___________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address of Principal Executive Identification No.
Offices and Telephone Number
1-11299 ENTERGY CORPORATION 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
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) 576-4000
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) 576-4000
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
___________________________________________________________________________
<PAGE>
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrants were required to file such reports), and (2)
have been subject to such filing requirements for the past 90 days.
Yes X No
Common Stock Outstanding Outstanding at October 31, 1999
Entergy Corporation ($0.01 par value) 241,282,570
This combined Quarterly Report on Form 10-Q is separately filed by
Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States, Inc.,
Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans,
Inc., and System Energy Resources, Inc. Information contained herein
relating to any individual company is filed by such company on its own
behalf. Each company reports herein only as to itself and makes no other
representations whatsoever as to any other company. This combined
Quarterly Report on Form 10-Q supplements and updates the Annual Report on
Form 10-K for the calendar year ended December 31, 1998, and the Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1999 and June 30,
1999, filed by the individual registrants with the SEC, and should be read
in conjunction therewith.
Forward Looking Information
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,
Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy
Mississippi, Inc., Entergy New Orleans, Inc., and System Energy Resources,
Inc. or their affiliated companies may be influenced by factors that could
cause actual outcomes to be materially different than anticipated. 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, interest
rate changes and changes in financial markets generally, changes in foreign
currency exchange rates, the ability to locate and correct computer codes
relevant to Year 2000 issues and related matters, and other factors.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 1999
Page Number
Definitions 1
Management's Financial Discussion and Analysis -
Liquidity and Capital Resources 3
Management's Financial Discussion and Analysis -
Significant Factors and Known Trends 8
Results of Operations and Financial Statements:
Entergy Corporation and Subsidiaries:
Results of Operations 13
Consolidated Statements of Income 19
Consolidated Statements of Cash Flows 20
Consolidated Balance Sheets 22
Statements of Consolidated Retained Earnings
and Comprehensive Income 24
Selected Operating Results 25
Entergy Arkansas, Inc.:
Results of Operations 26
Income Statements 29
Statements of Cash Flows 31
Balance Sheets 32
Selected Operating Results 34
Entergy Gulf States, Inc.:
Results of Operations 35
Income Statements 39
Statements of Cash Flows 41
Balance Sheets 42
Selected Operating Results 44
Entergy Louisiana, Inc.:
Results of Operations 45
Income Statements 47
Statements of Cash Flows 49
Balance Sheets 50
Selected Operating Results 52
Entergy Mississippi, Inc.:
Results of Operations 53
Income Statements 55
Statements of Cash Flows 57
Balance Sheets 58
Selected Operating Results 60
Entergy New Orleans, Inc.:
Results of Operations 61
Income Statements 64
Statements of Cash Flows 65
Balance Sheets 66
Selected Operating Results 68
System Energy Resources, Inc.:
Results of Operations 69
Income Statements 71
Statements of Cash Flows 73
Balance Sheets 74
Notes to Financial Statements for Entergy Corporation
and Subsidiaries 76
Part II:
Item 1. Legal Proceedings 86
Item 4. Submission of Matters to a Vote of Security
Holders 87
Item 5. Other Information 88
Item 6. Exhibits and Reports on Form 8-K 89
Signature 91
<PAGE>
DEFINITIONS
Certain abbreviations or acronyms used in the text are defined below:
Abbreviation or Acronym Term
AFUDC Allowance for Funds Used During Construction
ALJ Administrative Law Judge
ANO Arkansas Nuclear One Plant
ANO 1 Unit No. 1 of ANO
ANO 2 Unit No. 2 of ANO
APSC Arkansas Public Service Commission
Board Board of Directors of Entergy Corporation
Cajun Cajun Electric Power Cooperative, Inc.
Capital Funds Agreement Agreement, dated as of June 21, 1974, as amended,
between System Energy and Entergy Corporation, and
the assignments thereof
CitiPower CitiPower Pty., an electric distribution company
serving Melbourne, Australia and surrounding
suburbs, which was acquired by Entergy effective
January 5, 1996 and was sold on December 31, 1998.
Council Council of the City of New Orleans, Louisiana
domestic utility
companies Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New
Orleans, collectively
EPA U.S. Environmental Protection Agency
ETHC Entergy Technology Holding Company
EWG Exempt wholesale generator under PUHCA
Entergy Entergy Corporation and its various direct and
indirect subsidiaries
Entergy Arkansas Entergy Arkansas, Inc., an Arkansas corporation
Entergy Corporation Entergy Corporation, a Delaware corporation
Entergy Gulf States Entergy Gulf States, Inc., a Texas corporation
(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)
Entergy Louisiana Entergy Louisiana, Inc., a Louisiana corporation
Entergy Mississippi Entergy Mississippi, Inc., a Mississippi
corporation
Entergy New Orleans Entergy New Orleans, Inc., a Louisiana corporation
FERC Federal Energy Regulatory Commission
FUCO an exempt foreign utility company under PUHCA
Form 10-K The combined Annual Report on Form 10-K for the
year ended December 31, 1998 of Entergy, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and
System Energy
Grand Gulf 1 Unit No. 1 (nuclear) of the Grand Gulf Plant
Independence Independence Steam Electric Station (coal), owned
16% by Entergy Arkansas, 25% by Entergy
Mississippi, and 11% by Entergy Power, Inc.
LPSC Louisiana Public Service Commission
London Electricity London Electricity plc, a regional electric
company serving London, England, which was
acquired by Entergy effective February 1, 1997 and
was sold on December 4, 1998.
MPSC Mississippi Public Service Commission
MW Megawatt(s)
NRC Nuclear Regulatory Commission
Owner Participant A corporation that, in connection with the
Waterford 3 sale and leaseback transactions, has
acquired a beneficial interest in a trust, the
Owner Trustee of which is the owner and lessor of
undivided interests in Waterford 3
Owner Trustee Each institution and/or individual acting as Owner
Trustee under a trust agreement with an Owner
Participant in connection with the Waterford 3
sale and leaseback transactions
PUCT Public Utility Commission of Texas
PUHCA Public Utility Holding Company Act of 1935, as
amended
River Bend River Bend Nuclear Plant
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards as
promulgated by the Financial Accounting Standards
Board
System Energy System Energy Resources, Inc., an Arkansas
corporation
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
UK The United Kingdom of Great Britain and Northern
Ireland
Waterford 3 Unit No. 3 (nuclear) of the Waterford Plant
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Operations
Net cash flow from operations for Entergy Corporation, the domestic
utility companies, and System Energy for the nine months ended September
30, 1999 and 1998 was as follows:
Nine Months Ended Nine Months Ended
Company September 30, 1999 September 30, 1998
(In Millions)
Entergy Corporation $962.9 $1,272.6
Entergy Arkansas $217.7 $ 295.5
Entergy Gulf States $206.8 $ 323.8
Entergy Louisiana $299.0 $ 256.9
Entergy Mississippi $103.3 $ 104.1
Entergy New Orleans $ 47.3 $ 33.3
System Energy $109.9 $ 194.1
Entergy's consolidated cash flow from operations decreased compared to
1998 primarily due to the completion of rate phase-in plans and adverse
rate activity at certain of the domestic utility companies and a decrease
in cash provided by competitive businesses.
Rate phase-in plans contributed to cash flow from operations in 1998.
Under these plans, revenues collected exceed the cash cost of expenses.
These plans positively impacted cash flow from operations, but had no net
income effect because the higher revenues were offset by the amortization
of previously deferred costs. During 1998 the following phase-in plans
were completed:
o Entergy Gulf States' Louisiana retail phase-in plan for River Bend in
February;
o Entergy Mississippi's phase-in plan for Grand Gulf 1 in September;
and
o Entergy Arkansas' phase-in plan for Grand Gulf 1 in November.
The operating cash flow provided by competitive businesses was $2.9
million for the nine months ended September 30, 1999. For the nine months
ended September 30, 1998, the competitive businesses provided $202.8
million to operating cash flow. This change was primarily due to the sales
in December 1998 of London Electricity and CitiPower, which had provided
positive operating cash flow in 1998 but contributed no operating cash flow
in 1999.
The decrease in operating cash flow provided by the competitive
businesses was partially offset by:
o the sales of Efficient Solutions, Inc. in September 1998 and Entergy
Security, Inc. in January 1999, which had used operating cash flow
in 1998 and used none in 1999; and
o net income for the power marketing and trading businesses through
September 1999 compared to a net loss through September 1998, which
caused this business to provide operating cash flow in 1999 whereas
it used operating cash flow in 1998.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Investing Activities
Net cash used in investing activities decreased compared to the nine
months ended September 30, 1998. The decrease was primarily caused by:
o the maturity in August 1999 of the notes receivable purchased with
the net proceeds from the sale of London Electricity. The $956.4
million in proceeds from the sale of London Electricity were
partially reinvested in other temporary investments consisting of
U.S. dollar denominated commercial paper; and
o the sales of Entergy Security, Inc. in January 1999 and Entergy
Power Edesur Holding, LTD, TeleCorp Holding Corporation, Inc.,
Entergy Hyperion Telecommunications of Mississippi, LLC, Entergy
Hyperion Telecommunications of Louisiana, LLC, and Entergy
Hyperion Telecommunications of Arkansas, LLC in June 1999.
The decrease was partially offset by increased construction
expenditures. The increased expenditures were primarily due to
construction of the Saltend and Damhead Creek power plants by Entergy's
global power development business, spending on customer service and
reliability improvements by the domestic utility companies, and the return
to service of generation plants at Entergy Arkansas, Entergy Louisiana, and
Entergy New Orleans.
Financing Activities
Net cash used in financing activities increased compared to 1998
primarily due to:
o the redemption of preferred stock in 1999 at Entergy Gulf States and
Entergy Louisiana;
o the repurchase of Entergy Corporation common stock; and
o the repayment of bank borrowings by Entergy Corporation and ETHC with
a portion of the proceeds from the sale of Entergy Security, Inc.
These uses were partially offset by:
o borrowings under the credit facilities associated with the
construction of the Saltend and Damhead Creek power plants by Entergy's
global power development business;
o a reduction in the amount of debt retirements at Entergy Arkansas; and
o a reduction in dividend payments made by Entergy Corporation in 1999
compared to 1998.
Capital Resources
Entergy requires capital resources for:
o construction and other capital expenditures;
o debt and preferred stock maturities;
o capital investments;
o funding of subsidiaries; and
o dividend and interest payments.
Management provides more information on construction expenditures and
long-term debt and preferred stock maturities in Note 9 to the financial
statements in the Form 10-K.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy's sources of funds to meet its capital requirements include:
o internally generated funds;
o cash on hand;
o debt or preferred stock issuances;
o bank financing under new or existing facilities;
o short-term borrowings; and
o sales of businesses.
During the nine months ended September 30, 1999, cash from operations
and cash on hand met substantially all investing and financing requirements
of the domestic utility companies and System Energy. During this period
Entergy Corporation received dividend payments totaling $431.5 million from
the domestic utility companies and System Energy.
As of September 30, 1999, the status of Entergy's short-term credit
facilities is as follows:
o Entergy Corporation had no borrowings outstanding under a $250 million
bank credit facility that was amended and restated in September 1999.
o The Entergy Corporation and ETHC joint $50 million bank line of credit
was terminated on July 6, 1999. Proceeds from the June 1999 sales of
TeleCorp Holding Corporation, Inc., Entergy Hyperion Telecommunications
of Mississippi, LLC, Entergy Hyperion Telecommunications of Louisiana,
LLC, and Entergy Hyperion Telecommunications of Arkansas, LLC were
used to repay the borrowings previously outstanding under this line.
o The external bank credit lines of the domestic utility companies
expired on May 31, 1999 and were not renewed.
o Entergy's global power development business entered into a $250
million bank credit facility in March 1999, which expired on August 25,
1999.
In November 1996, SEC authorization was received by the domestic
utility companies to increase their short-term borrowing limits to amounts
totaling $1.3 billion. This included a total short-term borrowing limit
for the domestic utility companies of $1.078 billion. This authorization
is effective through November 30, 2001. As of September 30, 1999, only
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans had
borrowings outstanding from the money pool, in the amounts of $92.2
million, $11.1 million, and $4.6 million, respectively. The money pool is
an inter-company borrowing arrangement designed to reduce the domestic
utility companies' dependence on external short-term borrowings.
All securities issuances by Entergy, the domestic utility companies,
and System Energy are subject to regulatory approval either by the SEC or
by state or local utility regulators. Preferred stock and debt issuances
are subject to issuance tests set forth in corporate charters, bond
indentures, and other agreements. The domestic utility companies may also
establish special purpose trusts or limited partnerships as financing
subsidiaries for the purpose of issuing quarterly or monthly income
preferred securities.
Management expects that the domestic utility companies and System
Energy will continue to refinance or redeem higher cost debt and preferred
stock prior to maturity to the extent market conditions and interest and
dividend rates are favorable.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy's global power development business is currently constructing
two combined cycle gas turbine merchant power plants in the UK. Saltend, a
1,200 MW combined cycle gas turbine plant, will provide steam and
electricity to BP Chemicals' nearby complex with the remaining electricity
to be sold into the national power pool. Originally scheduled for
commercial operation in January 2000, Saltend's completion, according to
the construction contractor, will slip into early second quarter 2000. The
second plant is an 800 MW facility known as Damhead Creek. It is expected
to begin commercial operation in fourth quarter 2000. The financing of the
construction of these two power plants is discussed in Note 7 to the
financial statements in the Form 10-K. In October 1999, Entergy's global
power development business announced it is considering bids for up to a 50%
interest in Saltend.
Entergy's global power development business has several other projects
in various stages of development. These include the Fairfield and
Riverside projects. Fairfield, a planned 1,000MW combined cycle gas
turbine merchant power plant to be constructed in Fairfield, Texas, is
adjacent to Entergy Gulf States' service territory. Riverside is a planned
500MW combined cycle gas turbine cogeneration plant to be constructed in
Lake Charles, Louisiana. Riverside is expected to be owned 50% by
Entergy's global power development business and 50% by an industrial
customer of Entergy.
In October 1999, Entergy's global power development business obtained
an option to acquire from GE Power Systems twenty-four GE7FA advanced
technology gas turbines and four steam turbines for $1.9 billion and eight
GE7EA advanced technology gas turbines for $160 million for delivery from
2001 through 2004. The acquisitions will include long-term service
agreements. Four of the gas turbines are expected to be used in the
Fairfield project, and the remainder are expected to be used in other
future generation projects. Management anticipates that the acquisition of
these turbines will be funded by a combination of cash on hand, project
financing, and other external financing. Payments scheduled for these
acquisitions include $53 million in the fourth quarter 1999 and $269
million in 2000.
On July 13, 1999, Entergy's non-utility nuclear power business
acquired from Boston Edison Company (BECO) the 670 MW Pilgrim Nuclear
Station located in Plymouth, Massachusetts. The acquisition included the
plant, real estate, materials and supplies, and nuclear fuel, for a
purchase price of $81 million. The purchase price was funded with proceeds
from the sales of non-regulated businesses. As part of the Pilgrim
purchase, BECO funded a $471 million decommissioning trust fund, which was
transferred to an Entergy subsidiary. After a favorable tax determination
regarding the trust fund, Entergy has agreed to return $43 million of the
trust fund to BECO subsequent to September 30, 1999. Based on Entergy's
estimate the trust fund is adequate to cover future decommissioning costs
for the Pilgrim plant. Further discussion of this acquisition can be found
in Note 1 to the financial statements in this report and in "Part I,
Item 1, Other Businesses" in the Form 10-K.
Entergy's non-utility nuclear power business will continue to pursue
the acquisition of additional nuclear power plants. In November 1999, this
business entered into exclusive negotiations with the New York Power
Authority (NYPA) for a ninety day period with regard to the potential sale
of NYPA's James A. FitzPatrick 800 MW nuclear power plant located near
Oswego, New York and NYPA's Indian Point 3 980 MW nuclear power plant
located in Westchester County, New York.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy's ability to invest in domestic and foreign generation
businesses is subject to regulation by the SEC under PUHCA. Absent SEC
approval, the aggregate amount that Entergy, but not its non-regulated FUCO
and EWG subsidiaries, may invest in domestic and foreign utility businesses
is limited to an amount equal to 50% of consolidated retained earnings at
the time an investment is made. Using the proceeds from the sales of
London Electricity and CitiPower, Entergy's FUCO and EWG subsidiaries have
the ability to make significant additional investments in domestic and
foreign generation businesses.
Entergy has also made investments in energy-related businesses,
including power marketing and trading. Under the SEC's regulations
pursuant to PUHCA, there is a limit equal to 15% of consolidated
capitalization on the amount that may be invested in such businesses
without specific SEC approval. Entergy currently has considerable capacity
to make additional investments of this type without exceeding this limit.
In the nine months ended September 30, 1999, Entergy Corporation paid
$218 million in cash dividends on its common stock. Declarations of
dividends on Entergy's common stock are made at the discretion of the
Board. The Board evaluates the level of Entergy common stock dividends
based upon Entergy's earnings and financial strength. Dividend
restrictions are discussed in Note 8 to the financial statements in the
Form 10-K.
In October 1998, the Board approved a plan for the repurchase of
Entergy common stock through December 31, 2001 to fulfill the requirements
of various compensation and benefit plans. The stock repurchase plan
provides for purchases in the open market of up to 5 million shares for an
aggregate consideration of up to $250 million. In July 1999, the Board
approved the commitment of up to an additional $750 million toward the
repurchase of Entergy common stock through December 31, 2001. The shares
are being purchased on a discretionary basis. See Note 3 to the financial
statements for stock repurchases and issuances made during the nine months
ended September 30, 1999.
See Note 4 to the financial statements in this report for a discussion
of Entergy's recent long-term debt activity. See Notes 4, 5, 6, 7, 9 and
10 to the financial statements in the Form 10-K for additional information
on Entergy's and its subsidiaries' capital and financing requirements in
1999-2003.
Entergy Corporation and System Energy
Pursuant to the Capital Funds Agreement between Entergy Corporation
and System Energy, Entergy Corporation has agreed to supply System Energy
with sufficient capital to:
o maintain System Energy's equity at a minimum of 35% of its total
capitalization (excluding short-term debt);
o permit the continued commercial operation of Grand Gulf 1;
o pay in full all System Energy indebtedness for borrowed money when
due; and
o enable System Energy to make payments on specific debt under
supplements to the agreement assigning System Energy's rights in the
agreement as security for the specific debt.
The Capital Funds Agreement and other Grand Gulf 1 related agreements
are more thoroughly discussed in Note 9 to the financial statements in the
Form 10-K.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT
FACTORS AND KNOWN TRENDS" in the Form 10-K, including "Domestic Competition
- - Regulatory and Legislative Activity - Transition-to-Competition Filings",
"Industrial and Commercial Customers", and "Other Electric Utility Trends"
for a discussion of the increasing competitive pressures facing Entergy and
the electric utility industry. See also "Market Risks" in the Form 10-K
for a discussion of other significant issues affecting Entergy. Set forth
below are recent updates to the information contained in the Form 10-K
under the other headings contained therein.
Significant events have affected and will continue to affect Entergy's
results of operations. During the past twelve months, Entergy sold its
interests in London Electricity, CitiPower, Efficient Solutions, Inc., and
most of its telecommunications businesses, producing significant non-
recurring cash receipts. For financial information on Entergy's remaining
competitive businesses see Note 6 to the financial statements included in
this report. In addition, the domestic utility companies and System Energy
have been and will continue to be subject to regulatory proceedings
relating to several issues, including, but not limited to, their transition
to competition, rate recovery, and accounting matters, some or all of which
could impact their results of operations negatively. These factors affect
Entergy's competitive businesses and domestic utility companies and will
affect Entergy's results of operations in the future.
Domestic Competition
Regulatory and Legislative Activity
Open Access
In April 1999, Entergy filed a proposal seeking guidance from FERC
regarding the formation of an independent transmission company (Transco),
which would own, operate, control, and maintain transmission assets.
Transco member companies, which could include companies other than Entergy
or its subsidiaries, would receive passive ownership, but no voting rights.
The transmission assets and related employees of the domestic utility
companies would be transferred to the Transco.
In July 1999, FERC issued an order in response to Entergy's proposal.
FERC concluded that passive ownership of a Transco by a generating company
or other market participant could meet FERC's current independence and
governance requirements, provided the Transco is structured to address
certain issues and concerns raised by FERC. The issues and concerns
identified by FERC relate to the selection process for the Transco's board
of directors, the Transco board's fiduciary obligations to the member
companies, the ability of the Transco to raise additional capital, and
restrictions on transactions between the Transco and the member companies.
Management expects to make additional filings with federal, state, and
local regulatory authorities addressing these and other issues and seeking
necessary approvals for the formation of the Transco. If approved, the
Transco would likely become operational in 2001.
Legislative Activity
In April 1999, the governor of Arkansas signed into law a
restructuring bill passed by the Arkansas Legislature. The law provides
for retail open access by electric utilities on January 1, 2002. The APSC
may delay implementation of retail open access, but not beyond June 30,
2003. The new law provides the opportunity for recovery of stranded and
transition costs pursuant to a review and approval by the APSC, and for
securitization of the allowed stranded costs. The law also requires
Entergy Arkansas and other utilities to make filings separating
(unbundling) their costs into generation, transmission, distribution, and
customer service functions. Entergy Arkansas' unbundled rate filing must
be made by January 1, 2000. Utilities such as Entergy Arkansas that own
transmission facilities must subject them to operation by an independent
transmission organization by the retail open access date.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
In June 1999, the governor of Texas signed into law a restructuring
bill passed by the Texas Legislature. The law provides for retail open
access by most electric utilities on January 1, 2002, market power
mitigation measures, the opportunity for stranded cost recovery, and
securitization of regulatory assets and stranded costs. The law also
requires unbundling of the generation, transmission and distribution, and
retail provider functions, requires filing by January 10, 2000 of the
utilities' plans to unbundle these functions, and requires filing by April
1, 2000 of unbundled costs and proposed transmission, distribution, and
competition tariffs. The market power mitigation measures include a limit
on the ownership of generation assets by a power generation company within
a specified region. It is uncertain what implications this limit will have
for Entergy Gulf States or the Entergy system. However, it is possible
that the legislation could result in Entergy Gulf States having to use
mitigation measures, including divesting some of its generation assets, if
Entergy Gulf States is found to have generation market power. The law also
requires affected utilities to sell at auction, at least 60 days before
January 1, 2002, entitlements to at least 15% of their Texas jurisdictional
installed generation capacity. The obligation to auction capacity
entitlements continues for up to 60 months after January 1, 2002, or until
40% of jurisdictional customers have chosen an alternative supplier, if
earlier. Pursuant to the law, utilities such as Entergy Gulf States that
own transmission facilities must subject them to operational control by an
independent transmission organization by the retail open access date. The
PUCT and various participants in the industry are currently in the process
of implementing the legislation through various rulemaking and other
proceedings.
Regulatory Activity
In March 1999, the LPSC deferred making a decision on whether electric
industry restructuring is in the public interest. However, the LPSC staff,
outside consultants, and counsel were directed to work together to analyze
and resolve outstanding issues and recommend a plan for the implementation
of retail competition for consideration by the LPSC by January 1, 2001.
Once the Louisiana plan is presented to the LPSC, and if it is determined
that retail competition is in the public interest, it is anticipated that
the LPSC staff, outside consultants, counsel, and industry members will
work together to refine the plan in order that it can be implemented at a
future date.
See Note 2 to the financial statements in the Form 10-K for
information regarding the Revised Proposed Transition Plan (the Plan)
issued by the MPSC in June 1998. The MPSC continues to hold periodic
hearings and request informational filings regarding various potential
effects of retail competition. Enabling legislation necessary to implement
the Plan cannot be considered until the next session of the Mississippi
Legislature, which is scheduled to begin in January 2000.
State and Local Regulation
As discussed in Note 2 to the financial statements in the Form 10-K,
the PUCT had issued for comment proposed "Code of Conduct" rules governing
transactions between utilities and their affiliates. In June 1999, the
PUCT withdrew its proposed rules, and proposed new rules in August 1999.
The new rules implement the requirement of the new Texas retail open access
law that the PUCT adopt a code of conduct to ensure that utilities do not
give an impermissible advantage to competitive affiliates. The PUCT
currently plans to adopt final rules by the end of 1999. The current form
of the proposed rules would allow the continuation of shared services
affiliates, such as Entergy Operations, Inc. and Entergy Services, Inc.
Accordingly, the changes to Entergy's organization as a result of these
rules would be much less substantial than those that would have been
required under the PUCT's original published rules, which severely limited
the use of shared services affiliates. However, management cannot predict
the final form of the adopted rules and, therefore, their impact.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Entergy Mississippi implemented a $13.3 million rate reduction
effective May 1999 based on its annual performance-based formula rate plan
filing for the 1998 test year. In June 1999, Entergy Mississippi revised
its filing resulting in an additional rate reduction of approximately $1.5
million, effective July 1999. Entergy Louisiana submitted its fourth
annual performance-based formula rate plan filing for the 1998 test year in
April 1999, which indicated that a $20.7 million base rate reduction might
be appropriate. Based on Entergy Louisiana's filing and on subsequent
comments filed by Entergy Louisiana, the LPSC staff, and other parties,
Entergy Louisiana implemented a rate reduction of approximately
$15.0 million, effective August 1, 1999. Entergy Louisiana's filing is
subject to further review by the LPSC, which may result in an additional
change in rates. Hearings are scheduled to commence before the LPSC in
May 2000.
Accounting Issues
Continued Application of SFAS 71 and Stranded Cost Exposure
The domestic utility companies' and System Energy's financial
statements primarily reflect assets and costs based on existing cost-based
ratemaking regulation in accordance with SFAS 71, "Accounting for the
Effects of Certain Types of Regulation". Continued applicability of SFAS
71 to the financial statements requires that rates set by an independent
regulator on a cost-of-service basis be charged to and collected from
customers. Under historical ratemaking practice, regulated electric
utilities are granted exclusive geographic franchises to sell electricity.
The utilities are obligated to make investments and incur obligations to
serve customers. In return, prudently incurred costs are recovered from
customers along with a return on investment. Additionally, regulators have
required certain operating costs to be deferred for future recovery from
customers. These costs have been recorded as regulatory assets in the
financial statements.
The electric utility industry's movement toward a combination of
competition and a modified regulatory environment will likely result in
rates for the generation portion of the business that are not based on cost
of service. As a result, the generation portion of the business could be
required to discontinue application of SFAS 71. If a utility company is
required to discontinue application of SFAS 71 for a portion or all of its
operations, it could be required to record asset impairments and remove
regulatory assets and liabilities from its balance sheet. Management
believes that definitive outcomes have not yet been determined regarding
the transition to competition in each of Entergy's jurisdictions.
Therefore, the regulated operations of the domestic utility companies and
System Energy continue to apply SFAS 71. Arkansas and Texas have enacted
retail open access laws as described above, but Entergy believes that
significant issues remain to be addressed by Texas and Arkansas regulators,
and the enacted laws do not provide sufficient detail to determine
definitively the impact on Entergy Arkansas' and Entergy Gulf States'
regulated operations.
A potential effect of a transition to competition, including the
restructuring that will result from the Arkansas and Texas restructuring
laws, is stranded costs. Stranded costs are costs or commitments made by
utilities under a regulated pricing system that may not be recovered in a
competitive market. The restructuring laws enacted in Arkansas and Texas
provide for the recovery of stranded costs subsequent to a process of
review and approval by the APSC or PUCT. Entergy's exposure to stranded
costs is comprised primarily of the following:
o the regulatorily approved cost of constructing its nuclear generating
plants, which may become uneconomic in a competitive environment (the
domestic utility companies' net investment in nuclear generation is
provided in Note 1 to the financial statements in the Form 10-K);
o obligations that may be above-market under the Unit Power Sales
Agreement and under a hydroelectric facility long-term purchased power
contract, which were entered into by certain of the domestic utility
companies with regulatory approval (detail concerning these obligations
is provided in Note 9 to the financial statements in the Form 10-K);
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
o the decommissioning cost for some or all of its nuclear generating
plants (detail concerning these costs is provided in Note 9 to the
financial statements in the Form 10-K);
o the regulatorily approved cost of constructing some of its fossil-
fueled generating plants and the obligations that may be above-market under
related fuel contracts (detail concerning the domestic utility companies'
net investment in generation other than nuclear, which is primarily fossil
fueled, is provided in Note 1 to the financial statements in the Form 10-K,
and detail concerning certain fuel contracts is provided in Note 9 to the
financial statements in the Form 10-K); and
o regulatory assets.
The amount of these costs currently reflected in the financial statements
and the estimated net present value of the contractual obligations
described above total approximately $2.7 billion for Entergy Arkansas, $3.6
billion for Entergy Gulf States, $3.9 billion for Entergy Louisiana, $0.9
billion for Entergy Mississippi, and $0.4 billion for Entergy New Orleans.
The ultimate determination of the amount of the costs that are
stranded in Arkansas or Texas will be made pursuant to future regulatory
proceedings. The outcome of those proceedings is difficult to predict, and
will depend upon the timing of stranded cost determination, the values
attributable to certain strandable assets, assumptions concerning future
market prices for electricity, and other factors. It is not possible to
predict the magnitude of costs that may actually be stranded or the ability
to mitigate those costs in Louisiana, Mississippi, and New Orleans because
of the absence of restructuring legislation or regulatory determinations in
those jurisdictions. Until the proceedings in Arkansas and Texas are
concluded, it is anticipated that both Entergy Arkansas and Entergy Gulf
States will continue to apply SFAS 71 to their regulated operations. SFAS
71 will continue to be applied in Entergy's other jurisdictions pending
further legislative or regulatory developments. Discontinuation of the
application of SFAS 71 by the respective domestic utility companies and
System Energy, combined with a regulatory determination or legislation that
does not allow for recovery of all or a portion of its stranded costs,
could have a material adverse impact on the respective domestic utility
companies' and Entergy's financial statements. However, management
believes that the amount of costs that will be stranded without a means of
recovery or mitigation for the domestic utility companies will be
significantly less than the amounts referred to in the preceding paragraph.
The application of SFAS 71 is discussed more thoroughly in Note 1 to the
financial statements in the Form 10-K.
Year 2000 Issues
Management has been evaluating its computer software and hardware,
databases, embedded microprocessors (collectively referred to as "IT and
non-IT assets"), suppliers, and other relationships to determine actions
required to prevent problems related to the Year 2000, and the resources
required to take such actions. Unless corrected, these problems may result
in malfunctions in certain software applications, databases, and computer
equipment with respect to dates on or after January 1, 2000. These
malfunctions could disrupt operations of nuclear or fossil generating
plants, operation of transmission and distribution systems, and access to
interconnections with neighboring utilities, and could cause other
operational problems. While it is not possible to anticipate all future
events, especially when third parties are involved, management believes the
most reasonably likely worst case scenario is isolated disruptions of
service, which should be rapidly restored.
Management has adopted a four-step approach to address Year 2000
issues including:
o an inventory of all IT and non-IT assets;
o an assessment to determine if the IT and non-IT assets are critical to
the business and, if so, whether Year 2000 has an impact on them;
o remediation or replacement of critical systems determined to be Year
2000 deficient; and
o certification of such critical systems to confirm Year 2000
compliance.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Management has completed its inventory of IT and non-IT assets,
identified systems and equipment that could be affected by the millennium
change, and assessed the risk of potential failure for its assets.
Management defines services or products as Year 2000 "compliant" when they
perform the business, office automation, or process control requirements as
designed into the twenty-first century. Management defines an asset as
"certified" as Year 2000 compliant after it has been modified, or upgraded
if necessary, tested, and deployed in the operating environment.
Certification of Entergy's IT and non-IT assets that significantly affect
service to customers, and of IT and non-IT assets that do not significantly
affect service to customers, but are important to Entergy operations, was
complete in June 1999.
Management has completed an assessment of its vendors that affect
Entergy's operations with respect to Year 2000 issues. All vendors have
been contacted by letter, and vendors whose failure to provide services
would quickly downgrade or suspend Entergy's operations have been
interviewed and evaluated for Year 2000 readiness. Entergy's goal is to
receive written confirmation of the Year 2000 readiness of these critical
vendors. Entergy's contingency plans will include utilization of
alternative suppliers and stockpiling of fuel and other supplies.
Management will implement Year 2000 contingency plans for vendors
throughout 1999.
Maintenance or modification costs associated with Year 2000 compliance
are being expensed as incurred, while the costs of new software are being
capitalized and amortized over the software's useful life. Management's
current estimate of maintenance and modification costs related to Year 2000
issues which have been or will be incurred between 1998 and mid-2000 is
approximately $50 million. Entergy has incurred approximately $48 million
of this total through September 1999. These expenses are being funded
through operating cash flows. Additionally, total capitalized costs for
projects accelerated due to Year 2000 issues are estimated to be $19
million. Entergy has incurred approximately $17 million of this total
through September 1999.
Based on the Year 2000 risk determinations of management, an
independent consultant's risk assessment, and the results of certification
activities, management has created and is implementing contingency plans
throughout 1999 to address Year 2000 issues. Management completed its
written contingency plans in June 1999, using the guidelines issued by the
Nuclear Energy Institute and the guidelines issued by the North American
Electric Reliability Council. The contingency plans address various types
of asset failures that could cause disruptions in service, and create
specific mitigation strategies to rapidly restore service to customers.
For example, to mitigate the risk of loss of generation, Entergy intends to
carry more generation reserve than normal within its control area during
the hours surrounding midnight, December 31, 1999. Although Entergy is
taking steps that it believes will address the Year 2000 issue, this issue
presents risks that may not be entirely foreseen and eliminated and which
could significantly affect utility operations and financial performance.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased for the three and nine months ended September 30,
1999 compared to the three and nine months ended September 30, 1998,
primarily due to decreases in interest charges, depreciation and
amortization, and other operation and maintenance expenses, and an increase
in other income, partially offset by a decrease in operating revenues.
Note 6 to the financial statements provides a detailed breakdown of
financial information by business segment. Competitive businesses are
included in the following segments discussed in Note 6: power marketing
and trading, Entergy London, CitiPower, and all other. All other also
includes the parent company, Entergy Corporation, and the elimination of
power marketing and trading mark-to-market profits on intercompany power
transactions. Net income for the three and nine months ended September 30,
1998 reflected the results of operations for Entergy London, CitiPower,
Efficient Solutions, Inc., Entergy Security, Inc., Entergy Power Edesur
Holdings, Entergy Hyperion Telecommunications, and TeleCorp Holding
Corporation, Inc. These businesses were sold between late 1998 and mid-
1999, and are therefore not included in some or all of 1999's results of
operations.
Revenues and Sales
Domestic Utility Companies and System Energy
The changes in electric operating revenues associated with the
domestic utility companies for the three and nine months ended September
30, 1999 are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Base revenues ($11.7) $79.4
Rate riders (63.2) (146.6)
Fuel cost recovery 67.4 83.1
Sales volume/weather (11.9) 20.2
Other revenue (including unbilled) 1.0 5.3
Sales for resale 5.4 (25.1)
------ -----
Total ($13.0) $16.3
====== =====
Base revenues
Base revenues decreased for the three months ended September 30, 1999
primarily due to:
o Texas retail annual base rate reductions of $69 million and $4.2
million that were implemented in December 1998 and March 1999,
respectively; and
o reserves recorded at Entergy Gulf States in the Louisiana jurisdiction
in the third quarter of 1999 for the estimated outcomes of annual
earnings reviews.
These decreases were partially offset by a reduction in the amount of
reserves recorded in the third quarter of 1999 compared to the third
quarter of 1998 for the anticipated effects of rate proceedings in Texas.
Base revenues increased for the nine months ended September 30, 1999
primarily due to:
o a $93.6 million reversal in June 1999 of regulatory reserves
associated with the accelerated amortization of accounting order
deferrals in conjunction with the settlement agreement in Entergy
Gulf States' November 1998 Texas rate filing. The settlement
agreement was approved by the PUCT in June 1999. The net income
effect of this reversal is largely offset by the amortization of
rate deferrals discussed below; and
o a reduction in the amount of reserves recorded in 1999 compared to
1998 for the anticipated effects of rate proceedings in Texas.
Partially offsetting these increases were:
o Louisiana retail annual base rate reductions of $87 million and $18
million that were implemented at Entergy Gulf States in February and
August 1998, respectively;
o Texas retail annual base rate reductions of $69 million and $4.2
million that were implemented in December 1998 and March 1999,
respectively; and
o reserves recorded at Entergy Gulf States in the Louisiana jurisdiction
in 1999 for the estimated outcomes of annual earnings reviews.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Rate rider
Rate rider revenues do not affect net income because they are offset
by specific incurred expenses.
Rate rider revenues decreased $63.2 million and $146.6 million for the
three and nine months ended September 30, 1999, respectively, as a result
of a revised Grand Gulf rider. This new rider eliminated revenues
attributable to the Grand Gulf phase-in plan, which was completed in
November 1998 for Entergy Arkansas and September 1998 for Entergy
Mississippi. These decreases were partially offset by the implementation
of the Grand Gulf Accelerated Recovery Tariffs at Entergy Arkansas and
Entergy Mississippi, allowing these companies to accelerate a portion of
the payments of their Grand Gulf purchased power obligations. The tariffs
became effective in January 1999 and October 1998, respectively.
Fuel cost recovery
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that is offset by specific incurred fuel costs.
Fuel cost recovery revenues increased for the three and nine months
ended September 30, 1999 due to:
o an increased fuel factor implemented in Entergy Gulf States' Texas
jurisdiction;
o a fuel surcharge implemented in Entergy Gulf States' Texas
jurisdiction in February 1999;
o an increase in the energy cost recovery rate effective April 1999 at
Entergy Arkansas; and
o the 1998 completion of a customer refund obligation under the 1997
energy cost recovery agreement at Entergy Arkansas.
Sales volume/weather
Sales volume decreased for the three months ended September 30, 1999
primarily due to less favorable weather, particularly at Entergy Gulf States
and Entergy Louisiana.
Sales volume increased $20.2 million for the nine months ended
September 30, 1999 primarily due to an increase in the number of customers
at Entergy Arkansas, Entergy Gulf States, Entergy Mississippi, and Entergy
New Orleans, especially in the higher margin residential and commercial
sectors.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other revenue
Other revenue for the three and nine months ended September 30, 1999
was affected by a change in estimated unbilled revenues of the domestic
utility companies. The changed estimate more closely aligns the fuel
component of unbilled revenues with regulatory treatment. The net effect
of this change was to increase other revenue, although this increase was
largely offset by milder weather in 1999. The change in estimate is
expected to affect comparisons of quarterly and year-to-date revenue to
applicable prior period amounts through the first quarter of 2000.
Comparative impacts are also affected by seasonal variations in demand.
Sales for resale
Sales for resale increased $5.4 million for the three months ended
September 30, 1999 primarily due to favorable unit prices at Entergy Gulf
States and Entergy Louisiana, partially offset by the loss of certain
municipal and co-op customer contracts at Entergy Arkansas and decreased
generation availability at Entergy Arkansas due to plant outages in August
and September 1999.
Sales for resale decreased $25.1 million for the nine months ended
September 30, 1999 primarily due to the loss of certain municipal and co-op
customer contracts at Entergy Arkansas.
Competitive Businesses
Competitive business revenues decreased approximately $1.5 billion and
$2.4 billion for the three and nine months ended September 30, 1999,
respectively. These decreases were primarily due to decreased sales
revenues in the power marketing and trading business and the sales of
Entergy London, CitiPower, and Efficient Solutions, Inc. in 1998. The
decreased sales revenues in the power marketing and trading business
resulted from decreased electricity trading volumes for this business in
the peak summer months in 1999 compared to 1998. However, the impact on
net income from these decreased revenues was more than offset by decreased
fuel and purchased power expenses as discussed in Expenses and other below,
resulting in an increase in operating income for this business for the
three and nine months ended September 30, 1999 compared to the three and
nine months ended September 30, 1998.
Expenses and other
Domestic Utility Companies and System Energy
Fuel and purchased power expenses
Net fuel and purchased power expenses increased for the three and nine
months ended September 30, 1999 primarily due to:
o an increase in the price of purchased power and gas in the summer
months of 1999 due to increased demand and decreased availability in the
market;
o a shift from lower priced nuclear fuel to higher priced gas and
purchased power due to nuclear outages at Entergy Arkansas and Entergy
Louisiana, and limited availability of lower priced coal units at
Entergy Arkansas;
o a higher fuel factor and fuel surcharge in the Texas jurisdiction in
1999;
o the 1998 completion of a customer refund obligation under the 1997
energy cost recovery agreement at Entergy Arkansas, which lowered 1998
fuel cost recoveries; and
o an increase in the energy cost recovery rate effective April 1999 at
Entergy Arkansas.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other operation and maintenance
Other operation and maintenance increased for the three and nine
months ended September 30, 1999 primarily due to spending on customer
service and reliability improvements.
Depreciation and amortization
Depreciation and amortization decreased for the three and nine months
ended September 30, 1999 due to:
o reduced River Bend depreciation expense as a result of the write-down
of the River Bend abeyed plant required by the Texas rate settlement;
o reduced transmission and distribution depreciation rates at Entergy
Gulf States as a result of compliance with PUCT and LPSC rate orders;
o reduced amortization of the River Bend Unit 2 cancellation loss as a
result of the completion of amortization for the Louisiana portion of
the loss and the reduction in amortization of the Texas portion in
accordance with a PUCT rate order;
o lower depreciation due to a review of plant in-service dates for
consistency with regulatory treatment; and
o lower depreciation associated with the sale and leaseback of a portion
of Grand Gulf 1 as compared to the same period in 1998.
Other regulatory charges
Other regulatory charges decreased for the three and nine months ended
September 30, 1999 primarily due to:
o a decreased over-recovery of Grand Gulf 1 related costs at Entergy
Mississippi;
o an under-recovery of Grand Gulf 1 related costs at Entergy New
Orleans; and
o accruals made in 1998 at Entergy Arkansas for the transition cost
account.
These decreases were largely offset for the nine months ended
September 30, 1999 by an increase in regulatory charges at System Energy
related to the implementation of the Grand Gulf Accelerated Recovery
Tariffs at Entergy Arkansas and Entergy Mississippi. These tariffs allow
System Energy to accelerate its recovery of Grand Gulf 1 plant investment
costs.
Amortization of rate deferrals
The amortization of rate deferrals decreased for the three and nine
months ended September 30, 1999 primarily due to:
o the completion of the Grand Gulf 1 rate phase-in plans at Entergy
Arkansas and Entergy Mississippi in November and September 1998,
respectively;
o the completion of the Louisiana retail rate phase-in plan for River
Bend at Entergy Gulf States in February 1998; and
o the reduction in the amortization of the Texas portion of the River
Bend accounting order deferrals as a result of the Texas rate
settlement at Entergy Gulf States which reduced the deferred asset.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
These decreases were partially offset for the nine months ended
September 30, 1999 by the increase in amortization expense due to the
reduction in the unamortized balance of the accounting order deferrals at
Entergy Gulf States in June 1999 as a result of the Texas rate settlement
referred to above.
Other income
Other income increased for the three and nine months ended
September 30, 1999 primarily due to an increase in AFUDC resulting from an
adjustment recorded in the third quarter of 1999 on certain capital
projects.
Other income also increased for the nine months ended September 30,
1999 due to an increase in AFUDC resulting from large nuclear projects at
Entergy Arkansas and Entergy Louisiana.
Interest charges
Interest charges decreased for the three and nine months ended
September 30, 1999 primarily due to the retirement, redemption, or
refinancing of certain long-term debt at Entergy Gulf States, Entergy
Louisiana, and System Energy and also at Entergy Arkansas for the nine
months ended September 30, 1999. This decrease was partially offset by
interest on the potential refund of System Energy's proposed rate increase.
See Note 2 for further discussion.
Competitive Businesses
Fuel and purchased power expenses
Fuel and purchased power expenses decreased for the three and nine
months ended September 30, 1999 primarily due to the business sales
previously discussed, decreased electricity trading volume in the power
marketing and trading business, and a $44 million counterparty default
incurred in 1998 by the power marketing and trading business. These
decreases are partially offset by increased gas trading volume in the power
marketing and trading business.
Other operation and maintenance expenses
Other operation and maintenance expenses decreased for the three and
nine months ended September 30, 1999 primarily due to the business sales
previously discussed. The decrease was partially offset by an increase in
such expenses for the power marketing and trading business compared to the
three and nine months ended September 30, 1998, resulting primarily from
increased risk management and back-office support.
Other income
Other income increased for the three and nine months ended September
30, 1999 due primarily to:
o interest income of $45.5 million in 1999 on the proceeds of the sales
of Entergy London and CitiPower; and
o a $68.6 million ($35.9 million net of tax) loss on the sale of
Efficient Solutions, Inc. (formerly Entergy Integrated Solutions, Inc.)
in September 1998.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other income also increased for the nine months ended September 30,
1999 due to:
o a $26.7 million ($17 million net of tax) gain on the sale of Entergy
Power Edesur Holdings in June 1999;
o a $12.9 million ($8.0 million net of tax) gain on the sale of Entergy
Hyperion Telecommunications in June 1999;
o a $12.5 million ($.6 million net of tax) gain on the sale of Entergy
Security, Inc. in January 1999; and
o a $7.6 million ($4.9 million net of tax) adjustment to the final sale
price of CitiPower in January 1999.
Interest charges
Interest on long-term debt decreased for the three and nine months
ended September 30, 1999 due primarily to the retirement of debt associated
with the Entergy London and CitiPower businesses.
Income Taxes
The effective income tax rates for the three months ended September
30, 1999 and 1998 were 41.6% and 22.9%, respectively. The effective income
tax rates for the nine months ended September 30, 1999 and 1998 were 37.2%
and 26.4%, respectively. The effective income tax rate increased in the
current year primarily due to the favorable impact of the reduction in the
UK corporation tax rate from 31% to 30% in the third quarter of 1998, the
recording of a deferred tax benefit in the second quarter of 1998 related
to the expected utilization of capital loss carryforwards, and the
recording of deferred tax benefits in the third quarter of 1998 related to
the expected utilization of foreign tax credits. These increases were
partially offset by the recording of deferred tax benefits in the second
quarter of 1999 related to expected utilization of foreign tax credits.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
1999 1998 1999 1998
(In Thousands, Except Share Data)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Domestic electric $2,019,513 $2,032,463 $4,871,232 $4,854,872
Natural gas 18,441 17,003 78,321 91,616
Steam products - 11,626 15,550 32,151
Competitive businesses 1,026,581 2,526,355 2,055,758 4,430,714
---------- ---------- ---------- ----------
TOTAL 3,064,535 4,587,447 7,020,861 9,409,353
---------- ---------- ---------- ----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel related expenses, and
gas purchased for resale 584,211 579,961 1,478,055 1,256,778
Purchased power 1,139,855 2,423,958 2,190,481 4,010,896
Nuclear refueling outage expenses 19,594 20,445 56,414 64,134
Other operation and maintenance 413,221 482,129 1,181,559 1,466,322
Decommissioning 11,572 12,559 35,004 36,508
Taxes other than income taxes 93,028 91,033 259,149 277,145
Depreciation and amortization 161,616 243,816 523,165 717,414
Other regulatory charges - net 29,003 71,542 10,033 11,759
Amortization of rate deferrals 10,722 71,331 107,902 219,507
---------- ---------- ---------- ----------
TOTAL 2,462,822 3,996,774 5,841,762 8,060,463
---------- ---------- ---------- ----------
OPERATING INCOME 601,713 590,673 1,179,099 1,348,890
---------- ---------- ---------- ----------
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction 7,877 4,027 20,636 9,650
Gain (loss) on sale of assets - net 587 (67,212) 61,888 (54,091)
Miscellaneous - net 24,959 17,282 74,975 53,941
---------- ---------- ---------- ----------
TOTAL 33,423 (45,903) 157,499 9,500
---------- ---------- ---------- ----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 116,615 182,899 359,310 565,785
Other interest - net 12,921 11,481 58,404 35,636
Distributions on preferred securities of subsidiaries 4,709 13,407 14,128 33,535
Allowance for borrowed funds used during construction (6,064) (3,453) (16,469) (8,015)
---------- ---------- ---------- ----------
TOTAL 128,181 204,334 415,373 626,941
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 506,955 340,436 921,225 731,449
Income taxes 210,797 77,839 342,403 192,820
---------- ---------- ---------- ----------
CONSOLIDATED NET INCOME 296,158 262,597 578,822 538,629
Preferred dividend requirements of subsidiaries and others 9,939 11,611 30,645 35,091
---------- ---------- ---------- ----------
EARNINGS APPLICABLE TO
COMMON STOCK $286,219 $250,986 $548,177 $503,538
========== ========== ========== ==========
Earnings per average common share:
Basic and diluted $1.16 $1.02 $2.22 $2.04
Dividends declared per common share $0.30 $0.30 $0.90 $1.20
Average number of common shares outstanding:
Basic 246,253,929 246,615,620 246,541,754 246,331,931
Diluted 246,386,502 246,777,031 247,095,210 246,509,467
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
(In Thousands)
OPERATING ACTIVITIES
<S> <C> <C>
Consolidated net income $578,822 $538,629
Noncash items included in net income:
Amortization of rate deferrals 107,902 219,507
Reserve for regulatory adjustments (13,156) 128,807
Other regulatory charges 10,033 11,759
Depreciation, amortization, and decommissioning 558,169 753,922
Deferred income taxes and investment tax credits (180,764) (125,224)
Allowance for equity funds used during construction (20,636) (9,650)
(Gain) loss on sale of assets (61,888) 54,091
Changes in working capital (Net of effects from dispositions):
Receivables (383,339) (438,679)
Fuel inventory (28,551) 26,119
Accounts payable 244,784 286,360
Taxes accrued 391,609 338,440
Interest accrued (39,348) (19,151)
Deferred fuel (169,347) (121,413)
Other working capital accounts 1,121 (94,325)
Decommissioning trust contributions and realized change in trust assets (45,847) (56,915)
Provision for estimated losses and reserves (31,995) (132,556)
Changes in other regulatory assets (33,766) (30,873)
Other 79,082 (56,294)
-------- ---------
Net cash flow provided by operating activities 962,885 1,272,554
-------- ---------
INVESTING ACTIVITIES
Construction/capital expenditures (792,348) (712,671)
Allowance for equity funds used during construction 20,636 9,650
Nuclear fuel purchases (114,764) (59,409)
Proceeds from sale/leaseback of nuclear fuel 108,938 78,969
Proceeds from sale of businesses 351,082 (21,893)
Investment in other nonregulated/nonutility properties (80,864) (40,704)
Proceeds from notes receivable 956,356 -
Purchase of other temporary investments (468,653) -
Other 7,908 (35,595)
-------- ---------
Net cash flow used in investing activities (11,709) (781,653)
-------- ---------
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
FINANCING ACTIVITIES
Proceeds from the issuance of:
First mortgage bonds 74,679 141,994
G&R mortgage bonds 124,192 78,703
Other long-term debt 585,051 282,219
Common stock 13,390 15,333
Retirement of:
First mortgage bonds (345,887) (351,335)
G&R mortgage bonds (132,413) (110,000)
Other long-term debt (369,625) (211,754)
Repurchase of common stock (129,160) -
Redemption of preferred stock (77,958) (10,250)
Changes in short-term borrowings - net (285,500) (17,964)
Dividends paid:
Preferred stock (31,340) (35,217)
Common stock (218,042) (296,022)
---------- --------
Net cash flow used in financing activities (792,613) (514,293)
---------- --------
Effect of exchange rates on cash and cash equivalents 1,340 1,006
---------- --------
Net increase (decrease) in cash and cash equivalents 159,903 (22,386)
Cash and cash equivalents at beginning of period 1,184,495 830,547
---------- --------
Cash and cash equivalents at end of period $1,344,398 $808,161
========== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $447,054 $627,534
Income taxes $155,426 $97,775
Noncash investing and financing activities:
Change in unrealized appreciation/(depreciation) of
decommissioning trust assets $22,916 ($4,696)
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents:
Cash $152,081 $386,764
Temporary cash investments - at cost,
which approximates market 1,090,317 797,731
Special deposits 102,000 -
----------- -----------
Total cash and cash equivalents 1,344,398 1,184,495
----------- -----------
Other temporary investments - at cost,
which approximates market 468,653 -
Notes receivable 2,262 959,328
Accounts receivable:
Customer 429,791 280,648
Allowance for doubtful accounts (9,194) (10,300)
Other 360,172 197,362
Accrued unbilled revenues 346,120 245,350
----------- -----------
Total receivables 1,126,889 713,060
----------- -----------
Deferred fuel costs 338,187 169,589
Fuel inventory - at average cost 118,157 90,408
Materials and supplies - at average cost 392,030 374,674
Rate deferrals 33,500 37,507
Deferred nuclear refueling outage costs 41,336 37,138
Prepayments and other 87,397 77,749
----------- -----------
TOTAL 3,952,809 3,643,948
----------- -----------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 214 214
Decommissioning trust funds 1,248,780 709,018
Non-utility property - at cost (less accumulated depreciation) 216,969 205,660
Non-regulated investments 262,633 557,347
Other - at cost (less accumulated depreciation) 16,491 16,041
----------- -----------
TOTAL 1,745,087 1,488,280
----------- -----------
UTILITY PLANT
Electric 23,170,302 22,704,572
Plant acquisition adjustment 410,996 423,195
Property under capital lease 777,459 789,045
Natural gas 188,162 183,621
Steam products - 80,537
Construction work in progress 1,140,618 911,278
Nuclear fuel under capital lease 307,402 282,595
Nuclear fuel 88,223 29,690
----------- -----------
TOTAL UTILITY PLANT 26,083,162 25,404,533
Less - accumulated depreciation and amortization (10,803,794) (10,075,951)
----------- -----------
UTILITY PLANT - NET 15,279,368 15,328,582
----------- -----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Rate deferrals 21,199 125,095
SFAS 109 regulatory asset - net 1,102,862 1,141,318
Unamortized loss on reacquired debt 198,699 191,786
Other regulatory assets 600,401 528,179
Long-term receivables 32,876 34,617
Other 464,525 354,889
----------- -----------
TOTAL 2,420,562 2,375,884
----------- -----------
TOTAL ASSETS $23,397,826 $22,836,694
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
CURRENT LIABILITIES
<S> <C> <C>
Currently maturing long-term debt $316,735 $255,221
Notes payable 665 296,790
Accounts payable 757,743 522,072
Customer deposits 153,897 148,972
Taxes accrued 675,102 284,847
Accumulated deferred income taxes 97,926 31,976
Nuclear refueling outage costs 5,700 16,991
Interest accrued 145,567 185,688
Co-owner advances 14,305 4,073
Obligations under capital leases 175,964 176,270
Other 81,214 58,909
----------- -----------
TOTAL 2,424,818 1,981,809
----------- -----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 3,319,890 3,538,332
Accumulated deferred investment tax credits 524,351 565,744
Obligations under capital leases 232,944 220,209
FERC settlement - refund obligation 38,861 43,159
Other regulatory liabilities 196,760 153,163
Decommissioning 594,651 107,365
Transition to competition 95,856 90,623
Regulatory reserves 354,620 674,310
Accumulated provisions 262,707 252,321
Other 742,557 635,024
----------- -----------
TOTAL 6,363,197 6,280,250
----------- -----------
Long-term debt 6,504,287 6,596,617
Preferred stock with sinking fund 89,650 167,523
Preference stock 150,000 150,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts holding
solely junior subordinated deferrable debentures 215,000 215,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 338,454 338,455
Common stock, $.01 par value, authorized 500,000,000
shares; issued 247,016,020 shares in 1999 and
246,829,076 shares in 1998 2,470 2,468
Paid-in capital 4,634,412 4,630,609
Retained earnings 2,852,718 2,526,888
Accumulated other comprehensive loss, net of tax:
Cumulative foreign currency translation adjustment (64,691) (46,739)
Less - treasury stock, at cost (3,721,974 shares in 1999 and
208,907 shares in 1998) 112,489 6,186
----------- -----------
TOTAL 7,650,874 7,445,495
----------- -----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $23,397,826 $22,836,694
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS AND COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended
1999 1998
(In Thousands)
RETAINED EARNINGS
<S> <C> <C> <C> <C>
Retained Earnings - Beginning of period $2,640,373 $2,188,165
Add - Earnings applicable to common stock 286,219 $286,219 250,986 $250,986
Deduct:
Dividends declared on common stock 74,057 73,983
Capital stock and other expenses (183) (117)
---------- ----------
Total 73,874 73,866
---------- ----------
Retained Earnings - End of period $2,852,718 $2,365,285
========== ==========
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET
OF TAX:
Balance at beginning of period ($47,697) ($73,665)
Foreign currency translation adjustments (16,994) (16,994) (14,708) (14,708)
---------- ----------
Balance at end of period ($64,691) ($88,373)
========== -------- ========== --------
Comprehensive Income $269,225 $236,278
======== ========
Nine Months Ended
1999 1998
(In Thousands)
RETAINED EARNINGS
Retained Earnings - Beginning of period $2,526,888 $2,157,912
Add - Earnings applicable to common stock 548,177 $548,177 503,538 $503,538
Deduct:
Dividends declared on common stock 222,077 295,514
Capital stock and other expenses 270 651
---------- ----------
Total 222,347 296,165
---------- ----------
Retained Earnings - End of period $2,852,718 $2,365,285
========== ==========
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET
OF TAX:
Balance at beginning of period ($46,739) ($69,817)
Foreign currency translation adjustments (17,952) (17,952) (18,556) (18,556)
---------- ----------
Balance at end of period ($64,691) ($88,373)
========== -------- ========== --------
Comprehensive Income $530,225 $484,982
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
<S> <C> <C> <C> <C>
Domestic Electric Operating Revenues:
Residential $ 815.3 $ 844.5 ($29.2) (3)
Commercial 450.8 454.9 (4.1) (1)
Industrial 513.9 496.3 17.6 4
Governmental 46.6 48.9 (2.3) (5)
----------------------------------
Total retail 1,826.6 1,844.6 (18.0) (1)
Sales for resale 151.7 144.9 6.8 5
Other 41.2 43.0 (1.8) (4)
----------------------------------
Total $2,019.5 $ 2,032.5 ($13.0) (1)
==================================
Billed Electric Energy
Sales (GWH):
Residential 11,007 11,229 (222) (2)
Commercial 7,227 7,122 105 1
Industrial 11,297 11,311 (14) -
Governmental 720 745 (25) (3)
----------------------------------
Total retail 30,251 30,407 (156) (1)
Sales for resale 3,087 3,005 82 3
----------------------------------
Total 33,338 33,412 (74) -
==================================
Nine Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
Domestic Electric Operating Revenues:
Residential $ 1,745.2 $ 1,811.2 ($66.0) (4)
Commercial 1,125.9 1,148.4 (22.5) (2)
Industrial 1,370.1 1,380.5 (10.4) (1)
Governmental 120.9 133.2 (12.3) (9)
----------------------------------
Total retail 4,362.1 4,473.3 (111.2) (2)
Sales for resale 315.6 335.2 (19.6) (6)
Other 193.5 46.4 147.1 317
----------------------------------
Total $4,871.2 $ 4,854.9 $16.3 -
==================================
Billed Electric Energy
Sales (GWH):
Residential 24,274 24,166 108 -
Commercial 18,137 17,446 691 4
Industrial 32,340 32,577 (237) (1)
Governmental 1,932 2,042 (110) (5)
----------------------------------
Total retail 76,683 76,231 452 1
Sales for resale 7,391 7,580 (189) (2)
----------------------------------
Total 84,074 83,811 263 -
==================================
</TABLE>
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the three months ended September 30, 1999
compared to the three months ended September 30, 1998 primarily due to
decreased unbilled revenues and increased other operation and maintenance
expenses, partially offset by decreased regulatory charges.
Net income decreased for the nine months ended September 30, 1999
compared to the nine months ended September 30, 1998 primarily due to
decreased unbilled revenues, partially offset by decreased regulatory
charges and interest expenses, and increased allowance for equity funds
used during construction.
Revenues and Sales
The changes in electric operating revenues for the three and nine
months ended September 30, 1999 are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Base revenues $1.0 $1.8
Rate riders (22.3) (51.9)
Fuel cost recovery 14.6 26.4
Sales volume/weather - 5.7
Other revenue (including unbilled) (23.4) (52.4)
Sales for resale (8.2) 10.2
------ ------
Total ($38.3) ($60.2)
====== ======
Rate rider
Rate rider revenues do not affect net income because they are offset
by specific incurred expenses.
Rate rider revenues decreased for the three and nine months ended
September 30, 1999 as a result of a revised Grand Gulf rider, which
includes consideration of the expiration of the Grand Gulf 1 phase-in plan
in November 1998, partially offset by the Grand Gulf Accelerated Recovery
Tariff (GGART). The tariff was designed to allow Entergy Arkansas to pay
down a portion of its Grand Gulf purchased power obligation in advance of
the implementation of retail access in Arkansas. The rider and GGART
became effective with the first billing cycle in January 1999.
Fuel cost recovery
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that is offset by specific incurred fuel costs.
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Fuel cost recovery revenues increased for the three and nine months
ended September 30, 1999 due to an increase in the energy cost recovery
rate effective April 1999 and the 1998 completion of a customer refund
obligation under the 1997 energy cost recovery agreement, which lowered
1998 fuel cost recoveries. The increase in the energy cost recovery rate
allows Entergy Arkansas to recover previously under-recovered fuel
expenses.
Other revenue
Other revenue decreased for the three and nine months ended September
30, 1999 primarily due to a change in estimated unbilled revenues and less
favorable weather in 1999. The changed estimate more closely aligns the
fuel component of unbilled revenues with regulatory treatment. A decrease
in price as a result of a change in the customer class mix also contributed
to the decrease. The change in estimate is expected to affect comparisons
of quarterly and year-to-date revenue to applicable prior period amounts
through the first quarter of 2000. Comparative impacts are also affected
by seasonal variations in demand.
Sales for resale
Sales for resale decreased for the three months ended September 30,
1999 primarily due to the loss of certain municipal and co-op customer
contracts and decreased generation availability due to plant outages at
White Bluff and ANO in August 1999 and September 1999, respectively.
Sales for resale increased for the nine months ended September 30,
1999 due to increased generation availability in 1999 as a result of
maintenance outages in 1998. Outages at affiliate plants in 1999 resulted
in an increase in sales to affiliated companies. This increase was
partially offset by decreased revenues from municipals, co-ops, and
nonaffiliated companies due to the loss of certain customer contracts.
Expenses
Fuel and purchased power expenses
Net fuel and purchased power expenses increased for the three months
ended September 30, 1999 primarily due to the increase in the price of
purchased power and gas in the summer months of 1999 as a result of
increased demand and decreased availability in the market.
Fuel and purchased power expenses increased for the nine months ended
September 30, 1999 due to the 1998 completion of a customer refund
obligation under the 1997 energy cost recovery agreement, which lowered
1998 fuel cost recoveries, and an increase in the energy cost recovery rate
effective April 1999. The increase in the energy cost recovery rate allows
Entergy Arkansas to recover previously under-recovered fuel expenses. The
high prices of purchased power and gas in the summer months of 1999 also
contributed to the increase in expense.
Other operation and maintenance
Other operation and maintenance expenses increased for the three
months ended September 30, 1999 primarily due to:
o increased distribution expenses related to additional customer service
and tree trimming expenditures;
o increased general plant maintenance at ANO; and
o increased maintenance at ANO 1 while the plant was down for refueling
in September 1999.
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other regulatory charges
Other regulatory charges decreased for the three and nine months ended
September 30, 1999 primarily due to the accruals in September 1998 for the
transition cost account. The decrease for the nine month period was
partially offset by increased recovery of Grand Gulf 1 costs.
Amortization of rate deferrals
The amortization of Grand Gulf 1 rate deferrals decreased for the
three and nine months ended September 30, 1999 due to the completion of the
Grand Gulf 1 rate phase-in plan in November 1998. The amortization of
previously deferred cost had no material effect on net income.
Other
Allowance for equity funds used during construction increased for the
three and nine months ended September 30, 1999 due to third quarter
adjustments to AFUDC on certain capital projects.
Interest expenses decreased for the three and nine months ended
September 30, 1999 due to the retirement, refinancing, or redemption of
certain long-term debt in 1998 and 1999.
Income taxes
The effective income tax rates for the three months ended September
30, 1999 and 1998 were 41.0% and 39.4%, respectively. The effective income
tax rates for the nine months ended September 30, 1999 and 1998 were 36.8%
and 39.2%, respectively. The decrease in the effective tax rates for the
nine months ended was due to lower pretax income and increased flow-through
tax benefits.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
1999 1998 1999 1998
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Domestic electric $488,801 $527,059 $1,187,961 $1,248,205
-------- -------- ---------- ----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel related expenses, and
gas purchased for resale 52,965 63,469 186,612 138,834
Purchased power 164,295 116,085 362,039 326,397
Nuclear refueling outage expenses 7,599 8,128 23,129 23,947
Other operation and maintenance 91,685 79,706 257,150 256,002
Decommissioning 3,277 4,464 8,054 10,700
Taxes other than income taxes 8,841 8,480 27,355 28,681
Depreciation and amortization 38,190 39,839 120,788 123,636
Other regulatory charges (credits) - net 8,379 43,984 (3,108) 21,878
Amortization of rate deferrals - 22,067 - 66,202
-------- -------- ---------- ----------
TOTAL 375,231 386,222 982,019 996,277
-------- -------- ---------- ----------
OPERATING INCOME 113,570 140,837 205,942 251,928
-------- -------- ---------- ----------
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction 3,614 1,934 9,458 4,266
Gain (loss) on sale of assets 2 (1) - 1,773
Miscellaneous - net 1,710 2,093 2,455 8,867
-------- -------- ---------- ----------
TOTAL 5,326 4,026 11,913 14,906
-------- -------- ---------- ----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 20,042 20,974 60,741 66,095
Other interest - net 1,569 2,307 4,658 3,667
Dividends on preferred securities of subsidiary 1,275 1,275 3,825 3,825
Allowance for borrowed funds used during construction (2,412) (1,383) (6,290) (3,034)
-------- -------- ---------- ----------
TOTAL 20,474 23,173 62,934 70,553
-------- -------- ---------- ----------
INCOME BEFORE INCOME TAXES 98,422 121,690 154,921 196,281
Income taxes 40,401 47,959 56,960 76,960
-------- -------- ---------- ----------
NET INCOME 58,021 73,731 97,961 119,321
Preferred dividend requirements and other 2,370 2,526 7,194 7,745
-------- -------- ---------- ----------
EARNINGS APPLICABLE TO
COMMON STOCK $55,651 $71,205 $90,767 $111,576
======== ======== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $97,961 $119,321
Noncash items included in net income:
Amortization of rate deferrals - 66,202
Other regulatory charges (credits) (3,108) 21,878
Depreciation, amortization, and decommissioning 128,842 134,336
Deferred income taxes and investment tax credits (1,414) (19,501)
Allowance for equity funds used during construction (9,458) (4,266)
Gain on sale of assets - (1,773)
Changes in working capital:
Receivables (22,706) (54,923)
Fuel inventory (21,843) 889
Accounts payable 24,874 41,397
Taxes accrued 36,285 82,721
Interest accrued (270) (2,565)
Deferred fuel costs (7,738) (65,408)
Other working capital accounts 13,941 (8,740)
Decommissioning trust contributions and realized
change in trust assets (12,889) (17,776)
Provision for estimated losses and reserves (12,029) (778)
Changes in other regulatory assets (22,355) (25,584)
Other 29,563 30,055
-------- --------
Net cash flow provided by operating activities 217,656 295,485
-------- --------
INVESTING ACTIVITIES
Construction expenditures (172,655) (122,209)
Allowance for equity funds used during construction 9,458 4,266
Nuclear fuel purchases (32,497) (38,354)
Proceeds from sale/leaseback of nuclear fuel 32,473 38,354
-------- --------
Net cash flow used in investing activities (163,221) (117,943)
-------- --------
FINANCING ACTIVITIES
Retirement of:
First mortgage bonds (38,287) (105,774)
Other long-term debt (980) (45,500)
Redemption of preferred stock (2,027) (4,000)
Dividends paid:
Common stock (78,800) (92,600)
Preferred stock (7,212) (7,844)
-------- --------
Net cash flow used in financing activities (127,306) (255,718)
-------- --------
Net decrease in cash and cash equivalents (72,871) (78,176)
Cash and cash equivalents at beginning of period 93,105 162,002
-------- --------
Cash and cash equivalents at end of period $20,234 $ 83,826
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $61,143 $67,314
Income taxes $16,927 $13,521
Noncash investing and financing activities:
Change in unrealized appreciation of
decommissioning trust assets $13,401 $35
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
ASSETS
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents:
Cash $9,999 $9,814
Temporary cash investments - at cost,
which approximates market 10,235 83,291
---------- ----------
Total cash and cash equivalents 20,234 93,105
---------- ----------
Accounts receivable:
Customer 109,932 72,234
Allowance for doubtful accounts (1,753) (1,753)
Associated companies 51,893 50,145
Other 1,910 4,510
Accrued unbilled revenues 58,943 73,083
---------- ----------
Total receivables 220,925 198,219
---------- ----------
Deferred fuel costs 48,929 41,191
Fuel inventory - at average cost 41,695 19,852
Materials and supplies - at average cost 90,733 89,033
Deferred nuclear refueling outage costs 22,875 17,787
Prepayments and other 7,705 5,557
---------- ----------
TOTAL 453,096 464,744
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 11,214 11,214
Decommissioning trust funds 329,575 303,285
Non-utility property - at cost (less accumulated
depreciation) 1,464 1,468
Other - at cost (less accumulated depreciation) 2,993 3,602
---------- ----------
TOTAL 345,246 319,569
---------- ----------
UTILITY PLANT
Electric 4,867,025 4,731,699
Property under capital lease 46,855 49,415
Construction work in progress 204,440 201,853
Nuclear fuel under capital lease 95,681 95,589
Nuclear fuel 5,776 -
---------- ----------
TOTAL UTILITY PLANT 5,219,777 5,078,556
Less - accumulated depreciation and amortization (2,385,730) (2,275,170)
---------- ----------
UTILITY PLANT - NET 2,834,047 2,803,386
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 251,398 248,275
Unamortized loss on reacquired debt 49,165 51,747
Other regulatory assets 116,158 96,927
Other 15,273 22,003
---------- ----------
TOTAL 431,994 418,952
---------- ----------
TOTAL ASSETS $4,064,383 $4,006,651
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT LIABILITIES
Currently maturing long-term debt $340 $1,094
Notes payable 667 667
Accounts payable:
Associated companies 56,121 47,963
Other 96,684 79,969
Customer deposits 25,888 25,196
Taxes accrued 104,870 68,585
Accumulated deferred income taxes 31,712 24,162
Interest accrued 25,016 25,285
Co-owner advances 22,434 4,073
Obligations under capital leases 63,012 64,068
Other 19,990 16,183
---------- ----------
TOTAL 446,734 357,245
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 754,881 756,571
Accumulated deferred investment tax credits 94,939 98,768
Obligations under capital leases 79,524 80,936
Other regulatory liabilities 78,985 65,583
Transition to competition 95,856 90,623
Accumulated provisions 39,375 51,404
Other 58,085 56,400
---------- ----------
TOTAL 1,201,645 1,200,285
---------- ----------
Long-term debt 1,129,228 1,172,285
Preferred stock with sinking fund 20,000 22,027
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 60,000 60,000
SHAREHOLDERS' 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 in 1999
and 1998 470 470
Paid-in capital 590,134 590,134
Retained earnings 499,822 487,855
---------- ----------
TOTAL 1,206,776 1,194,809
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,064,383 $4,006,651
========== ==========
See Notes To Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
<S> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $ 198.2 $ 208.0 ($9.8) (5)
Commercial 92.3 91.7 0.6 1
Industrial 100.5 98.2 2.3 2
Governmental 4.3 4.2 0.1 2
-------------------------------
Total retail 395.3 402.1 (6.8) (2)
Sales for resale
Associated companies 42.3 39.1 3.2 8
Non-associated companies 66.6 78.0 (11.4) (15)
Other (15.4) 7.9 (23.3) (295)
-------------------------------
Total $ 488.8 $ 527.1 ($38.3) (7)
===============================
Billed Electric Energy
Sales (GWH):
Residential 2,317 2,368 (51) (2)
Commercial 1,545 1,510 35 2
Industrial 1,944 1,901 43 2
Governmental 69 67 2 3
-------------------------------
Total retail 5,875 5,846 29 -
Sales for resale
Associated companies 1,304 1,523 (219) (14)
Non-associated companies 1,607 1,425 182 13
-------------------------------
Total 8,786 8,794 (8) -
===============================
Nine Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 425.8 $ 447.2 ($21.4) (5)
Commercial 220.4 220.0 0.4 -
Industrial 251.9 248.9 3.0 1
Governmental 11.1 11.2 (0.1) (1)
--------------------------------
Total retail 909.2 927.3 (18.1) (2)
Sales for resale
Associated companies 132.7 98.7 34.0 34
Non-associated companies 152.3 176.1 (23.8) (14)
Other (6.2) 46.1 (52.3) (113)
--------------------------------
Total $1,188.0 $ 1,248.2 ($60.2) (5)
================================
Billed Electric Energy
Sales (GWH):
Residential 5,182 5,229 (47) (1)
Commercial 3,732 3,629 103 3
Industrial 5,244 5,109 135 3
Governmental 181 178 3 2
--------------------------------
Total retail 14,339 14,145 194 1
Sales for resale
Associated companies 5,575 4,023 1,552 39
Non-associated companies 3,723 3,835 (112) (3)
--------------------------------
Total 23,637 22,003 1,634 7
================================
</TABLE>
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased for the three and nine months ended September 30,
1999 compared to the three and nine months ended September 30, 1998
primarily due to increased operating revenues, lower depreciation and
amortization expense, and decreased interest expense. For the nine months
ended, this increase was also due to higher other income and was partially
offset by increased operating expenses and income taxes.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the three and nine
months ended September 30, 1999 are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Base revenues ($10.0) $84.1
Fuel cost recovery 52.2 56.5
Sales volume/weather (3.4) 6.5
Other revenue (including unbilled) 4.6 14.9
Sales for resale 34.8 16.6
----- ------
Total $78.2 $178.6
===== ======
Base revenues
Base revenues decreased for the three months ended September 30, 1999
primarily due to:
o Texas retail annual base rate reductions of $69 million and $4.2
million that were implemented in December 1998 and March 1999,
respectively; and
o reserves recorded in the Louisiana jurisdiction in the third quarter
of 1999 for the estimated outcomes of annual earnings reviews.
These decreases were partially offset by a reduction in the amount of
reserves recorded in the third quarter of 1999 compared to the third
quarter of 1998 for the anticipated effects of rate proceedings in Texas.
Base revenues increased for the nine months ended September 30, 1999
primarily due to:
o a $93.6 million reversal in June 1999 of regulatory reserves
associated with the accelerated amortization of accounting order
deferrals in conjunction with the settlement agreement in Entergy
Gulf States' November 1998 rate filing. The settlement agreement
was approved by the PUCT in June 1999. The net income effect of
this reversal is largely offset by the amortization of rate
deferrals discussed below; and
o a reduction in the amount of reserves recorded in 1999 compared to
1998 for the anticipated effects of rate proceedings in Texas.
Partially offsetting these increases were:
o Louisiana retail annual base rate reductions of $87 million and $18
million that were implemented in February and August 1998, respectively;
o Texas retail annual base rate reductions of $69 million and $4.2
million that were implemented in December 1998 and March 1999,
respectively; and
o reserves recorded in the Louisiana jurisdiction in 1999 for the
estimated outcomes of annual earnings reviews.
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Fuel cost recovery
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that is offset by specific incurred fuel costs.
Fuel cost recovery revenues increased for the three and nine months
ended September 30, 1999 due to a higher fuel factor in 1999 and a fuel
surcharge implemented in February 1999, both in the Texas jurisdiction.
These increases were partially offset by reduced fuel recovery in the
Louisiana jurisdiction primarily due to lower fuel prices and decreased
generation for the period included in fuel cost recovery revenues.
Sales volume/weather
Sales volume decreased for the three months ended September 30, 1999
primarily due to less favorable summer weather in 1999.
Sales volume increased for the nine months ended September 30, 1999
due to an increase in usage and the number of customers in the higher
margin residential and commercial customer classes, partially offset by
decreased usage in the lower margin industrial customer class.
Other revenue
Other revenue increased for the three and nine months ended September
30, 1999 primarily due to a change in estimated unbilled revenues. The
changed estimate more closely aligns the fuel component of unbilled
revenues with regulatory treatment. This increase was partially offset by
milder weather in 1999. The change in estimate is expected to affect
comparisons of quarterly and year-to-date revenue to applicable prior
period amounts through the first quarter of 2000. Comparative impacts are
also affected by seasonal variations in demand.
Sales for resale
Sales for resale revenues increased for the three and nine months
ended September 30, 1999 as a result of increased sales to associated
companies due to greater energy availability and higher unit prices. This
was partially offset by lower sales of energy from April to June 1999 due
to less generation available for sale because of the extended refueling
outage at River Bend which began in early April 1999. River Bend was
brought back on-line at full power on July 14, 1999.
Gas operating revenues
Gas operating revenues decreased for the nine months ended September
30, 1999 primarily due to lower prices of gas purchased for resale as well
as decreased usage as a result of warmer winter weather, especially in the
residential and commercial sectors.
Steam operating revenues
Steam operating revenues decreased for the three and nine months ended
September 30, 1999 due to a new lease arrangement for Louisiana Station 1
that began in June 1999. Under the terms of this new lease, revenues are
now classified as other income rather than steam operating revenues, which
was the previous classification. It is expected that less revenue will be
realized under the new lease arrangement compared to the previous
arrangement with the steam customer.
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Expenses
Fuel and purchased power
Fuel and purchased power expenses increased for the three and nine
months ended September 30, 1999 primarily due to higher gas expense due to
higher unit gas prices in the third quarter of 1999. Partially offsetting
the increase for the three months was additional fuel cost deferrals as a
result of fuel cost under-recovery during the period.
The increase for the nine months was also due to a shift to gas
generation in the first six months of 1999 because of the reduced
availability of Nelson 6 and the extended River Bend nuclear refueling
outage. The increase was partially offset by lower gas prices during the
first six months of 1999. Purchased power expense increased due to higher
unit prices despite a decrease in the volume purchased.
Fuel and purchased power expenses also increased for the nine months
ended due to reduced fuel cost under-recovery as a result of the higher
fuel factor and fuel surcharge in the Texas jurisdiction in 1999.
Other operation and maintenance
Other operation and maintenance expenses decreased for the three
months ended September 30, 1999 primarily due to a reduction in fossil
expenses primarily as a result of outages in 1998 at both the Willow Glen
and Lewis Creek plants. This decrease was partially offset by higher tree-
trimming, support service and consultant expenses.
Other operation and maintenance expenses increased for the nine months
ended September 30, 1999 due to increases in employee benefit expense,
casualty reserve accruals, and tree-trimming expenses, partially offset by
the lower fossil expenses described above.
Taxes other than income taxes
Taxes other than income taxes decreased for the three and nine months
ended September 30, 1999 primarily due to reduced local franchise taxes as
a result of less revenue being subject to the tax in 1999.
Depreciation and amortization
Depreciation and amortization decreased for the three and nine months
ended September 30, 1999 due to:
o reduced River Bend depreciation expense as a result of the write-down
of the River Bend abeyed plant required by the Texas rate settlement;
o reduced transmission and distribution depreciation rates as a result
of compliance with PUCT and LPSC rate orders;
o reduced amortization of the River Bend Unit 2 cancellation loss as a
result of the completion of amortization for the Louisiana portion of
the loss and the reduction in amortization of the Texas portion in
accordance with a PUCT rate order; and
o lower depreciation due to a review of plant in-service dates for
consistency with regulatory treatment.
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
These factors were partially offset by an increase in the River Bend
depreciation rate as a result of compliance with PUCT and LPSC rate orders.
Amortization of rate deferrals
The amortization of rate deferrals decreased for the three months
ended September 30, 1999 primarily due to the June 1999 Texas rate
settlement, which resulted in a substantial reduction in the unamortized
balance of rate deferrals. Partially offsetting this reduction was a
shorter amortization period ending December 31, 2001. The previous
amortization period for these deferrals was scheduled to run through late
2009.
The amortization of rate deferrals increased for the nine months ended
September 30, 1999 primarily due to the large reduction of these deferrals
in June 1999. Partially offsetting this increase for the nine month period
was the reduction in the amortization of Texas rate deferrals described
above and the completion of the Louisiana retail rate phase-in plan for
River Bend in February 1998.
Other
Other income
Other income increased for the three and nine months ended September
30, 1999 primarily due to third quarter adjustments to AFUDC on certain
capital projects.
Interest charges
Interest charges decreased for the three and nine months ended
September 30, 1999 primarily due to the retirement, redemption, or
refinancing of certain long-term debt in 1998 and the first quarter of
1999.
Income taxes
The effective income tax rates for the three months ended September
30, 1999 and 1998 were 39.1% and 42.0%, respectively. The effective income
tax rates for the nine months ended September 30, 1999 and 1998 were 42.1%
and 43.9%, respectively. The decreases in 1999 were primarily due to
reduced taxable income as a result of higher tax depreciation and increased
amortization of investment tax credits.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
1999 1998 1999 1998
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Domestic electric $671,457 $593,326 $1,609,285 $1,430,665
Natural gas 4,619 4,410 21,603 27,710
Steam products - 11,626 15,550 32,151
-------- -------- ---------- ----------
TOTAL 676,076 609,362 1,646,438 1,490,526
-------- -------- ---------- ----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel related expenses, and
gas purchased for resale 180,037 159,442 451,301 406,696
Purchased power 163,546 95,358 296,075 254,989
Nuclear refueling outage expenses 5,010 3,334 10,366 11,558
Other operation and maintenance 96,661 99,871 302,718 296,572
Decommissioning 1,362 1,162 6,152 5,010
Taxes other than income taxes 30,611 33,191 86,421 92,159
Depreciation and amortization 40,053 50,178 139,885 154,298
Other regulatory credits - net (3,390) (1,847) (15,677) (11,830)
Amortization of rate deferrals 1,402 2,269 85,795 19,480
-------- -------- ---------- ----------
TOTAL 515,292 442,958 1,363,036 1,228,932
-------- -------- ---------- ----------
OPERATING INCOME 160,784 166,404 283,402 261,594
-------- -------- ---------- ----------
OTHER INCOME
Allowance for equity funds used during construction 2,424 757 4,741 2,057
Gain on sale of assets 602 407 1,512 1,182
Miscellaneous - net 5,909 6,950 12,462 12,673
-------- -------- ---------- ----------
TOTAL 8,935 8,114 18,715 15,912
-------- -------- ---------- ----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 34,117 37,104 103,645 114,192
Other interest - net 3,112 1,132 4,683 2,847
Dividends on preferred securities of subsidiary 1,859 1,859 5,578 5,578
Allowance for borrowed funds used during construction (2,170) (611) (4,305) (1,625)
-------- -------- ---------- ----------
TOTAL 36,918 39,484 109,601 120,992
-------- -------- ---------- ----------
INCOME BEFORE INCOME TAXES 132,801 135,034 192,516 156,514
Income taxes 51,880 56,721 81,136 68,686
-------- -------- ---------- ----------
NET INCOME 80,921 78,313 111,380 87,828
Preferred and preference dividend requirements and other 4,108 4,747 12,774 14,335
-------- -------- ---------- ----------
EARNINGS APPLICABLE TO
COMMON STOCK $76,813 $73,566 $98,606 $73,493
======== ======== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $111,380 $87,828
Noncash items included in net income:
Amortization of rate deferrals 85,795 19,480
Reserve for regulatory adjustments (107,901) 76,883
Other regulatory credits (15,677) (11,830)
Depreciation, amortization, and decommissioning 146,037 159,308
Deferred income taxes and investment tax credits 18,482 4,456
Allowance for equity funds used during construction (4,741) (2,057)
Gain on sale of assets (1,512) (1,182)
Changes in working capital:
Receivables (72,852) (14,841)
Fuel inventory (12,196) 6,560
Accounts payable 16,240 (9,621)
Taxes accrued 81,302 65,956
Interest accrued 7,396 8,189
Deferred fuel costs (40,647) (43,391)
Other working capital accounts (13,133) (296)
Decommissioning trust contributions and realized
change in trust assets (8,162) (617)
Provision for estimated losses and reserves 5,529 (4,978)
Changes in other regulatory assets 1,217 587
Other 10,286 (16,637)
--------- ---------
Net cash flow provided by operating activities 206,843 323,797
--------- ---------
INVESTING ACTIVITIES
Construction expenditures (122,538) (77,904)
Allowance for equity funds used during construction 4,741 2,057
Nuclear fuel purchases (51,980) (226)
Proceeds from sale/leaseback of nuclear fuel 43,009 219
--------- ---------
Net cash flow used in investing activities (126,768) (75,854)
--------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of:
Other long-term debt 122,999 21,600
Retirement of:
First mortgage bonds (25,000) (25,000)
Other long-term debt (22,920) (72,090)
Redemption of preferred stock (25,931) (6,250)
Dividends paid:
Common stock (88,000) (109,400)
Preferred stock (12,873) (14,362)
--------- ---------
Net cash flow used in financing activities (51,725) (205,502)
--------- ---------
Net increase in cash and cash equivalents 28,350 42,441
Cash and cash equivalents at beginning of period 115,736 127,775
--------- ---------
Cash and cash equivalents at end of period $144,086 $170,216
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $101,963 $109,058
Income taxes $3,114 $23,164
Noncash investing and financing activities:
Change in unrealized appreciation of
decommissioning trust assets $8,540 $4,907
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
ASSETS
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents:
Cash $12,186 $11,629
Temporary cash investments - at cost,
which approximates market 29,900 104,107
Special deposits 102,000 -
---------- ----------
Total cash and cash equivalents 144,086 115,736
---------- ----------
Accounts receivable:
Customer 108,065 78,961
Allowance for doubtful accounts (1,735) (1,735)
Associated companies 17,783 23,250
Other 28,890 28,265
Accrued unbilled revenues 108,159 59,569
---------- ----------
Total receivables 261,162 188,310
---------- ----------
Deferred fuel costs 173,544 132,896
Fuel inventory - at average cost 42,397 30,201
Materials and supplies - at average cost 108,531 108,346
Rate deferrals 5,606 9,077
Prepayments and other 24,530 20,495
---------- ----------
TOTAL 759,856 605,061
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds 226,471 209,770
Non-utility property - at cost (less accumulated
depreciation) 187,054 165,272
Other - at cost (less accumulated depreciation) 13,498 12,426
---------- ----------
TOTAL 427,023 387,468
---------- ----------
UTILITY PLANT
Electric 7,353,247 7,250,789
Property under capital lease 48,074 54,427
Natural gas 52,996 51,053
Steam products - 80,537
Construction work in progress 100,660 105,121
Nuclear fuel under capital lease 81,191 46,572
---------- ----------
TOTAL UTILITY PLANT 7,636,168 7,588,499
Less - accumulated depreciation and amortization (3,509,640) (3,141,518)
---------- ----------
UTILITY PLANT - NET 4,126,528 4,446,981
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Rate deferrals 7,008 89,333
SFAS 109 regulatory asset - net 374,796 376,406
Unamortized loss on reacquired debt 39,522 42,879
Other regulatory assets 90,307 89,914
Long-term receivables 32,876 34,617
Other 22,584 221,085
---------- ----------
TOTAL 567,093 854,234
---------- ----------
TOTAL ASSETS $5,880,500 $6,293,744
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT LIABILITIES
Currently maturing long-term debt $148,000 $71,515
Accounts payable:
Associated companies 51,893 60,932
Other 116,381 91,102
Customer deposits 32,788 31,462
Taxes accrued 137,082 55,780
Accumulated deferred income taxes 42,376 21,260
Nuclear refueling outage costs 5,700 16,991
Interest accrued 50,027 42,631
Obligations under capital leases 35,176 34,343
Other 17,193 16,325
---------- ----------
TOTAL 636,616 442,341
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 1,091,162 1,081,598
Accumulated deferred investment tax credits 180,090 193,509
Obligations under capital leases 94,089 66,656
Other regulatory liabilities 20,809 30,287
Regulatory reserves 100,588 515,023
Accumulated provisions 66,428 60,899
Other 258,661 455,997
---------- ----------
TOTAL 1,811,827 2,403,969
---------- ----------
Long-term debt 1,631,522 1,631,658
Preferred stock with sinking fund 34,650 60,497
Preference stock 150,000 150,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 85,000 85,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 51,444 51,444
Common stock, no par value, authorized 200,000,000
shares; issued and outstanding 100 shares in 1999
and 1998 114,055 114,055
Paid-in capital 1,152,575 1,152,575
Retained earnings 212,811 202,205
---------- ----------
TOTAL 1,530,885 1,520,279
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,880,500 $6,293,744
========== ==========
See Notes To Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
<S> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $ 209.9 $ 202.7 $ 7.2 4
Commercial 121.8 113.8 8.0 7
Industrial 197.8 189.1 8.7 5
Governmental 7.2 7.8 (0.6) (8)
---------------------------------
Total retail 536.7 513.4 23.3 5
Sales for resale
Associated companies 27.0 3.2 23.8 744
Non-associated companies 50.4 39.4 11.0 28
Other 57.4 37.3 20.1 54
---------------------------------
Total $ 671.5 $ 593.3 $ 78.2 13
=================================
Billed Electric Energy
Sales (GWH):
Residential 3,182 3,210 (28) (1)
Commercial 2,175 2,102 73 3
Industrial 4,555 4,631 (76) (2)
Governmental 112 141 (29) (21)
---------------------------------
Total retail 10,024 10,084 (60) (1)
Sales for resale
Associated companies 306 85 221 260
Non-associated companies 1,104 1,162 (58) (5)
---------------------------------
Total 11,434 11,331 103 1
=================================
Nine Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 463.3 $ 470.5 ($7.2) (2)
Commercial 316.3 317.3 (1.0) -
Industrial 524.3 539.3 (15.0) (3)
Governmental 20.5 29.1 (8.6) (30)
---------------------------------
Total retail 1,324.4 1,356.2 (31.8) (2)
Sales for resale
Associated companies 31.6 13.3 18.3 138
Non-associated companies 86.4 88.1 (1.7) (2)
Other 166.9 (26.9) 193.8 720
---------------------------------
Total $ 1,609.3 $ 1,430.7 $ 178.6 12
=================================
Billed Electric Energy
Sales (GWH):
Residential 7,024 6,878 146 2
Commercial 5,558 5,190 368 7
Industrial 13,111 13,594 (483) (4)
Governmental 314 460 (146) (32)
---------------------------------
Total retail 26,007 26,122 (115) -
Sales for resale
Associated companies 476 347 129 37
Non-associated companies 2,517 2,608 (91) (3)
---------------------------------
Total 29,000 29,077 (77) -
=================================
</TABLE>
<PAGE>
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased for the three months ended September 30, 1999
compared to the three months ended September 30, 1998 primarily due to an
increase in unbilled revenue, and decreases in interest charges and nuclear
refueling outage expenses, partially offset by a decrease in sales
volume/weather revenues.
Net income increased for the nine months ended September 30, 1999
compared to the nine months ended September 30, 1998 primarily due to an
increase in unbilled revenue, and decreases in other operation and
maintenance expenses, interest charges, and nuclear refueling outage
expenses.
Revenues and Sales
The changes in electric operating revenues for the three and nine
months ended September 30, 1999 are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Base revenues $3.1 $5.7
Fuel cost recovery 9.8 22.8
Sales volume/weather (8.0) (0.6)
Other revenue (including unbilled) 16.1 75.6
Sales for resale 18.3 13.4
----- ------
Total $39.3 $116.9
===== ======
Fuel cost recovery
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that is offset by specific incurred fuel costs.
Fuel cost recovery revenues increased for the three and nine months
ended September 30, 1999 primarily due to a shift from lower priced nuclear
fuel to higher priced gas and purchased power due to nuclear outages at
Waterford 3 in 1999.
Sales volume/weather
Sales volume decreased for the three months ended September 30, 1999
primarily due to less favorable weather in the residential and commercial
sectors.
Other revenue
Other revenue increased for the three and nine months ended September
30, 1999 primarily due to a change in estimated unbilled revenues. The
changed estimate more closely aligns the fuel component of unbilled
revenues with regulatory treatment. The change in estimate is expected to
affect comparisons of quarterly and year-to-date revenue to applicable
prior period amounts through the first quarter of 2000. Comparative
impacts are also affected by seasonal variations in demand.
<PAGE>
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales for resale revenue
Sales for resale increased for the three and nine months ended
September 30, 1999 primarily due to increased sales to affiliates as a
result of outages at affiliate plants in 1999 and favorable unit prices in
July and August 1999 caused by increased purchased power and natural gas
market prices.
Expenses
Fuel and purchased power
Net fuel and purchased power expenses increased for the three and
nine months ended September 30, 1999 due to a shift from lower priced
nuclear fuel to higher priced gas and purchased power due to nuclear
outages at Waterford 3 in 1999.
Nuclear refueling outage expenses
Nuclear refueling outage expenses decreased for the three and nine
months ended September 30, 1999 as a result of the amortization of larger
outage expenses in 1998 due to the extended nuclear refueling outage in
1997.
Other operation and maintenance
Other operation and maintenance expenses decreased for the nine
months ended September 30, 1999 primarily due to:
o insurance settlement proceeds received in June 1999 related to the
replacement of a heat exchanger;
o the receipt of higher insurance distributions in 1999;
o the capitalization of costs associated with return to service
projects; and
o a reduction in outside contractors at Waterford 3.
Other
Interest charges
Interest on long-term debt decreased for the three and nine months
ended September 30, 1999 primarily due to the redemption, retirement, or
refinancing of certain long-term debt during 1999.
Income taxes
The effective income tax rates for the three months ended September
30, 1999 and 1998 remained relatively unchanged at 39.4% and 39.8%,
respectively. The effective income tax rates for the nine months ended
September 30, 1999 and 1998 also remained relatively unchanged at 39.8% and
40.9%, respectively.
<PAGE>
ENTERGY LOUISIANA, INC.
INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
1999 1998 1999 1998
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Domestic electric $576,956 $537,632 $1,434,692 $1,317,785
-------- -------- ---------- ----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel related expenses, and
gas purchased for resale 112,908 134,630 275,531 280,340
Purchased power 156,391 102,559 340,973 291,914
Nuclear refueling outage expenses 3,481 5,435 12,403 16,305
Other operation and maintenance 72,181 72,276 205,497 215,785
Decommissioning 2,197 2,197 6,590 6,590
Taxes other than income taxes 19,145 18,237 55,815 53,708
Depreciation and amortization 38,601 37,905 120,564 120,742
Other regulatory credits - net - - - (1,754)
-------- -------- ---------- ----------
TOTAL 404,904 373,239 1,017,373 983,630
-------- -------- ---------- ----------
OPERATING INCOME 172,052 164,393 417,319 334,155
-------- -------- ---------- ----------
OTHER INCOME
Allowance for equity funds used during construction 790 586 3,282 1,406
Gain on sale of assets - - - 2,340
Miscellaneous - net 862 340 1,442 368
-------- -------- ---------- ----------
TOTAL 1,652 926 4,724 4,114
-------- -------- ---------- ----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 24,728 27,181 78,472 84,790
Other interest - net 1,609 1,665 3,821 4,682
Dividends on preferred securities of subsidiary 1,575 1,575 4,725 4,725
Allowance for borrowed funds used during construction (631) (535) (2,998) (1,285)
-------- -------- ---------- ----------
TOTAL 27,281 29,886 84,020 92,912
-------- -------- ---------- ----------
INCOME BEFORE INCOME TAXES 146,423 135,433 338,023 245,357
Income taxes 57,744 53,963 134,485 100,424
-------- -------- ---------- ----------
NET INCOME 88,679 81,470 203,538 144,933
Preferred dividend requirements and other 2,378 3,253 7,427 9,760
-------- -------- ---------- ----------
EARNINGS APPLICABLE TO
COMMON STOCK $86,301 $78,217 $196,111 $135,173
======== ======== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY LOUISIANA, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
(In Thousands)
OPERATING ACTIVITIES
<S> <C> <C>
Net income $203,538 $144,933
Noncash items included in net income:
Other regulatory credits - (1,754)
Depreciation, amortization, and decommissioning 127,154 127,332
Deferred income taxes and investment tax credits 25,141 4,842
Allowance for equity funds used during construction (3,282) (1,406)
Gain on sale of assets - (2,340)
Changes in working capital:
Receivables (107,103) (64,824)
Accounts payable 96,470 (12,277)
Taxes accrued 63,173 108,558
Interest accrued (28,789) 1,895
Deferred fuel costs (64,836) (18,217)
Other working capital accounts (2,438) 14,826
Decommissioning trust contributions and realized
change in trust assets (8,510) (11,062)
Provision for estimated losses and reserves 2,290 6,024
Changes in other regulatory assets 20,033 12,109
Other (23,864) (51,693)
-------- --------
Net cash flow provided by operating activities 298,977 256,946
-------- --------
INVESTING ACTIVITIES
Construction expenditures (86,163) (62,672)
Allowance for equity funds used during construction 3,282 1,406
Nuclear fuel purchases (11,308) (22,293)
Proceeds from sale/leaseback of nuclear fuel 11,308 9,872
-------- --------
Net cash flow used in investing activities (82,881) (73,687)
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
First mortgage bonds 74,679 112,556
Other long-term debt 113,418 -
Retirement of:
First mortgage bonds (122,600) (150,561)
Other long-term debt (129,710) (175)
Redemption of preferred stock (50,000) -
Dividends paid:
Common stock (165,400) (138,500)
Preferred stock (8,010) (9,760)
-------- --------
Net cash flow used in financing activities (287,623) (186,440)
-------- --------
Net increase (decrease) in cash and cash equivalents (71,527) (3,181)
Cash and cash equivalents at beginning of period 83,030 43,920
-------- --------
Cash and cash equivalents at end of period $11,503 $40,739
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $111,675 $88,282
Income taxes $82,454 $21,150
Noncash investing and financing activities:
Change in unrealized appreciation/(depreciation) of
decommissioning trust assets $1,987 ($138)
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
ASSETS
September 30, 1999 and December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
(In Thousands)
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents:
Cash $11,503 $10,187
Temporary cash investments - at cost,
which approximates market - 72,843
---------- ----------
Total cash and cash equivalents 11,503 83,030
---------- ----------
Accounts receivable:
Customer 122,517 65,262
Allowance for doubtful accounts (1,164) (1,164)
Associated companies 16,538 33,775
Other 12,030 19,305
Accrued unbilled revenues 124,900 50,540
---------- ----------
Total receivables 274,821 167,718
---------- ----------
Deferred fuel costs 57,038 -
Accumulated deferred income taxes - 13,331
Materials and supplies - at average cost 81,536 82,220
Deferred nuclear refueling outage costs 14,814 6,498
Prepayments and other 7,961 11,566
---------- ----------
TOTAL 447,673 364,363
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 14,230 14,230
Decommissioning trust funds 93,178 82,680
Non-utility property - at cost (less accumulated depreciation) 21,454 21,460
---------- ----------
TOTAL 128,862 118,370
---------- ----------
UTILITY PLANT
Electric 5,191,079 5,095,278
Property under capital lease 234,339 234,339
Construction work in progress 75,584 85,565
Nuclear fuel under capital lease 59,048 75,814
---------- ----------
TOTAL UTILITY PLANT 5,560,050 5,490,996
Less - accumulated depreciation and amortization (2,274,416) (2,158,800)
---------- ----------
UTILITY PLANT - NET 3,285,634 3,332,196
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 253,799 270,068
Unamortized loss on reacquired debt 33,810 30,629
Other regulatory assets 45,835 49,599
Other 16,469 15,816
---------- ----------
TOTAL 349,913 366,112
---------- ----------
TOTAL ASSETS $4,212,082 $4,181,041
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS'EQUITY
September 30, 1999 and December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
(In Thousands)
CURRENT LIABILITIES
<S> <C> <C>
Currently maturing long-term debt $120,448 $6,772
Accounts payable:
Associated companies 140,719 43,051
Other 89,267 90,465
Customer deposits 55,489 55,966
Taxes accrued 81,376 18,203
Accumulated deferred income taxes 14,821 -
Interest accrued 24,513 53,302
Deferred fuel cost - 7,798
Obligations under capital leases 32,539 32,539
Other 9,079 7,644
---------- ----------
TOTAL 568,251 315,740
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 826,143 840,931
Accumulated deferred investment tax credits 124,538 128,689
Obligations under capital leases 26,509 43,275
Other regulatory liabilities 12,824 10,836
Accumulated provisions 54,934 52,645
Other 39,711 39,791
---------- ----------
TOTAL 1,084,659 1,116,167
---------- ----------
Long-term debt 1,161,594 1,332,315
Preferred stock with sinking fund 35,000 85,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 70,000 70,000
SHAREHOLDERS' 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 in
1999 and 1998 1,088,900 1,088,900
Capital stock expense and other (2,321) (2,320)
Retained earnings 105,499 74,739
---------- ----------
TOTAL 1,292,578 1,261,819
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,212,082 $4,181,041
========== ==========
See Notes To Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
<S> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $ 228.2 $ 224.1 $ 4.1 2
Commercial 116.3 112.2 4.1 4
Industrial 168.4 155.0 13.4 9
Governmental 9.1 8.8 0.3 3
---------------------------------
Total retail 522.0 500.1 21.9 4
Sales for resale
Associated companies 18.4 3.7 14.7 397
Non-associated companies 19.6 16.0 3.6 23
Other 16.9 17.8 (0.9) (5)
---------------------------------
Total $ 576.9 $ 537.6 $ 39.3 7
=================================
Billed Electric Energy
Sales (GWH):
Residential 2,955 3,058 (103) (3)
Commercial 1,568 1,615 (47) (3)
Industrial 3,802 3,805 (3) -
Governmental 123 126 (3) (2)
---------------------------------
Total retail 8,448 8,604 (156) (2)
Sales for resale
Associated companies 150 76 74 97
Non-associated companies 195 207 (12) (6)
---------------------------------
Total 8,793 8,887 (94) (1)
=================================
Nine Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 485.6 $ 465.0 $ 20.6 4
Commercial 289.4 274.7 14.7 5
Industrial 463.1 441.0 22.1 5
Governmental 25.0 24.5 0.5 2
-----------------------------------
Total retail 1,263.1 1,205.2 57.9 5
Sales for resale
Associated companies 26.3 14.0 12.3 88
Non-associated companies 43.9 42.8 1.1 3
Other 101.4 55.8 45.6 82
-----------------------------------
Total $ 1,434.7 $ 1,317.8 $ 116.9 9
===================================
Billed Electric Energy
Sales (GWH):
Residential 6,615 6,620 (5) -
Commercial 3,986 3,979 7 -
Industrial 11,205 11,120 85 1
Governmental 354 364 (10) (3)
---------------------------------
Total retail 22,160 22,083 77 -
Sales for resale
Associated companies 390 311 79 25
Non-associated companies 672 619 53 9
---------------------------------
Total 23,222 23,013 209 1
=================================
</TABLE>
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the three and nine months ended September 30,
1999 compared to the three and nine months ended September 30, 1998
primarily due to a decrease in unbilled revenues and an increase in other
operation and maintenance expense, partially offset by a decrease in
interest expense.
Revenues and Sales
The changes in electric operating revenues for the three and nine
months ended September 30, 1999 are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Base revenues ($4.0) ($6.5)
Grand Gulf rate rider (40.9) (94.7)
Fuel cost recovery (3.6) (7.7)
Sales volume/weather 1.2 5.2
Other revenue (including unbilled) (5.9) (32.7)
Sales for resale (4.4) (18.1)
------ -------
Total ($57.6) ($154.5)
====== =======
Base revenues
Base revenues decreased for the three and nine months ended September
30, 1999 due to a base rate reduction that became effective in May 1999.
Grand Gulf rate rider revenues
Rate rider revenues do not affect net income because they are offset
by specific incurred expenses.
Grand Gulf rate rider revenue decreased for the three and nine months
ended September 30, 1999 as a result of a new rider which became effective
October 1, 1998. This new rider eliminated revenues attributable to the
Grand Gulf phase-in plan, which was completed in September 1998. However,
this decrease was partially offset by the Grand Gulf Accelerated Recovery
Tariff, which also became effective October 1, 1998. This tariff provides
for accelerated recovery of a portion of Entergy Mississippi's Grand Gulf
purchased power obligation.
Other revenue
Other revenue decreased for the three and nine months ended September
30, 1999 primarily due to less favorable weather in 1999. A change in
estimated unbilled revenues also significantly contributed to the decrease
for the nine months ended September 30, 1999. The changed estimate more
closely aligns the fuel component of unbilled revenues with regulatory
treatment. The change in estimate is expected to affect comparisons of
quarterly and year-to-date revenue to applicable prior period amounts
through the first quarter of 2000. Comparative impacts are also affected
by seasonal variations in demand.
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales for resale
Sales for resale decreased for the three and nine months ended
September 30, 1999 primarily due to a decrease in sales to associated
companies as a result of decreased oil generation due to plant outages at
Entergy Mississippi in 1999. The decrease for the nine months ended
September 30, 1999 was also due to higher sales to associated companies in
1998 as a result of an outage at Entergy Arkansas.
Expenses
Fuel and purchased power expenses
Net fuel and purchased power expenses decreased slightly for the three
and nine months ended September 30, 1999 due to a decrease in total
generation requirements. The decrease was largely offset by a shift from
lower priced oil generation to higher priced purchased power as a result of
plant outages in 1999.
Other operation and maintenance
Other operation and maintenance expenses increased for the three and
nine months ended September 30, 1999 primarily due to:
o plant outages in 1999;
o an increase in customer service and reliability improvement spending;
o adjustments to compensation accruals; and
o an increase in casualty reserves.
Other regulatory charges
Other regulatory charges decreased for the three and nine months ended
September 30, 1999 due to a decreased over-recovery of Grand Gulf 1 related
costs because of the new rider implemented in October 1998.
Amortization of rate deferrals
Amortization of rate deferrals decreased for the three and nine months
ended September 30, 1999 due to the completion of the Grand Gulf 1 rate
phase-in plan in September 1998. These phase-ins had no material effect on
net income.
Other
Interest and other charges
Interest on long-term debt decreased for the three and nine months
ended September 30, 1999 primarily due to the retirement, redemption, or
refinancing of certain long-term debt in 1999.
Income taxes
The effective income tax rates for the three months ended September
30, 1999 and 1998 remained relatively unchanged at 35.4% and 35.7%,
respectively. The effective income tax rates for the nine months ended
September 30, 1999 and 1998 remained unchanged at 34.8%.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
1999 1998 1999 1998
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Domestic electric $267,159 $324,784 $644,239 $798,709
-------- -------- -------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel related expenses, and
gas purchased for resale 44,842 85,859 141,617 196,260
Purchased power 111,236 71,404 259,505 210,030
Other operation and maintenance 35,355 30,631 108,268 91,883
Taxes other than income taxes 11,752 12,060 33,496 34,259
Depreciation and amortization 9,166 10,900 31,665 33,294
Other regulatory charges (credits) - net 12,290 24,912 (5,681) 2,883
Amortization of rate deferrals - 34,990 - 104,969
-------- -------- -------- --------
TOTAL 224,641 270,756 568,870 673,578
-------- -------- -------- --------
OPERATING INCOME 42,518 54,028 75,369 125,131
-------- -------- -------- --------
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction 325 17 693 17
Gain (loss) on sale of assets 1 (1) - 1,023
Miscellaneous - net 1,723 971 5,215 3,002
-------- -------- -------- --------
TOTAL 2,049 987 5,908 4,042
-------- -------- -------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 8,113 9,153 27,135 28,614
Other interest - net 849 577 2,294 2,737
Allowance for borrowed funds used during construction (330) (287) (1,026) (420)
-------- -------- -------- --------
TOTAL 8,632 9,443 28,403 30,931
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 35,935 45,572 52,874 98,242
Income taxes 12,724 16,252 18,425 34,215
-------- -------- -------- --------
NET INCOME 23,211 29,320 34,449 64,027
Preferred dividend requirements and other 842 842 2,527 2,527
-------- -------- -------- --------
EARNINGS APPLICABLE TO
COMMON STOCK $22,369 $28,478 $31,922 $61,500
======== ======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $34,449 $64,027
Noncash items included in net income:
Amortization of rate deferrals - 104,969
Other regulatory charges (credits) (5,681) 2,883
Depreciation and amortization 31,665 33,294
Deferred income taxes and investment tax credits 15,432 (35,447)
Allowance for equity funds used during construction (693) (17)
Gain on sale of assets - (1,023)
Changes in working capital:
Receivables 10,702 (50,374)
Fuel inventory (1,942) 809
Accounts payable 31,504 (32,907)
Taxes accrued 51,337 43,546
Interest accrued (1,351) (1,212)
Deferred fuel costs (37,805) 678
Other working capital accounts 10,428 (8,348)
Provision for estimated losses and reserves 2,033 (5,499)
Changes in other regulatory assets (39,284) (28,143)
Other 2,526 16,892
-------- --------
Net cash flow provided by operating activities 103,320 104,128
-------- --------
INVESTING ACTIVITIES
Construction expenditures (59,151) (31,391)
Allowance for equity funds used during construction 693 17
-------- --------
Net cash flow used in investing activities (58,458) (31,374)
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
G&R mortgage bonds 124,192 78,703
Other long-term debt 29,491 -
Retirement of:
G&R mortgage bonds (132,413) (80,000)
Other long-term debt (30,865) (20)
Dividends paid:
Common stock (28,700) (66,000)
Preferred stock (2,521) (2,527)
-------- --------
Net cash flow used in financing activities (40,816) (69,844)
-------- --------
Net increase in cash and cash equivalents 4,046 2,910
Cash and cash equivalents at beginning of period 2,640 6,816
-------- --------
Cash and cash equivalents at end of period $6,686 $9,726
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid/(received) during the period for:
Interest - net of amount capitalized $29,386 $31,585
Income taxes ($53,785) $18,926
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
ASSETS
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents:
Cash $6,686 $2,640
Accounts receivable:
Customer 48,245 39,701
Allowance for doubtful accounts (1,217) (1,217)
Associated companies 3,004 5,703
Other 623 1,267
Accrued unbilled revenues 30,000 45,904
---------- ----------
Total receivables 80,655 91,358
---------- ----------
Deferred fuel costs 39,913 2,108
Accumulated deferred income taxes 4,759 665
Fuel inventory - at average cost 4,945 3,002
Materials and supplies - at average cost 16,533 17,149
Prepayments and other 6,336 12,256
---------- ----------
TOTAL 159,827 129,178
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 5,531 5,531
Non-utility property - at cost (less accumulated
depreciation) 6,997 7,056
Other - at cost (less accumulated depreciation) - 13
---------- ----------
TOTAL 12,528 12,600
---------- ----------
UTILITY PLANT
Electric 1,766,552 1,718,426
Property under capital lease 407 477
Construction work in progress 40,036 35,317
---------- ----------
TOTAL UTILITY PLANT 1,806,995 1,754,220
Less - accumulated depreciation and amortization (710,426) (685,214)
---------- ----------
UTILITY PLANT - NET 1,096,569 1,069,006
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 25,201 25,515
Unamortized loss on reacquired debt 16,677 7,981
Other regulatory assets 140,199 100,601
Other 6,927 6,048
---------- ----------
TOTAL 189,004 140,145
---------- ----------
TOTAL ASSETS $1,457,928 $1,350,929
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT LIABILITIES
Currently maturing long-term debt $- $20
Accounts payable:
Associated companies 48,209 44,091
Other 45,830 18,444
Customer deposits 22,206 18,265
Taxes accrued 57,350 6,013
Interest accrued 13,281 14,632
Obligations under capital leases 93 92
Other 2,278 2,319
---------- ----------
TOTAL 189,247 103,876
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 301,488 281,017
Accumulated deferred investment tax credits 21,283 22,408
Obligations under capital leases 314 384
Accumulated provisions 5,233 3,200
Other 634 4,331
---------- ----------
TOTAL 328,952 311,340
---------- ----------
Long-term debt 464,411 463,616
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 50,381 50,381
Common stock, no par value, authorized 15,000,000
shares; issued and outstanding 8,666,357 shares in 1999
and 1998 199,326 199,326
Capital stock expense and other (59) (59)
Retained earnings 225,670 222,449
---------- ----------
TOTAL 475,318 472,097
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,457,928 $1,350,929
========== ==========
See Notes To Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
<S> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $ 114.1 $ 139.2 ($25.1) (18)
Commercial 75.3 89.5 (14.2) (16)
Industrial 39.4 46.0 (6.6) (14)
Governmental 6.3 7.7 (1.4) (18)
-------------------------------
Total retail 235.1 282.4 (47.3) (17)
Sales for resale
Associated companies 23.4 29.3 (5.9) (20)
Non-associated companies 11.9 10.4 1.5 14
Other (3.2) 2.7 (5.9) (219)
-------------------------------
Total $ 267.2 $ 324.8 ($57.6) (18)
===============================
Billed Electric Energy
Sales (GWH):
Residential 1,745 1,750 (5) -
Commercial 1,290 1,247 43 3
Industrial 853 830 23 3
Governmental 103 101 2 2
-------------------------------
Total retail 3,991 3,928 63 2
Sales for resale
Associated companies 362 903 (541) (60)
Non-associated companies 140 162 (22) (14)
-------------------------------
Total 4,493 4,993 (500) (10)
===============================
Nine Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 246.5 $ 297.1 ($50.6) (17)
Commercial 190.5 221.9 (31.4) (14)
Industrial 112.3 130.9 (18.6) (14)
Governmental 17.9 21.0 (3.1) (15)
-------------------------------
Total retail 567.2 670.9 (103.7) (15)
Sales for resale
Associated companies 53.6 71.2 (17.6) (25)
Non-associated companies 25.2 25.7 (0.5) (2)
Other (1.8) 30.9 (32.7) (106)
-------------------------------
Total $ 644.2 $ 798.7 ($154.5) (19)
===============================
Billed Electric Energy
Sales (GWH):
Residential 3,777 3,759 18 -
Commercial 3,165 3,021 144 5
Industrial 2,394 2,359 35 1
Governmental 274 260 14 5
-------------------------------
Total retail 9,610 9,399 211 2
Sales for resale
Associated companies 1,527 2,137 (610) (29)
Non-associated companies 342 373 (31) (8)
-------------------------------
Total 11,479 11,909 (430) (4)
===============================
</TABLE>
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased for the three months ended September 30, 1999
compared to the three months ended September 30, 1998 primarily due to an
increase in unbilled revenues.
Net income increased for the nine months ended September 30, 1999
compared to the nine months ended September 30, 1998 primarily due to
increases in unbilled revenues and sales volume, partially offset by an
increase in other operation and maintenance expenses.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the three and nine
months ended September 30, 1999 are as follows:
Three Months Ended Nine Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Base revenues ($1.8) ($5.7)
Fuel cost recovery (5.6) (14.9)
Sales volume/weather (1.7) 3.4
Other revenue (including unbilled) 0.8 5.2
Sales for resale 4.4 5.1
----- -----
Total ($3.9) ($6.9)
===== =====
Base revenues
Base revenues decreased for the three and nine months ended September
30, 1999 primarily due to changes in pricing in the commercial sector and a
scheduled rate change in the amortization of Grand Gulf 1 phase-in
expenses.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are
an addition to revenues that is offset by specific incurred fuel costs.
Fuel cost recovery revenues decreased for the three and nine months
ended September 30, 1999 primarily due to an under-recovery of deferred
fuel expenses resulting from increased fuel and purchased power costs in
July and August 1999 compared to the comparable periods in the prior year.
Sales volume/weather
Sales volume/weather increased for the nine months ended September 30,
1999 primarily due to an increase in the number of customers especially in
the higher margin residential and commercial sectors.
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other revenue
Other revenue increased for the nine months ended September 30, 1999
primarily due to a change in estimated unbilled revenues. The changed
estimate more closely aligns the fuel component of unbilled revenues with
regulatory treatment. The increase was partially offset by less favorable
weather in 1999. The change in estimate is expected to affect comparisons
of quarterly and year-to-date revenue to applicable prior period amounts
through the first quarter of 2000. Comparative impacts are also affected
by seasonal variations in demand.
Sales for resale
Sales for resale increased for the three and nine months ended
September 30, 1999 primarily due to favorable unit prices resulting from
increased purchased power and gas market prices, coupled with an increase
in affiliated sales volume.
Gas Operating Revenues
Gas operating revenues decreased for the nine months ended September
30, 1999 due to decreased usage primarily in the residential sector.
Expenses
Fuel and purchased power
Net fuel and purchased power expenses decreased for the nine months
ended September 30, 1999 primarily due to an under-recovery of deferred
fuel expenses resulting from increased fuel and purchased power costs in
July and August 1999 compared to the comparable periods in the prior year.
Other operation and maintenance
Other operation and maintenance increased for the nine months ended
September 30, 1999 due to:
o increases in spending for customer service and reliability
improvements;
o increases in environmental provisions; and
o adjustments to compensation and accruals.
Other regulatory charges (credits)
Other regulatory credits increased for the three months ended
September 30, 1999 primarily due to an under-recovery of Grand Gulf 1
related costs in 1999 versus an over-recovery in 1998.
Other regulatory credits increased for the nine months ended September
30, 1999 primarily due to a greater under-recovery of Grand Gulf 1 costs in
1999.
Amortization of rate deferrals
Amortization of rate deferrals decreased for the three and nine months
ended September 30, 1999 primarily due to a scheduled rate change in the
amortization of Grand Gulf 1 phase-in expenses.
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Income taxes
For the three months ended September 30, 1999 and 1998, the effective
income tax rates remained relatively unchanged at 39.1% and 39.5%,
respectively. For the nine months ended September 30, 1999 and 1998, the
effective income tax rates were 39.9% and 41.5%, respectively. The
decrease in tax rates for the nine months ended September 30, 1999 was
primarily due to the increase in pretax income reducing the impact of
permanent differences and flow through items.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
1999 1998 1999 1998
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Domestic electric $149,320 $153,215 $333,765 $340,672
Natural gas 13,821 12,593 56,718 63,905
-------- -------- -------- --------
TOTAL 163,141 165,808 390,483 404,577
-------- -------- -------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel related expenses, and
gas purchased for resale 36,179 47,512 87,255 103,196
Purchased power 54,877 44,058 132,793 130,886
Other operation and maintenance 19,956 20,677 60,227 57,762
Taxes other than income taxes 11,540 12,102 29,677 30,827
Depreciation and amortization 4,867 5,225 15,795 16,304
Other regulatory charges (credits) - net (2,221) 4,019 (8,831) (824)
Amortization of rate deferrals 9,321 12,005 22,107 28,857
-------- -------- -------- --------
TOTAL 134,519 145,598 339,023 367,008
-------- -------- -------- --------
OPERATING INCOME 28,622 20,210 51,460 37,569
-------- -------- -------- --------
OTHER INCOME
Allowance for equity funds used during construction 236 125 659 214
Gain on sale of assets - - - 458
Miscellaneous - net 213 377 1,185 41
-------- -------- -------- --------
TOTAL 449 502 1,844 713
-------- -------- -------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 3,319 3,547 9,958 10,406
Other interest - net 334 295 988 772
Allowance for borrowed funds used during construction (170) (97) (481) (165)
-------- -------- -------- --------
TOTAL 3,483 3,745 10,465 11,013
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 25,588 16,967 42,839 27,269
Income taxes 10,006 6,710 17,098 11,336
-------- -------- -------- --------
NET INCOME 15,582 10,257 25,741 15,933
Preferred dividend requirements and other 241 241 724 724
-------- -------- -------- --------
EARNINGS APPLICABLE TO
COMMON STOCK $15,341 $10,016 $25,017 $15,209
======== ======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $25,741 $15,933
Noncash items included in net income:
Amortization of rate deferrals 22,107 28,857
Other regulatory credits (8,831) (824)
Depreciation and amortization 15,795 16,304
Deferred income taxes and investment tax credits 2,094 (12,696)
Allowance for equity funds used during construction (659) (214)
Gain on sale of assets - (458)
Changes in working capital:
Receivables (22,069) (26,249)
Fuel inventory 1,194 2,611
Accounts payable 15,739 2,161
Taxes accrued 19,112 19,639
Interest accrued (2,894) (3,055)
Deferred fuel costs (17,573) 4,925
Other working capital accounts 1,586 (2,083)
Provision for estimated losses and reserves (1,678) (312)
Changes in other regulatory assets (9,679) (4,373)
Other 7,265 (6,836)
-------- --------
Net cash flow provided by operating activities 47,250 33,330
-------- --------
INVESTING ACTIVITIES
Construction expenditures (34,823) (12,073)
Allowance for equity funds used during construction 659 214
-------- --------
Net cash flow used in investing activities (34,164) (11,859)
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
First mortgage bonds - 29,438
Retirement of:
G&R mortgage bonds - (30,000)
Dividends paid:
Common stock (24,400) (9,700)
Preferred stock (724) (724)
-------- --------
Net cash flow used in financing activities (25,124) (10,986)
-------- --------
Net increase (decrease) in cash and cash equivalents (12,038) 10,485
Cash and cash equivalents at beginning of period 17,153 9,458
-------- --------
Cash and cash equivalents at end of period $5,115 $19,943
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid/(received) during the period for:
Interest - net of amount capitalized $13,569 $13,992
Income taxes ($6,301) $5,462
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
ASSETS
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents:
Cash $5,115 $3,769
Temporary cash investments - at cost,
which approximates market - 13,384
-------- --------
Total cash and cash equivalents 5,115 17,153
-------- --------
Accounts receivable:
Customer 40,947 24,355
Allowance for doubtful accounts (761) (761)
Associated companies 682 3,320
Other 4,086 3,835
Accrued unbilled revenues 24,118 16,254
-------- --------
Total receivables 69,072 47,003
-------- --------
Deferred fuel costs 18,763 1,191
Fuel inventory - at average cost 2,278 3,472
Materials and supplies - at average cost 9,498 8,845
Rate deferrals 27,894 28,430
Prepayments and other 4,884 6,686
-------- --------
TOTAL 137,504 112,780
-------- --------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 3,259 3,259
-------- --------
UTILITY PLANT
Electric 543,967 514,685
Natural gas 135,166 132,568
Construction work in progress 21,462 20,184
-------- --------
TOTAL UTILITY PLANT 700,595 667,437
Less - accumulated depreciation and amortization (384,907) (371,558)
-------- --------
UTILITY PLANT - NET 315,688 295,879
-------- --------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Rate deferrals 14,191 35,762
Unamortized loss on reacquired debt 1,240 1,399
Other regulatory assets 31,237 21,558
Other 1,284 1,267
-------- --------
TOTAL 47,952 59,986
-------- --------
TOTAL ASSETS $504,403 $471,904
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable:
Associated companies $20,338 $18,283
Other 24,693 11,008
Customer deposits 17,526 18,083
Taxes accrued 19,112 -
Accumulated deferred income taxes 12,357 6,284
Interest accrued 2,024 4,919
Other 2,776 1,782
-------- --------
TOTAL 98,826 60,359
-------- --------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 50,992 57,214
Accumulated deferred investment tax credits 6,506 6,894
SFAS 109 regulatory liability - net 3,667 942
Other regulatory liabilities 2,063 3,146
Accumulated provisions 7,689 9,367
Other 8,128 8,116
-------- --------
TOTAL 79,045 85,679
-------- --------
Long-term debt 169,067 169,018
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 19,780 19,780
Common stock, $4 par value, authorized 10,000,000
shares; issued and outstanding 8,435,900 shares in 1999
and 1998 33,744 33,744
Paid-in capital 36,294 36,294
Retained earnings 67,647 67,030
-------- --------
TOTAL 157,465 156,848
-------- --------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $504,403 $471,904
======== ========
See Notes To Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
<S> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $ 65.0 $ 70.4 ($5.4) (8)
Commercial 45.2 47.8 (2.6) (5)
Industrial 7.8 8.1 (0.3) (4)
Governmental 19.7 20.5 (0.8) (4)
--------------------------------
Total retail 137.7 146.8 (9.1) (6)
Sales for resale
Associated companies 5.3 1.6 3.7 231
Non-associated companies 3.9 3.2 0.7 22
Other 2.4 1.6 0.8 50
--------------------------------
Total $149.3 $153.2 ($3.9) (3)
================================
Billed Electric Energy
Sales (GWH):
Residential 809 844 (35) (4)
Commercial 649 648 1 -
Industrial 144 144 - -
Governmental 312 311 1 -
--------------------------------
Total retail 1,914 1,947 (33) (2)
Sales for resale
Associated companies 83 42 41 98
Non-associated companies 41 50 (9) (18)
--------------------------------
Total 2,038 2,039 (1) -
================================
Nine Months Ended Increase/
Description 1999 1998 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 124.0 $ 131.3 ($7.3) (6)
Commercial 109.3 114.5 (5.2) (5)
Industrial 18.6 20.4 (1.8) (9)
Governmental 46.3 47.4 (1.1) (2)
---------------------------------
Total retail 298.2 313.6 (15.4) (5)
Sales for resale
Associated companies 12.0 6.8 5.2 76
Non-associated companies 8.4 8.5 (0.1) (1)
Other 15.2 11.8 3.4 29
---------------------------------
Total $ 333.8 $ 340.7 ($6.9) (2)
=================================
Billed Electric Energy
Sales (GWH):
Residential 1,675 1,680 (5) -
Commercial 1,695 1,628 67 4
Industrial 386 395 (9) (2)
Governmental 811 780 31 4
---------------------------------
Total retail 4,567 4,483 84 2
Sales for resale
Associated companies 371 222 149 67
Non-associated companies 137 145 (8) (6)
---------------------------------
Total 5,075 4,850 225 5
=================================
</TABLE>
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased for the three and nine months ended September 30,
1999 primarily as a result of the additional reserves and interest recorded
for the potential refund of System Energy's proposed rate increase.
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. Operating revenues increased for the
three and nine months ended September 30, 1999 due to the implementation of
the Grand Gulf Accelerated Recovery Tariff (GGART) at Entergy Arkansas and
Entergy Mississippi. The tariff was designed to allow Entergy Arkansas and
Entergy Mississippi to pay down a portion of their Grand Gulf purchased
power obligation in advance of the implementation of retail access. It
became effective on January 1, 1999 and October 1, 1998 for Entergy
Arkansas and Entergy Mississippi, respectively. The GGART is discussed in
Note 2 to the financial statements in the Form 10-K. System Energy's
proposed rate increase, which is subject to refund, is discussed in Note 2
to the financial statements.
Expenses
Fuel expenses
Fuel expenses increased for the nine months ended September 30, 1999
as a result of greater nuclear fuel generation in 1999 due to a scheduled
nuclear refueling outage in April and May 1998.
Depreciation
Depreciation expenses decreased for the three and nine months ended
September 30, 1999 due to lower depreciation associated with the sale and
leaseback of a portion of Grand Gulf 1, as compared to the same period in
1998.
Other regulatory charges
The increase in other regulatory charges for the three and nine months
ended September 30, 1999 reflects the implementation of the GGART at
Entergy Arkansas and Entergy Mississippi, as discussed above.
The GGART does not affect net income because it is an addition to
revenues that is offset by specific incurred expenses.
Other
Other income
Other income increased for the three and nine months ended September
30, 1999 due to additional interest income earned on larger short-term
investments.
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Interest charges
Other interest increased for the three and nine months ended September
30, 1999 due to interest on the potential refund of System Energy's
proposed rate increase.
Interest on long-term debt decreased for the nine months ended
September 30, 1999 as a result of the refinancing and redemption of
pollution control revenue bonds in 1998 and 1999, and the redemption of
first mortgage bonds in 1999.
Income taxes
The effective income tax rates remained relatively unchanged for the
three months ended September 30, 1999 and 1998 at 45.5% and 45.1%,
respectively. The effective tax rates for the nine months ended September
30, 1999 and 1998 were 42.0% and 45.2%, respectively. The decrease in 1999
was primarily due to lower income and the amortization of investment tax
credits related to Grand Gulf Unit 2.
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
INCOME STATEMENTS
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
1999 1998 1999 1998
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Domestic electric $163,801 $152,083 $463,923 $445,025
-------- -------- -------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel related expenses, and
gas purchased for resale 11,659 12,278 32,453 29,308
Nuclear refueling outage expenses 3,505 3,479 10,516 12,255
Other operation and maintenance 23,822 22,513 64,814 66,285
Decommissioning 4,736 4,736 14,208 14,208
Taxes other than income taxes 6,721 6,564 20,240 20,202
Depreciation and amortization 28,212 33,741 84,631 89,859
Other regulatory charges - net 13,945 - 43,330 -
-------- -------- -------- --------
TOTAL 92,600 83,311 270,192 232,117
-------- -------- -------- --------
OPERATING INCOME 71,201 68,772 193,731 212,908
-------- -------- -------- --------
OTHER INCOME
Allowance for equity funds used during construction 489 609 1,802 1,690
Miscellaneous - net 4,244 3,058 12,448 8,670
-------- -------- -------- --------
TOTAL 4,733 3,667 14,250 10,360
-------- -------- -------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 26,028 25,617 77,127 84,068
Other interest - net 6,139 1,560 38,781 4,827
Allowance for borrowed funds used during construction (352) (542) (1,369) (1,487)
-------- -------- -------- --------
TOTAL 31,815 26,635 114,539 87,408
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 44,119 45,804 93,442 135,860
Income taxes 20,076 20,665 39,217 61,355
-------- -------- -------- --------
NET INCOME $24,043 $25,139 $54,225 $74,505
======== ======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $54,225 $74,505
Noncash items included in net income:
Reserve for regulatory adjustments 94,745 51,924
Other regulatory charges 43,330 -
Depreciation, amortization, and decommissioning 98,839 104,067
Deferred income taxes and investment tax credits (78,247) (28,736)
Allowance for equity funds used during construction (1,802) (1,690)
Changes in working capital:
Receivables (100,766) 10,478
Accounts payable 14,489 (4,319)
Taxes accrued (14,181) 21,590
Interest accrued (13,355) (10,830)
Other working capital accounts 7,377 (6,604)
Decommissioning trust contributions and realized
change in trust assets (16,286) (18,053)
Provision for estimated losses and reserves (268) (421)
Changes in other regulatory assets 22,419 14,531
Other (592) (12,325)
-------- --------
Net cash flow provided by operating activities 109,927 194,117
-------- --------
INVESTING ACTIVITIES
Construction expenditures (16,441) (20,004)
Allowance for equity funds used during construction 1,802 1,690
Nuclear fuel purchases (22,148) (30,523)
Proceeds from sale/leaseback of nuclear fuel 22,148 30,523
-------- --------
Net cash flow used in investing activities (14,639) (18,314)
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
Other long-term debt 101,856 -
Retirement of:
First mortgage bonds (160,000) (70,000)
Other long-term debt (122,885) (7,861)
Dividends paid:
Common stock (46,200) (72,300)
-------- --------
Net cash flow used in financing activities (227,229) (150,161)
-------- --------
Net increase (decrease) in cash and cash equivalents (131,941) 25,642
Cash and cash equivalents at beginning of period 236,841 150,519
-------- --------
Cash and cash equivalents at end of period $104,900 $176,161
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $123,049 $93,613
Income taxes $118,471 $63,664
Noncash investing and financing activities:
Change in unrealized appreciation/(depreciation) of
decommissioning trust assets ($1,012) $314
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEET
ASSETS
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents:
Cash $137 $120
Temporary cash investments - at cost,
which approximates market 104,763 236,721
---------- ----------
Total cash and cash equivalents 104,900 236,841
---------- ----------
Accounts receivable:
Associated companies 216,592 125,171
Other 13,776 4,431
---------- ----------
Total receivables 230,368 129,602
---------- ----------
Materials and supplies - at average cost 63,225 62,203
Deferred nuclear refueling outage costs 3,647 12,853
Prepayments and other 3,421 2,592
---------- ----------
TOTAL 405,561 444,091
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds 128,556 113,282
---------- ----------
UTILITY PLANT
Electric 3,052,649 3,030,636
Property under capital lease 441,614 441,098
Construction work in progress 46,937 57,076
Nuclear fuel under capital lease 71,482 64,621
---------- ----------
TOTAL UTILITY PLANT 3,612,682 3,593,431
Less - accumulated depreciation and amortization (1,280,690) (1,198,266)
---------- ----------
UTILITY PLANT - NET 2,331,992 2,395,165
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 201,336 221,996
Unamortized loss on reacquired debt 58,285 57,150
Other regulatory assets 186,497 188,256
Other 11,353 11,265
---------- ----------
TOTAL 457,471 478,667
---------- ----------
TOTAL ASSETS $3,323,580 $3,431,205
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, 1999 and December 31, 1998
(Unaudited)
1999 1998
(In Thousands)
CURRENT LIABILITIES
<S> <C> <C>
Currently maturing long-term debt $47,947 $175,820
Accounts payable:
Associated companies 36,049 25,975
Other 23,835 19,420
Taxes accrued 62,625 76,806
Accumulated deferred income taxes 1,420 5,022
Interest accrued 28,667 42,022
Obligations under capital leases 41,835 41,835
Other 1,565 1,543
---------- ----------
TOTAL 243,943 388,443
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 434,598 506,727
Accumulated deferred investment tax credits 94,088 96,695
Obligations under capital leases 29,647 22,786
FERC settlement - refund obligation 38,861 43,159
Other regulatory liabilities 82,080 43,309
Decommissioning 123,651 107,365
Regulatory reserves 254,032 159,287
Accumulated provisions 1,704 1,971
Other 16,282 17,524
---------- ----------
TOTAL 1,074,943 998,823
---------- ----------
Long-term debt 1,112,560 1,159,830
SHAREHOLDERS' EQUITY
Common stock, no par value, authorized 1,000,000
shares; issued and outstanding 789,350 shares in 1999
in 1998 789,350 789,350
Retained earnings 102,784 94,759
---------- ----------
TOTAL 892,134 884,109
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,323,580 $3,431,205
========== ==========
See Notes To Financial Statements.
</TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. COMMITMENTS AND CONTINGENCIES
Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States)
See "Cajun - Coal Contracts" in Note 9 of the Form 10-K for
information relating to the declaratory judgment actions filed by Entergy
Gulf States in the U.S. Bankruptcy Court in which the Cajun bankruptcy case
is pending. In October 1999, the bankruptcy court entered an order,
pursuant to a settlement agreement among the parties, that confirmed a plan
of reorganization in the bankruptcy case. The settlement agreement and
plan of reorganization effectively release Entergy Gulf States from any
claims asserted by the coal suppliers and transporters for Big Cajun II.
The appeals between Entergy and the coal suppliers and transporters will be
dismissed upon the effective date of the plan of reorganization.
Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy)
See Note 9 in the Form 10-K for information on Entergy's estimated
construction expenditures (excluding nuclear fuel) for the years 1999,
2000, and 2001 and long-term debt and preferred stock maturities and cash
sinking fund requirements for the period 1999-2001.
In October 1999, Entergy's global power development business obtained
an option to acquire from GE Power Systems twenty-four GE7FA advanced
technology gas turbines and four steam turbines for $1.9 billion and eight
GE7EA advanced technology gas turbines for $160 million for delivery from
2001 through 2004. The acquisitions will include long-term service
agreements. Management anticipates that the acquisition of these turbines
will be funded by a combination of cash on hand, project financing, and
other external financing. Payments scheduled for these acquisitions include
$53 million in the fourth quarter 1999 and $269 million in 2000.
Sales Warranties and Indemnities (Entergy Corporation)
See Note 9 in the Form 10-K for information on certain warranties made
by Entergy or its subsidiaries in the Entergy London and CitiPower sales
transactions.
Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs (Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
See Note 9 in the Form 10-K for information on nuclear liability,
property and replacement power insurance, related NRC regulations, the
disposal of spent nuclear fuel, other high-level radioactive waste, and
decommissioning costs associated with ANO 1, ANO 2, River Bend, Waterford
3, and Grand Gulf 1.
In July 1999, Entergy's non-utility nuclear power business purchased
the 670 MW Pilgrim Nuclear Station (Pilgrim) including the plant, real
estate, materials and supplies, and nuclear fuel from Boston Edison (BECO)
for a purchase price of $81 million. As part of the Pilgrim purchase, BECO
funded a $471 million decommissioning trust fund, which was transferred to
an Entergy subsidiary. After a favorable tax determination regarding the
trust fund, Entergy has agreed to return $43 million of the trust fund to
BECO subsequent to September 30, 1999. Based on Entergy's estimate the
trust fund is adequate to cover future decommissioning costs for the
Pilgrim plant.
As discussed in the Form 10-K, the Price-Anderson Act assessment
exposure for Pilgrim is $88.1 million per nuclear incident. With the
addition of Pilgrim, the private insurance program providing coverage for
worker tort claims discussed in the Form 10-K provides for a maximum
assessment of approximately $18.6 million for Entergy's six nuclear units.
Pilgrim is insured for $1.115 billion in property damages under the
insurance programs discussed in the Form 10-K. Pilgrim's assessment
maximum under the property damage and replacement power/business
interruption insurance programs discussed in the Form 10-K is $7.3 million.
The spent fuel storage facility at Pilgrim is expected to provide storage
capacity until approximately 2003. Entergy plans to modify the facility to
provide sufficient spent fuel storage capacity through approximately 2012.
ANO Matters (Entergy Corporation and Entergy Arkansas)
See Note 9 to the financial statements in the Form 10-K for
information on cracks in a number of steam generator tubes at ANO 2 that
were discovered and repaired during an outage in March 1992, and the
replacement of the steam generators scheduled in 2000. Further inspections
and repairs were conducted at subsequent refueling and mid-cycle outages,
including the most recent outage in February 1999.
Environmental Issues
(Entergy Gulf States)
Entergy Gulf States has been designated as a potentially responsible
party (PRP) for the cleanup of certain hazardous waste disposal sites.
Entergy Gulf States is currently negotiating with the EPA and state
authorities regarding the clean up of certain of these sites. As of
September 30, 1999, a remaining recorded liability of approximately $19.8
million existed relating to the clean up of the remaining sites at which
Entergy Gulf States has been designated a PRP. See "Environmental
Regulation" in Item 1 of Part I of the Form 10-K for additional discussion
of Entergy Gulf States environmental clean-up activity and related
litigation.
(Entergy Louisiana and Entergy New Orleans)
During 1993, the Louisiana Department of Environmental Quality (LDEQ)
issued new rules for solid waste regulation, including regulation of
wastewater impoundments. Entergy Louisiana and Entergy New Orleans have
determined that certain of their power plant wastewater impoundments were
affected by these regulations and chose to upgrade or close them. As a
result, a remaining recorded liability in the amount of $5.8 million and
$0.5 million existed at September 30, 1999 for wastewater upgrades and
closures for Entergy Louisiana and Entergy New Orleans, respectively.
Completion of this work is pending LDEQ approval.
Waterford 3 Lease Obligations (Entergy Louisiana)
On September 28, 1989, Entergy Louisiana entered into three
transactions for the sale and leaseback of undivided interests (aggregating
approximately 9.3%) in Waterford 3, which were refinanced in 1997. Entergy
Louisiana may be obligated to pay amounts sufficient to permit the Owner
Participants to withdraw from these lease transactions. Additionally,
Entergy Louisiana may be required to assume the outstanding bonds issued by
the Owner Trustee under these leases to finance, in part, its acquisition
of the undivided interests in Waterford 3. See Note 10 to the Form 10-K
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
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.
Reimbursement Agreement (System Energy)
Under a bank letter of credit and reimbursement agreement, System
Energy has agreed to a number of covenants relating to the maintenance of
certain capitalization and fixed charge coverage ratios. System Energy
agreed, during the term of the agreement, to maintain its equity at not
less than 33% of its adjusted capitalization (defined in the agreement to
include certain amounts not included in capitalization for financial
statement purposes). In addition, System Energy must maintain, with
respect to each fiscal quarter during the term of the agreement, a ratio of
adjusted net income to interest expense (calculated, in each case, as
specified in the agreement) of at least 1.60 times earnings. System Energy
was in compliance with the above covenants at September 30, 1999. See Note
9 to the Form 10-K for further information.
Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)
In addition to those discussed above, Entergy and the domestic utility
companies are involved in a number of legal proceedings and claims in the
ordinary course of their business. While management is unable to predict
the outcome of such litigation, it is not expected that the ultimate
resolution of these matters will have a material adverse effect on results
of operations, cash flows, or financial condition of these entities.
NOTE 2. RATE AND REGULATORY MATTERS
Retail Rate Proceedings
Filings with the APSC (Entergy Corporation and Entergy Arkansas)
Entergy Arkansas' rate schedules include an Energy Cost Recovery
Rider, which is designed to permit recovery of the costs of fuel and
purchased energy costs. The rider utilizes projected energy costs for the
twelve-month period commencing on April 1 of each year to develop an energy
cost rate, which is redetermined annually and includes a true-up adjustment
reflecting the over-recovery or under-recovery of the energy cost for the
prior calendar year.
In March 1999, Entergy Arkansas filed its annually redetermined energy
cost rate with the APSC in accordance with the Energy Cost Recovery Rider
formula and special circumstance agreement. The filing reflected that an
increase was warranted to offset an under-recovery of the energy costs for
1998. The increased energy cost rate is effective April 1999 through March
2000.
See Note 2 to the Form 10-K for information regarding the settlement
agreement filed with the APSC and the establishment of a transition cost
account. The estimated transition cost account reserve recorded for
Entergy Arkansas in 1998 was adjusted in June 1999 as a result of the final
1998 APSC order on the transition cost account for a negative net income
impact of $.9 million. The results of operations reflect these charges in
operating expenses. As of September 30, 1999, the transition cost account
balance was $95.9 million.
Filings with the PUCT (Entergy Corporation and Entergy Gulf States)
Previous developments and information related to Entergy Gulf States'
retail rate proceedings are presented in Note 2 to the Form 10-K.
In June 1999, the PUCT issued its final order approving the settlement
agreement that Entergy Gulf States had entered into in February 1999. On
July 20, 1999, intervenor Office of Public Utility Counsel (OPC) filed a
motion for rehearing, addressing limited portions of the discussion
included in the final order. On August 5, 1999, the PUCT voted not to hear
the OPC's motion for rehearing. The OPC then filed a notice to withdraw
from the settlement alleging that the PUCT order was not materially
consistent with the settlement agreement and that its withdrawal rendered
the agreement null and void. The PUCT considered the matter in mid-August
and upheld its order. The OPC has filed an appeal of this decision at
Travis County District Court. Entergy Gulf States cannot predict the
impact of OPC's appeal.
The settlement agreement resolves the pending appeal of Entergy Gulf
States' 1996 rate proceedings as well as its 1998 rate proceedings and all
of the settling parties' pending appeals in other matters, except for the
appeal in the River Bend abeyed cost recovery proceeding. The settlement
agreement provides for the following:
o an annual $4.2 million base rate reduction, effective March 1, 1999,
which is in addition to the annual $69 million base rate reduction (net
of River Bend accounting order deferrals) in the PUCT's second order
on rehearing in October 1998;
o a methodology for semi-annual revisions of the fixed fuel factor based
on the market price of natural gas;
o a base rate freeze through June 1, 2000. In accordance with the Texas
restructuring law, the base rate freeze extends through December 2001;
o amortization of the remaining River Bend accounting order deferrals as
of January 1, 1999, over three years on a straight-line basis, provided
that such accounting order deferrals shall not be recognized in any
subsequent base rate case or stranded cost calculation;
o the dismissal of all pending appeals of the settling parties relating
to Entergy Gulf States' proceedings with the PUCT, except the River Bend
appeal discussed in Note 2 to the Form 10-K; and
o the potential recovery in the River Bend appeal is limited to $115
million net plant in service as of January 1, 2002, less depreciation
over the remaining life of the plant beginning January 1, 2002 through
the date the plant costs are included in rate base, provided that any
such recovery shall not be used to increase rates above the level
agreed to in the settlement agreement.
As a result of the settlement agreement, in June 1999, Entergy Gulf
States
o removed from its balance sheet a $207.3 million deferred asset and the
associated provision recorded for unrecovered purchased power costs and
deferred revenue from Nelson Industrial Steam Company, which had no net
income impact on Entergy Gulf States;
o removed the reserve for River Bend plant costs held in abeyance and
reduced the plant asset, resulting in other income of $4.8 million; and
o removed the $93.9 million reserve for the amortization of River Bend
accounting order deferrals to reflect the three year amortization
schedule detailed in the agreement. The income impact of this
removal was largely offset by an increase in the rate of amortization
of the accounting order deferrals.
In December 1998, the PUCT issued an order approving the
implementation of a revised fixed fuel factor and fuel and purchased power
surcharge that would result in increased recovery of $112.1 million of
under-recovered fuel costs, inclusive of interest, over a 24-month period.
These increases were implemented in the first billing cycle in February
1999. In March 1999, North Star Steel Texas, Inc. and certain cities
served by Entergy Gulf States appealed the PUCT's order to the State
District Court in Travis County, Texas. In September 1999, in accordance
with the settlement agreement, the cities dismissed their appeal. Entergy
Gulf States cannot predict the outcome of the appeal of North Star Steel
Texas, Inc.
Based on the settlement agreement approved in June 1999 discussed
above, Entergy Gulf States has adopted a methodology for calculating its
fixed fuel factor based on the market price of natural gas. This
calculation and any necessary adjustments to the fuel factor will be made
semi-annually beginning March 1, 1999. The calculation for March 1, 1999
showed that the fuel factor adopted in the December 1998 PUCT order
discussed above should be reduced. This fuel factor reduction was approved
by the PUCT in February 1999. The calculation for September 1, 1999 showed
an increase to the March 1 fuel factor was required. The increased factor
was put in place in September 1999 and approved by the PUCT in October
1999.
The amounts collected under Entergy Gulf States' fixed fuel factor are
and will continue to be the subject of fuel reconciliation proceedings
before the PUCT, including a fuel reconciliation case filed by Entergy Gulf
States in July 1999. In the proceeding the PUCT will consider the
reasonableness of Entergy Gulf States' fuel and purchased power expenses
incurred between July 1, 1996 and February 28, 1999 and Entergy Gulf
States' request to implement a surcharge of under-recovered fuel expenses.
Expenses incurred after February 28, 1999 will be addressed in future fuel
reconciliation proceedings before the PUCT. Hearings on the fuel
reconciliation proceeding filed in July 1999 are scheduled for December
1999. Management cannot predict the outcome of this or future fuel
reconciliation proceedings.
In September 1999, Entergy Gulf States filed an application with the
PUCT requesting an interim fuel surcharge to collect under-recovered fuel
and purchased power expenses from March 1999 through July 1999. The
requested surcharge would collect $33.9 million over five months, beginning
January 2000. Hearings were held in October 1999, and an order is expected
from the PUCT in the fourth quarter of 1999. The fuel and purchased power
expenses contained in this surcharge will be subject to future fuel
reconciliation proceedings. Management cannot predict the outcome of the
filing.
In June 1999, the PUCT instituted a proceeding to consider the final
adjustment of the rate refunds that were ordered in the PUCT's October 1998
second order on rehearing described in Note 2 to the Form 10-K. These
refunds were required to occur over the fourteen-month period of August
1998 through September 1999. The PUCT issued an order on July 16, 1999
adopting a methodology which required Entergy Gulf States to refund an
additional $25 million. This refund was recorded in the second quarter of
1999 and was reflected as a reduction in operating revenues.
In September and October 1999, the City Councils of six Texas cities
in Entergy Gulf States' service territory enacted ordinances which purport
to require Entergy Gulf States to "book and hold in a suspense account all
revenues from the sale of River Bend power attributable to the 30% share
acquired from Cajun Electric Cooperative pending regulatory determination
of the appropriate regulatory treatment of such power." The ordinances
purport to be effective December 1997. Entergy Gulf States filed for a
review of the ordinances at the PUCT in October 1999. Entergy Gulf States
believes that the ordinances are beyond the cities' authority and contrary
to the Texas Public Utility Regulatory Act. Management, however, cannot
predict the outcome of its challenge to the validity of the ordinances.
Filings with the LPSC (Entergy Corporation, Entergy Gulf States and
Entergy Louisiana)
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. In October 1996, the LPSC issued an order requiring
a $34.2 million refund. The 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. Subsequently, Entergy Gulf States
appealed and received an injunction to stay this order, except insofar as
the order required the $14.3 million refund. In January 1999, the
Louisiana Supreme Court affirmed the LPSC's October 1996 order. In
accordance with this decision, Entergy Gulf States refunded $26.2 million,
including interest, in August 1999. Management reserved for this refund in
1998 in connection with estimates of the probable outcome of this
proceeding and the annual earnings reviews discussed in Note 2 to the
financial statements in the Form 10-K.
In the third quarter of 1999, Entergy Louisiana settled its third
annual performance-based formula rate plan filing with the LPSC. The third
annual performance-based formula rate plan filing is discussed in Note 2 to
the financial statements in the Form 10-K. The settlement requires no
further change in Entergy Louisiana's base rates.
In April 1999, Entergy Louisiana submitted its fourth annual
performance-based formula rate plan filing for the 1998 test year. The
filing indicated that a $20.7 million base rate reduction might be
appropriate. Based on Entergy Louisiana's filing and on subsequent
comments filed by Entergy Louisiana, the LPSC staff, and other parties,
Entergy Louisiana implemented an interim rate reduction of approximately
$15.0 million, effective August 1, 1999. Entergy Louisiana's filing will
be subject to further review by the LPSC, which may result in an additional
change in rates. Hearings are scheduled to commence before the LPSC in May
2000.
Also in April 1999, the Louisiana Supreme Court rendered a decision in
the second post-Merger earnings review of Entergy Gulf States. Previous
developments and information related to Entergy Gulf States' post-Merger
earnings reviews are presented in Note 2 to the financial statements to the
Form 10-K. In this most recent decision, the Louisiana Supreme Court
decided in favor of Entergy Gulf States on two of the issues raised in its
appeal, one of which will reduce the refund that Entergy Gulf States will
be required to make from $9.6 million to $6.0 million. The case has been
remanded to the LPSC and management is continuing to evaluate the
implications of this decision.
In May 1999, Entergy Gulf States filed its sixth required post-Merger
earnings analysis with the LPSC. This filing will be subject to review by
the LPSC, which may result in a change in rates. Hearings are scheduled
for February 2000.
Through September 1999, Entergy Gulf States has recorded an additional
$22.1 million in reserves for management's updated estimates of the
outcomes of the annual earnings reviews and fuel cost review in Louisiana.
These reserves are primarily reflected as a reduction of Entergy Gulf
States' operating revenues.
In March 1999, the LPSC deferred making a decision on whether electric
industry restructuring in Louisiana is in the public interest.
Anticipating that retail competition will be in the public interest at some
future date, the LPSC approved the development of a Louisiana specific plan
for possible future implementation. The LPSC staff, outside consultants,
and counsel were directed to work together to analyze and resolve
outstanding issues and recommend a plan for the implementation of retail
competition for consideration by the LPSC by January 1, 2001. Once the
Louisiana specific plan is presented to the LPSC, and if it is determined
that retail competition is in the public interest in Louisiana, it is
anticipated that the LPSC staff, outside consultants, counsel, and industry
members will work together to refine the submitted plan in order that it
can be implemented at a future date.
Filings with the MPSC (Entergy Corporation and Entergy Mississippi)
In March 1999, Entergy Mississippi submitted its annual performance-
based formula rate plan filing for the 1998 test year. In April 1999, the
MPSC issued an order approving a prospective rate reduction of $13.3
million. This rate reduction went into effect May 1, 1999. In June 1999,
Entergy Mississippi revised its March 1999 filing to include a portion of
refinanced long-term debt not included in the original filing. This
revision resulted in an additional rate reduction of approximately $1.5
million, effective July 1999.
Filings with the Council (Entergy Corporation and Entergy New Orleans)
In April 1999, Entergy New Orleans filed, in compliance with
directives of the Council, a plan that would allow for gas retail open
access in New Orleans. The plan outlines the conditions under which
Entergy New Orleans could support retail open access should the Council
find it in the public interest. It is anticipated that a hearing process
on the public interest issue will be completed by December 1999.
Proposed Rate Increase (System Energy)
As reported in the Form 10-K, System Energy filed an application with
FERC in 1995 requesting a rate increase of $65.5 million. The rate
increase was put into effect, subject to refund, in December 1995. After
holding hearings in 1996, a FERC ALJ found that portions of System Energy's
request should be rejected, including a proposed increase in return on
common equity from 11% to 13% and a requested change in decommissioning
cost methodology. The ALJ recommended a decrease in the return on common
equity from 11% to 10.86%. Other portions of System Energy's request for a
rate increase were approved by the ALJ. All of the ALJ's findings are
advisory, and may be accepted, modified or rejected by FERC in a final
order. No such order has been forthcoming.
If the FERC were to approve the ALJ's findings, System Energy would be
required to make a refund of money collected under its proposed tariff in
the amount of $219.5 million as of September 30, 1999, together with
interest in the amount of $34.5 million. As of September 30, 1999, System
Energy has provided reserves for such refund and interest thereon in the
aggregate amount of $254 million. It is not certain when FERC may issue a
final order in this rate proceeding or whether FERC will accept, modify, or
reject the ALJ's findings. Although management believes that the reserves
discussed above are adequate to reflect the probable outcome of this
proceeding, additional reserves or write-offs could be required in the
future.
NOTE 3. COMMON STOCK (Entergy Corporation)
During the nine months ended September 30, 1999, Entergy Corporation
repurchased 4,136,700 shares of common stock in the open market. These
shares were purchased pursuant to Entergy's stock repurchase plan and also
to fulfill the requirements of various compensation and benefit plans.
Entergy Corporation issued 623,633 shares of its previously repurchased
common stock to satisfy stock options exercised and employee stock
purchases. In addition, Entergy Corporation received proceeds of $5.6
million from the issuance of 186,944 shares of common stock under its
dividend reinvestment and stock purchase plan.
NOTE 4. LONG-TERM DEBT
(Entergy Gulf States)
On September 29, 1999, in connection with two refunding agreements
with Entergy Gulf States, the Parish of West Feliciana, State of Louisiana
issued $62 million of Pollution Control Revenue Refunding Bonds
(Series 1999-A), accruing interest at a rate of 5.65% per annum for the
first five years, due 2028, and $40 million of 6.6% Pollution Control
Revenue Refunding Bonds (Series 1999-B) due 2028. The proceeds from these
issuances will be used to refund $102 million of 8.0% Pollution Control
Revenue Refunding Bonds (Series 1994), due 2024, on December 1, 1999.
(Entergy Louisiana)
On October 7, 1999, in connection with a refunding agreement with
Entergy Louisiana, the Parish of St. Charles, State of Louisiana issued
$111 million of Pollution Control Revenue Refunding Bonds (Series 1999-C),
accruing interest at a rate of 5.35% per annum for the first four years,
due 2029. The proceeds from this issuance will be used to refund the
following series:
o $105 million of 8.0% Pollution Control Revenue Bonds (1984 Second
Series, due 2014) on December 1, 1999;
o $3.385 million of 6.40% Pollution Control Revenue Bonds (1977 Series,
due 2007) on January 1, 2000; and
o $2.565 million of 8.0% Pollution Control Revenue Bonds (1979 Series,
due 2009) on January 1, 2000.
NOTE 5. RETAINED EARNINGS (Entergy Corporation)
On October 29, 1999, the Board declared a common stock dividend of
$.30 per share, payable on December 1, 1999, to holders of record on
November 10, 1999.
NOTE 6. BUSINESS SEGMENT INFORMATION (Entergy Corporation)
See Note 14 to the financial statements in the Form 10-K for
information regarding Entergy's adoption of SFAS 131 and its operating
segments. Entergy's segment financial information for the three months
ended September 30, 1999 and 1998 is as follows (in thousands):
<TABLE>
<CAPTION>
Domestic
Utility Power
and System Marketing Entergy
Energy and Trading* London* CitiPower* All Other* Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C> <C>
1999
Operating Revenues $2,044,283 $988,550 $ - $ - $45,979 ($14,277) $3,064,535
-----------------------------------------------------------------------------------
Operating Expenses:
Fuel & gas purch. for resale 438,591 145,140 - - 1,199 (719) 584,211
Purchased power 360,862 793,329 - - (5,406) (8,930) 1,139,855
Nuclear refueling outages 19,594 - - - - - 19,594
Other operation & maint. 334,484 21,658 - - 62,150 (5,071) 413,221
Deprec, amort. & decomm. 170,660 1,378 - - 1,150 - 173,188
Taxes other than income 88,610 104 - - 4,314 - 93,028
Other regulatory charges - net 29,003 - - - - - 29,003
Amort. of rate deferrals 10,722 - - - - - 10,722
-----------------------------------------------------------------------------------
Total oper. expenses 1,452,526 961,609 - - 63,407 (14,720) 2,462,822
-----------------------------------------------------------------------------------
Operating Income 591,757 26,941 - - (17,428) 443 601,713
Other Income (Deductions) 20,627 1,125 - - 13,732 (2,061) 33,423
Interest Charges 126,091 1,276 - - 2,432 (1,618) 128,181
-----------------------------------------------------------------------------------
Income Before Income Taxes 486,293 26,790 - - (6,128) - 506,955
Income Taxes 193,996 9,504 - - 7,297 - 210,797
-----------------------------------------------------------------------------------
Net Income (Loss) $292,297 $17,286 $ - $ - ($13,425) $ - $296,158
===================================================================================
1998
Operating Revenues $2,068,692 $1,969,342 $464,760 $73,042 $28,077 ($16,466) $4,587,447
-----------------------------------------------------------------------------------
Operating Expenses:
Fuel & gas purch. for resale 503,157 81,743 - - (3,419) (1,520) 579,961
Purchased power 186,950 1,945,139 277,581 23,713 (562) (8,863) 2,423,958
Nuclear refueling outages 20,445 - - - - - 20,445
Other operation & maint. 319,324 16,825 57,959 16,779 77,770 (6,528) 482,129
Deprec, amort. & decomm. 189,873 1,255 34,221 6,721 24,305 - 256,375
Taxes other than income 90,606 185 - (151) 393 - 91,033
Other regulatory charges - net 71,542 - - - - - 71,542
Amort. of rate deferrals 71,331 - - - - - 71,331
-----------------------------------------------------------------------------------
Total oper. expenses 1,453,228 2,045,147 369,761 47,062 98,487 (16,911) 3,996,774
-----------------------------------------------------------------------------------
Operating Income 615,464 (75,805) 94,999 25,980 (70,410) 445 590,673
Other Income (Deductions) 15,765 2,103 7,414 (22) (70,430) (733) (45,903)
Interest Charges 129,940 57 50,448 13,076 11,101 (288) 204,334
-----------------------------------------------------------------------------------
Income Before Income Taxes 501,289 (73,759) 51,965 12,882 (151,941) - 340,436
Income Taxes 202,658 (27,974) (15,638) 2,232 (83,439) - 77,839
-----------------------------------------------------------------------------------
Net Income (Loss) $298,631 ($45,785) $67,603 $10,650 ($68,502) $ - $262,597
===================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Entergy's segment financial information for the nine months ended
September 30, 1999 and 1998 is as follows:
Domestic
Utility and Power
System Marketing Entergy
Energy and Trading* London* CitiPower* All Other* Eliminations Consolidated
<S> <C> <C <C> <C> <C> <C> <C>
1999
Operating Revenues $4,977,012 $2,002,146 $ - $ - $67,582 ($25,879) $7,020,861
-----------------------------------------------------------------------------------------
Operating Expenses:
Fuel & gas purch. for resale 1,174,769 305,146 - - (1,141) (719) 1,478,055
Purchased power 576,590 1,635,685 - - (5,801) (15,993) 2,190,481
Nuclear refueling outages 56,414 - - - - - 56,414
Other operation & maint. 986,124 53,442 - - 152,760 (10,767) 1,181,559
Deprec, amort. & decomm. 548,332 3,707 - - 6,130 - 558,169
Taxes other than income 253,003 502 - - 5,644 - 259,149
Other regulatory charges - net 10,033 - - - - - 10,033
Amort. of rate deferrals 107,902 - - - - - 107,902
-----------------------------------------------------------------------------------------
Total oper. expenses 3,713,167 1,998,482 - - 157,592 (27,479) 5,841,762
-----------------------------------------------------------------------------------------
Operating Income 1,263,845 3,664 - - (90,010) 1,600 1,179,099
Other Income (Deductions) 50,302 3,217 - - 107,510 (3,530) 157,499
Interest Charges 402,913 1,280 - - 13,110 (1,930) 415,373
-----------------------------------------------------------------------------------------
Income Before Income Taxes 911,234 5,601 - - 4,390 - 921,225
Income Taxes 361,493 2,468 - - (21,558) - 342,403
-----------------------------------------------------------------------------------------
Net Income $549,741 $3,133 $ - $ - $25,948 $ - $578,822
=========================================================================================
1998
Operating Revenues $4,992,164 $2,626,900 $1,494,552 $230,543 $97,245 ($32,051) $9,409,353
-----------------------------------------------------------------------------------------
Operating Expenses:
Fuel & gas purch. for resale 1,154,634 109,077 - - (5,413) (1,520) 1,256,778
Purchased power 513,700 2,514,614 940,815 77,723 (15,059) (20,897) 4,010,896
Nuclear refueling outages 64,134 - - - - - 64,134
Other operation & maint. 968,664 38,310 225,324 49,850 195,143 (10,969) 1,466,322
Deprec, amort. & decomm. 573,235 3,795 103,241 21,163 52,488 - 753,922
Taxes other than income 259,709 695 - 14,970 1,771 - 277,145
Other regulatory charges - net 11,759 - - - - - 11,759
Amort. of rate deferrals 219,507 - - - - - 219,507
-----------------------------------------------------------------------------------------
Total oper. expenses 3,765,342 2,666,491 1,269,380 163,706 228,930 (33,386) 8,060,463
-----------------------------------------------------------------------------------------
Operating Income 1,226,822 (39,591) 225,172 66,837 (131,685) 1,335 1,348,890
Other Income (Deductions) 41,652 6,327 24,970 123 (61,509) (2,063) 9,500
Interest Charges 405,543 151 147,589 41,415 32,971 (728) 626,941
-----------------------------------------------------------------------------------------
Income Before Income Taxes 862,931 (33,415) 102,553 25,545 (226,165) - 731,449
Income Taxes 354,434 (12,147) 22 4,723 (154,212) - 192,820
-----------------------------------------------------------------------------------------
Net Income (Loss) $508,497 ($21,268) $102,531 $20,822 ($71,953) $ - $538,629
=========================================================================================
Businesses marked with * are referred to as the "competitive
businesses," with the exception of the parent company, Entergy Corporation,
which is also included in the "All Other" column. Eliminations are
primarily intersegment activity.
__________________________________
In the opinion of Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy, the accompanying unaudited condensed financial statements
contain all adjustments (consisting primarily of normal recurring accruals
and reclassification of previously reported amounts to conform to current
classifications) necessary for a fair statement of the results for the
interim periods presented. However, the business of the domestic utility
companies and System Energy is subject to seasonal fluctuations with the
peak periods occurring during the third quarter. The results for the
interim periods presented should not be used as a basis for estimating
results of operations for a full year.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See "PART I, Item 1, Other Regulation and Litigation" in the Form 10-K
for a discussion of legal proceedings affecting Entergy. Set forth below
are updates to the information contained in the Form 10-K.
Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States)
See "Cajun - Coal Contracts" in Note 9 of the Form 10-K for
information relating to the declaratory judgment actions filed by Entergy
Gulf States and the counterclaims filed by the defendants. See "Cajun -
Coal Contracts" in Note 1 herein for developments that have occurred since
the filing of the Form 10-K.
Catalyst Technologies, Inc. (Entergy Corporation)
See "Catalyst Technologies, Inc." in Item 1 of Part I of the Form 10-K
for information relating to the lawsuit filed by Catalyst Technologies,
Inc. This proceeding was dismissed in March 1999 in accordance with the
settlement agreement discussed in the Form 10-K.
Ratepayer Lawsuits (Entergy Corporation, Entergy Louisiana, and Entergy
New Orleans)
See "Ratepayer Lawsuits" in Item 1 of Part I of the Form 10-K and in
Item 1 of Part II of the 1999 first and second quarter Forms 10-Q for a
discussion of the lawsuits filed by ratepayers with the LPSC, the New
Orleans City Council, and in Louisiana state courts in Orleans and East
Baton Rouge Parishes.
Fiber Optic Cable Litigation (Entergy Corporation, Entergy Gulf
States)
See "Fiber Optic Cable Litigation" in Item 1 of Part II of the 1999
first quarter Form 10-Q for information relating to the lawsuit filed by a
group of property owners against Entergy Corporation, Entergy Gulf States,
Entergy Services, and ETHC.
Franchise Service Area Litigation (Entergy Gulf States)
See "Franchise Service Area Litigation" in Item 1 of Part 1 of the
Form 10-K and in Item 1 of Part II of the 1999 second quarter Form 10-Q for
information relating to the request filed by Beaumont Power and Light
Company (BP&L) with the PUCT to obtain a certificate of convenience and
necessity for those portions of Jefferson County outside the boundaries of
any municipality for which Entergy Gulf States provides retail electric
service. A hearing on the merits of BP&L's application has been scheduled
for December 1999, at which time the similar matter involving Corpus
Christi Power & Light Company will also be heard.
BP&L has amended its application to add a request for a certificate of
convenience and necessity to provide retail electric service within the
City of Beaumont. BP&L's original application contemplated using Entergy
Gulf States' facilities in providing service, but the amended application
acknowledges that the Texas electric utility restructuring law requires
BP&L to use its own facilities to connect to its customers, if it is
granted a certificate of convenience and necessity.
Ice Storm Litigation (Entergy Corporation and Entergy Gulf States)
See "Ice Storm Litigation" in Item 1 of Part II of the 1999 second
quarter Form 10-Q for information relating to the lawsuit filed by a group
of Entergy Gulf States customers in Texas against Entergy Corporation,
Entergy Gulf States, and other Entergy subsidiaries in state court in
Jefferson County, Texas purportedly on behalf of all Entergy Gulf States
customers in Texas who sustained outages in a January 1997 ice storm.
Panda Energy Corporation (Entergy Corporation)
See "Panda Energy Corporation" in Item 1 of Part I of the Form 10-K
for information relating to the lawsuit filed by Panda Energy Corporation
(Panda). In October 1999, the parties agreed to settle the lawsuit for a
cash payment to Panda that is immaterial to the results of operations and
financial condition of Entergy, and the proceeding will be dismissed.
Litigation Environment (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy)
The four states in which Entergy and the domestic utility companies
operate, and in particular Louisiana and Texas, have proven to be unusually
litigious environments. Judges and juries in Louisiana and Texas have
demonstrated a willingness to grant large verdicts, including punitive
damages, to plaintiffs in personal injury, property damage, and business
tort cases. Entergy uses all means appropriate to contest litigation
threatened or filed against it, but the litigation environment in the
states referred to poses a significant business risk.
Environmental Matters (Entergy Louisiana and Entergy New Orleans)
Entergy New Orleans has completed the stabilization and abatement of
asbestos containing material at the A. B. Paterson Generating Plant,
located in New Orleans, Louisiana. Entergy notified the Louisiana
Department of Environmental Quality of its intent to repair and remove
insulation and machinery gaskets. On-site abatement of gaskets and
insulating material was completed during the third quarter of 1999. The
cost incurred through September 30, 1999 is approximately $1.9 million, and
future costs are not expected to exceed the existing provision of
approximately $45,000.
During 1993, the LDEQ issued new rules for solid waste regulation,
including regulation of wastewater impoundments. Entergy Louisiana and
Entergy New Orleans have determined that certain of their power plant
wastewater impoundments were affected by these regulations and have chosen
to upgrade or close them. As a result, a remaining recorded liability in
the amount of $5.8 million for Entergy Louisiana and $470,000 for Entergy
New Orleans existed at September 30, 1999 for wastewater upgrades and
closures. Completion of this work is awaiting the LDEQ's approval.
Item 4. Submission of Matters to a Vote of Security Holders
(Entergy Arkansas)
A consent in lieu of the annual meeting of common stockholders was
executed on July 7, 1999. The consent was signed on behalf of Entergy
Corporation, the holder of all issued and outstanding shares of common
stock. The common stockholder, by such consent, elected the following
individuals to serve as directors constituting the Board of Directors of
Entergy Arkansas: Thomas J. Wright, Donald C. Hintz, and C. John Wilder.
(Entergy Gulf States)
A consent in lieu of the annual meeting of common stockholders was
executed on July 7, 1999. The consent was signed on behalf of Entergy
Corporation, the holder of all issued and outstanding shares of common
stock. The common stockholder, by such consent, elected the following
individuals to serve as directors constituting the Board of Directors of
Entergy Gulf States: Jerry D. Jackson, Joseph F. Domino, Donald C. Hintz,
and C. John Wilder.
(Entergy Louisiana)
A consent in lieu of the annual meeting of common stockholders was
executed on July 7, 1999. The consent was signed on behalf of Entergy
Corporation, the holder of all issued and outstanding shares of common
stock. The common stockholder, by such consent, elected the following
individuals to serve as directors constituting the Board of Directors of
Entergy Louisiana: Jerry D. Jackson, Donald C. Hintz, and C. John Wilder.
(Entergy Mississippi)
A consent in lieu of the annual meeting of common stockholders was
executed on July 7, 1999. The consent was signed on behalf of Entergy
Corporation, the holder of all issued and outstanding shares of common
stock. The common stockholder, by such consent, elected the following
individuals to serve as directors constituting the Board of Directors of
Entergy Mississippi: Carolyn C. Shanks, Donald C. Hintz, and C. John
Wilder.
(Entergy New Orleans)
A consent in lieu of the annual meeting of common stockholders was
executed on July 7, 1999. The consent was signed on behalf of Entergy
Corporation, the holder of all issued and outstanding shares of common
stock. The common stockholder, by such consent, elected the following
individuals to serve as directors constituting the Board of Directors of
Entergy New Orleans: Daniel F. Packer, Donald C. Hintz, and C. John
Wilder.
(System Energy)
A consent in lieu of the annual meeting of common stockholders was
executed on July 30, 1999. The consent was signed on behalf of Entergy
Corporation, the holder of all issued and outstanding shares of common
stock. The common stockholder, by such consent, elected the following
individuals to serve as directors constituting the Board of Directors of
System Energy: Jerry W. Yelverton, Donald C. Hintz, and C. John Wilder.
Item 5. Other Information
Earnings Ratios (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
The domestic utility companies and System Energy have calculated
ratios of earnings to fixed charges and ratios of earnings to combined
fixed charges and preferred dividends pursuant to Item 503 of Regulation S-
K of the SEC as follows:
Ratios of Earnings to Fixed Charges
Twelve Months Ended
December 31, September 30,
1994 1995 1996 1997 1998 1999
Entergy Arkansas 2.32 2.56 2.93 2.54 2.63 2.29
Entergy Gulf States (b)- 1.86 1.47 1.42 1.40 1.61
Entergy Louisiana 2.91 3.18 3.16 2.74 3.18 4.06
Entergy Mississippi 2.12 2.92 3.40 2.98 3.12 2.10
Entergy New Orleans 1.91 3.93 3.51 2.70 2.65 3.65
System Energy 1.23 2.07 2.21 2.31 2.52 1.90
Ratios of Earnings to Combined Fixed Charges
and Preferred Dividends
Twelve Months Ended
December 31, September 30,
1994 1995 1996 1997 1998 1999
Entergy Arkansas 1.97 2.12 2.44 2.24 2.28 2.01
Entergy Gulf States (a) (b)- 1.54 1.19 1.23 1.20 1.39
Entergy Louisiana 2.43 2.60 2.64 2.36 2.75 3.58
Entergy Mississippi 1.81 2.51 2.95 2.69 2.80 1.88
Entergy New Orleans 1.73 3.56 3.22 2.44 2.41 3.32
(a) "Preferred Dividends" in the case of Entergy Gulf States also
include dividends on preference stock.
(b) 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.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
** 4(a) - Refunding Agreement (Series 1999-A) between Entergy Gulf
States and Parish of West Feliciana, State of Louisiana
dated as of September 1, 1999 (B-3(c) to Rule 24
Certificate dated October 8, 1999 in File No. 70-8721).
** 4(b) - Refunding Agreement (Series 1999-B) between Entergy Gulf
States and Parish of West Feliciana, State of Louisiana
dated as of September 1, 1999 (B-3(d) to Rule 24
Certificate dated October 8, 1999 in File No. 70-8721).
** 4(c) - Refunding Agreement (Series 1999-C) between Entergy
Louisiana and Parish of St. Charles, State of Louisiana
dated as of October 1, 1999 (B-11(a) to Rule 24
Certificate dated October 15, 1999 in File No. 70-9141).
27(a) - Financial Data Schedule for Entergy Corporation and
Subsidiaries as of September 30, 1999.
27(b) - Financial Data Schedule for Entergy Arkansas as of
September 30, 1999.
27(c) - Financial Data Schedule for Entergy Gulf States as of
September 30, 1999.
27(d) - Financial Data Schedule for Entergy Louisiana as of
September 30, 1999.
27(e) - Financial Data Schedule for Entergy Mississippi as of
September 30, 1999.
27(f) - Financial Data Schedule for Entergy New Orleans as of
September 30, 1999.
27(g) - Financial Data Schedule for System Energy as of September
30, 1999.
99(a) - Entergy Arkansas' Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred Dividends, as defined.
99(b) - Entergy Gulf States' Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred Dividends, as defined.
99(c) - Entergy Louisiana's Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred Dividends, as defined.
99(d) - Entergy Mississippi's Computation of Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Dividends, as defined.
99(e) - Entergy New Orleans' Computation of Ratios of Earnings to
Fixed Charges and of Earnings to Combined Fixed Charges
and Preferred Dividends, as defined.
99(f) - System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
** 99(g) - Annual Reports on Form 10-K of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System
Energy for the fiscal year ended December 31, 1998,
portions of which are incorporated herein by reference as
described elsewhere in this document (filed with the SEC
in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-
5807, and 1-9067, respectively).
** 99(h) - Quarterly Reports on Form 10-Q of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System
Energy for the quarter ended March 31, 1999, portions of
which are incorporated herein by reference as described
elsewhere in this document (filed with the SEC in File
Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-5807, and
1-9067, respectively).
** 99(i) - Quarterly Reports on Form 10-Q of Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System
Energy for the quarter ended June 30, 1999, portions of
which are incorporated herein by reference as described
elsewhere in this document (filed with the SEC in File
Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-320, 0-5807, and
1-9067, respectively).
___________________________
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation
agrees to furnish to the Commission upon request any instrument with
respect to long-term debt that is not registered or listed herein as an
Exhibit because the total amount of securities authorized under such
agreement does not exceed ten percent of Entergy Corporation and its
subsidiaries on a consolidated basis.
* Reference is made to a duplicate list of exhibits being
filed as a part of this report on Form 10-Q for the quarter
ended September 30, 1999, which list, prepared in
accordance with Item 102 of Regulation S-T of the SEC,
immediately precedes the exhibits being filed with this
report on Form 10-Q for the quarter ended September 30,
1999.
** Incorporated herein by reference as indicated.
(b) Reports on Form 8-K
Entergy Corporation and Entergy Gulf States
A Current Report on Form 8-K, dated July 23, 1999,
was filed with the SEC on July 23, 1999, reporting
information under Item 5. "Other Events".
A Current Report on Form 8-K, dated September 9,
1999, was filed with the SEC on September 9, 1999,
reporting information under Item 5. "Other Events".
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized. The signature for each
undersigned company shall be deemed to relate only to matters having
reference to such company or its subsidiaries.
ENTERGY CORPORATION
ENTERGY ARKANSAS, INC.
ENTERGY GULF STATES, INC.
ENTERGY LOUISIANA, INC.
ENTERGY MISSISSIPPI, INC.
ENTERGY NEW ORLEANS, INC.
SYSTEM ENERGY RESOURCES, INC.
/s/ Nathan E. Langston
Nathan E. Langston
Vice President and Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer)
Date: November 12, 1999
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Corporation and Subsidiaries financial statements for the quarter ended
September 30, 1999 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 15,279,368
<OTHER-PROPERTY-AND-INVEST> 1,745,087
<TOTAL-CURRENT-ASSETS> 3,952,809
<TOTAL-DEFERRED-CHARGES> 2,420,562
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 23,397,826
<COMMON> 2,470
<CAPITAL-SURPLUS-PAID-IN> 4,634,412
<RETAINED-EARNINGS> 2,852,718
<TOTAL-COMMON-STOCKHOLDERS-EQ> 7,312,420
304,650
488,454
<LONG-TERM-DEBT-NET> 6,504,287
<SHORT-TERM-NOTES> 665
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 316,735
0
<CAPITAL-LEASE-OBLIGATIONS> 232,944
<LEASES-CURRENT> 175,964
<OTHER-ITEMS-CAPITAL-AND-LIAB> 8,061,707
<TOT-CAPITALIZATION-AND-LIAB> 23,397,826
<GROSS-OPERATING-REVENUE> 7,020,861
<INCOME-TAX-EXPENSE> 342,403
<OTHER-OPERATING-EXPENSES> 5,841,762
<TOTAL-OPERATING-EXPENSES> 5,841,762
<OPERATING-INCOME-LOSS> 1,179,099
<OTHER-INCOME-NET> 157,499
<INCOME-BEFORE-INTEREST-EXPEN> 1,336,598
<TOTAL-INTEREST-EXPENSE> 415,373
<NET-INCOME> 578,822
30,645
<EARNINGS-AVAILABLE-FOR-COMM> 548,177
<COMMON-STOCK-DIVIDENDS> 218,042
<TOTAL-INTEREST-ON-BONDS> 447,054
<CASH-FLOW-OPERATIONS> 962,885
<EPS-BASIC> 2.22
<EPS-DILUTED> 2.22
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Arkansas, Inc. financial statements for the quarter ended September 30, 1999
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,834,047
<OTHER-PROPERTY-AND-INVEST> 345,246
<TOTAL-CURRENT-ASSETS> 453,096
<TOTAL-DEFERRED-CHARGES> 431,994
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,064,383
<COMMON> 470
<CAPITAL-SURPLUS-PAID-IN> 590,134
<RETAINED-EARNINGS> 499,822
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,090,426
80,000
116,350
<LONG-TERM-DEBT-NET> 1,129,228
<SHORT-TERM-NOTES> 667
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 340
0
<CAPITAL-LEASE-OBLIGATIONS> 79,524
<LEASES-CURRENT> 63,012
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,504,836
<TOT-CAPITALIZATION-AND-LIAB> 4,064,383
<GROSS-OPERATING-REVENUE> 1,187,961
<INCOME-TAX-EXPENSE> 56,960
<OTHER-OPERATING-EXPENSES> 982,019
<TOTAL-OPERATING-EXPENSES> 982,019
<OPERATING-INCOME-LOSS> 205,942
<OTHER-INCOME-NET> 11,913
<INCOME-BEFORE-INTEREST-EXPEN> 217,855
<TOTAL-INTEREST-EXPENSE> 62,934
<NET-INCOME> 97,961
7,194
<EARNINGS-AVAILABLE-FOR-COMM> 90,767
<COMMON-STOCK-DIVIDENDS> 78,800
<TOTAL-INTEREST-ON-BONDS> 61,143
<CASH-FLOW-OPERATIONS> 217,656
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Gulf States, Inc. financial statements for the quarter ended September 30, 1999
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4,126,528
<OTHER-PROPERTY-AND-INVEST> 427,023
<TOTAL-CURRENT-ASSETS> 759,856
<TOTAL-DEFERRED-CHARGES> 567,093
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5,880,500
<COMMON> 114,055
<CAPITAL-SURPLUS-PAID-IN> 1,152,575
<RETAINED-EARNINGS> 212,811
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,479,441
119,650
201,444
<LONG-TERM-DEBT-NET> 1,631,522
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 148,000
0
<CAPITAL-LEASE-OBLIGATIONS> 94,089
<LEASES-CURRENT> 35,176
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,171,178
<TOT-CAPITALIZATION-AND-LIAB> 5,880,500
<GROSS-OPERATING-REVENUE> 1,646,438
<INCOME-TAX-EXPENSE> 81,136
<OTHER-OPERATING-EXPENSES> 1,363,036
<TOTAL-OPERATING-EXPENSES> 1,363,036
<OPERATING-INCOME-LOSS> 283,402
<OTHER-INCOME-NET> 18,715
<INCOME-BEFORE-INTEREST-EXPEN> 302,117
<TOTAL-INTEREST-EXPENSE> 109,601
<NET-INCOME> 111,380
12,774
<EARNINGS-AVAILABLE-FOR-COMM> 98,606
<COMMON-STOCK-DIVIDENDS> 88,000
<TOTAL-INTEREST-ON-BONDS> 101,963
<CASH-FLOW-OPERATIONS> 206,843
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Louisiana, Inc. financial statements for the quarter ended September 30, 1999
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,285,634
<OTHER-PROPERTY-AND-INVEST> 128,862
<TOTAL-CURRENT-ASSETS> 447,673
<TOTAL-DEFERRED-CHARGES> 349,913
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,212,082
<COMMON> 1,088,900
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 105,499
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,192,078
105,000
100,500
<LONG-TERM-DEBT-NET> 1,161,594
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 120,448
0
<CAPITAL-LEASE-OBLIGATIONS> 26,509
<LEASES-CURRENT> 32,539
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,473,414
<TOT-CAPITALIZATION-AND-LIAB> 4,212,082
<GROSS-OPERATING-REVENUE> 1,434,692
<INCOME-TAX-EXPENSE> 134,485
<OTHER-OPERATING-EXPENSES> 1,017,373
<TOTAL-OPERATING-EXPENSES> 1,017,373
<OPERATING-INCOME-LOSS> 417,319
<OTHER-INCOME-NET> 4,724
<INCOME-BEFORE-INTEREST-EXPEN> 422,043
<TOTAL-INTEREST-EXPENSE> 84,020
<NET-INCOME> 203,538
7,427
<EARNINGS-AVAILABLE-FOR-COMM> 196,111
<COMMON-STOCK-DIVIDENDS> 165,400
<TOTAL-INTEREST-ON-BONDS> 111,675
<CASH-FLOW-OPERATIONS> 298,977
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Mississippi, Inc. financial statements for the quarter ended September 30, 1999
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,096,569
<OTHER-PROPERTY-AND-INVEST> 12,528
<TOTAL-CURRENT-ASSETS> 159,827
<TOTAL-DEFERRED-CHARGES> 189,004
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,457,928
<COMMON> 199,326
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 225,670
<TOTAL-COMMON-STOCKHOLDERS-EQ> 424,937
0
50,381
<LONG-TERM-DEBT-NET> 464,411
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 314
<LEASES-CURRENT> 93
<OTHER-ITEMS-CAPITAL-AND-LIAB> 517,792
<TOT-CAPITALIZATION-AND-LIAB> 1,457,928
<GROSS-OPERATING-REVENUE> 644,239
<INCOME-TAX-EXPENSE> 18,425
<OTHER-OPERATING-EXPENSES> 568,870
<TOTAL-OPERATING-EXPENSES> 568,870
<OPERATING-INCOME-LOSS> 75,369
<OTHER-INCOME-NET> 5,908
<INCOME-BEFORE-INTEREST-EXPEN> 81,277
<TOTAL-INTEREST-EXPENSE> 28,403
<NET-INCOME> 34,449
2,527
<EARNINGS-AVAILABLE-FOR-COMM> 31,922
<COMMON-STOCK-DIVIDENDS> 28,700
<TOTAL-INTEREST-ON-BONDS> 29,386
<CASH-FLOW-OPERATIONS> 103,320
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
New Orleans, Inc. financial statements for the quarter ended September 30, 1999
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 315,688
<OTHER-PROPERTY-AND-INVEST> 3,259
<TOTAL-CURRENT-ASSETS> 137,504
<TOTAL-DEFERRED-CHARGES> 47,952
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 504,403
<COMMON> 33,744
<CAPITAL-SURPLUS-PAID-IN> 36,293
<RETAINED-EARNINGS> 67,647
<TOTAL-COMMON-STOCKHOLDERS-EQ> 137,685
0
19,780
<LONG-TERM-DEBT-NET> 169,067
<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> 177,871
<TOT-CAPITALIZATION-AND-LIAB> 504,403
<GROSS-OPERATING-REVENUE> 390,483
<INCOME-TAX-EXPENSE> 17,098
<OTHER-OPERATING-EXPENSES> 339,023
<TOTAL-OPERATING-EXPENSES> 339,023
<OPERATING-INCOME-LOSS> 51,460
<OTHER-INCOME-NET> 1,844
<INCOME-BEFORE-INTEREST-EXPEN> 53,304
<TOTAL-INTEREST-EXPENSE> 10,465
<NET-INCOME> 25,741
724
<EARNINGS-AVAILABLE-FOR-COMM> 25,017
<COMMON-STOCK-DIVIDENDS> 24,400
<TOTAL-INTEREST-ON-BONDS> 13,569
<CASH-FLOW-OPERATIONS> 47,250
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from System
Energy Resources, Inc. financial statements for the quarter ended
September 30, 1999 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,331,992
<OTHER-PROPERTY-AND-INVEST> 128,556
<TOTAL-CURRENT-ASSETS> 405,561
<TOTAL-DEFERRED-CHARGES> 457,471
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,323,580
<COMMON> 789,350
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 102,784
<TOTAL-COMMON-STOCKHOLDERS-EQ> 892,134
0
0
<LONG-TERM-DEBT-NET> 1,112,560
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 47,947
0
<CAPITAL-LEASE-OBLIGATIONS> 29,647
<LEASES-CURRENT> 41,835
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,199,457
<TOT-CAPITALIZATION-AND-LIAB> 3,323,850
<GROSS-OPERATING-REVENUE> 463,923
<INCOME-TAX-EXPENSE> 39,217
<OTHER-OPERATING-EXPENSES> 270,192
<TOTAL-OPERATING-EXPENSES> 270,192
<OPERATING-INCOME-LOSS> 193,731
<OTHER-INCOME-NET> 14,250
<INCOME-BEFORE-INTEREST-EXPEN> 207,981
<TOTAL-INTEREST-EXPENSE> 114,539
<NET-INCOME> 54,225
0
<EARNINGS-AVAILABLE-FOR-COMM> 54,225
<COMMON-STOCK-DIVIDENDS> 46,200
<TOTAL-INTEREST-ON-BONDS> 123,049
<CASH-FLOW-OPERATIONS> 109,927
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99(a)
Entergy Arkansas, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
12 months
1994 1995 1996 1997 1998 September-99
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest Charges $110,814 $115,337 $106,716 $104,165 $96,685 $92,322
Interest applicable to rentals 19,140 18,158 19,121 17,529 15,511 16,786
------------------------------------------------------------
Total fixed charges, as defined 129,954 133,495 125,837 121,694 112,196 109,108
Preferred dividends, as defined (a) 23,234 27,636 24,731 16,073 16,763 15,400
------------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $153,188 $161,131 $150,568 $137,767 $128,959 $124,508
============================================================
Earnings as defined:
Net Income $142,263 $136,666 $157,798 $127,977 $110,951 $89,591
Add:
Provision for income taxes:
Total 29,220 72,081 84,445 59,220 71,374 51,374
Fixed charges as above 129,954 133,495 125,837 121,694 112,196 109,108
------------------------------------------------------------
Total earnings, as defined $301,437 $342,242 $368,080 $308,891 $294,521 $250,073
============================================================
Ratio of earnings to fixed charges, as defined 2.32 2.56 2.93 2.54 2.63 2.29
============================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.97 2.12 2.44 2.24 2.28 2.01
============================================================
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by
dividing the preferred dividend requirement by one hundred percent (100%)
minus the income tax rate.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99(b)
Entergy Gulf States, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
12 months
1994 1995 1996 1997 1998 Sept 1999
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest charges $204,134 $200,224 $193,890 $180,073 $178,220 $169,509
Interest applicable to rentals 21,539 16,648 14,887 15,747 16,927 18,807
-----------------------------------------------------------
Total fixed charges, as defined 225,673 216,872 208,777 195,820 195,147 188,316
Preferred dividends, as defined (a) 52,210 44,651 48,690 30,028 32,031 28,564
-----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $277,883 $261,523 $257,467 $225,848 $227,178 $216,880
===========================================================
Earnings as defined:
Income (loss) from continuing operations before extraordinary items and
the cumulative effect of accounting changes ($82,755) $122,919 ($3,887) $59,976 $46,393 $69,945
Add:
Income Taxes (62,086) 63,244 102,091 22,402 31,773 44,223
Fixed charges as above 225,673 216,872 208,777 195,820 195,147 188,316
-----------------------------------------------------------
Total earnings, as defined (b) $80,832 $403,035 $306,981 $278,198 $273,313 $302,484
===========================================================
Ratio of earnings to fixed charges, as defined 0.36 1.86 1.47 1.42 1.40 1.61
===========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 0.29 1.54 1.19 1.23 1.20 1.39
===========================================================
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by
dividing the preferred dividend requirement by one hundred percent (100%)
minus the income tax rate.
(b) Earnings for the year ended December 31, 1994, for GSU were not adequate
to cover fixed charges combined fixed charges and preferred dividends
by $144.8 million and $197.1 million, respectively.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99(c)
Entergy Louisiana, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
12 months
1994 1995 1996 1997 1998 Sept 99
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest $136,444 $136,901 $132,412 $128,900 $122,890 $115,711
Interest applicable to rentals 8,332 9,332 10,601 9,203 9,564 8,841
-----------------------------------------------------------
Total fixed charges, as defined 144,776 146,233 143,013 138,103 132,454 124,552
Preferred dividends, as defined (a) 29,171 32,847 28,234 22,103 20,925 16,736
-----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $173,947 $179,080 $171,247 $160,206 $153,379 $141,288
===========================================================
Earnings as defined:
Net Income $213,839 $201,537 $190,762 $141,757 $179,487 $238,092
Add:
Provision for income taxes:
Total Taxes 63,288 117,114 118,559 98,965 109,104 143,165
Fixed charges as above 144,776 146,233 143,013 138,103 132,454 124,552
-----------------------------------------------------------
Total earnings, as defined $421,903 $464,884 $452,334 $378,825 $421,045 $505,809
===========================================================
Ratio of earnings to fixed charges, as defined 2.91 3.18 3.16 2.74 3.18 4.06
===========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 2.43 2.60 2.64 2.36 2.75 3.58
===========================================================
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by
dividing the preferred dividend requirement by one hundred percent (100%)
minus the income tax rate.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99(d)
Entergy Mississippi, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
12 months
1994 1995 1996 1997 1998 Sept 1999
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest $52,764 $51,635 $48,007 $45,274 $40,927 $39,005
Interest applicable to rentals 1,716 2,173 2,165 1,947 1,864 2,235
-----------------------------------------------------------
Total fixed charges, as defined 54,480 53,808 50,172 47,221 42,791 41,240
Preferred dividends, as defined (a) 9,447 9,004 7,610 5,123 4,878 4,880
-----------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $63,927 $62,812 $57,782 $52,344 $47,669 $46,120
===========================================================
Earnings as defined:
Net Income $48,779 $68,667 $79,210 $66,661 $62,638 $33,060
Add:
Provision for income taxes:
Total income taxes 12,476 34,877 41,107 26,744 28,031 12,241
Fixed charges as above 54,480 53,808 50,172 47,221 42,791 41,240
-----------------------------------------------------------
Total earnings, as defined $115,735 $157,352 $170,489 $140,626 $133,460 $86,541
===========================================================
Ratio of earnings to fixed charges, as defined 2.12 2.92 3.40 2.98 3.12 2.10
===========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.81 2.51 2.95 2.69 2.80 1.88
===========================================================
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by
dividing the preferred dividend requirement by one hundred percent (100%)
minus the income tax rate.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99(e)
Entergy New Orleans, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
12 months
1994 1995 1996 1997 1998 Sept 1999
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest $18,272 $17,802 $16,304 $15,287 $14,792 $14,561
Interest applicable to rentals 1,245 916 831 911 1,045 1,213
---------------------------------------------------------
Total fixed charges, as defined 19,517 18,718 17,135 16,198 15,837 15,774
Preferred dividends, as defined (a) 2,071 1,964 1,549 1,723 1,566 1,532
---------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $21,588 $20,682 $18,684 $17,921 $17,403 $17,306
=========================================================
Earnings as defined:
Net Income $13,211 $34,386 $26,776 $15,451 $16,137 $25,945
Add:
Provision for income taxes:
Total 4,600 20,467 16,216 12,142 10,042 15,804
Fixed charges as above 19,517 18,718 17,135 16,198 15,837 15,774
---------------------------------------------------------
Total earnings, as defined $37,328 $73,571 $60,127 $43,791 $42,016 $57,523
=========================================================
Ratio of earnings to fixed charges, as defined 1.91 3.93 3.51 2.70 2.65 3.65
=========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.73 3.56 3.22 2.44 2.41 3.32
=========================================================
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by
dividing the preferred dividend requirement by one hundred percent (100%)
minus the income tax rate.
(b) Earnings for the twelve months ended December 31, 1991 include the $90
million effect of the 1991 NOPSI Settlement.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 99(f)
System Energy Resources, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges
12 months
1994 1995 1996 1997 1998 Sept 1999
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest $176,504 $151,512 $143,720 $128,653 $116,060 $143,073
Interest applicable to rentals 7,546 6,475 6,223 6,065 5,189 14,379
-----------------------------------------------------------
Total fixed charges, as defined $184,050 $157,987 $149,943 $134,718 $121,249 $157,452
===========================================================
Earnings as defined:
Net Income $5,407 $93,039 $98,668 $102,295 $106,476 $86,196
Add:
Provision for income taxes:
Total 36,838 75,493 82,121 74,654 77,263 55,125
Fixed charges as above 184,050 157,987 149,943 134,718 121,249 157,452
-----------------------------------------------------------
Total earnings, as defined $226,295 $326,519 $330,732 $311,667 $304,988 $298,773
===========================================================
Ratio of earnings to fixed charges, as defined 1.23 2.07 2.21 2.31 2.52 1.90
===========================================================
</TABLE>
