___________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission Registrant, State of Incorporation, IRS Employer
File Number Address of Principal Executive Identification No.
Offices and Telephone Number
1-11299 ENTERGY CORPORATION 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
1-10764 ENTERGY ARKANSAS, INC. 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-2703 ENTERGY GULF STATES, INC. 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 ENTERGY LOUISIANA, INC. 72-0245590
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
0-320 ENTERGY MISSISSIPPI, INC. 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 529-5262
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
___________________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Registrant Title of Class on Which Registered
<S> <C> <C>
Entergy Corporation Common Stock, $0.01 Par Value - 246,494,143 New York Stock Exchange, Inc.
shares outstanding at February 26, 1999 Chicago Stock Exchange Inc.
Pacific Exchange Inc.
Entergy Arkansas Capital I 8-1/2% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value:
$4.40 Dividend Series New York Stock Exchange, Inc.
$4.52 Dividend Series New York Stock Exchange, Inc.
$5.08 Dividend Series New York Stock Exchange, Inc.
$8.80 Dividend Series New York Stock Exchange, Inc.
Adjustable Rate Series B (Depository Receipts) New York Stock Exchange, Inc.
Preference Stock, Cumulative, without Par Value New York Stock Exchange, Inc.
$1.75 Dividend Series
Entergy Gulf States Capital I 8.75% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
Entergy Louisiana Capital I 9% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Class
Entergy Arkansas, Inc. Preferred Stock, Cumulative, $100 Par Value
Preferred Stock, Cumulative, $25 Par Value
Preferred Stock, Cumulative, $0.01 Par Value
Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value
Entergy Louisiana, Inc. Preferred Stock, Cumulative, $100 Par Value
Preferred Stock, Cumulative, $25 Par Value
Entergy Mississippi, Inc. Preferred Stock, Cumulative, $100 Par Value
Entergy New Orleans, Inc. Preferred Stock, Cumulative, $100 Par Value
<PAGE>
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrants were required to file such reports), and (2)
have been subject to such filing requirements for the past 90 days.
Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants' knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of Entergy Corporation Common Stock, $0.01
Par Value, held by non-affiliates, was $7 billion based on the reported
last sale price of such stock on the New York Stock Exchange on February
26, 1999. Entergy Corporation is directly or indirectly the sole holder of
the common stock of Entergy Arkansas, Inc., Entergy Gulf States, Inc.,
Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans,
Inc., and System Energy Resources, Inc.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of Entergy Corporation to be filed in
connection with its Annual Meeting of Stockholders, to be held May 14,
1999, are incorporated by reference into Parts I and III hereof.
<PAGE>
TABLE OF CONTENTS
Page
Number
Definitions i
Part I
Item 1. Business 1
Item 2. Properties 32
Item 3. Legal Proceedings 33
Item 4. Submission of Matters to a Vote of Security Holders 33
Directors and Executive Officers of Entergy Corporation 33
Part II
Item 5. Market for Registrants' Common Equity and Related
Stockholder Matters 36
Item 6. Selected Financial Data 37
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 37
Item 7A.Quantitative and Qualitative Disclosures About Market
Risk 37
Item 8. Financial Statements and Supplementary Data 37
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 186
Part III
Item 10. Directors and Executive Officers of the Registrants 186
Item 11. Executive Compensation 190
Item 12. Security Ownership of Certain Beneficial Owners and
Management 199
Item 13. Certain Relationships and Related Transactions 202
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 203
Signatures 204
Report of Independent Accountants on Financial Statement Schedules 212
Index to Financial Statement Schedules S-1
Exhibit Index E-1
This combined Form 10-K is separately filed by Entergy Corporation,
Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc.,
Entergy Mississippi, Inc., Entergy New Orleans, Inc., and System Energy
Resources, Inc. Information contained herein relating to any individual
company is filed by such company on its own behalf. Each company makes
representations only as to itself and makes no other representations
whatsoever as to any other company.
This report should be read in its entirety. No one section of the
report deals with all aspects of the subject matter.
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>
DEFINITIONS
Certain abbreviations or acronyms used in the text and notes are
defined below:
Abbreviation or Acronym Term
AFUDC Allowance for Funds Used During Construction
Algiers 15th Ward of the City of New Orleans, Louisiana
ALJ Administrative Law Judge
ANO 1 and 2 Units 1 and 2 of Arkansas Nuclear One Steam Electric
Generating Station (nuclear), owned by Entergy Arkansas
APB Accounting Principles Board
APSC Arkansas Public Service Commission
Arkansas Cities and
Cooperatives Cities of Benton, North Little Rock, Prescott and
Osceola; the Conway Corporation, the West Memphis
Utilities Commission and the Farmers' Electric
Cooperative
Availability
Agreement Agreement, dated as of June 21, 1974, as amended, among
System Energy and Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans, and the
assignments thereof
BPS British pounds sterling
Cajun Cajun Electric Power Cooperative, Inc. (currently in
chapter 11 bankruptcy reorganization)
Capital Funds
Agreement Agreement, dated as of June 21, 1974, as amended,
between System Energy and Entergy Corporation, and the
assignments thereof
CitiPower CitiPower Pty., an electric distribution company
serving Melbourne, Australia and surrounding suburbs,
which was acquired by Entergy effective January 5,
1996. CitiPower was sold by Entergy effective December
31, 1998.
Council Council of the City of New Orleans, Louisiana
D.C. Circuit United States Court of Appeals for the District of
Columbia Circuit
DOE United States Department of Energy
domestic utility
companies Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New
Orleans, collectively
EITF Emerging Issues Task Force
EMF Electromagnetic fields
EPA Environmental Protection Agency
EPAct Energy Policy Act of 1992
EPDC Entergy Power Development Corporation
EPMC Entergy Power Marketing Corp.
ETC Exempt telecommunications company under PUHCA
ETHC Entergy Technology Holding Company
EWG Exempt wholesale generator under PUHCA
Entergy Entergy Corporation and its various direct and indirect
subsidiaries
Entergy Arkansas Entergy Arkansas, Inc.
Entergy Corporation Entergy Corporation, a Delaware corporation, successor
to Entergy Corporation, a Florida corporation
Entergy Enterprises Entergy Enterprises, Inc.
Entergy Gulf States Entergy Gulf States, Inc., including its wholly owned
subsidiaries - Varibus Corporation, GSG&T, Inc.,
Prudential Oil & Gas, Inc., and Southern Gulf Railway
Company
Entergy London Entergy London Investments plc, formerly Entergy Power
UK plc (including its wholly owned subsidiary, London
Electricity plc). Entergy London was sold by Entergy
effective December 4, 1998.
<PAGE>
DEFINITIONS (Continued)
Abbreviation or Acronym Term
Entergy Louisiana Entergy Louisiana, Inc.
Entergy Mississippi Entergy Mississippi, Inc.
Entergy New Orleans Entergy New Orleans, Inc.
Entergy Operations Entergy Operations, Inc.
Entergy Power Entergy Power, Inc.
Entergy Services Entergy Services, Inc.
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
FUCO an exempt foreign utility company under PUHCA
G&R Mortgage Bonds General and Refunding Mortgage Bonds
Grand Gulf 1 and 2 Units 1 and 2 of Grand Gulf Steam Electric Generating
Station (nuclear), 90% owned by System Energy
GWH one million kilowatt-hours
Independence Independence Steam Electric Station (coal), owned 16%
by Entergy Arkansas, 25% by Entergy Mississippi, and 7%
by Entergy Power
IRS Internal Revenue Service
KPL Kingsnorth Power Ltd.
KV kilovolt
KW kilowatt
KWH kilowatt-hour(s)
London Electricity London Electricity plc - a regional electric company
serving London, England, which was acquired by Entergy
London effective February 1, 1997. Entergy London was
sold by Entergy effective December 4, 1998.
LDEQ Louisiana Department of Environmental Quality
LPSC Louisiana Public Service Commission
MCF 1,000 cubic feet of gas
Merger The combination transaction, consummated on
December 31, 1993, by which Entergy Gulf States became
a subsidiary of Entergy Corporation
MDEQ Mississippi Department of Environmental Quality
MPSC Mississippi Public Service Commission
MW Megawatt(s)
N/A Not applicable
Nelson Unit 6 Unit No. 6 (coal) of the Nelson Steam Electric
Generating Station, owned 70% by Entergy Gulf States
NISCO Nelson Industrial Steam Company
1991 NOPSI
Settlement Agreement, retroactive to October 4, 1991, among
Entergy New Orleans, the Council, and the Alliance for
Affordable Energy, Inc. (local consumer advocate
group), which settled certain Grand Gulf 1 prudence
issues and certain litigation related to the resolution
adopted by the Council on February 4, 1988, disallowing
Entergy New Orleans' recovery of $135 million of
previously deferred Grand Gulf 1-related costs
1994 NOPSI
Settlement Settlement effective January 1, 1995, between Entergy
New Orleans and the Council in which Entergy New
Orleans agreed to implement a permanent reduction in
electric and gas rates and resolve disputes with the
Council in the interpretation of the 1991 NOPSI
Settlement
<PAGE>
DEFINITIONS (Concluded)
Abbreviation or Acronym Term
NPL Superfund National Priorities List
NRC Nuclear Regulatory Commission
PRP Potentially Responsible Party (a person or entity that
may be responsible for remediation of environmental
contamination)
PUCT Public Utility Commission of Texas
PUHCA Public Utility Holding Company Act of 1935, as amended
PURPA Public Utility Regulatory Policies Act of 1978
Rate Cap The level of Entergy Gulf States' retail electric base
rates in effect at December 31, 1993, for the Louisiana
retail jurisdiction, and the level of such rates in
effect prior to the settlement agreement with the PUCT
on July 21, 1994, for the Texas retail jurisdiction,
which could not be exceeded before December 31, 1998
Reallocation
Agreement 1981 Agreement, superseded in part by a June 13, 1985
decision of FERC, among Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy relating to the sale of capacity and
energy from Grand Gulf
Ritchie 2 Unit 2 of the R. E. Ritchie Steam Electric Generating
Station (gas/oil)
River Bend River Bend Steam Electric Generating Station (nuclear)
RUS Rural Utility Services (formerly the Rural
Electrification Administration or "REA")
SCC Saltend Cogeneration Company
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards,
promulgated by the FASB
SMEPA South Mississippi Electric Power Agency
System Agreement Agreement, effective January 1, 1983, as modified,
among the domestic utility companies relating to the
sharing of generating capacity and other power
resources
System Energy System Energy Resources, Inc.
System Fuels System Fuels, Inc.
UK The United Kingdom of Great Britain and Northern
Ireland
Unit Power Sales
Agreement Agreement, dated as of June 10, 1982, as amended and
approved by FERC, among Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy, relating to the sale of capacity and
energy from System Energy's share of Grand Gulf 1
Waterford 3 Unit No. 3 (nuclear) of the Waterford Steam Electric
Generating Station, owned 90.7% by Entergy Louisiana.
The remaining 9.3% undivided interest is leased by
Entergy Louisiana.
White Bluff White Bluff Steam Electric Generating Station, 57%
owned by Entergy Arkansas
<PAGE>
PART I
Item 1. Business
BUSINESS OF ENTERGY
General
Entergy Corporation is a Delaware corporation which, through its
subsidiaries, engages principally in the following businesses: domestic
utility, power marketing and trading, global power development, and
domestic nuclear operations. It has no significant assets other than the
stock of its subsidiaries. Entergy Corporation is a registered public
utility holding company under PUHCA. As such, Entergy Corporation and its
subsidiaries generally are subject to the broad regulatory provisions of
PUHCA. PUHCA limits entry by registered public utility holding companies
to domestic integrated utility businesses, domestic and foreign electric
generation ventures, foreign utility ownership, telecommunications and
information service businesses, and other domestic energy related
businesses.
Domestic Utility
Entergy Corporation has five wholly-owned domestic retail electric
utility subsidiaries: Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans. As of December
31, 1998, these utility companies provided retail electric service to
approximately 2.5 million customers primarily in portions of the states of
Arkansas, Louisiana, Mississippi, and Texas. In addition, Entergy Gulf
States furnishes natural gas utility service in and around Baton Rouge,
Louisiana, and Entergy New Orleans furnishes natural gas utility service in
New Orleans, Louisiana. The business of the domestic utility companies is
subject to seasonal fluctuations, with the peak sales period normally
occurring during the third quarter of each year. During 1998, the domestic
utility companies' combined retail electric sales as a percentage of total
electric sales were: residential - 27.8%; commercial - 20.8%; and
industrial - 39.0%. Retail electric revenues from these sectors as a
percentage of total electric revenues were: residential - 37.5%;
commercial - 24.7%; and industrial - 29.8%. Sales to governmental and
municipal sectors and to nonaffiliated utilities accounted for the balance
of energy sales. The major industrial customers of the domestic utility
companies are in the chemical, petroleum refining, paper, and food products
industries. The retail rates and services of Entergy's domestic retail
utility subsidiaries are regulated by state and/or local regulatory
authorities.
Entergy Corporation also owns 100% of the voting stock of System
Energy, an Arkansas corporation that owns and leases an aggregate 90%
undivided interest in Grand Gulf. System Energy sells all of the capacity
and energy from its interest in Grand Gulf 1 at wholesale to its only
customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans. Management discusses sales from Grand Gulf 1 more
thoroughly in "CAPITAL REQUIREMENTS AND FUTURE FINANCING - Certain System
Financial and Support Agreements - Unit Power Sales Agreement" below.
System Energy's wholesale power sales are subject to the jurisdiction of
FERC.
Entergy Services, Inc., a Delaware corporation wholly-owned by Entergy
Corporation, provides management, administrative, accounting, legal,
engineering, and other services primarily to the domestic utility
subsidiaries of Entergy Corporation, and also to Entergy Enterprises.
Entergy Operations, a Delaware corporation, is also wholly-owned by Entergy
Corporation and provides nuclear management, operations and maintenance
services under contract for ANO, River Bend, Waterford 3, and Grand Gulf 1,
subject to the owner oversight of Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and System Energy, respectively. Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans own 35%,
33%, 19%, and 13%, respectively, of the common stock of System Fuels, a
Louisiana corporation that implements and manages certain programs to
procure, deliver, and store fuel supplies for those companies. Entergy
Services, Entergy Operations, and System Fuels provide their services to
the domestic utility companies and System Energy, on an "at cost" basis,
pursuant to service agreements approved by the SEC under PUHCA.
Entergy Gulf States has wholly-owned subsidiaries that (i) own and
operate intrastate gas pipelines in Louisiana used primarily to transport
fuel to two of Entergy Gulf States' generating stations; (ii) own the Lewis
Creek Station, a gas-fired generating plant, which is leased to and
operated by Entergy Gulf States; and (iii) own several miles of railroad
track constructed in Louisiana primarily for the purpose of transporting
coal for use as boiler fuel at Entergy Gulf States' Nelson Unit 6
generating facility.
Power Marketing and Trading
Entergy conducts its power marketing and trading business primarily
through two subsidiaries, Entergy Power and EPMC, which are both Delaware
corporations. Entergy Power is a domestic power producer that owns 665 MW
of fossil-fueled generation assets located in Arkansas. Entergy Power
markets electric capacity and energy in the wholesale market. Entergy
Power's wholesale power sales are subject to the jurisdiction of FERC.
EPMC engages in the marketing and trading of physical and financial energy
commodity products, industrial energy management, and risk management
services. It has authority from the SEC to deal in a wide range of energy
commodities and related financial products. Entergy's power marketing and
trading business has also recently begun trading activities in the UK.
EPMC is exposed to credit risk in the event of nonperformance by
counterparties to financial instruments. For each counterparty, EPMC
analyzes the financial condition prior to entering into an agreement,
establishes credit limits, and monitors the appropriateness of these limits
on an ongoing basis. Swap contracts and most other over-the-counter
instruments may be subject to margin requirements with the counterparty.
The principal markets for power and natural gas are utilities and
industrial end-users located throughout the United States. EPMC has a
concentration of receivables due from such customers. These industry
concentrations may affect EPMC's overall credit risk, either positively or
negatively, in that changes in economic, industry, regulatory or other
conditions may similarly affect certain customers.
Other Businesses
Entergy's global power development business is focused on acquiring or
developing power generation projects in Australia, Europe, Latin America,
and North America. This business owns interests in the following foreign
electric generation assets:
Investment Percent Ownership Status
Argentina - Costanera, 1,260 MW 6% operational
Argentina - Costanera expansion, 220 MW 10% operational
Chile - San Isidro, 370 MW 25% operational
Pakistan - Hub River, 1,292 MW 5% operational
Peru - Edegel - 819 MW 21% operational
United Kingdom - Saltend, 1,200 MW 100% under construction
United Kingdom - Damhead Creek, 792 MW 100% under construction
Entergy's global power development business has several other development
projects located within its focus geographic regions in the planning stages
as well as the 24MW Nantong project under construction in China.
Management does not intend to pursue further developments in Asia.
Entergy's domestic nuclear business focuses on providing operations
and management services (O&M Services), including decommissioning services,
to nuclear generating facilities owned by other utilities in the United
States. O&M Services include engineering, long term operations and
maintenance, fuel procurement, management and supervision, technical
support and training, administrative support, and any other managerial or
technical services required to operate, maintain and decommission nuclear
electric power facilities. Currently such services are provided for the
Maine Yankee nuclear power plant.
In November 1998, Entergy's nuclear business signed an agreement to
buy Boston Edison's 670 MW Pilgrim Nuclear Station in Plymouth,
Massachusetts. Pilgrim is the first plant to be acquired by Entergy as
part of a non-regulated business strategy that focuses on competitive
nuclear power acquisitions and power generation as primary growth areas.
Management expects to close the transaction in the second quarter of 1999.
The sales agreement provides that Boston Edison will fully fund a
decommissioning cost trust based on estimated decommissioning costs. The
sales agreement also includes total output power purchase agreements with
Boston Edison and other utilities. One hundred percent of plant output is
committed through 2001, which decreases to 50% by 2003. The power purchase
agreements will expire at the end of 2004.
Business Sales
Prior to 1998, Entergy acquired interests in a number of foreign
utility businesses. In August 1998, Entergy's Board of Directors approved
a new strategic focus that included the sale of certain of these
businesses. The largest investment was the ownership of London
Electricity. Entergy, through Entergy London, acquired London Electricity
in February 1997. London Electricity is a regional electric company that
is principally engaged in the distribution and supply of electricity to
customers in and around London, England. Entergy sold its interest in
Entergy London and London Electricity in December 1998. Entergy's second
largest investment was CitiPower, which is an Australian company acquired
in January 1996. CitiPower is principally engaged in the distribution and
supply of electricity to customers in Melbourne, Australia. Entergy sold
its interest in CitiPower in December 1998. Entergy also owns a 5%
interest in Edesur, S.A., which is the retail electric distribution company
for the southern part of Buenos Aires, Argentina. Entergy is seeking to
sell its interest in Edesur in 1999.
In September 1998, Entergy sold its energy management subsidiary,
Efficient Solutions, Inc. (formerly Entergy Integrated Solutions, Inc.).
In January 1999, Entergy disposed of its security monitoring business which
operates primarily in North and South Carolina, Alabama, Florida, Georgia,
Mississippi, Louisiana, and Texas. In March 1999, Entergy signed an
agreement to dispose of its interest in the Hyperion Telecommunications
joint ventures, which operate three Competitive Local Exchange Carriers
(CLECs) in Little Rock, Arkansas; Jackson, Mississippi; and Baton Rouge,
Louisiana. These CLECs provide long distance carrier access and local
exchange services.
Domestic and Foreign Generation Investments
Entergy's ability to invest in domestic and foreign generation
businesses is subject to the SEC's regulations under PUHCA. Absent SEC
approval, these regulations limit the aggregate amount that Entergy may
invest in domestic and foreign generation businesses to an amount equal to
50% of consolidated retained earnings at the time an investment is made.
Due to the sale of electric distribution businesses in the UK and Australia
in 1998, Entergy will have the ability to make significant additional
investments in domestic and foreign generation businesses.
International operations are subject to the risks inherent in
conducting business abroad, including possible nationalization or
expropriation, price and currency exchange controls, inflation, limitations
on foreign participation in local enterprises, and other restrictions.
Changes in the relative value of currencies occur from time to time, and
may favorably or unfavorably affect the financial condition and results of
operations of Entergy's non-U.S. businesses. In addition, exchange control
restrictions in certain countries may limit or prevent the repatriation of
earnings.
Selected Data
Selected customer and sales data for 1998 are summarized in the
following tables:
<TABLE>
<CAPTION>
Customers as of
December 31, 1998
Area Served Electric Gas
(In Thousands)
<S> <C> <C> <C>
Entergy Arkansas Portions of Arkansas and Tennessee 629 -
Entergy Gulf States Portions of Texas and Louisiana 658 89
Entergy Louisiana Portions of Louisiana 631 -
Entergy Mississippi Portions of Mississippi 388 -
Entergy New Orleans City of New Orleans, except Algiers, which
is provided electric service by
Entergy Louisiana 189 151
----- ---
Total customers 2,495 240
===== ===
</TABLE>
1998 - Selected Domestic Utility Electric Energy Sales Data
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Mississippi New Orleans Energy Entergy (a)
(In GWH's)
<S> <C> <C> <C> <C> <C> <C> <C>
Electric Department:
Sales to retail
customers 18,456 34,596 29,004 12,325 5,841 - 100,224
Sales for resale:
Affiliates 6,500 1,091 386 2,424 370 8,259 -
Other 5,948 2,990 855 484 199 - 11,187
---------------------------------------------------------------------------------
Total 30,904 38,677 30,245 15,233 6,410 8,259 111,411
Steam Department:
Sales to steam
products customer - 1,803 - - - - 1,803
---------------------------------------------------------------------------------
Total 30,904 40,480 30,245 15,233 6,410 8,259 113,214
=================================================================================
Average use per
residential 12,333 15,510 15,329 14,555 12,611 - 14,303
customer (KWH) =================================================================================
</TABLE>
(a) Includes the effect of intercompany eliminations.
1998 - Selected Natural Gas Sales Data
Entergy New Orleans and Entergy Gulf States sold 15,969,673 and
6,321,495 MCF, respectively, of natural gas to retail customers in 1998.
Revenues from natural gas operations for each of the three years in the
period ended December 31, 1998, were not material for Entergy Gulf States.
Entergy New Orleans' products and services are discussed below in "BUSINESS
SEGMENTS".
Refer to "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY
CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, ENTERGY GULF STATES,
ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, and SYSTEM
ENERGY" which follow each company's financial statements in this report,
for further information with respect to operating statistics.
Employees
As of December 31, 1998, Entergy had 12,816 employees as follows:
Full-time:
Entergy Corporation -
Entergy Arkansas 1,413
Entergy Gulf States 1,476
Entergy Louisiana 720
Entergy Mississippi 729
Entergy New Orleans 302
System Energy -
Entergy Operations 3,581
Entergy Services 3,021
Other subsidiaries 1,455
------
Total Full-time 12,697
Part-time 119
------
Total Entergy 12,816
======
Competition
"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS, SIGNIFICANT FACTORS
AND KNOWN TRENDS" and Note 2 to the financial statements contain detailed
discussions of competitive challenges Entergy faces in the utility
industry, including the filings made by the domestic utility companies with
their respective state and local regulatory authorities addressing
transition to a more competitive utility business environment.
CAPITAL REQUIREMENTS AND FUTURE FINANCING
Estimated construction expenditures for the domestic utility companies
and System Energy for the period 1999-2001 are set forth in the following
table. These estimates include environmental expenditures and AFUDC, but
exclude nuclear fuel.
1999 2000 2001 2002
(In Millions)
Entergy Arkansas $210 $210 $187 $607
Entergy Gulf States 161 157 141 459
Entergy Louisiana 114 111 99 324
Entergy Mississippi 66 66 59 191
Entergy New Orleans 37 31 27 95
System Energy 22 22 19 63
With the exception of Entergy Arkansas, no significant construction
costs are expected in connection with the domestic utility companies' and
System Energy's generating facilities. Entergy plans to return generating
stations at Entergy Arkansas, Entergy Louisiana and Entergy New Orleans
with 583 MW of capacity to service in 1999. These stations will be
returned to service with estimated capital expenditures of $9.0 million,
which is included above. Projected construction expenditures for the
replacement of ANO 2's steam generators are included in Entergy Arkansas'
estimated figures above. The replacement of ANO 2's steam generators is
discussed in Note 9 to the financial statements. Actual construction costs
may vary from these estimates for a number of reasons, including changes in
load growth estimates, environmental regulations, and labor, equipment,
materials, and capital costs, and modifications to generating units to meet
regulatory requirements. In addition to construction expenditure
requirements, Entergy must meet scheduled long-term debt and preferred
stock maturities and cash sinking fund requirements. Capital requirements
and financing information are discussed in Notes 4, 5, 6, and 7 to the
financial statements.
In December 1997, Entergy's global power development business entered
into a BPS646 million (approximately $1.07 billion) nonrecourse credit
facility with an international bank group for the construction of the
Saltend 1,200 MW gas-fired power plant in northeast England. The power
plant will sell power into the UK power pool at prices established by the
market. This plant is being constructed under a lump-sum contract with a
major international contractor. This business has also entered into a
series of contracts, including a long-term ground lease for the site; a
long-term gas supply agreement with take-or-pay obligations, and a long-
term steam and power supply agreement with the industrial host. The total
cost of this project is currently estimated to be approximately $875
million. The project is expected to be operational by January 2000.
Financing is discussed in Note 7 to the financial statements.
In September 1997, Entergy's global power generation business acquired
land in southeast England and certain rights to build a power station for
$67 million. In September 1998, this business began construction of the
Damhead Creek 792 MW combined cycle gas turbine merchant power plant on
this site. The total cost of this project is currently estimated to be
approximately $594 million. Agreements have been finalized regarding
permanent financing, construction and gas supply. Damhead Creek's power
will be sold through the England and Wales Electricity Pool. The target
date for commercial operation is the fourth quarter of 2000. The financing
of Damhead Creek is discussed in Note 7 to the financial statements.
Entergy Corporation's primary capital requirements are to invest
periodically in, or make loans to, its subsidiaries and to invest in new
enterprises. Management discusses Entergy Corporation's current and future
planned investments in its subsidiaries and the financial sources for such
investments in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY
AND CAPITAL RESOURCES". The principal sources of funds for Entergy
Corporation are dividend distributions from its subsidiaries, funds
available under its bank credit facilities, funds received from its
dividend reinvestment and stock purchase plan, and funds received from the
sale of foreign utility investments.
Certain System Financial and Support Agreements
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The Unit Power Sales Agreement allocates capacity and energy (and the
related costs) from System Energy's 90% ownership and leasehold interests
in Grand Gulf 1 to Entergy Arkansas (36%), Entergy Louisiana (14%), Entergy
Mississippi (33%), and Entergy New Orleans (17%). Each of these companies
is obligated to make payments to System Energy for its entitlement of
capacity and energy on a full cost-of-service basis regardless of the
quantity of energy delivered, so long as Grand Gulf 1 remains in commercial
operation. Payments under the Unit Power Sales Agreement are System
Energy's only source of operating revenues. The financial condition of
System Energy depends upon the continued commercial operation of Grand Gulf
1 and the receipt of such payments. Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans generally recover payments
made under the Unit Power Sales Agreement through the rates charged to
their customers. In the case of Entergy Arkansas and Entergy Louisiana,
payments are also recovered through sales of electricity from their
respective retained shares of Grand Gulf 1. The retained shares are
discussed in Note 2 to the financial statements.
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The Availability Agreement among System Energy and Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans was entered
into in 1974 in connection with the financing by System Energy of Grand
Gulf. The Availability Agreement provided that System Energy would join in
the System Agreement on or before the date on which Grand Gulf 1 was placed
in commercial operation and would make available to Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans all
capacity and energy available from System Energy's share of Grand Gulf.
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans also agreed severally to pay System Energy monthly for the
right to receive capacity and energy from Grand Gulf in amounts that (when
added to any amounts received by System Energy under the Unit Power Sales
Agreement, or otherwise) would at least equal System Energy's total
operating expenses for Grand Gulf (including depreciation at a specified
rate) and interest charges. The September 1989 write-off of System
Energy's investment in Grand Gulf 2, amounting to approximately $900
million, is being amortized for Availability Agreement purposes over 27
years.
The allocation percentages under the Availability Agreement are fixed
as follows: Entergy Arkansas - 17.1%; Entergy Louisiana - 26.9%; Entergy
Mississippi - 31.3%; and Entergy New Orleans - 24.7%. The allocation
percentages under the Availability Agreement would remain in effect and
would govern payments made under such agreement in the event of a shortfall
of funds available to System Energy from other sources, including payments
under the Unit Power Sales Agreement.
System Energy has assigned its rights to payments and advances from
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans under the Availability Agreement as security for its first mortgage
bonds and reimbursement obligations to certain banks providing the letters
of credit in connection with the equity funding of the sale and leaseback
transactions described in Note 10 under "Sale and Leaseback Transactions -
Grand Gulf 1 Lease Obligations." In these assignments, Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans further
agreed that, in the event they were prohibited by governmental action from
making payments under the Availability Agreement (for example, if FERC
reduced or disallowed such payments as constituting excessive rates), they
would then make subordinated advances to System Energy in the same amounts
and at the same times as the prohibited payments. System Energy would not
be allowed to repay these subordinated advances so long as it remained in
default under the related indebtedness or in other similar circumstances.
Each of the assignment agreements relating to the Availability
Agreement provides that Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans will make payments directly to System
Energy. However, if there is an event of default, those payments must be
made directly to the holders of indebtedness that are the beneficiaries of
such assignment agreements. The payments must be made pro rata according
to the amount of the respective obligations secured.
The obligations of Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans to make payments under the
Availability Agreement are subject to the receipt and continued
effectiveness of all necessary regulatory approvals. Sales of capacity and
energy under the Availability Agreement would require that the Availability
Agreement be submitted to FERC for approval with respect to the terms of
such sale. No such filing with FERC has been made because sales of
capacity and energy from Grand Gulf are being made pursuant to the Unit
Power Sales Agreement. If, for any reason, sales of capacity and energy
are made in the future pursuant to the Availability Agreement, the
jurisdictional portions of the Availability Agreement would be submitted to
FERC for approval. Other aspects of the Availability Agreement are subject
to the jurisdiction of the SEC, whose approval has been obtained, under
PUHCA.
Since commercial operation of Grand Gulf 1 began, payments under the
Unit Power Sales Agreement to System Energy have exceeded the amounts
payable under the Availability Agreement. Therefore, no payments under the
Availability Agreement have ever been required. In the event such payments
were required, the ability of Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans to recover from their customers
amounts paid under the Availability Agreement, or under the assignments
thereof, would depend upon the outcome of rate proceedings before state and
local regulatory authorities. Opposition to full recovery would be likely,
and the outcome of such proceedings, should they occur, is not predictable.
The Availability Agreement may be terminated, amended, or modified by
mutual agreement of the parties thereto, without further consent of any
assignees or other creditors.
Capital Funds Agreement (Entergy Corporation and System Energy)
System Energy and Entergy Corporation have entered into the Capital
Funds Agreement, whereby Entergy Corporation has agreed to supply System
Energy with sufficient capital to (i) maintain System Energy's equity
capital at an amount equal to a minimum of 35% of its total capitalization
(excluding short-term debt) and (ii) permit the continued commercial
operation of Grand Gulf 1 and pay in full all indebtedness for borrowed
money of System Energy when due.
Entergy Corporation has entered into various supplements to the
Capital Funds Agreement. System Energy has assigned its rights under such
supplements as security for its first mortgage bonds and for reimbursement
obligations to certain banks providing letters of credit in connection with
the equity funding of the sale and leaseback transactions described in Note
10 under "Sale and Leaseback Transactions - Grand Gulf 1 Lease
Obligations." Each such supplement provides that permitted indebtedness
for borrowed money incurred by System Energy in connection with the
financing of Grand Gulf may be secured by System Energy's rights under the
Capital Funds Agreement on a pro rata basis (except for the Specific
Payments, as defined below). In addition, in the supplements to the
Capital Funds Agreement relating to the specific indebtedness being
secured, Entergy Corporation has agreed to make cash capital contributions
directly to System Energy sufficient to enable System Energy to make
payments when due on such indebtedness (Specific Payments). However, if
there is an event of default, Entergy Corporation must make those payments
directly to the holders of indebtedness benefiting from the supplemental
agreements. The payments (other than the Specific Payments) must be made
pro rata according to the amount of the respective obligations benefiting
from the supplemental agreements.
The Capital Funds Agreement may be terminated, amended, or modified by
mutual agreement of the parties thereto, upon obtaining the consent, if
required, of those holders of System Energy's indebtedness then outstanding
who have received the assignments of the Capital Funds Agreement.
RATE MATTERS AND REGULATION
Rate Matters
The retail rates of Entergy's domestic utility companies are regulated
by state and/or local regulatory authorities, as described below. FERC
regulates their wholesale rates (including intrasystem sales pursuant to
the System Agreement) and interstate transmission of electricity, as well
as rates for System Energy's sales of capacity and energy from Grand Gulf 1
to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans pursuant to the Unit Power Sales Agreement.
Wholesale Rate Matters
System Energy
As described above under "CAPITAL REQUIREMENTS AND FUTURE FINANCING -
Certain System Financial and Support Agreements", System Energy recovers
costs related to its interest in Grand Gulf 1 through rates charged to
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans for capacity and energy under the Unit Power Sales Agreement.
In December 1995, System Energy implemented a $65.5 million rate
increase, subject to refund. In 1998, FERC approved requests by Entergy
Arkansas and Entergy Mississippi to accelerate a portion of their Grand
Gulf purchased power obligations. The rate increase request filed by
System Energy with FERC and the Grand Gulf accelerated recovery tariffs are
discussed in Note 2 to the financial statements.
System Agreement (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy)
Entergy's domestic utility companies engage in the coordinated
planning, construction, and operation of generation and transmission
facilities pursuant to the terms of the System Agreement, as described
under "PROPERTY - Generating Stations", below.
In connection with the Merger in 1993, FERC approved certain rate
schedule changes to integrate Entergy Gulf States into the System
Agreement. In approving the Merger, FERC also initiated a new proceeding
to consider whether the System Agreement permits certain out-of-service
generating units to be included in reserve equalization calculations under
Service Schedule MSS-1 of that agreement. The LPSC and the MPSC submitted
testimony in this proceeding seeking retroactive refunds for Entergy
Louisiana and Entergy Mississippi estimated at $22.6 million and $13.2
million plus related interest charges, respectively. The ALJ recommended
that no retroactive refunds should be ordered and that the System Agreement
should be amended to allow out-of-service units to be included in reserve
equalization. In August 1997, the FERC issued an Opinion and Order
affirming the initial decision of the ALJ. The LPSC and the MPSC filed a
request for rehearing of FERC's August 1997 decision, which was denied.
The LPSC and the MPSC then appealed FERC's decision to the U.S. Court of
Appeals for the D. C. Circuit in March 1998. Oral arguments in this appeal
are scheduled for March 1999. No assurance can be given as to the timing
or outcome of the appeal.
In March 1995, the LPSC filed a complaint with FERC alleging that the
System Agreement results in unjust and unreasonable rates. The LPSC
requested FERC to modify the System Agreement to exclude curtailable load
from the cost allocation determination and to permit Entergy's domestic
utility companies that engage in real-time pricing at the retail level to
be assessed only the marginal cost for energy sold among the domestic
utility companies. In August 1996, FERC dismissed the LPSC's complaint
finding that the LPSC's claim that the System Agreement is unjust and
unreasonable was without merit. The FERC confirmed this finding in a
September 1997 order denying the LPSC's request for rehearing. The LPSC
has appealed FERC's dismissal of its complaint to the D. C. Circuit and
oral arguments in this appeal were held in December 1998. No assurance can
be given as to the timing or outcome of the appeal.
Open Access Transmission (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans)
In October 1994, Entergy's domestic utility companies filed revised
transmission tariffs. In January 1995, FERC made the transmission tariffs
effective, subject to refund, and ordered an investigation of Entergy
Power's market pricing authority, thereby making Entergy Power's market
price rate schedules subject to refund. In October 1998, the FERC issued
an order, which stipulated that Entergy's open access transmission tariff
mitigated any transmission market power and affirmed that transmission
service should be priced at a rolled-in, system-wide rate rather than the
bifurcated bulk and local transmission pricing proposed by Entergy. The
FERC also rejected customers' requests to receive credits for customer-
owned facilities that are not integrated with, and support, Entergy's
transmission system. Requests for rehearing or clarification of that
decision are pending before FERC. The October 1998 order also determined
that no further action is needed in the investigation of Entergy Power's
market pricing authority.
Competition within the wholesale electric energy market has
intensified with open access transmission and an increase in marketing and
trading activities by utilities and power marketers. Open access
transmission allows third party suppliers to transmit energy to customers
over transmission facilities owned by another entity. To implement open
access transmission to wholesale customers, FERC issued two orders in 1996.
Order No. 888 requires all public utilities subject to FERC jurisdiction to
provide wholesale transmission access to third parties and specifically
addresses issues related to nondiscriminatory transmission and stranded
costs. Order No. 889 addresses codes of conduct and requires the
implementation and maintenance of an open access same-time information
system by each public utility.
In July 1996, Entergy's domestic utility companies filed an open
access transmission tariff in compliance with FERC Order No. 888, which
superseded the tariffs previously filed. In January 1997, FERC accepted
the non-rate terms and conditions of the July 1996 tariff, subject to
limited modifications. In a March 1997 order (Order No. 888-A), FERC
directed public utilities to file revised tariffs to reflect changes
resulting from rehearing of Order No. 888. In July 1997, Entergy Services
filed with the FERC its wholesale transmission access compliance tariff
incorporating the non-rate terms and conditions of FERC Order No. 888-A.
FERC's October 1998 Order discussed above resolved the rate-related issues.
In response to FERC policy strongly favoring independent control over
transmission operations as a means of enhancing competitive wholesale power
markets, Entergy has proposed to FERC the formation of a regional
transmission company (Transco). The proposed Transco would be:
o a separate legal entity regulated by FERC;
o composed of the transmission system transferred to it by the
domestic utility companies and other transmission owners in
Entergy's region;
o operated and maintained by employees who would work exclusively
for the Transco and would not be employed by Entergy or the
domestic utility companies; and
o passively owned by the domestic utility companies, which will not
control or otherwise direct its operation and management.
Management expects to make additional filings with federal, state, and
local regulatory authorities seeking necessary approvals for the formation
of the Transco.
Retail Rate Matters
General (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
Certain costs related to Grand Gulf 1, Waterford 3, and River Bend
were phased into retail rates over a period of years in order to avoid the
"rate shock" associated with increasing rates to reflect all such costs at
once. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and the
portion of Entergy Gulf States regulated by the LPSC have fully recovered
such deferred costs. Entergy New Orleans' phase-in plan expires in 2001.
The retail regulatory philosophy is shifting in some jurisdictions
from traditional cost-of-service regulation to performance-based rate
regulation. Performance-based formula rate plans are designed to encourage
efficiencies and productivity while permitting utilities and their
customers to share in the benefits. Entergy Mississippi and Entergy
Louisiana have implemented performance-based formula rate plans.
The domestic utility companies have initiated proceedings with state
and local regulators regarding an orderly transition to a more competitive
market for electricity. The filings by the domestic utility companies and
the generic restructuring dockets established by the local and state
regulators are discussed more thoroughly in Note 2 to the financial
statements.
Entergy Arkansas
Retail Rate Proceedings
Entergy Arkansas' retail rate proceedings that were resolved during
the past year or are currently pending are discussed in Note 2 to the
financial statements.
Recovery of Grand Gulf 1 Costs
Under the settlement agreement entered into with the APSC in 1985 and
amended in 1988, Entergy Arkansas agreed to forego recovery of a portion of
its Grand Gulf l-related costs, to recover a portion of such costs
currently, and to defer a portion of such costs for future recovery.
Deferrals ceased in l990, and Entergy Arkansas has fully recovered such
deferrals pursuant to the phase-in plan, which expired in November 1998.
In 1996 and subsequent years, Entergy Arkansas retains 22% of its 36% share
(approximately 7.92%) of Grand Gulf 1 costs and recovers the remaining 78%
through rates. In the event Entergy Arkansas is not able to sell its
retained share to third parties, it may sell such energy to its retail
customers at a price equal to its avoided energy cost, which is currently
less than Entergy Arkansas' cost of energy from its retained share.
Fuel Recovery
Entergy Arkansas' rate schedules include an energy cost recovery rider
to recover the costs of energy (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.
Rate Freeze
In December 1997 the APSC approved a settlement agreement resolving
Entergy Arkansas' transition to competition case. One provision in that
settlement was that base rates would remain at the level resulting from
that case until July 1, 2001. The terms of the settlement agreement are
discussed in Note 2 to the financial statements.
Entergy Gulf States
Retail Rate Proceedings
Entergy Gulf States' retail rate proceedings that were resolved during
the past year or are currently pending are discussed in Note 2 to the
financial statements.
Settlement Agreement
On February 1, 1999, Entergy Gulf States entered into a settlement
agreement with all but one of the parties to Entergy Gulf States' pending
Texas rate proceeding. If approved, the settlement agreement would resolve
the pending approval of Entergy Gulf States' 1996 rate proceedings as well
as its 1998 rate proceedings and all pending appeals in other matters,
except for the appeal in the River Bend 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 reduced fixed fuel factor, effective March 1, 1999;
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;
o remaining River Bend accounting order deferrals as of January 1,
1999, are to be amortized 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 relating to Entergy Gulf
States' proceedings with the PUCT, except the River Bend appeal
discussed below; 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.
On February 19, 1999, the PUCT approved the implementation of new rates
consistent with the terms of the settlement agreement on an interim basis,
pending final approval of the settlement agreement. The new rates were
made effective on March 1, 1999. The PUCT will hold a hearing on the
settlement agreement on April 13, 1999, and a final decision is expected in
May 1999. Management cannot predict the likelihood that the PUCT will
approve the settlement agreement.
Recovery of River Bend Costs
Entergy Gulf States was amortizing $182 million of River Bend
operating and purchased power costs, depreciation, and accrued carrying
charges over a 20-year period. However, the PUCT recently accelerated the
recovery of these deferrals to a three-year recovery period ending in May
1999. In 1998, Entergy Gulf States recorded reserves of $81.6 million
($48.6 million net of taxes) reflecting such accelerated recovery pending a
final decision on Entergy Gulf States' appeal. The settlement agreement
discussed above, if approved, would allow Entergy Gulf States to amortize
the remaining deferral balance 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.
Also, in accordance with a phase-in plan approved by the LPSC, Entergy
Gulf States deferred $294 million of its River Bend costs related to the
period February 1988 through February 1991. These deferrals have been
fully recovered pursuant to the phase-in plan, which expired in February
1998.
Texas Jurisdiction - River Bend
In March 1998, the PUCT issued an order disallowing recovery of $1.4
billion of company-wide abeyed River Bend plant costs and approximately
$157 million of Texas retail jurisdiction deferred River Bend operating and
carrying costs (Abeyed Deferrals). Based on its long-lived asset
impairment policy, Entergy Gulf States wrote off Abeyed Deferrals of $169
million, net of tax, effective January 1, 1996. The River Bend plant costs
have been held in abeyance since 1988, during which time they have been the
subject of several appeals by Entergy Gulf States. Following denial by the
PUCT of Entergy Gulf States' latest motion for rehearing, Entergy Gulf
States has again appealed the PUCT's decision on this matter to a Texas
District Court. The settlement agreement discussed above, if approved,
would require that Entergy Gulf States not act on its appeal before January
1, 2002 and would limit the potential recovery 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.
Based on advice of counsel, management believes that it is probable that
the matter will be remanded again to the PUCT for a further ruling on the
prudence of the abeyed plant costs and it is reasonably possible that some
portion of these costs will be included in rate base. The abeyed plant
cost proceedings and reserves established to reflect management's estimate
of the probable outcome thereof are discussed in more detail in Note 2 to
the financial statements.
Fuel Recovery
Entergy Gulf States' Texas rate schedules include a fixed fuel factor
to recover fuel and purchased power costs not recovered in base rates. The
fixed fuel factor may be revised every six months in accordance with a
schedule set by the PUCT. To the extent actual costs vary from the fixed
factor, refunds or surcharges are required or permitted. The settlement
agreement discussed above, if approved, would establish a methodology for
semi-annual revisions of the fixed fuel factor based on the market price of
natural gas, effective through December 2001 or until otherwise ordered by
the PUCT. Fuel costs are also subject to reconciliation proceedings at
least every three years.
Entergy Gulf States' Louisiana electric rate schedules include a fuel
adjustment clause designed to recover the cost of fuel and purchased power
costs, adjusted by a surcharge (or credit) for deferred fuel expense
arising from the monthly reconciliation of actual fuel cost incurred with
fuel revenues billed to customers. The LPSC and the PUCT fuel cost reviews
that were resolved during the past year or are currently pending are
discussed in Note 2 to the financial statements.
Entergy Gulf States' Louisiana gas rates include a purchased gas
adjustment to recover the cost of purchased gas.
Entergy Louisiana
Retail Rate Proceedings
Entergy Louisiana's retail rate proceedings that were resolved during
the past year or are currently pending are discussed in Note 2 to the
financial statements.
Recovery of Grand Gulf 1 Costs
In a series of LPSC orders, court decisions, and agreements from late
1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to
costs associated with Entergy Louisiana's share of capacity and energy from
Grand Gulf l, subject to certain terms and conditions. In November 1988
Entergy Louisiana agreed to retain, and not recover from retail ratepayers,
18% of its 14% share (approximately 2.52%) of the costs of Grand Gulf 1's
capacity and energy. Non-fuel operation and maintenance costs for Grand
Gulf 1 are recovered through Entergy Louisiana's base rates. Additionally,
Entergy Louisiana is allowed to recover, through the fuel adjustment
clause, 4.6 cents per KWH for the energy related to its retained portion of
these costs. Alternatively, Entergy Louisiana may sell such energy to
nonaffiliated parties at prices above the fuel adjustment clause recovery
amount, subject to the LPSC's approval.
Performance-Based Formula Rate Plan
In September 1998 the LPSC issued an order extending the annual
performance-based formula rate plan filings for Entergy Louisiana for an
additional three years, through an April 2000 filing for the 1999 test
year. Entergy Louisiana's performance-based formula rate plan filings are
discussed in Note 2 to the financial statements.
Fuel Recovery
Entergy Louisiana's rate schedules include a fuel adjustment clause
designed to recover the cost of fuel in the second prior month, adjusted by
a surcharge (or credit) for deferred fuel expense arising from the monthly
reconciliation of actual fuel incurred with fuel cost revenues billed to
customers.
Entergy Mississippi
Retail Rate Proceedings
Entergy Mississippi's retail rate proceedings that were resolved
during the past year or are currently pending are discussed in Note 2 to
the financial statements.
Recovery of Grand Gulf 1 Costs
In September 1985 the MPSC granted Entergy Mississippi an annual base
rate increase of approximately $326.5 million in connection with its
allocated share of Grand Gulf 1 costs. The MPSC also provided for the
deferral of a portion of such costs that were incurred each year through
1992, and recovery of these deferrals over a period of six years, which
ended in September 1998.
Performance-Based Formula Rate Plan
Under a performance-based formula rate plan (formula rate plan)
effective March 25, 1994, Entergy Mississippi's earned rate of return is
calculated automatically every 12 months and compared to and adjusted
against a benchmark rate of return (calculated under a separate formula
within the formula rate plan). The formula rate plan allows for periodic
small adjustments in rates based on a comparison of actual earned returns
to benchmark returns and upon certain performance factors. The formula
rate plan filing for the 1997 test year is discussed in Note 2 to the
financial statements. The formula rate plan filing for the 1998 test year
will be submitted in March 1999.
Fuel Recovery
Entergy Mississippi's rate schedules include an energy cost recovery
rider to recover the costs of energy (fuel and purchased energy costs). The
rider utilizes projected energy costs for the coming calendar 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 as of September 30 immediately preceding the annual
redetermination.
Entergy New Orleans
Retail Rate Proceedings
Entergy New Orleans' retail rate proceedings that were resolved during
the past year or are currently pending are discussed in Note 2 to the
financial statements.
Recovery of Grand Gulf 1 Costs
Under Entergy New Orleans' various rate settlements with the Council
in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not
recover from ratepayers a total of $96.2 million of its Grand Gulf 1 costs.
Entergy New Orleans was permitted to implement annual rate increases in
decreasing amounts each year through 1995, and to defer certain costs and
related carrying charges for recovery on a schedule extending from 1991
through 2001. As of December 31, 1998, the uncollected balance of Entergy
New Orleans' deferred costs was $64.2 million.
Fuel Recovery
Entergy New Orleans' electric rate schedules include a fuel adjustment
clause designed to recover the cost of fuel in the second prior month,
adjusted by a surcharge (or credit) for deferred fuel expense arising from
the monthly reconciliation of actual fuel incurred with fuel cost revenues
billed to customers. The adjustment also includes the difference between
non-fuel Grand Gulf 1 costs paid by Entergy New Orleans and the estimate of
such costs provided in Entergy New Orleans' Grand Gulf 1 rate settlements.
Entergy New Orleans' gas rate schedules include an adjustment to reflect
gas costs in excess of those collected in base rates, adjusted by a
surcharge (or credit) similar to that included in the electric fuel
adjustment clause.
Regulation
Federal Regulation (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy)
PUHCA
Entergy Corporation and its various direct and indirect subsidiaries
(with the exception of its EWG, FUCO, and ETC subsidiaries) are subject to
the broad regulatory provisions of PUHCA. Except with respect to
investments in certain domestic power projects, foreign utility company
projects, and telecommunication projects, the principal regulatory
provisions of PUHCA:
o limit the operations of a registered holding company system to a
single, integrated public utility system, plus certain ancillary
and related systems and businesses;
o regulate certain transactions among affiliates within a holding
company system; and
o govern the issuance, acquisition and disposition of securities and
assets by registered holding companies and their subsidiaries;
o limit the entry by registered holding companies and their
subsidiaries into businesses other than electric and/or gas
utility businesses; and
o require SEC approval for certain utility mergers and acquisitions.
Entergy Corporation and other electric utility holding companies have
supported legislation in the United States Congress to repeal PUHCA and
transfer certain aspects of the oversight of public utility holding
companies from the SEC to FERC. Entergy believes that PUHCA inhibits its
ability to compete in the evolving electric energy marketplace and largely
duplicates the oversight activities already performed by FERC, state and
local regulators. In June 1995, the SEC adopted a report proposing options
for the repeal or significant modification of PUHCA.
Federal Power Act
The domestic utility companies, System Energy, Entergy Power, and EPMC
are subject to the Federal Power Act as administered by FERC and the DOE.
The Federal Power Act provides for regulatory jurisdiction over the
transmission and wholesale sale of electric energy in interstate commerce,
licensing of certain hydroelectric projects and certain other activities,
including accounting policies and practices. Such regulation includes
jurisdiction over the rates charged by System Energy for capacity and
energy provided to Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans from Grand Gulf 1.
Entergy Arkansas holds a FERC license for two hydroelectric projects
(70 MW), which was renewed on July 2, 1980 and expires in February 2003.
In February 1998, Entergy Arkansas filed notice of its intent to relicense
these hydroelectric projects.
Regulation of the Nuclear Power Industry (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)
Regulation of Nuclear Power
Under the Atomic Energy Act of 1954 and the Energy Reorganization Act
of 1974, the operation of nuclear plants is heavily regulated by the NRC,
which has broad power to impose licensing and safety-related requirements.
In the event of non-compliance, the NRC has the authority to impose fines
or shut down a unit, or both, depending upon its assessment of the severity
of the situation, until compliance is achieved. Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, and System Energy, as owners of all or
portions of ANO, River Bend, Waterford 3, and Grand Gulf 1, respectively,
and Entergy Operations, as the licensee and operator of these units, are
subject to the jurisdiction of the NRC. Revised safety requirements
promulgated by the NRC have, in the past, necessitated substantial capital
expenditures at these nuclear plants, and additional expenditures could be
required in the future.
The nuclear power industry faces uncertainties with respect to the
cost and long-term availability of sites for disposal of spent nuclear fuel
and other radioactive waste, nuclear plant operations, the technological
and financial aspects of decommissioning plants at the end of their
licensed lives, and requirements relating to nuclear insurance. These
matters are briefly discussed below.
Regulation of Spent Fuel and Other High-Level Radioactive Waste
Under the Nuclear Waste Policy Act of 1982, the DOE is required, for a
specified fee, to construct storage facilities for, and to dispose of, all
spent nuclear fuel and other high-level radioactive waste generated by
domestic nuclear power reactors. However, the DOE has not yet identified a
permanent storage repository and, as a result, future expenditures may be
required to increase spent fuel storage capacity at Entergy's nuclear plant
sites. Information concerning spent fuel disposal contracts with the DOE,
schedules for initial shipments of spent nuclear fuel, current on-site
storage capacity, and costs of providing additional on-site storage is
presented in Note 9 to the financial statements.
Regulation of Low-Level Radioactive Waste
The availability and cost of disposal facilities for low-level
radioactive waste resulting from normal nuclear plant operations are
subject to a number of uncertainties. Under the Low-Level Radioactive
Waste Policy Act of 1980, as amended, each state is responsible for
disposal of waste originating in that state, but states may participate in
regional compacts to fulfill their responsibilities jointly. The States of
Arkansas and Louisiana participate in the Central Interstate Low-Level
Radioactive Waste Compact (Central States Compact), and the State of
Mississippi participates in the Southeast Low-Level Radioactive Waste
Compact (Southeast Compact). Both the Central States Compact and the
Southeast Compact have experienced significant delays in the development of
waste storage facilities. Two disposal sites are currently operating in
the United States, but only one site, the Barnwell Disposal Facility
(Barnwell) located in South Carolina, is open to out-of-region generators.
The availability of Barnwell provides only a temporary solution for low-
level radioactive waste storage, and does not alleviate the need to develop
new disposal capacity.
The Southeast Compact process is currently on hold pending resolution
of future funding. In December 1998, the host state for the Central States
Compact, Nebraska, denied the license application. On December 30, 1998,
Entergy and two other utilities in the Central States Compact filed a
lawsuit against the state of Nebraska seeking damages resulting from delays
and a faulty license review process. Entergy Arkansas, Entergy Louisiana
and Entergy Gulf States, along with other waste generators, fund the
development costs for new disposal facilities relating to the Central
States Compact. During the fourth quarter of 1997, Entergy Arkansas,
Entergy Louisiana, and Entergy Gulf States reserved $17.4 million, $12.3
million, and $13.8 million, respectively, related to previously deferred
radioactive waste facility costs incurred in connection with the Central
States Compact. However, in 1998 based on actions of the APSC, Entergy
Arkansas reversed the 1997 reserve of previously deferred costs.
Development costs to be incurred in the future are difficult to predict.
The current schedules for the site development in both the Central States
Compact and the Southeast Compact are undetermined at this time. Until
long-term disposal facilities are established, Entergy will seek continued
access to existing facilities. If such access is unavailable, Entergy will
store low-level waste at its nuclear plant sites.
Regulation of Nuclear Plant Decommissioning
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy are recovering through electric rates the estimated decommissioning
costs for ANO, River Bend, Waterford 3, and Grand Gulf 1, respectively.
These amounts are deposited in trust funds which, together with the related
earnings, can only be used for future decommissioning costs. Estimated
decommissioning costs are periodically reviewed and updated to reflect
inflation and changes in regulatory requirements and technology.
Applications are periodically made to appropriate regulatory authorities to
reflect in rates the changes in projected decommissioning costs.
Additional information with respect to decommissioning costs for ANO, River
Bend, Waterford 3, and Grand Gulf 1 is found in Note 9 to the financial
statements.
The EPAct requires all electric utilities (including Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, and System Energy) that purchased
uranium enrichment services from the DOE to contribute up to a total of
$150 million annually over approximately 15 years (adjusted for inflation,
up to a total of $2.25 billion) for decontamination and decommissioning of
enrichment facilities. In accordance with the EPAct, contributions to
decontamination and decommissioning funds are recovered through rates in
the same manner as other fuel costs. The estimated annual contributions by
Entergy for decontamination and decommissioning fees are discussed in Note
9 to the financial statements.
Nuclear Insurance
The Price-Anderson Act limits public liability for a single nuclear
incident to approximately $9.8 billion. Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and System Energy have protection with respect
to this liability through a combination of private insurance and an
industry assessment program, as well as insurance for property damage,
costs of replacement power, and other risks relating to nuclear generating
units. Insurance applicable to the nuclear programs of Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, and System Energy is discussed in
Note 9 to the financial statements.
Nuclear Operations
General (Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and System Energy)
Entergy Operations operates ANO, River Bend, Waterford 3, and Grand
Gulf 1, subject to the owner oversight of Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and System Energy, respectively. Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy pay
directly or reimburse Entergy Operations at cost for its operation of the
nuclear units.
ANO Matters (Entergy Corporation and Entergy Arkansas)
The replacement of steam generators at ANO 2 is discussed in Note 9 to
the financial statements.
River Bend (Entergy Corporation and Entergy Gulf States)
In connection with the Merger, Entergy Gulf States filed two
applications with the NRC in January 1993 to amend the River Bend operating
license. The applications sought the NRC's consent to the Merger and to a
change in the licensed operator of the facility from Entergy Gulf States to
Entergy Operations. The NRC Staff issued the two license amendments for
River Bend. On February 14, 1994, Cajun filed with the D.C. Circuit
petitions for review of the two license amendments for River Bend. In
March 1995, the D.C. Circuit ordered that the NRC order and license
amendments be set aside, and remanded the case to the NRC for further
consideration. Subsequently, the NRC affirmed its original findings and
reissued the two license amendments. Subsequent petitions for review and
appeals filed by Cajun and the Arkansas Cities and Cooperatives were
dismissed in 1997 and 1998. The two license amendments are currently in
full force and effect.
State Regulation (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans)
General
Entergy Arkansas is subject to regulation by the APSC, which includes
the authority to:
o set rates;
o determine reasonable and adequate service;
o require proper accounting;
o control leasing;
o control the acquisition or sale of any public utility plant or
property constituting an operating unit or system;
o set rates of depreciation;
o issue certificates of convenience and necessity and certificates of
environmental compatibility and public need; and
o regulate the issuance and sale of certain securities.
Entergy Gulf States is subject to the jurisdiction of the municipal
authorities of a number of incorporated cities in Texas as to retail rates
and service within their boundaries, with appellate jurisdiction over such
matters residing in the PUCT. Entergy Gulf States' Texas business is also
subject to regulation by the PUCT as to retail rates and service in rural
areas, certification of new generating plants, and extensions of service
into new areas. Entergy Gulf States' Louisiana business is subject to
regulation by the LPSC as to electric and gas service, rates and charges,
certification of generating facilities and power or capacity purchase
contracts, depreciation, accounting, and other matters.
Entergy Louisiana is subject to regulation by the LPSC as to electric
service, rates and charges, certification of generating facilities and
power or capacity purchase contracts, depreciation, accounting, and other
matters. Entergy Louisiana is also subject to the jurisdiction of the
Council with respect to such matters within Algiers in Orleans Parish.
Entergy Mississippi is subject to regulation as to service, service
areas, facilities, and retail rates by the MPSC. Entergy Mississippi is
also subject to regulation by the APSC as to the certificate of
environmental compatibility and public need for the Independence Station,
which is located in Arkansas.
Entergy New Orleans is subject to regulation by the Council as to
electric and gas service, rates and charges, standards of service,
depreciation, accounting, issuance of certain securities, and other
matters.
Franchises
Entergy Arkansas holds exclusive franchises to provide electric
service in approximately 300 incorporated cities and towns in Arkansas.
These franchises are unlimited in duration and continue unless the
municipalities purchase the utility property. In Arkansas, franchises are
considered to be contracts and, therefore, are terminable upon breach of
the terms of the franchise.
Entergy Gulf States holds non-exclusive franchises, permits, or
certificates of convenience and necessity to provide electric and gas
service in approximately 55 incorporated municipalities in Louisiana and
approximately 63 incorporated municipalities in Texas. Entergy Gulf States
typically is granted 50-year franchises in Texas and 60-year franchises in
Louisiana. Entergy Gulf States' current electric franchises will expire
during 2007 - 2036 in Texas and during 2015 - 2046 in Louisiana. The
natural gas franchise in the City of Baton Rouge will expire in 2015. In
addition, Entergy Gulf States has received from the PUCT a certificate of
convenience and necessity to provide electric service to areas within 21
counties in eastern Texas.
Entergy Louisiana holds non-exclusive franchises to provide electric
service in approximately 116 incorporated Louisiana municipalities. Most
of these franchises have 25-year terms, although six of these
municipalities have granted 60-year franchises. Entergy Louisiana also
supplies electric service in approximately 353 unincorporated communities,
all of which are located in Louisiana parishes in which it holds non-
exclusive franchises.
Entergy Mississippi has received from the MPSC certificates of public
convenience and necessity to provide electric service to areas within 45
counties, including a number of municipalities, in western Mississippi.
Under Mississippi statutory law, such certificates are exclusive. Entergy
Mississippi may continue to serve in such municipalities upon payment of a
statutory franchise fee, regardless of whether an original municipal
franchise is still in existence.
Entergy New Orleans provides electric and gas service in the City of
New Orleans pursuant to city ordinances. These ordinances contain a
continuing option for the City of New Orleans to purchase Entergy New
Orleans' electric and gas utility properties.
The business of System Energy is limited to wholesale power sales and
has no distribution franchises.
Environmental Regulation
General
Entergy's facilities and operations are subject to regulation by
various domestic and foreign governmental authorities having jurisdiction
over air quality, water quality, control of toxic substances and hazardous
and solid wastes, and other environmental matters. Management believes
that its affected subsidiaries are in substantial compliance with
environmental regulations currently applicable to their facilities and
operations. Because environmental regulations are subject to change,
future compliance costs cannot be precisely estimated. However, management
estimates that future capital expenditures for environmental compliance
will not be material for Entergy or any of its reporting subsidiaries.
Clean Air Legislation
The Clean Air Act Amendments of 1990 (the Act) established the
following three programs that currently or in the future may affect
Entergy's fossil-fueled generation: (i) an acid rain program for control of
sulfur dioxide (SO2) and nitrogen oxides (NOx); (ii) an ozone nonattainment
area program for control of NOx and volatile organic compounds; and (iii)
an operating permits program for administration and enforcement of these
and other Act programs.
Under the acid rain program, it is anticipated that no additional
equipment to control SO2 will be required by Entergy's subsidiaries. The
Act provides allowances to most of the affected Entergy generating units
for emissions based upon past emission levels and operating
characteristics. Each allowance is an entitlement to emit one ton of SO2
per year. Under the Act, utilities are or will be required to possess
allowances for SO2 emissions from affected generating units. All Entergy
fossil-fueled generating units are classified as "Phase II" units under the
Act and are subject to SO2 allowance requirements beginning in the year
2000. Management believes that it will be able to operate the domestic
utility companies' generating units efficiently without installing
scrubbers or experiencing other significant expenditures.
Control equipment may eventually be required for certain Entergy Gulf
States generating units to achieve NOx reductions due to the ozone
nonattainment status of areas served in and around Beaumont and Houston,
Texas. Texas environmental authorities have imposed NOx controls on power
plants that must be in place by November 1999. The aggregate cost of such
control equipment for the affected Entergy Gulf States plants is estimated
to be less than $1.5 million through the year 2000. It is expected that
Texas, in conjunction with the EPA, will publish future control strategies
in 1999. Depending on the strategies developed by Texas, additional costs
may be incurred between 2000 and 2007, but these costs cannot currently be
estimated.
Other Environmental Matters
The Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (CERCLA), authorizes the EPA and, indirectly, the
states, to require generators and certain transporters of certain hazardous
substances released from or at a site, and the owners or operators of any
such site, to cleanup the site or reimburse site clean-up costs. CERCLA
has been interpreted to impose joint and several liability on responsible
parties. Entergy's domestic utility companies have sent waste materials to
various disposal sites over the years. Also, certain operating procedures
and maintenance practices employed by Entergy's domestic utility companies,
which historically were not subject to regulation, are now regulated by
environmental laws. Some of these sites have been the subject of
governmental action under CERCLA, resulting in site clean-up activities.
The domestic utility companies have participated to various degrees in
accordance with their respective potential liabilities in such site clean-
ups and have developed experience with clean-up costs. The affected
domestic utility companies have established reserves for such environmental
clean-up/restoration activities.
Entergy Arkansas
Entergy Arkansas has received notices from time to time from the EPA,
the Arkansas Department of Pollution Control & Ecology (ADPC&E), and others
alleging that Entergy Arkansas, along with others, may be a PRP for clean-
up costs associated with various sites in Arkansas. Most of these sites
are neither owned nor operated by any Entergy affiliated company.
Contaminants at the sites include polychlorinated biphenyls (PCBs), lead,
and other hazardous substances.
At the EPA's request, Entergy Arkansas voluntarily performed
stabilization activities at the Benton Salvage site in Saline County,
Arkansas. While the EPA has not named PRPs for this site, Entergy Arkansas
has attempted to negotiate a settlement with the EPA. Entergy Arkansas and
the EPA were unable to reach an agreement satisfactory to both parties.
The EPA completed its own clean-up of the site in 1996. Entergy Arkansas
does not believe that its potential liability, if any, with respect to this
site will be material.
Entergy Arkansas entered into a Consent Administrative Order with the
ADPC&E in 1991 that named Entergy Arkansas as a PRP for the initial
stabilization associated with contamination at the Utilities Services, Inc.
state Superfund site located near Rison, Arkansas. This site was found to
have soil contaminated by PCBs and pentachlorophenol (a wood preservative).
Containers and drums that contained PCBs and other hazardous substances
were found at the site. Entergy Arkansas' share of total remediation costs
at this site is estimated not to exceed $2.7 million. Entergy Arkansas
worked with ADPC&E to identify and notify other PRPs with respect to this
site. Entergy Arkansas has received assurances that the ADPC&E will use
its enforcement authority to allocate remediation expenses among Entergy
Arkansas and any other PRPs that are identified. Approximately 20 PRPs
have been identified to date. Entergy Arkansas has performed the
activities necessary to stabilize the site, at a cost of approximately
$400,000.
Entergy Gulf States
Entergy Gulf States has been designated by the EPA as a PRP for the
clean-up of certain hazardous waste disposal sites. Entergy Gulf States is
negotiating with the EPA and state authorities regarding the clean-up of
these sites. Several class action and other suits have been filed in state
and federal courts seeking relief from Entergy Gulf States and others for
damages caused by the disposal of hazardous waste and for asbestos-related
disease allegedly resulting from exposure on Entergy Gulf States' premises
(see "Other Regulation and Litigation" below).
In 1971, Entergy Gulf States purchased property near its Sabine
generating station, known as the Bailey site, for possible expansion of
cooling water facilities. Entergy Gulf States sold the property in 1984.
In October 1984, an abandoned waste site on the property was included on
the NPL by the EPA. Entergy Gulf States negotiated with the EPA and a
consent decree has been signed by all PRPs for the voluntary clean-up of
the Bailey site. On-site remediation was completed during 1997. Total
remediation costs at this site are currently expected to be approximately
$33 million. However, federal and state agencies are still examining
potential liabilities associated with natural resource damage. Entergy
Gulf States is expected to be responsible for about 2.26% of the estimated
clean-up cost. Entergy Gulf States does not expect that its remaining
responsibility with respect to this site will be material after allowance
for its existing provision for clean-up in the amount of $300,000.
Entergy Gulf States is currently involved in a multi-phased remedial
investigation of a site, known as the Lake Charles Service Center, located
in Lake Charles, Louisiana. A manufactured gas plant (MGP) is thought to
have operated at this site from approximately 1916 to 1931. Coal tar, a by-
product of the distillation process employed at MGPs, was apparently routed
to a portion of the property for disposal. The same area has also been
used as a landfill. Under an order issued by the LDEQ, which is currently
stayed, Entergy Gulf States was required to investigate and, if necessary,
take remedial action at the site. Preliminary estimates of remediation
costs are approximately $20 million. On February 13, 1995, the EPA
published a proposed rule adding the Lake Charles Service Center to the
NPL. Another PRP has been identified that may have had a role in the
ownership and operation of the MGP. Entergy Gulf States has signed an
Administrative Consent Order negotiated with the EPA, but does not
presently expect that its ultimate responsibility for this site will
materially exceed its existing clean-up provision of $20 million.
Entergy Gulf States is currently involved in an initial investigation
of an MGP site, known as the Old Jennings Ice Plant, located in Jennings,
Louisiana. The MGP site is believed to have operated from approximately
1909 to 1926. The site is currently used for an electrical substation and
storage of transmission and distribution equipment. In July 1996, a
petroleum-like substance was discovered on the surface soil, and
notification was made to the LDEQ. The LDEQ was aware of this site based
upon a survey performed by an environmental consultant for the EPA.
Entergy Gulf States obtained the services of an environmental consultant to
collect core samples and to perform a search of historical records to
determine what activities occurred at Jennings. Results of the core
sampling, which found limited amounts of contamination on-site, were
submitted to the LDEQ. The review by LDEQ is complete and additional
sampling is planned during 1999 to determine a cost-effective remediation
strategy. Entergy does not expect that its ultimate financial
responsibility with respect to this site will be material. The amount of
its existing provision for clean-up is $250,000.
Entergy Louisiana, Entergy New Orleans, and System Energy
Entergy Louisiana, Entergy New Orleans, and System Energy have
received notices from the EPA and/or the states of Louisiana and
Mississippi that one or more of them may be a PRP for the following
disposal sites, which are neither owned nor operated by any Entergy
subsidiary:
o In October 1997, the MDEQ ordered Entergy Louisiana to implement a
remedial action work plan prepared by a PRP committee for Disposal Systems,
Inc. sites at Fifth Street (Clay Point) and Lee Street in Biloxi,
Mississippi, and at Woolmarket, Mississippi. Entergy Louisiana filed a
petition with the MDEQ denying that it had sent any wastes to the Lee
Street or Woolmarket sites. With regard to the Clay Point site, the
petition states: 1) that wastes that had been transported by its contractor
to the site are not pollutants within the meaning of the applicable
Mississippi statutes or regulations; 2) that any wastes at that site have
been cleaned up under a consent decree between the EPA and the PRPs, which
was approved by the U. S. District Court for the Southern District of
Mississippi, Southern Division; 3) that any cleaned up waste is stored at a
warehouse on the site; and, 4) that the State of Mississippi has no
jurisdiction in view of the consent decree of the federal court. The
petition further requested a hearing before the MDEQ. No hearing date has
been set. The MDEQ issued a similar order on the same date to Entergy
Louisiana's contractor, Ebasco Services, Inc., which Entergy Louisiana has
agreed to defend and indemnify. The MDEQ issued a similar order on the
same date to Bechtel Power, the contractor for System Energy on the Grand
Gulf plant. System Energy was not named as a defendant in the order.
Bechtel has filed a petition asking for a hearing. Entergy is currently
negotiating a settlement that was developed by a PRP committee. The
settlement would relieve Entergy Louisiana and System Energy of future
liability or costs associated with these sites. The settlement for Entergy
Louisiana, including EBASCO, is expected to be approximately $300,000.
System Energy is not expected to participate in the settlement payments.
o From 1992 to 1994, Entergy Louisiana performed a site assessment and
remedial activities at a retired power plant known as the Thibodaux
municipal site, previously owned and operated by a Louisiana municipality.
Entergy Louisiana purchased the power plant at this site as part of the
acquisition of municipal electric systems. The site assessment indicated
some subsurface contamination from fuel oil. Remediation of the Thibodaux
site is expected to continue through 2000. The cost incurred through
December 31, 1998 for the Thibodaux site is $386,000, and future costs are
not expected to exceed the existing provision of $433,000.
During 1993, the LDEQ issued new rules for solid waste regulation,
including regulation of waste water impoundments. Entergy Louisiana has
determined that certain of its power plant waste water impoundments were
affected by these regulations and has chosen to upgrade or close them. As
a result, a remaining recorded liability in the amount of $5.9 million
existed at December 31, 1998 for waste water upgrades and closures.
Completion of this work is awaiting the LDEQ's approval. Cumulative
expenditures relating to the upgrades and closures of waste water
impoundments are $7.1 million as of December 31, 1998.
Other Regulation and Litigation
Merger (Entergy Corporation and Entergy Gulf States)
FERC's orders approving the Merger were appealed to the D.C. Circuit
by Entergy Services, the Council, the Arkansas Electric Energy Consumers
(AEEC), the APSC, Cajun, the MPSC, the American Forest and Paper
Association, the State of Mississippi, the City of Benton and other cities,
and Occidental Chemical Corporation (Occidental). Entergy Services sought
review of FERC's deletion of a 40% cap on the amount of fuel savings
Entergy Gulf States may be required to transfer to other Entergy domestic
utility companies under a tracking mechanism designed to protect the other
companies from certain unexpected increases in fuel costs. The other
parties sought to overturn FERC's decisions on various grounds, including
issues as to whether FERC appropriately conditioned the Merger to protect
various interested parties from alleged harm and FERC's reliance on
Entergy's transmission tariff to mitigate any potential anticompetitive
impacts of the Merger. On November 18, 1994, the D.C. Circuit denied
motions filed by Cajun, Occidental, and AEEC for a remand to FERC and a
partial summary grant of the petitions for review. At the same time, the
D.C. Circuit ordered that the cases be held in abeyance pending FERC's
issuance of (i) a final order on remand in the proceedings on Entergy's
transmission tariff (see discussion of tariff case in "RATE MATTERS AND
REGULATION - Rate Matters - Wholesale Rate Matters - Open Access
Transmission" above), and (ii) a final order on competition issues in the
proceedings on the Merger.
In December 1993, Entergy Services submitted tariff revisions to FERC
to comply with FERC's order dated December 15, 1993, approving the Merger.
In February 1994, the APSC and AEEC filed with FERC a joint protest,
alleging that Entergy should be required to insulate the ratepayers of
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans from all litigation liabilities related to River Bend. In a
May 17, 1994 order on rehearing, FERC addressed Entergy's commitment to
insulate the customers of Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans against liability resulting from
certain litigation involving River Bend. In response to FERC's
clarification of Entergy's commitment, Entergy Services filed a new
compliance filing in June 1994. The APSC and AEEC subsequently filed
protests questioning the adequacy of Entergy's June 1994 compliance filing.
FERC accepted the compliance filing in December 1998.
Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and Entergy New Orleans)
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans are defendants in numerous lawsuits that
have been filed by former employees alleging 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.
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, 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.
Asbestos and Hazardous Waste Suits
(Entergy Gulf States)
Several lawsuits have been filed on behalf of plaintiffs in state and
federal courts in Jefferson and Orange Counties, Texas. These suits seek
relief from Entergy Gulf States as well as numerous other defendants for
damages caused to the plaintiffs or others by the alleged exposure to
hazardous waste and asbestos on the defendants' premises. The plaintiffs
in some of these suits are also suing Entergy Gulf States and all other
defendants on a conspiracy claim. There are also asbestos-related lawsuits
filed in the District Court of Calcasieu Parish in Lake Charles, Louisiana,
naming numerous defendants including Entergy Gulf States. The suits allege
that each plaintiff contracted an asbestos-related disease from exposure to
asbestos insulation products on the premises of the defendants. Plaintiffs
have filed lawsuits in Louisiana in state courts in East Baton Rouge,
Iberville, and Ascension Parishes. These suits seek relief from Entergy
Gulf States and numerous other defendants for damages caused to the
plaintiffs or others by alleged exposure to hazardous waste and asbestos on
the defendants' premises. It is not known how many of the plaintiffs in
any of the foregoing cases actually worked on Entergy Gulf States'
premises. Settlements with the Jefferson County plaintiffs and with the
Calcasieu Parish plaintiffs are in the process of being consummated.
Entergy Gulf States' share of the settlements of these cases is not
material, in the aggregate, to its financial position or results of
operations.
Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States)
A discussion of this litigation is included under the caption "Cajun-
Coal Contracts" in Note 9 to the financial statements.
Catalyst Technologies, Inc. (Entergy Corporation)
In June 1993, Catalyst Technologies, Inc. (CTI) filed a petition in
the Civil District Court for the Parish of Orleans, Louisiana (CDC),
against Electec, Inc., now named Entergy Enterprises, Inc. (EEI), which is
a wholly-owned non-utility subsidiary of Entergy Corporation. The petition
alleged, among other things, breach of contract, and breach of the
obligation of good faith and fair dealing. In August 1997, a jury in the
CDC returned a verdict against EEI in the amount of $346 million plus
interest of approximately $118 million. In November 1997, the trial judge
entered a judgment notwithstanding the verdict in favor of EEI in the CTI
lawsuit. Finding as a matter of law that the jury's verdict was incorrect,
the judge ruled that no contract ever existed between CTI and Entergy
Enterprises, and that the verdict was contrary to the law and the evidence.
CTI appealed this ruling to the Louisiana Court of Appeal for the Fourth
Circuit, and oral argument was heard in November 1998. In March 1999, EEI
agreed to settle the lawsuit for a $2.5 million cash payment to the
plaintiffs, and the proceeding will be dismissed.
Union Pacific Railroad (Entergy Corporation and Entergy Arkansas)
In October 1997, Entergy Arkansas and Entergy Services filed a civil
suit against Union Pacific Railroad Company (Union Pacific) in the United
States District Court for the Middle District of Louisiana. This suit
seeks damages and the termination of coal shipping contracts with Union
Pacific because of Union Pacific's failure to meet its contractual
obligations to ship coal to Entergy Arkansas' two large coal-fired plants.
The lawsuit also alleges that such failure has impaired Entergy Arkansas'
ability to generate and sell electricity from these plants. The case has
been transferred to the United States District Court for the District of
Nebraska. In January 1999, on cross motions for summary judgment, the
court ruled that Union Pacific has breached obligations under the
contracts. Under the court's ruling, if the breaches of the contracts by
Union Pacific are proven at trial to be material, rescission of the
contracts is available to Entergy as a remedy, in addition to any monetary
damages awarded. Entergy Arkansas continues to seek an order from the
Federal Surface Transportation Board requiring Union Pacific to allow
another railroad to bring coal to one of the Entergy Arkansas generating
plants.
Aquila Power Corporation (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans)
In March 1998, Aquila Power Corporation ("Aquila") filed a complaint
with the FERC against Entergy Services, as agent for the domestic utility
companies, alleging that the domestic utility companies improperly
reserved transmission capacity on Entergy's transmission system, resulting
in the denial of Aquila's request for transmission service. Aquila's
complaint seeks compensation for lost profits, an order prohibiting
Entergy and/or its affiliates from engaging in similar conduct, and
suspension of the domestic utility companies' and EPMC's market-rate
authority. In May 1998, Entergy filed its response denying the Aquila
allegations. Subsequently, Aquila amended and restated its complaint,
alleging additional instances of improper activities by Entergy. In
addition to its requests in its original complaint, Aquila's amended
complaint seeks a finding by FERC that Entergy is in violation of FERC
Orders No. 888 and 889, and an order that Entergy should be required to
join or agree to the formation of an independent system operator. Entergy
filed its response to the amended and restated complaint in July 1998,
denying the alleged improper conduct, and also moved in September 1998 to
dismiss Aquila's complaint. Aquila has responded, and no hearing date has
been set by FERC.
Panda Energy Corporation (Entergy Corporation)
In 1994, Panda Energy Corporation (Panda) commenced litigation in
Texas in the Dallas District Court against Entergy Corporation and certain
of its subsidiaries. The allegations include, among others, tortious
interference with contractual relations, conspiracy, misappropriation of
corporate opportunity, unfair competition and fraud, and constructive
trust issues. Panda seeks damages of approximately $4.8 billion, of which
$3.6 billion is claimed in punitive damages. The district court granted
the defendants' motion for summary judgment and dismissed the lawsuit,
finding that Panda is unable to show damages and that the facts alleged do
not support a cause of action against the defendants. In August 1998, an
appellate court reversed the dismissal and remanded the lawsuit to the
district court. Entergy and other defendants petitioned the appellate
court for rehearing, but that petition was denied in October 1998.
Entergy's petition to the Texas Supreme Court for review of the appellate
court decision was denied in February 1999, and the case has been remanded
to the district court for further proceedings. Entergy believes that
Panda's claims have no merit and that Entergy will ultimately prevail in
having the case dismissed.
Ratepayer Lawsuits (Entergy Corporation, Entergy Louisiana, and Entergy
New Orleans)
In April 1998, a group of residential and business ratepayers filed a
complaint against Entergy New Orleans in state court in Orleans Parish
purportedly on behalf of all ratepayers in New Orleans. The plaintiffs
allege that Entergy New Orleans overcharged ratepayers by at least $300
million since 1975 in violation of limits on Entergy New Orleans' rate of
return that the plaintiffs allege are set by the 1922 franchise ordinances
passed by the New Orleans City Council. The plaintiffs seek, among other
things, (1) a declaratory judgment that such franchise ordinances have been
violated, and (2) a remand to the City Council for the establishment of the
amount of overcharges plus interest. Entergy New Orleans believes the
lawsuit is completely without merit. Entergy New Orleans has charged only
those rates authorized by the City Council, which the City Council has set
in accordance with applicable law. Entergy New Orleans is vigorously
defending itself in the lawsuit.
In May 1998, a group of ratepayers filed a complaint against Entergy
Corporation, Entergy Power, and Entergy Louisiana in state court in Orleans
Parish purportedly on behalf of all Entergy Louisiana ratepayers. The
plaintiffs allege that the fuel costs passed by Entergy Louisiana to
customers through its fuel adjustment clause were improper. The plaintiffs
seek, among other things, a refund of the amounts allegedly charged in
excess of the proper fuel adjustment. This same group of ratepayers also
filed with the LPSC a complaint against Entergy Corporation and Entergy
Louisiana seeking relief similar to that which they seek by their lawsuit
in state court. Entergy Louisiana is vigorously defending itself in the
lawsuit.
In May 1998, a group of ratepayers filed a complaint against Entergy
Louisiana in state court in East Baton Rouge Parish purportedly on behalf
of all Entergy Louisiana ratepayers. The plaintiffs allege that the
formula ratemaking plan authorized by the LPSC has allowed Entergy
Louisiana to earn amounts in excess of a fair return. The plaintiffs seek,
among other things, (1) a declaratory judgment that the formula ratemaking
plan is an improper ratemaking practice, and (2) a refund of the amounts
allegedly charged in excess of proper ratemaking practices. Entergy
Louisiana believes the lawsuit is completely without merit, and is
vigorously defending itself.
Franchise Fee Litigation (Entergy Gulf States)
In September 1998, the City of Nederland filed a petition against
Entergy Gulf States and Entergy Services in state court in Jefferson
County, Texas, purportedly on behalf of all Texas municipalities that have
ordinances or agreements with Entergy Gulf States. The lawsuit alleges
that Entergy Gulf States has been underpaying its franchise fees due to
failure to properly calculate its gross receipts. Plaintiff seeks a
judgment for the allegedly underpaid fees and punitive damages. Entergy
Gulf States believes the lawsuit is completely without merit, and is
vigorously defending itself in the lawsuit.
Fiber Optic Cable Litigation (Entergy Corporation, Entergy Gulf
States)
In May 1998, a group of property owners filed a petition against
Entergy Corporation, Entergy Gulf States, Entergy Services, and ETHC in
state court in Jefferson County, Texas purportedly on behalf of all
property owners throughout the Entergy service area who have conveyed
easements to the defendants. The lawsuit alleges that Entergy installed
fiber optic cable across their property without obtaining appropriate
easements. The plaintiffs seek actual damages for the use of the land and
a share of the profits made through use of the fiber optic cables and
punitive damages. Entergy is vigorously defending itself in the lawsuit,
and believes that any damages suffered by the plaintiff landowners is
negligible and that there is no basis for the claim seeking a share of
profits.
Franchise Service Area Litigation (Entergy Gulf States)
In early 1998, Beaumont Power and Light Company (BP&L) sought
unsuccessfully a franchise to provide electric service in the City of
Beaumont, Texas, where Entergy Gulf States already holds such a franchise.
In November 1998, BP&L filed a request before 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. BP&L's application contemplates
using Entergy Gulf States' facilities in their provision of service. In
Texas, utilities are required to obtain a certificate of convenience and
necessity (CCN) prior to providing retail electric service. Jefferson
County is currently singly certificated to Entergy Gulf States. If BP&L's
application is granted, BP&L would be able to provide retail service to
Entergy Gulf States' customers in the area for which the certificate would
apply. The hearing on the merits of the application in the BP&L case is
scheduled to be held in June 1999.
The PUCT has raised a number of legal issues that must be addressed
prior to reaching the merits of BP&L's application. These legal issues are
currently being addressed in another application before the PUCT. In
October 1998, Corpus Christi Power & Light Company (CCP&L) filed a request
before the PUCT to obtain a CCN to operate in an area certificated to
Central Power & Light Company. Entergy Gulf States has intervened and is
participating in the CCP&L case. The outcome of certain legal issues in
the CCP&L case are likely to be applicable to the BP&L case. It is not
known at this time what the decision will be on these threshold issues or
when the decision will be rendered. A hearing on the threshold issues in
the CCP&L case was held in February 1999. The ALJ should issue a
recommendation in the second quarter of 1999 for consideration by the PUCT.
Hindusthan Development Corporation, Ltd. (Entergy Corporation)
In January 1999, Hindusthan Development Corporation (HDC) commenced an
arbitration proceeding in India against Entergy Power Asia Ltd. (EPAL), an
indirect, wholly owned subsidiary of Entergy Corporation. The arbitration
is under UNCITRAL rules, which have been adopted in both India and the
United States. HDC alleges that EPAL did not fulfill its obligations under
a Joint Development Agreement (JDA) to develop a 350 MW cogeneration plant
to be built in Bina, India. HDC also alleges that EPAL wrongfully withdrew
as lead developer. Entergy's management believes that HDC's allegations
are completely without merit, and that both parties to the JDA had an
absolute right of withdrawal. HDC is seeking unspecified damages of $1.1
billion. EPAL is vigorously defending itself in the arbitration
proceeding.
EARNINGS RATIOS OF DOMESTIC UTILITY COMPANIES AND SYSTEM ENERGY
The domestic utility companies' and System Energy's ratios of earnings
to fixed charges and ratios of earnings to combined fixed charges and
preferred dividends pursuant to Item 503 of SEC Regulation S-K are as
follows:
Ratios of Earnings to Fixed Charges
Years Ended December 31,
1998 1997 1996 1995 1994
Entergy Arkansas 2.63 2.54 2.93 2.56 2.32
Entergy Gulf States 1.40 1.42 1.47 1.86 (b)
Entergy Louisiana 3.18 2.74 3.16 3.18 2.91
Entergy Mississippi 3.04 2.98 3.40 2.92 2.12
Entergy New Orleans 2.59 2.70 3.51 3.93 1.91
System Energy 2.52 2.31 2.21 2.07 1.23
Ratios of Earnings to Combined Fixed
Charges and Preferred Dividends
Years Ended December 31,
1998 1997 1996 1995 1994
Entergy Arkansas 2.28 2.24 2.44 2.12 1.97
Entergy Gulf States(a) 1.20 1.23 1.19 1.54 (b)
Entergy Louisiana 2.75 2.36 2.64 2.60 2.43
Entergy Mississippi 2.73 2.69 2.95 2.51 1.81
Entergy New Orleans 2.36 2.44 3.22 3.56 1.73
(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.
BUSINESS SEGMENTS
Entergy Corporation
Entergy's business segments are discussed in Note 14 to the financial
statements.
Entergy New Orleans
Electric Service
Entergy New Orleans supplied retail electric service to approximately
189,000 customers as of December 31, 1998. During 1998, 41% of electric
operating revenues was derived from residential sales, 37% from commercial
sales, 7% from industrial sales, and 15% from sales to governmental and
municipal customers.
Natural Gas Service
Entergy New Orleans supplied retail natural gas service to
approximately 151,000 customers as of December 31, 1998. During 1998, 53%
of gas operating revenues was derived from residential sales, 20% from
commercial sales, 10% from industrial sales, and 17% from sales to
governmental and municipal customers, as described below in "FUEL SUPPLY -
Natural Gas Purchased for Resale."
Financial Information Relating to Products and Services
Financial information relating to Entergy New Orleans' products and
services is presented in Entergy New Orleans' financial statements.
Entergy Gulf States
For the year ended December 31, 1998, 96% of Entergy Gulf States'
operating revenues were derived from the electric utility business. Of the
remaining operating revenues, 2% were derived from the steam business and
2% from the natural gas business.
PROPERTY
Generating Stations
The total capability of the generating stations owned and leased by
the domestic operating companies and System Energy as of December 31, 1998,
by company and by fuel type, is indicated below:
Owned and Leased Capability MW (1)
Gas
Turbine
and
Internal
Company Total Fossil Nuclear Combustion Hydro
Entergy Arkansas 4,373 (2) 2,379 1,694 230 (4) 70
Entergy Gulf States 6,854 (2) 5,843 936 (5) 75 -
Entergy Louisiana 5,423 (2) 4,329 1,075 19 -
Entergy Mississippi 3,063 (2) 3,052 - 11 -
Entergy New Orleans 934 (2) 918 - 16 -
Sytem Energy 1,080 - 1,080 - -
------ ------ ----- --- ---
Total 21,727 (3) 16,521 (3) 4,785 351 70
====== ====== ===== === ===
(1) "Owned and Leased Capability" is the dependable load carrying
capability as demonstrated under actual operating conditions based on
the primary fuel (assuming no curtailments) that each station was
designed to utilize.
(2) Excludes the capacity of fossil-fueled generating stations placed on
extended reserve shutdown as follows: Entergy Arkansas - 506 MW;
Entergy Gulf States - 405 MW; Entergy Louisiana - 157 MW; Entergy
Mississippi - 73 MW; Entergy New Orleans - 143 MW. Generating
stations that are not expected to be utilized in the near-term to meet
load requirements are placed in extended reserve shutdown in order to
minimize operating expenses.
(3) Excludes net capability of generating facilities owned by Entergy
Power, which owns 665 MW of fossil-fueled capacity.
(4) Includes 188 MW of capacity leased by Entergy Arkansas through 1999.
(5) Includes 281 MW representing the portion of River Bend obtained by
Entergy Gulf States as part of the Cajun Settlement in December 1997.
In November 1998, a non-utility subsidiary of Entergy signed an
agreement to buy Boston Edison's 670 MW Pilgrim Nuclear Station in
Plymouth, MA. Pilgrim will be the first nuclear plant to be acquired by
Entergy as part of a non-regulated business strategy that focuses on
competitive nuclear power acquisitions and power generation as primary
growth areas. The purchase and sale agreement anticipates a closing date
in the second quarter of 1999. The sale includes the Pilgrim generating
plant and facilities (including nuclear fuel) and a 1600-acre site on Cape
Cod Bay.
Entergy's load and capacity projections are reviewed periodically to
assess the need and timing for additional generating capacity and of
interconnections in light of the availability of power, the location of new
loads, and maximum economy to Entergy. Domestically, based on load and
capability projections and bulk power availability, when new generation
resources are needed, Entergy expects to meet this need by means other than
construction of new base load generating capacity. Entergy expects to meet
future capacity needs by, among other things, purchasing power in the
wholesale power market and/or removing generating stations from extended
reserve shutdown. Currently, plans are being implemented to re-activate
several units that are in extended reserve shut down. The units, once back
on line, will provide an additional 583 MW of capacity to serve customers
during peak demand.
Under the terms of the System Agreement, certain generating capacity
and other power resources are shared among the domestic utility companies.
The System Agreement provides, among other things, that parties having
generating reserves greater than their load requirements (long companies)
shall receive payments from those parties having deficiencies in generating
reserves (short companies). Such payments are at amounts sufficient to
cover certain of the long companies' costs, including operating expenses,
fixed charges on debt, dividend requirements on preferred and preference
stock, and a fair rate of return on common equity investment. Under the
System Agreement, these charges are based on costs associated with the long
companies' steam electric generating units fueled by oil or gas. In
addition, for all energy exchanged among the domestic utility companies
under the System Agreement, the short companies are required to pay the
cost of fuel consumed in generating such energy plus a charge to cover
other associated costs. FERC proceedings relating to the System Agreement
are discussed more thoroughly in "RATE MATTERS AND REGULATION - Rate
Matters - Wholesale Rate Matters - System Agreement," above.
Entergy's domestic utility business is subject to seasonal
fluctuations, with the peak period occurring in the summer months. The
1998 peak demand of 20,591 MW occurred on July 8, 1998. The total
operational system capability at the time of peak was 20,485 MW. This
yielded a slightly negative reserve margin at the time of the peak of
approximately -0.5%.
Interconnections
The electric generating facilities of Entergy's domestic utility
companies consist principally of steam-electric production facilities
strategically located with reference to availability of fuel, protection of
local loads, and other controlling economic factors. These generating
units are interconnected by a transmission system operating at various
voltages up to 500 KV. Generally, with the exception of Grand Gulf 1,
Entergy Power's capacity and a small portion of Entergy Mississippi's
capacity, operating facilities or interests therein are owned or leased by
the domestic utility company serving the area in which the generating
facilities are located. All of Entergy's generating facilities are
centrally dispatched and operated in order to obtain low cost sources of
energy with a minimum of investment and efficient use of plant.
In addition to the many neighboring utilities with which the domestic
utility companies interconnect, the domestic utility companies are members
of the Southeastern Electric Reliability Council. The primary purpose of
this council is to ensure the reliability and adequacy of the electric bulk
power supply in the southeast region of the United States. The
Southeastern Electric Reliability Council is a member of the North American
Electric Reliability Council.
Gas Property
As of December 31, 1998, Entergy New Orleans distributed and
transported natural gas for distribution solely within the limits of the
City of New Orleans through a total of 1445 miles of gas distribution mains
and 41 miles of gas transmission pipelines.
As of December 31, 1998, the gas properties of Entergy Gulf States,
which are located in and around Baton Rouge, Louisiana, were not material
to Entergy Gulf States.
Titles
The generating stations of Entergy's public utility companies are
generally located on properties owned in fee simple. The greater portion
of the transmission and distribution lines of the domestic utility
companies have been constructed on property of private owners pursuant to
easements or on public highways and streets pursuant to appropriate
franchises. The rights of each company in the property on which its
facilities are located are considered by such company to be adequate for
its use in the conduct of its business. Minor defects and irregularities
customarily found in properties of like size and character may exist, but
such defects and irregularities do not, in the opinion of management,
materially impair the use of the properties affected thereby. The domestic
utility companies generally have the right of eminent domain, whereby they
may, if necessary, perfect or secure titles to, or easements or servitudes
on, privately held lands used in or reasonably necessary for their utility
operations.
Substantially all the physical properties owned by each Entergy
domestic utility company and System Energy are subject to the lien of
mortgages securing the first mortgage bonds of such company. The Lewis
Creek generating station is owned by GSG&T, Inc., a subsidiary of Entergy
Gulf States, and is not subject to the lien of the Entergy Gulf States
mortgage securing the first mortgage bonds of Entergy Gulf States, but is
leased to and operated by Entergy Gulf States. In the case of Entergy
Louisiana, certain properties are also subject to a second lien securing
other obligations of Entergy Louisiana. In the case of Entergy
Mississippi, substantially all of its properties and assets are also
subject to the second mortgage lien of its general and refunding mortgage
bond indenture. However, Entergy Mississippi's first mortgage is expected
to be cancelled in 1999.
FUEL SUPPLY
The sources of generation and average fuel cost per KWH for the
domestic utility companies and System Energy for the years 1996-1998 were:
Natural Gas Fuel Oil Nuclear Fuel Coal
% Cents % Cents % Cents % Cents
of per of per of Per of Per
Year Gen KWH Gen KWH Gen KWH Gen KWH
1998 40 2.50 6 2.37 40 .53 14 1.67
1997 39 2.97 4 3.11 41 .54 16 1.73
1996 42 2.99 1 3.03 41 .56 16 1.73
Actual 1998 and projected 1999 sources of generation for the domestic
utility companies and System Energy are:
Natural Gas Fuel Oil Nuclear Coal
1998 1999 1998 1999 1998 1999 1998 1999
Entergy Arkansas 9% 8% - - 58% 38% 32% 54%
Entergy Gulf States 61% 70% - - 26% 22% 13% 8%
Entergy Louisiana 58% 58% 1% 1% 41% 41% - -
Entergy Mississippi 27% 7% 50% 73% - - 23% 20%
Entergy New Orleans 87% 75% 13% 25% - - - -
System Energy - - - - 100%(a) 100%(a) - -
Total 40% 36% 6% 11% 40% 28% 14% 24%
(a) In addition to the nuclear capacity given above for the following
companies, capacity and energy from System Energy's interest in Grand
Gulf 1 is allocated as follows: Entergy Arkansas - 36%; Entergy
Louisiana - 14%; Entergy Mississippi - 33%; and Entergy New Orleans -
17%.
(b) Immaterial amounts of generation were provided by hydroelectric power.
Natural Gas
The domestic utility companies have long-term firm and short-term
interruptible gas contracts. Long-term firm contracts comprise less than
30% of the domestic utility companies' total requirements but can be called
upon, if necessary, to satisfy a significant percentage of the domestic
utility companies' needs. Short-term contracts and spot-market purchases
satisfy additional gas requirements. Entergy Gulf States has a
transportation service agreement with a gas supplier that provides flexible
natural gas service to certain generating stations by using such supplier's
pipeline and gas storage facility.
Many factors, including wellhead deliverability, storage and pipeline
capacity, and demand requirements of end users, influence the availability
and price of natural gas supplies for power plants. Demand is tied to
weather conditions as well as to the prices of other energy sources.
Supplies of natural gas are expected to be adequate in 1999. However,
pursuant to federal and state regulations, gas supplies to power plants may
be interrupted during periods of shortage. To the extent natural gas
supplies may be disrupted, the domestic utility companies will use
alternate fuels, such as oil, or rely to a larger extent on coal and
nuclear generation.
Coal
Entergy Arkansas has long-term contracts with mines in the State of
Wyoming for the supply of low-sulfur coal for White Bluff and Independence.
These contracts, which expire in 2002 and 2011, provide for approximately
85% of Entergy Arkansas' expected annual coal requirements. Additional
requirements are satisfied by spot market purchases. Entergy Gulf States
has a contract for a supply of low-sulfur Wyoming coal for Nelson Unit 6,
which should be sufficient to satisfy its fuel requirements for that unit
through 2010. Cajun has advised Entergy Gulf States that Cajun has
contracts that should provide an adequate supply of coal for the operation
of Big Cajun 2, Unit 3.
Nuclear Fuel
The nuclear fuel cycle involves the following:
o mining and milling of uranium ore to produce a concentrate;
o conversion of the concentrate to uranium hexafluoride gas;
o enrichment of the hexafluoride gas;
o fabrication of nuclear fuel assemblies for use in fueling nuclear
reactors; and
o disposal of spent fuel.
System Fuels is responsible for contracts to acquire nuclear material
to be used in fueling Entergy Arkansas', Entergy Louisiana's, and System
Energy's nuclear units and maintaining inventories of such materials during
the various stages of processing. Each of these companies purchases the
required enriched uranium hexafluoride from System Fuels, but contracts
separately for the fabrication of its own nuclear fuel. The requirements
for River Bend are covered by contracts made by Entergy Gulf States.
Entergy Operations acts as an agent for System Fuels and Entergy Gulf
States in negotiating and/or administering nuclear fuel contracts.
Based upon currently planned fuel cycles, Entergy's nuclear units
currently have contracts and inventory that provide adequate materials and
services. Existing contracts for uranium concentrate, conversion of the
concentrate to uranium hexafluoride, and enrichment of the uranium
hexafluoride will provide a significant percentage of these materials and
services over the next several years. Additional materials and services
required beyond the coverage of these contracts are expected to be
available at a reasonable cost for the foreseeable future.
Current fabrication contracts will provide a significant percentage of
these materials and services for termination dates ranging from 2000-2002.
The Nuclear Waste Policy Act of 1982 provides for the disposal of spent
nuclear fuel or high level waste by the DOE. There is a discussion of
spent nuclear fuel disposal in Note 9 to the financial statements.
Entergy will enter into additional arrangements to acquire nuclear
fuel beyond the dates shown above. Except as noted above, it is not
possible to predict the ultimate cost of such arrangements.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy each have made arrangements to lease nuclear fuel and related
equipment and services. The lessors finance the acquisition and ownership
of nuclear fuel through credit agreements and the issuance of notes. These
agreements are subject to periodic renewal with the consent of the lenders.
There are more thorough discussions of nuclear fuel leases in Note 10 to
the financial statements.
Entergy Gulf States received nuclear fuel as part of the settlement of
the Cajun litigation. This nuclear fuel was put under lease in December
1998.
Natural Gas Purchased for Resale
Entergy New Orleans has several suppliers of natural gas for resale.
Its system is interconnected with three interstate and three intrastate
pipelines. Presently, Entergy New Orleans' primary suppliers are Koch
Energy Trading Company (KET), an interstate gas marketer, Bridgeline Gas
Distributors and Pontchartrain Natural Gas via Louisiana Gas Services
(LGS). Entergy New Orleans has a "no-notice" service gas purchase contract
with KET which guarantees Entergy New Orleans gas delivery at any point
after the agreed gas volume has been met. The KET gas supply is
transported to Entergy New Orleans pursuant to a transportation service
agreement with Koch Gateway Pipeline Company (KGPC). This service is
subject to FERC-approved rates. Entergy New Orleans has firm contracts
with its two intrastate suppliers and also makes interruptible spot market
purchases. In recent years, natural gas deliveries have been subject
primarily to weather-related curtailments. However, Entergy New Orleans
has experienced no such curtailments.
As a result of the implementation of FERC-mandated interstate pipeline
restructuring in 1993, curtailments of interstate gas supply could occur if
Entergy New Orleans' suppliers failed to perform their obligations to
deliver gas under their supply agreements. KGPC could curtail
transportation capacity only in the event of pipeline system constraints.
Based on the current supply of natural gas, and absent extreme weather-
related curtailments, Entergy New Orleans does not anticipate any
interruptions in natural gas deliveries to its customers.
Entergy Gulf States purchases natural gas for resale under an
agreement with Mid Louisiana Gas Company. The present supplier would not
be allowed to discontinue service prior to receiving FERC approval.
Research
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans are members of the Electric Power
Research Institute (EPRI). EPRI conducts a broad range of research in
major technical fields related to the electric utility industry. Entergy
participates in various EPRI projects based on Entergy's needs and
available resources. During each of the years 1998, 1997, and 1996,
Entergy and its subsidiaries contributed approximately $9 million for EPRI
and other research programs.
Item 2. Properties
Information regarding the properties of the registrants is included in
Item 1. "Business - PROPERTY," in this report.
Item 3. Legal Proceedings
Details of the registrants' material rate proceedings, environmental
regulation and proceedings, and other regulatory proceedings and litigation
that are pending or that terminated in the fourth quarter of 1998 are
discussed in Item 1. "Business - RATE MATTERS AND REGULATION," in this
report.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1998, no matters were submitted to a vote
of the security holders of Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
or System Energy.
DIRECTORS AND EXECUTIVE OFFICERS OF ENTERGY CORPORATION
Directors
Information required by this item concerning directors of Entergy
Corporation is set forth under the heading "Proposal 1--Election of
Directors" contained in the Proxy Statement of Entergy Corporation, (the
"Proxy Statement"), to be filed in connection with its Annual Meeting of
Stockholders to be held May 14, 1999, ("Annual Meeting"), and is
incorporated herein by reference. Information required by this item
concerning officers and directors of the remaining registrants is reported
in Part III of this document.
<TABLE>
<CAPTION>
Executive Officers
Name Age Position Period
<S> <C> <C> <C>
Robert v.d. Luft 63 Chairman of the Board of Entergy Corporation 1998-Present
Acting Chief Executive Officer of Entergy Corporation 1998
Director of Entergy Corporation 1992-Present
Chief Executive Officer of Entergy New Orleans 1998
Director of Entergy New Orleans and System Energy 1998
Chairman of the Board of DuPont Dow Elastomers 1996-1998
Chairman of DuPont International 1993-1996
President of DuPont Europe 1993-1996
Senior Vice President DuPont 1988-1996
In addition, Mr. Luft was an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies in 1998.
J. Wayne Leonard 48 Chief Executive Officer and Director of Entergy Corporation 1999-Present
Director of Entergy Arkansas, Entergy Gulf States, Entergy 1998-Present
Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy
President and Chief Operating Officer of Entergy Corporation 1998
Chief Operating Officer of Entergy Arkansas, Entergy Gulf 1998
States, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans
Vice Chairman of Entergy New Orleans 1998
President of Energy Commodities Strategic Business Unit 1996-1998
President of Cinergy Capital & Trading 1996-1998
Group Vice President and Chief Financial Officer of Cinergy 1994-1996
Corporation
In addition, Mr. Leonard is an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies.
Edwin Lupberger (a) 62 Chairman of the Board, Chief Executive Officer, and Director 1985-1998
of Entergy Corporation
Chairman of the Board and Chief Executive Officer of Entergy 1993-1998
Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans
Chairman of the Board, Chief Executive Officer, and Director 1994-1998
of Entergy Gulf States
Chairman of the Board of System Energy 1986-1998
President of Entergy Corporation 1995-1998
Director of Entergy Arkansas, Entergy Louisiana, Entergy 1986-1998
Mississippi, Entergy New Orleans, and System Energy
In addition, Mr. Lupberger was an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies.
Jerry L. Maulden 62 Vice Chairman of Entergy Corporation 1995-Present
Vice Chairman of Entergy Arkansas, Entergy Gulf States, 1993-Present
Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans
Chief Operating Officer of Entergy Arkansas, Entergy Gulf 1993-1998
States, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans
Director of Entergy Arkansas 1979-Present
Director of Entergy Gulf States 1993-Present
Director of Entergy Louisiana 1991-Present
Director of Entergy New Orleans 1991-1998
Director of Entergy Mississippi 1988-Present
Director of System Energy 1987-1998
President and Chief Operating Officer of Entergy Corporation 1993-1995
In addition, Mr. Maulden is an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies.
Donald C. Hintz 56 President of Entergy Corporation 1999-Present
Executive Vice President and Chief Nuclear Officer of 1998
Entergy Arkansas, Entergy Gulf States, and Entergy
Louisiana
Group President and Chief Nuclear Operating Officer of 1997-1998
Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
and Entergy Louisiana
Chief Executive Officer and President of System Energy 1992-1998
Executive Vice President and Chief Nuclear Officer of 1994-1997
Entergy Corporation
Executive Vice President - Nuclear of Entergy Arkansas, 1994-1997
Entergy Gulf States, and Entergy Louisiana
Director of Entergy Arkansas, Entergy Louisiana, Entergy 1992-Present
Mississippi, and System Energy
Director of Entergy Gulf States 1993-Present
Director of Entergy New Orleans 1999-Present
1992-1994
Senior Vice President and Chief Nuclear Officer of Entergy 1993-1994
Corporation
Senior Vice President - Nuclear of Entergy Arkansas 1990-1994
Senior Vice President - Nuclear of Entergy Gulf States 1993-1994
Senior Vice President - Nuclear of Entergy Louisiana 1992-1994
In addition, Mr. Hintz is an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies.
Frank F. Gallaher 53 Group President and Chief Utility Operating Officer of 1997-Present
Entergy Corporation
Executive Vice President and Chief Utility Operating Officer 1998-Present
for Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans
Group President and Chief Utility Operating Officer of 1997-1998
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans
Director of Entergy Arkansas, Entergy Louisiana, and Entergy 1997-Present
Mississippi
Director of Entergy Gulf States 1993-Present
Executive Vice President of Operations of Entergy 1996-1997
Corporation
Executive Vice President of Operations of Entergy Arkansas, 1993-1997
Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans
President of Entergy Gulf States 1994-1996
In addition, Mr. Gallaher is an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies.
Jerry D. Jackson 54 Executive Vice President of Entergy Corporation 1999-Present
President and Chief Executive Officer of Entergy Gulf States 1999-Present
- Louisiana and Entergy Louisiana
Chief Administrative Officer of Entergy Corporation, 1997-1998
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans
Executive Vice President - External Affairs of Entergy 1994-1998
Corporation
Executive Vice President - External Affairs of Entergy 1995-1998
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Director of Entergy Arkansas, Entergy Louisiana, Entergy 1992-Present
Mississippi, and Entergy New Orleans
Director of Entergy Gulf States 1994-Present
Executive Vice President of Marketing of Entergy Corporation 1994-1995
Executive Vice President - Marketing of Entergy Arkansas, 1995
Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Executive Vice President - Finance and External Affairs of 1990-1994
Entergy Corporation
Executive Vice President - Finance and External Affairs of 1992-1994
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans
Executive Vice President - Finance and External Affairs of 1993-1994
Entergy Gulf States
Secretary of Entergy Corporation 1991-1994
Secretary of Entergy Gulf States 1994-1995
Director of System Energy 1993-1995
In addition, Mr. Jackson is an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies.
C. John Wilder 40 Executive Vice President and Chief Financial Officer of 1998-Present
Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy
Director of System Energy 1999-Present
Chief Executive Officer of Shell Capital Company 1998
Assistant Treasurer of the Royal Dutch/Shell Group 1996-1998
Director of Economics and Finance of Shell Exploration and 1995-1996
Production
Assistant Treasurer of Shell Oil Company 1992-1995
In addition, Mr. Wilder is an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies.
Michael G. Thompson 58 Senior Vice President and General Counsel of Entergy 1992-Present
Corporation
Senior Vice President, General Counsel, and Secretary of 1995-Present
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans
Secretary of Entergy Corporation 1994-Present
Assistant Secretary of Entergy Corporation 1993-1994
In addition, Mr. Thompson is an executive officer and/or
director of various other wholly owned subsidiaries of
Entergy Corporation and its operating companies.
Nathan E. Langston 50 Vice President and Chief Accounting Officer of Entergy 1998-Present
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy
Director of Tax Services of Entergy Services 1993-1998
Controller of Entergy Arkansas 1980-1993
Steven C. McNeal 42 Vice President and Treasurer of Entergy Corporation, Entergy 1998-Present
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
Assistant Treasurer of Entergy Arkansas, Entergy Gulf 1994-1998
States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy
Director of Corporate Finance of Entergy Services 1994-1998
</TABLE>
(a) Mr. Lupberger is a director of International Shipholding
Corporation, New Orleans, LA.
Each officer of Entergy Corporation is elected yearly by the Board of
Directors.
Directorships shown in footnote (a) above are generally limited to
entities subject to Section 12 or 15(d) of the Securities and Exchange Act
of 1934 or to the Investment Company Act of 1940.
PART II
Item 5. Market for Registrants' Common Equity and Related Stockholder
Matters
Entergy Corporation
The shares of Entergy Corporation's common stock are listed on the New
York Stock, Chicago Stock, and Pacific Exchanges.
The high and low prices of Entergy Corporation's common stock for each
quarterly period in 1998 and 1997 were as follows:
1998 1997
High Low High Low
(In Dollars)
First 30 1/8 27 5/16 28 3/8 24
Second 29 5/8 23 1/4 27 1/2 22 3/8
Third 30 13/16 26 3/16 28 24 1/16
Fourth 32 7/16 28 1/16 30 1/4 23
Consecutive quarterly cash dividends on common stock were paid to
stockholders of Entergy Corporation in 1998 and 1997. In 1998, dividends
of 45 cents per share were paid in the first and second quarters and
dividends of 30 cents per share were paid in the third and fourth quarters.
Quarterly dividends of 45 cents per share were paid in 1997.
As of February 28, 1999, there were 80,877 stockholders of record of
Entergy Corporation.
Entergy Corporation's future ability to pay dividends is discussed in
Note 8 to the financial statements. In addition to the restrictions
described in Note 8, PUHCA provides that, without approval of the SEC, the
unrestricted, undistributed retained earnings of any Entergy Corporation
subsidiary are not available for distribution to Entergy Corporation's
common stockholders until such earnings are made available to Entergy
Corporation through the declaration of dividends by such subsidiaries.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
There is no market for the common stock of Entergy Corporation's
wholly owned subsidiaries. Cash dividends on common stock paid by the
subsidiaries to Entergy Corporation during 1998 and 1997, were as follows:
1998 1997
(In Millions)
Entergy Arkansas $ 92.6 $128.6
Entergy Gulf States $109.4 $ 77.2
Entergy Louisiana $138.5 $145.4
Entergy Mississippi $ 66.0 $ 59.2
Entergy New Orleans $ 9.7 $ 26.0
System Energy $ 72.3 $113.8
Information with respect to restrictions that limit the ability of
System Energy and the domestic utility companies to pay dividends is
presented in Note 8 to the financial statements and "Management's Financial
Discussion and Analysis - Liquidity and Capital Resources".
Item 6. Selected Financial Data
Refer to "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY
CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, ENTERGY GULF STATES,
ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, and SYSTEM
ENERGY" which follow each company's financial statements in this report,
for information with respect to operating statistics.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY
AND CAPITAL RESOURCES," " - SIGNIFICANT FACTORS AND KNOWN TRENDS," and "-
RESULTS OF OPERATIONS OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY
ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI,
ENTERGY NEW ORLEANS, and SYSTEM ENERGY".
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Entergy Corporation and Subsidiaries. Refer to information under the
heading "ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL
DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS."
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS
Entergy Corporation and Subsidiaries:
Report of Management 39
Audit Committee Chairperson's Letter 40
Management's Financial Discussion and Analysis 41
Report of Independent Accountants 51
Management's Financial Discussion and Analysis 52
Statements of Consolidated Income For the Years Ended December 31, 59
1998, 1997, and 1996
Statements of Consolidated Cash Flows For the Years Ended December 60
31, 1998, 1997, and 1996
Consolidated Balance Sheets, December 31, 1998 and 1997 62
Statements of Consolidated Retained Earnings and Paid-In Capital 64
for the Years Ended December 31, 1998, 1997, and 1996
Selected Financial Data - Five-Year Comparison 65
Entergy Arkansas, Inc.:
Report of Independent Accountants 66
Management's Financial Discussion and Analysis 67
Statements of Income For the Years Ended December 31, 1998, 1997, 70
and 1996
Statements of Cash Flows For the Years Ended December 31, 1998, 71
1997, and 1996
Balance Sheets, December 31, 1998 and 1997 72
Statements of Retained Earnings for the Years Ended December 31, 74
1998, 1997, and 1996
Selected Financial Data - Five-Year Comparison 74
Entergy Gulf States, Inc.:
Report of Independent Accountants 76
Management's Financial Discussion and Analysis 77
Statements of Income (Loss) For the Years Ended December 31, 1998, 81
1997, and 1996
Statements of Cash Flows For the Years Ended December 31, 1998, 83
1997, and 1996
Balance Sheets, December 31, 1998 and 1997 84
Statements of Retained Earnings for the Years Ended December 31, 86
1998, 1997, and 1996
Selected Financial Data - Five-Year Comparison 87
Entergy Louisiana, Inc.:
Report of Independent Accountants 88
Management's Financial Discussion and Analysis 89
Statements of Income For the Years Ended December 31, 1998, 1997, 91
and 1996
Statements of Cash Flows For the Years Ended December 31, 1998, 93
1997, and 1996
Balance Sheets, December 31, 1998 and 1997 94
Statements of Retained Earnings for the Years Ended December 31, 96
1998, 1997, and 1996
Selected Financial Data - Five-Year Comparison 97
Entergy Mississippi, Inc.:
Report of Independent Accountants 98
Management's Financial Discussion and Analysis 99
Statements of Income For the Years Ended December 31, 1998, 1997, 102
and 1996
Statements of Cash Flows For the Years Ended December 31, 1998, 103
1997, and 1996
Balance Sheets, December 31, 1998 and 1997 104
Statements of Retained Earnings for the Years Ended December 31, 106
1998, 1997, and 1996
Selected Financial Data - Five-Year Comparison 107
Entergy New Orleans, Inc.:
Report of Independent Accountants 108
Management's Financial Discussion and Analysis 109
Statements of Income For the Years Ended December 31, 1998, 1997, 112
and 1996
Statements of Cash Flows For the Years Ended December 31, 1998, 113
1997, and 1996
Balance Sheets, December 31, 1998 and 1997 114
Statements of Retained Earnings for the Years Ended December 31, 116
1998, 1997, and 1996
Selected Financial Data - Five-Year Comparison 117
System Energy Resources, Inc.:
Report of Independent Accountants 118
Management's Financial Discussion and Analysis 119
Statements of Income For the Years Ended December 31, 1998, 1997, 121
and 1996
Statements of Cash Flows For the Years Ended December 31, 1998, 123
1997, and 1996
Balance Sheets, December 31, 1998 and 1997 124
Statements of Retained Earnings for the Years Ended December 31, 126
1998, 1997, and 1996
Selected Financial Data - Five-Year Comparison 127
Notes to Financial Statements for Entergy Corporation and 128
Subsidiaries
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
REPORT OF MANAGEMENT
Management of Entergy Corporation and its subsidiaries have prepared
and are responsible for the financial statements and related financial
information included herein. The financial statements are based on
generally accepted accounting principles in the United States.
Financial information included elsewhere in this report is consistent with
the financial statements.
To meet their responsibilities with respect to financial information,
management maintains and enforces a system of internal accounting controls
designed to provide reasonable assurance, on a cost-effective basis, as to
the integrity, objectivity, and reliability of the financial records, and
as to the protection of assets. This system includes communication through
written policies and procedures, an employee Code of Entegrity, and an
organizational structure that provides for appropriate division of
responsibility and the training of personnel. This system is also tested
by a comprehensive internal audit program.
Independent public accountants provide an objective assessment of the
degree to which management meets its responsibility for fairness of
financial reporting. They regularly evaluate the system of internal
accounting controls and perform such tests and other procedures as they
deem necessary to reach and express an opinion on the fairness of the
financial statements.
Management believes that these policies and procedures provide
reasonable assurance that its operations are carried out with a high
standard of business conduct.
J. WAYNE LEONARD
Chief Executive Officer of Entergy Corporation
and Chairman of the Board of Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and
System Energy
C. JOHN WILDER
Executive Vice President and
Chief Financial Officer
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
AUDIT COMMITTEE CHAIRPERSON'S LETTER
The Entergy Corporation Board of Directors' Audit Committee is
comprised of five directors who are not officers of Entergy Corporation:
Dr. Paul W. Murrill, Chairperson, George W. Davis, James R. Nichols, Eugene
H. Owen, and Bismark A. Steinhagen. The committee held seven meetings
during 1998.
The Audit Committee oversees Entergy Corporation's financial reporting
process on behalf of the Board of Directors and provides reasonable
assurance to the Board that sufficient operating, accounting, and financial
controls are in existence and are adequately reviewed by programs of
internal and external audits.
The Audit Committee discussed with Entergy's internal auditors and the
independent public accountants (PricewaterhouseCoopers LLP) the overall
scope, specific plans, and results of their respective audits, as well as
Entergy Corporation's financial statements and the adequacy of Entergy
Corporation's internal controls. The committee met, together and
separately, with Entergy's internal auditors and independent public
accountants, without management present, to discuss the results of their
audits, their evaluation of Entergy Corporation's internal controls, and
the overall quality of Entergy Corporation's financial reporting. The
meetings were designed to facilitate and encourage private communication
between the committee and the internal auditors and independent public
accountants.
The Audit Committee believes that management maintains an effective
system of internal controls which results in fairly presented financial
statements.
DR. PAUL W. MURRILL
Chairperson, Audit Committee
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
OVERVIEW
After a slow start in 1998, Entergy achieved strongcord results for
the year in earnings per share and operating cash flow. In addition,
Entergy's debt as a percentage of debt, preferred and common equity capital
as of year-end was 48.6% in 1998, 56.5% in 1997, and 52.5% in 1996.
Entergy's cash and resulting liquidity position improved significantly as
compared to one year ago. These financial results were achieved primarily
due to Entergy's new strategic focus, which resulted in the sale of several
businesses.
In August 1998, Entergy's Board of Directors approved a new strategic
focus that should significantly impact Entergy's future operations and
financial results. This strategy aligns Entergy's strengths and the
businesses it will pursue. These businesses are:
o domestic utility operations;
o global power development; and
o nuclear power operations.
Additionally, Entergy's power marketing and trading business provides the
global power development and the nuclear operations businesses with market
liquidity and price-risk management, and represents them in interfacing
with the wholesale marketplace.
Consistent with its new strategic direction, Entergy sold several
businesses. Proceeds from the sales were used, in part, to pay off debt
associated with the acquisition of these businesses. Further information
on these transactions is presented in Note 12 to the financial statements.
The discussion in the pages that follow reviews the most important
items affecting Entergy and includes:
o the electric utility industry's continued progression toward
competition;
o sales of significant portions of Entergy's businesses not aligned with
its new strategy; and
o substantial improvement in Entergy's financial strength resulting from
the sale of over $4 billion of assets.
The changes noted above create significant uncertainties. Resolution
of the following uncertainties may have a material impact on Entergy:
o the timing and specific provisions of transition to competition
legislation at the local and federal levels relating to the electric
utility industry;
o Entergy's ability to achieve fair recovery of its potentially stranded
investments;
o the impact of customer choice as more customers have freedom to choose
their electricity supplier; and
o Entergy's ability to achieve fair value for assets which may be sold
as a result of the breakup of electric utility monopolies.
Both the changes and uncertainties highlighted above must be
considered in evaluating Entergy's financial condition. A more detailed
explanation of these items and other pertinent information impacting
Entergy's financial strength follow.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Entergy's liquidity and capital resources were affected by the
following in 1998:
o Cash flow from operations decreased compared to 1997 principally due
to completion of rate phase-in plans and other rate activity at
certain of the domestic utility companies, partially offset by an
increase in net income from competitive businesses.
o Net cash provided by investing activities increased substantially due
to the sales of London Electricity and CitiPower.
o Net cash used in financing activities changed significantly from 1997
primarily due to the retirement of the debt associated with the
acquisition of London Electricity and CitiPower.
Operations
Net cash flow from operations for Entergy, the domestic utility
companies, and System Energy for the years ended December 31, 1998, 1997,
and 1996 was:
1998 1997 1996
(In Millions)
Entergy $1,679 $1,725 $1,528
Entergy Arkansas $ 357 $ 434 $ 377
Entergy Gulf States $ 415 $ 466 $ 322
Entergy Louisiana $ 339 $ 341 $ 352
Entergy Mississippi $ 172 $ 159 $ 182
Entergy New Orleans $ 41 $ 49 $ 44
System Energy $ 263 $ 278 $ 287
Competitive businesses contributed $151.7 million to Entergy
Corporation's cash flow from operations in 1998. Substantially all of this
contribution came from London Electricity and CitiPower, both of which were
sold in December 1998.
Rate phase-in plans contributed to cash flow from operations in 1998.
Under these plans, revenues collected exceed the cash cost of expenses.
Such plans positively impact current cash flow from operations, but have no
net income effect because the higher revenues are offset by the
amortization of previously deferred costs. However, during 1998 the
following phase-in plans were completed:
o Entergy Gulf States' Louisiana retail phase-in plan for River Bend was
completed in February;
o Entergy Mississippi's phase-in plan for Grand Gulf 1 was completed in
September; and
o Entergy Arkansas' phase-in plan for Grand Gulf 1 was completed in
November.
Entergy New Orleans' phase-in plan for Grand Gulf 1 will be completed in
2001.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Investing Activities
Net cash provided by investing activities increased substantially in
1998 principally due to the sales of Entergy London and CitiPower.
However, this increase was offset by the investment of the majority of the
net proceeds from the Entergy London sale in BPS574 million ($947 million)
of notes receivable which will mature in August 1999. Entergy has entered
foreign currency forward contracts to hedge the U.S. dollar equivalent
amount of these notes and their related interest at maturity. At maturity,
Entergy expects to receive approximately $1 billion and will use the
proceeds to reduce debt and fund future investments. Business dispositions
are discussed in Note 12 to the financial statements.
Capital Resources
Entergy requires capital resources for:
o construction/capital expenditures;
o debt and preferred stock maturities;
o capital investments;
o funding of subsidiaries; and
o dividend payments.
Management provides more information on construction expenditures and long-
term debt and preferred stock maturities in Note 9 to the financial
statements.
Entergy's sources to meet the above include:
o internally generated funds;
o cash on hand;
o debt or preferred stock issuances;
o bank financing under new or existing facilities; and
o short-term borrowings.
During 1998, cash from operations and the sale of businesses and cash
on hand met substantially all investing and financing requirements of the
domestic utility companies and System Energy. Entergy Corporation received
$488.5 million in dividend payments from the domestic utility companies and
System Energy in 1998.
All debt and common and preferred stock issuances are subject to
regulatory approval. 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 income preferred securities.
Management expects the domestic utility companies and System Energy to
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 ability to invest in domestic and foreign generation
businesses is subject to the SEC's regulations under PUHCA. Absent SEC
approval, these regulations limit the aggregate amount that Entergy may
invest in domestic and foreign generation businesses to an amount equal to
50% of consolidated retained earnings at the time an investment is made.
Due to the sale of electric distribution businesses in the UK and Australia
in 1998, Entergy will have the ability to make significant additional
investments in domestic and foreign generation businesses.
Entergy's global power development business is currently constructing
two combined cycle gas turbine merchant power plants in the UK. The first
is a 1200 MW plant known as Saltend. It is expected to begin commercial
operation in the first quarter of 2000. The second is a 792 MW plant known
as Damhead Creek. It is expected to begin commercial operation in the
fourth quarter of 2000. The financing of the construction of these two
power plants is discussed in Note 7 to the financial statements.
In September 1998, Entergy's nuclear power business signed a long-term
contract to provide management oversight of decommissioning activities at
the Maine Yankee nuclear power plant through the projected completion of
such activities in 2004. Management believes this arrangement is the first
of its kind for decommissioning and reflects a growing trend among
utilities to utilize outside management for nuclear activities. Also,
Entergy's nuclear power business has agreed to acquire the 670 MW Pilgrim
Nuclear Station, including the plant's nuclear fuel, for $80 million. This
sale is expected to close in the second quarter of 1999.
Entergy has also made investments in energy-related businesses,
including power marketing and trading. Under PUHCA, the SEC imposes 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 before such limits would be exceeded.
In 1998, Entergy Corporation paid $373.4 million in cash dividends on
its common stock. Declarations of dividends on Entergy's common stock are
made at the discretion of Entergy Corporation's Board of Directors (the
Board). The Board declared quarterly dividends of $.30 per share on
Entergy's common stock in the third and fourth quarters of 1998 and in the
first quarter of 1999. These dividends represent a $.15 per share
reduction from the previous level of Entergy's dividends. The reduction
was made in order to strengthen Entergy's financial position and fund
future investments. In the future, the Board will re-evaluate 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 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.
Rate proceedings in Texas could have a material adverse impact on
Entergy Gulf States' cash flow from operations. However, management
believes that Entergy Gulf States' cash flow from operations will be
sufficient to fund its capital requirements for the foreseeable future.
The rate proceedings are discussed in Note 2 to the financial statements.
Entergy and its subsidiaries' capital and refinancing requirements and
available lines of credit are more thoroughly discussed in Notes 4, 5, 6,
7, 9, and 10 to the financial statements.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy Corporation and System Energy
Pursuant to an agreement with certain creditors, Entergy Corporation
has agreed to supply System Energy with sufficient capital to:
o maintain System Energy's equity capital 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 System Energy 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.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Domestic Competition
The electric utility industry has traditionally operated as a
regulated monopoly, but is transitioning to an environment of increased
retail and wholesale competition. This presents opportunities to compete
for new customers and creates the risk of loss of existing customers. In
addition, it presents opportunities to enter into new businesses and to
restructure existing businesses. In an effort to position itself in a
competitive environment, Entergy continues to work with regulatory and
legislative authorities.
Regulatory and Legislative Activity
Transition-to-Competition Filings
Under historical ratemaking practice, regulated electric utilities are
granted exclusive geographic franchises to sell electricity. In return,
the utilities are obligated to make investments and incur obligations to
serve customers. Prudently incurred costs are recovered from customers
along with a return on investment. Additionally, regulators have allowed
certain operating costs to be deferred for future recovery from customers.
These costs have been recorded as regulatory assets in the financial
statements.
As a result of the traditional ratemaking process, Entergy has
recorded nuclear investments and nuclear purchase obligations on its
balance sheets at amounts that could exceed future expected cash flows in a
competitive marketplace. Entergy's domestic utility companies have made
transition-to-competition filings requesting accelerated recovery of the
majority of the companies' nuclear investments and related obligations over
a seven-year period. These filings also seek protection for certain classes
of ratepayers from possible cost shifting that may result from competition.
To date only Entergy Arkansas has received partial approval for its filing.
Management believes the Entergy Arkansas plan puts in place a process for
achieving customer choice, meets Entergy's objectives of an orderly
transition to competition, and mitigates potentially stranded costs.
Management provides details concerning the domestic utility companies'
current net investment in nuclear generation in Note 1 to the financial
statements and concerning the transition-to-competition filings and other
regulatory activity in Note 2 to the financial statements.
Open Access
Competition within the wholesale electric energy market has
intensified with the implementation of open access transmission. Open
access allows third-party suppliers to transmit energy to customers over
transmission facilities owned by another entity. To implement open access
to wholesale customers, FERC issued two orders in 1996 requiring all public
utilities subject to FERC jurisdiction to provide wholesale transmission
access to third parties and requiring each public utility to implement and
maintain an open access same-time information system. Entergy's domestic
utility companies filed tariffs to comply with the orders issued in 1996.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
In response to FERC policy strongly favoring independent control over
transmission operations as a means of enhancing competitive wholesale power
markets, Entergy has proposed to FERC the formation of a regional
transmission company (Transco). The proposed Transco would be:
o a separate legal entity regulated by FERC;
o composed of the transmission system transferred to it by the domestic
utility companies and other transmission owners in Entergy's region;
o operated and maintained by employees who would work exclusively for
the Transco and would not be employed by Entergy or the domestic
utility companies; and
o passively owned by the domestic utility companies, which will not
control or otherwise direct its operation and management.
Management expects to make additional filings with federal, state, and
local regulatory authorities seeking necessary approvals for the formation
of the Transco.
Legislative Activity
The Arkansas and Texas state legislatures are considering legislation
to restructure the retail electric utility industry and allow competition.
Both of these legislatures convened in January 1999 and have begun
addressing this issue. Entergy is actively participating in these
deliberations.
The Texas legislature is currently considering legislation that would
open the Texas retail market to competition. The most comprehensive
proposed bill has been filed in the Texas Senate and calls for a
competitive retail access date of January 1, 2002, market power mitigation
measures, stranded cost recovery, and securitization of regulatory assets
and stranded costs, among other things. The market power mitigation
measures include a limit on the ownership of generation by a distribution
company within a specified region. It is not clear what the implications
of this limit would be for Entergy Gulf States or the Entergy system
generally. However, it is possible that the legislation could require that
Entergy Gulf States divest some of its generation assets. The bill also
freezes rates to residential and certain commercial customers until the
competitive retail access date and then implements a five-percent annual
rate reduction for five years or until 40 percent of the market for those
customers is lost. A similar proposed bill has been introduced in the
Arkansas Senate. There can be no certainty as to the outcome of the
legislation.
A number of bills have been introduced in the United States Congress
to deregulate the electric power industry. Some of these bills would amend
or repeal PUHCA and/or PURPA. The bills generally have provisions that
would give consumers the ability to choose their own electric service
provider. Entergy Corporation has supported legislation in Congress to
repeal PUHCA. In June 1998, the Clinton Administration submitted a bill
containing the above provisions, along with one allowing states to "opt
out" of competition if they felt restructuring would harm residents.
Congress took no action on any comprehensive electric restructuring
legislation or repeal of PUHCA during 1998.
Industrial and Commercial Customers
In addition to the risks of losing customers due to competition, some
large industrial and commercial customers of the domestic utility companies
are exploring ways to reduce their energy costs. Among the alternatives
available to these customers are self-generation and cogeneration. The
domestic utility companies have responded by negotiating electric service
contracts that may provide service to large industrial and commercial
customers at tariffed rates lower than would otherwise be applicable.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Through December 1998, Entergy Gulf States and Entergy Louisiana had
received notices from nine large industrial customers that they were
proceeding with proposed cogeneration projects. As a result, it is
expected that 1999 net income will decrease by approximately $8 million and
sales will decline by 369,000 megawatt-hours from the prior year. These
customers will continue to purchase energy at a reduced level from Entergy
Gulf States and Entergy Louisiana.
State and Local Regulation
The retail regulatory philosophy is shifting in some jurisdictions
from traditional cost-of-service regulation to performance-based
regulation. Performance-based formula rate plans are designed to encourage
increased efficiency and productivity while permitting utilities and their
customers to share in the benefits. Entergy Mississippi and Entergy
Louisiana have implemented performance-based rate plans. Entergy
Louisiana's 1997 test year under the plan indicated that rates would not be
materially changed. Entergy Mississippi implemented a $6.6 million rate
reduction in May 1998 resulting from its plan.
All of the domestic utility companies have recently been ordered to
grant base rate reductions and have refunded or credited customers for
previous overcollections of rates. The continuing pattern of rate
reductions reflects completion of rate phase-in plans, lower costs of
service ordered by regulators, and the competitive environment in which the
domestic utility companies operate. The domestic utility companies' retail
and wholesale rate matters and proceedings are discussed more thoroughly in
Note 2 to the financial statements.
The PUCT has published proposed "Code of Conduct" rules governing
affiliate transactions. Although these rules have not been adopted,
management believes that the rules would severely restrict the type and
extent of services that Entergy's service companies could provide to
Entergy Gulf States. Management believes that adoption of these rules
would result in higher costs for Entergy Gulf States and its Texas and
Louisiana customers. Other state or local regulators with jurisdiction
over Entergy's utility subsidiaries may propose similar rules in the
future.
Other Electric Utility Trends
In some areas of the United States, municipalities whose residents are
served by investor-owned utilities are exploring the possibility of
establishing new electric distribution systems, or extending existing ones.
In some cases, municipalities are also seeking new delivery points in order
to serve retail customers, especially large industrial customers that
currently receive service from an investor-owned utility. Where
successful, these efforts may result in the utility's inability to recover
costs that it has incurred for the purpose of serving those customers.
Utility mergers and joint ventures involving domestic and overseas
companies are another continuing trend in the transition to competition.
In some areas of the country, utilities have either sold or are attempting
to sell all or a substantial portion of their generation assets to focus
their businesses on transmission and/or distribution services. FERC is
currently advocating the creation by utilities of arrangements under which
their transmission systems will be operated independently and on a regional
basis.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Accounting Issues
Continued Application of SFAS 71
The domestic utility companies' and System Energy's financial
statements currently reflect, for the most part, assets and costs based on
existing cost-based ratemaking 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 for the foreseeable future. The electric
utility industry's movement toward a combination of competition and a
modified regulatory environment could result in rates that are not based on
cost of service. 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 remove regulatory assets and liabilities from its balance
sheet.
Definitive outcomes have not yet been determined regarding the
transition to competition filings in Entergy's jurisdictions; therefore,
the regulated operations continue to apply SFAS 71. Discontinuation of the
application of SFAS 71 could have a material adverse impact on Entergy's
financial statements. The application of SFAS 71 is discussed more
thoroughly in Note 1 to the financial statements.
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.
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.
Management has completed its inventory of IT and non-IT assets, has
identified systems and equipment that could be affected by the millennium
change, and has assessed the risk of potential failure for most of 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 assets that significantly affect
operations is scheduled to be substantially complete by the end of the
first quarter of 1999, and is on schedule and approximately 77% complete as
of January 31, 1999. Certification will continue for assets that do not
significantly affect operations, but do impact efficiency and
profitability, throughout 1999.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Management is currently performing an assessment of its vendors that
affect Entergy's operations with respect to Year 2000 issues. Entergy's
goal is to receive written confirmation of the Year 2000 compliance of its
critical vendors. Alternative suppliers or contingency plans will be
considered for those suppliers that do not demonstrate sufficient Year 2000
readiness. Management will implement Year 2000 contingency plans for
suppliers throughout 1999.
Maintenance or modification costs associated with Year 2000 compliance
will be expensed as incurred, while the costs of new software will be
capitalized and amortized over the software's useful life. Management's
current estimate of maintenance and modification costs related to Year 2000
issues to be incurred in 1998 through mid-2000 is approximately
$54 million. Entergy has incurred approximately $26 million of this total
through January 1999. The sales of Entergy London and CitiPower in December
1998 decreased estimated expenses from $81 million at September 30, 1998 to
the $54 million mentioned above. 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 $11 million of this total through
January 1999.
An independent consultant has been engaged to assist management in its
assessment of the risks of Year 2000 malfunctions. This assessment is
currently in progress. Based on the risk determinations of this
assessment, and the results of certification activities, management is
creating and implementing contingency plans, as needed, throughout 1999 to
address Year 2000 issues. 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.
Market Risks
Entergy uses derivative instruments to manage the following market
risks:
o the commodity price risk associated with its power marketing and
trading business;
o the currency exchange rate risk associated with the investment of the
net proceeds of the sale of Entergy London; and
o the interest rate risk associated with certain of its variable rate
credit facilities.
Entergy's power marketing and trading business enters into sales and
purchases of electricity and natural gas for delivery into the future.
Because the market prices of electricity and natural gas can be volatile,
Entergy's power marketing and trading business is exposed to risk arising
from differences between the fixed prices in its commitments and
fluctuating market prices. To mitigate its exposure, Entergy's power
marketing and trading business enters into electricity and natural gas
futures, swaps, option contracts, and electricity forward agreements.
Entergy's power marketing and trading business utilizes a value-at-
risk model to assess the market risk of its derivative financial
instruments. Value-at-risk represents the potential loss for an instrument
or portfolio from adverse changes in market factors for a specified time
period and confidence level. The value-at-risk was estimated using
historical simulation calculated on a daily basis over a thirty-day period
with a 95% confidence level and a holding period of two business days.
Based on these assumptions, this business's value-at-risk as of December
31, 1998 was not material to Entergy.
Management's calculation of value-at-risk exposure represents an
estimate of reasonably possible net losses that would be recognized on its
portfolio of derivative financial instruments, assuming hypothetical
movements in option contracts. It does not represent the maximum possible
loss or an expected loss that may occur, because actual future gains and
losses will differ from those estimated, based upon actual fluctuations in
market rates, operating exposures, and the timing thereof, and changes in
the portfolio of derivative financial instruments during the year.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
The notes receivable purchased with the proceeds of the Entergy London
sale are denominated in BPS. To hedge currency exposure on these notes
receivable, Entergy entered into currency forward agreements to fix the U.
S. dollar amount that will be received upon maturity of the notes in August
1999. The investment of the sales proceeds and the forward agreements are
discussed more thoroughly in Note 12 to the financial statements.
Entergy uses interest rate swaps to reduce the impact of interest rate
changes on certain variable-rate credit facilities associated with its
global power development business. The interest rate swap agreements
involve the exchange of floating rate interest payments for fixed rate
interest payments over the life of the agreements. These swaps are
discussed more thoroughly in Note 7 to the financial statements.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and comprehensive income, of
retained earnings and paid-in-capital, and of cash flows present fairly, in
all material respects, the financial position of Entergy Corporation and
its subsidiaries at December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 18, 1999
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Entergy Corporation's consolidated net income in 1998 would have
increased as compared to 1997 by approximately 20%, excluding the effects
of the items listed below. This increase was due to increased competitive
business revenues, decreased interest charges, and decreased income taxes,
partially offset by increased operating expenses and decreased domestic
utility electric operating revenues. Net income in 1997 would have
decreased as compared to 1996 by approximately 9%, excluding the effects of
the items below. This decrease was due to decreased earnings from domestic
utility operations, partially offset by increased earnings from competitive
businesses, primarily London Electricity.
1998 1997 1996
(In Millions)
Net income $785.6 $300.9 $490.6
------ ------ ------
Sales and write-downs of investments in 208.9 - -
non-regulated businesses
UK tax rate changes 31.7 64.7 -
UK windfall profits tax - (234.1) -
Power market counterparty default (27.0) - -
Entergy Gulf States rate reserves (a) (129.0) (227.0) -
Radioactive waste facility write-offs 9.3 (26.4) -
Entergy Gulf States Cajun Settlement (b) - 146.6 -
River Bend rate deferrals write-off - - (174.0)
River Bend litigation accrual reversal - - 30.0
------ ------- ------
$691.7 $577.1 $634.6
====== ======= ======
(a) The effects of the Entergy Gulf States rate
reserves in 1997 are reflected in the financial
statement categories of domestic electric
revenues (See other revenue herein), other
income, and income taxes.
(b) The effects of the Entergy Gulf States Cajun
Settlement in 1997 are reflected in the
financial statement categories of domestic
electric revenues (See other revenue herein),
other operation and maintenance expenses, other
income, and income taxes.
Note: The items included in the table above are
identified based on judgment of management.
Factors that management considers in identifying
these items include significance, infrequency,
unusual nature, and effect on cash flow.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Revenues and Sales
Domestic Utility Companies and System Energy
The changes in electric operating revenues for Entergy's domestic
utility companies and System Energy for 1998 compared to 1997, and 1997
compared to 1996, are as follows:
Increase/(Decrease)
Description 1998 1997
(In Millions)
Base revenues ($290.3) ($160.1)
Rate riders (108.6) (3.6)
Fuel cost recovery (80.6) 90.1
Sales volume/weather 187.3 31.3
Other revenue (including unbilled) (191.0) 146.8
Sales for resale 80.7 (16.6)
------- ------
Total ($402.5) $87.9
======= ======
Base revenues
In 1998, base revenues decreased primarily due to base rate
reductions, reserves for refunds, and other regulatory adjustments totaling
$216.5 million ($129.0 million net of tax) at Entergy Gulf States.
In 1997, base revenues decreased due to reserves recorded at Entergy
Gulf States for potential regulatory adjustments. These adjustments were
based on management's estimates of the financial effect of potential
adverse rulings in connection with the pending rate proceedings in Texas.
These rate reductions and other pending rate proceedings are discussed
in Note 2 to the financial statements.
Rate rider revenues
Rate rider revenues do not affect net income because specific incurred
expenses offset them.
In 1998, rate rider revenues decreased due to the decline in the Grand
Gulf 1 cost recovery rate rider revenues at Entergy Arkansas, reflecting
scheduled reductions in the phase-in plan that was completed in
November 1998. Rate rider revenues also decreased due to reductions
required by the settlement agreement between the APSC and Entergy Arkansas.
The settlement agreement with the APSC is discussed in Note 2 to the
financial statements.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that are offset by specific incurred fuel costs.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1998, fuel cost recovery revenues decreased primarily due to lower
pricing at Entergy Louisiana resulting in a change in generation mix.
In 1997, fuel cost recovery revenues increased due to a PUCT order
that approved recovery of previously under-recovered fuel expenses by
Entergy Gulf States.
Sales volume
In 1998, sales volume increased as a result of significantly warmer
weather at all the domestic utility companies. Entergy established a new
peak usage record for the system on July 8, 1998.
In 1997, sales volume increased primarily due to an increase in sales
to industrial customers, particularly certain cogeneration customers who
purchased replacement electricity from Entergy Gulf States. These
increases were partially offset by the effects of milder weather in 1997.
Other revenue
In 1998, other revenue decreased primarily due to the revenue portion
of the gain recognized in December 1997 on the Cajun Settlement at Entergy
Gulf States, the effect of which was partially offset by regulatory
reserves recorded at Entergy Gulf States in 1997. Other revenue also
decreased due to unfavorable pricing of unbilled revenues resulting from
rate reductions at Entergy Gulf States.
In 1997, other revenue increased principally due to the revenue
portion of the gain recognized on the Cajun Settlement at Entergy Gulf
States, which totaled $154.5 million ($92.0 million net of tax). The
effect of the Cajun Settlement was partially offset by regulatory reserves
recorded at Entergy Gulf States in 1997 of $70 million ($41.6 million net
of tax).
Sales for resale
In 1998, sales for resale increased due to increased sales to non-
associated companies, particularly at Entergy Arkansas, and increased
demand at Entergy Gulf States.
Competitive business revenues
Competitive business revenues increased by $2.4 billion in 1998
primarily due to increased sales volume in the power marketing and trading
business. This business' volume increased dramatically in 1998 due to
increased marketing efforts and significantly warmer weather. The impact
on net income from these revenues was offset by increased power purchased
for resale as discussed in Expenses below.
Competitive business revenues increased by $2.3 billion in 1997
primarily due to the February 1997 acquisition of London Electricity by
Entergy London. London Electricity contributed $1.8 billion of revenues to
Entergy results of operations during the eleven months it was included in
1997. Competitive business revenues also increased due to an increase of
$396 million in power marketing and trading business revenues resulting
from a full year of trading in 1997 as compared to six months in 1996.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Expenses
Operating expenses for 1997 include Entergy London's operating
expenses of $1.7 billion, which are not comparative with 1996. This change
is due to Entergy London's acquisition of London Electricity effective
February 1997.
Purchased power expenses
In 1998, purchased power expenses increased primarily due to
significantly increased power trading by the power marketing and trading
business. The increased trading resulted in a $2.3 billion increase in
purchased power expenses for this business. Additionally, in 1998, the
power marketing and trading business incurred a $44 million ($27 million
net of tax) counterparty default.
In 1997, purchased power expenses increased primarily due to higher
power purchased for resale by the power marketing and trading business
resulting from a full year of trading in 1997 as compared to six months in
1996.
Nuclear refueling outage expenses
In 1997, nuclear refueling outage expenses increased primarily due to
the amortization of previously deferred November 1996 outage expenses at
System Energy. These expenses were amortized over an 18-month period that
began in December 1996. Prior to this outage, such costs were expensed as
incurred. No nuclear refueling outage expenses were incurred at System
Energy in 1996.
Other operation and maintenance expenses
In 1998, other operation and maintenance expenses increased primarily
due to the following:
o The 1997 Cajun Settlement resulted in the transfer of the 30% interest
in River Bend owned by Cajun to Entergy Gulf States. Entergy Gulf
States' operating expenses in 1998 included 100% of River Bend's
operation and maintenance expenses, as compared to 70% of such
expenses for the year ended December 31, 1997.
o Acquisition of security companies whose operation and maintenance
expenses were included in 1998 but not in 1997.
o Transmission expenses for the power marketing and trading business
were higher due to significantly increased power trading sales volume.
These increases in other operation and maintenance expenses were
partially offset by decreased non-refueling outage related contract work
and maintenance performed at Entergy Louisiana in 1997. Operation and
maintenance expenses also decreased at System Energy due to lower contract
labor, materials and supplies expense, and insurance and materials and
supplies refunds.
In 1997, other operation and maintenance expenses excluding Entergy
London decreased primarily due to the Cajun Settlement at Entergy Gulf
States in December 1997, which resulted in a reduction of operation and
maintenance expenses of $72.2 million ($43 million net of tax). This
decrease was partially offset by the $44 million ($26.4 million net of
tax) reserves for the radioactive waste facility deferrals at Entergy
Arkansas, Entergy Gulf States, and Entergy Louisiana.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Depreciation, amortization, and decommissioning
In 1997, depreciation, amortization, and decommissioning expenses
increased principally due to:
o the reduction of the regulatory asset established at System Energy to
defer depreciation associated with the sale and leaseback of a portion
of Grand Gulf 1; and
o increased plant additions and improvements.
Other regulatory charges
In 1998, other regulatory charges increased primarily due to:
o additional accruals of $74.0 million ($45.0 million net of tax) for
the transition cost account at Entergy Arkansas; and
o the decrease in the under-recovery of Grand Gulf 1-related costs at
Entergy Mississippi.
The increase was partially offset by the $15.3 million ($9.3 million
net of tax) reversal of the 1997 reserves for previously deferred
radioactive waste facility costs in December 1998.
The settlement agreement with the APSC established the transition cost
account to collect earnings in excess of an allowed return on equity for
offset against potential stranded costs when retail access is implemented.
Amortization of rate deferrals
In 1998, the increase in operating expenses was partially offset by
the decreased amortization of rate deferrals. The amortization of rate
deferrals decreased because of the completion of phase-in plans at Entergy
Arkansas, Entergy Gulf States, and Entergy Mississippi.
In 1997, rate deferral amortization increased primarily due to greater
Grand Gulf 1 rate deferral amortization at Entergy Arkansas and Entergy New
Orleans, as prescribed in the Grand Gulf 1 rate phase-in plans, and the
December 1997 APSC settlement agreements for Entergy Arkansas.
Other
Other income
In 1998, other income increased primarily due to the following:
o the gains recorded on the sales of Entergy London of $327.3 million
($246.8 million net of tax) and CitiPower of $29.8 million ($19.3
million net of tax); and
o the reserve for regulatory adjustments recorded at Entergy Gulf States
was less in 1998 than in 1997.
These increases in 1998 were partially offset by:
o the $68.6 million ($35.9 million net of tax) loss on the sale of
Efficient Solutions, Inc. in September 1998;
o $32.8 million ($21.3 million net of tax) of write-downs of Entergy's
investments in two Asian projects; and
o interest income related to the Cajun Settlement recorded in December
1997 at Entergy Gulf States.
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1997, other income decreased primarily due to the reserve for
regulatory adjustments of $311 million ($185.4 million net of tax) and the
1996 $50 million ($30 million net of tax) reversal of reserves provided for
the Cajun litigation at Entergy Gulf States. Partially offsetting this
decrease was:
o $19.6 million ($11.6 million net of tax) of interest income related to
the Cajun Settlement recorded in December 1997 at Entergy Gulf States;
and
o the $194 million ($174.0 million net of tax) write-off of River Bend
rate deferrals at Entergy Gulf States in January 1996.
Interest charges
In 1998, interest charges decreased due to the retirement of certain
long-term debt at the domestic utility businesses. This decrease was
partially offset by an increase in the average amount of debt and preferred
securities outstanding during 1998, compared to 1997, at Entergy London.
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 25.3%,
61.0%, and 46.2%, respectively. The effective income tax rate decreased in
1998 principally due to:
o the UK windfall profits tax of $234.1 million at Entergy London
recognized in 1997;
o the tax effects of the Cajun Settlement in 1997;
o recognition of $44 million of deferred tax benefits in 1998 related to
expected utilization of Entergy's capital loss carryforwards; and
o a $31.7 million reduction in taxes because of reductions in the UK
corporation tax rate from 31% to 30% in the third quarter of 1998.
These decreases were partially offset by a reduction in the UK
corporation tax rate from 33% to 31% in 1997, which lowered taxes in 1997
by $64.7 million.
The effective income tax rate increased in 1997 principally due to:
o the $234.1 million UK windfall profits tax at Entergy London;
o the tax effects of the Cajun Settlement; and
o the 1996 write-off at Entergy Gulf States.
These increases were partially offset by a reduction in the UK
corporation tax rate from 33% to 31% in 1997, which lowered taxes by $64.7
million.
Income taxes are discussed in Note 3 to the financial statements.
Preferred Dividend Requirements
In 1997, preferred dividend requirements decreased principally due to
stock redemptions.
<PAGE>
<TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Years Ended December 31,
1998 1997 1996
(In Thousands, Except Share Data)
<S> <C> <C> <C>
Operating Revenues:
Domestic electric $6,136,322 $6,538,831 $6,450,940
Natural gas 115,355 137,345 134,456
Steam products 43,167 43,664 59,143
Competitive businesses 5,199,928 2,819,086 518,987
----------- ---------- ----------
Total 11,494,772 9,538,926 7,163,526
----------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 1,706,028 1,677,041 1,635,885
Purchased power 4,585,444 2,318,811 704,744
Nuclear refueling outage expenses 83,885 73,857 55,148
Other operation and maintenance 1,988,040 1,886,149 1,577,383
Depreciation, amortization, and decommissioning 984,929 980,008 790,948
Taxes other than income taxes 362,153 365,439 353,270
Other regulatory charges (credits) 35,136 (18,545) (47,542)
Amortization of rate deferrals 237,302 421,803 414,969
----------- ---------- ----------
Total 9,982,917 7,704,563 5,484,805
----------- ---------- ----------
Operating Income 1,511,855 1,834,363 1,678,721
----------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 12,465 10,057 9,951
Gain on sales of non-regulated businesses 255,718 27,199 13,818
Write-off of River Bend rate deferrals - - (194,498)
Miscellaneous - net 104,841 (237,107) 123,765
----------- ---------- ----------
Total 373,024 (199,851) (46,964)
----------- ---------- ----------
Interest Charges:
Interest on long-term debt 735,601 797,266 674,532
Other interest - net 65,047 51,624 49,053
Distributions on preferred securities of subsidiaries 42,628 21,319 4,797
Allowance for borrowed funds used
during construction (10,761) (7,937) (8,347)
----------- ---------- ----------
Total 832,515 862,272 720,035
----------- ---------- ----------
Income Before Income Taxes 1,052,364 772,240 911,722
Income Taxes 266,735 471,341 421,159
----------- ---------- ----------
Consolidated Net Income 785,629 300,899 490,563
Preferred and Preference Dividend Requirements of
Subsidiaries and Other 46,560 53,216 70,536
----------- ---------- ----------
Earnings Applicable to Common Stock 739,069 247,683 420,027
Other Comprehensive Income:
Foreign Currency Translation Adjustment 23,078 (91,542) 21,725
----------- ---------- ----------
Comprehensive Net Income $762,147 $156,141 $441,752
=========== ========== ==========
Earnings per average common share:
Basic and diluted $3.00 $1.03 $1.83
Dividends declared per common share $1.50 $1.80 $1.80
Average number of common shares outstanding:
Basic 246,396,469 240,207,539 229,084,241
Diluted 246,572,481 240,347,292 229,249,574
See Notes to Financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Consolidated net income $785,629 $300,899 $490,563
Noncash items included in net income:
Gain on Cajun Settlement - (246,022) -
Write-off of River Bend rate deferrals - - 194,498
Reserve for regulatory adjustments 130,603 381,285 -
Amortization of rate deferrals 237,302 421,803 414,969
Other regulatory charges 35,136 (18,545) (47,542)
Depreciation, amortization, and decommissioning 984,929 980,008 790,948
Deferred income taxes and investment tax credits (64,563) (252,955) 76,920
Allowance for equity funds used during construction (12,465) (10,057) (9,951)
Gain on sale of non-regulated businesses (255,718) (27,199) (13,818)
Changes in working capital, net of effects from dispositions:
Receivables 24,176 (99,411) (30,322)
Fuel inventory 28,439 20,272 (17,220)
Accounts payable 31,229 181,243 4,011
Taxes accrued 58,505 143,151 (27,488)
Interest accrued (37,937) (9,849) 7,176
Other working capital accounts 24,216 (130,715) (121,692)
Changes in other regulatory assets (13,684) 28,016 (85,051)
Provision for estimated losses and reserves (133,880) (22,423) 31,063
Decommissioning trust contributions and realized change in trust assets (73,641) (68,139) (52,204)
Proceeds from settlement of Cajun litigation - 102,299 -
Other (69,219) 50,971 (76,811)
---------- ---------- ----------
Net cash flow provided by operating activities 1,679,057 1,724,632 1,528,049
---------- ---------- ----------
Investing Activities:
Construction/capital expenditures (1,143,612) (847,223) (571,890)
Allowance for equity funds used during construction 12,465 10,057 9,951
Nuclear fuel purchases (102,747) (89,237) (123,929)
Proceeds from sale/leaseback of nuclear fuel 128,210 144,442 109,980
Proceeds from sale of businesses 2,275,014 54,153 39,398
Acquisition of non-regulated businesses (41,776) (2,039,370) (1,239,112)
Purchase of notes receivable (947,444) - -
Other (43,238) (15,966) 1,245
---------- ---------- ----------
Net cash flow provided by (used in) investing activities 136,872 (2,783,144) (1,774,357)
---------- ---------- ----------
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Financing Activities:
Proceeds from the issuance of:
Long-term debt 1,904,074 2,047,282 1,538,372
Preferred securities of subsidiary trusts and partnerships - 382,323 125,963
Common stock 19,341 305,379 118,087
Retirement of long-term debt (3,151,680) (751,669) (1,022,685)
Repurchase of common stock (2,964) - -
Redemption of preferred stock (17,481) (124,367) (157,503)
Changes in short-term borrowings - net 205,412 142,025 (24,981)
Preferred stock dividends paid (46,809) (51,270) (70,536)
Common stock dividends paid (373,441) (438,183) (405,346)
---------- ---------- ----------
Net cash flow provided by (used in) financing activities (1,463,548) 1,511,520 101,371
---------- ---------- ----------
Effect of exchange rates on cash and cash equivalents 1,567 (11,164) 50
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 353,948 441,844 (144,887)
Cash and cash equivalents at beginning of period 830,547 388,703 533,590
---------- ---------- ----------
Cash and cash equivalents at end of period $1,184,495 $830,547 $388,703
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $842,269 $831,307 $691,617
Income taxes $273,935 $390,238 $373,247
Noncash investing and financing activities:
Capital lease obligation incurred - - $16,358
Change in unrealized appreciation of
decommissioning trust assets $46,325 $30,951 $7,803
Acquisition of nuclear fuel - - $47,695
Treasury shares issued to acquire security business - $21,464 -
Net assets acquired from Cajun settlement - $319,056 -
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $386,764 $85,067
Temporary cash investments - at cost,
which approximates market 797,731 700,431
Special deposits - 45,049
----------- -----------
Total cash and cash equivalents 1,184,495 830,547
Notes receivable 959,329 8,157
Accounts receivable:
Customer (less allowance for doubtful accounts of
$10.3 million in 1998 and $32.8 million in 1997) 270,348 458,085
Other 197,362 225,523
Accrued unbilled revenues 245,350 580,194
Deferred fuel costs 169,589 150,596
Accumulated deferred income taxes 11,329 -
Fuel inventory - at average cost 90,408 119,331
Materials and supplies - at average cost 374,674 367,870
Rate deferrals 37,507 237,302
Prepayments and other 114,886 193,717
----------- -----------
Total 3,655,277 3,171,322
----------- -----------
Other Property and Investments:
Decommissioning trust funds 709,018 589,050
Non-regulated investments 557,347 568,951
Other 221,915 225,818
----------- -----------
Total 1,488,280 1,383,819
----------- -----------
Utility Plant:
Electric 22,704,872 25,310,122
Plant acquisition adjustment - Entergy Gulf States 422,895 439,160
Electric plant under leases 675,309 674,483
Property under capital leases - electric 113,736 134,278
Natural gas 183,621 169,964
Steam products 80,537 82,289
Construction work in progress 911,278 565,667
Nuclear fuel under capital leases 282,595 269,011
Nuclear fuel 29,690 72,875
----------- -----------
Total 25,404,533 27,717,849
Less - accumulated depreciation and amortization 10,075,951 9,585,021
----------- -----------
Utility plant - net 15,328,582 18,132,828
----------- -----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 125,095 162,602
SFAS 109 regulatory asset - net 1,141,318 1,174,187
Unamortized loss on reacquired debt 191,786 196,891
Other regulatory assets 513,333 466,780
Long-term receivables 34,617 36,984
Distribution licenses (net of amortization of $56.7 million in 1997) - 1,813,465
Other 369,735 461,822
----------- -----------
Total 2,375,884 4,312,731
----------- -----------
TOTAL $22,848,023 $27,000,700
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $255,221 $390,674
Notes payable 296,790 428,964
Accounts payable 522,072 915,800
Customer deposits 148,972 178,162
Taxes accrued 284,847 359,996
Accumulated deferred income taxes - 56,524
Interest accrued 185,688 214,763
Dividends declared 7,918 8,166
Obligations under capital leases 176,270 167,700
Other 72,055 81,303
----------- -----------
Total 1,949,833 2,802,052
----------- -----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 3,581,637 4,567,052
Accumulated deferred investment tax credits 565,744 587,781
Obligations under capital leases 220,209 236,000
Other 1,955,965 1,857,514
----------- -----------
Total 6,323,555 7,248,347
----------- -----------
Long-term debt 6,596,617 9,068,325
Subsidiaries' preferred stock with sinking fund 167,523 185,005
Subsidiary's preference stock 150,000 150,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts holding
solely junior subordinated deferrable debentures 215,000 215,000
Company-obligated redeemable preferred securities of subsidiary
partnership holding solely junior subordinated deferrable debentures - 300,000
Shareholders' Equity:
Subsidiaries' preferred stock without sinking fund 338,455 338,455
Common stock, $.01 par value, authorized 500,000,000
shares; issued 246,829,076 shares in 1998 and 246,149,198
shares in 1997 2,468 2,461
Additional paid-in capital 4,630,609 4,613,572
Retained earnings 2,526,888 2,157,912
Cumulative foreign currency translation adjustment (46,739) (69,817)
Less - treasury stock, at cost (208,907 shares in 1998 and
306,852 shares in 1997) 6,186 10,612
----------- -----------
Total 7,445,495 7,031,971
----------- -----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $22,848,023 $27,000,700
=========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS AND PAID-IN CAPITAL
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $2,157,912 $2,341,703 $2,335,579
Add:
Earnings applicable to common stock 739,069 247,683 420,027
Deduct:
Dividends declared on common stock 369,498 432,268 412,250
Capital stock and other expenses 595 (794) 1,653
---------- ---------- ----------
Total 370,093 431,474 413,903
---------- ---------- ----------
Retained Earnings, December 31 $2,526,888 $2,157,912 $2,341,703
========== ========== ==========
Paid-in Capital, January 1 $4,613,572 $4,320,591 $4,201,483
Add:
Gain on reacquisition of
subsidiaries' preferred stock - 273 1,795
Common stock issuances related to stock plans 17,037 292,870 117,560
---------- ---------- ----------
Total 17,037 293,143 119,355
---------- ---------- ----------
Deduct:
Capital stock discounts and other expenses - 162 247
---------- ---------- ----------
Paid-in Capital, December 31 $4,630,609 $4,613,572 $4,320,591
========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1998 (1) 1997 (2) 1996 (3) 1995 1994
(In Thousands, Except Percentages and Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Operating revenues $11,494,772 $ 9,538,926 $ 7,163,526 $ 6,273,072 $ 5,981,820
Consolidated net income $ 785,629 $ 300,899 $ 490,563 $ 562,534 (5) $ 423,559
Earnings per share
Basic and Diluted $ 3.00 $ 1.03 $ 1.83 $ 2.13 (5) $ 1.49
Dividends declared per share $ 1.50 $ 1.80 $ 1.80 $ 1.80 $ 1.80
Return on average common equity 10.71% 3.71% 6.41% 8.11% 5.31%
Book value per share, year-end $ 28.82 $ 27.23 $ 28.51 $ 28.41 $ 27.93
Total assets $22,848,023 $ 27,000,700 $22,956,025 $22,265,930 $22,621,874
Long-term obligations (4) $ 7,349,349 $ 10,154,330 $ 8,335,150 $ 7,484,248 $ 7,817,366
(1) Includes the effects of the sale of London Electricity
and CitiPower in December 1998.
(2) Includes the effects of the London Electricity
acquisition in February 1997.
(3) Includes the effects of the CitiPower acquisition in
January 1996.
(4) Includes long-term debt (excluding currently maturing
debt), preferred and preference stock with sinking
fund, preferred securities of subsidiary trusts and
partnership, and noncurrent capital lease obligations.
(5) Represents income before cumulative effect of
accounting changes.
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Domestic Utility Electric (Dollars In Thousands)
Operating Revenues:
Residential $2,299,317 $2,271,363 $2,277,647 $2,177,348 $2,127,820
Commercial 1,513,050 1,581,878 1,573,251 1,491,818 1,500,462
Industrial 1,829,085 2,018,625 1,987,640 1,810,045 1,834,155
Governmental 172,368 171,773 169,287 154,032 159,840
-----------------------------------------------------------------
Total retail 5,813,820 6,043,639 6,007,825 5,633,243 5,622,277
Sales for resale 440,605 359,881 376,011 334,874 293,702
Other (1)(2) (118,103) 135,311 67,104 119,901 (123,569)
-----------------------------------------------------------------
Total $6,136,322 $6,538,831 $6,450,940 $6,088,018 $5,792,410
=================================================================
Billed Electric Energy
Sales (GWH):
Residential 30,935 28,286 28,303 27,704 26,231
Commercial 23,177 21,671 21,234 20,719 20,050
Industrial 43,453 44,649 44,340 42,260 41,030
Governmental 2,659 2,507 2,449 2,311 2,233
-----------------------------------------------------------------
Total retail 100,224 97,113 96,326 92,994 89,544
Sales for resale 11,187 9,707 10,583 10,471 7,908
-----------------------------------------------------------------
Total 111,411 106,820 106,909 103,465 97,452
=================================================================
(1) 1994 includes the effects of the FERC Settlement, the
1994 NOPSI Settlement, and an Entergy Gulf States reserve
for rate refund.
(2) 1998 includes the effect of a reserve for rate refund at
Entergy Gulf States.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Arkansas, Inc.
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings, and of cash flows present fairly, in all
material respects, the financial position of Entergy Arkansas, Inc. at
December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 18, 1999
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 1998 and 1997 primarily due to decreased
electric operating revenues and recovery of Grand Gulf 1 carrying charges.
These decreases were partially offset by lower interest charges and
operating expenses in 1998 and lower income taxes in 1997.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended
December 31, 1998 and 1997 are as follows:
Increase/(Decrease)
Description 1998 1997
(In Millions)
Base revenues ($7.0) ($8.1)
Rate riders (106.0) 15.4
Fuel cost recovery (21.8) 10.3
Sales volume/weather 55.8 5.9
Other revenue (including unbilled) 11.4 (24.2)
Sales for resale (39.4) (27.0)
------- ------
Total ($107.0) ($27.7)
======= ======
Rate rider revenue
Rate rider revenues do not affect net income because specific incurred
expenses offset them.
In 1998, rate rider revenues decreased primarily due to the decline in
the Grand Gulf 1 cost recovery rate rider revenues. This decline reflects
scheduled reductions in the phase-in plan, which was completed in November
1998, and reductions required by the settlement agreement with the APSC.
In 1997, rate rider revenues increased as a result of increased Grand
Gulf 1 rate rider revenues as a result of warmer weather during the second
half of the year.
The settlement agreement with the APSC is discussed in more detail in
Note 2 to the financial statements.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that are offset by specific incurred fuel costs.
In 1998, fuel cost recovery revenues decreased due to unfavorable
pricing resulting from a change to a fixed fuel factor in January 1998,
partially offset by an increase in generation.
In 1997, fuel cost recovery revenues increased primarily due to a
change in fuel mix as a result of favorable pricing.
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales volume/weather
In 1998, sales volume increased as a result of significantly warmer
weather as compared to 1997.
Other revenue
In 1998, other revenue, primarily unbilled, increased as a result of
significantly warmer weather as compared to 1997.
In 1997, other revenue, primarily unbilled, decreased due to:
o the volume difference in the unbilled beginning of year amount; and
o the $10.6 million impact of a rate reduction implemented in 1997
related to the transition to competition filing with the APSC.
Sales for resale
In 1998, sales for resale decreased primarily due to a decrease in
sales to associated companies as a result of reduced generation due to
outages at both ANO1 and ANO2 and restricted generation due to disruption
in coal deliveries during the second quarter of 1998. This decrease was
partially offset by an increase in sales to non-associated companies as a
result of short-term contracts with certain wholesale customers.
In 1997, sales for resale decreased as a result of a decrease in sales
to associated companies, primarily due to changes in generation
requirements and availability among the domestic utility companies.
Expenses
Fuel and purchased power expenses
In 1998, fuel expenses decreased primarily due to the impact of the
under-recovered deferred fuel cost in excess of the fixed fuel factor
implemented in January 1998, billed to retail customers.
In 1997, fuel and purchased power expenses decreased primarily as a
result of significantly lower prices.
Other regulatory charges
In 1998, other regulatory charges increased as a result of additional
accruals made in 1998 for the transition cost account, partially offset by
a small over-recovery of Grand Gulf 1 related costs and the reversal of the
1997 write-off of previously deferred radioactive waste facility costs.
In 1997, other regulatory charges increased as a result of:
o the recognition of additional regulatory liabilities related to the
APSC settlement agreement; and
o the write-off of previously deferred radioactive waste facility costs.
The settlement agreement with the APSC and the transition cost account
are discussed more thoroughly in Note 2 to the financial statements.
<PAGE>
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Amortization of rate deferrals
In 1998, the amortization of Grand Gulf 1 rate deferrals decreased due
a decrease in the amortization prescribed in the Grand Gulf 1 rate phase-in
plan, which was completed in November 1998.
In 1997, the amortization of Grand Gulf 1 rate deferrals increased due
to an increase in the amortization prescribed in the Grand Gulf 1 rate
phase-in plan.
Other
Other income
Other income decreased in 1998 and 1997 due to reduced Grand Gulf 1
carrying charges as a result of a decline in the deferral balance, which
does not impact net income.
Interest charges
Interest charges decreased in 1998 and 1997 due to the retirement of
certain long-term debt.
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 39%,
31.6% and 34.9%, respectively.
The effective income tax rate increased in 1998 primarily due to the
reversal of previously recorded AFUDC amounts included in depreciation.
The effective income tax rate decreased in 1997 primarily due to the
impact of recording the tax benefit of Entergy Corporation's expenses as
prescribed by the tax allocation agreement.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Revenues $1,608,698 $1,715,714 $1,743,433
---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 204,318 254,703 257,008
Purchased power 419,947 419,128 432,825
Nuclear refueling outage expenses 32,046 27,969 29,365
Other operation and maintenance 358,006 360,860 358,789
Depreciation, amortization, and decommissioning 181,436 166,652 167,878
Taxes other than income taxes 37,223 36,700 37,688
Other regulatory charges 45,658 29,686 18,096
Amortization of rate deferrals 75,249 153,141 131,634
---------- ---------- ----------
Total 1,353,883 1,448,839 1,433,283
---------- ---------- ----------
Operating Income 254,815 266,875 310,150
---------- ---------- ----------
Other Income:
Allowance for equity funds used
during construction 5,921 3,563 3,886
Miscellaneous - net 14,069 18,663 32,591
---------- ---------- ----------
Total 19,990 22,226 36,477
---------- ---------- ----------
Interest Charges:
Interest on long-term debt 86,772 95,122 98,531
Other interest - net 4,813 3,943 6,257
Distributions on preferred securities of subsidiary 5,100 5,100 1,927
Allowance for borrowed funds used
during construction (4,205) (2,261) (2,330)
---------- ---------- ----------
Total 92,480 101,904 104,385
---------- ---------- ----------
Income Before Income Taxes 182,325 187,197 242,242
Income Taxes 71,374 59,220 84,444
---------- ---------- ----------
Net Income 110,951 127,977 157,798
Preferred Dividend Requirements and Other 10,201 10,988 16,110
---------- ---------- ----------
Earnings Applicable to Common Stock $100,750 $116,989 $141,688
========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $110,951 $127,977 $157,798
Noncash items included in net income:
Amortization of rate deferrals 75,249 153,141 131,634
Other regulatory charges 45,658 29,686 18,096
Depreciation, amortization, and decommissioning 181,436 166,652 167,878
Deferred income taxes and investment tax credits (12,293) (77,814) (46,026)
Allowance for equity funds used during construction (5,921) (3,563) (3,886)
Changes in working capital:
Receivables 35,398 9,099 (4,292)
Fuel inventory 8,317 29,150 137
Accounts payable (7,911) (25,451) (1,112)
Taxes accrued (8,742) 23,133 14,035
Interest accrued (3,541) 1,201 (2,615)
Deferred fuel costs (57,435) (9,289) (10,882)
Other working capital accounts (7,050) (931) 3,353
Decommissioning trust contributions and realized
change in trust assets (25,929) (24,956) (30,474)
Provision for estimated losses and reserves 2,032 9,594 4,125
Other 26,897 26,111 (21,191)
-------- -------- --------
Net cash flow provided by operating activities 357,116 433,740 376,578
-------- -------- --------
Investing Activities:
Construction expenditures (190,459) (140,913) (145,529)
Allowance for equity funds used during construction 5,921 3,563 3,886
Nuclear fuel purchases (45,845) (59,104) (26,084)
Proceeds from sale/leaseback of nuclear fuel 42,055 59,065 25,451
-------- -------- --------
Net cash flow used in investing activities (188,328) (137,389) (142,276)
-------- -------- --------
Financing Activities:
Proceeds from issuance of:
First mortgage bonds - 84,064 84,256
Other long-term debt - 45,500 -
Preferred securities of subsidiary trust - - 58,168
Retirement of:
First mortgage bonds (105,774) (117,587) (112,807)
Other long-term debt (45,650) - (1,700)
Redemption of preferred stock (9,000) (9,000) (69,624)
Dividends paid:
Common stock (92,600) (128,600) (142,800)
Preferred stock (10,407) (11,194) (17,736)
-------- -------- --------
Net cash flow used in financing activities (263,431) (136,817) (202,243)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents (94,643) 159,534 32,059
Cash and cash equivalents at beginning of period 203,391 43,857 11,798
-------- -------- --------
Cash and cash equivalents at end of period $108,748 $203,391 $43,857
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $95,050 $ 98,013 $104,651
Income taxes $91,407 $111,394 $110,211
Noncash investing and financing activities:
Capital lease obligations incurred - - $16,358
Acquisition of nuclear fuel - - $27,500
Change in unrealized appreciation of
decommissioning trust assets $26,782 $22,343 $5,968
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
ASSETS
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $9,814 $6,076
Temporary cash investments - at cost,
which approximates market:
Associated companies 15,643 41,389
Other 83,291 110,877
Special deposits - 45,049
---------- ----------
Total cash and cash equivalents 108,748 203,391
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1.8 million in 1998 and 1997) 70,481 71,910
Associated companies 34,502 46,166
Other 4,510 10,282
Accrued unbilled revenues 73,083 89,616
Fuel inventory - at average cost 19,852 28,169
Materials and supplies - at average cost 89,033 79,692
Deferred fuel cost 41,191 -
Rate deferrals - 75,249
Deferred nuclear refueling outage costs 17,787 24,335
Prepayments and other 5,557 8,647
---------- ----------
Total 464,744 637,457
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 11,213 11,213
Decommissioning trust fund 303,286 250,573
Other - at cost (less accumulated depreciation) 5,070 4,939
---------- ----------
Total 319,569 266,725
---------- ----------
Utility Plant:
Electric 4,731,699 4,650,065
Property under capital leases 49,415 53,843
Construction work in progress 201,853 123,087
Nuclear fuel under capital lease 95,589 92,621
---------- ----------
Total 5,078,556 4,919,616
Less - accumulated depreciation and amortization 2,275,170 2,116,826
---------- ----------
Utility plant - net 2,803,386 2,802,790
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 248,275 252,712
Unamortized loss on reacquired debt 51,747 53,780
Other regulatory assets 96,927 79,461
Other 22,003 13,952
---------- ----------
Total 418,952 399,905
---------- ----------
TOTAL $4,006,651 $4,106,877
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $1,094 $60,650
Notes payable 667 667
Accounts payable:
Associated companies 47,963 59,438
Other 79,969 76,405
Customer deposits 25,196 23,437
Taxes accrued 68,585 77,327
Accumulated deferred income taxes 23,137 32,239
Interest accrued 25,285 28,826
Co-owner advances 4,073 7,666
Deferred fuel cost - 16,244
Obligations under capital leases 64,068 62,623
Other 16,183 21,696
---------- ----------
Total 356,220 467,218
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 757,596 759,489
Accumulated deferred investment tax credits 98,768 103,899
Obligations under capital leases 80,936 83,841
Other 264,010 169,884
---------- ----------
Total 1,201,310 1,117,113
---------- ----------
Long-term debt 1,172,285 1,244,860
Preferred stock with sinking fund 22,027 31,027
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 470 470
Additional Paid-in capital 590,134 590,134
Retained earnings 487,855 479,705
---------- ----------
Total 1,194,809 1,186,659
---------- ----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $4,006,651 $4,106,877
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY ARKANSAS, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
Retained Earnings, January 1 $479,705 $491,316 $492,386
Add:
Net income 110,951 127,977 157,798
Increase in investment in subsidiary - - 42
-------- -------- --------
Total 110,951 127,977 157,840
-------- -------- --------
Deduct:
Dividends declared:
Preferred stock 10,201 10,988 16,110
Common stock 92,600 128,600 142,800
-------- -------- --------
Total 102,801 139,588 158,910
-------- -------- --------
Retained Earnings, December 31 (Note 8) $487,855 $479,705 $491,316
======== ======== ========
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1998 1997 1996 1995 1994
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $1,608,698 $1,715,714 $1,743,433 $1,648,233 $1,590,742
Net income $ 110,951 $ 127,977 $ 157,798 $ 136,665(2) $ 142,263
Total assets $4,006,651 $4,106,877 $4,153,817 $4,204,415 $4,292,215
Long-term obligations (1) $1,335,248 $1,419,728 $1,439,355 $1,423,804 $1,446,940
</TABLE>
(1) Includes long-term debt (excluding currently maturing
debt), preferred stock with sinking fund, preferred
securities of subsidiary trust, and noncurrent capital
lease obligations.
(2) Represents income before cumulative effect of
accounting changes.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $562,325 $551,821 $546,100 $542,862 $506,160
Commercial 288,816 332,715 323,328 318,475 307,296
Industrial 330,016 372,083 364,943 362,854 338,988
Governmental 14,640 18,200 16,989 17,084 16,698
---------------------------------------------------------------
Total retail 1,195,797 1,274,819 1,251,360 1,241,275 1,169,142
Sales for resale:
Associated companies 149,603 213,845 248,211 178,885 212,314
Non-associated companies 240,090 215,249 207,887 195,844 182,920
Other 23,208 11,801 35,975 32,229 26,366
---------------------------------------------------------------
Total $1,608,698 $1,715,714 $1,743,433 $1,648,233 $1,590,742
===============================================================
Billed Electric Energy
Sales (GWH):
Residential 6,613 5,988 6,023 5,868 5,522
Commercial 4,773 4,445 4,390 4,267 4,147
Industrial 6,837 6,647 6,487 6,314 5,941
Governmental 233 239 234 243 231
---------------------------------------------------------------
Total retail 18,456 17,319 17,134 16,692 15,841
Sales for resale:
Associated companies 6,500 9,557 10,471 8,386 10,591
Non-associated companies 5,948 6,828 6,720 5,066 4,906
---------------------------------------------------------------
Total 30,904 33,704 34,325 30,144 31,338
===============================================================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Gulf States, Inc.
In our opinion, the accompanying balance sheets and the related statements
of income (loss), of retained earnings, and of cash flows present fairly,
in all material respects, the financial position of Entergy Gulf States,
Inc. at December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 18, 1999
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income in 1998 as compared to 1997 would have increased by
approximately 19%, excluding the special items listed below, due to
decreased operating expenses, partially offset by increased income taxes.
Net income in 1997 as compared to 1996 would have increased approximately
5%, excluding the items listed below, due to an increase in electric
operating revenues.
1998 1997 1996
(In Millions)
Net income (loss) $ 46.4 $ 60.0 $ (3.9)
Rate reserves (a) (129.0) (227.0) -
Cajun Settlement (b) - 146.6 -
Radioactive waste facility write-offs - (7.4) -
River Bend rate deferrals write-off - - (174.0)
River Bend litigation accrual reversal - - 30.0
--------- --------- --------
$ 175.4 $ 147.8 $ 140.1
========= ========= ========
(a) The effects of the rate reserves in 1997 are reflected in the
financial statement categories of electric revenues (See other
revenues herein), other income and income taxes.
(b) The effects of the Cajun Settlement in 1997 are reflected in the
financial statement categories of electric revenues (See other
revenues herein), other operation and maintenance expenses, other
income and income taxes.
Note: The items included in the table above are identified by
management based on judgment. Factors which management considers
in identifying special items include significance, infrequency,
unusual nature, and effect on cash flow.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the twelve months ended
December 31, 1998 and 1997 are as follows:
Increase/(Decrease)
Description 1998 1997
(In Millions)
Base revenues ($228.3) ($103.8)
Fuel cost recovery 1.6 66.8
Sales volume/weather 61.2 46.2
Other revenue (including unbilled) (171.5) 150.0
Sales for resale 53.1 (23.7)
------- ------
Total ($283.9) $135.5
======= ======
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Base revenues
In 1998, base revenues decreased due to base rate reductions and
reserves for refunds to Louisiana and Texas retail customers totaling
$216.5 million ($129.0 million net of tax).
In 1997, base revenues decreased primarily due to the following:
o the reserve for regulatory adjustments;
o the provision for rate reductions implemented for Louisiana retail
customers in November 1996 and February 1997;
o aggressive pricing strategies for targeted customer segments; and
o a change in the sales mix from residential customers to industrial
customers.
The LPSC and PUCT rate issues and the River Bend plant-related costs
are discussed in Note 2 to the financial statements.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that are offset by specific incurred fuel costs.
In 1997, fuel cost recovery revenues increased due to a PUCT order
that approved recovery of under-recovered fuel expenses.
Sales volume
In 1998, sales volume increased due to significantly warmer weather
and an increase in customer base.
In 1997, sales volume increased primarily due to an increase in sales
to industrial customers, particularly certain cogeneration customers who
purchased electricity from Entergy Gulf States for less than their
production cost.
Other revenue
In 1998, other revenue decreased primarily due to the revenue
recognized on the gain on the Cajun Settlement in December 1997 for the
transfer of Cajun's 30% of River Bend, the effect of which was partially
offset by regulatory reserves recorded in 1997. Other revenue also
decreased due to unfavorable pricing of unbilled revenues due to rate
reductions.
In 1997, other revenue increased due to the revenue recognized on the
gain resulting from the Cajun Settlement for transfer of Cajun's 30% of
River Bend, which totaled $154.5 million ($92.0 million net of tax). The
effect of the Cajun Settlement was partially offset by regulatory reserves
recorded at Entergy Gulf States in 1997 of $70 million ($41.6 million net
of tax).
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales for resale
In 1998, sales for resale increased primarily due to additional
revenues related to the sale of energy from the 30% interest in River Bend
transferred by the Cajun bankruptcy trustee to Entergy Gulf States in
December 1997. Sales for resale also increased due to increased sales to
non-associated utilities as a result of increased demand.
In 1997, sales for resale decreased due to decreased sales to both
associated and non-associated companies.
Gas and steam operating revenues
Gas operating revenues decreased in 1998 due to a lower unit price for
gas purchased for resale.
Gas operating revenues increased in 1997 due to an increase in the
fuel factor granted by the LPSC. This increase permits recovery of
previously deferred gas costs. A decrease in steam operating revenues due
to a change in a customer contract in 1997 and an increase in customer
requirements in 1996 offset the increase in gas operating revenues.
Expenses
Fuel and purchased power
In 1998, fuel and purchased power expenses decreased primarily due to
favorable gas and nuclear fuel prices and a shift in the generation mix as
a result of these prices. Continued under-recovery of deferred expenses
also contributed to the decrease in fuel expenses.
In 1997, fuel and purchased power expenses increased due to increased
gas usage and increased energy requirements resulting from higher sales
volume.
Other operation and maintenance expenses
In 1998, other operation and maintenance expenses increased as a
result of the Cajun Settlement in December 1997, pursuant to which the 30%
interest in River Bend owned by Cajun was transferred by the Cajun
bankruptcy trustee to Entergy Gulf States. Entergy Gulf States now
includes 100% of River Bend's operation and maintenance expenses in its
operating expenses, as compared to 70% of such expenses for the year ended
December 31, 1997.
In 1997, other operation and maintenance expenses decreased due to the
Cajun Settlement, which resulted in a reduction of operation and maintenance
expenses of $72.2 million ($43 million net of tax). This decrease was
partially offset by the $12.4 million ($7.4 million net of tax) write-off of
radioactive waste facility costs in December 1997.
Amortization of rate deferrals
In 1998, the amortization of rate deferrals decreased due to the
completion in February of the Louisiana retail phase-in plan for River
Bend.
In 1997, the amortization of rate deferrals increased based on the
LPSC-approved River Bend phase-in plan. The River Bend phase-in plan is
discussed in Note 2 to the financial statements.
<PAGE>
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Other income
In 1998, other income increased due to the 1997 reserve and settlement
discussed below.
In 1997, other income decreased due to the reserve for regulatory
adjustments of $311 million ($185.4 million net of tax) and the 1996 $50
million ($30 million net of tax) reversal of reserves provided for the
Cajun litigation. These decreases were partially offset by interest income
of $19.6 million ($11.6 million net of tax) related to the Cajun Settlement
recorded in December 1997 and the 1996 $194 million ($174 million net of
tax) write-off of River Bend rate deferrals.
Interest charges
Interest charges remained relatively unchanged in 1998. Total
interest expense decreased as a result of the retirement, redemption, or
refinancing of certain long-term debt in 1997 and 1998. This decrease was
offset by an increase in other interest due to the interest component of
the provisions recorded for anticipated rate refunds in Louisiana.
Interest expense decreased in 1997 due to the retirement of long-term
debt.
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 40.6%,
27.2%, and 104.0%, respectively.
The increase in the effective income tax rate in 1998 was due to a
decrease in the flow-through of tax benefits related to operating reserves
and the increased reversal of previously recorded AFUDC amounts included in
depreciation.
The decrease in the effective income tax rate in 1997 was due to a
decrease in regulatory operating reserves, which received flow through
treatment in 1997, and the River Bend SFAS 121 write-down in 1996.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF INCOME (LOSS)
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Revenues:
Electric $1,777,584 $2,061,511 $1,925,988
Natural gas 33,058 42,654 34,050
Steam products 43,167 43,664 59,143
---------- ---------- ----------
Total 1,853,809 2,147,829 2,019,181
---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 538,388 560,104 520,065
Purchased power 317,684 327,037 295,960
Nuclear refueling outage expenses 14,362 10,829 8,660
Other operation and maintenance 411,303 316,253 402,719
Depreciation, amortization, and decommissioning 199,372 214,644 206,070
Taxes other than income taxes 120,782 109,572 102,170
Other regulatory credits (5,485) (26,611) (25,317)
Amortization of rate deferrals 21,749 105,455 96,956
---------- ---------- ----------
Total 1,618,155 1,617,283 1,607,283
---------- ---------- ----------
Operating Income 235,654 530,546 411,898
---------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 2,143 2,211 2,618
Write-off of River Bend rate deferrals - - (194,498)
Miscellaneous - net 16,719 (272,135) 69,841
---------- ---------- ----------
Total 18,862 (269,924) (122,039)
---------- ---------- ----------
Interest Charges:
Interest on long-term debt 149,767 163,146 181,071
Other interest - net 21,016 10,026 12,819
Distributions on preferred securities of subsidiary 7,437 6,901 -
Allowance for borrowed funds used
during construction (1,870) (1,829) (2,235)
---------- ---------- ----------
Total 176,350 178,244 191,655
---------- ---------- ----------
Income Before Income Taxes 78,166 82,378 98,204
Income Taxes 31,773 22,402 102,091
---------- ---------- ----------
Net Income (Loss) 46,393 59,976 (3,887)
Preferred and Preference Dividend Requirements and Other 19,011 23,865 28,505
---------- ---------- ----------
Earnings (Loss) Applicable to Common Stock $27,382 $36,111 ($32,392)
========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income (loss) $46,393 $59,976 ($3,887)
Noncash items included in net income (loss):
Write-off of River Bend rate deferrals - - 194,498
Gain on Cajun Settlement - (246,022) -
Reserve for regulatory adjustments 130,603 381,285 -
Amortization of rate deferrals 21,749 105,455 96,956
Other regulatory credits (5,485) (26,611) (25,317)
Depreciation, amortization, and decommissioning 199,372 214,644 206,070
Deferred income taxes and investment tax credits (29,174) (52,486) 101,380
Allowance for equity funds used during construction (2,143) (2,211) (2,618)
Changes in working capital:
Receivables 43,834 (19,679) 3,691
Fuel inventory 7,426 7,382 (12,868)
Accounts payable (6,135) 16,999 (26,706)
Taxes accrued 7,462 12,171 (1,266)
Interest accrued (2,523) (4,497) (7,186)
Deferred fuel 12,861 (46,254) (68,349)
Other working capital accounts 10,963 (11,765) (70,775)
Decommissioning trust contributions and realized
change in trust assets (11,899) (9,540) (7,436)
Provision for estimated losses and reserves (8,390) (5,852) (1,885)
Proceeds from settlement of Cajun litigation - 102,299 -
Other (358) (8,970) (51,947)
-------- -------- --------
Net cash flow provided by operating activities 414,556 466,324 322,355
-------- -------- --------
Investing Activities:
Construction expenditures (136,960) (132,566) (154,993)
Allowance for equity funds used during construction 2,143 2,211 2,618
Nuclear fuel purchases (1,977) (25,522) (25,124)
Proceeds from sale/leaseback of nuclear fuel 15,932 25,522 26,523
-------- -------- --------
Net cash flow used in investing activities (120,862) (130,355) (150,976)
-------- -------- --------
Financing Activities:
Proceeds from the issuance of:
Long-term debt 21,600 - 780
Preferred securities of subsidiary trust - 82,323 -
Retirement of:
First mortgage bonds (140,000) (132,240) (195,417)
Other long-term debt (72,090) (50,865) (50,425)
Redemption of preferred and preference stock (8,481) (93,367) (10,179)
Dividends paid:
Common stock (109,400) (77,200) -
Preferred and preference stock (19,055) (21,862) (28,336)
-------- -------- --------
Net cash flow used in financing activities (327,426) (293,211) (283,577)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents (33,732) 42,758 (112,198)
Cash and cash equivalents at beginning of period 165,164 122,406 234,604
-------- -------- --------
Cash and cash equivalents at end of period $131,432 $165,164 $122,406
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $173,599 $176,372 $192,196
Income taxes $46,620 $50,477 $285
Noncash investing and financing activities:
Change in unrealized appreciation of
decommissioning trust assets $10,410 $3,939 $1,604
Net assets acquired from Cajun settlement - $319,056 -
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
ASSETS
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $11,629 $10,549
Temporary cash investments - at cost,
which approximates market:
Associated companies 15,696 37,389
Other 104,107 117,226
---------- ----------
Total cash and cash equivalents 131,432 165,164
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1.7 million in 1998 and $1.8 million in 1997) 77,226 99,762
Associated companies 7,554 9,024
Other 28,265 32,837
Accrued unbilled revenues 59,569 74,825
Deferred fuel costs 132,896 145,757
Accumulated deferred income taxes 26,940 22,093
Fuel inventory - at average cost 30,201 37,627
Materials and supplies - at average cost 108,346 104,690
Rate deferrals 9,077 21,749
Prepayments and other 20,495 21,680
---------- ----------
Total 632,001 735,208
---------- ----------
Other Property and Investments:
Decommissioning trust fund 209,771 187,462
Other - at cost (less accumulated depreciation) 177,698 176,953
---------- ----------
Total 387,469 364,415
---------- ----------
Utility Plant:
Electric 7,250,789 7,168,668
Natural Gas 51,053 47,656
Steam products 80,538 82,289
Property under capital leases 54,427 67,946
Construction work in progress 105,085 90,333
Nuclear fuel under capital lease 46,572 54,390
Nuclear fuel - 23,051
---------- ----------
Total 7,588,464 7,534,333
Less - accumulated depreciation and amortization 3,141,483 2,996,147
---------- ----------
Utility plant - net 4,446,981 4,538,186
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 89,333 98,410
SFAS 109 regulatory asset - net 376,406 376,275
Unamortized loss on reacquired debt 42,879 48,417
Other regulatory assets 85,730 86,819
Long-term receivables 34,617 36,984
Other 221,085 203,923
---------- ----------
Total 850,050 850,828
---------- ----------
TOTAL $6,316,501 $6,488,637
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $71,515 $190,890
Accounts payable:
Associated companies 60,932 48,726
Other 91,103 109,444
Customer deposits 31,462 30,311
Taxes accrued 55,780 48,318
Interest accrued 42,631 45,154
Nuclear refueling reserve 16,991 3,386
Obligations under capital leases 34,343 30,280
Other 16,324 17,646
---------- ----------
Total 421,081 524,155
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,113,831 1,124,644
Accumulated deferred investment tax credits 209,477 215,438
Obligations under capital leases 66,656 92,055
Deferred River Bend finance charges 13,127 9,330
Regulatory reserves 511,888 381,285
Other 533,007 532,794
---------- ----------
Total 2,447,986 2,355,546
---------- ----------
Long-term debt 1,631,658 1,702,719
Preferred stock with sinking fund 60,497 68,978
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 114,055 114,055
Additional paid-in capital 1,152,575 1,152,575
Retained earnings 202,205 284,165
---------- ----------
Total 1,520,279 1,602,239
---------- ----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $6,316,501 $6,488,637
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY GULF STATES, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
Retained Earnings, January 1 $284,165 $325,312 $357,704
Add:
Net income (loss) 46,393 59,976 (3,887)
Deduct:
Dividends declared:
Preferred and preference stock 19,011 21,862 28,336
Common stock 109,400 77,200 -
Preferred and preference stock
redemption and other (58) 2,061 169
-------- -------- --------
Total 128,353 101,123 28,505
-------- -------- --------
Retained Earnings, December 31 (Note 8) $202,205 $284,165 $325,312
======== ======== ========
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1998 1997 1996 1995 1994
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $1,853,809 $2,147,829 $2,019,181 $1,861,974 $1,797,365
Net income (loss) $ 46,393 $ 59,976 $ (3,887) $ 122,919 $ (82,755)
Total assets $6,316,501 $6,488,637 $6,421,179 $6,861,058 $6,843,461
Long-term obligations (1) $1,993,811 $2,098,752 $2,226,329 $2,521,203 $2,689,042
</TABLE>
(1) Includes long-term debt (excluding currently maturing
debt), preferred and preference stock with sinking
fund, preferred securities of subsidiary trust, and
noncurrent capital lease obligations.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $605,759 $624,862 $612,398 $573,566 $569,997
Commercial 422,944 452,724 444,133 412,601 414,929
Industrial 704,393 740,418 685,178 604,688 626,047
Governmental 35,930 33,774 31,023 25,042 25,242
----------------------------------------------------------------
Total retail 1,769,026 1,851,778 1,772,732 1,615,897 1,636,215
Sales for resale:
Associated companies 14,172 14,260 20,783 62,431 45,263
Non-associated companies 112,182 59,015 76,173 67,103 52,967
Other (1) (117,796) 136,458 56,300 43,533 (15,244)
----------------------------------------------------------------
Total $1,777,584 $2,061,511 $1,925,988 $1,788,964 $1,719,201
================================================================
Billed Electric Energy
Sales (GWH):
Residential 8,903 8,178 8,035 7,699 7,351
Commercial 6,975 6,575 6,417 6,219 6,089
Industrial 18,158 18,038 16,661 15,393 15,026
Governmental 560 481 438 311 297
----------------------------------------------------------------
Total retail 34,596 33,272 31,551 29,622 28,763
Sales for resale:
Associated companies 1,091 414 656 2,935 1,866
Non-associated companies 2,990 1,503 2,148 2,212 1,650
----------------------------------------------------------------
Total Electric Department 38,677 35,189 34,355 34,769 32,279
================================================================
(1) 1998 and 1994 include the effects of an Entergy Gulf
States reserve for rate refund.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Louisiana, Inc.
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings, and of cash flows present fairly, in all
material respects, the financial position of Entergy Louisiana, Inc. at
December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 18, 1999
<PAGE>
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased in 1998 primarily due to a decrease in operating
expenses, partially offset by a decrease in electric operating revenues and
higher income taxes.
Net income decreased in 1997 primarily due to a decrease in electric
operating revenues and an increase in other operation and maintenance
expenses, partially offset by lower income taxes.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended
December 31, 1998 and 1997 are as follows:
Increase/(Decrease)
Description 1998 1997
(In Millions)
Base revenues ($35.0) ($26.9)
Fuel cost recovery (95.4) 29.7
Sales volume/weather 30.8 (23.8)
Other revenue (including unbilled) (3.2) -
Sales for resale 10.4 (4.6)
------ ------
Total ($92.4) ($25.6)
====== ======
Base revenues
Base revenues decreased in 1998 and 1997 due to base rate reductions
that became effective in the latter parts of 1996 and 1997 and early 1998.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that are offset by specific incurred fuel costs.
In 1998, fuel cost recovery revenues decreased due to lower pricing
resulting in a change in generation mix.
In 1997, fuel cost recovery revenues increased due to shifting
generation requirements as a result of the extended Waterford 3 refueling
outage.
Sales volume/weather
Sales volume increased in 1998 primarily due to significantly warmer
weather. The increase in sales volume was partially offset by the loss of
a large industrial customer as well as substantially lower sales to two
other large industrial customers.
<PAGE>
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales volume decreased in 1997 because of milder weather during the
first half of 1997 and the loss of a large industrial customer, as well as
substantially lower sales to another large industrial customer in 1997 due
to customer cogeneration.
Sales for resale
Sales for resale increased in 1998 as a result of an increase in sales
to associated companies, primarily due to changes in generation
requirements and availability among the domestic utility companies.
Expenses
Fuel and purchased power expenses
In 1998, fuel and purchased power expenses decreased due to:
o lower gas prices;
o a shift in mix to nuclear fuel; and
o shifting generation requirements in 1997 as a result of the extended
refueling outage at the Waterford 3 nuclear plant.
In 1997, fuel and purchased power expenses increased primarily due to
shifting generation requirements resulting from the extended refueling
outage at the Waterford 3 nuclear plant, partially offset by lower fuel
prices.
Other operation and maintenance expenses
Other operation and maintenance expenses decreased in 1998 and
increased in 1997, primarily due to the following:
o non-refueling outage related contract work at Waterford 3 during 1997;
o maintenance performed at Waterford 3 in 1997;
o the write-off of previously deferred radioactive waste facility costs
in 1997; and
o expenses related to fire damage sustained at the Little Gypsy fossil
plant in September 1997.
Other
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 37.8%,
41.1%, and 38.3% respectively.
The effective income tax rate decreased in 1998 primarily due to
accelerated tax depreciation deductions reflecting a shorter tax life on
certain assets.
The effective income tax rate increased in 1997 primarily due to
decreased amortization of deferred income taxes on property fully
depreciated for income tax purposes.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Revenues $1,710,908 $1,803,272 $1,828,867
---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 383,413 429,823 419,331
Purchased power 372,763 413,532 403,322
Nuclear refueling outage expenses 21,740 18,634 15,885
Other operation and maintenance 289,522 318,856 297,667
Depreciation, amortization, and decommissioning 171,723 172,035 167,779
Taxes other than income taxes 70,621 71,558 72,329
Other regulatory charges (credits) (1,755) 5,505 (3,752)
Amortization of rate deferrals - 5,749 19,860
---------- ---------- ----------
Total 1,308,027 1,435,692 1,392,421
---------- ---------- ----------
Operating Income 402,881 367,580 436,446
---------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,887 1,149 862
Miscellaneous - net 4,984 (517) 2,933
---------- ---------- ----------
Total 6,871 632 3,795
---------- ---------- ----------
Interest Charges:
Interest on long-term debt 109,463 116,715 122,604
Other interest - net 7,127 5,885 6,938
Distributions on preferred securities of subsidiary 6,300 6,300 2,870
Allowance for borrowed funds used
during construction (1,729) (1,410) (1,493)
---------- ---------- ----------
Total 121,161 127,490 130,919
---------- ---------- ----------
Income Before Income Taxes 288,591 240,722 309,322
Income Taxes 109,104 98,965 118,560
---------- ---------- ----------
Net Income 179,487 141,757 190,762
Preferred Dividend Requirements and Other 13,014 13,355 19,947
---------- ---------- ----------
Earnings Applicable to Common Stock $166,473 $128,402 $170,815
========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $179,487 $141,757 $190,762
Noncash items included in net income:
Amortization of rate deferrals - 5,749 19,860
Other regulatory charges (credits) (1,755) 5,505 (3,752)
Depreciation, amortization, and decommissioning 171,723 172,035 167,779
Deferred income taxes and investment tax credits 26,910 (15,456) 18,809
Allowance for equity funds used during construction (1,887) (1,149) (862)
Changes in working capital:
Receivables (122) 2,445 (4,889)
Accounts payable (5,878) 9,140 22,838
Taxes accrued (7,040) 17,853 (11,222)
Interest accrued 18,731 (14,678) 5,047
Other working capital accounts 21,513 19,329 (26,831)
Decommissioning trust contributions and realized
change in trust assets (11,648) (11,191) (11,620)
Provision for estimated losses and reserves 6,410 3,986 3,240
Deferred interest-Waterford 3 lease obligation (17,799) 990 (7,138)
Other regulatory assets (19,608) 329 (6,385)
Other (20,473) 4,482 (3,965)
---------- ---------- ----------
Net cash flow provided by operating activities 338,564 341,126 351,671
---------- ---------- ----------
Investing Activities:
Construction expenditures (105,306) (84,767) (103,187)
Allowance for equity funds used during construction 1,887 1,149 862
Nuclear fuel purchases (38,141) (43,332) -
Proceeds from sale/leaseback of nuclear fuel 39,701 43,332 -
---------- ---------- ----------
Net cash flow used in investing activities (101,859) (83,618) (102,325)
---------- ---------- ----------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds 112,556 - 113,994
Preferred securities of subsidiary trust - - 67,795
Retirement of:
First mortgage bonds (150,561) (34,000) (130,000)
Other long-term debt (225) (288) (270)
Redemption of preferred stock - (7,500) (67,824)
Changes in short-term borrowings - net - (31,066) (45,393)
Dividends paid:
Common stock (138,500) (145,400) (179,200)
Preferred stock (13,014) (13,251) (19,072)
---------- ---------- ----------
Net cash flow used in financing activities (189,744) (231,505) (259,970)
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 46,961 26,003 (10,624)
Cash and cash equivalents at beginning of period 49,749 23,746 34,370
---------- ---------- ----------
Cash and cash equivalents at end of period $96,710 $49,749 $23,746
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $98,801 $138,530 $122,370
Income taxes $86,830 $68,323 $125,924
Noncash investing and financing activities:
Acquisition of nuclear fuel - - $32,685
Change in unrealized appreciation of
decommissioning trust assets $5,928 $3,432 $301
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
ASSETS
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $10,187 $5,148
Temporary cash investments - at cost,
which approximates market 86,523 44,601
---------- ----------
Total cash and cash equivalents 96,710 49,749
Accounts receivable:
Customer (less allowance for doubtful accounts
of $1.2 million in 1998 and 1997) 64,098 69,566
Associated companies 20,095 15,035
Other 19,305 7,441
Accrued unbilled revenues 50,540 61,874
Accumulated deferred income taxes 14,176 10,994
Materials and supplies - at average cost 82,220 82,850
Deferred nuclear refueling outage costs 6,498 27,176
Prepayments and other 11,566 10,793
---------- ----------
Total 365,208 335,478
---------- ----------
Other Property and Investments:
Nonutility property 21,627 22,525
Decommissioning trust fund 82,680 65,104
Investment in subsidiary companies - at equity 14,230 14,230
---------- ----------
Total 118,537 101,859
---------- ----------
Utility Plant:
Electric 5,095,278 5,058,130
Property under capital leases 234,339 233,513
Construction work in progress 85,565 52,632
Nuclear fuel under capital lease 75,814 57,811
Nuclear fuel - 1,560
---------- ----------
Total 5,490,996 5,403,646
Less - accumulated depreciation and amortization 2,158,968 2,021,392
---------- ----------
Utility plant - net 3,332,028 3,382,254
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 270,068 278,234
Unamortized loss on reacquired debt 30,629 33,468
Other regulatory assets 49,599 29,991
Other 15,816 14,116
---------- ----------
Total 366,112 355,809
---------- ----------
TOTAL $4,181,885 $4,175,400
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $6,772 $35,300
Accounts payable:
Associated companies 43,051 43,508
Other 90,465 95,886
Customer deposits 55,966 55,331
Taxes accrued 18,203 25,243
Interest accrued 53,302 34,571
Dividends declared 3,253 3,253
Deferred fuel costs 7,798 3,268
Obligations under capital leases 32,539 29,232
Other 4,391 8,578
---------- ----------
Total 315,740 334,170
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 841,775 813,748
Accumulated deferred investment tax credits 128,689 134,276
Obligations under capital leases 43,275 28,579
Deferred interest - Waterford 3 lease obligation - 17,799
Other 103,273 119,519
---------- ----------
Total 1,117,012 1,113,921
---------- ----------
Long-term debt 1,332,315 1,338,464
Preferred stock with sinking fund 85,000 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 1,088,900 1,088,900
Capital stock expense and other (2,321) (2,321)
Retained earnings 74,739 46,766
---------- ----------
Total 1,261,818 1,233,845
---------- ----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $4,181,885 $4,175,400
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY LOUISIANA, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
Retained Earnings, January 1 $46,766 $63,764 $72,150
Add:
Net income 179,487 141,757 190,762
Deduct:
Dividends declared:
Preferred stock 13,014 13,016 17,412
Common stock 138,500 145,400 179,200
Capital stock expenses - 339 2,536
-------- -------- --------
Total 151,514 158,755 199,148
-------- -------- --------
Retained Earnings, December 31 (Note 8) $74,739 $46,766 $63,764
======== ======== ========
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1998 1997 1996 1995 1994
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $1,710,908 $1,803,272 $ 1,828,867 $1,674,875 $1,710,415
Net income $ 179,487 $ 141,757 $ 190,762 $ 201,537 $ 213,839
Total assets $4,181,885 $4,175,400 $ 4,279,278 $4,331,523 $4,435,439
Long-term obligations (1) $1,530,590 $1,522,043 $ 1,545,889 $1,528,542 $1,530,558
(1) Includes long-term debt (excluding currently maturing
debt), preferred stock with sinking fund, preferred
securities of subsidiary trust, and noncurrent capital
lease obligations.
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $598,573 $606,173 $609,308 $583,373 $577,084
Commercial 367,151 379,131 374,515 353,582 358,672
Industrial 597,536 708,356 727,505 641,196 659,061
Governmental 32,795 34,171 33,621 31,616 31,679
---------- ---------- ---------- ---------- ----------
Total retail 1,596,055 1,727,831 1,744,949 1,609,767 1,626,496
Sales for resale:
Associated companies 16,002 3,817 5,065 1,178 352
Non-associated companies 53,538 55,345 58,685 48,987 36,928
Other 45,313 16,279 20,168 14,943 46,639
---------- ---------- ---------- ---------- ----------
Total $1,710,908 $1,803,272 $1,828,867 $1,674,875 $1,710,415
========== ========== ========== ========== ==========
Billed Electric Energy
Sales (GWH):
Residential 8,477 7,826 7,893 7,855 7,449
Commercial 5,265 4,906 4,846 4,786 4,631
Industrial 14,781 16,390 17,647 16,971 16,561
Governmental 481 460 457 439 423
---------- ---------- ---------- ---------- ----------
Total retail 29,004 29,582 30,843 30,051 29,064
Sales for resale:
Associated companies 386 104 143 44 10
Non-associated companies 855 805 982 1,293 776
---------- ---------- ---------- ---------- ----------
Total 30,245 30,491 31,968 31,388 29,850
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy Mississippi, Inc.
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings, and of cash flows present fairly, in all
material respects, the financial position of Entergy Mississippi, Inc. at
December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 18, 1999
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 1998 primarily as a result of an increase in
operating expenses, partially offset by an increase in electric operating
revenues.
Net income decreased in 1997 as a result of a decrease in electric
operating revenues and an increase in other operation and maintenance
expenses, partially offset by lower income taxes.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended
December 31, 1998 and 1997 are as follows:
Increase/(Decrease)
Description 1998 1997
(In Millions)
Base revenues ($10.2) ($7.7)
Grand Gulf rate rider (2.6) (19.0)
Fuel cost recovery 20.5 (14.5)
Sales volume/weather 25.6 3.8
Other revenue (including unbilled) 0.6 (1.6)
Sales for resale 5.0 18.0
----- ------
Total $38.9 ($21.0)
===== ======
Base revenues
In 1998, base revenues decreased due to the formula rate plan
reduction that became effective in 1998. There is discussion of the
formula rate plan reduction in Note 2 to the financial statements.
Grand Gulf rate rider revenues
Rate rider revenues do not affect net income because specific incurred
expenses offset them.
In 1997, as a result of the annual MPSC review, Entergy Mississippi's
Grand Gulf 1 rate rider was decreased based on the estimate of costs for
the next year. Therefore, Grand Gulf 1 rate rider revenues in 1997 were
lower than in 1996.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that are offset by specific incurred fuel costs.
In 1998, fuel cost recovery revenues increased primarily due to the
increase in generation.
In 1997, fuel cost recovery revenues decreased primarily as a result
of an MPSC order, effective May 1, 1997 that changed fuel recovery pricing
to a fixed fuel factor.
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales volume/weather
In 1998, the sales volume increased as a result of significantly
warmer weather.
Sales for resale
In 1997, sales for resale increased as a result of an increase in
sales to associated companies due to changes in generation requirements
and availability among the domestic utility companies.
Expenses
Fuel expenses
In 1998, fuel expenses increased primarily due to:
o the impact of the under-recovery of deferred fuel costs in excess of
the fixed fuel factor applied in 1997. In January 1998, Entergy
Mississippi increased its fixed fuel factor to recover actual fuel
expenses more accurately.
o the increased usage as a result of the change in the fuel mix from
higher priced purchased power to lower-priced fossil fuel.
Purchased power expenses
In 1997, purchased power expenses increased due to:
o the increased usage as a result of the change in the fuel mix from
higher priced fossil fuel to lower priced purchased power; and
o an increase in generation and purchases related to increases in sales
volume and sales for resale.
Other operation and maintenance
In 1997, other operation and maintenance expenses increased primarily
due to:
o increased contract labor as a result of increased maintenance and
plant outage expenses in 1997; and
o increased loss reserves as a result of increased litigation reserves.
Other regulatory credits
In 1998, other regulatory credits decreased primarily due to less
under-recovery of Grand Gulf related expenses in 1998 as compared to 1997.
Amortization of rate deferrals
In 1998, amortization of rate deferrals decreased due to the
completion in September 1998 of the Grand Gulf 1 phase-in plan.
<PAGE>
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 30.9%,
28.6%, and 34.2% respectively.
The effective income tax rate for 1998 increased slightly due to
decreased amortization of excess deferred taxes related to rate deferrals.
The effective income tax rate decreased in 1997 primarily due to the
impact of recording the tax benefit of Entergy Corporation's expenses as
prescribed by the tax allocation agreement.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Revenues $976,300 $937,395 $958,430
-------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses 241,415 199,880 207,116
Purchased power 286,769 285,447 272,812
Other operation and maintenance 130,727 129,812 122,628
Depreciation and amortization 45,133 43,300 40,313
Taxes other than income taxes 44,888 43,142 43,389
Other regulatory credits (3,186) (20,731) (23,026)
Amortization of rate deferrals 104,969 119,797 130,602
-------- -------- --------
Total 850,715 800,647 793,834
-------- -------- --------
Operating Income 125,585 136,748 164,596
-------- -------- --------
Other Income:
Allowance for equity funds used
during construction 188 543 1,143
Miscellaneous - net 4,891 919 1,662
-------- -------- --------
Total 5,079 1,462 2,805
-------- -------- --------
Interest Charges:
Interest on long-term debt 37,756 40,791 44,137
Other interest - net 3,171 4,483 3,870
Allowance for borrowed funds used
during construction (932) (469) (923)
-------- -------- --------
Total 39,995 44,805 47,084
-------- -------- --------
Income Before Income Taxes 90,669 93,405 120,317
Income Taxes 28,031 26,744 41,106
-------- -------- --------
Net Income 62,638 66,661 79,211
Preferred Dividend Requirements and Other 3,370 4,044 5,010
-------- -------- --------
Earnings Applicable to Common Stock $59,268 $62,617 $74,201
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $62,638 $66,661 $79,211
Noncash items included in net income:
Amortization of rate deferrals 104,969 119,797 130,602
Other regulatory credits (3,186) (20,731) (23,026)
Depreciation and amortization 45,133 43,300 40,313
Deferred income taxes and investment tax credits (12,494) (32,204) (32,887)
Allowance for equity funds used during construction (188) (543) (1,143)
Changes in working capital:
Receivables 6,253 2,978 (4,123)
Fuel inventory 384 3,275 20
Accounts payable 14,750 (9,246) 88
Taxes accrued (26,301) 5,832 (2,157)
Interest accrued 323 (6,600) (925)
Other working capital accounts 21,479 (12,283) 4,074
Changes in other regulatory assets (35,774) (18,518) (28,573)
Other (6,241) 17,368 20,492
-------- -------- --------
Net cash flow provided by operating activities 171,745 159,086 181,966
-------- -------- --------
Investing Activities:
Construction expenditures (58,705) (50,334) (85,018)
Allowance for equity funds used during construction 188 543 1,143
-------- -------- --------
Net cash flow used in investing activities (58,517) (49,791) (83,875)
-------- -------- --------
Financing Activities:
Proceeds from the issuance of general and refunding
mortgage bonds 78,703 64,827 -
Retirement of:
General and refunding mortgage bonds (80,000) (96,000) (26,000)
First mortgage bonds - - (35,000)
Other long-term debt (20) (15) (15)
Redemption of preferred stock - (14,500) (9,876)
Changes in short-term borrowings - net (46,717) (3,091) 50,253
Dividends paid:
Common stock (66,000) (59,200) (79,900)
Preferred stock (3,370) (3,998) (5,000)
-------- -------- --------
Net cash flow used in financing activities (117,404) (111,977) (105,538)
-------- -------- --------
Net decrease in cash and cash equivalents (4,176) (2,682) (7,447)
Cash and cash equivalents at beginning of period 6,816 9,498 16,945
-------- -------- --------
Cash and cash equivalents at end of period $2,640 $6,816 $9,498
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $39,291 $50,662 $47,692
Income taxes $64,204 $51,598 $73,687
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
ASSETS
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Assets:
Cash $2,640 $6,816
Accounts Receivable:
Customer (less allowance for doubtful accounts
of $1.2 million in 1998 and $.9 million in 1997) 38,484 36,636
Associated companies 5,703 6,842
Other 1,266 4,139
Accrued unbilled revenues 45,904 49,993
Fuel inventory - at average cost 3,002 3,386
Materials and supplies - at average cost 17,149 17,657
Rate deferrals - 104,969
Prepayments and other 14,364 39,863
---------- ----------
Total 128,512 270,301
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 5,531 5,531
Other - at cost (less accumulated depreciation) 7,069 7,757
---------- ----------
Total 12,600 13,288
---------- ----------
Utility Plant:
Electric 1,718,903 1,687,400
Construction work in progress 35,317 22,960
---------- ----------
Total 1,754,220 1,710,360
Less - accumulated depreciation and amortization 685,214 656,828
---------- ----------
Utility plant - net 1,069,006 1,053,532
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 25,515 22,993
Unamortized loss on reacquired debt 7,981 8,404
Other regulatory assets 100,601 64,827
Other 6,049 6,216
---------- ----------
Total 140,146 102,440
---------- ----------
TOTAL $1,350,264 $1,439,561
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $20 $20
Notes payable - associated companies 445 47,162
Accounts payable:
Associated companies 43,639 36,057
Other 18,444 11,276
Customer deposits 18,265 24,084
Taxes accrued 6,013 32,314
Accumulated deferred income taxes 620 44,277
Interest accrued 14,632 14,309
Other 4,097 2,806
---------- ----------
Total 106,175 212,305
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 279,732 244,464
Accumulated deferred investment tax credits 22,408 23,915
Other 6,236 15,892
---------- ----------
Total 308,376 284,271
---------- ----------
Long-term debt 463,616 464,156
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 199,326 199,326
Capital stock expense and other (59) (59)
Retained earnings 222,449 229,181
---------- ----------
Total 472,097 478,829
---------- ----------
Commitments and Contingencies (Notes 2 and 9)
TOTAL $1,350,264 $1,439,561
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
Retained Earnings, January 1 $229,181 $225,764 $231,463
Add:
Net income 62,638 66,661 79,211
Deduct:
Dividends declared:
Preferred stock 3,370 3,656 4,803
Common stock 66,000 59,200 79,900
Preferred stock expenses - 388 207
-------- -------- --------
Total 69,370 63,244 84,910
-------- -------- --------
Retained Earnings, December 31 (Note 8) $222,449 $229,181 $225,764
======== ======== ========
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1998 1997 1996 1995 1994
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $ 976,300 $ 937,395 $ 958,430 $ 889,843 $ 859,845
Net Income $ 62,638 $ 66,661 $ 79,211 $ 68,667 $ 48,779
Total assets $1,350,264 $1,439,561 $1,521,466 $1,581,983 $1,637,828
Long-term obligations (1) $ 463,616 $ 464,156 $ 406,054 $ 511,613 $ 507,555
</TABLE>
(1) Includes long-term debt (excluding currently maturing
debt).
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $367,895 $342,818 $358,264 $336,194 $332,567
Commercial 284,787 274,195 281,626 262,786 257,154
Industrial 170,910 173,152 185,351 178,466 184,637
Governmental 26,670 26,882 29,093 27,410 27,495
-------- -------- -------- -------- --------
Total retail 850,262 817,047 854,334 804,856 801,853
Sales for resale:
Associated companies 80,357 78,233 58,749 35,928 37,747
Non-associated companies 24,205 21,276 22,814 21,906 16,728
Other 21,476 20,839 22,533 27,153 3,517
-------- -------- -------- -------- --------
Total $976,300 $937,395 $958,430 $889,843 $859,845
======== ======== ======== ======== ========
Billed Electric Energy
Sales (GWH):
Residential 4,800 4,323 4,355 4,233 4,014
Commercial 4,015 3,673 3,508 3,368 3,151
Industrial 3,163 3,089 3,063 3,044 2,985
Governmental 347 333 346 336 330
-------- -------- -------- -------- --------
Total retail 12,325 11,418 11,272 10,981 10,480
Sales for resale:
Associated companies 2,424 1,918 1,368 959 1,079
Non-associated companies 484 412 521 692 512
-------- -------- -------- -------- --------
Total 15,233 13,748 13,161 12,632 12,071
======== ======== ======== ======== ========
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Entergy New Orleans, Inc.
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings, and of cash flows present fairly, in all
material respects, the financial position of Entergy New Orleans, Inc. at
December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 18, 1999
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased slightly in 1998 compared to 1997 primarily due
to an increase in operating revenues and other income and a decrease in
income taxes, partially offset by increased operating expenses.
Net income decreased in 1997 compared to 1996 primarily due to an
increase in taxes other than income taxes, partially offset by lower income
taxes.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the twelve months
ended December 31, 1998 and 1997 are as follows:
Increase/(Decrease)
Description 1998 1997
(In Millions)
Base revenues ($9.8) ($13.6)
Fuel cost recovery 14.5 (2.2)
Sales volume/weather 13.9 (0.8)
Other revenue (including unbilled) 1.0 16.7
Sales for resale 1.7 6.8
----- ----
Total $21.3 $6.9
===== ====
Base revenues
In 1998 and 1997, base revenues decreased primarily due to reductions
in residential and commercial rates that went into effect in August 1997.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are
an increase to revenues that are offset by specific incurred fuel costs.
In 1998, fuel cost recovery revenues increased due to higher fuel
prices and increased generation.
Sales volume/weather
In 1998, sales volume increased primarily due to significantly warmer
weather.
Other revenue
In 1997, other revenue increased as a result of a rate refund recorded
in 1996.
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales for resale
In 1997, sales for resale increased as a result of an increase in
electric sales to associated companies primarily due to changes in
generation requirements and availability among the domestic utility
companies.
Gas operating revenues
Gas operating revenues decreased in 1998 and 1997 primarily due to
lower gas prices.
Expenses
Fuel and purchased power expenses
In 1998, fuel and purchased power expenses increased primarily due to:
o an increase in purchased power primarily due to increased generation
requirements as a result of significantly warmer weather and an
increase in the price of purchased power; and
o an over-recovery of gas and electric fuel cost in 1998 due to market
price fluctuations.
This increase was partially offset by a decrease in the price of gas
purchased for resale.
In 1997, fuel and purchased power expenses decreased primarily due to
a shift from higher priced purchased power to lower priced fuel.
Other operation and maintenance expenses
In 1998, other operation and maintenance expenses increased primarily
due to an increase in environmental reserves, regulatory commission
expense, and administrative and general salaries.
Taxes other than income taxes
In 1997, taxes other than income taxes increased because of higher
franchise taxes resulting from a December 1996 Council order increasing
Entergy New Orleans' annual franchise fee from 2.5% to 5% of gross
revenues.
Other regulatory credits
In 1997, other regulatory credits decreased primarily as a result of
the 1996 deferral of Entergy New Orleans' portion of the proposed System
Energy rate increase.
The proposed System Energy rate increase is discussed in Note 2 to
the financial statements.
<PAGE>
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Miscellaneous income
Miscellaneous income increased in 1998 primarily due to Entergy New
Orleans' portion of System Fuel's gain on the sale of oil and gas
properties and an increase in interest related to the Grand Gulf 1 Rate
Deferral Plan.
The Grand Gulf 1 Rate Deferral Plan is discussed in Note 2 to the
financial statements.
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 38.4%,
44.0%, and 37.7%, respectively.
The decrease in the effective income tax rate for 1998 was primarily
due to a tax benefit recorded in 1998 related to a depreciation adjustment.
The increase in the effective income tax rate for 1997 was primarily
due to decreased amortization in 1997 of deferred income taxes on property
fully depreciated for federal income tax purposes.
Income taxes are discussed more thoroughly in Note 3 to the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Revenues:
Electric $431,453 $410,131 $403,254
Natural gas 82,297 94,691 101,023
-------- -------- --------
Total 513,750 504,822 504,277
-------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 138,142 141,902 129,059
Purchased power 164,435 156,542 176,450
Other operation and maintenance 79,023 72,748 71,421
Depreciation and amortization 21,878 21,107 20,007
Taxes other than income taxes 40,417 38,964 27,388
Other regulatory credits (4,540) (6,394) (13,543)
Amortization of rate deferrals 35,336 37,662 35,917
-------- -------- --------
Total 474,691 462,531 446,699
-------- -------- --------
Operating Income 39,059 42,291 57,578
-------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 284 380 321
Miscellaneous - net 1,409 (77) 1,146
-------- -------- --------
Total 1,693 303 1,467
-------- -------- --------
Interest Charges:
Interest on long-term debt 13,717 13,918 15,268
Other interest - net 1,075 1,369 1,036
Allowance for borrowed funds used
during construction (219) (286) (252)
-------- -------- --------
Total 14,573 15,001 16,052
-------- -------- --------
Income Before Income Taxes 26,179 27,593 42,993
Income Taxes 10,042 12,142 16,217
-------- -------- --------
Net Income 16,137 15,451 26,776
Preferred Dividend Requirements and Other 965 965 965
-------- -------- --------
Earnings Applicable to Common Stock $15,172 $14,486 $25,811
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $16,137 $15,451 $26,776
Noncash items included in net income:
Amortization of rate deferrals 35,336 37,662 35,917
Other regulatory credits (4,540) (6,394) (13,543)
Depreciation and amortization 21,878 21,107 20,007
Deferred income taxes and investment tax credits (7,498) (1,957) (12,274)
Allowance for equity funds used during construction (284) (380) (321)
Changes in working capital:
Receivables 3,743 (1,260) 832
Accounts payable (4,136) 540 (5,638)
Interest accrued (130) (276) 214
Other working capital accounts (3,060) (14,082) (9,566)
Other regulatory assets (6,964) 7,365 (5,942)
Other (9,557) (9,188) 7,544
-------- -------- --------
Net cash flow provided by operating activities 40,925 48,588 44,006
-------- -------- --------
Investing Activities:
Construction expenditures (21,691) (16,137) (27,956)
Allowance for equity funds used during construction 284 380 321
-------- -------- --------
Net cash flow used in investing activities (21,407) (15,757) (27,635)
-------- -------- --------
Financing Activities:
Proceeds from the issuance of general and refunding mortgage bonds 29,438 - 39,608
Retirement of:
First mortgage bonds - (12,000) (23,250)
General and refunding mortgage bonds (30,000) - (30,000)
Dividends paid:
Common stock (9,700) (26,000) (34,000)
Preferred stock (965) (965) (965)
-------- -------- --------
Net cash flow used in financing activities (11,227) (38,965) (48,607)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 8,291 (6,134) (32,236)
Cash and cash equivalents at beginning of period 11,376 17,510 49,746
-------- -------- --------
Cash and cash equivalents at end of period $19,667 $11,376 $17,510
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $14,592 $15,237 $15,609
Income taxes - net $26,197 $10,981 $31,870
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
ASSETS
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $3,769 $4,321
Temporary cash investments - at cost,
which approximates market:
Associated companies 2,514 1,918
Other 13,384 5,137
-------- --------
Total cash and cash equivalents 19,667 11,376
Accounts receivable:
Customer (less allowance for doubtful accounts
of $0.8 million in 1998 and $0.7 million in 1997) 23,594 26,913
Associated companies 806 1,081
Other 3,835 4,155
Accrued unbilled revenues 16,254 16,083
Deferred electric fuel and resale gas costs 1,191 9,384
Materials and supplies - at average cost 8,845 9,389
Rate deferrals 28,430 35,336
Prepayments and other 10,158 6,087
-------- --------
Total 112,780 119,804
-------- --------
Other Property and Investments:
Investment in subsidiary companies - at equity 3,259 3,259
-------- --------
Utility Plant:
Electric 514,685 508,338
Natural gas 132,568 122,308
Construction work in progress 20,184 19,184
-------- --------
Total 667,437 649,830
Less - accumulated depreciation and amortization 371,558 355,854
-------- --------
Utility plant - net 295,879 293,976
-------- --------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 35,762 64,192
Unamortized loss on reacquired debt 1,399 1,435
Other regulatory assets 21,558 14,594
Other 1,267 890
-------- --------
Total 59,986 81,111
-------- --------
TOTAL $471,904 $498,150
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Liabilities:
Accounts payable:
Associated companies $18,283 $15,922
Other 11,008 17,505
Customer deposits 18,082 16,982
Accumulated deferred income taxes 6,031 11,544
Interest accrued 4,919 5,049
Provision for rate refund - 3,108
Other 1,783 7,501
-------- --------
Total 60,106 77,611
-------- --------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 57,467 61,000
Accumulated deferred investment tax credits 6,894 7,396
Accumulated provision for property insurance 11,106 15,487
Other 10,465 16,327
-------- --------
Total 85,932 100,210
-------- --------
Long-term debt 169,018 168,953
Shareholders' Equity:
Preferred stock without sinking fund 19,780 19,780
Common Shareholder's Equity:
Common stock, $4 par value, authorized
10,000,000 shares; issued and outstanding
8,435,900 shares 33,744 33,744
Additional paid-in capital 36,294 36,294
Retained earnings 67,030 61,558
-------- --------
Total 156,848 151,376
-------- --------
Commitments and Contingencies (Notes 2 and 9)
TOTAL $471,904 $498,150
======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
Retained Earnings, January 1 $61,558 $73,072 $81,261
Add:
Net income 16,137 15,451 26,776
Deduct:
Dividends declared:
Preferred stock 965 965 965
Common stock 9,700 26,000 34,000
------- ------- -------
Total 10,665 26,965 34,965
------- ------- -------
Retained Earnings, December 31 (Note 8) $67,030 $61,558 $73,072
======= ======= =======
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1998 1997 1996 1995 1994
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $513,750 $ 504,822 $504,277 $470,278 $447,787
Net Income $ 16,137 $ 15,451 $ 26,776 $ 34,386 $ 13,211
Total assets $471,904 $ 498,150 $549,996 $596,206 $592,894
Long-term obligations (1) $169,018 $ 168,953 $168,888 $155,958 $167,610
</TABLE>
(1) Includes long-term debt (excluding currently maturing debt).
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Electric Operating Revenues:
Residential $164,765 $145,688 $151,577 $141,353 $142,013
Commercial 149,353 143,113 149,649 144,374 162,410
Industrial 26,229 24,616 24,663 22,842 25,422
Governmental 62,332 58,746 58,561 52,880 58,726
-------- -------- -------- -------- --------
Total retail 402,679 372,163 384,450 361,449 388,571
Sales for resale:
Associated companies 10,451 10,342 2,649 3,217 2,061
Non-associated companies 10,590 8,996 9,882 9,864 7,512
Other (1) 7,733 18,630 6,273 15,472 (37,714)
-------- -------- -------- -------- --------
Total $431,453 $410,131 $403,254 $390,002 $360,430
======== ======== ======== ======== ========
Billed Electric Energy
Sales (GWH):
Residential 2,141 1,971 1,998 2,049 1,896
Commercial 2,149 2,072 2,073 2,079 2,031
Industrial 514 484 481 537 518
Governmental 1,037 994 974 983 951
-------- -------- -------- -------- --------
Total retail 5,841 5,521 5,526 5,648 5,396
Sales for resale:
Associated companies 370 316 66 149 92
Non-associated companies 199 160 212 297 202
-------- -------- -------- -------- --------
Total 6,410 5,997 5,804 6,094 5,690
======== ======== ======== ======== ========
(1) 1994 includes the effects of the 1994 NOPSI Settlement.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
System Energy Resources, Inc.
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings, and of cash flows present fairly, in all
material respects, the financial position of System Energy Resources, Inc.
at December 31, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 18, 1999
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased slightly in 1998 and 1997 primarily due to the
increase in other income.
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. System Energy's proposed rate
increase, which is subject to refund, is discussed in Note 2 to the
financial statements.
Expenses
Fuel expenses
In 1998, fuel expenses decreased because of lower generation due to a
scheduled nuclear refueling outage in April and May of this year. There
was no refueling outage in 1997. Grand Gulf I was on-line for 318 days in
1998 as compared with 365 days in 1997, and 322 days in 1996.
Nuclear refueling outage expenses
In 1997, nuclear refueling outage expenses increased due to costs
that were deferred from the November 1996 outage, which were amortized
over an 18-month period that began in December 1996. Prior to this
outage, such costs were expensed as incurred and no such expenses were
incurred in 1996.
Other operation and maintenance expenses
In 1998, other operation and maintenance expenses decreased primarily
because of lower contract labor and materials and supplies expense. Also
contributing to the lower expense were insurance and materials and supplies
refunds.
Depreciation, amortization and decommissioning
In 1997, depreciation, amortization, and decommissioning expenses
increased as a result of the reduction of the regulatory asset established
to defer the depreciation associated with the sale and leaseback in 1989
of a portion of Grand Gulf 1. The depreciation was deferred to match the
collection of lease principal and revenues with the depreciation of the
asset.
Other
Other income
Other income increased in both 1998 and 1997 as a result of the
interest earned on System Energy's investment in the money pool, an inter-
company borrowing arrangement designed to reduce the domestic utility
companies' and System Energy's dependence on external short-term
borrowings.
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Interest charges
Interest charges decreased in both 1998 and in 1997 due primarily to
the retirement and refinancing of higher-cost long-term debt.
Income taxes
The effective income tax rates in 1998, 1997, and 1996 were 42.1%,
42.2%, and 45.4%, respectively.
The decrease in the effective income tax rate for 1997 is primarily
due to the impact of recording the tax benefit of Entergy Corporation's
expenses as prescribed by the tax allocation agreement.
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF INCOME
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Revenues $602,373 $633,698 $623,620
-------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 41,740 48,475 43,761
Nuclear refueling outage expenses 15,737 16,425 1,239
Other operation and maintenance 86,696 101,269 105,453
Depreciation, amortization, and decommissioning 144,275 147,859 128,474
Taxes other than income taxes 26,839 26,477 27,654
Other regulatory charges 4,443 - -
-------- -------- --------
Total 319,730 340,505 306,581
-------- -------- --------
Operating Income 282,643 293,193 317,039
-------- -------- --------
Other Income:
Allowance for equity funds used
during construction 2,042 2,209 1,122
Miscellaneous - net 13,309 8,517 5,234
-------- -------- --------
Total 15,351 10,726 6,356
-------- -------- --------
Interest Charges:
Interest on long-term debt 109,735 121,633 135,376
Other interest - net 6,325 7,020 8,344
Allowance for borrowed funds used
during construction (1,805) (1,683) (1,114)
-------- -------- --------
Total 114,255 126,970 142,606
-------- -------- --------
Income Before Income Taxes 183,739 176,949 180,789
Income Taxes 77,263 74,654 82,121
-------- -------- --------
Net Income $106,476 $102,295 $98,668
======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $106,476 $102,295 $98,668
Noncash items included in net income:
Other regulatory charges 4,443 - -
Depreciation, amortization, and decommissioning 144,275 147,859 128,474
Deferred income taxes and investment tax credits (28,222) (39,370) 48,975
Allowance for equity funds used during construction (2,042) (2,209) (1,122)
Changes in working capital:
Receivables (1,742) (9,543) 3,436
Accounts payable (2,858) 11,172 560
Taxes accrued 1,131 7,852 (4,825)
Interest accrued (300) 8,127 (2,548)
Other working capital accounts (2,230) 19,054 (13,430)
Decommissioning trust contributions and realized
change in trust assets (24,165) (22,452) (21,366)
FERC Settlement - refund obligation (5,141) (4,539) (4,009)
Provision for estimated losses and reserves 66,532 43,216 46,919
Other 7,047 16,684 7,125
-------- -------- --------
Net cash flow provided by operating activities 263,204 278,146 286,857
-------- -------- --------
Investing Activities:
Construction expenditures (30,692) (35,141) (29,469)
Allowance for equity funds used during construction 2,042 2,209 1,122
Nuclear fuel purchases (30,523) (16,524) (44,704)
Proceeds from sale/leaseback of nuclear fuel 30,523 16,524 43,971
-------- -------- --------
Net cash flow used in investing activities (28,650) (32,932) (29,080)
-------- -------- --------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds - - 233,656
Other long-term debt 212,976 - 133,933
Retirement of:
First mortgage bonds (70,000) (10,000) (325,101)
Other long-term debt (230,341) (7,319) (92,700)
Changes in short-term borrowings - net - - (2,990)
Common stock dividends paid (72,300) (113,800) (112,500)
-------- -------- --------
Net cash flow used in financing activities (159,665) (131,119) (165,702)
-------- -------- --------
Net increase in cash and cash equivalents 74,889 114,095 92,075
Cash and cash equivalents at beginning of period 206,410 92,315 240
-------- -------- --------
Cash and cash equivalents at end of period $281,299 $206,410 $92,315
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $107,923 $112,387 $139,596
Income taxes $104,987 $105,621 $36,397
Noncash investing and financing activities:
Change in unrealized appreciation (depreciation) of
decommissioning trust assets $3,205 $1,237 ($70)
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $120 $792
Temporary cash investments - at cost,
which approximates market:
Associated companies 44,458 55,891
Other 236,721 149,727
---------- ----------
Total cash and cash equivalents 281,299 206,410
Accounts receivable:
Associated companies 80,713 79,262
Other 4,431 4,140
Materials and supplies - at average cost 62,203 63,782
Deferred nuclear refueling outage costs 12,853 7,777
Prepayments and other 2,592 3,658
---------- ----------
Total 444,091 365,029
---------- ----------
Other Property and Investments:
Decommissioning trust fund 113,282 85,912
---------- ----------
Utility Plant:
Electric 3,030,764 3,025,389
Electric plant under leases 440,970 440,970
Construction work in progress 57,076 36,445
Nuclear fuel under capital lease 64,621 64,190
---------- ----------
Total 3,593,431 3,566,994
Less - accumulated depreciation and amortization 1,198,266 1,086,820
---------- ----------
Utility plant - net 2,395,165 2,480,174
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 221,996 243,027
Unamortized loss on reacquired debt 57,150 51,386
Other regulatory assets 188,256 192,290
Other 11,265 14,213
---------- ----------
Total 478,667 500,916
---------- ----------
TOTAL $3,431,205 $3,432,031
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
1998 1997
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt $175,820 $70,000
Accounts payable:
Associated companies 25,975 29,131
Other 19,420 19,122
Taxes accrued 76,806 75,675
Interest accrued 42,022 42,322
Obligations under capital leases 41,835 41,977
Other 1,542 1,341
---------- ----------
Total 383,420 279,568
---------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 511,749 562,051
Accumulated deferred investment tax credits 96,695 100,171
Obligations under capital leases 22,786 22,213
FERC Settlement - refund obligation 43,159 48,300
Other 329,457 227,847
---------- ----------
Total 1,003,846 960,582
---------- ----------
Long-term debt 1,159,830 1,341,948
Common Shareholder's Equity:
Common stock, no par value, authorized
1,000,000 shares; issued and outstanding
789,350 shares 789,350 789,350
Retained earnings 94,759 60,583
---------- ----------
Total 884,109 849,933
---------- ----------
Commitments and Contingencies (Notes 2, 9 and 10)
TOTAL $3,431,205 $3,432,031
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $60,583 $72,088 $85,920
Add:
Net income 106,476 102,295 98,668
Deduct:
Dividends declared 72,300 113,800 112,500
------- ------- -------
Retained Earnings, December 31 (Note 8) $94,759 $60,583 $72,088
======= ======= =======
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SYSTEM ENERGY RESOURCES, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
1998 1997 1996 1995 1994
(In Thousands)
<S> <C> <C> <C> <C> <C>
Operating revenues $ 602,373 $ 633,698 $ 623,620 $ 605,639 $ 474,963
Net income $ 106,476 $ 102,295 $ 98,668 $ 93,039 $ 5,407
Total assets $3,431,205 $3,432,031 $3,461,293 $3,431,012 $3,613,359
Long-term obligations (1) $1,182,616 $1,364,161 $1,474,427 $1,264,024 $1,456,993
Electric energy sales (GWH) 8,259 9,735 8,302 7,212 8,653
(1) Includes long-term debt (excluding current maturities) and
noncurrent capital lease obligations.
</TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The accompanying consolidated financial statements include the
accounts of Entergy Corporation and its direct and indirect subsidiaries,
including the domestic utility companies and System Energy, whose separate
financial statements are included in this document. The financial
statements presented herein result from these companies having registered
securities with the SEC.
As required by generally accepted accounting principles, all
significant intercompany transactions have been eliminated. Entergy
Corporation's domestic utility subsidiaries and System Energy maintain
accounts in accordance with FERC and other regulatory guidelines. Certain
previously reported amounts have been reclassified to conform to current
classifications, with no effect on net income or shareholders' equity.
As discussed in Note 12, Entergy Corporation sold its investments in
Entergy London and CitiPower in December 1998. Accordingly, the
consolidated balance sheet does not include amounts for these entities as
of December 31, 1998, and the consolidated statements of income and cash
flows for 1998 include amounts for Entergy London and CitiPower through the
dates of their respective sales.
Use of Estimates in the Preparation of Financial Statements
The preparation of Entergy Corporation and its subsidiaries' financial
statements, in conformity with generally accepted accounting principles,
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities, and the reported amounts of revenues and expenses.
Adjustments to the reported amounts of assets and liabilities may be
necessary in the future to the extent that future estimates or actual
results are different from the estimates used.
Revenues and Fuel Costs
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi generate,
transmit, and distribute electricity (primarily to retail customers) in
Arkansas, Louisiana, and Mississippi, respectively. Entergy Gulf States
generates, transmits, and distributes electricity primarily to retail
customers in Texas and Louisiana; distributes gas at retail primarily in
Baton Rouge, Louisiana; and also sells steam to a large refinery complex in
Baton Rouge. Entergy New Orleans sells both electricity and gas to retail
customers in the City of New Orleans, except for Algiers, where Entergy
Louisiana is the electricity supplier.
System Energy's operating revenues recover operating expenses,
depreciation, and capital costs attributable to Grand Gulf 1 from Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.
Capital costs are computed by allowing a return on System Energy's common
equity funds allocable to its net investment in Grand Gulf 1, plus System
Energy's effective interest cost for its debt allocable to its investment
in Grand Gulf 1. System Energy's proposed rate increase is discussed in
Note 2 to the financial statements.
A portion of Entergy Arkansas' and Entergy Louisiana's purchase of
power from Grand Gulf has not been included in the determination of the
cost of service to retail customers by the APSC and LPSC, respectively, as
described in Note 2.
The domestic utility companies accrue estimated revenues for energy
delivered since the latest billings. The domestic utility companies' rate
schedules include either fuel adjustment clauses or fixed fuel factors,
both of which allow either current recovery or deferral of fuel costs until
such costs are reflected in the related revenues. Fixed fuel factors
remain in effect until changed as part of a general rate case, fuel
reconciliation, or fixed fuel factor filing.
Utility Plant
Utility plant is stated at original cost. The original cost of
utility plant retired or removed, plus the applicable removal costs, less
salvage, is charged to accumulated depreciation. Maintenance, repairs, and
minor replacement costs are charged to operating expenses. Substantially
all of the utility plant is subject to liens from mortgage bond indentures.
Utility plant includes the portions of Grand Gulf 1 and Waterford 3
that have been sold and leased back. For financial reporting purposes,
these sale and leaseback arrangements are reflected as financing
transactions.
Net utility plant by company and functional category, as of December
31, 1998, is shown below (in millions):
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Production
Nuclear $ 7,346 $ 930 $ 2,234 $ 1,931 $ - $ - $ 2,251
Other 1,453 343 626 210 203 9 -
Transmission 1,581 448 482 318 302 21 10
Distribution 3,094 937 825 732 438 162 -
Other 489 100 152 52 91 16 13
Plant acquisition adjustment -
Entergy Gulf States 423 - - - - - -
Other 99 - 31 - - 68 -
Construction Work in Progress 911 202 105 85 35 20 57
Nuclear Fuel 312 96 46 76 - - 64
(leased and owned)
Accumulated Provision for
Decommissioning (1) (379) (253) (54) (72) - - -
-----------------------------------------------------------------------------------
Utility Plant - Net $ 15,329 $ 2,803 $ 4,447 $ 3,332 $ 1,069 $ 296 $ 2,395
===================================================================================
</TABLE>
(1) The decommissioning liability related to the 30% of River Bend
previously owned by Cajun and System Energy's decommissioning
liability are recorded on the respective Balance Sheets in "Deferred
Credits and Other Liabilities - Other".
Depreciation is computed on the straight-line basis at rates based on
the estimated service lives and costs of removal of the various classes of
property. Depreciation rates on average depreciable property are shown
below:
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
1998 3.0% 3.3% 2.6% 3.0% 2.5% 3.1% 3.3%
1997 3.2% 3.1% 2.8% 3.0% 2.5% 3.1% 3.4%
1996 3.0% 3.2% 2.7% 3.0% 2.4% 3.1% 3.3%
</TABLE>
AFUDC represents the approximate net composite interest cost of
borrowed funds and a reasonable return on the equity funds used for
construction. Although AFUDC increases both utility plant and earnings, it
is only realized in cash through depreciation provisions included in rates.
Jointly-Owned Generating Stations
Certain Entergy Corporation subsidiaries jointly own electric
generating facilities with third parties. The investments and expenses
associated with these generating stations are recorded by the subsidiaries
to the extent of their respective undivided ownership interests. As of
December 31, 1998, the subsidiaries' investment and accumulated
depreciation in each of these generating stations were as follows:
<TABLE>
<CAPTION>
Total
Megawatt Accumulated
Generating Stations Fuel Type Capability Ownership Investment Depreciation
(In Millions)
<S> <C> <C> <C> <C> <C> <C>
Entergy Arkansas
Independence Unit 1 Coal 836 31.50% $ 118 $ 50
Common Facilities Coal 15.75% 30 12
White Bluff Units 1 and 2 Coal 1,659 57.00% 399 188
Entergy Gulf States
Roy S. Nelson Unit 6 Coal 550 70.00% 401 187
Big Cajun 2 Unit 3 Coal 540 42.00% 224 99
Entergy Mississippi -
Independence Units 1 and 2 Coal 1,678 25.00% 224 89
System Energy -
Grand Gulf Unit 1 Nuclear 1,200 90.00%(1) 3,454 1,197
Entergy Power -
Independence Unit 2 Coal 842 14.37% 81 30
</TABLE>
(1)Includes an 11.5% leasehold interest held by System Energy. System
Energy's Grand Gulf 1 lease obligations are discussed in Note 10 to the
financial statements.
Income Taxes
Entergy Corporation and its subsidiaries file a U.S. consolidated
federal income tax return. Income taxes are allocated to the subsidiaries
in proportion to their contribution to consolidated taxable income. SEC
regulations require that no Entergy Corporation subsidiary pay more taxes
than it would have paid if a separate income tax return had been filed. In
accordance with SFAS 109, "Accounting for Income Taxes", deferred income
taxes are recorded for all temporary differences between the book and tax
basis of assets and liabilities, and for certain credits available for
carryforward.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion of the
deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Investment tax credits are deferred and amortized based upon the
average useful life of the related property, in accordance with rate
treatment.
Distribution Licenses
Distribution licenses represented the identifiable intangible assets
related to London Electricity and CitiPower that exclusively permit
distribution services to be provided within defined territories. Prior to
the sales of Entergy London and CitiPower, licenses were being amortized
over 40 years using the straight-line method during the periods in 1998,
1997, and 1996 in which Entergy owned these entities.
Reacquired Debt
The premiums and costs associated with reacquired debt of the domestic
utility companies and System Energy (except that allocable to the
deregulated operations of Entergy Gulf States) are being amortized over the
life of the related new issuances, in accordance with ratemaking treatment.
Cash and Cash Equivalents
Entergy considers all unrestricted highly liquid debt instruments
purchased with an original maturity of three months or less to be cash
equivalents.
Investments
Entergy applies the provisions of SFAS 115, "Accounting for
Investments for Certain Debt and Equity Securities", in accounting for
investments in decommissioning trust funds. As a result, Entergy has
recorded on the consolidated balance sheet $99 million of additional value
in the decommissioning trust funds of the domestic utility companies and
System Energy. This increase represents the amount by which the fair value
of the securities held in such funds exceeds the amounts deposited from
rate recovery, plus the related earnings on the amounts deposited. In
accordance with the regulatory treatment for decommissioning trust funds,
Entergy has recorded an offsetting amount in unrealized gains on investment
securities as a regulatory liability in other deferred credits.
Foreign Currency Translation
All assets and liabilities of Entergy's foreign subsidiaries are
translated into U.S. dollars at the exchange rate in effect at the end of
the period. Revenues and expenses are translated at average exchange rates
prevailing during the period. The resulting translation adjustments are
reflected in a separate component of shareholders' equity. Current
exchange rates are used for U.S. dollar disclosures of future obligations
denominated in foreign currencies. No representation is made that the
foreign currency denominated amounts have been, could have been, or could
be converted into U.S. dollars at the rates indicated or at any other
rates.
Earnings per Share
The average number of common shares outstanding for the presentation
of diluted earnings per share for the years 1998, 1997, and 1996 were
greater by approximately 176,000, 140,000, and 165,000 shares,
respectively, than the number of such shares for the presentation of basic
earnings per share due to Entergy's stock option and other stock
compensation plans discussed more thoroughly in Note 5.
Options to purchase approximately 149,000, 225,000, and 235,000 shares
of common stock at various prices were outstanding at the end of 1998,
1997, and 1996, respectively, but were not included in the computation of
diluted earnings per share because the options' exercise prices were
greater than the market price of the common shares at the end of each of
the years presented.
Application of SFAS 71
The domestic utility companies and System Energy currently account for
the effects of regulation pursuant to SFAS 71, "Accounting for the Effects
of Certain Types of Regulation". This statement applies to the financial
statements of a rate-regulated enterprise that meets three criteria. The
enterprise must have rates that (i) are approved by the regulator; (ii) are
cost-based; and (iii) can be charged to and collected from customers.
These criteria may also be applied to separable portions of a utility's
business, such as the generation or transmission functions, or to specific
classes of customers. If an enterprise meets these criteria, it may
capitalize costs that would otherwise be charged to expense if the rate
actions of its regulator make it probable that those costs will be
recovered in future revenue. Such capitalized costs are reflected as
regulatory assets in the accompanying financial statements. SFAS 71
requires that rate-regulated enterprises assess the probability of
recovering their regulatory assets at each balance sheet date. When an
enterprise concludes that recovery of a regulatory asset is no longer
probable, the regulatory asset must be removed from the entity's balance
sheet.
SFAS 101, "Accounting for the Discontinuation of Application of FASB
Statement No. 71", specifies how an enterprise that ceases to meet the
criteria for application of SFAS 71 for all or part of its operations
should report that event in its financial statements. In general, SFAS 101
requires that the enterprise report the discontinuation of the application
of SFAS 71 by eliminating from its balance sheet all regulatory assets and
liabilities related to the applicable segment. Additionally, if it is
determined that a regulated enterprise is no longer recovering all of its
costs and therefore no longer qualifies for SFAS 71 accounting, it is
possible that an impairment may exist that could require further write-offs
of plant assets.
During 1997, EITF 97-4: "Deregulation of the Pricing of Electricity -
Issues Related to the Application of FASB Statements No. 71 and 101" was
issued. This pronouncement specifies that SFAS 71 should be discontinued
at a date no later than when the details of the transition to competition
plan for all or a portion of the entity subject to such plan are known.
However, other factors could cause the discontinuation of SFAS 71 before
that date. Additionally, EITF 97-4 promulgates that regulatory assets to
be recovered through cash flows derived from another portion of the entity
that continues to apply SFAS 71 should not be written off; rather, they
should be considered regulatory assets of the segment that will continue to
apply SFAS 71.
As of December 31, 1998, the majority of the domestic utility
companies' and System Energy's operations continue to meet each of the
criteria required for the use of SFAS 71, and the companies have recorded
significant regulatory assets.
During 1996, FERC issued orders that require utilities to provide open
access to their transmission system to promote a more competitive market
for wholesale power sales. As described in Note 2, the domestic utility
companies have filed transition-to-competition proposals with their retail
regulators providing, among other things, for accelerated recovery of
certain capitalized costs to facilitate an orderly transition to a
competitive retail power market. In response to these filings, certain
regulatory commissions have begun proceedings to consider retail
competition in their jurisdictions.
Regulators, other than in Arkansas, have generally deferred action on
the plans in lieu of their general proceedings on competition. Entergy
cannot, at this time, predict the completion dates or ultimate outcome of
these proceedings. Accordingly, the domestic utility companies and System
Energy anticipate that they will continue to meet the criteria for the
application of SFAS 71 in the foreseeable future.
Domestic Deregulated Operations
Entergy Gulf States discontinued regulatory accounting principles for
its wholesale jurisdiction and its steam department during 1989 and for the
Louisiana retail deregulated portion of River Bend in 1991. The latter was
in accordance with a deregulated asset plan representing an unregulated
portion (approximately 24%) of River Bend (plant costs, generation,
revenues, and expenses) established pursuant to a January 1992 LPSC order.
The plan allows Entergy Gulf States to sell such generation to Louisiana
retail customers at 4.6 cents per KWH or off-system at higher prices, with
certain provisions for sharing such incremental revenue above 4.6 cents per
KWH between ratepayers and shareholders.
The results of these deregulated operations (before interest charges)
for the years ended December 31, 1998, 1997, and 1996 are as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Operating Revenues $ 178,303 $ 155,471 $174,751
Operating Expenses
Fuel, operating, and maintenance 137,579 89,987 119,784
Depreciation 39,497 36,351 31,455
--------- --------- ---------
Total Operating Expense 177,076 126,338 151,239
Income Tax Expense 1,154 9,416 9,598
--------- --------- ---------
Net Income From Deregulated Utility Operations $ 73 $ 19,717 $ 13,914
========= ========= =========
</TABLE>
The net investment associated with these deregulated operations was
approximately $864 million as of December 31, 1998. This amount includes
Cajun's interest in River Bend, which was transferred by Cajun's Trustee in
Bankruptcy to Entergy Gulf States in late 1997 at a fair value of $139
million, based on management's estimate of its value at the time of
transfer.
Impairment of Long-Lived Assets
Entergy periodically reviews long-lived assets whenever events or
changes in circumstances indicate that recoverability of these assets is
uncertain. Generally, the determination of recoverability is based on the
net cash flows expected to result from such operations and assets.
Projected net cash flows depend on the future operating costs associated
with the assets, the efficiency and availability of the assets and
generating units, and the future market and price for energy over the
remaining life of the assets. Based on current estimates of future cash
flows, management anticipates that future revenues from such assets and
operations of Entergy will fully recover all related costs.
Assets regulated under traditional cost-of-service ratemaking, and
thereby subject to SFAS 71 accounting, are generally not subject to
impairment because this form of regulation assures that all allowed costs
are subject to recovery. However, certain deregulated assets and other
operations of the domestic utility companies totaling approximately $1.6
billion (pre-tax) could be affected in the future. Those assets include
Entergy Arkansas' and Entergy Louisiana's retained shares of Grand Gulf 1,
Entergy Gulf States' Louisiana deregulated asset plan, the Texas
jurisdiction abeyed portion of the River Bend plant and the portion of the
plant transferred from Cajun, and wholesale jurisdiction and steam
department operations.
Change in Accounting for Nuclear Refueling Outage Costs (Entergy
Corporation and System Energy)
System Energy filed a rate increase request with FERC in May 1995,
which, among other things, proposed a change in the accounting recognition
of incremental nuclear refueling outage costs from that of expensing those
costs as incurred to deferring and amortizing those costs over the
operating period immediately following the nuclear refueling outage. As
described in Note 2, the FERC ALJ issued an initial decision in this
proceeding in July 1996, agreeing to the change in recognition of outage
costs proposed by System Energy. Accordingly, System Energy deferred the
refueling outage costs incurred in the fourth quarter of 1996. As of
December 31, 1996, System Energy's current assets included $24.0 million in
deferred nuclear refueling outage costs, which were amortized over the next
fuel cycle (approximately 18 months). Amortization of these costs in the
fourth quarter of 1996 and in 1997 and 1998 amounted to $1.2 million, $16.4
million, and $6.4 million, respectively. This change had no material
impact on the net income of either Entergy or System Energy because System
Energy is recovering the refueling outage costs from Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and these
companies, in turn, will recover these costs from their ratepayers.
Derivative Financial Instruments
Entergy uses a variety of derivative financial instruments, including
interest rate and foreign currency swaps, and natural gas and electricity
futures, forwards, and options, as a part of its overall risk management
strategy.
Entergy accounts for derivative financial instruments used to mitigate
risk in accordance with hedge accounting. If such interest rate swap
derivatives were to be sold or terminated, any gain or loss would be
deferred and amortized over the remaining life of the debt instrument being
hedged by the interest rate swap. If the debt instrument being hedged by
the interest rate swaps were to be extinguished, any gain or loss
attributable to the swap would be recognized in the period of the
transaction.
Entergy's power marketing and trading business enters into sales and
purchases of electricity and natural gas for delivery up to 12 months in
the future. Financial instruments used in connection with marketing and
trading activities are accounted for using the mark-to-market method.
Under the mark-to-market method of accounting, derivative financial
instruments are reflected at market value with resulting unrealized gains
and losses recognized currently in income.
Additional information concerning Entergy's derivative instruments
outstanding as of December 31, 1998 is included in Notes 7, 9, and 12 to
the financial statements.
Fair Value Disclosures
The estimated fair value of financial instruments was determined using
bid prices reported by dealer markets and by nationally recognized
investment banking firms. The estimated fair value of derivative financial
instruments is based on market quotes of the applicable interest or foreign
currency exchange rates, or a survey of electricity forward prices.
Considerable judgment is required in developing the estimates of fair
value. Therefore, estimates are not necessarily indicative of the amounts
that Entergy could realize in a current market exchange. In addition,
gains or losses realized on financial instruments held by regulated
businesses may be reflected in future rates and therefore do not accrue to
the benefit or detriment of stockholders.
Entergy considers the carrying amounts of financial instruments
classified as current assets and liabilities to be a reasonable estimate of
their fair value because of the short maturity of these instruments. In
addition, Entergy does not expect that performance of its obligations will
be required in connection with certain off-balance sheet commitments and
guarantees considered financial instruments. For these reasons, and
because of the related-party nature of these commitments and guarantees,
determination of fair value is not considered practicable. Additional
information regarding financial instruments is included in Notes 4, 5, 7,
and 9 to the financial statements.
New Accounting Pronouncements
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," which will be effective for Entergy in
2000. This statement requires that all derivatives be recognized in the
statement of financial position as either assets or liabilities and
measured at fair value. The statement also requires the designation and
reassessment of all hedging relationships. The changes in fair value of
derivatives will be recognized in earnings or in comprehensive income,
depending on the type of hedge relationship involved. The adoption of SFAS
133 is not expected to have a material effect on the financial position,
results of operations, or cash flows of Entergy Corporation.
During 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which will be
effective for Entergy in 1999. This SOP requires that computer software
costs that are incurred in the preliminary project stage be expensed as
incurred. Once the capitalization criteria of the SOP have been met,
external direct cost of materials and services used in developing or
obtaining internal use computer software, as well as payroll and payroll-
related costs of employees (to the extent of time spent directly on
internal use computer software projects), and interest costs incurred in
developing such computer software should be capitalized. Training costs
and data conversion costs should be expensed as incurred, with certain
exceptions. The adoption of SOP 98-1 is not expected to have a material
effect on the financial position, results of operations, or cash flows of
Entergy Corporation.
NOTE 2. RATE AND REGULATORY MATTERS
Retail Rate Proceedings
Filings with the APSC (Entergy Corporation and Entergy Arkansas)
In December 1997, the APSC approved a settlement agreement, which
provides for the following:
o accelerated amortization of Entergy Arkansas' Grand Gulf purchased
power obligation in an amount totaling $165.3 million over the period
from January 1999 to June 2004;
o the establishment of a transition cost account to collect earnings in
excess of an 11% return on equity to offset against stranded costs when
retail access is implemented;
o a rate freeze for at least a three-year period;
o the establishment of four generic dockets to address competition and
transition issues that must be resolved prior to retail access; and
o rate decreases totaling $200 million over the two-year period 1998-
1999. However, the net income effect from these reductions is only
approximately $22 million.
During 1998, Entergy Arkansas' operating expenses reflected reserves of
$74.0 million ($45 million net of taxes) to record the 1998 accrual of
excess earnings and an adjustment of the December 1997 accrual. As of
December 31, 1998, the transition cost account balance was $90.6 million.
Additional reserves may also be required in 1999 based on earnings reviews.
In management's opinion, Entergy Arkansas continues to meet each of the
criteria required for the continued application of SFAS 71. Refer to
"Application of SFAS 71" in Note 1 for a discussion of this issue.
Filings with the PUCT and Texas Cities
Recovery of River Bend Costs (Entergy Corporation and Entergy Gulf States)
In March 1998, the PUCT issued an order disallowing recovery of $1.4
billion of company-wide abeyed River Bend plant costs and approximately
$157 million of Texas retail jurisdiction deferred River Bend operating and
carrying costs (Abeyed Deferrals). Based on its long-lived asset
impairment policy, Entergy Gulf States wrote off Abeyed Deferrals of $169
million, net of tax, effective January 1, 1996. The River Bend plant costs
have been held in abeyance since 1988, during which time they have been the
subject of several appeals by Entergy Gulf States. As of December 31,
1998, such costs (net of taxes and depreciation) totaled approximately $249
million.
Following denial by the PUCT of its motion for rehearing, Entergy Gulf
States has again appealed the PUCT's decision on this matter to the Travis
County District Court in Texas. The settlement agreement discussed below,
if approved, would require that Entergy Gulf States not act on its appeal
before January 1, 2002 and would limit the potential recovery 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. Based on advice of counsel, management believes that
it is probable that the matter will be remanded again to the PUCT for a
further ruling on the prudence of the abeyed plant costs and it is
reasonably possible that some portion of these costs will be included in
rate base. Therefore, management believes that the reserves discussed
below are adequate to reflect the probable outcome of the abeyed plant
costs proceeding, but no assurance can be given that additional future
reserves or write-offs will not be required.
In October 1998, the PUCT issued a final order in the judicial remand
of the PUCT's 1988 decision to require Entergy Gulf States to use tax
benefits generated by disallowed expenses to reduce rates. The PUCT's
order reduced the amount of the requested recovery to $75 million,
primarily by reducing the requested carrying costs based on an overall rate
of return to the amounts allowed for the over- and under-billing for
utility service. This allowed recovery was used to offset the retroactive
rate refund discussed below. Following the overruling of its motion for
rehearing, Entergy Gulf States filed an appeal in November 1998 contending
that the PUCT had improperly reduced its recovery. No assurance can be
given as to the timing or outcome of the appeal. The settlement discussed
below, if approved, would require Entergy Gulf States to dismiss this
appeal.
Rate Proceedings (Entergy Corporation and Entergy Gulf States)
As the result of an investigation of the reasonableness of Entergy
Gulf States' rates, the PUCT in March 1995 ordered an annual base rate
reduction of $36.5 million retroactive to March 31, 1994, which resulted in
a 1995 refund to customers of $61.8 million (including interest). Entergy
Gulf States and other parties have appealed the PUCT order, but no
assurance can be given as to the timing or outcome of the appeal. The
settlement discussed below, if approved, would require Entergy Gulf States
and other signatories to the settlement to dismiss this appeal.
In accordance with the Merger agreement, Entergy Gulf States filed a
rate proceeding with the PUCT in November 1996. In April 1996, certain
cities served by Entergy Gulf States (Cities) instituted investigations of
the reasonableness of Entergy Gulf States' rates. In May 1996, the Cities
agreed to forego their pending investigation based on the assurance that
any rate decrease ordered in the November 1996 filing would be retroactive
to June 1, 1996, with accrued interest until refunded. The agreement
further provided that no base rate increase would be retroactive.
Subsequent to the November 1996 filing, the Cities passed ordinances
reducing Entergy Gulf States' rates by $43.6 million. Entergy Gulf States
appealed these ordinances to the PUCT, and these appeals were consolidated
in the November 1996 rate proceeding before the PUCT. A proposal to
achieve an orderly transition to retail electric competition in Texas,
similar to the filing described below that Entergy Gulf States made with
the LPSC, was included in the November 1996 filing. This filing with the
PUCT was litigated in four phases as follows:
1. fuel factor/fuel reconciliation phase, of which Entergy Gulf States
believes there was an under-recovered fuel balance of $41.4 million,
including interest, for the period from July 1995 to June 1996;
2. revenue requirement phase;
3. cost allocation/rate design phase; and
4. competitive issues phase.
A supplemental filing with respect to the fourth phase was made with the
PUCT in April 1997, outlining a comprehensive market reform proposal
calling for the establishment of retail competition, service quality
standards, a regional power exchange, and an independent system operator.
Entergy Gulf States requested from the PUCT a reciprocal commitment to
provide an opportunity for the full recovery of prudently incurred
investments previously approved by regulators. The rebuttal testimony of
Entergy Gulf States in the competition phase of the case modified its
position to include elements from the 1997 proposed Texas legislation
addressing retail access. Most notable were the provisions calling for a
transition period through the year 2001 and rate reductions for residential
and most commercial customers.
In June 1998, the PUCT began its deliberations on the Entergy Gulf
States' rate case filed in November 1996. The PUCT did not accept
settlements filed in March and June of 1998 by Entergy Gulf States and
various intervenor groups. In July 1998, the PUCT issued an order and,
after making modifications on rehearing, issued its second order on
rehearing in October 1998. The second order on rehearing reduces Entergy
Gulf States' Texas rates by approximately $111 million annually effective
December 18, 1998, offset through May 1999 by accelerated recovery of
accounting order deferrals, resulting in a net reduction of $69 million on
an annual basis through that date. This order also required a refund of
$76 million, subject to a true-up adjustment. This refund is calculated as
a rate reduction and service quality refund retroactive to June 1996,
offset by the accelerated recovery of the accounting order deferrals, a
fuel surcharge, and recovery of amounts allowed in the income tax remand
case discussed above. This refund amount was reduced by $32 million from
the original refund ordered in the July 1998 order, but was offset by the
passage of time from the original rate reduction's assumed effective date
of August 1998 to the new assumed effective date of December 1, 1998.
Entergy Gulf States filed a motion for reconsideration, which was overruled
by the PUCT. The refunds pursuant to the PUCT's order began in August 1998
and the ordered rate decrease was implemented in December 1998. Entergy
Gulf States has appealed the PUCT's October 1998 order on rehearing, but no
assurance can be given as to the timing or outcome of the appeal. The
settlement discussed below, if approved, would require Entergy Gulf States
to dismiss this appeal. During 1997 and 1998, Entergy Gulf States'
operating revenues reflected reserves of $381 million ($227 million net of
taxes) and $114.3 million ($68.1 million net of taxes), respectively, which
were recorded based on management's estimates of the probable outcome of
the rate case and abeyed plant cost proceedings.
In the PUCT's October 1998 second order on rehearing, the PUCT also
disallowed recovery of approximately $49 million of Entergy's affiliate
costs allocated to Entergy Gulf States in Texas. Entergy's affiliate costs
principally result from:
o managing fossil and nuclear generating plants;
o managing transmission and distribution systems;
o providing human resources, accounting, and legal services; and
o providing other necessary services to Entergy Corporation's electric
utility subsidiaries.
The PUCT has published proposed "Code of Conduct" rules governing
affiliate transactions. Although these rules have not been adopted,
management believes that the rules, if adopted as proposed, would severely
restrict the type and extent of services that Entergy's service companies
could provide to Entergy Gulf States. Management believes that adoption of
these rules would result in higher costs for Entergy Gulf States and its
Texas and Louisiana customers. Other state or local regulators with
jurisdiction over Entergy's utility subsidiaries may propose similar rules
in the future. Legislation currently pending in Texas and Arkansas also
includes provisions governing affiliate transactions or the competitive use
of information obtained in the course of the regulated utility business.
In November 1998, Entergy Gulf States filed a new rate application
with the PUCT requesting the approval of tariffs and riders designed to
collect a total non-fuel base rate revenue requirement for the Texas retail
jurisdiction of $457.2 million based on the test year ended June 30, 1998.
In December 1998, Entergy Gulf States updated this filing to reflect the
base rate revenues from the PUCT's October 1998 second order on rehearing
in its cost of service study. In the update, Entergy Gulf States agreed to
cap the base rate revenue requirement at the level proposed in the initial
filing. The modified filing seeks an annualized base rate increase of
$84.6 million through January 31, 2000 and $95.5 million thereafter.
Management cannot predict the ultimate outcome of this rate proceeding.
On February 1, 1999, Entergy Gulf States entered into a settlement
agreement with all but one of the parties to Entergy Gulf States' pending
Texas rate proceeding. If approved, the settlement agreement would resolve
the pending approval of Entergy Gulf States' 1996 rate proceedings as well
as its 1998 rate proceedings and all pending appeals in other matters,
except for the appeal in the River Bend 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 reduced fixed fuel factor, effective March 1, 1999;
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;
o remaining River Bend accounting order deferrals as of January 1, 1999,
are to be amortized 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 relating to Entergy Gulf States'
proceedings with the PUCT, except the River Bend appeal discussed below;
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.
On February 19, 1999, the PUCT approved the implementation of new rates
consistent with the terms of the settlement agreement on an interim basis,
pending final approval of the settlement agreement. The new rates were
made effective on March 1, 1999. The PUCT will hold a hearing on the
settlement agreement on April 13, 1999, and a final decision is expected in
May 1999. Management cannot predict the likelihood that the PUCT will
approve the settlement agreement.
PUCT Fuel Cost Review (Entergy Corporation and Entergy Gulf States)
In December 1995, Entergy Gulf States filed a fuel and purchased power
reconciliation filing with the PUCT to recover $22.4 million, including
interest, of fuel under-recoveries incurred during the period from January
1994 through June 1995. The PUCT issued an order on rehearing approving
the recovery of $18.5 million of the under-recovered fuel balance. Entergy
Gulf States has appealed portions of the PUCT's order to the Texas District
Court. No assurance can be given as to the timing or outcome of these
appeals. The settlement agreement discussed above, if approved, would
require Entergy Gulf States to dismiss this appeal.
In September 1998, Entergy Gulf States filed an application with the
PUCT for an increase in its fixed fuel factor and a surcharge to Texas
retail customers for the cumulative under-recovery of fuel and purchased
power costs. The proposed increase in the fixed fuel factor would have
resulted in increased revenues of $55.6 million annually compared to the
then current fixed fuel factor. The proposed surcharge was designed to
recover $128.1 million, including interest, for fuel under-recoveries
incurred during the period from July 1996 through June 1998. Hearings on
this application were held in October 1998, and the PUCT issued an order in
December 1998. The PUCT's order adopted the terms of a non-unanimous
stipulation whereby a revised fuel factor and fuel surcharge would be
implemented that would result in increased revenues of $42.4 million
annually and 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. As discussed
above, Entergy Gulf States has entered into a settlement agreement in its
pending base rate proceeding under which the fixed fuel factor will be
reduced effective March 1, 1999 and will be adjusted thereafter on a semi-
annual basis. This fuel factor reduction was approved by the PUCT on an
interim basis on February 18,1999. All amounts at issue in this proceeding
will be the subject of a future fuel reconciliation proceeding before the
PUCT, at which time the PUCT will consider the reasonableness of the
Entergy Gulf States' fuel and purchased power expenses extending back to
July 1, 1996. Management cannot predict the ultimate outcome of the fuel
reconciliation proceeding.
NISCO Unrecovered Costs (Entergy Corporation and Entergy Gulf States)
In 1986, the PUCT ordered that the purchased power costs from NISCO in
excess of Entergy Gulf States' avoided costs be disallowed. The PUCT
disallowance resulted in approximately $12 million to $15 million of
unrecovered purchased power costs on an annual basis, which Entergy Gulf
States continued to expense as the costs were incurred. In April 1991, the
Texas Supreme Court ordered the PUCT to allow Entergy Gulf States to
recover reasonable and necessary purchased power payments in excess of its
avoided cost in future proceedings. Based on a January 1992 filing by
Entergy Gulf States requesting a new fixed fuel factor and a final
reconciliation of fuel and purchased power costs incurred between December
1986 and September 1991, the PUCT in June 1993 concluded that purchased
power costs from NISCO in excess of Entergy Gulf States' avoided costs were
not reasonably incurred. In October 1993, Entergy Gulf States appealed the
PUCT's order to the Travis County District Court where the matter is still
pending. As of December 31, 1998, Entergy Gulf States had recorded $200.2
million of unrecovered purchased power costs and deferred revenue pending
the appeal to the District Court. No assurance can be given as to the
timing or outcome of the appeal. The settlement agreement discussed above,
if approved, would require Entergy Gulf States to dismiss this appeal.
Filings with the LPSC
(Entergy Corporation and Entergy Gulf States)
Annual Earnings Reviews
In May 1995, Entergy Gulf States filed its second required post-Merger
earnings analysis with the LPSC. Hearings on this review were held in
December 1995. In October 1996, the LPSC issued an order requiring a $33.3
million annual base rate reduction and a $9.6 million refund. One
component of the rate reduction removes from base rates approximately $13.4
million annually of costs that will be recovered in the future through the
fuel adjustment clause. Subsequently, Entergy Gulf States appealed the
LPSC's order and obtained an injunction to stay the order, except insofar
as it requires the $13.4 million reduction, which Entergy Gulf States
implemented in November 1996. In addition, pursuant to an October 1996
settlement with the LPSC, Entergy Gulf States will be allowed to recover
$8.1 million annually related to certain gas transportation and storage
facilities costs. This amount will be applied as an offset against any
refund that may be required by a final judgment in Entergy Gulf States'
appeal of the second post-Merger earnings review order.
In May 1996, Entergy Gulf States filed its third required post-Merger
earnings analysis with the LPSC. Based on this filing, Entergy Gulf States
implemented a $5.3 million annual rate reduction in June 1996. In
September 1998, the LPSC issued an order in the third required post-Merger
earnings analysis that required a refund of $44.8 million for the period
June 1996 through May 1997, and a prospective rate reduction of $54.6
million effective September 20, 1998. Entergy Gulf States has appealed
this order and has been granted injunctive relief pending a final decision
on appeal.
In May 1997, Entergy Gulf States filed its fourth post-Merger earnings
analysis with the LPSC. Hearings were concluded in 1998 and a final
decision by the LPSC is expected during the first half of 1999.
In May 1998, Entergy Gulf States filed its fifth 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 to
begin in May 1999.
In July 1998, Entergy Gulf States implemented an $18 million rate
reduction effective July 29, 1998 to reflect reductions that are expected
to occur as a result of Entergy Gulf States' annual earnings reviews. In
addition, Entergy Gulf States' operating revenues during the fourth quarter
of 1998 reflect reserves of $102.2 million ($60.9 million net of taxes)
based on management's estimates of the probable outcome of such annual
earnings reviews as well as the LPSC fuel cost review discussed below.
Proceedings on issues in the second, third, fourth and fifth post-Merger
earnings analyses will continue.
LPSC Fuel Cost Review
In September 1996, the LPSC completed the second phase of its review
of Entergy Gulf States' fuel costs, which covered the period October 1991
through December 1994. 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. Pursuant
to this decision, Entergy Gulf States expects to refund the remaining $19.9
million (including interest) in the first quarter of 1999. In 1998,
management reserved for this refund in connection with estimates of the
probable outcome of this proceeding and the annual earnings reviews
discussed above.
(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)
In September 1996, Entergy Gulf States and Entergy Louisiana filed
proposals with the LPSC designed to achieve an orderly transition to retail
electric competition in Louisiana, while protecting certain classes of
ratepayers from bearing the burden of cost shifting. The proposals consist
of the following:
o no increase in rates for any customer class;
o a universal service charge for customers that remain connected to
Entergy Gulf States' or Entergy Louisiana's electric facilities but
choose to purchase their electricity from another source;
o a seven-year base rate freeze in the Louisiana areas serviced by
Entergy Gulf States and Entergy Louisiana; and
o complete recovery, over a seven-year period, of the remaining plant
investment associated with River Bend and Waterford 3 as of December 31,
1995.
In February 1997, the LPSC identified certain issues embodied in the
Entergy Gulf States and Entergy Louisiana proposals that will be addressed
in those companies' existing rate dockets, and other issues that will be
addressed in an ongoing generic regulatory proceeding examining electric
utility industry restructuring. During 1998, hearings were conducted
related to the quantification of potential stranded costs. The ALJ should
issue a recommendation in 1999 for consideration by the LPSC.
During 1998, the LPSC also identified seven areas for consideration in
the generic rulemaking docket on competition in the electric utility
industry to address whether competition in the electric utility industry is
in the public's best interest. Each Louisiana electric utility and
intervening party filed comments and responses to the LPSC Staff's data
requests, and hearings were held on each issue. This proceeding should
produce a generic rulemaking order in 1999.
(Entergy Corporation and Entergy Louisiana)
In May 1997, Entergy Louisiana made its second annual performance-
based formula rate plan filing with the LPSC for the 1996 test year. This
filing resulted in a total rate reduction of approximately $54.5 million,
which was implemented beginning in the first billing cycle of July 1997.
Rates were reduced by an additional $0.7 million effective July 1, 1997,
and by an additional $2.9 million effective March 1998. Upon completion of
the hearing process in December 1998, the LPSC issued an order requiring an
additional rate reduction and refund, although the amounts thereof were not
quantified. Entergy Louisiana has appealed this order, and has obtained a
preliminary injunction pending a final decision on appeal.
In September 1998, Entergy Louisiana made its third annual performance-
based formula rate plan filing with the LPSC for the 1997 test year. The
filing indicated that earnings were such that no change in rates would be
warranted with the exception of the elimination of a $3.7 million one-time
credit that will result in a rate increase in this amount. Hearings will
be conducted on this filing in 1999, after which the LPSC may order further
rate adjustments. In September 1998, the LPSC issued an order extending
the annual performance-based formula rate plan filings for Entergy
Louisiana for an additional three years, through an April 2000 filing for
the 1999 test year.
Filings with the MPSC (Entergy Corporation and Entergy Mississippi)
In March 1998, Entergy Mississippi filed its annual earnings review
with the MPSC under its performance-based formula rate plan for the 1997
test year. In April 1998, the MPSC issued an order approving a prospective
rate reduction of $6.6 million. This rate reduction went into effect May
1, 1998.
From 1996 to the present, Entergy Mississippi and the MPSC have been
addressing issues regarding an orderly transition to a more competitive
market for electricity. As a result of these discussions and recent
hearings held in April 1998, the MPSC issued a Revised Proposed Transition
Plan (the Plan) in June 1998 that omitted the previous restriction on
securitization of stranded costs and provided for enabling legislation
necessary to implement the Plan in 2000. The Plan also provides for retail
competition in Mississippi to begin January 1, 2001 and for recovery of
allowable stranded costs through a non-bypassable charge during a
transition period between January 2001 and the end of 2004. The MPSC
conducted hearings in September 1998 on the market power and reliability
studies previously filed (as requested by the MPSC) by the investor-owned
utilities in Mississippi. During November 1998, the MPSC conducted
hearings to address certification requirements and load dispatch and
control rules.
Filings with the Council (Entergy Corporation and Entergy New Orleans)
In connection with the Council's rate investigation, Entergy New
Orleans submitted its cost of service and revenue requirement filing along
with its transition to competition plan in September 1997. In November
1997, the Council severed the traditional ratemaking issues from the
transition filings and established separate dockets for electric
competition and gas competition. Hearings related to the rate
investigation were held and concluded in July 1998. Entergy New Orleans
filed a settlement agreement before the Council, which was approved in
November 1998. The settlement agreement required the following:
o base rate reductions for Entergy New Orleans' electric customers of
$7.1 million effective January 1, 1999, $3.2 million effective
October 1, 1999, and $16.1 million effective October 1, 2000;
o a base rate reduction for Entergy New Orleans' gas customers of $1.9
million effective January 1999; and
o no base rate increases prior to October 1, 2001.
In October 1998, the Council established a procedural schedule for the
purpose of determining if natural gas retail competition is in the public's
best interest. Under this procedural schedule, several technical
conferences will be held, followed by filed testimony from all
participants. Hearings are scheduled to begin in May 1999. The electric
transition-to-competition filing made in September 1997 is generally
similar to those filed for the other domestic utility companies. No
procedural schedule has been established for that proceeding.
The Council is currently investigating the prudence of Entergy New
Orleans' natural gas purchasing practices. The procedural schedule
established for this docket requires all parties to file testimony through
the first quarter of 1999 and hearings are expected to begin in May 1999.
River Bend Cost Deferrals (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States was amortizing $182 million of River Bend
operating and purchased power costs, depreciation, and accrued carrying
charges over a 20-year period; however, the PUCT recently accelerated the
recovery of these deferrals to a three-year recovery period ending in May
1999. In 1998, Entergy Gulf States recorded reserves of $81.6 million
($48.6 million net of taxes) reflecting such accelerated recovery pending a
final decision on Entergy Gulf States' appeal. The settlement agreement
discussed above, if approved, would require Entergy Gulf States to dismiss
this appeal; however, it also allows Entergy Gulf States to amortize the
remaining deferral balance 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.
Also, in accordance with a phase-in plan approved by the LPSC, Entergy
Gulf States deferred $294 million of its River Bend costs related to the
period February 1988 through February 1991. These deferrals have been
fully recovered pursuant to the phase-in plan, which expired in February
1998.
Grand Gulf 1 Deferrals
(Entergy Corporation and Entergy Arkansas)
Under the settlement agreement entered into with the APSC in 1985 and
amended in 1988, Entergy Arkansas agreed to retain a portion of its Grand
Gulf l-related costs, recover a portion of such costs currently, and defer
a portion of such costs for future recovery. Deferrals ceased in 1990, and
Entergy Arkansas has fully recovered such deferrals pursuant to the phase-
in plan, which expired in November 1998. In 1996 and subsequent years,
Entergy Arkansas retains 22% of its 36% share (approximately 7.92%) of
Grand Gulf 1 costs and recovers the remaining 78%. In the event that
Entergy Arkansas is not able to sell its retained share to third parties,
it may sell such energy to its retail customers at a price equal to its
avoided energy cost, which is currently less than Entergy Arkansas' cost of
energy from its retained share.
(Entergy Corporation and Entergy Louisiana)
In a series of LPSC orders, court decisions, and agreements from late
1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to
costs associated with Entergy Louisiana's share of capacity and energy from
Grand Gulf l, subject to certain terms and conditions. In November 1988,
Entergy Louisiana agreed to retain, and not recover from retail ratepayers,
18% of its 14% share (approximately 2.52%) of the costs of Grand Gulf l
capacity and energy. Non-fuel operation and maintenance costs for Grand
Gulf 1 are recovered through Entergy Louisiana's base rates. Entergy
Louisiana is allowed to recover through the fuel adjustment clause 4.6
cents per KWH for the energy related to its retained portion of these
costs. Alternatively, Entergy Louisiana may sell such energy to
nonaffiliated parties at prices above the fuel adjustment clause recovery
amount, subject to the LPSC's approval.
(Entergy Corporation and Entergy Mississippi)
Entergy Mississippi entered into a plan with the MPSC that provided,
among other things, for the recovery by Entergy Mississippi, in equal
annual installments over 10 years beginning October 1, 1988, of all Grand
Gulf 1-related costs deferred through September 30, 1988, pursuant to a
final order by the MPSC. Additionally, the plan provided that Entergy
Mississippi would defer, in decreasing amounts, a portion of its Grand
Gulf 1-related costs over four years beginning October 1, 1988. Entergy
Mississippi recovered these deferrals along with related carrying charges
over the six-year period from October 1992 to September 1998. The
completion of the recovery of the deferred costs and associated carrying
charges, offset by i) the accelerated recovery of Entergy Mississippi's
Grand Gulf purchased power obligation, and ii) the recovery of a portion of
Entergy Mississippi's allocation of the proposed System Energy wholesale
rate increase discussed herein, resulted in a $127.1 million annual rate
reduction for Entergy Mississippi as of October 1, 1998. The reduction
will not result in a decrease in Entergy Mississippi's income as the phase-
in plan deferrals have now been fully amortized and no further expense
associated with the phase-in plan will be recognized.
(Entergy Corporation and Entergy New Orleans)
Under Entergy New Orleans' various rate settlements with the Council
in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not
recover from ratepayers a total of $96.2 million of its Grand Gulf 1 costs.
Entergy New Orleans was permitted to implement annual rate increases in
decreasing amounts each year through 1995, and to defer certain costs and
related carrying charges for recovery on a schedule extending from 1991
through 2001. As of December 31, 1998, the uncollected balance of Entergy
New Orleans' deferred costs was $64.2 million.
FERC Settlement (Entergy Corporation and System Energy)
In November 1994, FERC approved an agreement settling a long-standing
dispute involving income tax allocation procedures of System Energy. In
accordance with the agreement, System Energy will refund a total of
approximately $62 million, plus interest, to Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans through June 2004.
System Energy also reclassified from utility plant to other deferred debits
approximately $81 million of other Grand Gulf 1 costs. Although such costs
are excluded from rate base, System Energy is amortizing and recovering
these costs over a 10-year period. Interest on the $62 million refund and
the loss of the return on the $81 million of other Grand Gulf 1 costs will
reduce Entergy's and System Energy's net income by approximately $10
million annually until 2004.
Proposed Rate Increase (System Energy, Entergy Mississippi, and Entergy New
Orleans)
(System Energy)
System Energy filed an application with FERC in May 1995, for a $65.5
million rate increase. The request seeks changes to System Energy's rate
schedule, including increases in the revenue requirement associated with
decommissioning costs, the depreciation rate, and the rate of return on
common equity. The request also includes a proposed change in the
accounting recognition of nuclear refueling outage costs from that of
expensing those costs as incurred to the deferral and amortization method
described in Note 1. In December 1995, System Energy implemented the $65.5
million rate increase, subject to refund, for which a portion has been
reserved. Following hearings on System Energy's request in July 1996, the
ALJ issued an initial decision that agreed with certain of System Energy's
proposals, including the change in accounting for nuclear refueling outage
costs, while rejecting a proposed increase in return on common equity and
recommending instead a slight decrease in the allowed return. The ALJ also
rejected the proposed change in the decommissioning cost methodology. The
decision of the ALJ is preliminary and may be modified in the final
decision by FERC. No assurance can be given as to the timing or outcome of
the rate increase request or the amount of any refunds in excess of
reserves that may be required.
(Entergy Mississippi)
Entergy Mississippi's allocation of the proposed System Energy
wholesale rate increase is $21.6 million annually. In July 1995, Entergy
Mississippi filed a schedule with the MPSC that defers the retail recovery
of the System Energy rate increase. The deferral plan, which was approved
by the MPSC, began in December 1995, the effective date of the System
Energy rate increase, and will end after the issuance of a final order by
FERC. Under this plan, the deferral period ended September 1998, and the
deferred amount would have been amortized over 48 months beginning in
October 1998. Although the deferral period under the plan has ended, FERC
has not yet issued an order. For that reason, Entergy Mississippi filed a
revised deferral plan with the MPSC in August 1998 that provides for
recovery, effective with October 1998 billings, of $11.8 million of the
System Energy rate increase that was approved by the FERC ALJ's initial
decision in July 1996. The $11.8 million is being amortized over the
original 48-month period, which began in October 1998. The amount of
System Energy's proposed increase in excess of the $11.8 million will
continue to be deferred until the issuance of a final order by the FERC, or
October 2000, whichever occurs first. These deferred amounts, plus
carrying charges, will be amortized over a 45-month period beginning in
October 2000.
(Entergy New Orleans)
Entergy New Orleans' allocation of the proposed System Energy
wholesale rate increase is $11.1 million annually. In February 1996,
Entergy New Orleans filed a plan with the Council to defer 50% of the
amount of the System Energy rate increase. The deferral began in February
1996 and will end after the issuance of a final order by FERC.
Grand Gulf Accelerated Recovery Tariff
(Entergy Arkansas)
In April 1998, FERC approved the Grand Gulf Accelerated Recovery
Tariff that Entergy Arkansas filed as part of the settlement agreement that
was approved by the APSC in December 1997. The tariff was designed to
allow Entergy Arkansas to pay down a portion of its Grand Gulf obligation
in advance of the implementation of retail access in Arkansas. The tariff
became effective on January 1, 1999. The settlement agreement with the
APSC is discussed above in "Filings with the APSC." In December 1998, an
intervenor group filed a motion with FERC to suspend this tariff, alleging
that the tariff is inconsistent with FERC policy on accelerated
depreciation announced in an August 1998 decision.
(Entergy Mississippi)
In September 1998, FERC approved the Grand Gulf Accelerated Recovery
Tariff for Entergy Mississippi's allocable portion of Grand Gulf, which was
filed with FERC in August 1998. The tariff provides for the acceleration
of Entergy Mississippi's Grand Gulf purchased power obligation in an amount
totaling $221.3 million over the period October 1, 1998 through June 30,
2004, and is used to offset the rate reduction described above in "Grand
Gulf 1 Deferrals."
NOTE 3. INCOME TAXES
Income tax expenses for 1998, 1997, and 1996 consist of the following
(in thousands):
<TABLE>
<CAPTION>
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Current:
Federal $235,979 $ 68,814 $ 43,729 $69,551 $ 34,984 $ 15,010 $91,107
Foreign 28,156 - - - - - -
State 67,163 14,853 17,218 12,643 5,541 2,530 14,378
---------------------------------------------------------------------------
Total 331,298 83,667 60,947 82,194 40,525 17,540 105,485
Deferred -- net (109,474) (7,153) (90,314) 32,506 (10,983) (6,993) (24,745)
Investment tax credit
adjustments -- net 44,911 (5,140) 61,140 (5,596) (1,511) (505) (3,477)
---------------------------------------------------------------------------
Recorded income tax expense $266,735 $ 71,374 $ 31,773 $109,104 $ 28,031 $ 10,042 $77,263
===========================================================================
1997 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Current:
Federal $433,444 $ 113,278 $ 68,881 $ 94,448 $ 49,472 $ 12,003 $ 98,428
Foreign 237,337 - - - - - -
State 76,905 23,756 6,007 19,974 9,476 2,096 15,596
---------------------------------------------------------------------------------
Total 747,686 137,034 74,888 114,422 58,948 14,099 114,024
Deferred -- net (312,691) (73,406) (104,435) (9,833) (30,697) (1,369) (35,894)
Investment tax credit
adjustments -- net 36,346 (4,408) 51,949 (5,624) (1,507) (588) (3,476)
---------------------------------------------------------------------------------
Recorded income tax expense $471,341 $ 59,220 $ 22,402 $ 98,965 $ 26,744 $ 12,142 $ 74,654
=================================================================================
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Current:
Federal $272,036 $ 108,583 $ 510 $ 78,629 $ 64,358 $ 23,860 $ 19,637
State 72,204 21,888 201 21,122 9,635 4,631 13,508
---------------------------------------------------------------------------------
Total 344,240 130,471 711 99,751 73,993 28,491 33,145
Deferred -- net 100,572 (41,261) 106,715 24,656 (29,390) (11,587) 52,447
Investment tax credit
adjustments -- net (23,653) (4,766) (5,335) (5,847) (3,497) (687) (3,471)
---------------------------------------------------------------------------------
Recorded income tax expense $421,159 $ 84,444 $ 102,091 $ 118,560 $ 41,106 $ 16,217 $ 82,121
=================================================================================
</TABLE>
Total income taxes differ from the amounts computed by applying the
statutory income tax rate to income before taxes. The reasons for the
differences for the years 1998, 1997, and 1996 are (amounts in thousands):
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System
1998 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Computed at statutory rate (35%) $368,327 $ 63,814 $ 27,358 $ 101,007 $ 31,734 $ 9,162 $ 64,309
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 37,494 9,289 7,744 9,156 3,053 831 7,421
Depreciation 40,578 6,497 11,099 8,147 (686) 888 14,633
Rate deferrals - net (511) 701 659 372 (2,535) 292 -
Amortization of investment
tax credits (21,285) (5,136) (5,061) (5,592) (1,512) (504) (3,480)
Flow-through/permanent
differences (1,280) 3,150 (4,285) (188) 149 (88) (18)
US tax on foreign income 112,799 - - - - - -
Non-taxable gain on sale
of foreign assets (20,283) - - - - - -
Change in UK statutory rate (31,703) - - - - - -
US tax rate in excess of foreign tax rate (4,605) - - - - - -
Foreign subsidiary basis difference (58,235) - - - - - -
Reduced rate on gain on sale
of foreign assets (56,712) - - - - - -
Non-deductible franchise fees 7,315 - - - - - -
Interest on perpetual instruments (5,467) - - - - - -
Benefit of Entergy Corporation
expenses - (5,212) (4,948) (3,947) (2,386) (629) (4,999)
Change in valuation allowance (106,636)
Other -- net 6,939 (1,729) (793) 149 214 90 (603)
---------------------------------------------------------------------------------
Total income taxes $ 266,735 $ 71,374 $ 31,773 $ 109,104 $ 28,031 $ 10,042 $ 77,263
=================================================================================
Effective Income Tax Rate 25.3% 39.1% 40.6% 37.8% 30.9% 38.4% 42.1%
Entergy Entergy Entergy Entergy Entergy System
1997 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Computed at statutory rate (35%) $ 270,284 $ 64,470 $ 28,833 $ 84,253 $ 32,691 $ 9,658 $ 61,932
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 33,272 8,382 1,274 12,106 3,110 1,191 7,209
Depreciation 25,471 (2,784) (3,670) 13,162 964 2,236 15,563
Rate deferrals - net 3,484 1,543 5,575 (526) (3,504) 396 -
Amortization of investment
tax credits (19,592) (4,404) (3,981) (5,627) (1,512) (589) (3,479)
Flow-through/permanent
differences (6,537) (308) (6,133) 47 (78) (65) -
UK windfall profits tax 234,080 - - - - - -
Change in UK statutory rate (64,670) - - - - - -
Non-deductible franchise fees 17,234 - - - - - -
Interest on perpetual instruments (9,094) - - - - - -
Benefit of Entergy Corporation
expenses - (4,920) - (4,788) (2,704) (831) (4,037)
Other -- net (12,591) (2,759) 504 338 (2,223) 146 (2,534)
------------------------------------------------------------------------------
Total income taxes $ 471,341 $ 59,220 $ 22,402 $ 98,965 $ 26,744 $ 12,142 $ 74,654
==============================================================================
Effective Income Tax Rate 61.0% 31.6% 27.2% 41.1% 28.6% 44.0% 42.2%
Entergy Entergy Entergy Entergy Entergy System
1996 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Computed at statutory rate (35%) $ 319,103 $ 84,785 $ 34,371 $ 108,262 $ 42,111 $ 15,048 $ 63,626
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 54,801 10,796 19,389 11,535 4,188 1,449 7,444
Depreciation 15,829 (2,102) (6,305) 6,722 1,604 402 15,508
Rate deferrals - net 1,973 1,115 5,537 (1,829) (3,430) 580 -
Amortization of investment
tax credits (20,349) (4,608) (4,380) (5,664) (1,582) (635) (3,480)
Flow-through/permanent
differences 1,059 (845) 2,792 (449) (275) (164) -
SFAS 121 write-off 48,265 - 48,265 - - - -
Other -- net 478 (4,697) 2,422 (17) (1,510) (463) (977)
---------------------------------------------------------------------------------
Total income taxes $ 421,159 $ 84,444 $ 102,091 $ 118,560 $ 41,106 $ 16,217 $ 82,121
=================================================================================
Effective Income Tax Rate 46.2% 34.9% 104.0% 38.3% 34.2% 37.7% 45.4%
</TABLE>
Significant components of net deferred tax liabilities as of December
31, 1998 and 1997, are as follows (in thousands):
<TABLE>
<CAPTION>
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Deferred Tax Liabilities:
Net regulatory assets/(liabilities) $(1,334,014) $(286,983) $ (432,070) $(319,588) $ (34,086) $ (2,305) $(258,982)
Plant-related basis differences (3,053,837) (505,851) (1,027,463) (739,298) (214,461) (57,778) (489,501)
Rate deferrals (97,071) (1,350) (26,986) - (36,064) (32,671) -
Gain on sale of assets (80,500) - - - - - -
Other (55,700) (63,663) (8,923) (23,912) (6,531) (5,372) (20,517)
---------------------------------------------------------------------------------------
Total $(4,621,122) $(857,847) $(1,495,442) $(1,082,798) $(291,142) $ (98,126) $(769,000)
=======================================================================================
Deferred Tax Assets:
Accumulated deferred investment
tax credit 192,696 38,708 55,664 49,520 8,571 3,247 36,986
Investment tax credit carryforwards 8,979 - 8,979 - - - -
Net operating loss carryforwards 2,137 - 2,137 - - - -
Capital loss carryforwards 65,939 - - - - - -
Foreign tax credits 135,727 - - - - - -
Alternative minimum tax credit 40,658 - 40,658 - - - -
Sale and leaseback 240,067 - - 108,125 - - 131,942
Removal cost 108,858 1,127 27,015 66,012 2,945 11,759 -
Unbilled revenues 36,802 - 20,365 12,660 (726) 4,503 -
Pension-related items 30,911 - 11,565 9,664 - 5,849 3,833
Rate refund 110,312 - 49,385 - - - 60,927
Reserve for regulatory adjustments 158,839 - 158,839 - - - -
Transition cost accrual 35,374 35,374 - - - - -
FERC Settlement 15,057 - - - - - 15,057
Other 10,719 1,905 33,944 9,218 - 9,270 8,506
Valuation allowance (142,261) - - - - - -
---------------------------------------------------------------------------------------
Total $ 1,050,814 $ 77,114 $ 408,551 $ 255,199 $ 10,790 $ 34,628 $ 257,251
=======================================================================================
Net deferred tax liability $(3,570,308) $(780,733) $(1,086,891) $ (827,599) $(280,352) $ (63,498) $(511,749)
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Deferred Tax Liabilities:
Net regulatory assets/
(liabilities) (1,378,858) $(293,433) $ (437,397) $ (329,903) $ (32,140) $ (4,642) $(281,343)
Plant-related basis differences (3,574,260) (475,950) (991,253) (716,512) (192,402) (52,295) (494,564)
Rate deferrals (177,609) (26,164) (33,665) - (74,427) (43,353) -
Pension-related items (74,777) - - - - - -
Distribution License (411,467) - - - - - -
Other (181,306) (53,666) (66,995) (32,101) (7,494) (4,336) (16,714)
-----------------------------------------------------------------------------------
Total $(5,798,277) $(849,213) (1,529,310) $(1,078,516) $(306,463) $(104,626) $(792,621)
===================================================================================
Deferred Tax Assets:
Accumulated deferred investment
tax credit 204,414 40,721 61,122 51,669 9,147 3,440 38,315
Investment tax credit
carryforwards 83,080 - 83,080 - - - -
Net operating loss carryforwards 2,137 - 2,137 - - - -
Foreign tax credits 248,897 - - - - - -
Alternative minimum tax credit 40,658 - 40,658 - - - -
Sale and leaseback 235,668 - - 108,944 - - 126,724
Removal cost 105,477 1,198 27,027 63,759 2,590 10,903 -
Unbilled revenues 45,505 - 23,848 16,970 (1,195) 5,882 -
Pension-related items 33,724 - 12,897 9,653 1,801 6,097 3,276
Rate refund 63,128 - 28,301 - - - 34,827
Reserve for regulatory adjustments 125,852 - 125,852 - - - -
Transition cost accrual 6,504 6,504 - - - - -
FERC Settlement 17,193 - - - - - 17,193
Other 211,361 9,062 21,837 24,767 5,379 5,760 10,235
Valuation Allowance (248,897) - - - - - -
-----------------------------------------------------------------------------------
Total $ 1,174,701 $ 57,485 $ 426,759 $ 275,762 $ 17,722 $ 32,082 $ 230,570
===================================================================================
Net deferred tax liability $(4,623,576) $ (791,728) $(1,102,551) $(802,754) $ (288,741) $(72,544) $(562,051)
===================================================================================
</TABLE>
As of December 31, 1998, Entergy has investment tax credit (ITC)
carryforwards of $9.0 million and state net operating loss carryforwards of
$25.7 million, all related to Entergy Gulf States. The ITC carryforwards
include the 35% reduction required by the Tax Reform Act of 1986 and may be
applied solely against the federal income tax liability of Entergy Gulf
States. If these carryforwards are not utilized, they will expire between
1999 and 2002. The alternative minimum tax (AMT) credit carryforwards as
of December 31, 1998 were $40.7 million, all related to Entergy Gulf
States. This AMT credit can be carried forward indefinitely and may be
applied solely against the federal income tax liability of Entergy Gulf
States.
The valuation allowance is provided primarily against foreign tax
credit carryforwards, which can be utilized against future taxable income
in the United States. If these carryforwards are not utilized, they will
expire between 2000 and 2003.
NOTE 4. LINES OF CREDIT AND RELATED SHORT-TERM BORROWINGS (Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
In November 1996, SEC authorization was received by Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy to increase short-term borrowing limits to $235
million, $340 million, $225 million, $103 million, $35 million, and $140
million, respectively (for a total of $1.078 billion). This authorization
is effective through November 30, 2001. Of these companies, only Entergy
Mississippi had borrowings outstanding as of December 31, 1998. Entergy
Mississippi had $445,000 of borrowings outstanding from the money pool.
The money pool is an inter-company borrowing arrangement designed to reduce
the domestic utility companies' dependence on external short-term
borrowings. Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi
had undrawn external lines of credit as of December 31, 1998, of $18
million, $47 million, and $24 million, respectively.
In September 1998, Entergy Corporation replaced its $300 million bank
credit facility with a $250 million, 364 day bank credit facility. As of
December 31, 1998, $120 million was outstanding under this facility.
In September 1996, Entergy Corporation and ETHC obtained a three-year
$100 million bank line of credit which was increased to $300 million in
1998. Either Entergy Corporation or ETHC, with a guarantee from Entergy
Corporation, can draw on this line. The proceeds are to be used
exclusively for exempt telecommunication investments as defined in PUHCA.
As of December 31, 1998, Entergy Corporation and ETHC had $165.5 million
and $112.8 million, respectively, outstanding under this facility. In
February 1999, in conjunction with the sale of Entergy Security, Entergy
reduced this line of credit to $100 million. At that time, the Entergy
Corporation indebtedness on the line of credit was paid off and the ETHC
indebtedness was paid down to $62.8 million.
Other Entergy companies have SEC authorization to borrow through the
money pool from Entergy Corporation and from commercial banks in an
aggregate principal amount up to $265 million, of which $104.4 million was
outstanding as of December 31, 1998. Some of these borrowings are
restricted as to use, and are collateralized by certain assets.
In total, Entergy had committed short-term credit facilities in the
amount of $639.2 million as of December 31, 1998, of which $128.2 million
was unused. The weighted-average interest rate on Entergy's outstanding
borrowings as of December 31, 1998 and 1997 was 5.97% and 7.09%,
respectively. Commitment fees on the lines of credit for Entergy Arkansas,
Entergy Louisiana, and Entergy Mississippi are .125% of the undrawn
amounts. The commitment fee for Entergy Corporation's $250 million credit
facility is currently .15% of the undrawn amount and for Entergy
Corporation/ETHC's $300 million credit facility is currently .17% of the
undrawn amount. Commitment fees and interest rates on loans under these
two credit facilities can fluctuate depending on the senior debt ratings of
the domestic utility companies. There is further discussion of commitments
for long-term financing arrangements in Note 7 to the financial statements.
NOTE 5. PREFERRED, PREFERENCE, AND COMMON STOCK (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
The number of shares authorized and outstanding, and dollar value of
preferred and preference stock for Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans as of December 31, 1998, and 1997 were:
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Entergy Arkansas Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.32% Series 70,000 70,000 $ 7,000 $ 7,000 $103.65
4.72% Series 93,500 93,500 9,350 9,350 $107.00
4.56% Series 75,000 75,000 7,500 7,500 $102.83
4.56% 1965 Series 75,000 75,000 7,500 7,500 $102.50
6.08% Series 100,000 100,000 10,000 10,000 $102.83
7.32% Series 100,000 100,000 10,000 10,000 $103.17
7.80% Series 150,000 150,000 15,000 15,000 $103.25
7.40% Series 200,000 200,000 20,000 20,000 $102.80
7.88% Series 150,000 150,000 15,000 15,000 $103.00
Cumulative, $0.01 par value:
$1.96 Series (a)(b) 600,000 600,000 15,000 15,000 $25.00
--------- --------- -------- --------
Total without sinking fund 1,613,500 1,613,500 $116,350 $116,350
========= ========= ======== ========
With sinking fund:
Cumulative, $100 par value
8.52% Series 200,000 250,000 $ 20,000 $ 25,000 $104.26
Cumulative, $25 par value
9.92% Series 81,085 241,085 2,027 6,027 $26.32
--------- --------- -------- --------
Total with sinking fund 281,085 491,085 $ 22,027 $ 31,027
========= ========= ======== ========
Fair Value of Preferred Stock with sinking fund (d) $ 22,986 $ 32,018
======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Entergy Gulf States Preferred and Preference Stock
Preference Stock
Cumulative, without par value
7% Series (a)(b) 6,000,000 6,000,000 $150,000 $150,000 -
========= ========= ======== ========
Preferred Stock
Authorized 6,000,000, $100 par
value, cumulative
Without sinking fund:
4.40% Series 51,173 51,173 $ 5,117 $ 5,117 $108.00
4.50% Series 5,830 5,830 583 583 $105.00
4.40%-1949 Series 1,655 1,655 166 166 $103.00
4.20% Series 9,745 9,745 975 975 $102.82
4.44% Series 14,804 14,804 1,480 1,480 $103.75
5.00% Series 10,993 10,993 1,099 1,099 $104.25
5.08% Series 26,845 26,845 2,685 2,685 $104.63
4.52% Series 10,564 10,564 1,056 1,056 $103.57
6.08% Series 32,829 32,829 3,283 3,283 $103.34
7.56% Series 350,000 350,000 35,000 35,000 $101.80
--------- --------- -------- --------
Total without sinking fund 514,438 514,438 $ 51,444 $ 51,444
========= ========= ======== ========
With sinking fund:
8.80% Series 139,971 162,283 $ 13,997 $ 16,228 $100.00
8.64% Series 84,000 112,000 8,400 11,200 $101.00
Adjustable Rate - A, 7.00%(c) 156,000 168,000 15,600 16,800 $100.00
Adjustable Rate - B, 7.00%(c) 225,000 247,500 22,500 24,750 $100.00
--------- --------- -------- --------
Total with sinking fund 604,971 689,783 $ 60,497 $ 68,978
========= ========= ======== ========
Fair Value of Preference Stock and
Preferred Stock with sinking fund (d) $203,456 $220,413
======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Entergy Louisiana Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.96% Series 60,000 60,000 $ 6,000 $ 6,000 $104.25
4.16% Series 70,000 70,000 7,000 7,000 $104.21
4.44% Series 70,000 70,000 7,000 7,000 $104.06
5.16% Series 75,000 75,000 7,500 7,500 $104.18
5.40% Series 80,000 80,000 8,000 8,000 $103.00
6.44% Series 80,000 80,000 8,000 8,000 $102.92
7.84% Series 100,000 100,000 10,000 10,000 $103.78
7.36% Series 100,000 100,000 10,000 10,000 $103.36
Cumulative, $25 par value:
8.00% Series 1,480,000 1,480,000 37,000 37,000 $25.00
--------- --------- -------- --------
Total without sinking fund 2,115,000 2,115,000 $100,500 $100,500
========= ========= ======== ========
With sinking fund:
Cumulative, $100 par value
7.00% Series 500,000 500,000 $ 50,000 $ 50,000 $100.00
8.00% Series (b) 350,000 350,000 35,000 35,000 -
--------- --------- -------- --------
Total with sinking fund 850,000 850,000 $ 85,000 $ 85,000
========= ========= ======== ========
Fair Value of Preferred Stock with sinking fund (d) $ 87,813 $ 87,288
======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Entergy Mississippi Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.36% Series 59,920 59,920 $ 5,992 $ 5,992 $103.86
4.56% Series 43,888 43,888 4,389 4,389 $107.00
4.92% Series 100,000 100,000 10,000 10,000 $102.88
7.44% Series 100,000 100,000 10,000 10,000 $102.81
8.36% Series 200,000 200,000 20,000 20,000 $100.00
--------- --------- -------- --------
Total without sinking fund 503,808 503,808 $ 50,381 $ 50,381
========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Entergy New Orleans Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.75% Series 77,798 77,798 $ 7,780 $ 7,780 $105.00
4.36% Series 60,000 60,000 6,000 6,000 $104.57
5.56% Series 60,000 60,000 6,000 6,000 $102.59
--------- --------- -------- --------
Total without sinking fund 197,798 197,798 $ 19,780 $ 19,780
========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Shares Call Price Per
Authorized Total Share as of
and Outstanding Dollar Value December 31,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Entergy Corporation
Subsidiary's Preference Stock
(a)(b) 6,000,000 6,000,000 $150,000 $150,000 -
========= ========= ======== ========
Subsidiaries' Preferred Stock
Without sinking fund 4,944,544 4,944,544 $338,455 $338,455
========= ========= ======== ========
With sinking fund 1,736,056 2,030,868 $167,523 $185,005
========= ========= ======== ========
Fair Value of Preference Stock
and Preferred Stock with
sinking fund (d) $314,255 $339,719
======== ========
(a) The total dollar value represents the liquidation value of $25 per
share.
(b) These series are not redeemable as of December 31, 1998.
(c) Represents weighted-average annualized rates for 1998.
(d) Fair values were determined using bid prices reported by dealer
markets and by nationally recognized investment banking firms. There
is additional disclosure of fair value of financial instruments in
Note 1 to the financial statements.
Changes in the preferred stock, with and without sinking fund,
preference stock, and common stock of Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans
during the last three years were:
Number of Shares
1998 1997 1996
Preferred stock retirements
Entergy Arkansas
$100 par value (50,000) (50,000) (50,000)
$25 par value (160,000) (160,000) (560,000)
$0.01 par value - - (2,000,000)
Entergy Gulf States
$100 par value (84,812) (934,812) (101,943)
Entergy Louisiana
$100 par value - - (100,000)
$25 par value - (300,000) (2,300,370)
Entergy Mississippi
$100 par value - (145,000) (97,700)
Cash sinking fund requirements and mandatory redemptions for the next
five years for preferred and preference stock, outstanding as of December
31, 1998, are as follows:
Entergy Entergy Entergy
Entergy Arkansas Gulf States Louisiana
(In Thousands)
1999 $60,466 $4,500 $5,966 $50,000
2000 160,466 4,500 155,966 -
2001 45,466 4,500 5,966 35,000
2002 10,466 4,500 5,966 -
2003 10,466 4,500 5,966 -
Entergy Arkansas and Entergy Gulf States have the annual noncumulative
option to redeem, at par, additional amounts of certain series of their
outstanding preferred stock.
Entergy Corporation from time to time reissues treasury shares to meet
the requirements of the Stock Plan for Outside Directors (Directors' Plan),
the Equity Ownership Plan of Entergy Corporation and Subsidiaries (Equity
Plan), and certain other stock benefit plans. The Directors' Plan awards
to nonemployee directors a portion of their compensation in the form of a
fixed number of shares of Entergy Corporation common stock. Shares awarded
under the Directors' Plan were 5,100; 9,104; and 6,750 during 1998, 1997,
and 1996, respectively.
During 1998, Entergy Corporation issued 392,845 shares of its
previously repurchased common stock to satisfy stock options exercised and
stock purchases under its Equity Ownership Plan. In 1998, Entergy
Corporation repurchased 300,000 shares. In addition, Entergy Corporation
received proceeds of $11 million from the issuance of 385,770 shares of
common stock under its dividend reinvestment and stock purchase plan during
1998.
The Equity Plan grants stock options, equity awards, and incentive
awards to key employees of the domestic utility companies. The costs of
equity and incentive awards are charged to income over the period of the
grant or restricted period, as appropriate. Amounts charged to
compensation expense in 1998 were immaterial. Stock options, which
comprise 50% of the shares targeted for distribution under the Equity Plan,
are granted at exercise prices not less than market value on the date of
grant. The options are generally exercisable six months from the date of
grant, with the exception of 40,000 options granted on December 31, 1998,
which are not exercisable until January 1, 2000, but not more than 10 years
after the date of grant.
Entergy does not recognize compensation expense for stock options
issued at market value on the date of grant. The impact on Entergy's net
income for each of the years 1998, 1997, and 1996 would have been
$144,000, $296,000, and $166,000, respectively, had compensation cost for
the stock options been recognized based on the fair value of options at
the grant date for awards under the option plan.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following stock
option weighted-average assumptions:
1998 1997 1996
Stock price volatility 20.9% 19% 19%
Expected term in years 5 5 5
Risk-free interest rate 5.1% 6.3% 5.4%
Dividend yield 5.4% 6.8% 6.1%
Dividend payment $1.58 $1.80 $1.80
Nonstatutory stock option transactions are summarized as follows:
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
Average Average Average
Number Option Number Option Number Option
of Options Price of Options Price of Options Price
<S> <C> <C> <C> <C> <C> <C>
Beginning-of-year balance 1,172,808 $ 25.15 1,051,808 $ 24.97 1,009,308 $ 24.61
Options granted 123,750 29.47 255,000 25.84 82,500 29.38
Options exercised (340,919) 23.29 (2,500) 23.38 (7,500) 23.38
Options forfeited (38,000) 29.89 (131,500) 25.08 (32,500) 25.40
--------- --------- ---------
End-of-year balance 917,639 $ 26.23 1,172,808 $ 25.15 1,051,808 $ 24.97
========= ========= =========
Options exercisable at year-end 877,639 422,909 277,909
Weighted average fair value of
options granted $ 4.12 $ 3.10 $ 3.27
</TABLE>
The following table summarizes information about stock options
outstanding as of December 31, 1998:
<TABLE>
<CAPTION>
Options Options
Outstand Exercisable
ing
Weighted- Avg
Remaining Weighted- Number Weighted-
Range of As of Contractual Avg. Exercise Exercisable Avg. Exercise
Exercise Prices 12/31/98 Life-Yrs. Price at 12/31/98 Price
<S> <C> <C> <C> <C> <C>
$20 - $30 769,032 6.8 $ 24.57 769,032 $ 24.57
$30 - $40 148,607 6.0 $ 34.77 108,607 $ 36.12
------- -------
$20 - $40 917,639 6.7 $ 26.23 877,639 $ 26.00
======= =======
</TABLE>
To meet the requirements of the Employee Stock Investment Plan (ESIP),
Entergy Corporation was authorized to issue or acquire, through March 31,
1997, up to 2,000,000 shares of its common stock to be held as treasury
shares. In February 1997, Entergy received authority from the SEC to
extend the ESIP for an additional three years ending on March 31, 2000.
Under the extended plan, Entergy Corporation may issue either treasury
shares or previously authorized but unissued shares. Under the terms of
the ESIP, employees can choose each year to have up to 10% of their regular
annual salary (not to exceed $25,000) withheld to purchase the Company's
common stock at a purchase price equal to 85% of the lower of the market
value on the first or last business day of the plan year ending March 31.
Under the plan, the number of subscribed shares was 294,108; 319,457; and
327,017 in 1998, 1997, and 1996, respectively.
The fair value of ESIP shares granted was estimated on the date of the
grant using the Black-Scholes option-pricing model with expected ESIP
weighted-average assumptions:
1998 1997 1996
Stock price volatility 19% 19% 18%
Expected term in years 1 1 1
Risk-free interest rate 5.1% 6.1% 5.4%
Dividend yield 6.1% 7.4% 6.4%
Dividend payment $1.80 $1.80 $1.80
The weighted-average fair value of those purchase rights granted was $5.94,
$4.75, and $5.41 in 1998, 1997, and 1996, respectively. The impact on
Entergy's net income would have been ($325,000), $48,000, and $894,000 in
1998, 1997, and 1996, respectively, had compensation cost for the ESIP been
determined based on the fair value at the grant date for awards under the
ESIP.
Entergy sponsors the Savings Plan of Entergy Corporation and
Subsidiaries (Savings Plan). Effective December 31, 1997, the Employee
Stock Ownership Plan of Entergy Corporation and Subsidiaries (ESOP) and the
Gulf States Utilities Company Employees' Thrift Plan (GSU Thrift Plan) were
merged into the Savings Plan. Subsequent to the merger, the Savings Plan
constitutes two plans: a Profit Sharing Plan and an ESOP. The Savings Plan
is a defined contribution plan covering eligible employees of Entergy and
its subsidiaries who have completed certain service requirements.
Entergy's subsidiaries' contributions to the Profit Sharing Plan and
voluntary participant contributions to the ESOP, and any income thereon,
are invested in shares of Entergy Corporation common stock. Management
does not expect to make any future contributions to the ESOP.
The Profit Sharing Plan provides that the employing Entergy subsidiary
may make matching contributions to the plan in an amount equal to 50% of
the participant's basic contribution, up to 6% of their salary, in shares
of Entergy Corporation common stock. Entergy's subsidiaries contributed
$13.6 million in 1998 and $13.2 million in both 1997 and 1996 to the
Entergy Savings Plan. Prior to the merger of the GSU Thrift Plan into the
Entergy Savings Plan, Entergy Gulf States contributed $306,000 and $300,000
to the GSU Thrift Plan in 1997 and 1996, respectively.
Entergy Gulf States sponsors the Gulf States Utilities Company
Employee Stock Ownership Plan (GSU ESOP). The GSU ESOP is available to all
employees of the domestic utility companies' and certain other affiliate
companies, upon completion of certain eligibility requirements. All
contributions to the plan are invested in shares of Entergy Corporation
common stock. Entergy Gulf States makes contributions to the GSU ESOP
based on expected utilization of additional investment tax credits in the
Entergy federal tax return and on expected participants' contributions. In
1998, Entergy Gulf States contributed $7.7 million. No contributions were
made to the GSU ESOP during 1997, and 1996. Effective December 31, 1998,
the GSU ESOP was merged into the Savings Plan due to the utilization of all
available tax credits. Therefore, no additional contributions will be made
to the GSU ESOP.
NOTE 6. COMPANY-OBLIGATED REDEEMABLE PREFERRED SECURITIES
(Entergy Arkansas, Entergy Louisiana, Entergy Gulf States)
Entergy Arkansas Capital I, Entergy Louisiana Capital I, and Entergy
Gulf States Capital I (Trusts) were established as financing subsidiaries
of Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States,
respectively, for the purpose of issuing common and preferred securities.
The Trusts issue Cumulative Quarterly Income Preferred Securities
(Preferred Securities) to the public and common securities to the parent
company. Proceeds from such issues are used to purchase junior
subordinated deferrable interest debentures (Debentures) from the parent
company. The Debentures held by each Trust are its only assets. Each
Trust uses interest payments received on the Debentures owned by it to make
cash distributions on the Preferred Securities.
<TABLE>
<CAPTION>
Fair Market
Value of
Preferred Common Interest Rate Trust's Preferred
Date Securities Securities Securities/ Investment in Securities
Trusts Of Issue Issued Issued Debentures Debentures at 12-31-98
(In Millions) (In Millions)
<S> <C> <C> <C> <C> <C> <C>
Arkansas Capital I 8-14-96 $60.0 $1.9 8.50% $61.9 $60.3
Louisiana Capital I 7-16-96 $70.0 $2.2 9.00% $72.2 $71.4
Gulf States Capital I 1-28-97 $85.0 $2.6 8.75% $87.6 $86.9
</TABLE>
The Preferred Securities of the Trusts mature in the years 2045 and
2046. The Preferred Securities are redeemable at 100% of their principal
amount at the option of Entergy Arkansas, Entergy Louisiana, and Entergy
Gulf States beginning in 2001 and 2002, or earlier under certain limited
circumstances, including the loss of the tax deduction arising out of the
interest paid on the Debentures. Entergy Arkansas, Entergy Louisiana, and
Entergy Gulf States have, pursuant to certain agreements, fully and
unconditionally guaranteed payment of distributions on the Preferred
Securities issued by their respective trusts. Entergy Arkansas, Entergy
Louisiana, and Entergy Gulf States are the owners of all of the common
securities of their individual Trusts, which constitute 3% of each Trust's
total capital.
NOTE 7. LONG - TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy)
Long-term debt as of December 31, 1998 was:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maturities Interest Entergy Entergy Entergy Entergy Entergy System
From To From To Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
First Mortgage Bonds
1999 2004 6.000% 8.250% $1,640,409 $265,000 $674,750 $335,959 $365,000
2005 2010 6.500% 7.500% 428,000 215,000 98,000 115,000
2020 2026 7.000% 8.940% 833,237 273,287 444,950 115,000
G&R Bonds
2002 2026 6.625% 8.750% 590,000 $420,000 $170,000
Governmental Obligations(a)
1999 2008 5.900% 8.500% 36,537 1,540 22,920 11,212 865
2009 2026 5.600% 9.500% 1,618,335 286,200 457,335 412,170 46,030 416,600
Debentures
1999 2000 7.380% 7.800% 75,000 75,000
Saltend Project Senior Credit Facility
avg rate 7.13% due 2014 320,485
Damhead Creek Project Senior Credit
Facility, avg rate 6.88% due 2016 166,482
EP Edegel, Inc. Note Payable, 7.7% due 2000 67,000
Long-Term DOE Obligation (Note 9) 129,891 129,891
Waterford 3 Lease Obligation 8.09% (Note 10) 353,600 353,600
Grand Gulf Lease Obligation 7.02% (Note 10) 481,301 481,301
Other Long-Term Debt 134,313 10,614 9,771
Unamortized Premium and Discount - Net (23,052) (8,153) (4,553) (3,854) (3,259) (982) (2,251)
-----------------------------------------------------------------------------
Total Long-Term Debt 6,851,838 1,173,379 1,703,173 1,339,087 463,636 169,018 1,335,650
Less Amount Due Within One Year 255,221 1,094 71,515 6,772 20 - 175,820
-----------------------------------------------------------------------------
Long-Term Debt Excluding Amount Due
Within One Year $6,596,617 $1,172,285 $1,631,658 $1,332,315 $463,616 $169,018 $1,159,830
==============================================================================
Fair Value of Long-Term Debt (c) $6,244,711 $1,081,502 $1,871,739 $1,059,893 $481,520 $207,538 $878,446
==============================================================================
</TABLE>
Long-term debt as of December 31, 1997 was:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maturities Interest Entergy Entergy Entergy Entergy Entergy System
From To From To Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
First Mortgage Bonds
1998 1999 6.000% 11.375% $491,000 $15,000 $211,000 $35,000 $230,000
2000 2004 6.000% 8.250% 1,435,270 265,000 603,750 361,520 205,000
2005 2009 6.650% 7.500% 313,000 215,000 98,000
2010 2019 9.750% 75,000 75,000
2020 2026 7.000% 10.000% 939,011 289,061 444,950 205,000
G&R Bonds
2000 2023 6.625% 8.800% 590,000 $420,000 $170,000
Governmental Obligations(a)
1998 2008 5.900% 8.750% 104,617 47,190 45,010 11,532 885
2009 2026 5.600% 9.875% 1,596,735 286,200 435,735 412,170 46,030 416,600
Debentures
1998 2000 7.380% 9.720% 125,000 50,000 75,000
Eurobonds
2003 2005 8.000% 8.625% 325,940
Loan Notes Due 2003(b) 33,814
Revolving Bank Debt Facility:
Facility A, avg rate 8.789% due 2002 1,332,774
Facility B 117,000
EPDC Revolving Credit Facility due 2000 70,307
Saltend Project Senior Credit Facility/2014 39,610
Long-Term DOE Obligation (Note 9) 123,506 123,506
Waterford 3 Lease Obligation 8.09% (Note 10) 353,600 353,600
Grand Gulf Lease Obligation 7.02% (Note 10) 489,162 489,162
EP Edegel, Inc. Note Payable, due 2000 67,000
CitiPower Crt Line avg rate 8.31% due 2000 715,330
Other Long-Term Debt 149,201 9,937
Unamortized Premium and Discount - Net (27,878) (10,447) (4,773) (5,058) (2,739) (1,047) (3,814)
---------------------------------------------------------------------------
Total Long-Term Debt 9,458,999 1,305,510 1,893,609 1,373,764 464,176 168,953 1,411,948
Less Amount Due Within One Year 390,674 60,650 190,890 35,300 20 - 70,000
---------------------------------------------------------------------------
Long-Term Debt Excluding Amount Due
Within One Year $9,068,325 $1,244,860 $1,702,719 $1,338,464 $464,156 $168,953 $1,341,948
============================================================================
Fair Value of Long-Term Debt (c) $8,635,583 $1,223,591 $1,990,881 $1,074,053 $488,145 $171,199 $969,724
============================================================================
</TABLE>
(a) Consists of pollution control bonds, certain series of which are
secured by non-interest bearing first mortgage bonds.
(b) Loan notes are included as current maturities of long-term debt based
on the option of the holders to redeem such notes on March 31 of each
year until their final maturity on March 31, 2003.
(c) The fair value excludes lease obligations, long-term DOE obligations,
and other long-term debt and includes debt due within one year. It is
determined using bid prices reported by dealer markets and by
nationally recognized investment banking firms.
The annual long-term debt maturities (excluding lease obligations) and
annual cash sinking fund requirements for debt outstanding as of December
31, 1998, for the next five years are as follows:
<TABLE>
<CAPTION>
Entergy Entergy Entergy Entergy Entergy System
Entergy(a) Arkansas(b) Gulf States(c) Louisiana(d) Mississippi New Orleans Energy
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $232,854 $ 1,094 $71,515 $ 225 $ 20 - $160,000
2000 176,035 245 545 100,225 20 - 75,000
2001 277,310 35 123,325 18,925 25 - 135,000
2002 613,159 110,035 150,610 217,489 65,025 - 70,000
2003 219,930 155,035 39,640 230 25 $25,000 -
</TABLE>
(a) Not included are other sinking fund requirements of approximately
$66.2 million annually, which may be satisfied by cash or by
certification of property additions at the rate of 167% of such
requirements.
(b) Not included are other sinking fund requirements of approximately $4.6
million annually, which may be satisfied by cash or by certification
of property additions at the rate of 167% of such requirements.
(c) Not included are other sinking fund requirements of approximately
$53.7 million annually, which may be satisfied by cash or by
certification of property additions at the rate of 167% of such
requirements.
(d) Not included are other sinking fund requirements of approximately $7.9
million annually, which may be satisfied by cash or by certification
of property additions at the rate of 167% of such requirements.
In August 1997, EPDC entered into a BPS50 million ($82.5 million)
credit facility to finance the acquisition of the Damhead Creek project.
In December 1997, EPDC amended the credit facility and increased the amount
of the revolver to BPS100 million ($165 million). As of December 31, 1998,
approximately BPS6.8 million ($10.5 million) was outstanding under this
facility. As of December 31, 1998, EPDC had obtained BPS89.7 million
($148.0 million) of letters of credit under the credit facility to support
project commitments on the Saltend and Damhead Creek projects. The
interest rate on the outstanding borrowings was 6.97% as of December 31,
1998.
In December 1997, Saltend Cogeneration Company (SCC), an indirect
wholly-owned subsidiary of EPDC, entered into a BPS646 million ($1.07
billion) non-recourse senior credit facility (Senior Credit Facility) to
finance the construction of a 1,200-MW gas-fired power plant in northeast
England. Borrowings under the Senior Credit Facility are payable after
completion of construction over a 15-year period beginning December 31,
2000. SCC also entered into a BPS72 million ($118 million) Subordinated
Credit Facility that provides funding upon the earlier of completion of
construction or July 31, 2000. The proceeds of borrowings under this
facility will be used to repay a portion of the Senior Credit Facility.
The Subordinated Credit Facility is payable over a 10-year period beginning
December 31, 2000. The Senior Credit Facility is collateralized by all of
the assets of SCC. In February 1998, SCC entered into 15-year interest
rate swap agreements for 85% of the Senior Debt Facility on a fixed-rate
basis of 6.7%. SCC is exposed to market risks from movements in interest
rates if the counterparties to the interest rate swap agreements were to
default on contractual payments. SCC does not anticipate nonperformance by
any counterparty to these interest rate swap agreements. At December 31,
1998, SCC has outstanding interest rate swap agreements totaling a notional
amount of $302.3 million. The estimated fair value of the interest rate
swap agreements, which represent the estimated amount SCC would pay to
terminate the swaps at December 31, 1998, is a net liability of $45
million. Certain cash balances, primarily related to SCC, are restricted
from being used to make loans and advances or to pay dividends to EPDC by
the amount required for debt payments, letter of credit expenses, and
permitted project costs. The total restricted cash was $25.7 million as of
December 31, 1998.
In December 1998, Damhead Creek Finance Limited (DCFL), an indirect
wholly-owned subsidiary of EPDC, entered into a BPS463.4 million ($764.6
million) non-recourse senior credit facility (Senior Credit Facility) to
finance the construction of a 792-MW gas-fired power plant in southeast
England. Borrowings under the Senior Credit Facility are payable after
completion of construction over a fifteen-year period beginning December
31, 2001. DCFL also entered into a BPS36.1 million ($59.6 million)
Subordinated Credit Facility that provides funding upon the earlier of
completion of construction or July 22, 2001. Borrowings under this
facility will be used to repay a portion of the Senior Credit Facility.
The Subordinated Credit Facility is payable over a ten-year period
beginning December 31, 2001. All of the assets of DCFL are pledged as
collateral under the Senior Credit Facility. Furthermore, the Senior
Credit Facility requires DCFL to enter into interest rate hedge agreements
for a majority of the project debt. Certain cash balances, primarily
related to this project, are restricted from being used to make loans and
advances or to pay dividends to EPDC by the amount required for debt
payments, letter of credit expenses, and permitted project costs. The
total restricted cash was $16.3 million at December 31, 1998.
NOTE 8. DIVIDEND RESTRICTIONS (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, System Energy)
Provisions within the Articles of Incorporation or pertinent
indentures and various other agreements relating to the long-term debt and
preferred stock of certain of Entergy Corporation's subsidiaries restrict
the payment of cash dividends or other distributions on their common and
preferred stock. Additionally, PUHCA prohibits Entergy Corporation's
subsidiaries from making loans or advances to Entergy Corporation. As of
December 31, 1998, Entergy Arkansas and Entergy Mississippi had restricted
retained earnings unavailable for distribution to Entergy Corporation of
$199.3 million and $15.8 million, respectively. During 1998, cash
dividends paid to Entergy Corporation by its subsidiaries totaled $488.5
million.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States filed declaratory judgment actions in the U.S.
Bankruptcy Court in which the Cajun bankruptcy case is pending. These
actions were filed to seek rulings declaring that Entergy Gulf States is
not liable for damages to certain coal suppliers and the rail and barge
companies that transport coal to Big Cajun 2, Unit 3 if their contracts are
rejected in the bankruptcy proceeding. Collectively, the coal suppliers
and transporters have asserted claims in the Cajun bankruptcy case that
exceed $1.6 billion. Entergy Gulf States believes the damages alleged are
significantly exaggerated. In February 1999, the bankruptcy judge entered
an order declaring that Entergy Gulf States has no obligation under the
contracts between the coal suppliers and transporters and Cajun.
Therefore, if the contracts are rejected in the bankruptcy proceeding,
Entergy Gulf States will not be liable to the coal suppliers and
transporters for the damages claimed by them. The decision of the
bankruptcy judge is subject to appeal.
Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy)
Construction expenditures (including AFUDC and excluding nuclear fuel)
for Entergy for the years 1999, 2000, and 2001 are estimated to total $1.4
billion, $1.3 billion, and $1.4 billion, respectively. Entergy will also
require $952 million during the period 1999-2001 to meet long-term debt and
preferred stock maturities and cash sinking fund requirements. Entergy
plans to meet these requirements primarily with internally generated funds
and cash on hand, supplemented by proceeds of the issuance of debt and from
outstanding credit facilities. Certain domestic utility companies and
System Energy may also continue the acquisition or refinancing of all or a
portion of certain outstanding series of preferred stock and long-term
debt.
Sales Warranties and Indemnities (Entergy Corporation)
In the Entergy London and CitiPower sales transactions, Entergy or its
subsidiaries made certain warranties to the purchasers. These warranties
include representations regarding litigation, accuracy of financial
accounts, and the adequacy of existing tax provisions. Notice of a claim
on the CitiPower warranties must be given by December 2000, and Entergy's
potential liability is limited to A$100 million ($60 million). Notice of a
claim on the Entergy London warranties must be given by June 30, 2001, and
Entergy's liability is limited to BPS1.4 billion ($2.3 billion) on certain
tax warranties and BPS140 million ($232 million) on the remaining
warranties. Entergy has also agreed to maintain the net asset value of the
subsidiary that sold Entergy London at $700 million through June 30, 2001.
Management believes it has adequately provided reserves for the ultimate
resolution of such matters at December 31, 1998.
Fuel Purchase Agreements
(Entergy Arkansas and Entergy Mississippi)
Entergy Arkansas has long-term contracts with mines in Wyoming for the
supply of low-sulfur coal to White Bluff and Independence (which is also
25% owned by Entergy Mississippi). These contracts, which expire in 2002
and 2011, provide for approximately 85% of Entergy Arkansas' expected
annual coal requirements. Additional requirements are satisfied by spot
market purchases.
(Entergy Gulf States)
Entergy Gulf States has a contract for a supply of low-sulfur Wyoming
coal for Nelson Unit 6, which should be sufficient to satisfy the fuel
requirements at Nelson Unit 6 through 2010. Cajun has advised Entergy Gulf
States that Cajun has contracts that should provide an adequate supply of
coal for the operation of Big Cajun 2, Unit 3.
Entergy Gulf States has long-term gas contracts that will satisfy
approximately 17% of its annual requirements, which is the minimum volume
Entergy Gulf States is required to purchase under the contracts.
Additional gas requirements are satisfied under less expensive short-term
contracts. Entergy Gulf States has a transportation service agreement with
a gas supplier that provides flexible natural gas service to the Sabine and
Lewis Creek generating stations.
(Entergy Louisiana)
In June 1992, Entergy Louisiana agreed to a renegotiated 20-year
natural gas supply contract. Entergy Louisiana agreed to purchase natural
gas in annual amounts equal to approximately one-third of its projected
annual fuel requirements for certain generating units. Annual demand
charges associated with this contract are estimated to be $7.8 million.
Such charges aggregate $109 million for the years 1999 through 2012.
Entergy Louisiana recovers the cost of fuel consumed during the generation
of electricity through its fuel adjustment clause.
(Entergy Corporation)
Entergy's global power development business has entered into gas
supply contracts at the project level to supply up to 100% of the gas
requirements for the Saltend and Damhead Creek power plants located in the
UK. Both contracts have 15-year terms, are expected to commence upon
operations of the applicable power plant, and include a take or pay
obligation for approximately 75% of the gas requirement for each plant.
Sales Agreements/Power Purchases
(Entergy Gulf States)
In 1988, Entergy Gulf States entered into a joint venture with a
primary term of 20 years with Conoco, Inc., Citgo Petroleum Corporation,
and Vista Chemical Company (collectively the Industrial Participants),
whereby Entergy Gulf States' Nelson Units 1 and 2 were sold to NISCO, a
partnership consisting of the Industrial Participants and Entergy Gulf
States. The Industrial Participants supply the fuel for the units, while
Entergy Gulf States operates the units at the discretion of the Industrial
Participants and purchases the electricity produced by the units. Entergy
Gulf States is continuing to sell electricity to the Industrial
Participants. For the years ended December 31, 1998, 1997, and 1996, the
purchases by Entergy Gulf States of electricity from the joint venture
totaled $57.5 million, $70.7 million, and $62.0 million, respectively.
(Entergy Louisiana)
Entergy Louisiana has an agreement extending through the year 2031 to
purchase energy generated by a hydroelectric facility. During 1998, 1997,
and 1996, Entergy Louisiana made payments under the contract of
approximately $77.8 million, $64.6 million, and $56.3 million,
respectively. If the maximum percentage (94%) of the energy is made
available to Entergy Louisiana, current production projections would
require estimated payments of approximately $71.0 million in 1999, and a
total of $3.5 billion for the years 2000 through 2031. Entergy Louisiana
currently recovers the costs of purchased energy through its fuel
adjustment clause.
System Fuels (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans have ownership interests in System Fuels of 35%, 33%, 19%, and
13%, respectively. The owners of System Fuels have agreed to make loans to
System Fuels to finance its fuel procurement, delivery, and storage
activities. As of December 31, 1998, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans had approximately
$11.0 million, $14.2 million, $5.5 million, and $3.3 million, respectively,
in loans outstanding to System Fuels, which mature in 2008.
Nuclear Insurance (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy)
The Price-Anderson Act limits public liability for a single nuclear
incident to approximately $9.8 billion. Protection for this liability is
provided through a combination of private insurance (currently $200 million
each for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy) and an industry assessment program. Under the assessment
program, the maximum payment requirement for each nuclear incident would be
$88.1 million per reactor, payable at a rate of $10 million per licensed
reactor per incident per year. Entergy has five licensed reactors. As a
co-licensee of Grand Gulf 1 with System Energy, SMEPA would share 10% of
this obligation. In addition, each owner/licensee of Entergy's five
nuclear units participates in a private insurance program that provides
coverage for worker tort claims filed for bodily injury caused by radiation
exposure. The program provides for a maximum assessment of approximately
$16 million for the five nuclear units in the event that losses exceed
accumulated reserve funds.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy are also members of certain insurance programs that provide coverage
for property damage, including decontamination and premature
decommissioning expense, to members' nuclear generating plants. As of
December 31, 1998, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and System Energy were each insured against such losses up to
$2.3 billion. In addition, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans are members of an
insurance program that covers certain replacement power and business
interruption costs incurred due to prolonged nuclear unit outages. Under
the property damage and replacement power/business interruption insurance
programs, these Entergy subsidiaries could be subject to assessments if
losses exceed the accumulated funds available to the insurers. As of
December 31, 1998, the maximum amounts of such possible assessments were:
Entergy Arkansas - $17.9 million; Entergy Gulf States - $13.5 million;
Entergy Louisiana - $15.5 million; Entergy Mississippi - $0.7 million;
Entergy New Orleans - $0.4 million; and System Energy - $12.4 million.
Under its agreement with System Energy, SMEPA would share in System
Energy's obligation.
The amount of property insurance maintained for each Entergy nuclear
unit exceeds the NRC's minimum requirement for nuclear power plant
licensees of $1.06 billion per site. NRC regulations provide that the
proceeds of this insurance must be used, first, to place and maintain the
reactor in a safe and stable condition and, second, to complete
decontamination operations. Only after proceeds are dedicated for such use
and regulatory approval is secured would any remaining proceeds be made
available for the benefit of plant owners or their creditors.
Spent Nuclear Fuel and Decommissioning Costs (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy provide for estimated future disposal costs for spent nuclear fuel
in accordance with the Nuclear Waste Policy Act of 1982. The affected
Entergy companies entered into contracts with the DOE, whereby the DOE will
furnish disposal service at a cost of one mill per net KWH generated and
sold after April 7, 1983, plus a one-time fee for generation prior to that
date. Entergy Arkansas is the only Entergy company that generated
electricity with nuclear fuel prior to that date and has recorded a
liability as of December 31, 1998 of approximately $130 million. The fees
payable to the DOE may be adjusted in the future to assure full recovery.
Entergy considers all costs incurred or to be incurred for the disposal of
spent nuclear fuel, except accrued interest, to be proper components of
nuclear fuel expense. Provisions to recover such costs have been or will
be made in applications to regulatory authorities.
Delays have occurred in the DOE's program for the acceptance and
disposal of spent nuclear fuel at a permanent repository. In February
1993, the DOE asserted that it did not have a legal obligation to accept
spent nuclear fuel without an operational repository for which it has not
yet arranged. Entergy Operations and System Fuels joined in lawsuits
against the DOE in the U.S. Court of Appeals for the D.C. Circuit, seeking
clarification of the DOE's responsibility to receive spent nuclear fuel
beginning in 1998. The original suits asked for: 1) a ruling stating that
the Nuclear Waste Policy Act requires the DOE to begin taking title to the
spent fuel and to start removing it from nuclear power plants in 1998; 2) a
mandate for the DOE's nuclear waste management program to begin accepting
fuel in 1998 and for court monitoring of the program; and 3) the potential
for escrow of payments to a nuclear waste fund instead of directly to the
DOE. In July 1996, the court reversed the DOE's interpretation of the 1998
obligation and unanimously ruled that the Nuclear Waste Policy Act creates
an unconditional obligation to begin acceptance of spent fuel by 1998, but
did not make a ruling on the remedies.
In December 1996, the DOE notified contract holders that it
anticipated it would not be able to begin such acceptance until after that
date. In January 1997, Entergy Operations and a coalition of 36 electric
utilities and 46 state agencies filed lawsuits to suspend payments to the
Nuclear Waste Fund. The lawsuits asked the court to: (i) find that the
December 1996 DOE letter demonstrates breach of contract on the part of the
DOE; (ii) order utilities to place the Nuclear Waste Fund payments in an
escrow account and not provide the funds to the DOE until it fulfills its
obligation; (iii) prevent the DOE from taking adverse action against
utilities that withhold payments; and (iv) order the DOE to submit a plan
to the court describing how the agency intends to fulfill its obligation on
an ongoing basis. In November 1997, the court reaffirmed the DOE's
unconditional obligation to begin accepting spent fuel by January 1998, and
ordered the DOE to proceed with contractual remedies consistent with the
DOE's unconditional obligation. Nevertheless, the ruling did not address
the plaintiffs' request for authority to withhold payments to the DOE.
Therefore, in December 1997, Entergy Operations and a coalition of 27
utilities petitioned the DOE to suspend and escrow future payments to the
DOE's waste fund beginning February 1, 1998. In January 1998, the DOE
rejected the coalition's petition. In February 1998, Entergy Operations
and the coalition of 36 electric utilities filed a motion with the court
seeking enforcement of its November 1997 order and other relief. The court
denied this petition in May 1998.
Pending DOE acceptance and disposal of spent nuclear fuel, all Entergy
companies are responsible for their own spent fuel storage. Current
on-site spent fuel storage capacity at Grand Gulf 1 and River Bend is
estimated to be sufficient until approximately 2004 and 2008, respectively.
The spent fuel pool at Waterford 3 is being expanded through the
replacement of the existing storage racks with higher density storage
racks. This expansion should provide sufficient storage for Waterford 3
until 2010. Current on-site spent fuel storage capacity at ANO is
estimated to be sufficient until 2000. An ANO storage facility using dry
casks began operation in 1996. This facility may be expanded as required.
The initial cost of providing additional on-site spent fuel storage
capability anticipated to be required at Grand Gulf 1 and River Bend is
expected to be in the range of $5 million to $10 million per unit. In
addition, about $3 million to $5 million per unit will be required every
two to three years subsequent to 2000 for ANO and every four to five years
subsequent to 2004 and 2008 for Grand Gulf 1 and River Bend, respectively,
until the DOE's repository or storage facility begins accepting such units'
spent fuel.
Total decommissioning costs as of December 31, 1998, for the Entergy
nuclear power plants, excluding co-owner shares, have been estimated as
follows:
Total Estimated
Decommissioning Costs
(In Millions)
ANO 1 and ANO 2 (based on a 1998 cost study reflecting
1997 dollars) $813.1
River Bend (based on a 1996 cost study reflecting
1996 dollars) 419.0
Waterford 3 (based on a 1994 updated study in 1993
dollars) 320.1
Grand Gulf 1 (based on a 1994 cost study using 1993
dollars) 365.9
--------
$1,918.1
========
A decommissioning cost update was prepared for River Bend in 1998 that
produced a revised decommissioning cost estimate of $562.7 million. The
cost update was filed with the PUCT in November 1998 for review.
Entergy Arkansas and Entergy Louisiana are authorized to recover in
rates amounts that, when added to estimated investment income, should be
sufficient to meet the above estimated decommissioning costs for ANO and
Waterford 3, respectively. In the Texas retail jurisdiction, Entergy Gulf
States is recovering in rates River Bend decommissioning costs that total
$385.2 million, based on the 1996 cost study. Entergy Gulf States included
decommissioning costs based on the 1998 update in the PUCT rate review
filed in November 1998. That review is ongoing. In the Louisiana retail
jurisdiction, Entergy Gulf States included decommissioning costs, based on
the 1996 study, in the LPSC rate review filed in May 1996. In June 1996, a
rate decrease was implemented that included decommissioning revenue
requirements based on the 1996 study. In September 1998, the LPSC issued
an order accepting the 1996 cost study amount of $419 million. The
September 1998 order has been appealed. System Energy was previously
recovering in rates amounts sufficient to fund $198 million (in 1989
dollars) of its Grand Gulf 1 decommissioning costs. System Energy included
decommissioning costs (based on the 1994 study) in its rate increase filing
with FERC. Rates requested in this proceeding were placed into effect in
December 1995, subject to refund. FERC has not yet issued an order in the
System Energy rate case.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy periodically review and update estimated decommissioning costs.
Although Entergy is presently under-recovering for Grand Gulf and River
Bend, based on the above estimates, applications have been and will
continue to be made to the appropriate regulatory authorities to reflect in
rates any future change in projected decommissioning costs. The amounts
recovered in rates are deposited in trust funds and reported at market
value as quoted on nationally traded markets or as determined by widely
used pricing services. These trust fund assets largely offset the
accumulated decommissioning liability that is recorded as accumulated
depreciation for Entergy Arkansas, Entergy Gulf States, and Entergy
Louisiana, and is recorded as other deferred credits for System Energy.
The liability associated with the trust funds received from Cajun with the
transfer of Cajun's 30% share of River Bend is also recorded as other
deferred credits by Entergy Gulf States.
The cumulative liabilities and actual decommissioning expenses
recorded in 1998 by Entergy were as follows:
Cumulative 1998 Cumulative
Liabilities as of 1998 Trust Decommissioning Liabilities as of
December 31, 1997 Earnings Expenses December 31, 1998
ANO 1 and ANO 2 $227.0 $10.8 $15.6 $253.4
River Bend 180.7 2.1 5.8 188.6
Waterford 3 60.2 2.9 8.8 71.9
Grand Gulf 1 83.2 5.2 18.9 107.3
------ ----- ----- ------
$551.1 $21.0 $49.1 $621.2
====== ===== ===== ======
In 1997 and 1996, ANO's decommissioning expense was $17.3 million and
$20.1 million, respectively; River Bend's decommissioning expense was $7.5
million and $6.0 million, respectively; Waterford 3's decommissioning
expense was $8.8 million in both years, and Grand Gulf 1's decommissioning
expense was $19.0 million in both years. The actual decommissioning costs
may vary from the estimates because of regulatory requirements, changes in
technology, and increased costs of labor, materials, and equipment.
Management believes that actual decommissioning costs are likely to be
higher than the estimated amounts presented above.
The SEC has questioned certain of the financial accounting practices
of the electric utility industry regarding the recognition, measurement,
and classification of decommissioning costs for nuclear plants in the
financial statements of electric utilities. In response to these
questions, the FASB has been reviewing the accounting for decommissioning
and has expanded the scope of its review to include liabilities related to
the closure and removal of all long-lived assets. If current electric
utility industry accounting practices with respect to nuclear
decommissioning and other closure costs are changed, annual provisions for
such costs could increase.
The EPAct contains a provision that assesses domestic nuclear
utilities with fees for the decontamination and decommissioning of the
DOE's past uranium enrichment operations. The decontamination and
decommissioning assessments are being used to set up a fund into which
contributions from utilities and the federal government will be placed.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy's annual assessments, which will be adjusted annually for inflation,
are approximately $3.8 million, $0.9 million, $1.4 million, and $1.6
million (in 1998 dollars), respectively, for approximately 15 years. As of
December 31, 1998, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and System Energy had recorded liabilities of $30.2 million,
$5.3 million, $11.5 million, and $11.3 million, respectively, for
decontamination and decommissioning fees in other current liabilities and
other noncurrent liabilities. These liabilities were offset in the
consolidated financial statements by regulatory assets. FERC requires that
utilities treat these assessments as costs of fuel as they are amortized
and recover these costs through rates in the same manner as other fuel
costs.
ANO Matters (Entergy Corporation and Entergy Arkansas)
Cracks in steam generator tubes at ANO 2 were discovered and repaired
during an outage in March 1992. Further inspections and repairs were
conducted at subsequent refueling and mid-cycle outages, including the most
recent mid-cycle outage in May 1998. Turbine modifications were installed
in May 1997 to restore most of the output lost due to steam generator
fouling and tube plugging. The unit may be approaching the current limit
for the number of steam generator tubes that can be plugged with the unit
in operation. If the established limit is reached during a future outage,
it could become necessary for Entergy Operations to insert sleeves in steam
generator tubes that were previously plugged. In October 1996, Entergy
Corporation's Board of Directors authorized Entergy Arkansas and Entergy
Operations to negotiate a contract for the fabrication and installation of
replacement steam generators at ANO 2. Entergy estimates the cost of
fabrication and replacement of the steam generators to be approximately
$150 million. Entergy Operations has entered into contracts, with certain
cancellation provisions, for the design, fabrication, and installation of
replacement steam generators. It is anticipated that the steam generators
will be installed during a planned refueling outage in 2000. In December
1998, the APSC issued an order finding replacement of the ANO 2 steam
generators is in the public interest. Entergy Operations periodically
meets with the NRC to discuss the results of inspections of the steam
generator tubes, as well as the timing of future inspections.
Environmental Issues
(Entergy Gulf States)
Entergy Gulf States has been designated as a PRP for the clean-up of
certain hazardous waste disposal sites. Entergy Gulf States is currently
negotiating with the EPA and state authorities regarding the clean-up of
these sites. Several class action and other suits have been filed in state
and federal courts seeking relief from Entergy Gulf States and others for
damages caused by the disposal of hazardous waste and for asbestos-related
disease allegedly resulting from exposure on Entergy Gulf States premises.
While the amounts at issue in the clean-up efforts and suits may be
substantial, Entergy Gulf States believes that its results of operations
and financial condition will not be materially adversely affected by the
outcome of the suits. As of December 31, 1998, a remaining provision of
$20 million existed relating to the clean-up of the remaining sites at
which Entergy Gulf States has been designated as a PRP.
(Entergy Louisiana)
During 1993, the LDEQ issued new rules for solid waste regulation,
including regulation of wastewater impoundments. Entergy Louisiana has
determined that certain of its power plant wastewater impoundments were
affected by these regulations and has chosen to upgrade or close them. As
a result, a remaining recorded liability in the amount of $5.9 million
existed as of December 31, 1998, for wastewater impoundment upgrades and
closures. Completion of this work is pending LDEQ approval. Cumulative
expenditures relating to the upgrades and closures of wastewater
impoundments are $7.1 million as of December 31, 1998.
City Franchise Ordinances (Entergy New Orleans)
Entergy New Orleans provides electric and gas service in the City of
New Orleans pursuant to City franchise ordinances. These ordinances
contain a continuing option for the City to purchase Entergy New Orleans'
electric and gas utility properties.
Waterford 3 Lease Obligations (Entergy Louisiana)
On September 28, 1989, Entergy Louisiana entered into three identical
transactions for the sale and leaseback of undivided interests (aggregating
approximately 9.3%) in Waterford 3. In July 1997, Entergy Louisiana caused
the lessors to issue $307,632,000 aggregate principal amount of Waterford 3
Secured Lease Obligation Bonds, 8.09% Series due 2017, to refinance the
outstanding bonds originally issued to finance the purchase of the
undivided interests by the lessors. The lease payments were reduced to
reflect the lower interest costs. Upon the occurrence of certain events,
Entergy Louisiana may be obligated to pay amounts sufficient to permit the
Owner Participants to withdraw from the lease transactions. Entergy
Louisiana may be required to assume the outstanding bonds issued by the
Owner Trustee to finance, in part, its acquisition of the undivided
interests in Waterford 3.
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.
Grand Gulf 1-Related Agreements
Capital Funds Agreement (Entergy Corporation and System Energy)
Entergy Corporation has agreed to supply System Energy with sufficient
capital to (i) maintain System Energy's equity capital at an amount equal
to a minimum of 35% of its total capitalization (excluding short-term
debt), and (ii) permit the continued commercial operation of Grand Gulf 1
and pay in full all indebtedness for borrowed money of System Energy when
due. In addition, under supplements to the Capital Funds Agreement
assigning System Energy's rights as security for specific debt of System
Energy, Entergy Corporation has agreed to make cash capital contributions
to enable System Energy to make payments on such debt when due.
System Energy has entered into agreements with Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans whereby
they are obligated to purchase their respective entitlements of capacity
and energy from System Energy's 90% ownership and leasehold interest in
Grand Gulf 1, and to make payments that, together with other available
funds, are adequate to cover System Energy's operating expenses. System
Energy would have to secure funds from other sources, including Entergy
Corporation's obligations under the Capital Funds Agreement, to cover any
shortfalls from payments received from Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans under these agreements.
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
System Energy has agreed to sell all of its 90% owned and leased share
of capacity and energy from Grand Gulf 1 to Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans in accordance with
specified percentages (Entergy Arkansas-36%, Entergy Louisiana-14%, Entergy
Mississippi-33%, and Entergy New Orleans-17%) as ordered by FERC. Charges
under this agreement are paid in consideration for the purchasing
companies' respective entitlement to receive capacity and energy and are
payable irrespective of the quantity of energy delivered so long as the
unit remains in commercial operation. The agreement will remain in effect
until terminated by the parties and the termination is approved by FERC,
most likely upon Grand Gulf 1's retirement from service. Monthly
obligations for payments under the agreement are approximately $21 million,
$8 million, $19 million, and $10 million for Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans, respectively.
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans are individually obligated to make payments or subordinated
advances to System Energy in accordance with stated percentages (Entergy
Arkansas-17.1%, Entergy Louisiana-26.9%, Entergy Mississippi-31.3%, and
Entergy New Orleans-24.7%) in amounts that, when added to amounts received
under the Unit Power Sales Agreement or otherwise, are adequate to cover
all of System Energy's operating expenses as defined, including an amount
sufficient to amortize the cost of Grand Gulf 2 over 27 years. (See
Reallocation Agreement terms below.) System Energy has assigned its rights
to payments and advances to certain creditors as security for certain
obligations. Since commercial operation of Grand Gulf 1, payments under
the Unit Power Sales Agreement have exceeded the amounts payable under the
Availability Agreement. Accordingly, no payments under the Availability
Agreement have ever been required. If Entergy Arkansas or Entergy
Mississippi fails to make its Unit Power Sales Agreement payments, and
System Energy is unable to obtain funds from other sources, Entergy
Louisiana and Entergy New Orleans could become subject to claims or demands
by System Energy or its creditors for payments or advances under the
Availability Agreement (or the assignments thereof) equal to the difference
between their required Unit Power Sales Agreement payments and their
required Availability Agreement payments.
Reallocation Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
System Energy, Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans entered into the Reallocation
Agreement relating to the sale of capacity and energy from Grand Gulf and
the related costs, in which Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans agreed to assume all of Entergy Arkansas'
responsibilities and obligations with respect to Grand Gulf under the
Availability Agreement. FERC's decision allocating a portion of Grand Gulf
1 capacity and energy to Entergy Arkansas supersedes the Reallocation
Agreement as it relates to Grand Gulf 1. Responsibility for any Grand Gulf
2 amortization amounts has been individually allocated (Entergy Louisiana-
26.23%, Entergy Mississippi-43.97%, and Entergy New Orleans-29.80%) under
the terms of the Reallocation Agreement. However, the Reallocation
Agreement does not affect Entergy Arkansas' obligation to System Energy's
lenders under the assignments referred to in the preceding paragraph.
Entergy Arkansas would be liable for its share of such amounts if Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans were unable to meet
their contractual obligations. No payments of any amortization amounts
will be required so long as amounts paid to System Energy under the Unit
Power Sales Agreement, including other funds available to System Energy,
exceed amounts required under the Availability Agreement, which is expected
to be the case for the foreseeable future.
Reimbursement Agreement (System Energy)
In December 1988, System Energy entered into two separate, but
identical, arrangements for the sale and leaseback of an approximate
aggregate 11.5% ownership interest in Grand Gulf 1. In connection with the
equity funding of the sale and leaseback arrangements, letters of credit
are required to be maintained to secure certain amounts payable for the
benefit of the equity investors by System Energy under the leases. The
current letters of credit are effective until January 15, 2000.
Under the provisions of a bank letter of credit reimbursement
agreement, System Energy has agreed to a number of covenants relating to
the maintenance of certain capitalization and fixed charge coverage ratios.
System Energy agreed, during the term of the reimbursement agreement, to
maintain its equity at not less than 33% of its adjusted capitalization
(defined in the reimbursement agreement to include certain amounts not
included in capitalization for financial statement purposes). In addition,
System Energy must maintain, with respect to each fiscal quarter during the
term of the reimbursement agreement, a ratio of adjusted net income to
interest expense (calculated, in each case, as specified in the
reimbursement agreement) of at least 1.60 times earnings. As of December
31, 1998, System Energy's equity approximated 37.33% of its adjusted
capitalization, and its fixed charge coverage ratio was 2.58.
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 10. LEASES
General
As of December 31, 1998, Entergy had capital leases and non-cancelable
operating leases for equipment, buildings, vehicles, and fuel storage
facilities (excluding nuclear fuel leases and the sale and leaseback
transactions) with minimum lease payments as follows:
Capital Leases
Entergy Entergy
Year Entergy Arkansas Gulf States
(In Thousands)
1999 $26,926 $10,953 $12,063
2000 25,380 9,646 11,829
2001 23,677 9,646 11,853
2002 19,415 9,646 9,720
2003 19,566 9,646 9,720
Years thereafter 59,031 32,565 26,466
-----------------------------------
Minimum lease payments 173,995 82,102 81,651
Less: Amount
representing interest 40,538 23,898 15,540
-----------------------------------
Present value of net
minimum lease payments $133,457 $58,204 $66,111
===================================
Operating Leases
Entergy Entergy Entergy
Year Entergy Arkansas Gulf States Louisiana
(In Thousands)
1999 $66,644 $22,781 $17,437 $4,597
2000 64,047 22,620 17,157 4,522
2001 57,708 22,699 14,914 1,167
2002 48,666 20,173 12,226 1,025
2003 34,576 9,221 11,763 917
Years thereafter 146,003 37,171 45,236 -
------------------------------------------
Minimum lease payments $417,644 $134,665 $118,733 $12,228
==========================================
Rental expense for Entergy's leases (excluding nuclear fuel leases and
the sale and leaseback transactions) amounted to approximately $69.4
million, $70.7 million, and $62.1 million in 1998, 1997, and 1996,
respectively. These amounts include $19.4 million, $19.7 million, and
$26.0 million, respectively, for Entergy Arkansas; $18.1 million, $17.6
million, and $11.8 million, respectively, for Entergy Gulf States; and
$13.3 million, $12.8 million, and $13.7 million, respectively, for Entergy
Louisiana.
Nuclear Fuel Leases (Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, System Energy)
As of December 31, 1998, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and System Energy each had arrangements to lease nuclear
fuel in an aggregate amount up to $110 million, $75 million, $80 million,
and $100 million, respectively. As of December 31, 1998, the unrecovered
cost base of Entergy Arkansas', Entergy Gulf States', Entergy Louisiana's,
and System Energy's nuclear fuel leases amounted to approximately $95.6
million, $46.6 million, $75.8 million, and $64.6 million, respectively.
The lessors finance the acquisition and ownership of nuclear fuel through
credit agreements and the issuance of notes. The credit agreements for
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy
have been extended and now have termination dates of December 2000,
December 2000, January 2000, and February 2001, respectively. Such
termination dates may be extended from time to time with the consent of the
lenders. The intermediate-term notes issued pursuant to these fuel lease
arrangements have varying maturities through February 15, 2001. It is
expected that additional financing under the leases will be arranged as
needed to acquire additional fuel, to pay interest, and to pay maturing
debt. However, if such additional financing cannot be arranged, the lessee
in each case must purchase sufficient nuclear fuel to allow the lessor to
meet its obligations.
Lease payments are based on nuclear fuel use. The table below
represents the nuclear fuel lease expense and related interest charged to
operations by the domestic utility companies and System Energy in 1998,
1997, and 1996:
1998 1997 1996
Lease Lease Lease
Expense Interest Expense Interest Expense Interest
(In Millions)
Entergy Arkansas $50.5 $4.9 $53.7 $6.4 $53.9 $7.1
Entergy Gulf States 26.1 3.1 25.5 3.2 27.1 4.2
Entergy Louisiana 36.8 3.9 29.4 3.7 39.8 4.9
System Energy 35.4 4.7 41.1 5.4 37.7 5.5
-------------------------------------------------------
Total $148.8 $16.6 $149.7 $18.7 $158.5 $21.7
=======================================================
Sale and Leaseback Transactions
Waterford 3 Lease Obligations (Entergy Louisiana)
Entergy Louisiana is the lessee of three separate undivided interests
in Waterford 3 under three separate, but substantially identical, long-term
net leases. The lessors under such leases acquired the undivided interests
(aggregating approximately 9.3%) in Waterford 3 from Entergy Louisiana in
three separate sale-leaseback transactions that occurred in 1989. Entergy
Louisiana is leasing back the interests on a net lease basis over an
approximate 28-year basic lease term. Approximately 87.7% of the aggregate
consideration paid by the lessors for their respective undivided interests
was provided to the lessors from the issuance of Waterford 3 Secured Lease
Obligation Bonds (Initial Series Bonds) in 1989. Interests were acquired
from Entergy Louisiana with funds obtained from the issuance and sale by
the purchasers of intermediate-term and long-term secured lease obligation
bonds. The lease payments to be made by Entergy Louisiana will be
sufficient to service such debt.
Entergy Louisiana did not exercise its option to repurchase the
undivided interests in Waterford 3 in September 1994. As a result, Entergy
Louisiana was required to provide collateral for the equity portion of
certain amounts payable by Entergy Louisiana under the leases. Such
collateral was in the form of a new series of non-interest-bearing first
mortgage bonds in the aggregate principal amount of $208.2 million issued
by Entergy Louisiana in September 1994.
In July 1997, Entergy Louisiana caused the Waterford 3 lessors to
issue $307.6 million aggregate principal amount of Waterford 3 Secured
Lease Obligation Bonds, 8.09% Series due 2017, to refinance the outstanding
bonds originally issued to finance the purchase of the undivided interests
by the lessors. The lease payments have been reduced to reflect the lower
interest costs.
Upon the occurrence of certain events (including lease events of
default, events of loss, deemed loss events or certain adverse "Financial
Events" with respect to Entergy Louisiana), Entergy Louisiana may be
obligated to pay amounts sufficient to permit the Owner Participants to
withdraw from the lease transactions, and Entergy Louisiana may be required
to assume the outstanding bonds issued by the Owner Trustee to finance, in
part, its acquisition of the undivided interests in Waterford 3.
"Financial Events" include, among other things, failure by Entergy
Louisiana, following the expiration of any applicable grace or cure
periods, to maintain (1) as of the end of any fiscal quarter, total equity
capital (including preferred stock) at least equal to 30% of adjusted
capitalization, or (2) in respect of the 12-month period ending on the last
day of any fiscal quarter, a fixed charge coverage ratio of at least 1.50.
As of December 31, 1998, Entergy Louisiana's total equity capital
(including preferred stock) was 47.5% of adjusted capitalization and its
fixed charge coverage ratio was 3.10.
As of December 31, 1998, Entergy Louisiana had future minimum lease
payments (reflecting an overall implicit rate of 7.45%) in connection with
the Waterford 3 sale and leaseback transactions, which are recorded as long-
term debt, as follows (in thousands):
1999 $49,108
2000 42,573
2001 40,909
2002 39,246
2003 59,709
Years thereafter 472,429
--------
Total 703,974
Less: Amount
representing interest 350,374
--------
Present value of net
minimum lease payments $353,600
========
Grand Gulf 1 Lease Obligations (System Energy)
In December 1988 System Energy entered into two arrangements for the
sale and leaseback of an aggregate 11.5% undivided ownership interest in
Grand Gulf 1 for an aggregate cash consideration of $500 million. System
Energy is leasing back the undivided interest on a net lease basis over a
26 1/2-year basic lease term. System Energy has options to terminate the
leases and to repurchase the undivided interest in Grand Gulf 1 at certain
intervals during the basic lease term. Further, at the end of the basic
lease term, System Energy has an option to renew the leases or to
repurchase the undivided interest in Grand Gulf 1.
Due to "continuing involvement" by System Energy, the sale and
leaseback arrangements of the undivided portions of Grand Gulf 1, as
described above, are required to be reflected for financial reporting
purposes as financing transactions in System Energy's financial statements.
The amounts charged to expense for financial reporting purposes include the
interest portion of the lease obligations and depreciation of the plant.
However, operating revenues include the recovery of the lease payments
because the transactions are accounted for as sales and leasebacks for
ratemaking purposes. The total of interest and depreciation expense
exceeds the corresponding revenues realized during the early part of the
lease term. Consistent with a recommendation contained in a FERC audit
report, System Energy recorded as a net deferred asset the difference
between the recovery of the lease payments and the amounts expensed for
interest and depreciation and is recording such difference as a deferred
asset on an ongoing basis. The amount of this deferred asset was $85.9
million and $84.0 million as of December 31, 1998, and 1997, respectively.
As of December 31, 1998, System Energy had future minimum lease
payments (reflecting an implicit rate of 7.02%), which are recorded as long-
term debt as follows (in thousands):
1999 $42,753
2000 42,753
2001 46,803
2002 53,827
2003 48,524
Years thereafter 610,913
--------
Total 845,573
Less: Amount
representing interest 364,272
--------
Present value of net
minimum lease payments $481,301
========
NOTE 11. POSTRETIREMENT BENEFITS (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy)
Pension Plans
Entergy has two postretirement benefit plans, "Entergy Corporation
Retirement Plan for Non-Bargaining Employees" and "Entergy Corporation
Retirement Plan for Bargaining Employees," covering substantially all of
its domestic employees. The pension plans are noncontributory and provide
pension benefits that are based on employees' credited service and
compensation during the final years before retirement. Entergy Corporation
and its subsidiaries fund pension costs in accordance with contribution
guidelines established by the Employee Retirement Income Security Act of
1974, as amended, and the Internal Revenue Code of 1986, as amended. The
assets of the plans include common and preferred stocks, fixed-income
securities, interest in a money market fund, and insurance contracts.
Total 1998, 1997, and 1996 pension cost of Entergy Corporation and its
subsidiaries, including amounts capitalized, included the following
components (in thousands):
<TABLE>
<CAPTION>
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost-benefits earned
during the period $ 45,470 $ 7,428 $ 5,448 $ 4,148 $ 1,913 $ 818 $ 2,494
Interest cost on projected
benefit obligation 192,132 27,919 24,564 16,845 10,362 3,020 3,265
Expected return on assets (233,058) (31,119) (32,506) (22,526) (12,335) (2,082) (3,979)
Amortization of transition asset (9,740) (2,335) (2,387) (2,808) (1,250) (196) (597)
Amortization of prior service cost 11,459 1,226 1,434 558 480 259 80
----------------------------------------------------------------------------
Net pension cost (income) $ 6,263 $ 3,119 $ (3,447) $ (3,783) $ (830) $ 1,819 $ 1,263
============================================================================
</TABLE>
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost-benefits earned
during the period $ 47,703 $ 6,937 $ 5,365 $ 3,762 $ 1,893 $ 763 $ 2,389
Interest cost on projected
benefit obligation 193,665 26,472 23,684 15,778 10,011 2,783 2,942
Expected return on assets (220,641) (28,050) (29,119) (19,988) (11,258) (1,915) (3,480)
Amortization of transition asset (2,546) (2,336) (2,387) (2,808) (1,250) (195) (597)
Amortization of prior service cost 4,266 1,227 1,434 558 480 259 80
----------------------------------------------------------------------------
Net pension cost (income) $ 22,447 $ 4,250 $ (1,023) $ (2,698) $ (124) $ 1,695 $ 1,334
============================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost-benefits earned
during the period $ 31,584 $ 7,605 $ 5,852 $ 4,684 $ 2,157 $ 1,147 $ 2,658
Interest cost on projected
benefit obligation 84,303 24,540 20,952 15,735 9,462 2,973 2,645
Expected return on assets (94,438) (26,090) (28,122) (18,656) (10,614) (1,802) (3,141)
Amortization of transition asset (2,547) (2,336) (2,387) (2,808) (1,250) (195) (597)
Amortization of prior service cost 4,656 1,227 1,825 558 479 259 80
Recognized net (gain)/loss 69 31 - - - - 38
----------------------------------------------------------------------------
Net pension cost (income) $ 23,627 $ 4,977 $ (1,880) $ (487) $ 234 $ 2,382 $ 1,683
============================================================================
</TABLE>
The funded status of Entergy's various pension plans as of
December 31, 1998 and 1997 was (in thousands):
<TABLE>
<CAPTION>
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Change in Projected Benefit
Obligation (PBO)
Balance at 1/1/98 $2,495,107 $381,581 $327,842 $226,254 $140,317 $ 40,568 $46,433
Service cost 45,470 7,428 5,448 4,148 1,913 818 2,494
Interest cost 192,132 27,919 24,564 16,845 10,362 3,020 3,265
Actuarial (gain)/loss 142,217 41,742 45,302 29,769 15,544 5,319 4,005
Benefits paid (161,999) (23,032) (25,868) (15,158) (9,358) (1,844) (658)
Disposition of subsidiaries (1,159,676) - - - - - -
-------------------------------------------------------------------------------
Balance at 12/31/98 $1,553,251 $435,638 $377,288 $261,858 $158,778 $ 47,881 $55,539
-------------------------------------------------------------------------------
Change in Plan Assets
Fair value of assets at 1/1/98 $3,133,232 $427,175 $454,912 $317,650 $174,434 $ 23,145 $52,539
Actual return on plan assets 472,181 67,058 76,254 54,171 27,318 2,000 8,440
Employer contributions 72,596 2,152 8,067 - 44 5,626 211
Benefits paid (161,999) (23,032) (25,868) (15,158) (9,358) (1,844) (658)
Disposition of subsidiaries (1,724,818) - - - - - -
-------------------------------------------------------------------------------
Fair value of assets at 12/31/98 $1,791,192 $473,353 $513,365 $356,663 $192,438 $ 28,927 $60,532
-------------------------------------------------------------------------------
Funded status $237,941 $37,715 $136,077 $ 94,805 $ 33,660 $(18,954) $ 4,993
Unrecognized transition asset (24,798) (7,007) (4,775) (8,423) (3,751) (376) (4,097)
Unrecognized prior service cost 32,748 12,429 11,215 4,796 3,935 1,447 941
Unrecognized net (gain)/loss (239,781) (63,274) (178,188) (87,536) (33,921) 12,507 (7,100)
-----------------------------------------------------------------------------
Prepaid/(accrued) pension cost $ 6,110 $(20,137) $(35,671) $ 3,642 $ (77) $ (5,376) $(5,263)
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Change in Projected Benefit
Obligation (PBO)
Balance at 1/1/97* $2,358,442 $338,306 $315,781 $217,710 $129,577 $ 41,511 $38,401
Service cost 47,703 6,937 5,365 3,762 1,893 763 2,389
Interest cost 193,665 26,472 23,684 15,778 10,011 2,783 2,942
Amendments 2,121 - 2,121 - - - -
Employee contributions 6,107 - - - - - -
Actuarial (gain)/loss 48,563 32,405 7,262 3,907 7,871 (3,025) 3,302
Benefits paid (161,494) (22,539) (26,371) (14,903) (9,035) (1,464) (601)
-------------------------------------------------------------------------------
Balance at 12/31/97 $2,495,107 $381,581 $327,842 $226,254 $140,317 $ 40,568 $46,433
-------------------------------------------------------------------------------
Change in Plan Assets
Fair value of assets at 1/1/97* $2,870,072 $374,849 $397,749 $271,857 $150,398 $ 21,801 $43,824
Actual return on plan assets 392,908 73,994 83,291 59,038 30,058 1,896 9,044
Employer contributions 31,746 871 243 1,658 3,013 912 272
Benefits paid (161,494) (22,539) (26,371) (14,903) (9,035) (1,464) (601)
-------------------------------------------------------------------------------
Fair value of assets at 12/31/97 $3,133,232 $427,175 $454,912 $317,650 $174,434 $ 23,145 $52,539
-------------------------------------------------------------------------------
Funded status $638,125 $45,594 $127,070 $ 91,396 $ 34,117 $(17,423) $ 6,106
Unrecognized transition asset (32,151) (9,343) (7,162) (11,230) (5,001) (571) (4,694)
Unrecognized prior service cost 35,500 13,656 12,649 5,353 4,414 1,706 1,021
Unrecognized net (gain)/loss (420,802) (69,076) (179,742) (85,660) (34,482) 7,106 (6,645)
-----------------------------------------------------------------------------
Prepaid/(accrued) pension cost $220,672 $(19,169) $(47,185) $ (141) $ (952) $ (9,182) $(4,212)
-----------------------------------------------------------------------------
* As a result of the London Electricity acquisition, effective February 7,
1997, the PBO balance and the fair value of assets at January 1, 1997
include $1.1 billion and $1.5 billion, respectively, related to Entergy
London.
</TABLE>
The significant actuarial assumptions used in computing the
information above for the domestic utility companies and System Energy for
1998, 1997, and 1996 were as follows:
1998 1997 1996
Weighted-average discount rate 6.75% 7.25% 7.75%
Weighted-average rate of increase in
future compensation levels 4.6% 4.6% 4.6%
Expected long-term rate of return on plan
assets 9.0% 9.0% 9.0%
Transition assets of Entergy are being amortized over the
greater of the remaining service period of active
participants or 15 years.
Other Postretirement Benefits
Entergy also provides certain health care and life insurance benefits
for retired employees. Substantially all domestic employees may become
eligible for these benefits if they reach retirement age while still
working for Entergy.
Effective January 1, 1993, Entergy adopted SFAS 106, which required a
change from a cash method to an accrual method of accounting for
postretirement benefits other than pensions. The domestic utility companies
have sought approval, in their respective regulatory jurisdictions, to
implement the appropriate accounting requirements related to SFAS 106 for
ratemaking purposes. Entergy Arkansas received an order permitting
deferral, as a regulatory asset, of the difference between its annual cash
expenditures for postretirement benefits other than pensions and the SFAS
106 accrual, for a five-year period that began January 1, 1993. In
December 1997, the APSC issued an order allowing the 15-year amortization
of this regulatory asset. In 1998, Entergy Arkansas began to recover its
SFAS 106 expenses (including the amortization of the regulatory asset) in
rates as allowed by the APSC. Entergy Mississippi is expensing its SFAS
106 costs, which are reflected in rates pursuant to an order from the MPSC
in connection with Entergy Mississippi's formulary incentive rate plan.
Entergy New Orleans is expensing its SFAS 106 costs. Pursuant to the
PUCT's May 26, 1995, amended order, Entergy Gulf States is currently
collecting the Texas portion of its SFAS 106 costs in rates. The LPSC
ordered Entergy Gulf States and Entergy Louisiana to continue the use of
the pay-as-you-go method for ratemaking purposes for postretirement
benefits other than pensions, but the LPSC retains the flexibility to
examine individual companies' accounting for postretirement benefits to
determine if special exceptions to this order are warranted.
Pursuant to regulatory directives, Entergy Arkansas, Entergy
Mississippi, Entergy New Orleans, the portion of Entergy Gulf States
regulated by the PUCT, and System Energy fund postretirement benefit
obligations collected in rates. System Energy is funding on behalf of
Entergy Operations postretirement benefits associated with Grand Gulf 1.
Entergy Louisiana and Entergy Gulf States continue to fund a portion of
these benefits regulated by the LPSC and FERC on a pay-as-you-go basis.
The assets of the various postretirement benefit plans other than pensions
include common stocks, fixed-income securities, and a money market fund.
At January 1, 1993, the actuarially determined accumulated postretirement
benefit obligation (APBO) earned by retirees and active employees was
estimated to be approximately $241.4 million and $128 million for Entergy
(other than Entergy Gulf States) and for Entergy Gulf States, respectively.
Such obligations are being amortized over a 20-year period beginning in
1993.
Total 1998, 1997, and 1996 postretirement benefit costs of Entergy
Corporation and its subsidiaries, including amounts capitalized and
deferred, included the following components (in thousands):
<TABLE>
<CAPTION>
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost-benefits earned
during the period $ 13,878 $ 3,325 $ 2,553 $ 1,776 $ 862 $ 432 $ 871
Interest cost on APBO 28,443 6,519 8,103 4,089 2,085 2,714 652
Expected return on assets (5,260) (215) (2,385) - (1,059) (1,155) (446)
Amortization of transition
obligation 17,874 3,954 5,803 2,971 1,502 2,678 262
Amortization of prior service cost 44 - 44 - - - -
Recognized net (gain)/loss (3,501) - (1,216) (686) (264) (1,024) (79)
----------------------------------------------------------------------------
Net postretirement benefit cost $ 51,478 $ 13,583 $ 12,902 $ 8,150 $ 3,126 $ 3,645 $ 1,260
============================================================================
</TABLE>
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost-benefits earned
during the period $ 13,991 $ 3,204 $ 3,227 $ 2,081 $ 1,092 $ 618 $ 939
Interest cost on APBO 29,317 6,232 9,466 4,490 2,278 3,106 648
Expected return on assets (3,386) - (1,637) - (695) (840) (214)
Amortization of transition
obligation 15,686 3,954 5,803 2,971 1,502 2,678 262
Amortization of prior service cost 44 - 44 - - - -
Recognized net (gain)/loss 134 (238) 672 (348) (103) (742) -
----------------------------------------------------------------------------
Net postretirement benefit cost $ 55,786 $ 13,152 $ 17,575 $ 9,194 $ 4,074 $ 4,820 $ 1,635
============================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Service cost-benefits earned
during the period $ 14,351 $ 3,128 $ 3,476 $ 2,155 $ 1,081 $ 661 $ 890
Interest cost on APBO 26,133 5,580 8,164 4,283 2,171 3,085 512
Expected return on assets (1,654) - (388) - (479) (681) (106)
Amortization of transition
obligation 15,686 3,954 5,803 2,971 1,502 2,678 262
Amortization of prior service cost 44 - 44 - - - -
Recognized net (gain)/loss (1,516) (557) (477) (277) (44) (701) (53)
----------------------------------------------------------------------------
Net postretirement benefit cost $ 53,044 $ 12,105 $ 16,622 $ 9,132 $ 4,231 $ 5,042 $ 1,505
============================================================================
</TABLE>
The funded status of Entergy's postretirement plans as of December 31,
1998 and 1997 was (in thousands):
<TABLE>
<CAPTION>
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Change in APBO
Balance at 1/1/98 $ 427,962 $ 91,097 $136,228 $ 65,385 $ 33,273 $ 43,833 $10,464
Service cost 13,878 3,325 2,553 1,776 862 432 871
Interest cost 28,443 6,519 8,103 4,089 2,085 2,714 652
Amendments 8,005 8,005 - - - - -
Actuarial (gain)/loss (13,773) (7,090) (15,007) (3,698) (1,545) (2,589) (573)
Benefits paid (20,006) - (7,446) (4,103) (2,271) (3,552) (346)
-------------------------------------------------------------------------------
Balance at 12/31/98 $ 444,509 $101,856 $124,431 $ 63,449 $ 32,404 $ 40,838 $11,068
-------------------------------------------------------------------------------
Change in Plan Assets
Fair value of assets at 1/1/98 $ 59,688 $ - $ 25,696 $ - $ 11,807 $ 17,350 $ 4,835
Actual return on plan assets 4,616 713 1,165 - 1,612 405 721
Employer contributions 52,372 18,151 12,095 4,103 7,611 6,177 1,947
Benefits paid (27,097) (7,090) (7,446) (4,103) (2,271) (3,552) (347)
-------------------------------------------------------------------------------
Fair value of assets at 12/31/98 $ 89,579 $ 11,774 $ 31,510 $ - $ 18,759 $ 20,380 $ 7,156
-------------------------------------------------------------------------------
Funded status $(354,930) $(90,082) $(92,921) $(63,449) $(13,645) $(20,458) $(3,912)
Unrecognized transition asset 160,613 55,344 81,247 41,604 21,027 37,505 3,670
Unrecognized prior service cost 379 - 379 - - - -
Unrecognized net (gain)/loss 24,704 3,403 (14,186) (7,351) (4,539) (12,337) (1,327)
------------------------------------------------------------------------------
Prepaid/(accrued) postretirement
benefit asset/(liability) $(169,234) $(31,335) $(25,481) $(29,196) $ 2,843 $ 4,710 $(1,569)
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1997 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
<S> <C> <C> <C> <C> <C> <C> <C>
Change in APBO
Balance at 1/1/97 $ 365,199 $ 78,049 $112,801 $ 59,699 $ 30,229 $ 41,937 $ 7,849
Service cost 13,991 3,204 3,227 2,081 1,092 618 939
Interest cost 29,317 6,232 9,466 4,490 2,278 3,106 648
Actuarial (gain)/loss 43,908 9,072 17,897 3,040 1,573 1,880 1,225
Benefits paid (24,453) (5,460) (7,163) (3,925) (1,899) (3,708) (197)
-------------------------------------------------------------------------------
Balance at 12/31/97 $ 427,962 $ 91,097 $136,228 $ 65,385 $ 33,273 $ 43,833 $10,464
-------------------------------------------------------------------------------
Change in Plan Assets
Fair value of assets at 1/1/97 $ 38,152 $ - $ 15,599 $ - $ 7,553 $ 12,711 $ 2,289
Actual return on plan assets 11,626 - 6,080 - 1,819 3,216 511
Employer contributions 34,363 5,460 11,180 3,925 4,334 5,131 2,232
Benefits paid (24,453) (5,460) (7,163) (3,925) (1,899) (3,708) (197)
-------------------------------------------------------------------------------
Fair value of assets at 12/31/97 $ 59,688 $ - $ 25,696 $ - $ 11,807 $ 17,350 $ 4,835
-------------------------------------------------------------------------------
Funded status $(368,274) $(91,097) $(110,532) $(65,385) $(21,466) $(26,483) $(5,629)
Unrecognized transition asset 172,085 59,298 87,050 44,575 22,529 40,183 3,932
Unrecognized prior service cost 423 - 423 - - - -
Unrecognized net (gain)/loss 25,638 (4,104) (1,615) (4,338) (2,705) (11,522) (559)
------------------------------------------------------------------------------
Prepaid/(accrued) postretirement
benefit asset/(liability) $(170,128) $(35,903) $(24,674) $(25,148) $ (1,642) $ 2,178 $(2,256)
------------------------------------------------------------------------------
</TABLE>
The assumed health care cost trend rate used in measuring the APBO of
Entergy was 6.0% for 1999, gradually decreasing each successive year until
it reaches 5.0% in 2006. A one percentage-point change in the assumed
health care cost trend rate for 1998 would have the following effects (in
thousands):
<TABLE>
<CAPTION>
1 Percentage Point Increase 1 Percentage Point Decrease
Increase in the Decrease in the
Increase in sum of service Decrease in the sum of service
1998 the APBO cost and interest APBO cost and interest
cost cost
<S> <C> <C> <C> <C>
Entergy $37,073 $4,930 ($31,149) ($4,037)
Entergy Arkansas 7,997 1,119 (6,746) (918)
Entergy Gulf States 11,085 1,214 (9,338) (1,000)
Entergy Louisiana 4,801 626 (4,051) (515)
Entergy Mississippi 2,422 301 (2,042) (248)
Entergy New Orleans 2,574 239 (2,206) (201)
System Energy 1,248 250 (1,025) (201)
</TABLE>
The significant actuarial assumptions used in determining the APBO for
1998, 1997, and 1996 were as follows:
1998 1997 1996
Weighted-average discount rate 6.75% 7.25% 7.75%
Weighted-average rate of increase in
future compensation levels 4.6% 4.6% 4.6%
Expected long-term rate of return on
plan assets 9.0% 9.0% 9.0%
NOTE 12. DISPOSITION OF SUBSIDIARY BUSINESSES (Entergy Corporation)
In August 1998, Entergy's Board of Directors approved a new strategic
direction for Entergy that included the sale of several businesses. These
businesses include Entergy London and its wholly-owned subsidiary London
Electricity; CitiPower Pty.; Edesur, S.A.; Entergy Security, Inc.;
Efficient Solutions, Inc.; and certain portions of Entergy's
telecommunications businesses. The results of operations of these
businesses are included in Entergy's Consolidated Statements of Income and
Comprehensive Income through their respective dates of sale. Gains or
losses arising from sales concluded in 1998 are included in "Other Income
(Deductions), Sale of non-regulated businesses" in that statement.
In September 1998, Entergy sold its energy management subsidiary,
Efficient Solutions, Inc. (formerly Entergy Integrated Solutions, Inc.).
The loss on the sale was approximately $69 million ($36 million net of tax,
or $0.15 per common share).
In December 1998, Entergy sold its London, England electricity
distribution and supply subsidiary, London Electricity. The gain on the
sale was approximately $327 million ($247 million net of tax, or $1.00 per
common share). The majority of the net proceeds from the London
Electricity sale were invested in notes receivable totaling BPS574 million
($947 million). The banks obligated on the notes receivable are each rated
by Standard & Poor's at A-1+ on their short-term obligations. These notes
mature in August 1999.
Entergy has entered into foreign currency forward contracts to hedge
the U.S. dollar equivalent amount of these notes and related accrued
interest at maturity. The forward contracts are in the notional amount of
BPS600 million, mature in August 1999, and lock in an average spot rate of
$1.666125 to BPS1. The banks obligated on the forward contracts are rated
by Standard & Poor's at A-1 or above on their short-term obligations. At
maturity, Entergy expects to receive approximately $1 billion, including
accrued interest, from the notes after the effects of hedging.
Management's estimate of the fair value of the forward contracts as of
December 31, 1998, based on quoted currency exchange rates, is a net asset
of approximately $7.3 million.
In December 1998, Entergy sold its Melbourne, Australia electricity
distribution subsidiary, CitiPower. The gain on the sale was approximately
$30 million ($19 million net of tax, or $0.08 per common share).
In January 1999, Entergy sold its security monitoring subsidiary,
Entergy Security, Inc., at a small gain. This gain will be reflected in
Entergy's 1999 results of operations.
The businesses sold through December 31, 1998 collectively represented
$6.7 billion of Entergy's total assets at the time of their respective
sales and generated $177 million of Entergy's net income, excluding gains
or losses from disposition, for the year ended December 31, 1998. Further
information on the results of operations and total assets of Entergy London
and CitiPower is included in Note 14 to the financial statements.
An adjustment to the carrying amounts of Entergy's investments in
businesses located in Asia was recorded in the fourth quarter 1998. The
adjustment reduced net income by $22 million, or $0.09 per common share.
Management believes that the sale prices of businesses remaining to be sold
at December 31, 1998 will exceed their net book value, and no further
adjustments to their carrying values are necessary.
NOTE 13. TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy)
The various domestic utility companies purchase electricity from
and/or sell electricity to other domestic utility companies, System Energy,
and Entergy Power (in the case of Entergy Arkansas) under rate schedules
filed with FERC. In addition, the domestic utility companies and System
Energy purchase fuel from System Fuels; receive management, technical,
advisory, operating, and administrative services from Entergy Services; and
receive management, technical, and operating services from Entergy
Operations.
As described in Note 1, all of System Energy's operating revenues
consist of billings to Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans.
The tables below contain the various affiliate transactions among the
domestic utility companies and System Entergy (in millions).
Intercompany Revenues
Entergy Entergy Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Mississippi New Orleans Energy
1998 $162.0 $16.7 $16.7 $88.3 $11.0 $602.4
1997 $230.8 $15.9 $ 3.4 $85.5 $11.1 $633.7
1996 $283.6 $22.1 $ 6.8 $66.4 $ 2.9 $623.6
Intercompany Operating Expenses (excluding transactions with Entergy
Operations)
Entergy Entergy Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(1)
1998 $353.7 $419.7 $269.0 $338.1 $194.9 $39.6
1997 $335.0 $416.4 $326.7 $316.1 $177.1 $36.5
1996 $346.7 $395.7 $331.3 $294.6 $185.9 $ 8.6
(1)Includes $18.8 million in 1998, $16.5 million in 1997, and $38.8
million in 1996 for power purchased from Entergy Power.
Operating Expenses Paid or Reimbursed to Entergy Operations
Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Energy
1998 $167.5 $114.2 $125.0 $62.8
1997 $162.1 $ 63.5 $133.3 $64.7
1996 $163.3 $133.7 $ 97.7 $98.1
NOTE 14. BUSINESS SEGMENT INFORMATION (Entergy Corporation and Entergy
New Orleans)
In 1998, Entergy adopted SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information." Entergy's reportable segments as of
December 31, 1998 are domestic utility and power marketing and trading.
Entergy's international electric distribution businesses, Entergy London
and CitiPower, were sold in December 1998. These businesses would have
been a reportable segment had they been held as of December 31, 1998, and
financial information regarding them is also provided below.
Domestic utility provides retail electric service in portions of
Arkansas, Louisiana, Mississippi, and Texas, and provides natural gas
utility service in portions of Louisiana. Entergy's power marketing and
trading segment markets wholesale electricity, gas, other generating fuels,
and electric capacity, and markets financial instruments to third parties.
Entergy's reportable segments are strategic business units managed
separately due to their different operating and regulatory environments.
Entergy's segment financial information is as follows (in thousands):
<TABLE>
<CAPTION>
Domestic Power Entergy CitiPower All Other Eliminations Consolidated
Utility Marketing London
and Trading
1998
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (loss) $528,498 ($15,539) $117,749 $3,103 $151,818 - $785,629
Operating revenues 6,310,543 2,879,507 1,911,875 303,245 125,770 ($36,168) 11,494,772
Depreciation and amortization 717,068 5,059 126,586 28,444 61,022 - 938,179
Decommissioning 46,750 - - - - - 46,750
Interest expense 548,299 170 182,479 80,586 21,803 (822) 832,515
Interest income 51,750 7,688 9,033 - 31,295 - 99,766
Income tax expense (benefit) 331,931 (8,216) 4,589 - (61,569) - 266,735
Total assets 19,738,995 359,626 - - 2,783,732 (34,330) 22,848,023
1997
Net income (loss) $517,691 $14,161 ($147,335) ($1,546) ($82,072) - $300,899
Operating revenues 6,731,872 526,614 1,847,042 342,959 124,053 ($33,614) 9,538,926
Depreciation and amortization 713,490 4,789 121,365 32,702 55,110 - 927,456
Decommissioning 52,552 - - - - - 52,552
Interest expense 583,613 91 178,647 69,011 32,911 (2,001) 862,272
Interest income 56,578 2,497 22,328 45 23,603 - 105,051
Income tax expense (benefit) 296,430 8,318 177,023 22,924 (33,354) - 471,341
Total assets 20,114,594 354,694 4,403,625 1,068,564 1,093,783 (34,560) 27,000,700
1996
Net income (loss) $555,284 $6,152 - ($1,659) ($69,214) - $490,563
Operating revenues 6,654,495 130,262 - 378,326 49,374 ($48,931) 7,163,526
Depreciation and amortization 676,749 5,580 - 34,477 20,370 - 737,176
Decommissioning 53,772 - - - - - 53,772
Interest expense 626,774 119 - 75,707 22,065 (4,630) 720,035
Interest income 32,388 2,560 - 326 8,101 - 43,375
Income tax expense (benefit) 448,445 4,760 - - (32,046) - 421,159
Total assets 20,597,669 145,089 - 1,324,228 923,083 (34,044) 22,956,025
</TABLE>
The All Other category includes the parent Entergy Corporation, segments
below the quantitative threshold for separate disclosure, and other
business activities. Other segments principally include global power
development and nuclear power operations and management. Other business
activities principally include the gains on the sales of Entergy London and
CitiPower, and the loss on the sale of Efficient Solutions. Reconciling
items are principally intersegment activity.
Products and Services
In addition to retail electric service, Entergy New Orleans supplies
natural gas services in the City of New Orleans. Revenue from these two
services is disclosed in Entergy New Orleans' Statements of Income.
Geographic areas
For the years ended December 31, 1998, 1997, and 1996, Entergy did not
derive material revenues from outside of the United States, other than from
Entergy London and CitiPower, which are noted above.
Long-lived assets as of December 31 were as follows (in thousands):
1998 1997 1996
Domestic $ 14,863,488 $15,228,107 $ 15,599,221
Foreign $ 465,094 $ 2,904,721 $ 623,902
------------ ----------- -------------
Consolidated $ 15,328,582 $18,132,828 $ 16,223,123
============ =========== =============
NOTE 15. QUARTERLY FINANCIAL DATA (UNAUDITED) (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The business of the domestic utility companies and System Energy is
subject to seasonal fluctuations with the peak periods occurring during the
third quarter. Operating results for the four quarters of 1998 and 1997
were:
<TABLE>
<CAPTION>
Operating Revenue
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
1998:
First Quarter $2,313,092 $329,789 $457,509 $356,038 $205,017 $113,663 $148,606
Second Quarter 2,508,814 391,357 423,655 424,115 268,908 125,106 144,336
Third Quarter 4,587,447 527,059 609,362 537,632 324,784 165,808 152,083
Fourth Quarter 2,085,419 360,493 363,283 393,123 177,591 109,173 157,348
1997:
First Quarter $2,045,753 $374,731 $481,328 $433,983 200,328 124,956 155,662
Second Quarter 2,155,295 423,619 476,421 412,263 212,892 109,803 161,021
Third Quarter 2,797,587 545,849 599,974 554,486 294,983 139,940 160,573
Fourth Quarter 2,540,291 371,515 590,106 402,540 229,192 130,123 156,442
</TABLE>
<TABLE>
<CAPTION>
Operating Income
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
1998:
First Quarter $285,507 $ 27,254 $63,661 $ 55,222 $16,406 $ 1,891 $71,959
Second Quarter 472,710 83,837 31,529 114,540 55,720 15,468 72,177
Third Quarter 590,673 140,837 166,404 164,393 54,028 20,210 68,772
Fourth Quarter 162,965 2,887 (25,940) 68,726 (569) 1,490 69,735
1997:
First Quarter $372,218 $ 30,890 $93,014 $ 77,880 $22,694 $ 8,755 $74,316
Second Quarter 433,887 80,873 75,643 87,911 40,395 9,400 73,568
Third Quarter 672,617 148,688 158,365 147,976 52,832 18,096 72,813
Fourth Quarter 355,641 6,424 203,524 53,813 20,827 6,040 72,496
</TABLE>
<TABLE>
<CAPTION>
Net Income (Loss)
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
1998:
First Quarter $60,054 $5,623 $14,756 $13,917 $5,194 $ (902) $24,587
Second Quarter 215,979 39,967 (5,241) 49,546 29,512 6,577 24,779
Third Quarter 262,596 73,731 78,313 81,470 29,321 10,258 25,139
Fourth Quarter 247,000 (8,370) (41,435) 34,554 (1,389) 204 31,971
1997:
First Quarter $126,485 $9,848 $32,535 $26,172 $8,352 $ 2,818 $24,345
Second Quarter 158,579 38,085 27,028 32,607 19,399 3,038 24,093
Third Quarter 93,321 78,251 70,740 70,681 27,335 8,590 24,449
Fourth Quarter (77,486) 1,793 (70,327) 12,297 11,575 1,005 29,408
</TABLE>
Earnings (Loss) per Average Common Share (Entergy Corporation)
1998 1997
Basic and Diluted Basic and Diluted
First Quarter $0.20 $ 0.47
Second Quarter $0.83 $ 0.61
Third Quarter $1.01 $ 0.33
Fourth Quarter $0.96 $(0.38)
<PAGE>
Item 9. Changes In and Disagreements With Accountants On Accounting and
Financial Disclosure.
No event that would be described in response to this item has occurred
with respect to Entergy, System Energy, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, or Entergy New Orleans.
PART III
Item 10. Directors and Executive Officers of the Registrants (Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy)
All officers and directors listed below held the specified positions
with their respective companies as of the date of filing this report.
<TABLE>
<CAPTION>
Name Age Position Period
ENTERGY ARKANSAS, INC.
Directors
<S> <C> <C> <C>
R. Drake Keith 63 Chief Executive Officer of Entergy Arkansas 1998-Present
President and Director of Entergy Arkansas 1989-Present
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Officers
Cecil L. Alexander 63 Vice President - Governmental Affairs of 1991-Present
Entergy Arkansas
C. Gary Clary 54 Senior Vice President - Human Resources and 1998-Present
Administration of Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Vice President - Human Resources and 1997-1998
Administration of Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Director-System Human Resources of Entergy 1993-1996
Services
C. Hiram Walters 62 Vice President - Customer Service of Entergy 1993-Present
Arkansas
Vice President - Customer Service of Entergy 1994-Present
Louisiana
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
R. Drake Keith See information under the Entergy Arkansas
Directors above.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part I.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part I.
ENTERGY GULF STATES, INC.
Directors
John J. Cordaro 65 Chief Executive Officer - Louisiana 1998
President - Louisiana 1997-1998
Director of Entergy Gulf States and 1996-1998
Entergy Louisiana
State President - Louisiana 1996-1997
President and Director of Entergy 1992-1996
Louisiana and Entergy New Orleans
Joseph F. Domino 50 Director of Entergy Gulf States 1999-Present
President and Chief Executive Officer - 1998-Present
Texas
Director - Southwest Franchise of Entergy 1997-1998
Gulf States
Director - Eastern Region of Entergy 1995-1997
Services
Director - Southern Region of Entergy 1994-1995
Services
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Officers
James D. Bruno 59 Vice President of Customer Service of 1998-Present
Entergy Louisiana and Entergy Gulf States
Vice President of Customer Service of 1994-1998
Entergy Louisiana and Entergy New Orleans
Vice President - Metro Region of Entergy 1993-1994
Services
S. G. Cunningham, Jr. 58 Vice President - Regulatory and 1996-Present
Governmental Affairs of Entergy Louisiana
and Entergy Gulf States
Vice President - State Regulatory Affairs 1994-1996
of Entergy Services
Vice President - Entergy Corporation, 1993-1994
Entergy Gulf States Transition, and
Regulatory Affairs of Entergy Services
Vice President - Rates and Regulatory 1991-1994
Affairs of Entergy Louisiana and Entergy
New Orleans
Murphy A. Dreher 46 Vice President - State Governmental 1999-Present
Affairs of Entergy Gulf States and
Entergy Louisiana
Legislative Executive - Governmental 1995-1998
Affairs of Entergy Gulf States
Director of Governmental Affairs of 1993-1995
Entergy Gulf States
Randall W. Helmick 44 Vice President of Operations - Louisiana 1998-Present
Director of Special Projects of London 1997-1998
Electricity
Director of Reliability of Entergy 1997
Services
Director of Operations and Engineering of 1994-1997
Entergy Services
J. Parker McCollough 47 Vice President - State Governmental 1996-Present
Affairs of Entergy Gulf States - Texas
Vice President - Governmental Affairs, 1993-1996
Texas Association of Realtors (trade
association)
C. Gary Clary See information under the Entergy Arkansas
Officers Section above.
John J. Cordaro See information under the Entergy Gulf
States Directors Section above.
Joseph F. Domino See information under the Entergy Gulf
States Directors Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part I.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part I.
ENTERGY LOUISIANA, INC.
Directors
John J. Cordaro See information under the Entergy Gulf
States Directors Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Officers
James D. Bruno See information under the Entergy Gulf
States Officers Section above.
C. Gary Clary See information under the Entergy Arkansas
Officers Section above.
John J. Cordaro See information under the Entergy Gulf
States Directors Section above.
S. G. Cunningham, Jr. See information under the Entergy Gulf
States Officers Section above.
Murphy A. Dreher See information under the Entergy Gulf
States Officers Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Randall W. Helmick See information under the Entergy Gulf
States Officers Section above.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part I.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part I.
C. Hiram Walters See information under the Entergy Arkansas
Officers Section above.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part I.
ENTERGY MISSISSIPPI, INC.
Directors
Donald E. Meiners (a) 63 Chief Executive Officer of Entergy 1998-Present
Mississippi
President and Director of Entergy 1992-Present
Mississippi
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Officers
Bill F. Cossar 60 Vice President - Governmental Affairs of 1987-Present
Entergy Mississippi
C. Gary Clary See information under the Entergy Arkansas
Officers Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part I.
Donald E. Meiners See information under the Entergy
Mississippi Directors Section above.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part I.
ENTERGY NEW ORLEANS, INC.
Directors
Daniel F. Packer 51 Chief Executive Officer of Entergy New 1998-Present
Orleans
President and Director of Entergy New 1997-Present
Orleans
State President - City of New Orleans 1996-1997
Vice President - Regulatory and 1994-1996
Governmental Affairs of Entergy New
Orleans
General Manager - Plant Operations at 1991-1994
Waterford 3
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Robert v.d. Luft See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Officers
Elaine Coleman 49 Vice President External Affairs of Entergy 1998-Present
New Orleans
Director of Customer Service of Entergy 1998
Services
Lead Customer Service Manager of Entergy 1995-1998
Services
Manager of Employee Communication of 1993-1995
Entergy Services
C. Gary Clary See information under the Entergy Arkansas
Officers Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part I.
Daniel F. Packer See information under the Entergy New
Orleans Directors Section above.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part I.
SYSTEM ENERGY RESOURCES, INC.
Directors
Jerry W. Yelverton 54 Director, President and Chief Executive 1999-Present
Officer of System Energy
Senior Vice President of Nuclear of Entergy 1997-1998
Services
Executive Vice President and Chief Operating 1996-1998
Officer of Entergy Operations
Vice President of Operations of ANO 1992-1996
In addition, Mr. Yelverton is an executive
officer and/or director of various other
wholly owned subsidiaries of Entergy
Corporation and its operating companies.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
J. Wayne Leonard See information under the Entergy
Corporation Officers Section in Part I.
Robert v.d. Luft See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Jerry L. Maulden See information under the Entergy
Corporation Officers Section in Part I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part I.
Officers
Joseph L. Blount 52 Secretary of System Energy and Entergy 1991-Present
Operations
Vice President Legal and External Affairs of 1990-1993
Entergy Operations
In addition, Mr. Yelverton is an executive
officer and/or director of various other
wholly owned subsidiaries of Entergy
Corporation and its operating companies.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part I.
Edwin Lupberger See information under the Entergy
Corporation Officers Section in Part I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part I.
Jerry W. Yelverton See information under the System Energy
Directors section above.
</TABLE>
(a) Mr. Meiners is a director of Trustmark National Bank, Jackson,
MS, and Trustmark Corporation, Jackson, MS.
Each director and officer of the applicable Entergy company is
elected yearly to serve by the unanimous consent of the sole
stockholder, Entergy Corporation, at its annual meeting.
Directorships shown in footnote (a) above are generally limited
to entities subject to Section 12 or 15(d) of the Securities and
Exchange Act of 1934 or to the Investment Company Act of 1940.
Section 16(a) Beneficial Ownership Reporting Compliance
Information called for by this item concerning the directors and
officers of Entergy Corporation is set forth in the Proxy Statement of
Entergy Corporation to be filed in connection with its Annual Meeting
of Stockholders to be held on May 14, 1999, under the heading "Section
16(a) Beneficial Ownership Reporting Compliance", which information is
incorporated herein by reference.
Item 11. Executive Compensation
ENTERGY CORPORATION
Information called for by this item concerning the directors and
officers of Entergy Corporation is set forth in the Proxy Statement
under the headings "Executive Compensation Tables", "General
Information About Nominees", and "Director Compensation", which
information is incorporated herein by reference.
ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY
MISSISSIPPI, ENTERGY NEW ORLEANS, AND SYSTEM ENERGY
Summary Compensation Table
The following table includes the Chief Executive Officer and the
four other most highly compensated executive officers in office as of
December 31, 1998 at Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
(collectively, the "Named Executive Officers"). This determination
was based on total annual base salary and bonuses from all Entergy
sources earned by each officer for the year 1998. See Item 10,
"Directors and Executive Officers of the Registrants," for information
on the principal positions of the Named Executive Officers in the
table below.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
As shown in Item 10, most Named Executive Officers are employed
by several Entergy companies. Because it would be impracticable to
allocate such officers' salaries among the various companies, the
table below includes the aggregate compensation paid by all Entergy
companies.
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
Restricted Securities (a)
Other Annual Stock Underlying All Other
Name Year Salary Bonus Compensation Awards Options Compensation
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Cordaro 1998 $ 227,556 $67,211 $45,209 (b) 1,250 shares $5,833
CEO-Entergy Gulf States 1997 206,410 0 37,986 (b) 2,500 6,192
and Entergy Louisiana 1996 199,141 79,012 23,052 (b) 2,500 9,873
Joseph F. Domino 1998 $ 164,011 $39,492 $ 4,558 (b) 0 shares $5,409
CEO-Entergy Gulf States 1997 138,374 0 16,205 (b) 0 0
1996 132,138 34,080 20,900 (b) 0 0
Frank F. Gallaher 1998 $382,829 $ 350,934 $89,137 (b) 2,500 shares $12,396
1997 327,385 0 11,132 (b) 5,000 9,822
1996 276,538 130,150 35,641 (b) 5,000 10,321
Donald C. Hintz 1998 $423,379 $ 269,846 $28,508 (b) 2,500 shares $14,236
CEO-System Energy 1997 365,077 0 18,245 (b) 5,000 10,952
1996 343,269 231,299 12,516 (b) 5,000 14,197
Jerry D. Jackson 1998 $408,456 $ 348,156 $59,630 (b) 2,500 shares $13,849
1997 342,077 0 56,359 (b) 5,000 10,262
1996 332,115 209,489 37,928 (b) 5,000 13,862
R. Drake Keith 1998 $289,145 $ 165,582 $67,239 (b) 1,250 shares $10,259
CEO-Entergy Arkansas 1997 276,728 0 41,230 (b) 2,500 8,292
1996 275,343 108,927 27,621 (b) 2,500 11,413
Nathan E. Langston 1998 $158,563 $ 111,125 $21,953 (b) 0 shares $5,243
1997 131,660 10,504 17,462 (b) 0 0
1996 127,089 23,551 15,149 (b) 0 0
J. Wayne Leonard 1998 $412,843 $1,145,416 $65,787(e) $796,860 0 shares $18,125
CEO-Entergy Corporation (b)(c)
Edwin Lupberger (d) 1998 $589,231 $ 441,336 $94,867 (b) 5,000 shares $11,081,645(f)
1997 785,385 0 271,422 (b) 10,000 23,562
1996 735,577 448,794 123,601 (b) 10,000 23,567
Jerry L. Maulden 1998 $476,287 $ 388,022 $42,712 (b) 2,500 shares $17,782
1997 445,615 0 67,485 (b) 5,000 13,369
1996 435,000 260,301 27,056 (b) 5,000 14,550
Steven C. McNeal 1998 $154,721 $ 94,400 $ 4,432 (b) 0 shares $5,145
1997 122,474 9,818 14,237 (b) 0 0
1996 116,364 21,649 10,491 (b) 0 0
Donald E. Meiners 1998 $268,345 $ 148,734 $60,353 (b) 1,250 shares $9,388
CEO-Entergy Mississippi 1997 255,410 0 33,748 (b) 2,500 7,662
1996 254,064 100,536 37,021 (b) 2,500 10,775
Daniel F. Packer 1998 $170,326 $ 123,513 $54,208(e) (b) 0 shares $4,018
CEO-Entergy New Orleans 1997 147,077 0 96,097(e) (b) 0 3,028
1996 135,292 39,363 31,391(e) (b) 0 6,428
C. John Wilder 1998 $201,413 $ 513,106 $ 7,255 $758,560 0 shares $3,300
(b)(c)
</TABLE>
(a) Includes the following:
(1) 1998 benefit accruals under the Defined Contribution
Restoration Plan as follows: Mr. Cordaro $345; Mr. Gallaher
$6,908; Mr. Hintz $8,748; Mr. Jackson $8,361; Mr. Keith
$4,771; Mr. Lupberger $16,131; Mr. Maulden $12,982; and Mr.
Meiners $3,934.
(2) 1998 employer contributions to the Entergy Stock Ownership
Plan of $688 each for Mr. Cordaro, Mr. Domino, Mr. Gallaher,
Mr. Hintz, Mr. Jackson, Mr. Keith, Mr. Langston, Mr. McNeal,
and Mr. Meiners, and $403 for Mr. Lupberger.
(3) 1998 employer contributions to the System Savings Plan as
follows: Mr. Cordaro $4,800; Mr. Domino $4,721; Mr.
Gallaher $4,800; Mr. Hintz $4,800; Mr. Jackson $4,800; Mr.
Keith $4,800; Mr. Langston $4,555; Mr. Lupberger $4,800; Mr.
McNeal $4,457; Mr. Maulden $4,800; Mr. Meiners $4,766; and
Mr. Packer $4,018.
(4) 1998 reimbursements for moving expenses as follows: Mr.
Leonard $18,125 and Mr. Wilder $3,300.
(b) Restricted stock awards in 1998 are reported under the "Long-Term
Incentive Plan Awards" table, and reference is made to this table
for information on the aggregate number of restricted shares
awarded during 1998 and the vesting schedule for such shares. At
December 31, 1998, the number and value of the aggregate
restricted stock holdings were as follows: Mr. Cordaro 4,500
shares, $140,063; Mr. Domino 3,252 shares, $101,219; Mr. Gallaher
7,497 shares, $233,344; Mr. Hintz 27,006 shares, $840,562; Mr.
Jackson 27,000 shares, $840,375; Mr. Keith 4,500 shares,
$140,063; Mr. Langston 4,506 shares, $140,249; Mr. Leonard 85,080
shares, $2,648,115; Mr. Lupberger 13,056 shares, $406,368; Mr.
Maulden 13,500 shares, $420,188; Mr. Meiners 4,500 shares,
$140,063; Mr. Packer 4,500 shares, $140,063; and Mr. Wilder
47,777 shares, $1,487,059. Accumulated dividends are paid on
restricted stock when vested. No restrictions were lifted in
1998, 1997, and 1996. The value of restricted stock holdings as
of December 31, 1998 is determined by multiplying the total
number of shares held by the closing market price of Entergy
Corporation common stock on the New York Stock Exchange Composite
Transactions on December 31, 1998 ($31.125 per share).
(c) In addition to the restricted shares granted under the Long Term
Incentive Plan Mr. Leonard and Mr. Wilder were granted 30,000 and
26,000 additional restricted shares, respectively. Restricted
shares awarded will vest incrementally over a three-year period,
beginning in 1999, based on continued service with Entergy
Corporation. Restrictions will be lifted annually. The value
Mr. Leonard and Mr. Wilder may realize is dependent upon both the
number of shares that vest and the future market price of Entergy
Corporation common stock. Accumulated dividends are not paid on
Mr. Leonard's 30,000 shares and 21,000 shares of Mr. Wilder's
restricted stock when vested. Accumulated dividends will be paid
on 5,000 shares of Mr. Wilder's restricted stock when vested.
(d) Edwin Lupberger is the former Chief Executive Officer of Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans.
(e) Includes Mr. Packer's living expenses of approximately $24,000 in
1998, $68,000 in 1997, and $11,700 in 1996, including taxes and
housing. Includes Mr. Leonard's living expenses of approximately
$18,000 in 1998.
(f) Includes $1,338,461 of severance payments; $9,553,226 of a lump
sum distribution under the System Executive Retirement Plan
(SERP); and a $168,623 payment under the Defined Contribution
Restoration Plan.
Option Grants in 1998
The following table summarizes option grants during 1998 to the
Named Executive Officers. The absence, in the table below, of any
Named Executive Officer indicates that no options were granted to such
officer.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
% of Total Value
Number of Options at Assumed Annual
Securities Granted to Exercise Rates of Stock
Underlying Employees Price Price Appreciation
Options in (per Expiration for Option Term(b)
Name Granted (a) 1998 share) (a) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
John J. Cordaro 1,250 1.0% $ 28.625 1/22/08 $22,503 $ 57,026
Frank F. Gallaher 2,500 2.0% 28.625 1/22/08 45,005 114,052
Donald C. Hintz 2,500 2.0% 28.625 1/22/08 45,005 114,052
Jerry D. Jackson 2,500 2.0% 28.625 1/22/08 45,005 114,052
R. Drake Keith 1,250 1.0% 28.625 1/22/08 22,503 57,026
Edwin Lupberger 5,000 4.0% 28.625 1/22/08 90,011 228,104
Jerry L. Maulden 2,500 2.0% 28.625 1/22/08 45,005 114,052
Donald E. Meiners 1,250 1.0% 28.625 1/22/08 22,503 57,026
</TABLE>
(a) Options were granted on January 22, 1998, pursuant to the Equity
Ownership Plan. All options granted on this date have an
exercise price equal to the closing price of Entergy Corporation
common stock on the New York Stock Exchange Composite
Transactions on January 22, 1998. These options became
exercisable on July 22, 1998.
(b) Calculation based on the market price of the underlying
securities assuming the market price increases over a ten-year
option period and assuming annual compounding. The column
presents estimates of potential values based on simple
mathematical assumptions. The actual value, if any, a Named
Executive Officer may realize is dependent upon the market price
on the date of option exercise.
Aggregated Option Exercises in 1998 and December 31, 1998 Option
Values
The following table summarizes the number and value of options
exercised during 1998, as well as the number and value of all
unexercised options held by the Named Executive Officers. The
absence, in the table below, of any Named Executive Officer indicates
that no options are held by such officer.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Shares Acquired Value as of December 31, 1998 as of December 31, 1998 (b)
Name on Exercise Realized (a) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
John J. Cordaro 6,250 $ 20,625 5,000 - $ - $ -
Joseph F. Domino - - 1,500 - 11,438 -
Frank F. Gallaher - - 45,000 - 313,750 -
Donald C. Hintz - - 55,000 - 336,875 -
Jerry D. Jackson - - 51,911 - 298,413 -
R. Drake Keith - - 13,424 - 20,899 -
Nathan E. Langston - - 1,500 - 11,438 -
Edwin Lupberger - - 113,824 - 674,329 -
Jerry L. Maulden 25,000 221,875 32,500 - 84,375 -
Steven C. McNeal - - 1,500 - 11,438 -
Donald E. Meiners 5,000 23,123 11,250 - 11,250 -
Daniel F. Packer 2,000 11,250 - - - -
</TABLE>
(a) Based on the difference between the closing price of Entergy
Corporation's common stock on the New York Stock Exchange Composite
Transactions on the exercise date and the option exercise price.
(b) Based on the difference between the closing price of Entergy
Corporation's common stock on the New York Stock Exchange Composite
Transactions on December 31, 1998, and the option exercise price.
Long-Term Incentive Plan Awards in 1998
The following Table summarizes the awards of restricted shares of
Entergy Corporation common stock granted under the Equity Ownership
Plan in 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
Estimated Future Payouts Under
Non-Stock Price-Based Plans (a) (b)
Number of Performance Period Until
Name Shares Maturation or Payout Threshold Target Maximum
<S> <C> <C> <C> <C> <C>
John J. Cordaro 4,500 1/1/98-12/31/00 1,500 3,000 4,500
Joseph F. Domino 3,252 1/1/98-12/31/00 1,084 2,168 3,252
Frank F. Gallaher 7,497 1/1/98-12/31/00 2,499 4,998 7,497
Donald C. Hintz 27,006 1/1/98-12/31/00 9,002 18,004 27,006
Jerry D. Jackson 27,000 1/1/98-12/31/00 9,000 18,000 27,000
R. Drake Keith 4,500 1/1/98-12/31/00 1,500 3,000 4,500
Nathan E. Langston 4,506 1/1/98-12/31/00 1,127 2,253 4,506
J. Wayne Leonard 55,080 1/1/98-12/31/00 18,360 36,720 55,080
Edwin Lupberger 13,056 1/1/98-12/31/00 4,352 8,704 13,056
Jerry L. Maulden 13,500 1/1/98-12/31/00 4,500 9,000 13,500
Donald E. Meiners 4,500 1/1/98-12/31/00 1,500 3,000 4,500
Daniel F. Packer 4,500 1/1/98-12/31/00 1,500 3,000 4,500
C. John Wilder 21,777 1/1/98-12/31/00 7,259 14,518 21,777
</TABLE>
(a) Restricted shares awarded will vest at the end of a three-year
period, subject to the attainment of approved performance goals for
Entergy. Restrictions are lifted based upon the achievement of the
cumulative result of these goals for the performance period. The
value any Named Executive Officer may realize is dependent upon both
the number of shares that vest and the future market price of Entergy
Corporation common stock.
(b) The threshold, target, and maximum levels correspond to the
achievement of 50%, 100%, and 150%, respectively, of Equity Ownership
Plan goals. Achievement of a threshold, target, or maximum level
would result in the award of the number of shares indicated in the
respective column. Achievement of a level between these three
specified levels would result in the award of a number of shares
calculated by means of interpolation.
Pension Plan Tables
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
Retirement Income Plan Table
Annual
Covered Years of Service
Compensation 15 20 25 30 35
$100,000 $22,500 $30,000 $37,500 $45,000 $52,500
200,000 45,000 60,000 75,000 90,000 105,000
300,000 67,500 90,000 112,500 135,000 157,500
400,000 90,000 120,000 150,000 180,000 210,000
500,000 112,500 150,000 187,500 225,000 262,500
650,000 146,250 195,000 243,750 292,500 341,250
950,000 213,750 285,000 356,250 427,500 498,750
All of the Named Executive Officers participate in a Retirement
Income Plan, a defined benefit plan, that provides a benefit for
employees at retirement from Entergy based upon (1) generally all
years of service beginning at age 21 through termination, with a
forty-year maximum, multiplied by (2) 1.5%, multiplied by (3) the
final average compensation. Final average compensation is based on
the highest consecutive 60 months of covered compensation in the last
120 months of service. The normal form of benefit for a single
employee is a lifetime annuity and for a married employee is a 50%
joint and survivor annuity. Other actuarially equivalent options are
available to each retiree. Retirement benefits are not subject to any
deduction for Social Security or other offset amounts. The amount of
the Named Executive Officers' annual compensation covered by the plan
as of December 31, 1998, is represented by the salary column in the
Summary Compensation Table above.
The credited years of service under the Retirement Income Plan,
as of December 31, 1998, for the following Named Executive Officers is
as follows: Mr. Cordaro 40; Mr. Domino 28; Mr. Gallaher 29; Mr.
Langston 27; Mr. Leonard 1; Mr. Maulden 33; Mr. McNeal 16; Mr. Meiners
28; and Mr. Packer 16. The credited years of service under the
Retirement Income Plan, as of December 31, 1998 for the following
Named Executive Officers, as a result of entering into supplemental
retirement agreements, is as follows: Mr. Hintz 27; Mr. Jackson 19;
Mr. Keith 32; Mr. Lupberger 35; and Mr. Wilder 15.
The maximum benefit under the Retirement Income Plan is limited
by Sections 401 and 415 of the Internal Revenue Code of 1986, as
amended; however, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
have elected to participate in the Pension Equalization Plan sponsored
by Entergy Corporation. Under this plan, certain executives,
including the Named Executive Officers, would receive an additional
amount equal to the benefit that would have been payable under the
Retirement Income Plan, except for the Sections 401 and 415
limitations discussed above.
In addition to the Retirement Income Plan discussed above,
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy participate in the Supplemental Retirement
Plan of Entergy Corporation and Subsidiaries and the Post-Retirement
Plan of Entergy Corporation and Subsidiaries. Participation is limited
to one of these two plans and is at the invitation of Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy. The participant may receive from the appropriate
Entergy company a monthly benefit payment not in excess of .025 (under
the Supplemental Retirement Plan) or .0333 (under the Post-Retirement
Plan) times the participant's average basic annual salary (as defined
in the plans) for a maximum of 120 months. Mr. Hintz and Mr. Packer
have entered into a Supplemental Retirement Plan participation
contract, and Mr. Cordaro, Mr. Gallaher, Mr. Jackson, Mr. Keith, Mr.
Lupberger, Mr. Maulden, and Mr. Meiners have entered into Post-
Retirement Plan participation contracts. Current estimates indicate
that the annual payments to each Named Executive Officer under the
above plans would be less than the payments to that officer under the
System Executive Retirement Plan discussed below.
System Executive Retirement Plan Table (1)
Annual
Covered Years of Service
Compensation 15 20 25 30+
$ 200,000 $90,000 $100,000 $ 110,000 $120,000
300,000 135,000 150,000 165,000 180,000
400,000 180,000 200,000 220,000 240,000
500,000 225,000 250,000 275,000 300,000
600,000 270,000 300,000 330,000 360,000
700,000 315,000 350,000 385,000 420,000
1,000,000 450,000 500,000 550,000 600,000
___________
(1)Covered pay includes the average of the highest three years of
annual base pay and incentive awards earned by the executive
during the ten years immediately preceding his retirement.
Benefits shown are based on a target replacement ratio of 50%
based on the years of service and covered compensation shown. The
benefits for 10, 15, and 20 or more years of service at the 45%
and 55% replacement levels would decrease (in the case of 45%) or
increase (in the case of 55%) by the following percentages: 3.0%,
4.5%, and 5.0%, respectively.
In 1993, Entergy Corporation adopted the System Executive
Retirement Plan (SERP). This plan was amended in 1998. Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy are participating employers in
the SERP. The SERP is an unfunded defined benefit plan offered at
retirement to certain senior executives, which would currently include
all the Named Executive Officers (except for Mr. Langston, Mr.
Leonard, Mr. McNeal, and Mr. Packer). Participating executives
choose, at retirement, between the retirement benefits paid under
provisions of the SERP or those payable under the Supplemental
Retirement Plan or the Post-Retirement Plan discussed above. The plan
was amended in 1998 to provide that covered pay is the average of the
highest three years annual base pay and incentive awards earned by the
executive during the ten years immediately preceding his retirement.
Benefits paid under the SERP are calculated by multiplying the covered
pay times target pay replacement ratios (45%, 50%, or 55%, dependent
on job rating at retirement) that are attained, according to plan
design, at 20 years of credited service. The target ratios are
increased by 1% for each year of service over 20 years, up to a
maximum of 30 years of service. In accordance with the SERP formula,
the target ratios are reduced for each year of service below 20 years.
The credited years of service under this plan are identical to the
years of service for Named Executive Officers (other than Mr. Jackson,
Mr. Keith, and Mr. Wilder) disclosed above in the section entitled
"Pension Plan Tables-Retirement Income Plan Table". Mr. Jackson, Mr.
Keith, and Mr. Wilder have 25 years, 15 years, and 5 months,
respectively, of credited service under this plan. Mr. Maulden's
retirement benefits are discussed under the "Employment Contracts"
section below. His benefits will be calculated based on the
provisions in effect prior to the 1998 SERP amendment.
The amended plan provides that a single employee receives a
lifetime annuity and a married employee receives the reduced benefit
with a 50% surviving spouse annuity. Other actuarially equivalent
options are available to each retiree. SERP benefits are offset by
any and all defined benefit plan payments from Entergy. SERP benefits
are not subject to Social Security offsets.
Eligibility for and receipt of benefits under any of the
executive plans described above are contingent upon several factors.
The participant must agree, without the specific consent of the
Entergy company for which such participant was last employed, not to
take employment after retirement with any entity that is in
competition with, or similar in nature to, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy or any affiliate thereof. Eligibility for
benefits is forfeitable for various reasons, including violation of an
agreement with Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy, certain resignations of employment, or certain terminations of
employment without Company permission.
In addition to the Retirement Income Plan discussed above,
Entergy Gulf States provides, among other benefits to officers, an
Executive Income Security Plan for key managerial personnel. The plan
provides participants with certain retirement, disability,
termination, and survivors' benefits. To the extent that such
benefits are not funded by the employee benefit plans of Entergy Gulf
States or by vested benefits payable by the participants' former
employers, Entergy Gulf States is obligated to make supplemental
payments to participants or their survivors. The plan provides that
upon the death or disability of a participant during his employment,
he or his designated survivors will receive (i) during the first year
following his death or disability an amount not to exceed his annual
base salary, and (ii) thereafter for a number of years until the
participant attains or would have attained age 65, but not less than
nine years, an amount equal to one-half of the participant's annual
base salary. The plan also provides supplemental retirement benefits
for life for participants retiring after reaching age 65 equal to one-
half of the participant's average final compensation rate, with one-
half of such benefit upon the death of the participant being payable
to a surviving spouse for life.
Entergy Gulf States amended and restated the plan effective March
1, 1991, to provide such benefits for life upon termination of
employment of a participating officer or key managerial employee
without cause (as defined in the plan) or if the participant separates
from employment for good reason (as defined in the plan), with 1/2 of
such benefits to be payable to a surviving spouse for life. Further,
the plan was amended to provide medical benefits for a participant and
his family when the participant separates from service. These medical
benefits generally continue until the participant is eligible to
receive medical benefits from a subsequent employer; but in the case
of a participant who is over 50 at the time of separation and was
participating in the plan on March 1, 1991, medical benefits continue
for life. By virtue of the 1991 amendment and restatement, benefits
for a participant under such plan cannot be modified once he becomes
eligible to participate in the plan. Mr. Domino is a participant in
this plan.
Compensation of Directors
For information regarding compensation of the directors of
Entergy Corporation, see the Proxy Statement under the heading
"Director Compensation", which information is incorporated herein by
reference. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy currently
have no non-employee directors, and none of the current directors of
Entergy Corporation are compensated for their responsibilities as
director.
Retired non-employee directors of Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans with a minimum
of five years of service on the respective Boards of Directors are
paid $200 a month for a term of years corresponding to the number of
years of active service as directors. Retired non-employee directors
with over ten years of service receive a lifetime benefit of $200 a
month. Years of service as an advisory director are included in
calculating this benefit. System Energy has no retired non-employee
directors.
Retired non-employee directors of Entergy Gulf States receive
retirement benefits under a plan in which all directors who served
continuously for a period of years will receive a percentage of their
retainer fee in effect at the time of their retirement for life. The
retirement benefit is 30 percent of the retainer fee for service of
not less than five nor more than nine years, 40 percent for service of
not less than ten nor more than fourteen years, and 50 percent for
fifteen or more years of service. For those directors who retired
prior to the retirement age, their benefits are reduced. The plan
also provides disability retirement and optional hospital and medical
coverage if the director has served at least five years prior to the
disability. The retired director pays one-third of the premium for
such optional hospital and medical coverage and Entergy Gulf States
pays the remaining two-thirds. Years of service as an advisory
director are included in calculating this benefit.
Employment Contracts, Termination of Employment Agreements, Retirement
Agreements and Change-in-Control Arrangements
Entergy Gulf States
As a result of the Merger, Entergy Gulf States is obligated to
pay benefits under the Executive Income Security Plan to those persons
who were participants at the time of the Merger and who later
terminated their employment under circumstances described in the plan.
For additional description of the benefits under the Executive Income
Security Plan, see the "Pension Plan Tables-System Executive
Retirement Plan Table" section noted above.
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
In connection with Mr. Leonard's employment, the Company entered
into an agreement with him that provided for an annual salary of
$600,000 and a potential annual incentive payout of 70%. In addition
to participation in the incentive and stock option plans, Mr. Leonard
received a signing bonus of $500,000 and a retention award of 30,000
restricted shares of Common Stock. As long as Mr. Leonard remains
employed, the restrictions will be lifted on 10,000 shares per year
beginning on his first employment anniversary. In lieu of
participation in Entergy Executive Retirement Plans, Entergy agreed to
provide Mr. Leonard with a retirement benefit comparable to the one
provided by his previous employer. This benefit will be calculated on
the basis of 60% of his highest three year average base salary and
annual incentive payments, and will be offset by Mr. Leonard's vested
retirement benefit from his previous employment. This retirement
benefit can begin at age 55. If Mr. Leonard should resign prior to
age 55 without permission, he will forfeit this replacement benefit
and receive only regular accrued pension benefits. If he should
resign prior to age 55 with the Corporation's permission, he will
receive the replacement benefit, but discounted at the rate of 6.5%
for each year before age 55. This benefit would not be payable until
age 62. Mr. Leonard's agreement contains a "change of control"
provision that provides for an immediate vesting of the 60%
replacement pension benefit plus a lump sum payment of 2.99 times his
average three years base pay.
Mr. Wilder entered into an employment agreement with the
Corporation pursuant to which he will receive an annual salary of
$400,000 and the potential maximum annual incentive payout of 90%.
Mr. Wilder will be eligible for a pro-rata share of the performance
award for the period 1998-2001 and the pro-rata share of stock option
grant at the end of the first year. The Corporation granted Mr. Wilder
a signing bonus of $300,000, and 21,000 shares of restricted stock
upon which restrictions will be lifted on 7,000 shares each year
beginning on his first employment anniversary. Mr. Wilder was offered
participation in the System Executive Retirement Plan and was credited
with 15 years of service. If Entergy terminates Mr. Wilder's
employment within two years other than for just cause, he will receive
his annual base salary and continuation of his health benefits for two
years.; all remaining earned but unvested stock options and
performance shares would immediately vest. Upon a change of control,
if Mr. Wilder resigns for "good reason" his executive pension benefits
will immediately vest and he will receive a lump sum payment of 2.99
times his average three years base pay.
In connection with his retirement, Mr. Lupberger entered into an
agreement with the Corporation, which provided that he would receive,
subject to certain conditions, a severance payment of $1,338,462 paid
in a lump sum. In addition, Mr. Lupberger received all benefits he
would have received under the incentive plans, pro rated through July
31, 1998, the last day of his employment. All amounts paid or earned
are included in the Summary Compensation Table above, except for
93,333 shares of stock at an exercise price of $29.94 that he received
at his pro rata share of the 1998 Long Term Incentive Award. Mr.
Lupberger has until January 31, 2009 to exercise these options. Mr.
Lupberger will receive all retirement benefits pursuant to the
retirement plans in which he participated.
In connection with his early retirement, Mr. Maulden entered into
an agreement with Entergy. Beginning on April 1, 1999, Mr. Maulden
will continue to serve as Vice Chairman, and will continue to receive
his base salary, incentive pay and all other benefits but will no
longer be responsible for any organizational responsibilities. On
April 1, 2000, his retirement date, Mr. Maulden will receive
retirement benefits as though he had continued as an active employee
until age 65 without the application of any early retirement discount
factor. In addition, the Company has agreed to fund a named chair at
the University of Arkansas at Little Rock for $1,000,000. The funding
will be made in four equal installments to be paid directly to the
university on April 1, 1999, 2000, 2001, and 2002.
Personnel Committee Interlocks and Insider Participation
The compensation of Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy executive officers was set by the Personnel Committee of
Entergy Corporation's Board of Directors, composed solely of Directors
of Entergy Corporation. No current or former officers or employees of
any Entergy company participated in deliberations concerning
compensation during 1998.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Entergy Corporation owns 100% of the outstanding common stock of
registrants Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy. The
information with respect to persons known by Entergy Corporation to be
beneficial owners of more than 5% of Entergy Corporation's outstanding
common stock is included under the heading "Stockholders Who Own at
Least Five Percent" in the Proxy Statement, which information is
incorporated herein by reference. The registrants know of no
contractual arrangements that may, at a subsequent date, result in a
change in control of any of the registrants.
As of December 31, 1998, the directors, the Named Executive
Officers, and the directors and officers as a group for Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy,
respectively, beneficially owned directly or indirectly common stock
of Entergy Corporation as indicated:
Entergy Corporation
Common Stock
Amount and Nature of
Beneficial Ownership(a)
Sole Voting
and Other
Investment Beneficial
Name Power Ownership(b)
Entergy Corporation
W. Frank Blount* 5,634 -
John A. Cooper, Jr.* 8,134 -
George W. Davis* 300 -
Norman C. Francis* 1,500 -
Frank F. Gallaher** 15,223 45,000
Donald C. Hintz** 3,157 55,000
Jerry D. Jackson** 21,804 51,911
J. Wayne Leonard***(d) - -
Robert v.d. Luft***(d) 8,884 -
Edwin Lupberger**(d) 30,203 116,824 (c)
Jerry L. Maulden** 9,453 32,500
Adm. Kinnaird R. McKee* 3,367 -
Paul W. Murrill* 3,011 -
James R. Nichols* 7,014 -
Eugene H. Owen* 4,292 -
John N. Palmer, Sr.* 16,182 -
Robert D. Pugh**** 6,400 6,500 (c)
Wm. Clifford Smith* 7,598 -
Bismark A. Steinhagen* 8,837 -
All directors and executive
officers 180,366 330,735
<PAGE>
Entergy Corporation
Common Stock
Amount and Nature of
Beneficial Ownership(a)
Sole Voting
and Other
Investment Beneficial
Name Power Ownership(b)
Entergy Arkansas
Frank F. Gallaher*** 15,223 45,000
Donald C. Hintz* 3,157 55,000
Jerry D. Jackson*** 21,804 51,911
R. Drake Keith*** 6,304 13,424
J. Wayne Leonard***(d) - -
Edwin Lupberger**(d) 30,203 116,824 (c)
Jerry L. Maulden*** 9,453 32,500
All directors and executive
officers 142,653 343,409
Entergy Gulf States
John J. Cordaro*** 4,269 5,000
Joseph F. Domino*** 5,809 1,500
Frank F. Gallaher*** 15,223 45,000
Donald C. Hintz* 3,157 55,000
Jerry D. Jackson*** 21,804 51,911
J. Wayne Leonard***(d) - -
Edwin Lupberger**(d) 30,203 116,824 (c)
Jerry L. Maulden*** 9,453 32,500
All directors and executive
officers 152,704 339,235
Entergy Louisiana
John J. Cordaro*** 4,269 5,000
Frank F. Gallaher*** 15,223 45,000
Donald C. Hintz* 3,157 55,000
Jerry D. Jackson*** 21,804 51,911
J. Wayne Leonard***(d) - -
Edwin Lupberger**(d) 30,203 116,824 (c)
Jerry L. Maulden*** 9,453 32,500
All directors and executive
officers 148,650 339,235
<PAGE>
Entergy Corporation
Common Stock
Amount and Nature of
Beneficial Ownership(a)
Sole Voting
and Other
Investment Beneficial
Name Power Ownership(b)
Entergy Mississippi
Frank F. Gallaher*** 15,223 45,000
Donald C. Hintz* 3,157 55,000
Jerry D. Jackson*** 21,804 51,911
J. Wayne Leonard***(d) - -
Edwin Lupberger**(d) 30,203 116,824 (c)
Jerry L. Maulden*** 9,453 32,500
Donald E. Meiners*** 11,337 11,250
All directors and executive
officers 143,489 339,235
Entergy New Orleans
Frank F. Gallaher** 15,223 45,000
Donald C. Hintz* 3,157 55,000
Jerry D. Jackson*** 21,804 51,911
J. Wayne Leonard***(d) - -
Robert v.d. Luft*(d) 8,884 -
Edwin Lupberger**(d) 30,203 116,824 (c)
Jerry L. Maulden** 9,453 32,500
Daniel F. Packer *** 2,271 -
All directors and executive
officers 141,213 327,985
System Energy
Donald C. Hintz* 3,157 55,000
Nathan E. Langston** 8,666 1,500
J. Wayne Leonard*(d) - -
Robert v.d. Luft*(d) 8,884 -
Edwin Lupberger**(d) 30,203 116,824 (c)
Jerry L. Maulden* 9,453 32,500
Steven C. McNeal** 2,571 1,500
C. John Wilder*** - -
Jerry W. Yelverton* 7,334 8,250
All directors and executive
officers 74,223 215,574
* Director of the respective Company
** Named Executive Officer of the respective Company
*** Director and Named Executive Officer of the respective Company
**** Mr. Pugh's term will expire at the Annual Meeting and he is not
standing for re-election.
(a) Based on information furnished by the respective individuals.
Except as noted, each individual has sole voting and investment
power. The number of shares of Entergy corporation common stock
owned by each individual and by all directors and executive
officers as a group does not exceed one percent of the
outstanding Entergy Corporation common stock.
(b) Includes, for the Named Executive Officers, shares of Entergy
Corporation common stock in the form of unexercised stock options
awarded pursuant to the Equity Ownership Plan as follows: John
J. Cordaro, 5,000 shares; Joseph F. Domino, 1,500 shares; Frank
F. Gallaher, 45,000 shares; Donald C. Hintz, 55,000 shares; Jerry
D. Jackson, 51,911 shares; R. Drake Keith, 13,424 shares; Nathan
E. Langston, 1,500 shares; Edwin Lupberger, 113,824 shares; Jerry
L. Maulden, 32,500 shares; Steven C. McNeal, 1,500 shares; and
Donald E. Meiners, 11,250 shares.
(c) Includes Common Stock held by Mrs. Pugh of 6,500 shares of which
Mr. Pugh disclaims beneficial ownership and 2,500 shares held by
Mrs. Lupberger of which Mr. Lupberger disclaims beneficial
ownership. In addition, Mr. Lupberger owns 500 shares in joint
tenancy with his mother, for which he disclaims beneficial
ownership.
(d) Mr. Luft served as acting Chief Executive Officer of Entergy
Corporation and a director of Entergy New Orleans and System
Energy during 1998. Mr. Lupberger is the former Chief Executive
Officer and a former director of Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans. Mr. Lupberger is a former
director of System Energy. As of January 1, 1999, Mr. Leonard
was appointed Chief Executive Officer and director of Entergy
Corporation, and Chairman of the Board for Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy.
Item 13. Certain Relationships and Related Transactions
During 1998, T. Baker Smith & Son, Inc. performed land surveying
services for, and received payments of approximately $13,624 from,
Entergy Louisiana, Inc. Mr. Wm. Clifford Smith, a director of Entergy
Corporation, is President of T. Baker Smith & Son, Inc. Mr. Smith's
children own 100% of the voting stock of T. Baker Smith & Son, Inc.
See Item 10, "Directors and Executive Officers of the
Registrants," for information on certain relationships and
transactions required to be reported under this item.
Other than as provided under applicable corporate laws, Entergy
does not have policies whereby transactions involving executive
officers and directors are approved by a majority of disinterested
directors. However, pursuant to the Entergy Corporation Code of
Conduct, transactions involving an Entergy company and its executive
officers must have prior approval by the next higher reporting level
of that individual, and transactions involving an Entergy company and
its directors must be reported to the secretary of the appropriate
Entergy company.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.
(a)1. Financial Statements and Independent Auditors' Reports for
Entergy, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy are listed in the Index to Financial Statements (see
pages 37 and 38)
(a)2. Financial Statement Schedules
Reports of Independent Accountants on Financial Statement
Schedules (see page 212)
Financial Statement Schedules are listed in the Index to
Financial Statement Schedules (see page S-1)
(a)3. Exhibits
Exhibits for Entergy, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy are listed in the Exhibit Index (see page E-
1). Each management contract or compensatory plan or
arrangement required to be filed as an exhibit hereto is
identified as such by footnote in the Exhibit Index.
(b) Reports on Form 8-K
Entergy Corporation
A current report on Form 8-K, dated November 25, 1998, was
filed with the SEC on November 25, 1998, reporting information
under Item 5. "Other Events".
Entergy Corporation and Entergy London Investments
A current report on Form 8-K, dated November 30, 1998, was
filed with the SEC on December 1, 1998, reporting information
under Item 5. "Other Events".
Entergy Corporation
A current report on Form 8-K, dated December 4, 1998, was filed
with the SEC on December 21, 1998, reporting information under
Item 2. "Acquisition or Disposition of Assets" and Item 7.
"Financial Statements, Pro Forma Financial Statements and
Exhibits".
<PAGE>
ENTERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY CORPORATION
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President and
Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 12, 1999
Accounting Officer
(Principal Accounting Officer)
J. Wayne Leonard (Chief Executive Officer and Director;
Principal Executive Officer) and Robert v.d. Luft
(Chairman of the Board and Director); W. Frank Blount,
John A. Cooper, Jr., George W. Davis, N. C. Francis,
Kinnaird R. McKee, Paul W. Murrill, James R. Nichols,
Eugene H. Owen, John N. Palmer, Sr., Robert D. Pugh,
Wm. Clifford Smith, and Bismark A. Steinhagen (Directors).
By: /s/ Nathan E. Langston March 12, 1999
(Nathan E. Langston, Attorney-in-fact)
<PAGE>
ENTERGY ARKANSAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY ARKANSAS, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 12, 1999
Accounting Officer
(Principal Accounting Officer)
R. Drake Keith (President, Chief Executive Officer and
Director; Principal Executive Officer) and J. Wayne Leonard
(Chairman of the Board and Director); Frank F.
Gallaher, Donald C. Hintz, Jerry D. Jackson, and Jerry L.
Maulden (Directors).
By: /s/ Nathan E. Langston March 12, 1999
(Nathan E. Langston, Attorney-in-fact)
<PAGE>
ENTERGY GULF STATES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY GULF STATES, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President and
Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 12, 1999
Accounting Officer
(Principal Accounting Officer)
Jerry D. Jackson (President, Chief Executive Officer-Louisiana
and Director; Principal Executive Officer), Joseph F.
Domino (President, Chief Executive Officer-Texas and Director;
Principal Executive Officer), and J. Wayne Leonard
(Chairman of the Board and Director); Frank F. Gallaher,
Donald C. Hintz, and Jerry L. Maulden (Directors).
By: /s/ Nathan E. Langston March 12, 1999
(Nathan E. Langston, Attorney-in-fact)
<PAGE>
ENTERGY LOUISIANA, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY LOUISIANA, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 12, 1999
Accounting Officer
(Principal Accounting Officer)
Jerry D. Jackson (President, Chief Executive Officer and
Director; Principal Executive Officer) and J. Wayne
Leonard (Chairman of the Board and Director); Frank F.
Gallaher, Donald C. Hintz, and Jerry L. Maulden
(Directors).
By: /s/ Nathan E. Langston March 12, 1999
(Nathan E. Langston, Attorney-in-fact)
<PAGE>
ENTERGY MISSISSIPPI, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY MISSISSIPPI, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 12, 1999
Accounting Officer
(Principal Accounting Officer)
Donald E. Meiners (President, Chief Executive Officer and
Director; Principal Executive Officer) and J. Wayne
Leonard (Chairman of the Board and Director); Frank F.
Gallaher, Donald C. Hintz, Jerry D. Jackson, and Jerry L.
Maulden (Directors).
By: /s/ Nathan E. Langston March 12, 1999
(Nathan E. Langston, Attorney-in-fact)
<PAGE>
ENTERGY NEW ORLEANS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY NEW ORLEANS, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 12, 1999
Accounting Officer
(Principal Accounting Officer)
Daniel F. Packer (President, Chief Executive Officer and
Director; Principal Executive Officer) and J. Wayne
Leonard (Chairman of the Board and Director); Donald C.
Hintz and Jerry D. Jackson (Directors).
By: /s/ Nathan E. Langston March 12, 1999
(Nathan E. Langston, Attorney-in-fact)
<PAGE>
SYSTEM ENERGY RESOURCES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
SYSTEM ENERGY RESOURCES, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 12, 1999
Accounting Officer
(Principal Accounting Officer)
Jerry W. Yelverton (President, Chief Executive Officer
and Director; Principal Executive Officer) and J. Wayne
Leonard (Chairman of the Board and Director), Donald C.
Hintz and C. John Wilder (Directors).
By: /s/ Nathan E. Langston March 12, 1999
(Nathan E. Langston, Attorney-in-fact)
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective
Amendment Nos. 2, 3, 4A, and 5A on Form S-8, and their related
Prospectuses, to the registration statement of Entergy Corporation on
Form S-4 (File Number 33-54298) and the registration statements and
related Prospectuses on Form S-3 (File Numbers 333-02503 and 333-22007)
of our reports dated February 18, 1999, on our audits of the
consolidated financial statements and financial statement schedules of
Entergy Corporation as of December 31, 1998 and 1997, and for each of
the three years in the period ended December 31, 1998, which are
included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy Arkansas, Inc. on
Form S-3 (File Numbers 33-50289, 333-00103 and 333-05045) of our
reports dated February 18, 1999, on our audits of the financial
statements and financial statement schedule of Entergy Arkansas, Inc.
as of December 31, 1998 and 1997, and for each of the three years in
the period ended December 31, 1998, which are included in this Annual
Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy Gulf States, Inc. on
Form S-3 (File Numbers 33-49739, 33-51181 and 333-60957), on Form S-8
(File Numbers 2-76551 and 2-98011) and on Form S-2 (File Number 333-
17911), of our reports dated February 18, 1999, on our audits of the
financial statements and financial statement schedule of Entergy Gulf
States, Inc. as of December 31, 1998 and 1997, and for each of the
three years in the period ended December 31, 1998, which are included
in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy Louisiana, Inc. on
Form S-3 (File Numbers 33-46085, 33-39221, 33-50937, 333-00105, 333-
01329 and 333-03567) of our reports dated February 18, 1999, on our
audits of the financial statements and financial statement schedule of
Entergy Louisiana, Inc. as of December 31, 1998 and 1997, and for each
of the three years in the period ended December 31, 1998, which are
included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy Mississippi, Inc. on
Form S-3 (File Numbers 33-53004, 33-55826, 33-50507 and 333-64023) of
our reports dated February 18, 1999, on our audits of the financial
statements and financial statement schedule of Entergy Mississippi,
Inc. as of December 31, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998, which are included in this
Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of Entergy New Orleans, Inc. on
Form S-3 (File Numbers 33-57926 and 333-00255) of our reports dated
February 18, 1999, on our audits of the financial statements and
financial statement schedule of Entergy New Orleans, Inc. as of
December 31, 1998 and 1997, and for each of the three years in the
period ended December 31, 1998, which are included in this Annual
Report on Form 10-K.
We consent to the incorporation by reference in the registration
statements and the related Prospectuses of System Energy Resources, Inc.
on Form S-3 (File Numbers 33-47662, 33-61189 and 333-06717) of our
report dated February 18, 1999, on our audits of the financial
statements of System Energy Resources, Inc. as of December 31, 1998 and
1997, and for each of the three years in the period ended December 31,
1998, which is included in this Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
March 10, 1999
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders
of Entergy Corporation
Our audits of the consolidated financial statements of Entergy
Corporation and the financial statements of Entergy Arkansas, Inc.,
Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy
Mississippi, Inc., and Entergy New Orleans, Inc. (which reports and
financial statements are included in this Annual Report on Form 10-K)
also included audits of the financial statement schedules listed in
Item 14(a)(2) of this Form 10-K. In our opinion, these financial
statement schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the
related financial statements.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 18, 1999
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule Page
I Financial Statements of Entergy Corporation:
Statements of Income - For the Years Ended
December 31, 1998, 1997, and 1996 S-2
Statements of Cash Flows - For the Years Ended
December 31, 1998, 1997, and 1996 S-3
Balance Sheets, December 31, 1998 and 1997 S-4
Statements of Retained Earnings and Paid-In Capital - For
the Years Ended December 31, 1998, 1997, and 1996 S-5
II Valuation and Qualifying Accounts
1998, 1997 and 1996:
Entergy Corporation and Subsidiaries S-6
Entergy Arkansas, Inc. S-7
Entergy Gulf States, Inc. S-8
Entergy Louisiana, Inc. S-9
Entergy Mississippi, Inc. S-10
Entergy New Orleans, Inc. S-11
Schedules other than those listed above are omitted because they
are not required, not applicable or the required information is shown
in the financial statements or notes thereto.
Columns have been omitted from schedules filed because the
information is not applicable.
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION
SCHEDULE I-FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF INCOME
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Income:
Equity in income of subsidiaries $822,758 $325,419 $459,350
Interest on temporary investments 2,536 5,086 4,840
-------- -------- --------
Total 825,294 330,505 464,190
-------- -------- --------
Expenses and Other Deductions:
Administrative and general expenses 77,296 62,250 34,402
Income taxes (credit) (6,847) 3,438 (1,558)
Taxes other than income 1,325 1,226 828
Interest 14,451 15,908 10,491
-------- -------- --------
Total 86,225 82,822 44,163
-------- -------- --------
Net Income $739,069 $247,683 $420,027
======== ======== ========
See Entergy Corporation and Subsidiaries Notes to Financial
Statements in Part II, Item 8.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $739,069 $247,683 $420,027
Noncash items included in net income:
Equity in earnings of subsidiaries (822,758) (325,419) (459,350)
Deferred income taxes (1,997) 898 8,499
Depreciation 2,069 1,442 1,628
Changes in working capital:
Receivables (21,033) (8,683) 3,232
Payables 357 (3,690) 9,919
Other working capital accounts 3,614 (400) (1,170)
Common stock dividends received from subsidiaries 488,500 550,200 554,200
Other 36,948 43,479 (3,524)
--------- -------- --------
Net cash flow provided by operating activities 424,769 505,510 533,461
--------- -------- --------
Investing Activities:
Investment in subsidiaries (96,383) (633,449) (266,681)
Capital expenditures (212) (23,079) -
--------- -------- --------
Net cash flow used in investing activities (96,595) (656,528) (266,681)
--------- -------- --------
Financing Activities:
Changes in short-term borrowings 99,500 166,000 20,000
Common stock dividends paid (373,441) (438,183) (405,346)
Repurchase of common stock (2,964) - -
Issuance of common stock 19,341 305,379 118,087
--------- -------- --------
Net cash flow provided by (used in) financing activities (257,564) 33,196 (267,259)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents 70,610 (117,822) (479)
Cash and cash equivalents at beginning of period 10,843 128,665 129,144
--------- -------- --------
Cash and cash equivalents at end of period $81,453 $10,843 $128,665
========= ======== ========
See Entergy Corporation and Subsidiaries Notes to Financial Statements
in Part II, Item 8.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
BALANCE SHEETS
December 31,
1998 1997
(In Thousands)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Temporary cash investments - at cost,
which approximates market:
Associated companies $12,879 $2,947
Other 68,574 7,896
---------- ----------
Total cash and cash equivalents 81,453 10,843
Accounts receivable:
Associated companies 35,781 14,700
Interest receivable 253 301
Other 9,380 20,345
---------- ----------
Total 126,867 46,189
---------- ----------
Investment in Wholly-owned Subsidiaries 7,268,768 6,832,590
---------- ----------
Deferred Debits and Other Assets 71,543 89,315
---------- ----------
Total $7,467,178 $6,968,094
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $285,500 $186,000
Accounts payable:
Associated companies 6,041 4,331
Other 531 1,884
Interest accrued - 1,918
Other current liabilities 3,394 8,827
---------- ----------
Total 295,466 202,960
---------- ----------
Deferred Credits and Noncurrent Liabilities 64,672 71,618
---------- ----------
Shareholders' Equity:
Common stock, $.01 par value, authorized
500,000,000 shares; issued 246,829,076 shares
in 1998 and 246,149,198 shares in 1997 2,468 2,461
Paid-in capital 4,630,609 4,613,572
Retained earnings 2,526,888 2,157,912
Cumulative foreign currency translation adjustment (46,739) (69,817)
Less cost of treasury stock (208,907 shares in
1998 and 306,852 shares in 1997) 6,186 10,612
---------- ----------
Total common shareholders' equity 7,107,040 6,693,516
---------- ----------
Total $7,467,178 $6,968,094
========== ==========
See Entergy Corporation and Subsidiaries Notes to Financial Statements
in Part II, Item 8.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF RETAINED EARNINGS AND PAID-IN CAPITAL
For the Years Ended December 31,
1998 1997 1996
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 $2,157,912 $2,341,703 $2,335,579
Add:
Net income 739,069 247,683 420,027
Deduct:
Dividends declared on common stock 369,498 432,268 412,250
Capital stock and other expenses 595 (794) 1,653
---------- ---------- ----------
Total 370,093 431,474 413,903
---------- ---------- ----------
Retained Earnings, December 31 $2,526,888 $2,157,912 $2,341,703
========== ========== ==========
Paid-in Capital, January 1 $4,613,572 $4,320,591 $4,201,483
Add:
Gain on reacquisition of
subsidiaries' preferred stock - 273 1,795
Common stock issuances related to stock plans 17,037 292,870 117,560
---------- ---------- ----------
Total 17,037 293,143 119,355
---------- ---------- ----------
Deduct:
Capital stock discounts and other expenses - 162 247
---------- ---------- ----------
Paid-in Capital, December 31 $4,630,609 $4,613,572 $4,320,591
========== ========== ==========
See Entergy Corporation and Subsidiaries Notes to Financial Statements
in Part II, Item 8.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1998, 1997, and 1996
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $9,800 $16,451 $15,996 $10,255
==============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $23,422 $28,838 $67,106 $(14,846)
Injuries and damages (Note 2) 26,484 17,960 16,282 28,162
Environmental 36,368 7,596 8,107 35,857
----------------------------------------------
Total $86,274 $54,394 $91,495 $49,173
==============================================
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $9,189 $17,106 $16,495 $9,800
==============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $35,026 $24,128 $35,732 $23,422
Injuries and damages (Note 2) 26,145 20,294 19,955 26,484
Environmental 37,719 5,993 7,344 36,368
----------------------------------------------
Total $98,890 $50,415 $63,031 $86,274
==============================================
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $7,109 $19,770 $17,690 $9,189
Other 12,337 - 12,337 -
----------------------------------------------
Total $19,446 $19,770 $30,027 $9,189
==============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $36,733 $26,136 $27,843 $35,026
Injuries and damages (Note 2) 19,981 23,373 17,209 26,145
Environmental 40,262 2,599 5,142 37,719
----------------------------------------------
Total $96,976 $52,108 $50,194 $98,890
==============================================
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current
expenses as appropriate and for the estimated cost of settling claims
for injuries and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY ARKANSAS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1998, 1997, and 1996
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,799 $3,848 $3,894 $1,753
=============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $858 $18,805 $12,063 $7,600
Injuries and damages (Note 2) 4,798 3,144 3,324 4,618
Environmental 4,753 1,470 1,329 4,894
---------------------------------------------
Total $10,409 $23,419 $16,716 $17,112
=============================================
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $2,326 $3,140 $3,667 $1,799
=============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $14 $11,613 $10,769 $858
Injuries and damages (Note 2) 2,810 3,538 1,550 4,798
Environmental 5,163 1,320 1,730 4,753
---------------------------------------------
Total $7,987 $16,471 $14,049 $10,409
=============================================
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $2,058 $5,341 $5,073 $2,326
=============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $900 $8,808 $9,694 $14
Injuries and damages (Note 2) 1,810 2,980 1,980 2,810
Environmental 6,514 1,320 2,671 5,163
---------------------------------------------
Total $9,224 $13,108 $14,345 $7,987
=============================================
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1998, 1997, and 1996
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,791 $3,169 $3,225 $1,735
=============================================
Accumulated Provisions
Not Deducted from Assets--
Property insurance $4,317 $5,583 $14,084 $(4,184)
Injuries and damages (Note 2) 5,339 4,634 5,214 4,759
Environmental 23,789 3,058 4,538 22,309
---------------------------------------------
Total $33,445 $13,275 $23,836 $22,884
=============================================
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,997 $3,695 $3,901 $1,791
=============================================
Accumulated Provisions
Not Deducted from Assets--
Property insurance $17,003 $5,584 $18,270 $4,317
Injuries and damages (Note 2) 9,594 5,479 9,734 5,339
Environmental 21,829 3,746 1,786 23,789
---------------------------------------------
Total $48,426 $14,809 $29,790 $33,445
=============================================
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,608 $4,709 $4,320 $1,997
=============================================
Accumulated Provisions
Not Deducted from Assets--
Property insurance $14,141 $5,899 $3,037 $17,003
Injuries and damages (Note 2) 5,199 7,955 3,560 9,594
Environmental 21,864 365 400 21,829
---------------------------------------------
Total $41,204 $14,219 $6,997 $48,426
=============================================
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY LOUISIANA, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1998, 1997, and 1996
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,157 $1,919 $1,912 $1,164
============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $581 $2,930 $21,336 $(17,825)
Injuries and damages (Note 2) 9,944 9,263 6,083 13,124
Environmental 7,599 668 1,031 7,236
--------------------------------------------
Total $18,124 $12,861 $28,450 $2,535
============================================
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,429 $2,542 $2,814 $1,157
============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $261 $5,411 $5,091 $581
Injuries and damages (Note 2) 9,443 5,080 4,579 9,944
Environmental 9,979 495 2,875 7,599
--------------------------------------------
Total $19,683 $10,986 $12,545 $18,124
============================================
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,390 $3,241 $3,202 $1,429
============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $1,013 $4,583 $5,335 $261
Injuries and damages (Note 2) 8,414 10,646 9,617 9,443
Environmental 11,379 495 1,895 9,979
--------------------------------------------
Total $20,806 $15,724 $16,847 $19,683
============================================
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for
injuries and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY MISSISSIPPI, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1998, 1997, and 1996
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $931 $2,747 $2,461 $1,217
============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $2,179 $1,520 $15,242 $(11,543)
Injuries and damages (Note 2) 4,662 (437) 429 3,796
Environmental 227 900 423 704
--------------------------------------------
Total $7,068 $1,983 $16,094 $(7,043)
============================================
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,374 $1,950 $2,393 $931
============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $2,082 $1,520 $1,423 $2,179
Injuries and damages (Note 2) 2,905 4,055 2,298 4,662
Environmental 693 330 796 227
--------------------------------------------
Total $5,680 $5,905 $4,517 $7,068
============================================
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,585 $2,996 $3,207 $1,374
============================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $5,013 $6,846 $9,777 $2,082
Injuries and damages (Note 2) 2,565 928 588 2,905
Environmental 467 330 104 693
--------------------------------------------
Total $8,045 $8,104 $10,469 $5,680
============================================
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY NEW ORLEANS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1998, 1997, and 1996
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
<S> <C> <C> <C> <C>
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $711 - $(50) $761
===========================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $15,487 - $4,381 $11,106
Injuries and damages (Note 2) 1,741 1,356 1,232 1,865
Environmental - 1,500 786 714
-------------------------------------------
Total $17,228 $2,856 $6,399 $13,685
===========================================
Year ended December 31, 1997
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $696 $1,599 $1,584 $711
===========================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $15,666 - $179 $15,487
Injuries and damages (Note 2) 1,393 $2,142 1,794 1,741
Environmental 55 102 157 -
-------------------------------------------
Total $17,114 $2,244 $2,130 $17,228
===========================================
Year ended December 31, 1996
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $468 $2,116 $1,888 $696
===========================================
Accumulated Provisions Not
Deducted from Assets:
Property insurance $15,666 - - $15,666
Injuries and damages (Note 2) 1,993 $864 $1,464 1,393
Environmental 38 89 72 55
-------------------------------------------
Total $17,697 $953 $1,536 $17,114
===========================================
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
</TABLE>
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the
exhibit number are filed herewith. The balance of the exhibits
have heretofore been filed with the SEC, respectively, as the
exhibits and in the file numbers indicated and are incorporated
herein by reference. The exhibits marked with a (+) are
management contracts or compensatory plans or arrangements
required to be filed herewith and required to be identified as
such by Item 14 of Form 10-K. Reference is made to a duplicate
list of exhibits being filed as a part of this Form 10-K, which
list, prepared in accordance with Item 102 of Regulation S-T of
the SEC, immediately precedes the exhibits being physically filed
with this Form 10-K.
(3) (i) Articles of Incorporation
Entergy Corporation
(a) 1 -- Certificate of Incorporation of Entergy
Corporation dated December 31, 1993 (A-1(a) to Rule 24
Certificate in 70-8059).
System Energy
(b) 1 -- Amended and Restated Articles of Incorporation of
System Energy and amendments thereto through April 28,
1989 (A-1(a) to Form U-1 in 70-5399).
Entergy Arkansas
(c) 1 -- Amended and Restated Articles of Incorporation of
Entergy Arkansas and amendments thereto through April 22,
1996 (3(a) to Form 10-Q for the quarter ended March 31,
1996 in 1-10764).
Entergy Gulf States
(d) 1 -- Restated Articles of Incorporation of Entergy Gulf
States and amendments thereto through April 22, 1996
(3(b) to Form 10-Q for the quarter ended March 31, 1996
in 1-2703).
Entergy Louisiana
(e) 1 -- Restated Articles of Incorporation of Entergy
Louisiana and amendments thereto through April 22, 1996
(3(c) to Form 10-Q for the quarter ended March 31, 1996
in 1-8474).
Entergy Mississippi
(f) 1 -- Restated Articles of Incorporation of Entergy
Mississippi and amendments thereto through November 17,
1997 (3(i)(f)1 to Form 10-K for the year ended December
31, 1997 in 0-320).
Entergy New Orleans
(g) 1 -- Restatement of Articles of Incorporation of
Entergy New Orleans and amendments thereto through April
22, 1996 (3(e) to Form 10-Q for the quarter ended March
31, 1996 in 0-5807).
(3) (ii) By-Laws
(a) -- By-Laws of Entergy Corporation as amended
September 14, 1998, and as presently in effect (3(a) to
Form 10-Q for the quarter ended September 30, 1998).
(b) -- By-Laws of System Energy effective July 6, 1998,
and as presently in effect (3(f) to Form 10-Q for the
quarter ended June 30, 1998).
(c) -- By-Laws of Entergy Arkansas as of October 5, 1998,
and as presently in effect (3(b) to Form 10-Q for the
quarter ended September 30, 1998).
(d) -- By-Laws of Entergy Gulf States as of October 5,
1998, and as presently in effect (3(c) to Form 10-Q for
the quarter ended September 30, 1998).
(e) -- By-Laws of Entergy Louisiana as of October 5,
1998, and as presently in effect (3(d) to Form 10-Q for
the quarter ended September 30, 1998).
(f) -- By-Laws of Entergy Mississippi as of October 5,
1998, and as presently in effect (3(e) to Form 10-Q for
the quarter ended September 30, 1998).
(g) -- By-Laws of Entergy New Orleans as of October 5,
1998, and as presently in effect (3(f) to Form 10-Q for
the quarter ended September 30, 1998).
(4) Instruments Defining Rights of Security Holders,
Including Indentures
Entergy Corporation
(a) 1 -- See (4)(b) through (4)(g) below for instruments
defining the rights of holders of long-term debt of
System Energy, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi and Entergy New
Orleans.
(a) 2 -- Credit Agreement, dated as of September 13, 1996,
among Entergy Corporation, Entergy Technology Holding
Company, the Banks (The Bank of New York, Bank of America
NT & SA, The Bank of Nova Scotia, Banque Nationale de
Paris (Houston Agency), The First National Bank of
Chicago, The Fuji Bank Ltd., Societe Generale Southwest
Agency, and CIBC Inc.) and The Bank of New York, as Agent
(the "Entergy-ETHC Credit Agreement") (filed as Exhibit
4(a)12 to Form 10-K for the year ended December 31, 1996
in 1-11299).
(a) 3 -- Amendment No. 1, dated as of October 22, 1996 to
Credit Agreement Entergy-ETHC Credit Agreement (filed as
Exhibit 4(a)13 to Form 10-K for the year ended December
31, 1996 in 1-11299).
(a) 4 -- Guaranty and Acknowledgment Agreement, dated as of
October 3, 1996, by Entergy Corporation to The Bank of
New York of certain promissory notes issued by ETHC in
connection with acquisition of 280 Equity Holdings, Ltd
(filed as Exhibit 4(a)14 to Form 10-K for the year ended
December 31, 1996 in 1-11299).
(a) 5 -- Amendment, dated as of November 21, 1996, to
Guaranty and Acknowledgment Agreement by Entergy
Corporation to The Bank of New York of certain promissory
notes issued by ETHC in connection with acquisition of
280 Equity Holdings, Ltd (filed as Exhibit 4(a)15 to Form
10-K for the year ended December 31, 1996 in 1-11299).
(a) 6 -- Guaranty and Acknowledgment Agreement, dated as of
November 21, 1996, by Entergy Corporation to The Bank of
New York of certain promissory notes issued by ETHC in
connection with acquisition of Sentry (filed as Exhibit
4(a)16 to Form 10-K for the year ended December 31, 1996
in 1-11299).
(a) 7 -- Amended and Restated Credit Agreement, dated as of
December 12, 1996, among Entergy, the Banks (Bank of
America National Trust & Savings Association, The Bank of
New York, The Chase Manhattan Bank, Citibank, N.A., Union
Bank of Switzerland, ABN Amro Bank N.V., The Bank of Nova
Scotia, Canadian Imperial Bank of Commerce, Mellon Bank,
N.A., First National Bank of Commerce and Whitney
National Bank) and Citibank, N.A., as Agent (filed as
Exhibit 4(a)17 to Form 10-K for the year ended December
31, 1996 in 1-11299).
System Energy
(b) 1 -- Mortgage and Deed of Trust, dated as of June 15,
1977, as amended by twenty-one Supplemental Indentures
(A-1 in 70-5890 (Mortgage); B and C to Rule 24
Certificate in 70-5890 (First); B to Rule 24 Certificate
in 70-6259 (Second); 20(a)-5 to Form 10-Q for the quarter
ended June 30, 1981, in 1-3517 (Third); A-1(e)-1 to
Rule 24 Certificate in 70-6985 (Fourth); B to Rule 24
Certificate in 70-7021 (Fifth); B to Rule 24 Certificate
in 70-7021 (Sixth); A-3(b) to Rule 24 Certificate in
70-7026 (Seventh); A-3(b) to Rule 24 Certificate in
70-7158 (Eighth); B to Rule 24 Certificate in 70-7123
(Ninth); B-1 to Rule 24 Certificate in 70-7272 (Tenth);
B-2 to Rule 24 Certificate in 70-7272 (Eleventh); B-3 to
Rule 24 Certificate in 70-7272 (Twelfth); B-1 to Rule 24
Certificate in 70-7382 (Thirteenth); B-2 to Rule 24
Certificate in 70-7382 (Fourteenth); A-2(c) to Rule 24
Certificate in 70-7946 (Fifteenth); A-2(c) to Rule 24
Certificate in 70-7946 (Sixteenth); A-2(d) to Rule 24
Certificate in 70-7946 (Seventeenth); A-2(e) to Rule 24
Certificate dated May 4, 1993 in 70-7946 (Eighteenth); A-
2(g) to Rule 24 Certificate dated May 6, 1994, in 70-7946
(Nineteenth); A-2(a)(1) to Rule 24 Certificate dated
August 8, 1996 in File No. 70-8511 (Twentieth); and A-
2(a)(2) to Rule 24 Certificate dated August 8, 1996 in
File No. 70-8511 (Twenty-first)).
(b) 2 -- Facility Lease No. 1, dated as of December 1,
1988, between Meridian Trust Company and Stephen M. Carta
(Steven Kaba, successor), as Owner Trustees, and System
Energy (B-2(c)(1) to Rule 24 Certificate dated January 9,
1989 in 70-7561), as supplemented by Lease Supplement No.
1 dated as of April 1, 1989 (B-22(b) (1) to Rule 24
Certificate dated April 21, 1989 in 70-7561) and Lease
Supplement No. 2 dated as of January 1, 1994 (B-3(d) to
Rule 24 Certificate dated January 31, 1994 in 70-8215).
(b) 3 -- Facility Lease No. 2, dated as of December 1, 1988
between Meridian Trust Company and Stephen M. Carta
(Steven Kaba, successor), as Owner Trustees, and System
Energy (B-2(c)(2) to Rule 24 Certificate dated January 9,
1989 in 70-7561), as supplemented by Lease Supplement No.
1 dated as of April 1, 1989 (B-22(b) (2) to Rule 24
Certificate dated April 21, 1989 in 70-7561) and Lease
Supplement No. 2 dated as of January 1, 1994 (B-4(d) Rule
24 Certificate dated January 31, 1994 in 70-8215).
(b) 4 -- Indenture (for Unsecured Debt Securities), dated
as of September 1, 1995, between System Energy Resources,
Inc., and Chemical Bank (B-10(a) to Rule 24 Certificate
in 70-8511).
Entergy Arkansas
(c) 1 -- Mortgage and Deed of Trust, dated as of
October 1, 1944, as amended by fifty-fourth Supplemental
Indentures (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121
(First); 7(c) in 2-7605 (Second); 7(d) in 2-8100 (Third);
7(a)-4 in 2-8482 (Fourth); 7(a)-5 in 2-9149 (Fifth);
4(a)-6 in 2-9789 (Sixth); 4(a)-7 in 2-10261 (Seventh);
4(a)-8 in 2-11043 (Eighth); 2(b)-9 in 2-11468 (Ninth);
2(b)-10 in 2-15767 (Tenth); D in 70-3952 (Eleventh); D in
70-4099 (Twelfth); 4(d) in 2-23185 (Thirteenth); 2(c) in
2-24414 (Fourteenth); 2(c) in 2-25913 (Fifteenth); 2(c)
in 2-28869 (Sixteenth); 2(d) in 2-28869 (Seventeenth);
2(c) in 2-35107 (Eighteenth); 2(d) in 2-36646
(Nineteenth); 2(c) in 2-39253 (Twentieth); 2(c) in
2-41080 (Twenty-first); C-1 to Rule 24 Certificate in
70-5151 (Twenty-second); C-1 to Rule 24 Certificate in
70-5257 (Twenty-third); C to Rule 24 Certificate in
70-5343 (Twenty-fourth); C-1 to Rule 24 Certificate in
70-5404 (Twenty-fifth); C to Rule 24 Certificate in
70-5502 (Twenty-sixth); C-1 to Rule 24 Certificate in
70-5556 (Twenty-seventh); C-1 to Rule 24 Certificate in
70-5693 (Twenty-eighth); C-1 to Rule 24 Certificate in
70-6078 (Twenty-ninth); C-1 to Rule 24 Certificate in
70-6174 (Thirtieth); C-1 to Rule 24 Certificate in
70-6246 (Thirty-first); C-1 to Rule 24 Certificate in
70-6498 (Thirty-second); A-4b-2 to Rule 24 Certificate in
70-6326 (Thirty-third); C-1 to Rule 24 Certificate in
70-6607 (Thirty-fourth); C-1 to Rule 24 Certificate in
70-6650 (Thirty-fifth); C-1 to Rule 24 Certificate, dated
December 1, 1982, in 70-6774 (Thirty-sixth); C-1 to
Rule 24 Certificate, dated February 17, 1983, in 70-6774
(Thirty-seventh); A-2(a) to Rule 24 Certificate, dated
December 5, 1984, in 70-6858 (Thirty-eighth); A-3(a) to
Rule 24 Certificate in 70-7127 (Thirty-ninth); A-7 to
Rule 24 Certificate in 70-7068 (Fortieth); A-8(b) to
Rule 24 Certificate dated July 6, 1989 in 70-7346
(Forty-first); A-8(c) to Rule 24 Certificate, dated
February 1, 1990 in 70-7346 (Forty-second); 4 to Form
10-Q for the quarter ended September 30, 1990 in 1-10764
(Forty-third); A-2(a) to Rule 24 Certificate, dated
November 30, 1990, in 70-7802 (Forty-fourth); A-2(b) to
Rule 24 Certificate, dated January 24, 1991, in 70-7802
(Forty-fifth); 4(d)(2) in 33-54298 (Forty-sixth); 4(c)(2)
to Form 10-K for the year ended December 31, 1992 in 1-
10764 (Forty-seventh); 4(b) to Form 10-Q for the quarter
ended June 30, 1993 in 1-10764 (Forty-eighth); 4(c) to
Form 10-Q for the quarter ended June 30, 1993 in 1-10764
(Forty-ninth); 4(b) to Form 10-Q for the quarter ended
September 30, 1993 in 1-10764 (Fiftieth); 4(c) to Form 10-
Q for the quarter ended September 30, 1993 in 1-10764
(Fifty-first); 4(a) to Form 10-Q for the quarter ended
June 30, 1994 (Fifty-second); C-2 to Form U5S for the
year ended December 31, 1995 (Fifty-third); and C-2(a) to
Form U5S for the year ended December 31, 1996 (Fifty-
fourth)).
(c) 2 -- Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities between Entergy
Arkansas and Bank of New York (as Trustee), dated as of
August 1, 1996 (filed as Exhibit A-1(a) to Rule 24
Certificate dated August 26, 1996 in File No. 70-8723).
(c) 3 -- Amended and Restated Trust Agreement of
Entergy Arkansas Capital I, dated as of August 14, 1996
(filed as Exhibit A-3(a) to Rule 24 Certificate dated
August 26, 1996 in File No. 70-8723).
(c) 4 -- Guarantee Agreement between Entergy Arkansas
(as Guarantor) and The Bank of New York (as Trustee),
dated as of August 14, 1996, with respect to Entergy
Arkansas Capital I's obligations on its 8 1/2% Cumulative
Quarterly Income Preferred Securities, Series A (filed as
Exhibit A-4(a) to Rule 24 Certificate dated August 26,
1996 in File No. 70-8723).
Entergy Gulf States
(d) 1 -- Indenture of Mortgage, dated September 1, 1926, as
amended by certain Supplemental Indentures (B-a-I-1 in
Registration No. 2-2449 (Mortgage); 7-A-9 in Registration
No. 2-6893 (Seventh); B to Form 8-K dated September 1,
1959 (Eighteenth); B to Form 8-K dated February 1, 1966
(Twenty-second); B to Form 8-K dated March 1, 1967
(Twenty-third); C to Form 8-K dated March 1, 1968 (Twenty-
fourth); B to Form 8-K dated November 1, 1968 (Twenty-
fifth); B to Form 8-K dated April 1, 1969 (Twenty-sixth);
2-A-8 in Registration No. 2-66612 (Thirty-eighth); 4-2 to
Form 10-K for the year ended December 31, 1984 in 1-2703
(Forty-eighth); 4-2 to Form 10-K for the year ended
December 31, 1988 in 1-2703 (Fifty-second); 4 to Form 10-
K for the year ended December 31, 1991 in 1-2703 (Fifty-
third); 4 to Form 8-K dated July 29, 1992 in 1-2703
(Fifth-fourth); 4 to Form 10-K dated December 31, 1992
in 1-2703 (Fifty-fifth); 4 to Form 10-Q for the quarter
ended March 31, 1993 in 1-2703 (Fifty-sixth); and 4-2 to
Amendment No. 9 to Registration No. 2-76551 (Fifty-
seventh)).
(d) 2 -- Indenture, dated March 21, 1939, accepting
resignation of The Chase National Bank of the City of New
York as trustee and appointing Central Hanover Bank and
Trust Company as successor trustee (B-a-1-6 in
Registration No. 2-4076).
(d) 3 -- Trust Indenture for 9.72% Debentures due July 1,
1998 (4 in Registration No. 33-40113).
(d) 4 -- Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities, dated as of
January 15, 1997 (filed as Exhibit A-11(a) to Rule 24
Certificate dated February 6, 1997 in File No. 70-8721).
(d) 5 -- Amended and Restated Trust Agreement of Entergy
Gulf States Capital I dated January 28, 1997 of Series A
Preferred Securities (filed as Exhibit A-13(a) to Rule 24
Certificate dated February 6, 1997 in File No. 70-8721).
(d) 6 -- Guarantee Agreement between Entergy Gulf States,
Inc. (as Guarantor) and The Bank of New York (as Trustee)
dated as of January 28, 1997 with respect to Entergy Gulf
States Capital I's obligation on its 8.75% Cumulative
Quarterly Income Preferred Securities, Series A (filed as
Exhibit A-14(a) to Rule 24 Certificate dated February 6,
1997 in File No. 70-8721).
Entergy Louisiana
(e) 1 -- Mortgage and Deed of Trust, dated as of April 1,
1944, as amended by fifty-two Supplemental Indentures
(7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); 7(c)
in 2-8636 (Second); 4(b)-3 in 2-10412 (Third); 4(b)-4 in
2-12264 (Fourth); 2(b)-5 in 2-12936 (Fifth); D in 70-3862
(Sixth); 2(b)-7 in 2-22340 (Seventh); 2(c) in 2-24429
(Eighth); 4(c)-9 in 2-25801 (Ninth); 4(c)-10 in 2-26911
(Tenth); 2(c) in 2-28123 (Eleventh); 2(c) in 2-34659
(Twelfth); C to Rule 24 Certificate in 70-4793
(Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); 2(b)-2 in
2-39437 (Fifteenth); 2(b)-2 in 2-42523 (Sixteenth); C to
Rule 24 Certificate in 70-5242 (Seventeenth); C to
Rule 24 Certificate in 70-5330 (Eighteenth); C-1 to
Rule 24 Certificate in 70-5449 (Nineteenth); C-1 to
Rule 24 Certificate in 70-5550 (Twentieth); A-6(a) to
Rule 24 Certificate in 70-5598 (Twenty-first); C-1 to
Rule 24 Certificate in 70-5711 (Twenty-second); C-1 to
Rule 24 Certificate in 70-5919 (Twenty-third); C-1 to
Rule 24 Certificate in 70-6102 (Twenty-fourth); C-1 to
Rule 24 Certificate in 70-6169 (Twenty-fifth); C-1 to
Rule 24 Certificate in 70-6278 (Twenty-sixth); C-1 to
Rule 24 Certificate in 70-6355 (Twenty-seventh); C-1 to
Rule 24 Certificate in 70-6508 (Twenty-eighth); C-1 to
Rule 24 Certificate in 70-6556 (Twenty-ninth); C-1 to
Rule 24 Certificate in 70-6635 (Thirtieth); C-1 to
Rule 24 Certificate in 70-6834 (Thirty-first); C-1 to
Rule 24 Certificate in 70-6886 (Thirty-second); C-1 to
Rule 24 Certificate in 70-6993 (Thirty-third); C-2 to
Rule 24 Certificate in 70-6993 (Thirty-fourth); C-3 to
Rule 24 Certificate in 70-6993 (Thirty-fifth); A-2(a) to
Rule 24 Certificate in 70-7166 (Thirty-sixth); A-2(a) in
70-7226 (Thirty-seventh); C-1 to Rule 24 Certificate in
70-7270 (Thirty-eighth); 4(a) to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1988, in 1-8474
(Thirty-ninth); A-2(b) to Rule 24 Certificate in 70-7553
(Fortieth); A-2(d) to Rule 24 Certificate in 70-7553
(Forty-first); A-3(a) to Rule 24 Certificate in 70-7822
(Forty-second); A-3(b) to Rule 24 Certificate in 70-7822
(Forty-third); A-2(b) to Rule 24 Certificate in File
No. 70-7822 (Forty-fourth); A-3(c) to Rule 24 Certificate
in 70-7822 (Forty-fifth); A-2(c) to Rule 24 Certificate
dated April 7, 1993 in 70-7822 (Forty-sixth); A-3(d) to
Rule 24 Certificate dated June 4, 1993 in 70-7822 (Forth-
seventh); A-3(e) to Rule 24 Certificate dated December
21, 1993 in 70-7822 (Forty-eighth); A-3(f) to Rule 24
Certificate dated August 1, 1994 in 70-7822 (Forty-
ninth); A-4(c) to Rule 24 Certificate dated September 28,
1994 in 70-7653 (Fiftieth); A-2(a) to Rule 24 Certificate
dated April 4, 1996 in File No. 70-8487 (Fifty-first);
and A-2(a) to Rule 24 Certificate dated April 3, 1998 in
File No. 70-9141 (Fifty-second).
(e) 2 -- Facility Lease No. 1, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-1 in Registration
No. 33-30660).
(e) 3 -- Facility Lease No. 2, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-2 in Registration
No. 33-30660).
(e) 4 -- Facility Lease No. 3, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-3 in Registration
No. 33-30660).
(e) 5 -- Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities, dated as of July
1, 1996 (filed as Exhibit A-14(a) to Rule 24 Certificate
dated July 25, 1996 in File No. 70-8487).
(e) 6 -- Amended and Restated Trust Agreement of Entergy
Louisiana Capital I dated July 16, 1996 of Series A
Preferred Securities (filed as Exhibit A-16(a) to Rule 24
Certificate dated July 25, 1996 in File No. 70-8487).
(e) 7 -- Guarantee Agreement between Entergy Louisiana,
Inc. (as Guarantor) and The Bank of New York (as Trustee)
dated as of July 16, 1996 with respect to Entergy
Louisiana Capital I's obligation on its 9% Cumulative
Quarterly Income Preferred Securities, Series A (filed as
Exhibit A-19(a) to Rule 24 Certificate dated July 25,
1996 in File No. 70-8487).
Entergy Mississippi
(f) 1 -- Mortgage and Deed of Trust, dated as of September
1, 1944, as amended by twenty-five Supplemental
Indentures (7(d) in 2-5437 (Mortgage); 7(b) in 2-7051
(First); 7(c) in 2-7763 (Second); 7(d) in 2-8484 (Third);
4(b)-4 in 2-10059 (Fourth); 2(b)-5 in 2-13942 (Fifth);
A-11 to Form U-1 in 70-4116 (Sixth); 2(b)-7 in 2-23084
(Seventh); 4(c)-9 in 2-24234 (Eighth); 2(b)-9(a) in
2-25502 (Ninth); A-11(a) to Form U-1 in 70-4803 (Tenth);
A-12(a) to Form U-1 in 70-4892 (Eleventh); A-13(a) to
Form U-1 in 70-5165 (Twelfth); A-14(a) to Form U-1 in
70-5286 (Thirteenth); A-15(a) to Form U-1 in 70-5371
(Fourteenth); A-16(a) to Form U-1 in 70-5417 (Fifteenth);
A-17 to Form U-1 in 70-5484 (Sixteenth); 2(a)-19 in
2-54234 (Seventeenth); C-1 to Rule 24 Certificate in
70-6619 (Eighteenth); A-2(c) to Rule 24 Certificate in
70-6672 (Nineteenth); A-2(d) to Rule 24 Certificate in
70-6672 (Twentieth); C-1(a) to Rule 24 Certificate in
70-6816 (Twenty-first); C-1(a) to Rule 24 Certificate in
70-7020 (Twenty-second); C-1(b) to Rule 24 Certificate in
70-7020 (Twenty-third); C-1(a) to Rule 24 Certificate in
70-7230 (Twenty-fourth); and A-2(a) to Rule 24
Certificate in 70-7419 (Twenty-fifth)).
(f) 2 -- Mortgage and Deed of Trust, dated as of
February 1, 1988, as amended by twelve Supplemental
Indentures (A-2(a)-2 to Rule 24 Certificate in 70-7461
(Mortgage); A-2(b)-2 in 70-7461 (First); A-5(b) to
Rule 24 Certificate in 70-7419 (Second); A-4(b) to
Rule 24 Certificate in 70-7554 (Third); A-1(b)-1 to Rule
24 Certificate in 70-7737 (Fourth); A-2(b) to Rule 24
Certificate dated November 24, 1992 in 70-7914 (Fifth);
A-2(e) to Rule 24 Certificate dated January 22, 1993 in
70-7914 (Sixth); A-2(g) to Form U-1 in 70-7914 (Seventh);
A-2(i) to Rule 24 Certificate dated November 10, 1993 in
70-7914 (Eighth); A-2(j) to Rule 24 Certificate dated
July 22, 1994 in 70-7914 (Ninth); (A-2(l) to Rule 24
Certificate dated April 21, 1995 in File 70-7914 (Tenth);
A-2(a) to Rule 24 Certificate dated June 27, 1997 in File
70-8719 (Eleventh); and A-2(b) to Rule 24 Certificate
dated April 16, 1998 in File 70-8719 (Twelfth)).
Entergy New Orleans
(g) 1 -- Mortgage and Deed of Trust, dated as of May 1,
1987, as amended by seven Supplemental Indentures (A-2(c)
to Rule 24 Certificate in 70-7350 (Mortgage); A-5(b) to
Rule 24 Certificate in 70-7350 (First); A-4(b) to Rule 24
Certificate in 70-7448 (Second); 4(f)4 to Form 10-K for
the year ended December 31, 1992 in 0-5807 (Third); 4(a)
to Form 10-Q for the quarter ended September 30, 1993 in
0-5807 (Fourth); 4(a) to Form 8-K dated April 26, 1995 in
File No. 0-5807 (Fifth); 4(a) to Form 8-K dated March 22,
1996 in File No. 0-5807 (Sixth); and 4(b) to Form 10-Q
for the quarter ended June 30, 1998 in 0-5807 (Seventh)).
(10) Material Contracts
Entergy Corporation
(a) 1 -- Agreement, dated April 23, 1982, among certain
System companies, relating to System Planning and
Development and Intra-System Transactions (10(a)1 to
Form 10-K for the year ended December 31, 1982, in
1-3517).
(a) 2 -- Middle South Utilities (now Entergy Corporation)
System Agency Agreement, dated December 11, 1970 (5(a)-2
in 2-41080).
(a) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated
December 11, 1970 (5(a)-4 in 2-41080).
(a) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a)-4 in 2-41080).
(a) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(a) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-41080).
(a) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (5(a)-6 in 2-43175).
(a) 8 -- Amendment, dated April 27, 1984, to Service
Agreement with Entergy Services (10(a)-7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(a) 9 -- Amendment, dated August 1, 1988, to Service
Agreement with Entergy Services (10(a)-8 to Form 10-K for
the year ended December 31, 1988, in 1-3517).
(a) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(a)-9 to Form 10-K for
the year ended December 31, 1990, in 1-3517).
(a) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 for the year
ended December 31, 1994 in 1-3517).
(a) 12-- Availability Agreement, dated June 21, 1974, among
System Energy and certain other System companies (B to
Rule 24 Certificate, dated June 24, 1974, in 70-5399).
(a) 13-- First Amendment to Availability Agreement, dated
as of June 30, 1977 (B to Rule 24 Certificate, dated
June 24, 1977, in 70-5399).
(a) 14-- Second Amendment to Availability Agreement, dated
as of June 15, 1981 (E to Rule 24 Certificate, dated
July 1, 1981, in 70-6592).
(a) 15-- Third Amendment to Availability Agreement, dated
as of June 28, 1984 (B-13(a) to Rule 24 Certificate,
dated July 6, 1984, in 70-6985).
(a) 16-- Fourth Amendment to Availability Agreement, dated
as of June 1, 1989 (A to Rule 24 Certificate, dated
June 8, 1989, in 70-5399).
(a) 17-- Eighteenth Assignment of Availability Agreement,
Consent and Agreement, dated as of September 1, 1986,
with United States Trust Company of New York and
Gerard F. Ganey, as Trustees (C-2 to Rule 24 Certificate,
dated October 1, 1986, in 70-7272).
(a) 18-- Nineteenth Assignment of Availability Agreement,
Consent and Agreement, dated as of September 1, 1986,
with United States Trust Company of New York and
Gerard F. Ganey, as Trustees (C-3 to Rule 24 Certificate,
dated October 1, 1986, in 70-7272).
(a) 19-- Twenty-sixth Assignment of Availability Agreement,
Consent and Agreement, dated as of October 1, 1992, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (B-2(c) to Rule 24 Certificate, dated
November 2, 1992, in 70-7946).
(a) 20-- Twenty-seventh Assignment of Availability
Agreement, Consent and Agreement, dated as of April 1,
1993, with United States Trust Company of New York and
Gerard F. Ganey as Trustees (B-2(d) to Rule 24
Certificate dated May 4, 1993 in 70-7946).
(a) 21-- Twenty-ninth Assignment of Availability Agreement,
Consent and Agreement, dated as of April 1, 1994, with
United States Trust Company of New York and Gerard F.
Ganey as Trustees (B-2(f) to Rule 24 Certificate dated
May 6, 1994, in 70-7946).
(a) 22-- Thirtieth Assignment of Availability Agreement,
Consent and Agreement, dated as of August 1, 1996, among
System Energy, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi and Entergy New Orleans, and United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (filed as Exhibit B-2(a) to Rule 24 Certificate
dated August 8, 1996 in File No. 70-8511).
(a) 23-- Thirty-first Assignment of Availability Agreement,
Consent and Agreement, dated as of August 1, 1996, among
System Energy, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans, and United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (filed as Exhibit B-2(b) to Rule 24 Certificate
dated August 8, 1996 in File No. 70-8511).
(a) 24-- Thirty-second Assignment of Availability
Agreement, Consent and Agreement, dated as of December
27, 1996, among System Energy, Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans,
and The Chase Manhattan Bank (filed as Exhibit B-2(a) to
Rule 24 Certificate dated January 13, 1997 in File No. 70-
7561).
(a) 25-- Capital Funds Agreement, dated June 21, 1974,
between Entergy Corporation and System Energy (C to
Rule 24 Certificate, dated June 24, 1974, in 70-5399).
(a) 26-- First Amendment to Capital Funds Agreement, dated
as of June 1, 1989 (B to Rule 24 Certificate, dated
June 8, 1989, in 70-5399).
(a) 27-- Eighteenth Supplementary Capital Funds Agreement
and Assignment, dated as of September 1, 1986, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (D-2 to Rule 24 Certificate, dated
October 1, 1986, in 70-7272).
(a) 28-- Nineteenth Supplementary Capital Funds Agreement
and Assignment, dated as of September 1, 1986, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (D-3 to Rule 24 Certificate, dated
October 1, 1986, in 70-7272).
(a) 29-- Twenty-sixth Supplementary Capital Funds Agreement
and Assignment, dated as of October 1, 1992, with United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (B-3(c) to Rule 24 Certificate dated November 2,
1992 in 70-7946).
(a) 30-- Twenty-seventh Supplementary Capital Funds
Agreement and Assignment, dated as of April 1, 1993, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (B-3(d) to Rule 24 Certificate dated
May 4, 1993 in 70-7946).
(a) 31-- Twenty-ninth Supplementary Capital Funds Agreement
and Assignment, dated as of April 1, 1994, with United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (B-3(f) to Rule 24 Certificate dated May 6,
1994, in 70-7946).
(a) 32-- Thirtieth Supplementary Capital Funds Agreement
and Assignment, dated as of August 1, 1996, among Entergy
Corporation, System Energy and United States Trust
Company of New York and Gerard F. Ganey, as Trustees
(filed as Exhibit B-3(a) to Rule 24 Certificate dated
August 8, 1996 in File No. 70-8511).
(a) 33-- Thirty-first Supplementary Capital Funds Agreement
and Assignment, dated as of August 1, 1996, among Entergy
Corporation, System Energy and United States Trust
Company of New York and Gerard F. Ganey, as Trustees
(filed as Exhibit B-3(b) to Rule 24 Certificate dated
August 8, 1996 in File No. 70-8511).
(a) 34-- Thirty-second Supplementary Capital Funds
Agreement and Assignment, dated as of December 27, 1996,
among Entergy Corporation, System Energy and The Chase
Manhattan Bank (filed as Exhibit B-1(a) to Rule 24
Certificate dated January 13, 1997 in File No. 70-7561).
(a) 35-- First Amendment to Supplementary Capital Funds
Agreements and Assignments, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy, Deposit
Guaranty National Bank, United States Trust Company of
New York and Gerard F. Ganey (C to Rule 24 Certificate,
dated June 8, 1989, in 70-7026).
(a) 36-- First Amendment to Supplementary Capital Funds
Agreements and Assignments, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy, United
States Trust Company of New York and Gerard F. Ganey (C
to Rule 24 Certificate, dated June 8, 1989, in 70-7123).
(a) 37-- First Amendment to Supplementary Capital Funds
Agreement and Assignment, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy and
Chemical Bank (C to Rule 24 Certificate, dated June 8,
1989, in 70-7561).
(a) 38-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(a) 39-- Joint Construction, Acquisition and Ownership
Agreement, dated as of May 1, 1980, between System Energy
and SMEPA (B-1(a) in 70-6337), as amended by Amendment
No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and
Amendment No. 2, dated as of October 31, 1980 (1 to Rule
24 Certificate, dated October 30, 1981, in 70-6337).
(a) 40-- Operating Agreement dated as of May 1, 1980,
between System Energy and SMEPA (B(2)(a) in 70-6337).
(a) 41-- Assignment, Assumption and Further Agreement
No. 1, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(1) to Rule 24 Certificate, dated January 9, 1989,
in 70-7561).
(a) 42-- Assignment, Assumption and Further Agreement
No. 2, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(2) to Rule 24 Certificate, dated January 9, 1989,
in 70-7561).
(a) 43-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B(3)(a) in 70-6337).
(a) 44-- Grand Gulf Unit No. 2 Supplementary Agreement,
dated as of February 7, 1986, between System Energy and
SMEPA (10(aaa) in 33-4033).
(a) 45-- Compromise and Settlement Agreement, dated June 4,
1982, between Texaco, Inc. and Entergy Louisiana (28(a)
to Form 8-K, dated June 4, 1982, in 1-3517).
+(a) 46-- Post-Retirement Plan (10(a)37 to Form 10-K for the
year ended December 31, 1983, in 1-3517).
(a) 47-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a)-39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(a) 48-- First Amendment to Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(a) 49-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(a) 50-- Middle South Utilities Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (Exhibit D-1 to Form U5S for the
year ended December 31, 1987).
(a) 51-- First Amendment, dated January 1, 1990, to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(a) 52-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(a) 53-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(a) 54-- Fourth Amendment dated April 1, 1997 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-5 to Form U5S for the year
ended December 31, 1996).
(a) 55-- Guaranty Agreement between Entergy Corporation and
Entergy Arkansas, dated as of September 20, 1990 (B-1(a)
to Rule 24 Certificate, dated September 27, 1990, in
70-7757).
(a) 56-- Guarantee Agreement between Entergy Corporation
and Entergy Louisiana, dated as of September 20, 1990
(B-2(a) to Rule 24 Certificate, dated September 27, 1990,
in 70-7757).
(a) 57-- Guarantee Agreement between Entergy Corporation
and System Energy, dated as of September 20, 1990 (B-3(a)
to Rule 24 Certificate, dated September 27, 1990, in 70-
7757).
(a) 58-- Loan Agreement between Entergy Operations and
Entergy Corporation, dated as of September 20, 1990
(B-12(b) to Rule 24 Certificate, dated June 15, 1990, in
70-7679).
(a) 59-- Loan Agreement between Entergy Power and Entergy
Corporation, dated as of August 28, 1990 (A-4(b) to Rule
24 Certificate, dated September 6, 1990, in 70-7684).
(a) 60-- Loan Agreement between Entergy Corporation and
Entergy Systems and Service, Inc., dated as of
December 29, 1992 (A-4(b) to Rule 24 Certificate in
70-7947).
+(a) 61-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(a) 62-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(a) 63-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated May
24, 1991, in 70-7831).
+(a) 64-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a) 71 to Form 10-
K for the year ended December 31, 1992 in 1-3517).
+(a) 65-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(a) 66-- Retired Outside Director Benefit Plan (10(a)63 to
Form 10-K for the year ended December 31, 1991, in
1-3517).
+(a) 67-- Agreement between Entergy Corporation and Jerry D.
Jackson. (10(a) 67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(a) 68-- Supplemental Retirement Plan (10(a) 69 to Form 10-
K for the year ended December 31, 1992 in 1-3517).
+(a) 69-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(a) 70-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a) 72 to Form 10-K for the year
ended December 31, 1992 in 1-3517).
+(a) 71-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a) 73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(a) 72-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a) 74 to
Form 10-K for the year ended December 31, 1992 in 1-
3517).
(a) 73-- Agreement and Plan of Reorganization Between
Entergy Corporation and Gulf States Utilities Company,
dated June 5, 1992 (1 to Current Report on Form 8-K dated
June 5, 1992 in 1-3517).
+(a) 74-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(a) 75-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
*+(a) 76--Edwin A. Lupberger's Confidential Settlement Agreement
and Receipt and Release.
*+(a) 77--Jerry L. Maulden's Retirement Letter Agreement.
*+(a) 78--Letter of Intent regarding the Employment of Wayne
Leonard.
System Energy
(b) 1 through
(b) 13-- See 10(a)-12 through 10(a)-24 above.
(b) 14 through
(b) 26-- See 10(a)-25 through 10(a)-37 above.
(b) 27-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(b) 28-- Joint Construction, Acquisition and Ownership
Agreement, dated as of May 1, 1980, between System Energy
and SMEPA (B-1(a) in 70-6337), as amended by Amendment
No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and
Amendment No. 2, dated as of October 31, 1980 (1 to
Rule 24 Certificate, dated October 30, 1981, in 70-6337).
(b) 29-- Operating Agreement, dated as of May 1, 1980,
between System Energy and SMEPA (B(2)(a) in 70-6337).
(b) 30-- Installment Sale Agreement, dated as of
December 1, 1983 between System Energy and Claiborne
County, Mississippi (B-1 to First Rule 24 Certificate in
70-6913).
(b) 31-- Installment Sale Agreement, dated as of June 1,
1984, between System Energy and Claiborne County,
Mississippi (B-2 to Second Rule 24 Certificate in
70-6913).
(b) 32-- Loan Agreement, dated as of October 15, 1998,
between System Energy and Mississippi Business Finance
Corporation (B-6(b) to Rule 24 Certificate in 70-8511).
(b) 33-- Amended and Restated Installment Sale Agreement,
dated as of May 1, 1995, between System Energy and
Claiborne County, Mississippi (B-6(a) to Rule 24
Certificate in 70-8511).
(b) 34- Amended and Restated Installment Sale Agreement,
dated as of February 15, 1996, between System Energy and
Claiborne County, Mississippi (filed as Exhibit B-6(a) to
Rule 24 Certificate dated March 4, 1996 in File No.
70-8511).
(b) 35-- Facility Lease No. 1, dated as of December 1,
1988, between Meridian Trust Company and Stephen M. Carta
(Stephen J. Kaba, successor), as Owner Trustees, and
System Energy (B-2(c)(1) to Rule 24 Certificate dated
January 9, 1989 in 70-7561), as supplemented by Lease
Supplement No. 1 dated as of April 1, 1989 (B-22(b) (1)
to Rule 24 Certificate dated April 21, 1989 in 70-7561)
and Lease Supplement No. 2 dated as of January 1, 1994 (B-
3(d) to Rule 24 Certificate dated January 31, 1994 in 70-
8215).
(b) 36-- Facility Lease No. 2, dated as of December 1, 1988
between Meridian Trust Company and Stephen M. Carta
(Stephen J. Kaba, successor), as Owner Trustees, and
System Energy (B-2(c)(2) to Rule 24 Certificate dated
January 9, 1989 in 70-7561), as supplemented by Lease
Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2)
to Rule 24 Certificate dated April 21, 1989 in 70-7561)
and Lease Supplement No. 2 dated as of January 1, 1994 (B-
4(d) Rule 24 Certificate dated January 31, 1994 in 70-
8215).
(b) 37-- Assignment, Assumption and Further Agreement
No. 1, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(1) to Rule 24 Certificate, dated January 9, 1989,
in 70-7561).
(b) 38-- Assignment, Assumption and Further Agreement
No. 2, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(2) to Rule 24 Certificate, dated January 9, 1989,
in 70-7561).
(b) 39-- Collateral Trust Indenture, dated as of January 1,
1994, among System Energy, GG1B Funding Corporation and
Bankers Trust Company, as Trustee (A-3(e) to Rule 24
Certificate dated January 31, 1994, in 70-8215), as
supplemented by Supplemental Indenture No. 1 dated
January 1, 1994, (A-3(f) to Rule 24 Certificate dated
January 31, 1994, in 70-8215).
(b) 40-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B(3)(a) in 70-6337).
(b) 41-- Grand Gulf Unit No. 2 Supplementary Agreement,
dated as of February 7, 1986, between System Energy and
SMEPA (10(aaa) in 33-4033).
(b) 42-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a)-39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(b) 43-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(b) 44-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(b) 45-- Fuel Lease, dated as of February 24, 1989, between
River Fuel Funding Company #3, Inc. and System Energy
(B-1(b) to Rule 24 Certificate, dated March 3, 1989, in
70-7604).
(b) 46-- System Energy's Consent, dated January 31, 1995,
pursuant to Fuel Lease, dated as of February 24, 1989,
between River Fuel Funding Company #3, Inc. and System
Energy (B-1(c) to Rule 24 Certificate, dated February 13,
1995 in 70-7604).
(b) 47-- Sales Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (D to
Rule 24 Certificate, dated June 26, 1974, in 70-5399).
(b) 48-- Service Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (E to
Rule 24 Certificate, dated June 26, 1974, in 70-5399).
(b) 49-- Partial Termination Agreement, dated as of
December 1, 1986, between System Energy and Entergy
Mississippi (A-2 to Rule 24 Certificate, dated January 8,
1987, in 70-5399).
(b) 50-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(b) 51-- First Amendment, dated January 1, 1990 to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(b) 52-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(b) 53-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(b) 54-- Service Agreement with Entergy Services, dated as
of July 16, 1974, as amended (10(b)-43 to Form 10-K for
the year ended December 31, 1988, in 1-9067).
(b) 55-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(b)-45 to Form 10-K
for the year ended December 31, 1990, in 1-9067).
(b) 56-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a) -11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(b) 57-- Operating Agreement between Entergy Operations and
System Energy, dated as of June 6, 1990 (B-3(b) to Rule
24 Certificate, dated June 15, 1990, in 70-7679).
(b) 58-- Guarantee Agreement between Entergy Corporation
and System Energy, dated as of September 20, 1990 (B-3(a)
to Rule 24 Certificate, dated September 27, 1990, in
70-7757).
+(b) 59-- Agreement between System Energy and Donald C.
Hintz (10(b)47 to Form 10-K for the year ended
December 31, 1991, in 1-9067).
(b) 60-- Amended and Restated Reimbursement Agreement,
dated as of December 1, 1988 as amended and restated as
of December 27, 1996, among System Energy Resources,
Inc., The Bank of Tokyo-Mitsubishi, Ltd., as Funding Bank
and The Chase Manhattan Bank (as successor by merger with
Chemical Bank), as administrating bank, Union Bank of
California, N.A., as documentation agent, and the Banks
named therein, as Participating Banks (B-3(a) to Rule 24
Certificate dated January 13, 1997 in 70-7561).
+(b) 61-- Edwin A. Lupberger's Confidential Settlement
Agreement and Receipt and Release (10(a)76 to Form 10-K
for the year ended December 31, 1998 in 1-11299).
*+(b) 62--Letter to John Wilder offering Employment.
+(b) 63-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
Entergy Arkansas
(c) 1 -- Agreement, dated April 23, 1982, among Entergy
Arkansas and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(c) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)2 in 2-41080).
(c) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a)-4 in 2-41080).
(c) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(c) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(c) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-41080).
(c) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (5(a)- 6 in 2-43175).
(c) 8 -- Amendment, dated April 27, 1984, to Service
Agreement, with Entergy Services (10(a)- 7 to Form 10-K
for the year ended December 31, 1984, in 1-3517).
(c) 9 -- Amendment, dated August 1, 1988, to Service
Agreement with Entergy Services (10(c)- 8 to Form 10-K
for the year ended December 31, 1988, in 1-10764).
(c) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(c)-9 to Form 10-K for
the year ended December 31, 1990, in 1-10764).
(c) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(c) 12 through
(c) 24-- See 10(a)-12 through 10(a)-24 above.
(c) 25-- Agreement, dated August 20, 1954, between Entergy
Arkansas and the United States of America (SPA)(13(h) in
2-11467).
(c) 26-- Amendment, dated April 19, 1955, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-2 in 2-41080).
(c) 27-- Amendment, dated January 3, 1964, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-3 in 2-41080).
(c) 28-- Amendment, dated September 5, 1968, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-4 in 2-41080).
(c) 29-- Amendment, dated November 19, 1970, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-5 in 2-41080).
(c) 30-- Amendment, dated July 18, 1961, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-6 in 2-41080).
(c) 31-- Amendment, dated December 27, 1961, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-7 in 2-41080).
(c) 32-- Amendment, dated January 25, 1968, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-8 in 2-41080).
(c) 33-- Amendment, dated October 14, 1971, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-9 in 2-43175).
(c) 34-- Amendment, dated January 10, 1977, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-10 in 2-60233).
(c) 35-- Agreement, dated May 14, 1971, between Entergy
Arkansas and the United States of America (SPA) (5(e) in
2-41080).
(c) 36-- Amendment, dated January 10, 1977, to the United
States of America (SPA) Contract, dated May 14, 1971
(5(e)-1 in 2-60233).
(c) 37-- Contract, dated May 28, 1943, Amendment to
Contract, dated July 21, 1949, and Supplement to
Amendment to Contract, dated December 30, 1949, between
Entergy Arkansas and McKamie Gas Cleaning Company;
Agreements, dated as of September 30, 1965, between
Entergy Arkansas and former stockholders of McKamie Gas
Cleaning Company; and Letter Agreement, dated June 22,
1966, by Humble Oil & Refining Company accepted by
Entergy Arkansas on June 24, 1966 (5(k)-7 in 2-41080).
(c) 38-- Agreement, dated April 3, 1972, between Entergy
Services and Gulf United Nuclear Fuels Corporation
(5(l)-3 in 2-46152).
(c) 39-- Fuel Lease, dated as of December 22, 1988, between
River Fuel Trust #1 and Entergy Arkansas (B-1(b) to Rule
24 Certificate in 70-7571).
(c) 40-- White Bluff Operating Agreement, dated June 27,
1977, among Entergy Arkansas and Arkansas Electric
Cooperative Corporation and City Water and Light Plant of
the City of Jonesboro, Arkansas (B-2(a) to Rule 24
Certificate, dated June 30, 1977, in 70-6009).
(c) 41-- White Bluff Ownership Agreement, dated June 27,
1977, among Entergy Arkansas and Arkansas Electric
Cooperative Corporation and City Water and Light Plant of
the City of Jonesboro, Arkansas (B-1(a) to Rule 24
Certificate, dated June 30, 1977, in 70-6009).
(c) 42-- Agreement, dated June 29, 1979, between Entergy
Arkansas and City of Conway, Arkansas (5(r)-3 in
2-66235).
(c) 43-- Transmission Agreement, dated August 2, 1977,
between Entergy Arkansas and City Water and Light Plant
of the City of Jonesboro, Arkansas (5(r)-3 in 2-60233).
(c) 44-- Power Coordination, Interchange and Transmission
Service Agreement, dated as of June 27, 1977, between
Arkansas Electric Cooperative Corporation and Entergy
Arkansas (5(r)-4 in 2-60233).
(c) 45-- Independence Steam Electric Station Operating
Agreement, dated July 31, 1979, among Entergy Arkansas
and Arkansas Electric Cooperative Corporation and City
Water and Light Plant of the City of Jonesboro, Arkansas
and City of Conway, Arkansas (5(r)-6 in 2-66235).
(c) 46-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Operating Agreement
(10(c) 51 to Form 10-K for the year ended December 31,
1984, in 1-10764).
(c) 47-- Independence Steam Electric Station Ownership
Agreement, dated July 31, 1979, among Entergy Arkansas
and Arkansas Electric Cooperative Corporation and City
Water and Light Plant of the City of Jonesboro, Arkansas
and City of Conway, Arkansas (5(r)-7 in 2-66235).
(c) 48-- Amendment, dated December 28, 1979, to the
Independence Steam Electric Station Ownership Agreement
(5(r)-7(a) in 2-66235).
(c) 49-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Ownership Agreement
(10(c) 54 to Form 10-K for the year ended December 31,
1984, in 1-10764).
(c) 50-- Owner's Agreement, dated November 28, 1984, among
Entergy Arkansas, Entergy Mississippi, other co-owners of
the Independence Station (10(c) 55 to Form 10-K for the
year ended December 31, 1984, in 1-10764).
(c) 51-- Consent, Agreement and Assumption, dated December
4, 1984, among Entergy Arkansas, Entergy Mississippi,
other co-owners of the Independence Station and United
States Trust Company of New York, as Trustee (10(c) 56 to
Form 10-K for the year ended December 31, 1984, in
1-10764).
(c) 52-- Power Coordination, Interchange and Transmission
Service Agreement, dated as of July 31, 1979, between
Entergy Arkansas and City Water and Light Plant of the
City of Jonesboro, Arkansas (5(r)-8 in 2-66235).
(c) 53-- Power Coordination, Interchange and Transmission
Agreement, dated as of June 29, 1979, between City of
Conway, Arkansas and Entergy Arkansas (5(r)-9 in
2-66235).
(c) 54-- Agreement, dated June 21, 1979, between Entergy
Arkansas and Reeves E. Ritchie ((10)(b)-90 to Form 10-K
for the year ended December 31, 1980, in 1-10764).
(c) 55-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(c) 56-- Post-Retirement Plan (10(b) 55 to Form 10-K for
the year ended December 31, 1983, in 1-10764).
(c) 57-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(c) 58-- First Amendment to Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy, Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(c) 59-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(c) 60-- Contract For Disposal of Spent Nuclear Fuel and/or
High-Level Radioactive Waste, dated June 30, 1983, among
the DOE, System Fuels and Entergy Arkansas (10(b)-57 to
Form 10-K for the year ended December 31, 1983, in
1-10764).
(c) 61-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(c) 62-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(c) 63-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(c) 64-- Third Amendment dated January 1, 1994, to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(c) 65-- Assignment of Coal Supply Agreement, dated
December 1, 1987, between System Fuels and Entergy
Arkansas (B to Rule 24 letter filing, dated November 10,
1987, in 70-5964).
(c) 66-- Coal Supply Agreement, dated December 22, 1976,
between System Fuels and Antelope Coal Company (B-1 in
70-5964), as amended by First Amendment (A to Rule 24
Certificate in 70-5964); Second Amendment (A to Rule 24
letter filing, dated December 16, 1983, in 70-5964); and
Third Amendment (A to Rule 24 letter filing, dated
November 10, 1987 in 70-5964).
(c) 67-- Operating Agreement between Entergy Operations and
Entergy Arkansas, dated as of June 6, 1990 (B-1(b) to
Rule 24 Certificate, dated June 15, 1990, in 70-7679).
(c) 68-- Guaranty Agreement between Entergy Corporation and
Entergy Arkansas, dated as of September 20, 1990 (B-1(a)
to Rule 24 Certificate, dated September 27, 1990, in
70-7757).
(c) 69-- Agreement for Purchase and Sale of Independence
Unit 2 between Entergy Arkansas and Entergy Power, dated
as of August 28, 1990 (B-3(c) to Rule 24 Certificate,
dated September 6, 1990, in 70-7684).
(c) 70-- Agreement for Purchase and Sale of Ritchie Unit 2
between Entergy Arkansas and Entergy Power, dated as of
August 28, 1990 (B-4(d) to Rule 24 Certificate, dated
September 6, 1990, in 70-7684).
(c) 71-- Ritchie Steam Electric Station Unit No. 2
Operating Agreement between Entergy Arkansas and Entergy
Power, dated as of August 28, 1990 (B-5(a) to Rule 24
Certificate, dated September 6, 1990, in 70-7684).
(c) 72-- Ritchie Steam Electric Station Unit No. 2
Ownership Agreement between Entergy Arkansas and Entergy
Power, dated as of August 28, 1990 (B-6(a) to Rule 24
Certificate, dated September 6, 1990, in 70-7684).
(c) 73-- Power Coordination, Interchange and Transmission
Service Agreement between Entergy Power and Entergy
Arkansas, dated as of August 28, 1990 (10(c)-71 to Form
10-K for the year ended December 31, 1990, in 1-10764).
+(c) 74-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a)52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(c) 75-- Entergy Corporation Annual Incentive Plan (10(a)54
to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(c) 76-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated
May 24, 1991, in 70-7831).
+(c) 77-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(c) 78-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(c) 79-- Agreement between Arkansas Power & Light Company
and R. Drake Keith. (10(c) 78 to Form 10-K for the year
ended December 31, 1992 in 1-10764).
+(c) 80-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(c) 81-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(c) 82-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(c) 83-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a)73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(c) 84-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(c) 85-- Agreement between Entergy Corporation and Jerry D.
Jackson (10(a)-67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(c) 86-- Agreement between System Energy and Donald C.
Hintz (10(b)-47 to Form 10-K for the year ended
December 31, 1991 in 1-9067).
+(c) 87-- Summary Description of Retired Outside Director
Benefit Plan. (10(c) 90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(c) 88-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(c) 89-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
(c) 90-- Loan Agreement dated June 15, 1993, between
Entergy Arkansas and Independence Country, Arkansas (B-1
(a) to Rule 24 Certificate dated July 9, 1993 in 70-
8171).
(c) 91-- Installment Sale Agreement dated January 1, 1991,
between Entergy Arkansas and Pope Country, Arkansas (B-1
(b) to Rule 24 Certificate dated January 24, 1991 in 70-
7802).
(c) 92-- Installment Sale Agreement dated November 1, 1990,
between Entergy Arkansas and Pope Country, Arkansas (B-1
(a) to Rule 24 Certificate dated November 30, 1990 in 70-
7802).
(c) 93-- Loan Agreement dated June 15, 1994, between
Entergy Arkansas and Jefferson County, Arkansas (B-1(a)
to Rule 24 Certificate dated June 30, 1994 in 70-8405).
(c) 94-- Loan Agreement dated June 15, 1994, between
Entergy Arkansas and Pope County, Arkansas (B-1(b) to
Rule 24 Certificate in 70-8405).
(c) 95-- Loan Agreement dated November 15, 1995,
between Entergy Arkansas and Pope County, Arkansas (10(c)
96 to Form 10-K for the year ended December 31, 1995 in 1-
10764).
(c) 96-- Agreement as to Expenses and Liabilities
between Entergy Arkansas and Entergy Arkansas Capital I,
dated as of August 14, 1996 (4(j) to Form 10-Q for the
quarter ended September 30, 1996 in 1-10764).
(c) 97-- Loan Agreement dated December 1, 1997,
between Entergy Arkansas and Jefferson County, Arkansas
(10(c)100 to Form 10-K for the year ended December 31,
1997 in 1-10764).
+(c) 98-- Edwin A. Lupberger's Confidential Settlement
Agreement and Receipt and Release (10(a)76 to Form 10-K
for the year ended December 31, 1998 in 1-11299).
+(c) 99-- Jerry L. Maulden's Retirement Letter Agreement
(10(a)77 to Form 10-K for the year ended December 31,
1998 in 1-11299).
+(c) 100-- Letter of Intent regarding the Employment of Wayne
Leonard (10(a)78 to Form 10-K for the year ended December
31, 1998 in 1-11299).
Entergy Gulf States
(d) 1 -- Guaranty Agreement, dated July 1, 1976, between
Entergy Gulf States and American Bank and Trust Company
(C and D to Form 8-K, dated August 6, 1976 in 1-2703).
(d) 2 -- Lease of Railroad Equipment, dated as of December
1, 1981, between The Connecticut Bank and Trust Company
as Lessor and Entergy Gulf States as Lessee and First
Supplement, dated as of December 31, 1981, relating to
605 One Hundred-Ton Unit Train Steel Coal Porter Cars (4-
12 to Form 10-K for the year ended December 31, 1981 in 1-
2703).
(d) 3 -- Guaranty Agreement, dated August 1, 1992, between
Entergy Gulf States and Hibernia National Bank, relating
to Pollution Control Revenue Refunding Bonds of the
Industrial Development Board of the Parish of Calcasieu,
Inc. (Louisiana) (10-1 to Form 10-K for the year ended
December 31, 1992 in 1-2703).
(d) 4 -- Guaranty Agreement, dated January 1, 1993, between
Entergy Gulf States and Hancock Bank of Louisiana,
relating to Pollution Control Revenue Refunding Bonds of
the Parish of Pointe Coupee (Louisiana) (10-2 to Form 10-
K for the year ended December 31, 1992 in 1-2703).
(d) 5 -- Deposit Agreement, dated as of December 1, 1983
between Entergy Gulf States, Morgan Guaranty Trust Co. as
Depositary and the Holders of Depository Receipts,
relating to the Issue of 900,000 Depositary Preferred
Shares, each representing 1/2 share of Adjustable Rate
Cumulative Preferred Stock, Series E-$100 Par Value (4-17
to Form 10-K for the year ended December 31, 1983 in 1-
2703).
(d) 6 -- Agreement effective February 1, 1964, between
Sabine River Authority, State of Louisiana, and Sabine
River Authority of Texas, and Entergy Gulf States,
Central Louisiana Electric Company, Inc., and Louisiana
Power & Light Company, as supplemented (B to Form 8-K,
dated May 6, 1964, A to Form 8-K, dated October 5, 1967,
A to Form 8-K, dated May 5, 1969, and A to Form 8-K,
dated December 1, 1969, in 1-2708).
(d) 7 -- Joint Ownership Participation and Operating
Agreement regarding River Bend Unit 1 Nuclear Plant,
dated August 20, 1979, between Entergy Gulf States,
Cajun, and SRG&T; Power Interconnection Agreement with
Cajun, dated June 26, 1978, and approved by the REA on
August 16, 1979, between Entergy Gulf States and Cajun;
and Letter Agreement regarding CEPCO buybacks, dated
August 28, 1979, between Entergy Gulf States and Cajun
(2, 3, and 4, respectively, to Form 8-K, dated September
7, 1979, in 1-2703).
(d) 8 -- Ground Lease, dated August 15, 1980, between
Statmont Associates Limited Partnership (Statmont) and
Entergy Gulf States, as amended (3 to Form 8-K, dated
August 19, 1980, and A-3-b to Form 10-Q for the quarter
ended September 30, 1983 in 1-2703).
(d) 9 -- Lease and Sublease Agreement, dated August 15,
1980, between Statmont and Entergy Gulf States, as
amended (4 to Form 8-K, dated August 19, 1980, and A-3-c
to Form 10-Q for the quarter ended September 30, 1983 in
1-2703).
(d) 10-- Lease Agreement, dated September 18, 1980, between
BLC Corporation and Entergy Gulf States (1 to Form 8-K,
dated October 6, 1980 in 1-2703).
(d) 11-- Joint Ownership Participation and Operating
Agreement for Big Cajun, between Entergy Gulf States,
Cajun Electric Power Cooperative, Inc., and Sam Rayburn
G&T, Inc, dated November 14, 1980 (6 to Form 8-K, dated
January 29, 1981 in 1-2703); Amendment No. 1, dated
December 12, 1980 (7 to Form 8-K, dated January 29, 1981
in 1-2703); Amendment No. 2, dated December 29, 1980 (8
to Form 8-K, dated January 29, 1981 in 1-2703).
(d) 12-- Agreement of Joint Ownership Participation between
SRMPA, SRG&T and Entergy Gulf States, dated June 6, 1980,
for Nelson Station, Coal Unit #6, as amended (8 to Form 8-
K, dated June 11, 1980, A-2-b to Form 10-Q For the
quarter ended June 30, 1982; and 10-1 to Form 8-K, dated
February 19, 1988 in 1-2703).
(d) 13-- Agreements between Southern Company and Entergy
Gulf States, dated February 25, 1982, which cover the
construction of a 140-mile transmission line to connect
the two systems, purchase of power and use of
transmission facilities (10-31 to Form 10-K, for the year
ended December 31, 1981 in 1-2703).
+(d) 14-- Executive Income Security Plan, effective October
1, 1980, as amended, continued and completely restated
effective as of March 1, 1991 (10-2 to Form 10-K for the
year ended December 31, 1991 in 1-2703).
(d) 15-- Transmission Facilities Agreement between Entergy
Gulf States and Mississippi Power Company, dated February
28, 1982, and Amendment, dated May 12, 1982 (A-2-c to
Form 10-Q for the quarter ended March 31, 1982 in 1-2703)
and Amendment, dated December 6, 1983 (10-43 to Form 10-
K, for the year ended December 31, 1983 in 1-2703).
(d) 16-- Lease Agreement dated as of June 29, 1983, between
Entergy Gulf States and City National Bank of Baton
Rouge, as Owner Trustee, in connection with the leasing
of a Simulator and Training Center for River Bend Unit 1
(A-2-a to Form 10-Q for the quarter ended June 30, 1983
in 1-2703) and Amendment, dated December 14, 1984 (10-55
to Form 10-K, for the year ended December 31, 1984 in 1-
2703).
(d) 17-- Participation Agreement, dated as of June 29,
1983, among Entergy Gulf States, City National Bank of
Baton Rouge, PruFunding, Inc. Bank of the Southwest
National Association, Houston and Bankers Life Company,
in connection with the leasing of a Simulator and
Training Center of River Bend Unit 1 (A-2-b to Form 10-Q
for the quarter ended June 30, 1983 in 1-2703).
(d) 18-- Tax Indemnity Agreement, dated as of June 29,
1983, between Entergy Gulf States and PruFunding, Inc.,
in connection with the leasing of a Simulator and
Training Center for River Bend Unit I (A-2-c to Form 10-Q
for the quarter ended June 30, 1993 in 1-2703).
(d) 19-- Agreement to Lease, dated as of August 28, 1985,
among Entergy Gulf States, City National Bank of Baton
Rouge, as Owner Trustee, and Prudential Interfunding
Corp., as Trustor, in connection with the leasing of
improvement to a Simulator and Training Facility for
River Bend Unit I (10-69 to Form 10-K, for the year ended
December 31, 1985 in 1-2703).
(d) 20-- First Amended Power Sales Agreement, dated
December 1, 1985 between Sabine River Authority, State of
Louisiana, and Sabine River Authority, State of Texas,
and Entergy Gulf States, Central Louisiana Electric Co.,
Inc., and Louisiana Power and Light Company (10-72 to
Form 10-K for the year ended December 31, 1985 in 1-
2703).
+(d) 21-- Deferred Compensation Plan for Directors of
Entergy Gulf States and Varibus Corporation, as amended
January 8, 1987, and effective January 1, 1987 (10-77 to
Form 10-K for the year ended December 31, 1986 in 1-
2703). Amendment dated December 4, 1991 (10-3 to
Amendment No. 8 in Registration No. 2-76551).
+(d) 22-- Trust Agreement for Deferred Payments to be made
by Entergy Gulf States pursuant to the Executive Income
Security Plan, by and between Entergy Gulf States and
Bankers Trust Company, effective November 1, 1986 (10-78
to Form 10-K for the year ended December 31, 1986 in 1-
2703).
+(d) 23-- Trust Agreement for Deferred Installments under
Entergy Gulf States' Management Incentive Compensation
Plan and Administrative Guidelines by and between Entergy
Gulf States and Bankers Trust Company, effective June 1,
1986 (10-79 to Form 10-K for the year ended December 31,
1986 in 1-2703).
+(d) 24-- Nonqualified Deferred Compensation Plan for
Officers, Nonemployee Directors and Designated Key
Employees, effective December 1, 1985, as amended,
continued and completely restated effective as of March
1, 1991 (10-3 to Amendment No. 8 in Registration No. 2-
76551).
+(d) 25-- Trust Agreement for Entergy Gulf States'
Nonqualified Directors and Designated Key Employees by
and between Entergy Gulf States and First City Bank,
Texas-Beaumont, N.A. (now Texas Commerce Bank), effective
July 1, 1991 (10-4 to Form 10-K for the year ended
December 31, 1992 in 1-2703).
(d) 26-- Lease Agreement, dated as of June 29, 1987, among
GSG&T, Inc., and Entergy Gulf States related to the
leaseback of the Lewis Creek generating station (10-83 to
Form 10-K for the year ended December 31, 1988 in 1-
2703).
(d) 27-- Nuclear Fuel Lease Agreement between Entergy Gulf
States and River Bend Fuel Services, Inc. to lease the
fuel for River Bend Unit 1, dated February 7, 1989 (10-64
to Form 10-K for the year ended December 31, 1988 in 1-
2703).
(d) 28-- Trust and Investment Management Agreement between
Entergy Gulf States and Morgan Guaranty and Trust Company
of New York (the "Decommissioning Trust Agreement) with
respect to decommissioning funds authorized to be
collected by Entergy Gulf States, dated March 15, 1989
(10-66 to Form 10-K for the year ended December 31, 1988
in 1-2703).
(d) 29-- Amendment No. 2 dated November 1, 1995 between
Entergy Gulf States and Mellon Bank to Decommissioning
Trust Agreement (10(d) 31 to Form 10-K for the year ended
December 31, 1995).
(d) 30-- Credit Agreement, dated as of December 29, 1993,
among River Bend Fuel Services, Inc. and Certain
Commercial Lending Institutions and CIBC Inc. as Agent
for the Lenders (10(d) 34 to Form 10-K for year ended
December 31, 1994).
(d) 31-- Amendment No. 1 dated as of January 31, to Credit
Agreement, dated as of December 31, 1993, among River
Bend Fuel Services, Inc. and certain commercial lending
institutions and CIBC Inc. as agent for Lenders (10(d) 33
to Form 10-K for the year ended December 31, 1995).
(d) 32-- Partnership Agreement by and among Conoco Inc.,
and Entergy Gulf States, CITGO Petroleum Corporation and
Vista Chemical Company, dated April 28, 1988 (10-67 to
Form 10-K for the year ended December 31, 1988 in 1-
2703).
+(d) 33-- Gulf States Utilities Company Executive Continuity
Plan, dated January 18, 1991 (10-6 to Form 10-K for the
year ended December 31, 1990 in 1-2703).
+(d) 34-- Trust Agreement for Entergy Gulf States' Executive
Continuity Plan, by and between Entergy Gulf States and
First City Bank, Texas-Beaumont, N.A. (now Texas Commerce
Bank), effective May 20, 1991 (10-5 to Form 10-K for the
year ended December 31, 1992 in 1-2703).
+(d) 35-- Gulf States Utilities Board of Directors'
Retirement Plan, dated February 15, 1991 (10-8 to Form 10-
K for the year ended December 31, 1990 in 1-2703).
+(d) 36-- Gulf States Utilities Company Employees' Trustee
Retirement Plan effective July 1, 1955 as amended,
continued and completely restated effective January 1,
1989; and Amendment No.1 effective January 1, 1993 (10-6
to Form 10-K for the year ended December 31, 1992 in 1-
2703).
(d) 37-- Agreement and Plan of Reorganization, dated June
5, 1992, between Entergy Gulf States and Entergy
Corporation (2 to Form 8-K, dated June 8, 1992 in 1-
2703).
+(d) 38-- Gulf States Utilities Company Employee Stock
Ownership Plan, as amended, continued, and completely
restated effective January 1, 1984, and January 1, 1985
(A to Form 11-K, dated December 31, 1985 in 1-2703).
+(d) 39-- Trust Agreement under the Gulf States Utilities
Company Employee Stock Ownership Plan, dated December 30,
1976, between Entergy Gulf States and the Louisiana
National Bank, as Trustee (2-A to Registration No. 2-
62395).
+(d) 40-- Letter Agreement dated September 7, 1977 between
Entergy Gulf States and the Trustee, delegating certain
of the Trustee's functions to the ESOP Committee (2-B to
Registration Statement No. 2-62395).
+(d) 41-- Gulf States Utilities Company Employees Thrift
Plan as amended, continued and completely restated
effective as of January 1, 1992 (28-1 to Amendment No. 8
to Registration No. 2-76551).
+(d) 42-- Restatement of Trust Agreement under the Gulf
States Utilities Company Employees Thrift Plan,
reflecting changes made through January 1, 1989, between
Entergy Gulf States and First City Bank, Texas-Beaumont,
N.A., (now Texas Commerce Bank ), as Trustee (2-A to Form
8-K dated October 20, 1989 in 1-2703).
(d) 43-- Operating Agreement between Entergy Operations and
Entergy Gulf States, dated as of December 31, 1993 (B-
2(f) to Rule 24 Certificate in 70-8059).
(d) 44-- Guarantee Agreement between Entergy Corporation
and Entergy Gulf States, dated as of December 31, 1993 (B-
5(a) to Rule 24 Certificate in 70-8059).
(d) 45-- Service Agreement with Entergy Services, dated as
of December 31, 1993 (B-6(c) to Rule 24 Certificate in
70-8059).
+(d) 46-- Amendment to Employment Agreement between J. L.
Donnelly and Entergy Gulf States, dated December 22, 1993
(10(d) 57 to Form 10-K for the year ended December 31,
1993 in 1-2703).
(d) 47-- Assignment, Assumption and Amendment Agreement to
Letter of Credit and Reimbursement Agreement between
Entergy Gulf States, Canadian Imperial Bank of Commerce
and Westpac Banking Corporation (10(d) 58 to Form 10-K
for the year ended December 31, 1993 in 1-2703).
(d) 48-- Third Amendment, dated January 1, 1994, to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(d) 49-- Refunding Agreement between Entergy Gulf States
and West Feliciana Parish (dated December 20, 1994 (B-
12(a) to Rule 24 Certificate dated December 30, 1994 in
70-8375).
(d) 50-- Agreement as to Expenses and Liabilities
between Entergy Gulf States and Entergy Gulf States
Capital I, dated as of January 28, 1997 (10(d)52 to Form
10-K for the year ended December 31, 1996 in 1-2703).
(d) 51-- Refunding Agreement between Entergy Gulf States
and Parish of Iberville, State of Louisiana dated as of
May 1, 1998 (B-3(a) to Rule 24 Certificate dated May 29,
1998 in 70-8721).
+(d) 52-- Edwin A. Lupberger's Confidential Settlement
Agreement and Receipt and Release (10(a)76 to Form 10-K
for the year ended December 31, 1998 in 1-11299).
+(d) 53-- Jerry L. Maulden's Retirement Letter Agreement
(10(a)77 to Form 10-K for the year ended December 31,
1998 in 1-11299).
+(d) 54-- Letter of Intent regarding the Employment of Wayne
Leonard (10(a)78 to Form 10-K for the year ended December
31, 1998 in 1-11299).
+(d) 55-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
Entergy Louisiana
(e) 1 -- Agreement, dated April 23, 1982, among Entergy
Louisiana and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(e) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(e) 3 -- Amendment, dated as of February 10, 1971, to
Middle South Utilities System Agency Agreement, dated
December 11, 1970 (5(a)-4 in 2-41080).
(e) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(e) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(e) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-42523).
(e) 7 -- Amendment, dated as of January 1, 1972, to Service
Agreement with Entergy Services (4(a)-6 in 2-45916).
(e) 8 -- Amendment, dated as of April 27, 1984, to Service
Agreement with Entergy Services (10(a) 7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(e) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(d)-8 to Form 10-K for
the year ended December 31, 1988, in 1-8474).
(e) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(d)-9 to Form 10-K for
the year ended December 31, 1990, in 1-8474).
(e) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(e) 12 through
(e) 24-- See 10(a)-12 through 10(a)-24 above.
(e) 25-- Fuel Lease, dated as of January 31, 1989, between
River Fuel Company #2, Inc., and Entergy Louisiana
(B-1(b) to Rule 24 Certificate in 70-7580).
(e) 26-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(e) 27-- Compromise and Settlement Agreement, dated June 4,
1982, between Texaco, Inc. and Entergy Louisiana (28(a)
to Form 8-K, dated June 4, 1982, in 1-8474).
+(e) 28-- Post-Retirement Plan (10(c)23 to Form 10-K for the
year ended December 31, 1983, in 1-8474).
(e) 29-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(e) 30-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(e) 31-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(e) 32-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Tax Allocation Agreement, dated
April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(e) 33-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement, dated
January 1, 1990 (D-2 to Form U5S for the year ended
December 31, 1989).
(e) 34-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(e) 35-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(e) 36-- Contract for Disposal of Spent Nuclear Fuel and/or
High-Level Radioactive Waste, dated February 2, 1984,
among DOE, System Fuels and Entergy Louisiana (10(d)33 to
Form 10-K for the year ended December 31, 1984, in
1-8474).
(e) 37-- Operating Agreement between Entergy Operations and
Entergy Louisiana, dated as of June 6, 1990 (B-2(c) to
Rule 24 Certificate, dated June 15, 1990, in 70-7679).
(e) 38-- Guarantee Agreement between Entergy Corporation
and Entergy Louisiana, dated as of September 20, 1990
(B-2(a), to Rule 24 Certificate, dated September 27,
1990, in 70-7757).
+(e) 39-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(e) 40-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(e) 41-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated
May 24, 1991, in 70-7831).
+(e) 42-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a) 71 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(e) 43-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(e) 44-- Supplemental Retirement Plan (10(a) 69 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(e) 45-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a) 53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(e) 46-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a) 72 to Form 10-K for the year
ended December 31, 1992 in 1-3517).
+(e) 47-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a) 73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(e) 48-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries (10(a) 74 to Form 10-K for
the year ended December 31, 1992 in 1-3517).
+(e) 49-- Agreement between Entergy Corporation and Jerry D.
Jackson (10(a) 67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(e) 50-- Agreement between System Energy and Donald C.
Hintz (10(b) 47 to Form 10-K for the year ended
December 31, 1991 in 1-9067).
+(e) 51-- Summary Description of Retired Outside Director
Benefit Plan (10(c)90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(e) 52-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(e) 53-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
(e) 54-- Installment Sale Agreement, dated July 20, 1994,
between Entergy Louisiana and St. Charles Parish,
Louisiana (B-6(e) to Rule 24 Certificate dated August 1,
1994 in 70-7822).
(e) 55-- Installment Sale Agreement, dated November 1,
1995, between Entergy Louisiana and St. Charles Parish,
Louisiana (B-6(a) to Rule 24 Certificate dated December
19, 1995 in 70-8487).
(e) 56-- Agreement as to Expenses and Liabilities between
Entergy Louisiana, Inc. and Entergy Louisiana Capital I
dated July 16, 1996 (4(d) to Form 10-Q for the quarter
ended June 30, 1996 in 1-8474).
+(e) 57-- Edwin A. Lupberger's Confidential Settlement
Agreement and Receipt and Release (10(a)76 to Form 10-K
for the year ended December 31, 1998 in 1-11299).
+(e) 58-- Jerry L. Maulden's Retirement Letter Agreement
(10(a)77 to Form 10-K for the year ended December 31,
1998 in 1-11299).
+(e) 59-- Letter of Intent regarding the Employment of Wayne
Leonard (10(a)78 to Form 10-K for the year ended December
31, 1998 in 1-11299).
Entergy Mississippi
(f) 1 -- Agreement dated April 23, 1982, among Entergy
Mississippi and certain other System companies, relating
to System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(f) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(f) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a) 4 in 2-41080).
(f) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(f) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(f) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (D in 37-63).
(f) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (A to Notice, dated
October 14, 1971, in 37-63).
(f) 8 -- Amendment, dated April 27, 1984, to Service
Agreement with Entergy Services (10(a) 7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(f) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(e) 8 to Form 10-K for
the year ended December 31, 1988, in 0-320).
(f) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(e) 9 to Form 10-K for
the year ended December 31, 1990, in 0-320).
(f) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(f) 12 though
(f) 24-- See 10(a)-12 - 10(a)-24 above.
(f) 25-- Installment Sale Agreement, dated as of June 1,
1974, between Entergy Mississippi and Washington County,
Mississippi (B-2(a) to Rule 24 Certificate, dated August
1, 1974, in 70-5504).
(f) 26-- Installment Sale Agreement, dated as of July 1,
1982, between Entergy Mississippi and Independence
County, Arkansas, (B-1(c) to Rule 24 Certificate dated
July 21, 1982, in 70-6672).
(f) 27-- Installment Sale Agreement, dated as of December
1, 1982, between Entergy Mississippi and Independence
County, Arkansas, (B-1(d) to Rule 24 Certificate dated
December 7, 1982, in 70-6672).
(f) 28-- Amended and Restated Installment Sale Agreement,
dated as of April 1, 1994, between Entergy Mississippi
and Warren County, Mississippi, (B-6(a) to Rule 24
Certificate dated May 4, 1994, in 70-7914).
(f) 29-- Amended and Restated Installment Sale Agreement,
dated as of April 1, 1994, between Entergy Mississippi
and Washington County, Mississippi, (B-6(b) to Rule 24
Certificate dated May 4, 1994, in 70-7914).
(f) 30-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B-3(a) in 70-6337).
(f) 31-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Operating Agreement
(10(c) 51 to Form 10-K for the year ended December 31,
1984, in 0-375).
(f) 32-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Ownership Agreement
(10(c) 54 to Form 10-K for the year ended December 31,
1984, in 0-375).
(f) 33-- Owners Agreement, dated November 28, 1984, among
Entergy Arkansas, Entergy Mississippi and other co-owners
of the Independence Station (10(c) 55 to Form 10-K for
the year ended December 31, 1984, in 0-375).
(f) 34-- Consent, Agreement and Assumption, dated December
4, 1984, among Entergy Arkansas, Entergy Mississippi,
other co-owners of the Independence Station and United
States Trust Company of New York, as Trustee (10(c) 56 to
Form 10-K for the year ended December 31, 1984, in
0-375).
(f) 35-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(f) 36-- Post-Retirement Plan (10(d) 24 to Form 10-K for
the year ended December 31, 1983, in 0-320).
(f) 37-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(f) 38-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(f) 39-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(f) 40-- Sales Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (D to Rule
24 Certificate, dated June 26, 1974, in 70-5399).
(f) 41-- Service Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (E to Rule
24 Certificate, dated June 26, 1974, in 70-5399).
(f) 42-- Partial Termination Agreement, dated as of
December 1, 1986, between System Energy and Entergy
Mississippi (A-2 to Rule 24 Certificate dated January 8,
1987, in 70-5399).
(f) 43-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(f) 44-- First Amendment dated January 1, 1990 to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Tax Allocation Agreement (D-2 to Form U5S
for the year ended December 31, 1989).
(f) 45-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(f) 46-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
+(f) 47-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(f) 48-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(f) 49-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated
May 24, 1991, in 70-7831).
+(f) 50-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(f) 51-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(f) 52-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(f) 53-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(f) 54-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(f) 55-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a)73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(f) 56-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(f) 57-- Agreement between Entergy Corporation and Jerry D.
Jackson (10(a)-67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(f) 58-- Agreement between System Energy and Donald C.
Hintz (10(b)-47 to Form 10-K for the year ended
December 31, 1991 in 1-9067).
+(f) 59-- Summary Description of Retired Outside Director
Benefit Plan (10(c)-90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(f) 60-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(f) 61-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(f) 62-- Edwin A. Lupberger's Confidential Settlement
Agreement and Receipt and Release (10(a)76 to Form 10-K
for the year ended December 31, 1998 in 1-11299).
+(f) 63-- Jerry L. Maulden's Retirement Letter Agreement
(10(a)77 to Form 10-K for the year ended December 31,
1998 in 1-11299).
+(f) 64-- Letter of Intent regarding the Employment of Wayne
Leonard (10(a)78 to Form 10-K for the year ended December
31, 1998 in 1-11299).
Entergy New Orleans
(g) 1 -- Agreement, dated April 23, 1982, among Entergy New
Orleans and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a)-1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(g) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(g) 3 -- Amendment dated as of February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a)-4 in 2-41080).
(g) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(g) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(g) 6 -- Service Agreement with Entergy Services dated as
of April 1, 1963 (5(a)-5 in 2-42523).
(g) 7 -- Amendment, dated as of January 1, 1972, to Service
Agreement with Entergy Services (4(a)-6 in 2-45916).
(g) 8 -- Amendment, dated as of April 27, 1984, to Service
Agreement with Entergy Services (10(a)7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(g) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(f)-8 to Form 10-K for
the year ended December 31, 1988, in 0-5807).
(g) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(f)-9 to Form 10-K for
the year ended December 31, 1990, in 0-5807).
(g) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for year ended December 31, 1994 in 1-3517).
(g) 12 through
(g) 24-- See 10(a)-12 - 10(a)-24 above.
(g) 25-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(g) 26-- Post-Retirement Plan (10(e) 22 to Form 10-K for
the year ended December 31, 1983, in 1-1319).
(g) 27-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982, in 1-3517).
(g) 28-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984, in 1-3517).
(g) 29-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(g) 30-- Transfer Agreement, dated as of June 28, 1983,
among the City of New Orleans, Entergy New Orleans and
Regional Transit Authority (2(a) to Form 8-K, dated June
24, 1983, in 1-1319).
(g) 31-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(g) 32-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(g) 33-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(g) 34-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
+(g) 35-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a)52 to Form 10-K for
the year ended December 31, 1989, in 1-3517).
+(g) 36-- Entergy Corporation Annual Incentive Plan (10(a)54
to Form 10-K for the year ended December 31, 1989, in
1-3517).
+(g) 37-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate, dated
May 24, 1991, in 70-7831).
+(g) 38-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(g) 39-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(g) 40-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(g) 41-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(g) 42-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(g) 43-- Executive Medical Plan of Entergy Corporation and
Subsidiaries (10(a)73 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(g) 44-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(g) 45-- Agreement between Entergy Corporation and Jerry D.
Jackson (10(a)-67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(g) 46-- Agreement between System Energy and Donald C.
Hintz (10(b)-47 to Form 10-K for the year ended December
31, 1991 in 1-9067).
+(g) 47-- Summary Description of Retired Outside Director
Benefit Plan (10(c)-90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(g) 48-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(g) 49-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(g) 50-- Edwin A. Lupberger's Confidential Settlement
Agreement and Receipt and Release (10(a)76 to Form 10-K
for the year ended December 31, 1998 in 1-11299).
+(g) 51-- Jerry L. Maulden's Retirement Letter Agreement
(10(a)77 to Form 10-K for the year ended December 31,
1998 in 1-11299).
+(g) 52-- Letter of Intent regarding the Employment of Wayne
Leonard (10(a)78 to Form 10-K for the year ended December
31, 1998 in 1-11299).
(12) Statement Re Computation of Ratios
*(a) Entergy Arkansas's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(b) Entergy Gulf States' Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(c) Entergy Louisiana's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(d) Entergy Mississippi's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(e) Entergy New Orleans' Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(f) System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
*(21) Subsidiaries of the Registrants
(23) Consents of Experts and Counsel
*(a) The consent of PricewaterhouseCoopers LLP is contained
herein at page 211.
*(24) Powers of Attorney
(27) Financial Data Schedule
*(a) Financial Data Schedule for Entergy Corporation and
Subsidiaries as of December 31, 1998.
*(b) Financial Data Schedule for Entergy Arkansas as of
December 31, 1998.
*(c) Financial Data Schedule for Entergy Gulf States as of
December 31, 1998.
*(d) Financial Data Schedule for Entergy Louisiana as of
December 31, 1998.
*(e) Financial Data Schedule for Entergy Mississippi as of
December 31, 1998.
*(f) Financial Data Schedule for Entergy New Orleans as of
December 31, 1998.
*(g) Financial Data Schedule for System Energy as of December
31, 1998.
_________________
* Filed herewith.
+ Management contracts or compensatory plans or arrangements.
Exhibit 10(a)76
CONFIDENTIAL SETTLEMENT AGREEMENT
AND RECEIPT AND RELEASE
STATE OF LOUISIANA
PARISH OF ORLEANS
This is a Confidential Settlement Agreement and Receipt and
Release ("Agreement") between, on the one hand, Edwin A.
Lupberger ("Lupberger") and, on the other hand, Entergy
Corporation, Entergy Services, Inc., and any direct and indirect
subsidiary or affiliated entity of either ("Company").
WHEREAS, prior to May 26, 1998, Lupberger served as Chairman
and Chief Executive Officer of the Company; and
WHEREAS, on May 26, 1998, Lupberger requested to begin
transition to retirement by relinquishing both his duties as the
Chairman and Chief Executive Officer of the Company; and
WHEREAS, at a special meeting of the Board of Directors of
the Company on May 26, 1998, it was resolved that the Company
grant Lupberger's request to begin the transition to retirement
and to accept Lupberger's decision to relinquish his duties as
Chairman and Chief Executive Officer of the Company; and
WHEREAS, a dispute has arisen with respect to the period of
transition to retirement contemplated by each of the parties; and
WHEREAS, the Board of Directors of the Company further
resolved on May 26, 1998, to study and decide upon an appropriate
retirement package for Lupberger taking into account the various
benefit plans in effect at the Company, Lupberger's eligibility
thereunder being in some instances undisputed and in other
instances disputed, and also considering a compromise of disputed
claims,
NOW THEREFORE, for and in consideration of the provisions of
this Agreement and the mutual benefits to be derived thereunder
by the parties, Lupberger and the Company agree as follows:
1.a. For and in consideration of the provisions set forth in
paragraphs 2 and 7 below, the undersigned Lupberger does hereby
fully acquit, release and forever discharge Company, its agents,
employees, directors, officers, attorneys, insurers, benefit
plans and the administrators and fiduciaries thereof, and all of
their predecessors, successors, and assigns ("Released Parties")
from any and all claims, causes of action and demands of any
kind, whether known or unknown, and whether asserted or not,
which he has, ever has had, or ever in the future may have, and
which are based on agreements, rights, benefit plans, acts and/or
omissions, existing or occurring up to and including the date
this Agreement is fully executed. The items of consideration set
forth in paragraph 2 are inclusive of any attorney's fees or
costs Lupberger could claim or recover under any statute, common
law theory, civil law theory and/or any other legal theory of
recovery.
b. Lupberger does not waive or release
indemnification and insurance that Lupberger may have pursuant to
indemnification and insurance arrangements of the Company
provided to directors and officers of the Company generally, nor
does Lupberger agree to indemnify the Company for matters for
which he would be indemnified or insured pursuant to such
arrangements.
2. The consideration for this Agreement is all of the
following:
a. All stock and stock options currently vested in
Lupberger are the property of Lupberger and are
unaffected by this Agreement. In accordance with
the terms and conditions of the Equity Ownership
Plan, all options owned by Lupberger must be
exercised no later than six (6) months from
Lupberger's effective retirement date or by
January 31, 1999. As stated in paragraph 3 below,
nothing herein expands or alters the provisions of
the Equity Ownership Plan.
b. Lupberger retires effective August 1, 1998.
c. Lupberger will receive, in accordance with
incentive plan provisions, and if goals are met,
incentive compensation under the three Plans noted
below prorated to August 1, 1998. By illustration
only, the amount of such incentive compensation
reflecting a proration of the "target" levels of
achievement would equate to the following:
$326,700 1998 Annual Incentive Plan
$872,645 1996-1998 Long Term Incentive Plan
(at $27.625 per share and prorated
two-thirds to reflect 1996-1997
performance)
$254,844 1998-2000 Long Term Incentive Plan
(at $27.625 per share)
93,333 options 1998 grant of stock options under the
Equity Ownership Plan. As stated in
paragraph 3 below, nothing herein
expands or alters the provisions of
the Equity Ownership Plan.
d. Lupberger will receive a severance payment as
follows:
$800,000 One year base salary, plus
$538,462 One week for each year of credited
service (35 years which includes
supplemental credited service per
prior agreement), which equals
$1,338,462 Total severance payable in a lump
sum or at the bi-weekly rate of
$30,769.24 until paid, at
Lupberger's option.
The sum of $15,384.62, representing amounts of
miscellaneous payments unrelated to service
performed through July 31, 1998, and paid to
Lupberger after July 31, 1998, through the date
that this Agreement becomes effective and
irrevocable under the terms of paragraph 14 below
shall be credited against and shall reduce the
total severance benefits thereafter due under this
paragraph. Lupberger acknowledges that it is the
Company's position that he had no rights to the
severance payments provided herein, which is in
part given in exchange for the receipt and release
provided herein.
e. Subject to paragraph 3 below and without limiting
the terms and limitations contained in the
Retirement Plan for Non-Bargaining Employees
("Qualified Plan"), and the System Executive
Retirement Plan and supplemental credited service
agreements entered into previously with Lupberger
including the agreement entered into on
January 31, 1986 (collectively referred to as "Non-
Qualified Plans"), Lupberger will also receive the
payments from both the Qualified and Non-Qualified
Plans in an estimated amount equal to the
following:
$4,455.02 Per month from Qualified Plan
beginning August 1, 1998. This is
based on the assumption that
Lupberger elects a single-life
annuity with a ten-year certain
feature form of benefits.
$64,957.76 Per month from Non-Qualified Plans
beginning August 1, 1998. This
assumes a single life annuity with
a ten year certain feature. Under
the terms of this Agreement, the
Company does hereby consent to
Lupberger's early commencement of
benefits under the Non-Qualified
Plans in accordance with the terms
and conditions of such plans.
f. The Non-Qualified Plans have a lump sum feature
which provide Lupberger with the option of a one-
time payment of $9,553,226 rather than receiving
$64,957.76 per month for Lupberger's lifetime.
Any election by Lupberger to receive such Non-
Qualified Plans benefits in a lump sum must be
made in writing prior to the expiration of the
revocation period described in paragraph 14 and,
if so elected, will be paid in accordance with the
terms and conditions of such plans.
g. Lupberger will, effective August 1, 1998, be
entitled to all other benefits, if any,
specifically provided for in the Qualified Plan,
Executive Deferred Compensation Plan, the Equity
Ownership Plan, the Defined Contribution
Restoration Plan, the Savings Plan of Entergy
Corporation and Subsidiaries, the Benefits Plus
Plans, and the Gulf States Utilities ESOP.
Nothing stated herein shall be construed to limit
or restrict Lupberger's participation or benefits
under the Qualified Plan, Executive Deferred
Compensation Plan, the Equity Ownership Plan, the
Defined Contribution Restoration Plan, the Savings
Plan of Entergy Corporation and Subsidiaries, the
Benefits Plus Plans, and the Gulf States Utilities
ESOP subject to the terms and conditions of such
plans.
h. Lupberger will return all Company property in his
possession except his Company-owned personal
computer which computer shall become his personal
property as of the effective date of the
Agreement.
i. Lupberger shall be paid his accrued,
unused vacation pay.
3. Nothing in this Agreement shall be interpreted or
construed as enlarging or reducing any of Lupberger's existing
rights under any benefit plans in effect at the Company. All
payments or benefits under any and all such benefit plans shall
be made strictly in accordance with the written terms and
conditions of said plans. No payments due under this Agreement
including payments which Lupberger has the right to elect to
receive in a lump sum shall be made until after the expiration of
the seven day post-signing period set forth in paragraph 14
hereof except that the Company may, at its option, waive this
provision as to any particular payment decided upon by the
Company and may make such payment prior to the expiration of the
seven day post-signing period.
4. Lupberger agrees that the items referenced in paragraph
1 and set forth in paragraph 2 above are consideration for and
are in full accord, satisfaction and final compromise and
settlement of any rights and/or claims Lupberger may have for
benefits under, or for damages resulting from the Company's
alleged breach of, any employment provision, contract or
agreement, employee benefit plan, severance agreement, incentive
plan, stock option plan or agreement and/or for any alleged
violation of any provision of the Louisiana Employment
Discrimination Law, La. R.S. 23:301, et seq., the Louisiana Wage
Statute, La. R.S. 23:631, et seq., the Employee Retirement Income
Security Act of 1974, 29 U.S.C., 1001, et seq., the Age
Discrimination in Employment Act of 1967, 29 U.S.C. 621, et
seq., Title VII of the Civil Rights Act of 1964, 42 U.S.C.
2000e, et seq., as amended, the Americans with Disabilities Act,
42 U.S.C. 12101, et seq., the Fair Labor Standards Act of 1938,
29 U.S.C. 201, et seq., as well as any other federal, state or
local civil rights, retaliation, pension or welfare benefit,
employment discrimination, employment or labor laws, and/or
contract or tort laws, and any and all other claims for any and
all other monetary, legal and/or equitable relief which are or
may be related to Lupberger's employment with the Company or the
termination of that employment.
5. Lupberger represents and warrants that no person other
than Lupberger is entitled to assert any claims against the
Released Parties based on or arising out of any rights or claims
of any kind or character alleged to belong to Lupberger in or as
a consequence of his employment with the Company, the termination
thereof, or Lupberger's contacts and relationships with the
Released Parties. These representations and warranties shall
survive the execution of this Agreement. Lupberger does not
waive claims that may arise after the date this Agreement is
fully executed and which are based on acts and/or omission
occurring after the date this Agreement is fully executed.
Lupberger also acknowledges that it is his responsibility to
comply with the provisions of the Judgment dated March 23, 1998,
in the matter of Lupberger v. Lupberger, Case No. 97-16285, Civil
District Court for the Parish of Orleans, to the extent said
Judgment may pertain to any consideration set forth in paragraph
2 above.
6. Lupberger hereby agrees to defend entirely at
Lupberger's own expense and to fully indemnify and forever hold
harmless the Released Parties from any and all such claims,
causes of actions or demands that may be brought against the
Released Parties by anyone in connection with any alleged injury
or damage claimed to result from Lupberger's employment with the
Company, Lupberger's termination therefrom and any relationship
between Lupberger and the Released Parties.
7. Lupberger agrees that any payment or other form of
consideration and other terms and conditions set forth in this
Agreement are in compromise and settlement of any disputed claims
relating to the employment of Lupberger by the Company and the
termination of Lupberger's employment, whether said disputed
claims be in tort, contract, or otherwise and that the Company
expressly denies any and all liability for any and all such
disputed claims.
8. Lupberger agrees that he shall not institute, nor be
represented as a party in, any lawsuit, charge, claim, demand,
complaint or other proceeding against or involving the Company
and/or the Released Parties based on Lupberger's employment with
the Company, whether on an individual basis or class action basis
or otherwise, with or in any administrative agency, regulatory,
judicial or other forum, under any federal, state or local laws,
rules, regulations or upon any other basis, based upon any act
and/or omission occurring up to and including the date this
Agreement is fully executed and Lupberger shall not seek or
accept any award or settlement from any such source or
proceeding. If Lupberger institutes, is a party to, or is a
member of any class that institutes any such action, Lupberger's
claims shall be dismissed or class membership terminated with
prejudice immediately upon the presentation and/or filing of this
Agreement in such action; additionally, in that event, Lupberger
agrees that he will pay the Company and/or the Released Parties
their costs, including reasonable attorney's fees, in obtaining
such dismissal of any claims or termination of any class
membership, other than the situation in which he is a member of
the class involuntarily.
9. This Agreement shall not be filed with any Court and
the parties agree that this Agreement may not be introduced in
any proceeding, except (a) to establish conclusively the
settlement and release of all potential claims by Lupberger
against the Company and/or the Released Parties, or a breach of
this Agreement, or (b) as required by applicable laws,
regulations, and rules including, without limitation, any
disclosure requirements promulgated by the Securities and
Exchange Commission, or which exist under securities laws; or
(c) as ordered by any court, judicial, or administrative agency.
10. Lupberger and the Company agree to keep the facts and
particulars of this Agreement confidential and pledge not to
release any information concerning same to any person at any time
before or following the execution of this Agreement, except: (a)
as required by law or lawful process; (b) to secure advice from a
legal or tax advisor; (c) by Lupberger only, to Lupberger's
immediate family or to Lupberger's last divorced wife or her
attorneys; or (d) in a legal action or proceeding by Lupberger or
the Released Parties to enforce the terms of the Agreement. It
is expressly agreed and understood that the provisions of this
paragraph are material terms of this Agreement.
11. Lupberger agrees that Lupberger shall assume all
responsibility for and shall indemnify and hold Company harmless
against any and all claims, losses, damages, liabilities, suits
and actions, judgments, costs, penalties and expenses including,
but not limited to, reasonable attorney's fees and litigation
costs and expenses, resulting from any liability or claim of
liability asserted by any federal, state or local authorities for
improper withholding or failure to pay taxes including, but not
limited to, federal and/or state income taxes and social security
and/or Medicare taxes, with respect to any payment made pursuant
to this Agreement. Lupberger's indemnity shall not extend to the
Company's share, if any, of social security, Medicare, or other
payroll taxes which are normally paid by an employer and not
withheld from an employee's paycheck, to the extent applicable by
law.
12. Lupberger does not now seek, and agrees that Lupberger
will not in the future seek employment or reemployment in any
position or capacity with the Company, except with the expressed
prior written consent of the Company acknowledging the effect of
any such reemployment on the terms of this Agreement. Lupberger
acknowledges and recognizes that Lupberger is not now and will
not in the future be eligible for reemployment by the Company and
that any such application can be rejected pursuant to the terms
of this Agreement. Furthermore, Lupberger shall not, without the
prior written consent of the Company which consent may be freely
withheld, engage in any activity or employment that is contrary
to the interests of the Company or, for a period of two years
after August 1, 1998, which is in direct competition with any
business or business units owned and operated by the Company as
of the date of this Agreement in any place where the Company does
business including, without limitation, any Parish in the State
of Louisiana.
13. The parties agree that neither Lupberger nor the
Company will engage in any communications of any sort, either
internally or with or to third parties, which in any way
disparages or tends to disparage the other, either as statements
of opinion or of fact. Lupberger shall not divulge, communicate
or use to the detriment of the Company, or any of its affiliated
companies, or use for the benefit of any person or entity, or
misuse in any way, any confidential information or proprietary
information or trade secrets of the Company or any of its
affiliated companies, including without limitation non-public
financial information, know-how, formulae or other technical or
operational data. Lupberger agrees that any such information or
data he has acquired was received in confidence and as a
fiduciary of the Company or its affiliated companies.
14. Lupberger acknowledges that Lupberger was given twenty-
one (21) days to review this Agreement from the time Lupberger
received the Agreement, and that Lupberger was advised to review
the Agreement with an attorney of Lupberger's choice. Lupberger
has seven (7) days after signing this Agreement to revoke the
Agreement by notifying the Company in writing and returning any
payments made by the Company pursuant to paragraph 2. Such
notice should be sent to: Daniel Lund, Esq., Montgomery,
Barnett, Brown, Read, Hammond & Mintz, L.L.P., 3200 Energy
Centre, 1100 Poydras Street, New Orleans, Louisiana 70163-3200.
15. This Agreement represents the complete understanding
between the parties to the Agreement. No other promises or
agreements shall be binding or shall nullify this Agreement
unless reduced to writing and signed by the parties hereto, or by
counsel for and on behalf of the parties. Lupberger affirms that
the only consideration for his signing this Agreement is as
stated herein, that no other promise or agreement of any kind has
been made to or with him by any person or entity whatsoever to
cause Lupberger to execute this Agreement, and that Lupberger
fully understands the meaning and intent of this Agreement
including, but no limited to, its final and binding effect.
Lupberger warrants that any attorney's fees or costs due or owing
any attorneys for representation of Lupberger will be paid in
full by Lupberger, and that Lupberger will defend entirely at
Lupberger's own expense and fully indemnify and forever hold
harmless the Released Parties from any actions, claims or demands
against them by any attorney seeking attorney's fees or costs in
connection with legal representation of Lupberger.
16. Lupberger further affirms that he has carefully read
the foregoing "Confidential Settlement Agreement and Receipt and
Release," knows and understands the contents thereof, that
Lupberger executes same as his own free act and deed and it is
his intention that he be legally bound thereby. Lupberger
further affirms that his attorneys have carefully explained the
terms, conditions and final and binding effect of this Agreement
to him, answered his questions fully, and that Lupberger
indicated to his attorneys that he understood the Agreement and
its effect.
17. This Confidential Settlement Agreement and Receipt and
Release may be executed by the parties hereto in several
counterparts, each of which when so executed shall be deemed to
be an original, but all such counterparts shall together
constitute but one and the same instrument, provided, however,
that this act shall not be effective as to any party until
executed by all parties.
18. In the event that any provision of this Agreement
is deemed to be invalid by reason of the operation of any
law, or by reason of the interpretation placed thereon by
any court, this Agreement shall be construed as not
containing such provision and any and all other provisions
hereof which otherwise are lawful and valid shall remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned have hereunto set
their hands this day of , 1998.
WITNESSES:
EDWIN A. LUPBERGER
ENTERGY CORPORATION AND
ENTERGY SERVICES, INC.
BY:
DULY AUTHORIZED
<PAGE>
STATE OF LOUISIANA
PARISH OF ORLEANS
VERIFICATION
BEFORE ME, the undersigned Notary, personally came and
appeared,
EDWIN A. LUPBERGER
who, after being duly sworn, did depose and say:
I have read the foregoing Confidential Settlement
Agreement and Receipt and Release and understand the terms
thereof. I have consulted my attorney with regard to this
Agreement. By my signature below, I affirm that I have
signed the foregoing Agreement as my free act and deed for
the purposes stated therein.
EDWIN A. LUPBERGER
SWORN TO AND SUBSCRIBED
BEFORE ME, NOTARY PUBLIC,
THIS DAY OF
, 1998.
NOTARY PUBLIC
<PAGE>
STATE OF LOUISIANA
PARISH OF ORLEANS
VERIFICATION
BEFORE ME, the undersigned Notary, personally came and
appeared,
ANTHONY J. CORRERO, III
who, after being duly sworn, did depose and say:
As counsel for Edwin A. Lupberger, I hereby certify
that I have explained the foregoing Confidential Settlement
Agreement and Receipt and Release to my client and that he
understands and voluntarily agrees to its provisions. By
signature below, I affirm that the items of consideration
set forth in paragraph 3 of the Agreement represent
consideration for a full and final settlement of any and all
claims Lupberger may have against the Released Parties
including, but not limited to, claims for attorney's fees
and costs. By signature below, I hereby waive any and all
claims against the above-described Released Parties for any
attorney's fees or costs due or owing myself or my firm as a
result of legal representation in this matter. By signature
below, I agree that I will not disclose to any person or
entity the fact or contents of this Agreement or the
considerations therefor except as specifically provided for
in the Agreement.
ATTORNEY FOR LUPBERGER
SWORN TO AND SUBSCRIBED
BEFORE ME, NOTARY PUBLIC,
THIS DAY OF
, 1998.
NOTARY PUBLIC
Exhibit 10(a)77
[Letterhead of Jerry L. Maulden]
as amended on September 18, 1998
March 19, 1998
Mr. Edwin A. Lupberger
Chairman and CEO
Mail Unit: L-ENT-28B
Dear Ed:
The purpose of this letter is to record the compensation and benefits
package Entergy Corporation and/or its Subsidiaries ("the Company")
is to provide to me as a result of my announcing my retirement in
March 1999, and begin receiving early retirement benefits, effective
April 1, 2000.
The following is my understanding of the retirement package that you
and I have agreed upon.
A) Between Now and March 31,1999:
1 will continue to perform my duties as Vice Chairman for which I
will continue to receive a compensation, incentives (i.e., Executive
Annual Incentive Plan, Long Term Incentive Plan and Equity Ownership
Plan), and employee benefits commensurate with the position of Vice
Chairman.
B) Between April 1, 1999 and my early retirement, effective April 1,
2000:
1. I will serve as Vice Chairman or as assigned by Entergy C
orporation's Chairman and CEO; but, I will be relieved of all my
organizational responsibilities and begin my transition toward
retirement;
2. I will continue to occupy my present office, receive the Base
Salary that is in effect on April 1, 1999, incentives (i.e.,
Executive Annual Incentive Plan, Long Term Incentive Plan and
Equity Ownership Plan), and employee benefits.
3. The Company irrevocably accepts this letter as my formal request
for Early Retirement, effective April 1, 2000. The Company also
irrevocably consents to pay retirement benefits calculated with
either the Post-Retirement Plan or with the System Executive
Retirement Plan. I also understand that the choice of benefits is
entirely mine; and that, I will be permitted to makes this benefit
election at any time prior to the commencement of such payment.
The acceptance of this letter itself shall constitute the only
consent necessary for me to retire with full retirement benefits,
beginning on April 1, 2000; and, this consent shall be
irrevocable. Regardless of which benefit I select, the Company
shall calculate my years of credited service as if I had continued
to be an active employee through age 65 with such benefits
beginning at age 65 (i.e., without the application of the 2% per
year Early Retirement Discount Factor);
4. I will be permitted to exercise any or all of my stock options at
anytime prior to October 1, 2000 (i.e., within six months
following my early retirement effective date). If the Company were
to solicit and receive stockholder approval to extend the exercise
period, that period of extension would also apply to my stock
option exercise; and,
<PAGE>
Mr. Edwin A. Lupberger
March 19, 1998
Page 2
5. The Company will fund a Named Chair (for the sum of $1,000,000) at
the University of Arkansas at Little Rock (UALR). The funding of
this endowment will consist of four equal annual payments of
$250.000 each with the first payment due on April 1, 1999, with
each subsequent payment due and payable in the first quarter of
the years 2000, 2001, and 2002. All payments will be made directly
to UALR.
B) At and after my early retirement, effective April 1, 2000:
1. I will receive a lump-sum payment equal to six weeks (i.e., 240
hours) of unused calendar year 2000 vacation which will be paid
shortly after March 31, 2000;
2. I will serve as an Entergy Arkansas Advisory Board member until
August 13, 2006 (i.e., until I reach age 70) for which I will
receive their standard compensation and benefits package;
3. I will be reimbursed on a quarterly basis (not to exceed $30,000
per year) for any and all expenses (actually incurred by me in the
preceding quarter) associated with an offsite office and secretary
until August 13, 2006 (i.e., until I reach age 70);
4. I will retain my personal computer with fax (i.e., I can retain
my current equipment and personal property upon my retirement).
If you concur with these provisions, please indicate by signing this
letter below and returning it to me at your convenience.
Sincerely,
/s/ Jerry L. Maulden
Jerry L. Maulden
Approved by: /s/ Edwin A. Lupberger on: March 30, 1998
Edwin A. Lupberger
Chairman of the Board and Chief Executive Officer
Attachment
Exhibit 10(a)78
[Letterhead of C. Gary Clary]
March 13, 1998
Mr. J. Wayne Leonard
5150 Rollman Estate Drive
Cincinnati, OH 45236
Subject:Letter of Intent
Dear Wayne:
I would like to confirm the discussions we have had regarding our
intent to extend an employment offer to you for the position of
President and Chief Operating Officer, Domestic Operations. The
offer will include the following:
* Base Salary: $600,000
* Target Annual Incentive: $420,000 (70% of Base Salary)
* Long Term Incentive Plan: Maximum of 15,000 shares of Entergy Corp.
(i.e., Performance Shares) common stock per year -- (Estimated value @
$28 per share + $1.80 dividends = $447,000).
(Target annual = 10,000 ETR shares)
* Stock Options: Maximum = 150,000 options per year
(Target = 100,000 per year)
* Signing Bonus: $500,000 Payable in cash shortly after
your date of hire; or, it can
be tax deferred until your
retirement - your choice.
* Retention Award: 30,000 ETR shares. Restrictions lifted
(i.e., Restricted Shares) at the rate of 10,000 shares per year
(no dividends) beginning with
your first employment anniversary.
(Estimated value @ $28 per share =
$280,000/yr. & $840,000 total).
* Retirement benefits (with 60% of your highest three-year
continued employment until average base salary and annual
age 55): incentive payments. Benefit payments can
begin as early as your age 55.
However, this benefit will be offset
to the full extent of your ClNergy's age
62 terminated vested benefit of
$12,862.74 per month. ClNergy's
offset may be lower if you choose to
retire before age 62. Spousal
benefit = 50% of this benefit.
<PAGE>
Mr. J. Wayne Leonard
March 13, 1998
Page 2
* Termination benefits:
- - Voluntary resignation
prior to age 55: Payment of accrued compensation benefits.
The 60% of three-year compensation guarantee
described herein would be forfeited.
- - Termination prior to
age 55 with ETR Payment of accrued compensation and benefits.
permission: The 60% replacement rate under the retirement
benefit described herein would be reduced at
the annual rate of 6.5% per year for each
year your termination date precedes your
age 55; and, it would become payable at
age 62. Spousal retirement benefit = 50%
- - Change in Control --
resignation for Payment of accrued compensation and benefits,
"Good Reason": including immediate vesting of the 60%
replacement rate under the retirement benefit
described herein (such payments would begin
at age 55). Plus, a lump sum "parachute
payment" equal to 2.99 times your average
three-year pay (i.e., "Base Amounts, which is
equal to the maximum amount that can be paid
without the payment becoming subject to the
Excise TAX within the meaning of Section
280G(b)(l) of the IRC.)
* Welfare Benefits and
Perquisites: In addition to the full range of benefits
offered to all employees, you will be
eligible for such benefits as executive
car allowance, financial counseling,
Executive Medical and country club
membership.
* Home Purchase: Entergy will make you a "directed offer"
equal to the cost you incurred to purchase
your present home.
* Vacation: Four weeks beginning in 1998 and five weeks
after your fifth anniversary of employment.
As I mentioned, this offer is contingent upon Board approval. The
Board is next scheduled to meet on Wednesday, March 25, 1998.
Signed: /s/ Gary Clary On: March 13, 1998
Gary Clary, VP, Human Resources & Administration
Signed: J. Wayne Leonard On:____________________________
J. Wayne Leonard
Exhibit 10(b)62
[Letterhead of C. Gary Clary]
June 4,1998
Mr. C. John Wilder
26 Chapel Square
Virginia Park
Virginia Water
Surrey GU25 4SZ
England
Dear John:
On behalf of Entergy Corporation, I would like to offer you the
position of Executive Vice President & Chief Financial Officer.
The details of the offer consist of:
Starting Salary $400,000 Annual
$33,333.33 Monthly
Executive Annual Incentive Plan (EAIP) Payout Opportunity
ACHIEVEMENT LEVEL
MINIMUM TARGET MAXIMUM
30% 60% 90%
$120,000 $240,000 $360,000
The plan is based on a calendar year. You will be eligible for a
prorated payout based on the number of days of employment. The
actual award is based on a continuous level of achievement and
not bracketed.
Long Term Incentive Plan
This plan provides participants with performance shares which
will be earned by achieving pre-approved Entergy Corporation
goals for the three-year performance period (1998-2000). You will
be eligible for a prorated amount of performance shares based on
the number of full months as a participant. The opportunities for
a full 36 months of participation are:
ACHIEVEMENT LEVEL
MINIMUM TARGET MAXIMUM
9,000 shares 18,000 shares 27,000 shares
Stock Option Plan
This Plan provides participants with stock option grants which
will be earned by achieving pre-approved, annual Entergy
Corporation goals. You will be eligible for a prorated amount of
stock options based on the number of full months as a
participant. The opportunities for a full 12 months of
participation are:
ACHIEVEMENT LEVEL
MINIMUM TARGET MAXIMUM
20,000 options 40,000 options 60,000 options
Signing Bonus $300,000 paid shortly after your date of hire.
Retention Award (i.e., Restricted Stock)
You will be awarded 21,000 Entergy shares with restrictions
lifted at the rate of 7,000 shares per year beginning with your
first employment anniversary.
Relocation Assistance
You will receive one month's salary ($33,333.33), paid at the
time you relocate, for miscellaneous relocation expenses.
Additional conditions of your relocation assistance will be
established after your discussions with your current employer.
Retirement Benefits (with SERP)
This Plan accumulates benefits at the rate of 1.5% per year, with
full vesting after five years of actual service. The benefit is
based on your average five-year salary (including incentive pay),
with unreduced monthly retirement benefit at age 65 or reduced
(at 2% per year) as early as age 55.
Supplemental Credited Service Agreement
Entergy will include an additional 15 years of credited service
to your qualified retirement plan benefits.
Savings Plan
After a six-month waiting period, you may participate in this
plan. You may contribute as much as 16% of your base salary and
receive tax-deferred benefits in addition to a 50% company match
(maximum company match is 3% of your base salary).
Equity Awards Program Deferral
You can defer up to 100% of your EAIP bonus on a pre-tax basis.
The deferred funds are used to buy Entergy common stock at a 20%
discount--applied to the market price at the time of deferral.
Vacation
You are eligible for four weeks vacation beginning in 1999
(prorated for 1998 - two weeks), and five weeks after your
fifth anniversary of employment
PERQUISITES
Monthly Auto Allowance of $825 Per Month and Parking
- - This is net of taxes; the company will gross up this auto
allowance for all applicable taxes.
- - You are also eligible for paid parking at your work
location, if needed.
Physical Exam
A comprehensive annual physical will be provided to you at
company expense.
Lunch Club
You may enroll in a lunch club that is intended and used as a
vehicle to conduct business.
Country Club Membership
You are eligible for a country club membership at $5,000 maximum
first-year country club dues, with up to $3,000 maximum for
annual renewals.
Executive Disability
This plan guarantees that your total disability payments from all
sources will equal 65% of your monthly base salary.
Executive Medical
- - Covers IRS approved medical and dental expenses that are not
covered by the company's medical and dental plans--up to $4,000
per year, per company policy.
- - Reimbursement of deductibles and co-payments are excluded.
Personal Effects Insurance and Personal Accident Insurance
- - Personal effects insurance coverage for loss of personal
effects--$2,500 for any occurrence; $500 limit for jewelry;
excludes automobiles, furniture, bicycles, and eyeglasses.
- - Personal accident insurance provides $100,000 in accidental
death and dismemberment coverage for you. Additional coverage for
you and your dependents is also available.
Termination Benefits
- - If you should voluntary resign prior to age 65, you will
receive payment of accrued compensation and benefits. SERP
benefits described herein would be forfeited.
- - If you should terminate prior to age 55 with Entergy's
permission, you will receive payment of accrued compensation and
benefits. The accrued SERP benefit would be reduced at an average
annual rate of 6.5% per year for each year your termination date
precedes your age 65; and, payments cannot begin prior to you
attaining age 55.
- - If, due to a change in control, you resign for "good
reason", you will receive payment of accrued compensation and
benefits, including immediate vesting of your accrued SERP
benefit plus a lump-sum "parachute payment" equal to 2.99 times
your average three-year pay (i.e., 2.99 times your "Base Amount",
which is equal to the maximum amount that can be paid without the
payment becoming subject to the Excise Tax within the meaning of
Section 280G(b)(1) of the IRC).
- - If the Company should initiate termination for reasons other
than just cause prior to you completing two years of service,
Entergy will pay you two years of base salary continuation and
health care benefits. In addition, Entergy will immediately vest
all earned, but unvested, stock options and performance shares.
This will include any remaining shares of the 21,000 restricted
stock provided as a retention award.
This offer is contingent upon a security background check and the
successful completion of a pre-employment drug screening. I will
forward these materials under separate cover.
After you have had a chance to review this offer, please contact
me to discuss any questions you may have. I hope this offer meets
with your approval, and I look forward to working with you as
part of the Entergy team.
Sincerely,
/s/ Gary Clary
Gary Clary
Senior Vice President
Human Resources & Administration
GC/vr
Attachments
Agreed: /s/ C. John Wilder
C. John Wilder
Date: June 5, 1998
<TABLE>
<CAPTION>
Exhibit 12(a)
Entergy Arkansas, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest Charges $119,591 $110,814 $115,337 $106,716 $104,165 $96,685
Interest applicable to rentals 16,860 19,140 18,158 19,121 17,529 15,511
------------------------------------------------------
Total fixed charges, as defined 136,451 129,954 133,495 125,837 121,694 112,196
Preferred dividends, as defined (a) 30,334 23,234 27,636 24,731 16,073 16,763
------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $166,785 $153,188 $161,131 $150,568 $137,767 $128,959
======================================================
Earnings as defined:
Net Income $205,297 $142,263 $136,666 $157,798 $127,977 $110,951
Add:
Provision for income taxes:
Total 82,337 29,220 72,081 84,445 59,220 71,374
Fixed charges as above 136,451 129,954 133,495 125,837 121,694 112,196
------------------------------------------------------
Total earnings, as defined $424,085 $301,437 $342,242 $368,080 $308,891 $294,521
======================================================
Ratio of earnings to fixed charges, as defined 3.11 2.32 2.56 2.93 2.54 2.63
======================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 2.54 1.97 2.12 2.44 2.24 2.28
======================================================
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by
dividing the preferred dividend requirement by one hundred percent
(100%) minus the income tax rate.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 12(b)
Entergy Gulf States, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest charges $210,599 $204,134 $200,224 $193,890 $180,073 $178,220
Interest applicable to rentals 23,455 21,539 16,648 14,887 15,747 16,927
---------------------------------------------------------
Total fixed charges, as defined 234,054 225,673 216,872 208,777 195,820 195,147
Preferred dividends, as defined (a) 65,299 52,210 44,651 48,690 30,028 32,031
---------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $299,353 $277,883 $261,523 $257,467 $225,848 $227,178
=========================================================
Earnings as defined:
Income (loss) from continuing operations before extraordinary
items and the cumulative effect of accounting changes $69,462 ($82,755)$122,919 ($3,887) $59,976 $46,393
Add:
Income Taxes 58,016 (62,086) 63,244 102,091 22,402 31,773
Fixed charges as above 234,054 225,673 216,872 208,777 195,820 195,147
---------------------------------------------------------
Total earnings, as defined (b) $361,532 $80,832 $403,035 $306,981 $278,198 $273,313
=========================================================
Ratio of earnings to fixed charges, as defined 1.54 0.36 1.86 1.47 1.42 1.40
=========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 1.21 0.29 1.54 1.19 1.23 1.20
=========================================================
(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 12(c)
Entergy Louisiana, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest $136,957 $136,444 $136,901 $132,412 $128,900 $122,890
Interest applicable to rentals 8,519 8,332 9,332 10,601 9,203 9,564
---------------------------------------------------------
Total fixed charges, as defined 145,476 144,776 146,233 143,013 138,103 132,454
Preferred dividends, as defined (a) 40,779 29,171 32,847 28,234 22,103 20,925
---------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $186,255 $173,947 $179,080 $171,247 $160,206 $153,379
=========================================================
Earnings as defined:
Net Income $188,808 $213,839 $201,537 $190,762 $141,757 $179,487
Add:
Provision for income taxes:
Total Taxes 110,813 63,288 117,114 118,559 98,965 109,104
Fixed charges as above 145,476 144,776 146,233 143,013 138,103 132,454
---------------------------------------------------------
Total earnings, as defined $445,097 $421,903 $464,884 $452,334 $378,825 $421,045
=========================================================
Ratio of earnings to fixed charges, as defined 3.06 2.91 3.18 3.16 2.74 3.18
=========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 2.39 2.43 2.60 2.64 2.36 2.75
=========================================================
- ------------------------
(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 12(d)
Entergy Mississippi, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest $55,359 $52,764 $51,635 $48,007 $45,274 $40,927
Interest applicable to rentals 1,264 1,716 2,173 2,165 1,947 1,864
---------------------------------------------------------
Total fixed charges, as defined 56,623 54,480 53,808 50,172 47,221 42,791
Preferred dividends, as defined (a) 12,990 9,447 9,004 7,610 5,123 4,878
---------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $69,613 $63,927 $62,812 $57,782 $52,344 $47,669
=========================================================
Earnings as defined:
Net Income $101,743 $48,779 $68,667 $79,210 $66,661 $59,268
Add:
Provision for income taxes:
Total income taxes 55,993 12,476 34,877 41,107 26,744 28,031
Fixed charges as above 56,623 54,480 53,808 50,172 47,221 42,791
----------------------------------------------------------
Total earnings, as defined $214,359 $115,735 $157,352 $170,489 $140,626 $130,090
==========================================================
Ratio of earnings to fixed charges, as defined 3.79 2.12 2.92 3.40 2.98 3.04
=========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 3.08 1.81 2.51 2.95 2.69 2.73
=========================================================
- ------------------------
(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 12(e)
Entergy New Orleans, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges and Preferred Dividends
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest $21,092 $18,272 $17,802 $16,304 $15,287 $14,792
Interest applicable to rentals 544 1,245 916 831 911 1,045
--------------------------------------------------------
Total fixed charges, as defined 21,636 19,517 18,718 17,135 16,198 15,837
Preferred dividends, as defined (a) 2,952 2,071 1,964 1,549 1,723 1,566
--------------------------------------------------------
Combined fixed charges and preferred dividends, as defined $24,588 $21,588 $20,682 $18,684 $17,921 $17,403
=======================================================
Earnings as defined:
Net Income $47,709 $13,211 $34,386 $26,776 $15,451 $15,172
Add:
Provision for income taxes:
Total 31,938 4,600 20,467 16,216 12,142 10,042
Fixed charges as above 21,636 19,517 18,718 17,135 16,198 15,837
--------------------------------------------------------
Total earnings, as defined $101,283 $37,328 $73,571 $60,127 $43,791 $41,051
========================================================
Ratio of earnings to fixed charges, as defined 4.68 1.91 3.93 3.51 2.70 2.59
========================================================
Ratio of earnings to combined fixed charges and
preferred dividends, as defined 4.12 1.73 3.56 3.22 2.44 2.36
========================================================
- ------------------------
(a) "Preferred dividends," as defined by SEC regulation S-K, are computed by
dividing the preferred dividend requirement by one hundred percent (100%)
minus the income tax rate.
(b) Earnings for the twelve months ended December 31, 1991 include the $90
million effect of the 1991 NOPSI Settlement.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 12(f)
System Energy Resources, Inc.
Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Fixed charges, as defined:
Total Interest $190,938 $176,504 $151,512 $143,720 $128,653 $116,060
Interest applicable to rentals 6,790 7,546 6,475 6,223 6,065 5,189
-----------------------------------------------------------
Total fixed charges, as defined $197,728 $184,050 $157,987 $149,943 $134,718 $121,249
===========================================================
Earnings as defined:
Net Income $93,927 $5,407 $93,039 $98,668 $102,295 $106,476
Add:
Provision for income taxes:
Total 78,552 36,838 75,493 82,121 74,654 77,263
Fixed charges as above 197,728 184,050 157,987 149,943 134,718 121,249
-----------------------------------------------------------
Total earnings, as defined $370,207 $226,295 $326,519 $330,732 $311,667 $304,988
===========================================================
Ratio of earnings to fixed charges, as defined 1.87 1.23 2.07 2.21 2.31 2.52
===========================================================
</TABLE>
Exhibit 21
The seven registrants, Entergy Corporation, System Energy Resources,
Inc., Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana,
Inc., Entergy Mississippi, Inc., and Entergy New Orleans, Inc., are listed
below:
State or Other
Jurisdiction of
Incorporation
Entergy Corporation Delaware
System Energy Resources, Inc. (a) Arkansas
Entergy Arkansas, Inc. (a) Arkansas
Entergy Gulf States, Inc. (a) Texas
Entergy Louisiana, Inc. (a) Louisiana
Entergy Mississippi, Inc. (a) Mississippi
Entergy New Orleans, Inc. (a) Louisiana
_______________________
(a)Entergy Corporation owns all of the Common Stock of System Energy
Resources, Inc., Entergy Arkansas Inc., Entergy Gulf States, Inc.,
Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New
Orleans, Inc..
Exhibit 24
February 26, 1999
TO: Nathan E. Langston
Laurence M. Hamric
Re: Power of Attorney; 1998 Form 10-K
Entergy Corporation, referred to herein as the Company, will
file with the Securities and Exchange Commission its Annual
Report on Form 10-K for the year ended December 31, 1998
pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
The Company and the undersigned persons, in their respective
capacities as directors and/or officers of the Company, as
specified in Attachment I, do each hereby make, constitute
and appoint Nathan Langston and Laurence M. Hamric, and each
of them, their true and lawful Attorneys (with full power of
substitution) for each of the undersigned and in his or her
name, place and stead to sign and cause to be filed with the
Securities and Exchange Commission the aforementioned Annual
Report on Form 10-K and any amendments thereto.
Yours very truly,
ENTERGY CORPORATION
By:/s/ Wayne Leonard
Wayne Leonard
Chief Executive Officer
and Director
<PAGE>
/s/ W. Frank Blount, Jr. /s/ John A. Cooper, Jr.
W. Frank Blount, Jr. John A. Cooper, Jr.
Director Director
/s/ George W. Davis /s/ Norman C. Francis
George W. Davis Norman C. Francis
Director Director
/s/ Robert v.d. Luft /s/ Wayne Leonard
Robert v.d. Luft Wayne Leonard
Chairman of the Board Chief Executive Officer
Director Director
/s/ Kinnaird R. McKee /s/ Paul W. Murrill
Kinnaird R. McKee Paul W. Murrill
Director Director
/s/ James R. Nichols /s/ Eugene H. Owen
James R. Nichols Eugene H. Owen
Director Director
/s/ John N. Palmer, Jr. /s/ Robert D. Pugh
John N. Palmer, Jr. Robert D. Pugh
Director Director
/s/ Bismark A. Steinhagen /s/ Wm. Clifford Smith
Bismark A. Steinhagen Wm. Clifford Smith
Director Director
/s/ C. John Wilder
C. John Wilder
Executive Vice President
and Chief Financial
Officer
<PAGE>
ATTACHMENT I
Entergy Corporation
Chief Executive Officer and Director - Wayne Leonard
(principal executive officer)
Vice President and Chief Financial Officer - C. John Wilder
(principal financial officer)
Directors - W. Frank Blount, John A. Cooper, Jr., George W.
Davis, Norman C. Francis, Robert v.d. Luft, Kinnaird R.
McKee, Wayne Leonard, Paul W. Murrill, James R. Nichols,
Eugene H. Owen, John N. Palmer, Sr., Robert D. Pugh, Wm.
Clifford Smith, Bismark A. Steinhagen.
<PAGE>
February 26, 1999
TO: Nathan E. Langston
Laurence M. Hamric
Re: Power of Attorney; 1998 Form 10-K
Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy
Louisiana, Inc., Entergy Mississippi, Entergy New Orleans
and System Energy Resources, Inc. (collectively referred to
herein as the Companies) will each file with the Securities
and Exchange Commission its Annual Report on Form 10-K for
the year ended December 31, 1998 pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
The Companies and the undersigned person, in their
respective capacities as directors and/or officers of the
Companies, as specified in Attachment I, do each hereby
make, constitute and appoint Nathan Langston and Laurence M.
Hamric, and each of them, their true and lawful Attorneys
(with full power of substitution) for each of the
undersigned and in his or her name, place and stead to sign
and cause to be filed with the Securities and Exchange
Commission the aforementioned Annual Report on Form 10-K and
any amendments thereto.
Yours very truly,
ENTERGY ARKANSAS, INC. (hereinafter "EAI")
ENTERGY GULF STATES, INC. (hereinafter "EGSI")
ENTERGY LOUISIANA, INC. (hereinafter "ELI")
ENTERGY MISSISSIPPI, INC. (hereinafter "EMI")
ENTERGY NEW ORLEANS, INC. (hereinafter "ENOI")
SYSTEM ENERGY RESOURCES, INC. (hereinafter "SERI")
By: /s/ Wayne Leonard
Wayne Leonard
Chairman of the Board
and Director of EAI, EGSI, ELI,
EMI, ENOI and SERI
<PAGE>
/s/ Joseph F. Domino /s/ Jerry W. Yelverton
Joseph F. Domino Jerry W. Yelverton
Director of EGSI Director, President and
Chief Executive Officer
of SERI
/s/ Frank F. Gallaher /s/ Donald C. Hintz
Frank F. Gallaher Donald C. Hintz
Director of EAI, EGSI, Director of EAI, EGSI,
ELI and EMI ELI, EMI, ENOI and SERI
/s/ Jerry D. Jackson /s/ R. Drake Keith
Jerry D. Jackson R. Drake Keith
Director of EAI, EGSI, Director, President and
ELI, EMI, and ENOI and Chief Executive Officer
President and Chief of EAI
Executive Officer of
ELI and President and
Chief Executive Officer
- - Louisiana of EGSI
/s/ Jerry L. Maulden /s/ Daniel F. Packer
Jerry L. Maulden Daniel F. Packer
Director of EAI, EGSI, Director, President and
ELI and EMI Chief Executive Officer
of ENOI
/s/ Donald E. Meiners /s/ C. John Wilder
Donald E. Meiners C. John Wilder
Director, President and Executive Vice President
Chief Executive Officer and Chief Financial
of EMI Officer of EAI, EGSI,
ELI, EMI, ENOI and SERI
<PAGE>
ATTACHMENT I
Entergy Arkansas, Inc.
Chairman of the Board - Wayne Leonard; President and Chief
Executive Officer - R. Drake Keith (principal executive
officer); Executive Vice President and Chief Financial
Officer - C. John Wilder (principal financial officer).
Directors -Frank F. Gallaher, Donald C. Hintz, Jerry D.
Jackson, R. Drake Keith, Wayne Leonard, Jerry L. Maulden.
Entergy Gulf States, Inc.
Chairman of the Board - Wayne Leonard; President and Chief
Executive Officer - Louisiana - Jerry D. Jackson (principal
executive officer); Executive Vice President and Chief
Financial Officer - C. John Wilder (principal financial
officer).
Directors -Joseph E. Domino, Frank F. Gallaher, Donald C.
Hintz, Jerry D. Jackson, Wayne Leonard , Jerry L. Maulden.
Entergy Louisiana, Inc.
Chairman of the Board - Wayne Leonard; President and Chief
Executive Officer - Jerry D. Jackson (principal executive
officer); Executive Vice President and Chief Financial
Officer - C. John Wilder (principal financial officer).
Directors - Frank F. Gallaher, Donald C. Hintz, Jerry D.
Jackson, Wayne Leonard, Jerry L. Maulden.
Entergy Mississippi, Inc.
Chairman of the Board - Wayne Leonard; President and Chief
Executive Officer - Donald E. Meiners (principal executive
officer); Executive Vice President and Chief Financial
Officer - C. John Wilder (principal financial officer).
Directors -Frank F. Gallaher, Donald C. Hintz, Jerry D.
Jackson, Wayne Leonard, Jerry L. Maulden, Donald E. Meiners.
<PAGE>
ATTACHMENT I (Continued)
Entergy New Orleans, Inc.
Chairman of the Board - Wayne Leonard; President and Chief
Executive Officer - Daniel F. Packer (principal executive
officer); Executive Vice President and Chief Financial
Officer - C. John Wilder (principal financial officer).
Directors - Jerry D. Jackson, Donald C. Hintz, Wayne
Leonard, Daniel F. Packer.
System Energy Resources, Inc.
Chairman of the Board - Wayne Leonard; President and Chief
Executive Officer - Jerry W. Yelverton (principal executive
officer); Executive Vice President and Chief Financial
Officer - C. John Wilder (principal financial officer).
Directors - Donald C. Hintz, Wayne Leonard, C. John Wilder,
Jerry W. Yelverton
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Corporation's financial statements for the year ended December 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000065984
<NAME> ENTERGY CORPORATION AND SUBSIDIARIES
<SUBSIDIARY>
<NUMBER> 023
<NAME> ENTERGY CORPORATION AND SUBSIDIARIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 15,328,582
<OTHER-PROPERTY-AND-INVEST> 1,488,280
<TOTAL-CURRENT-ASSETS> 3,655,277
<TOTAL-DEFERRED-CHARGES> 2,375,884
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 22,848,023
<COMMON> 2,468
<CAPITAL-SURPLUS-PAID-IN> 4,630,609
<RETAINED-EARNINGS> 2,526,888
<TOTAL-COMMON-STOCKHOLDERS-EQ> 7,159,956
382,523
488,455
<LONG-TERM-DEBT-NET> 6,596,617
<SHORT-TERM-NOTES> 296,790
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 255,221
0
<CAPITAL-LEASE-OBLIGATIONS> 220,209
<LEASES-CURRENT> 176,270
<OTHER-ITEMS-CAPITAL-AND-LIAB> 7,271,982
<TOT-CAPITALIZATION-AND-LIAB> 22,848,023
<GROSS-OPERATING-REVENUE> 11,494,772
<INCOME-TAX-EXPENSE> 266,735
<OTHER-OPERATING-EXPENSES> 9,982,917
<TOTAL-OPERATING-EXPENSES> 9,982,917
<OPERATING-INCOME-LOSS> 1,511,855
<OTHER-INCOME-NET> 373,024
<INCOME-BEFORE-INTEREST-EXPEN> 1,884,879
<TOTAL-INTEREST-EXPENSE> 832,515
<NET-INCOME> 785,629
46,560
<EARNINGS-AVAILABLE-FOR-COMM> 739,069
<COMMON-STOCK-DIVIDENDS> 373,441
<TOTAL-INTEREST-ON-BONDS> 842,269
<CASH-FLOW-OPERATIONS> 1,679,057
<EPS-PRIMARY> $3.00
<EPS-DILUTED> $3.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Arkansas' financial statements for the year ended December 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000007323
<NAME> ENTERGY ARKANSAS, INC.
<SUBSIDIARY>
<NUMBER> 001
<NAME> ENTERGY ARKANSAS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,803,386
<OTHER-PROPERTY-AND-INVEST> 319,569
<TOTAL-CURRENT-ASSETS> 464,744
<TOTAL-DEFERRED-CHARGES> 418,952
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,006,651
<COMMON> 470
<CAPITAL-SURPLUS-PAID-IN> 590,134
<RETAINED-EARNINGS> 487,855
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,078,459
82,027
116,350
<LONG-TERM-DEBT-NET> 1,172,285
<SHORT-TERM-NOTES> 667
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,094
0
<CAPITAL-LEASE-OBLIGATIONS> 80,936
<LEASES-CURRENT> 64,068
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,410,765
<TOT-CAPITALIZATION-AND-LIAB> 4,006,651
<GROSS-OPERATING-REVENUE> 1,608,698
<INCOME-TAX-EXPENSE> 71,374
<OTHER-OPERATING-EXPENSES> 1,353,883
<TOTAL-OPERATING-EXPENSES> 1,353,883
<OPERATING-INCOME-LOSS> 254,815
<OTHER-INCOME-NET> 19,990
<INCOME-BEFORE-INTEREST-EXPEN> 274,805
<TOTAL-INTEREST-EXPENSE> 92,480
<NET-INCOME> 110,951
10,201
<EARNINGS-AVAILABLE-FOR-COMM> 100,750
<COMMON-STOCK-DIVIDENDS> 92,600
<TOTAL-INTEREST-ON-BONDS> 95,050
<CASH-FLOW-OPERATIONS> 357,116
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy Gulf
States' financial statements for the year ended December 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000044570
<NAME> ENTERGY GULF STATES, INC.
<SUBSIDIARY>
<NUMBER> 006
<NAME> ENTERGY GULF STATES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4,446,981
<OTHER-PROPERTY-AND-INVEST> 387,469
<TOTAL-CURRENT-ASSETS> 632,001
<TOTAL-DEFERRED-CHARGES> 850,050
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 6,316,501
<COMMON> 114,055
<CAPITAL-SURPLUS-PAID-IN> 1,152,575
<RETAINED-EARNINGS> 202,205
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,468,835
145,497
201,444
<LONG-TERM-DEBT-NET> 1,631,658
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 71,515
0
<CAPITAL-LEASE-OBLIGATIONS> 66,656
<LEASES-CURRENT> 34,343
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,696,553
<TOT-CAPITALIZATION-AND-LIAB> 6,316,501
<GROSS-OPERATING-REVENUE> 1,853,809
<INCOME-TAX-EXPENSE> 31,773
<OTHER-OPERATING-EXPENSES> 1,618,155
<TOTAL-OPERATING-EXPENSES> 1,618,155
<OPERATING-INCOME-LOSS> 235,654
<OTHER-INCOME-NET> 18,862
<INCOME-BEFORE-INTEREST-EXPEN> 254,516
<TOTAL-INTEREST-EXPENSE> 176,350
<NET-INCOME> 46,393
19,011
<EARNINGS-AVAILABLE-FOR-COMM> 27,382
<COMMON-STOCK-DIVIDENDS> 109,400
<TOTAL-INTEREST-ON-BONDS> 173,599
<CASH-FLOW-OPERATIONS> 414,556
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Louisiana's financial statements for the year ended December 31, 1998 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000060527
<NAME> ENTERGY LOUISIANA, INC.
<SUBSIDIARY>
<NUMBER> 012
<NAME> ENTERGY LOUISIANA, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,332,028
<OTHER-PROPERTY-AND-INVEST> 118,537
<TOTAL-CURRENT-ASSETS> 365,208
<TOTAL-DEFERRED-CHARGES> 366,112
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,181,885
<COMMON> 1,088,900
<CAPITAL-SURPLUS-PAID-IN> (2,321)
<RETAINED-EARNINGS> 74,739
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,161,318
155,000
100,500
<LONG-TERM-DEBT-NET> 1,332,315
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 6,772
0
<CAPITAL-LEASE-OBLIGATIONS> 43,275
<LEASES-CURRENT> 32,539
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,350,166
<TOT-CAPITALIZATION-AND-LIAB> 4,181,885
<GROSS-OPERATING-REVENUE> 1,710,908
<INCOME-TAX-EXPENSE> 109,104
<OTHER-OPERATING-EXPENSES> 1,308,027
<TOTAL-OPERATING-EXPENSES> 1,308,027
<OPERATING-INCOME-LOSS> 402,881
<OTHER-INCOME-NET> 6,871
<INCOME-BEFORE-INTEREST-EXPEN> 409,752
<TOTAL-INTEREST-EXPENSE> 121,161
<NET-INCOME> 179,487
13,014
<EARNINGS-AVAILABLE-FOR-COMM> 166,473
<COMMON-STOCK-DIVIDENDS> 138,500
<TOTAL-INTEREST-ON-BONDS> 98,801
<CASH-FLOW-OPERATIONS> 338,564
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
Mississippi's financial statements for the year ended December 31, 1998 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000066901
<NAME> ENTERGY MISSISSIPPI, INC.
<SUBSIDIARY>
<NUMBER> 016
<NAME> ENTERGY MISSISSIPPI, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,069,006
<OTHER-PROPERTY-AND-INVEST> 12,600
<TOTAL-CURRENT-ASSETS> 128,512
<TOTAL-DEFERRED-CHARGES> 140,146
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,350,264
<COMMON> 199,326
<CAPITAL-SURPLUS-PAID-IN> (59)
<RETAINED-EARNINGS> 222,449
<TOTAL-COMMON-STOCKHOLDERS-EQ> 421,716
0
50,381
<LONG-TERM-DEBT-NET> 463,616
<SHORT-TERM-NOTES> 445
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 20
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 414,086
<TOT-CAPITALIZATION-AND-LIAB> 1,350,264
<GROSS-OPERATING-REVENUE> 976,300
<INCOME-TAX-EXPENSE> 28,031
<OTHER-OPERATING-EXPENSES> 850,715
<TOTAL-OPERATING-EXPENSES> 850,715
<OPERATING-INCOME-LOSS> 125,585
<OTHER-INCOME-NET> 5,079
<INCOME-BEFORE-INTEREST-EXPEN> 130,664
<TOTAL-INTEREST-EXPENSE> 39,995
<NET-INCOME> 62,638
3,370
<EARNINGS-AVAILABLE-FOR-COMM> 59,268
<COMMON-STOCK-DIVIDENDS> 66,000
<TOTAL-INTEREST-ON-BONDS> 39,291
<CASH-FLOW-OPERATIONS> 171,745
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Entergy
New Orleans' financial statements for the year ended December 31, 1998 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000071508
<NAME> ENTERGY NEW ORLEANS, INC.
<SUBSIDIARY>
<NUMBER> 017
<NAME> ENTERGY NEW ORLEANS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 295,879
<OTHER-PROPERTY-AND-INVEST> 3,259
<TOTAL-CURRENT-ASSETS> 112,780
<TOTAL-DEFERRED-CHARGES> 59,986
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 471,904
<COMMON> 33,744
<CAPITAL-SURPLUS-PAID-IN> 36,294
<RETAINED-EARNINGS> 67,030
<TOTAL-COMMON-STOCKHOLDERS-EQ> 137,068
0
19,780
<LONG-TERM-DEBT-NET> 169,018
<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> 146,038
<TOT-CAPITALIZATION-AND-LIAB> 471,904
<GROSS-OPERATING-REVENUE> 513,750
<INCOME-TAX-EXPENSE> 10,042
<OTHER-OPERATING-EXPENSES> 474,691
<TOTAL-OPERATING-EXPENSES> 474,691
<OPERATING-INCOME-LOSS> 39,059
<OTHER-INCOME-NET> 1,693
<INCOME-BEFORE-INTEREST-EXPEN> 40,752
<TOTAL-INTEREST-EXPENSE> 14,573
<NET-INCOME> 16,137
965
<EARNINGS-AVAILABLE-FOR-COMM> 15,172
<COMMON-STOCK-DIVIDENDS> 9,700
<TOTAL-INTEREST-ON-BONDS> 14,592
<CASH-FLOW-OPERATIONS> 40,925
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from System
Energy's financial statements for the year ended December 31, 1998 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000202584
<NAME> SYSTEM ENERGY RESOURCES, INC.
<SUBSIDIARY>
<NUMBER> 018
<NAME> SYSTEM ENERGY RESOURCES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,395,165
<OTHER-PROPERTY-AND-INVEST> 113,282
<TOTAL-CURRENT-ASSETS> 444,091
<TOTAL-DEFERRED-CHARGES> 478,667
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,431,205
<COMMON> 789,350
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 94,759
<TOTAL-COMMON-STOCKHOLDERS-EQ> 884,109
0
0
<LONG-TERM-DEBT-NET> 1,159,830
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 175,820
0
<CAPITAL-LEASE-OBLIGATIONS> 22,786
<LEASES-CURRENT> 41,835
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,146,825
<TOT-CAPITALIZATION-AND-LIAB> 3,431,205
<GROSS-OPERATING-REVENUE> 602,373
<INCOME-TAX-EXPENSE> 77,263
<OTHER-OPERATING-EXPENSES> 319,730
<TOTAL-OPERATING-EXPENSES> 319,730
<OPERATING-INCOME-LOSS> 282,643
<OTHER-INCOME-NET> 15,351
<INCOME-BEFORE-INTEREST-EXPEN> 297,994
<TOTAL-INTEREST-EXPENSE> 114,255
<NET-INCOME> 106,476
0
<EARNINGS-AVAILABLE-FOR-COMM> 106,476
<COMMON-STOCK-DIVIDENDS> 72,300
<TOTAL-INTEREST-ON-BONDS> 107,923
<CASH-FLOW-OPERATIONS> 263,204
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
