy Louisiana)
During 1993, the LDEQ issued new rules for solid waste regulation,
including regulation of waste water impoundments. Entergy Louisiana
has determined that certain of its power plant waste water impoundments
were affected by these regulations and has chosen to upgrade or close
them. As a result, a remaining recorded liability in the amount of
$6.7 million existed as of December 31, 1997, for waste water upgrades
and closures. Completion of this work is pending LDEQ approval.
Cumulative expenditures relating to the upgrades and closures of waste
water impoundments are $7.1 million as of December 31, 1997.
City Franchise Ordinances (Entergy New Orleans)
Entergy New Orleans provides electric and gas service in the City
of New Orleans pursuant to City franchise ordinances that state, among
other things, the City has a continuing option to purchase Entergy New
Orleans' electric and gas utility properties.
Waterford 3 Lease Obligations (Entergy Louisiana)
On September 28, 1989, Entergy Louisiana entered into three
identical transactions for the sale and leaseback of undivided
interests (aggregating approximately 9.3%) in Waterford 3. In July
1997, Entergy Louisiana caused the lessors to issue $307,632,000
aggregate principal amount of Waterford 3 Secured Lease Obligation
Bonds, 8.09% Series due 2017, to refinance the outstanding bonds
originally issued to finance the purchase of the undivided interests by
the lessors. The lease payments will be reduced to reflect the lower
interest costs. 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 10 for further information.
Employment Litigation
(Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans)
Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and Entergy New Orleans are defendants in numerous
lawsuits described below that have been filed by former employees
asserting that they were wrongfully terminated and/or discriminated
against due to age, race, and/or sex. Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New
Orleans are vigorously defending these suits and deny any liability to
the plaintiffs. However, no assurance can be given as to the outcome
of these cases.
(Entergy Corporation, Entergy Louisiana, and Entergy New Orleans)
Entergy Corporation, Entergy Louisiana, and Entergy New Orleans
are defendants in numerous lawsuits filed in Louisiana state court on
behalf of approximately 147 plaintiffs who claim that they were
illegally terminated from their jobs due to discrimination on the basis
of age. The plaintiffs have requested that the court certify the
matter as a class action. On August 13, 1997, the court certified the
case as a class action. The court decision to certify a class action
has been appealed to the Louisiana Fifth Circuit Court of Appeal. No
assurance can be given as to the timing or outcome of these
proceedings.
(Entergy Corporation and Entergy Arkansas)
Entergy Corporation and Entergy Arkansas are defendants in a
number of lawsuits filed in federal court on behalf of a total of
approximately 60 plaintiffs who claim they were illegally terminated
from their jobs due to discrimination on the basis of age or race.
The first of these lawsuits, originally involving 29 plaintiffs,
was tried before a jury beginning in April 1997. Settlements were
reached with two of the plaintiffs prior to the trial. In May 1997,
the jury rendered findings as to 22 of the plaintiffs indicating that
Entergy had no liability to them for discrimination. However, the jury
also found that Entergy had intentionally discriminated against the
remaining five plaintiffs on the basis of age. As a result, these five
plaintiffs are entitled to damages equal to twice their back pay plus
lost future wages, and they will be awarded attorneys' fees in an
amount which has not yet been determined by the court.
A trial date for another suit involving 18 plaintiffs, originally
scheduled for May 1997, has been continued until April 1998. A motion
for summary judgment in favor of the defendants is pending in this
suit. Another suit, involving a single plaintiff, which had been set
for trial in February 1998, has been continued with no new trial date
set. Another of the suits, involving a single plaintiff, was settled
for an immaterial amount prior to trial in November 1997. Another of
the suits, involving nine plaintiffs, has been set for trial in June
1998. The last of these suits is in the discovery stage and has been
set for trial in July 1998.
(Entergy Corporation and Entergy Gulf States)
Entergy Corporation and Entergy Gulf States were defendants in a
lawsuit involving approximately 176 plaintiffs filed in state court in
Texas by former employees who claim that they lost their jobs as a
result of the Merger. The plaintiffs in these cases asserted various
claims, including discrimination on the basis of age, race, and/or sex.
The court made a preliminary ruling that each plaintiff's claim should
be tried separately. However, all of these claims were settled before
reaching trial in June 1997.
(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)
Entergy Corporation, Entergy Gulf States, and Entergy Louisiana
were defendants in a suit filed in federal court in Louisiana by
approximately 57 plaintiffs who claimed, among other things, they were
wrongfully discharged from their employment on the basis of their age.
However, all of these claims were settled before reaching trial in
September 1997.
Entergy London Agreements and Contracts (Entergy London)
Entergy London is subject to an agreement whereby the UK
government is entitled to a proportion of certain property gains
realized by London Electricity as a result of disposals or events
treated as disposals occurring after March 31, 1990, of properties held
at that date. This commitment is effective until March 31, 2000.
Entergy London has recorded approximately $165 million in reserves
as of December 31, 1997, related to unfavorable long-term contracts.
These reserves will be amortized over the remaining lives of the
contracts which range from 14 to 18 years. The reserves recorded are
based on the excess of estimated fair market value of these contracts
over the present value of the future cash flows under the contracts at
the applicable discount rate and prices.
NOTE 10. LEASES
General
As of December 31, 1997, Entergy had capital leases and
noncancelable operating leases for equipment, buildings, vehicles, and
fuel storage facilities (excluding nuclear fuel leases and the sale and
leaseback transactions) with minimum lease payments as follows:
Capital Leases
Entergy Entergy
Year Entergy Arkansas Gulf States
(In Thousands)
1998 $ 27,369 $ 10,953 $ 12,480
1999 27,343 10,953 12,480
2000 25,534 9,646 11,983
2001 23,452 9,646 11,628
2002 19,574 9,646 9,879
Years thereafter 80,512 42,211 38,101
---------- ---------- ----------
Minimum lease payments 203,784 93,055 96,551
Less: Amount
representing interest 68,074 37,311 29,073
Present value of net ---------- ---------- ----------
minimum lease payments $ 135,710 $ 55,744 $ 67,478
========== ========== ==========
<TABLE>
<CAPTION>
Operating Leases
Entergy Entergy Entergy Entergy
Year Entergy Arkansas Gulf States Louisiana London
(In Thousands)
<S> <C> <C> <C> <C> <C>
1998 $67,748 $17,946 $14,429 $5,108 $10,780
1999 65,557 17,913 14,408 4,702 9,831
2000 62,645 17,913 13,801 4,644 9,707
2001 56,473 17,995 11,546 1,178 9,707
2002 55,011 17,772 11,292 1,163 9,589
Years thereafter 334,155 55,886 56,528 - 119,956
-------- -------- -------- ------- --------
Minimum lease payments $641,589 $145,425 $122,004 $16,795 $169,570
======== ======== ======== ======= ========
</TABLE>
Rental expense for Entergy's leases (excluding nuclear fuel
leases and the sale and leaseback transactions) amounted to
approximately $70.7 million, $62.1 million, and $61.1 million in 1997,
1996, and 1995, respectively. These amounts include $19.7 million,
$26.0 million, and $26.0 million, respectively, for Entergy Arkansas;
$17.6 million, $11.8 million, and $13.0 million, respectively, for
Entergy Gulf States; $12.8 million, $13.7 million, and $13.6 million,
respectively, for Entergy Louisiana; and $11.4 million in 1997 for
Entergy London.
Nuclear Fuel Leases (Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, System Energy)
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy each has arrangements to lease nuclear fuel in an
aggregate amount up to $140 million, $70 million, $80 million, and $90
million respectively. As of December 31, 1997, the unrecovered cost
base of Entergy Arkansas', Entergy Gulf States', Entergy Louisiana's,
and System Energy's nuclear fuel leases amounted to approximately $92.6
million, $54.4 million, $57.8 million, and $64.2 million, respectively.
The lessors finance the acquisition and ownership of nuclear fuel
through credit agreements and the issuance of notes. These agreements
are subject to annual renewal with, in Entergy Louisiana's and Entergy
Gulf States' case, the consent of the lenders. The credit agreements
for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy have been extended and now have termination dates of
December 2000, December 2000, January 2001, and February 2001,
respectively. The debt securities issued pursuant to these fuel lease
arrangements have varying maturities through December 15, 2000. It is
expected that the credit agreements will be extended or alternative
financing will be secured by each lessor upon the maturity of the
current arrangements. If extensions or alternative financing cannot be
arranged, the lessee in each case must purchase sufficient nuclear fuel
to allow the lessor to retire such borrowings.
Lease payments are based on nuclear fuel use. Nuclear fuel lease
expense charged to operations by the domestic utility companies in
1997, 1996, and 1995 was $149.7 million (including interest of $18.7
million), $158.5 million (including interest of $21.7 million), and
$153.5 million (including interest of $22.1 million), respectively.
Specifically, in 1997, 1996, and 1995, Entergy Arkansas' expense was
$53.7 million, $53.9 million, and $46.8 million (including interest of
$6.4 million, $7.1 million, and $6.7 million), respectively; Entergy
Gulf States' expense was $25.5 million, $27.1 million, and $41.4
million (including interest of $3.2 million, $4.2 million, and $6.0
million), respectively; Entergy Louisiana's expense was $29.4 million,
$39.8 million, and $30.8 million (including interest of $3.7 million,
$4.9 million, and $3.7 million), respectively; System Energy's expense
was $41.1 million, $37.7 million, and $34.5 million (including interest
of $5.4 million, $5.5 million, and $5.7 million), respectively.
Sale and Leaseback Transactions
Waterford 3 Lease Obligations (Entergy Louisiana)
Entergy Louisiana is the lessee of three separate undivided
interests in Waterford 3 under three separate, but substantially
identical, long-term net leases. The lessors under such leases
acquired the undivided interests (aggregating approximately 9.3%) in
Waterford 3 from Entergy Louisiana in three separate sale-leaseback
transactions that occurred in 1989. Entergy Louisiana is leasing
back the interests on a net lease basis over an approximate 28-year
basic lease term. Approximately 87.7% of the aggregate consideration
paid by the lessors for their respective undivided interests was
provided to the lessors from the issuance of Waterford 3 Secured Lease
Obligation Bonds (Initial Series Bonds) in 1989. Interests were
acquired from Entergy Louisiana with funds obtained from the
issuance and sale by the purchasers of intermediate-term and long-term
secured lease obligation bonds. The lease payments to be made by
Entergy Louisiana will be sufficient to service such debt.
Entergy Louisiana did not exercise its option to repurchase the
undivided interests in Waterford 3 in September 1994. As a result,
Entergy Louisiana was required to provide collateral for the equity
portion of certain amounts payable by Entergy Louisiana under the
leases. Such collateral was in the form of a new series of non-
interest-bearing first mortgage bonds in the aggregate principal amount
of $208.2 million issued by Entergy Louisiana in September 1994.
In July 1997, Entergy Louisiana caused the Waterford 3 lessors to
issue $307,632,000 aggregate principal amount of Waterford 3 Secured
Lease Obligation Bonds, 8.09% Series due 2017, to refinance the
outstanding bonds originally issued to finance the purchase of the
undivided interests by the lessors. The lease payments have been
reduced to reflect the lower interest costs.
Upon the occurrence of certain events (including lease events of
default, events of loss, deemed loss events or certain adverse
"Financial Events" with respect to Entergy Louisiana), 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. "Financial Events" include, among other
things, failure by Entergy Louisiana, following the expiration of any
applicable grace or cure periods, to maintain (1) as of the end of any
fiscal quarter, total equity capital (including preferred stock) at
least equal to 30% of adjusted capitalization, or (2) in respect of the
12-month period ending on the last day of any fiscal quarter, a fixed
charge coverage ratio of at least 1.50. As of December 31, 1997,
Entergy Louisiana's total equity capital (including preferred stock)
was 46.8% of adjusted capitalization and its fixed charge coverage
ratio was 2.79.
As of December 31, 1997, Entergy Louisiana had future minimum
lease payments (reflecting an overall implicit rate of 7.45%) in
connection with the Waterford 3 sale and leaseback transactions, which
are recorded as long-term debt, as follows (in thousands):
1998 $ 23,850
1999 49,108
2000 42,573
2001 40,909
2002 39,246
Years thereafter 532,137
----------
Total 727,823
Less: Amount representing interest 374,223
----------
Present value of net minimum lease payments $ 353,600
==========
Grand Gulf 1 Lease Obligations (System Energy)
On December 28, 1988, System Energy entered into two arrangements
for the sale and leaseback of an aggregate 11.5% undivided ownership
interest in Grand Gulf 1 for an aggregate cash consideration of $500
million. System Energy is leasing back the undivided interest on a net
lease basis over a 26 1/2-year basic lease term. System Energy has
options to terminate the leases and to repurchase the undivided
interest in Grand Gulf 1 at certain intervals during the basic lease
term. Further, at the end of the basic lease term, System Energy has
an option to renew the leases or to repurchase the undivided interest
in Grand Gulf 1. See Note 9 with respect to certain other terms of the
transactions.
In accordance with SFAS 98, "Accounting for Leases," due to
"continuing involvement" by System Energy, the sale and leaseback
arrangements of the undivided portions of Grand Gulf 1, as described
above, are required to be reflected for financial reporting purposes as
financing transactions in System Energy's financial statements. The
amounts charged to expense for financial reporting purposes include the
interest portion of the lease obligations and depreciation of the
plant. However, operating revenues include the recovery of the lease
payments because the transactions are accounted for as sales and
leasebacks for rate-making purposes. The total of interest and
depreciation expense exceeds the corresponding revenues realized during
the early part of the lease term. Consistent with a recommendation
contained in a FERC audit report, System Energy recorded as a deferred
asset the difference between the recovery of the lease payments and the
amounts expensed for interest and depreciation and is recording such
difference as a deferred asset on an ongoing basis. The amount of this
deferred asset was $84.0 million and $93.2 million as of December 31,
1997, and 1996, respectively.
As of December 31, 1997, System Energy had future minimum lease
payments (reflecting an implicit rate of 7.02%), which are recorded as
long-term debt as follows (in thousands):
1998 $ 42,753
1999 42,753
2000 42,753
2001 46,803
2002 53,827
Years thereafter 659,437
----------
Total 888,326
Less: Amount representing interest 399,164
----------
Present value of net minimum lease payments $ 489,162
==========
NOTE 11. POSTRETIREMENT BENEFITS (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, System Energy, and Entergy London)
Pension Plans
Entergy has two postretirement benefit plans, "Entergy Corporation
Retirement Plan for Non-Bargaining Employees" and "Entergy Corporation
Retirement Plan for Bargaining Employees", covering substantially all
of its domestic employees. The pension plans are noncontributory and
provide pension benefits that are based on employees' credited service
and compensation during the final years before retirement. Entergy
Corporation and its subsidiaries fund pension costs in accordance with
contribution guidelines established by the Employee Retirement Income
Security Act of 1974, as amended, and the Internal Revenue Code of
1986, as amended. The assets of the plans include common and preferred
stocks, fixed income securities, interest in a money market fund, and
insurance contracts.
Entergy London participates in a defined benefit pension plan,
which provides pension and other related defined benefits, based on
final pensionable pay, to substantially all employees throughout the
electricity supply industry in the UK. Entergy London uses the
projected unit credit actuarial method for funding purposes. Amounts
funded to the pension are primarily invested in equity and fixed income
securities.
Total 1997, 1996, and 1995 pension cost of Entergy Corporation and
its subsidiaries, including amounts capitalized, included the following
components (in thousands):
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System Entergy
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned
during the period $48,908 $6,937 $5,365 $3,762 $1,893 $763 $2,389 $16,615
Interest cost on projected
benefit obligation 193,930 26,472 23,684 15,778 10,011 2,783 2,942 99,358
Actual return on plan assets (306,613) (46,065) (53,729) (49,438) (19,577) (1,914) (6,052) (118,465)
Net amortization and deferral 86,486 16,906 23,657 27,200 7,549 63 2,055 -
----------------------------------------------------------------------------------
Net pension cost (income) $22,711 $4,250 ($1,023) ($2,698) ($124) $1,695 $1,334 ($2,492)
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned
during the period $31,584 $7,605 $5,852 $4,684 $2,157 $1,147 $2,658
Interest cost on projected
benefit obligation 84,303 24,540 20,952 15,735 9,462 2,973 2,645
Actual return on plan assets (163,520) (41,183) (47,416) (41,219) (17,767) (1,826) (4,146)
Net amortization and deferral 71,260 14,015 18,732 20,313 6,382 88 526
-------------------------------------------------------------------------
Net pension cost (income) $23,627 $4,977 ($1,880) ($487) $234 $2,382 $1,683
=========================================================================
</TABLE>
<TABLE>
<CAPTION>
1995 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned $29,282 $7,786 $6,686 $4,143 $2,152 $1,158 $2,260
during the period
Interest cost on projected 80,794 24,372 21,098 15,111 9,240 2,680 2,230
benefit obligation
Actual return on plan assets (261,864) (71,807) (82,624) (53,348) (30,443) (1,614) (8,827)
Net amortization and deferral 178,345 47,766 53,921 34,902 20,081 64 5,510
--------------------------------------------------------------------------
Net pension cost (income) $26,557 $8,117 ($919) $808 $1,030 $2,288 $1,173
==========================================================================
</TABLE>
The funded status of Entergy's various pension plans as of
December 31, 1997, and 1996 was (in thousands):
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System Entergy
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Actuarial present value of
accumulated pension
plan obligation:
Vested $2,189,915 $333,343 $294,552 $201,454 $126,882 $34,616 $31,774 $1,026,071
Nonvested 9,882 3,295 883 2,318 682 357 543 -
-------------------------------------------------------------------------------------
Accumulated benefit obligation 2,199,797 336,638 295,435 203,772 127,564 34,973 32,317 1,026,071
-------------------------------------------------------------------------------------
Plan assets at fair value 3,144,498 427,175 454,912 328,381 174,651 23,043 53,105 1,537,297
Projected benefit obligation 2,496,086 381,581 327,842 226,254 140,317 40,568 46,433 1,134,174
-------------------------------------------------------------------------------------
Plan assets in excess of 648,412 45,594 127,070 102,127 34,334 (17,525) 6,672 403,123
(less than) projected benefit
obligation
Unrecognized prior service cost 35,500 13,656 12,649 5,353 4,414 1,706 1,021 -
Unrecognized transition asset (32,151) (9,343) (7,162) (11,230) (5,001) (572) (4,694) -
Unrecognized net loss (gain) (431,178) (69,076) (179,742) (96,391) (34,699) 7,209 (7,211) (161,907)
-------------------------------------------------------------------------------------
Accrued pension asset (liability) $220,583 ($19,169) ($47,185) ($141) ($952) ($9,182) ($4,212) $241,216
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Actuarial present value of
accumulated pension
plan obligation:
Vested $1,027,307 $296,181 $287,201 $193,183 $117,142 $34,466 $25,195
Nonvested 4,775 1,345 748 697 154 29 655
-----------------------------------------------------------------------------
Accumulated benefit obligation 1,032,082 297,526 287,949 193,880 117,296 34,495 25,850
-----------------------------------------------------------------------------
Plan assets at fair value 1,359,614 374,849 397,749 282,470 150,616 22,017 43,943
Projected benefit obligation 1,196,925 338,307 315,781 217,711 129,578 41,511 38,401
-----------------------------------------------------------------------------
Plan assets in excess of 162,689 36,542 81,968 64,759 21,038 (19,494) 5,542
(less than) projected benefit
obligation
Unrecognized prior service cost 36,131 14,882 11,964 5,911 4,894 1,965 1,100
Unrecognized transition asset (39,504) (11,679) (9,550) (14,037) (6,252) (767) (5,291)
Unrecognized net loss (gain) (180,525) (55,536) (132,832) (61,130) (23,769) 9,897 (4,502)
-----------------------------------------------------------------------------
Accrued pension liability ($21,209) ($15,791) ($48,450) ($4,497) ($4,089) ($8,399) ($3,151)
=============================================================================
</TABLE>
The significant actuarial assumptions used in computing the
information above for the domestic utility companies and System Energy
for 1997, 1996, and 1995 were as follows: weighted-average discount
rate, 7.25% for 1997, 7.75% for 1996, and 7.5% for 1995, weighted-
average rate of increase in future compensation levels, 4.6% for 1997,
1996, and 1995; and expected long-term rate of return on plan assets,
9.0% for 1997 and 1996, and 8.5% for 1995. Transition assets of
Entergy are being amortized over the greater of the remaining service
period of active participants or 15 years.
The significant actuarial assumptions used in computing the
information above for Entergy London for 1997 were as follows:
weighted-average discount rate of 9.0%, weighted-average rate of
increase in future compensation levels of 6.5%, and expected long-term
rate of return on plan assets of 9.0%.
Other Postretirement Benefits
Entergy also provides certain health care and life insurance
benefits for retired employees. Substantially all domestic employees
may become eligible for these benefits if they reach retirement age
while still working for Entergy.
Effective January 1, 1993, Entergy adopted SFAS 106 which required
a change from a cash method to an accrual method of accounting for
postretirement benefits other than pensions. The domestic utility
companies have sought approval, in their respective regulatory
jurisdictions, to implement the appropriate accounting requirements
related to SFAS 106 for ratemaking purposes. Entergy Arkansas received
an order permitting deferral, as a regulatory asset, of the difference
between its annual cash expenditures for postretirement benefits other
than pensions and the SFAS 106 accrual, for a five-year period that
began January 1, 1993. In December 1997, the APSC issued an order
allowing the 15 year amortization of this regulatory asset. Beginning
in 1998, Entergy Arkansas will be allowed to recover its SFAS 106
expenses in rates. Entergy Mississippi is expensing its SFAS 106 costs,
which are reflected in rates pursuant to an order from the MPSC in
connection with Entergy Mississippi's formulary incentive rate plan.
Entergy New Orleans is expensing its SFAS 106 costs. Pursuant to
the PUCT's May 26, 1995, amended order, Entergy Gulf States is currently
collecting the Texas portion of its SFAS 106 costs in rates. The LPSC
ordered Entergy Gulf States and Entergy Louisiana to continue the use
of the pay-as-you-go method for ratemaking purposes for postretirement
benefits other than pensions, but the LPSC retains the flexibility to
examine individual companies' accounting for postretirement benefits
to determine if special exceptions to this order are warranted.
In December 1997, Entergy Arkansas was allowed to begin funding
its SFAS 106 costs commencing in 1998. Pursuant to regulatory
directives, Entergy Mississippi, Entergy New Orleans, the portion of
Entergy Gulf States regulated by the PUCT, and System Energy, fund
postretirement benefit obligations collected in rates. System Energy
is funding on behalf of Entergy Operations postretirement benefits
associated with Grand Gulf 1. Entergy Louisiana and Entergy Gulf
States continue to fund a portion of these benefits regulated by the
LPSC and FERC on a pay-as-you-go basis. The assets of the various
postretirement benefit plans other than pensions include common stocks,
fixed-income securities, and a money market fund. At January 1, 1993,
the actuarially determined accumulated postretirement benefit
obligation (APBO) earned by retirees and active employees was estimated
to be approximately $241.4 million and $128 million for Entergy (other
than Entergy Gulf States) and for Entergy Gulf States, respectively.
Such obligations are being amortized over a 20-year period beginning in
1993.
Total 1997, 1996, and 1995 postretirement benefit cost of Entergy
Corporation and its subsidiaries, including amounts capitalized and
deferred, included the following components (in thousands):
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned
during the period $13,991 $3,204 $3,227 $2,081 $1,092 $618 $939
Interest cost on APBO 29,317 6,232 9,466 4,490 2,278 3,106 648
Actual return on plan assets (3,386) - (1,637) - (695) (840) (214)
Net amortization and deferral 15,864 3,716 6,519 2,623 1,399 1,936 262
---------------------------------------------------------------------------
Net postretirement benefit cost $55,786 $13,152 $17,575 $9,194 $4,074 $4,820 $1,635
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned
during the period $14,351 $3,128 $3,476 $2,155 $1,081 $661 $890
Interest cost on APBO 26,133 5,580 8,164 4,283 2,171 3,085 512
Actual return on plan assets (1,654) - (388) - (479) (681) (106)
Net amortization and deferral 14,214 3,397 5,370 2,694 1,458 1,977 209
---------------------------------------------------------------------------
Net postretirement benefit cost $53,044 $12,105 $16,622 $9,132 $4,231 $5,042 $1,505
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
1995 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned $10,797 $2,777 $1,864 $2,047 $909 $650 $687
during the period
Interest cost on APBO 25,629 5,398 8,526 4,215 1,969 3,258 603
Actual return on plan assets (759) - - - (245) (514) -
Net amortization and deferral 11,023 2,702 4,477 2,121 988 1,876 262
-------------------------------------------------------------------------
Net postretirement benefit cost $46,690 $10,877 $14,867 $8,383 $3,621 $5,270 $1,552
=========================================================================
</TABLE>
The funded status of Entergy's postretirement plans as of December
31, 1997, and 1996, was (in thousands):
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees $313,243 $66,279 $112,150 $47,774 $23,062 $37,890 $3,264
Other fully eligible participants 32,530 6,151 6,203 4,713 3,543 1,974 1,936
Other active participants 82,189 18,667 17,875 12,898 6,668 3,969 5,264
-------------------------------------------------------------------------------
Accumulated benefit obligation 427,962 91,097 136,228 65,385 33,273 43,833 10,464
Plan assets at fair value 63,930 - 28,390 - 12,140 18,565 4,835
-------------------------------------------------------------------------------
Plan assets less than APBO (364,032) (91,097) (107,838) (65,385) (21,133) (25,268) (5,629)
Unrecognized transition obligation 172,085 59,298 87,050 44,575 22,529 40,183 3,932
Unrecognized net loss (gain)/other 21,819 (4,104) (3,886) (4,338) (3,038) (12,737) (559)
-------------------------------------------------------------------------------
Accrued postretirement benefit asset (liability) ($170,128) ($35,903) ($24,674) ($25,148) ($1,642) $2,178 ($2,256)
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees $263,504 $56,945 $90,450 $44,083 $21,639 $36,613 $1,401
Other fully eligible participants 28,507 5,599 5,728 4,063 2,753 1,694 1,861
Other active participants 73,188 15,505 16,623 11,553 5,837 3,630 4,587
----------------------------------------------------------------------------
Accumulated benefit obligation 365,199 78,049 112,801 59,699 30,229 41,937 7,849
Plan assets at fair value 37,970 - 15,528 - 7,517 12,647 2,278
----------------------------------------------------------------------------
Plan assets less than APBO (327,229) (78,049) (97,273) (59,699) (22,712) (29,290) (5,571)
Unrecognized transition obligation 183,557 63,252 92,853 47,546 24,031 42,861 4,194
Unrecognized net loss (gain)/other (5,032) (13,414) (13,859) (7,726) (3,221) (11,704) (1,476)
-----------------------------------------------------------------------------
Accrued postretirement benefit asset (liability) ($148,704) ($28,211) ($18,279) ($19,879) ($1,902) $1,867 ($2,853)
=============================================================================
</TABLE>
The assumed health care cost trend rate used in measuring the APBO
of Entergy was 6.8% for 1998, gradually decreasing each successive year
until it reaches 5.0% in 2005. A one percentage-point increase in the
assumed health care cost trend rate for each year would have increased
the APBO of Entergy, as of December 31, 1997, by 11.3% (Entergy
Arkansas-11.5%, Entergy Gulf States-10.3%, Entergy Louisiana-11.4%,
Entergy Mississippi-11.9%, Entergy New Orleans-10.0%, and System Energy-
15.4%), and the sum of the service cost and interest cost by
approximately 14.7% (Entergy Arkansas-14.7%, Entergy Gulf States-13.9%,
Entergy Louisiana-14.2%, Entergy Mississippi-14.9%, Entergy New Orleans-
11.5%, and System Energy-18.9%). The assumed discount rate and rate of
increase in future compensation used in determining the APBO were 7.25%
for 1997, 7.75% for 1996, and 7.5% for 1995, and 4.6% for 1997, 1996,
and 1995, respectively. The expected long-term rate of return on plan
assets was 9.0% for 1997 and 1996, and 8.5% for 1995.
NOTE 12. RESTRUCTURING CHARGES (Entergy London)
In 1995 and 1996, London Electricity implemented a restructuring
program to reduce the number of employees in the Network Services,
Customer Services, Corporate and Information Technology groups. An
initial plan was approved by the Board of Directors in September 1994
and was based on a business plan developed subsequent to the 1994
Regulatory Review of Distribution (the Distribution Review).
Following the reopening of the Distribution Review during 1995, a
further plan was proposed leading to further reduction of employees in
the same areas. This plan was approved by the Board of Directors in May
1996. The balance as of December 31, 1997, for restructuring charges is
shown below along with the actual termination benefits paid under the
restructuring plan for the year ended December 31, 1997 (in millions).
Provision for restructuring as of January 31, $ 41.7
1997 (date of acquisition)
Adjustments to restructuring provision in 1997 13.3
Payments made in 1997 (29.7)
Cumulative translation adjustment 1.0
------
Balance December 31, 1997 $ 26.3
======
The restructuring charges shown above primarily included employee
severance costs related to the expected termination of approximately
1,372 employees in various groups. As of December 31, 1997, 895
employees had either been terminated or accepted voluntary separation
packages under the restructuring plan.
NOTE 13. ACQUISITIONS (Entergy Corporation and Entergy London)
On December 18, 1996, Entergy Corporation, through its wholly-
owned subsidiary Entergy London, made a formal cash offer to acquire
London Electricity for $2.1 billion. London Electricity is a regional
electric company serving approximately two million customers in the
metropolitan area of London, England. The offer was approved by
authorities in the UK, and, as of February 7, 1997, the offer was made
unconditional. Entergy Corporation, through Entergy London, now
controls 100% of the common shares of London Electricity. Entergy has
included the results of operations of London Electricity in its results
of operations beginning February 1, 1997, based on management's
determination that effective control was achieved on that date. The
acquisition was financed by Entergy London with $1.7 billion of debt,
which is non-recourse to Entergy Corporation, and $392 million of
equity provided by Entergy Corporation from available cash and
borrowings under Entergy Corporation's $300 million line of credit.
The debt has since been refinanced (see Note 7).
The cost of the London Electricity license is being amortized on a
straight-line basis over a 40-year period beginning February 1, 1997.
As of December 31, 1997, the unamortized balance of the license was
approximately $1.3 billion.
In accordance with the purchase method of accounting, the results
of operations for Entergy Corporation reported in its Statements of
Consolidated Income and Cash Flows do not reflect London Electricity's
results of operations for any period prior to February 1, 1997. The
pro forma combined revenues, net income, and earnings per common share
of Entergy Corporation presented below give effect to the acquisition
as if it had occurred on January 1, 1997 and 1996, respectively. 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.
For the Twelve Months Ending:
December 31, 1997(a) December 31, 1996(b)
(In Millions of U.S. Dollars, Except Share Data)
Operating revenues $9,783 $9,288
Net income $304 $488
Earnings per average common share
Basic and diluted $1.04 $1.82
(a)On July 31, 1997, the British government enacted into law a one-
time windfall profits tax on privatized industries, including
regional electric utilities such as London Electricity. London
Electricity's liability for this tax is approximately BPS140
million (approximately $234 million), which will not be deductible
for UK corporation tax purposes. Payment of the tax is required in
two equal installments, the first was paid on December 1, 1997, and
the second of which is due one year later. The government also
decreased the corporate income tax rate in the UK from 33% to 31%,
effective as of April 1, 1997. In accordance with SFAS 109,
"Accounting for Income Taxes," this reduction in UK corporate tax
rates resulted in a one-time reduction in income tax expense for
London Electricity of approximately $65 million during the quarter
ended September 30, 1997.
(b)Net Income in 1996 includes the $174 million net of tax write-off
of River Bend rate deferrals pursuant to SFAS 121.
NOTE 14. TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
System Energy, and Entergy London)
The various domestic utility companies purchase electricity from
and/or sell electricity to other domestic utility companies, System
Energy, and Entergy Power (in the case of Entergy Arkansas) under rate
schedules filed with FERC. In addition, the domestic utility companies
and System Energy purchase fuel from System Fuels; receive management,
technical, advisory, operating, and administrative services from
Entergy Services; and receive management, technical, and operating
services from Entergy Operations. Entergy London receives technical,
advisory, and administrative services from Entergy Services and Entergy
Enterprises.
As described in Note 1, all of System Energy's operating revenues
consist of billings to Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans.
The tables below contain the various affiliate transactions among
the domestic utility companies and System Entergy (in millions).
Intercompany Revenues
Entergy Entergy Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Mississippi New Orleans Energy
1997 $229.7 $14.6 $2.0 $84.9 $10.8 $633.7
1996 $282.7 $21.2 $5.6 $65.9 $ 2.6 $623.6
1995 $195.5 $62.7 $1.6 $43.3 $ 3.2 $605.6
<TABLE>
<CAPTION>
Intercompany Operating Expenses
Entergy Entergy Entergy Entergy Entergy System Entergy
Arkansas(1) Gulf States Louisiana Mississippi New Orleans Energy London
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $335.0 $416.4 $326.7 $316.1 $177.1 $36.5 $5.3
1996 $346.7 $395.7 $331.3 $294.6 $185.9 $ 8.6 -
1995 $316.0 $266.5 $335.5 $262.6 $164.4 $ 6.5 -
</TABLE>
(1)Includes $16.5 million in 1997, $38.8 million in 1996, and $31.0
million in 1995 for power purchased from Entergy Power.
Operating Expenses Paid or Reimbursed to Entergy Operations
Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Energy
1997 $162.1 $135.7 $133.3 $ 64.7
1996 $163.3 $133.7 $ 97.7 $ 98.1
1995 $189.8 $129.1 $122.6 $116.9
In addition, certain materials and services required for
fabrication of nuclear fuel are acquired and financed by System Fuels
and then sold to System Energy as needed. Charges for these materials
and services, which represent additions to nuclear fuel, amounted to
approximately $16.5 million in 1997, $44.7 million in 1996, and $51.5
million in 1995.
NOTE 15. BUSINESS SEGMENT INFORMATION (Entergy New Orleans and
Entergy London)
Entergy New Orleans supplies electric and natural gas services in
the City. Entergy New Orleans' segment information follows:
<TABLE>
<CAPTION>
1997 1996 1995
Electric Gas Electric Gas Electric Gas
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $410,131 $94,691 $403,254 $101,023 $390,002 $80,276
Revenue from sales to
unaffiliated customers (1) 399,789 94,691 400,605 101,023 386,785 80,276
Operating income
before income taxes 38,752 3,539 51,937 5,641 61,092 9,638
Net utility plant 212,648 62,144 214,106 63,865 204,407 65,236
Depreciation expense 17,157 3,638 16,525 3,342 15,858 3,290
Construction expenditures 14,988 1,149 23,411 4,545 21,729 6,107
</TABLE>
(1) Entergy New Orleans' intersegment transactions are not material
(less than 1% of sales to unaffiliated customers).
Entergy London is engaged in two electric industry segments:
distribution, which involves the transfer and delivery of electricity
across its network to its customers, and supply, which involves bulk
purchases of electricity from the Electricity Pool for delivery to the
distribution networks. Other consists principally of Entergy London's
investment in private distribution networks, electricity contracting
services, and investments in generating assets. Information about
Entergy London's operations in these individual segments for the year
ended December 31, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
Distribution Supply Other Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Operating revenues $498,801 $1,689,034 $102,550 $(443,343) $1,847,042
Operating income 140,713 15,095 37,082 (6,080) 186,810
Depreciation and amortization 111,028 7,219 3,118 - 121,365
Total assets employed at period end 3,628,954 537,973 236,698 - 4,403,625
Capital expenditures 143,936 16,069 21,160 - 181,165
</TABLE>
NOTE 16. QUARTERLY FINANCIAL DATA (UNAUDITED) (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Energy, and Entergy London)
The business of the domestic utility companies, System Energy, and
Entergy London is subject to seasonal fluctuations with the peak periods
occurring during the third quarter for the domestic utility companies
and System Energy and occurring during the first quarter for Entergy
London. Operating results for the four quarters of 1997 and 1996 were:
<TABLE>
<CAPTION>
Operating Revenue
Entergy Entergy Entergy Entergy Entergy System Entergy
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997:
First Quarter $2,045,753 $374,731 $ 481,328 $433,983 $ 200,328 $124,956 $155,662 $379,519
Second Quarter 2,178,090 423,619 476,421 412,263 212,892 109,803 161,021 450,405
Third Quarter 2,797,587 545,849 599,974 554,486 294,983 139,940 160,573 443,975
Fourth Quarter 2,540,291 371,515 590,106 402,540 229,192 130,123 156,442 573,143
1996:
First Quarter $1,598,992 $383,081 $ 456,631 $417,767 $ 203,902 $127,280 $156,424 N/A
Second Quarter 1,853,677 467,990 525,567 457,847 247,479 127,829 160,369 N/A
Third Quarter 2,148,332 529,276 592,130 549,295 297,118 150,937 154,467 N/A
Fourth Quarter 1,576,656 363,086 444,853 403,958 209,931 98,231 152,360 N/A
</TABLE>
<TABLE>
<CAPTION>
Operating Income (Loss)
Entergy Entergy Entergy Entergy Entergy System Entergy
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997:
First Quarter $372,218 $30,890 $ 93,014 $ 77,880 $ 22,694 $ 8,755 $74,316 $37,135
Second Quarter 433,887 80,873 75,643 87,911 40,395 9,400 73,568 47,704
Third Quarter 672,617 148,688 158,365 147,976 52,832 18,096 72,813 58,673
Fourth Quarter 378,436 6,424 203,524 53,813 20,827 6,040 72,496 43,298
1996:
First Quarter $342,403 $41,955 $ 77,058 $ 95,166 $ 30,470 $15,752 $82,938 N/A
Second Quarter 501,169 105,237 118,420 119,736 57,283 19,608 82,894 N/A
Third Quarter 609,763 131,319 152,022 155,755 54,696 28,319 75,270 N/A
Fourth Quarter 239,517 31,639 64,398 65,789 22,147 (6,101) 75,937 N/A
</TABLE>
<TABLE>
<CAPTION>
Net Income (Loss)
Entergy Entergy Entergy Entergy Entergy System Entergy
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy London
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997:
First Quarter $126,485 $ 9,848 $ 32,535 $26,172 $ 8,352 $ 2,818 $24,345 $15,639
Second Quarter 158,579 38,085 27,028 32,607 19,399 3,038 24,093 9,320
Third Quarter 93,321 78,251 70,740 70,681 27,335 8,590 24,449 (172,268)
Fourth Quarter (77,486) 1,793 (70,327) 12,297 11,575 1,005 29,408 (26)
1996:
First Quarter $(68,990) $19,268 $(152,257) $40,530 $ 12,924 $ 8,035 $23,530 N/A
Second Quarter 206,701 55,712 47,140 55,385 29,818 10,360 23,382 N/A
Third Quarter 299,166 70,791 90,965 77,302 28,205 15,221 24,749 N/A
Fourth Quarter 53,686 12,027 10,265 17,545 8,264 (6,840) 27,007 N/A
</TABLE>
Earnings (Loss) per Average Common Share (Entergy Corporation)
1997 1996
Basic Diluted Basic Diluted
First Quarter $ 0.47 $ 0.47 $ (0.38) $(0.38)
Second Quarter $ 0.61 $ 0.61 $ 0.83 $ 0.83
Third Quarter $ 0.33 $ 0.33 $ 1.22 $ 1.22
Fourth Quarter $(0.36) $(0.36) $ 0.16 $ 0.16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of London Electricity plc
We have audited the accompanying consolidated balance sheet of London
Electricity plc as of March 31, 1996 and the related consolidated
statements of operations, cash flows and changes in shareholders' equity
for the period from April 1, 1996 to January 31, 1997, and the year ended
March 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
London Electricity plc as of March 31, 1996 and the results of its
operations and its cash flows for the period from April 1, 1996 to January
31, 1997 and the year ended March 31, 1996 in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
July 31, 1997
<PAGE>
LONDON ELECTRICITY PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations - Predecessor Company
The following discussion of results of operations for London
Electricity relates to periods prior to its acquisition by Entergy London.
Such periods do not include acquisition adjustments described under
"Accounting for the Acquisition"in "ENTERGY LONDON INVESTMENTS plc AND
SUBSIDIARY - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS." This analysis is included based on London
Electricity constituting a predecessor of Entergy London. Entergy London's
results of operations do not include results for London Electricity prior
to February 1, 1997.
National Grid Group Transactions
During the fiscal year ended March 31, 1996, London Electricity, as
well as each of the other 11 REC businesses in the UK, reorganized their
interests in the National Grid Group (NGG). London Electricity distributed
the majority of its shares in NGG to its shareholders. As part of this
distribution, London Electricity revalued these shares to fair market value
and recognized a gain of approximately $417 million and received special
dividends of $205 million and rights dividends of $4.7 million from NGG
which were also recognized as income. Additionally, London Electricity
received approximately $109.8 million as a result of NGG's sale of its
pumped storage business which was also recognized as a gain in fiscal year
1996. London Electricity has retained shares of NGG for the purpose of
establishing an employee stock ownership plan ("ESOP") for its employees
who were participants in London Electricity stock option and sharesave
plans to compensate them for any dimunition in value in London Electricity
shares as a result of NGG distributions. The cost of such ESOP shares has
been reflected as expense of $27.1 million in the fiscal year 1996 results
of operations. As a result of all of the above, London Electricity
recognized a total nonrecurring gain of $709 million ($573 million after
tax effect) in the fiscal year ended March 31, 1996 results of operations.
As part of the agreement among the shareholders of NGG, each of the RECs
agreed to provide a discount to each of their respective Franchise Supply
Customers which, together with the associated reduction in the Fossil Fuel
Levy (a reimbursement to non-fossil fuel generators for the extra cost of
such generation), produced a credit on each Franchise Supply Customer's
bill of just over $78. The cost to London Electricity of providing this
discount amounted to $130 million (net of the reduction in the Fossil Fuel
Levy of $13 million) which was credited to customers in the last quarter of
the fiscal year ended March 31, 1996. The effect of the refund was to
reduce operating revenues, cost of sales, gross profit, and net income by
$143 million, $13 million, $130 million, and $88 million, respectively.
The net dividends received from NGG and the net after tax proceeds from the
sale of NGG's pumped storage business were sufficient to offset the after
tax cash cost of providing the $78 per customer discount to its Franchise
Supply Customers and taxation cost of distributing its NGG investment to
its shareholders.
Income from Operations
Income from operations was $169 million for the ten-month period from
April 1, 1996 to January 31, 1997, an increase of $10 million from the
fiscal year which ended March 31, 1996. The increase was due principally
to lower selling, general and administrative expenses and lower other
operation and maintenance costs in the latter period due to there being
only ten months in that period. Revenues were lower by $95 million
(including the impact of the NGG refund) in the period from April 1, 1996
to January 31, 1997, when compared to the revenues in fiscal year 1996 of
$1,860 million. Largely offsetting this decrease was a $92 million
decrease in cost of sales from the $1,307 million incurred in fiscal year
1996. Both decreases were principally due to the shorter time period from
April 1, 1996 to January 31, 1997.
<PAGE>
LONDON ELECTRICITY PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Income (loss) from operations by segments for the ten-month period
ended January 31, 1997, was $159 million, $(1) million, and $11 million for
the distribution, supply, and other segments, respectively. Income (loss)
from those segments in fiscal year 1996 was $247 million, $(110) million,
and $22 million, respectively.
The decrease in distribution operating income of $88 million was
principally due to: (i) reductions in distribution revenue from an 11%
allowed distribution revenues reduction announced by the Regulator
effective at the beginning of fiscal year 1997 and a decrease of 15% in
distribution sales volume due to the shorter time period and (ii) an
increase in distribution operating expenses due to restructuring charges
during the ten-month period ended January 31, 1997.
The reduction in supply operating loss of $109 million was principally
due to the $130 million customer refund (net of the Fossil Fuel Levy
reduction) in 1996 from the NGG transactions. Such increase was partially
offset by a 5% decrease in number of electricity units supplied.
Net Income
Net income decreased by $48 million, from $146 million in fiscal year
1996 (excluding the after tax effect of NGG transactions of $573 million)
to $98 million in the ten-month period ended January 31, 1997. This
decrease was primarily due to the reduction in distribution operating
revenues due to the factors discussed below in "Revenues."
Revenues
Operating revenues, excluding the impact of the NGG refund, decreased
by $238 million (12%) from $2,003 million in fiscal year 1996 to $1,765
million in the ten-month period ended January 31, 1997, as follows:
Operating Revenues
Increase (Decrease)
from Fiscal Year
1996 to the ten-month Period
ended January 31, 1997
(In millions)
Electricity distribution $ (124)
Electricity supply (199)
Other 14
Intra-business 71
------
Total operating revenues $ (238)
======
The factors affecting distribution revenues are the same as those
described in "ENTERGY LONDON INVESTMENTS plc AND SUBSIDIARY - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"
comparing the year ended December 31, 1997 with the ten-month period ended
January 31, 1997 above.
<PAGE>
LONDON ELECTRICITY PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Revenues from the distribution business decreased by $124 million
(22%) from $559 million for fiscal year 1996 to $435 million for the ten-
month period ended January 31, 1997, principally due to two additional
months of operation in the earlier time period. An additional factor
contributing to the decrease was a reduction in the maximum allowable
average price of units distributed as a result of the application of the
revised Distribution Price Control Formula.
Two principal factors determine the amount of revenues produced by the
supply business: the unit price of electricity supplied (which, in the case
of franchise supply customers, is controlled by the Supply Price Control
Formula) and the number of electricity units supplied. London Electricity
is expected to have the exclusive right to supply all franchise supply
customers in its Franchise Area until at least April 1, 1998.
Franchise supply customers, who are generally residential and small
commercial customers, comprised 54% of total sales volume in the ten-month
period ended January 31, 1997. The volume of unit sales of electricity for
franchise supply customers is influenced largely by the number of customers
in London Electricity's Franchise Area, weather conditions and prevailing
economic conditions. Unit sales to non-franchise supply customers, who are
typically large commercial and industrial businesses, constituted 46% of
total sales volume during the ten-month period ended January 31, 1997.
Volume in this segment is determined primarily by the success of the supply
business in contracting to supply customers with electricity who are
located both inside and outside London Electricity's Franchise Area.
During the ten-month period ended January 31, 1997, the number of
electricity units supplied decreased by 5% while total revenues produced by
the supply business decreased by $199 million (11%), to $1,663 million from
$1,862 million (excluding the impact of the NGG refund of $143 million) for
fiscal year 1996. Units supplied to franchise supply customers decreased
by 16%, while units supplied to non-franchise supply customers increased by
12%.
Other revenues for the ten-month period ended January 31, 1997 totaled
$107 million, an increase of $14 million over fiscal year 1996. Such
increase was primarily a result of increased electrical contracting
services to the distribution segment by London Electricity Contracting
Limited ("LEC"), the revenues for which were eliminated in intra-business
eliminations. Intra-business eliminations decreased slightly from fiscal
year 1996 to the ten-month period ended January 31, 1997, notwithstanding
the LEC increase due principally to the reductions (due to a shorter time
period) in electricity distribution revenues (the majority of which are
charged to the supply segment) as discussed above.
Cost of Sales
Cost of sales decreased by $105 million (8%) from $1,320 million
(excluding the NGG-related Fossil Fuel Levy reduction of $13 million) in
fiscal year 1996 to $1,215 million in the ten-month period ended January
31, 1997. This decrease was principally due to two additional months
results of operations in the earlier period.
Expenses
Operating expenses decreased by $13 million (3%) from $394 million in
fiscal year 1996 to $381 million for the ten-month period ended January 31,
1997. This decrease was primarily due to lower selling, general and
administrative expenses and other operation and maintenance costs,
partially offset by one-time restructuring charges of $19 million in the
later period.
<PAGE>
LONDON ELECTRICITY PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Other
Other Income (Expense)
Other income (expense) decreased by $733 million from $740 million in
fiscal year 1996 to $7 million in the ten-month period ended January 31,
1997. This decrease was primarily attributable to other income of $709
million from the NGG transaction in fiscal year 1996. See "National Grid
Group Transactions" above.
Interest Expense, Net
Interest expense, net increased by $19 million from $8 million in
fiscal year 1996 to $27 million in the ten-month period ended January 31,
1997, principally as a result of the financing costs associated with the 8-
5/8%, BPS100 million Eurobond issue in October 1995 which was outstanding
for five months of fiscal year 1996 and the entire period from April 1,
1996 through January 31, 1997.
Income Taxes
Entergy London's effective income tax rate of 19% in fiscal year 1996
increased to 34% for the ten-month period ended January 31, 1997. This
increase was due principally to book/tax differences from the NGG
transaction in fiscal year 1996.
<PAGE>
<TABLE>
<CAPTION>
LONDON ELECTRICITY PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
for the period from April 1, 1996 to January 31, 1997 and the year ended
March 31, 1996
(in thousands)
Period from
April 1, 1996 to Year Ended
January 31, 1997 March 31, 1996
<S> <C> <C>
Operating revenues $1,765,605 $1,859,938
Cost of sales 1,215,455 1,306,827
---------- ----------
Gross profit 550,150 553,111
Depreciation and amortization 62,165 66,085
Property taxes 30,687 31,790
Restructuring charges 18,507 _
Selling, general and administrative 211,961 229,889
Other operation and maintenance costs 58,052 66,242
---------- ----------
Income from operations 168,778 159,105
Other income:
National Grid Transaction
Gain on revaluation of National Grid investment _ 416,869
Gain on sale of pumped storage business _ 109,777
Special dividends _ 205,146
Contribution to Employee Stock Ownership Plan _ (27,092)
Dividend income 6,011 38,837
Equity in earnings (loss) of affiliate 3,796 (3,445)
Other, net (2,531) 157
---------- ----------
Total other income 7,276 740,249
Interest expense, net 27,049 7,673
---------- ----------
Income before income taxes 149,005 891,681
Income taxes 50,776 172,260
---------- ----------
Net income $ 98,229 $ 719,421
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LONDON ELECTRICITY PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the period from April 1, 1996 to January 31, 1997 and the year ended
March 31, 1996
(in thousands)
Period from
April 1, 1996 to Year Ended
January 31, 1997 March 31, 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 98,229 $ 719,421
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 62,165 66,085
Deferred income taxes 22,778 27,248
Gain on revaluation of National Grid investment _ (416,869)
Change in assets and liabilities:
Inventory (3,164) (4,855)
Accounts receivable and unbilled revenue (21,354) (24,743)
Income tax receivable 182,065 (124,184)
Other receivables 4,904 (50,738)
Prepayments and other 3,164 (6,890)
Long-term receivables and other (9,491) (27,248)
Accounts payable 41,127 8,456
Income taxes payable (200,098) 117,450
Deferred revenue and other current liabilities (17,242) 23,647
Other long-term liabilities (2,215) (7,673)
--------- ----------
Net cash provided by operating activities 160,868 299,107
--------- ----------
Cash flows from investing activities:
Capital expenditures (182,856) (173,201)
Proceeds from sale of fixed assets 791 1,879
Receipt of consumer contributions 26,574 23,334
Purchase of investments (6,169) (37,114)
Sales of investments 10,282 57,785
--------- ----------
Net cash used in investing activities (151,378) (127,317)
--------- ----------
Cash flows from financing activities:
Proceeds from bond issue 316 155,191
Proceeds from issuance of common stock 1,740 15,033
Repayments on bond issue _ _
Net proceeds from available lines of credit 103,669 57,785
Dividends paid (108,215) (397,717)
Repurchase of common stock _ (1,253)
--------- ----------
Net cash used in financing activities (2,490) (170,961)
--------- ----------
Effect of exchange rates on cash and cash equivalents 8,880 (11,301)
--------- ----------
Increase (decrease) in cash and cash equivalents 15,880 (10,472)
Beginning of period cash and cash equivalents 19,851 30,323
--------- ----------
End of period cash and cash equivalents $ 35,731 $ 19,851
========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 44,290 $ 19,418
Cash paid for income taxes $ 267,324 $ 120,582
See Notes to Financial Statements.
</TABLE>
<PAGE>
LONDON ELECTRICITY PLC
CONSOLIDATED BALANCE SHEET
March 31, 1996
(in thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 19,851
Accounts receivable:
Customer receivable net of reserve of $13.3 173,315
million
Unbilled revenue 117,884
Deferred income tax asset 24,127
Income tax receivable 191,028
Other receivables 82,304
Prepayments and other 12,369
Inventory 11,300
Investments 25,501
----------
Total current assets 657,679
----------
Property, plant and equipment, net of accumulated 1,070,885
depreciation of $710.5 million
Construction work in progress 125,672
Goodwill, net of accumulated amortization of $3.4 63,065
million
Investments, long-term 16,186
Long-term receivables 15,270
Prepaid pension asset 111,624
----------
Total assets $2,060,381
==========
See Notes to Financial Statements.
<PAGE>
LONDON ELECTRICITY PLC
CONSOLIDATED BALANCE SHEET
March 31, 1996
(in thousands, except share and per share amounts)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 146,745
Accounts payable 179,423
Income taxes payable 236,838
Deferred revenue 30,693
Other liabilities 74,058
----------
Total current liabilities 667,757
----------
Long-term debt 301,888
Deferred income tax liability 317,769
Other 89,634
----------
Total liabilities 1,377,048
----------
Commitments and Contingencies
Shareholders' equity:
Common stock, BPS .583 par value per share,
257,142,857 shares authorized, 203,153
174,290,836 shares issued and outstanding
Additional paid-in capital 14,960
Retained earnings 499,536
Cumulative translation adjustment (34,316)
----------
Total shareholders' equity 683,333
----------
Total liabilities and shareholders' equity $2,060,381
==========
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
LONDON ELECTRICITY PLC
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
for the period from April 1, 1996 to January 31, 1997 and the year ended
March 31, 1996
(in thousands, except share amounts)
Additional Cumulative
Common Stock Paid-In Retained Translation Shareholders'
Shares Amount Capital Earnings Adjustment Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1995 197,695,699 $198,612 $4,468 $722,724 $30,719 $956,523
Common stock issued 4,956,992 4,541 10,492 _ _ 15,033
Reduction in shares from
reverse stock split (27,522,282) _ _ _ _ _
Treasury shares acquired (839,573) _ _ (1,253) _ (1,253)
Revaluation of National
Grid investment _ _ _ _ _ 274,254
Realized gain on
distribution of National
Grid investment _ _ _ _ _ (274,254)
Net income _ _ _ 719,421 _ 719,421
Dividends declared:
Cash dividends _ _ _ (402,686) _ (402,686)
National Grid Distribution _ _ _ (538,670) _ (538,670)
Cumulative translation
adjustment _ _ _ - (65,035) (65,035)
----------- -------- ------- -------- ------- --------
Balance, March 31, 1996 174,290,836 203,153 14,960 499,536 (34,316) 683,333
Common stock issued 390,712 158 _ 1,582 _ 1,740
Net income _ _ _ 98,229 _ 98,229
Dividends declared _ _ _ (113,833) _ (113,833)
Cumulative translation
adjustment _ _ _ - 32,178 32,178
----------- -------- ------- -------- ------- --------
Balance, January 31, 1997 174,681,548 $203,311 $14,960 $485,514 $(2,138) $701,647
=========== ======== ======= ======== ======= ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
LONDON ELECTRICITY PLC
SELECTED FINANCIAL DATA - FOUR-YEAR COMPARISON
Period from
April 1, 1996 to Year Ended March 31,
January 31, 1997 1996 1995 1994 (1)
(In Thousands)
Operating revenues $1,765,605 $ 1,859,938 $1,898,976 $1,970,830
Net income $98,229 $ 719,421 $189,269 $213,795
Total assets N/A $ 2,060,381 $2,007,417 $1,813,448
Long-term obligations (2) N/A $ 301,888 $159,879 $281,960
(1) Amounts as of and for the year ended March 31, 1994 are derived from
financial statements prepared in accordance with UK generally accepted
accounting principles (GAAP). The principal differences between US
GAAP and UK GAAP financial statements relate to the treatment of
goodwill, pension costs, deferred income taxes, timing of recognition
of restructuring accruals, and timing of recognition of dividends.
(2) Includes long-term debt (excluding currently maturing debt).
<PAGE>
LONDON ELECTRICITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS:
London Electricity plc ("London Electricity") is one of the twelve
regional electricity companies ("RECs") in England and Wales licensed to
supply, distribute, and, to a limited extent, generate electricity. The
RECs were created as a result of the privatization of the United Kingdom
("UK") electric industry in 1990 after the state-owned low voltage
distribution networks were allocated to the then existing twelve regional
boards. London Electricity's main business, the distribution and supply of
electricity to customers in London, England, is regulated under the terms
of London Electricity's PES license by the Office of Electricity Regulation
(the "Regulator").
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
In accordance with SFAS 52, "Foreign Currency Translation", all assets
and liabilities of London Electricity are translated into U.S. dollars at
the exchange rate in effect at the end of the period, and revenues and
expenses are translated at average exchange rates prevailing during the
period. The resulting translation adjustments are reflected in a separate
component of shareholders' equity. Current exchange rates are used for
U.S. dollar disclosure of future obligations. No representation is made
that the foreign currency denominated amounts have been, could have been or
could be converted into U.S. dollars at the rates indicated or at any other
rates.
The financial statements of London Electricity are presented in
conformity with accounting principles generally accepted in the United
States ("US GAAP"). The consolidated financial statements include the
accounts of London Electricity and its wholly-owned and majority-owned
subsidiaries and have been prepared from records maintained by London
Electricity in the UK. All significant intercompany accounts and
transactions have been eliminated in consolidation. London Electricity is
not subject to rate regulation, but rather, is subject to price cap
regulation and, therefore, the provisions of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types
of Regulation" ("SFAS 71") do not apply.
London Electricity was acquired by Entergy London Investments plc,
formerly Entergy Power UK plc, effective February 1, 1997. The financial
statements include the results of operations of London Electricity through
the date of acquisition.
Use of Estimates in the Preparation of Financial Statements
The preparation of London Electricity's financial statements, in
conformity with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities and the reported amounts of revenues and expenses during the
reporting period. Adjustments to the reported amounts of assets and
liabilities may be necessary in the future to the extent that future
estimates or actual results are different from the estimates used in the
financial statements.
Revenue Recognition
London Electricity distributes electricity to commercial, residential
and industrial customers within the London area. London Electricity
records revenue net of value added tax ("VAT") and accrues revenue for
services provided but unbilled at the end of each reporting period. London
Electricity purchases power primarily from the wholesale trading market for
electricity in England and Wales (the "Pool"). The Pool monitors supply
and demand between generators and suppliers, sets prices for generation and
provides centralized settlement of amounts due between generators and
suppliers.
Cash and Cash Equivalents
London Electricity considers all short-term investments with an
original maturity of three months or less to be cash and cash equivalents.
Property, Plant and Equipment
Property, plant and equipment is stated at original cost and includes
materials, labor and appropriate overhead costs. London Electricity is
entitled, under certain conditions, to collect cash contributions from
consumers to fund improvements to London Electricity's distribution
networks. These consumer contributions are credited against the historical
cost of the asset.
Depreciation is computed by the straight-line method at rates based on
the estimated service lives of each of the various classes of property.
Consumer contributions are amortized into income at a rate of 2.5%.
Depreciation rates on average depreciable property are shown below:
Distribution network assets 2.5%
Buildings 1.7%
Vehicles and mobile plant 10%-20%
Furniture and equipment, including computer 20%-33%
hardware and software
Income Taxes
London Electricity accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). This standard requires that deferred income taxes be
recorded for all temporary differences between the financial statement
basis and tax basis of assets and liabilities and loss carryforwards, and
that deferred tax balances be based on enacted tax laws at rates that are
expected to be in effect when the temporary differences reverse.
Goodwill
Goodwill represents the excess of cost over the fair value of net
assets acquired and is being amortized over forty years using the straight-
line method.
Financial Instruments
London Electricity enters into interest rate swaps as a part of its
overall risk management strategy and does not hold or issue material
amounts of derivative financial instruments for trading purposes. London
Electricity accounts for its interest rate swaps in accordance with the
concepts established in Statement of Financial Accounting Standards No. 80,
"Accounting for Futures Contracts" ("SFAS 80") and various Emerging Issue
Task Force pronouncements. If the interest rate swaps were to be sold or
terminated, any gain or loss would be deferred and amortized over the
remaining life of the debt instrument being hedged by the interest rate
swap. If the debt instrument being hedged by the interest rate swaps were
to be extinguished, any gain or loss attributable to the swap would be
recognized in the period of the transaction.
London Electricity considers the carrying amounts of financial
instruments classified as current assets and liabilities to be a reasonable
estimate of their fair value because of the short maturity of these
instruments.
Price Control
Charges for distribution of electricity and supply to customers with a
maximum demand under 100kW are subject to a price control formula set out
in London Electricity's PES license which allows a maximum charge per unit
of electricity.
Differences in the charges, or in the purchase cost of electricity,
can result in the under or overrecovery of revenues in a particular year.
Where there is an overrecovery of supply of distribution business
revenues against the regulated maximum allowable amount, revenues are
deferred in an amount equivalent to the overrecovered amount. The deferred
amount is deducted from operating revenues and included in other
liabilities. Where there is an underrecovery, no anticipation of any
potential future recovery is made.
London Electricity enters into contracts for differences ("CFDs")
primarily to hedge its supply business against the price risk of
electricity purchases from the Pool. Use of these CFDs is carried out
within the framework of London Electricity's purchasing strategy and
hedging guidelines. Risk of loss is monitored through establishment of
approved counterparties and maximum counterparty limits and minimum credit
ratings. London Electricity recognizes gains (losses) on CFDs when
settlement is made. Gains (losses) on CFDs are recognized as a decrease
(increase) to cost of sales based upon the difference between fixed prices
in the CFD compared to variable prices paid to the Pool for the period.
Gains (losses) based upon the difference between fixed prices in the CFD
compared to variable prices paid to the Pool for future electricity
purchases are not recognized until the period of such settlements.
Pursuant to Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of" ("SFAS 121") London Electricity periodically
reviews its long-lived assets whenever events or changes in circumstances
indicate that recoverability of these assets is uncertain. Generally, the
determination of recoverability is based on the undiscounted net cash flows
expected to result from such assets. Projected undiscounted net cash flows
depend on the future operating costs associated with the assets and future
market prices over the remaining life of the assets. Based on current
estimates of future undiscounted cash flows as prescribed under SFAS 121,
management anticipates that future revenues from such assets will fully
recover all related costs.
NOTE 3. REGULATORY MATTERS:
The distribution business of London Electricity is regulated under its
PES license, pursuant to which revenue of the distribution business is
controlled by the Distribution Price Control Formula (DPCF). The DPCF
determines the maximum average price per unit of electricity (expressed in
kilowatt hours, a "unit") that a REC may charge. The elements used in the
DPCF are established for a five-year period and are subject to review by
the Regulator at the end of each five-year period and at other times at the
discretion of the Regulator. At each review the Regulator can adjust the
value of certain elements in the DPCF. Following a review by the Regulator
in August 1994, a 14% price reduction was set for London Electricity,
effective April 1, 1995. In July 1995, a further review of distribution
prices was concluded by the Regulator for fiscal years 1997 to 2000. As a
result of this further review, London Electricity's distribution prices
were reduced an additional 11%, effective April 1, 1996, 3% effective April
1, 1997 and will be reduced by a further 3% on both April 1, 1998 and 1999.
The supply business of London Electricity is also regulated by the
Regulator and prices are established based upon the Supply Price Control
Formula which is similar to the DPCF; however, it allows full pass through
for all properly incurred costs and is set for a four-year period by the
Regulator.
The non-franchise supply market, which typically includes larger
commercial and industrial customers was opened to competition for all
customers with usage above 1MW upon privatization of the industry in 1990.
The non-franchise supply markets of 100 kW or more were opened to full
competition starting in April 1994.
Currently London Electricity, under its PES license, has the exclusive
right to supply residential and small industrial and commercial customers
within its franchise area. It is anticipated that the supply market will
be fully competitive over a six month period starting in April 1998.
NOTE 4. INVESTMENTS:
London Electricity accounts for investments whose fair market value is
readily determinable in accordance with Statement of Financial Accounting
Standards No. 115, "Accounting for Investments for Certain Debt and Equity
Securities" ("SFAS 115"). These securities are considered available-for-
sale securities under SFAS 115 and their fair values approximate cost.
Other securities whose fair market values are not readily determinable and
in which London Electricity does not have a significant interest are
recorded at cost.
Investments in companies in which London Electricity's ownership
interests range from 20% to 50% and investments in which London
Electricity's ownership is less than 20% but over which London Electricity
exercises significant influence over operating and financial policies are
accounted for using the equity method. The following are London
Electricity's equity method investments as of March 31, 1996:
Investment Percentage Ownership
London Total Gas Ltd 50%
Combined Power Systems Ltd 32% combined ownership in
common and preferred shares
Thames Valley Power Ltd 50%
London Total Energy Ltd 50%
Barking Power Ltd 13.5%
NOTE 5. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost, consists of the following (in
thousands):
March 31, 1996
Distribution network assets $1,769,946
Land and buildings 117,579
Vehicles and mobile plant 24,279
Furniture, fixtures and equipment, including 181,407
computer hardware and software
Consumer contributions to construction (311,813)
----------
1,781,398
Less accumulated depreciation and amortization (710,513)
----------
$1,070,885
==========
NOTE 6. INCOME TAXES:
London Electricity's income tax expense for the period from April 1,
1996 to January 31, 1997, and the year ended March 31, 1996, consists of
the following (in thousands):
Period from
April 1, 1996 to Year ended
January 31, 1997 March 31, 1996
Current $ 27,998 $64,206
Deferred 22,778 27,248
Current taxes on National Grid transactions:
Tax on special dividend _ 35,705
Tax on distribution in kind _ 93,490
Tax on ESOP contribution _ (5,637)
Tax reduction related to customer discount _ (42,752)
-------- --------
Total $ 50,776 $172,260
======== ========
London Electricity's total income taxes differ from the amounts
computed by applying the statutory income tax rate to income before taxes.
The reasons for the differences in the period from April 1, 1996 to January
31, 1997 and the year ended March 31, 1996 are (in thousands):
<TABLE>
<CAPTION>
Period from
April 1, 1996 to Year ended
January 31, 1997 March 31, 1996
<S> <C> <C>
Pre-tax income $149,005 $891,681
Income taxes computed at statutory rate 49,194 294,252
National Grid transactions:
Revaluation of investment excluded from taxable income _ (44,005)
Gain on sale of pumped storage business excluded from
taxable income _ (36,175)
Tax credit on contribution to ESOP _ (5,638)
Special dividends not taxable _ (10,805)
Effect of difference between statutory rate (33%) and
rate on dividends received (20%) (791) (31,163)
Amortization of goodwill 475 626
Other 1,898 5,168
-------- --------
Total income tax expense $ 50,776 $172,260
======== ========
</TABLE>
Significant components of London Electricity's net deferred tax
liability as of March 31, 1996 are as follows (in thousands):
Deferred tax liability
Property-related basis differences $(280,968)
Prepaid pension asset (36,801)
---------
Total (317,769)
Deferred tax asset
Restructuring and other provisions 24,127
---------
Net deferred tax liability $(293,642)
=========
As a result of Parliamentary elections held on May 1, 1997, the Labour
Party gained control of the UK Government. On July 31, 1997 legislation
establishing a windfall profits tax, which affects regulated companies
privatized since 1979 including London Electricity, was enacted. In
accordance with SFAS 109 under US GAAP, London Electricity will record a
charge to income for the windfall profits tax during the quarter ending
September 30, 1997. A change in the UK statutory rate from 33% to 31% was
also included in the legislation. The impact of such changes will be
recognition in the quarter ending September 30, 1997 of the $224 million
expense for the windfall profits tax and approximately $61 million of
income tax benefit as a result of the change in the UK statutory income tax
rate in London Electricity's results of operations.
The tax years since fiscal year 1990 are currently under review by the
Inland Revenue in the UK. London Electricity believes that there is no
additional liability related to the tax years under review.
NOTE 7. LONG-TERM DEBT:
The long-term debt of London Electricity as of March 31, 1996 consists
of the following (in thousands):
8% Eurobonds repayable March 28, 2003 $ 151,020
8 5/8% Eurobonds repayable October 26, 2005 150,868
---------
Total $ 301,888
=========
The 8% and 8 5/8% Eurobonds may become due prior to their stated
maturity only upon the occurrence of certain events including default,
liquidation or bankruptcy of London Electricity. London Electricity does
not anticipate default under the agreements.
London Electricity entered into an interest rate swap agreement to
reduce the impact of interest rate changes on its outstanding debt. The
interest rate swap agreement involves the exchange of a fixed interest rate
for a floating interest rate periodically over the life of the agreement.
If the counterparty to the interest rate swap was to default on contractual
payments, London Electricity could be exposed to increased cost related to
replacing the original agreement. However, London Electricity does not
anticipate non-performance. At March 31, 1996, London Electricity was party
to a notional amount of $12 million for an interest rate swap agreement
with a maturity date of May 6, 2003.
NOTE 8. COMMON STOCK:
During 1996, London Electricity effected a reverse stock split of six
for every seven shares of common stock held. This reduced, by approximately
28 million, the number of common shares outstanding and increased the par
value of the stock from BPS0.50 to BPS0.583 per share.
NOTE 9. NOTES PAYABLE:
Other facilities available to London Electricity are short-term
unsecured, uncommitted facilities of BPS228 million and a BPS150 million
Sterling Commercial Paper Program ("Sterling Program"). Uncommitted
facilities are unsecured facilities which are available at London
Electricity's request, however there is no obligation by the bank
counterparty to make funds available to London Electricity. The Sterling
Program is a negotiable promissory note with short term maturities (up to
364 days) issued at a discount to face value. London Electricity had an
outstanding balance of $146.7 million on all of these facilities as of
March 31, 1996. The weighted average interest rate incurred on these
borrowings was 6.3% and 6.1% for the period from April 1, 1996 to January
31, 1997 and for the year ended March 31, 1996, respectively.
NOTE 10. COMMITMENTS AND CONTINGENCIES:
London Electricity has entered into operating lease agreements for the
use of buildings and vehicles. Minimum future rental payments under all
operating leases as of March 31, 1996 are as follows (in thousands):
1997 $10,842
1998 10,536
1999 10,078
2000 10,078
2001 9,773
Thereafter 127,810
--------
Total $179,117
========
Rental expense incurred under these lease agreements was $10.6 million
and $12.4 million for the period from April 1, 1996 to January 31, 1997 and
for the year ended March 31, 1996, respectively.
London Electricity is subject to an agreement whereby the UK
government is entitled to a proportion of certain property gains accruing
to London Electricity as a result of disposals or events treated as
disposals occurring after March 31, 1990 of properties held at that date.
This commitment is effective until March 31, 2000.
London Electricity has utilized a portion of the pension plan surplus
to increase benefits to members and reduce employer and employee
contributions. A recent court ruling in the UK upheld such uses of pension
surpluses. However, should the decision be reversed on appeal, London
Electricity could be required to repay pension surpluses utilized.
Management is unable to predict the likely outcome of this matter at this
time.
The UK Environmental Protection Act 1990 addresses waste management
issues and imposes certain obligations on companies which handle and
dispose of waste. Some of London Electricity's distribution activities
produce waste but London Electricity believes that it has taken and
continues to take measures to comply with the applicable laws and
governmental regulations for the protection of the environment. There are
no material legal or administrative proceedings pending against London
Electricity with respect to any environmental matter.
London Electricity is required to file five-year projections with the
Regulator for capital expenditures related to its regulated distribution
network and updates of such projections annually. The most recent updated
projection was for the five-year period ended March 31, 2000 and was filed
in July 1997. This filing indicated London Electricity's current projection
of approximately $772.3 million for the five-year period. Approximately
$294.2 million has already been spent in fiscal years 1996 and 1997 related
to this five-year projection.
London Electricity uses CFDs and power purchase contracts with certain
UK generators to fix the price of electricity for a contracted quantity
over a specific period of time. At March 31, 1996, London Electricity has
outstanding CFDs and power purchase contracts for approximately 52,000 GWH
of electricity. These include a long term power purchase contract with an
affiliate which is based on 27.5% of the affiliate's capacity from its 1000
MW facility through the year 2010. London Electricity's sales volumes were
approximately 17,000 GWH and 18,000 GWH in the period from April 1, 1996 to
January 31, 1997, and the year ended March 31, 1996, respectively.
NOTE 11. PENSION BENEFITS:
London Electricity participates in a defined benefit pension plan,
which provides pension and other related defined benefits, based on final
pensionable pay, to substantially all employees throughout the electric
supply industry in the UK. Contributions to the plan by London Electricity
on behalf of its employees were $16.0 million for the year ended March 31,
1996. London Electricity made no contributions to the plan during the
period April 1, 1996 to January 31, 1997.
London Electricity uses the projected unit credit actuarial method for
funding purposes. Amounts funded to the pension are primarily invested in
equity and fixed income securities.
Statement of Financial Accounting Standards No. 87 "Employees
Accounting for Pensions" ("SFAS 87") was issued in 1988 and is effective
for fiscal years beginning after December 15, 1988. The provisions of SFAS
87 were initially adopted by London Electricity on April 1, 1994.
Accordingly, the unrecognized net transition asset at the date of initial
application of SFAS 87 is being amortized over 15 years beginning April 1,
1989. The amount of the unrecognized net transition asset credited to
equity on April 1, 1994 was $42.9 million.
The following table sets forth the plan's funded status and amounts
recognized in London Electricity's balance sheet at March 31, 1996 (in
thousands):
Accumulated benefit obligation:
Vested $ 900,625
=========
Projected benefit obligation 1,029,962
Plan assets at fair value 1,231,831
---------
Assets in excess of projected benefit 201,869
obligation
Unrecognized net gain (18,782)
Unrecognized net transition asset (71,463)
---------
Prepaid pension asset $ 111,624
=========
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation, and the expected long-term rate of return on
assets was 9%, 6.5% and 9%, respectively, for the period from April 1, 1996
to January 31, 1997 and for the year ended March 31, 1996.
The components of the plan's net pension income during the periods are
shown below (in thousands):
Period from
April 1, 1996 to Year ended
January 31, 1997 March 31, 1996
Service cost (benefits earned during the period) $10,440 $ 13,311
Interest cost on projected benefit obligations 70,232 85,347
Actual return on plan assets (92,377) (227,227)
Net amortization and deferral 3,955 115,258
------- --------
Net pension benefit $(7,750) $(13,311)
======= ========
NOTE 12. DISTRIBUTION OF NATIONAL GRID INVESTMENT:
In December 1995, each of the RECs distributed their investments in
the National Grid Holding Company plc ("National Grid"). London Electricity
distributed its ownership shares in National Grid to its shareholders.
Prior to the distribution, the National Grid shares were listed on the
London Stock Exchange and revalued to reflect the market value of the
common stock of National Grid, whose shares had not previously been
publicly traded and for which there was no readily determinable fair market
value. London Electricity recorded a gain on the revaluation of $416.9
million in the Statement of Operations for the year ended March 31, 1996.
National Grid also effected a rights issue at $3.12 per share to raise
additional equity capital. London Electricity invested an additional $27.5
million in National Grid as a result of the rights issue. Approximately
96% of the total National Grid shares owned by London Electricity were then
distributed in kind to the shareholders of London Electricity.
The remaining shares owned by London Electricity were retained to
establish an Employee Stock Ownership Plan ("ESOP") to compensate
participants of the Employee and Executive Sharesave Plans (employee stock
option plans) for any diminution in value of London Electricity shares as a
result of the demerger. Approximately 5.1 million shares of National Grid
were reserved for contributions to the ESOP. The actual shares will be
contributed to the ESOP upon exercise of options under the employee stock
option plans. The contributed shares related to the establishment of the
ESOP plus expenses and cash contributions due to the ESOP to compensate the
participants for taxes payable related to this distribution were charged to
expense during the fiscal year ended March 31, 1996. The difference
between actual National Grid shares contributed and the total amount
charged to expense is included in other liabilities in London Electricity's
balance sheet as of March 31, 1996.
National Grid also distributed to London Electricity its ownership
shares in PSB Holding Limited ("PSB"), the holding company of First Hydro
Limited which had been transferred to National Grid in 1990. As part of
the demerger, PSB was sold to Mission Energy and London Electricity
recorded a $109.8 million gain on the sale.
Finally, as part of the demerger, the Regulator ordered a $78 refund
to each of London Electricity's supply customers which was offset by a
reduction in the fossil fuel levy charged to London Electricity. The
effect of the refund, which was recorded in the year ended March 31, 1996,
was to reduce operating revenues, cost of sales and gross profit by $142.3
million , $13.0 million and $129.4 million, respectively.
The investment in National Grid has been accounted for by London
Electricity as a cost method investment. The consolidated results of
operations of London Electricity therefore do not include any of the
results of operations of National Grid.
NOTE 13. EMPLOYEE OPTIONS:
London Electricity was acquired by Entergy London Investments plc,
formerly Entergy Power UK plc, effective February 1, 1997. In conjunction
with the purchase of London Electricity, the holders of any outstanding
options under the employee option plans were given the opportunity to
exercise their options and sell their shares to Entergy London Investments
plc at a price of BPS7.05 per share which then entitled the owner of the
shares to the interim dividend of BPS.179 per share. If the holders of the
options did not exercise their options, such options were cash canceled and
the holders were paid BPS7.05 per share.
Under the Employee Sharesave Plan, London Electricity was authorized
to issue shares of common stock pursuant to stock options granted to
officers, key employees and directors. Under the Executive Sharesave Plan,
London Electricity was authorized to issue shares of common stock pursuant
to stock options granted to directors.
The stock options had an exercise price equal to the fair market value
of the common stock on the date of grant and a contractual term of 10
years. The stock options became exercisable on the third anniversary of
the date of grant under the Executive Sharesave Plan.
A summary of the status of London Electricity's stock options for the
period from April 1, 1996 to January 31, 1997 and for the year ended March
31, 1996 and the changes during the years ended on such dates is presented
below:
<TABLE>
<CAPTION>
Period from
April 1, 1996 to
January 31, 1997 Years ended March 31, 1996
# Shares of # Shares of
Underlying Exercise Underlying Exercise
Options Prices Options Prices
<S> <C> <C> <C> <C>
Outstanding at beginning of year 1,873,505 BPS3.56 6,985,705 BPS2.26
Granted 3,625,911 4.82 89,628 5.94
Exercised (390,712) 3.33 (4,956,992) 1.89
Forfeited _ _ (244,836) 2.09
Expired _ _ _ _
--------- ---------
Outstanding at end of year 5,108,704 1,873,505
========= =========
</TABLE
NOTE 14. RESTRUCTURING CHARGES:
In 1995 and 1996, London Electricity implemented a restructuring
program to reduce the number of employees in the Network Services, Customer
Services, Corporate and Information Technology groups. An initial plan was
approved by the Board of Directors of London Electricity in September 1994
and was based on a business plan developed subsequent to the 1994
Regulatory Review of Distribution (the "Distribution Review").
Following the reopening of the Distribution Review during 1995, a
further plan was proposed leading to a further reduction of employees in
the same areas. This plan was approved by the Board of Directors in May
1996, and approximately $18.5 million in restructuring charges was recorded
for the period from April 1, 1996 to January 31, 1997. The balances for
restructuring charges and the actual termination benefits paid under the
program for the period from April 1, 1996 to January 31, 1997 and the year
ended March 31, 1996 are as follows (in thousands):
Provision for restructuring as of March 31, 1995 $30,322
Restructuring charges in 1996 _
Payments made in 1996 _
Translation adjustment (1,767)
-------
Balance March 31, 1996 28,555
Restructuring charges in 1997 18,507
Payments made in 1997 (16,609)
Translation adjustment 1,433
-------
Provision for restructuring as of January 31, 1997 $31,886
=======
The number of employees terminated under these plans was 250 and 308
for the period from April 1, 1996 to January 31, 1997 and the year ended
March 31, 1996, respectively.
NOTE 15. SEGMENT INFORMATION:
London Electricity is engaged in two electric industry segments:
distribution, which involves the transfer and delivery of electricity
across London Electricity's network to its customers, and supply, which
involves bulk purchases of electricity from the Pool for delivery of supply
to the distribution networks. Other consists principally of London
Electricity's investment in private distribution networks, electricity
contracting services and investments in generating assets. Information
about London Electricity's operations in these individual segments during
the period from April 1, 1996 to January 31, 1997 and for the year ended
March 31, 1996 is as follows (in thousands):
</TABLE>
<TABLE>
<CAPTION>
Period from April 1, 1996 to January 31, 1997
Distribution Supply Other Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Operating revenues $435,470 $1,662,788 $106,772 $(439,425) $1,765,605
Operating income 159,129 (1,265) 10,914 _ 168,778
Depreciation and amortization 51,092 6,485 4,588 _ 62,165
Total assets employed at 1,363,077 446,560 287,453 _ 2,097,090
period end
Capital expenditures 153,118 15,027 14,711 _ 182,856
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, 1996
Distribution Supply Other Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $559,219 $1,719,468 (a) $92,550 $(511,299) $1,859,938
Operating income 247,428 (110,246)(b) 24,272 (2,349) 159,105
Depreciation and amortization 54,967 3,915 7,203 _ 66,085
Total assets employed at 1,211,827 376,710 471,844 _ 2,060,381
period end
Capital expenditures 151,590 7,047 14,564 _ 173,201
</TABLE>
(a) Includes $142.3 million refund to customers related to National Grid
transaction.
(b) Includes net effect of $142.3 million refund and $13.0 reduction of
fossil fuel levy related to National Grid transaction. See Note 12.
<PAGE>
Item 9. Changes In and Disagreements With Accountants On Accounting
and Financial Disclosure.
No event that would be described in response to this item has
occurred with respect to Entergy, System Energy, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, or
Entergy New Orleans.
PART III
Item 10. Directors and Executive Officers of the Registrants (Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, System Energy and Entergy London)
All officers and directors listed below held the specified
positions with their respective companies as of the date of filing
this report.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name Age Position Period
ENTERGY ARKANSAS, INC.
Directors
R. Drake Keith 62 President and Director of Entergy Arkansas 1989-Present
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Officers
Michael R. Niggli 48 Senior Vice President - Customer Accounts of Entergy 1996-1998
Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and Entergy
Services
Senior Vice President - Marketing of Entergy Arkansas, 1993-1996
Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and Entergy Services
Vice President - Customer Services of Entergy 1993-1993
Louisiana, Entergy New Orleans, and Entergy Services
C. Gary Clary 53 Vice President - Human Resources and Administration of 1997-Present
Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and Entergy Operations
Vice President - Human Resources and Administration of 1996-Present
Entergy Services
Director-System Human Resources of Entergy Services 1993-1996
Cecil L. Alexander 62 Vice President - Governmental Affairs of Entergy 1991-Present
Arkansas
James S. Pilgrim 62 Vice President - Customer Service of Entergy Arkansas 1994-Present
Director, Central Region, TDCS Customer Service 1993-1994
Central Division Manager of Mississippi 1991-1993
C. Hiram Walters 61 Vice President - Customer Service of Entergy Arkansas 1993-Present
Vice President - Customer Service of Entergy Louisiana 1994-Present
Vice President - Customer Service of Entergy Services 1997-Present
Vice President - Customer Service, Central Region of 1993-1997
Entergy Services
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
R. Drake Keith See information under the Entergy Arkansas Directors
Section above.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Michael G. Thompson See information under the Entergy Corporation Officers
Section in Part I.
William J. Regan, Jr. See information under the Entergy Corporation Officers
Section in Part I.
Louis E. Buck, Jr. See information under the Entergy Corporation Officers
Section in Part I.
ENTERGY GULF STATES, INC.
Directors
Karen R. Johnson 53 President - Texas 1997-Present
Director of Entergy Gulf States 1996-Present
State President - Texas 1996-1997
Vice President - Governmental Affairs of Entergy Gulf 1994-1996
States - Texas
Executive Director of State Bar of Texas (state agency) 1990-1994
John J. Cordaro 64 President - Louisiana 1997-Present
Director of Entergy Gulf States and Entergy Louisiana 1996-Present
State President - Louisiana 1996-1997
President and Director of Entergy Louisiana and Entergy 1992-1996
New Orleans
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Officers
William E. Colston 62 Vice President - Customer Service of Entergy Gulf 1994-Present
States
Vice President - Customer Service of Entergy Louisiana 1993-Present
Vice President - Customer Service of Southern Region of 1993-Present
Entergy Services
Regional Director of Entergy Louisiana 1992-1993
S. G. Cunningham, Jr. 57 Vice President - Regulatory and Governmental Affairs of 1996-Present
Entergy Louisiana and Entergy Gulf States
Vice President - State Regulatory Affairs of Entergy 1994-1996
Services
Vice President - Entergy Corporation, Entergy Gulf 1993-1994
States Transition, and Regulatory Affairs of Entergy
Services
Vice President - Rates and Regulatory Affairs of 1991-1994
Entergy Louisiana and Entergy New Orleans
Vice President - Regulatory Affairs of Entergy Services 1992-1993
J. Parker McCollough 47 Vice President - State Governmental Affairs of Entergy 1996-Present
Gulf States
Vice President - Governmental Affairs, Texas 1993-1996
Association of Realtors (trade association)
Member- Texas House of Representatives 1989-1993
Wright & Greenhill, PC (law firm) 1991-1993
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
C. Gary Clary See information under the Entergy Arkansas Officers
Section above.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Michael G. Thompson See information under the Entergy Corporation Officers
Section in Part I.
Michael R. Niggli See information under the Entergy Arkansas Officers
Section above.
Karen Johnson See information under the Entergy Gulf States Directors
Section above.
John J. Cordaro See information under the Entergy Gulf States Directors
Section above.
William J. Regan, Jr. See information under the Entergy Corporation Officers
Section in Part I.
Louis E. Buck, Jr. See information under the Entergy Corporation Officers
Section in Part I.
ENTERGY LOUISIANA, INC.
Directors
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
John J. Cordaro See information under the Entergy Gulf States Directors
Section above.
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Officers
James D. Bruno 58 Vice President - Customer Service of Entergy Louisiana 1994-Present
and Entergy New Orleans
Vice President - Metro Region of Entergy Services 1993-Present
Region Director - Metro Region of Entergy Services 1991-1993
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
John J. Cordaro See information under the Entergy Gulf States Directors
Section above.
C. Gary Clary See information under the Entergy Arkansas Officers
Section above.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Michael G. Thompson See information under the Entergy Corporation Officers
Section in Part I.
Michael R. Niggli See information under the Entergy Arkansas Officers
Section above.
William E. Colston See information under the Entergy Gulf States Officers
Section above.
William J. Regan, Jr. See information under the Entergy Corporation Officers
Section in Part I.
Louis E. Buck, Jr. See information under the Entergy Corporation Officers
Section in Part I.
C. Hiram Walters See information under the Entergy Arkansas Officers
Section above.
S. G. Cunningham, Jr. See information under the Entergy Gulf States Officers
Section above.
ENTERGY MISSISSIPPI, INC.
Directors
Donald E. Meiners (a) 62 President and Director of Entergy Mississippi 1992-Present
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Officers
Bill F. Cossar 59 Vice President - Governmental Affairs of Entergy 1987-Present
Mississippi
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
Donald E. Meiners See information under the Entergy Mississippi Directors
Section above.
C. Gary Clary See information under the Entergy Arkansas Officers
Section above.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Michael G. Thompson See information under the Entergy Corporation Officers
Section in Part I.
Michael R. Niggli See information under the Entergy Arkansas Officers
Section above.
William J. Regan, Jr. See information under the Entergy Corporation Officers
Section in Part I.
Louis E. Buck, Jr. See information under the Entergy Corporation Officers
Section in Part I.
ENTERGY NEW ORLEANS, INC.
Directors
Daniel F. Packer 50 President and Director of Entergy New Orleans 1997-Present
State President - City of New Orleans 1996-1997
Vice President - Regulatory and Governmental Affairs of 1994-1996
Entergy New Orleans
General Manager - Plant Operations at Waterford 3 1991-1994
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Officers
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
C. Gary Clary See information under the Entergy Arkansas Officers
Section above.
Jerry D. Jackson See information under the Entergy Corporation Officers
Section in Part I.
Frank F. Gallaher See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Michael G. Thompson See information under the Entergy Corporation Officers
Section in Part I.
Michael R. Niggli See information under the Entergy Arkansas Officers
Section above.
Daniel F. Packer See information under the Entergy New Orleans Directors
Section above.
James D. Bruno See information under the Entergy Louisiana Officers
Section above.
William J. Regan, Jr. See information under the Entergy Corporation Officers
Section in Part I.
Louis E. Buck, Jr. See information under the Entergy Corporation Officers
Section in Part I.
SYSTEM ENERGY RESOURCES, INC.
Directors
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Jerry L. Maulden See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
Officers
Joseph L. Blount 51 Secretary of System Energy and Entergy Operations 1991-Present
Vice President Legal and External Affairs of Entergy 1990-1993
Operations
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Donald C. Hintz See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
William J. Regan, Jr. See information under the Entergy Corporation Officers
Section in Part I.
Louis E. Buck, Jr. See information under the Entergy Corporation Officers
Section in Part I.
ENTERGY LONDON INVESTMENTS PLC
Directors
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Michael B. Bemis See information under the Entergy Corporation Officers
Section in Part I.
Officers
Edwin Lupberger See information under the Entergy Corporation Officers
Section in Part I.
Michael B. Bemis See information under the Entergy Corporation Officers
Section in Part I.
Michael G. Thompson See information under the Entergy Corporation Officers
Section in Part I.
William J. Regan, Jr. See information under the Entergy Corporation Officers
Section in Part I.
Louis E. Buck, Jr. See information under the Entergy Corporation Officers
Section in Part I.
Gerald D. McInvale See information under the Entergy Corporation Officers
Section in Part I.
</TABLE>
(a) Mr. Meiners is a director of Trustmark National Bank, Jackson,
MS, and Trustmark Corporation, Jackson, MS.
Each director and officer of the applicable Entergy company is
elected yearly to serve by the unanimous consent of the sole
stockholder, Entergy Corporation, at its annual meeting.
Directorships shown in footnote (a) above are generally limited
to entities subject to Section 12 or 15(d) of the Securities and
Exchange Act of 1934 or to the Investment Company Act of 1940.
Section 16(a) Beneficial Ownership Reporting Compliance
Information called for by this item concerning the directors and
officers of Entergy Corporation is set forth in the Proxy Statement of
Entergy Corporation to be filed in connection with its Annual Meeting
of Stockholders to be held on May 15, 1998, under the heading "Section
16(a) Beneficial Ownership Reporting Compliance", which information is
incorporated herein by reference.
Item 11. Executive Compensation
ENTERGY CORPORATION
Information called for by this item concerning the directors and
officers of Entergy Corporation is set forth in the Proxy Statement
under the headings "Executive Compensation Tables", "General
Information About Nominees", and "Director Compensation", which
information is incorporated herein by reference.
ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY
MISSISSIPPI, ENTERGY NEW ORLEANS, SYSTEM ENERGY AND ENTERGY LONDON
Summary Compensation Table
The following table includes the Chief Executive Officer and the
four other most highly compensated executive officers in office as of
December 31, 1997 at Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy and
Entergy London, (collectively, the "Named Executive Officers") as well
as Gerald D. McInvale who would have been included as one of the four
most highly compensated officers but for the fact that he was not
serving as an executive officer at the end of the fiscal year. This
determination was based on total annual base salary and bonuses from
all Entergy sources earned by each officer for the year 1997. See
Item 10, "Directors and Executive Officers of the Registrants," for
information on the principal positions of the Named Executive Officers
in the table below.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Entergy and Entergy London
As shown in Item 10, most Named Executive Officers are employed
by several Entergy companies. Because it would be impracticable to
allocate such officers' salaries among the various companies, the
table below includes the aggregate compensation paid by all Entergy
companies.
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Long-Term Compensation
Annual Compensation Awards Payouts
Restricted Securities (b) (c)
(a) Other Annual Stock Underlying LTIP All Other
Name Year Salary Bonus Compensation Awards Options Payouts Compensation
Michael B. Bemis 1997 $314,154 $ 0 $ 734,368 (f) (d) 5,000 shares $ 0 $11,736
1996 297,115 168,125 43,884 (d) 5,000 0 12,813
1995 290,000 216,909 22,844 (d) 27,500 294,282 12,063
Joseph L. Blount 1997 $126,288 $ 0 $ 291 (d) 0 shares $ 0 $3,789
1996 124,904 38,471 10,147 (d) 0 0 6,177
1995 119,185 43,645 15,842 (d) 0 0 15,705
Louis E. Buck, Jr. 1997 $159,954 $29,882 $ 9,105 (d) 2,500 shares $ 0 $ 4,799
1996 153,558 66,187 26,132 (d) 0 0 20,683
1995 49,039 21,280 9,151 (d) 0 0 7,529
Frank F. Gallaher 1997 $327,385 $ 0 $ 11,132 (d) 5,000 shares $ 0 $ 9,822
1996 276,538 130,150 35,641 (d) 5,000 0 10,321
1995 240,000 198,360 61,360 (d) 27,500 324,398 7,638
Donald C. Hintz* 1997 $365,077 $ 0 $ 18,245 (d) 5,000 shares $ 0 $10,952
1996 343,269 231,299 12,516 (d) 5,000 0 14,197
1995 325,000 265,049 13,394 (d) 30,000 409,414 9,750
Jerry D. Jackson 1997 $342,077 $ 0 $ 56,359 (d) 5,000 shares $ 0 $10,262
1996 332,115 209,489 37,928 (d) 5,000 0 13,862
1995 325,000 256,838 43,054 (d) 30,000 422,438 9,750
Edwin Lupberger** 1997 $785,385 $ 0 $ 271,422 (d) 10,000 shares $ 0 $23,562
1996 735,577 448,794 123,601 (d) 10,000 0 23,567
1995 700,000 568,400 89,163 (d) 60,000 781,337 21,000
Jerry L. Maulden 1997 $445,615 $ 0 $ 67,485 (d) 5,000 shares $ 0 $13,369
1996 435,000 260,301 27,056 (d) 5,000 0 14,550
1995 435,000 353,220 26,248 (d) 30,000 422,438 13,050
Gerald D. McInvale (e) 1997 $331,154 $ 0 $ 17,389 (d) 5,000 shares $ 0 $ 9,923
1996 271,730 179,576 13,995 (d) 5,000 0 12,051
1995 255,481 186,739 12,525 (d) 27,500 294,282 7,664
William J. Regan, Jr. 1997 $195,379 $36,448 $ 13,740 (d) 2,500 shares $ 0 $ 5,861
1996 190,000 81,132 20,684 (d) 0 0 8,852
1995 120,577 54,727 21,141 (d) 2,000 0 7,821
Michael G. Thompson 1997 $259,315 $ 0 $ 12,856 (d) 5,000 shares $ 0 $ 7,729
1996 245,960 132,620 20,640 (d) 5,000 0 11,278
1995 236,546 163,612 57,600 (d) 2,500 211,219 7,096
</TABLE>
* Chief Executive Officer of System Energy.
** Chief Executive Officer of Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
Entergy London.
(a) Includes bonuses earned pursuant to the Annual Incentive Plan.
(b) Amounts include the value of restricted shares that vested in
1997, 1996, and 1995 (see note (d) below) under Entergy's Equity
Ownership Plan.
(c) Includes the following:
(1) 1997 benefit accruals under the Defined Contribution
Restoration Plan as follows: Mr. Bemis $4,625; Mr. Gallaher
$5,022; Mr. Hintz $6,152; Mr. Jackson $5,462; Mr.
Lupberger $18,762; Mr. Maulden $8,969; Mr. McInvale
$5,123; Mr. Regan $1,061; and Mr. Thompson $2,979.
(2) 1997 employer contributions to the System Savings Plan
as follows: Mr. Bemis $4,800; Mr. Blount $3,789; Mr. Buck
$4,799; Mr. Gallaher $4,800; Mr. Hintz $4,800; Mr.
Jackson $4,800; Mr. Lupberger $4,800; Mr. Maulden $4,400;
Mr. McInvale $4,800; Mr. Regan $4,800; and Mr. Thompson
$4,750.
(3) 1997 reimbursements for moving expenses as follows:
Mr. Bemis $2,311.
(d) There were no restricted stock awards in 1997 under the Equity
Ownership Plan. At December 31, 1997, the number and value of
the aggregate restricted stock holdings were as follows: Mr.
Bemis 30,000 shares, $898,125; Mr. Blount 2,250 shares, $67,359;
Mr. Buck 4,500 shares, $134,719; Mr. Gallaher 30,000 shares,
$898,125; Mr. Hintz 30,000 shares, $898,125; Mr. Jackson 30,000
shares, $898,125; Mr. Lupberger 60,000 shares, $1,796,250; Mr.
Maulden 37,500 shares, $1,122,656; Mr. McInvale 30,000 shares,
$898,125; Mr. Regan 4,500 shares, $134,719; and Mr. Thompson
22,500 shares, $673,594. Accumulated dividends are paid on
restricted stock when vested. The value of stock for which
restrictions were lifted in 1997, 1996, and 1995, and the
applicable portion of accumulated cash dividends, are reported in
the LTIP Payouts column in the above table. The value of
restricted stock awards as of December 31, 1997 are determined by
multiplying the total number of shares awarded by the closing
market price of Entergy Corporation common stock on the New York
Stock Exchange Composite Transactions on December 31, 1997
($29.9375 per share).
(e) Gerald D. McInvale is a former officer of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Energy and Entergy
London.
(f) Includes approximately $670,000 related to various overseas
living expenses, including UK taxes and housing, associated with
Mr. Bemis' overseas assignment in London.
Option Grants in 1997
The following table summarizes option grants during 1997 to the
Named Executive Officers. The absence, in the table below, of any
Named Executive Officer indicates that no options were granted to such
officer.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Entergy and Entergy London
<PAGE>
<TABLE>
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Individual Grants Potential Realizable
% of Total Value
Number of Options at Assumed Annual
Securities Granted to Exercise Rates of Stock
Underlying Employees Price Price Appreciation
Options in (per share) Expiration for Option Term (b)
Name Granted (a) 1997 (a) Date 5% 10%
Michael B. Bemis 5,000 2.0% $ 26.5 1/30/07 $ 83,329 $211,171
Louis E. Buck, Jr. 2,500 1.0% 26.5 1/30/07 41,664 105,585
Frank F. Gallaher 5,000 2.0% 26.5 1/30/07 83,329 211,171
Donald C. Hintz 5,000 2.0% 26.5 1/30/07 83,329 211,171
Jerry D. Jackson 5,000 2.0% 26.5 1/30/07 83,329 211,171
Edwin Lupberger 10,000 3.9% 26.5 1/30/07 166,657 422,342
Jerry L. Maulden 5,000 2.0% 26.5 1/30/07 83,329 211,171
Gerald D. McInvale 5,000 2.0% 26.5 1/30/07 83,329 211,171
William J. Regan, Jr. 2,500 1.0% 26.5 1/30/07 41,664 105,585
Michael G. Thompson 5,000 2.0% 26.5 1/30/07 83,329 211,171
</TABLE>
(a) Options were granted on January 30, 1997, pursuant to the Equity
Ownership Plan. All options granted on this date have an
exercise price equal to the closing price of Entergy Corporation
common stock on the New York Stock Exchange Composite
Transactions on January 30, 1997. These options became
exercisable on July 30, 1997.
(b) Calculation based on the market price of the underlying
securities assuming the market price increases over a ten-year
option period and assuming annual compounding. The column
presents estimates of potential values based on simple
mathematical assumptions. The actual value, if any, a Named
Executive Officer may realize is dependent upon the market price
on the date of option exercise.
Aggregated Option Exercises in 1997 and December 31, 1997 Option
Values
The following table summarizes the number and value of all
unexercised options held by the Named Executive Officers. The
absence, in the table below, of any Named Executive Officer indicates
that no options are held by such officer. In 1997, no options were
exercised by any Named Executive Officer.
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Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
as of December 31, 1997 as of December 31, 1997(a)
Name Exercisable Unexercisable Exercisable Unexercisable
Michael B. Bemis 20,000 25,000 $ 37,188 $ 226,563
Louis E. Buck, Jr. 2,500 - 8,594 -
Frank F. Gallaher 17,500 25,000 36,406 226,563
Donald C. Hintz 27,500 25,000 53,594 226,563
Jerry D. Jackson 24,411 25,000 20,841 226,563
Edwin Lupberger 58,824 50,000 107,308 453,125
Jerry L. Maulden 30,000 25,000 54,375 226,563
Gerald D. McInvale 20,000 25,000 37,188 226,563
William J. Regan, Jr. 2,500 2,000 8,594 12,875
Michael G. Thompson 17,500 - 36,406 -
</TABLE>
(a) Based on the difference between the closing price of Entergy
Corporation's common stock on the New York Stock Exchange
Composite Transactions on December 31, 1997, and the option
exercise price.
Pension Plan Tables
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
Retirement Income Plan Table
Annual
Covered Years of Service
Compensation 15 20 25 30 35
$100,000 $ 22,500 $ 30,000 $37,500 $45,000 $52,000
200,000 45,000 60,000 75,000 90,000 105,000
300,000 67,500 90,000 112,500 135,000 157,500
400,000 90,000 120,000 150,000 180,000 210,000
500,000 112,500 150,000 187,500 225,000 262,500
650,000 146,250 195,000 243,750 292,500 341,250
950,000 213,750 285,000 356,250 427,500 498,750
All of the Named Executive Officers participate in a Retirement
Income Plan, a defined benefit plan, that provides a benefit for
employees at retirement from Entergy based upon (1) generally all
years of service beginning at age 21 through termination, with a
forty-year maximum, multiplied by (2) 1.5%, multiplied by (3) the
final average compensation. Final average compensation is based on
the highest consecutive 60 months of covered compensation in the last
120 months of service. The normal form of benefit for a single
employee is a lifetime annuity and for a married employee is a 50%
joint and survivor annuity. Other actuarially equivalent options are
available to each retiree. Retirement benefits are not subject to any
deduction for Social Security or other offset amounts. The amount of
the Named Executive Officers' annual compensation covered by the plan
as of December 31, 1997, is represented by the salary column in the
Summary Compensation Table above.
The credited years of service under the Retirement Income Plan,
as of December 31, 1997, for the Named Executive Officers is as
follows: Mr. Bemis 15; Mr. Blount 13; Mr. Buck 2; Mr. Gallaher 28;
Mr. Maulden 32; and Mr. Regan 2. The credited years of service under
the respective Retirement Income Plan, as of December 31, 1997 for the
following Named Executive Officers, as a result of entering into
supplemental retirement agreements, is as follows: Mr. Hintz 26;
Mr. Jackson 18; Mr. Lupberger 34; Mr. McInvale 25; and Mr. Thompson
21.
The maximum benefit under the Retirement Income Plan is limited
by Sections 401 and 415 of the Internal Revenue Code of 1986, as
amended; however, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
have elected to participate in the Pension Equalization Plan sponsored
by Entergy Corporation. Under this plan, certain executives,
including the Named Executive Officers, would receive an additional
amount equal to the benefit that would have been payable under the
Retirement Income Plan, except for the Sections 401 and 415
limitations discussed above.
In addition to the Retirement Income Plan discussed above,
Entergy Arkansas, Louisiana, Mississippi, New Orleans, and System
Energy participate in the Supplemental Retirement Plan of Entergy
Corporation and Subsidiaries and the Post-Retirement Plan of Entergy
Corporation and Subsidiaries. Participation is limited to one of these
two plans and is at the invitation of Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy. The participant may receive from the appropriate Entergy
company a monthly benefit payment not in excess of .025 (under the
Supplemental Retirement Plan) or .0333 (under the Post-Retirement
Plan) times the participant's average basic annual salary (as defined
in the plans) for a maximum of 120 months. Mr. Hintz has entered into
a Supplemental Retirement Plan participation contract, and all of the
other Named Executive Officers, (except for Mr. Blount, Mr. Buck,
Mr. McInvale, Mr. Regan, and Mr. Thompson) have entered into Post-
Retirement Plan participation contracts. Current estimates indicate
that the annual payments to the Named Executive Officers under the
above plans would be less than the payments to that officer under the
System Executive Retirement Plan discussed below.
System Executive Retirement Plan Table (1)
Annual
Covered Years of Service
Compensation 15 20 25 30+
$ 200,000 $ 90,000 $100,000 $110,000 $120,000
300,000 135,000 150,000 165,000 180,000
400,000 180,000 200,000 220,000 240,000
500,000 225,000 250,000 275,000 300,000
600,000 270,000 300,000 330,000 360,000
700,000 315,000 350,000 385,000 420,000
1,000,000 450,000 500,000 550,000 600,000
___________
(1) Benefits shown are based on a target replacement ratio of 50%
based on the years of service and covered compensation shown. The
benefits for 10, 15, and 20 or more years of service at the 45%
and 55% replacement levels would decrease (in the case of 45%) or
increase (in the case of 55%) by the following percentages: 3.0%,
4.5%, and 5.0%, respectively.
In 1993, Entergy Corporation adopted the System Executive
Retirement Plan (SERP). Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy are participating employers in the SERP. The SERP is an
unfunded defined benefit plan offered at retirement to certain senior
executives, which would currently include all the Named Executive
Officers (except for Mr. Blount). Participating executives choose, at
retirement, between the retirement benefits paid under provisions of
the SERP or those payable under the Supplemental Retirement Plan or
the Post-Retirement Plan discussed above. Covered pay under the SERP
includes final annual base salary (see the Summary Compensation Table
above for the base salary covered by the SERP as of December 31, 1997)
plus the Target Incentive Award (i.e., a percentage of final annual
base salary) for the participant in effect at retirement. Benefits
paid under the SERP are calculated by multiplying the covered pay
times target pay replacement ratios (45%, 50%, or 55%, dependent on
job rating at retirement) that are attained, according to plan design,
at 20 years of credited service. The target ratios are increased by
1% for each year of service over 20 years, up to a maximum of 30 years
of service. In accordance with the SERP formula, the target ratios
are reduced for each year of service below 20 years. The credited
years of service under this plan are identical to the years of service
for Named Executive Officers (other than Mr. Bemis, Mr. Jackson, Mr.
McInvale, and Mr. Thompson) disclosed above in the section entitled
"Pension Plan Tables-Retirement Income Plan Table". Mr. Bemis, Mr.
Jackson, Mr. McInvale, and Mr. Thompson have 25 years, 24 years, 16
years, and 16 years, respectively, of credited service under this
plan.
The normal form of benefit for a single employee is a lifetime
annuity and for a married employee is a 50% joint and survivor
annuity. All SERP payments are guaranteed for ten years. Other
actuarially equivalent options are available to each retiree. SERP
benefits are offset by any and all defined benefit plan payments from
Entergy and from prior employers. SERP benefits are not subject to
Social Security offsets.
Eligibility for and receipt of benefits under any of the
executive plans described above are contingent upon several factors.
The participant must agree, without the specific consent of the
Entergy company for which such participant was last employed, not to
take employment after retirement with any entity that is in
competition with, or similar in nature to, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy or any affiliate thereof. Eligibility for
benefits is forfeitable for various reasons, including violation of an
agreement with Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy, resignation of employment, or termination of employment
without Company permission.
In addition to the Retirement Income Plan discussed above,
Entergy Gulf States provides, among other benefits to officers, an
Executive Income Security Plan for key managerial personnel. The plan
provides participants with certain retirement, disability,
termination, and survivors' benefits. To the extent that such
benefits are not funded by the employee benefit plans of Entergy Gulf
States or by vested benefits payable by the participants' former
employers, Entergy Gulf States is obligated to make supplemental
payments to participants or their survivors. The plan provides that
upon the death or disability of a participant during his employment,
he or his designated survivors will receive (i) during the first year
following his death or disability an amount not to exceed his annual
base salary, and (ii) thereafter for a number of years until the
participant attains or would have attained age 65, but not less than
nine years, an amount equal to one-half of the participant's annual
base salary. The plan also provides supplemental retirement benefits
for life for participants retiring after reaching age 65 equal to one-
half of the participant's average final compensation rate, with one-
half of such benefit upon the death of the participant being payable
to a surviving spouse for life.
Entergy Gulf States amended and restated the plan effective March
1, 1991, to provide such benefits for life upon termination of
employment of a participating officer or key managerial employee
without cause (as defined in the plan) or if the participant separates
from employment for good reason (as defined in the plan), with 1/2 of
such benefits to be payable to a surviving spouse for life. Further,
the plan was amended to provide medical benefits for a participant and
his family when the participant separates from service. These medical
benefits generally continue until the participant is eligible to
receive medical benefits from a subsequent employer; but in the case
of a participant who is over 50 at the time of separation and was
participating in the plan on March 1, 1991, medical benefits continue
for life. By virtue of the 1991 amendment and restatement, benefits
for a participant under such plan cannot be modified once he becomes
eligible to participate in the plan. None of the Named Executive
Officers are participants in this plan.
Compensation of Directors
For information regarding compensation of the directors of
Entergy Corporation, see the Proxy Statement under the heading
"Director Compensation", which information is incorporated herein by
reference. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, System Energy and Entergy
London currently have no non-employee directors, and none of the
current directors is compensated for his responsibilities as director.
Retired non-employee directors of Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans with a minimum
of five years of service on the respective Boards of Directors are
paid $200 a month for a term of years corresponding to the number of
years of active service as directors. Retired non-employee directors
with over ten years of service receive a lifetime benefit of $200 a
month. Years of service as an advisory director are included in
calculating this benefit. System Energy and Entergy London have no
retired non-employee directors.
Retired non-employee directors of Entergy Gulf States receive
retirement benefits under a plan in which all directors who served
continuously for a period of years will receive a percentage of their
retainer fee in effect at the time of their retirement for life. The
retirement benefit is 30 percent of the retainer fee for service of
not less than five nor more than nine years, 40 percent for service of
not less than ten nor more than fourteen years, and 50 percent for
fifteen or more years of service. For those directors who retired
prior to the retirement age, their benefits are reduced. The plan
also provides disability retirement and optional hospital and medical
coverage if the director has served at least five years prior to the
disability. The retired director pays one-third of the premium for
such optional hospital and medical coverage and Entergy Gulf States
pays the remaining two-thirds. Years of service as an advisory
director are included in calculating this benefit.
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements
Entergy Gulf States
As a result of the Merger, Entergy Gulf States is obligated to
pay benefits under the Executive Income Security Plan to those persons
who were participants at the time of the Merger and who later
terminated their employment under circumstances described in the plan.
For additional description of the benefits under the Executive Income
Security Plan, see the "Pension Plan Tables-System Executive
Retirement Plan Table" section noted above.
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy,
and Entergy London
In connection with the resignation of his position as Vice
Chairman, Mr. McInvale entered into a contract under which he will
provide services as required and remain as an employee of Entergy Services
through May 31, 2001, subject to certain terms and conditions, at a
monthly salary of approximately $33,300. In addition, such contract
provides for the continuation of benefits under Mr. McInvale's continued
participation in, or the providing of benefits comparable to those under,
Entergy's Savings Plan, Retirement Plan, Supplemental Credited Service
Agreement, System Executive Retirement Plan, Equity Ownership Plan,
Executive Medical Plan and the applicable portion of any awards under
the Executive Annual Incentive Plan and Long Term Incentive Program.
In the event of Mr. McInvale's death prior to May 31, 2001, his
surviving spouse or estate would receive a lump sum equal to the net
present value of all base salary payments due from the date of death
to May 31, 2001, together with the benefits lost, or the comparable
value.
Personnel Committee Interlocks and Insider Participation
The compensation of Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System
Energy and Entergy London executive officers was set by the Personnel
Committee of Entergy Corporation's Board of Directors, composed solely
of Directors of Entergy Corporation. No current or former officers or
employees of any Entergy company participated in deliberations
concerning compensation during 1997.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Entergy Corporation owns 100% of the outstanding common stock of
registrants Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, System Energy and Entergy
London. The information with respect to persons known by Entergy
Corporation to be beneficial owners of more than 5% of Entergy
Corporation's outstanding common stock is included under the heading
"Stockholders Who Own at Least Five Percent" in the Proxy Statement,
which information is incorporated herein by reference. The
registrants know of no contractual arrangements that may, at a
subsequent date, result in a change in control of any of the
registrants.
As of December 31, 1997, the directors, the Named Executive
Officers, and the directors and officers as a group for Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, System Energy and Entergy
London, respectively, beneficially owned directly or indirectly common
stock of Entergy Corporation as indicated:
Entergy Corporation
Common Stock
Amount and Nature of
Beneficial Ownership(a)
Sole Voting
and Other
Investment Beneficial
Name Power Ownership(b)
Entergy Corporation
W. Frank Blount* 5,034 -
John A. Cooper, Jr.* 7,534 -
Lucie J. Fjeldstad**** 3,984 -
Dr. Norman C. Francis* 1,200 -
Frank F. Gallaher** 19,641 17,500
Donald C. Hintz** 11,318 27,500
Jerry D. Jackson** 29,500 24,411
Robert v.d. Luft* 4,284 -
Edwin Lupberger*** 36,583 63,324 (c)
Jerry L. Maulden** 27,165 30,000
Gerald D. McInvale (d) 10,901 20,000
Adm. Kinnaird R. McKee* 3,067 -
Paul W. Murrill* 2,985 -
James R. Nichols* 6,065 -
Eugene H. Owen* 3,692 -
John N. Palmer, Sr.* 16,481 -
Robert D. Pugh* 8,300 6,500 (c)
Wm. Clifford Smith* 6,621 -
Bismark A. Steinhagen* 8,237 -
All directors and executive
officers 262,891 244,235
Entergy Arkansas
Frank F. Gallaher*** 19,641 17,500
Donald C. Hintz*** 11,318 27,500
Jerry D. Jackson*** 29,500 24,411
R. Drake Keith* 9,019 -
Edwin Lupberger*** 36,583 63,324 (c)
Jerry L. Maulden*** 27,165 30,000
Gerald D. McInvale (d) 10,901 20,000
All directors and executive
officers 198,064 205,235
Entergy Gulf States
John J. Cordaro * 5,369 -
Frank F. Gallaher*** 19,641 17,500
Donald C. Hintz*** 11,318 27,500
Jerry D. Jackson*** 29,500 24,411
Karen R. Johnson * 802 -
Edwin Lupberger*** 36,583 63,324 (c)
Jerry L. Maulden*** 27,165 30,000
Gerald D. McInvale (d) 10,901 20,000
All directors and executive
officers 192,465 205,235
Entergy Louisiana
John J. Cordaro* 5,369 -
Frank F. Gallaher*** 19,641 17,500
Donald C. Hintz*** 11,318 27,500
Jerry D. Jackson*** 29,500 24,411
Edwin Lupberger*** 36,583 63,324 (c)
Jerry L. Maulden*** 27,165 30,000
Gerald D. McInvale (d) 10,901 20,000
All directors and executive
officers 201,761 205,235
Entergy Mississippi
Frank F. Gallaher*** 19,641 17,500
Donald C. Hintz* 11,318 27,500
Jerry D. Jackson*** 29,500 24,411
Edwin Lupberger*** 36,583 63,324 (c)
Jerry L. Maulden*** 27,165 30,000
Gerald D. McInvale (d) 10,901 20,000
Donald E. Meiners* 10,521 -
Michael G. Thompson** 13,462 17,500
All directors and executive
officers 185,188 205,235
Entergy New Orleans
Frank F. Gallaher** 19,641 17,500
Jerry D. Jackson*** 29,500 24,411
Edwin Lupberger*** 36,583 63,324 (c)
Jerry L. Maulden*** 27,165 30,000
Gerald D. McInvale (d) 10,901 20,000
Daniel F. Packer *** 3,854 -
Michael G. Thompson** 13,462 17,500
All directors and executive
officers 168,482 177,735
System Energy
Joseph L. Blount** 3,535 -
Louis E. Buck, Jr.** 2,996 2,500
Donald C. Hintz*** 11,318 27,500
Edwin Lupberger*** 36,583 63,324 (c)
Jerry L. Maulden* 27,165 30,000
Gerald D. McInvale (d) 10,901 20,000
William J. Regan, Jr.** 2,908 2,500
All directors and executive
officers 95,406 145,824
Entergy London
Michael B. Bemis*** 24,646 20,000
Louis E. Buck, Jr.** 2,996 2,500
Edwin Lupberger*** 36,583 63,324 (c)
Gerald D. McInvale (d) 10,901 20,000
William J. Regan, Jr.** 2,908 2,500
Michael G. Thompson** 13,462 17,500
All directors and executive
officers 80,585 125,824
* Director of the respective Company
** Named Executive Officer of the respective Company
*** Director and Named Executive Officer of the respective Company
**** Mrs. Fjeldstad's term will expire at the Annual Meeting and she
is not standing for re-election.
(a) Based on information furnished by the respective individuals.
Except as noted, each individual has sole voting and investment
power. The amount owned by each individual and by all directors
and executive officers as a group does not exceed one percent of
the outstanding securities of any class of security so owned.
(b) Includes, for the Named Executive Officers, shares of Entergy
Corporation common stock in the form of unexercised stock options
awarded pursuant to the Equity Ownership Plan as follows: Louis
E. Buck, Jr., 2,500 shares; Michael B. Bemis, 20,000 shares;
Frank F. Gallaher, 17,500 shares; Donald C. Hintz, 27,500 shares;
Jerry D. Jackson, 24,411 shares; Edwin Lupberger, 58,824 shares;
Jerry L. Maulden, 30,000 shares; Gerald D. McInvale, 20,000
shares; William J. Regan, Jr., 2,500 shares; and Michael G.
Thompson, 17,500 shares.
(c) Includes, for the Named Executive Officers, shares of Entergy
Corporation common stock held by their spouses. The named
persons disclaim beneficial ownership in these shares as follows:
Edwin Lupberger, 2,500 shares; and Robert D. Pugh, 6,500 shares.
In addition, Edwin Lupberger owns 2,000 shares in joint tenancy
with his mother for which he disclaims beneficial ownership.
(d) Gerald D. McInvale is a former officer of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Energy, and Entergy
London.
Item 13. Certain Relationships and Related Transactions
During 1997, T. Baker Smith & Son, Inc. performed land surveying
services for, and received payments of approximately $81,000 from,
Entergy Louisiana, Inc. Mr. Wm. Clifford Smith, a director of Entergy
Corporation, is President of T. Baker Smith & Son, Inc. Mr. Smith's
children own 100% of the voting stock of T. Baker Smith & Son, Inc.
See Item 10, "Directors and Executive Officers of the
Registrants," for information on certain relationships and
transactions required to be reported under this item.
Other than as provided under applicable corporate laws, Entergy
does not have policies whereby transactions involving executive
officers and directors are approved by a majority of disinterested
directors. However, pursuant to the Entergy Corporation Code of
Conduct, transactions involving an Entergy company and its executive
officers must have prior approval by the next higher reporting level
of that individual, and transactions involving an Entergy company and
its directors must be reported to the secretary of the appropriate
Entergy company.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.
(a)1. Financial Statements and Independent Auditors' Reports for
Entergy, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, System
Energy, Entergy London, and London Electricity are listed in
the Index to Financial Statements (see pages 44 and 45)
(a)2. Financial Statement Schedules
Reports of Independent Accountants on Financial Statement
Schedules (see page 249)
Financial Statement Schedules are listed in the Index to
Financial Statement Schedules (see page S-1)
(a)3. Exhibits
Exhibits for Entergy, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
System Energy and Entergy London are listed in the Exhibit
Index (see page E-1). Each management contract or compensatory
plan or arrangement required to be filed as an exhibit hereto
is identified as such by footnote in the Exhibit Index.
(b) Reports on Form 8-K
Entergy Corporation
A current report on Form 8-K, dated September 23, 1997, was
filed with the SEC on October 1, 1997, reporting information
under Item 5. "Other Events".
Entergy Corporation, Entergy Arkansas, and Entergy Gulf States
A current report on Form 8-K, dated October 9, 1997, was filed
with the SEC on October 10, 1997, reporting information under
Item 5. "Other Events".
Entergy Corporation
A current report on Form 8-K, dated November 19, 1997, was
filed with the SEC on November 24, 1997, reporting information
under Item 5. "Other Information".
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, and
System Energy
A current report on Form 8-K, dated December 12, 1997, was
filed with the SEC on December 29, 1997, reporting information
under Item 5. "Other Information".
<PAGE>
ENTERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY CORPORATION
By /s/ Louis E. Buck
Louis E. Buck, Vice President,
Chief Accounting Officer and
Assistant Secretary
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Louis E. Buck
Louis E. Buck Vice President, Chief Accounting March 9, 1998
Officer and Assistant Secretary
(Principal Accounting Officer)
Edwin Lupberger (Chairman of the Board, Chief Executive
Officer and Director; Principal Executive Officer); W.
Frank Blount, John A. Cooper, Jr., Lucie J. Fjeldstad,
N. C. Francis, Robert v.d. Luft, Kinnaird R. McKee,
Paul W. Murrill, James R. Nichols, Eugene H. Owen, John
N. Palmer, Sr., Robert D. Pugh, Wm. Clifford Smith,
and Bismark A. Steinhagen (Directors).
By: /s/ Louis E. Buck March 9, 1998
(Louis E. Buck, Attorney-in-fact)
<PAGE>
ENTERGY ARKANSAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY ARKANSAS, INC.
By /s/ Louis E. Buck
Louis E. Buck, Vice President,
Chief Accounting Officer and
Assistant Secretary
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Louis E. Buck
Louis E. Buck Vice President, Chief Accounting March 9, 1998
Officer and Assistant Secretary
(Principal Accounting Officer)
Edwin Lupberger (Chairman of the Board, Chief Executive
Officer and Director; Principal Executive Officer); Frank
F. Gallaher, Donald C. Hintz, Jerry D. Jackson, R.
Drake Keith, and Jerry L. Maulden (Directors).
By: /s/ Louis E. Buck March 9, 1998
(Louis E. Buck, Attorney-in-fact)
<PAGE>
ENTERGY GULF STATES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY GULF STATES, INC.
By /s/ Louis E. Buck
Louis E. Buck, Vice President,
Chief Accounting Officer and
Assistant Secretary
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Louis E. Buck
Louis E. Buck Vice President, Chief Accounting March 9, 1998
Officer and Assistant Secretary
(Principal Accounting Officer)
Edwin Lupberger (Chairman of the Board, Chief Executive
Officer and Director; Principal Executive Officer); John
J. Cordaro, Frank F. Gallaher, Donald C. Hintz, Jerry D.
Jackson, Karen R. Johnson, and Jerry L. Maulden
(Directors).
By: /s/ Louis E. Buck March 9, 1998
(Louis E. Buck, Attorney-in-fact)
<PAGE>
ENTERGY LOUISIANA, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY LOUISIANA, INC.
By /s/ Louis E. Buck
Louis E. Buck, Vice President,
Chief Accounting Officer and
Assistant Secretary
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Louis E. Buck
Louis E. Buck Vice President, Chief Accounting March 9, 1998
Officer and Assistant Secretary
(Principal Accounting Officer)
Edwin Lupberger (Chairman of the Board, Chief Executive
Officer and Director; Principal Executive Officer); John
J. Cordaro, Frank F. Gallaher, Donald C. Hintz, Jerry D.
Jackson, and Jerry L. Maulden (Directors).
By: /s/ Louis E. Buck March 9, 1998
(Louis E. Buck, Attorney-in-fact)
<PAGE>
ENTERGY MISSISSIPPI, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY MISSISSIPPI, INC.
By /s/ Louis E. Buck
Louis E. Buck, Vice President,
Chief Accounting Officer and
Assistant Secretary
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Louis E. Buck
Louis E. Buck Vice President, Chief Accounting March 9, 1998
Officer and Assistant Secretary
(Principal Accounting Officer)
Edwin Lupberger (Chairman of the Board, Chief Executive
Officer and Director; Principal Executive Officer); Frank
F. Gallaher, Donald C. Hintz, Jerry D. Jackson, Jerry L.
Maulden, and Donald E. Meiners (Directors).
By:/s/ Louis E. Buck March 9, 1998
(Louis E. Buck, Attorney-in-fact)
<PAGE>
ENTERGY NEW ORLEANS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY NEW ORLEANS, INC.
By /s/ Louis E. Buck
Louis E. Buck, Vice President,
Chief Accounting Officer and
Assistant Secretary
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Louis E. Buck
Louis E. Buck Vice President, Chief Accounting March 9, 1998
Officer and Assistant Secretary
(Principal Accounting Officer)
Edwin Lupberger (Chairman of the Board, Chief Executive
Officer and Director; Principal Executive Officer); Jerry
D. Jackson, Jerry L. Maulden, and Daniel F. Packer
(Directors).
By: /s/ Louis E. Buck March 9, 1998
(Louis E. Buck, Attorney-in-fact)
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
SYSTEM ENERGY RESOURCES, INC.
By /s/ Louis E. Buck
Louis E. Buck, Vice President,
Chief Accounting Officer and
Assistant Secretary
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Louis E. Buck
Louis E. Buck Vice President, Chief Accounting March 9, 1998
Officer and Assistant Secretary
(Principal Accounting Officer)
Donald C. Hintz (President, Chief Executive Officer and
Director; Principal Executive Officer); Edwin Lupberger
(Chairman of the Board), and Jerry L. Maulden
(Directors).
By: /s/ Louis E. Buck March 9, 1998
(Louis E. Buck, Attorney-in-fact)
<PAGE>
ENTERGY LONDON INVESTMENTS PLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY LONDON INVESTMENTS PLC
By /s/ Louis E. Buck
Louis E. Buck, Audit Controller
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Louis E. Buck
Louis E. Buck Audit Controller March 9, 1998
(Principal Accounting Officer)
Edwin Lupberger (Chairman of the Board, Chief Executive
Officer and Director; Principal Executive Officer);
Michael B. Bemis (Director).
By: /s/ Louis E. Buck March 9, 1998
(Louis E. Buck, Attorney-in-fact)
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective
Amendment Nos. 2, 3, 4A, and 5A on Form S-8 and the related
Prospectuses to the registration statement of Entergy Corporation on
Form S-4 (File Number 33-54298) and on Form S-3 (File Numbers 333-02503
and 333-22007) of our reports dated March 4, 1998, on our audits of the
consolidated financial statements and financial statement schedules of
Entergy Corporation as of December 31, 1997 and 1996, and for each of
the three years in the period ended December 31, 1997, which reports
include an explanatory paragraph related to changes in accounting
methods for the impairment of long-lived assets and for long-lived
assets to be disposed of and incremental nuclear plant outage
maintenance costs by one of the Corporation's subsidiaries and are
included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy Arkansas, Inc.
(formerly Arkansas Power & Light Company) on Form S-3 (File Numbers
33-50289, 333-00103 and 333-05045) of our reports dated March 4, 1998,
on our audits of the financial statements and financial statement
schedule of Entergy Arkansas, Inc. as of December 31, 1997 and 1996,
and for each of the three years in the period ended December 31, 1997,
which are included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy Gulf States, Inc.
(formerly Gulf States Utilities Company) on Form S-3 (File Numbers 33-
49739 and 33-51181), Form S-8 (File Numbers 2-76551 and 2-98011) and on
Form S-2 (File Number 333-17911), of our reports dated March 4, 1998,
on our audits of the financial statements and financial statement
schedule of Entergy Gulf States, Inc. as of December 31, 1997 and 1996,
and for each of the three years in the period ended December 31, 1997,
which reports include an explanatory paragraph related to a change in
accounting for the impairment of long-lived assets and long-lived
assets to be disposed of and are included in this Annual Report on Form
10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy Louisiana, Inc.
(formerly Louisiana Power & Light Company) on Form S-3 (File Numbers 33-
46085, 33-39221, 33-50937, 333-00105, 333-01329 and 333-03567) of our
reports dated March 4, 1998, on our audits of the financial statements
and financial statement schedule of Entergy Louisiana, Inc. as of
December 31, 1997 and 1996, and for each of the three years in the
period ended December 31, 1997, which are included in this Annual
Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy Mississippi, Inc.
(formerly Mississippi Power & Light Company) on Form S-3 (File Numbers
33-53004, 33-55826 and 33-50507) of our reports dated March 4, 1998,
on our audits of the financial statements and financial statement
schedule of Entergy Mississippi, Inc. as of December 31, 1997 and 1996,
and for each of the three years in the period ended December 31, 1997,
which are included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy New Orleans, Inc.
(formerly New Orleans Public Service Inc.) on Form S-3 (File Numbers 33-
57926 and 333-00255) of our reports dated March 4, 1998, on our audits
of the financial statements and financial statement schedule of Entergy
New Orleans, Inc. as of December 31, 1997 and 1996, and for each of
the three years in the period ended December 31, 1997, which are
included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of System Energy Resources,
Inc. on Form S-3 (File Numbers 33-47662, 33-61189 and 333-06717) of our
report dated March 4, 1998, on our audits of the financial statements
of System Energy Resources, Inc. as of December 31, 1997 and 1996, and
for each of the three years in the period ended December 31, 1997,
which report includes an explanatory paragraph related to the Company's
1996 change in its method of accounting for incremental nuclear
plant outage maintenance costs and is included in this Annual Report
on Form 10-K.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 9, 1998
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders
of Entergy Corporation
We have audited the consolidated financial statements of Entergy
Corporation and Subsidiaries and the financial statements of Entergy
Arkansas, Inc. (formerly Arkansas Power & Light Company), Entergy Gulf
States, Inc. (formerly Gulf States Utilities Company), Entergy
Louisiana, Inc. (formerly Louisiana Power & Light Company), Entergy
Mississippi, Inc. (formerly Mississippi Power & Light Company) and
Entergy New Orleans, Inc. (formerly New Orleans Public Service Inc.)
as of December 31, 1997 and 1996, and for each of the three years in
the period ended December 31, 1997, and the consolidated financial
statements of Entergy London Investments plc and Subsidiary as of
December 31, 1997 and for the year then ended, and have issued our
reports thereon dated March 4, 1998, and have audited the consolidated
financial statements of London Electricity plc as of March 31, 1996
and for the period from April 1, 1996 to January 31, 1997 and the year
ended March 31, 1996, and have issued our report thereon dated July 31,
1997, which reports are included elsewhere in this Form 10-K, which
reports as to Entergy Corporation and Entergy Gulf States, Inc.
include an explanatory paragraph related to a change in accounting for
the impairment of long-lived assets and long-lived assets to be
disposed of, and which reports as to Entergy Corporation and System
Energy Resources, Inc. include an explanatory paragraph related to
changes in accounting for incremental nuclear plant outage maintenance
expenses. In connection with our audits of such financial statements,
we have also audited the related financial statement schedules
included in Item 14(a)2 of this Form 10-K.
In our opinion the financial statement schedules referred to
above, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
March 4, 1998
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule Page
I Financial Statements of Entergy Corporation:
Statements of Income - For the Years Ended December 31, 1997,
1996, and 1995 S-2
Statements of Cash Flows - For the Years Ended December 31, 1997,
1996, and 1995 S-3
Balance Sheets, December 31, 1997 and 1996 S-4
Statements of Retained Earnings and Paid-In Capital - For the
Years Ended December 31, 1997, 1996, and 1995 S-5
II Valuation and Qualifying Accounts
1997, 1996 and 1995:
Entergy Corporation and Subsidiaries S-6
Entergy Arkansas, Inc. S-7
Entergy Gulf States, Inc. S-8
Entergy Louisiana, Inc. S-9
Entergy Mississippi, Inc. S-10
Entergy New Orleans, Inc.. S-11
Entergy London Investments plc S-12
London Electricity plc S-13
Schedules other than those listed above are omitted because they
are not required, not applicable or the required information is shown
in the financial statements or notes thereto.
Columns have been omitted from schedules filed because the
information is not applicable.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION
SCHEDULE I-FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF INCOME
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Income:
Equity in income of subsidiaries $325,419 $459,350 $549,144
Interest on temporary investments 5,086 4,840 20,641
-------- -------- --------
Total 330,505 464,190 569,785
-------- -------- --------
Expenses and Other Deductions:
Administrative and general expenses 62,250 34,402 53,872
Income taxes (credit) 3,438 (1,558) (5,383)
Taxes other than income 1,226 828 1,102
Interest 15,908 10,491 214
-------- -------- --------
Total 82,822 44,163 49,805
-------- -------- --------
Net Income $247,683 $420,027 $519,980
======== ======== ========
See Entergy Corporation and Subsidiaries Notes to Financial
Statements in Part II, Item 8.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $247,683 $420,027 $519,980
Noncash items included in net income:
Equity in earnings of subsidiaries (325,419) (459,350) (549,144)
Deferred income taxes 898 8,499 (2,024)
Depreciation 1,442 1,628 1,421
Changes in working capital:
Receivables (8,683) 3,232 2,161
Payables (3,690) 9,919 (3,776)
Other working capital accounts (400) (1,170) (1,701)
Common stock dividends received from subsidiaries 550,200 554,200 565,589
Other 43,479 (3,524) 8,652
-------- -------- --------
Net cash flow provided by operating activities 505,510 533,461 541,158
-------- -------- --------
Investing Activities:
Investment in subsidiaries (633,449) (266,681) (477,709)
Capital expenditures (23,079) - -
Advance to subsidiary - - 221,540
-------- -------- --------
Net cash flow used in investing activities (656,528) (266,681) (256,169)
-------- -------- --------
Financing Activities:
Changes in short-term borrowings 166,000 20,000 -
Common stock dividends paid (438,183) (405,346) (408,553)
Issuance of common stock 305,379 118,087 -
-------- -------- --------
Net cash flow provided by (used in) financing activities 33,196 (267,259) (408,553)
-------- -------- --------
Net decrease in cash and cash equivalents (117,822) (479) (123,564)
Cash and cash equivalents at beginning of period 128,665 129,144 252,708
-------- -------- --------
Cash and cash equivalents at end of period $10,843 $128,665 $129,144
======== ======== ========
See Entergy Corporation and Subsidiaries Notes to Financial Statements
in Part II, Item 8.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
BALANCE SHEETS
December 31,
1997 1996
(In Thousands)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $ - $23
Temporary cash investments - at cost,
which approximates market:
Associated companies 2,947 57,986
Other 7,896 70,656
---------- ----------
Total cash and cash equivalents 10,843 128,665
Accounts receivable:
Associated companies 14,700 5,940
Interest receivable 301 378
Other 20,345 20,389
---------- ----------
Total 46,189 155,372
---------- ----------
Investment in Wholly-owned Subsidiaries 6,832,590 6,531,729
---------- ----------
Deferred Debits and Other Assets 89,315 74,891
---------- ----------
Total $6,968,094 $6,761,992
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $186,000 $20,000
Accounts payable:
Associated companies 4,331 11,613
Other 1,884 22
Interest accrued 1,918 188
Other current liabilities 8,827 15,638
---------- ----------
Total 202,960 47,461
---------- ----------
Deferred Credits and Noncurrent Liabilities 71,618 73,616
---------- ----------
Shareholders' Equity:
Common stock, $.01 par value, authorized
500,000,000 shares; issued 246,149,198 shares
in 1997 and 234,456,457 shares in 1996 2,461 2,345
Paid-in capital 4,613,572 4,320,591
Retained earnings 2,157,912 2,341,703
Cumulative foreign currency translation adjustment (69,817) 21,725
Less cost of treasury stock (306,852 shares in
1997 and 1,496,118 shares in 1996) 10,612 45,449
---------- ----------
Total common shareholders' equity 6,693,516 6,640,915
---------- ----------
Total $6,968,094 $6,761,992
========== ==========
See Entergy Corporation and Subsidiaries Notes to Financial Statements
in Part II, Item 8.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF RETAINED EARNINGS AND PAID-IN CAPITAL
For the Years Ended
December 31,
1997 1996 1995
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $2,341,703 $2,335,579 $2,223,739
Add:
Net income 247,683 420,027 519,980
Deduct:
Dividends declared on common stock 432,268 412,250 409,801
Capital stock and other expenses (794) 1,653 (1,661)
---------- ---------- ----------
Total 431,474 413,903 408,140
---------- ---------- ----------
Retained Earnings, December 31 $2,157,912 $2,341,703 $2,335,579
========== ========== ==========
Paid-in Capital, January 1 $4,320,591 $4,201,483 $4,202,134
Add:
Gain (loss) on reacquisition of
subsidiaries' preferred stock 273 1,795 (26)
Common stock issuances related to stock plans 292,870 117,560 (3,002)
---------- ---------- ----------
Total 293,143 119,355 (3,028)
---------- ---------- ----------
Deduct:
Capital stock discounts and other expenses 162 247 (2,377)
---------- ---------- ----------
Paid-in Capital, December 31 $4,613,572 $4,320,591 $4,201,483
========== ========== ==========
See Entergy Corporation and Subsidiaries Notes to Consolidated Financial
Statements in Part II, Item 8.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1996, and 1995
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Balance Deductions
at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $7,822 $12,926 $14,359 $6,389
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $35,026 $24,128 $35,732 $23,422
Injuries and damages (Note 2) 26,145 20,294 19,955 26,484
Environmental 37,719 5,993 7,344 36,368
------- ------- ------- -------
Total $98,890 $50,415 $63,031 $86,274
======= ======= ======= =======
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $7,109 $18,403 $17,690 $7,822
Other 12,337 - 12,337 -
------- ------- ------- -------
Total $19,446 $18,403 $30,027 $7,822
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $36,733 $26,136 $27,843 $35,026
Injuries and damages (Note 2) 19,981 23,373 17,209 26,145
Environmental 40,262 2,599 5,142 37,719
------- ------- ------- -------
Total $96,976 $52,108 $50,194 $98,890
======= ======= ======= =======
Year ended December 31, 1995
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $6,740 $14,586 $14,217 $7,109
Other - 12,337 - 12,337
------- ------- ------- -------
Total $6,740 $26,923 $14,217 $19,446
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $32,871 $16,263 $12,401 $36,733
Injuries and damages (Note 2) 22,066 11,667 13,752 19,981
Environmental 42,739 7,639 10,116 40,262
------- ------- ------- -------
Total $97,676 $35,569 $36,269 $96,976
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1996, and 1995
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $2,326 $3,140 $3,667 $1,799
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $14 $11,613 $10,769 $858
Injuries and damages (Note 2) 2,810 3,538 1,550 4,798
Environmental 5,163 1,320 1,730 4,753
------- ------- ------- -------
Total $7,987 $16,471 $14,049 $10,409
======= ======= ======= =======
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $2,058 $5,341 $5,073 $2,326
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $900 $8,808 $9,694 $14
Injuries and damages (Note 2) 1,810 2,980 1,980 2,810
Environmental 6,514 1,320 2,671 5,163
------- ------- ------- -------
Total $9,224 $13,108 $14,345 $7,987
======= ======= ======= =======
Year ended December 31, 1995
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,950 $3,997 $3,889 $2,058
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $1,916 $4,810 $5,826 $900
Injuries and damages (Note 2) 2,660 710 1,560 1,810
Environmental 5,350 4,435 3,271 6,514
------- ------- ------- -------
Total $9,926 $9,955 $10,657 $9,224
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1996, and 1995
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,997 $3,695 $3,901 $1,791
======= ======= ======= =======
Accumulated Provisions
Not Deducted from Assets--
Property insurance $17,003 $5,584 $18,270 $4,317
Injuries and damages (Note 2) 9,594 5,479 9,734 5,339
Environmental 21,829 3,746 1,786 23,789
------- ------- ------- -------
Total $48,426 $14,809 $29,790 $33,445
======= ======= ======= =======
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,608 $4,709 $4,320 $1,997
======= ======= ======= =======
Accumulated Provisions
Not Deducted from Assets--
Property insurance $14,141 $5,899 $3,037 $17,003
Injuries and damages (Note 2) 5,199 7,955 3,560 9,594
Environmental 21,864 365 400 21,829
------- ------- ------- -------
Total $41,204 $14,219 $6,997 $48,426
======= ======= ======= =======
Year ended December 31, 1995
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $715 $3,715 $2,822 $1,608
======= ======= ======= =======
Accumulated Provisions
Not Deducted from Assets--
Property insurance $10,451 $6,396 $2,706 $14,141
Injuries and damages (Note 2) 6,922 6,243 7,966 5,199
Environmental 20,314 2,483 933 21,864
------- ------- ------- -------
Total $37,687 $15,122 $11,605 $41,204
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1996, and 1995
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,429 $2,542 $2,814 $1,157
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $261 $5,411 $5,091 $581
Injuries and damages (Note 2) 9,443 5,080 4,579 9,944
Environmental 9,979 495 2,875 7,599
------- ------- ------- -------
Total $19,683 $10,986 $12,545 $18,124
======= ======= ======= =======
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,390 $3,241 $3,202 $1,429
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $1,013 $4,583 $5,335 $261
Injuries and damages (Note 2) 8,414 10,646 9,617 9,443
Environmental 11,379 495 1,895 9,979
------- ------- ------- -------
Total $20,806 $15,724 $16,847 $19,683
======= ======= ======= =======
Year ended December 31, 1995
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,175 $2,450 $2,235 $1,390
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $814 $3,537 $3,338 $1,013
Injuries and damages (Note 2) 7,350 4,486 3,422 8,414
Environmental 16,394 (89) 4,926 11,379
------- ------- ------- -------
Total $24,558 $7,934 $11,686 $20,806
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1996, and 1995
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,374 $1,950 $2,393 $931
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $2,082 $1,520 $1,423 $2,179
Injuries and damages (Note 2) 2,905 4,055 2,298 4,662
Environmental 693 330 796 227
------- ------- ------- -------
Total $5,680 $5,905 $4,517 $7,068
======= ======= ======= =======
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,585 $2,996 $3,207 $1,374
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $5,013 $6,846 $9,777 $2,082
Injuries and damages (Note 2) 2,565 928 588 2,905
Environmental 467 330 104 693
------- ------- ------- -------
Total $8,045 $8,104 $10,469 $5,680
======= ======= ======= =======
Year ended December 31, 1995
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $2,070 $1,691 $2,176 $1,585
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $3,779 $1,520 $286 $5,013
Injuries and damages (Note 2) 3,725 (1,154) 6 2,565
Environmental 684 735 952 467
------- ------- ------- -------
Total $8,188 $1,101 $1,244 $8,045
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current
expenses as appropriate and for the estimated cost of settling claims
for injuries and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1996, and 1995
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $696 $1,599 $1,584 $711
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $15,666 - $179 $15,487
Injuries and damages (Note 2) 1,393 $2,142 1,794 1,741
Environmental 55 102 157 -
------- ------- ------- -------
Total $17,114 $2,244 $2,130 $17,228
======= ======= ======= =======
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $468 $2,116 $1,888 $696
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $15,666 - - $15,666
Injuries and damages (Note 2) 1,993 $864 $1,464 1,393
Environmental 38 89 72 55
------- ------- ------- -------
Total $17,697 $953 $1,536 $17,114
======= ======= ======= =======
Year ended December 31, 1995
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $830 $2,733 $3,095 $468
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $15,911 - $245 $15,666
Injuries and damages (Note 2) 1,409 $1,382 798 1,993
Environmental (3) 75 34 38
------- ------- ------- -------
Total $17,317 $1,457 $1,077 $17,697
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Twelve Months Ended December 31, 1997
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $17,465 $5,300 $ 865 $21,900
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $18,747 $3,300 $ 7,247 $14,800
======= ======= ======= =======
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LONDON ELECTRICITY PLC
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Period from April 1, 1996 to January 31, 1997 and
for the Year Ended March 31, 1996
(In Thousands)
Column A Column B Column C Column D Column E
Additions
Deductions
Balance at from Balance
Beginning Charged to Other Provisions at End
Description of Period Income Changes (Note 1) of Period
<S> <C> <C> <C> <C> <C>
Period ended January 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $13,285 $10,124 $700 $6,644 $17,465
======= ======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Insurance (2) $24,432 $2,373 $1,116 $9,174 $18,747
======= ======= ======= ======= =======
Period ended March 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $13,783 $1,096 $(811) $783 $13,285
======= ======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Insurance (2) $26,430 $470 $(1,528) $940 $24,432
======= ======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Represents the deductible portion of casualty losses to be incurred
before third party reimbursement begins for injuries and damages.
</TABLE>
<PAGE>
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the
exhibit number are filed herewith. The balance of the exhibits
have heretofore been filed with the SEC, respectively, as the
exhibits and in the file numbers indicated and are incorporated
herein by reference. The exhibits marked with a (+) are
management contracts or compensatory plans or arrangements
required to be filed herewith and required to be identified as
such by Item 14 of Form 10-K. Reference is made to a duplicate
list of exhibits being filed as a part of this Form 10-K, which
list, prepared in accordance with Item 102 of Regulation S-T of
the SEC, immediately precedes the exhibits being physically filed
with this Form 10-K.
(3) (i) Articles of Incorporation
Entergy Corporation
(a) 1 -- Certificate of Incorporation of Entergy
Corporation dated December 31, 1993, (A-1(a) to Rule 24
Certificate in 70-8059).
System Energy
(b) 1 -- Amended and Restated Articles of Incorporation of
System Energy and amendments thereto through April 28,
1989 (A-1(a) to Form U-1 in 70-5399).
Entergy Arkansas
(c) 1 -- Amended and Restated Articles of Incorporation of
Entergy Arkansas and amendments thereto through April 22,
1996 (3(a) to Form 10-Q for the quarter ended March 31,
1996 in 1-10764).
Entergy Gulf States
(d) 1 -- Restated Articles of Incorporation of Entergy Gulf
States and amendments thereto through April 22, 1996
(3(b) to Form 10-Q for the quarter ended March 31, 1996
in 1-2703).
Entergy Louisiana
(e) 1 -- Restated Articles of Incorporation of Entergy
Louisiana and amendments thereto through April 22, 1996
(3(c) to Form 10-Q for the quarter ended March 31, 1996
in 1-8474).
Entergy Mississippi
*(f) 1 -- Restated Articles of Incorporation of Entergy
Mississippi and amendments thereto through November 17,
1997
Entergy New Orleans
(g) 1 -- Restatement of Articles of Incorporation of
Entergy New Orleans and amendments thereto through April
22, 1996 (3(e) to Form 10-Q for the quarter ended March
31, 1996 in 0-5807).
Entergy London
(h) 1 -- Memorandum and Articles of Association of the
Company and amendments thereto through September 1, 1997
(4.01 in 333-33331 dated October 1, 1997).
(3) (ii) By-Laws
(a) -- By-Laws of Entergy Corporation effective August
25, 1992, and as presently in effect (A-2(a) to Rule 24
Certificate in 70-8059).
(b) -- By-Laws of System Energy effective May 4, 1989,
and as presently in effect (A-2(a) in 70-5399).
(c) -- By-Laws of Entergy Arkansas as amended effective
May 5, 1994, and as presently in effect (3(d) to Form 10-
Q for the quarter ended June 30, 1994).
(d) -- By-Laws of Entergy Gulf States as amended
effective May 5, 1994, and as presently in effect (A-12
in 70-8059).
(e) -- By-Laws of Entergy Louisiana effective January 23,
1984, and as presently in effect (A-4 in 70-6962).
(f) -- By-Laws of Entergy Mississippi as amended
effective April 5, 1995, and as presently in effect
(3(ii)(f) to Form 10-K for the year ended December 31,
1995 in 0-320).
(g) -- By-Laws of Entergy New Orleans effective May 5,
1994, and as presently in effect (3(g) to Form 10-Q for
the quarter ended June 30, 1994 in 0-5807).
(4) Instruments Defining Rights of Security Holders,
Including Indentures
Entergy Corporation
(a) 1 -- See (4)(b) through (4)(g) below for instruments
defining the rights of holders of long-term debt of
System Energy, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi and Entergy New
Orleans.
(a) 2 --Share Sale Agreement (Revised) of December 12, 1995,
relating to acquisition of CitiPower Limited, among State
Electricity Commission of Victoria, the State of
Victoria, Entergy Victoria LDC, Entergy Victoria Holding
LDC and Entergy Corporation (filed as Exhibit C-1(o) to
Form U5S for the year ended December 31, 1995 pursuant to
Rule 104).
(a) 3 -- Multi-Option Syndicated Facility Agreement, dated
as of January 5, 1996, among CitiPower Limited as
Borrower, Commonwealth Bank of Australia as Facility
Agent, Bank of America N.T. & S.A. as Arranger, and
Commonwealth Bank of Australia as Security Trustee (filed
as Exhibit C-1(p) to Form U5S for the year ended December
31, 1995).
(a) 4 -- Undertaking Agreement, dated as of March 7, 1996,
of Entergy Corporation to Commonwealth Bank of Australia
as Facility-Agent, of CitiPower Limited's obligations up
to maximum of $7,367,000 under the Multi-Option
Syndicated Facility Agreement (filed as Exhibit C-1(q) to
Form U5S for the year ended December 31, 1995).
(a) 5 -- Credit Agreement, dated as of September 13, 1996,
among Entergy Corporation, Entergy Technology Holding
Company, the Banks (The Bank of New York, Bank of America
NT & SA, The Bank of Nova Scotia, Banque Nationale de
Paris (Houston Agency), The First National Bank of
Chicago, The Fuji Bank Ltd., Societe Generale Southwest
Agency, and CIBC Inc.) and The Bank of New York, as Agent
(the "Entergy-ETHC Credit Agreement") (filed as Exhibit
4(a)12 to Form 10-K for the year ended December 31, 1996
in 1-11299).
(a) 6 -- Amendment No. 1, dated as of October 22, 1996 to
Credit Agreement Entergy-ETHC Credit Agreement (filed as
Exhibit 4(a)13 to Form 10-K for the year ended December
31, 1996 in 1-11299).
(a) 7 -- Guaranty and Acknowledgment Agreement, dated as of
October 3, 1996, by Entergy Corporation to The Bank of
New York of certain promissory notes issued by ETHC in
connection with acquisition of 280 Equity Holdings, Ltd
(filed as Exhibit 4(a)14 to Form 10-K for the year ended
December 31, 1996 in 1-11299).
(a) 8 -- Amendment, dated as of November 21, 1996, to
Guaranty and Acknowledgment Agreement by Entergy
Corporation to The Bank of New York of certain promissory
notes issued by ETHC in connection with acquisition of
280 Equity Holdings, Ltd (filed as Exhibit 4(a)15 to Form
10-K for the year ended December 31, 1996 in 1-11299).
(a) 9 -- Guaranty and Acknowledgment Agreement, dated as of
November 21, 1996, by Entergy Corporation to The Bank of
New York of certain promissory notes issued by ETHC in
connection with acquisition of Sentry (filed as Exhibit
4(a)16 to Form 10-K for the year ended December 31, 1996
in 1-11299).
(a) 10-- Amended and Restated Credit Agreement, dated as of
December 12, 1996, among Entergy, the Banks (Bank of
America National Trust & Savings Association, The Bank of
New York, The Chase Manhattan Bank, Citibank, N.A., Union
Bank of Switzerland, ABN Amro Bank N.V., The Bank of Nova
Scotia, Canadian Imperial Bank of Commerce, Mellon Bank,
N.A., First National Bank of Commerce and Whitney
National Bank) and Citibank, N.A., as Agent (filed as
Exhibit 4(a)17 to Form 10-K for the year ended December
31, 1996 in 1-11299).
System Energy
(b) 1 -- Mortgage and Deed of Trust, dated as of June 15,
1977, as amended by twenty-one Supplemental Indentures
(A-1 in 70-5890 (Mortgage); B and C to Rule 24
Certificate in 70-5890 (First); B to Rule 24 Certificate
in 70-6259 (Second); 20(a)-5 to Form 10-Q for the quarter
ended June 30, 1981, in 1-3517 (Third); A-1(e)-1 to
Rule 24 Certificate in 70-6985 (Fourth); B to Rule 24
Certificate in 70-7021 (Fifth); B to Rule 24 Certificate
in 70-7021 (Sixth); A-3(b) to Rule 24 Certificate in
70-7026 (Seventh); A-3(b) to Rule 24 Certificate in
70-7158 (Eighth); B to Rule 24 Certificate in 70-7123
(Ninth); B-1 to Rule 24 Certificate in 70-7272 (Tenth);
B-2 to Rule 24 Certificate in 70-7272 (Eleventh); B-3 to
Rule 24 Certificate in 70-7272 (Twelfth); B-1 to Rule 24
Certificate in 70-7382 (Thirteenth); B-2 to Rule 24
Certificate in 70-7382 (Fourteenth); A-2(c) to Rule 24
Certificate in 70-7946 (Fifteenth); A-2(c) to Rule 24
Certificate in 70-7946 (Sixteenth); A-2(d) to Rule 24
Certificate in 70-7946 (Seventeenth); A-2(e) to Rule 24
Certificate dated May 4, 1993 in 70-7946 (Eighteenth); A-
2(g) to Rule 24 Certificate dated May 6, 1994, in 70-7946
(Nineteenth); A-2(a)(1) to Rule 24 Certificate dated
August 8, 1996 in File No. 70-8511 (Twentieth); and A-
2(a)(2) to Rule 24 Certificate dated August 8, 1996 in
File No. 70-8511 (Twenty-first)).
(b) 2 -- Facility Lease No. 1, dated as of December 1,
1988, between Meridian Trust Company and Stephen M. Carta
(Steven Kaba, successor), as Owner Trustees, and System
Energy (B-2(c)(1) to Rule 24 Certificate dated January 9,
1989 in 70-7561), as supplemented by Lease Supplement No.
1 dated as of April 1, 1989 (B-22(b) (1) to Rule 24
Certificate dated April 21, 1989 in 70-7561) and Lease
Supplement No. 2 dated as of January 1, 1994 (B-3(d) to
Rule 24 Certificate dated January 31, 1994 in 70-8215).
(b) 3 -- Facility Lease No. 2, dated as of December 1, 1988
between Meridian Trust Company and Stephen M. Carta
(Steven Kaba, successor), as Owner Trustees, and System
Energy (B-2(c)(2) to Rule 24 Certificate dated January 9,
1989 in 70-7561), as supplemented by Lease Supplement No.
1 dated as of April 1, 1989 (B-22(b) (2) to Rule 24
Certificate dated April 21, 1989 in 70-7561) and Lease
Supplement No. 2 dated as of January 1, 1994 (B-4(d) Rule
24 Certificate dated January 31, 1994 in 70-8215).
(b) 4 -- Indenture (for Unsecured Debt Securities), dated
as of September 1, 1995, between System Energy Resources,
Inc., and Chemical Bank (B-10(a) to Rule 24 Certificate
in 70-8511).
Entergy Arkansas
(c) 1 -- Mortgage and Deed of Trust, dated as of
October 1, 1944, as amended by fifty-fourth Supplemental
Indentures (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121
(First); 7(c) in 2-7605 (Second); 7(d) in 2-8100 (Third);
7(a)-4 in 2-8482 (Fourth); 7(a)-5 in 2-9149 (Fifth);
4(a)-6 in 2-9789 (Sixth); 4(a)-7 in 2-10261 (Seventh);
4(a)-8 in 2-11043 (Eighth); 2(b)-9 in 2-11468 (Ninth);
2(b)-10 in 2-15767 (Tenth); D in 70-3952 (Eleventh); D in
70-4099 (Twelfth); 4(d) in 2-23185 (Thirteenth); 2(c) in
2-24414 (Fourteenth); 2(c) in 2-25913 (Fifteenth); 2(c)
in 2-28869 (Sixteenth); 2(d) in 2-28869 (Seventeenth);
2(c) in 2-35107 (Eighteenth); 2(d) in 2-36646
(Nineteenth); 2(c) in 2-39253 (Twentieth); 2(c) in
2-41080 (Twenty-first); C-1 to Rule 24 Certificate in
70-5151 (Twenty-second); C-1 to Rule 24 Certificate in
70-5257 (Twenty-third); C to Rule 24 Certificate in
70-5343 (Twenty-fourth); C-1 to Rule 24 Certificate in
70-5404 (Twenty-fifth); C to Rule 24 Certificate in
70-5502 (Twenty-sixth); C-1 to Rule 24 Certificate in
70-5556 (Twenty-seventh); C-1 to Rule 24 Certificate in
70-5693 (Twenty-eighth); C-1 to Rule 24 Certificate in
70-6078 (Twenty-ninth); C-1 to Rule 24 Certificate in
70-6174 (Thirtieth); C-1 to Rule 24 Certificate in
70-6246 (Thirty-first); C-1 to Rule 24 Certificate in
70-6498 (Thirty-second); A-4b-2 to Rule 24 Certificate in
70-6326 (Thirty-third); C-1 to Rule 24 Certificate in
70-6607 (Thirty-fourth); C-1 to Rule 24 Certificate in
70-6650 (Thirty-fifth); C-1 to Rule 24 Certificate, dated
December 1, 1982, in 70-6774 (Thirty-sixth); C-1 to
Rule 24 Certificate, dated February 17, 1983, in 70-6774
(Thirty-seventh); A-2(a) to Rule 24 Certificate, dated
December 5, 1984, in 70-6858 (Thirty-eighth); A-3(a) to
Rule 24 Certificate in 70-7127 (Thirty-ninth); A-7 to
Rule 24 Certificate in 70-7068 (Fortieth); A-8(b) to
Rule 24 Certificate dated July 6, 1989 in 70-7346
(Forty-first); A-8(c) to Rule 24 Certificate, dated
February 1, 1990 in 70-7346 (Forty-second); 4 to Form
10-Q for the quarter ended September 30, 1990 in 1-10764
(Forty-third); A-2(a) to Rule 24 Certificate, dated
November 30, 1990, in 70-7802 (Forty-fourth); A-2(b) to
Rule 24 Certificate, dated January 24, 1991, in 70-7802
(Forty-fifth); 4(d)(2) in 33-54298 (Forty-sixth); 4(c)(2)
to Form 10-K for the year ended December 31, 1992 in 1-
10764 (Forty-seventh); 4(b) to Form 10-Q for the quarter
ended June 30, 1993 in 1-10764 (Forty-eighth); 4(c) to
Form 10-Q for the quarter ended June 30, 1993 in 1-10764
(Forty-ninth); 4(b) to Form 10-Q for the quarter ended
September 30, 1993 in 1-10764 (Fiftieth); 4(c) to Form 10-
Q for the quarter ended September 30, 1993 in 1-10764
(Fifty-first); 4(a) to Form 10-Q for the quarter ended
June 30, 1994 (Fifty-second); C-2 to Form U5S for the
year ended December 31, 1995 (Fifty-third); and C-2(a) to
Form U5S for the year ended December 31, 1996 (Fifty-
fourth)).
(c) 2 -- Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities between Entergy
Arkansas and Bank of New York (as Trustee), dated as of
August 1, 1996 (filed as Exhibit A-1(a) to Rule 24
Certificate dated August 26, 1996 in File No. 70-8723).
(c) 3 -- Amended and Restated Trust Agreement of
Entergy Arkansas Capital I, dated as of August 14, 1996
(filed as Exhibit A-3(a) to Rule 24 Certificate dated
August 26, 1996 in File No. 70-8723).
(c) 4 -- Guarantee Agreement between Entergy Arkansas
(as Guarantor) and The Bank of New York (as Trustee),
dated as of August 14, 1996, with respect to Entergy
Arkansas Capital I's obligations on its 8 1/2% Cumulative
Quarterly Income Preferred Securities, Series A (filed as
Exhibit A-4(a) to Rule 24 Certificate dated August 26,
1996 in File No. 70-8723).
Entergy Gulf States
(d) 1 -- Indenture of Mortgage, dated September 1, 1926, as
amended by certain Supplemental Indentures (B-a-I-1 in
Registration No. 2-2449 (Mortgage); 7-A-9 in Registration
No. 2-6893 (Seventh); B to Form 8-K dated September 1,
1959 (Eighteenth); B to Form 8-K dated February 1, 1966
(Twenty-second); B to Form 8-K dated March 1, 1967
(Twenty-third); C to Form 8-K dated March 1, 1968 (Twenty-
fourth); B to Form 8-K dated November 1, 1968 (Twenty-
fifth); B to Form 8-K dated April 1, 1969 (Twenty-sixth);
2-A-8 in Registration No. 2-66612 (Thirty-eighth); 4-2 to
Form 10-K for the year ended December 31, 1984 in 1-2703
(Forty-eighth); 4-2 to Form 10-K for the year ended
December 31, 1988 in 1-2703 (Fifty-second); 4 to Form 10-
K for the year ended December 31, 1991 in 1-2703 (Fifty-
third); 4 to Form 8-K dated July 29, 1992 in 1-2703
(Fifth-fourth); 4 to Form 10-K dated December 31, 1992
in 1-2703 (Fifty-fifth); 4 to Form 10-Q for the quarter
ended March 31, 1993 in 1-2703 (Fifty-sixth); and 4-2 to
Amendment No. 9 to Registration No. 2-76551 (Fifty-
seventh)).
(d) 2 -- Indenture, dated March 21, 1939, accepting
resignation of The Chase National Bank of the City of New
York as trustee and appointing Central Hanover Bank and
Trust Company as successor trustee (B-a-1-6 in
Registration No. 2-4076).
(d) 3 -- Trust Indenture for 9.72% Debentures due July 1,
1998 (4 in Registration No. 33-40113).
(d) 4 -- Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities, dated as of
January 15, 1997 (filed as Exhibit A-11(a) to Rule 24
Certificate dated February 6, 1997 in File No. 70-8721).
(d) 5 -- Amended and Restated Trust Agreement of Entergy
Gulf States Capital I dated January 28, 1997 of Series A
Preferred Securities (filed as Exhibit A-13(a) to Rule 24
Certificate dated February 6, 1997 in File No. 70-8721).
(d) 6 -- Guarantee Agreement between Entergy Gulf States,
Inc. (as Guarantor) and The Bank of New York (as Trustee)
dated as of January 28, 1997 with respect to Entergy Gulf
States Capital I's obligation on its 8.75% Cumulative
Quarterly Income Preferred Securities, Series A (filed as
Exhibit A-14(a) to Rule 24 Certificate dated February 6,
1997 in File No. 70-8721).
Entergy Louisiana
(e) 1 -- Mortgage and Deed of Trust, dated as of April 1,
1944, as amended by fifty-one Supplemental Indentures
(7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); 7(c)
in 2-8636 (Second); 4(b)-3 in 2-10412 (Third); 4(b)-4 in
2-12264 (Fourth); 2(b)-5 in 2-12936 (Fifth); D in 70-3862
(Sixth); 2(b)-7 in 2-22340 (Seventh); 2(c) in 2-24429
(Eighth); 4(c)-9 in 2-25801 (Ninth); 4(c)-10 in 2-26911
(Tenth); 2(c) in 2-28123 (Eleventh); 2(c) in 2-34659
(Twelfth); C to Rule 24 Certificate in 70-4793
(Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); 2(b)-2 in
2-39437 (Fifteenth); 2(b)-2 in 2-42523 (Sixteenth); C to
Rule 24 Certificate in 70-5242 (Seventeenth); C to
Rule 24 Certificate in 70-5330 (Eighteenth); C-1 to
Rule 24 Certificate in 70-5449 (Nineteenth); C-1 to
Rule 24 Certificate in 70-5550 (Twentieth); A-6(a) to
Rule 24 Certificate in 70-5598 (Twenty-first); C-1 to
Rule 24 Certificate in 70-5711 (Twenty-second); C-1 to
Rule 24 Certificate in 70-5919 (Twenty-third); C-1 to
Rule 24 Certificate in 70-6102 (Twenty-fourth); C-1 to
Rule 24 Certificate in 70-6169 (Twenty-fifth); C-1 to
Rule 24 Certificate in 70-6278 (Twenty-sixth); C-1 to
Rule 24 Certificate in 70-6355 (Twenty-seventh); C-1 to
Rule 24 Certificate in 70-6508 (Twenty-eighth); C-1 to
Rule 24 Certificate in 70-6556 (Twenty-ninth); C-1 to
Rule 24 Certificate in 70-6635 (Thirtieth); C-1 to
Rule 24 Certificate in 70-6834 (Thirty-first); C-1 to
Rule 24 Certificate in 70-6886 (Thirty-second); C-1 to
Rule 24 Certificate in 70-6993 (Thirty-third); C-2 to
Rule 24 Certificate in 70-6993 (Thirty-fourth); C-3 to
Rule 24 Certificate in 70-6993 (Thirty-fifth); A-2(a) to
Rule 24 Certificate in 70-7166 (Thirty-sixth); A-2(a) in
70-7226 (Thirty-seventh); C-1 to Rule 24 Certificate in
70-7270 (Thirty-eighth); 4(a) to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1988, in 1-8474
(Thirty-ninth); A-2(b) to Rule 24 Certificate in 70-7553
(Fortieth); A-2(d) to Rule 24 Certificate in 70-7553
(Forty-first); A-3(a) to Rule 24 Certificate in 70-7822
(Forty-second); A-3(b) to Rule 24 Certificate in 70-7822
(Forty-third); A-2(b) to Rule 24 Certificate in File
No. 70-7822 (Forty-fourth); A-3(c) to Rule 24 Certificate
in 70-7822 (Forty-fifth); A-2(c) to Rule 24 Certificate
dated April 7, 1993 in 70-7822 (Forty-sixth); A-3(d) to
Rule 24 Certificate dated June 4, 1993 in 70-7822 (Forth-
seventh); A-3(e) to Rule 24 Certificate dated December
21, 1993 in 70-7822 (Forty-eighth); A-3(f) to Rule 24
Certificate dated August 1, 1994 in 70-7822 (Forty-
ninth); A-4(c) to Rule 24 Certificate dated September 28,
1994 in 70-7653 (Fiftieth) and A-2(a) to Rule 24
Certificate dated April 4, 1996 in File No. 70-8487
(Fifty-first)).
(e) 2 -- Facility Lease No. 1, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-1 in Registration
No. 33-30660).
(e) 3 -- Facility Lease No. 2, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-2 in Registration
No. 33-30660).
(e) 4 -- Facility Lease No. 3, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-3 in Registration
No. 33-30660).
(e) 5 -- 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).
(e) 6 -- 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).
(e) 7 -- 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).
Entergy Mississippi
(f) 1 -- Mortgage and Deed of Trust, dated as of September
1, 1944, as amended by twenty-five Supplemental
Indentures (7(d) in 2-5437 (Mortgage); 7(b) in 2-7051
(First); 7(c) in 2-7763 (Second); 7(d) in 2-8484 (Third);
4(b)-4 in 2-10059 (Fourth); 2(b)-5 in 2-13942 (Fifth);
A-11 to Form U-1 in 70-4116 (Sixth); 2(b)-7 in 2-23084
(Seventh); 4(c)-9 in 2-24234 (Eighth); 2(b)-9(a) in
2-25502 (Ninth); A-11(a) to Form U-1 in 70-4803 (Tenth);
A-12(a) to Form U-1 in 70-4892 (Eleventh); A-13(a) to
Form U-1 in 70-5165 (Twelfth); A-14(a) to Form U-1 in
70-5286 (Thirteenth); A-15(a) to Form U-1 in 70-5371
(Fourteenth); A-16(a) to Form U-1 in 70-5417 (Fifteenth);
A-17 to Form U-1 in 70-5484 (Sixteenth); 2(a)-19 in
2-54234 (Seventeenth); C-1 to Rule 24 Certificate in
70-6619 (Eighteenth); A-2(c) to Rule 24 Certificate in
70-6672 (Nineteenth); A-2(d) to Rule 24 Certificate in
70-6672 (Twentieth); C-1(a) to Rule 24 Certificate in
70-6816 (Twenty-first); C-1(a) to Rule 24 Certificate in
70-7020 (Twenty-second); C-1(b) to Rule 24 Certificate in
70-7020 (Twenty-third); C-1(a) to Rule 24 Certificate in
70-7230 (Twenty-fourth); and A-2(a) to Rule 24
Certificate in 70-7419 (Twenty-fifth)).
(f) 2 -- Mortgage and Deed of Trust, dated as of
February 1, 1988, as amended by eleventh Supplemental
Indentures (A-2(a)-2 to Rule 24 Certificate in 70-7461
(Mortgage); A-2(b)-2 in 70-7461 (First); A-5(b) to
Rule 24 Certificate in 70-7419 (Second); A-4(b) to
Rule 24 Certificate in 70-7554 (Third); A-1(b)-1 to Rule
24 Certificate in 70-7737 (Fourth); A-2(b) to Rule 24
Certificate dated November 24, 1992 in 70-7914 (Fifth);
A-2(e) to Rule 24 Certificate dated January 22, 1993 in
70-7914 (Sixth); A-2(g) to Form U-1 in 70-7914 (Seventh);
A-2(i) to Rule 24 Certificate dated November 10, 1993 in
70-7914 (Eighth); A-2(j) to Rule 24 Certificate dated
July 22, 1994 in 70-7914 (Ninth); and (A-2(l) to Rule 24
Certificate dated April 21, 1995 in File 70-7914 (Tenth);
and A-2(a) to Rule 24 Certificate dated June 27, 1997 in
File 70-8719 (Eleventh)).
Entergy New Orleans
(g) 1 -- Mortgage and Deed of Trust, dated as of May 1,
1987, as amended by six Supplemental Indentures (A-2(c)
to Rule 24 Certificate in 70-7350 (Mortgage); A-5(b) to
Rule 24 Certificate in 70-7350 (First); A-4(b) to Rule 24
Certificate in 70-7448 (Second); 4(f)4 to Form 10-K for
the year ended December 31, 1992 in 0-5807 (Third); 4(a)
to Form 10-Q for the quarter ended September 30, 1993 in
0-5807 (Fourth); 4(a) to Form 8-K dated April 26, 1995 in
File No. 0-5807 (Fifth); and 4(a) to Form 8-K dated March
22, 1996 in File No. 0-5807 (Sixth)).
Entergy London
(h) 1 -- Indenture for Unsecured Subordinated Debt
Securities relating to Preferred Securities, dated as of
November 1, 1997 (filed as Exhibit A-1(a) to Rule 24
Certificate dated December 4, 1997 in File No. 70-9081).
(h) 2 -- Amended and Restated Limited Partnership Agreement
of Entergy London Capital, L.P. dated as of November 19,
1997 of Series A Preferred Securities (filed as Exhibit A-
5(a) to Rule 24 Certificate dated December 4, 1997 in
File No. 70-9081).
(h) 3 -- Guarantee Agreement between Entergy London
Investments plc (as Guarantor) and The Bank of New York
(as Trustee) dated as of November 19, 1997 with respect
to Entergy London Capital, L.P.'s obligation on its 8-
5/8% Cumulative Quarterly Income Preferred Securities,
Series A (filed as Exhibit A-6(a) to Rule 24 Certificate
dated December 4, 1997 in File No. 70-9081).
*(h) 4 -- The BPS1,010,000,000 Restated Credit Agreement
dated November 17, 1997 among Entergy Power UK plc, ABN
AMRO Bank N.V., Bank of America International Limited and
Union Bank of Switzerland as arrangers and ABN AMRO Bank
N.V. as Agent for the banks named therein.
(10) Material Contracts
Entergy Corporation
(a) 1 -- Agreement, dated April 23, 1982, among certain
System companies, relating to System Planning and
Development and Intra-System Transactions (10(a)1 to
Form 10-K for the year ended December 31, 1982, in
1-3517).
(a) 2 -- Middle South Utilities (now Entergy Corporation)
System Agency Agreement, dated December 11, 1970 (5(a)-2
in 2-41080).
(a) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated
December 11, 1970 (5(a)-4 in 2-41080).
(a) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a)-4 in 2-41080).
(a) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(a) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-41080).
(a) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (5(a)-6 in 2-43175).
(a) 8 -- Amendment, dated April 27, 1984, to Service
Agreement with Entergy Services (10(a)-7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(a) 9 -- Amendment, dated August 1, 1988, to Service
Agreement with Entergy Services (10(a)-8 to Form 10-K for
the year ended December 31, 1988, in 1-3517).
(a) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(a)-9 to Form 10-K for
the year ended December 31, 1990, in 1-3517).
(a) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 for the year
ended December 31, 1994 in 1-3517).
(a) 12-- Availability Agreement, dated June 21, 1974, among
System Energy and certain other System companies (B to
Rule 24 Certificate, dated June 24, 1974, in 70-5399).
(a) 13-- First Amendment to Availability Agreement, dated
as of June 30, 1977 (B to Rule 24 Certificate, dated
June 24, 1977, in 70-5399).
(a) 14-- Second Amendment to Availability Agreement, dated
as of June 15, 1981 (E to Rule 24 Certificate, dated
July 1, 1981, in 70-6592).
(a) 15-- Third Amendment to Availability Agreement, dated
as of June 28, 1984 (B-13(a) to Rule 24 Certificate,
dated July 6, 1984, in 70-6985).
(a) 16-- Fourth Amendment to Availability Agreement, dated
as of June 1, 1989 (A to Rule 24 Certificate, dated
June 8, 1989, in 70-5399).
(a) 17-- Eighteenth Assignment of Availability Agreement,
Consent and Agreement, dated as of September 1, 1986,
with United States Trust Company of New York and
Gerard F. Ganey, as Trustees (C-2 to Rule 24 Certificate,
dated October 1, 1986, in 70-7272).
(a) 18-- Nineteenth Assignment of Availability Agreement,
Consent and Agreement, dated as of September 1, 1986,
with United States Trust Company of New York and
Gerard F. Ganey, as Trustees (C-3 to Rule 24 Certificate,
dated October 1, 1986, in 70-7272).
(a) 19-- Twenty-sixth Assignment of Availability Agreement,
Consent and Agreement, dated as of October 1, 1992, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (B-2(c) to Rule 24 Certificate, dated
November 2, 1992, in 70-7946).
(a) 20-- Twenty-seventh Assignment of Availability
Agreement, Consent and Agreement, dated as of April 1,
1993, with United States Trust Company of New York and
Gerard F. Ganey as Trustees (B-2(d) to Rule 24
Certificate dated May 4, 1993 in 70-7946).
(a) 21-- Twenty-ninth Assignment of Availability Agreement,
Consent and Agreement, dated as of April 1, 1994, with
United States Trust Company of New York and Gerard F.
Ganey as Trustees (B-2(f) to Rule 24 Certificate dated
May 6, 1994, in 70-7946).
(a) 22-- Thirtieth Assignment of Availability Agreement,
Consent and Agreement, dated as of August 1, 1996, among
System Energy, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi and Entergy New Orleans, and United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (filed as Exhibit B-2(a) to Rule 24 Certificate
dated August 8, 1996 in File No. 70-8511).
(a) 23-- Thirty-first Assignment of Availability Agreement,
Consent and Agreement, dated as of August 1, 1996, among
System Energy, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans, and United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (filed as Exhibit B-2(b) to Rule 24 Certificate
dated August 8, 1996 in File No. 70-8511).
(a) 24-- Thirty-second Assignment of Availability
Agreement, Consent and Agreement, dated as of December
27, 1996, among System Energy, Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans,
and The Chase Manhattan Bank (filed as Exhibit B-2(a) to
Rule 24 Certificate dated January 13, 1997 in File No. 70-
7561).
(a) 25-- Capital Funds Agreement, dated June 21, 1974,
between Entergy Corporation and System Energy (C to
Rule 24 Certificate, dated June 24, 1974, in 70-5399).
(a) 26-- First Amendment to Capital Funds Agreement, dated
as of June 1, 1989 (B to Rule 24 Certificate, dated
June 8, 1989, in 70-5399).
(a) 27-- Eighteenth Supplementary Capital Funds Agreement
and Assignment, dated as of September 1, 1986, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (D-2 to Rule 24 Certificate, dated
October 1, 1986, in 70-7272).
(a) 28-- Nineteenth Supplementary Capital Funds Agreement
and Assignment, dated as of September 1, 1986, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (D-3 to Rule 24 Certificate, dated
October 1, 1986, in 70-7272).
(a) 29-- Twenty-sixth Supplementary Capital Funds Agreement
and Assignment, dated as of October 1, 1992, with United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (B-3(c) to Rule 24 Certificate dated November 2,
1992 in 70-7946).
(a) 30-- Twenty-seventh Supplementary Capital Funds
Agreement and Assignment, dated as of April 1, 1993, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (B-3(d) to Rule 24 Certificate dated
May 4, 1993 in 70-7946).
(a) 31-- Twenty-ninth Supplementary Capital Funds Agreement
and Assignment, dated as of April 1, 1994, with United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (B-3(f) to Rule 24 Certificate dated May 6,
1994, in 70-7946).
(a) 32-- Thirtieth Supplementary Capital Funds Agreement
and Assignment, dated as of August 1, 1996, among Entergy
Corporation, System Energy and United States Trust
Company of New York and Gerard F. Ganey, as Trustees
(filed as Exhibit B-3(a) to Rule 24 Certificate dated
August 8, 1996 in File No. 70-8511).
(a) 33-- Thirty-first Supplementary Capital Funds Agreement
and Assignment, dated as of August 1, 1996, among Entergy
Corporation, System Energy and United States Trust
Company of New York and Gerard F. Ganey, as Trustees
(filed as Exhibit B-3(b) to Rule 24 Certificate dated
August 8, 1996 in File No. 70-8511).
(a) 34-- Thirty-second Supplementary Capital Funds
Agreement and Assignment, dated as of December 27, 1996,
among Entergy Corporation, System Energy and The Chase
Manhattan Bank (filed as Exhibit B-1(a) to Rule 24
Certificate dated January 13, 1997 in File No. 70-7561).
(a) 35-- First Amendment to Supplementary Capital Funds
Agreements and Assignments, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy, Deposit
Guaranty National Bank, United States Trust Company of
New York and Gerard F. Ganey (C to Rule 24 Certificate,
dated June 8, 1989, in 70-7026).
(a) 36-- First Amendment to Supplementary Capital Funds
Agreements and Assignments, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy, United
States Trust Company of New York and Gerard F. Ganey (C
to Rule 24 Certificate, dated June 8, 1989, in 70-7123).
(a) 37-- First Amendment to Supplementary Capital Funds
Agreement and Assignment, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy and
Chemical Bank (C to Rule 24 Certificate, dated June 8,
1989, in 70-7561).
+(a) 38-- Agreement between Entergy Corporation and Edwin
Lupberger (10(a)-42 to Form 10-K for the year ended
December 31, 1985, in 1-3517).
(a) 39-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(a) 40-- Joint Construction, Acquisition and Ownership
Agreement, dated as of May 1, 1980, between System Energy
and SMEPA (B-1(a) in 70-6337), as amended by Amendment
No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and
Amendment No. 2, dated as of October 31, 1980 (1 to Rule
24 Certificate, dated October 30, 1981, in 70-6337).
(a) 41-- Operating Agreement dated as of May 1, 1980,
between System Energy and SMEPA (B(2)(a) in 70-6337).
(a) 42-- Assignment, Assumption and Further Agreement
No. 1, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(1) to Rule 24 Certificate, dated January 9, 1989,
in 70-7561).
(a) 43-- Assignment, Assumption and Further Agreement
No. 2, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(2) to Rule 24 Certificate, dated January 9, 1989,
in 70-7561).
(a) 44-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B(3)(a) in 70-6337).
(a) 45-- Grand Gulf Unit No. 2 Supplementary Agreement,
dated as of February 7, 1986, between System Energy and
SMEPA (10(aaa) in 33-4033).
(a) 46-- Compromise and Settlement Agreement, dated June 4,
1982, between Texaco, Inc. and Entergy Louisiana (28(a)
to Form 8-K, dated June 4, 1982, in 1-3517).
+(a) 47-- Post-Retirement Plan (10(a)37 to Form 10-K for the
year ended December 31, 1983, in 1-3517).
(a) 48-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a)-39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(a) 49-- First Amendment to Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(a) 50-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(a) 51-- Middle South Utilities Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (Exhibit D-1 to Form U5S for the
year ended December 31, 1987).
(a) 52-- First Amendment, dated January 1, 1990, to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(a) 53-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(a) 54-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(a) 55-- Fourth Amendment dated April 1, 1997 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-5 to Form U5S for the year
ended December 31, 1996).
(a) 56-- Guaranty Agreement between Entergy Corporation and
Entergy Arkansas, dated as of September 20, 1990 (B-1(a)
to Rule 24 Certificate, dated September 27, 1990, in
70-7757).
(a) 57-- Guarantee Agreement between Entergy Corporation
and Entergy Louisiana, dated as of September 20, 1990
(B-2(a) to Rule 24 Certificate, dated September 27, 1990,
in 70-7757).
(a) 58-- Guarantee Agreement between Entergy Corporation
and System Energy, dated as of September 20, 1990 (B-3(a)
to Rule 24 Certificate, dated September 27, 1990, in 70-
7757).
(a) 59-- Loan Agreement between Entergy Operations and
Entergy Corporation, dated as of September 20, 1990
(B-12(b) to Rule 24 Certificate, dated June 15, 1990, in
70-7679).
(a) 60-- Loan Agreement between Entergy Power and Entergy
Corporation, dated as of August 28, 1990 (A-4(b) to Rule
24 Certificate, dated September 6, 1990, in 70-7684).
(a) 61-- Loan Agreement between Entergy Corporation and
Entergy Systems and Service, Inc., dated as of
December 29, 1992 (A-4(b) to Rule 24 Certificate in
70-7947).
+(a) 62-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(a) 63-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(a) 64-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated May
24, 1991, in 70-7831).
+(a) 65-- Retired Outside Director Benefit Plan (10(a)63 to
Form 10-K for the year ended December 31, 1991, in
1-3517).
+(a) 66-- Agreement between Entergy Corporation and Jerry D.
Jackson. (10(a) 67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(a) 67-- Agreement between Entergy Services, Inc., a
subsidiary of Entergy Corporation, and Gerald D. McInvale
(10(a) 68 to Form 10-K for the year ended December 31,
1992 in 1-3517).
*+(a) 68--Agreement between Entergy Services, Inc., a subsidiary
of Entergy Corporation, and Gerald D. McInvale.
+(a) 69-- Supplemental Retirement Plan (10(a) 69 to Form 10-
K for the year ended December 31, 1992 in 1-3517).
+(a) 70-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(a) 71-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a) 71 to Form 10-
K for the year ended December 31, 1992 in 1-3517).
+(a) 72-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a) 72 to Form 10-K for the year
ended December 31, 1992 in 1-3517).
+(a) 73-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a) 73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(a) 74-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a) 74 to
Form 10-K for the year ended December 31, 1992 in 1-
3517).
+(a) 75-- Summary Description of Private Ownership Vehicle
Plan of Entergy Corporation and Subsidiaries (10(a) 75 to
Form 10-K for the year ended December 31, 1992 in 1-
3517).
(a) 76-- Agreement and Plan of Reorganization Between
Entergy Corporation and Gulf States Utilities Company,
dated June 5, 1992 (1 to Current Report on Form 8-K dated
June 5, 1992 in 1-3517).
+(a) 77-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(a) 78-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
System Energy
(b) 1 through
(b) 13-- See 10(a)-12 through 10(a)-24 above.
(b) 14 through
(b) 26-- See 10(a)-25 through 10(a)-37 above.
(b) 27-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(b) 28-- Joint Construction, Acquisition and Ownership
Agreement, dated as of May 1, 1980, between System Energy
and SMEPA (B-1(a) in 70-6337), as amended by Amendment
No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and
Amendment No. 2, dated as of October 31, 1980 (1 to
Rule 24 Certificate, dated October 30, 1981, in 70-6337).
(b) 29-- Operating Agreement, dated as of May 1, 1980,
between System Energy and SMEPA (B(2)(a) in 70-6337).
(b) 30-- Installment Sale Agreement, dated as of
December 1, 1983 between System Energy and Claiborne
County, Mississippi (B-1 to First Rule 24 Certificate in
70-6913).
(b) 31-- Installment Sale Agreement, dated as of June 1,
1984, between System Energy and Claiborne County,
Mississippi (B-2 to Second Rule 24 Certificate in
70-6913).
(b) 32-- Installment Sale Agreement, dated as of
December 1, 1984, between System Energy and Claiborne
County, Mississippi (B-1 to First Rule 24 Certificate in
70-7026).
(b) 33-- Amended and Restated Installment Sale Agreement,
dated as of May 1, 1995, between System Energy and
Claiborne County, Mississippi (B-6(a) to Rule 24
Certificate in 70-8511).
(b) 34- Amended and Restated Installment Sale Agreement, dated
as of February 15, 1996, between System Energy and Claiborne
County, Mississippi (filed as Exhibit B-6(a) to Rule 24
Certificate dated March 4, 1996 in File No. 70-8511).
(b) 35-- Facility Lease No. 1, dated as of December 1,
1988, between Meridian Trust Company and Stephen M. Carta
(Stephen J. Kaba, successor), as Owner Trustees, and
System Energy (B-2(c)(1) to Rule 24 Certificate dated
January 9, 1989 in 70-7561), as supplemented by Lease
Supplement No. 1 dated as of April 1, 1989 (B-22(b) (1)
to Rule 24 Certificate dated April 21, 1989 in 70-7561)
and Lease Supplement No. 2 dated as of January 1, 1994 (B-
3(d) to Rule 24 Certificate dated January 31, 1994 in 70-
8215).
(b) 36-- Facility Lease No. 2, dated as of December 1, 1988
between Meridian Trust Company and Stephen M. Carta
(Stephen J. Kaba, successor), as Owner Trustees, and
System Energy (B-2(c)(2) to Rule 24 Certificate dated
January 9, 1989 in 70-7561), as supplemented by Lease
Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2)
to Rule 24 Certificate dated April 21, 1989 in 70-7561)
and Lease Supplement No. 2 dated as of January 1, 1994 (B-
4(d) Rule 24 Certificate dated January 31, 1994 in 70-
8215).
(b) 37-- Assignment, Assumption and Further Agreement
No. 1, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(1) to Rule 24 Certificate, dated January 9, 1989,
in 70-7561).
(b) 38-- Assignment, Assumption and Further Agreement
No. 2, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(2) to Rule 24 Certificate, dated January 9, 1989,
in 70-7561).
(b) 39-- Collateral Trust Indenture, dated as of January 1,
1994, among System Energy, GG1B Funding Corporation and
Bankers Trust Company, as Trustee (A-3(e) to Rule 24
Certificate dated January 31, 1994, in 70-8215), as
supplemented by Supplemental Indenture No. 1 dated
January 1, 1994, (A-3(f) to Rule 24 Certificate dated
January 31, 1994, in 70-8215).
(b) 40-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B(3)(a) in 70-6337).
(b) 41-- Grand Gulf Unit No. 2 Supplementary Agreement,
dated as of February 7, 1986, between System Energy and
SMEPA (10(aaa) in 33-4033).
(b) 42-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a)-39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(b) 43-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(b) 44-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(b) 45-- Fuel Lease, dated as of February 24, 1989, between
River Fuel Funding Company #3, Inc. and System Energy
(B-1(b) to Rule 24 Certificate, dated March 3, 1989, in
70-7604).
(b) 46-- System Energy's Consent, dated January 31, 1995,
pursuant to Fuel Lease, dated as of February 24, 1989,
between River Fuel Funding Company #3, Inc. and System
Energy (B-1(c) to Rule 24 Certificate, dated February 13,
1995 in 70-7604).
(b) 47-- Sales Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (D to
Rule 24 Certificate, dated June 26, 1974, in 70-5399).
(b) 48-- Service Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (E to
Rule 24 Certificate, dated June 26, 1974, in 70-5399).
(b) 49-- Partial Termination Agreement, dated as of
December 1, 1986, between System Energy and Entergy
Mississippi (A-2 to Rule 24 Certificate, dated January 8,
1987, in 70-5399).
(b) 50-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(b) 51-- First Amendment, dated January 1, 1990 to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(b) 52-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(b) 53-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(b) 54-- Service Agreement with Entergy Services, dated as
of July 16, 1974, as amended (10(b)-43 to Form 10-K for
the year ended December 31, 1988, in 1-9067).
(b) 55-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(b)-45 to Form 10-K
for the year ended December 31, 1990, in 1-9067).
(b) 56-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a) -11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(b) 57-- Operating Agreement between Entergy Operations and
System Energy, dated as of June 6, 1990 (B-3(b) to Rule
24 Certificate, dated June 15, 1990, in 70-7679).
(b) 58-- Guarantee Agreement between Entergy Corporation
and System Energy, dated as of September 20, 1990 (B-3(a)
to Rule 24 Certificate, dated September 27, 1990, in
70-7757).
+(b) 59-- Agreement between System Energy and Donald C.
Hintz (10(b)47 to Form 10-K for the year ended
December 31, 1991, in 1-9067).
+(b) 60-- Agreement between Entergy Corporation and Edwin
Lupberger (10(a)-42 to Form 10-K for the year ended
December 31, 1985 in 1-3517).
+(b) 61-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(b) 62-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1997 in 1-11299).
(b) 63-- Amended and Restated Reimbursement Agreement,
dated as of December 1, 1988 as amended and restated as
of December 27, 1996, among System Energy Resources,
Inc., The Bank of Tokyo-Mitsubishi, Ltd., as Funding Bank
and The Chase Manhattan Bank (as successor by merger with
Chemical Bank), as administrating bank, Union Bank of
California, N.A., as documentation agent, and the Banks
named therein, as Participating Banks (B-3(a) to Rule 24
Certificate dated January 13, 1997 in 70-7561).
Entergy Arkansas
(c) 1 -- Agreement, dated April 23, 1982, among Entergy
Arkansas and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(c) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)2 in 2-41080).
(c) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a)-4 in 2-41080).
(c) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(c) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(c) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-41080).
(c) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (5(a)- 6 in 2-43175).
(c) 8 -- Amendment, dated April 27, 1984, to Service
Agreement, with Entergy Services (10(a)- 7 to Form 10-K
for the year ended December 31, 1984, in 1-3517).
(c) 9 -- Amendment, dated August 1, 1988, to Service
Agreement with Entergy Services (10(c)- 8 to Form 10-K
for the year ended December 31, 1988, in 1-10764).
(c) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(c)-9 to Form 10-K for
the year ended December 31, 1990, in 1-10764).
(c) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(c) 12 through
(c) 24-- See 10(a)-12 through 10(a)-24 above.
(c) 25-- Agreement, dated August 20, 1954, between Entergy
Arkansas and the United States of America (SPA)(13(h) in
2-11467).
(c) 26-- Amendment, dated April 19, 1955, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-2 in 2-41080).
(c) 27-- Amendment, dated January 3, 1964, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-3 in 2-41080).
(c) 28-- Amendment, dated September 5, 1968, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-4 in 2-41080).
(c) 29-- Amendment, dated November 19, 1970, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-5 in 2-41080).
(c) 30-- Amendment, dated July 18, 1961, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-6 in 2-41080).
(c) 31-- Amendment, dated December 27, 1961, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-7 in 2-41080).
(c) 32-- Amendment, dated January 25, 1968, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-8 in 2-41080).
(c) 33-- Amendment, dated October 14, 1971, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-9 in 2-43175).
(c) 34-- Amendment, dated January 10, 1977, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-10 in 2-60233).
(c) 35-- Agreement, dated May 14, 1971, between Entergy
Arkansas and the United States of America (SPA) (5(e) in
2-41080).
(c) 36-- Amendment, dated January 10, 1977, to the United
States of America (SPA) Contract, dated May 14, 1971
(5(e)-1 in 2-60233).
(c) 37-- Contract, dated May 28, 1943, Amendment to
Contract, dated July 21, 1949, and Supplement to
Amendment to Contract, dated December 30, 1949, between
Entergy Arkansas and McKamie Gas Cleaning Company;
Agreements, dated as of September 30, 1965, between
Entergy Arkansas and former stockholders of McKamie Gas
Cleaning Company; and Letter Agreement, dated June 22,
1966, by Humble Oil & Refining Company accepted by
Entergy Arkansas on June 24, 1966 (5(k)-7 in 2-41080).
(c) 38-- Agreement, dated April 3, 1972, between Entergy
Services and Gulf United Nuclear Fuels Corporation
(5(l)-3 in 2-46152).
(c) 39-- Fuel Lease, dated as of December 22, 1988, between
River Fuel Trust #1 and Entergy Arkansas (B-1(b) to Rule
24 Certificate in 70-7571).
(c) 40-- White Bluff Operating Agreement, dated June 27,
1977, among Entergy Arkansas and Arkansas Electric
Cooperative Corporation and City Water and Light Plant of
the City of Jonesboro, Arkansas (B-2(a) to Rule 24
Certificate, dated June 30, 1977, in 70-6009).
(c) 41-- White Bluff Ownership Agreement, dated June 27,
1977, among Entergy Arkansas and Arkansas Electric
Cooperative Corporation and City Water and Light Plant of
the City of Jonesboro, Arkansas (B-1(a) to Rule 24
Certificate, dated June 30, 1977, in 70-6009).
(c) 42-- Agreement, dated June 29, 1979, between Entergy
Arkansas and City of Conway, Arkansas (5(r)-3 in
2-66235).
(c) 43-- Transmission Agreement, dated August 2, 1977,
between Entergy Arkansas and City Water and Light Plant
of the City of Jonesboro, Arkansas (5(r)-3 in 2-60233).
(c) 44-- Power Coordination, Interchange and Transmission
Service Agreement, dated as of June 27, 1977, between
Arkansas Electric Cooperative Corporation and Entergy
Arkansas (5(r)-4 in 2-60233).
(c) 45-- Independence Steam Electric Station Operating
Agreement, dated July 31, 1979, among Entergy Arkansas
and Arkansas Electric Cooperative Corporation and City
Water and Light Plant of the City of Jonesboro, Arkansas
and City of Conway, Arkansas (5(r)-6 in 2-66235).
(c) 46-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Operating Agreement
(10(c) 51 to Form 10-K for the year ended December 31,
1984, in 1-10764).
(c) 47-- Independence Steam Electric Station Ownership
Agreement, dated July 31, 1979, among Entergy Arkansas
and Arkansas Electric Cooperative Corporation and City
Water and Light Plant of the City of Jonesboro, Arkansas
and City of Conway, Arkansas (5(r)-7 in 2-66235).
(c) 48-- Amendment, dated December 28, 1979, to the
Independence Steam Electric Station Ownership Agreement
(5(r)-7(a) in 2-66235).
(c) 49-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Ownership Agreement
(10(c) 54 to Form 10-K for the year ended December 31,
1984, in 1-10764).
(c) 50-- Owner's Agreement, dated November 28, 1984, among
Entergy Arkansas, Entergy Mississippi, other co-owners of
the Independence Station (10(c) 55 to Form 10-K for the
year ended December 31, 1984, in 1-10764).
(c) 51-- Consent, Agreement and Assumption, dated December
4, 1984, among Entergy Arkansas, Entergy Mississippi,
other co-owners of the Independence Station and United
States Trust Company of New York, as Trustee (10(c) 56 to
Form 10-K for the year ended December 31, 1984, in
1-10764).
(c) 52-- Power Coordination, Interchange and Transmission
Service Agreement, dated as of July 31, 1979, between
Entergy Arkansas and City Water and Light Plant of the
City of Jonesboro, Arkansas (5(r)-8 in 2-66235).
(c) 53-- Power Coordination, Interchange and Transmission
Agreement, dated as of June 29, 1979, between City of
Conway, Arkansas and Entergy Arkansas (5(r)-9 in
2-66235).
(c) 54-- Agreement, dated June 21, 1979, between Entergy
Arkansas and Reeves E. Ritchie ((10)(b)-90 to Form 10-K
for the year ended December 31, 1980, in 1-10764).
(c) 55-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(c) 56-- Post-Retirement Plan (10(b) 55 to Form 10-K for
the year ended December 31, 1983, in 1-10764).
(c) 57-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(c) 58-- First Amendment to Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy, Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(c) 59-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(c) 60-- Contract For Disposal of Spent Nuclear Fuel and/or
High-Level Radioactive Waste, dated June 30, 1983, among
the DOE, System Fuels and Entergy Arkansas (10(b)-57 to
Form 10-K for the year ended December 31, 1983, in
1-10764).
(c) 61-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(c) 62-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(c) 63-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(c) 64-- Third Amendment dated January 1, 1994, to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(c) 65-- Assignment of Coal Supply Agreement, dated
December 1, 1987, between System Fuels and Entergy
Arkansas (B to Rule 24 letter filing, dated November 10,
1987, in 70-5964).
(c) 66-- Coal Supply Agreement, dated December 22, 1976,
between System Fuels and Antelope Coal Company (B-1 in
70-5964), as amended by First Amendment (A to Rule 24
Certificate in 70-5964); Second Amendment (A to Rule 24
letter filing, dated December 16, 1983, in 70-5964); and
Third Amendment (A to Rule 24 letter filing, dated
November 10, 1987 in 70-5964).
(c) 67-- Operating Agreement between Entergy Operations and
Entergy Arkansas, dated as of June 6, 1990 (B-1(b) to
Rule 24 Certificate, dated June 15, 1990, in 70-7679).
(c) 68-- Guaranty Agreement between Entergy Corporation and
Entergy Arkansas, dated as of September 20, 1990 (B-1(a)
to Rule 24 Certificate, dated September 27, 1990, in
70-7757).
(c) 69-- Agreement for Purchase and Sale of Independence
Unit 2 between Entergy Arkansas and Entergy Power, dated
as of August 28, 1990 (B-3(c) to Rule 24 Certificate,
dated September 6, 1990, in 70-7684).
(c) 70-- Agreement for Purchase and Sale of Ritchie Unit 2
between Entergy Arkansas and Entergy Power, dated as of
August 28, 1990 (B-4(d) to Rule 24 Certificate, dated
September 6, 1990, in 70-7684).
(c) 71-- Ritchie Steam Electric Station Unit No. 2
Operating Agreement between Entergy Arkansas and Entergy
Power, dated as of August 28, 1990 (B-5(a) to Rule 24
Certificate, dated September 6, 1990, in 70-7684).
(c) 72-- Ritchie Steam Electric Station Unit No. 2
Ownership Agreement between Entergy Arkansas and Entergy
Power, dated as of August 28, 1990 (B-6(a) to Rule 24
Certificate, dated September 6, 1990, in 70-7684).
(c) 73-- Power Coordination, Interchange and Transmission
Service Agreement between Entergy Power and Entergy
Arkansas, dated as of August 28, 1990 (10(c)-71 to Form
10-K for the year ended December 31, 1990, in 1-10764).
+(c) 74-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a)52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(c) 75-- Entergy Corporation Annual Incentive Plan (10(a)54
to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(c) 76-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated
May 24, 1991, in 70-7831).
+(c) 77-- Agreement between Arkansas Power & Light Company
and R. Drake Keith. (10(c) 78 to Form 10-K for the year
ended December 31, 1992 in 1-10764).
+(c) 78-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(c) 79-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(c) 80-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(c) 81-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(c) 82-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a)73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(c) 83-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(c) 84-- Summary Description of Private Ownership Vehicle
Plan of Entergy Corporation and Subsidiaries (10(a)75 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(c) 85-- Agreement between Entergy Corporation and Edwin
Lupberger (10(a)-42 to Form 10-K for the year ended
December 31, 1985 in 1-3517).
+(c) 86-- Agreement between Entergy Corporation and Jerry D.
Jackson (10(a)-67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(c) 87-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(c) 88-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1997 in 1-11299).
+(c) 89-- Agreement between System Energy and Donald C.
Hintz (10(b)-47 to Form 10-K for the year ended
December 31, 1991 in 1-9067).
+(c) 90-- Summary Description of Retired Outside Director
Benefit Plan. (10(c) 90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(c) 91-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(c) 92-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
(c) 93-- Loan Agreement dated June 15, 1993, between
Entergy Arkansas and Independence Country, Arkansas (B-1
(a) to Rule 24 Certificate dated July 9, 1993 in 70-
8171).
(c) 94-- Installment Sale Agreement dated January 1, 1991,
between Entergy Arkansas and Pope Country, Arkansas (B-1
(b) to Rule 24 Certificate dated January 24, 1991 in 70-
7802).
(c) 95-- Installment Sale Agreement dated November 1, 1990,
between Entergy Arkansas and Pope Country, Arkansas (B-1
(a) to Rule 24 Certificate dated November 30, 1990 in 70-
7802).
(c) 96-- Loan Agreement dated June 15, 1994, between
Entergy Arkansas and Jefferson County, Arkansas (B-1(a)
to Rule 24 Certificate dated June 30, 1994 in 70-8405).
(c) 97-- Loan Agreement dated June 15, 1994, between
Entergy Arkansas and Pope County, Arkansas (B-1(b) to
Rule 24 Certificate in 70-8405).
(c) 98-- Loan Agreement dated November 15, 1995,
between Entergy Arkansas and Pope County, Arkansas (10(c)
96 to Form 10-K for the year ended December 31, 1995 in 1-
10764).
(c) 99-- Agreement as to Expenses and Liabilities
between Entergy Arkansas and Entergy Arkansas Capital I,
dated as of August 14, 1996 (4(j) to Form 10-Q for the
quarter ended September 30, 1996 in 1-10764).
*(c) 100-- Loan Agreement dated December 1, 1997,
between Entergy Arkansas and Jefferson County, Arkansas.
Entergy Gulf States
(d) 1 -- Guaranty Agreement, dated July 1, 1976, between
Entergy Gulf States and American Bank and Trust Company
(C and D to Form 8-K, dated August 6, 1976 in 1-2703).
(d) 2 -- Lease of Railroad Equipment, dated as of December
1, 1981, between The Connecticut Bank and Trust Company
as Lessor and Entergy Gulf States as Lessee and First
Supplement, dated as of December 31, 1981, relating to
605 One Hundred-Ton Unit Train Steel Coal Porter Cars (4-
12 to Form 10-K for the year ended December 31, 1981 in 1-
2703).
(d) 3 -- Guaranty Agreement, dated August 1, 1992, between
Entergy Gulf States and Hibernia National Bank, relating
to Pollution Control Revenue Refunding Bonds of the
Industrial Development Board of the Parish of Calcasieu,
Inc. (Louisiana) (10-1 to Form 10-K for the year ended
December 31, 1992 in 1-2703).
(d) 4 -- Guaranty Agreement, dated January 1, 1993, between
Entergy Gulf States and Hancock Bank of Louisiana,
relating to Pollution Control Revenue Refunding Bonds of
the Parish of Pointe Coupee (Louisiana) (10-2 to Form 10-
K for the year ended December 31, 1992 in 1-2703).
(d) 5 -- Deposit Agreement, dated as of December 1, 1983
between Entergy Gulf States, Morgan Guaranty Trust Co. as
Depositary and the Holders of Depository Receipts,
relating to the Issue of 900,000 Depositary Preferred
Shares, each representing 1/2 share of Adjustable Rate
Cumulative Preferred Stock, Series E-$100 Par Value (4-17
to Form 10-K for the year ended December 31, 1983 in 1-
2703).
(d) 6 -- Letter of Credit and Reimbursement Agreement,
dated December 27, 1985, between Entergy Gulf States and
Westpac Banking Corporation relating to Variable Rate
Demand Pollution Control Revenue Bonds of the Parish of
West Feliciana, State of Louisiana, Series 1985-D (4-26
to Form 10-K for the year ended December 31, 1985 in 1-
2703) and Letter Agreement amending same dated October
20, 1992 (10-3 to Form 10-K for the year ended December
31, 1992 in 1-2703).
(d) 7 -- Reimbursement and Loan Agreement, dated as of
April 23, 1986, by and between Entergy Gulf States and
The Long-Term Credit Bank of Japan, Ltd., relating to
Multiple Rate Demand Pollution Control Revenue Bonds of
the Parish of West Feliciana, State of Louisiana, Series
1985 (4-26 to Form 10-K, for the year ended December 31,
1986 in 1-2703) and Letter Agreement amending same, dated
February 19, 1993 (10 to Form 10-K for the year ended
December 31, 1992 in 1-2703).
(d) 8 -- Agreement effective February 1, 1964, between
Sabine River Authority, State of Louisiana, and Sabine
River Authority of Texas, and Entergy Gulf States,
Central Louisiana Electric Company, Inc., and Louisiana
Power & Light Company, as supplemented (B to Form 8-K,
dated May 6, 1964, A to Form 8-K, dated October 5, 1967,
A to Form 8-K, dated May 5, 1969, and A to Form 8-K,
dated December 1, 1969, in 1-2708).
(d) 9 -- Joint Ownership Participation and Operating
Agreement regarding River Bend Unit 1 Nuclear Plant,
dated August 20, 1979, between Entergy Gulf States,
Cajun, and SRG&T; Power Interconnection Agreement with
Cajun, dated June 26, 1978, and approved by the REA on
August 16, 1979, between Entergy Gulf States and Cajun;
and Letter Agreement regarding CEPCO buybacks, dated
August 28, 1979, between Entergy Gulf States and Cajun
(2, 3, and 4, respectively, to Form 8-K, dated September
7, 1979, in 1-2703).
(d) 10-- Ground Lease, dated August 15, 1980, between
Statmont Associates Limited Partnership (Statmont) and
Entergy Gulf States, as amended (3 to Form 8-K, dated
August 19, 1980, and A-3-b to Form 10-Q for the quarter
ended September 30, 1983 in 1-2703).
(d) 11-- Lease and Sublease Agreement, dated August 15,
1980, between Statmont and Entergy Gulf States, as
amended (4 to Form 8-K, dated August 19, 1980, and A-3-c
to Form 10-Q for the quarter ended September 30, 1983 in
1-2703).
(d) 12-- Lease Agreement, dated September 18, 1980, between
BLC Corporation and Entergy Gulf States (1 to Form 8-K,
dated October 6, 1980 in 1-2703).
(d) 13-- Joint Ownership Participation and Operating
Agreement for Big Cajun, between Entergy Gulf States,
Cajun Electric Power Cooperative, Inc., and Sam Rayburn
G&T, Inc, dated November 14, 1980 (6 to Form 8-K, dated
January 29, 1981 in 1-2703); Amendment No. 1, dated
December 12, 1980 (7 to Form 8-K, dated January 29, 1981
in 1-2703); Amendment No. 2, dated December 29, 1980 (8
to Form 8-K, dated January 29, 1981 in 1-2703).
(d) 14-- Agreement of Joint Ownership Participation between
SRMPA, SRG&T and Entergy Gulf States, dated June 6, 1980,
for Nelson Station, Coal Unit #6, as amended (8 to Form 8-
K, dated June 11, 1980, A-2-b to Form 10-Q For the
quarter ended June 30, 1982; and 10-1 to Form 8-K, dated
February 19, 1988 in 1-2703).
(d) 15-- Agreements between Southern Company and Entergy
Gulf States, dated February 25, 1982, which cover the
construction of a 140-mile transmission line to connect
the two systems, purchase of power and use of
transmission facilities (10-31 to Form 10-K, for the year
ended December 31, 1981 in 1-2703).
+(d) 16-- Executive Income Security Plan, effective October
1, 1980, as amended, continued and completely restated
effective as of March 1, 1991 (10-2 to Form 10-K for the
year ended December 31, 1991 in 1-2703).
(d) 17-- Transmission Facilities Agreement between Entergy
Gulf States and Mississippi Power Company, dated February
28, 1982, and Amendment, dated May 12, 1982 (A-2-c to
Form 10-Q for the quarter ended March 31, 1982 in 1-2703)
and Amendment, dated December 6, 1983 (10-43 to Form 10-
K, for the year ended December 31, 1983 in 1-2703).
(d) 18-- Lease Agreement dated as of June 29, 1983, between
Entergy Gulf States and City National Bank of Baton
Rouge, as Owner Trustee, in connection with the leasing
of a Simulator and Training Center for River Bend Unit 1
(A-2-a to Form 10-Q for the quarter ended June 30, 1983
in 1-2703) and Amendment, dated December 14, 1984 (10-55
to Form 10-K, for the year ended December 31, 1984 in 1-
2703).
(d) 19-- Participation Agreement, dated as of June 29,
1983, among Entergy Gulf States, City National Bank of
Baton Rouge, PruFunding, Inc. Bank of the Southwest
National Association, Houston and Bankers Life Company,
in connection with the leasing of a Simulator and
Training Center of River Bend Unit 1 (A-2-b to Form 10-Q
for the quarter ended June 30, 1983 in 1-2703).
(d) 20-- Tax Indemnity Agreement, dated as of June 29,
1983, between Entergy Gulf States and PruFunding, Inc.,
in connection with the leasing of a Simulator and
Training Center for River Bend Unit I (A-2-c to Form 10-Q
for the quarter ended June 30, 1993 in 1-2703).
(d) 21-- Agreement to Lease, dated as of August 28, 1985,
among Entergy Gulf States, City National Bank of Baton
Rouge, as Owner Trustee, and Prudential Interfunding
Corp., as Trustor, in connection with the leasing of
improvement to a Simulator and Training Facility for
River Bend Unit I (10-69 to Form 10-K, for the year ended
December 31, 1985 in 1-2703).
(d) 22-- First Amended Power Sales Agreement, dated
December 1, 1985 between Sabine River Authority, State of
Louisiana, and Sabine River Authority, State of Texas,
and Entergy Gulf States, Central Louisiana Electric Co.,
Inc., and Louisiana Power and Light Company (10-72 to
Form 10-K for the year ended December 31, 1985 in 1-
2703).
+(d) 23-- Deferred Compensation Plan for Directors of
Entergy Gulf States and Varibus Corporation, as amended
January 8, 1987, and effective January 1, 1987 (10-77 to
Form 10-K for the year ended December 31, 1986 in 1-
2703). Amendment dated December 4, 1991 (10-3 to
Amendment No. 8 in Registration No. 2-76551).
+(d) 24-- Trust Agreement for Deferred Payments to be made
by Entergy Gulf States pursuant to the Executive Income
Security Plan, by and between Entergy Gulf States and
Bankers Trust Company, effective November 1, 1986 (10-78
to Form 10-K for the year ended December 31, 1986 in 1-
2703).
+(d) 25-- Trust Agreement for Deferred Installments under
Entergy Gulf States' Management Incentive Compensation
Plan and Administrative Guidelines by and between Entergy
Gulf States and Bankers Trust Company, effective June 1,
1986 (10-79 to Form 10-K for the year ended December 31,
1986 in 1-2703).
+(d) 26-- Nonqualified Deferred Compensation Plan for
Officers, Nonemployee Directors and Designated Key
Employees, effective December 1, 1985, as amended,
continued and completely restated effective as of March
1, 1991 (10-3 to Amendment No. 8 in Registration No. 2-
76551).
+(d) 27-- Trust Agreement for Entergy Gulf States'
Nonqualified Directors and Designated Key Employees by
and between Entergy Gulf States and First City Bank,
Texas-Beaumont, N.A. (now Texas Commerce Bank), effective
July 1, 1991 (10-4 to Form 10-K for the year ended
December 31, 1992 in 1-2703).
(d) 28-- Lease Agreement, dated as of June 29, 1987, among
GSG&T, Inc., and Entergy Gulf States related to the
leaseback of the Lewis Creek generating station (10-83 to
Form 10-K for the year ended December 31, 1988 in 1-
2703).
(d) 29-- Nuclear Fuel Lease Agreement between Entergy Gulf
States and River Bend Fuel Services, Inc. to lease the
fuel for River Bend Unit 1, dated February 7, 1989 (10-64
to Form 10-K for the year ended December 31, 1988 in 1-
2703).
(d) 30-- Trust and Investment Management Agreement between
Entergy Gulf States and Morgan Guaranty and Trust Company
of New York (the "Decommissioning Trust Agreement) with
respect to decommissioning funds authorized to be
collected by Entergy Gulf States, dated March 15, 1989
(10-66 to Form 10-K for the year ended December 31, 1988
in 1-2703).
(d) 31-- Amendment No. 2 dated November 1, 1995 between
Entergy Gulf States and Mellon Bank to Decommissioning
Trust Agreement (10(d) 31 to Form 10-K for the year ended
December 31, 1995).
(d) 32-- Credit Agreement, dated as of December 29, 1993,
among River Bend Fuel Services, Inc. and Certain
Commercial Lending Institutions and CIBC Inc. as Agent
for the Lenders (10(d) 34 to Form 10-K for year ended
December 31, 1994).
(d) 33-- Amendment No. 1 dated as of January 31, to Credit
Agreement, dated as of December 31, 1993, among River
Bend Fuel Services, Inc. and certain commercial lending
institutions and CIBC Inc. as agent for Lenders (10(d) 33
to Form 10-K for the year ended December 31, 1995).
(d) 34-- Partnership Agreement by and among Conoco Inc.,
and Entergy Gulf States, CITGO Petroleum Corporation and
Vista Chemical Company, dated April 28, 1988 (10-67 to
Form 10-K for the year ended December 31, 1988 in 1-
2703).
+(d) 35-- Gulf States Utilities Company Executive Continuity
Plan, dated January 18, 1991 (10-6 to Form 10-K for the
year ended December 31, 1990 in 1-2703).
+(d) 36-- Trust Agreement for Entergy Gulf States' Executive
Continuity Plan, by and between Entergy Gulf States and
First City Bank, Texas-Beaumont, N.A. (now Texas Commerce
Bank), effective May 20, 1991 (10-5 to Form 10-K for the
year ended December 31, 1992 in 1-2703).
+(d) 37-- Gulf States Utilities Board of Directors'
Retirement Plan, dated February 15, 1991 (10-8 to Form 10-
K for the year ended December 31, 1990 in 1-2703).
+(d) 38-- Gulf States Utilities Company Employees' Trustee
Retirement Plan effective July 1, 1955 as amended,
continued and completely restated effective January 1,
1989; and Amendment No.1 effective January 1, 1993 (10-6
to Form 10-K for the year ended December 31, 1992 in 1-
2703).
(d) 39-- Agreement and Plan of Reorganization, dated June
5, 1992, between Entergy Gulf States and Entergy
Corporation (2 to Form 8-K, dated June 8, 1992 in 1-
2703).
+(d) 40-- Gulf States Utilities Company Employee Stock
Ownership Plan, as amended, continued, and completely
restated effective January 1, 1984, and January 1, 1985
(A to Form 11-K, dated December 31, 1985 in 1-2703).
+(d) 41-- Trust Agreement under the Gulf States Utilities
Company Employee Stock Ownership Plan, dated December 30,
1976, between Entergy Gulf States and the Louisiana
National Bank, as Trustee (2-A to Registration No. 2-
62395).
+(d) 42-- Letter Agreement dated September 7, 1977 between
Entergy Gulf States and the Trustee, delegating certain
of the Trustee's functions to the ESOP Committee (2-B to
Registration Statement No. 2-62395).
+(d) 43-- Gulf States Utilities Company Employees Thrift
Plan as amended, continued and completely restated
effective as of January 1, 1992 (28-1 to Amendment No. 8
to Registration No. 2-76551).
+(d) 44-- Restatement of Trust Agreement under the Gulf
States Utilities Company Employees Thrift Plan,
reflecting changes made through January 1, 1989, between
Entergy Gulf States and First City Bank, Texas-Beaumont,
N.A., (now Texas Commerce Bank ), as Trustee (2-A to Form
8-K dated October 20, 1989 in 1-2703).
(d) 45-- Operating Agreement between Entergy Operations and
Entergy Gulf States, dated as of December 31, 1993 (B-
2(f) to Rule 24 Certificate in 70-8059).
(d) 46-- Guarantee Agreement between Entergy Corporation
and Entergy Gulf States, dated as of December 31, 1993 (B-
5(a) to Rule 24 Certificate in 70-8059).
(d) 47-- Service Agreement with Entergy Services, dated as
of December 31, 1993 (B-6(c) to Rule 24 Certificate in
70-8059).
+(d) 48-- Amendment to Employment Agreement between J. L.
Donnelly and Entergy Gulf States, dated December 22, 1993
(10(d) 57 to Form 10-K for the year ended December 31,
1993 in 1-2703).
(d) 49-- Assignment, Assumption and Amendment Agreement to
Letter of Credit and Reimbursement Agreement between
Entergy Gulf States, Canadian Imperial Bank of Commerce
and Westpac Banking Corporation (10(d) 58 to Form 10-K
for the year ended December 31, 1993 in 1-2703).
(d) 50-- Third Amendment, dated January 1, 1994, to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(d) 51-- Refunding Agreement between Entergy Gulf States
and West Feliciana Parish (dated December 20, 1994 (B-
12(a) to Rule 24 Certificate dated December 30, 1994 in
70-8375).
(d) 52-- Agreement as to Expenses and Liabilities
between Entergy Gulf States and Entergy Gulf States
Capital I, dated as of January 28, 1997 (10(d)52 to Form
10-K for the year ended December 31, 1996 in 1-2703).
+(d) 53-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1997 in 1-11299).
Entergy Louisiana
(e) 1 -- Agreement, dated April 23, 1982, among Entergy
Louisiana and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(e) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(e) 3 -- Amendment, dated as of February 10, 1971, to
Middle South Utilities System Agency Agreement, dated
December 11, 1970 (5(a)-4 in 2-41080).
(e) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(e) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(e) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-42523).
(e) 7 -- Amendment, dated as of January 1, 1972, to Service
Agreement with Entergy Services (4(a)-6 in 2-45916).
(e) 8 -- Amendment, dated as of April 27, 1984, to Service
Agreement with Entergy Services (10(a) 7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(e) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(d)-8 to Form 10-K for
the year ended December 31, 1988, in 1-8474).
(e) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(d)-9 to Form 10-K for
the year ended December 31, 1990, in 1-8474).
(e) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(e) 12 through
(e) 24-- See 10(a)-12 through 10(a)-24 above.
(e) 25-- Fuel Lease, dated as of January 31, 1989, between
River Fuel Company #2, Inc., and Entergy Louisiana
(B-1(b) to Rule 24 Certificate in 70-7580).
(e) 26-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(e) 27-- Compromise and Settlement Agreement, dated June 4,
1982, between Texaco, Inc. and Entergy Louisiana (28(a)
to Form 8-K, dated June 4, 1982, in 1-8474).
+(e) 28-- Post-Retirement Plan (10(c)23 to Form 10-K for the
year ended December 31, 1983, in 1-8474).
(e) 29-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(e) 30-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(e) 31-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(e) 32-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Tax Allocation Agreement, dated
April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(e) 33-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement, dated
January 1, 1990 (D-2 to Form U5S for the year ended
December 31, 1989).
(e) 34-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(e) 35-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(e) 36-- Contract for Disposal of Spent Nuclear Fuel and/or
High-Level Radioactive Waste, dated February 2, 1984,
among DOE, System Fuels and Entergy Louisiana (10(d)33 to
Form 10-K for the year ended December 31, 1984, in
1-8474).
(e) 37-- Operating Agreement between Entergy Operations and
Entergy Louisiana, dated as of June 6, 1990 (B-2(c) to
Rule 24 Certificate, dated June 15, 1990, in 70-7679).
(e) 38-- Guarantee Agreement between Entergy Corporation
and Entergy Louisiana, dated as of September 20, 1990
(B-2(a), to Rule 24 Certificate, dated September 27,
1990, in 70-7757).
+(e) 39-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(e) 40-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(e) 41-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated
May 24, 1991, in 70-7831).
+(e) 42-- Supplemental Retirement Plan (10(a) 69 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(e) 43-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a) 53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(e) 44-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a) 71 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(e) 45-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a) 72 to Form 10-K for the year
ended December 31, 1992 in 1-3517).
+(e) 46-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a) 73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(e) 47-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries (10(a) 74 to Form 10-K for
the year ended December 31, 1992 in 1-3517).
+(e) 48-- Summary Description of Private Ownership Vehicle
Plan of Entergy Corporation and Subsidiaries (10(a) 75 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(e) 49-- Agreement between Entergy Corporation and Edwin
Lupberger (10(a) 42 to Form 10-K for the year ended
December 31, 1985 in 1-3517).
+(e) 50-- Agreement between Entergy Corporation and Jerry D.
Jackson (10(a) 67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(e) 51-- Agreement between Entergy Services and Gerald D.
McInvale (10(a) 68 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(e) 52-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1997 in 1-11299).
+(e) 53-- Agreement between System Energy and Donald C.
Hintz (10(b) 47 to Form 10-K for the year ended
December 31, 1991 in 1-9067).
+(e) 54-- Summary Description of Retired Outside Director
Benefit Plan (10(c)90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(e) 55-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(e) 56-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
(e) 57-- Installment Sale Agreement, dated July 20, 1994,
between Entergy Louisiana and St. Charles Parish,
Louisiana (B-6(e) to Rule 24 Certificate dated August 1,
1994 in 70-7822).
(e) 58-- Installment Sale Agreement, dated November 1,
1995, between Entergy Louisiana and St. Charles Parish,
Louisiana (B-6(a) to Rule 24 Certificate dated December
19, 1995 in 70-8487).
(e) 59-- Agreement as to Expenses and Liabilities between
Entergy Louisiana, Inc. and Entergy Louisiana Capital I
dated July 16, 1996 (4(d) to Form 10-Q for the quarter
ended June 30, 1996 in 1-8474).
Entergy Mississippi
(f) 1 -- Agreement dated April 23, 1982, among Entergy
Mississippi and certain other System companies, relating
to System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(f) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(f) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a) 4 in 2-41080).
(f) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(f) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(f) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (D in 37-63).
(f) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (A to Notice, dated
October 14, 1971, in 37-63).
(f) 8 -- Amendment, dated April 27, 1984, to Service
Agreement with Entergy Services (10(a) 7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(f) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(e) 8 to Form 10-K for
the year ended December 31, 1988, in 0-320).
(f) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(e) 9 to Form 10-K for
the year ended December 31, 1990, in 0-320).
(f) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(f) 12 though
(f) 24-- See 10(a)-12 - 10(a)-24 above.
(f) 25-- Installment Sale Agreement, dated as of June 1,
1974, between Entergy Mississippi and Washington County,
Mississippi (B-2(a) to Rule 24 Certificate, dated August
1, 1974, in 70-5504).
(f) 26-- Installment Sale Agreement, dated as of July 1,
1982, between Entergy Mississippi and Independence
County, Arkansas, (B-1(c) to Rule 24 Certificate dated
July 21, 1982, in 70-6672).
(f) 27-- Installment Sale Agreement, dated as of December
1, 1982, between Entergy Mississippi and Independence
County, Arkansas, (B-1(d) to Rule 24 Certificate dated
December 7, 1982, in 70-6672).
(f) 28-- Amended and Restated Installment Sale Agreement,
dated as of April 1, 1994, between Entergy Mississippi
and Warren County, Mississippi, (B-6(a) to Rule 24
Certificate dated May 4, 1994, in 70-7914).
(f) 29-- Amended and Restated Installment Sale Agreement,
dated as of April 1, 1994, between Entergy Mississippi
and Washington County, Mississippi, (B-6(b) to Rule 24
Certificate dated May 4, 1994, in 70-7914).
(f) 30-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B-3(a) in 70-6337).
(f) 31-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Operating Agreement
(10(c) 51 to Form 10-K for the year ended December 31,
1984, in 0-375).
(f) 32-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Ownership Agreement
(10(c) 54 to Form 10-K for the year ended December 31,
1984, in 0-375).
(f) 33-- Owners Agreement, dated November 28, 1984, among
Entergy Arkansas, Entergy Mississippi and other co-
owners of the Independence Station (10(c) 55 to Form 10-K
for the year ended December 31, 1984, in 0-375).
(f) 34-- Consent, Agreement and Assumption, dated December
4, 1984, among Entergy Arkansas, Entergy Mississippi,
other co-owners of the Independence Station and United
States Trust Company of New York, as Trustee (10(c) 56 to
Form 10-K for the year ended December 31, 1984, in
0-375).
(f) 35-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(f) 36-- Post-Retirement Plan (10(d) 24 to Form 10-K for
the year ended December 31, 1983, in 0-320).
(f) 37-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(f) 38-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(f) 39-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(f) 40-- Sales Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (D to Rule
24 Certificate, dated June 26, 1974, in 70-5399).
(f) 41-- Service Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (E to Rule
24 Certificate, dated June 26, 1974, in 70-5399).
(f) 42-- Partial Termination Agreement, dated as of
December 1, 1986, between System Energy and Entergy
Mississippi (A-2 to Rule 24 Certificate dated January 8,
1987, in 70-5399).
(f) 43-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(f) 44-- First Amendment dated January 1, 1990 to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Tax Allocation Agreement (D-2 to Form U5S
for the year ended December 31, 1989).
(f) 45-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(f) 46-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
+(f) 47-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(f) 48-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(f) 49-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated
May 24, 1991, in 70-7831).
+(f) 50-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(f) 51-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(f) 52-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(f) 53-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(f) 54-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a)73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(f) 55-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(f) 56-- Summary Description of Private Ownership Vehicle
Plan of Entergy Corporation and Subsidiaries (10(a)75 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(f) 57-- Agreement between Entergy Corporation and Edwin
Lupberger (10(a)-42 to Form 10-K for the year ended
December 31, 1985 in 1-3517).
+(f) 58-- Agreement between Entergy Corporation and Jerry D.
Jackson (10(a)-67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(f) 59-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(f) 60-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1997 in 1-11299).
+(f) 61-- Agreement between System Energy and Donald C.
Hintz (10(b)-47 to Form 10-K for the year ended
December 31, 1991 in 1-9067).
+(f) 62-- Summary Description of Retired Outside Director
Benefit Plan (10(c)-90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(f) 63-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(f) 64-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
Entergy New Orleans
(g) 1 -- Agreement, dated April 23, 1982, among Entergy New
Orleans and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a)-1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(g) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(g) 3 -- Amendment dated as of February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a)-4 in 2-41080).
(g) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(g) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(g) 6 -- Service Agreement with Entergy Services dated as
of April 1, 1963 (5(a)-5 in 2-42523).
(g) 7 -- Amendment, dated as of January 1, 1972, to Service
Agreement with Entergy Services (4(a)-6 in 2-45916).
(g) 8 -- Amendment, dated as of April 27, 1984, to Service
Agreement with Entergy Services (10(a)7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(g) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(f)-8 to Form 10-K for
the year ended December 31, 1988, in 0-5807).
(g) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(f)-9 to Form 10-K for
the year ended December 31, 1990, in 0-5807).
(g) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for year ended December 31, 1994 in 1-3517).
(g) 12 through
(g) 24-- See 10(a)-12 - 10(a)-24 above.
(g) 25-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(g) 26-- Post-Retirement Plan (10(e) 22 to Form 10-K for
the year ended December 31, 1983, in 1-1319).
(g) 27-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(g) 28-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(g) 29-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(g) 30-- Transfer Agreement, dated as of June 28, 1983,
among the City of New Orleans, Entergy New Orleans and
Regional Transit Authority (2(a) to Form 8-K, dated June
24, 1983, in 1-1319).
(g) 31-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(g) 32-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(g) 33-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(g) 34-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
+(g) 35-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a)52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(g) 36-- Entergy Corporation Annual Incentive Plan (10(a)54
to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(g) 37-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated
May 24, 1991, in 70-7831).
+(g) 38-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(g) 39-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(g) 40-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(g) 41-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(g) 42-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a)73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(g) 43-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(g) 44-- Summary Description of Private Ownership Vehicle
Plan of Entergy Corporation and Subsidiaries (10(a)75 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(g) 45-- Agreement between Entergy Corporation and Edwin
Lupberger (10(a)-42 to Form 10-K for the year ended
December 31, 1985 in 1-3517).
+(g) 46-- Agreement between Entergy Corporation and Jerry D.
Jackson (10(a)-67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(g) 47-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(g) 48-- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1997 in 1-11299).
+(g) 49-- Agreement between System Energy and Donald C.
Hintz (10(b)-47 to Form 10-K for the year ended December
31, 1991 in 1-9067).
+(g) 50-- Summary Description of Retired Outside Director
Benefit Plan (10(c)-90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(g) 51-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(g) 52-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
Entergy London
(h) 1 -- London Electricity Public Electricity Supply
("PES") License dated March 26, 1990, as revised through
January 8, 1996 (10.01 in File No. 333-33331).
(h) 2 -- Modifications to the PES License issued to London
Electricity effective October 1997 (10.02 in File No. 333-
33331).
(h) 3 -- Second-Tier License to Supply Electricity for
London Electricity dated March 25, 1991 (10.03 in File
No. 333-33331).
(h) 4 -- Pooling and Settlement Agreement dated March 30,
1990, as amended and restated at October 17, 1996, and as
supplemented through July 28, 1997 among the Generators
named therein, the Suppliers named therein (including
London Electricity), Energy Settlements and Information
Services (as Settlement System Administrator), Energy
Pool Funds Administration Limited (as Pool Funds
Administrator), The National Grid Company plc (as Grid
Operator and Ancillary Services Provider), London
Electricity and Other Parties (10.04 in File No.
333-33331).
(h) 5 -- Master Connection and Use of System Agreement
dated as of March 30, 1990 among The National Grid
Company plc and its users (including London Electricity)
(10.05 in File No. 333-33331).
(h) 6 -- Master Agreement dated as of October 25, 1995
among The National Grid Holding plc, The National Grid
Company plc, London Electricity and the other RECs (10.06
in File No. 333-33331).
(h) 7 -- Memorandum of Understanding between the National
Grid Group plc, London Electricity and each of the RECs,
dated November 17, 1995 (10.07 in File No. 333-33331).
+(h) 8 -- Agreement between Entergy Services and Gerald D.
McInvale (10(a)-68 to Form 10-K for the year ended
December 31, 1997 in 1-11299).
(12) Statement Re Computation of Ratios
*(a) Entergy Arkansas's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(b) Entergy Gulf States' Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(c) Entergy Louisiana's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(d) Entergy Mississippi's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(e) Entergy New Orleans' Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(f) System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
*(g) Entergy London's Computation of Ratios of Earnings to
Fixed Charges, as defined.
*(21) Subsidiaries of the Registrants
(23) Consents of Experts and Counsel
*(a) The consent of Coopers & Lybrand L.L.P. is contained
herein at page 248.
*(24) Powers of Attorney
(27) Financial Data Schedule
*(a) Financial Data Schedule for Entergy Corporation and
Subsidiaries as of December 31, 1997.
*(b) Financial Data Schedule for Entergy Arkansas as of
December 31, 1997.
*(c) Financial Data Schedule for Entergy Gulf States as of
December 31, 1997.
*(d) Financial Data Schedule for Entergy Louisiana as of
December 31, 1997.
*(e) Financial Data Schedule for Entergy Mississippi as of
December 31, 1997.
*(f) Financial Data Schedule for Entergy New Orleans as of
December 31, 1997.
*(g) Financial Data Schedule for System Energy as of December
31, 1997.
*(h) Financial Data Schedule for Entergy London as of December
31, 1997.
_________________
* Filed herewith.
+ Management contracts or compensatory plans or arrangements.
Exhibit 3(i)(f)1
RESTATED ARTICLES OF INCORPORATION
OF
MISSISSIPPI POWER & LIGHT COMPANY
Pursuant to the provisions of Section 64 of the Mississippi
Business Corporation Law (Section 79-3-127, Mississippi Code of
1972, as amended), the undersigned Corporation adopts the
following Restated Articles of Incorporation:
FIRST: The name of the Corporation is MISSISSIPPI POWER &
LIGHT COMPANY.
SECOND: The period of its duration is ninety-nine (99)
years.
THIRD: The purpose or purposes which the Corporation is
authorized to pursue are:
To acquire, buy, hold, own, sell, lease, exchange, dispose
of, finance, deal in, construct, build, equip, improve, use,
operate, maintain and work upon:
(a) Any and all kinds of plants and systems for the
manufacture, production, storage, utilization, purchase,
sale, supply, transmission, distribution or disposition of
electricity, natural or artificial gas, water or steam, or
power produced thereby, or of ice and refrigeration of any
and every kind;
(b) Any and all kinds of telephone, telegraph, radio,
wireless and other systems, facilities and devices for the
receipt and transmission of sounds and signals, any and all
kinds of interurban, city and street railways and railroads
and bus lines for the transportation of passengers and/or
freight, transmission lines, systems, appliances, equipment
and devices and tracks, stations, buildings and other
structures and facilities;
(c) Any and all kinds of works, power plants,
manufactories, structures, substations, systems, tracks,
machinery, generators, motors, lamps, poles, pipes, wires,
cables, conduits, apparatus, devices, equipment, supplies,
articles and merchandise of every kind pertaining to or in
anywise connected with the construction, operation or
maintenance of telephone, telegraph, radio, wireless and
other systems, facilities and devices for the receipt and
transmission of sounds and signals, or of interurban, city
and street railways and railroads and bus lines, or in
anywise connected with or pertaining to the manufacture,
production, purchase, use, sale, supply, transmission,
distribution, regulation, control or application of
electricity, natural or artificial gas, water, steam, ice,
refrigeration and power or any other purposes;
To acquire, buy, hold, own, sell, lease, exchange, dispose
of, transmit, distribute, deal in, use, manufacture, produce,
furnish and supply street and interurban railway and bus service,
electricity, natural or artificial gas, light, heat, ice,
refrigeration, water and steam in any form and for any purposes
whatsoever, and any power or force or energy in any form and for
any purposes whatsoever;
To buy, sell, manufacture, produce and generally deal in
milk, cream and any articles or substances used or usable in or
in connection with the manufacture and production of ice cream,
ices, beverages and soda fountain supplies; to buy, sell,
manufacture, produce and generally deal in ice cream and ices;
To acquire, organize, assemble, develop, build up and
operate constructing and operating and other organizations and
systems, and to hire, sell, lease, exchange, turn over, deliver
and dispose of such organizations and systems in whole or in part
and as going organizations and systems and otherwise, and to
enter into and perform contracts, agreements and undertakings of
any kind in connection with any or all the foregoing powers;
To do a general contracting business;
To purchase, acquire, develop, mine, explore, drill, hold,
own and dispose of lands, interests in and rights with respect to
lands and waters and fixed and movable property;
To borrow money and contract debts when necessary for the
transaction of the business of the Corporation or for the
exercise of its corporate rights, privileges or franchises or for
any other lawful purpose of its incorporation; to issue bonds,
promissory notes, bills of exchange, debentures and other
obligations and evidences of indebtedness payable at a specified
time or times or payable upon the happening of a specified event
or events, whether secured by mortgage, pledge or otherwise or
unsecured, for money borrowed or in payment for property
purchased or acquired or any other lawful objects;
To guarantee, purchase, hold, sell, assign, transfer,
mortgage, pledge or otherwise dispose of the shares of the
capital stock of, or any bonds, securities or evidences of
indebtedness created by, any other corporation or corporations of
the State of Mississippi or any other state or government and,
while the owner of such stock, to exercise all the rights, powers
and privileges of individual ownership with respect thereto
including the right to vote thereon, and to consent and otherwise
act with respect thereto;
To aid in any manner any corporation or association,
domestic or foreign, or any firm or individual, any shares of
stock in which or any bonds, debentures, notes, securities,
evidences of indebtedness, contracts or obligations of which are
held by or for the Corporation or in which or in the welfare of
which the Corporation shall have any interest, and to do any acts
designed to protect, preserve, improve or enhance the value of
any property at any time held or controlled by the Corporation,
or in which it may be at any time interested; and to organize or
promote or facilitate the organization of subsidiary companies;
To purchase, hold, sell and transfer shares of its own
capital stock, provided that the Corporation shall not purchase
its own shares of capital stock except from surplus of its assets
over its liabilities including capital; and provided, further,
that the shares of its own capital stock owned by the Corporation
shall not be voted upon directly or indirectly nor counted as
outstanding for the purposes of any stockholders' quorum or vote;
In any manner to acquire, enjoy, utilize and to dispose of
patents, copyrights and trade-marks and any licenses or other
rights or interests therein and thereunder:
To purchase, acquire, hold, own or dispose of franchises,
concessions, consents, privileges and licenses necessary for and
in its opinion useful or desirable for or in connection with the
foregoing powers;
To do all and everything necessary and proper for the
accomplishment of the objects enumerated in these Restated
Articles of Incorporation or any amendment thereof or necessary
or incidental to the protection and benefits of the Corporation,
and in general to carry on any lawful business necessary or not
incidental to the attainment of the objects of the Corporation
whether or not such business is similar in nature to the objects
set forth in these Restated Articles of Incorporation or any
amendment thereof.
To do any or all things herein set forth, to the same extent
and as fully as natural persons might or could do, and in any
part of the world, and as principal, agent, contractor or
otherwise, and either alone or in conjunction with any other
persons, firms, associations or corporations;
To conduct its business in all its branches in the State of
Mississippi, other states, the District of Columbia, the
territories and colonies of the United States, and any foreign
countries, and to have one or more offices out of the State of
Mississippi and to hold, purchase, mortgage and convey real and
personal property both within and without the State of
Mississippi; provided, however, that the Corporation shall not
exercise any of the powers set forth herein for the purpose of
engaging in business as a street railway, telegraph or telephone
company unless prior thereto this Article Third shall have been
amended to set forth a description of the line and the points it
will traverse.
FOURTH: The aggregate number of shares which the Corporation
shall have authority to issue is 17,004,478 shares, divided into
2,004,476 shares of Preferred Stock of the par value of $100 per
share and 15,000,000 shares of Common Stock without par value.
The preferences, limitations and relative rights in respect
of the shares of each class and the variations in the relative
rights and preferences as between series of any preferred or
special class in series are as follows:
The Preferred Stock shall be issuable in one or more series
from time to time and the shares of each series shall have the
same rank and be identical with each other and shall have the
same relative rights except with respect to the following:
(a) The number of shares to constitute each such series
and the distinctive designation thereof;
(b) The annual rate or rates of dividends payable on
shares of such series, the dates on which dividends shall be
paid in each year and the date from which such dividends
shall commence to accumulate;
(c) The amount or amounts payable upon redemption
thereof; and
(d) The sinking fund provisions, if any, for the
redemption or purchase of shares;
which different characterics of clauses (a), (b), (c) and (d)
above may be stated and expressed with respect to each series in
the resolution or resolutions providing for the issue of such
series adopted by the Board of Directors or in these Restated
Articles of Incorporation of any amendment thereof.
A series of 60,000 shares of Preferred Stock shall:
(a) be designated "4.36% Preferred Stock Cumulative,
$100 Par Value";
(b) have a dividend rate of $4.36 per share per annum
payable quarterly on February 1, May 1, August 1 and
November 1 of each year, the first dividend date to be
February 1, 1963, and such dividends to be cumulative from
the last date to which dividends upon the 4.36% Preferred
Stock Cumulative, $100 Par Value, of Mississippi Power &
Light Company, a Florida corporation, are paid;
(c) be subject to redemption in the manner provided
herein with respect to the Preferred Stock at the price of
$105.36 per share if redeemed on or before February 1, 1964,
and of $103.88 per share if redeemed after February 1, 1964,
in each case plus an amount equivalent to the accumulated
and unpaid dividends thereon, if any, to the date fixed for
redemption.
A series of 44,476 shares of the Preferred Stock shall:
(a) be designated "4.56% Preferred Stock, Cumulative,
$100 Par Value";
(b) have a dividend rate of $4.56 per share per annum
payable quarterly on February 1, May 1, August 1 and
November 1 of each year, the first dividend date to be
February 1, 1963, and such dividends to be cumulative from
the last date to which dividends upon the 4.56% Preferred
Stock, Cumulative, $100 Par Value, of Mississippi Power &
Light Company, a Florida corporation, are paid; and
(c) be subject to redemption in the manner provided
herein with respect to the Preferred Stock at the price of
$108.50 per share if redeemed on or before November 1, 1964,
and of $107.00 per share if redeemed after November 1, 1964,
in each case plus an amount equivalent to the accumulated
and unpaid dividends thereon, if any, to the date fixed for
redemption.
A series of 100,000 shares of the Preferred Stock shall:
(a) be designated "4.92% Preferred Stock, Cumulative,
$100 Par Value";
(b) have a dividend rate of $4.92 per share per annum
payable quarterly on February 1, May 1, August 1 and
November 1 of each year, the first dividend date to be
February 1, 1966, and such dividends to be cumulative from
the date of issue of said series; and
(c) be subject to redemption at the price of $106.30 per
share if redeemed on or before January 1, 1971, of $104.38
per share if redeemed after January 1, 1971 and on or before
January 1, 1976, and of $102.88 per share if redeemed after
January 1, 1976, in each case plus an amount equivalent to
the accumulated and unpaid dividends thereon, if any, to the
date fixed for redemption.
A series of 75,000 shares of the Preferred Stock shall:
(a) be designated "9.16% Preferred Stock, Cumulative,
$100 Par Value";
(b) have a dividend rate of $9.16 per share per annum
payable quarterly on February 1, May 1, August 1 and
November 1 of each year, the first dividend date to be
November 1, 1970, and such dividends to be cumulative from
the date of issue of said series; and
(c) be subject to redemption at the price of $110.93 per
share if redeemed on or before August 1, 1975, of $108.64
per share if redeemed after August 1, 1975 and on or before
August 1, 1980, of $106.35 per share if redeemed after
August 1, 1980 and on or before August 1, 1985, and of
$104.06 per share if redeemed after August 1, 1985, in each
case plus an amount equivalent to the accumulated and unpaid
dividends thereon, if any, to the date fixed for redemption;
provided, however, that no share of the 9.16% Preferred
Stock, Cumulative, $100 Par Value, shall be redeemed prior
to August 1, 1975 if such redemption is for the purpose or
in anticipation of refunding such share through the use,
directly or indirectly, of funds borrowed by the
Corporation, or through the use, directly or indirectly, of
funds derived through the issuance by the Corporation of
stock ranking prior to or on a parity with the 9.16%
Preferred Stock, Cumulative, $100 Par Value, as to dividends
or assets, if such borrowed funds have an effective interest
cost to the Corporation (computed in accordance with
generally accepted financial practice) or such stock has an
effective dividend cost to the Corporation (so computed) of
less than the effective dividend cost to the Corporation of
the 9.16% Preferred Stock, Cumulative, $100 Per Value.
A series of 100,000 shares of the Preferred Stock shall:
(a) be designated "7.44% Preferred Stock, Cumulative,
$100 Par Value";
(b) have a dividend rate of $7.44 per share per annum
payable quarterly on February 1, May 1, August 1 and
November 1 of each year, the first dividend date to be May
1, 1973, and such dividends to be cumulative from February
14, 1973; and
(c) be subject to redemption at the price of $108.39 per
share if redeemed on or before February 1, 1978, of $106.53
per share if redeemed after February 1, 1978 and on or
before February 1, 1983, of $104.67 per share if redeemed
after February 1, 1983 and on or before February 1, 1988,
and of $102.81 per share if redeemed after February 1, 1988,
in each case plus an amount equivalent to the accumulated
and unpaid dividends thereon, if any, to the date fixed for
redemption; provided, however, that no share of the 7.44%
Preferred Stock, Cumulative, $100 Par Value, shall be
redeemed prior to February 1, 1978 if such redemption is for
the purpose or in anticipation of refunding such share
through the use, directly or indirectly, of funds borrowed
by the Corporation, or through the use, directly or
indirectly, of funds derived through the issuance by the
Corporation of stock ranking prior to or on a parity with
the 7.44% Preferred Stock, Cumulative, $100 Par Value, as to
dividends or assets, if such borrowed funds have an
effective interest cost to the Corporation (computed in
accordance with generally accepted financial practice) or
such stock has an effective dividend cost to the Corporation
(so computed) of less than the effective dividend cost to
the Corporation of the 7.44% Preferred Stock, Cumulative,
S100 Par Value.
A series of 200,000 shares of the Preferred Stock shall:
(a) be designated "17% Preferred Stock, Cumulative, $100
Par Value"
(b) have a dividend rate of $17.00 per share per annum
payable quarterly on February 1, May 1, August 1 and
November 1 of each year, the first dividend date to be
November 1, 1981, and such dividends to be cumulative from
the date of issuance;
(c) be subject to redemption at the price of $117.00 per
share if redeemed on or before September 1, 1986, of $112.75
per share if redeemed after September 1, 1986 and on or
before September 1, 1991, of $108.50 per share if redeemed
after September 1, 1991 and on or before September 1, 1996,
and of $104.25 per share if redeemed after September 1,
1996, in each case plus an amount equivalent to the
accumulated and unpaid dividends thereon, if any, to the
date fixed for redemption; provided, however, that no share
of the 17% Preferred Stock Cumulative, $100 Par Value, shall
be redeemed prior to September 1, 1986 if such redemption is
for the purpose or in anticipation of refunding such share
through the use, directly or indirectly, of funds borrowed
by the Corporation or through the use, directly or
indirectly, of funds derived through the issuance by the
Corporation of stock ranking prior to or on a parity with
the 17% Preferred Stock, Cumulative, $100 Par Value, as to
dividends or assets if such borrowed funds have an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice) or such stock;
has an effective dividend cost to the Corporation (so
computed) of less than the effective dividend cost to the
Corporation of the 17% Preferred Stock, Cumulative, $100 Par
Value; and
(d) be subject to redemption as and for a sinking fund
as follows: On September 1, 1986 and on each September 1
thereafter (each such date being hereinafter referred to as
a "17% Sinking Fund Redemption Date"), for so long as any
shares of the 17% Preferred Stock, Cumulative, $100 Par
Value, shall remain outstanding, the Corporation shall
redeem, out of funds legally available therefor, 10,000
shares of the 17% Preferred Stock, Cumulative, $100 Par
value (or the number of shares then outstanding if less than
10,000) at the sinking fund redemption price of $100 per
share plus, as to each share so redeemed, an amount
equivalent to the accumulated and unpaid dividends thereon,
if any, to the date of redemption (the obligation of the
Corporation so to redeem the shares of the 17% Preferred
Stock, Cumulative, $100 Par Value, being hereinafter
referred to as the "17% Sinking Fund Obligation"); the 17%
Sinking Fund Obligation shall be cumulative; if on any 17%
Sinking Fund Redemption Date, the Corporation shall not have
funds legally available therefor sufficient to redeem the
full number of shares required to be redeemed on that date,
the 17% Sinking Fund Obligation with respect to the shares
not redeemed shall carry forward to each successive 17%
Sinking Fund Redemption Date until such shares shall have
been redeemed; whenever on any 17% Sinking Fund Redemption
Date, the funds of the Corporation legally available for the
satisfaction of the 17% Sinking Fund Obligation and all
other sinking fund and similar obligations then existing
with respect to any other class or series of its stock
ranking on a parity as to dividends or assets with the 17%
Preferred Stock, Cumulative, $100 Par Value (such Obligation
and obligations collectively being hereinafter referred to
as the "Total Sinking Fund Obligation") are insufficient to
permit the Corporation to satisfy fully its Total Sinking
Fund Obligation on that date, the Corporation shall apply to
the satisfaction of its 17% Sinking Fund Obligation on that
date that proportion of such legally available funds which
is equal to the ratio of such 17% Sinking Fund Obligation to
such Total Sinking Fund Obligation; in addition to the 17%
Sinking Fund Obligation, the Corporation shall have the
option, which shall be noncumulative, to redeem, upon
authorization of the Board of Directors, on each 17% Sinking
Fund Redemption Date, at the aforesaid sinking fund
redemption price, up to 10,000 additional shares of the 17%
Preferred Stock, Cumulative, $100 Par Value; the Corporation
shall be entitled, at its election, to credit against its
17% Sinking Fund Obligation on any 17% Sinking Fund
Redemption Date any shares of the 17% Preferred Stock,
Cumulative, Stock Par Value (including shares of the 17%
Preferred Stock, Cumulative, $100 Par Value optionally
redeemed at the aforesaid sinking fund price) theretofore
redeemed (other than shares of the 17% Preferred Stock,
Cumulative, $100 Par Value redeemed pursuant to the 17%
Sinking Fund Obligation) purchased or otherwise acquired and
not previously credited against the 17% Sinking Fund
Obligation.
A series of 100,000 shares of the Preferred Stock shall:
(a) be designated "14-3/4% Preferred Stock, Cumulative,
$100 Par Value";
(b) have a dividend rate of $14.75 per share per annum
payable quarterly on February 1, May 1, August 1 and
November 1 of each year, the first dividend date to be May 1
1982, and such dividends to be cumulative from the date of
issuance;
(c) be subject to redemption at the price of $114.75 per
share if redeemed after the issuance and sale and on or
before March 1, 1983, $113.11 per share if redeemed after
March 1, 1983 and on or before March 1, 1984, $111.47 per
share if redeemed after March 1, 1984 and on or before March
1, 1985, $109.83 per share if redeemed after March 1, 1985
and on or before March 1, 1986, $108.19 per share if
redeemed after March 1, 1986 and on or before March 1, 1987,
$106.56 per share if redeemed after March 1, 1987 and on or
before March 1, 1988, $104.92 per share if redeemed after
March 1, 1988 and on or before March 1, 1989, $103.28 per
share if redeemed after March 1, 1989 and on or before March
1, l990, $101.64 per share if redeemed after March 1, 1990
and on or before March 1, 1991, and $100.00 per share if
redeemed after March 1, 1991, in each case plus an amount
equivalent to the accumulated and unpaid dividends thereon,
if any, to the date fixed for redemption; provided, however,
that no share of the 14-3/4% Preferred Stock, Cumulative,
$100 Par Value, shall be redeemed prior to March 1, 1987 if
such redemption is for the purpose or in anticipation of
refunding such share through the use, directly or
indirectly, of funds borrowed by the Corporation, or through
the use, directly or indirectly, of funds derived through
the issuance by the Corporation of stock ranking prior to or
on a parity with the 14-3/4% Preferred Stock, Cumulative,
$100 Par Value, as to dividends or assets, if such borrowed
funds have an effective interest cost to the Corporation
(computed in accordance with generally accepted financial
practice) or such stock has an effective dividend cost to
the Corporation (so computed) of less than the effective
dividend cost to the Corporation of the 14-3/4% Preferred
Stock, Cumulative, $100 Par Value; and
(d) be subject to redemption as and for a sinking fund
as follows. On March 1, 1990, 1991 and 1992 (each such date
being hereinafter referred to as a "14-3/4% Sinking Fund
Redemption Date"), the Corporation shall redeem, out of
funds legally available therefor, 33,333, 33,333 and 33,334
shares, respectively, of the 14-3/4% Preferred Stock,
Cumulative, $100 Par Value, at the sinking fund redemption
price of $100 per share plus, as to each share so redeemed,
an amount equivalent to the accumulated and unpaid dividends
thereon, if any, to the date of redemption (the obligation
of the Corporation so to redeem the shares of the 14-3/4%
Preferred Stock, Cumulative, $100 Par Value, being
hereinafter referred to as the "14-3/4% Sinking Fund
Obligation"); the 14-3/4% Sinking Fund Obligation shall be
cumulative; if on any 14-3/4% Sinking Fund Redemption Date,
the Corporation shall not have funds legally available
therefor sufficient to redeem the full number of shares
required to be redeemed on that date, the 14-3/4% Sinking
Fund Obligation with respect to the shares not redeemed
shall carry forward to each successive 14-3/4% Sinking Fund
Redemption Date (or, in the event the 14-3/4% Sinking Fund
Obligation is not satisfied on March 1, 1992, to such date
as soon thereafter as funds are legally available to satisfy
the 14-3/4% Sinking Fund Obligation) until such shares shall
have been redeemed; whenever on any 14-3/4% Sinking Fund
Redemption Date, the funds of the Corporation legally
available for the satisfaction of the 14-3/4% Sinking Fund
Obligation and all other sinking fund and similar
obligations then existing with respect to any other class or
series of its stock ranking on a parity as to dividends or
assets with the 14-3/4% Preferred Stock, Cumulative, $100
Par Value (such Obligation and obligations collectively
being hereinafter referred to as the "Total Sinking Fund
Obligation") are insufficient to permit the Corporation to
satisfy fully its Total Sinking Fund Obligation on that
date, the Corporation shall apply to the satisfaction of its
14-3/4% Sinking Fund Obligation on that date that proportion
of such legally available funds which is equal to the ratio
of such 14-3/4% Sinking Fund Obligation to such Total
Sinking Fund Obligation.
A series of 100,000 shares of the Preferred Stock shall:
(a) be designated "12.00% Preferred Stock, Cumulative,
$100 Par Value";
(b) have a dividend rate of $12.00 per share per annum
payable quarterly on February 1, May 1, August 1 and
November l of each year, the first dividend date to be May
1, 1983, and such dividends to be cumulative from the date
of issuance;
(c) be subject to redemption at the price of $112.00 per
share if redeemed on or before March 1, 1988, of $109.00 per
share if redeemed after March 1, 1988 and on or before March
1, 1993, of $106.00 per share if redeemed after March 1,
1993 and on or before March 1, 1998, and of $103.00 per
share if redeemed after March 1, 1998, in each case plus an
amount equivalent to the accumulated and unpaid dividends
thereon, if any, to the date fixed for redemption; provided,
however, that no share of the 12.00% Preferred Stock,
Cumulative, $100 Par Value, shall be redeemed prior to March
1, 1988 if such redemption is for the purpose or in anticipa
tion of refunding such share through the use, directly or
indirectly, of funds borrowed by the Corporation, or through
the use, directly or indirectly, of funds derived through
the issuance by the Corporation of stock ranking prior to or
on a parity with the 12.00% Preferred Stock, Cumulative,
$100 Par Value, as to dividends or assets, if such borrowed
funds have an effective interest cost to the Corporation
(computed in accordance with generally accepted financial
practice) or such stock has an effective dividend cost to
the Corporation (so computed) of less than 12.7497% to per
annum; and
(d) be subject to redemption as and for a sinking fund
as follows: on March 1, 1888 and on each March 1 thereafter
(each such date being hereinafter referred to as a "12.00%
Sinking Fund Redemption Date"), for so long as any shares of
the 12.00% Preferred Stock, Cumulative, $100 Par Value,
shall remain outstanding, the Corporation shall redeem, out
of funds legally available therefor, 5,000 shares of the
12.00% Preferred Stock, Cumulative, $100 Par Value (or the
number of shares then outstanding if less than 5,000) at the
sinking fund redemption price of $100 per share plus, as to
each share so redeemed, an amount equivalent to the
accumulated and unpaid dividends thereon, if any, to the
date of redemption (the obligation of the Corporation so to
redeem the shares of the 12.00% Preferred Stock, Cumulative,
$100 Par Value, being hereinafter referred to as the "12.00%
Sinking Fund Obligation"); the 12.00% Sinking Fund
Obligation shall be cumulative; if on any 12.00% Sinking
Fund Redemption Date, the Corporation shall not have funds
legally available therefor sufficient to redeem the full
number of shares required to be redeemed on that date, the
12.00% Sinking Fund Obligation with respect to the shares
not redeemed shall carry forward to each successive 12.00%
Sinking Fund Redemption Date until such shares shall have
been redeemed; whenever on any 12.00% Sinking Fund
Redemption Date, the funds of the Corporation legally
available for the satisfaction of the 12.00% Sinking Fund
Obligation and all other sinking fund and similar
obligations then existing with respect to any other class or
series of its stock ranking on a parity as to dividends or
assets with the 12.00% Preferred Stock Cumulative, $100 Par
Value (such Obligation and obligations collectively being
hereinafter referred to as the "Total Sinking Fund
Obligation") are insufficient to permit the Corporation to
satisfy fully its Total Sinking Fund Obligation on that
date, the Corporation shall apply to the satisfaction of its
12.00% Sinking Fund Obligation on that date that proportion
of such legally available funds which is equal to the ratio
of such 12.00% Sinking Fund Obligation to such Total Sinking
Fund Obligation; in addition to the 12.00% Sinking Fund
Obligation, the Corporation shall have the option, which
shall be noncumulative, to redeem, upon authorization of the
Board of Directors, on each 12.00% Sinking Fund Redemption
Date, at the aforesaid sinking fund redemption price, up to
5,000 additional shares of the 12.00% Preferred Stock
Cumulative, $100 Par Value; the Corporation shall be
entitled, at its election, to credit against its 12.00%
Sinking Fund Obligation on any 12.00% Sinking Fund
Redemption Date any shares of the 12.00% Preferred Stock,
Cumulative, $100 Par Value (including shares of the 12.00%
Preferred Stock Cumulative, $100 Par Value optionally
redeemed at the aforesaid sinking fund price) theretofore
redeemed (other than shares of the 12.00% Preferred Stock,
Cumulative, $100 Par Value redeemed pursuant to the 12.00%
Sinking Fund Obligation) purchased or otherwise acquired and
not previously credited against the 12.00% Sinking Fund
Obligation.
Subject to the foregoing, the distinguishing characteristics
of the Preferred Stock shall be:
(A) Each series of the Preferred Stock, pari passu with all
shares of preferred stock of any class or series then
outstanding, shall be entitled but only when and as declared by
the Board of Directors, out of funds legally available for the
payment of dividends in preference to the Common Stock, to
dividends at the rate stated and expressed with respect to such
series herein or by the resolution or resolutions providing for
the issue of such series adopted by the Board of Directors; such
dividends to be cumulative from such date and payable on such
dates in each year as may be stated and expressed in said
resolution, to stockholders of record as of a date not to exceed
40 days and not less than 10 days preceding the dividend payment
dates so fixed.
(B) If and when dividends payable on any of the Preferred
Stock of the Corporation at any time outstanding shall be in
default in an amount equal to four full quarterly payments or
more per share, and thereafter until all dividends on any such
preferred stock in default shall have been paid, the holders of
the Preferred Stock pari passu with the holders of other
preferred stock then outstanding, voting separately as a class,
shall be entitled to elect the smallest number of directors
necessary to constitute a majority of the full Board of
Directors, and, except as provided in the following paragraph,
the holders of the Common Stock, voting separately as a class,
shall be entitled to elect the remaining directors of the
Corporation. The terms of office, as directors, of all persons
who may be directors of the Corporation at the time shall
terminate upon the election of a majority of the Board of
Directors by the holders of the Preferred Stock except that if
the holders of the Common Stock shall not have elected the
remaining directors of the Corporation, then, and only in that
event, the directors of the Corporation in office just prior to
the election of a majority of the Board of Directors by the
holders of the Preferred Stock shall elect the remaining
directors of the Corporation. Thereafter, while such default
continues and the majority of the Board of Directors is being
elected by the holders of the Preferred Stock, the remaining
directors, whether elected by directors, as aforesaid, or whether
originally or later elected by holders of the Common Stock shall
continue in office until their successors are elected by holders
of the Common Stock and shall qualify.
If and when all dividends then in default on the Preferred
Stock; then outstanding shall be paid (such dividends to be
declared and paid out of any funds legally available therefor as
soon as reasonably practicable), the holders of the Preferred
Stock shall be divested of any special right with respect to the
election of directors, and the voting power of the holders of the
Preferred Stock and the holders of the Common Stock shall revert
to the status existing before the first dividend payment date on
which dividends on the Preferred Stock were not paid in full, but
always subject to the same provisions for vesting such special
rights in the holders of the Preferred Stock in case of further
like defaults in the payment of dividends thereon as described in
the immediately foregoing paragraph. Upon termination of any such
special voting right upon payment of all accumulated and unpaid
dividends on the Preferred Stock, the terms of office of all
persons who may have been elected directors of the Corporation by
vote of the holders of the Preferred Stock as a class, pursuant
to such special voting right shall forthwith terminate, and the
resulting vacancies shall be filled by the vote of a majority of
the remaining directors.
In case of any vacancy in the office of a director occurring
among the directors elected by the holders of the Preferred
Stock, voting separately as a class, the remaining directors
elected by the holders of the Preferred Stock, by affirmative
vote of a majority thereof, or the remaining director so elected
if there be but one, may elect a successor or successors to hold
office for the unexpired term or terms of the director or
directors whose place or places shall be vacant. Likewise, in
case of any vacancy in the office of a director occurring among
the directors not elected by the holders of the Preferred Stock,
the remaining directors not elected by the holders of the
Preferred Stock, by affirmative vote of a majority thereof, or
the remaining director so elected if there be but one, may elect
a successor or successors to hold office for the unexpired term
or terms of the director or directors whose place or places shall
be vacant.
Whenever the right shall have accrued to the holders of the
Preferred Stock to elect directors, voting separately as a class,
it shall be the duty of the President, a Vice-President or the
Secretary of the Corporation forthwith to call and cause notice
to be given to the shareholders entitled to vote of a meeting to
be held at such time as the Corporation's officers may fix, not
less than forty-five nor more than sixty days after the accrual
of such right, for the purpose of electing directors. The notice
so given shall be mailed to each holder of record of preferred
stock at his last known address appearing on the books of the
Corporation and shall set forth, among other things, (i) that by
reason of the fact that dividends payable on preferred stock are
in default in an amount equal to four full quarterly payments or
more per share, the holders of the Preferred Stock, voting
separately as a class, have the right to elect the smallest
number of directors necessary to constitute a majority of the
full Board of Directors of the Corporation, (ii) that any holder
of the Preferred Stock has the right, at any reasonable time, to
inspect, and make copies of, the list or lists of holders of the
Preferred Stock maintained at the principal office of the
Corporation or at the office of any Transfer Agent of the
Preferred Stock, and (iii) either the entirety of this paragraph
or the substance thereof with respect to the number of shares of
the Preferred Stock required to be represented at any meeting, or
adjournment thereof, called for the election of directors of the
Corporation. At the first meeting of stockholders held for the
purpose of electing directors during such time as the holders of
the Preferred Stock shall have the special right, voting
separately as a class, to elect directors, the presence in person
or by proxy of the holders of a majority of the outstanding
Common Stock shall be required to constitute a quorum of such
class for the election of directors, and the presence in person
or by proxy of the holders of a majority of the outstanding
Preferred Stock shall be required to constitute a quorum of such
class for the election of directors; provided, however, that in
the absence of a quorum of the holders of the Preferred Stock, no
election of directors shall be held, but a majority of the
holders of the Preferred Stock who are present in person or by
proxy shall have power to adjourn the election of the directors
to a date not less than fifteen nor more than fifty days from the
giving of the notice of such adjourned meeting hereinafter
provided for; and provided, further, that at such adjourned
meeting, the presence in person or by proxy of the holders of 35%
of the outstanding Preferred Stock shall be required to
constitute a quorum of such class for the election of directors.
In the event such first meeting of stockholders shall be so
adjourned, it shall be the duty of the President, a Vice-
President or the Secretary of the Corporation, within ten days
from the date on which such first meeting shall have been
adjourned, to cause notice of such adjourned meeting to be given
to the shareholders entitled to vote thereat, such adjourned
meeting to be held not less than fifteen days nor more than fifty
days from the giving of such second notice. Such second notice.
shall be given in the form and manner hereinabove provided for
with respect to the notice required to be given of such first
meeting of stockholders, and shall further set forth that a
quorum was not present at such first meeting and that the holders
of 35% of the outstanding Preferred Stock shall be required to
constitute a quorum of such class for the election of directors
at such adjourned meeting. If the requisite quorum of holders of
the Preferred Stock shall not be present at said adjourned
meeting, then the directors of the Corporation then in office
shall remain in office until the next Annual Meeting of the
Corporation, or special meeting in lieu thereof and until their
successors shall have been elected and shall qualify. Neither
such first meeting nor such adjourned meeting shall be held on a
date within sixty days of the date of the next Annual Meeting of
the Corporation, or special meeting in lieu thereof. At each
Annual Meeting of the Corporation, or special meeting in lieu
thereof, held during such time as the holders of the Preferred
Stock, voting separately as a class. shall have the right to
elect a majority of the Board of Directors, the foregoing
provisions of this paragraph shall govern each Annual Meeting, or
special meeting in lieu thereof, as if said Annual Meeting or
special meeting were the first meeting of stockholders held for
the purpose of electing directors after the right of the holders
of the Preferred Stock, voting separately as a class, to elect a
majority of the Board of Directors, should have accrued the
exception, that if, at any adjourned annual meeting, or special
meeting in lieu thereof, the holders of 35% of the outstanding
Preferred Stock are not present in person or by proxy, all the
directors shall be elected by a vote of the holders of a majority
of the Common Stock of the Corporation present or represented at
the meeting.
(C) So long as any shares of the Preferred Stock are
outstanding, the Corporation shall not, without the consent
(given by vote at a meeting called for that purpose) of at least
two-thirds of the total number of shares of the Preferred Stock
then outstanding:
(1) create, authorize or issue any new stock which,
after issuance would rank prior to the Preferred Stock as to
dividends, in liquidation, dissolution, winding up or
distribution, or create, authorize or issue any security
convertible into shares of any such stock except for the
purpose of providing funds for the redemption of all of the
Preferred Stock then outstanding, such new stock or security
not to be issued until such redemption shall have been
authorized and notice of such redemption given and the
aggregate redemption price deposited as provided in
paragraph (G) below; provided, however, that any such new
stock or security shall be issued within twelve months after
the vote of the Preferred Stock herein provided for
authorizing the issuance of such new stock or security; or
(2) amend, alter, or repeal any of the rights,
preferences or powers of the holders of the Preferred Stock
so as to affect adversely any such rights, preferences or
powers; provided, however, that if such amendment,
alteration or repeal affects adversely the rights,
preferences or powers of one or more, but not all, series of
Preferred Stock at the time outstanding, only the consent of
the holders of at least two-thirds of the total number of
outstanding shares of all series so affected shall be
required; and provided, further, that an amendment to
increase or decrease the authorized amount of Preferred
Stock or to create or authorize, or increase or decrease the
amount of, any class of stock; ranking on a parity with the
outstanding shares of the Preferred Stock as to dividends or
assets shall not be deemed to affect adversely the rights,
preferences or powers of the holders of the Preferred Stock
or any series thereof.
(D) So long as any shares of the Preferred Stock are
outstanding, the Corporation shall not, without the consent
(given by vote at a meeting called for that purpose) of the
holders of a majority of the total number of shares of the
Preferred Stock then outstanding:
(1) merge or consolidate with or into any other
corporation or corporations or sell or otherwise dispose of
all or substantially all of the assets of the Corporation,
unless such merger or consolidation or sale or other
disposition, or the exchange, issuance or assumption of all
securities to be issued or assumed in connection with any
such merger or consolidation or sale or other disposition,
shall have been ordered, approved or permitted under the
Public Utility Holding Company Act of 1935; or
(2) issue or assume any unsecured notes, debentures or
other securities representing unsecured indebtedness for
purposes other than (i) the refunding of outstanding
unsecured indebtedness theretofore issued or assumed by the
Corporation resulting in equal or longer maturities, or (ii)
the reacquisition, redemption or other retirement of all
outstanding shares of the Preferred Stock, if immediately
after such issue or assumption, the total principal amount
of all unsecured notes, debentures or other securities
representing unsecured indebtedness issued or assumed by the
Corporation, including unsecured indebtedness then to be
issued or assumed (but excluding the principal amount then
outstanding of any unsecured notes, debentures, or other
securities representing unsecured indebtedness having a
maturity in excess of ten (10) years and in amount not
exceeding 10% of the aggregate of (a) and (b) of this
section below) would exceed ten per centum (10%) of the
aggregate of (a) the total principal amount of all bonds or
other securities representing secured indebtedness issued or
assumed by the Corporation and then to be outstanding, and
(b) the capital and surplus of the Corporation as then to be
stated on the books of account of the Corporation. When
unsecured notes, debentures or other securities representing
unsecured debt of a maturity in excess of ten (10) years
shall become of a maturity of ten (10) years or less, it
shall then be regarded as unsecured debt of a maturity of
less than ten (10) years and shall be computed with such
debt for the purpose of determining the percentage ratio to
the sum of (a) and (b) above of unsecured debt of a maturity
of less than ten (10) years, and when provision shall have
been made, whether through a sinking fund or otherwise, for
the retirement, prior to their maturity, of unsecured notes,
debentures, or other securities representing unsecured debt
of a maturity in excess of ten (10) years, the amount of any
such security so required to be retired in less than ten
(10) years shall be regarded as unsecured debt of a maturity
of less than ten (10) years (and not as unsecured debt of a
maturity in excess of ten (10) years) and shall be computed
with such debt for the purpose of determining the percentage
ratio to the sum of (a) and (b) above of unsecured debt of a
maturity of less than ten (10) years, provided, however,
that the payment due upon the maturity of unsecured debt
having an original single maturity in excess of ten (10)
years or the payment due upon the latest maturity of any
serial debt which had original maturities in excess of ten
(10) years shall not, for purposes of this provision, be
regarded as unsecured debt of a maturity of less than ten
(10) years until such payment or payments shall be required
to be made within three (3) years; furthermore, when
unsecured notes, debentures or other securities representing
unsecured debt of a maturity of less than ten (10) years
shall exceed 10% of the sum of (a) and (b) above, no
additional unsecured notes, debentures or other securities
representing unsecured debt shall be issued or assumed
(except for the purpose set forth in (i) or (ii) above)
until such ratio is reduced to 10% of the sum of (a) and (b)
above; or
(3) issue, sell or otherwise dispose of any shares of
the Preferred Stock in addition to the 104,476 shares of the
Preferred Stock originally authorized, or of any other class
of stock ranking on a parity with the Preferred Stock as to
dividends or in liquidation, dissolution, winding up or
distribution, unless the gross income of the Corporation and
Mississippi Power & Light Company, a Florida corporation,
for a period of twelve (12) consecutive calendar months
within the fifteen (15) calendar months immediately
preceding the issuance, sale or disposition of such stock,
determined in accordance with generally accepted accounting
practices (but in any event after deducting all taxes and
the greater of (a) the amount for said period charged by the
Corporation and Mississippi Power & Light Company, a Florida
corporation, on their books to depreciation expense or (b)
the largest amount required to be provided therefor by any
mortgage indenture of the Corporation) to be available for
the payment of interest, shall have been at least one and
one-half times the sum of (i) the annual interest charges on
all interest bearing indebtedness of the Corporation and
(ii) the annual dividend requirements on all outstanding
shares of the Preferred Stock and of all other classes of
stock ranking prior to, or on a parity with, the Preferred
Stock as to dividends or distributions, including the shares
proposed to be issued; provided, that there shall be
excluded from the foregoing computation interest charges on
all indebtedness and dividends on all shares of stock which
are to be retired in connection with the issue of such
additional shares of the Preferred Stock or other class of
stocks ranking prior to, or on a parity with, the Preferred
Stock as to dividends or distributions; and provided,
further, that in any case where such additional shares of
the Preferred Stock, or other class of stock ranking on a
parity with the Preferred Stock as to dividends or
distributions, are to be issued in connection with the
acquisition of additional property, the gross income of the
property to be so acquired, computed on the same basis as
the gross income of the Corporation, may be included on a
pro forma basis in making the foregoing computation; or
(4) issue, sell, or otherwise dispose of any shares of
the Preferred Stock, in addition to the 104,476 shares of
the Preferred Stock originally authorized, or of any other
class of stock ranking on a parity with the Preferred Stock
as to dividends or distributions, unless the aggregate of
the capital of the Corporation applicable to the Common
Stock and the surplus of the Corporation shall be not less
than the aggregate amount payable on the involuntary
liquidation, dissolution, or winding up of the Corporation,
in respect of all shares of the Preferred Stock and all
shares of stock, if any, ranking prior thereto, or on a
parity therewith, as to dividends or distributions, which
will be outstanding after the issue of the shares proposed
to be issued; provided, that if, for the purposes of meeting
the requirements of this subparagraph (4), it becomes
necessary to take into consideration any earned surplus of
the Corporation, the Corporation shall not thereafter pay
any dividends on shares of the Common Stock which would
result in reducing the Corporation's Common Stock equity (as
in paragraph (H) hereinafter defined) to an amount less than
the aggregate amount payable, on involuntary liquidation,
dissolution or winding up the Corporation, on all shares of
the Preferred Stock and of any stock ranking prior to, or on
a parity with, the Preferred Stock, as to dividends or other
distributions, at the time outstanding.
(E) Each holder of Common Stock of the Corporation shall be
entitled to one vote, in person or by proxy, for each share of
such stock standing in his name on the books of the Corporation.
Except as hereinbefore expressly provided in this Section Fourth,
the holders of the Preferred Stock shall have no power to vote
and shall be entitled to no notice of any meeting of the
stockholders of the Corporation. As to matters upon which holders
of the Preferred Stock are entitled to vote as hereinbefore
expressly provided, each holder of such Preferred Stock shall be
entitled to one vote, in person or by proxy, for each share of
such Preferred Stock standing in his name on the books of the
Corporation.
(F) In the event of any voluntary liquidation, dissolution or
winding up of the Corporation, the Preferred Stock, pari passu
with all shares of preferred stock of any class or series then
outstanding, shall have a preference over the Common Stock until
an amount equal to the then current redemption price shall have
been paid. In the event of any involuntary liquidation,
dissolution or winding up of the Corporation, which shall include
any such liquidation, dissolution or winding up which may arise
out of or result from the condemnation or purchase of all or a
major portion of the properties of the Corporation, by (i) the
United States Government or any authority, agency or
instrumentality thereof, (ii) a state of the United States or any
political subdivision, authority, agency, or instrumentality
thereof, or (iii) a district, cooperative or other association or
entity not organized for profit, the Preferred Stock, pari passu
with all shares of preferred stock of any class or series then
outstanding, shall also have a preference over the Common Stock
until the full par value thereof and an amount equal to all
accumulated and unpaid dividends thereon shall have been paid by
dividends or distribution.
(G) Upon the affirmative vote of a majority of the shares of
the issued and outstanding Common Stock at any annual meeting, or
any special meeting called for that purpose, the Corporation may
at any time redeem all of any series of said Preferred Stock or
may from time to time redeem any part thereof, by paying in cash
the redemption price then applicable thereto as stated and
expressed with respect to such series in the resolution providing
for the issue of such shares adopted by the Board of Directors of
the Corporation, or in these Restated Articles of Incorporation
or any amendment thereof, plus, in each case, an amount
equivalent to the accumulated and unpaid dividends, if any, to
the date of redemption. Notice of the intention of the
Corporation to redeem all or any part of the Preferred Stock
shall be mailed not less than thirty (30) days nor more than
sixty (60) days before the date of redemption to each holder of
record of Preferred Stock to be redeemed, at his post office
address as shown by the Corporation's records, and not less than
thirty (30) days' nor more than sixty (60) days' notice of such
redemption may be published in such manner as may be prescribed
by resolution of the Board of Directors of the Corporation; and,
in the event of such publication, no defect in the mailing of
such notice shall affect the validity of the proceedings for the
redemption of any shares of Preferred Stock so to be redeemed.
Contemporaneously with the mailing or the publication of such
notice as aforesaid or at any time thereafter prior to the date
of redemption, the Corporation may deposit the aggregate
redemption price (or the portion thereof not already paid in the
redemption of such Preferred Stock so to be redeemed) with any
bank or trust company in the City of New York, New York, or in
the City of Jackson, Mississippi, named in such notice, payable
to the order of the record holders of the Preferred Stock so to
be redeemed, as the case may be, on the endorsement and surrender
of their certificates, and thereupon said holders shall cease to
be stockholders with respect to such shares; and from and after
the making of such deposit such holders shall have no interest in
or claim against the Corporation with respect to said shares, but
shall be entitled only to receive such moneys from said bank or
trust company, with interest, if any, allowed by such bank or
trust company on such moneys deposited as in this paragraph
provided, on endorsement and surrender of their certificates, as
aforesaid. Any moneys so deposited, plus interest thereon, if
any, remaining unclaimed at the end of six years from the date
fixed for redemption, if thereafter requested by resolution of
the Board of Directors, shall be repaid to the Corporation, and
in the event of such repayment to the Corporation, such holders
of record of the shares so redeemed as shall not have made claim
against such moneys prior to such repayment to the Corporation,
shall be deemed to be unsecured creditors of the Corporation for
an amount, without interest, equivalent to the amount deposited,
plus interest thereon, if any, allowed by such bank or trust
company, as above stated, for the redemption of such shares and
so paid to the Corporation. Shares of the Preferred Stock which
have been redeemed shall not be reissued. If less than all of
the shares of the Preferred Stock are to be redeemed, the shares
thereof to be redeemed shall be selected by lot, in such manner
as the Board of Directors of the Corporation shall determine, by
an independent bank or trust company selected for that purpose by
the Board of Directors of the Corporation. Nothing herein
contained shall limit any legal right of the Corporation to
purchase or otherwise acquire any shares of the Preferred Stock;
provided, however, that, so long as any shares of the Preferred
Stock are outstanding, the Corporation shall not redeem, purchase
or otherwise acquire less than all of the shares of the Preferred
Stock, if, at the time of such redemption, purchase or other
acquisition, dividends payable on the Preferred Stock shall be in
default in whole or in part, unless, prior to or concurrently
with such redemption, purchase or other acquisition, all such
defaults shall be cured or unless such redemption, purchase or
other acquisition shall have been ordered, approved or permitted
under the Public Utility Holding Company Act of 1935; and
provided further that, so long as any shares of the Preferred
Stock are outstanding, the Corporation shall not make any payment
or set aside any funds for payment into any sinking fund for the
purchase or redemption of any shares of the Preferred Stock, if,
at the time of such payment, or the setting apart of funds for
such payment, dividends payable on the Preferred Stock shall be
in default in whole or in part, unless, prior to or concurrently
with such payment or the setting apart of funds for such payment,
all such defaults shall be cured or unless such payment, or the
setting apart of funds for such payment, shall have been ordered,
approved or permitted under the Public Utility Holding Company
Act of 1935. Any shares of the Preferred Stock so redeemed,
purchased or acquired shall retired and cancelled.
(H) For the purposes of this paragraph (H) and subparagraph
(4) of paragraph (D) the term "Common Stock Equity" shall mean
the aggregate of the par value of, or stated capital represented
by, the outstanding shares (other than shares owned by the
Corporation) of stock ranking junior to the Preferred Stock as to
dividends and assets, of the premium on such junior stock and of
the surplus (including earned surplus, capital surplus and
surplus invested in plant) of the Corporation less (1) any
amounts recorded on the books of the Corporation for utility
plant and other plant in excess of the original cost thereof, (2)
unamortized debt discount and expense, capital stock discount and
expense and any other intangible items set forth on the asset
side of the balance sheet as a result of accounting convention,
(3) the excess, if any, of the aggregate amount payable on
involuntary liquidation, dissolution or winding up of the affairs
of the Corporation upon all outstanding preferred stock of the
Corporation over the aggregate par or stated value thereof and
any premiums thereon and (4) the excess, if any, for the period
beginning with January 1, 1954, to the end of the month within
ninety (90) days preceding the date as of which Common Stock
Equity is determined, of the cumulative amount computed under re
quirements contained in the Corporation's mortgage indentures
relating to minimum depreciation provisions (this cumulative
amount being the aggregate of the largest amounts separately
computed for entire periods of differing coexisting mortgage
indenture requirements), over the amount charged by the
Corporation and Mississippi Power & Light Company, a Florida
corporation, on their books for depreciation during such period,
including the final fraction of a year; provided, however, that
no deductions shall be required to be made in respect of items
referred to in subdivisions (1) and (2) of this paragraph (H) in
cases in which such items are being amortized or are provided
for, or are being provided for, by reserves. For the purpose of
this paragraph (H): (i) the term "total capitalization" shall
mean the sum of the Common Stock Equity plus item three (3) in
this paragraph (H) and the stated capital applicable to, and any
premium on, outstanding stock of the Corporation not included in
Common Stock Equity, and the principal amount of all outstanding
debt of the Corporation maturing more than twelve months after
the date of issue thereof; and (ii) the term "dividends on Common
Stock" shall embrace dividends on Common Stock (other than
dividends payable only in shares of Common Stock), distributions
on, and purchases or other acquisitions for value of, any Common
Stock of the Corporation or other stock if any, subordinate to
its Preferred Stock. So long as any shares of the Preferred
Stock are outstanding, the Corporation shall not declare or pay
any dividends on the Common Stock, except as follows:
(a) If and so long as the Common Stock Equity at the
end of the calendar month immediately preceding the date on
which a dividend on Common Stock is declared is, or as a
result of such dividend would become, less than 20% of total
capitalization, the Corporation shall not declare such
dividends in an amount which, together with all other
dividends on Common Stock paid within the year ending with
and including the date on which such dividend is payable,
exceeds 50% of the net income of the Corporation available
for dividends on the Common Stock for the twelve full
calendar months immediately preceding the month in which
such dividends are declared, except in an amount not
exceeding the aggregate of dividends on Common Stock which
under the restrictions set forth above in this subparagraph
(a) could have been, and have not been, declared; and
(b) If and so long as the Common Stock Equity at the
end of the calendar month immediately preceding the date on
which a dividend on Common Stock is declared is, or as a
result of such dividend would become, less than 25% but not
less than 20% of total capitalization, the Corporation shall
not declare dividends on the Common Stock in an amount
which, together with all other dividends on Common Stock
paid within the year ending with and including the date on
which such dividend is payable, exceeds 75% of the net
income of the Corporation and Mississippi Power & Light
Company, a Florida corporation, available for dividends on
the Common Stock for the twelve full calendar months
immediately preceding the month in which such dividends are
declared, except in an amount not exceeding the aggregate of
dividends on Common Stock which under the restrictions set
forth above in subparagraph (a) and in this subparagraph (b)
could have been and have not been declared; and
(c) If any time when the Common Stock Equity is 25% or
more of total capitalization, the Corporation may not
declare dividends on shares of the Common Stock which would
reduce the Common Stock Equity below 25% of total
capitalization, except to the extent provided in
subparagraphs (a) and (b) above.
At anytime when the aggregate of all amounts credited
subsequent to January 1, 1954, to the depreciation reserve
account of the Corporation and Mississippi Power & Light Company,
a Florida corporation, through charges to operating revenue
deductions or otherwise on the books of the Corporation and
Mississippi Power & Light Company, a Florida corporation, shall
be less than the amount computed as provided in clause (aa)
below, under requirements contained in the Corporation's mortgage
indentures, then for the purposes of subparagraphs (a) and (b)
above, in determining the earnings available for common stock
dividends during any twelve-month period, the amount to be
provided for depreciation in that period shall be (aa) the
greater of the cumulative amount charged to depreciation expense
on the books of the Corporation and Mississippi Power & Light
Company, a Florida corporation, or the cumulative amount computer
under requirements contained in the Corporation's mortgage
indentures relating to minimum depreciation provisions (the
latter cumulative amount being the aggregate of the largest
amounts separately computed for entire periods of differing co-
existing mortgage indenture requirements) for the period from
January 1, 1954, to and including said twelve-month period, less
(bb) the greater of the cumulative amount charged to depreciation
expense on the books of the Corporation and Mississippi Power &
Light Company, a Florida corporation, or the cumulative amount
computed under requirements contained in the Corporation's
mortgage indentures relating to minimum depreciation provisions
(the latter cumulative amount being the aggregate of the largest
amounts separately computed for entire periods of differing
coexisting mortgage indenture requirements) from January 1, 1954,
up to but excluding said twelve-month period; provided that in
the event any company other than Mississippi Power & Light
Company, a Florida corporation, is merged into the Corporation
the "cumulative amount computed under requirements contained in
the Corporation's mortgage indentures relating to minimum
depreciation provisions" referred to above shall be computed
without regard, for the period prior to the merger, of property
acquired in the merger, and the "cumulative amount charged to
depreciation expense on the books of the Corporation" shall be
exclusive of amounts provided for such property prior to the
merger.
(I) The Board of Directors are hereby expressly authorized
by resolution or resolutions to state and express the series and
distinctive serial designation of any authorized and unissued
shares of Preferred Stock proposed to be issued, the number of
shares to constitute each such series, the annual rate or rates
of dividends payable on shares of each series together with the
dates on which such dividends shall be paid in each year, the
date from which such dividends shall commence to accumulate, the
amount or amounts payable upon redemption and the sinking fund
provisions, if any, for the redemption or purchase of shares.
(J) Dividends may be paid upon the Common Stock only when (i)
dividends have been paid or declared and funds set apart for the
payment of dividends as aforesaid on the Preferred Stock from the
date(s) after which dividends thereon became cumulative, to the
beginning of the period then current, with respect to which such
dividends on the Preferred Stock are usually declared, and (ii)
all payments have been made or funds have been set aside for
payments then or theretofore due under sinking fund provisions,
if any, for the redemption or purchase of shares of any series of
the Preferred Stock, but whenever (x) there shall have been paid
or declared and funds shall have been set apart for the payment
of all such dividends upon the Preferred Stock as aforesaid, and
(y) all payments shall have been made or funds shall have been
set aside for payments then or theretofore due under sinking fund
provisions, if any, for the redemption or purchase of shares of
any series of the Preferred Stock, then, subject to the
limitations above set forth, dividends upon the Common Stock may
be declared payable then or thereafter, out of any net earnings
or surplus of assets over liabilities, including capital, then
remaining. After the payment of the limited dividends and/or
shares in distribution of assets to which the Preferred Stock is
expressly entitled in preference to the Common Stock, in
accordance with the provisions hereinabove set forth, the Common
Stock alone (subject to the rights of any class of stock
hereafter authorized) shall receive all further dividends and
shares in distribution.
(K) Subject to the limitations hereinabove set forth the
Corporation from time to time may resell any of its own stock,
purchased or otherwise acquired by it as hereinafter provided
for, at such price as may be fixed by its Board of Directors or
Executive Committee.
(L) Subject to the limitations hereinabove set forth the
Corporation in order to acquire funds with which to redeem any
outstanding Preferred Stock of any class, may issue and sell
stock of any class then authorized but unissued, bonds, notes,
evidences of indebtedness, or other securities.
(M) Subject to the limitations hereinabove set forth the
Board of Directors of the Corporation may at any time authorize
the conversion or exchange of the whole or any particular share
of the outstanding preferred stock of any class with the consent
of the holder thereof, into or for stock of any other class at
the time of such consent authorized but unissued and may fix the
terms and conditions upon which such conversion or exchange may
be made; provided that without the consent of the holders of
record of two-thirds of the shares of Common Stock outstanding
given at a meeting of the holders of the Common Stock called and
held as provided by the By-Laws or given in writing without a
meeting, the Board of Directors shall not authorize the
conversion or exchange of any preferred stock of any class into
or for Common Stock or authorize the conversion or exchange of
any preferred stock; of any class into or for preferred stock of
any other class, if by such conversion or exchange the amount
which the holders of the shares of stock so converted or
exchanged would be entitled to receive either as dividends or
shares in distribution of assets in preference to the Common
Stock would be increased.
(N) A consolidation, merger or amalgamation of the
Corporation with or into any other corporation or corporations
shall not be deemed a distribution of assets of the Corporation
within the meaning of any provisions of these Restated Articles
of Incorporation.
(O) The consideration received by the Corporation from the
sale of any additional stock without nominal or par value shall
be entered in the Corporation's capital stock account.
(P) Subject to the limitations hereinabove set forth upon
the vote of a majority of all the Directors of the Corporation
and of a majority of the total number of shares of stock then
issued and outstanding and entitled to vote, irrespective of
class (or if the vote of a larger number or different proportion
of shares is required by the laws of the State of Mississippi not
withstanding the above agreement of the stockholders of the
Corporation to the contrary, then upon the vote of the larger
number or different proportion of shares so required), the
Corporation may from time to time create or authorize one or more
other classes of stock with such preferences, designations,
rights, privileges, powers, restrictions, limitations and qualifi
cations as may be determined by said vote, which may be the same
as or different from the preferences, designations, rights,
privileges, powers, restrictions, limitations and qualifications
of the classes of stock of the Corporation then authorized. Any
such vote authorizing the creation of a new class of stock may
provide that all moneys payable by the Corporation with respect
to any class of stock thereby authorized shall be paid in the
money of any foreign country named therein or designated by the
Board of Directors, pursuant to authority therein granted, at a
fixed rate of exchange with the money of the United States of
America therein stated or provided for and all such payments
shall be made accordingly. Any such vote may authorize any shares
of any class then authorized but unissued to be issued as shares
of such new class or classes
(Q) Subject to the limitations hereinabove set forth, either
the Preferred Stock or the Common Stock or both of said classes
of stock, may be increased at any time upon vote of the holders
of a majority of the total number of shares of the Corporation
then issued and outstanding and entitled to vote thereon,
irrespective of class.
(R) If any provisions in this Section Fourth shall be in
conflict or inconsistent with any other provisions of these
Restated Articles of Incorporation of the Corporation the
provisions of this Section Fourth shall prevail and govern.
FIFTH: The Corporation will not commence business until at
least $1,000 has been received by it as consideration for the
issuance of shares.
SIXTH: Existing provisions limiting or denying to
shareholders the preemptive right to acquire additional or
treasury shares of the Corporation are:
No holder of any stock of the Corporation shall be entitled
as of right to purchase or subscribe for any part of any unissued
stock of the Corporation, or any additional stock of any class to
be issued by reason of any increase of the authorized capital
stock of the Corporation or of bonds, certificates of
indebtedness, debentures, or other securities convertible into
stock of the Corporation, but any such unissued stock or any such
additional authorized issue of new stock, or of securities
convertible into stock, may be issued and disposed of by the
Board of Directors without offering to the stockholders then of
record, or to any class of stockholders, any thereof on any
terms.
SEVENTH: Existing provisions of the Restated Articles of
Incorporation for the regulation of the internal affairs of the
Corporation are:
(a) General authority is hereby conferred upon the
Board of Directors to fix the consideration for which shares
of stock of the Corporation without nominal or par value may
be issued and disposed of, and the shares of stock of the
Corporation without nominal or par value, whether authorized
by these Restated Articles of Incorporation or by subsequent
increase of the authorized number of shares of stock or by
amendment of these Restated Articles of Incorporation by
consolidation or merger or otherwise, and/or any securities
convertible into stock of the Corporation without nominal or
par value may be issued and disposed of for such
consideration and on such terms and in such manner as may be
fixed from time to time by the Board of Directors.
(b) The issue of the whole, or any part determined by
the Board of Directors, of the shares of stock of the
Corporation as partly paid, and subject to calls thereon
until the whole thereof shall have been paid, is hereby
authorized.
(c) The Board of Directors shall have power to
authorize the payment of compensation to the directors for
services to the Corporation, including fees for attendance
at meetings of the Board of Directors or the Executive
Committee and all other committees and to determine the
amount of such compensation and fees.
(d) The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by
it, alleged to have been lost or destroyed and the Board of
Directors may, in their discretion, require the owner of the
lost or destroyed certificate, or his legal representative,
to give bond in such sum as they may direct as indemnity
against any claim that may be made against the Corporation,
its officers, employees or agents by reason thereof; a new
certificate may be issued without requiring any bond when,
in the judgment of the directors, it is proper so to do.
If the Corporation shall neglect or refuse to issue
such a new certificate and it shall appear that the owner
thereof has applied to the Corporation for a new certificate
in place thereof and has made due proof of the loss or
destruction thereof and has given such notice of his
application for such new certificate on such newspaper of
general circulation, published in the State of Mississippi
as reasonably should be approved by the Board of Directors,
and in such other newspaper as may be required by the Board
of Directors, and has tendered to the Corporation adequate
security to indemnify the Corporation, its officers
employees, or agents, and any person other than such
applicant who shall thereafter appear to be the lawful owner
of such alleged lost or destroyed certificate against
damage, loss or expense because of the issuance of such new
certificate, and the effect thereof as herein provided,
then, unless there is adequate cause why such new
certificate shall not be issued, the Corporation, upon the
receipt of said indemnity, shall issue a new certificate of
stock in place of such lost or destroyed certificate. In the
event that the Corporation shall nevertheless refuse to
issue a new certificate as aforesaid, the applicant may then
petition any court of competent jurisdiction for relief
against the failure of the Corporation to perform its
obligations hereunder. In the event that the Corporation
shall issue such new certificate, any person who shall
thereafter claim any rights under the certificate in place
of which such new certificate is issued, whether such new
certificate is issued pursuant to the judgment or decree of
such court or voluntarily by the Corporation after the
publication of notice and the receipt of proof and indemnity
as aforesaid, shall have recourse to such indemnity and the
Corporation shall be discharged from all liability to such
person by reason of such certificate and the shares
represented thereby.
(e) No stockholder shall have any right to inspect any
account, book or document of the Corporation, except as
conferred by statute or authorized by the directors.
(f) A director of the Corporation shall not be
disqualified by his office from dealing or contracting with
the Corporation either as a vendor, purchaser or otherwise,
nor shall any transaction or contract of the Corporation be
void or voidable by reason of the fact that any director or
any firm of which any director is a member or any
corporation of which any director is a shareholder, officer
or director, is in any way interested in such transaction or
contract, provided that such transaction or contract is or
shall be authorized, ratified or approved either (1) by a
vote of a majority of a quorum of the Board of Directors or
the Executive Committee, without counting in such majority
or quorum any directors so interested or members of a firm
so interested or a shareholder, officer or director of a
corporation so interested, or (2) by the written consent, or
by vote at a stockholders' meeting of the holders of record
of a majority in number of all the outstanding shares of
stock of the Corporation entitled to vote; nor shall any
director be liable to account to the Corporation for any
profits realized by or from or through any such transaction
or contract of the Corporation, authorized, ratified or
approved as aforesaid by reason of the fact that he or any
firm of which he is a member or any corporation of which he
is a shareholder, officer or director was interested in such
transaction or contract. Nothing herein contained shall
create any liability in the events above described or
prevent the authorization, ratification or approval of such
contract in any other manner provided by law.
(g) Any director may be removed, whether cause shall be
assigned for his removal or not, and his place filled at any
meeting of the stockholders by the vote of a majority of the
outstanding stock of the Corporation entitled to vote.
Vacancies in the Board of Directors, except vacancies
arising from the removal of directors, shall be filed by the
directors remaining in office.
(h) Any property of the Corporation not essential to
the conduct of its corporate business and purposes may be
sold, leased, exchanged or otherwise disposed of by
authority of its Board of Directors and the Corporation may
sell, lease or exchange all of its property and franchises
or any of its property, franchises, corporate rights or
privileges essential to the conduct of its corporate
business and purposes upon the consent of and for such
considerations and upon such terms as may be authorized by a
majority of the Board of Directors and the holders of a
majority of the outstanding shares of stock entitled to
vote, expressed in writing or by vote at a meeting called
for that purpose in the manner provided by the By-Laws of
the Corporation for special meetings of stockholders; and at
no time shall any of the plants, properties, easements,
franchises (other than corporate franchises) or securities
then owned by the Corporation be deemed to be property,
franchises, corporate rights or privileges essential to the
conduct of the corporate business and purposes of the
Corporation.
Upon the vote or consent of the stockholders required
to dissolve the Corporation, the Corporation shall have
power, as the attorney and agent of the holders of all of
its outstanding stock, to sell, assign and transfer all such
stock to a new corporation organized under the laws of the
United States, the State of Mississippi or any other state,
and to receive as the consideration therefor shares of stock
of such new corporation of the several classes into which
the stock of the Corporation is then divided, equal in
number to the number of shares of stock of the Corporation
of said several classes then outstanding, such shares of
said new corporation to have the same preferences, voting
powers, restrictions and qualifications thereof as may then
attach to the classes of stock of the Corporation then
outstanding so far as the same shall be consistent with such
laws of the United States or of the State of Mississippi or
of such other state, except that the whole or any part of
such stock or any class thereof may be stock with or without
nominal or par value. In order to make effective such a
sale, assignment and transfer, the Corporation shall have
the right to transfer all its outstanding stock on its books
and to issue and deliver new certificates therefor in such
names and amounts as such new corporation may direct without
receiving for cancellation the certificates for such stock
previously issued and then outstanding. Upon completion of
such sale, assignment and transfer, the holders of the stock
of the Corporation shall have no rights or interests in or
against the Corporation except the right, upon surrender of
certificates for stock of the Corporation properly endorsed,
if required, to receive from the Corporation certificates
for shares of stock of such new corporation of the class
corresponding to the class of the shares surrendered, equal
in number to the number of shares of the stock of the
Corporation so surrendered.
(i) Upon the written assent or pursuant to the
affirmative vote in person or by proxy of the holders of a
majority in number of the shares then outstanding and
entitled to vote, irrespective of class, (1) any or every
statute of the State of Mississippi hereafter enacted,
whereby the rights, powers or privileges of the Corporation
are or may be increased, diminished or in any way affected
or whereby the rights, powers or privileges of the
stockholders of corporations organized under the law under
which the Corporation is organized, are increased,
diminished or in any way affected or whereby effect is given
to the action taken by any part, less than all, of the
stockholders of any such corporation, shall, notwithstanding
any provisions which may at the time be contained in these
Restated Articles of Incorporation or any law, apply to the
Corporation, and shall be binding not only upon the
Corporation, but upon every stockholder thereof, to the same
extent as if such statute had been in force at the date of
the making and filing of these Restated Articles of
Incorporation and/or (2) amendments of these Restated
Articles of Incorporation authorized at the time of the
making of such amendments by the laws of the State of
Mississippi may be made.
EIGHTH: The Restated Articles of Incorporation correctly set
forth without change the corresponding provisions of the Articles
of Incorporation as heretofore amended and restated, and
supersede the original Articles of Incorporation, and all
amendments thereto, and prior Restated Articles of Incorporation
and all amendments thereto.
DATED: December 21, 1983.
MISSISSIPPI POWER & LIGHT COMPANY
By: D. C. LUTKEN
Its President
[CORPORATE SEAL]
By: F. S. YORK, JR.
Its Secretary
STATE OF MISSISSIPPI
COUNTY OF HINDS
I, Bethel Ferguson, a Notary Public, do hereby certify that
on this 21st day of December, 1983, personally appeared before me
D. C. Lutken. who, being by me first duly sworn, declared that he
is the President of Mississippi Power & Light Company, that he
signed the foregoing document as President of the Corporation,
and that the statements therein contained are true.
BETHEL FERGUSON
Notary Public
My commission expires July 23, 1987.
[NOTARY'S SEAL]
<PAGE>
RESTATED ARTICLES OF INCORPORATION
of
MISSISSIPPI POWER & LIGHT COMPANY
Filing and Recording Data
Restated Articles of Incorporation filed with Secretary of State-
- -December 21, 1983
Certificate of Restated Articles of Incorporation issued by
Secretary of State--December 21, 1983
Certificate of Restated Articles of Incorporation and Restated
Articles of Incorporation filed for record in the office of the
Chancery Clerk of the First Judicial District of Hinds County,
Mississippi, Book 189, Page 624--December 22, 1983.
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Statement of Resolution Establishing Series of Shares
October 25, 1984
Pursuant to the provisions of Section 79-3-29 of the
Mississippi Business Corporation Law, the undersigned Corporation
submits the following statement for the purpose of establishing
and designating a series of shares and fixing and determining the
relative rights and preferences thereof:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The attached resolution establishing and designating a
series of shares and fixing and determining the relative
rights and preferences thereof was duly adopted by the
Board of Directors of the Corporation on October 24,
1984.
Dated this the 25th day of October, 1984.
MISSISSIPPI POWER & LIGHT COMPANY
By/s/ William Cavanaugh, III
William Cavanaugh, III
President
By /s/ Frank S. York, Jr.
Frank S. York, Jr.
Senior Vice President,
Chief Financial Officer
and Secretary
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this October 25, 1984, personally appeared before me William
Cavanaugh, III, who, being by me first duly sworn, declared that
he is President of Mississippi Power & Light Company, that he
executed the foregoing document as President of the Corporation,
and that the statements therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
March 30, 1986
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this October 25, 1984, personally appeared before me Frank S.
York, Jr., who, being by me first duly sworn, declared that he is
Senior Vice President, Chief Financial Officer and Secretary of
Mississippi Power & Light Company, that he executed the foregoing
document as Senior Vice President, Chief Financial Officer and
Secretary of the Corporation, and that the statements therein
contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
March 30, 1986
RESOLVED That there is hereby established a series of the
Preferred Stock of Mississippi Power & Light Company as follows:
A series of 150,000 shares of the Preferred Stock shall:
(a) be designated "16.16% Preferred Stock, Cumulative, $100
Par Value;"
(b) have a dividend rate of $16.16 per share per annum
payable quarterly on February 1, May 1, August 1, and November 1
of each year, the first dividend date to be February 1, 1986, and
such dividends to be cumulative from the date of issuance;
(c) be subject to redemption at the price of $116.16 per
share if redeemed on or before November 1, 1989, of $112.12 per
share if redeemed after November 1, 1989, and on or before
November 1, 1994, of $108.08 per share if redeemed after November
1, 1994, and on or before November 1, 1999, and of $104.04 per
share if redeemed after November 1, 1999, in each case plus an
amount equivalent to the accumulated and unpaid dividends
thereon, if any, to the date fixed for redemption; provided,
however, that no share of the 16.16% Preferred Stock, Cumulative,
$100 Par Value, shall be redeemed prior to November 1, 1989, if
such redemption is for the purpose or in anticipation of
refunding such share through the use, directly or indirectly, of
funds borrowed by the Corporation, or through the use, directly
or indirectly, of funds derived through the issuance by the
Corporation of stock ranking prior to or on a parity with the
16.16% Preferred Stock, Cumulative, $100 Par Value, as to
dividends or assets, if such borrowed funds have an effective
interest cost to the Corporation (computed in accordance with
generally accepted financial practice) or such stock has an
effective dividend cost to the Corporation (so computed) of less
than 16.2772% per annum; and
(d) be subject to redemption as and for a sinking fund as
follows: on November 1, 1989 and on each November 1 thereafter
(each such date being hereinafter referred to as a "16.16%
Sinking Fund Redemption Date"), for so long as any shares of the
16.16% Preferred Stock, Cumulative, $100 Par Value, shall remain
outstanding, the Corporation shall redeem, out of funds legally
available therefor, 7,500 shares of the 16.16% Preferred Stock,
Cumulative, $100 Par Value, (or the number of shares than
outstanding if less than 7,500) at the sinking fund redemption
price of $100 per share plus, as to each share so redeemed, an
amount equivalent to the accumulated and unpaid dividends
thereon, if any, to the date of redemption (the obligation of the
Corporation so to redeem the shares of the 16.16% Preferred
Stock, Cumulative, $100 Par Value, being hereinafter referred to
as the "16.16% Sinking Fund Obligation"); the 16.16% Sinking Fund
Obligation shall be cumulative; if on any 16.16% Sinking Fund
Redemption Date, the Corporation shall not have funds legally
available therefor sufficient to redeem the full number of shares
required to be redeemed on that date, the 16.16% Sinking Fund
Obligation with respect to the shares not redeemed shall carry
forward to each successive 16.16% Sinking Fund Redemption Date
until such shares shall have been redeemed; whenever on any
16.16% Sinking Fund Redemption Date, the funds of the Corporation
legally available for the satisfaction of the 16.16% Sinking Fund
Obligation and all other sinking fund and similar obligations
than existing with respect to any other class or series of its
stock ranking on a parity as to dividends or assets with the
16.16% Preferred Stock, Cumulative, $100 Par Value (such
obligation and obligations collectively being hereinafter
referred to as the "Total Sinking Fund Obligations"), are
insufficient to permit the Corporation to satisfy fully its Total
Sinking Fund Obligation on that date, the Corporation shall apply
to the satisfaction on its 16.16% Sinking Fund Obligation on that
date that proportion of such legally available funds which is
equal to the ratio of such 16.16% Sinking Fund Obligation to such
Total Sinking Fund Obligation; in addition to the 16.16% Sinking
Fund Obligation, the Corporation shall have the option, which
shall be noncumulative, to redeem, upon authorization of the
Board of Directors, on each 16.16% Sinking Fund Redemption Date,
at the aforesaid sinking fund redemption price, up to 7,500
additional shares of the 16.16% Preferred Stock, Cumulative $100
Par Value; the Corporation shall be entitled, at its election, to
credit against its 16.16% Sinking Fund Obligation on any 16.16%
Sinking Fund Redemption Date any shares of the Preferred Stock,
Cumulative, $100 Par Value (including shares of the 16.16%
Preferred Stock, Cumulative, $100 Par Value, optionally redeemed
at the aforesaid sinking fund price) theretofore redeemed (other
than shares of the 16.16% Preferred Stock, Cumulative, $100 Par
Value, redeemed pursuant to the 16.16% Sinking Fund Obligation)
purchased or otherwise acquired and not previously credited
against the 16.16% Sinking Fund Obligation.
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Statement of Resolution Establishing Series of Shares
July 24, 1986
Pursuant to the provisions of Section 79-3-29 of the
Mississippi Code of 1972, the undersigned Corporation submits the
following statement for the purpose of establishing and
designating a series of shares and fixing and determining the
relative rights and preferences thereof:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The attached resolution establishing and designating a
series of shares and fixing and determining the relative
rights and preferences thereof was duly adopted by the
Board of Directors of the Corporation on July 24, 1986.
Dated this the 24th day of July, 1986.
MISSISSIPPI POWER & LIGHT COMPANY
By/s/ William Cavanaugh, III
William Cavanaugh, III
President
By /s/ Frank S. York, Jr.
Frank S. York, Jr.
Senior Vice President,
Chief Financial Officer
and Secretary
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joseph L. Blount, a Notary Public, do hereby certify that
on this July 24, 1986, personally appeared before me William
Cavanaugh, III, who, being by me first duly sworn, declared that
he is President of Mississippi Power & Light Company, a
Mississippi corporation, that he executed the foregoing document
as President of the Corporation, and that the statements therein
contained are true.
/s/ Joseph L. Blount
Joseph L. Blount, Notary Public
My Commission Expires:
January 20, 1990
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joseph L. Blount, a Notary Public, do hereby certify that
on this July 24, 1986, personally appeared before me Frank S.
York, Jr., who, being by me first duly sworn, declared that he is
Senior Vice President, Chief Financial Officer and Secretary of
Mississippi Power & Light Company, a Mississippi corporation,
that he executed the foregoing document as Senior Vice President,
Chief Financial Officer and Secretary of the Corporation, and
that the statements therein contained are true.
/s/ Joseph L. Blount
Joseph L. Blount, Notary Public
My Commission Expires:
January 20, 1990
<PAGE>
RESOLVED That there is hereby established a series of the
Preferred Stock of Mississippi Power & Light Company as follows:
A series of 350,000 shares of the Preferred Stock shall:
(a) be designated "9% Preferred Stock, Cumulative, $100 Par
Value;"
(b) have a dividend rate of $9.00 per share per annum
payable quarterly on February 1, May 1, August 1, and November 1
of each year, the first dividend date to be November 1, 1986, and
such dividends to be cumulative from the date of issuance;
(c) be subject to redemption at the price of $109.00 per
share if redeemed on or before July 1, 1991, of $106.75 per share
if redeemed after July 1, 1991, in each case plus an amount
equivalent to the accumulated and unpaid dividends thereon, if
any, to the date fixed for redemption; provided, however, that no
share of the 9% Preferred Stock, Cumulative, $100 Par Value,
shall be redeemed prior to July 1, 1991, if such redemption is
for the purpose or in anticipation of refunding such share
through the use, directly or indirectly, of funds borrowed by the
Corporation, or through the use, directly or indirectly, of funds
derived through the issuance by the Corporation of stock ranking
prior to or on a parity with the 9% Preferred Stock, Cumulative,
$100 Par Value, as to dividends or assets, if such borrowed funds
have an effective interest cost to the Corporation (computed in
accordance with generally accepted financial practice) or such
stock has an effective dividend cost to the Corporation (so
computed) of less than 9.9901% per annum; and
(d) be subject to redemption as and for a sinking fund as
follows: on July 1, 1991, and on each July 1 thereafter (each
such date being hereinafter referred to as a "9% Sinking Fund
Redemption Date"), for so long as any shares of the 9% Preferred
Stock, Cumulative, $100 Par Value, shall remain outstanding, the
Corporation shall redeem, out of funds legally available
therefor, 70,000 shares of the 9% Preferred Stock, Cumulative,
$100 Par Value, (or the number of shares than outstanding if less
than 70,000) at the sinking fund redemption price of $100 per
share plus, as to each share so redeemed, an amount equivalent to
the accumulated and unpaid dividends thereon, if any, to the date
of redemption (the obligation of the Corporation so to redeem the
shares of the 9% Preferred Stock, Cumulative, $100 Par Value,
being hereinafter referred to as the "9% Sinking Fund
Obligation"); the 9% Sinking Fund Obligation shall be cumulative;
if on any 9.% Sinking Fund Redemption Date, the Corporation shall
not have funds legally available therefor sufficient to redeem
the full number of shares required to be redeemed on that date,
the 9% Sinking Fund Obligation with respect to the shares not
redeemed shall carry forward to each successive 9% Sinking Fund
Redemption Date until such shares shall have been redeemed;
whenever on any 9% Sinking Fund Redemption Date, the funds of the
Corporation legally available for the satisfaction of the 9%
Sinking Fund Obligation and all other sinking fund and similar
obligations than existing with respect to any other class or
series of its stock ranking on a parity as to dividends or assets
with the 9% Preferred Stock, Cumulative, $100 Par Value (such
obligation and obligations collectively being hereinafter
referred to as the "Total Sinking Fund Obligations"), are
insufficient to permit the Corporation to satisfy fully its Total
Sinking Fund Obligation on that date, the Corporation shall apply
to the satisfaction on its 9% Sinking Fund Obligation on that
date that proportion of such legally available funds which is
equal to the ratio of such 9% Sinking Fund Obligation to such
Total Sinking Fund Obligation; the Corporation shall be entitled,
at its election, to credit against its 9% Sinking Fund Obligation
on any 9% Sinking Fund Redemption Date any shares of the
Preferred Stock, Cumulative, $100 Par Value, theretofore
redeemed (other than shares of the 9% Preferred Stock,
Cumulative, $100 Par Value, redeemed pursuant to the 9% Sinking
Fund Obligation) purchased or otherwise acquired and not
previously credited against the 9% Sinking Fund Obligation.
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Statement of Cancellation of Shares
September 1, 1986
Pursuant to the provisions of Section 79-3-133 of the
Mississippi Code of 1972, the undersigned Corporation submits the
following statement of cancellation of redeemable shares by
redemption:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The number of redeemable shares cancelled through
redemption is 20,000 shares of 17% preferred stock,
cumulative, $100 par value.
3. The aggregate number of issued shares, itemized by class
and series, after giving effect to such cancellation is
as follows:
(a) 6,275,000 shares of common stock, without par
value;
(b) 59,920 shares of 4.36% preferred stock, cumulative,
$100 par value;
(c) 43,888 shares of 4.56% preferred stock, cumulative,
$100 par value;
(d) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(e) 75,000 shares of 9.16% preferred stock, cumulative,
$100 par value;
(f) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(g) 180,000 shares of 17% preferred stock, cumulative,
$100 par value;
(h) 100,000 shares of 14.75% preferred stock,
cumulative, $100 par value;
(i) 100,000 shares of 12% preferred stock, cumulative,
$100 par value;
(j) 150,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(k) 350,000 shares of 9% preferred stock, cumulative,
$100 par value;
4. The amount, expressed in dollars, of the stated capital
of the Corporation, after giving effect to such
cancellation is $270,205,800.00.
5. The Restated Articles of Incorporation of the
Corporation provide that the cancelled shares shall not
be reissued, and the number of shares which the
Corporation has authority to issue, itemized by class,
after giving effect to such cancellation, is as follows:
(a) 15,000,000 shares of common stock, without par
value, 6,275,000 of such shares being issued and
outstanding at the date hereof; and
(b) 1,984,476 shares of preferred stock, 1,258,808
shares of which are issued and outstanding as
outlined above.
Dated this the 10th day of December, 1986.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ Frank S. York, Jr.
Frank S. York, Jr.
Senior Vice President,
Chief Financial Officer
and Secretary
By /s/ A. H. Mapp
A. H. Mapp
Assistant Secretary and
Assistant Treasurer
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this 10th day of December, 1986, personally appeared before me
Frank S. York, Jr., who, being by me first duly sworn, declared
that he is Senior Vice President, Chief Financial Officer and
Secretary of Mississippi Power & Light Company, a Mississippi
corporation, that he executed the foregoing document as Senior
Vice President, Chief Financial Officer and Secretary of the
Corporation, and that the statements therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
________________________
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this 10th day of December, 1986, personally appeared before me A.
H. Mapp, who, being by me first duly sworn, declared that he is
Assistant Secretary and Assistant Treasurer of Mississippi Power
& Light Company, a Mississippi corporation, that he executed the
foregoing document as Senior Vice President, Chief Financial
Officer and Secretary of the Corporation, and that the statements
therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
________________________
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Statement of Cancellation of Shares
November 1, 1986
Pursuant to the provisions of Section 79-3-133 of the
Mississippi Code of 1972, the undersigned Corporation submits the
following statement of cancellation of redeemable shares by
redemption:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The number of redeemable shares cancelled through
redemption is 180,000 shares of 17% preferred stock,
cumulative, $100 par value.
3. The aggregate number of issued shares, itemized by class
and series, after giving effect to such cancellation is
as follows:
(a) 6,275,000 shares of common stock, without par
value;
(b) 59,920 shares of 4.36% preferred stock, cumulative,
$100 par value;
(c) 43,888 shares of 4.56% preferred stock, cumulative,
$100 par value;
(d) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(e) 75,000 shares of 9.16% preferred stock, cumulative,
$100 par value;
(f) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(g) 100,000 shares of 14.75% preferred stock,
cumulative, $100 par value;
(h) 100,000 shares of 12% preferred stock, cumulative,
$100 par value;
(i) 150,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(j) 350,000 shares of 9% preferred stock, cumulative,
$100 par value;
4. The amount, expressed in dollars, of the stated capital
of the Corporation, after giving effect to such
cancellation is $252,205,800.00.
5. The Restated Articles of Incorporation of the
Corporation provide that the cancelled shares shall not
be reissued, and the number of shares which the
Corporation has authority to issue, itemized by class,
after giving effect to such cancellation, is as follows:
(a) 15,000,000 shares of common stock, without par
value, 6,275,000 of such shares being issued and
outstanding at the date hereof; and
(b) 1,804,476 shares of preferred stock, 1,078,808
shares of which are issued and outstanding as
outlined above.
Dated this the 10th day of December, 1986.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ Frank S. York, Jr.
Frank S. York, Jr.
Senior Vice President,
Chief Financial Officer
and Secretary
By /s/ A. H. Mapp
A. H. Mapp
Assistant Secretary and
Assistant Treasurer
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this 10th day of December, 1986, personally appeared before me
Frank S. York, Jr., who, being by me first duly sworn, declared
that he is Senior Vice President, Chief Financial Officer and
Secretary of Mississippi Power & Light Company, a Mississippi
corporation, that he executed the foregoing document as Senior
Vice President, Chief Financial Officer and Secretary of the
Corporation, and that the statements therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
________________________
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this 10th day of December, 1986, personally appeared before me A.
H. Mapp, who, being by me first duly sworn, declared that he is
Assistant Secretary and Assistant Treasurer of Mississippi Power
& Light Company, a Mississippi corporation, that he executed the
foregoing document as Senior Vice President, Chief Financial
Officer and Secretary of the Corporation, and that the statements
therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
________________________
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Statement of Cancellation of Shares
November 1, 1986
Pursuant to the provisions of Section 79-3-133 of the
Mississippi Code of 1972, the undersigned Corporation submits the
following statement of cancellation of redeemable shares by
redemption:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The number of redeemable shares cancelled through
redemption is 100,000 shares of 14.75% preferred stock,
cumulative, $100 par value.
3. The aggregate number of issued shares, itemized by class
and series, after giving effect to such cancellation is
as follows:
(a) 6,275,000 shares of common stock, without par
value;
(b) 59,920 shares of 4.36% preferred stock, cumulative,
$100 par value;
(c) 43,888 shares of 4.56% preferred stock, cumulative,
$100 par value;
(d) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(e) 75,000 shares of 9.16% preferred stock, cumulative,
$100 par value;
(f) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(g) 100,000 shares of 12% preferred stock, cumulative,
$100 par value;
(h) 150,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(i) 350,000 shares of 9% preferred stock, cumulative,
$100 par value;
4. The amount, expressed in dollars, of the stated capital
of the Corporation, after giving effect to such
cancellation is $242,205,800.00.
5. The Restated Articles of Incorporation of the
Corporation provide that the cancelled shares shall not
be reissued, and the number of shares which the
Corporation has authority to issue, itemized by class,
after giving effect to such cancellation, is as follows:
(a) 15,000,000 shares of common stock, without par
value, 6,275,000 of such shares being issued and
outstanding at the date hereof; and
(b) 1,704,476 shares of preferred stock, 978,808 shares
of which are issued and outstanding as outlined
above.
Dated this the 10th day of December, 1986.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ Frank S. York, Jr.
Frank S. York, Jr.
Senior Vice President,
Chief Financial Officer
and Secretary
By /s/ A. H. Mapp
A. H. Mapp
Assistant Secretary and
Assistant Treasurer
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this 10th day of December, 1986, personally appeared before me
Frank S. York, Jr., who, being by me first duly sworn, declared
that he is Senior Vice President, Chief Financial Officer and
Secretary of Mississippi Power & Light Company, a Mississippi
corporation, that he executed the foregoing document as Senior
Vice President, Chief Financial Officer and Secretary of the
Corporation, and that the statements therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
________________________
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this 10th day of December, 1986, personally appeared before me A.
H. Mapp, who, being by me first duly sworn, declared that he is
Assistant Secretary and Assistant Treasurer of Mississippi Power
& Light Company, a Mississippi corporation, that he executed the
foregoing document as Senior Vice President, Chief Financial
Officer and Secretary of the Corporation, and that the statements
therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
________________________
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Statement of Resolution Establishing Series of Shares
January 13, 1987
Pursuant to the provisions of Section 79-3-29 of the
Mississippi Code of 1972, the undersigned Corporation submits the
following statement for the purpose of establishing and
designating a series of shares and fixing and determining the
relative rights and preferences thereof:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The attached resolution establishing and designating a
series of shares and fixing and determining the relative
rights and preferences thereof was duly adopted by the
Board of Directors of the Corporation on January 13,
1987.
Dated this the 13th day of January, 1987.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ D. C. Lutken
D. C. Lutken
President, Chairman of
the Board and Chief
Executive Officer
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this January 13, 1987, personally appeared before me D. C.
Lutken, who, being by me first duly sworn, declared that he is
President, Chairman of the Board and Chief Executive Officer of
Mississippi Power & Light Company, a Mississippi corporation,
that he executed the foregoing document as President, Chairman of
the Board and Chief Executive Officer of the Corporation, and
that the statements therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
________________________
STATE OF MISSISSIPPI
COUNTY OF MINDS
I, Joy L. Spears, a Notary Public, do hereby certify that on
this January 13, 1987, personally appeared before me G. A. Goff,
who, being by me first duly sworn, declared that he is Senior
Vice President, Chief Financial Officer and Secretary of
Mississippi Power & Light Company, a Mississippi corporation,
that he executed the foregoing document as Senior Vice President,
Chief Financial Officer and Secretary of the Corporation, and
that the statements therein contained are true.
/s/ Joy L. Spears
Joy L. Spears, Notary Public
My Commission Expires:
________________________
<PAGE>
RESOLVED That there is hereby established a series of the
Preferred Stock of Mississippi Power & Light Company as follows:
A series of 350,000 shares of the Preferred Stock shall:
(a) be designated "9.76% Preferred Stock, Cumulative, $100
Par Value;"
(b) have a dividend rate of $9.76 per share per annum
payable quarterly on February 1, May 1, August 1, and November 1
of each year, the first dividend date to be May 1, 1987, and such
dividends to be cumulative from the date of issuance;
(c) be subject to redemption at the price of $109.76 per
share if redeemed on or before January 1, 1988, of $108.68 per
share if redeemed after January 1, 1988, and on or before January
1, 1989, of $107.60 per share if redeemed after January 1, 1989,,
and on or before January 1, 1990, of $106.51 per share if
redeemed after January 1, 1990, and on or before January 1, 1991,
of $105.43 per share if redeemed after January 1, 1991, and on or
before January 1, 1992, of $104.34 per share if redeemed after
January 1, 1992, and on or before January 1, 1993, of $103.26 per
share if redeemed after January 1, 1993, and on or before January
1, 1994, of $102.17 per share if redeemed after January 1, 1994,
and on or before January 1, 1995, of $101.09 per share if
redeemed after January 1, 1995, and on or before January 1, 1996,
and of $100.00 per share if redeemed after January 1, 1996, in
each case plus an amount equivalent to the accumulated and unpaid
dividends thereon, if any, to the date fixed for redemption;
provided, however, that no share of the 9.76% Preferred Stock,
Cumulative, $100 Par Value, shall be redeemed prior to January 1,
1992, if such redemption is for the purpose or in anticipation of
refunding such share through the use, directly or indirectly, of
funds borrowed by the Corporation, or through the use, directly
or indirectly, of funds derived through the issuance by the
Corporation of stock ranking prior to or on a parity with the
9.76% Preferred Stock, Cumulative, $100 Par Value, as to
dividends or assets, if such borrowed funds have an effective
interest cost to the Corporation (computed in accordance with
generally accepted financial practice) or such stock has an
effective dividend cost to the Corporation (so computed) of less
than 9.9165% per annum; and
(d) be subject to redemption as and for a sinking fund as
follows: on January 1, 1993, and on each January 1 thereafter
(each such date being hereinafter referred to as a "9.76% Sinking
Fund Redemption Date"), for so long as any shares of the 9.76%
Preferred Stock, Cumulative, $100 Par Value, shall remain
outstanding, the Corporation shall redeem, out of funds legally
available therefor, 70,000 shares of the 9.76% Preferred Stock,
Cumulative, $100 Par Value, (or the number of shares than
outstanding if less than 70,000) at the sinking fund redemption
price of $100 per share plus, as to each share so redeemed, an
amount equivalent to the accumulated and unpaid dividends
thereon, if any, to the date of redemption (the obligation of the
Corporation so to redeem the shares of the 9.76% Preferred Stock,
Cumulative, $100 Par Value, being hereinafter referred to as the
"9.76% Sinking Fund Obligation"); the 9.76% Sinking Fund
Obligation shall be cumulative; if on any 9.76% Sinking Fund
Redemption Date, the Corporation shall not have funds legally
available therefor sufficient to redeem the full number of shares
required to be redeemed on that date, the 9.76% Sinking Fund
Obligation with respect to the shares not redeemed shall carry
forward to each successive 9.76% Sinking Fund Redemption Date
until such shares shall have been redeemed; whenever on any 9.76%
Sinking Fund Redemption Date, the funds of the Corporation
legally available for the satisfaction of the 9.76% Sinking Fund
Obligation and all other sinking fund and similar obligations
than existing with respect to any other class or series of its
stock ranking on a parity as to dividends or assets with the
9.76% Preferred Stock, Cumulative, $100 Par Value (such
obligation and obligations collectively being hereinafter
referred to as the "Total Sinking Fund Obligations"), are
insufficient to permit the Corporation to satisfy fully its Total
Sinking Fund Obligation on that date, the Corporation shall apply
to the satisfaction on its 9.76% Sinking Fund Obligation on that
date that proportion of such legally available funds which is
equal to the ratio of such 9.76% Sinking Fund Obligation to such
Total Sinking Fund Obligation; the Corporation shall be entitled,
at its election, to credit against its 9.76% Sinking Fund
Obligation on any 9.76% Sinking Fund Redemption Date any shares
of the Preferred Stock, Cumulative, $100 Par Value, theretofore
redeemed (other than shares of the 9.76% Preferred Stock,
Cumulative, $100 Par Value, redeemed pursuant to the 9.76%
Sinking Fund Obligation) purchased or otherwise acquired and not
previously credited against the 9.76% Sinking Fund Obligation.
FURTHER RESOLVED That the officers of the Company are hereby
authorized and directed to execute, file, publish and record all
such statements and other documents, and to do and perform all
such other and further acts and things, as in the judgment of the
officer or officers taking such action may be necessary or
desirable for the purpose of causing the immediately preceding
resolution to become fully effective and of causing said
resolution to become and constitute an amendment of the Restated
Articles of Incorporation of the Company, all in the manner and
to the extent required by the Mississippi Business Corporation
Law.
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (Supp. 1987)
March 8, 1988
The undersigned corporation, pursuant to Section 79-4-6.31
of the Mississippi Code of 1972, as amended, submits the
following document and sets forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 5,000 shares of 12%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 6,275,000 of such shares being issued and
outstanding at the date hereof; and
(b)1,699,476 shares of preferred stock, 1,323,808
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 95,000 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 150,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)350,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 8th day of March, 1988.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
By /s/ J. R. Martin
J. R. Martin
Treasurer and Assistant
Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (Supp. 1988)
January 19, 1989
The undersigned corporation, pursuant to Section 79-4-6.31
of the Mississippi Code of 1972, as amended, submits the
following document and sets forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 1,500 shares of 12%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,699,476 shares of preferred stock, 1,323,808
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 93,500 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 150,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)350,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 19th day of January, 1989.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
<PAGE>
REGISTERED AGENT/OFFICE STATEMENT OF CHANGE
(Mark appropriate box)
X DOMESTIC X PROFIT
FOREIGN NONPROFIT
1. Name of Corporation:
Mississippi Power & Light Company
Federal Tax ID: 64-0205830
2. Current street address of registered office:
308 East Pearl Street
Jackson, Mississippi 39201
3. New street address of registered office: (No change)
4. Name of current registered agent:
Donald C. Lutken or Robert C. Grenfell
5. Name of new registered agent:
Michael B. Bemis or Robert C. Grenfell
6. (Mark appropriate box)
(X) The undersigned hereby accepts designation as
registered agent for service of process.
/s/ Michael B. Bemis
/s/ Robert C. Grenfell
( ) Statement of written consent if attached.
7. ( ) Nonprofit. The street address of the registered
office and the street address of the
principal office of its registered
agent will be identical.
(X) Profit. The street address of the registered
office and the street address of the
business office of its registered agent
will be identical.
8. The corporation has been notified of the change of
registered office.
Mississippi Power & Light Company
Corporate Name
By: Michael B. Bemis, President and COO /s/ Michael B. Bemis
PRINTED NAME/CORPORATE TITLE SIGNATURE
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (Supp. 1988)
March 30, 1989
The undersigned corporation, pursuant to Section 79-4-6.31
of the Mississippi Code of 1972, as amended, submits the
following document and sets forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 8,500 shares of 12%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,699,476 shares of preferred stock, 1,323,808
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 85,000 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 150,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)350,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 30th day of March, 1989.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (Supp. 1988)
March 30, 1989
The undersigned corporation, pursuant to Section 79-4-6.31
of the Mississippi Code of 1972, as amended, submits the
following document and sets forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 5,800 shares of 12%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,692,176 shares of preferred stock, 1,316,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 87,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 150,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)350,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 30th day of March, 1989.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
<PAGE>
ARTICLES OF CORRECTION
(Mark appropriate box)
X PROFIT NONPROFIT
The undersigned corporation, pursuant to Section 79-4-1.24 (if a
profit corporation) or Section 79-11-113 (if a nonprofit
corporation) of the Mississippi Code of 1972, as amended, hereby
executes the following document and sets forth:
1. The name of the corporation is:
Mississippi Power & Light Company
2. (Mark appropriate box.)
(X) The document to be corrected is Articles of
Amendment which became effective on March 31,
1989 (date).
( ) A copy of the document to be corrected is attached.
3. The aforesaid articles contain the following incorrect
statement:
See Attachment "A"
4. a. The reason such statement is incorrect is: The
reduction in the number of shares of the class and
series referred to in attachment A was incorrectly
states as 8,500, and should have been 5,800, which
incorrect statement is a component of certain other
statements made in the Articles of Amendment, all as
reflected in attachment "A".
or
b. The manner in which the execution of such document
was defective was:
5. The correction is as follows: Attachment "B", a new
executed form of Articles of Amendment, is substituted
in its entirety for the Articles of Amendment referred
to above.
6. The certificate of correction shall become effective on
March 31, 1989.
By: Mississippi Power & Light Company /s/ G. A. Goff
printed name/corporation title G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
<PAGE>
ATTACHMENT "A"
The following incorrect statements were included in the
Articles of Amendment under Miss. Code Ann. Section 74-4-6.31
(Supp. 1988) dated March 30, 1989:
1. Paragraph 2 thereof provided as follows: "The
reduction in the number of authorized shares, itemized
by class and series, is 8,500 shares of 12% Preferred
Stock, Cumulative, $100 par value."
2. Paragraph 3(b) provided in part as follows: "1,699,476
shares of preferred stock, 1,323,808 shares of which
are issued and outstanding in the following series:
(vi) 85,000 shares of 12% preferred stock,
cumulative, $100 par value;
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (Supp. 1988)
November 2, 1989
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (Supp. 1988), submits the following document
and sets forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 90,000 shares of 16.16%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,602,176 shares of preferred stock, 1,226,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $200 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 87,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 60,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)350,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 2nd day of November, 1989.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1972)
March 28, 1990
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1972), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 10,000 shares of
12.009% Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,592,176 shares of preferred stock, 1,216,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $200 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 77,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 60,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)350,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 30th day of March, 1990.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1972)
November 2, 1990
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1972), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 15,000 shares of 16.16%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,577,176 shares of preferred stock, 1,201,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 77,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 45,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)350,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 2nd day of November, 1990.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
<PAGE>
[Letterhead of Wise Carter Child & Caraway]
March 26, 1991
Ms. Sylvia Jacobs
Branch Supervisor-Corporations Business Services
Secretary of State of State of Mississippi
202 North Congress Street, Suite 601
Jackson, MS 39205
Re: Mississippi Power & Light Company
Articles of Amendment
Dear Ms. Jacobs:
I received your Notice of Return regarding the Articles of
Amendment we recently filed for Mississippi Power & Light Company
under Section 79-4-6.31 of the Mississippi Code. Your Notice of
Return states that we must use Form C-3 provided in the Guide for
Domestic Corporations published by the Mississippi Secretary of
State.
I draw your attention to the fact that the Articles of
Amendment we are filing are being filed under Section 79-4-6.31
(1989) of the Mississippi Code, and not Section 79-4-10.06. I
agree that if we were filing Articles of Amendment under Section
79-4-10.06, the proper form to use would be Form C-3 provided by
the Mississippi Secretary of State. However, the Articles of
Amendment we are filing are being filed only because stock was
redeemed by the corporation and is now being cancelled.
We have used the form enclosed with this letter numerous
times in the past to file Articles of Amendment pursuant to
Section 79-4-6.31, after consultation with Ray Bailey. It is my
opinion that the form for the standard Articles of Amendment
would not be appropriate for the type of amendment we are filing,
and there is no place on the form to provide the information
required under Section 79-4-6.31. Accordingly, I am returning
our duplicate originals of the Articles of Amendment and request
that you file one among the records in your office, and return
the conformed copy, marked "Filed," to my attention at the above
address.
If you have any questions, please feel free to call at the
above direct dial number.
Very truly yours,
/s/ J. Michael Cockrell
J. Michael Cockrell
DMC/st
Enclosure
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
March 18, 1991
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is (a) 80 shares of 4.36%
preferred stock, cumulative, $100 par value; (b) 588
shares of 4.56% preferred stock, cumulative, $100 par
value; and (c) 10,000 shares of 12% preferred stock,
cumulative, $100 par value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,566,508 shares of preferred stock, 1,191,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 67,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 45,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)350,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 18th day of March, 1991.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ G. A. Goff
G. A. Goff
Senior Vice President,
Chief Financial Officer
and Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
July 12, 1991
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.00%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,496,508 shares of preferred stock, 1,121,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 67,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 45,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)280,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 12th day of July, 1991.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ A. H. Mapp
A. H. Mapp
Assistant Treasurer and
Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
November 19, 1991
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 15,000 shares of 16.16%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,481,508 shares of preferred stock, 1,106,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 67,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 30,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)280,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 19th day of November, 1991.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ A. H. Mapp
A. H. Mapp
Assistant Treasurer and
Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
March 13, 1992
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 10,000 shares of 12%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 7,579,400 of such shares being issued and
outstanding at the date hereof; and
(b)1,471,508 shares of preferred stock, 1,096,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 57,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 30,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)280,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 13th day of March, 1992.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ A. H. Mapp
Title: Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
July 15, 1992
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.00%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)1,401,508 shares of preferred stock, 1,026,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 57,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 30,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)210,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
Dated this the 15th day of July, 1992.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ A. H. Mapp
Title: Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment - Statement of Resolution
Establishing Series of Shares
October 22, 1992
Pursuant to the provisions of Section 79-4-6.02(d) of the
Mississippi Code of 1972 (Supp. 1989), Mississippi Power & Light
Company submits the following statement for the purpose of
establishing and designating a series of shares and fixing and
determining the relative rights and preferences thereof:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The attached resolution establishing and designating a
series of shares and fixing and determining the relative
rights and preferences thereof was duly adopted by the
Board of Directors of the Corporation on October 22,
1992.
Dated this the 22nd day of October, 1992.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ A. H. Mapp
Allan H. Mapp
Assistant Secretary and
Assistant Treasurer
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Excerpts from the minutes of the Meeting
of the Board of Directors held on October 22, 1992
RESOLVED That there is hereby established a series of the
Preferred Stock of Mississippi Power & Light Company as follows:
A series of 200,000 shares of the Preferred Stock shall:
(a) be designated as the "8.36% Preferred Stock,
Cumulative, $100 Par Value";
(b) have a dividend rate of $8.36 per share per annum
payable quarterly on February 1, May 1, August 1, and November 1
of each year, the first dividend date to be February 1, 1993, and
such dividends to be cumulative from the date of issuance; and
(c) be subject to redemption at the price of $100 par share
plus an amount equivalent to the accumulated and unpaid dividends
thereon, if any, to the date fixed for redemption (except that no
share of the 8.36% Preferred Stock shall be redeemed on or before
October 1, 1997).
FURTHER RESOLVED That the officers of the Company are hereby
authorized and directed to execute, file and publish and record
all such statements and other documents, and to do and perform
all such other and further acts and things, as in the judgment of
the officer and officers taking such action may be necessary or
desirable for the purpose of causing the immediately preceding
resolution to become fully effective and of causing said
resolution to become and constitute an amendment of the Restated
Articles of Incorporation of the Company, all in the manner and
to the extent required by the Mississippi Business Corporation
Law.
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
November 6, 1992
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 15,000 shares of 16.16%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)1,386,508 shares of preferred stock, 1,211,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 57,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 15,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)210,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 350,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(x) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 6th day of November, 1993.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ A. H. Mapp
Title: Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
January 12, 1993
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.76%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)1,316,508 shares of preferred stock, 1,141,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 57,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 15,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)210,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 280,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(x) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 12th day of January, 1993.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ A. H. Mapp
Title: Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
March 10, 1993
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 10,000 shares of 12.00%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)1,306,508 shares of preferred stock, 1,131,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 47,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 15,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)210,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 280,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(x) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 10th day of March, 1993.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ A. H. Mapp
Title: Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
July 12, 1993
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.00%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)1,236,508 shares of preferred stock, 1,061,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 47,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 15,000 shares of 16.16% preferred stock,
cumulative, $100 par value;
(viii)140,000 shares of 9% preferred stock,
cumulative, $100 par value;
(ix) 280,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(x) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 12th day of July, 1993.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ James W. Snider
Title: Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
November 15, 1993
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 15,000 shares of 16.16%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)1,221,508 shares of preferred stock, 1,046,508
shares of which are issued and outstanding in the
following series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 47,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 140,000 shares of 9% preferred stock,
cumulative, $100 par value;
(viii)280,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(ix) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 15th day of November, 1993.
MISSISSIPPI POWER & LIGHT COMPANY
By /s/ James W. Snider
Title: Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-10.06 (1989)
February 4, 1994
The undersigned corporation, pursuant to Section 79-4-10.06
of the Mississippi Code of 1972, as amended, submits the
following document and sets forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. As evidenced by the attached Stockholder's Written
Approval of Amendment authorizing 1,500,000 additional
shares of Preferred Stock of the par value of $100 per
share, the following amendment of the Restated Articles
of Incorporation, as amended (the "Charter"), was
proposed by the Board of Directors of Mississippi Power
& Light Company on October 29, 1993, was adopted by the
stockholders of the Corporation entitled to vote on the
amendment on February 4, 1994, in accordance with and in
the manner prescribed by the laws of the State of
Mississippi and the Charter of Mississippi Power & Light
Company:
The first paragraph in Article FOURTH of the Charter is
amended to read as follows:
FOURTH: The aggregate number of shares which the
Corporation shall have authority to issue is
17,721,508 shares, divided into 2,721,508 shares of
Preferred Stock of the par value of $100 per share
and 15,000,000 shares of Common Stock without par
value.
3. Pursuant to the Laws of the State of Mississippi and the
Charter of Mississippi Power & Light Company, the
holders of Preferred Stock of the par value of $100 per
share were not entitled to vote on the amendment as a
separate voting group. The holders of the outstanding
shares of common stock were the only stockholders
entitled to vote on the amendment.
4. The number of shares of common stock of the corporation
outstanding at the time of such adoption was 8,666,357;
and the number of shares entitled to vote thereon was
8,666,357.
Dated this the 4th day of February, 1994.
MISSISSIPPI POWER & LIGHT COMPANY
By: /s/ Edwin Lupberger
Edwin Lupberger
Chairman of the Board and
Chief Executive Officer
By: /s/ Donald E. Meiners
Donald E. Meiners
President
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
March 17, 1994
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 10,000 shares of 12.00%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,641,508 shares of preferred stock, 966,508 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 37,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 140,000 shares of 9% preferred stock,
cumulative, $100 par value;
(viii)210,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(ix) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 17th day of March, 1994.
MISSISSIPPI POWER & LIGHT COMPANY
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
August 1, 1994
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.00%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,571,508 shares of preferred stock, 896,508 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 37,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 70,000 shares of 9% preferred stock,
cumulative, $100 par value;
(viii)210,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(ix) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 1st day of August, 1994.
MISSISSIPPI POWER & LIGHT COMPANY
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
January 18, 1995
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.76%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,501,508 shares of preferred stock, 826,508 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 37,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 70,000 shares of 9% preferred stock,
cumulative, $100 par value;
(viii)140,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(ix) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 18th day of January, 1995.
MISSISSIPPI POWER & LIGHT COMPANY
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
March 7, 1995
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 10,000 shares of 12.00%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,491,508 shares of preferred stock, 816,508 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 27,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 70,000 shares of 9% preferred stock,
cumulative, $100 par value;
(viii)140,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(ix) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 7th day of March, 1995.
MISSISSIPPI POWER & LIGHT COMPANY
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
July 20, 1995
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.00%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,421,508 shares of preferred stock, 746,508 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 27,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 140,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(ix) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 20th day of July, 1995.
MISSISSIPPI POWER & LIGHT COMPANY
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
January 19, 1996
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.76%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,351,508 shares of preferred stock, 676,508 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 27,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 70,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(ix) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 19th day of January, 1996.
MISSISSIPPI POWER & LIGHT COMPANY
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
MISSISSIPPI POWER & LIGHT COMPANY
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
March 6, 1996
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Mississippi Power & Light
Company.
2. The reduction in the number of authorized shares,
itemized by class and series, is 10,000 shares of 12%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,341,508 shares of preferred stock, 666,508 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 17,700 shares of 12% preferred stock,
cumulative, $100 par value;
(vii) 70,000 shares of 9.76% preferred stock,
cumulative, $100 par value; and
(ix) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 6th day of March, 1996.
MISSISSIPPI POWER & LIGHT COMPANY
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
OFFICE OF THE MISSISSIPPI SECRETARY OF STATE
P. O. Box 136, Jackson, MS 39205-0136 (601) 359-1333
Articles of Amendment
The undersigned persons, pursuant to Section 79-4-10.06 (if a
profit corporation) or Section 79-11-305 (if a nonprofit
corporation) of the Mississippi Code of 1972, hereby execute the
following document and set forth:
1. Type of Corporation
X Profit Nonprofit
2. Name of Corporation
Mississippi Power & Light Company
3. The future effective date is (Complete if applicable)
4. Set forth the text of each amendment adopted. (Attach page)
5. If an amendment for a business corporation provides for an
exchange, reclassification, or cancellation of issued
shares, set forth the provisions for implementing the
amendment if they are not contained in the amendment itself.
(Attach page)
6. The amendment(s) was (were) adopted on: 04/22/96
FOR PROFIT CORPORATION (Check the appropriate box)
Adopted by the incorporators directors without shareholder
action and shareholder action
was not required.
FOR NONPROFIT CORPORATION (Check the appropriate box)
Adopted by the incorporators board of directors without
member action and member
action was not required.
FOR PROFIT CORPORATION
7. If the amendment was approved by shareholders
(a) The designation, number of outstanding shares, number
of votes entitled to be cast by each voting group
entitled to vote separately on the amendment, and the
number of votes of each voting group indisputably
represented at the meeting were
No of No. of votes No. of votes
outstanding entitled to indisputably
Designation shares be case represented
Common Stock 8666357 8666357 8666357
(b) EITHER
(i) the total number of votes cast for and against the
amendment by each voting group entitled to vote
separately on the amendment was
Total no. of Total no. of
Voting Group votes case FOR votes case AGAINST
Common stock 8666357 0
OR
(ii) the total number of undistributed votes cast for
the amendment by each voting group was
Total no. of
Voting Group undisputed votes case FOR the plan
and the number of votes case for the amendment by each
voting group was sufficient for approval by that voting
group.
FOR NONPROFIT CORPORATION
8. If the amendment was approved by the members
(a) The designation, number of memberships outstanding,
number of votes entitled to be cast by each class
entitled to vote separately on the amendment, and the
number of votes of each class indisputably represented
at the meeting were
No. of No. of No. of votes
memberships votes entitled indisputably
Designation outstanding to be cast represented
(b) EITHER
(i) the total number of votes cast for and against the
amendment by each class entitled to vote separately on
the amendment was
Total no. of Total no. of
Voting votes cast FOR votes cast AGAINST
OR
(ii) the total number of undistributed votes cast for the
amendment by each class was
Total no. of undisputed
Voting class votes cast FOR the amendment
and the number of votes cast for the amendment by each voting
group was sufficient for approval by that voting group.
By: Signature /s/ Michael G. Thompson
Printed Name Michael G. Thompson
Title: Senior Vice President
The Restated Articles of Incorporation of Mississippi Power &
Light Company, as amended, are amended, effective April 22, 1996,
by deleting the title and article FIRST in their entirety and
replacing therefor the following:
RESTATED ARTICLES OF INCORPORATION
OF
ENTERGY MISSISSIPPI, INC.
FIRST: The name of the Corporation is ENTERGY MISSISSIPPI, INC.
Any additional references to "Mississippi Power & Light
Company" in said Restated Articles of Incorporation, as amended,
are changed to "Entergy Mississippi, Inc."
<PAGE>
ENTERGY MISSISSIPPI, INC.
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
January 28, 1996
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Entergy Mississippi, Inc.
2. The reduction in the number of authorized shares,
itemized by class and series, is 70,000 shares of 9.76%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,271,508 shares of preferred stock, 596,508 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 17,700 shares of 12% preferred stock,
cumulative, $100 par value; and
(vii) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 28th day of January, 1997.
ENTERGY MISSISSIPPI, INC.
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
OFFICE OF THE MISSISSIPPI SECRETARY OF STATE
P. O. BOX 136, JACKSON, MS 39205-0136 (601)359-1333
ARTICLES OF CORRECTION
(Mark appropriate box)
The undersigned, pursuant to Section 79-4-1.24 (if a profit
corporation) or Section 79-11-113 (if a nonprofit corporation) of
the Mississippi Code of 1972, as amended, hereby executes the
following document and sets forth:
X PROFIT NONPROFIT
2. The name of the corporation is:
Mississippi Power & Light Company
3. (Mark appropriate box.)
(X) The document to be corrected is Articles of
Amendment which became effective on January 28,
1997 (date).
( ) A copy of the document to be corrected is attached.
4. The aforesaid articles contain the following incorrect
statement:
See Attachment "A"
5. a. The reason such statement is incorrect is: The
Articles of Amendment referred to above failed to reflect
the reduction in the number of authorized shares of
preferred stock of the 12% Series.
or
b. The manner in which the execution of such document
was defective was:
6. The correction is as follows: Attachment "B", a corrected
executed form of Articles of Amendment, is substituted
in its entirety for the Articles of Amendment referred
to above.
6. The certificate of correction shall become effective on
January 28, 1997.
By: Mississippi Power & Light Company /s/ J. W. Snider, Jr.
printed name/corporation title J. W. Snider, Jr.
Assistant Secretary
<PAGE>
Attachment A
The following incorrect statements were included in the
Articles of Amendment dated January 28, 1997:
1. The date on the face of the Articles of Amendment was
January 28, 1996.
2. Paragraph 2 failed to include in the reduction in the
number of authorized preferred shares 17,700 shares of 12%
Preferred Stock, Cumulative, $100 Par Value.
3. Paragraph 3(b) provided in part as follows:
"2,271,508 shares of Preferred Stock, 596,508 shares of
which are issued and outstanding in the following
series."
4. Paragraph 3(b)(vi) was included erroneously.
<PAGE>
ENTERGY MISSISSIPPI, INC.
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31 (1989)
January 28, 1997
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31 (1989), submits the following document and sets
forth:
1. The name of the corporation is Entergy Mississippi, Inc.
2. The reduction in the number of authorized shares,
itemized by class and series, is (a) 17,700 shares of
12% Preferred Stock, Cumulative, $100 Par Value and (b)
70,000 shares of 9.76% Preferred Stock, Cumulative, $100
Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,253,808 shares of preferred stock, 578,808 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 75,000 shares of 9.16% preferred stock,
cumulative, $100 par value;
(v) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(vi) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 28th day of January, 1997.
ENTERGY MISSISSIPPI, INC.
By: /s/ J. W. Snider, Jr.
Assistant Secretary
<PAGE>
ENTERGY MISSISSIPPI, INC.
Articles of Amendment Under Miss. Code Ann.
Section 79-4-6.31
November 17, 1997
The undersigned corporation, pursuant to Miss. Code Ann.
Section 79-4-6.31, submits the following document and sets forth:
1. The name of the corporation is Entergy Mississippi, Inc.
2. The reduction in the number of authorized shares,
itemized by class and series, is 75,000 shares of 9.16%
Preferred Stock, Cumulative, $100 Par Value.
3. The total number of authorized shares, itemized by class
and series, remaining after reduction of the shares is
as follows:
(a)15,000,000 shares of common stock, without par
value, 8,666,357 of such shares being issued and
outstanding at the date hereof; and
(b)2,178,808 shares of preferred stock, 503,808 shares
of which are issued and outstanding in the following
series:
(i) 59,920 shares of 4.36% preferred stock,
cumulative, $100 par value;
(ii) 43,888 shares of 4.56% preferred stock,
cumulative, $100 par value;
(iii) 100,000 shares of 4.92% preferred stock,
cumulative, $100 par value;
(iv) 100,000 shares of 7.44% preferred stock,
cumulative, $100 par value;
(v) 200,000 shares of 8.36% preferred stock,
cumulative, $100 par value.
Dated this the 17th day of November, 1997.
ENTERGY MISSISSIPPI, INC.
By: /s/ J. W. Snider, Jr.
Assistant Secretary
Exhibit 4(h)4
RESTATEMENT AGREEMENT
DATED 17th November, 1997
relating to a BPS1,250,000,000
Credit Agreement dated 17th December, 1996
(as amended)
FOR
ENTERGY LONDON INVESTMENTS PLC
(formerly ENTERGY POWER UK PLC)
and
LONDON ELECTRICITY PLC
ARRANGED BY
ABN AMRO BANK N.V.
and
UNION BANK OF SWITZERLAND
Allen & Overy
London
<PAGE>
INDEX
Clause Page
1. Interpretation 4
2. Amendments to and restatement of the Credit Agreement 4
3. Representations and warranties 5
4. Conditions precedent 5
5. Miscellaneous 5
6. Governing law 5
Schedules
1. BANKS 6
PART I - CONTINUING BANKS 6
PART II - NEW BANKS 6
PART III - RETIRING BANKS 7
2. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE 8
3. FORM OF RESTATED CREDIT AGREEMENT 10
SIGNATORIES 125
<PAGE>
THIS RESTATEMENT AGREEMENT is dated 17th November, 1997 and
made between:-
(1) ENTERGY UK LIMITED (Registered No. 3386063) ("EUK");
(2) ENTERGY LONDON INVESTMENTS PLC (Registered No. 3261188)
(the "Company");
(3) LONDON ELECTRICITY plc (Registered No. 2366852) ("London
Electricity");
(4) ENTERGY UK FINANCE LIMITED (Registered No. 3385743),
ENTERGY LONDON HOLDINGS LIMITED (Registered No. 3385734),
ENTERGY LONDON LIMITED (Registered No. 3261305), ENTERGY
INTERNATIONAL INVESTMENTS NO. 1 LTD LLC and ENTERGY
INTERNATIONAL INVESTMENTS NO. 2 LTD LLC (the "Additional
Guarantors");
(5) ABN AMRO BANK N.V. and UNION BANK OF SWITZERLAND as
arrangers (in this capacity the "Arrangers");
(6) THE FINANCIAL INSTITUTIONS listed in Part I of Schedule 1
to this Restatement Agreement (the "Continuing Banks");
(7) THE FINANCIAL INSTITUTIONS listed in Part II of
Schedule 1 to this Restatement Agreement (the "New
Banks");
(8) THE FINANCIAL INSTITUTIONS listed in Part III of
Schedule 1 to this Restatement Agreement (the "Retiring
Banks"); and
(9) ABN AMRO BANK N.V. as agent (in this capacity the
"Agent").
BACKGROUND:-
(A) By a credit agreement dated 17th December, 1996 (as
amended) (the "Credit Agreement"), the Continuing Banks
and the Retiring Banks agreed to make available to the
Company and London Electricity a BPS1,250,000,000
syndicated credit facility.
(B) The Company wishes to amend the Credit Agreement on the
terms below to reflect (inter alia) the change in the
corporate structure relating to its shareholding, the
refinancing of Facility B (as defined in the Credit
Agreement) and various other matters which have occurred
since the date of the Credit Agreement, and have
requested the other parties to the Credit Agreement to
amend it accordingly.
(C) The Retiring Banks have not agreed to the above request
of the Company and wish to withdraw from the Credit
Agreement.
(D) The Continuing Banks have agreed to the request and the
New Banks wish to join the Credit Agreement.
(E) The parties to this Restatement Agreement have agreed to
restate the Credit Agreement to reflect the above
arrangements.
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 Terms defined
In this Restatement Agreement:-
(a) "Effective Date" means 21st November, 1997 or such
other date as the Agent (with the prior agreement of
the other Finance Parties) may agree;
(b) "EIL Facility Agreement" means the U.S.$120,000,000
Credit Agreement dated as of 17th November, 1997
between Entergy International Ltd LLC, the Banks (as
defined therein) and ABN AMRO Bank N.V. as
administrative agent;
(c) "Finance Parties" means the Arrangers, the
Continuing Banks, the Retiring Banks, the New Banks
and the Agent;
(d) "Obligors" means EUK, the Company, the Additional
Guarantors and London Electricity; and
(e) "Restated Credit Agreement" means the Credit
Agreement as restated and amended in the terms of
Schedule 3.
1.2 Interpretation
(a) Terms defined in the Credit Agreement shall, unless the
contrary intention appears or the context otherwise
requires, have the same meaning in this Restatement
Agreement.
(b) A reference to the "agreed form" is a reference to the
form of a document agreed by the Company and the Agent
prior to the date of this Agreement.
(c) Clauses 1.2 (Construction) of the Credit Agreement shall
apply to this Restatement Agreement, as though it were
set out in full in this Restatement Agreement, but as if
references in that clause to the Credit Agreement were
construed as references to this Restatement Agreement.
(d) This Restatement Agreement is a Finance Document.
2. AMENDMENTS TO AND RESTATEMENT OF THE CREDIT AGREEMENT
With effect on and from the Effective Date:-
(a) the Credit Agreement shall be amended and restated
in the form set out in Schedule 3 so that the rights
and obligations of the parties to this Restatement
Agreement (other than the Retiring Banks) shall be
governed by the terms of the Restated Credit
Agreement;
(b) each New Bank will become a Bank under the Restated
Credit Agreement with Commitments as set out
opposite its name in Part II of Schedule 1 to the
Restated Credit Agreement; and
(c) without prejudice to accrued rights and obligations,
the Retiring Banks shall cease to have any rights,
and be released from all obligations, under the
Credit Agreement.
Notwithstanding the current terms of the Credit
Agreement, accrued commitment fee under the Credit
Agreement will be payable on the Effective Date.
3. REPRESENTATIONS AND WARRANTIES
Each Obligor represents and warrants to the Finance
Parties that the representations and warranties set out
in clause 16 (Representations and warranties) of the
Restated Credit Agreement are true and accurate in all
respects as at (unless expressly stated to be given at
the Effective Date) the date of this Restatement
Agreement and (in all cases) as at the Effective Date,
but as if references in the Restated Credit Agreement to
the Restated Credit Agreement were construed as
references to this Restatement Agreement.
4. CONDITIONS PRECEDENT
(a) Clause 2 above will only come into effect if the Agent
has received in form and substance satisfactory to the
Agent:
(i) all of the documents referred to in Part I of
Schedule 2; and
(ii) evidence that the conditions referred to in Part II
of Schedule 2 have been, or will on the Effective
Date be, satisfied.
The Agent shall promptly notify the other parties to this
Restatement Agreement of satisfaction of the above
conditions precedent.
(b) If the Effective Date shall not have occurred by the date
falling three months after the date of this Restatement
Agreement, this Restatement Agreement shall lapse and be
of no further effect.
5. MISCELLANEOUS
The provisions of Clauses 10 (Payments), 21 (Expenses),
22 (Stamp duties), 30 (Severability), 31 (Counterparts),
32 (Notices) and 33 (Jurisdiction) of the Restated Credit
Agreement shall apply to this Restatement Agreement as
though they were set out in full in this Restatement
Agreement, but as if references in those clauses to the
Restated Credit Agreement were construed as references to
this Restatement Agreement.
6. GOVERNING LAW
This Restatement Agreement is governed by English law.
This Restatement Agreement has been entered into on the date
stated at the beginning of this Restatement Agreement.
<PAGE>
SCHEDULE 1
BANKS
PART I
CONTINUING BANKS
ABN AMRO Bank N.V.
Union Bank of Switzerland
Bayerische Landesbank Girozentrale London Branch
The Sanwa Bank, Limited
The Bank of Tokyo-Mitsubishi, Ltd
Barclays Bank PLC
CIBC Wood Gundy PLCplc
The Dai-Ichi Kangyo Bank, Limited
Den Danske Bank Aktieselskab
Deutsche Bank AG London
Dresdner Bank AG London Branch
Rabobank International, London Branch
(Cooperatieve Centrale Raiffeisen Boerenleenbank BA)
The Royal Bank of Scotland plc
Societe Generale
The Sumitomo Trust & Banking Co., Ltd
The Toronto-Dominion Bank
Westdeutsche Landesbank Girozentrale
Commonwealth Bank of Australia
Credit Lyonnais
The Fuji Bank, Limited
National Westminster Bank plc
The Sakura Bank, Limited
The Bank of New York
Midland Bank PLC
The Nikko Bank (UK) plc
The Sumitomo Bank, Limited
The Tokai Bank, Limited
The Toyo Trust and Banking Company, Limited
PART II
NEW BANKS
De Nationale Investeringsbank N.V., London Branch
ING Bank N.V., London Branch
Scotiabank Europe PLC
PART III
RETIRING BANKS
Bank of America National Trust and Savings Association
The Bank of Nova Scotia
Bayerische Hypotheken-und Wechsel-Bank AG
The Industrial Bank of Japan, Limited
Kredietbank N.V.
Union Bank of California, N.A.
<PAGE>
SCHEDULE 2
CONDITIONS PRECEDENT TO THE EFFECTIVE DATE
PART I
1. A copy of the memorandum and articles of association,
certificate of incorporation and certificate of
incorporation on change of name (if any) of each Obligor
incorporated in England and the certificate of formation,
limited liability agreement and certificate of good
standing in respect of each Obligor formed under the laws
of the State of Delaware.
2. A copy of a resolution of the board of directors of each
Obligor incorporated in England, and a copy of a
resolution or consent of the member of each other
Obligor:-
(a) approving the terms of, and the transactions
contemplated by, and resolving that it execute this
Restatement Agreement;
(b) authorising a specified person or persons to
execute this Restatement Agreement on its behalf;
and
(c) authorising a specified person or persons, on
its behalf, to sign and/or despatch all documents
and notices to be signed and/or despatched by it
under or in connection with this Restatement
Agreement.
3. A copy of a resolution, passed by all the holders of the
issued or allotted shares in each Obligor incorporated in
England (other than London Electricity and EUK),
approving the terms of, and the transactions contemplated
by, the Restated Credit Agreement.
4. A certificate of an authorised signatory of each Obligor,
certifying the names and true signatures of the officers
or member of each Obligor authorised by the resolution or
consent referred to in paragraph 2 above.
5. Evidence (in the form of certificates from relevant
counsel or officers of the company concerned, supported
by, if applicable, entries on public record of that
company and payment instructions) that the corporate
structure contained in Schedule 7 to the Restatement
Agreement is correct, and that all the capital
arrangements referred to in that Schedule have been, or
will on the Effective Date be, fully implemented (whether
by way of share capital, capital contributions,
subordinated debt or otherwise).
6. Evidence that the conditions precedent to the initial
advance under the EIL Facility Agreement have been
satisfied or waived.
7. A copy of the BPS810,000,000 promissory note(s) from
Entergy London Holdings Limited to EUK and BPS810,000,000
plus the Sterling equivalent of at least U.S.$107,000,000
promissory note(s) from Entergy London Limited to Entergy
UK Finance Limited.
8. A Debenture executed by each Guarantor (other than the
Company).
9. A supplemental debenture executed by the Company,
amending and restating the Debenture dated 17th December,
1996, substantially in the agreed form.
10. Share certificates (and, if those share certificates are
not in the name of the Agent or its nominees, duly
executed stock transfer forms) for all the shares in
Entergy UK Limited, Entergy London Holdings Limited,
Entergy London Limited, Entergy UK Finance Limited and
the Company.
11. Completed form 395 in respect of each Debenture referred
to in paragraph 8 above.
12. The Intercreditor Agreement, duly executed by the
Obligors expressed to be party to it, substantially in
the agreed form.
13. A legal opinion of Richards, Layton & Finger, counsel of
the Obligors formed under the laws of the State of
Delaware, addressed to the Finance Parties, substantially
in the agreed form.
14. A legal opinion of Allen & Overy, English legal advisers
to the Arrangers, addressed to the Finance Parties,
substantially in the agreed form.
15. Novation agreements executed by the Company and,
respectively, ABN AMRO Bank N.V., Bank of America
National Trust and Savings Association and Union Bank of
Switzerland transferring the rights and obligations of
the Company under the existing Swap Documents with ABN
AMRO Bank N.V., Bank of America National Trust and
Savings Association and Union Bank of Switzerland to EUK,
substantially in the agreed form.
16. Evidence that CT Corporation has accepted its appointment
as process agent in New York for the purposes of
Clause 33 (Jurisdiction) of the Restated Credit
Agreement.
17. A copy of the indenture dated as of 1st November, 1997
between the Company and The Bank of New York, as trustee,
relating to the Subordinated Debentures and the
Subordinated Capital Security Guarantee.
18. A certificate of an authorised signatory of EUK
certifying that each copy document specified in this
Schedule 2 is correct, complete and in full force and
effect as at a date no earlier than the date of this
Restatement Agreement.
PART II
1. Payment of all amounts payable in respect of Facility B.
2. Payment of all amounts owing under the Finance Documents
to the Retiring Banks.
3. Payment of all accrued fees, costs and expenses of the
Agent (including reasonable legal fees and expenses of
the Agent) under this Restatement Agreement, to the
extent then due and payable.
<PAGE>
SCHEDULE 3
FORM OF RESTATED CREDIT AGREEMENT
RESTATED CREDIT AGREEMENT
DATED 17th December, 1996
(as subsequently amended including by way of a Restatement
Agreement dated 17th November, 1997)
BPS1,010,000,000
CREDIT FACILITY
FOR
ENTERGY UK LIMITED
and
LONDON ELECTRICITY plc
GUARANTEED BY
ENTERGY LONDON INVESTMENTS PLC
ENTERGY UK FINANCE LIMITED
ENTERGY LONDON HOLDINGS LIMITED
ENTERGY LONDON LIMITED
ENTERGY INTERNATIONAL INVESTMENTS NO. 1 LTD LLC
ENTERGY INTERNATIONAL INVESTMENTS NO. 2 LTD LLC
ARRANGED BY
ABN AMRO BANK N.V.
and
UNION BANK OF SWITZERLAND
Allen & Overy
London
<PAGE>
INDEX
Clause Page
1. INTERPRETATION 13
2. THE FACILITIES 31
3. PURPOSE AND AVAILABILITY 32
4. CONDITIONS PRECEDENT 32
5. UTILISATIONS 32
6. REPAYMENT 33
7. PREPAYMENT AND CANCELLATION 34
8. INTEREST PERIODS 35
9. INTEREST 36
10. PAYMENTS 38
11. TAXES 39
12. MARKET DISRUPTION 41
13. INCREASED COSTS 42
14. ILLEGALITY 43
15. GUARANTEE 44
16. REPRESENTATIONS AND WARRANTIES 46
17. UNDERTAKINGS 50
18. DEFAULT 66
19. THE AGENT AND THE ARRANGERS 72
20. FEES 76
21. EXPENSES 77
22. STAMP DUTIES 78
23. INDEMNITIES 78
24. EVIDENCE AND CALCULATIONS 79
25. AMENDMENTS AND WAIVERS 79
26. CHANGES TO THE PARTIES 80
27. DISCLOSURE OF INFORMATION 83
28. SET-OFF 83
29. PRO RATA SHARING 84
30. SEVERABILITY 85
31. COUNTERPARTS 85
32. NOTICES 85
33. JURISDICTION 86
34. GOVERNING LAW 87
<PAGE>
SCHEDULES
1. PART I - ADDITIONAL GUARANTORS 88
PART II - BANKS AND COMMITMENTS 88
2. CALCULATION OF THE MLA COST 90
3. FORM OF REQUEST 92
4. FORM OF NOVATION CERTIFICATE 93
5. FORM OF DEBENTURE 94
6. FORM OF SUBORDINATION AGREEMENT 113
7. CORPORATE STRUCTURE 124
<PAGE>
THIS AGREEMENT is dated 17th December, 1996 (as subsequently
amended, including by way of a Restatement Agreement dated
17th November, 1997) between:-
(1) ENTERGY UK LIMITED (Registered No. 3386063) ("EUK");
(2) ENTERGY LONDON INVESTMENTS PLC (Registered No. 3261188)
(the "Company");
(3) LONDON ELECTRICITY PLC (Registered No. 2366852) ("London
Electricity");
(4) THE COMPANIES listed in Part I of Schedule 1 as
additional guarantors (in this capacity the "Additional
Guarantors");
(5) ABN AMRO BANK N.V. and UNION BANK OF SWITZERLAND as
arrangers (in this capacity the "Arrangers");
(6) THE FINANCIAL INSTITUTIONS listed in Part II of Schedule
1 as banks (the "Banks");
(7) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION in
its capacity as party to a Swap Document ("B of A"); and
(8) ABN AMRO BANK N.V. as agent (in this capacity the
"Agent").
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 Definitions
In this Agreement:-
"Accounting Date"
means the last day of each financial quarter of the
Company.
"Accounting Period"
means any period of approximately three months or one
year ending on an Accounting Date for which accounts are
required to be prepared for the purposes of this
Agreement.
"Acquisition"
means the acquisition by the Company of the shares of
London Electricity.
"Act"
means the Electricity Act 1989 and, unless the context
otherwise requires, all subordinate legislation made
pursuant to it.
"Adjusted Capital and Reserves"
has the meaning given to it in Clause 17.26 (Financial
covenants).
"Affiliate"
means a Subsidiary or a Holding Company of a person and
any other Subsidiary of that Holding Company.
"Applicable Accounting Principles"
means:-
(a) in relation to accounts or financial statements or
Financial Indebtedness of London Electricity, UK
GAAP; and
(b) in relation to accounts or financial statements or
Financial Indebtedness of each other Obligor, US
GAAP.
"Auditors"
means Coopers & Lybrand or any other "Big Six" firm of
accountants or any other firm (approved by the Agent) of
independent public accountants of international standing
recognised and authorised by the Institute of Chartered
Accountants of England and Wales which is appointed by
the Company to audit the consolidated annual accounts of
the Company.
"Bonds"
means:
(a) the BPS100,000,000 8 per cent. bonds due 2003; and
(b) the BPS100,000,000 85/8 per cent. bonds due 2005,
issued by London Electricity.
"Borrower"
means, for Facility A, EUK or, for Facility C and subject
to Clause 2.4 (Release of London Electricity), London
Electricity.
"Borrowing"
means Financial Indebtedness (without double counting)
adjusted as follows:
(a) any interest, dividends, commission, fees or other
like financing charges, and any item falling within
paragraph (g) of the definition of Financial
Indebtedness, shall be excluded, save in each case
to the extent capitalised or more than 15 days
overdue for payment;
(b) in respect of any bonds, notes, debentures, loan
stocks and/or other debt securities issued at a
discount or redeemable at a premium and constituting
a Borrowing, the issue price thereof, together with
any applicable discount or premium recognised or
required by the Applicable Accounting Principles to
be recognised at the time of calculation (other than
amounts required by the Applicable Accounting
Principles to be accounted for as interest) in the
accounts of the relevant person (were any then to be
prepared), shall be included;
(c) in respect of paragraphs (d) and (e) of the
definition of Financial Indebtedness, only the
principal amount thereof as determined by the
Applicable Accounting Principles or (in the case of
paragraph (e)) the capitalised value (as so
determined) of any items falling thereunder shall be
included;
(d) any item falling within paragraph (f) of the
definition of Financial Indebtedness which is in
respect of any sum excluded by paragraph (a) or (c)
above shall be excluded; and
(e) any item falling within paragraph (f)(ii) of the
definition of Financial Indebtedness shall be
included only to the extent that the same has been
or (in accordance with the Applicable Accounting
Principles) ought to be given a value in the latest
or next Accounts, or in any notes to those Accounts.
"Business Day"
means a day (other than a Saturday or a Sunday) on which
banks are open for business in London.
"Capitalisation Ratio"
has the meaning given to it in Clause 17.26 (Financial
covenants).
"Commitment"
means, in respect of a Bank, its Facility A Commitment or
Facility C Commitment, as the case may be, and
"Commitments" means the aggregate of its Facility A
Commitment and Facility C Commitment.
"Consolidated EBITDA"
has the meaning given to it in Clause 17.26 (Financial
covenants).
"Consolidated Net Interest Payable"
has the meaning given to it in Clause 17.26 (Financial
covenants).
"Consolidated Net Total Borrowings"
has the meaning given to it in Clause 17.26 (Financial
covenants).
"Consolidated Total Interest Payable"
has the meaning given to it in Clause 17.26 (Financial
covenants).
"Dangerous Substance"
means any radioactive emissions, noise, any natural or
artificial substance (whether in the form of a solid,
liquid, gas or vapour) the generation, transportation,
storage, treatment, use or disposal of which (whether
alone or in combination with any other substance)
including (without limitation) any controlled, special,
hazardous, toxic, radioactive or dangerous substance or
waste, gives rise to a risk of causing harm to man or any
other living organism or damaging the Environment or
public health or welfare.
"Debenture"
means a debenture (as it may be amended) executed by a
Guarantor in favour of the Agent, substantially in the
form of Schedule 5.
"Default"
means an Event of Default or an event which, with the
giving of notice, expiry of any applicable grace period,
determination of materiality by the Majority Banks or
failure to create a first legal mortgage, in each case as
specified in Clause 18 (Default) (or any combination of
the foregoing), would constitute an Event of Default.
"Director General"
means the person appointed from time to time by the
Secretary of State to hold office as the Director General
of Electricity Supply for the purpose of the Act.
"Double Taxation Treaty"
means any convention between the government of the United
Kingdom and any other government for the avoidance of
double taxation and the prevention of fiscal evasion with
respect to taxes on income and capital gains.
"Drawdown Date"
means the date of the advance of a Loan.
"Effective Date"
has the meaning given to it in the Restatement Agreement.
"EIL Facility Agreement"
has the meaning given to it in the Restatement Agreement.
"ELC"
means Entergy London Capital L.P., a special purpose
Delaware limited partnership in which the Company is the
sole general partner.
"Environment"
means any of the following media, the air (including,
without limitation, the air within buildings and the air
within other natural or man-made structures above or
below ground), water (including, without limitation,
ground and surface water) and land (including, without
limitation, surface and sub-surface soil).
"Environmental Claim"
means any claim by any person:
(a) in respect of any loss or liability suffered or
incurred by that person as a result of or in
connection with any violation of Environmental Law;
or
(b) that arises as a result of or in connection with
Environmental Contamination and that could give rise
to any remedy or penalty (whether interim or final)
that may be enforced or assessed by private or
public legal action or administrative order or
proceedings, including, without limitation, any such
claim arising from injury to persons, property or
natural resources.
"Environmental Contamination"
means each of the following and their consequences:
(a) any release, emission, leakage or spillage of any
Dangerous Substance at or from any site owned,
occupied or used by any Obligor or any other member
of the Group into any part of the Environment; or
(b) any accident, fire, explosion or sudden event at any
site owned, occupied or used by any Obligor or any
other member of the Group which is directly or
indirectly caused by or attributable to any
Dangerous Substance; or
(c) any other pollution of the Environment.
"Environmental Law"
means all applicable laws (including, without limitation,
common law), regulations, directing codes of practice,
circulars, guidance notices and the like having legal
effect (whether in the United Kingdom or elsewhere)
concerning pollution or the protection of human health,
the Environment, the conditions of the work place or the
generation, transportation, storage, treatment or
disposal of Dangerous Substances.
"Environmental Licence"
means any authorisation required by any Environmental
Law.
"Event of Default"
means an event specified as such in Clause 18.1 (Events
of Default).
"Extraordinary Items"
has the meaning given to it in Clause 17.26 (Financial
Covenants).
"Facility"
means Facility A or Facility C.
"Facility A"
means the facility referred to as such in Clause 2.1(a)
(Facilities).
"Facility A Commitment"
means:
(a) in relation to a Bank which is a Bank on the
Effective Date, the amount in Sterling set opposite
its name in Part II of Schedule 1 under the heading
"Facility A Commitment"; and
(b) in relation to a Bank which becomes a Bank after the
Effective Date, the amount of a Facility A
Commitment acquired by it under Clause 26 (Changes
to the Parties),
to the extent not transferred, cancelled or reduced under
this Agreement.
"Facility A Final Repayment Date"
means 31st October, 2002.
"Facility A Loan"
means a loan made by the Banks under Facility A or the
principal amount outstanding of that loan.
"Facility C"
means the facility referred to as such in Clause 2.1(b)
(Facilities).
"Facility C Commitment"
means:
(a) in relation to a Bank which is a Bank on the
Effective Date, the amount in Sterling set out
opposite its name in Part II of Schedule 1 under the
heading "Facility C Commitment"; and
(b) in relation to a Bank which becomes a Bank after the
Effective Date, the amount of a Facility C
Commitment acquired by it under Clause 26 (Changes
to the Parties),
to the extent not transferred, cancelled or reduced under
this Agreement.
"Facility C Final Repayment Date"
means 17th December, 2001.
"Facility C Loan"
means a loan made by the Banks under Facility C or the
principal amount outstanding of that loan.
"Facility Office"
means the office notified by a Bank to the Agent:-
(a) on or before the date it becomes a Bank; or
(b) by not less than 5 Business Days' notice,
as the office through which it will perform all or any of
its obligations under this Agreement.
"Fee Letter"
means the letter dated the date of the Restatement
Agreement between the Arrangers and the Company, or the
letter dated the date of the Restatement Agreement
between the Company and the Agent, setting out the amount
of various fees referred to in Clause 20 (Fees).
"Final Repayment Date"
means the Facility A Final Repayment Date or the
Facility C Final Repayment Date.
"Finance Document"
means:-
(a) this Agreement;
(b) a Fee Letter;
(c) a Debenture;
(d) a Novation Certificate;
(e) a Subordination Agreement;
(f) a Swap Document;
(g) the Intercreditor Agreement; or
(h) any other document designated as such by the Agent
and an Obligor.
"Finance Party"
means an Arranger, a Bank, B of A or the Agent.
"Financial Indebtedness"
means any indebtedness for, or for interest or other
charges relating to, or otherwise in respect of or
pursuant to:-
(a) moneys borrowed or raised, including, without
limitation:
(i) monies raised by the sale of receivables or
other financial assets on terms (and to the
extent) that recourse may be had to the vendor
in the event of non-payment of those
receivables or financial assets when due;
(ii) monies raised under acceptance credit
facilities; and
(iii) monies raised through the issue of bonds,
notes, debentures, bills, loan stocks and other
debt securities (including any debt security
convertible, but not at the relevant time
converted, into share capital);
(b) the acquisition cost of assets or services to the
extent payable on deferred payment terms after the
time of acquisition or possession by the party
liable (whether or not evidenced by any bond, note,
debenture, bill, loan stock or other debt security),
excluding:
(i) retentions which are normal in the trade
concerned and not entered into primarily as a
means of raising finance;
(ii) any payment relating to construction works or
the acquisition of fixed assets which will
become payable only upon fulfilment of
conditions relating to or comprising completion
or commissioning of certain stages in such
works or in the supply programme or the
granting of any planning permission for such
works or fixed assets and which has not yet
become payable by reason of the non-fulfilment
of any such condition; and
(iii) any such cost payable on deferred payment
terms which are normal in the business
concerned and not entered into primarily as a
means of raising finance, and which do not
involve any deferral of payment of any sum for
more than six months;
(c) moneys received in consideration for the supply of
goods and/or services to the extent received more
than six months before the due date for their supply
(but excluding any liability in respect of bona fide
advance payments and deposits received from
customers in the ordinary course of trade);
(d) instalments under conditional sale agreements
entered into primarily as a method of raising
finance;
(e) payments under leases (whether in respect of land,
machinery, equipment or otherwise) and payments
under hire purchase agreements and similar
agreements and instruments, in each case where those
leases, agreements or instruments are treated as
finance leases in accordance with the Applicable
Accounting Principles;
(f) (i) any guarantee, indemnity, letter of credit or
other legally binding instrument to
assure payment of, or against loss in respect
of non-payment of, any of the indebtedness
specified in this definition and any counter-
indemnity in respect of any thereof; and/or
(ii) any legally binding agreement or other
instrument entered into in connection with any
of the indebtedness specified in this
definition requiring, or giving any person the
right (contingently or otherwise) to require,
that any other person invest in, make advances
to, purchase assets of or maintain the solvency
or financial condition of any other person;
and/or
(iii) any recourse under any form of assurance,
undertaking or support of a type referred to in
paragraph (b)(iii) of the definition of
"Project Finance Indebtedness";
(g) any interest rate and/or currency swap, and any
other interest or currency protection, hedging or
financial futures transaction or arrangement; or
(h) transactions which involve or have the commercial
effect of the borrowing of commodities as part of
an arrangement for or in substitution for the
raising of finance, the value of indebtedness
concerned for this purpose being the sum which must
be paid and/or the value in money terms of the
commodities which must be delivered by the
"borrower" to, or to the order of, the "lender",
but any Subordinated Debt, Project Finance Indebtedness
(other than indebtedness referred to in paragraph
(f)(iii) above) or indebtedness under any indemnity in
respect of any letter of credit issued in connection with
the Pooling and Settlement Agreement shall not constitute
Financial Indebtedness.
"Group"
means at any time the Company and its Subsidiaries at
that time.
"Guarantor"
means the Company or an Additional Guarantor.
"Holding Company"
has the meaning given to it in Section 736 of the
Companies Act 1985.
"Information Memorandum"
means the Information Memorandum dated October, 1997
prepared by the Borrowers in connection with the
Restatement Agreement.
"Intercompany Notes"
means the notes referred to in paragraph 7 of Part 1 of
Schedule 2 of the Restatement Agreement.
"Intercreditor Agreement"
means the agreement dated 17th November, 1997 between
EUK, the Guarantors and the Agent (in its capacity as
Agent under this Agreement and security trustee under the
Debentures) and ABN AMRO Bank N.V. (in its capacity as
administrative agent under the EIL Facility Agreement)
regulating enforcement of the Debentures and other
related matters.
"Interest Period"
means each period selected in accordance with Clause 8
(Interest Periods).
"LIBOR"
means the arithmetic mean (rounded upward to the nearest
four decimal places) of the rates, as supplied to the
Agent at its request, quoted by the Reference Banks to
leading banks in the London interbank market at or about
11.00 a.m. on the first day of an Interest Period for the
offering of deposits in Sterling for a period comparable
to the Interest Period.
"Licence"
means a public electricity supply licence held by a
member of the Group and issued pursuant to Section 6(1)
of the Act, as modified or supplemented from time to
time.
"Licenceholder"
means at any time the member of the Group which then
holds a Licence.
"Licence Undertaking"
means any undertaking or assurance given in connection
with the Acquisition by any one or more of the Company,
London Electricity or any Affiliate of any of them to the
Director General or the Secretary of State concerning the
management and/or ownership of and/or other matters
concerning London Electricity.
"Loan"
means a Facility A Loan or a Facility C Loan.
"London Electricity Group"
means at any time London Electricity and its Subsidiaries
at that time.
"Majority Banks"
means, at any time, Banks:-
(a) whose participations in all Loans then outstanding
aggregate more than 662/3 per cent. of all Loans
then outstanding; or
(b) if there are no Loans then outstanding, whose
Commitments then aggregate more than 662/3 per cent.
of the Total Commitments; or
(c) if there are no Loans then outstanding and the Total
Commitments have been reduced to zero, whose
Commitments aggregated more than 662/3 per cent. of
the Total Commitments immediately before the
reduction.
"Margin"
means:
(a) in respect of a Facility A Loan, 1.00 per cent per
annum or, as the case may be, subject to
Clause 9.1(b) (Interest rate) and with effect from
each applicable Margin Adjustment Date, at any time
when the Capitalisation Ratio is:
(i) greater than 70 per cent., 1.00 per cent. per
annum;
(ii) equal to or less than 70 per cent., but greater
than 65 per cent., 0.75 per cent. per annum;
(iii) equal to or less than 65 per cent., but
greater than 60 per cent., 0.60 per cent. per
annum;
(iv) equal to or less than 60 per cent., but greater
than 55 per cent., 0.45 per cent. per annum;
and
(v) equal to or less than 55 per cent., 0.30 per
cent. per annum;
or
(b) in respect of a Facility C Loan, 0.25 per cent. per
annum.
"Margin Adjustment Date"
means, in respect of a Facility A Loan, the first day of
the first Interest Period for that Facility A Loan
commencing after each determination of the Capitalisation
Ratio following delivery by the Company of a certificate
under Clause 17.2(b)(i) or (ii) (Financial information).
"Material Subsidiary"
means:
(a) London Electricity;
(b) any member of the Group (other than the Company and
any Project Finance Subsidiary):
(i) which is the Licenceholder; or
(ii) whose pre-tax operating profits represent at
least ten per cent. of the consolidated pre-tax
operating profits of the Group; or
(iii) the book value of whose gross assets
represents at least ten per cent. of the
consolidated gross assets of the Group,
and for this purpose:
(A) in the case of a company which itself has
Subsidiaries, the calculation shall be made by
using the consolidated pre-tax operating
profits or gross assets, as the case may be, of
it and its Subsidiaries;
(B) all calculations of consolidated pre-tax
operating profits or gross assets shall be made
by reference to:
(1) the latest accounts of the relevant
company (or, as the case may be, a
consolidation of the accounts of it and
its Subsidiaries) used for the purpose of
the then latest unaudited quarterly or
audited annual consolidated accounts of
the Group delivered to the Agent under
Clause 17.2 (Financial information); and
(2) those unaudited quarterly or, as the case
may be, audited annual consolidated
accounts of the Group;
and shall be made in accordance with the
Applicable Accounting Principles; or
(c) any member of the Group (other than the Company and
any Project Finance Subsidiary) which is not
otherwise a Material Subsidiary under this
definition but to which any Material Subsidiary
transfers in any annual Accounting Period all or
substantially all of its assets; the Material
Subsidiary from which the assets were transferred
shall cease to be a Material Subsidiary unless and
until it is shown to be a Material Subsidiary under
any other paragraph of this definition.
In the event of any dispute as to whether a Subsidiary is
or is not at any time a Material Subsidiary the question
shall be referred to the Auditors for determination
according to the provisions of this definition (acting as
experts at the cost of the Company) and their decision
shall be conclusive and binding on the Parties in the
absence of manifest error.
"MLA Cost"
means the cost imputed to the Banks of compliance with
the Mandatory Liquid Assets requirements of the Bank of
England during each Interest Period, determined in
accordance with Schedule 2.
"Novation Certificate"
has the meaning given to it in Clause 26.3 (Procedure for
novations).
"Obligor"
means a Borrower or a Guarantor.
"Party"
means a party to this Agreement.
"Permitted Transaction"
means:
(a) a reconstruction, amalgamation, reorganisation,
merger or consolidation of an Obligor or a Material
Subsidiary on terms approved by the Majority Banks;
(b) a disposal of assets permitted by the terms of this
Agreement; or
(c) a solvent liquidation, dissolution or winding-up of
a Material Subsidiary (other than London Electricity
or the Licenceholder) which does not have a Material
Adverse Effect.
"Pooling and Settlement Agreement"
means the agreement dated 30th March, 1990 made by London
Electricity (or any other Licenceholders) with the
National Grid Company plc and others setting out the
rules and procedures for the operation of an electricity
trading pool and of a settlement system.
"Project Finance Indebtedness"
means any Borrowing which finances the acquisition,
development, ownership and/or operation of an asset:
(a) which is incurred by a Project Finance Subsidiary;
or
(b) in respect of which the person or persons to whom
the Borrowing is or may be owed by the relevant
debtor (whether or not a member of the Group) has or
have no recourse whatsoever to any member of the
Group (other than to a Project Finance Subsidiary)
for its repayment other than:
(i) recourse to the debtor for amounts limited to
the cash flow or net cash flow (other than
historic cash flow or historic net cash flow)
from the asset; and/or
(ii) recourse to the debtor for the purpose only of
enabling amounts to be claimed in respect of
that Borrowing in an enforcement of any
Security Interest given by the debtor over the
asset or the income, cash flow or other
proceeds deriving from the asset (or given by
any shareholder or the like in the debtor over
its shares or like interest in the capital of
the debtor) to secure the Borrowing but only
if:
(A) the extent of the recourse to the
debtor is limited solely to the amount of
any recoveries made on any such
enforcement; and
(B) that person or persons are not
entitled, by virtue of any right or claim
arising out of or in connection with that
Borrowing, to commence proceedings for the
winding up or dissolution of the debtor or
to appoint or procure the appointment of
any receiver, trustee or similar person or
officer in respect of the debtor or any of
its assets (other than the assets the
subject of that Security Interest); and/or
(iii) recourse to the debtor generally, or
directly or indirectly to a member of the
Group, under any form of assurance, undertaking
or support, which recourse is limited to a
claim for damages (other than liquidated
damages and damages required to be calculated
in a specified way) for breach of an obligation
(other than a payment obligation or an
obligation to procure payment by another or an
indemnity in respect thereof or any obligation
to comply or to procure compliance by another
with any financial ratios or other tests of
financial condition) by the person against whom
such recourse is available.
"Project Finance Subsidiary"
means any Subsidiary of the Company (other than the
Licenceholder):
(a) which is a company whose principal assets and
business are constituted by the ownership,
acquisition, development and/or operation of an
asset whether directly or indirectly;
(b) none of whose Borrowings in respect of the financing
of the ownership, acquisition, development and/or
operation of an asset benefits from any recourse
whatsoever to any member of the Group (other than
the Subsidiary itself or another Project Finance
Subsidiary) in respect of its repayment, except as
expressly referred to in paragraph (b)(iii) of the
definition of Project Finance Indebtedness in this
Clause 1.1 (Definitions); and
(c) which has been designated as such by the Company by
notice to the Agent. However, the Company may give
notice to the Agent at any time that any Project
Finance Subsidiary is no longer a Project Finance
Subsidiary, whereupon it shall cease to be a Project
Finance Subsidiary.
"Qualifying Bank"
means:-
(a) a bank as defined in Section 840A of the Income and
Corporation Taxes Act 1988 which, for the purposes
of Section 349 of the Income and Corporation Taxes
Act 1988, is beneficially entitled to, and within
the charge to United Kingdom corporation tax as
regards, any interest received by it under this
Agreement, except that, if that Section is repealed,
modified, extended or re-enacted, the Agent may at
any time and from time to time (acting reasonably)
amend this definition to reflect such repeal,
modification, extension or enactment by giving
notice of the amended definition to the Company; or
(b) a person carrying on a bona fide banking business
who is resident (as such term is defined in the
appropriate Double Taxation Treaty) in a country
with which the United Kingdom has an appropriate
Double Taxation Treaty giving that person and other
residents of that country full exemption from United
Kingdom taxation on interest and does not carry on
business in the United Kingdom through a permanent
establishment with which the indebtedness under this
Agreement in respect of which the interest is paid
is effectively connected.
"Reference Banks"
means, subject to Clause 26.4 (Reference Banks), the
principal London offices of ABN AMRO Bank N.V., Barclays
Bank PLC and Union Bank of Switzerland.
"Repayment Date"
means the Facility A Final Repayment Date or the last day
of the Interest Period of a Facility C Loan.
"Request"
means a request made by a Borrower for a Loan,
substantially in the form of Schedule 3.
"Restatement Agreement"
means the agreement dated 17th November, 1997 between the
parties to this Agreement on the Effective Date and
several other banks which were party to this Agreement
immediately before the Effective Date pursuant to which
this Agreement has been restated and amended.
"Rollover Loan(s)"
means one or more Facility C Loan(s), the aggregate
principal amount of which is less than or equal to one or
more outstanding Facility C Loan(s), and whose Drawdown
Date coincides with the Repayment Date(s) of those
outstanding Facility C Loan(s).
"Secretary of State"
means the Secretary of State as referred to in the Act.
"Security Account"
has the meaning given to it in each Debenture.
"Security Interest"
means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement
or arrangement having the effect of conferring security.
"Sterling"
means the lawful currency for the time being of the
United Kingdom.
"Subordinated Capital Securities"
means the limited partnership interests of ELC designated
as "85/8% Cumulative Quarterly Income Preferred
Securities, Series A", issued concurrently with the
issuance of the Subordinated Debentures and not exceeding
U.S.$300,000,000 in aggregate liquidation preference
where:
(a) the proceeds of the issuance of the Subordinated
Capital Securities and the Company's capital
contributions to ELC are utilised by ELC to purchase
Subordinated Debentures; and
(b) the payments from time to time of interest on the
Subordinated Debentures are to be utilised by ELC to
make distributions to the holders of the
Subordinated Capital Securities.
"Subordinated Capital Security Guarantee"
means the guarantee of the Company to be executed and
delivered to the trustee with respect to the Subordinated
Capital Securities concurrently with the issuance
thereof, providing for a guarantee by the Company, on a
subordinated basis, of ELC's obligations under the
Subordinated Capital Securities, but only to the extent
that ELC has funds sufficient to make such payments.
"Subordinated Debentures"
means the 85/8% Junior Subordinated Deferrable Interest
Debentures, Series A to be issued to ELC and created
pursuant to an Indenture, dated as of 1st November, 1997,
between the Company and The Bank of New York, as Trustee,
and an "Officer's Certificate" as provided therein:
(a) providing for the issuance of Subordinated
Debentures in an aggregate principal amount equal to
the sum of the Company's capital contribution, as
general partner to ELC, plus the aggregate stated
liquidation preference of the Subordinated Capital
Securities to be issued concurrently with the
issuance of the Subordinated Debentures;
(b) providing that the Company shall have the right to
defer the payment of interest on the Subordinated
Debentures at any time or from time to time so long
as no Event of Default (as defined therein) shall
have occurred and be continuing; and
(c) providing that the payment of principal, premium, if
any, and interest on the Subordinated Debentures
shall be subordinate in right of payment and
enforcement to the prior payment of certain senior
indebtedness of the Company, to the extent provided
in such Indenture, provided that such senior
indebtedness shall include, without limitation, all
amounts outstanding under this Agreement, and
provided further, that such Indenture shall provide
that no payments on account of principal, premium,
if any, or interest on the Subordinated Debentures
may be made if there shall have occurred and be
continuing either a default in any payment with
respect to such senior indebtedness, or an event of
default with respect to such senior indebtedness
resulting in the acceleration of the maturity
thereof remaining uncured.
"Subordinated Debt"
means a separate unsecured loan to the Company from a
shareholder, or an Affiliate of a shareholder, of the
Company and/or any other person which:
(a) has a maturity date falling after the Facility A
Final Repayment Date;
(b) is not capable of acceleration (other than in the
event of insolvency or an insolvency proceeding)
whilst any amount may be or become payable by any
Obligor under the Finance Documents or any of the
Commitments remain in effect; and
(c) is subordinated (as regards priority of payment,
ranking, rights of enforcement and all other rights)
as to principal, interest and all other amounts
payable on or in respect thereof and any and all
claims (including for damages) related thereto to
all amounts which may be or become payable by the
Obligors under the Finance Documents,
all in accordance with a Subordination Agreement.
"Subordination Agreement"
means a subordination agreement entered, or to be
entered, into by the Agent, the Company and any other
person in respect of Subordinated Debt, substantially in
the form of Schedule 6.
"Subsidiary"
means:-
(a) a subsidiary within the meaning of Section 736 of
the Companies Act 1985, as amended by Section 144 of
the Companies Act 1989; and
(b) for the purposes of Clauses 17.26 (Financial
covenants) and any financial information relating to
the Group, a subsidiary undertaking within the
meaning of Section 21 of the Companies Act 1989.
"Swap Document"
means an interest rate hedging agreement (substantially
in the form agreed by the Company and the Agent prior to
the date of this Agreement) entered into by the Company
with certain Banks party to this Agreement as at the date
of this Agreement and any confirmation entered into
pursuant to any such agreement.
"Total Commitments"
means the aggregate of the Total Facility A Commitments
and the Total Facility C Commitments, being
BPS1,010,000,000 at the Effective Date.
"Total Facility A Commitments"
means the aggregate for the time being of the Facility A
Commitments, being BPS810,000,000 at the Effective Date.
"Total Facility C Commitments"
means the aggregate for the time being of the Facility C
Commitments, being BPS200,000,000 at the Effective Date.
"UK GAAP"
means generally accepted accounting principles in the
United Kingdom as at the date of this Agreement,
consistently applied.
"US GAAP"
means generally accepted accounting principles in the
United States as at the date of this Agreement,
consistently applied.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears,
a reference to:
(i) "assets" includes properties, revenues and rights of
every description;
an "authorisation" includes an authorisation,
consent, approval, resolution, licence, exemption,
filing, registration and notarisation;
something having a "Material Adverse Effect" is to
its having, or being reasonably likely to have, a
material adverse effect on the ability of an Obligor
to perform and comply with:
(A) its payment obligations under any Finance
Document;
(B) its obligations under Clause 17.26 (Financial
covenants); or
(C) any other of its material obligations under the
Finance Documents;
a "month" is a reference to a period starting on one
day in a calendar month and ending on the
numerically corresponding day in the next calendar
month, except that:
(1) if there is no numerically corresponding day in
the month in which that period ends, that
period shall end on the last Business Day in
that calendar month; or
(2) if an Interest Period commences on the last
Business Day of a calendar month, that Interest
Period shall end on the last Business Day in
the calendar month in which it is to end; and
a "regulation" includes any regulation, rule,
official directive, request or guideline (whether or
not having the force of law, but if not having the
force of law being of a type with which the person
concerned is accustomed to comply) of any
governmental body, agency, department or regulatory,
self-regulatory or other authority or organisation;
(ii) a provision of a law is a reference to that
provision as amended or re-enacted;
(iii) a Clause or a Schedule is a reference to a
clause of or a schedule to this Agreement;
(iv) a person includes its successors and permitted
assigns;
(v) a Finance Document or another document is a
reference to that Finance Document or that other
document as amended, novated, supplemented, replaced
or renewed; and
(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any
other Finance Document or in any notice given under or in
connection with any Finance Document has the same meaning
in that Finance Document or notice as in this Agreement.
(c) The index to and the headings in this Agreement are for
convenience only and are to be ignored in construing this
Agreement.
2. THE FACILITIES
2.1 Facilities
Subject to the terms of this Agreement, the Banks
irrevocably grant to the Borrowers the following
facilities:-
(a) Facility A - a committed term loan facility under
which the Banks shall, when requested by EUK, make
to EUK on the Effective Date a Loan in an amount
equal to the Total Facility A Commitments; and
(b) Facility C - a committed revolving credit facility
under which the Banks shall, when requested by
London Electricity, make to London Electricity Loans
up to an aggregate amount not exceeding, at any
time, the Total Facility C Commitments at that time.
No Bank is obliged to lend at any time more than its
Commitment(s).
2.2 Nature of a Finance Party's rights and obligations
(a) The obligations of a Finance Party under the Finance
Documents are several. Failure of a Finance Party to
carry out those obligations does not relieve any other
Party of its obligations under the Finance Documents. No
Finance Party is responsible for the obligations of any
other Finance Party under the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents
are divided rights. A Finance Party may, except as
otherwise stated in the Finance Documents, separately
enforce those rights.
2.3 Change of currency
(a) If more than one currency or currency unit are at the
same time recognised by the laws of any country as the
lawful currency of that country, then:
(i) any reference in the Finance Documents to, and any
obligations arising under the Finance Documents in,
the currency of that country shall be translated
into, or paid in, the lawful currency or currency
unit of that country designated by the Agent; and
(ii) any translation from one currency or currency unit
to another shall be at the official rate of exchange
legally recognised by the central bank for the
conversion of that currency or currency unit into
the other, rounded up or down by the Agent acting
in accordance with any applicable law on rounding
or, if there is no such law, acting reasonably in
accordance with market practice.
(b) If a change in any currency of a country occurs, this
Agreement will be amended to the extent the Agent (acting
reasonably) specifies to be necessary to reflect the
change in currency and to put the Banks (and, if possible
and practicable, the Borrowers) in the same position, so
far as possible, that they would have been in if no
change in currency had occurred.
2.4 Release of London Electricity
If the Facility C Commitments have been fully cancelled
and no amount payable by London Electricity is
outstanding under this Agreement, then, without prejudice
to any accrued rights or obligations, London Electricity
will cease to have any rights or obligations under this
Agreement and will cease to be a Borrower.
3. PURPOSE AND AVAILABILITY
(a) Each Borrower shall apply each Loan made to it towards
its working capital or general corporate purposes.
(b) Subject to the terms of this Agreement, EUK shall borrow
the Facility A Loan(s) on the Effective Date.
(c) Facility C Loans may be borrowed, subject to the terms of
this Agreement, at any time prior to the Facility C Final
Repayment Date.
(d) Without affecting the obligations of any Obligor in any
way, no Finance Party is bound to monitor or verify the
application of any Loan.
4. CONDITIONS PRECEDENT
The obligations of each Bank to participate in a Loan are
subject to the conditions precedent that:-
(a) on both the date of the Request and the Drawdown
Date:-
(i) the representations and warranties in Clause 16
(Representations and warranties) to be repeated
on those dates are correct in all material
respects and will be correct in all material
respects immediately after the Loan is made;
and
(ii) no Event of Default or (in the case of a Loan
which is not a Rollover Loan) no Default is
outstanding or will result from the Loan;
(b) it would not cause the Facility A Loan(s) or the
Facility C Loans to exceed the Total Facility A
Commitments or the Total Facility C Commitments, as
the case may be; and
(c) it would not result in there being more than 15
Loans outstanding at any time.
5. UTILISATIONS
5.1 Receipt of Requests
A Borrower may utilise a Facility if the Agent receives,
not later than 9.00 a.m. on the Business Day before its
Drawdown Date, a duly completed Request.
5.2 Completion of Requests
A Request will not be regarded as having been duly
completed unless:-
(a) it specifies whether the Loan is the Facility A
Loan(s) or a Facility C Loan;
(b) the Drawdown Date is, in the case of the Facility A
Loan(s), the Effective Date and, in the case of a
Facility C Loan, a Business Day falling before the
Facility C Final Repayment Date;
(c) the principal amount of the Loan is, in the case of
the Facility A Loan(s), an amount equal to the Total
Facility A Commitments and, in the case of a
Facility C Loan, a minimum of BPS10,000,000 and an
integral multiple of BPS5,000,000 or the balance of
the undrawn Facility C Commitments or such other
amount as the Agent may agree;
(d) the Interest Period specified complies with Clause 8
(Interest Periods); and
(e) the payment instructions comply with Clause 10
(Payments).
Each Request is irrevocable.
5.3 Amount of each Bank's participation in the Loan
The amount of a Bank's participation in a Loan will be
the proportion of the Loan which its Facility A
Commitment or Facility C Commitment bears to the Total
Facility A Commitments or the Total Facility C
Commitments, as the case may be, on the proposed Drawdown
Date.
5.4 Notification of the Banks
The Agent shall promptly notify each Bank of the details
of the requested Loan and the amount of its participation
in the Loan.
5.5 Payment of Proceeds
Subject to the terms of this Agreement, each relevant
Bank shall make its participation in a Loan available to
the Agent for the relevant Borrower on the relevant
Drawdown Date.
6. REPAYMENT
(a) EUK shall repay the Facility A Loan(s) in full on the
Facility A Final Repayment Date to the Agent for the
Banks.
(b) Subject to paragraph (c) below, London Electricity shall
repay each Facility C Loan in full on its Repayment Date
to the Agent for the Banks.
(c) Subject to the terms of this Agreement, amounts repaid by
London Electricity under paragraph (b) above may
subsequently be re-borrowed by London Electricity.
7. PREPAYMENT AND CANCELLATION
7.1 Automatic cancellation of the Total Commitments
The Facility C Commitment of each Bank shall be
automatically cancelled at close of business on the
Facility C Final Repayment Date.
7.2 Voluntary cancellation
London Electricity may, by giving not less than 2
Business Days' prior notice to the Agent, cancel the
unutilised portion of the Total Facility C Commitments in
whole or in part (but, if in part, in a minimum amount of
BPS10,000,000 and an integral multiple of BPS5,000,000).
Any cancellation in part shall be applied against the
Facility C Commitment of each Bank pro rata.
7.3 Voluntary prepayment
A Borrower may at any time, by giving not less than 2
Business Days' prior notice to the Agent, prepay a Loan
made to it in whole or in part (but, if in part, in
minimum amounts of BPS10,000,000), subject to Clause 23
(Indemnities).
7.4 Additional right of prepayment and cancellation
If any Obligor is required to pay any amount to a Bank
under Clause 11 (Taxes) or Clause 13 (Increased costs),
the Obligor may, whilst the circumstances giving rise to
the requirement continue, serve a notice of prepayment
and cancellation on that Bank through the Agent. In this
event:-
(a) on the date falling 5 Business Days after the date
of service of the notice each Obligor shall prepay
that Bank's participation in any Loans made to it
together with all other amounts payable by it to
that Bank under this Agreement; and
(b) the Bank's Commitments shall be cancelled on the
date of service of the notice.
7.5 Mitigation
If circumstances arise which would, or would on the
giving of notice, result in:
(a) any additional amounts becoming payable under
Clause 11.1 (Gross-up); or
(b) any amount becoming payable under Clause 13.1
(Increased costs); or
(c) any prepayment or cancellation under Clause 14
(Illegality),
then, without limiting the obligations of the Obligors
under this Agreement and without prejudice to the terms
of Clauses 11.1 (Gross-up), 13.1 (Increased costs) and 14
(Illegality), each Bank shall, in consultation with the
Company, take such reasonable steps as may be open to it
to mitigate or remove the relevant circumstance,
including (without limitation) the transfer with the
Company's consent as specified in Clause 26.2 (Transfers
by Banks) of its rights and obligations under this
Agreement to another bank or financial institution,
unless to do so might (in the opinion of the Bank) have a
material adverse effect on its business, operations or
financial condition or be contrary to its banking
policies or be otherwise prejudicial to it.
7.6 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this
Agreement is irrevocable. The Agent shall notify the
Banks promptly of receipt of any such notice.
(b) All prepayments under this Agreement shall be made
together with accrued interest on the amount prepaid.
(c) No prepayment or cancellation is permitted except in
accordance with the express terms of this Agreement.
(d) (i) Subject to the terms of this Agreement, amounts
prepaid under Facility C pursuant to Clause 7.3
(Voluntary prepayment) may subsequently be re-
borrowed.
(ii) No other amount prepaid may subsequently be re-
borrowed.
(iii) No amount of the Total Commitments cancelled
under this Agreement may subsequently be reinstated.
8. INTEREST PERIODS
8.1 Interest Periods
(a) Each Facility A Loan will have successive Interest
Periods. The first Interest Period will commence on the
Effective Date and subsequent Interest Periods will
commence on the expiry of the preceding Interest Period.
(b) Each Facility C Loan will have one Interest Period only.
(c) Interest Periods may, subject to the other provisions of
this Clause 8, be, for an approved duration or an
optional duration, and, for this purpose:
(i) "approved duration" means a period of 1, 2, 3 or 6
months; and
(ii) "optional duration" means any other period (other
than an approved duration) of up to 12 months.
8.2 Selection of Interest Periods
(a) EUK may select an Interest Period for a Facility A Loan
in its Request or in a notice to be received by the Agent
not later than 9.00 a.m. on the Business Day before the
commencement of that Interest Period (in the case of
subsequent Interest Periods).
(b) If it would not result in more than 15 Loans being
outstanding, EUK may select different Interest Periods
for a Facility A Loan in accordance with this Clause but
each part of a Loan to which an Interest Period applies
must be a minimum of BPS10,000,000 and an integral multiple
of BPS5,000,000 or such other amount as the Agent may
agree. Each part of a Facility A Loan which has a
different Interest Period shall be treated as a separate
Loan.
(c) London Electricity may select an Interest Period for a
Facility C Loan in its Request.
(d) If the relevant Borrower fails to specify the duration of
an Interest Period, it shall be of 3 months' duration.
8.3 Selection of an optional duration
(a) If a Borrower selects an Interest Period of an optional
duration, it may also select in the relevant Request or
notice an Interest Period of an approved duration to
apply if the selection of an Interest Period of an
optional duration becomes ineffective in accordance with
paragraph (b) below.
(b) If:-
(i) a Borrower requests an Interest Period of an
optional duration; and
(ii) the Agent receives notice from a Bank not later than
3.00 p.m. on the Business Day before the beginning
of that Interest Period that it does not agree to
the request,
the Interest Period for the proposed Loan shall be the
alternative period of an approved duration specified in
the relevant Request or notice or, in the absence of any
alternative selection, 3 months.
(c) If the Agent receives a notice from a Bank under
paragraph (b) above, it shall notify the relevant
Borrower and the Banks promptly of the new Interest
Period for the proposed Loan.
8.4 Overrunning of Final Repayment Date
Notwithstanding any other provision of this Clause 8, if
an Interest Period for a Loan would otherwise overrun the
relevant Final Repayment Date it shall be shortened so
that it ends on that Final Repayment Date.
8.5 Notification
The Agent shall notify the relevant Borrower and the
Banks of the duration of each Interest Period promptly
after ascertaining its duration.
9. INTEREST
9.1 Interest rate
(a) The rate of interest on each Loan for each of its
Interest Periods is the rate per annum determined by the
Agent to be the aggregate of the applicable:-
(i) Margin;
(ii) LIBOR; and
(iii) MLA Cost.
(b) If, in respect of any Accounting Period, the Company does
not comply with its obligations under Clause 17.2 (a) or
(b) (Financial information), the applicable Margin in
respect of each Facility A Loan from the date of the
Company's non-compliance until the date on which that non-
compliance is remedied, shall be adjusted so that the
Margin applicable to that Facility A Loan shall be the
next Increment up from the applicable Margin for that
Facility A Loan in the previous quarterly Accounting
Period.
(c) For the purposes of paragraph (b) above, an "Increment"
is the difference between each level of the Margin in sub-
paragraphs (i) to (v) of paragraph (a) of the definition
of "Margin" in Clause 1.1 (Definitions).
9.2 Due dates
Except as otherwise provided in this Agreement, accrued
interest on each Loan is payable by the relevant Borrower
on the last day of each Interest Period and also, in the
case of a Loan with an Interest Period longer than six
months, on the date falling six months after the
commencement of the Interest Period.
9.3 Default interest
(a) (i) If an Obligor fails to pay any amount payable
by it under the Finance Documents, it shall
forthwith on demand by the Agent pay interest on the
overdue amount from the due date up to the date of
actual payment, as well after as before judgement,
at a rate (the "default rate") determined by the
Agent to be 1 per cent per annum above, subject to
sub-paragraph (ii) below, the rate which would have
been payable if the overdue amount had, during the
period of non-payment, constituted a Sterling Loan
for such successive Interest Periods of such
duration as the Agent may reasonably determine
having regard to the likely duration of the default
(each a "Designated Interest Period").
(ii) If the overdue amount is a principal amount of a
Loan and it becomes due and payable prior to the
last day of an Interest Period for that Loan, then:-
(1) the first Designated Interest Period for that
overdue sum will be the unexpired portion of
that Interest Period; and
(2) the rate of interest on the overdue amount for
that first Designated Interest Period will be 1
per cent per annum above the rate on the
overdue amount under Clause 9.1 (Interest rate)
immediately before the due date.
After the expiry of the first Designated Interest
Period for that overdue amount, the rate on the
overdue amount will be calculated in accordance with
sub-paragraph (i) above.
(b) The default rate will be determined on each Business Day
or the first day of the relevant Designated Interest
Period, as appropriate.
(c) If the Agent determines that Sterling deposits are not at
the relevant time being made available by the Reference
Banks to leading banks in the London interbank market,
the default rate will be determined by reference to the
cost of funds to the Banks from whatever sources the
Banks may reasonably select, having due regard to the
likely duration of the default.
(d) Default interest will be compounded at the end of each
Designated Interest Period.
9.4 Notification of rates of interest
The Agent shall promptly notify each relevant Party of
the determination of a rate of interest under this
Agreement.
10. PAYMENTS
10.1 Place
All payments by an Obligor or a Bank under the Finance
Documents shall be made to the Agent to its account at
such office or bank in the U.K. as it may notify to that
Obligor or Bank for this purpose.
10.2 Currency and funds
Payments under the Finance Documents to the Agent shall
be made in Sterling for value on the due date at such
times as the Agent may specify to the Party concerned as
being customary at the time for the settlement of
transactions in Sterling.
10.3 Distribution
(a) Each payment received by the Agent under this Agreement
for another Party shall, subject to the paragraphs below,
be made available by the Agent to that Party by payment
to its account with such bank in the U.K. as it may
notify to the Agent for this purpose by not less than 5
Business Days' prior notice.
(b) Where the Repayment Date for an outstanding Facility C
Loan coincides with the Drawdown Date for a new
Facility C Loan the Agent shall apply the relevant new
Loan in or towards repayment of the relevant outstanding
Loan so that:-
(i) where the amount of the outstanding Loan exceeds the
amount of the new Loan, London Electricity shall
only be required to repay the excess; and
(ii) where the amount of the outstanding Loan is exactly
the same as the amount of the new Loan, London
Electricity shall not be required to make any
payment.
(c) The Agent may apply any amount received by it for a
Borrower in or towards payment (on the date and in the
currency and funds of receipt) of any amount due from
that Borrower under this Agreement or in or towards the
purchase of any amount of any currency to be so applied.
(d) Where a sum is to be paid under this Agreement to the
Agent for the account of another Party, the Agent is not
obliged to pay that sum to that Party until it has
established that it has actually received that sum. The
Agent may, however, assume that the sum has been paid to
it in accordance with this Agreement and, in reliance on
that assumption, make available to that Party a
corresponding amount. If the sum has not been made
available but the Agent has paid a corresponding amount
to another Party, that Party shall forthwith on demand
refund the corresponding amount to the Agent together
with interest on that amount from the date of payment to
the date of receipt, calculated at a rate determined by
the Agent to reflect its cost of funds.
10.4 Set-off and counterclaim
All payments made by an Obligor under the Finance
Documents shall be made without set-off or counterclaim.
10.5 Non-Business Days
(a) If a payment under the Finance Documents is due on a day
which is not a Business Day, the due date for that
payment shall instead be the next Business Day in the
same calendar month (if there is one) or the preceding
Business Day (if there is not).
(b) During any extension of the due date for payment of any
principal under this Agreement interest is payable on the
principal at the rate payable on the original due date.
10.6 Partial payments
(a) If the Agent receives a payment insufficient to discharge
all the amounts then due and payable by London
Electricity or the other Obligors under the Finance
Documents, the Agent shall apply that payment towards the
obligations of London Electricity or those other
Obligors, as the case may be, under the Finance Documents
in the following order:-
(i) first, in or towards payment pro rata of any unpaid
fees, costs and expenses of the Agent under this
Agreement;
(ii) secondly, in or towards payment pro rata of any
accrued fees due but unpaid under Clause 20.2
(Commitment fee);
(iii) thirdly, in or towards payment pro rata of any
accrued interest due but unpaid under this
Agreement;
(iv) fourthly, in or towards payment pro rata of any
principal due but unpaid under this Agreement and
any amount payable under the Swap Documents; and
(v) fifthly, in or towards payment pro rata of any other
sum due but unpaid under the Finance Documents.
(b) The Agent shall, if so directed by all the Banks, vary
the order set out in sub-paragraphs (a)(ii) to (v) above.
(c) Paragraphs (a) and (b) above shall override any
appropriation made by an Obligor.
11. TAXES
11.1 Gross-up
All payments by an Obligor under the Finance Documents
shall be made without any deduction and free and clear of
and without deduction for or on account of any taxes,
except to the extent that the Obligor is required by law
to make payment subject to any taxes. If any tax or
amounts in respect of tax must be deducted, or any other
deductions must be made, from any amounts payable or paid
by an Obligor, or paid or payable by the Agent to a Bank,
under the Finance Documents, the Obligor shall pay such
additional amounts as may be necessary to ensure that the
relevant Bank receives a net amount equal to the full
amount which it would have received had payment not been
made subject to tax or other deduction.
11.2 Tax receipts
All taxes required by law to be deducted or withheld by
an Obligor from any amounts paid or payable under the
Finance Documents shall be paid by the relevant Obligor
when due and the Obligor shall, within 15 days of the
payment being made to the appropriate taxation authority,
deliver to the Agent for the relevant Bank evidence
satisfactory to that Bank (including all relevant tax
receipts) that the payment has been duly remitted to the
appropriate authority.
11.3 Refund of Tax Credits
If:-
(a) an Obligor makes a payment under Clause 11.1 (Gross-
up) (a "Tax Payment") in respect of a payment to a
Bank under the Finance Documents; and
(b) that Bank determines in good faith that it has
obtained a refund of tax or obtained and used a
credit against tax on its overall net income (a "Tax
Credit") which that Bank is able to identify in good
faith as attributable to that Tax Payment,
then, if it determines, acting in good faith, that it can
do so without any adverse consequences for the Bank, that
Bank shall forthwith reimburse that Obligor, such amount
as that Bank in its absolute discretion determines to be
such proportion of that Tax Credit as will leave that
Bank (after that reimbursement) in no better or worse
position in respect of its worldwide tax liabilities than
it would have been in if no Tax Payment had been
required. A Bank shall have an absolute discretion as to
whether to claim any Tax Credit (and, if it does claim,
the extent, order and manner in which it does so) and
whether any amount is due from it under this Clause 11.3)
(and, if so, what amount and when). No Bank shall be
obliged to disclose any information regarding its tax
affairs and computations.
11.4 Qualifying Bank
(a) Each Bank party to this Agreement on the Effective Date
represents that it is a Qualifying Bank on the Effective
Date. Any bank or financial institution which becomes a
Bank after the Effective Date represents to each Obligor
on the date it becomes a Party that, as at that date, it
is a Qualifying Bank.
(b) If, otherwise than as a result of the introduction of,
change in, or any change in the interpretation,
administration or application of, any law or regulation,
any Double Taxation Treaty or any practice or concession
of the United Kingdom Inland Revenue occurring after the
date a Bank becomes a Party, the Bank is not or ceases to
be a Qualifying Bank, no Obligor will be liable to pay to
that Bank under Clause 11.1 (Gross-up) any amount in
respect of taxes levied or imposed by the United Kingdom
or any taxing authority of or in the United Kingdom in
excess of the amount it would have been obliged to pay if
that Bank had been or had not ceased to be a Qualifying
Bank.
(c) Any Bank which falls within paragraph (b) of the
definition of Qualifying Bank shall deliver to the
Company, on the date it becomes a Bank, a duly completed
form from the tax authorities in the country in which it
is resident such that each Borrower may receive from the
Inland Revenue a direction to that Borrower under the
Double Taxation Relief (Taxes on Income) (General)
Regulations 1970 that the Borrower should not, on account
of the relevant Double Taxation Treaty, pay any interest
due to the Bank under the Finance Documents under
deduction of United Kingdom tax. The Bank concerned
shall, upon the request of the relevant Borrower,
promptly and duly (if it is able to do so) execute and
deliver any and all such further instruments and
documents which are required for the purpose of obtaining
such a direction.
(d) Each Bank shall notify the Company through the Agent as
soon as it is aware that it ceases to be a Qualifying
Bank.
12. MARKET DISRUPTION
(a) If a Reference Bank does not supply an offered rate by
11.30 a.m. on the first day of any Interest Period, the
applicable LIBOR shall, subject to paragraph (b) below,
be determined on the basis of the quotations of the
remaining Reference Banks.
(b) If, in relation to any proposed Loan:-
(i) no, or only one, Reference Bank supplies a rate for
the purposes of determining the applicable LIBOR or
the Agent otherwise determines that adequate and
fair means do not exist for ascertaining the
applicable LIBOR; or
(ii) the Agent receives notification from Banks whose
participations in a Loan exceed 50 per cent. of that
Loan that, in their opinion:-
(A) matching deposits may not be available to them
in the London interbank market in the ordinary
course of business to fund their participations
in that Loan for the relevant Interest Period;
or
(B) the cost to them of matching deposits in the
London interbank market would be in excess of
the relevant LIBOR,
the Agent shall promptly notify the Company and the
relevant Banks of the fact and that this Clause 12 is in
operation.
(c) After any notification under paragraph (b) above:-
(i) in the case of the Facility A Loan, it shall be made
or continue but it shall have an Interest Period of
one month and the interest payable on that Loan
shall be determined in accordance with sub-
paragraphs (iii)-(vii) below;
(ii) in the case of a Facility C Loan, unless London
Electricity notifies the Agent to the contrary
before close of business on the day it received the
notification under paragraph (b) above, the Loan
shall still be made but it shall have an Interest
Period of one month and the interest payable on that
Loan shall be determined in accordance with sub-
paragraphs (iii) to (vii) below;
(iii) promptly after receipt of the notification, the
relevant Borrower and the Agent shall enter into
negotiations in good faith for a period of not more
than one month with a view to agreeing a substitute
basis for determining the rate of interest and/or
funding applicable to the Loan affected by the
notification;
(iv) any substitute basis agreed under sub-paragraph
(iii) above shall be, with the prior consent of all
the Banks, binding on all the Parties;
(v) if no substitute basis is agreed under sub-
paragraph (iii) above, each Bank (through the Agent)
shall certify on or before the last day of the
Interest Period to which the notification relates an
alternative basis for maintaining its participation
in that Loan;
(vi) any alternative basis referred to in sub-paragraph
(v) above may include an alternative method of
fixing the interest rate, alternative Interest
Periods or alternative currencies but it must
reflect the cost to the Banks of funding their
participations in that Loan from whatever sources
each relevant Bank may reasonably select (each
Bank's cost of funding being certified by that Bank
with a copy to the Agent) plus the Margin and (if
applicable) any MLA Cost; and
(vii) each alternative basis so certified shall be
binding on the Borrowers and the certifying Bank and
treated as part of this Agreement.
13. INCREASED COSTS
13.1 Increased costs
(a) Subject to Clause 13.2 (Exceptions), the relevant
Borrower shall forthwith on demand by a Finance Party pay
that Finance Party the amount of any increased cost
incurred by it as a result of:
(i) the introduction of, or any change in, or any change
in the interpretation or application of, any law or
regulation after the date of this Agreement; or
(ii) compliance with any regulation made after the date
of this Agreement,
including any law or regulation relating to taxation,
change in currency of a country or reserve asset, special
deposit, cash ratio, liquidity or capital adequacy
requirements or any other form of banking or monetary
control.
(b) In this Agreement "increased cost" means:-
(i) an additional cost incurred by a Finance Party or
its Holding Company as a result of the Finance Party
having entered into, or performing, maintaining or
funding its obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a
Finance Party or its Holding Company in the Finance
Party making, funding or maintaining all or any
advances comprised in a class of advances formed by
or including the participations in the Loans made or
to be made under this Agreement as is attributable
to the Finance Party making, funding or maintaining
those participations; or
(iii) a reduction in any amount payable to a Finance
Party or its Holding Company or the effective return
to a Finance Party under this Agreement or on its
capital or that of its Holding Company; or
(iv) the amount of any payment made by a Finance Party or
its Holding Company, or the amount of interest or
other return foregone by a Finance Party or its
Holding Company, calculated by reference to any
amount received or receivable by a Finance Party
from any other Party under this Agreement.
(c) A Finance Party intending to make a claim under this
Clause shall promptly notify the relevant Borrower in
reasonable detail of the circumstances giving rise to the
claim and the basis of computation of that claim.
However, no Finance Party is obliged to provide any
confidential information.
13.2 Exceptions
Clause 13.1 (Increased costs) does not apply to any
increased cost:-
(a) compensated for by the payment of the MLA Cost;
(b) compensated for by the operation of Clause 11
(Taxes) or which would have been compensated for but
for the operation of Clause 11.4(b) (Qualifying
Bank);
(c) attributable to any tax on the overall net income of
a Bank or its Holding Company (or the overall net
income of a division or branch of the Bank or its
Holding Company) imposed in the jurisdiction in
which its principal office or Facility Office is
situate;
(d) attributable to the relevant Bank (or its Holding
Company) having entered into a commitment to lend to
a third party which is, at the time of that
commitment, in breach of the relevant law or
regulation; or
(e) incurred in consequence of the implementation, as
contemplated at the date of this Agreement, of the
matters set out in:
(i) the report of the Basle Committee on Bank
Regulation and Supervisory Practices dated July
1988 and entitled "International Convergence of
Capital Measurement and Capital Standards"
(including in particular but without limitation
any directive of the Bank of England
implementing that report in the United
Kingdom);
(ii) the Directive of the Council of the European
Communities on a Solvency Ratio for Credit
Institutions (89/647/EEC of 18 December 1989);
and/or
(iii) the Directive of the Council of the
European Communities on Own Funds of Credit
Institutions (89/299/EEC of 17 April 1989),
unless it results from any change after the date of
this Agreement in, or in the interpretation or
application of, those matters as contemplated on the
date of this Agreement.
14. ILLEGALITY
If it is or becomes unlawful or contrary to any
regulation in any jurisdiction for a Bank to give effect
to any of its obligations as contemplated by this
Agreement or to fund or maintain its participation in any
Loan, then:-
(a) the Bank shall promptly notify the Company through
the Agent accordingly; and
(b) (i) each Borrower shall, on the latest day
permitted by the relevant law or regulation,
prepay that Bank's participation in all Loans
made to it together with all other amounts
payable by it to that Bank under this
Agreement; and
(ii) the Bank's Commitments shall be cancelled.
15. GUARANTEE
15.1 Guarantee
Each Guarantor jointly and severally and irrevocably and
unconditionally:-
(a) as principal obligor guarantees to each Finance
Party prompt performance by EUK of all its
obligations under the Finance Documents;
(b) undertakes with each Finance Party that whenever EUK
does not pay any amount when due under or in
connection with any Finance Document, that Guarantor
shall within two Business Days of demand by the
Agent pay that amount as if that Guarantor instead
of EUK were expressed to be the principal obligor;
and
(c) indemnifies each Finance Party within two Business
Days of demand against any loss or liability
suffered by it if any obligation so guaranteed by
that Guarantor is or becomes unenforceable, invalid
or illegal.
15.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend
to the ultimate balance of all sums payable by EUK under
the Finance Documents, regardless of any intermediate
payment or discharge in whole or in part.
15.3 Reinstatement
(a) Where any discharge (whether in respect of the
obligations of any Obligor, or any security for those
obligations or otherwise) is made in whole or in part or
any arrangement is made on the faith of any payment,
security or other disposition which is avoided or must be
restored on insolvency, liquidation or otherwise without
limitation, the liability of a Guarantor under this
Clause 15 (Guarantee) shall continue as if the discharge
or arrangement had not occurred.
(b) Each Finance Party may concede or compromise any claim
that any payment, security or other disposition is liable
to avoidance or restoration.
15.4 Waiver of defences
The obligations of a Guarantor under this Clause 15
(Guarantee) will not be affected by an act, omission,
matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under
this Clause 15 (Guarantee) or prejudice or diminish those
obligations in whole or in part, including (whether or
not known to it or any Finance Party):-
(a) any time or waiver granted to, or composition with,
any Obligor or other person;
(b) the taking, variation, compromise, exchange, renewal
or release of, or refusal or neglect to perfect,
take up or enforce, any rights against, or security
over assets of, any Obligor or other person or any
non-presentation or non-observance of any formality
or other requirement in respect of any instrument or
any failure to realise the full value of any
security;
(c) any incapacity or lack of powers, authority or legal
personality of or dissolution or change in the
members or status of any Obligor or any other
person;
(d) any variation (however fundamental) or replacement
of a Finance Document or any other document or
security so that references to that Finance Document
in this Clause 15 (Guarantee) shall include each
variation or replacement;
(e) any unenforceability, illegality or invalidity of
any obligation of any person under any Finance
Document or any other document or security, to the
intent that the obligations of the Guarantor under
this Clause 15 (Guarantee) shall remain in full
force and its guarantee be construed accordingly, as
if there were no unenforceability, illegality or
invalidity; or
(f) any postponement, discharge, reduction, non-
provability or other similar circumstance affecting
any obligation of any Obligor under a Finance
Document resulting from any insolvency, liquidation
or dissolution proceedings or from any law,
regulation or order so that each such obligation
shall for the purposes of the obligations of the
Guarantor under this Clause 15 (Guarantee) be
construed as if there were no such circumstance.
15.5 Immediate recourse
Each Guarantor waives any right it may have of first
requiring any Finance Party (or any trustee or agent on
its behalf) to proceed against or enforce any other
rights or security or claim payment from any Obligor
before claiming from that Guarantor under this Clause 15
(Guarantee).
15.6 Appropriations
Until all amounts which may be or become payable by any
Obligor under or in connection with the Finance Documents
have been irrevocably paid in full, each Finance Party
(or any trustee or agent on its behalf) may:-
(a) refrain from applying or enforcing any other moneys,
security or rights held or received by that Finance
Party (or any trustee or agent on its behalf) in
respect of those amounts, or apply and enforce the
same in such manner and order as it sees fit
(whether against those amounts or otherwise) and no
Guarantor shall be entitled to the benefit of the
same; and
(b) hold in an interest bearing suspense account any
moneys received from EUK or on account of the
liability of a Guarantor under this Clause 15
(Guarantee).
15.7 Non-competition
Until all amounts which may be or become payable by any
Obligor under or in connection with the Finance Documents
have been irrevocably paid in full, no Guarantor shall
after a claim has been made or by virtue of any payment
or performance by it under this Clause 15 (Guarantee):-
(a) be subrogated to any rights, security or moneys
held, received or receivable by any Finance Party
(or any trustee or agent on its behalf) or be
entitled to any right of contribution or indemnity
in respect of any payment made or moneys received on
account of that Guarantor's liability under this
Clause 15 (Guarantee);
(b) claim, rank, prove or vote as a creditor of any
Obligor or its estate in competition with any
Finance Party (or any trustee or agent on its
behalf); or
(c) receive, claim or have the benefit of any payment,
distribution or security from or on account of any
Obligor , or exercise any right of set-off as
against any Obligor .
Each Guarantor shall hold in trust for and forthwith pay
or transfer to the Agent for the Finance Parties any
payment or distribution or benefit of security received
by it contrary to this Clause 15.7.
15.8 Additional security
This guarantee is in addition to and is not in any way
prejudiced by any other security now or subsequently held
by any Finance Party.
16. REPRESENTATIONS AND WARRANTIES
16.1 Representations and warranties
Each Obligor makes the representations and warranties set
out in this Clause 16 (Representations and warranties) to
each Finance Party in respect of itself and its
Subsidiaries.
16.2 Status
(a) (i) In the case of an Obligor incorporated in
England, it is a limited liability company, duly
incorporated and validly existing under the
Companies Act 1985; and
(ii) in the case of an Obligor formed in the State
of Delaware, it is a limited liability company, duly
formed, validly existing and in good standing under
the laws of the State of Delaware; and
(b) it has the power to own its assets and carry on its
business as it is being conducted.
16.3 Powers and authority
It has the power to enter into and perform, and has taken
all necessary action to authorise the entry into,
performance and delivery of, the Finance Documents to
which it is or will be a party and the transactions
contemplated by those Finance Documents.
16.4 Legal validity
Each Finance Document to which it is or will be a party
constitutes, or when executed in accordance with its
terms will constitute, its legal, valid, binding and
enforceable obligation.
16.5 Non-conflict
The entry into and performance by it of, and the
transactions contemplated by, the Finance Documents do
not and will not:-
(a) conflict with any law or regulation, judicial or
official order or any Licence or Licence
Undertaking; or
(b) conflict with its constitutional documents; or
(c) conflict with any document which is binding upon any
Obligor or any other member of the Group or any
asset of any Obligor or any other member of the
Group to an extent or in a manner which has a
Material Adverse Effect.
16.6 No default
(a) No Event of Default or (unless this representation is
being repeated or deemed to be repeated on the date of a
Request or a Drawdown Date in respect of a Rollover Loan
or the first day of an Interest Period for a Facility A
Loan commencing after the Effective Date) other Default
is outstanding or will result from any Loan; and
(b) no other event is outstanding which constitutes a default
under any document which is binding on any Obligor or any
other member of the Group or any asset of any Obligor or
any other member of the Group to an extent or in a manner
which has a Material Adverse Effect.
16.7 Authorisations
Subject to due registration of any Debenture at Companies
House under section 395 of the Companies Act 1985, all
authorisations required by any UK or US law or the terms
of any Licence or Licence Undertaking in connection with
the entry into, performance, validity and enforceability
of, and the transactions contemplated by, the Finance
Documents have been obtained or effected (as appropriate)
and are in full force and effect.
16.8 Accounts
(a) In the case of the Company, the audited consolidated
accounts of the Group most recently delivered to the
Agent under this Agreement:-
(i) have been prepared in accordance with Applicable
Accounting Principles; and
(ii) fairly represent the consolidated financial
condition of the Group as at the date to which they
were drawn up.
(b) In the case of EUK and London Electricity, its audited
consolidated accounts most recently delivered to the
Agent:-
(i) have been prepared in accordance with Applicable
Accounting Principles; and
(ii) fairly represent its consolidated financial
condition as at the date to which they were drawn
up.
16.9 Litigation
No litigation, arbitration or administrative proceedings
are, to its knowledge, current, pending or threatened:
(a) to restrain the entry into, exercise of any of its
rights, and/or performance or enforcement of or
compliance with any of its obligations, under the
Finance Documents; or
(b) which have a Material Adverse Effect.
16.10 Information Memorandum
(a) All material factual information contained in the
Information Memorandum was true (or, in the case of
information provided by any person other than an Obligor
or its advisers, was true to the best of its knowledge
and belief) in all material respects at the date (if any)
ascribed to it in the Information Memorandum or (if none)
at the date of the relevant component of the Information
Memorandum;
(b) any expressions of opinion or intention and any forecasts
and projections contained in the Information Memorandum
were arrived at in good faith and were based on
reasonable assumptions which that Obligor believes to be
true; and
(c) as at the Effective Date, the Information Memorandum,
taken as a whole, was not misleading in any material
respect and did not omit to disclose any matter failure
to disclose which would result in any material
information contained in the Information Memorandum being
misleading in any material respect in the context of the
Finance Documents.
16.11 Environmental Matters
(a) Each Obligor and each other member of the Group has
obtained all material Environmental Licences required for
the carrying on of its business as then conducted and is
in compliance in all material respects with:
(i) the terms and conditions of those Environmental
Licences; and
(ii) all other applicable Environmental Law,
which, in each case, if not obtained or complied with,
has a Material Adverse Effect and there are, to its
knowledge, no circumstances which may materially prevent
or interfere with such compliance in the future which, if
not complied with, have a Material Adverse Effect;
(b) so far as it is aware, no Dangerous Substance has been
used, disposed of, generated, stored, transported,
dumped, released, deposited, buried or emitted at, on
from or under any site or premises (whether or not owned,
leased, occupied or controlled by any Obligor or any
other member of the Group and including any offsite waste
management or disposal location utilised by any Obligor
or any other member of the Group) in circumstances where
this has a Material Adverse Effect; and
(c) so far as it is aware, there is no Environmental Claim
(whether in respect of any site previously or currently
owned or occupied by any Obligor or any other member of
the Group or otherwise) pending or threatened, and there
are no past or present acts, omissions, events or
circumstances that would be likely to form the basis of
any Environmental Claim (whether in respect of any site
previously or currently owned or occupied by any Obligor
or any other member of the Group or otherwise), against
it which, in each case, is reasonably likely to be
determined against it and which, if so determined, has a
Material Adverse Effect.
16.12 Assets
Each Obligor is the legal and/or beneficial owner of all
its material assets free from any Security Interests
(other than any Security Interests permitted under
Clause 17.9(b) (Negative pledge)).
16.13 Ownership
Each Obligor confirms that the corporate structure chart
set out in Schedule 7 is accurate as at the Effective
Date and, as at the Effective Date, neither EUK nor any
Additional Guarantor has any material commitments or
Financial Indebtedness other than as contemplated by the
Finance Documents.
16.14 Licence
In the case of London Electricity and as at the Effective
Date:-
(a) the Licence is in full force and effect;
(b) there exist no material breaches of the terms of the
Licence or Licence Undertakings; and
(c) there are no circumstances in existence which would
entitle the Director General or the Secretary of
State to seek to revoke the Licence.
16.15 No insolvency
As at the Effective Date no insolvency, bankruptcy or
similar proceedings have been instituted by (and in
relation to) or against or threatened against any Obligor
or Material Subsidiary.
16.16 Times for making representations and warranties
The representations and warranties set out in this
Clause 16 (Representations and warranties):-
(a) are made by each Obligor on the Effective
Date; and
(b) (with the exception of Clauses 16.10 (Information
Memorandum), 16.13 (Ownership), 16.14 (Licence) and
16.15 (No insolvency)) are deemed to be made by each
Obligor on the date of each Request and the first
day of each Interest Period with reference to the
facts and circumstances then existing.
16.17 Qualifications to representations
The representations and warranties contained in Clauses
16.4 (Legal validity) and 16.7 (Authorisations) shall
(where applicable) be subject, as to matters of law only,
to the qualifications in the legal opinions referred to
in Part I of Schedule 2 to the Restatement Agreement.
17. UNDERTAKINGS
17.1 Duration
The undertakings in this Clause 17 (Undertakings) remain
in force from the date of this Agreement for so long as
any amount is or may be outstanding under this Agreement
or any Commitment is in force and are made (where
applicable) by itself in respect of it and its
Subsidiaries.
17.2 Financial information
(a) The Company shall supply to the Agent in sufficient
copies for all the Banks:-
(i) as soon as the same are available (and in any event
within 120 days of the end of each of their
financial years) the audited or (in the case of
London Electricity) unaudited consolidated accounts
of EUK, the Company and London Electricity for that
financial year;
(ii) as soon as the same are available (and in any event
within 60 days of the end of the first half-year of
each of their financial years and within 45 days (in
the case of the Company) or 60 days (in the case of
EUK) of the end of each quarter of each of their
financial years) the unaudited consolidated accounts
for that half-year or that quarter, as the case may
be, of EUK and the Company;
(iii) as soon as the same are available (and in any
event within 60 days of the end of the first half-
year of each of its financial years), the unaudited
consolidated accounts for that half-year of London
Electricity; and
(iv) as soon as the same are available (and in any event
within 210 days of the end of each of its financial
years) the audited unconsolidated accounts of London
Electricity for that year.
(b) The Company shall supply to the Agent in
sufficient copies for all the Banks:-
(i) together with its accounts specified in
paragraph (a)(i) above, a certificate signed by its
auditors setting out in reasonable detail
computations establishing compliance or non-
compliance with Clause 17.26 (Financial covenants)
as at the date to which those accounts were drawn-
up;
(ii) together with its accounts specified in paragraph
(a)(ii) above, a certificate signed by two of its
senior authorised officers on its behalf setting out
in reasonable detail computations establishing
compliance or non-compliance with Clause 17.26
(Financial covenants) as at the date to which those
accounts were drawn-up; and
(iii) within 5 Business Days of them being delivered
to the Director General under Condition 2 of Part II
of the Licence, the accounting statements delivered
to the Director General by London Electricity.
17.3 Information - miscellaneous
Each Obligor shall supply to the Agent:-
(a) all documents despatched by it to its creditors (or
any class of them), other than any creditors in
respect of Subordinated Debt or the Subordinated
Debentures, at the same time as they are despatched;
(b) promptly upon becoming aware of them, details of any
litigation, arbitration or administrative
proceedings which are current, threatened or
pending, and which:
(i) if adversely determined, have a Material
Adverse Effect; or
(ii) would involve liability or potential liability
of BPS10,000,000 or more (or its equivalent in
other currencies); or
(iii) involves the Director-General, the
Secretary of State, the Licence or any Licence
Undertaking;
(c) promptly upon becoming aware that any material
modifications to the Licence are being proposed by
the Director General or London Electricity and/or
that any Licence Undertaking is being requested by
the Director General or the Secretary of State,
reasonable details of those modifications and/or
that Licence Undertaking, to be updated from time to
time to reflect any changes;
(d) unless the Agent has already received them, copies
of any Licence Undertakings in force at the date of
the Acquisition and thereafter, promptly after the
giving of any Licence Undertaking; and
(e) promptly, such further information in the possession
or control of any member of the Group regarding its
financial condition and operations as any Finance
Party may reasonably request and which the Obligor
is able to provide without breaching any legal
obligation or regulation,
in sufficient copies for all of the Banks, if the Agent
so requests.
17.4 Notification of Default
(a) Each Obligor shall notify the Agent of any Default (and
the steps, if any, being taken to remedy it) promptly
upon becoming aware of its occurrence.
(b) Each Obligor shall notify the Agent of any event of
default or potential event of default under the EIL
Facility Agreement (and the steps, if any being taken to
remedy it) promptly upon becoming aware of its
occurrence.
17.5 Compliance certificates/accounting matters
(a) The Company shall supply to the Agent:-
(i) together with its accounts specified in
Clause 17.2(a) (Financial information); and
(ii) promptly at any other time, if the Agent so
requests,
a certificate signed by two of its senior officers on its
behalf certifying that no Default is outstanding or, if a
Default is outstanding, specifying the Default and the
steps, if any, being taken to remedy it.
(b) If, at any time after the date of this Agreement, any
material change is made to the Applicable Accounting
Principles, the Company shall notify the Agent of the
change and, in the absence of any agreement between the
Company and the Agent (acting on the instructions of the
Majority Banks) to the contrary, the Company shall ensure
that the Auditors provide a description of the change and
the adjustments which would be required to be made to the
latest accounts or financial statements so that those
accounts or financial statements reflect the Applicable
Accounting Principles, and any reference to any financial
statements or accounts delivered under this Agreement
shall be construed as a reference to those accounts or
financial statements as adjusted to reflect the
Applicable Accounting Principles.
(c) The Company shall ensure that each set of accounts to be
delivered by it under this Agreement are prepared and
audited (in the case of its annual accounts) by the
Auditors in accordance with the Applicable Accounting
Principles, subject to any variations which are not
material or, if material, have been agreed in writing by
the Majority Banks.
17.6 Authorisations
Each Obligor shall promptly:-
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Agent of,
any authorisation required by it under any law or
regulation to enable it to perform its obligations under,
or for the validity or enforceability of, any Finance
Document.
17.7 Environmental matters
Each Guarantor shall, and the Company shall procure that
each member of the Group will:
(a) obtain all requisite Environmental Licences and
comply in all material respects with:
(i) the terms and conditions of all Environmental
Licences applicable to it; and
(ii) all other applicable Environmental Laws,
in each case where failure to do so has a Material
Adverse Effect; and
(b) promptly upon receipt of the same, notify the Agent
of any claim, notice or other communication served
on it in respect of any alleged breach of or
corrective or remedial obligation or liability under
any Environmental Law which, if substantiated, has a
Material Adverse Effect.
17.8 Pari passu ranking
Each Obligor shall procure that its payment obligations
under the Finance Documents do and will rank at least
pari passu with all its other present and future
unsecured payment obligations, except for obligations
which are mandatorily preferred by law applying to
companies generally.
17.9 Negative pledge
(a) No Obligor shall, and the Company shall procure that no
other member of the Group will, create or permit to
subsist any Security Interest on any of its assets.
(b) Paragraph (a) does not apply to:
(i) any lien or right of set-off arising by operation of
law (or by an agreement having similar effect) in
the ordinary course of business; or
(ii) pledges of goods, the related documents of title
and/or other related documents arising or created in
the ordinary course of business of any member of the
London Electricity Group as security only for
indebtedness owed to a bank or financial institution
directly relating to the goods or documents on or
over which that pledge exists; or
(iii) any Security Interest arising out of title
retention or conditional sale provisions in a
supplier's standard conditions of supply of goods
acquired by any member of the London Electricity
Group in the ordinary course of its business; or
(iv) any Security Interest created under the Pooling and
Settlement Agreement; or
(v) any Security Interest existing on an asset at the
time of the acquisition of the asset by any member
of the London Electricity Group after the date of
this Agreement, but only if:
(A) the Security Interest was not created in
contemplation of the acquisition;
(B) the principal amount secured by the Security
Interest is not increased after the
acquisition; and
(C) the Security Interest is discharged within
180 days of the acquisition; or
(vi) any Security Interest existing on the assets of a
company at the time it becomes a member of the
London Electricity Group after the date of this
Agreement, but only if:
(A) the Security Interest was not created in
contemplation of the relevant company becoming
a member of the London Electricity Group;
(B) the principal amount secured by the Security
Interest is not increased after the relevant
company becomes a member of the London
Electricity Group; and
(C) the Security Interest is discharged within
180 days of the relevant company becoming a
member of the London Electricity Group; or
(vii) any Security Interest which:-
(A) constitutes a contractual right of any bank or
financial institution to apply any credit
balance maintained by any member of the London
Electricity Group with that bank or financial
institution against any amount due and payable
to such bank or financial institution by that
or any other member of the London Electricity
Group; and
(B) arises in connection with the relevant London
Electricity Group member's ordinary banking
arrangements (including a cash management
scheme); or
(viii) any Security Interest created:
(A) by the Debentures; or over any Excluded Asset
(as defined in a Debenture executed by an
Obligor in corporated in the U.S.A.); or
(B) with the approval of the Majority Banks; or
(ix) any Security Interest created or existing over the
assets of a Project Finance Subsidiary, or over the
shares (or like interest in the capital) of a
Project Finance Subsidiary, securing Project Finance
Indebtedness; or
(x) any other Security Interest created or existing over
the assets of any member of the London Electricity
Group not falling within any of paragraphs (i) to
(ix) above so long as the aggregate principal amount
of outstanding indebtedness of the London
Electricity Group secured by all the Security
Interests permitted under this sub-paragraph (x) at
any time, together with the aggregate principal
amount of all outstanding indebtedness permitted
under Clause 17.10(b) (Transactions similar to
security) at that time, does not exceed BPS50,000,000
(or its equivalent in other currencies).
(c) Notwithstanding the above, the Company shall not create
or permit to subsist any Security Interest on any of the
share capital of London Electricity other than pursuant
to a Debenture.
17.10 Transactions similar to security
(a) Subject to paragraph (b) below, no Obligor shall, and the
Company shall procure that no other member of the Group
will:-
(i) sell, transfer or otherwise dispose of any of its
assets on terms whereby it is or may be leased to or
re-acquired or acquired by a member of the Group or
any of its related entities; or
(ii) sell, transfer or otherwise dispose of any of its
receivables on terms that recourse may be had to the
vendor in the event of non-payment of those
receivables when due, except for the discounting of
bills or notes in the ordinary course of trading,
in circumstances where the transaction is entered into
primarily as a method of raising finance or of financing
the acquisition of an asset.
(b) Any member of the London Electricity Group may enter into
transactions otherwise prohibited by paragraph (a) above
so long as the aggregate principal amount of outstanding
indebtedness of the London Electricity Group in respect
of all such transactions at any time, together with the
aggregate principal amount of all outstanding secured
indebtedness permitted under Clause 17.9(b)(x) (Negative
pledge) at that time, does not exceed BPS50,000,000 (or its
equivalent in other currencies).
17.11 Disposals
(a) The Company shall not sell, transfer or otherwise dispose
of or cease to exercise control over any of the share
capital of London Electricity except under or pursuant to
the Debenture executed by it.
(b) No Obligor shall, and the Company shall procure that no
other member of the Group will, either in a single
transaction or in a series of transactions, whether
related or not and whether voluntarily or involuntarily,
sell, transfer, grant or lease or otherwise dispose of
all or any part of its assets (all such transactions
being "disposals" for the purpose of this Clause).
(c) Paragraph (b) does not apply to the following disposals
(if made on arm's length terms or permitted by
Clause 17.20 (Arm's length terms)):-
(i) disposals made in the ordinary course of business of
the disposing entity; or
(ii) disposals made by a member of the London Electricity
Group of assets in exchange for other assets
comparable or superior as to type, value and
quality; or
(iii) disposals made by a member of the London
Electricity Group of obsolete or surplus assets no
longer required for the purpose of the relevant
person's business; or
(iv) the payment of cash not otherwise prohibited by the
terms of any Finance Document; or
(v) disposals by one member of the London Electricity
Group to another member of the London Electricity
Group (other than a Project Finance Subsidiary), but
only if, in the case of a Subsidiary of London
Electricity to whom the assets are transferred,
London Electricity owns directly or indirectly at
least a corresponding percentage of the ownership
interest in the transferee Subsidiary as in the
transferor Subsidiary or disposals from one Obligor
to another Obligor; or
(vi) other disposals of assets which are integral to the
distribution and supply of electricity activities of
the London Electricity Group to the extent that the
value of those assets disposed of during any
financial year of London Electricity is less than
BPS20,000,000 (as determined by reference to the
audited consolidated balance sheet of London
Electricity as at the end of the relevant financial
year or, in the case of any such asset which was not
taken into account for the purposes of that balance
sheet, its book value at the date of disposal); or
(vii) other disposals of assets not referred to in
paragraph (vi) above to the extent that the value of
those assets disposed of during any financial year
of London Electricity is less than BPS50,000,000 (as
determined by reference to the audited consolidated
balance sheet of London Electricity as at the end of
the relevant financial year or, in the case of any
such asset which was not taken into account for the
purposes of that balance sheet, its book value at
the date of disposal); or
(viii) disposals made by a member of the London
Electricity Group of receivables on arm's length
terms up to a maximum value:
(1) of BPS20,000,000, at any time when the
Capitalisation Ratio is in excess of 65 per
cent.; or
(2) of BPS50,000,000 at any time when the
Capitalisation Ratio is less than or equal to
65 per cent.; or
(3) in excess of the relevant limit of BPS20,000,000
or BPS50,000,000, as appropriate, but only if the
net proceeds of any such excess disposals are
applied in accordance with this Agreement in or
towards prepayment of, first, Facility C Loans
and then Facility A Loans. The Total Facility
A Commitments and the Total Facility C
Commitments shall be reduced by an amount equal
to the relevant prepayment; or
(ix) any other disposal approved by the Majority Banks.
17.12 Change of business
The Company shall procure that no substantial change is
made to the general nature or scope of the business of
the Company or the Group from that carried on at the date
of this Agreement or those which are usual for
electricity companies in the United Kingdom as at the
date of this Agreement, including, without limitation,
electricity distribution, supply and generation,
electrical contracting and business activities relating
to the gas, telecommunication and water industries.
17.13 Holding Company
(a) The Company shall not carry on any business (other than
(i) the holding of shares in, the making of loans to and
the provision of administrative services to, members of
the Group and (ii) the holding of general partnership
interests in ELC, the execution, delivery and performance
of Subordinated Debentures and the execution, delivery
and performance of the Subordinated Capital Security
Guarantee) or acquire any assets other than cash, cash
equivalents or shares in (or loans to) members of the
Group or general partnership interests in ELC.
(b) No Additional Guarantor shall carry on any business
(other than the holding of shares in, the making of loans
to and the provision of administrative services to,
members of the Group or Obligors) or acquire any assets
other than cash, cash equivalents or shares in (or loans
to) members of the Group or Obligors.
(c) No Guarantor shall create or acquire any new Subsidiaries
(other than a member of the London Electricity Group).
17.14 Mergers and acquisitions
(a) No Obligor shall, and the Company shall procure that no
other member of the Group will, enter into any
amalgamation, demerger, merger or reconstruction, except
for any amalgamation, merger or reconstruction between a
member of the Group (other than a Borrower or the
Licenceholder) and any other member of the Group (other
than a Borrower or the Licenceholder).
(b) No Obligor shall, and the Company shall procure that no
other member of the Group will, acquire any assets or
business or make any investment if the assets, business
or investment is substantial in relation to the Group ,
except for:
(i) acquisitions or investments made in the ordinary
course of business;
(ii) capital expenditure and any other expenditure, in
either case in connection with compliance with the
Licence, any Licence Undertaking or any other
applicable law or regulation;
(iii) investments contemplated by the implementation
of the capital structure referred to in paragraph 5
of Part I of Schedule 2 to the Restatement Agreement
or any other investment by an Obligor or other
member of the Group in another Obligor or other
member of the Group; and
(iv) other acquisitions or investments, the consideration
for which does not exceed (on a cumulative basis) 20
per cent. of the Adjusted Capital and Reserves at
such time (or its equivalent in other currencies),
and no Default is then outstanding or will result
from the acquisition or investment.
17.15 Distributions
(a) No Guarantor shall declare, recommend, make or pay any
dividend, distribution or payment (including by way of
redemption, repurchase, defeasance, retirement, return or
repayment) to any of its shareholders (other than any
payment due to its shareholders for goods and/or services
received or provided in the ordinary course of business)
or make any payment (including by way of redemption,
repurchase, defeasance, retirement, return or repayment
and including the payment of interest) in respect of any
Subordinated Debt, if a Default is outstanding or will
result from the relevant dividend, payment or
distribution.
(b) Each Guarantor shall, and the Company shall procure that
London Electricity will:
(i) pay dividends to its shareholders; or
(ii) provide funds by way of the making of a loan or the
payment of interest on a loan or the repayment of a
loan to its shareholders,
in each case in the amount available to it and necessary
to enable EUK to perform its obligations under the
Finance Documents. However, a Guarantor's obligation
under this paragraph does not extend to making or
procuring a payment or providing or procuring funds if it
would be contrary to any law or regulation or (in the
case of London Electricity) would breach the Licence or
any Licence Undertaking. Without limiting the above, if
London Electricity could make a payment or provide funds
by complying with Section 155 of the Companies Act 1985
and London Electricity is able to do so, then the Company
shall procure that London Electricity shall take the
necessary steps under Section 155-158 of the Companies
Act 1985 to enable the payment to be made or the relevant
funds to be provided.
17.16 Lending and borrowing
(a) No Obligor (other than London Electricity) shall incur
any Financial Indebtedness other than:-
(i) under the Finance Documents;
(ii) under the Subordinated Capital Security Guarantee
and the Subordinated Debentures;
(iii) under the Intercompany Notes;
(iv) to another Obligor;
(v) Financial Indebtedness specified in paragraph (g) of
its definition in Clause 1.1 (Definitions) and
complying with Clause 17.17 (Hedging);
(vi) where the net proceeds of the Financial Indebtedness
are used to prepay the Facility A Loans in whole; or
(vii) where the net proceeds of the Financial
Indebtedness are used solely to prepay the Facility
A Loans in part and:
(A) the Financial Indebtedness is unsecured except
to the extent secured under the Debentures or
is subordinated to the Financial Indebtedness
under the Finance Documents;
(B) if the Financial Indebtedness is secured under
the Debentures, the creditors of that Financial
Indebtedness (or their agent or trustee) have
entered into an intercreditor agreement
providing that, for so long as any amount is
outstanding under Facility A, the Banks shall
maintain control of voting rights with respect
to the security created under the Debentures;
(C) the Financial Indebtedness:-
(1) does not have a maturity date;
(2) is not voluntarily prepayable (otherwise
than on a pro rata basis with Facility A);
and
(3) does not amortize,
prior to the Facility A Final Repayment Date;
and
(D) after the Financial Indebtedness is incurred
and the Facility A Loan(s) partially prepaid,
no Default will then be outstanding.
(b) The Company will procure that the aggregate Borrowings of
London Electricity and its Subsidiaries taken together on
a consolidated basis plus (to the extent not otherwise
included in Borrowings of London Electricity and/or its
Subsidiaries and without double counting) the amount of
any actual or contingent liabilities of London
Electricity and/or its Subsidiaries:
(i) for Borrowings at that time of any person in which
London Electricity or any of its Subsidiaries has an
ownership interest; or
(ii) to provide funds by loan, subscription for share
capital or otherwise to any person (other than a
member of the London Electricity Group) in which
London Electricity or any of its Subsidiaries has an
ownership interest,
will not exceed the aggregate of:
(A) the outstanding principal amount from time to time
of the Facility C Loans;
(B) the principal amount of all Borrowings of those
companies outstanding at the date London Electricity
became a member of the Group;
(C) the outstanding principal amount from time to time
of all Borrowings of those companies for which the
only creditor is the Company or Entergy UK Finance
Limited;
(D) any Borrowing of any member of the London
Electricity Group where there is recourse falling
within paragraph (b)(iii) of the definition of
"Project Finance Indebtedness" in Clause 1.1
(Definitions) outstanding from time to time; and
(E) the amount which, when aggregated with the amounts
referred to in sub-paragraphs (A), (B) and (D)
above, equals BPS600,000,000.
(c) No Obligor will, and each Obligor will procure that no
member of the Group will, be the creditor in respect of
any Borrowings, other than:
(i) any Borrowing entered into with the prior consent of
the Majority Banks;
(ii) any Borrowing under paragraph (b) of the definition
of "Borrowings" where trade credit is extended by
any member of the Group on normal commercial terms
and in the ordinary course of its business on
substantially the same terms (or terms more
favourable to it) and in similar circumstances as
for trade credit extended prior to the date of this
Agreement by London Electricity;
(iii) loans made by one member of the Group to
another member of the Group or Obligor or by one
Obligor to another Obligor or member of the Group;
(iv) cash deposits made by a member of the Group at a
bank or other financial institution or any
commercial paper rated A1 or higher by Standard &
Poor's Rating Group (or any of its successors) or P1
or higher by Moody's Investors Service, Inc. (or any
of its successors) held by any member of Group;
(v) the Intercompany Notes; or
(vi) Borrowings not otherwise permitted under to
paragraphs (i) to (v) above in an aggregate amount
for the Group as a whole at any time outstanding not
exceeding BPS40,000,000.
(d) Without prejudice to paragraph (a) above and unless the
Majority Banks otherwise consent (such consent not to be
unreasonably withheld), the Company shall procure that
London Electricity does not repay or redeem the Bonds
otherwise than as may be required by the relevant
bondholders in accordance with the terms of the Bonds.
17.17 Hedging
(a) Subject to paragraph (b) below, no Obligor shall, and the
Company shall ensure that none of its Subsidiaries will,
enter into any interest rate swap, cap, ceiling, collar
or floor or any currency swap, futures, foreign exchange
or commodity contract or option (whether over the counter
or exchange traded) or any similar treasury transaction,
other than spot foreign exchange contracts entered into
in the ordinary course of business, and transactions for
the hedging of actual or projected interest rate,
currency and/or commodity and/or energy price exposures
arising in the ordinary course of the business activities
of that member of the Group.
(b) (i) It is the policy of the Company and EUK to
ensure that the interest rate on at least 50 per
cent. of the aggregate of the outstanding Facility A
Loan(s) and the Facility C Loans is either fixed or
subject to a cap (the level of which must be
acceptable to the Arrangers (acting reasonably)),
based on current market rates at the time the
relevant hedging arrangement is put in place and for
an average period of not less than three years from
the date upon which London Electricity became a
member of the Group.
(ii) The Company and EUK confirms that it is party to
such Swap Documents as are necessary to implement
the above policy.
17.18 Insurance
Each Guarantor shall procure that there is:
(a) maintained with underwriters or insurance companies
of repute in respect of each member of the London
Electricity Group and each Obligor the policies of
insurance in relation to its business and assets
which a prudent person carrying on a similar
business might be expected to maintain (including
policies to cover public and third party liability
and insurance against business interruption) and any
such other insurance as may be required pursuant to
the terms of any Finance Document; and
(b) from time to time upon request by the Agent,
supplied to the Agent copies of all such insurance
policies or certificates of insurance or such other
evidence of the existence of such policies as may be
reasonably acceptable to the Agent.
17.19 Constitutional Documents
No Obligor will, and the Company will procure that no
other member of the Group will, without the prior consent
of the Majority Banks or as required by law, amend or
seek or agree to amend or replace the memorandum or
articles of association or other constitutional documents
or by-laws of any Obligor or any member of the Group in
any way which would be likely materially and adversely to
affect the interests of the Banks under the Finance
Documents.
17.20 Arm's length terms
No Obligor will, and the Company will procure that no
other member of the Group will, enter into any material
transaction with any other person otherwise than on arm's
length terms, other than:
(a) transactions previously approved by the Majority
Banks;
(b) loans from or to, or disposals by, one member of the
Group to another member of the Group or from one
Obligor to another Obligor, which, in each case, are
permitted under the Finance Documents;
(c) transactions entered into on terms more favourable
to a member of the Group than arm's length terms;
and
(d) other transactions (including the issue of
Subordinated Debt, the Subordinated Debentures and
the Subordinated Capital Security Guarantee)
expressly permitted under the Finance Documents.
17.21 Share capital and security
Each Guarantor shall ensure that no Obligor or member of
the Group whose shares are charged under a Debenture
shall issue any further shares or alter any rights
attaching to its issued shares in existence at the
Effective Date unless those further shares are
contemporaneously charged, by way of fixed charge, to the
Agent on the terms of a Debenture or, in the case of
further shares in London Electricity, are Excluded Shares
(as defined in the Debenture created by the Company).
17.22 Security perfection
Each Obligor shall take all action required to perfect
the Security Interests created by it under a Debenture
over the Security Assets (as defined in that Debenture)
as soon as reasonably practicable after the date of that
Debenture, including (without limitation) sending to the
Agent in form and substance satisfactory to it (acting
reasonably):
(a) unless already delivered to the Agent, all share
certificates and all other documents of title in
relation to shares, stocks or other securities
charged under that Debenture together with share
transfer forms executed in blank or other documents
required to enable the Agent or its nominees to
become registered as the owner of the same; and
(b) where required under the terms of the relevant
Debenture, duly executed notices of charge and
acknowledgements in the form of the relevant
schedules to that Debenture respectively in relation
to the relevant agreements or accounts charged under
that Debenture, but the relevant Obligor will only
be obliged to use reasonable endeavours to obtain
the acknowledgements referred to above.
17.23 Compliance with laws
Without prejudice to Clause 17.24 (Licences and
regulatory matters), each Obligor will, and the Company
will procure that each other member of the Group will,
comply in all material respects with all applicable laws
and regulations, whether domestic or foreign, having
jurisdiction over it or any of its assets, failure to
comply with which has a Material Adverse Effect.
17.24 Licences and regulatory matters
The Company shall:
(a) ensure that London Electricity and any Licenceholder
(or any other relevant member of the Group) complies
in all material respects with the terms of its
Licence where failure to comply has a Material
Adverse Effect; and
(b) notify the Agent promptly upon receipt by it or any
member of the Group of any notice from the
government, any court or any regulatory authority or
agency which is reasonably likely to give rise to
the revocation, termination, material adverse
amendment, suspension or withdrawal of any Licence
granted in its favour (unless, contemporaneously,
that Licence is to be replaced, substituted or
reissued on the same, substantially the same or
improved terms); and
(c) procure that each member of the Group will comply
with the requirements of all rules, regulations,
orders and other requirements of the Secretary of
State and the Director General under the Act or any
other law applicable to the conduct of the business
of the supply or distribution of electricity, where
failure to comply has a Material Adverse Effect.
17.25 Business Consents
Each Guarantor will, and the Company will procure that
each other member of the Group will, obtain, promptly
renew from time to time, and maintain in full force and
effect, and if so requested promptly furnish certified
copies to the Agent of, all such material authorisations
as may be required under any applicable law or regulation
or under the Licence or any Licence Undertaking to carry
on its business as it is being conducted from time to
time, where failure to obtain, renew or maintain any such
authorisation or non-compliance with the terms of the
same has a Material Adverse Effect.
17.26 Financial covenants
(a) In this Clause 17.26:-
"Adjusted Capital and Reserves"
means the amount (including any share premium) for the
time being paid up or credited as paid up on the issued
share capital of the Company, adjusted as follows:
(i) plus the outstanding amount of any Subordinated Debt
and Subordinated Capital Securities;
(ii) plus the amount standing to the credit (or, as the
case may be, minus the amount standing to the debit)
of the capital and revenue reserves of the Group;
(iii) plus any amount standing to the credit or minus
any amount standing to the debit of the consolidated
profit and loss account of the Group;
(iv) minus any distribution declared or made by the
Company or any of its Subsidiaries (other than to
another member of the Group) out of profits included
within reserves to the extent that those reserves
have not already been reduced on account of it;
(v) minus amounts attributable to the interests (if any)
of outside holders of issued share capital in any
member of the Group other than the Company itself;
(vi) plus any amount deducted from reserves or the profit
and loss account in respect of goodwill arising upon
and in respect of the Acquisition;
(vii) plus any amount deducted from reserves or the
profit and loss account as a provision for the
future payment of any exceptional, special or
windfall tax or levy applicable to, inter alia,
privatised regional electricity companies;
and, for the purposes of the foregoing:
(A) no item shall be effectively deducted or added more
than once, all items shall be calculated on a
consolidated basis and (subject only as may be
required in order to reflect the express inclusion
or exclusion of items as specified in this
definition) in accordance with the Applicable
Accounting Principles; and
(B) where the calculation is being made as at the end of
any Accounting Period it shall be determined from
the balance sheet forming part of the relevant
quarterly or annual accounts for that Accounting
Period.
"Capitalisation Ratio"
means, at any time, the ratio of Consolidated Net Total
Borrowings to the aggregate of Consolidated Net Total
Borrowings and Adjusted Capital and Reserves, expressed
as a percentage.
"Consolidated EBITDA"
for any period comprising an annual Accounting Period of
the Company or consecutive quarterly Accounting Periods
of the Company (taken together as one period) means the
profit of the Group for such period:
(i) before deducting all depreciation and other
amortisation;
(ii) before taking into account all Extraordinary Items
(whether positive or negative) but, in the case of
the first test of the covenant set out in
Clause 17.26(c)(i) only, after taking into account
all Exceptional Items (whether positive or
negative);
(iii) before deducting tax;
(iv) before taking into account Consolidated Net Interest
Payable for such period;
(v) before deducting the costs incurred in connection
with the Acquisition;
(vi) after deducting any gain, or adding any loss, to
book value arising in favour of the Group on the
sale, lease or other disposal of any asset (other
than on the sale of trading stock) during such
period and deducting any gain, or adding any loss,
arising on revaluation of any asset during such
period, in each case to the extent that it would
otherwise be taken into account,
and, for the purposes of the foregoing, no item shall be
effectively deducted or credited more than once in this
calculation, all items shall be determined on a
consolidated basis and (subject only as may be required
in order to reflect the express inclusion or exclusion of
items as specified in this definition) in accordance with
the Applicable Accounting Principles and as determined
from the consolidated accounts of the Group for that
annual Accounting Period or for the relevant Accounting
Periods falling within that period.
"Consolidated Net Interest Payable"
means Consolidated Total Interest Payable less any
interest or amounts in the nature of interest receivable
during the relevant annual Accounting Period of the
Company or consecutive quarterly Accounting Periods of
the Company (taken together as one period), determined on
the same basis and manner as for Consolidated Total
Interest Payable.
"Consolidated Net Total Borrowings"
at any time means the aggregate at that time of the
Borrowings of the members of the Group from sources
external to the Group,
(i) plus (to the extent not otherwise included) the
amount of any actual or contingent liability of any
member of the Group:
(A) for Borrowings at that time of any person in
which any member of the Group has an ownership
interest; or
(B) to provide funds by loan, subscription for
share capital or otherwise to any person in
which any member of the Group has an ownership
interest;
(ii) less the cash in hand and cash equivalents of the
members of the Group at that time, and
(iii) excluding, for the avoidance of doubt, the
amount of any liability of any member of the Group
in respect of the Subordinated Debentures, the
Subordinated Capital Security Guarantee and the
Subordinated Capital Securities,
calculated on a consolidated basis and (subject only as
may be required in order to reflect the express inclusion
or exclusion of items as specified herein and/or in the
definition of Borrowings in this Clause) in accordance
with the Applicable Accounting Principles and, where the
calculation is being made as at the end of any Accounting
Period for which a consolidated balance sheet of the
Group has been delivered to the Agent, as shown in that
balance sheet.
"Consolidated Total Interest Payable"
for any period comprising an annual Accounting Period of
the Company or consecutive quarterly Accounting Periods
of the Company (taken together as one period) means the
interest (and all amounts required by the Applicable
Accounting Principles to be accounted for as interest)
accrued on Borrowings of the Group during such period
(excluding any interest payable on the Subordinated
Debentures) as an obligation of any member or members of
the Group (whether or not paid or capitalised during or
deferred for payment after such period) adjusted to take
account of any amount constituting interest receivable by
any members of the Group under interest rate and/or
currency hedging agreements or instruments under which
all parties are in compliance with their payment and
other material obligations, all determined on a
consolidated basis and (subject only as may be required
in order to reflect the express inclusion or exclusion of
items as specified in this definition) in accordance with
the Applicable Accounting Principles and as shown in the
consolidated accounts of the Group for such annual
Accounting Period or for the Accounting Periods falling
within such period.
"Exceptional Items"
has the meaning given to it in Financial Reporting
Standard 3 issued by the Accounting Standards Board (as
in force at the date of this Agreement), but shall
exclude any items falling within the definition of
Extraordinary Items.
"Extraordinary Items"
in the case of the first test of the covenant set out in
Clause 17.26(c)(i) only, has the meaning given to it in
Financial Reporting Standard 3 issued by the Accounting
Standards Board (as in force at the date of this
Agreement) but in addition shall include those items
listed in paragraph 20 thereof and, thereafter, has the
meaning given to it under US GAAP.
(b) (i) All the terms used in paragraph (a) above are
to be calculated in accordance with the Applicable
Accounting Principles.
(ii) If there is a dispute as to any interpretation of or
computation for paragraph (a) above, the
interpretation or computation of the Auditors
prevails.
(c) The Company shall procure that:-
(i) as of each date on which it is tested under
paragraph (d) below, the ratio of Consolidated
EBITDA to Consolidated Net Interest Payable is no
less than:
(A) in the case of an Accounting Period ending on
or before 30th September 1998, 1.8:1; and
(B) in the case of any subsequent Accounting
Period, 2:1; and
(ii) the Capitalisation Ratio shall not, as of each date
on which it is tested under paragraph (d) below,
exceed:
(A) for the period from the Effective Date until
31st December, 1999, 75 per cent.; and
(B) thereafter, 70 per cent.
(d) (i) Each test of the covenant set out in
paragraph (c)(i) above shall be made on a quarterly
basis and in respect of the annual Accounting Period
ending on the expiry of the relevant quarterly
Accounting Period, except that the first test of the
covenant shall be made:
(A) as of 31st December, 1997 in respect of the
period beginning on 1st February, 1997 and
ending on that date; and
(B) by reference to UK GAAP and not US GAAP.
(ii) Each test of the covenant set out in
paragraph (c)(ii) above shall be made as of the last
day of each quarterly Accounting Period.
17.27 Payment of taxes
Each Guarantor shall, and the Company shall procure that
each member of the Group will, pay all taxes, assessments
and governmental charges or levies imposed upon it or
upon its income or profits or upon any of its assets,
before the same shall become in default, which, if not
paid, has a Material Adverse Effect.
17.28 Maintenance of existence
Each Guarantor shall, and the Company shall procure that
each member of the Group will, do all such things as
necessary to maintain its corporate existence except
pursuant to a Permitted Transaction.
17.29 Property rights
Each Guarantor shall, and the Company shall procure that
each member of the Group will, maintain and keep, or
cause to be maintained and kept, its properties in good
repair, working order and condition, and from time to
time make or cause to be made all needful and proper
repairs, renewals, replacements and improvements so that
the business carried on in connection therewith may be
properly conducted at all times, where failure to do so
has a Material Adverse Effect.
17.30 Books
Each Guarantor will, and the Company shall procure that
each member of the Group will, keep proper books of
record and account in which proper entries will be made
of its transactions in accordance with generally accepted
accounting principles in the U.K. or the U.S.
18. DEFAULT
18.1 Events of Default
Each of the events set out in Clauses 18.2 (Non-payment)
to 18.21 (Material adverse change) (inclusive) is an
Event of Default (whether or not caused by any reason
whatsoever outside the control of any Obligor or any
other person).
18.2 Non-payment
An Obligor does not pay on the due date any amount
payable by it under the Finance Documents at the place at
and in the currency in which it is expressed to be
payable and (if caused by technical or administrative
error) the non-payment continues unremedied for
3 Business Days from the receipt by it of notice of non-
payment from the Agent.
18.3 Breach of other obligations
(a) An Obligor fails to comply with any provision of Clauses
17.8 (Pari passu ranking) to 17.15 (Distributions)
inclusive, Clause 17.20 (Arm's length terms) and
Clause 17.26(c)(i) (Financial covenants);
(b) the Company fails to comply with Clause 17.26(c)(ii)
(Financial covenants) and, if that default is capable of
remedy, it is not remedied within 3 Business Days of it
becoming aware of the default; or
(c) an Obligor does not comply with any provision of the
Finance Documents (other than those referred to in
Clause 18.2 (Non-payment) or paragraph (a) or (b) above)
and, if that default is capable of remedy, it is not
remedied within 28 days of the earlier of the relevant
Obligor becoming aware of the default and receipt by it
of a notice of default from the Agent.
18.4 Misrepresentation
A representation, warranty or statement made or repeated
in or in connection with any Finance Document or in any
document delivered by or on behalf of any Obligor under
or in connection with any Finance Document is incorrect
in any material respect when made or deemed to be made or
repeated by reference to the facts and circumstances then
subsisting and, if the circumstances causing the
misrepresentation are capable of remedy within that
period, that misrepresentation is not remedied within 28
days of the earlier of the relevant Obligor becoming
aware of the misrepresentation and receipt by it of
notice from the Agent requiring remedy.
18.5 Cross-default
(a) Any Financial Indebtedness of any Obligor or other member
of the Group is not paid when due or within any
applicable grace period; or
(b) an event of default howsoever described exists in
relation to any Obligor or other member of the Group
under any document relating to Financial Indebtedness of
an Obligor or other member of the Group; or
(c) any Financial Indebtedness of any Obligor or other member
of the Group becomes prematurely due and payable or is
placed on demand as a result of an event of default
(howsoever described) under the document relating to that
Financial Indebtedness; or
(d) any commitment for, or underwriting of, any Financial
Indebtedness of any Obligor or other member of the Group
is cancelled or suspended as a result of an event of
default (howsoever described) under the document relating
to that Financial Indebtedness; or
(e) any Security Interest securing Financial Indebtedness
over any asset of any Obligor or other member of the
Group becomes enforceable; or
(f) any Financial Indebtedness under the EIL Facility
Agreement becomes prematurely due and payable as a result
of an event of default,
unless, in the case of any member(s) of the London
Electricity Group, the aggregate amount of Financial
Indebtedness is less than BPS20,000,000 (or its equivalent
in other currencies) and, for this purpose, the amount of
any Financial Indebtedness specified in paragraph (b)
above will be determined after making the adjustments
specified in paragraphs (b) and (c) of the definition of
"Borrowing" contained in Clause 1.1 (Definitions) and the
amount of any Financial Indebtedness specified in
paragraph (g) of its definition in Clause 1.1
(Definitions) will be determined on a mark-to-market
basis.
18.6 Insolvency
(a) an Obligor or any Material Subsidiary is, or is deemed
for the purposes of any law to be (except in the
circumstances of Section 123(1)(a) of the Insolvency Act
1986 where the Obligor or Material Subsidiary is
contesting payment of the relevant debt in good faith and
with due diligence), unable to pay its debts as they fall
due or to be insolvent, or admits inability to pay its
debts as they fall due; or
(b) an Obligor or any Material Subsidiary suspends making
payments on all or any class of its debts or announces an
intention to do so, or a moratorium is declared in
respect of all or any class of its indebtedness; or
(c) An Obligor or any Material Subsidiary by reason of
financial difficulties (in circumstances of actual or
imminent insolvency) begins negotiations with one or more
of its creditors with a view to the readjustment or
rescheduling of all or any class of its indebtedness.
18.7 Insolvency proceedings
(a) Any step (including petition, proposal or convening a
meeting) is taken with a view to a composition,
assignment or arrangement with any creditors of an
Obligor or a Material Subsidiary; or
(b) a meeting of an Obligor or a Material Subsidiary is
convened for the purpose of considering any resolution
for (or to petition for) its winding-up or its
administration or any such resolution is passed; or
(c) any person presents a petition for the winding-up or for
the administration of an Obligor or a Material
Subsidiary, and, in the case of a petition for winding-up
presented by a creditor, it is not withdrawn, discharged
or stayed within 21 days; or
(d) any order is made for the winding-up or administration of
an Obligor or a Material Subsidiary; or
(e) any other step (including petition, proposal or convening
a meeting) is taken with a view to the rehabilitation,
administration, custodianship, liquidation, winding-up or
dissolution of an Obligor or a Material Subsidiary or any
other insolvency proceedings involving an Obligor or a
Material Subsidiary, and, in the case of any such step
taken by a creditor, it is not withdrawn, discharged or
stayed within 21 days,
except for any which arises from a Permitted Transaction.
18.8 Appointment of receivers and managers
(a) Any liquidator, trustee in bankruptcy, judicial
custodian, compulsory manager, receiver, administrative
receiver, administrator or the like is appointed in
respect of an Obligor or a Material Subsidiary or any
part of its assets, otherwise than in connection with a
Permitted Transaction; or
(b) the directors of an Obligor or a Material Subsidiary
requests the appointment of a liquidator, trustee in
bankruptcy, judicial custodian, compulsory manager,
receiver, administrative receiver, administrator or the
like, otherwise than in connection with a Permitted
Transaction; or
(c) any other step is taken to enforce any Security Interest
over any part of the assets of an Obligor or a Material
Subsidiary and is not withdrawn, discharged or stayed
within 21 days.
18.9 Creditors' process
Any attachment, sequestration, distress or execution
affects any assets of an Obligor or a Material Subsidiary
(having, in the case of any member(s) of the London
Electricity Group, an aggregate value of BPS20,000,000 (or
its equivalent in other currencies)) and is not
discharged within 14 days, unless:
(a) it is being contested in good faith with due
diligence; and
(b) in the case of London Electricity, in the reasonable
opinion of the Majority Banks, it does not have a
Material Adverse Effect.
18.10 Analogous proceedings
There occurs, in relation to an Obligor or a Material
Subsidiary, any event anywhere which, in the opinion of
the Majority Banks, appears to correspond with any of
those mentioned in Clauses 18.6 (Insolvency) to 18.9
(Creditors' process) (inclusive).
18.11 Cessation of business
An Obligor or a Material Subsidiary ceases, or threatens
to cease, to carry on all or a substantial part of its
business, other than in connection with a Permitted
Transaction.
18.12 Unlawfulness
It is or becomes unlawful for any Obligor to perform any
of its material obligations under the Finance Documents.
18.13 Ownership of London Electricity
London Electricity ceases to be beneficially wholly-owned
by the Company.
18.14 Ownership of the Group
(a) The issued share capital of any Obligor ceases to be 100%
directly or indirectly legally and beneficially owned by
Entergy Corporation and/or any of its wholly-owned
Subsidiaries free of any Security Interest (other than
any created by a Debenture), except as a result of a sale
of, or issuance of stock representing, up to 20 per cent.
of the common stock of Entergy International Holdings Ltd
or Entergy International Ltd LLC.
(b) There is any variation to the corporate and/or capital
structure set out in Schedule 7 that has a material
adverse effect on the position of the Banks under the
Finance Documents.
18.15 Licence
(a) The Licence is revoked or surrendered or ceases to be
held by London Electricity or a wholly-owned Subsidiary
of London Electricity or the Company, other than in
circumstances which permit London Electricity or one of
its wholly-owned Subsidiaries to carry on the
distribution business of London Electricity substantially
as envisaged at the date of this Agreement either without
the Licence as a result of any change in the Act or with
a new public electricity supply licence issued to such
person under the Act whose terms are not materially less
favourable than those of the Licence; or
(b) the Licence or any substitute licence contemplated by
paragraph (a) above is materially modified in any manner
which, in the reasonable opinion of the Majority Banks,
has (whether immediately or in the course of time) a
Material Adverse Effect.
18.16 Compliance with the Act
The Licenceholder fails to comply with:
(a) a final order (within the meaning of Section 25 of
the Act); or
(b) a provisional order (within the meaning of that
section) which has been confirmed under that
section,
and, in either case, the order has not been revoked under
that section or the validity of the order has not been
questioned under Section 27 of the Act.
18.17 Pooling and Settlement Agreement
(a) Any notice requiring a Licenceholder to cease to be a
party to the Pooling and Settlement Agreement is given to
a Licenceholder under the Pooling and Settlement
Agreement.
(b) London Electricity or any other Licenceholder which
subsequently becomes a party to the Pooling and
Settlement Agreement ceases to be a party to the Pooling
and Settlement Agreement, except as the result of the
transfer of the Licence to another member of the Group
which becomes a party to the Pooling and Settlement
Agreement.
18.18 Expropriation
The authority or ability of any Obligor or London
Electricity or the Licenceholder to conduct its business
is wholly or substantially curtailed by any expropriation
or renationalisation by or on behalf of any governmental
authority.
18.19 Security
A Debenture or the guarantee of a Guarantor or any
Subordination Agreement is ineffective or is alleged by
an Obligor or (in the case of a Subordination Agreement)
the relevant junior creditor to be ineffective for any
reason.
18.20 Extra security
If:
(a) on any date as of which a covenant in paragraph (c)
(i) of Clause 17.26 (Financial covenants) is tested
the ratio of Consolidated EBITDA to Consolidated Net
Interest Payable is less than :
(i) in the case of a date falling on or before 30th
September, 1998, 1.81:1;
(ii) in the case of 31st December, 1998, 2.01:1;
(iii) in the case of a date falling after
31st December, 1998 and on or before 31st
December, 2000, 2.1:1; or
(iv) in the case of any subsequent date, 2.15:1
or
(b) the public senior debt ratings of London Electricity
shall be rated BB+ or below by Standard & Poor's
Rating Group (or any of its successors) and Ba1 or
below by Moody's Investors Service, Inc. (or any of
its successors),
and, in each case, the Company fails to create within
7 days a first legal mortgage, in favour of the Agent
under the terms of the Debenture executed by the Company,
of all the shares in London Electricity.
18.21 Material adverse change
Any event or series of events occurs which, in the
reasonable opinion of the Majority Banks, has or is
reasonably likely to have a material adverse effect on
the ability of an Obligor to comply with:
(a) its payment obligations under any Finance Document;
or
(b) its obligations under Clause 17.26 (Financial
covenants).
18.22 Acceleration
At any time during the existence of an Event of Default
the Agent may, and shall if so directed by the Majority
Banks, by notice to the Company:-
(a) cancel the Total Commitments; and/or
(b) demand that all or part of the Loans, together with
accrued interest, and all other amounts accrued
under this Agreement be immediately due and payable,
whereupon they shall become immediately due and
payable; and/or
(c) demand that all or part of the Loans be payable on
demand, whereupon they shall immediately become
payable on demand by the Agent (acting on the
instructions of the Majority Banks); and/or
(d) request that the Company, if it has not already done
so, executes a Debenture over the shares of London
Electricity which are not secured in favour of the
Agent.
19. THE AGENT AND THE ARRANGERS
19.1 Appointment and duties of the Agent
(a) Each Finance Party (other than the Agent) irrevocably
appoints the Agent to act as its agent under and in
connection with the Finance Documents, and irrevocably
authorises the Agent on its behalf to perform the duties
and to exercise the rights, powers and discretions that
are specifically delegated to it under or in connection
with the Finance Documents, together with any other
incidental rights, powers and discretions. The Agent
shall have only those duties which are expressly
specified in this Agreement. Those duties are solely of a
mechanical and administrative nature.
(b) The Agent agrees to execute a Subordination Agreement,
duly executed by the Company and the relevant junior
creditor, promptly on request by the Company.
19.2 Role of the Arrangers
Except as otherwise provided in this Agreement, no
Arranger has any obligations of any kind to any other
Party under or in connection with any Finance Document.
19.3 Relationship
The relationship between the Agent and the other Finance
Parties is that of agent and principal only. Nothing in
this Agreement constitutes the Agent as trustee or
fiduciary for any other Party or any other person and the
Agent need not hold in trust any moneys paid to it for a
Party or be liable to account for interest on those
moneys.
19.4 Majority Banks' directions
The Agent will be fully protected if it acts in
accordance with the instructions of the Majority Banks in
connection with the exercise of any right, power or
discretion or any matter not expressly provided for in
the Finance Documents. Any such instructions given by the
Majority Banks will be binding on all the Banks. In the
absence of such instructions the Agent may act as it
considers to be in the best interests of all the Banks.
19.5 Delegation
The Agent may act under the Finance Documents through its
personnel and agents.
19.6 Responsibility for documentation
None of the Agent and the Arrangers is responsible to any
other Party for:-
(a) the execution, genuineness, validity, enforceability
or sufficiency of any Finance Document or any other
document;
(b) the collectability of amounts payable under any
Finance Document; or
(c) the accuracy of any statements (whether written or
oral) made in or in connection with any Finance
Document (including the Information Memorandum).
19.7 Default
(a) The Agent is not obliged to monitor or enquire as to
whether or not a Default has occurred. The Agent will not
be deemed to have knowledge of the occurrence of a
Default. However, if the Agent receives notice from a
Party referring to this Agreement, describing the Default
and stating that the event is a Default, it shall
promptly notify the Banks.
(b) The Agent may require from the Banks the receipt of
security satisfactory to it whether by way of payment in
advance or otherwise, against any liability or loss which
it will or may incur in taking any proceedings or action
arising out of or in connection with any Finance Document
before it commences those proceedings or takes that
action.
19.8 Exoneration
(a) Without limiting paragraph (b) below, the Agent will not
be liable to any other Party for any action taken or not
taken by it under or in connection with any Finance
Document, unless directly caused by its gross negligence
or wilful misconduct.
(b) No Party may take any proceedings against any officer,
employee or agent of the Agent in respect of any claim it
might have against the Agent or in respect of any act or
omission of any kind (including negligence or wilful
misconduct) by that officer, employee or agent in
relation to any Finance Document.
19.9 Reliance
The Agent may:-
(a) rely on any notice or document believed by it to be
genuine and correct and to have been signed by, or
with the authority of, the proper person;
(b) rely on any statement made by a director or employee
of any person regarding any matters which may
reasonably be assumed to be within his knowledge or
within his power to verify; and
(c) engage, pay for and rely on legal or other
professional advisers selected by it (including
those in the Agent's employment and those
representing a Party other than the Agent).
19.10 Credit approval and appraisal
Without affecting the responsibility of any Obligor for
information supplied by it or on its behalf in connection
with any Finance Document, each Bank confirms that it:-
(a) has made its own independent investigation and
assessment of the financial condition and affairs of
each Obligor and its related entities in connection
with its participation in this Agreement and has not
relied exclusively on any information provided to it
by the Agent or an Arranger in connection with any
Finance Document; and
(b) will continue to make its own independent appraisal
of the creditworthiness of each Obligor and its
related entities while any amount is or may be
outstanding under the Finance Documents or any
Commitment is in force.
19.11 Information
(a) The Agent shall promptly forward to the person concerned
the original or a copy of any document which is delivered
to the Agent by a Party for that person.
(b) The Agent shall promptly supply a Bank with a copy of
each document received by the Agent under Clause 4
(Conditions precedent) upon the request and at the
expense of that Bank.
(c) Except where this Agreement specifically provides
otherwise, the Agent is not obliged to review or check
the accuracy or completeness of any document it forwards
to another Party.
(d) Except as provided above, the Agent has no duty:-
(i) either initially or on a continuing basis to provide
any Bank with any credit or other information
concerning the financial condition or affairs of any
Obligor or any related entity of any Obligor whether
coming into its possession or that of any of its
related entities before, on or after the date of
this Agreement; or
(ii) unless specifically requested to do so by a Bank in
accordance with this Agreement, to request any
certificates or other documents from any Obligor.
19.12 The Agent and the Arrangers individually
(a) If it is also a Bank, each of the Agent and the Arrangers
has the same rights and powers under the Finance
Documents as any other Bank and may exercise those rights
and powers as though it were not the Agent or an
Arranger.
(b) Each of the Agent and the Arrangers may:-
(i) carry on any business with an Obligor or its related
entities;
(ii) act as agent or trustee for, or in relation to any
financing involving, an Obligor or its related
entities; and
(iii) retain any profits or remuneration in
connection with its activities under this Agreement
or in relation to any of the foregoing.
(c) In acting as the Agent, the Agent's agency division shall
be treated as a separate entity from any other of its
divisions or departments and, notwithstanding the
foregoing provisions of this Clause 19, if the Agent
should act for any member of the Group in any capacity in
relation to any other matter, any information given by
that member of the Group to the Agent in such other
capacity may be treated as confidential by the Agent.
19.13 Indemnities
(a) Without limiting the liability of any Obligor under the
Finance Documents, each Bank shall forthwith on demand
indemnify the Agent for its proportion of any liability
or loss incurred by the Agent in any way relating to or
arising out of its acting as the Agent, except to the
extent that the liability or loss arises directly from
the Agent's gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in
paragraph (a) above is the proportion which its
participation in the Loans (if any) bear to all the Loans
on the date of the demand. If, however, there is no Loan
outstanding on the date of demand, then the proportion
will be the proportion which its Commitments bears to the
Total Commitments at the date of demand or, if the Total
Commitments have been cancelled, bore to the Total
Commitments immediately before being cancelled.
19.14 Compliance
(a) The Agent may refrain from doing anything which might, in
its opinion, constitute a breach of any law or regulation
or be otherwise actionable at the suit of any person, and
may do anything which, in its opinion, is necessary or
desirable to comply with any law or regulation of any
jurisdiction.
(b) Without limiting paragraph (a) above, the Agent need not
disclose any information relating to any Obligor or any
of its related entities if the disclosure might, in the
opinion of the Agent, constitute a breach of any law or
regulation or any duty of secrecy or confidentiality or
be otherwise actionable at the suit of any person.
19.15 Resignation of Agent
(a) Notwithstanding its irrevocable appointment, the Agent
may resign by giving notice to the Banks and the Company,
in which case the Agent may forthwith appoint one of its
Affiliates as successor Agent or, failing that, the
Majority Banks may (after consultation with the Company)
appoint a successor Agent.
(b) If the appointment of a successor Agent is to be made by
the Majority Banks but they have not, within 30 days
after notice of resignation, appointed a successor Agent
which accepts the appointment, the retiring Agent may
(after consultation with the Company) appoint a successor
Agent.
(c) The resignation of the retiring Agent and the appointment
of any successor Agent will both become effective only
upon the successor Agent notifying all the Parties that
it accepts the appointment. On giving the notification,
the successor Agent will succeed to the position of the
retiring Agent and the term "Agent" will mean the
successor Agent.
(d) The retiring Agent shall, at its own cost, make available
to the successor Agent such documents and records and
provide such assistance as the successor Agent may
reasonably request for the purposes of performing its
functions as the Agent under this Agreement.
(e) Upon its resignation becoming effective, this Clause 19
(The Agent and the Arrangers) shall continue to benefit
the retiring Agent in respect of any action taken or not
taken by it under or in connection with the Finance
Documents while it was the Agent, and, subject to
paragraph (d) above, it shall have no further obligation
under any Finance Document.
(f) If so instructed by the Majority Banks (after
consultation with the Company), the Agent shall resign in
accordance with paragraph (a) above. However, in this
event the Agent may not appoint a successor Agent.
19.16 Banks
The Agent may treat each Bank as a Bank, entitled to
payments under this Agreement and as acting through its
Facility Office(s) until it has received notice from the
Bank to the contrary not less than 5 Business Days prior
to the relevant payment.
19.17 Agent as Trustee
(a) The Agent in its capacity as trustee or otherwise under a
Debenture:-
(i) is not liable for any failure, omission or defect in
perfecting or registering the security constituted
or created by any Finance Document;
(ii) may accept without enquiry such title as the
relevant Obligor may have to any asset secured by a
Debenture; and
(iii) is not under any obligation to hold any Finance
Document or any other document in connection with
the Finance Documents or the assets secured by any
Finance Document (including title deeds) in its own
possession or to take any steps to protect or
preserve the same. The Agent may permit any member
of the Group to retain any Finance Document or other
document in its possession.
(b) Save as otherwise provided in the Finance Documents, all
moneys which under the trusts contained in the Finance
Documents are received by the Agent in its capacity as
trustee or otherwise may be invested in the name of or
under the control of the Agent in any investment
authorised by English law for the investment by trustees
of trust money or in any other investments which may be
selected by the Agent. Additionally, the same may be
placed on deposit in the name of or under the control of
the Agent at such bank or institution (including the
Agent) and upon such terms as the Agent may think fit.
20. FEES
20.1 Restatement fee
EUK shall pay (or procure the payment) to the Agent for
the Arrangers a restatement fee in the amount and on the
date agreed in the Fee Letter between EUK and the
Arrangers.
20.2 Commitment fee
(a) London Electricity shall pay to the Agent for each Bank a
commitment fee during the period from the date of this
Agreement up to (but excluding) the Facility C Final
Repayment Date computed at the rate of 0.125 per cent.
per annum on the undrawn, uncancelled amount of that
Bank's Facility C Commitment.
(b) Accrued commitment fee is payable quarterly in arrear.
Accrued commitment fee is also payable to the Agent for
the relevant Bank(s) on the cancelled amount of its
Facility C Commitment at the time the cancellation takes
effect.
20.3 Agent's fee
EUK shall pay (or procure the payment) to the Agent for
its own account an agency fee in the amount and on the
date agreed in the Fee Letter between EUK and the Agent.
20.4 VAT
Any fee referred to in this Clause 20 (Fees) is exclusive
of any value added tax or any other tax which might be
chargeable in connection with that fee. If any value
added tax or other tax is so chargeable, it shall be paid
by the relevant Borrower at the same time as it pays the
relevant fee.
21. EXPENSES
21.1 Initial and special costs
EUK shall forthwith on demand pay (or procure the
payment) to the Agent and the Arrangers the amount of all
reasonable costs and expenses (including legal fees)
reasonably incurred by them in connection with:-
(a) the negotiation, preparation, printing and execution
of this Agreement and any other documents referred
to in this Agreement and the syndication of the
Facilities, subject as provided in the letter dated
25th September, 1997 from the Arrangers to Entergy
Corporation;
(b) the negotiation, preparation, printing and execution
of any other Finance Document (other than a Novation
Certificate) executed after the date of this
Agreement; and
(c) any amendment, waiver, consent or suspension of
rights (or any proposal for any of the foregoing)
requested by or on behalf of an Obligor or, in the
case of Clause 2.3 (Change of currency), the Agent
and relating to a Finance Document or a document
referred to in any Finance Document.
21.2 Enforcement costs
EUK shall forthwith on demand pay (or procure the
payment) to each Finance Party the amount of all
reasonable costs and expenses (including, without
limitation, legal fees) incurred by it in connection with
the enforcement of, or the preservation of any rights
under, any Finance Document.
22. STAMP DUTIES
EUK shall pay (or procure the payment) and forthwith on
demand indemnify each Finance Party (or procure that each
Finance Party is indemnified) against any liability it
incurs in respect of any stamp, registration and similar
tax which is or becomes payable in connection with the
entry into, performance or enforcement of any Finance
Document.
23. INDEMNITIES
23.1 Currency indemnity
(a) If a Finance Party receives an amount in respect of an
Obligor's liability under the Finance Documents or if
that liability is converted into a claim, proof,
judgement or order in a currency other than the currency
(the "contractual currency") in which the amount is
expressed to be payable under the relevant Finance
Document:-
(i) that Obligor shall indemnify that Finance Party as
an independent obligation against any loss or
liability arising out of or as a result of the
conversion;
(ii) if the amount received by that Finance Party, when
converted into the contractual currency at a market
rate in the usual course of its business, is less
than the amount owed in the contractual currency,
the Obligor concerned shall forthwith on demand pay
to that Finance Party an amount in the contractual
currency equal to the deficit; and
(iii) the Obligor shall pay to the Finance Party
concerned on demand any exchange costs and taxes
payable in connection with any such conversion.
(b) Each Obligor waives any right it may have in any
jurisdiction to pay any amount under the Finance
Documents in a currency other than that in which it is
expressed to be payable.
23.2 Other indemnities
EUK shall forthwith on demand indemnify each Finance
Party (or procure that each Finance Party is indemnified)
against any loss or liability which that Finance Party
incurs as a consequence of:-
(a) the occurrence of any Default;
(b) a change in currency of a country or the operation
of Clause 2.3 (Change of currency), the operation of
Clause 18.22 (Acceleration) or Clause 29 (Pro rata
sharing);
(c) any payment of principal or an overdue amount being
received from any source otherwise than on the last
day of an Interest Period relative to the relevant
payment and, for the purposes of this paragraph (c),
the last day of an Interest Period for an overdue
amount is the last day of the relevant Designated
Interest Period (as defined in Clause 9.3 (Default
interest));
(d) (other than by reason of negligence or default by
any Finance Party) a Loan not being made after the
Borrower has delivered a Request for that Loan; or
(e) any failure by a member of the Group to comply with
the Environmental Laws applicable to it or any
Environmental Licence held by it.
EUK's liability in each case includes any loss of margin
or other loss or expense on account of funds borrowed,
contracted for or utilised to fund any amount payable
under any Finance Document, any amount repaid or prepaid
or any Loan.
24. EVIDENCE AND CALCULATIONS
24.1 Accounts
Accounts maintained by a Finance Party in connection with
this Agreement are prima facie evidence of the matters to
which they relate.
24.2 Certificates and determinations
Any certification or determination by a Finance Party of
a rate or amount under the Finance Documents is prima
facie evidence of the matters to which it relates. Any
determination by a Finance Party of an amount under a
Finance Document shall contain a calculation of the
amount in reasonable detail.
24.3 Calculations
Interest (including any applicable MLA Cost) and the fee
payable under Clause 20.2 (Commitment fee) accrue from
day to day and are calculated on the basis of the actual
number of days elapsed and a year of 365 days or (where
market practice so dictates) 360 days.
25. AMENDMENTS AND WAIVERS
25.1 Procedure
(a) Subject to Clause 25.2 (Exceptions), any term of the
Finance Documents may be amended or waived with the
agreement of the Company, the Majority Banks and the
Agent. The Agent may effect, on behalf of the Banks, an
amendment to which they or the Majority Banks have
agreed.
(b) The Agent shall promptly notify the other Parties of any
amendment or waiver effected under paragraph (a) above,
and any such amendment or waiver shall be binding on all
the Parties.
25.2 Exceptions
An amendment or waiver which relates to:-
(a) the definition of "Majority Banks" in Clause 1.1
(Definitions);
(b) an extension of the date for, or a decrease in an
amount or a change in the currency of, any payment
(including the Margin or any other amount of
interest or any fee) under the Finance Documents;
(c) an increase in a Bank's Commitment;
(d) the release of any Guarantor or any security the
subject of a Debenture;
(e) a term of a Finance Document which expressly
requires the consent of each Bank; or
(f) Clause 29 (Pro rata sharing) or this Clause 25
(Amendments and waivers),
may not be effected without the consent of each Bank.
25.3 Waivers and remedies cumulative
The rights of each Finance Party under the Finance
Documents:-
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under
the general law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is
not a waiver of that right.
26. CHANGES TO THE PARTIES
26.1 Transfers by Obligors
No Obligor may assign, transfer, novate or dispose of any
of, or any interest in, its rights and/or obligations
under this Agreement.
26.2 Transfers by Banks
(a) Subject to paragraph (b) below, a Bank (the "Existing
Bank") may at any time assign, transfer or novate any of
its Commitments and/or rights and/or obligations in whole
or in part under this Agreement to a Qualifying Bank (the
"New Bank"). A partial assignment, transfer or novation
is only permitted in minimum amounts of BPS10,000,000 and
if the Bank concerned assigns, transfers or novates a pro
rata portion of all its rights and obligations under
Facilities A and C.
(b) The prior consent of the Company is required for any such
assignment, transfer or novation referred to in paragraph
(a) above, unless:-
(i) the New Bank is another Bank or an Affiliate of a
Bank; or
(ii) a Default is outstanding.
However, the prior consent of the Company must not be
unreasonably withheld or delayed and will be deemed to
have been given if, within 14 days of receipt by the
Company of an application for consent, it has not been
expressly refused.
(b) A transfer of obligations will be effective only if
either:-
(i) the obligations are novated in accordance with
Clause 26.3 (Procedure for novations); or
(ii) the New Bank confirms to the Agent and the Company
that it undertakes to be bound by the terms of this
Agreement as a Bank in form and substance
satisfactory to the Agent. On the transfer becoming
effective in this manner the Existing Bank shall be
relieved of its obligations under this Agreement to
the extent that they are transferred to the New
Bank.
(c) Nothing in this Agreement restricts the ability of a Bank
to sub-contract an obligation if that Bank remains liable
under this Agreement for that obligation.
(d) On each occasion an Existing Bank assigns, transfers or
novates any of its rights and/or obligations under this
Agreement, the New Bank shall, on the date the
assignment, transfer and/or novation takes effect, pay to
the Agent for its own account a fee of BPS750.
(e) An Existing Bank is not responsible to a New Bank for:-
(i) the execution, genuineness, validity, enforceability
or sufficiency of any Finance Document or any other
document;
(ii) the collectability of amounts payable under any
Finance Document; or
(iii) the accuracy of any statements (whether written
or oral) made in or in connection with any Finance
Document.
(f) Each New Bank confirms to the Existing Bank and the other
Finance Parties that it:-
(i) has made its own independent investigation and
assessment of the financial condition and affairs of
each Obligor and its related entities in connection
with its participation in this Agreement and has not
relied exclusively on any information provided to it
by the Existing Bank in connection with any Finance
Document; and
(ii) will continue to make its own independent appraisal
of the creditworthiness of each Obligor and its
related entities while any amount is or may be
outstanding under this Agreement or any Commitment
is in force.
(g) Nothing in any Finance Document obliges an Existing Bank
to:-
(i) accept a re-transfer from a New Bank of any of the
rights and/or obligations assigned, transferred or
novated under this Clause; or
(ii) support any losses incurred by the New Bank by
reason of the non-performance by any Obligor of its
obligations under this Agreement or otherwise.
(h) Any reference in this Agreement to a Bank includes a New
Bank, but excludes a Bank if no amount is or may be owed
to or by that Bank under this Agreement and its
Commitment has been cancelled or reduced to nil.
26.3 Procedure for novations
(a) A novation is effected if:-
(i) the Existing Bank and the New Bank deliver to the
Agent a duly completed certificate, substantially in
the form of Schedule 4 (a "Novation Certificate");
and
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New
Bank) irrevocably authorises the Agent to execute any
duly completed Novation Certificate on its behalf.
(c) To the extent that they are expressed to be the subject
of the novation in the Novation Certificate:-
(i) the Existing Bank and the other Parties (the
"existing Parties") will be released from their
obligations to each other (the "discharged
obligations");
(ii) the New Bank and the existing Parties will assume
obligations towards each other which differ from the
discharged obligations only insofar as they are owed
to or assumed by the New Bank instead of the
Existing Bank;
(iii) the rights of the Existing Bank against the
existing Parties and vice versa (the "discharged
rights") will be cancelled; and
(iv) the New Bank and the existing Parties will acquire
rights against each other which differ from the
discharged rights only insofar as they are
exercisable by or against the New Bank instead of
the Existing Bank,
all on the date of execution of the Novation Certificate
by the Agent or, if later, the date specified in the
Novation Certificate.
26.4 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a
Bank, the Bank of which it is an Affiliate) ceases to be
one of the Banks, the Agent shall (in consultation with
the Company) appoint another Bank or an Affiliate of a
Bank to replace that Reference Bank.
26.5 Increased costs etc.
If:-
(a) a Bank assigns, transfers or novates any of its
Commitments and/or rights and/or obligations under
the Finance Documents or changes its Facility
Office; and
(b) as a result of circumstances existing at the date
the assignment, transfer, novation or change occurs,
an Obligor would be obliged to make a payment to the
New Bank or Bank acting through its new Facility
Office under Clause 11 (Taxes) or Clause 13
(Increased costs),
then, notwithstanding the provisions of Clause 11 (Taxes)
or Clause 13 (Increased costs), the relevant New Bank or
Bank acting through its new Facility Office is only
entitled to receive payment under those Clauses from an
Obligor to the same extent as the relevant Existing Bank
or Bank acting through its previous Facility Office would
have been if the assignment, transfer, novation or change
had not occurred
26.6 Register
The Agent shall keep a register of all the Parties and
shall supply any other Party (at that Party's expense)
with a copy of the register on request.
27. DISCLOSURE OF INFORMATION
(a) A Finance Party may disclose to one of its Affiliates or
any person (a "participant") with whom it is proposing to
enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this
Agreement:-
(i) a copy of any Finance Document; and
(ii) any information which that Finance Party has
acquired under or in connection with any Finance
Document,
so long as disclosure of confidential information under
sub-paragraph (ii) above may only be disclosed to a
participant if the participant has agreed in writing with
the relevant Finance Party to keep the information
confidential on the same terms (with consequential
changes) as are set out in paragraph (b) below.
(b) Each Finance Party shall keep confidential and not,
without the prior consent of the Company, use any
information (other than information which is publicly
available other than as a result of a breach of this
paragraph (b)) supplied by or on behalf of any Obligor
under the Finance Documents otherwise than in connection
with the Finance Documents. However, each Finance Party
is entitled to disclose information:
(i) in connection with any legal or arbitration
proceedings arising out of or in connection with a
Finance Document; or
(ii) if required to do so by an order of a court of
competent jurisdiction whether under any procedure
for discovering documents or otherwise; or
(iii) pursuant to any law or regulation in accordance
with which that Bank is required or accustomed to
act; or
(iv) to a governmental, banking, taxation or other
regulatory authority of any competent jurisdiction;
or
(v) to its accountants or legal advisers or any other
professional advisers.
28. SET-OFF
A Finance Party may set off any matured obligation owed
by an Obligor under this Agreement (to the extent
beneficially owned by that Finance Party) against any
obligation (whether or not matured) owed by that Finance
Party to that Obligor, regardless of the place of
payment, booking branch or currency of either obligation.
If the obligations are in different currencies, the
Finance Party may convert either obligation at a market
rate of exchange in its usual course of business for the
purpose of the set-off. If either obligation is
unliquidated or unascertained, the Finance Party may set
off in an amount estimated by it in good faith to be the
amount of that obligation. Nothing in this Clause 28
will be effective to create a charge.
29. PRO RATA SHARING
29.1 Redistribution
If any amount owing by an Obligor under this Agreement to
a Finance Party (the "recovering Finance Party") is
discharged by payment, set-off or any other manner other
than through the Agent in accordance with Clause 10
(Payments) (a "recovery"), then:-
(a) the recovering Finance Party shall, within 3
Business Days, notify details of the recovery to the
Agent;
(b) the Agent shall determine whether the recovery is in
excess of the amount which the recovering Finance
Party would have received had the recovery been
received by the Agent and distributed in accordance
with Clause 10 (Payments);
(c) subject to Clause 29.3 (Exceptions), the recovering
Finance Party shall, within 3 Business Days of
demand by the Agent, pay to the Agent an amount (the
"redistribution") equal to the excess;
(d) the Agent shall treat the redistribution as if it
were a payment by the Obligor concerned under
Clause 10 (Payments) and shall pay the
redistribution to the Finance Parties (other than
the recovering Finance Party) in accordance with
Clause 10.6 (Partial payments); and
(e) after payment of the full redistribution, the
recovering Finance Party will be subrogated to the
portion of the claims paid under paragraph (d)
above, and that Obligor will owe the recovering
Finance Party a debt which is equal to the
redistribution, immediately payable and of the type
originally discharged.
29.2 Reversal of redistribution
If under Clause 29.1 (Redistribution):-
(a) a recovering Finance Party must subsequently return
a recovery, or an amount measured by reference to a
recovery, to an Obligor; and
(b) the recovering Finance Party has paid a
redistribution in relation to that recovery,
each Finance Party shall, within 3 Business Days of
demand by the recovering Finance Party through the Agent,
reimburse the recovering Finance Party all or the
appropriate portion of the redistribution paid to that
Finance Party. Thereupon, the subrogation in
Clause 29.1(e) (Redistribution) will operate in reverse
to the extent of the reimbursement.
29.3 Exceptions
(a) A recovering Finance Party need not pay a redistribution
to the extent that it would not, after the payment, have
a valid claim against the Obligor concerned in the amount
of the redistribution pursuant to Clause 29.1(e)
(Redistribution).
(b) A recovering Finance Party is not obliged to share with
any other Finance Party any amount which the recovering
Finance Party has received or recovered as a result of
taking legal proceedings, if that other Finance Party had
an opportunity to participate in those legal proceedings,
but did not do so and did not take separate legal
proceedings.
30. SEVERABILITY
If a provision of any Finance Document is or becomes
illegal, invalid or unenforceable in any jurisdiction,
that shall not affect:-
(a) the legality, validity or enforceability in that
jurisdiction of any other provision of the Finance
Documents; or
(b) the legality, validity or enforceability in other
jurisdictions of that or any other provision of the
Finance Documents.
31. COUNTERPARTS
A Finance Document may be executed in any number of
counterparts, and this has the same effect as if the
signatures on the counterparts were on a single copy of
the Finance Document.
32. NOTICES
32.1 Giving of notices
All notices or other communications under or in
connection with the Finance Documents shall be given in
writing or by telex or facsimile. Any such notice will be
deemed to be given as follows:-
(a) if in writing, when delivered;
(b) if by telex, when despatched, but only if, at the
time of transmission, the correct answerback appears
at the start and at the end of the sender's copy of
the notice; and
(c) if by facsimile, when received.
However, a notice given in accordance with the above but
received on a non-working day or after business hours in
the place of receipt will only be deemed to be given on
the next working day in that place.
32.2 Addresses for notices
(a) The address, telex number and facsimile number of each
Party (other than the Agent) for all notices under or in
connection with the Finance Documents are:-
(i) that notified by that Party for this purpose to the
Agent on or before it becomes a Party; or
(ii) any other notified by that Party for this purpose to
the Agent by not less than five Business Days'
notice.
(b) The address, telex number and facsimile number of the
Agent is:-
101 Moorgate
London EC2M 6SB
Telex No: 887139 ABN ALG
Facsimile No: 0171 588 2975
Attention: Credit Administration
or such other as the Agent may notify to the other
Parties by not less than 5 Business Days' notice.
(c) The Agent shall, promptly upon request from any Party,
give to that Party the address, telex number or facsimile
number of any other Party applicable at the time for the
purposes of this Clause.
32.3 Facsimile notices
Each Obligor shall indemnify the Agent against any loss
or liability which the Agent incurs as a result of the
Agent accepting and/or acting upon any instructions under
the Finance Documents received by the Agent from that
Obligor by facsimile and which may not have been incurred
if, at the time of receipt, the Agent had been given the
instructions other than by facsimile.
33. JURISDICTION
33.1 Submission
(a) For the benefit of each Finance Party, each Obligor
agrees that the courts of England have jurisdiction to
settle any disputes in connection with any Finance
Document and accordingly submits to the jurisdiction of
the English courts.
(b) Without prejudice to paragraph (a) above, each Obligor
agrees that the State Courts or the Federal Courts
sitting in the State of New York have jurisdiction to
settle any disputes in connection with the Finance
Documents, and accordingly submits to the jurisdiction of
those Courts.
33.2 Service of process
Without prejudice to any other mode of service, each
Obligor:-
(a) if it is not incorporated in England,
irrevocably appoints the Company as its agent for
service of process relating to any proceedings
before the English courts in connection with any
Finance Document;
(b) irrevocably appoints CT Corporation of 1633
Broadway, New York, NY10033 as its agent for service
of process relating to any proceedings before the
New York courts in connection with any Finance
Document;
(c) agrees to maintain an agent for service of process
in New York for so long as any amount is outstanding
under this Agreement or any Commitment is in force;
(d) agrees that failure by a process agent to notify it
(where applicable) of the process will not
invalidate the proceedings concerned;
(e) consents, where there is not an agent for service of
process in the jurisdiction where proceedings have
been commenced, to the service of process relating
to any such proceedings by prepaid posting of a copy
of the process to its address for the time being
applying under Clause 32.2 (Addresses for notices);
and
(f) agrees that if the appointment of the person
mentioned in paragraph (b) above ceases to be
effective, it shall immediately appoint a further
person in New York to accept service of process on
its behalf in New York and, failing such appointment
within 15 days, the Agent is entitled to appoint
such person by notice to the relevant Obligor.
33.3 Forum convenience and enforcement abroad
Each Obligor:-
(a) waives objection to the English courts and the New
York courts on grounds of inconvenient forum or
otherwise as regards proceedings in connection with
a Finance Document; and
(b) agrees that a non-appealable judgment or order of an
English court or a New York court in connection with
a Finance Document is conclusive and binding on it
and may be enforced against it in the courts of any
other jurisdiction.
33.4 Non-exclusivity
Nothing in this Clause 33 (Jurisdiction) limits the right
of a Finance Party to bring proceedings against an
Obligor in connection with any Finance Document:-
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
34. GOVERNING LAW
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the
beginning of this Agreement.
SCHEDULE 1
PART I
ADDITIONAL GUARANTORS
ENTERGY INTERNATIONAL INVESTMENTS NO. 1 LTD LLC
ENTERGY INTERNATIONAL INVESTMENTS NO. 2 LTD LLC
ENTERGY LONDON HOLDINGS LIMITED
ENTERGY UK FINANCE LIMITED
ENTERGY LONDON LIMITED
PART II
BANKS AND COMMITMENTS
Banks Facility A Facility C
Commitments Commitments
ABN AMRO Bank N.V. BPS32,079,207.92 BPS7,920,792.08
Union Bank of Switzerland BPS32,079,207.92 BPS7,920,792.08
Bayerische Landesbank Girozentrale BPS36,389,851.49 BPS8,985,148.51
London Branch
The Sanwa Bank, Limited BPS36,389,851.49 BPS8,985,148.51
The Bank of Tokyo-Mitsubishi, Ltd BPS30,274,752.48 BPS7,475,247.52
Barclays Bank PLC BPS30,274,752.48 BPS7,475,247.52
CIBC Wood Gundy PLCplc BPS30,274,752.48 BPS7,475,247.52
The Dai-Ichi Kangyo Bank, Limited BPS30,274,752.48 BPS7,475,247.52
De Nationale Investeringsbank N.V., BPS30,274,752.48 BPS7,475,247.52
London Branch
Den Danske Bank Aktieselskab BPS30,274,752.48 BPS7,475,247.52
Deutsche Bank AG London BPS30,274,752.48 BPS7,475,247.52
Dresdner Bank AG London Branch BPS30,274,752.48 BPS7,475,247.52
Rabobank International, London Branch BPS30,274,752.48 BPS7,475,247.52
(Cooperatieve Centrale Raiffeisen
Boerenleenbank BA)
The Royal Bank of Scotland plc BPS30,274,752.48 BPS7,475,247.52
Scotiabank Europe PLC BPS30,274,752.48 BPS7,475,247.52
Societe Generale BPS30,274,752.48 BPS7,475,247.52
The Sumitomo Trust & Banking Co., Ltd BPS30,274,752.48 BPS7,475,247.52
The Toronto-Dominion Bank BPS30,274,752.48 BPS7,475,247.52
Westdeustche Landesbank Girozentrale BPS30,274,752.48 BPS7,475,247.52
Commonwealth Bank of Australia BPS22,455,445.54 BPS5,544,554.46
Credit Lyonnais BPS22,455,445.54 BPS5,544,554.46
The Fuji Bank, Limited BPS22,455,445.54 BPS5,544,554.46
National Westminster Bank plc BPS22,455,445.54 BPS5,544,554.46
The Sakura Bank, Limited BPS22,455,445.54 BPS5,544,554.46
The Bank of New York BPS15,237,623.76 BPS3,762,376.24
ING Bank N.V., London Branch BPS15,237,623.76 BPS3,762,376.24
Midland Bank PLC BPS15,237,623.76 BPS3,762,376.24
The Nikko Bank (UK) plc BPS15,237,623.76 BPS3,762,376.24
The Sumitomo Bank, Limited BPS15,237,623.76 BPS3,762,376.24
Banks Facility A Facility C
Commitments Commitments
The Tokai Bank, Limited BPS15,237,623.76 BPS3,762,376.24
The Toyo Trust and Banking Company, BPS15,237,623.76 BPS3,762,376.24
Limited
BPS810,000,000 BPS200,000,000
<PAGE>
SCHEDULE 2
CALCULATION OF THE MLA COST
(a) The MLA Cost for a Loan for its Interest Period(s) is
calculated in accordance with the following formula:-
BY + L(Y-X) + S(Y-Z)% per annum = MLA Cost
____________________
100 - (B+S)
where on the day of application of the formula:-
B is the percentage of the Agent's eligible
liabilities which the Bank of England requires the
Agent to hold on a non-interest-bearing deposit
account in accordance with its cash ratio
requirements;
Y is the rate at which Sterling deposits are offered
by the Agent to leading banks in the London
interbank market at or about 11.00 a.m. on that day
for the relevant period;
L is the percentage of eligible liabilities which the
Bank of England requires the Agent to maintain as
secured money with members of the London Discount
Market Association and/or as secured call money with
certain money brokers and gilt-edged primary market
makers;
X is the rate at which secured Sterling deposits in
the relevant amount may be placed by the Agent with
members of the London Discount Market Association
and/or as secured call money with certain money
brokers and gilt-edged primary market makers at or
about 11.00 a.m. on that day for the relevant
period;
S is the percentage of the Agent's eligible
liabilities which the Bank of England requires the
Agent to place as a special deposit; and
Z is the interest rate per annum allowed by the Bank
of England on special deposits.
(b) For the purposes of this Schedule 2:-
(i) "eligible liabilities" and "special deposits" have
the meanings given to them at the time of
application of the formula by the Bank of England;
(ii) "relevant period" in relation to a Loan, means:-
(A) if the relevant Interest Period is 3 months or
less, that Interest Period; or
(B) if the relevant Interest Period is more than 3
months, 3 months.
(c) In the application of the formula, B, Y, L, X, S and Z
are included in the formula as figures and not as
percentages, e.g. if B = 0.5% and Y = 15%, BY is
calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of the
relevant Interest Period.
(ii) Each rate calculated in accordance with the formula
is, if necessary, rounded upward to the nearest four
decimal places.
(e) If the Agent determines that a change in circumstances
has rendered, or will render, the formula inappropriate,
the Agent (after consultation with the Company and the
Banks) shall notify the Company of the manner in which
the MLA Cost will subsequently be calculated. The manner
of calculation so notified by the Agent shall, in the
absence of manifest error, be binding on all the Parties.
<PAGE>
SCHEDULE 3
FORM OF REQUEST
To: ABN AMRO BANK N.V. as Agent
From: [ENTERGY UK LIMITED/LONDON ELECTRICITY plc]*
Date: [ ]
ENTERGY UK LIMITED - BPS1,010,000,000 Revolving Credit Agreement
dated 17th December, 1996 (as amended including by way of a
restatement agreement
dated 17th November, 1997)
1. We wish to borrow a Facility A/a Facility C* Loan as
follows:-
(a) Drawdown Date:
[ ]
(b) Amount: [ ]
(c) Interest Period:
[ ]
/alternative Interest Period
[ ]**
(d) Payment instructions:
[ ].
2. We confirm that each condition specified in Clause 4
(Conditions precedent) is satisfied on the date of this
Request.
By:
[ENTERGY UK LIMITED/LONDON ELECTRICITY plc]*
Authorised Signatory
<PAGE>
SCHEDULE 4
FORM OF NOVATION CERTIFICATE
To: ABN AMRO BANK N.V. as Agent
From: [THE EXISTING BANK] and [THE NEW BANK] Date:
[ ]
ENTERGY UK LIMITED - BPS1,010,000,000 Revolving Credit Agreement
dated 17th December, 1996 (as amended including by way of a
restatement agreement
dated 17th November, 1997)
We refer to Clause 26.3 (Procedure for novations).
1. We [ ] (the
"Existing Bank") and
[ ] (the "New Bank")
agree to the Existing Bank and the New Bank novating all
the Existing Bank's Commitment(s) and/or rights and
obligations referred to in the Schedule in accordance
with Clause 26.3 (Procedure for novations).
2. The specified date for the purposes of Clause 26.3(c) is
[date of novation].
3. The Facility Office and address for notices of the New
Bank for the purposes of Clause 32.2 (Addresses for
notices) are set out in the Schedule.
4. This Novation Certificate is governed by English law.
THE SCHEDULE
Commitments/Rights and obligations to be novated
[Details of the Commitments/rights and obligations of the
Existing Bank to be novated].
[New Bank]
[Facility Office Address for notices]
[Existing Bank] [New Bank] ABN AMRO BANK
N.V.
By: By: By:
Date: Date: Date:
<PAGE>
SCHEDULE 5
FORM OF DEBENTURE
DEBENTURE
DATED 17th November, 1997
BETWEEN
[RELEVANT OBLIGOR]
- and -
ABN AMRO BANK N.V.
London
<PAGE>
TABLE OF CONTENTS
Clause Page
1. INTERPRETATION 96
2. FIXED SECURITY 99
3. FLOATING CHARGE 99
4. REPRESENTATIONS AND WARRANTIES 100
5. UNDERTAKINGS 100
7. WHEN SECURITY BECOMES ENFORCEABLE 102
8. ENFORCEMENT OF SECURITY 103
9. RECEIVER 104
10. POWERS OF RECEIVER 105
12. APPLICATION OF PROCEEDS 107
13. EXPENSES AND INDEMNITY 107
14. DELEGATION 107
15. FURTHER ASSURANCES 107
16. POWER OF ATTORNEY 108
17. MISCELLANEOUS 108
18. RELEASE 109
19. GOVERNING LAW 109
Schedules
1. FORM OF NOTICE TO THE ACCOUNT BANK 110
2. FORM OF ACKNOWLEDGEMENT OF THE ACCOUNT BANK 111
SIGNATORIES 112
<PAGE>
THIS DEED is dated 17th November, 1997 between:
(1) [ ] (the
"Chargor"); and
(2) ABN AMRO BANK N.V. (the "Agent") as agent and trustee for
the Secured Parties (as defined below).
BACKGROUND:
(A) The Chargor enters into this Deed in connection with the
Credit Agreement (as defined below).
(B) It is intended that this document takes effect as a deed
notwithstanding the fact that a party may only execute
this document under hand.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Deed:
"Account Bank"
means a person with whom a Security Account is maintained
under Clause 6 (Security Accounts).
"Credit Agreement"
means the BPS1,010,000,000 credit agreement dated 17th
December, 1996 between (among others) the parties to this
Deed (as amended, including by way of a restatement
agreement dated 17th November, 1997).
"EIL"
means Entergy International Ltd LLC.
"EIL Facility Agreement"
means the U.S.$120,000,000 credit agreement dated 17th
November, 1997 between EIL, the Banks (as defined
therein) and ABN AMRO Bank N.V. as administrative agent.
["Excluded Assets"
means the Tax Letter Agreement, any payments made under
the Tax Letter Agreement or the Tax Sharing Agreement
referred to in it and any U.S. Dollar account into which
those payments may be made.]*
"Financing Agreement"
means:
(a) a Finance Document;
(b) the EIL Facility Agreement; or
(c) a Refinancing Agreement,
and includes all amendments and supplements.
"Group Shares"
means any shares in any Obligor from time to time held by
the Chargor or a nominee on its behalf.
"Receiver"
means a receiver and manager or (if the Agent so
specifies in the relevant appointment) a receiver, in
either case, appointed under this Deed.
"Refinancing Agreement"
means a document providing for Financial Indebtedness
satisfying the requirements of Clause 17.16(a)(vi) or
(vii) (Lending and borrowing) of the Credit Agreement (as
in force at the date of this Deed).
"Related Rights"
means:
(a) any dividend or interest paid or payable in relation
to any Shares;
(b) any stocks, shares, securities, rights, moneys or
property accruing or offered at any time in relation
to any Shares by way of redemption, substitution,
exchange, bonus or preference, under option rights
or otherwise; and
(c) all dividends, interest or other income in respect
of any such asset as is referred to in paragraph (b)
above.
"Secured Liabilities"
means all present and future obligations and liabilities
(whether actual or contingent and whether owed jointly or
severally or in any other capacity whatsoever) of the
Chargor, EUK, EIL, Entergy International Investments
No. 1 Ltd LLC, Entergy International Investments No. 2
Ltd LLC or any Holding Company of any of the foregoing to
any Secured Party under the Financing Agreements.
"Secured Party"
means:
(a) a Finance Party (as defined in the Credit
Agreement);
(b) the Administrative Agent, an Arranger or a Lender
(each as defined in the EIL Facility Agreement); or
(c) any creditor (or any agent, trustee or arranger) in
respect of Financial Indebtedness incurred under a
Refinancing Agreement.
"Security Account"
means an account of the Chargor established under
Clause 6 (Security Accounts).
"Security Assets"
means all assets of the Chargor the subject of any
security created by this Deed.
"Security Period"
means the period beginning on the date of this Deed and
ending on the date on which the Agent is satisfied that
all the Secured Liabilities have been unconditionally and
irrevocably paid and discharged in full.
"Shares"
means the Group Shares and any other stocks, shares,
debentures, bonds or other securities and investments
held by the Chargor.
["Tax Letter Agreement"
means the tax letter agreement dated on or about 17th
November, 1997 between among EIL, Entergy Corporation,
the Chargor, Entergy International Investments No.1/2*
Ltd LLC and ABN AMRO Bank N.V. as agent for the lenders
under the EIL Facility Agreement.]**
1.2 Construction
(a) Capitalised terms defined in the Credit Agreement have,
unless expressly defined in this Deed, the same meaning
in this Deed.
(b) The provisions of Clause 1.2 of the Credit Agreement
apply to this Deed as though they were set out in full in
this Deed except that references to the Credit Agreement
are to be construed as references to this Deed.
(c) If the Agent (acting reasonably) considers that an amount
paid by any Obligor or EIL to a Secured Party under a
Financing Agreement is capable of being avoided or
otherwise set aside on the liquidation or administration
of that Obligor or EIL or otherwise, then that amount
shall not be considered to have been irrevocably paid for
the purposes of this Deed.
(d) A reference in this Deed to any assets includes, unless
the context otherwise requires, present and future
assets.
2. FIXED SECURITY
[Except for any Excluded Assets]* the Chargor, as
beneficial owner and as security for the payment of all
the Secured Liabilities, charges in favour of the Agent:-
(a) by way of a first legal mortgage all Group Shares
held by it and/or any nominee on its behalf and all
Related Rights accruing to the Group Shares; and
(b) by way of first fixed charge:-
(i) (to the extent not effectively mortgaged under
paragraph (a) above) its interest in all the
Shares and their Related Rights;
(ii) to the fullest extent permitted by law, all
moneys standing to the credit of any account
(including the Security Accounts) with any
person and the debts represented by them;
(iii) all of the Chargor's book and other debts,
the proceeds of the same and all other moneys
due and owing to the Chargor and the benefit of
all rights, securities and guarantees of any
nature enjoyed or held by it in relation to any
of the foregoing; and
(iv) to the extent that they are able to be the
subject of any Security Interest, the benefit
of all licences, consents and authorisations
(statutory or otherwise) held in connection
with its business or the use of any Security
Asset specified in any other sub-paragraph in
this Clause and the right to recover and
receive all compensation which may be payable
to it in respect of them.
The mortgages and charges created by this Clause 2 are
made with full title guarantee.
3. FLOATING CHARGE
3.1 Creation of floating charge
The Chargor, as beneficial owner and as security for the
payment of all of the Secured Liabilities, charges in
favour of the Agent by way of a first floating charge
[(other than any Excluded Assets)]* all its assets not
otherwise effectively mortgaged or charged by way of
fixed mortgage or charge by Clause 2 (Fixed Security).
3.2 Conversion
The Agent may by notice to the Chargor convert the
floating charge created by this Deed into a fixed charge
as regards all or any of the Chargor's assets specified
in the notice if:
(a) an Event of Default is outstanding; or
(b) the Agent considers those assets to be in danger of
being seized or sold under any form of distress,
attachment, execution or other legal process or to
be otherwise in jeopardy.
4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and warranties
The Chargor makes the representations and warranties set
out in this Clause 4 to each Finance Party.
4.2 Security
This Deed creates those Security Interests it purports to
create (subject, as to matters of law only, to the
qualifications in the legal opinions referred to in
Part I of Schedule 2 to the Restatement Agreement) and is
not liable to be avoided or otherwise set aside on the
liquidation or administration of the Chargor or
otherwise.
4.3 Shares
The Group Shares are fully paid and the Chargor is the
sole beneficial owner of the Shares, free from any
Security Interest (other than this Deed) or option.
4.4 Times for making representations and warranties
The representations and warranties set out in this
Clause 4 are made on the date of this Deed and are deemed
to be repeated by the Chargor on each date during the
Security Period with reference to the facts and
circumstances then existing.
5. UNDERTAKINGS
5.1 Duration
The undertakings in this Clause 5 remain in force
throughout the Security Period.
5.2 Restrictions on dealing
The Chargor shall not (except as permitted under the
Credit Agreement):-
(a) create or permit to subsist any Security Interest on
any Security Asset other than any Security Interest
created by this Deed; or
(b) sell, transfer, grant, or lease or otherwise dispose
of any Security Asset, except for:
(i) the disposal in the ordinary course of trade of
any Security Asset subject to the floating
charge created under Clause 3.1 (Creation of
floating charge); or
(ii) the investment of any moneys in any commercial
paper rated A1 or higher by Standard & Poors
Rating Group (or any of its successors) or P1
or higher by Moody's Investors Service, Inc.
(or any of its successors) or the disposal of
any such investment.
5.3 Book debts and receipts
[Except in respect of any Excluded Asset, the* ]The
Chargor shall:-
(a) get in and realise the Chargor's:
(i) securities to the extent held by way of
temporary investment; and
(ii) book and other debts and other moneys,
in the ordinary course of its business and hold the
proceeds of the getting in and realisation (until
payment into a Security Account if required in
accordance with paragraph (b) below) upon trust for
the Agent; and
(b) save to the extent that the Agent otherwise agrees,
pay the proceeds of the getting in and realisation
into a Security Account.
5.4 Notice to bank operating an account
[Except for any US Dollar account into which proceeds
comprising an Excluded Asset may be paid, the]*The
Chargor will give notice to any bank (other than the
Agent) operating an account of the Chargor on the date of
this Deed or (if later) the date the account is opened,
substantially in the form of Schedule 1, and shall use
its reasonable endeavours to procure that the relevant
bank acknowledges the notice substantially in the form of
Schedule 2.
5.5 Deposit of Shares
The Chargor shall:-
(a) deposit with the Agent, or as the Agent may direct,
all certificates, bearer instruments, and other
documents of title or evidence of ownership in
relation to the Shares and their Related Rights but
only, in the case of Shares other than the Group
Shares, if the Agent so requests whilst the security
created by this Deed is enforceable; and
(b) execute and deliver to the Agent all share transfers
and other documents which may be requested by the
Agent in order to enable the Agent or its nominees
to be registered as the owner or otherwise obtain a
legal title to the Shares and their Related Rights
but only, in the case of the Shares other than the
Group Shares, if the Agent so requests whilst the
security created by this Deed is enforceable.
6. SECURITY ACCOUNTS
6.1 Accounts
All Security Accounts must be maintained at a branch of
the Account Bank approved by the Agent. The initial
Account Bank is the Agent.
6.2 Change of Account Bank
(a) The Account Bank may be changed to another bank or
financial institution if the Agent so agrees or requires.
(b) A change only becomes effective upon the proposed new
Account Bank agreeing with the Agent and the Chargor, in
a manner satisfactory to the Agent and the Chargor, to
fulfil the role of the Account Bank under this Deed.
(c) In the event of a change of Account Bank, the amount (if
any) standing to the credit of the Security Accounts
maintained with the old Account Bank shall be transferred
to the corresponding Security Accounts maintained with
the new Account Bank forthwith upon the appointment
taking effect. The Chargor shall take any action which
the Agent may reasonably require to facilitate a change
of Account Bank and any transfer of credit balances
(including the execution of bank mandate forms).
6.3 Interest
Amounts standing to the credit of each Security Account
shall bear interest at a rate considered by the Account
Bank to be a fair market rate.
6.4 Withdrawals
(a) Except with the prior consent of the Agent, the Chargor
shall not withdraw any moneys standing to the credit of a
Security Account except for a purpose not prohibited by
the Credit Agreement or a Refinancing Agreement at a time
when the security constituted by this Deed is not
enforceable or has not been enforced.
(b) The Agent (or a Receiver) may (subject to the payment of
any claims having priority to this security) withdraw
amounts standing to the credit of a Security Account to
meet an amount due and payable under the Financing
Agreements when it is due and payable.
7. WHEN SECURITY BECOMES ENFORCEABLE
The security constituted by this Deed shall become
immediately enforceable if an Event of Default is
outstanding and the power of sale shall be immediately
exerciseable whilst this Deed is enforceable. Whilst the
security constituted by this Deed is enforceable, the
Agent may in its absolute discretion enforce all or any
part of the security in any manner it sees fit or as the
Majority Banks direct. If an Event of Default is
remedied or waived, the security constituted by this Deed
shall remain enforceable if, prior to the Event of
Default being remedied, the Agent has taken any step to
enforce the security.
8. ENFORCEMENT OF SECURITY
8.1 General
For the purposes of all powers implied by statute, the
Secured Liabilities are deemed to have become due and
payable on the date of this Deed and section 103 and
section 93 of the Law of Property Act 1925 shall not
apply to the security constituted by this Deed.
8.2 Shares
Whilst the security constituted by this Deed is
enforceable, the Agent may exercise (in the name of the
Chargor and without any further consent or authority on
the part of the Chargor) any voting rights and any powers
or rights which may be exercised by the person or persons
in whose name any Share and its Related Rights are
registered or who is the holder of any of them or
otherwise (including all the powers given to trustees by
Section 10(3) and (4) of the Trustee Act, 1925 as amended
by Section 9 of the Trustee Investment Act, 1961 in
respect of securities or property subject to a trust).
Until that time, the voting rights, powers and other
rights in respect of the Shares shall (if exercisable by
the Agent) be exercised in any manner which the Chargor
may direct in writing.
8.3 Contingencies
If the Agent enforces the security constituted by this
Deed at a time when no amounts are due under the
Financing Agreements but at a time when amounts may or
will become so due, the Agent (or the Receiver) may pay
the proceeds of any recoveries effected by it into a
Security Account.
8.4 No liability as mortgagee in possession
Neither the Agent nor any Receiver will be liable, by
reason of entering into possession of a Security Asset,
to account as mortgagee in possession or for any loss on
realisation or for any default or omission for which a
mortgagee in possession might be liable.
8.5 Agent of the Chargor
Each Receiver is deemed to be the agent of the Chargor
for all purposes and accordingly is deemed to be in the
same position as a Receiver duly appointed by a mortgagee
under the Law of Property Act 1925. The Chargor alone
shall be responsible for his contracts, engagements,
acts, omissions, defaults and losses and for liabilities
incurred by him and no Secured Party shall incur any
liability (either to the Chargor or to any other person)
by reason of the Agent making his appointment as a
Receiver or for any other reason.
8.6 Protection of third parties
No person (including a purchaser) dealing with the Agent
or a Receiver or its or his agents will be concerned to
enquire:-
(a) whether the Secured Liabilities have become payable;
or
(b) whether any power which the Agent or the Receiver is
purporting to exercise has become exercisable; or
(c) whether any money remains due under the Financing
Agreements; or
(d) how any money paid to the Agent or to the Receiver
is to be applied.
8.7 Redemption of prior mortgages
At any time whilst the security constituted by this Deed
is enforceable, the Agent may:-
(a) redeem any prior Security Interest against any
Security Asset; and/or
(b) procure the transfer of that Security Interest to
itself; and/or
(c) settle and pass the accounts of the prior mortgagee,
chargee or encumbrancer; any accounts so settled and
passed shall be conclusive and binding on the
Chargor.
All principal moneys, interest, costs, charges and
expenses of and incidental to any such redemption and/or
transfer shall be paid by the Chargor to the Agent on
demand.
9. RECEIVER
9.1 Appointment of Receiver
At any time whilst the security constituted by this Deed
is enforceable or, if the Chargor so requests the Agent
in writing, at any time, the Agent may without further
notice appoint under seal or in writing under its hand
any one or more persons to be a Receiver of all or any
part of the Security Assets in like manner in every
respect as if the Agent had become entitled under the Law
of Property Act 1925 to exercise the power of sale
conferred under the Law of Property Act 1925.
9.2 Removal
The Agent may by writing under its hand (subject to any
requirement for an order of the court in the case of an
administrative receiver) remove any Receiver appointed by
it and may, whenever it deems it expedient, appoint a new
Receiver in the place of any Receiver whose appointment
may for any reason have terminated.
9.3 Remuneration
The Agent may fix the remuneration of any Receiver
appointed by it.
9.4 Relationship with Agent
To the fullest extent permitted by law, any right, power
or discretion conferred by this Deed (either expressly or
impliedly) upon a Receiver of the Security Assets may
after the security created by this Deed becomes
enforceable be exercised by the Agent in relation to any
Security Asset without first appointing a Receiver or
notwithstanding the appointment of a Receiver.
10. POWERS OF RECEIVER
10.1 General
(a) Each Receiver has, and is entitled to exercise, all of
the rights, powers and discretions set out below in this
Clause 10 in addition to those conferred by the Law of
Property Act 1925 on any receiver appointed under the Law
of Property Act 1925.
(b) If there is more than one Receiver holding office at the
same time, each Receiver may (unless the document
appointing him states otherwise) exercise all of the
powers conferred on a Receiver under this Deed
individually and to the exclusion of any other Receivers.
(c) A Receiver who is an administrative receiver of the
Chargor has all the rights, powers and discretions of an
administrative receiver under the Insolvency Act 1986.
10.2 Possession
A Receiver may take immediate possession of, get in and
collect any Security Assets.
10.3 Carry on business
A Receiver may carry on the business of the Chargor as he
thinks fit.
10.4 Protection of assets
A Receiver may do all acts as he may think fit which the
Chargor might do in the ordinary conduct of its business
as well for the protection as for the improvement of the
Security Assets.
10.5 Employees
A Receiver may appoint and discharge managers, officers,
agents, accountants, servants, workmen and others for the
purposes of this Deed upon such terms as to remuneration
or otherwise as he may think proper and discharge any
such persons appointed by the Chargor.
10.6 Borrow money
A Receiver may raise and borrow money either unsecured or
on the security of any Security Asset either in priority
to the security constituted by this Deed or otherwise and
generally on any terms and for whatever purpose which he
thinks fit. No person lending that money is concerned to
enquire as to the propriety or purpose of the exercise of
that power or to check the application of any money so
raised or borrowed.
10.7 Sale of assets
A Receiver may sell, exchange, convert into money and
realise any Security Asset by public auction or private
contract and generally in any manner and on any terms
which he thinks proper. The consideration for any such
transaction may consist of cash, debentures or other
obligations, shares, stock or other valuable
consideration and any such consideration may be payable
in a lump sum or by instalments spread over such period
as he thinks fit.
10.8 Compromise
A Receiver may settle, adjust, refer to arbitration,
compromise and arrange any claims, accounts, disputes,
questions and demands with or by any person who is or
claims to be a creditor of the Chargor or relating in any
way to any Security Asset.
10.9 Legal Actions
A Receiver may bring, prosecute, enforce, defend and
abandon all actions, suits and proceedings in relation to
any Security Asset which may seem to him to be expedient.
10.10 Receipts
A Receiver may give valid receipts for all moneys and
execute all assurances and things which may be proper or
desirable for realising any Security Asset.
10.11 Subsidiaries
A Receiver may form a Subsidiary of the Chargor and
transfer to that Subsidiary any Security Asset.
10.12 Delegation
A Receiver may delegate his powers in accordance with
Clause 14 (Delegation).
10.13 Other powers
A Receiver may:-
(a) do all other acts and things which he may consider
desirable or necessary for realising any Security
Asset or incidental or conducive to any of the
rights, powers or discretions conferred on a
Receiver under or by virtue of this Deed; and
(b) exercise in relation to any Security Asset all the
powers, authorities and things which he would be
capable of exercising if he were the absolute
beneficial owner of the same,
and may use the name of the Chargor for any of the above
purposes.
11. SET OFF
The Agent may, at any time whilst the security
constituted by this Deed is enforceable, without notice
to or making demand on the Chargor and whether or not all
or any of the Secured Liabilities have matured:
(a) set off any of the Secured Liabilities against any
liability (whether or not matured) owed by the Agent
to the Chargor in respect of any moneys in the
Security Accounts regardless of the place of
payment, booking branch or currency of either
obligation; and/or
(b) debit any account of the Chargor (whether sole or
joint) with the Agent at any of its offices anywhere
(including an account opened specially for that
purpose) with all or any part of the Secured
Liabilities; and/or
(c) apply any moneys in a Security Account in or towards
the payment or discharge of the Secured Liabilities.
12. APPLICATION OF PROCEEDS
Any moneys received by the Agent or any Receiver whilst
the security constituted by this Deed is enforceable
shall be applied in the following order of priority (but
without prejudice to the right of any Secured Party to
recover any shortfall from the Chargor):
(a) in satisfaction of or provision for all costs and
expenses incurred by the Agent or any Receiver and
of all remuneration due to the Receiver under this
Deed;
(b) in or towards payment of the Secured Liabilities
under the Finance Documents and the Refinancing
Agreements pari passu (unless the relevant
refinancing is undertaken on a basis subordinate to
the Secured Liabilities under the Finance
Documents);
(c) in or towards payment of the Secured Liabilities
under the Refinancing Agreements pari passu (if the
relevant refinancing is undertaken on a basis
subordinate to the Secured Liabilities under the
Finance Documents);
(d) in or towards payment of the Secured Liabilities
under the EIL Facility Agreement; and
(e) in payment of the surplus (if any) to the Chargor or
other person entitled to it.
13. EXPENSES AND INDEMNITY
The Chargor shall forthwith on demand pay all costs and
expenses (including legal fees) incurred in connection
with this Deed by any Secured Party, Receiver, attorney,
manager, agent or other person appointed by the Agent
under this Deed, and keep each of them indemnified
against any failure or delay in paying the same.
14. DELEGATION
The Agent and any Receiver may delegate by power of
attorney or in any other manner to any person any right,
power or discretion exercisable by them under this Deed.
Any such delegation may be made upon the terms (including
power to sub-delegate) and subject to any regulations
which the Agent or that Receiver (as the case may be) may
think fit. Neither the Agent nor any Receiver will be in
any way liable or responsible to the Chargor for any loss
or liability arising from any act, default, omission or
misconduct on the part of any such delegate or sub-
delegate.
15. FURTHER ASSURANCES
The Chargor shall, at its own expense, take whatever
action the Agent or a Receiver may reasonably require
for:-
(a) perfecting or protecting the security intended to be
created by this Deed over any Security Asset;
(b) facilitating the realisation of any Security Asset,
or the exercise of any right, power or discretion
exercisable, by the Agent or any Receiver or any of
its or their delegates or sub-delegates in respect
of any Security Asset,
including the execution of any transfer, conveyance,
assignment or assurance of any property whether to the
Agent or to its nominees, and the giving of any notice,
order or direction and the making of any registration,
which, in any such case, the Agent may think expedient.
16. POWER OF ATTORNEY
The Chargor, by way of security, irrevocably and
severally appoints the Agent, each Receiver and any of
their delegates or sub-delegates to be its attorney to
take any action which the Chargor is obliged to take
under this Deed, including under Clause 15 (Further
assurances). The Chargor ratifies and confirms whatever
any attorney does or purports to do pursuant to its
appointment under this Clause.
17. MISCELLANEOUS
17.1 Covenant to pay
The Chargor shall pay or discharge the Secured
Liabilities in the manner provided for in the Finance
Documents and the Refinancing Agreements.
17.2 Continuing security
The security constituted by this Deed is continuing and
will extend to the ultimate balance of all the Secured
Liabilities, regardless of any intermediate payment or
discharge in whole or in part.
17.3 Additional security
The security constituted by this Deed is in addition to
and is not in any way prejudiced by any other security
now or subsequently held by any Secured Party for any
Secured Liability.
17.4 Tacking
Each Bank shall perform its obligations under the Credit
Agreement (including any obligation to make available
further advances).
17.5 New Accounts
If a Secured Party receives, or is deemed to be affected
by, notice, whether actual or constructive, of any
subsequent charge or other interest affecting any
Security Asset and/or the proceeds of sale of any
Security Asset, the Secured Party may open a new account
with the Chargor. If the Secured Party does not open a
new account, it shall nevertheless be treated as if it
had done so at the time when it received or was deemed to
have received notice. As from that time all payments made
to the Secured Party will be credited or be treated as
having been credited to the new account and will not
operate to reduce any amount for which this Deed is
security.
17.6 Time deposits
Without prejudice to any right of set-off any Secured
Party may have under any other Finance Document or
otherwise, if any time deposit matures on any account the
Chargor has with any Secured Party at a time within the
Security Period when:
(a) this security has become enforceable; and
(b) no amount of the Secured Liabilities is due and
payable,
that time deposit shall automatically be renewed for any
further maturity which that Secured Party considers
appropriate.
18. RELEASE
Upon the expiry of the Security Period (but not
otherwise), the Secured Parties shall, at the request and
cost of the Chargor, take whatever action is necessary to
release the Security Assets from the security constituted
by this Deed.
19. GOVERNING LAW
This Deed is governed by English law.
This Deed has been entered into as a deed on the date stated
at the beginning of this Deed.
<PAGE>
SCHEDULE 1
Form of notice to the Account Bank
To: [ ]
[
], [ ]
Dear Sirs,
We give you notice that, by a Debenture dated 17th November,
1997, [ ] charged (by way of a first
fixed and floating charge) to ABN AMRO Bank N.V. (as agent and
trustee) (the "Agent") all moneys (including interest) from
time to time standing to the credit of certain bank accounts
(the "Accounts") and the debt or debts represented thereby.
We irrevocably instruct and authorise you to disclose to the
Agent without any reference to or further authority from us
and without any inquiry by you as to the justification for the
disclosure, any information relating to any of the Accounts
maintained with you from time to time as the Agent may, at any
time and from time to time, request you to disclose to it.
Until the Agent notifies you in writing that it has taken any
step to enforce the security constituted by the Debenture, we
are entitled to operate the Accounts in accordance with our
usual practice.
This letter is governed by English law.
Would you please confirm your agreement to the above by
sending the enclosed acknowledgement to the Agent with a copy
to ourselves.
Yours faithfully,
................................
(Authorised signatory)
[ ]
<PAGE>
SCHEDULE 2
Form of acknowledgement of the Account Bank
To: ABN AMRO Bank N.V.
For the attention of: [ ]
[relevant address applying under
Clause 32 (Notices) of the Credit Agreement]
[ ], [ ]
Dear Sirs,
We confirm receipt from [ ]
(the "Company") of a notice dated
[ ] of a charge upon the
terms of a Debenture dated 17th November, 1997 of all moneys
(including interest) from time to time standing to the credit
of certain bank accounts of the Company (the "Accounts") and
the debt or debts represented thereby.
We confirm that we have not received notice of the interest of
any third party in any of the Accounts maintained with us.
We confirm that, until you give us notice in writing that the
assets charged to you under the Debenture have been released,
we do not have, and will not make or exercise, any claims or
demands, any rights of counterclaim, rights of set-off or any
other equities against the Company in respect of the Accounts
maintained with us.
This letter is governed by English law.
Yours faithfully,
.................................
[ ]
<PAGE>
SIGNATORIES TO THE DEBENTURE
The Chargor
EXECUTED as a deed )
by [THE CHARGOR] )
acting by [name of Director] )
and [name of Director/Secretary] )
....................................................
director
.....................................................
director/secretary
The Agent
ABN AMRO BANK N.V.
By:
<PAGE>
SCHEDULE 6
FORM OF SUBORDINATION AGREEMENT
DATED [ ], [ ]
BETWEEN
ENTERGY LONDON INVESTMENTS PLC
-and-
THE JUNIOR CREDITOR
(as defined in this Deed)
-and-
ABN AMRO BANK N.V.
as Security Agent
_________________________________
SUBORDINATION AGREEMENT
relating to a BPS1,010,000,000
credit agreement dated 17th December, 1996
between ENTERGY LONDON INVESTMENTS PLC and others
(as amended including by way of a restatement agreement
dated 17th November, 1997)
__________________________________
London
<PAGE>
TABLE OF CONTENTS
Clause Page
1. INTERPRETATION 115
2. THE COMPANY'S UNDERTAKINGS 117
3. JUNIOR CREDITOR'S UNDERTAKINGS 117
4. TURNOVER OF NON-PERMITTED RECOVERIES 118
5. SUBORDINATION ON INSOLVENCY 118
6. CONSENTS 119
7. REPRESENTATIONS AND WARRANTIES 119
8. SUBROGATION BY THE JUNIOR CREDITOR 119
9. PROTECTION OF SUBORDINATION 120
10. PRESERVATION OF JUNIOR DEBT 121
11. CHANGES TO THE PARTIES 121
12. MISCELLANEOUS 121
13. INDEMNITY 122
14. WAIVERS; REMEDIES CUMULATIVE 122
15. SEVERABILITY 122
16. GOVERNING LAW 122
SIGNATORIES 123
THIS SUBORDINATION AGREEMENT is dated [ ]
between:
(1) [ ] (the
"Junior Creditor");
(2) ENTERGY LONDON INVESTMENTS PLC (Registered
No. 3261188)(the "Company"); and
(3) ABN AMRO BANK N.V. (the "Agent") as agent and trustee for
the Finance Parties.
BACKGROUND:
(A) By the Credit Agreement the Banks have agreed to make
available a credit facility of up to BPS1,010,000,000 to
the Borrowers.
(B) The Junior Creditor has agreed to subordinate all amounts
payable under the Junior Finance Documents on the terms
of this Deed.
(C) It is intended that this document takes effect as a deed
notwithstanding the fact that a party may only execute
this document under hand.
1. INTERPRETATION
1.1 Definitions
In this Deed:
"Credit Agreement"
means the agreement dated 17th December, 1996 (as
amended, including by way of a restatement agreement
dated 17th November, 1997) between (among others) the
Borrowers and the Agent for a credit facility of up to
BPS1,010,000,000.
"Junior Debt"
means all present and future liabilities (actual or
contingent) payable or owing to the Junior Creditor by
the Company under or in connection with the Junior
Finance Documents relating thereto together with:
(a) any permitted novation, deferral or extension of any
of those liabilities;
(b) any further advances which may be made by the Junior
Creditor to the Company under any agreement
expressed to be supplemental to any Junior Finance
Document plus all interest, fees and costs in
connection therewith;
(c) any claim for damages or restitution in the event of
rescission of any of those liabilities or otherwise
in connection with the Junior Finance Documents;
(d) any claim against the Company flowing from any
recovery by the Company of a payment or discharge in
respect of those liabilities on grounds of
preference or otherwise; and
(e) any amounts (such as post-insolvency interest) which
would be included in any of the above for any
discharge, non-provability, unenforceability or non-
allowability of the same in any insolvency or other
proceedings.
"Junior Finance Documents"
means [specify debt document] and all variations,
replacements, novations of and supplements thereto.
"Majority Banks"
has the meaning given to it in the Credit Agreement.
"Senior Debt"
means all present and future liabilities (actual or
contingent) payable or owing by any Obligor to the
Finance Parties under or in connection with the Finance
Documents together with:
(a) any refinancing, novation, refunding, deferral or
extension of any of those liabilities;
(b) any further advances which may be made by the
Finance Parties to any Obligor under any agreement
expressed to be supplemental to any Finance Document
plus all interest, fees and costs in connection
therewith;
(c) any claim for damages or restitution in the event of
rescission of any of those liabilities or otherwise
in connection with the Finance Documents;
(d) any claim against any Obligor flowing from any
recovery by such Obligor of a payment or discharge
in respect of those liabilities on grounds of
preference or otherwise; and
(e) any amounts (such as post-insolvency interest) which
would be included in any of the above for any
discharge, non-provability, unenforceability or
non-allowability of the same in any insolvency or
other proceedings.
"Senior Liabilities"
means all present and future obligations and liabilities
(whether actual or contingent and whether owned jointly
or severally or in any capacity whatsoever) of each
Obligor to any Finance Party under each Finance Document
to which such Obligor is a party.
1.2 Construction
(a) Capitalised terms defined in the Credit Agreement have,
unless expressly defined in this Deed, the same meaning
in this Deed.
(b) The provisions of Clause 1.2 of the Credit Agreement
apply to this Deed as though they were set out in full in
this Deed except that references to the Credit Agreement
are to be construed as references to this Deed.
(c) References to any document, instrument or agreement shall
be construed as to include such document, instrument or
agreement as varied, amended, supplemented or novated
from time to time.
2. THE COMPANY'S UNDERTAKINGS
So long as any Senior Debt is outstanding and until the
Senior Liabilities have been irrevocably paid in full,
the Company will not except as permitted under the
Finance Documents (including, without limitation, Clause
17.15 (Distributions)) or except as the Agent (acting on
the instructions of the Majority Banks) has previously
consented:
(a) subject to Clause 5 (Subordination on insolvency),
pay or repay or purchase or acquire any of the
Junior Debt; or
(b) discharge any of the Junior Debt by set-off; or
(c) create or permit to subsist security over any of its
assets for any of the Junior Debt; or
(d) amend, vary, waive or release any term of the Junior
Finance Documents (other than any procedural or
administrative change or any other change which can
reasonably be expected not to prejudice any Senior
Debt or any Finance Party); or
(e) take or omit to take any action whereby the
subordination achieved by this Deed will be
impaired.
3. JUNIOR CREDITOR'S UNDERTAKINGS
So long as any Senior Debt is outstanding and until the
Senior Liabilities have been irrevocably paid in full,
except, as permitted under the Finance Documents or
except as the Agent (acting on the instructions of the
Majority Banks) has previously consented, the Junior
Creditor will:
(a) subject to Clause 5 (Subordination on insolvency),
not demand or receive payment of any of the Junior
Debt from the Company or any other source or apply
any money or assets in discharge of any Junior Debt;
(b) not discharge any of the Junior Debt by set-off;
(c) not permit to subsist or receive any security for
any of the Junior Debt;
(d) not permit to subsist or receive any guarantee or
other assurance against loss in respect of any of
the Junior Debt;
(e) not amend, vary, waive or release any term of the
Junior Finance Documents (other than any procedural
or administrative change or any other change which
can reasonably be expected not to prejudice any
Senior Debt or any Finance Party);
(f) promptly notify the Agent of any default or event of
default in respect of the Junior Debt;
(g) unless Clause 5 (Subordination on insolvency)
applies, not:
(i) declare any of the Junior Debt prematurely due
and payable;
(ii) enforce the Junior Debt by execution or
otherwise; or
(iii) initiate or take any steps with a view to
any insolvency, reorganisation or dissolution
proceedings in respect of the Company; and
(h) not take or omit to take any action whereby the
subordination achieved by this Deed may be impaired.
4. TURNOVER OF NON-PERMITTED RECOVERIES
4.1 Non-permitted payment
If, other than as permitted under the Finance Documents:
(a) the Junior Creditor receives a payment or
distribution in respect of any of the Junior Debt
from the Company or any other source; or
(b) the Junior Creditor receives the proceeds of any
enforcement of any security or any guarantee for any
Junior Debt; or
(c) the Company makes any payment or distribution to the
Junior Creditor on account of the purchase or other
acquisition of any of the Junior Debt,
the Junior Creditor will hold the same in trust for the
Finance Parties and pay and distribute it to the Agent
for application towards the Senior Debt until the Senior
Debt is irrevocably paid in full.
4.2 Non-permitted set-offs
If, other than as permitted under the Finance Documents,
for any reason, any of the Junior Debt is discharged by
set-off, the Junior Creditor will promptly pay an amount
equal to the discharge to the Agent for application
towards the Senior Debt until the Senior Debt is
irrevocably paid in full.
4.3 Failure of trust
If, for any reason, a trust in favour of, or a holding of
property for, the Finance Parties under this Deed is
invalid or unenforceable, the Junior Creditor will pay
and deliver to the Agent an amount equal to the payment,
receipt or recovery which the Junior Creditor would
otherwise have been bound to hold on trust for or as
property of the Finance Parties.
5. SUBORDINATION ON INSOLVENCY
If any of the events set out in Clauses 18.6 (Insolvency)
to 18.10 (Analogous proceedings) (inclusive) of the
Credit Agreement exists THEN
(a) the Junior Debt will be subordinate in right of
payment to the Senior Debt;
(b) the Agent may, and is irrevocably authorised on
behalf of the Junior Creditor to, (i) claim, enforce
and prove for the Junior Debt, (ii) file claims and
proofs, give receipts and take all such proceedings
and do all such things as the Agent reasonably sees
fit to recover the Junior Debt and (iii) receive all
distributions on the Junior Debt for application
towards the Senior Debt;
(c) if and to the extent that the Agent is not entitled
to do any of the foregoing, the Junior Creditor will
do so in good time as reasonably directed by the
Agent;
(d) the Junior Creditor will hold all distributions in
cash or in kind received or receivable by it in
respect of the Junior Debt from the Company or from
any other source in trust for the Finance Parties
and will (at the Junior Creditor's expense) pay and
transfer the same to the Agent for application
towards the Senior Debt until the Senior Debt is
irrevocably paid in full; and
(e) the trustee in bankruptcy, liquidator, assignee or
other person distributing the assets of the Company
or their proceeds is directed to pay distributions
on the Junior Debt direct to the Agent for
application towards the Senior Debt until the Senior
Debt is irrevocably paid in full. The Junior
Creditor will give all such notices and do all such
things as the Agent may reasonably direct to give
effect to this provision.
6. CONSENTS
The Junior Creditor will not have any remedy against the
Company or any other Obligor, the Agent or the Finance
Parties by reason of any transaction entered into between
the Agent and/or the Finance Parties and an Obligor which
violates any Junior Finance Document and the Junior
Creditor may not object to any such transaction by reason
of any provisions of the Junior Finance Documents.
7. REPRESENTATIONS AND WARRANTIES
The Junior Creditor represents and warrants to the Agent
and each Finance Party that this Deed:
(a) is within its powers and has been duly authorised by
it;
(b) constitutes its legal, valid and binding
obligations; and
(c) does not conflict in any material respect with any
law or regulation or its constitutional documents or
any document binding on it and that it has obtained
all necessary consents for its performance of this
Deed.
8. SUBROGATION BY THE JUNIOR CREDITOR
If any of the Senior Debt is wholly or partially paid out
of any proceeds received in respect of or on account of
the Junior Debt, the Junior Creditor will to that extent
be subrogated to the Senior Debt so paid but not before
all the Senior Debt is paid in full.
9. PROTECTION OF SUBORDINATION
9.1 Continuing subordination
The subordination provisions in this Deed constitute a
continuing subordination and benefit the ultimate balance
of the Senior Debt regardless of any intermediate payment
or discharge of the Senior Debt in whole or in part.
9.2 Waiver of defences
The subordination in this Deed and the obligations of the
Junior Creditor under this Deed will not be affected by
any act, omission, matter or thing which, but for this
provision, would reduce, release or prejudice the
subordination or any of those obligations in whole or in
part, including without limitation:
(a) any waiver granted to, or composition with, any
Obligor or other person;
(b) the taking, variation, compromise, exchange, renewal
or release of, or refusal or neglect to perfect,
take up or enforce, any rights against, or security
over assets of, any Obligor or other person in
respect of the Senior Debt or otherwise or any
failure to realise the full value of any security;
or
(c) any unenforceability, illegality or invalidity of
any obligation of any Obligor or security in respect
of the Senior Debt or any other document or
security.
9.3 Immediate recourse
The Junior Creditor waives any right it may have of first
requiring any Finance Party (or the Agent or any trustee
or other agent on its behalf) to proceed against or
enforce any other rights or security or claim payment
from any person before claiming the benefit of this Deed.
The Agent may refrain from applying or enforcing any
money, rights or security unless and until instructed by
the Majority Banks. The Majority Banks may give or
refrain from giving instructions to the Agent to enforce
or refrain from enforcing any security as long as they
see fit.
9.4 Appropriations
Until the Senior Liabilities have been irrevocably paid
in full, the Agent may:
(a) apply any moneys or property received under this
Deed or from any Obligor or from any other person
against the Senior Debt in accordance with the terms
of the Credit Agreement;
(b) hold in an interest-bearing suspense account any
moneys or distributions received from the Junior
Creditors under Clause 4 (Turnover of non-permitted
recoveries) or Clause 5 (Subordination on
insolvency) or on account of the liability of the
Junior Creditor under this Deed.
9.5 Non-competition
Until the Senior Liabilities have been irrevocably paid
in full, the Junior Creditor will not by virtue of any
payment or performance by them under this Deed or by
virtue of the operation of Clauses 4 (Turnover of non-
permitted recoveries) or 5 (Subordination on insolvency):-
(a) be subrogated to any rights, security or moneys
held, received or receivable by any Finance Party
(or the Agent or any trustee or other agent on its
behalf) or be entitled to any right of contribution
or indemnity in respect of any payment made or
moneys received on account of the Junior Creditor's
liability under this Deed; or
(b) claim, rank, prove or vote as a creditor of any
Obligor or other person or their respective estates
in competition with any Finance Party (or the Agent
or any trustee or other agent on its behalf); or
(c) receive, claim or have the benefit of any payment,
distribution or security from or on account of any
Obligor or other person.
10. PRESERVATION OF JUNIOR DEBT
Notwithstanding any term of this Deed postponing,
subordinating or preventing the payment of any of the
Junior Debt, the Junior Debt concerned shall, solely as
between the Company and the Junior Creditor, remain owing
or due and payable in accordance with the terms of the
Junior Finance Documents, and interest and default
interest will accrue on missed payments accordingly.
11. CHANGES TO THE PARTIES
11.1 Successors and assigns
This Deed is binding on the successors and assigns of the
parties hereto.
11.2 The Company and the Junior Creditor
Neither the Company nor the Junior Creditor may assign or
transfer any of their rights or obligations under this
Deed without the consent of the Majority Banks.
11.3 The Agent and the Finance Parties
The Agent and the Finance Parties may assign or otherwise
dispose of all or any of their rights under this Deed in
accordance with the Senior Finance Documents to which
they are respectively a party.
12. MISCELLANEOUS
12.1 Perpetuity
The perpetuity period for the trusts in this Deed is 80
years.
12.2 Power of attorney
By way of security for the obligations of the Junior
Creditor under this Deed, the Junior Creditor irrevocably
appoints the Agent as its attorney to do anything which
the Junior Creditor is required to do by this Deed but
has failed to do, having been given 10 Business Day's
notice to rectify such non-compliance. The Agent may
delegate this power subject to the approval of the
Majority Banks.
13. INDEMNITY
(a) The Company will indemnify the Agent and every attorney
appointed by it in respect of all liabilities and
expenses reasonably incurred by it or him in good faith
in connection with the enforcement or preservation of any
rights in accordance with this Deed.
(b) The Agent shall not be liable for any losses arising in
connection with the exercise or purported exercise of any
of its rights, powers and discretions in good faith under
this Deed, unless that liability arises as a result of
the Agent's negligence or wilful default and in
particular (but without limitation) the Agent in
possession shall not be liable to account as mortgagee in
possession or for anything except actual receipts.
14. WAIVERS; REMEDIES CUMULATIVE
The rights of the Agent and the Finance Parties under
this Deed:
(a) may be exercised as often as necessary;
(b) are cumulative and are not exclusive of their rights
under the general law; and
(c) may be waived only in writing and specifically and
may be on such terms as the Agent or the Finance
Parties see fit.
15. SEVERABILITY
(a) If a provision of this Deed is or becomes illegal,
invalid or unenforceable in any jurisdiction, that shall
not affect:
(i) the validity or enforceability in that jurisdiction
of any other provision of this Deed; or
(ii) the validity or enforceability in other
jurisdictions of that or any other provision of this
Deed.
(b) This Deed may be executed in any number of counterparts,
all of which, taken together, shall constitute one and
the same instrument and any party may enter into this
Deed by executing a counterpart.
16. GOVERNING LAW
This Deed is governed by and shall be construed in
accordance with English law.
This Deed has been entered into on the date stated at the
beginning of this Deed.
SIGNATORIES TO THE SUBORDINATION AGREEMENT
Junior Creditor
[ ]
By:
Company
ENTERGY LONDON INVESTMENTS PLC
By:
Agent
ABN AMRO BANK N.V.
By:
SCHEDULE 7
CORPORATE STRUCTURE
[RIDER Y MISSING]
<PAGE>
SIGNATORIES TO THE RESTATEMENT AGREEMENT
EUK
ENTERGY UK LIMITED
By: WILLIAM J. REGAN JR.
Company
ENTERGY LONDON INVESTMENTS PLC
By: WILLIAM J. REGAN JR.
London Electricity
LONDON ELECTRICITY PLC
By: ALAN TOWERS
Additional Guarantors
ENTERGY UK FINANCE LIMITED
By: WILLIAM J. REGAN JR.
ENTERGY LONDON HOLDINGS LIMITED
By: WILLIAM J. REGAN JR.
ENTERGY LONDON LIMITED
By: GERALD D. McINVALE
Additional Guarantors (continued)
ENTERGY INTERNATIONAL INVESTMENTS NO. 1 LTD LLC
By: Entergy International Ltd LLC, as member
By: Entergy International Holdings Ltd LLC, as member
By: Entergy Corporation, as member
By:
Name: WILLIAM J. REGAN JR.
Title: V.P. AND TREASURER
Additional Guarantors (continued)
ENTERGY INTERNATIONAL INVESTMENTS NO. 2 LTD LLC
By: Entergy International Ltd LLC, as member
By: Entergy International Holdings Ltd LLC, as member
By: Entergy Corporation, as member
By:
Name: WILLIAM J. REGAN JR.
Title: V.P. AND TREASURER
Arrangers
ABN AMRO BANK N.V.
By: Justin Cliffe
UNION BANK OF SWITZERLAND
By: Barbara Taylor
Continuing Banks
ABN AMRO BANK N.V.
By: Justin Cliffe
BAYERISCHE LANDESBANK GIROZENTRALE
LONDON BRANCH
By: Barbara Taylor
THE SANWA BANK, LIMITED
By: Peter Ellemann (Power of Attorney)
THE BANK OF TOKYO-MITSUBISHI, LTD
By: Peter Ellemann (Power of Attorney)
BARCLAYS BANK PLC
By: Paul Sims
CIBC WOOD GUNDY PLC
By: Suzy Webb
THE DAI-ICHI KANGYO BANK, LIMITED
By: Colin Vittery
DEN DANSKE BANK AKTIESELSKAB
By: Peter Ellemann (Power of Attorney)
DEUTSCHE BANK AG LONDON
By: Andrew Carter David Bugge
Continuing Banks (continued)
DRESDNER BANK AG LONDON BRANCH
By: Peter Ellemann (Power of Attorney)
RABOBANK INTERNATIONAL, LONDON BRANCH
(COOPERATIEVE CENTRALE RAIFFEISEN
BOERENLEENBANK BA)
By: Peter Ellemann (Power of Attorney)
THE ROYAL BANK OF SCOTLAND PLC
By: Peter Ellemann (Power of Attorney)
SOCIETE GENERALE
By: Peter Ellemann (Power of Attorney)
THE SUMITOMO TRUST & BANKING CO., LTD
By: David McDonnell
THE TORONTO-DOMINION BANK
By: Peter Ellemann (Power of Attorney)
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: Peter Ellemann (Power of Attorney)
COMMONWEALTH BANK OF AUSTRALIA
By: Peter Ellemann (Power of Attorney)
CREDIT LYONNAIS
By: Peter Ellemann (Power of Attorney)
Continuing Banks (continued)
THE FUJI BANK, LIMITED
By: Peter Richey
NATIONAL WESTMINSTER BANK PLC
By: John P. Kasperek
THE SAKURA BANK, LIMITED
By: C. Murchison
THE BANK OF NEW YORK
By: Ian K. Stewart
MIDLAND BANK PLC
By: Martin S. Peplow
THE NIKKO BANK (UK) PLC
By: E.G. Waite-Roberts
THE SUMITOMO BANK, LIMITED
By: Barry Henry
THE TOKAI BANK, LIMITED
By: Carl Roberts
THE TOYO TRUST AND BANKING COMPANY, LIMITED
By: John C. Sidhom
New Banks
DE NATIONALE INVESTERINGSBANK N.V.,
LONDON BRANCH
By: Peter Ellemann (Power of Attorney)
ING BANK N.V., LONDON BRANCH
By: James W. Rowe
SCOTIABANK EUROPE PLC
By: J.M. Copley
Retiring Banks
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: John R. Lavery
THE BANK OF NOVA SCOTIA
By: W. Currie
BAYERISCHE HYPOTHEKEN-UND WECHSEL-
BANK AG
By: J.C. Barton Trevor Pritchard
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: Peter Ellemann (Power of Attorney)
KREDIETBANK N.V.
By: Peter Ellemann (Power of Attorney)
Retiring Banks (continued)
UNION BANK OF CALIFORNIA, N.A.
By: Peter Ellemann (Power of Attorney)
Bank of America
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By: John R. Lavery
Agent
ABN AMRO BANK N.V.
By: Robert Skews
_______________________________
* Delete as appropriate.
** Only if Interest Period is of an optional duration.
* Include only in Debenture of US Chargors.
* Delete as applicable
** Include only in Debentures of US Chargors.
* Include only in Debentures of US Obligor.
Exhibit 10(a)68
January 12, 1998
Mr. Gerald D. McInvale
1828 State Street
New Orleans, LA 70118
Dear Gerald:
This letter (the "Agreement") sets forth the terms and
conditions of your continued employment with Entergy
Services, Inc. (the "Company") from and after November 24,
1997, and supersedes and replaces any and all prior
agreements between you (the "Employee") and the Company
except as limited herein. In consideration of your
continued employment with the Company and the mutual
covenants and agreements contained herein, you (the
"Employee") and the Company agree as follows:
1. Employment as Special Project Coordinator
The Company agrees to retain Employee as a Special Project
Coordinator commencing as of November 24, 1997, and
Employee agrees to render such services as a Special
Project Coordinator for the period described in Paragraph
2(a) hereof and upon the other terms and conditions herein
provided.
2. Terms and Responsibilities
(a) Term of Service. The period of Employee's service
under this Agreement shall be deemed to have commenced as
of November 24, 1997, and shall continue through May 31,
2001, and terminate at the end of that day unless
terminated prior thereto in accordance with the terms of
this Agreement. The Company, at its option, may terminate
this Agreement based on a material breach of the Agreement
by Employee, including, but not limited to, the provisions
of paragraph 2(b), paragraph 6 or paragraph 8 of this
Agreement.
(b) Responsibilities of Employee. During the period of
his service as a Special Project Coordinator hereunder,
Employee shall devote such of his time and efforts as may
be required by the Company from time to time in order to
perform his duties hereunder. Company agrees to make all
reasonable efforts to minimize the time required for such
activities and will attempt to limit them to twenty days or
less per calendar year. However, Employee may perform
services for other companies or organizations ("Other
Services") in accordance with the following conditions:
During the period of his service hereunder, the
Employee may perform Other Services provided that he
may not perform such Other Services for companies or
organizations which (i) are engaged in the sale at
retail or wholesale of natural gas or electricity or
(ii) which are engaged in any other business in which
the Company or any of its subsidiaries or affiliates
was engaged as of November 24, 1997.
In the event Employee desires to perform Other
Services governed by this subsection (b), he must
first provide written notice to the Company of his
desire to perform such Other Services and receive
written approval from the Company to so perform such
Other Services, which approval shall not be
unreasonably withheld.
3. Remuneration
(a) Employee's monthly Base Salary as a Special Project
Coordinator will be Thirty Three Thousand Three Hundred
Thirty Three Dollars and Thirty Three Cents ($33,333.33)
from November 24, 1997, through May 31, 2001. These
payments will be made to Employee in accordance with the
pay schedule in effect for all other active employees in
the Company.
(b) In the event Employee dies prior to June 1, 2001,
Employee's spouse or estate will receive a lump-sum payment
equal to the net present value of all payments remaining
between the time of death and May 31, 2001. In addition,
the Company will provide comparable benefits or pay the
value of the benefits lost as a result of Employee's death,
including the Retirement Plan, Supplemental Credited
Service Agreement, System Executive Retirement Plan with
ten added years of Benefit Service.
(c) In the event Employee dies prior to June 1, 2001,
Employee's spouse can continue her medical and dental
coverage under the then existing plans in accordance with
their then existing provisions subject to any and all
rights that Employee's spouse may have under COBRA
provisions or in accordance with applicable law at that
time.
(d) In the event that the Company is sold, or merged with
or into another company (in a transaction in which the
Company is not the surviving entity), or all or
substantially all of the assets of the Company are sold, or
more than 25% of the outstanding voting stock of the
Company is acquired by another person or persons acting as
a group ("Change in Control"), and Employee's employment is
thereafter terminated either by Employee for any reason or
by the Company for any reason, then, upon such termination,
the Company will pay Employee a lump-sum payment equal to
the net present value of all payments remaining between
the time of the Change in Control and May 31, 2001. In
addition, the Company will provide comparable benefits or
pay the value of the benefits lost as a result of the
Change in Control, including the Retirement Plan,
Supplemental Credited Service Agreement, System Executive
Retirement Plan with ten added years of Benefit Service.
(e) Should Employee elect to participate in the Company's
Savings Plan, he will do so in accordance with the Plan's
terms and conditions.
(f) For performance year 1997 only, Employee will be
eligible for any Executive Annual Incentive Plan benefit
payable in accordance with the terms and conditions of said
Plan. The Employee will not be eligible for any type of
incentive payouts beyond the performance year ending
December 31, 1997.
(g) Employee will be eligible to receive two-thirds (2/3)
of any Long Term Incentive Program benefit payable in
accordance with the 1996 terms and conditions of said Plan.
However, the Employee will not be eligible for any type of
incentive payouts in the future.
(h) Employee retains the option of exercising the 2,500
stock options awarded to him on December 31, 1991 (with an
exercise price of $29.625), the 2,500 stock options awarded
to him on February 1, 1993 (with an exercise price of
$34.75), the 2,500 stock options awarded to him on January
27, 1994 (with an exercise price of $37.00), the 2,500
stock options awarded to him on January 26, 1995 (with an
exercise price of $23.375), the 25,000 Merit Stock options
awarded to him on March 31, 1995 (with an exercise price of
$20.875), the 5,000 stock options awarded to him on January
25, 1996 (with an exercise price of $29.375), and the 5,000
stock options awarded to him on January 30, 1997 (with an
exercise price of $26.50), until such options expire, in
accordance with the Equity Ownership Plan, as may be
amended from time to time.
(i) Company agrees to maintain your account under the
Equity Awards Program of the Equity Ownership Plan
("Program") until such time as you terminate your
employment or otherwise become eligible for Program
payments in accordance with the terms and conditions of
said Program.
(j) Company agrees to count the years of service during
the period of this Agreement for purposes of Vesting and
Benefit Service under the Retirement Plan, Supplemental
Credited Service Agreement, System Executive Retirement
Plan (SERP) with ten added years of Benefit Service,
Savings and Defined Contribution Restoration plans, and the
parties acknowledge that Employee's rights under and
participation in the plans described in this Agreement
shall be in accordance with the terms of such plans, as
they may be amended from time to time. In no event shall
employee receive less than the amounts he has accrued and
will accrue in these plans during his employment with the
Company. For purposes of any of the foregoing plans, the
Company acknowledges and consents to Employee's election
to retire effective upon termination of this Agreement, if
he is otherwise eligible, which acknowledgment shall
satisfy all Company consent requirements for early
retirement under such plans.
(k) Company agrees to continue the following executive
perquisites during the term of this Agreement:
- Employee may retain the personal computer with fax
provided by Entergy for his home use, and
- Employee may continue, at his option, to occupy one of
Entergy's membership slots at New Orleans Country Club
during the term of this Agreement or until he leaves the
city, whichever comes first,, provided that Employee shall
bear all costs and charges associated with said membership,
including but not being limited to dues, capital
improvement charges, food and beverage charges and all
other fees and expenses, and provided further that the slot
is not needed by the Company in the future. In the event
Employee decides to stay in New Orleans, he shall have the
option of purchasing the membership from the Company at the
then-current market value.
(l) Employee shall remain eligible for the following
executive perquisites through December 31, 1997:
- Executive Financial Counseling Program reimbursement,
- Auto Reimbursement allowance,
- Company provided parking,
- Executive physicals,
- Luncheon Club membership(s),
- Executive Medical Plan,
- Executive Long Term Disability Plan, and
- Home security system monitoring and maintenance charges.
Effective January 1, 1998, the Employee shall cease to be
eligible for all executive perquisites, except that
Employee shall be entitled (a) to receive in 1998
reimbursement of all eligible expenses incurred in calendar
year 1997 and (b) to participate in the Executive Financial
Counseling Program in 1998 in connection with the
preparation of his 1997 income tax returns and to establish
will and estate plans based on this Agreement, provided the
existing Five Thousand Dollars ($5,000.00) limitation on
such planning is not exceeded.
(m) During the period of this Agreement, Employee will not
accrue or receive additional pay for vacation, holidays,
sick leave or any other benefits not specifically provided
for in this Agreement.
(n) During the period of this Agreement, Employee will not
be eligible for any kind of separation pay that may be
offered by the Company to other active employees.
(o) Company agrees that, any time during the term of this
Agreement, the Employee will be reimbursed for typical
expenses, including the costs of packing, transporting, and
unpacking, directly associated with one movement of
household goods from his present residence in New Orleans
to another location within the Continental United States.
This provision shall not apply, however, if Employee
accepts, with the permission of the Company as provided in
paragraph 2(b) hereof, a position with another employer
which has a relocation policy under which Employee is
eligible to receive relocation benefits.
4. Remedy for Breach
Employee hereby acknowledges that, in the event of any
material breach or threatened material breach by him of any
of the provisions of Paragraphs 2(b) or 6 of this
Agreement, the Company would have no adequate remedy at law
and could suffer substantial and irreparable damage.
Accordingly, Employee hereby agrees that, in such event,
the Company shall be entitled, without the necessity of
proving damages and notwithstanding any election by the
Company to claim damages, to obtain a temporary and/or
permanent injunction to restrain any such material breach
or threatened material breach or to obtain specific
performance of any of such provisions without bond, all
without prejudice to any and all other remedies which the
Company may have either at law or in equity.
5. Release
In consideration of the Company's agreement to provide the
compensation and benefits described herein, Employee agrees
to release and forever discharge the Company, its
subsidiaries and affiliates, and their respective
directors, officers, agents, servants, employees,
attorneys, successors, predecessors, assigns, insurers,
employee benefit plans and fiduciaries and agents of any of
the foregoing from any and all damages, losses, causes of
action, demands, liabilities, and claims of whatever kind
or nature, whether or not herein named, on behalf of
himself, or his heirs, executors, and assigns with respect
to all matters relating to or arising out of his employment
with the Company prior to the date of the execution of this
Agreement, and any existing claims or rights which he may
have under any federal, state or local law, including but
not being limited to all claims arising under the Age
Discrimination in Employment Act, 29 USC 621, et sec,
or for severance payments of any kind. Employee
acknowledges that he was provided with a copy of this
Agreement, that he was advised to discuss this Agreement
with his attorney, and that he was given no less than 21
days within which to consider signing this Agreement.
Employee further acknowledges that he had the option of
executing this Agreement at any time within the 21 day
period, at his sole discretion. He further acknowledges
that he was informed that (a) he had seven (7) days from
the date of his execution of this Agreement within which to
revoke this Agreement and (b) that this Agreement would not
become effective or enforceable until expiration of the
seven-day period. Employee acknowledges that he has
thoroughly reviewed this Agreement and understands that, to
the extent he has any claims covered by this Agreement, he
is waiving potentially valuable rights by the execution of
this Agreement. Employee further acknowledges that his
execution of this Agreement is free and voluntary and was
not procured through duress, coercion or undue influence.
Company agrees to indemnify Employee for his actions while
serving as an officer of the Company in accordance with the
bylaws of the Company and according to the terms and
conditions of the Company's director and officer liability
insurance in effect during his service as an officer.
Employee affirms and agrees that his employment
relationship with the Company will end on May 31, 2001, and
that he will withdraw unequivocally, completely and finally
from his employment on that date, unless sooner terminated
in accordance with the terms of this Agreement, and waive
all rights in connection with such relationship except as
to vested benefits and the payments and other benefits
described herein.
6. Confidentiality
Both Company and Employee agree that the terms of this
Agreement are confidential and will not be disclosed to
anyone for any purpose whatsoever (save and except
disclosure to Employee's spouse, to financial institutions
as part of a financial statement, to immediate family
members, financial, tax and legal advisors, to
prospective/actual employers or as required by law).
Employee agrees that he has returned or will return
immediately, and maintain in strictest confidence and will
not use in any way, any proprietary, confidential, or other
non-public information or documents relating to the
business and affairs of the Company, or of its
subsidiaries, affiliates and divisions.
7. Representation and Warranties
Employee represents and warrants that he is under no
restriction or obligation inconsistent with the execution
of this Agreement or with the performance of his
obligations hereunder.
8. Cooperation
Employee agrees to cooperate with the Company and its
counsel on any matters relating to the conduct of any
administrative or judicial litigation, claim, suit,
investigation or proceeding involving the Company or any of
its subsidiaries or affiliates arising out of or in
connection with any facts or circumstances occurring during
the term of Employee's employment with the Company in which
the Company determines that Employee's cooperation is
necessary or appropriate. Company agrees to make all
reasonable efforts to minimize time required for such
activities and to reimburse employee for any required
travel and related expenses.
9. Termination by Company
The Company may terminate this Agreement if Employee fails
to materially comply with any of the provisions hereof and,
in such event, all rights and benefits in favor of Employee
under this Agreement shall terminate.
10.Conflict Resolution
Any material dispute between parties shall be resolved
through binding arbitration, with the exception of
equitable remedies. The losing party to any enforcement
action pursuant to arbitration shall be obligated to pay
reasonable attorney fees and costs.
11.Miscellaneous Provisions
(a) Withholding. All payments to Employee made pursuant
to this Agreement, shall be subject to withholding of all
amounts required to be withheld by applicable Internal
Revenue Service rules and regulations and the rules and
regulations of all other applicable tax agency authorities
and shall be conditioned upon Employee's submission of all
information or execution of all instruments required in
order to enable the Company to comply with such withholding
requirements.
(b) Notice. Any notice required to be given in accordance
with the provisions of this Agreement shall be given in
writing, either by personal delivery or by causing such
written notice to be provided by registered mail, to
Employee at the address set forth herein or to the Company
at its principal business address to the attention of the
Office of the Chairman, with copy to C. Gary Clary, or at
such other address for a party as may be hereafter
specified by like notice, provided that written notice of a
change of address shall be effective only upon receipt
thereof.
(c) Governing Law. This Agreement is entered into in
accordance with, and shall be interpreted pursuant to, the
laws of the State of Delaware.
(d) Severability. If any provision of this Agreement
shall be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect or impair
the validity or enforceability of the remaining provisions
of this Agreement, which shall remain in full force and
effect in accordance with their terms.
(e) Non-Assignability. Employee's rights and obligations
under this Agreement may not be assigned or sold, in whole
or part, to any other person or entity.
(f) Successors. This Agreement shall be binding upon the
parties hereto and upon their respective heirs, successors
and assigns.
(g) Entire Agreement. This Agreement contains the entire
agreement between the parties relating to the subject
matter hereof and supersedes all previous agreements or
understandings, whether oral or written.
If this letter accurately sets forth the terms of our
agreement relating to your employment after November 24,
1997, please sign and date one of the enclosed originals of
this letter in the space provided below and return one
executed original to the Company.
ENTERGY SERVICES INC. ("COMPANY")
By: /s/ C. Gary Clary
C. Gary Clary
Vice President, Human Resources and
Administration
ACCEPTED AND AGREED TO on this ___
day of December, 1997.
/s/ Gerald D. McInvale
Gerald D. McInvale ("Employee")
Exhibit 10(c)100
_________________________________________________________________
JEFFERSON COUNTY, ARKANSAS
and
ENTERGY ARKANSAS, INC.
______________
LOAN AGREEMENT
______________
Dated as of December 1, 1997
_________________________________________________________________
$45,500,000 Jefferson County, Arkansas Pollution Control Revenue
Refunding Bonds (Entergy Arkansas, Inc. Project) Series 1997
<PAGE>
LOAN AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of
the Loan Agreement and is only
for convenience of reference.)
Parties 1
Recitals 1
ARTICLE I
DEFINITIONS
Section 1.01 Definitions 2
Section 1.02 Use of Words and Phrases 4
ARTICLE II
REPRESENTATIONS
Section 2.01 Representations and Warranties of the County 5
Section 2.02 Representations and Warranties of the Company 5
ARTICLE III
THE FACILITIES
Section 3.01 Construction of the Facilities 7
Section 3.02 Maintenance of Facilities; Remodeling 7
Section 3.03 Insurance 7
ARTICLE IV
ISSUANCE OF BONDS; DISPOSITION OF PROCEEDS OF BONDS
Section 4.01 Issuance of the Series 1997 Bonds 8
Section 4.02 Additional Bonds 8
Section 4.03 Disposition of Bond Proceeds 8
ARTICLE V
LOAN PROVISIONS; OTHER OBLIGATIONS
Section 5.01 Loan of Bond Proceeds 9
Section 5.02 Repayment of Loan 9
Section 5.03 Payments Assigned; Obligation Absolute 9
Section 5.04 Payment of Expenses 10
Section 5.05 Indemnification 10
Section 5.06 Payment of Taxes; Discharge of Liens 11
ARTICLE VI
SPECIAL COVENANTS AND AGREEMENTS
Section 6.01 Maintenance of Corporate Existence 12
Section 6.02 Permits or Licenses 12
Section 6.03 County's and Trustee's Access to Facilities 12
Section 6.04 Arbitrage Covenant 12
Section 6.05 Use of Facilities 13
Section 6.06 Tax Exempt Status of Bonds 13
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
Section 7.01 By the County 16
Section 7.02 By the Company 16
Section 7.03 Limitation 16
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01 Events of Default 17
Section 8.02 Force Majeure 18
Section 8.03 Remedies on Default 18
Section 8.04 No Remedy Exclusive 19
Section 8.05 Agreement to Pay Attorneys' Fees and Expenses 19
Section 8.06 Waiver of Breach 19
ARTICLE IX
REDEMPTION OR PURCHASE OF BONDS
Section 9.01 Redemption of Bonds 20
Section 9.02 Purchase of Bonds 20
ARTICLE X
RECORDATION AND OTHER INSTRUMENTS
Section 10.01 Recording and Filing 21
Section 10.02 Photocopies and Reproductions 21
ARTICLE XI
MISCELLANEOUS
Section 11.01 Notices 22
Section 11.02 Severability 22
Section 11.03 Execution of Counterparts 22
Section 11.04 Amounts Remaining in Bond Fund 22
Section 11.05 Amendments, Changes and Modifications 23
Section 11.06 Governing Law 23
Section 11.07 Authorized Company Representatives 23
Section 11.08 Term of the Agreement 23
Section 11.09 No Personal Liability 23
Section 11.10 Parties in Interest 23
Signatures and Seals 25
Exhibit A - Description of Facilities 26
<PAGE>
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of December 1, 1997, by
and between JEFFERSON COUNTY, ARKANSAS, a political subdivision
under the Constitution and laws of the State of Arkansas
(hereinafter referred to as the "County"), and ENTERGY ARKANSAS,
INC. (formerly Arkansas Power & Light Company), a corporation
organized and existing under and by virtue of the laws of the
State of Arkansas (hereinafter referred to as the "Company").
W I T N E S S E T H:
WHEREAS, the County is authorized and empowered under
the laws of the State of Arkansas, including particularly Title
14, Chapter 267 of the Arkansas Code of 1987 Annotated (the
"Act"), to issue revenue bonds and to expend the proceeds thereof
to finance and refinance the acquisition, construction,
reconstruction, extension, equipment or improvement of pollution
control facilities for the disposal or control of sewage, solid
waste, water pollution, air pollution, or any combination
thereof; and
WHEREAS, certain pollution control facilities
(hereinafter referred to as the "Facilities") have been acquired,
constructed and equipped at Units 1 and 2 of the electric
generating plant jointly owned by the Company and others located
within the boundaries of the County near Redfield, Arkansas and
known as the White Bluff Steam Electric Station (hereinafter
referred to as the "Plant"); and
WHEREAS, pursuant to and in accordance with the
provisions of the Act, the County has heretofore issued and
delivered its Pollution Control Revenue Bonds, Series 1977
(Arkansas Power & Light Company Project), in the aggregate
principal amount of $46,000,000, of which $45,500,000 in
aggregate principal amount is outstanding (the "Prior Bonds", for
the purpose of financing the cost of acquiring, constructing and
equipping all or part of the Company's interest in the
Facilities, and paying the expenses of authorizing and issuing
the Prior Bonds; and
WHEREAS, the County proposes to issue $45,500,000
aggregate principal amount of its revenue bonds under the Act
(the "Series 1997 Bonds") for the purpose of refunding the Prior
Bonds; and
WHEREAS, in connection with the issuance of the Series
1997 Bonds the proceeds of the Series 1997 Bonds will be loaned
by the County to the Company upon the terms and conditions set
forth herein; and
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants herein made, and subject to the
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. In addition to the words
and terms elsewhere defined in this Agreement or in the
Indenture, the following words and terms as used in this
Agreement shall have the following meanings unless the context or
use indicates another or different meaning:
"Act" -- Title 14, Chapter 267 of the Arkansas Code of
1987 Annotated, as amended and enacted from time to time.
"Additional Bonds" -- Bonds in addition to the Series
1997 Bonds, which are issued under the provisions of Section 211
of the Indenture.
"Administration Expenses" -- The reasonable and
necessary expenses incurred by the County with respect to this
Agreement, the Indenture and any transaction or event
contemplated by this Agreement or the Indenture including the
compensation and reimbursement of expenses and advances payable
to the Trustee, any paying agent, any co-paying agent, and the
registrar under the Indenture.
"Agreement" -- This Loan Agreement and any amendments
and supplements hereto.
"Authorized Company Representative" -- The person or
persons at the time designated to act on behalf of the Company,
such designation in each case to be evidenced by a certificate
furnished to the County and the Trustee containing the specimen
signature of such person or persons and signed on behalf of the
Company by its President, any Senior Vice President, any Vice
President, or the Treasurer or any Assistant Treasurer.
"Bonds" -- The Series 1997 Bonds and all Additional
Bonds issued by the County pursuant to the Indenture.
"Bond Counsel" -- Any firm of nationally recognized
municipal bond counsel selected by the Company and acceptable to
the County and the Trustee.
"Bond Fund" -- The fund by that name created and
established in Section 501 of the Indenture.
"Clearing Fund" -- The fund by that name created and
established in Section 601 of the Indenture.
"Code" -- The Internal Revenue Code of 1954, as
heretofore amended (the "1954 Code"), and the Internal Revenue
Code of 1986, as heretofore or hereafter amended (the "1986
Code"), as applicable.
"Company" -- Entergy Arkansas, Inc., a corporation
organized and operating under the laws of the State of Arkansas,
and its permitted successors and assigns.
"County" -- Jefferson County, Arkansas, a political
subdivision under the Constitution and laws of the State of
Arkansas.
"Event of Default" -- Any event of default specified in
Section 8.01 hereof.
"Facilities" -- The pollution control facilities at the
Plant which were financed and refinanced, in whole or in part,
with the proceeds of the Prior Bonds, which facilities are
generally described in Exhibit A hereto.
"Indenture" -- The Trust Indenture dated as of December
1, 1997, between the County and the Trustee, securing the Bonds,
and any amendments and supplements thereto.
"outstanding" -- When used with reference to the Bonds,
as of any particular date, all Bonds authenticated and delivered
under the Indenture except:
(a) Bonds canceled at or prior to such date or
delivered to or acquired by the Trustee prior to such date for
cancellation;
(b) Bonds deemed to be paid in accordance with Article
IX of the Indenture; and
(c) Bonds in lieu of or in exchange or substitution
for which other Bonds shall have been authenticated and delivered
pursuant to the Indenture.
"Plant" -- The Company's electric generating plant
located within the boundaries of the County.
"Prior Bonds" -- The County's Pollution Control Revenue
Bonds, Series 1977 (Arkansas Power & Light Company Project), in
the original aggregate principal amount of $46,000,000.
"Series 1997 Bonds" -- The initial issue of Bonds under
and secured by the Indenture in the aggregate principal amount of
$45,500,000.
"Trustee" -- The banking corporation or association
designated as Trustee in the Indenture, and its successor or
successors as such Trustee. The original Trustee is Simmons
First National Bank, Pine Bluff, Arkansas.
Section 1.02. Use of Words and Phrases. "Herein",
"hereby", "hereunder", "hereof", "hereinabove", "hereinafter",
and other equivalent words and phrases refer to this Agreement
and not solely to the particular portion thereof in which any
such word is used. The definitions set forth in Section 1.01
hereof include both singular and plural. Whenever used herein,
any pronoun shall be deemed to include both singular and plural
and to cover all genders.
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations and Warranties of the
County. The County makes the following representations and
warranties as the basis for the undertakings on the part of the
Company herein contained:
(a) The County is a political subdivision duly
existing under the Constitution and laws of the State of
Arkansas.
(b) The County has the power to enter into the trans
actions contemplated by this Agreement and to carry out its
obligations hereunder. By proper action of the governing body of
the County, the County has been duly authorized to execute and
deliver this Agreement.
(c) The County has not, and will not, except as
otherwise required by mandatory provisions of law, assign its
interest in this Agreement other than to secure the Bonds.
(d) The Facilities and their operation promote the
securing and developing of industry and the health, safety and
physical and economic welfare of the County and its inhabitants,
and thereby further the public purposes of the Act.
Section 2.02. Representations and Warranties of the
Company. The Company makes the following representations and
warranties as the basis for the undertakings on the part of the
County herein contained:
(a) The Company is a corporation duly incorporated and
in good standing under the laws of the State of Arkansas, is not
in violation of any provision of its Amended and Restated
Articles of Incorporation, or its Bylaws, each as amended, has
power to enter into this Agreement and to perform and observe the
agreements and covenants on its part contained herein, and has
duly authorized the execution and delivery of this Agreement by
proper corporate action.
(b) The Facilities constitute a pollution control
project of the type authorized and permitted by the Act.
(c) Neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement, conflicts with or results in a
breach of the terms, conditions or provisions of any restriction
or any agreement or instrument to which the Company is now a
party or by which the Company is bound, or constitutes a default
under any of the foregoing, or results in the creation or
imposition of any lien, charge or encumbrance whatsoever upon any
of the property or assets of the Company except any interests
created herein.
(d) The Securities and Exchange Commission, the
Arkansas Public Service Commission, and the Tennessee Public
Service Commission have each approved all matters relating to the
Company's participation in the transactions contemplated by this
Agreement which require said approval, and no other consent,
approval, authorization or other order of any regulatory body or
administrative agency or other governmental body is legally
required for the Company's participation therein, except such as
may have been obtained or may be required under the securities
laws of any state or in connection with the issuance of series of
Additional Bonds.
ARTICLE III
THE FACILITIES
Section 3.01. Construction of the Facilities. The
Company has caused the Facilities to be constructed in order to
effectuate the purposes of the Act.
Section 3.02. Maintenance of Facilities; Remodeling.
The Company shall, at its expense, cause the Facilities, and
every element and unit thereof, to be maintained, preserved and
kept in good repair, working order and condition, and from time
to time to cause all needful and proper repairs, replacements,
additions, betterments and improvements to be made thereto;
provided, however, that the Company may discontinue the operation
of, or reduce the capacity of, the Facilities, or any element or
unit thereof, if, in the judgment of the Company, any such action
is necessary or desirable in the conduct of the business of the
Company, or if the Company is ordered so to do by any regulatory
authority having jurisdiction in the premises, or if the Company
intends to sell or dispose of the same and within a reasonable
time shall endeavor to effectuate such sale. The Company shall
notify the County as to the nature and extent of any material
damage or loss to the Facilities and of the discontinuance of the
operation of the Facilities, or any material element or unit
thereof.
The Company may at its own expense cause the Facilities
to be remodeled or cause substitutions, modifications and
improvements to be made to the Facilities from time to time as
it, in its discretion, may deem to be desirable for its uses and
purposes, which remodeling, substitutions, modifications and
improvements shall be included under the terms of this Agreement
as part of the Facilities.
Section 3.03. Insurance. The Company shall, at its
expense, cause the Facilities to be kept insured against fire to
the extent that property of similar character is usually so
insured by companies similarly situated and operating like
properties, to a reasonable amount, by reputable insurance
companies or, in lieu of or supplementing such insurance in whole
or in part, adopt some other method or plan of protection against
loss by fire at least equal in protection to the method or plan
of protection against such loss of companies similarly situated
and operating like properties. All proceeds of such insurance,
or such other method or plan, shall be for the account of the
Company.
ARTICLE IV
ISSUANCE OF BONDS; DISPOSITION OF PROCEEDS OF BONDS
Section 4.01. Issuance of the Series 1997 Bonds. The
County shall issue the Series 1997 Bonds under and in accordance
with the Indenture, subject to the provisions of any bond
purchase agreement between the County and the original purchaser
or purchasers of the Series 1997 Bonds. The Company hereby
approves the issuance of the Series 1997 Bonds and all terms and
conditions thereof.
Section 4.02. Additional Bonds. So long as the
Company shall not be in default hereunder, and at the request of
the Company, the County may authorize and issue Additional Bonds
in aggregate principal amounts specified from time to time by the
Company in order to provide funds for the purpose of refunding
the Series 1997 Bonds or any series of Additional Bonds, in whole
or in part, or any combination thereof.
The right to issue Additional Bonds set forth in this
Agreement and the Indenture shall not imply that the County and
the Company may not enter into, and the County and the Company
expressly reserve the right to enter into, to the extent
permitted by law, another agreement or agreements with respect to
the issuance by the County, under an indenture or indentures
other than the Indenture, of refunding bonds to refund all or any
principal amount of any series of Bonds, and the provisions of
this Agreement and the Indenture governing the issuance of
Additional Bonds shall not apply thereto.
Section 4.03. Disposition of Bond Proceeds. The
proceeds of the issuance and sale of the Series 1997 Bonds and
any Additional Bonds, other than accrued interest, if any, paid
by the initial purchaser or purchasers thereof, shall be
deposited into the Clearing Fund, and any such accrued interest
shall be deposited into the Bond Fund, all in accordance with the
provisions of the Indenture.
ARTICLE V
LOAN PROVISIONS; OTHER OBLIGATIONS
Section 5.01. Loan of Bond Proceeds. Concurrently
with the sale and delivery of each series of the Bonds, the
County covenants and agrees that it will, upon the terms and
conditions in this Agreement, lend to the Company an amount equal
to the proceeds (other than accrued interest) of such series.
Pursuant to said covenant and agreement, the County will issue
the Bonds upon the terms and conditions contained in this
Agreement and the Indenture and will cause the Bond proceeds to
be applied as provided in Article IV hereof. The Bonds may be
sold by the County, with the consent of the Company, at a
discount from their principal amount. If the County does sell
Bonds at a discount, the amount of such discount shall be deemed
to have been loaned to the Company pursuant to the terms and
conditions hereof.
Section 5.02. Repayment of Loan. On or before any
date that principal of or interest on the Bonds is due as set
forth in the Indenture, or any date fixed for the redemption of
any or all of the Bonds pursuant to the Indenture, the Company
covenants and agrees to pay or to cause to be paid in lawful
money of the United States of America to the Trustee for deposit
in the Bond Fund, as a repayment of the loan made to the Company
pursuant to Section 5.01 hereof, a sum equal to the amount
payable on such payment date as principal (whether at maturity,
upon redemption or otherwise) of and premium, if any, and
interest on the Bonds as provided in the Indenture. Each payment
made pursuant to this Section shall be made in immediately
available funds at the principal corporate trust office of the
Trustee during normal banking hours.
In the event that the payment of the principal of and
accrued interest on the Bonds is accelerated under Section 1002
of the Indenture, the Company covenants and agrees to pay, or
cause to be paid, to the Trustee as provided above a sum equal to
all the principal of and interest on the Bonds then outstanding.
Each payment pursuant to this Section shall at all
times be sufficient to pay the amount of principal (whether at
maturity, upon redemption or otherwise) of and premium, if any,
and interest payable on the Bonds on the date that such payment
is due; provided that the obligation of the Company to make any
payment of the principal of or premium, if any, or interest on
the Bonds, whether at maturity, upon redemption or otherwise,
shall be reduced by the amount of any reduction under the
Indenture of the amount of the corresponding payment required to
be made by the County thereunder in respect of the principal of
or premium, if any, or interest on the Bonds.
Section 5.03. Payments Assigned; Obligation Absolute.
It is understood and agreed that all payments to be made by the
Company of the loan by the County are, by the Indenture, to be
pledged by the County to the Trustee, and that all rights and
interest of the County hereunder (except for the County's rights
under Sections 5.04, 5.05, 5.06, 6.03 and 8.05 hereof and any
rights of the County to receive notices, certificates, requests,
requisitions, directions and other communications hereunder) are
to be pledged and assigned to the Trustee. The Company assents
to such pledge and assignment and agrees that the obligation of
the Company to make the payments of the loan shall be absolute,
irrevocable and unconditional and shall not be subject to
cancellation, termination or abatement, or to any defense other
than payment, or to any right of set-off, counterclaim or
recoupment arising out of any breach under this Agreement, the
Indenture or otherwise by the County or the Trustee or any other
party, or out of any obligation or liability at any time owing to
the Company by the County, the Trustee or any other party, and,
further, that the payments of the loan from the County to the
Company and the other payments due hereunder shall continue to be
payable at the times and in the amounts specified herein, whether
or not the Facilities or the Plant, or any portion thereof, shall
have been completed or shall have been destroyed by fire or other
casualty, or title thereto, or the use thereof, shall have been
taken by the exercise of the power of eminent domain, and that
there shall be no abatement of or diminution in any such payments
by reason thereof, whether or not the Facilities or the Plant
shall be used or useful, and whether or not any applicable laws,
regulations or standards shall prevent or prohibit the use of the
Facilities or the Plant, or for any other reason.
Section 5.04. Payment of Expenses. The Company shall
pay, or cause to be paid, all of the Administration Expenses of
the County, the payment of the compensation and the reimbursement
of expenses and advances of the Trustee, any paying agent, any
co-paying agent, and the registrar under the Indenture to be made
directly to such entity.
Section 5.05. Indemnification. The Company releases
the County and the Trustee from, agrees that the County and the
Trustee shall not be liable for, and agrees to indemnify and hold
the County and the Trustee free and harmless from, any liability
for any loss or damage to property or any injury to or death of
any person that may be occasioned by any cause whatsoever
pertaining to the Facilities, except in any case as a result of
the negligence or bad faith of the County or the Trustee.
The Company will indemnify and hold the County and the
Trustee free and harmless from any loss, claim, damage, tax,
penalty, liability (including but not limited to liability for
any patent infringement), disbursement, litigation expenses,
attorneys' fees and expenses or court costs arising out of, or in
any way relating to, the execution or performance of this
Agreement, the issuance or sale of the Bonds, actions taken under
the Indenture, or any other cause whatsoever pertaining to the
Facilities, including without limitation, recovery costs arising
from the presence of hazardous substances, except in any case as
a result of the negligence or bad faith of the Trustee, or as a
result of the gross negligence or bad faith of the County.
Under this Section 5.05, the Company shall also be
deemed to release, indemnify and agree to hold harmless each
employee, official or officer of the County and the Trustee to
the same extent as the County and the Trustee.
Section 5.06. Payment of Taxes; Discharge of Liens.
The Company shall: (a) pay, or make provision for payment of, all
lawful taxes and assessments, including income, profits, property
or excise taxes, if any, or other municipal or governmental
charges, levied or assessed by any federal, state or municipal
government or political body upon the County with respect to the
Facilities or any part thereof or upon any amounts payable
hereunder; and (b) pay or cause to be satisfied and discharged or
make adequate provision to satisfy and discharge, within sixty
(60) days after the same shall accrue, any lien or charge upon
any amounts payable hereunder, and all lawful claims or demands
for labor, materials, supplies or other charges which, if unpaid,
might be or become a lien upon such amounts; provided that if the
Company shall first notify the County and the Trustee of its
intention so to do, the Company may in good faith contest any
such lien or charge or claims or demands in appropriate legal
proceedings, and in such event may permit the items so contested
to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom, unless the County or the
Trustee shall notify the Company in writing that, in the opinion
of counsel to the County or the Trustee, by nonpayment of any
such items the lien of the Indenture as to the amounts payable
hereunder will be materially endangered, in which event the
Company shall promptly pay and cause to be satisfied and
discharged all such unpaid items. The County shall cooperate
fully with the Company in any such contest.
ARTICLE VI
SPECIAL COVENANTS AND AGREEMENTS
Section 6.01. Maintenance of Corporate Existence. The
Company shall maintain its corporate existence, will not dissolve
or otherwise dispose of all or substantially all its assets and
will not consolidate with or merge with or into another
corporation; provided, however, that the Company may consolidate
with or merge with or into, or sell or otherwise transfer all or
substantially all of its assets (and may thereafter dissolve) to,
another corporation, incorporated under the laws of the United
States, one of the states thereof or the District of Columbia, if
the surviving, resulting or transferee corporation, as the case
may be (if other than the Company), prior to or simultaneously
with such consolidation, merger, sale or transfer, assumes, by
delivery to the Trustee of an instrument in writing satisfactory
in form and substance to the Trustee, all the obligations of the
Company hereunder.
If consolidation, merger or sale or other transfer is
made as permitted by this Section 6.01, the provisions of this
Section 6.01 shall continue in full force and effect and no
further consolidation, merger or sale or other transfer shall be
made except in compliance with the provisions of this Section
6.01.
Section 6.02. Permits or Licenses. In the event that
it may be necessary for the proper performance of this Agreement
on the part of the Company or the County that any application or
applications for any permit or license to do or to perform
certain things be made to any governmental or other agency by the
Company or the County, the Company and the County each shall,
upon the request of either, execute such application or
applications.
Section 6.03. County's and Trustee's Access to
Facilities. The County and the Trustee shall have the right,
upon appropriate prior notice to the Company, to have reasonable
access to the Facilities during normal business hours for the
purpose of making examinations and inspections of the same.
Section 6.04. Arbitrage Covenant. The County and the
Company covenant that the proceeds of the sale of the Bonds, the
earnings thereon, and any other moneys on deposit in any fund or
account maintained in respect of the Bonds (whether such moneys
were derived from the proceeds of the sale of the Bonds or from
other sources) will not be used in a manner which would cause the
Bonds to be treated as "arbitrage bonds" within the meaning of
Section 148 of the Code. The Company further covenants that: (a)
all actions with respect to the Bonds required by Section 148(f)
of the Code shall be taken; (b) it shall make the determinations
required by paragraph (b) of Section 702 of the Indenture and
promptly notify the Trustee of the same, together with supporting
calculations; and (c) it shall within twenty-five (25) days after
(i) the calendar date which corresponds to the final maturity of
the respective series of Bonds and each anniversary thereof
falling on or after the date of initial authentication and
delivery thereof up to and including the final maturity of such
series of the Bonds, unless the final payment, whether upon
redemption in whole or at maturity, of such Bonds shall have
occurred prior to such anniversary, and (ii) such final payment,
file with the Trustee a statement signed by an Authorized Company
Representative to the effect that the Company is then in
compliance with its covenants contained in clauses (a) and (b) of
this sentence, together with supporting calculations; provided,
however, that if the Company shall furnish an opinion of Bond
Counsel to the Trustee to the effect that no further action by
the Company is required for such compliance with respect to the
Bonds, the Company shall not thereafter be required to deliver
any such statements or calculations.
Section 6.05. Use of Facilities. The Company shall
cause the Facilities to be used for the abatement or control of
pollution or for the disposal of sewage or solid waste.
Section 6.06. Tax Exempt Status of Bonds. The County
and the Company mutually covenant and agree that neither of them
shall take or authorize or permit any action to be taken, and
have not taken or authorized or permitted any action to be taken,
which results in interest paid on the Bonds being included in
gross income for purposes of federal income taxes. Without
limiting the generality of the foregoing, the Company further
covenants and agrees as follows:
(a) Not less than 90% of the proceeds (within the
meaning of Section 103(b)(4) of the 1954 Code and
regulations thereunder) from the sale of the Prior Bonds was
expended (or was used to retire bonds not less than 90% of
the proceeds from the sale of which was expended) (i) for
proper costs of land or property of a character subject to
the allowance for depreciation under Section 167 of the
Code, or which will be, for federal income tax purposes,
chargeable to capital account or would have been so
chargeable either with a proper election by the Company (for
example under Section 266 of the Code) or but for a proper
election by the Company to deduct such amounts, and (ii) to
provide air or water pollution control or sewage or solid
waste disposal facilities within the meaning of Section
103(b)(4)(E) or (F) of the Code and regulations thereunder.
(b) Within fifteen (15) days of the date of issuance
of the Series 1997 Bonds, there neither have been nor will
be any private activity bonds (within the meaning of Section
141(a) of the 1986 Code) sold to finance facilities of the
Company or any related person within the meaning of Section
147(a)(2) of the Code, under a common plan of marketing, at
substantially the same rate of interest, and for which a
common or pooled security will be used or available to pay
debt service.
(c) The average maturity of the Series 1997 Bonds
(within the meaning of Section 147(b) of the 1986 Code and
regulations thereunder) does not exceed 120% of the average
reasonably expected economic life of the Facilities (within
the meaning of Section 147(b) of the 1986 Code and
regulations thereunder), remaining as of the date of issue
of the Series 1997 Bonds.
(d) No changes will be made with respect to the
Facilities (including, without limitation, their ownership
and use) which in any way impair the exclusion of interest
on any of the Bonds from gross income for purposes of
federal income taxation.
(e) No action shall be taken that will cause the
Series 1997 Bonds to be "federally guaranteed" as defined in
Section 149(b) of the Code.
(f) No portion of the proceeds of the Series 1997
Bonds (within the meaning of Section 147(g) of the Code and
regulations thereunder) will be used to finance costs of
issuance of the Series 1997 Bonds.
(g) (i) The Facilities being refinanced out of the
proceeds of the Series 1997 Bonds are part of the facilities
described in either the Memorandum of Agreement dated May
29, 1974, between the County and the Company (authorized by
Order of the County Court entered as of May 29, 1974), and
by Ordinance No. 1977-34 adopted by the Quorum Court on
September 29, 1977); (ii) acquisition and construction of
each of such Facilities commenced prior to May 29, 1974, and
that none of such Facilities had reached a degree of
completion which would permit operation, nor was any of such
Facilities in fact in operation, at substantially the level
for which it was designed prior to May 29, 1974; and (iii)
acquisition and construction of the Facilities described in
the Memorandum of Agreement dated April 5, 1985, commenced
on or after April 5, 1985, and none of such Facilities had
been placed in service or acquired (whichever occurred last)
as of December 19, 1985.
The covenants and agreements contained in this Section 6.06 shall
survive any termination of this Agreement.
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
Section 7.01. By the County. Except as provided in
Article V of this Agreement, the County will not sell, lease,
assign, transfer, convey or otherwise dispose of its interest in
this Agreement or any portion thereof or interest therein or in
the revenues therefrom without the written consent of the
Company.
Section 7.02. By the Company. The Company's interest
in this Agreement may be assigned in whole or in part, and the
Facilities may be leased or sold as a whole or in part (whether a
specific element or unit or an undivided interest), by the
Company, subject, however, to the condition that no assignment,
lease or sale (other than as described in Section 6.01 hereof)
shall relieve the Company from primary liability for its
obligations under Section 5.02 to repay the loan from the County
to the Company, or its obligations under Section 6.06 with
respect to the excludability from gross income of interest on the
Series 1997 Bonds for federal income tax purposes, or for any
other of its obligations hereunder, other than those obligations
relating to the operation, maintenance and insurance of the
Facilities which obligations (to the extent of the interest
assigned, leased or sold and to the extent assumed by the
assignee, lessee or purchaser) shall be deemed to be satisfied
and discharged.
After any lease or sale of any element or unit of the
Facilities, or any interest therein, such element or unit, or
interest therein, shall no longer be deemed to be part of the
Facilities for the purposes of this Agreement. Further, upon any
such lease or sale the Company shall comply with the requirements
of the Code and the regulations promulgated thereunder
(including, without limitation, the taking of remedial action
with respect to the Series 1997 Bonds) as the same may then be
applicable.
The Company shall, within fifteen (15) days after the
delivery thereof, furnish to the County and the Trustee a true
and complete copy of the agreements or other documents
effectuating any such assignment, lease or sale.
Section 7.03. Limitation. This Agreement shall not be
assigned nor shall the Facilities be leased or sold, in whole or
in part, except as provided in this Article VII or in Section
6.01 or in the Indenture.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. Events of Default. Each of the
following events shall constitute and is referred to in this
Agreement as an "Event of Default":
(a) a failure by the Company to make when due any
payment required to be made pursuant to Section 5.02 hereof,
which failure shall have resulted in an "Event of Default"
under clause (a) or (b) of Section 1001 of the Indenture;
(b) a failure by the Company to pay when due any other
amount required to be paid under this Agreement or to
observe and perform any covenant, condition or agreement on
its part to be observed or performed under this Agreement
which failure shall continue for a period of ninety (90)
days after written notice, specifying such failure and
requesting that it be remedied, shall have been given to the
Company by the County or the Trustee, unless the County and
the Trustee shall agree in writing to an extension of such
period prior to its expiration; provided, however, that the
County and the Trustee shall be deemed to have agreed to an
extension of such period if corrective action is initiated
by the Company within such period and is being diligently
pursued;
(c) the expiration of a period of ninety (90) days
following:
(1) the adjudication of the Company as a
bankrupt by any court of competent jurisdiction;
(2) the entry of an order approving a
petition seeking reorganization or arrangement of the
Company under the federal bankruptcy laws or any other
applicable law or statute of the United States, or of
any state thereof; or
(3) the appointment of a trustee or a
receiver of all or substantially all of the property of
the Company;
unless during such period such adjudication, order or
appointment of a trustee or receiver shall be vacated or
shall be stayed on appeal or otherwise or shall have
otherwise ceased to continue in effect; or
(d) the filing by the Company of a voluntary petition
in bankruptcy or the making of an assignment for the benefit
of creditors; the consenting by the Company to the
appointment of a receiver or trustee of all or any part of
its property; the filing by the Company of a petition or
answer seeking reorganization or arrangement under the
federal bankruptcy laws, or any other applicable law or
statute of the United States, or of any state thereof; or
the filing by the Company of a petition to take advantage of
any insolvency act.
Section 8.02. Force Majeure. The provisions of
Section 8.01 hereof are subject to the following limitations: If
by reason of acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders or other acts of any
kind of the Government of the United States or of the State of
Arkansas, or any other sovereign entity or body politic, or any
department, agency, political subdivision, court or official of
any of them, or any civil or military authority; insurrections;
riots; epidemics; landslides; lightning; earthquakes; volcanoes;
fires; hurricanes; tornados; storms; floods; washouts; droughts;
arrests; restraint of government and people; civil disturbances;
explosions; breakage or accident to machinery; partial or entire
failure of utilities; or any cause or event not reasonably within
the control of the Company, the Company is unable in whole or in
part to carry out any one or more of its agreements or
obligations contained herein, other than its obligations under
Section 5.02 hereof to repay the loan made to the Company and its
obligations under Sections 5.05, 6.01, 6.04, 6.06 and 9.01
hereof, the Company shall not be deemed in default by reason of
not carrying out said agreement or agreements or performing said
obligation or obligations during the continuance of such
inability. The Company agrees, however, to use its best efforts
to remedy with all reasonable dispatch the cause or causes
preventing it from carrying out its agreements; provided, that
the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the
Company, and the Company shall not be required to make settlement
of strikes, lockouts and other industrial disturbances by
acceding to the demands of the opposing party or parties when
such course is in the judgment of the Company unfavorable to the
Company.
Section 8.03. Remedies on Default. (a) Upon the
occurrence and continuance of any Event of Default, and further
upon the condition that, in accordance with the terms of the
Indenture, the Bonds shall have become immediately due and
payable pursuant to any provision of the Indenture, the payments
required to be paid pursuant to Section 5.02 hereof shall,
without further action, become and be immediately due and
payable.
(b) Upon the occurrence and continuance of any Event
of Default, the County with the prior consent of the Trustee, or
the Trustee, may take any action at law or in equity to collect
the payments then due and thereafter to come due hereunder, or to
enforce performance and observance of any obligation, agreement
or covenant of the Company under this Agreement.
(c) Any amounts collected pursuant to action taken
under this Section shall be applied in accordance with the
Indenture.
(d) In case any proceeding taken by the County or the
Trustee on account of any Event of Default shall have been dis
continued or abandoned for any reason, or shall have been
determined adversely to the County or the Trustee, then and in
every case the County and the Trustee shall be restored to their
former positions and rights hereunder, respectively, and all
rights, remedies and powers of the County and the Trustee shall
continue as though no such proceeding had been taken.
Section 8.04. No Remedy Exclusive. No remedy
conferred upon or reserved to the County or the Trustee by this
Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law or in
equity or by statute. No delay or omission to exercise any right
or power accruing upon any Event of Default shall impair any such
right or power or shall be construed to be a waiver thereof, but
any such right or power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle the County
or the Trustee to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice other than
such notice as may be required in this Article.
Section 8.05. Agreement to Pay Attorneys' Fees and
Expenses. In the event the Company should default under any of
the provisions of this Agreement and the County or the Trustee
should employ attorneys or incur other expenses for the
collection of payments due hereunder or for the enforcement of
performance or observance of any obligation or agreement on the
part of the Company contained herein, the Company agrees that it
will on demand therefor pay to the County or the Trustee, as the
case may be, the reasonable fees of such attorneys and such other
expenses so incurred.
Section 8.06. Waiver of Breach. In the event that any
agreement contained herein shall be breached by either the
Company or the County and such breach shall thereafter be waived
by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any
other breach hereunder. In view of the assignment of the
County's rights in and under this Agreement to the Trustee under
the Indenture, the County shall have no power to waive any
default hereunder by the Company without the consent of the
Trustee. Any waiver of any "Event of Default" under the
Indenture and a rescission and annulment of its consequences
shall constitute a waiver of the corresponding Event of Default
hereunder and a rescission and annulment of the consequence
thereof.
ARTICLE IX
REDEMPTION OR PURCHASE OF BONDS
Section 9.01. Redemption of Bonds. The County shall
take the actions required by the Indenture to discharge the lien
thereof through the redemption, or provision for payment or
redemption, of all Bonds then outstanding, or to effect the
redemption, or provision for payment or redemption, of less than
all the Bonds then outstanding, upon receipt by the County and
the Trustee from the Company of a notice designating the
principal amounts, series and maturities of the Bonds to be
redeemed, or for the payment or redemption of which provision is
to be made, and, in the case of redemption of Bonds, or provision
therefor, specifying the date of redemption, which shall not be
less than forty-five (45) days from the date such notice is
given, and the applicable redemption provision of the Indenture.
Unless otherwise stated therein or otherwise required by the
Indenture, such notice shall be revocable by the Company at any
time prior to the time at which the Bonds to be redeemed, or for
the payment or redemption of which provision is to be made, are
first deemed to be paid in accordance with Article IX of the
Indenture. The Company shall furnish, as a prepayment of the
amounts due under Section 5.02 hereof, any moneys or Government
Securities (as defined in the Indenture) required by the
Indenture to be deposited with the Trustee or otherwise paid by
the County in connection with any of the foregoing purposes.
Section 9.02. Purchase of Bonds. The Company may at
any time, and from time to time, furnish moneys to the Trustee
accompanied by a notice directing the Trustee to apply such
moneys to the purchase in the open market of Bonds in the
principal amounts and of the series and maturities specified in
such notice, and any Bonds so purchased shall thereupon be
canceled by the Trustee.
ARTICLE X
RECORDATION AND OTHER INSTRUMENTS
Section 10.01. Recording and Filing. The Company
shall record and file, or cause to be recorded and filed, all
documents and statements referred to in Section 404 of the
Indenture.
Section 10.02. Photocopies and Reproductions. A
photocopy or other reproduction of this Agreement may be filed as
a financing statement pursuant to the Uniform Commercial Code,
although the signatures of the Company and the County on such
reproduction are not original manual signatures.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Notices. Except as otherwise provided
in this Agreement, all notices, certificates or other
communications shall be sufficiently given and shall be deemed
given when mailed by registered or certified mail, postage
prepaid, to the County, the Company or the Trustee. Copies of
each notice, certificate or other communication given hereunder
by or to the Company shall be mailed by registered or certified
mail, postage prepaid, to the Trustee; provided, however, that
the effectiveness of any such notice shall not be affected by the
failure to send any such copies. Notices, certificates or other
communications shall be sent to the following addresses:
Company: Entergy Arkansas, Inc.
P.O. Box 61000
New Orleans, Louisiana 70161
Attention: Treasurer
County: Jefferson County, Arkansas
Jefferson County Courthouse
101 East Barraque Street
Pine Bluff, Arkansas 71601
Attention: County Judge
Trustee: Simmons First National Bank
P.O. Box 7009
Pine Bluff, Arkansas 71611
Attention: Corporate Trust Department
Any of the foregoing may, by notice given hereunder, designate
any further or different addresses to which subsequent notices,
certificates or other communications shall be sent.
Section 11.02. Severability. If any provision of this
Agreement shall be held or deemed to be or shall, in fact, be
illegal, inoperative or unenforceable, the same shall not affect
any other provision or provisions herein contained or render the
same invalid, inoperative, or unenforceable to any extent
whatever.
Section 11.03. Execution of Counterparts. This
Agreement may be simultaneously executed in several counterparts,
each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.04. Amounts Remaining in Bond Fund. It is
agreed by the parties hereto that after payment in full of (i)
the Bonds (or the provision for payment thereof having been made
in accordance with the provisions of the Indenture), (ii) the
Administration Expenses, and (iii) all other amounts required to
be paid under this Agreement and the Indenture, any amounts
remaining in the Bond Fund shall belong to and be paid by the
Trustee to the Company.
Section 11.05. Amendments, Changes and Modifications.
Except as otherwise provided in this Agreement or the Indenture,
subsequent to the initial issuance of Bonds and prior to payment
in full of the Bonds (or the provision for payment thereof having
been made in accordance with the provisions of the Indenture),
this Agreement may not be effectively amended, changed, modified,
altered or terminated nor any provision waived, without the
written consent of the Trustee which shall not be unreasonably
withheld.
Section 11.06. Governing Law. This Agreement shall be
governed exclusively by and construed in accordance with the
applicable laws of the State of Arkansas.
Section 11.07. Authorized Company Representatives. An
Authorized Company Representative shall act on behalf of the
Company whenever the approval of the Company is required or the
Company requests the County to take some action, and the County
and the Trustee shall be authorized to act on any such approval
or request and neither party hereto shall have any complaint
against the other or against the Trustee as a result of any such
action taken.
Section 11.08. Term of the Agreement. This Agreement
shall be in full force and effect from the date hereof until the
right, title and interest of the Trustee in and to the Trust
Estate (as defined in the Indenture) shall have ceased,
determined and become void in accordance with Article IX of the
Indenture and until all payments required under this Agreement
shall have been made.
Section 11.09. No Personal Liability. No covenant or
agreement contained in this Agreement shall be deemed to be the
covenant or agreement of any official, officer, agent, or
employee of the County in his individual capacity, and no such
person shall be subject to any personal liability or
accountability by reason of the issuance thereof.
Section 11.10. Parties in Interest. This Agreement
shall inure to the benefit of and shall be binding upon the
County, the Company and their respective successors and assigns,
and no other person, firm or corporation shall have any right,
remedy or claim under or by reason of this Agreement; provided,
however, that any obligation of the County created by or arising
out of this Agreement shall be payable solely out of the revenues
derived from this Agreement or the sale of the Bonds or income
earned on invested funds as provided in the Indenture and shall
not constitute, and no breach of this Agreement by the County
shall impose, a pecuniary liability upon the County or a charge
upon the County's general credit or against its taxing powers.
IN WITNESS WHEREOF, the County and the Company have
caused this Agreement to be executed in their respective
corporate names and their respective corporate seals to be
hereunto affixed and attested by their duly authorized officers,
all as of the date first above written.
JEFFERSON COUNTY, ARKANSAS
ATTEST:
By /s/ Jack Jones
/s/ Pamela Stone Ratliff County Judge
County Clerk
(SEAL)
ENTERGY ARKANSAS, INC.
ATTEST:
By /s/William J. Regan, Jr.
/s/ Christopher Screen Vice President and Treasurer
Assistant Secretary
(SEAL)
EXHIBIT A
DESCRIPTION OF FACILITIES
I. Ash Disposal Facilities. These facilities are designed
to remove and dispose of bottom ash and fly ash from each
generating unit of the Plant, and include the following
components:
(a) Two dewatering bins per unit;
(b) One conveyor blower per unit;
(c) Two silo fluidizing blowers per unit;
(d) One fly ash bin per unit;
(e) Two rotary unloaders per unit; and
(f) Two water ponds which function in conjunction with
the dewatering bins.
II. Condenser Cooling Water Facilities. Separate condenser
cooling water facilities are provided for each generating unit of
the Plant and are designed to supply the cooling water required
to remove the heat loads developed in the main condenser, as
follows:
(a) Two 50% capacity circulating water pumps per unit;
(b) One hyperbolic, natural draft cooling tower per
unit; and
(c) Circulating water piping from the cooling tower of
each unit to the turbine condensers of each unit, and
return piping.
Excluded herefrom are the special intake structures, low pressure
service water pumps, river intake pumps, clean water holding pond
and special discharge structures, clean water intake canal,
blowdown water pipe, and makeup water pipe with respect to each
generating unit.
III. Sewage Treatment and Disposal System. This system
consists of a package sewage treatment plant and necessary piping
to process the sanitary sewage from the Plant.
IV. Electrostatic Precipitators. There are four
electrostatic precipitators per unit, designed to remove
particulate matter from flue gases prior to being released to the
environment.
V. Coagulation and Sedimentation Ponds. There are two
coagulation and sedimentation ponds to chemically treat
contaminated water derived from the ash disposal area, the Plant
site, and the coal handling area.
Exhibit 12(a)
<TABLE>
<CAPTION>
Entergy Arkansas, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
Fixed charges, as defined:
Total Interest Charges 124,101 119,591 110,814 115,337 106,716 104,165
Interest applicable to rentals 17,657 16,860 19,140 18,158 19,121 17,529
-----------------------------------------------------------
Total fixed charges, as defined 141,758 136,451 129,954 133,495 125,837 121,694
Preferred dividends, as defined (a) 32,195 30,334 23,234 27,636 24,731 16,073
------------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $173,953 $166,785 $153,188 $161,131 $150,568 $137,767
============================================================
Earnings as defined:
Net Income $130,529 $205,297 $142,263 $136,666 $157,798 $127,977
Add:
Provision for income taxes:
Total 50,590 82,337 29,220 72,081 84,445 59,220
Fixed charges as above 141,758 136,451 129,954 133,495 125,837 121,694
------------------------------------------------------------
Total earnings, as defined $322,877 $424,085 $301,437 $342,242 $368,080 $308,891
============================================================
Ratio of earnings to fixed charges, as defined 2.28 3.11 2.32 2.56 2.93 2.54
============================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.86 2.54 1.97 2.12 2.44 2.24
============================================================
- ------------------------
(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>
Exhibit 12(b)
Entergy Gulf States, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
Fixed charges, as defined:
Total Interest charges 248,416 210,599 204,134 200,224 193,890 180,073
Interest applicable to rentals 23,759 23,455 21,539 16,648 14,887 15,747
----------------------------------------------------------
Total fixed charges, as defined 272,175 234,054 225,673 216,872 208,777 195,820
Preferred dividends, as defined (a) 69,617 65,299 52,210 44,651 48,690 30,028
----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $341,792 $299,353 $277,883 $261,523 $257,467 $225,848
==========================================================
Earnings as defined:
Income (loss) from continuing operations before extraordinary items and
the cumulative effect of accounting changes $139,413 $69,462 ($82,755) $122,919 ($3,887) 59,976
Add:
Income Taxes 55,860 58,016 (62,086) 63,244 102,091 22,402
Fixed charges as above 272,175 234,054 225,673 216,872 208,777 195,820
----------------------------------------------------------
Total earnings, as defined (b) $467,448 $361,532 $80,832 $403,035 $306,981 $278,198
==========================================================
Ratio of earnings to fixed charges, as defined 1.72 1.54 0.36 1.86 1.47 1.42
==========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.37 1.21 0.29 1.54 1.19 1.23
==========================================================
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by dividing the preferred dividend requirement by one
hundred percent (100%) minus the income tax rate.
(b) Earnings for the year ended December 31, 1994, for GSU were not adequate to cover fixed charges combined fixed charges and
preferred dividends by $144.8 million and $197.1 million, respectively.
</TABLE>
Exhibit 12(c)
Entergy Louisiana, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
Fixed charges, as defined:
Total Interest 141,513 136,957 136,444 136,901 132,412 128,900
Interest applicable to rentals 9,363 8,519 8,332 9,332 10,601 9,203
----------------------------------------------------------
Total fixed charges, as defined 150,876 145,476 144,776 146,233 143,013 138,103
Preferred dividends, as defined (a) 42,026 40,779 29,171 32,847 28,234 22,103
----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $192,902 $186,255 $173,947 $179,080 $171,247 $160,206
==========================================================
Earnings as defined:
Net Income $182,989 $188,808 $213,839 $201,537 $190,762 $141,757
Add:
Provision for income taxes:
Total Taxes 87,037 110,813 63,288 117,114 118,559 98,965
Fixed charges as above 150,876 145,476 144,776 146,233 143,013 138,103
----------------------------------------------------------
Total earnings, as defined $420,902 $445,097 $421,903 $464,884 $452,334 $378,825
==========================================================
Ratio of earnings to fixed charges, as defined 2.79 3.06 2.91 3.18 3.16 2.74
==========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 2.18 2.39 2.43 2.60 2.64 2.36
==========================================================
- ------------------------
(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>
Exhibit 12(d)
Entergy Mississippi, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
Fixed charges, as defined:
Total Interest 64,066 55,359 52,764 51,635 48,007 45,274
Interest applicable to rentals 521 1,264 1,716 2,173 2,165 1,947
---------------------------------------------------------
Total fixed charges, as defined 64,587 56,623 54,480 53,808 50,172 47,221
Preferred dividends, as defined (a) 12,823 12,990 9,447 9,004 7,610 5,123
---------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $77,410 $69,613 $63,927 $62,812 $57,782 $52,344
=========================================================
Earnings as defined:
Net Income $65,036 $101,743 $48,779 $68,667 $79,210 66,661
Add:
Provision for income taxes:
Total income taxes 23,147 55,993 12,476 34,877 41,107 26,744
Fixed charges as above 64,587 56,623 54,480 53,808 50,172 47,221
----------------------------------------------------------
Total earnings, as defined $152,770 $214,359 $115,735 $157,352 $170,489 $140,626
==========================================================
Ratio of earnings to fixed charges, as defined 2.37 3.79 2.12 2.92 3.40 2.98
==========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.97 3.08 1.81 2.51 2.95 2.69
==========================================================
- ------------------------
(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>
Exhibit 12(e)
Entergy New Orleans, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
Fixed charges, as defined:
Total Interest 25,224 21,092 18,272 17,802 16,304 15,287
Interest applicable to rentals 444 544 1,245 916 831 911
---------------------------------------------------------
Total fixed charges, as defined 25,668 21,636 19,517 18,718 17,135 16,198
Preferred dividends, as defined (a) 3,214 2,952 2,071 1,964 1,549 1,723
---------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $28,882 $24,588 $21,588 $20,682 $18,684 $17,921
=========================================================
Earnings as defined:
Net Income $26,424 $47,709 $13,211 $34,386 $26,776 $15,451
Add:
Provision for income taxes:
Total 16,065 31,938 4,600 20,467 16,216 12,142
Fixed charges as above 25,668 21,636 19,517 18,718 17,135 16,198
---------------------------------------------------------
Total earnings, as defined $68,157 $101,283 $37,328 $73,571 $60,127 $43,791
=========================================================
Ratio of earnings to fixed charges, as defined 2.66 4.68 1.91 3.93 3.51 2.70
=========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 2.36 4.12 1.73 3.56 3.22 2.44
=========================================================
- ------------------------
(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>
Exhibit 12(f)
System Energy Resources, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
Fixed charges, as defined:
Total Interest 204,541 190,938 176,504 151,512 143,720 128,653
Interest applicable to rentals 6,265 6,790 7,546 6,475 6,223 6,065
-----------------------------------------------------------
Total fixed charges, as defined $210,806 $197,728 $184,050 $157,987 $149,943 $134,718
===========================================================
Earnings as defined:
Net Income $130,141 $93,927 $5,407 $93,039 $98,668 $102,295
Add:
Provision for income taxes:
Total 88,853 78,552 36,838 75,493 82,121 74,654
Fixed charges as above 210,806 197,728 184,050 157,987 149,943 134,718
-----------------------------------------------------------
Total earnings, as defined $429,800 $370,207 $226,295 $326,519 $330,732 $311,667
===========================================================
Ratio of earnings to fixed charges, as defined 2.04 1.87 1.23 2.07 2.21 2.31
===========================================================
</TABLE>
Exhibit 12(g)
Entergy London Investments
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges
1997
Fixed charges, as defined:
Total Interest 178,647
Interest applicable to rentals 3,766
---------
Total fixed charges, as defined $182,413
=========
Earnings as defined:
Net Income ($148,856)
Add:
Provision for income taxes:
Total (55,536)
Fixed charges as above 182,413
---------
Total earnings, as defined ($21,979)
=========
Ratio of earnings to fixed charges, as defined -0.12
=========
Exhibit 21
The eight registrants, Entergy Corporation, System Energy Resources,
Inc., Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy London
Investments plc, Entergy Louisiana, Inc., Entergy Mississippi, Inc., and
Entergy New Orleans, Inc., and their active subsidiaries, are listed below:
State or Other
Jurisdiction of
Incorporation
Entergy Corporation Delaware
System Energy Resources, Inc. (a) Arkansas
Entergy Arkansas, Inc. (a) Arkansas
Entergy Arkansas Capital I (b) Delaware
The Arklahoma Corporation (b) Arkansas
Entergy Gulf States, Inc. (a) Texas
Entergy Gulf States Capital I (c) Delaware
Varibus Corporation (c) Texas
GSG&T, Inc. (c) Texas
Southern Gulf Railway Company (c) Texas
Prudential Oil & Gas, Inc. (c) Texas
Entergy Louisiana, Inc. (a) Louisiana
Entergy Louisiana Capital I (d) Delaware
Entergy Mississippi, Inc. (a) Mississippi
Entergy New Orleans, Inc. (a) Louisiana
System Fuels, Inc. (e) Louisiana
Entergy Services, Inc. (a) Delaware
Entergy Power, Inc. (a) Delaware
Entergy Operations, Inc. (a) Delaware
Entergy Enterprises, Inc. (a) Louisiana
Entergy S.A. (a) Argentina
Entergy Power Development Corporation (a) Delaware
Entergy Integrated Solutions, Inc. Delaware
Entergy Pakistan, Ltd. Delaware
Entergy Power Asia, Ltd. Cayman Islands
Entergy International Holdings Ltd. LLC (a) Delaware
Entergy International Ltd. LLC Delaware
Entergy Global Power Operations Corporation (a) Delaware
Entergy Power Operations U.S., Inc. Delaware
Entergy Power Operations Corporation Delaware
EP Edegel, Inc. Delaware
Entergy Power CBA Holding Ltd. Bermuda
EPG Cayman Holding I Cayman Islands
EPG Cayman Holding II Cayman Islands
Entergy Victoria LDC Cayman Islands
Entergy Victoria Holding, LDC Cayman Islands
CitiPower Trust Australia
CitiPower Ltd. Australia
Entergy Power Edesur Holding Ltd. (a) Bermuda
Entergy Power Marketing Corp. (a) Delaware
Entergy Power Holding II, Ltd. Cayman Islands
Entergy Power Operations Holdings Ltd. Cayman Islands
Entergy Power Operations Pakistan LDC Cayman Islands
Entergy Nuclear, Inc. Delaware
Entergy Power Cayman Investments, Ltd. Cayman Islands
Entergy Power Peru S.A. Peru
Entergy do Brasil LTDA Brazil
Entergy Technology Holding Company (a) Delaware
Entergy Power International Holdings Delaware
Corporation (a)
Entergy Power Generation Corporation (a) Delaware
Entergy Power Saltend, Ltd. Cayman Islands
Entergy Power Chile, Inc. Delaware
Entergy London Limited England
Entergy London Investments plc England
London Electricity plc England
_______________________
(a)Entergy Corporation owns all of the Common Stock of System Energy
Resources, Inc., Entergy Arkansas Inc., Entergy Gulf States, Inc.,
Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New
Orleans, Inc., Entergy Services, Inc., Entergy Power, Inc., Entergy
Operations, Inc., Entergy Enterprises, Inc., Entergy S.A., Entergy
Power Development Corporation, Entergy International Holdings Ltd. LLC,
Entergy Power Edesur Holding Ltd., Entergy Power Marketing Corp.,
Entergy Power International Holdings Corporation, Entergy Power
Generation Corporation, Entergy Global Power Operations Corporation and
Entergy Technology Holding Company.
(b)Entergy Arkansas, Inc. 100 % of the common stock of Entergy Arkansas
Capital I and 34% of the Common Stock of The Arklahoma Corporation.
(c)Entergy Gulf States, Inc. owns all of the Common Stock of Entergy Gulf
States Capital I, Varibus Corporation, GSG&T, Inc., Southern Gulf
Railway Company, and Prudential Oil & Gas, Inc.
(d)Entergy Louisiana, Inc. owns all of the common stock of Entergy
Louisiana Capital I.
(e)The capital stock of System Fuels, Inc. is owned in proportions of 35%,
33%, 19% and 13% by Entergy Arkansas, Inc., Entergy Louisiana, Inc.,
Entergy Mississippi, Inc., and Entergy New Orleans, Inc., respectively.
Exhibit 24
DATE: March 2, 1998
TO: Louis E. Buck, Jr.
Laurence M. Hamric
FROM: Edwin Lupberger, et. al.
SUBJECT: Power of Attorney; 1997 Form 10-K
Entergy Corporation, referred to herein as the Company, will file with the
Securities and Exchange Commission its Annual Report on Form 10-K for the
year ended December 31, 1997 pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
The Company and the undersigned, in their respective capacities as
directors and/or officers of said Company as specified in Attachment I, do
each hereby make, constitute and appoint Louis E. Buck, Jr. and Laurence
M. Hamric, and each of them, their true and lawful Attorneys (with full
power of substitution) for each of the undersigned and in his or her name,
place and stead to sign and cause to be filed with the Securities and
Exchange Commission the aforementioned Annual Report on Form 10-K and any
amendments thereto.
Yours very truly,
Entergy Corporation
By: /s/ Edwin Lupberger
Edwin Lupberger
Chairman of the Board, President
Chief Executive Officer and
Principal Financial Officer
<PAGE>
/s/ W. Frank Blount /s/ John A. Cooper, Jr.
W. Frank Blount John A. Cooper, Jr.
/s/ Lucie J. Fjeldstad /s/ Norman C. Francis
Lucie J. Fjeldstad Norman C. Francis
/s/ Robert v.d. Luft /s/ Edwin Lupberger
Robert v.d. Luft Edwin Lupberger
/s/ Kinnaird R. McKee /s/ Paul W. Murrill
Kinnaird R. McKee Paul W. Murrill
/s/ James R. Nichols /s/ Eugene H. Owen
James R. Nichols Eugene H. Owen
/s/ John N. Palmer, Sr. /s/ Robert D. Pugh
John N. Palmer, Sr. Robert D. Pugh
/s/ Bismark A. Steinhagen /s/ Wm. Clifford Smith
Bismark A. Steinhagen Wm. Clifford Smith
<PAGE>
Entergy Corporation
Chairman of the Board, Chief Executive Officer, Principal Financial
Officer and Director (principal executive officer and principal financial
officer) - Edwin Lupberger
Directors - W. Frank Blount, John A. Cooper, Jr., Lucie J. Fjeldstad,
Norman C. Francis, Robert v.d. Luft, Kinnaird R. McKee, Edwin Lupberger,
Paul W. Murrill, James R. Nichols, Eugene H. Owen, John N. Palmer, Sr.,
Robert D. Pugh, Wm. Clifford Smith, Bismark A. Steinhagen.
<PAGE>
DATE: March 2, 1998
TO: Louis E. Buck, Jr.
Laurence M. Hamric
FROM: Edwin Lupberger, et. al.
SUBJECT: Power of Attorney; 1997 Form 10-K
Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana,
Inc., Entergy Mississippi, Inc., Entergy New Orleans, Inc., System Energy
Resources, Inc., and Entergy London Investments plc (collectively referred
to herein as the Companies) will file with the Securities and Exchange
Commission their respective Annual Reports on Form 10-K for the year ended
December 31, 1997 pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
The Companies and the undersigned, in their respective capacities as
directors and/or officers of said Companies as specified in Attachment I,
do each hereby make, constitute and appoint Louis E. Buck and Laurence M.
Hamric, and each of them, their true and lawful Attorneys (with full power
of substitution) for each of the undersigned and in his or her name, place
and stead to sign and cause to be filed with the Securities and Exchange
Commission the aforementioned Annual Report on Form 10-K and any
amendments thereto.
Yours very truly,
Entergy Arkansas, Inc.
Entergy Gulf States, Inc.
Entergy Louisiana, Inc.
Entergy Mississippi, Inc.
Entergy New Orleans, Inc.
System Energy Resources, Inc.
Entergy London Investments plc
By: /s/ Edwin Lupberger
Edwin Lupberger
Chairman of the Board
Chief Executive Officer and
Principal Financial Officer
<PAGE>
/s/ Michael B. Bemis
Michael B. Bemis
/s/ John J. Cordaro /s/ Karen R. Johnson
John J. Cordaro Karen R. Johnson
/s/ Frank F. Gallaher /s/ Donald C. Hintz
Frank F. Gallaher Donald C. Hintz
/s/ Jerry D. Jackson /s/ R. Drake Keith
Jerry D. Jackson R. Drake Keith
/s/ Edwin Lupberger /s/ Jerry L. Maulden
Edwin Lupberger Jerry L. Maulden
/s/ Donald E. Meiners /s/ Daniel F. Packer
Donald E. Meiners Daniel F. Packer
<PAGE>
Entergy Arkansas, Inc.
Chairman of the Board, Chief Executive Officer, Principal Financial
Officer and Director (principal executive officer and principal financial
officer) - Edwin Lupberger
Directors -Frank F. Gallaher, Donald C. Hintz, Jerry D. Jackson, R. Drake
Keith, Edwin Lupberger, Jerry L. Maulden.
Entergy Gulf States, Inc.
Chairman of the Board, Chief Executive Officer, Principal Financial
Officer and Director (principal executive officer and principal financial
officer) - Edwin Lupberger
Directors - John J. Cordaro, Frank F. Gallaher, Donald C. Hintz, Jerry D.
Jackson, Karen R. Johnson, Edwin Lupberger, Jerry L. Maulden.
Entergy Louisiana, Inc.
Chairman of the Board, Chief Executive Officer, Principal Financial
Officer and Director (principal executive officer and principal financial
officer) - Edwin Lupberger
Directors - Frank F. Gallaher, John J. Cordaro, Donald C. Hintz, Jerry D.
Jackson, Edwin Lupberger, Jerry L. Maulden.
Entergy Mississippi, Inc.
Chairman of the Board, Chief Executive Officer, Principal Financial
Officer and Director (principal executive officer and principal financial
officer) - Edwin Lupberger
Directors -Frank F. Gallaher, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, Donald E. Meiners.
Entergy New Orleans, Inc.
Chairman of the Board, Chief Executive Officer, Principal Financial
Officer and Director (principal executive officer and principal financial
officer) - Edwin Lupberger
Directors - Jerry D. Jackson, Edwin Lupberger, Jerry L. Maulden, Daniel F.
Packer.
System Energy Resources, Inc.
President, Chief Executive Officer, Principal Financial Officer and
Director (principal executive officer) - Donald C. Hintz
Chairman of the Board and Principal Financial Officer (principal financial
officer) - Edwin Lupberger
Directors - Donald C. Hintz, Edwin Lupberger, Jerry L. Maulden.
Entergy London Investments plc
Chairman of the Board, Chief Executive Officer, Principal Financial
Officer and Director (principal executive officer and principal financial
officer) - Edwin Lupberger
Directors - Michael B. Bemis, Edwin Lupberger
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Corporation's financial statements for the year ended December 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000065984
<NAME> ENTERGY CORPORATION AND SUBSIDIARIES
<SUBSIDIARY>
<NUMBER> 023
<NAME> ENTERGY CORPORATION AND SUBSIDIARIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 18,132,828
<OTHER-PROPERTY-AND-INVEST> 1,383,819
<TOTAL-CURRENT-ASSETS> 3,171,322
<TOTAL-DEFERRED-CHARGES> 4,312,731
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 27,000,700
<COMMON> 2,461
<CAPITAL-SURPLUS-PAID-IN> 4,613,572
<RETAINED-EARNINGS> 2,157,912
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,714,740
400,005
788,445
<LONG-TERM-DEBT-NET> 9,068,325
<SHORT-TERM-NOTES> 428,964
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 390,674
0
<CAPITAL-LEASE-OBLIGATIONS> 236,000
<LEASES-CURRENT> 167,700
<OTHER-ITEMS-CAPITAL-AND-LIAB> 8,746,642
<TOT-CAPITALIZATION-AND-LIAB> 27,000,700
<GROSS-OPERATING-REVENUE> 9,561,721
<INCOME-TAX-EXPENSE> 471,341
<OTHER-OPERATING-EXPENSES> 7,704,563
<TOTAL-OPERATING-EXPENSES> 7,704,563
<OPERATING-INCOME-LOSS> 1,857,158
<OTHER-INCOME-NET> (222,646)
<INCOME-BEFORE-INTEREST-EXPEN> 1,634,512
<TOTAL-INTEREST-EXPENSE> 862,272
<NET-INCOME> 300,899
53,216
<EARNINGS-AVAILABLE-FOR-COMM> 247,683
<COMMON-STOCK-DIVIDENDS> 438,183
<TOTAL-INTEREST-ON-BONDS> 858,871
<CASH-FLOW-OPERATIONS> 1,724,632
<EPS-PRIMARY> $1.03
<EPS-DILUTED> $1.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Arkansas' financial statements for the year ended December 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000007323
<NAME> ENTERGY ARKANSAS, INC.
<SUBSIDIARY>
<NUMBER> 001
<NAME> ENTERGY ARKANSAS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,802,790
<OTHER-PROPERTY-AND-INVEST> 266,725
<TOTAL-CURRENT-ASSETS> 637,457
<TOTAL-DEFERRED-CHARGES> 399,905
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,106,877
<COMMON> 470
<CAPITAL-SURPLUS-PAID-IN> 590,134
<RETAINED-EARNINGS> 479,705
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,070,309
91,027
116,350
<LONG-TERM-DEBT-NET> 1,244,860
<SHORT-TERM-NOTES> 667
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 60,650
0
<CAPITAL-LEASE-OBLIGATIONS> 83,841
<LEASES-CURRENT> 62,623
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,376,550
<TOT-CAPITALIZATION-AND-LIAB> 4,106,877
<GROSS-OPERATING-REVENUE> 1,715,714
<INCOME-TAX-EXPENSE> 59,220
<OTHER-OPERATING-EXPENSES> 1,448,839
<TOTAL-OPERATING-EXPENSES> 1,448,839
<OPERATING-INCOME-LOSS> 266,875
<OTHER-INCOME-NET> 22,226
<INCOME-BEFORE-INTEREST-EXPEN> 289,101
<TOTAL-INTEREST-EXPENSE> 101,904
<NET-INCOME> 127,977
10,988
<EARNINGS-AVAILABLE-FOR-COMM> 116,989
<COMMON-STOCK-DIVIDENDS> 128,600
<TOTAL-INTEREST-ON-BONDS> 101,839
<CASH-FLOW-OPERATIONS> 433,740
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy Gulf
States' financial statements for the year ended December 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000044570
<NAME> ENTERGY GULF STATES, INC.
<SUBSIDIARY>
<NUMBER> 006
<NAME> ENTERGY GULF STATES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4,538,186
<OTHER-PROPERTY-AND-INVEST> 364,415
<TOTAL-CURRENT-ASSETS> 735,208
<TOTAL-DEFERRED-CHARGES> 850,828
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 6,488,637
<COMMON> 114,055
<CAPITAL-SURPLUS-PAID-IN> 1,152,575
<RETAINED-EARNINGS> 284,165
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,550,795
153,978
201,444
<LONG-TERM-DEBT-NET> 1,702,719
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 190,890
0
<CAPITAL-LEASE-OBLIGATIONS> 92,055
<LEASES-CURRENT> 30,280
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,566,476
<TOT-CAPITALIZATION-AND-LIAB> 6,488,637
<GROSS-OPERATING-REVENUE> 2,147,829
<INCOME-TAX-EXPENSE> 22,402
<OTHER-OPERATING-EXPENSES> 1,617,283
<TOTAL-OPERATING-EXPENSES> 1,617,283
<OPERATING-INCOME-LOSS> 530,546
<OTHER-INCOME-NET> (269,924)
<INCOME-BEFORE-INTEREST-EXPEN> 260,622
<TOTAL-INTEREST-EXPENSE> 178,244
<NET-INCOME> 59,976
23,865
<EARNINGS-AVAILABLE-FOR-COMM> 36,111
<COMMON-STOCK-DIVIDENDS> 77,200
<TOTAL-INTEREST-ON-BONDS> 167,642
<CASH-FLOW-OPERATIONS> 466,324
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Louisiana's financial statements for the year ended December 31, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000060527
<NAME> ENTERGY LOUISIANA, INC.
<SUBSIDIARY>
<NUMBER> 012
<NAME> ENTERGY LOUISIANA, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,382,254
<OTHER-PROPERTY-AND-INVEST> 101,859
<TOTAL-CURRENT-ASSETS> 335,478
<TOTAL-DEFERRED-CHARGES> 355,809
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,175,400
<COMMON> 1,088,900
<CAPITAL-SURPLUS-PAID-IN> (2,321)
<RETAINED-EARNINGS> 46,766
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,133,345
155,000
100,500
<LONG-TERM-DEBT-NET> 1,338,464
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 35,300
0
<CAPITAL-LEASE-OBLIGATIONS> 28,579
<LEASES-CURRENT> 29,232
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,354,980
<TOT-CAPITALIZATION-AND-LIAB> 4,175,400
<GROSS-OPERATING-REVENUE> 1,803,272
<INCOME-TAX-EXPENSE> 98,965
<OTHER-OPERATING-EXPENSES> 1,435,692
<TOTAL-OPERATING-EXPENSES> 1,435,692
<OPERATING-INCOME-LOSS> 367,580
<OTHER-INCOME-NET> 632
<INCOME-BEFORE-INTEREST-EXPEN> 368,212
<TOTAL-INTEREST-EXPENSE> 127,490
<NET-INCOME> 141,757
13,355
<EARNINGS-AVAILABLE-FOR-COMM> 128,402
<COMMON-STOCK-DIVIDENDS> 145,400
<TOTAL-INTEREST-ON-BONDS> 132,199
<CASH-FLOW-OPERATIONS> 341,126
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Mississippi's financial statements for the year ended December 31, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000066901
<NAME> ENTERGY MISSISSIPPI, INC.
<SUBSIDIARY>
<NUMBER> 016
<NAME> ENTERGY MISSISSIPPI, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,053,532
<OTHER-PROPERTY-AND-INVEST> 13,288
<TOTAL-CURRENT-ASSETS> 270,301
<TOTAL-DEFERRED-CHARGES> 102,440
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,439,561
<COMMON> 199,326
<CAPITAL-SURPLUS-PAID-IN> (59)
<RETAINED-EARNINGS> 229,181
<TOTAL-COMMON-STOCKHOLDERS-EQ> 428,448
0
50,381
<LONG-TERM-DEBT-NET> 464,156
<SHORT-TERM-NOTES> 47,162
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 20
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 449,394
<TOT-CAPITALIZATION-AND-LIAB> 1,439,561
<GROSS-OPERATING-REVENUE> 937,395
<INCOME-TAX-EXPENSE> 26,744
<OTHER-OPERATING-EXPENSES> 800,647
<TOTAL-OPERATING-EXPENSES> 800,647
<OPERATING-INCOME-LOSS> 136,748
<OTHER-INCOME-NET> 1,462
<INCOME-BEFORE-INTEREST-EXPEN> 138,210
<TOTAL-INTEREST-EXPENSE> 44,805
<NET-INCOME> 66,661
4,044
<EARNINGS-AVAILABLE-FOR-COMM> 62,617
<COMMON-STOCK-DIVIDENDS> 59,200
<TOTAL-INTEREST-ON-BONDS> 50,194
<CASH-FLOW-OPERATIONS> 159,086
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
New Orleans' financial statements for the year ended December 31, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000071508
<NAME> ENTERGY NEW ORLEANS, INC.
<SUBSIDIARY>
<NUMBER> 017
<NAME> ENTERGY NEW ORLEANS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 293,976
<OTHER-PROPERTY-AND-INVEST> 3,259
<TOTAL-CURRENT-ASSETS> 119,804
<TOTAL-DEFERRED-CHARGES> 81,111
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 498,150
<COMMON> 33,744
<CAPITAL-SURPLUS-PAID-IN> 36,294
<RETAINED-EARNINGS> 61,558
<TOTAL-COMMON-STOCKHOLDERS-EQ> 131,596
0
19,780
<LONG-TERM-DEBT-NET> 168,953
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 177,821
<TOT-CAPITALIZATION-AND-LIAB> 498,150
<GROSS-OPERATING-REVENUE> 504,822
<INCOME-TAX-EXPENSE> 12,142
<OTHER-OPERATING-EXPENSES> 462,531
<TOTAL-OPERATING-EXPENSES> 462,531
<OPERATING-INCOME-LOSS> 42,291
<OTHER-INCOME-NET> 303
<INCOME-BEFORE-INTEREST-EXPEN> 42,594
<TOTAL-INTEREST-EXPENSE> 15,001
<NET-INCOME> 15,451
965
<EARNINGS-AVAILABLE-FOR-COMM> 14,486
<COMMON-STOCK-DIVIDENDS> 26,000
<TOTAL-INTEREST-ON-BONDS> 14,951
<CASH-FLOW-OPERATIONS> 48,588
<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 year ended December 31, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000202584
<NAME> SYSTEM ENERGY RESOURCES, INC.
<SUBSIDIARY>
<NUMBER> 018
<NAME> SYSTEM ENERGY RESOURCES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,480,174
<OTHER-PROPERTY-AND-INVEST> 85,912
<TOTAL-CURRENT-ASSETS> 365,029
<TOTAL-DEFERRED-CHARGES> 500,916
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,432,031
<COMMON> 789,350
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 60,583
<TOTAL-COMMON-STOCKHOLDERS-EQ> 849,933
0
0
<LONG-TERM-DEBT-NET> 1,341,948
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 70,000
0
<CAPITAL-LEASE-OBLIGATIONS> 22,213
<LEASES-CURRENT> 41,977
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,105,960
<TOT-CAPITALIZATION-AND-LIAB> 3,432,031
<GROSS-OPERATING-REVENUE> 633,698
<INCOME-TAX-EXPENSE> 74,654
<OTHER-OPERATING-EXPENSES> 340,505
<TOTAL-OPERATING-EXPENSES> 340,505
<OPERATING-INCOME-LOSS> 293,193
<OTHER-INCOME-NET> 10,726
<INCOME-BEFORE-INTEREST-EXPEN> 303,919
<TOTAL-INTEREST-EXPENSE> 126,970
<NET-INCOME> 102,295
0
<EARNINGS-AVAILABLE-FOR-COMM> 102,295
<COMMON-STOCK-DIVIDENDS> 113,800
<TOTAL-INTEREST-ON-BONDS> 103,684
<CASH-FLOW-OPERATIONS> 278,146
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
London's financial statements for the year ended December 31, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001042730
<NAME> ENTERGY LONDON INVESTMENTS PLC
<SUBSIDIARY>
<NUMBER> 036
<NAME> ENTERGY LONDON INVESTMENTS PLC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,274,834
<OTHER-PROPERTY-AND-INVEST> 1,607,192
<TOTAL-CURRENT-ASSETS> 521,599
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,403,625
<COMMON> 114,000
<CAPITAL-SURPLUS-PAID-IN> 391,981
<RETAINED-EARNINGS> (132,390)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 365,832
300,000
0
<LONG-TERM-DEBT-NET> 1,706,096
<SHORT-TERM-NOTES> 240,794
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 33,814
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,757,089
<TOT-CAPITALIZATION-AND-LIAB> 4,403,625
<GROSS-OPERATING-REVENUE> 1,847,042
<INCOME-TAX-EXPENSE> 177,023
<OTHER-OPERATING-EXPENSES> 1,660,232
<TOTAL-OPERATING-EXPENSES> 1,660,232
<OPERATING-INCOME-LOSS> 186,810
<OTHER-INCOME-NET> 21,525
<INCOME-BEFORE-INTEREST-EXPEN> 208,335
<TOTAL-INTEREST-EXPENSE> 178,647
<NET-INCOME> (147,335)
0
<EARNINGS-AVAILABLE-FOR-COMM> (147,335)
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 139,578
<CASH-FLOW-OPERATIONS> 51,257
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
