File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
____________________________
DECLARATION
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________
Entergy Power, Inc. Entergy Corporation
Parkwood Two Building 639 Loyola Avenue
10055 Grogan's Mill Road, Suite 500 New Orleans, LA 70113
The Woodlands, TX 77380
(Names of companies filing this statement
and addresses of principal executive offices)
____________________________
Entergy Corporation
(Name of top registered holding company parent of
each applicant or declarant)
____________________________
Shahid J. Malik Naomi A. Nakagama
President and Senior Vice President -
Chief Executive Officer Finance and Treasurer
Entergy Power, Inc. Entergy Corporation
Parkwood Two Building 639 Loyola Avenue
10055 Grogan's Mill Road New Orleans, LA 70113
Suite 500
The Woodlands, TX 77380
(Names and addresses of agents for service)
____________________________
The Commission is also requested to send copies
of any communications in connection with this matter to:
Laurence M. Hamric, Esq. Christopher J. Bernard, Esq.
Associate General Counsel General Counsel
Entergy Services, Inc. Entergy Power, Inc.
639 Loyola Avenue Parkwood Two Building
New Orleans, LA 70113 10055 Grogan's Mill Road
Suite 500
The Woodlands, TX 77380
Thomas C. Havens, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
<PAGE>
Item 1. Description of Proposed Transaction.
Entergy Power, Inc. ("EPI"), a Delaware corporation, is
a wholly-owned subsidiary of Entergy Corporation
("Entergy"), a Delaware corporation which is a registered
holding company under the Public Utility Holding Company Act
of 1935, as amended (the "Act"). EPI and Entergy (the
"Declarants") hereby request the approval of the Securities
and Exchange Commission (the "Commission") under Section
12(d) of the Act and Rule 44 promulgated by the Commission
thereunder for EPI to sell to a non-associate party, prior
to December 31, 1999, a portion of its interest in certain
electric generating facilities and related assets, as more
fully described below. The Declarants further request any
requisite Commission approval under Section 12(c) of the Act
and Rule 46 thereunder for EPI to make dividend payments to
Entergy from time to time through December 31, 1999 out of
the unused proceeds from the sale of such assets.
A. Background.
1. Formation and Business of EPI.
Pursuant to Commission order dated August 27, 1990 (the
"1990 Order")<FN1>, EPI was formed to participate as a supplier
of electricity at wholesale to non-associate companies in
bulk power markets. In accordance with the 1990 Order, EPI
acquired the ownership interests of its associate company,
Entergy Arkansas, Inc. ("Entergy Arkansas" (formerly
Arkansas Power & Light Company)), in (1) Unit No. 2 of the
Independence Steam Electric Generating Station ("ISES 2"),
and (2) Unit No. 2 of the Ritchie Steam Electric Generating
Station ("Ritchie 2"), representing an aggregate of 809
megawatts ("MW") of generating capacity (the "Transferred
Capacity").<FN2> The purpose of the "spin off" of the
Transferred Capacity by Entergy Arkansas to EPI was to
remove excess generating capacity from the rate base of the
Entergy System,<FN3> and thereby relieve the System's ratepayers
of the costs associated with such excess capacity.<FN4>
As a result of these transactions, in addition to its
100% ownership interest in Ritchie 2, EPI originally
acquired from Entergy Arkansas (1) a 31.5% undivided
ownership interest in ISES 2, (2) a 15.75% undivided
ownership interest in certain land and common facilities at
the Independence Station, and (3) a 15.75% undivided
ownership interest in the Certificate of Environmental
Compatibility and Public Need (the "Certificate") for the
Independence Station (collectively, the "ISES 2 Ownership
Share"). In addition, pursuant to the 1990 Order, EPI
acquired from Entergy Arkansas a 15.75% undivided ownership
interest in certain leases, mine facilities and mine
equipment located in Wyoming (the "Wyoming Property") used
to supply coal to the Independence Station. EPI acquired
the ISES 2 Ownership Share and the Wyoming Property pursuant
to an Agreement for the Purchase and Sale of Independence
Unit 2, dated as of August 28, 1990, between Entergy
Arkansas and EPI (the "Original Sale Agreement"). Under the
Original Sale Agreement, Entergy Arkansas also assigned to
EPI certain rights, duties and obligations, to the extent of
the ISES 2 Ownership Share, under the Independence Steam
Electric Station Ownership Agreement (the "ISES 2 Ownership
Agreement") and the Independence Steam Electric Station
Operating Agreement (the "ISES 2 Operating Agreement"), each
dated as of July 31, 1979. EPI acquired the Transferred
Capacity and related facilities for a total purchase price
equal to the depreciated book cost of such assets, or
$175,223,460.<FN5>
Since acquiring the Transferred Capacity and related
facilities, EPI has been engaged in the business of
marketing and selling the Transferred Capacity and related
energy, at wholesale, to non-associate bulk power purchasers
on negotiated (i.e., market based) terms and conditions.<FN6>
To facilitate its sales from the Transferred Capacity, EPI
receives electric transmission service pursuant to the
Entergy System's open access transmission tariff. In
addition, as discussed further below, Entergy Arkansas
manages, controls, operates and maintains ISES 2 and Ritchie
2 for the benefit of EPI and the other co-owners of such
generating facilities.
EPI currently has approximately 500 MW of capacity
under contract for terms longer than one year, including the
following:
(1) Alabama Municipal Electric Authority -- 50 MW
through 2005.
(2) Associated Electric Cooperative, Inc. -- 200 MW
from January 1996, increasing to 300 MW in 2000 through
May 2010.
(3) East Texas Electric Cooperative, Inc. -- 40 MW
through 2009.
(4) Municipal Energy Agency of Mississippi -- 23 MW to
May 2010.
(5) Northeast Texas Electric Cooperative, Inc. -- 36
MW through 2017.<FN7>
(6) Oglethorpe Power Cooperative -- 100 MW to June 30,
2002.
(7) Tallahassee Electric Department -- 25 MW from
March 9, 1996 through March 2002.
EPI's bulk power marketing business is subject to
certain conditions imposed by the Arkansas Public Service
Commission ("APSC"). Specifically, the APSC order issued in
1990 authorizing the sale of the Transferred Capacity
prohibited EPI from, among other things, serving any retail
or wholesale loads within the state of Arkansas. However,
in 1995, EPI received a partial waiver of such condition so
that EPI is now permitted to make wholesale sales to non-
associate customers located in Arkansas.<FN8>
2. Sale of ISES Interest to CWL.
Pursuant to order of the Commission dated August 2,
1996 (HCAR No. 26549), on August 28, 1997, EPI sold to City
Water and Light Plant of Jonesboro (Arkansas) ("CWL"), which
previously had a 5% undivided ownership interest in ISES 2,
(1) an additional 10% undivided ownership interest in ISES 2
(equivalent to 84 MW of capacity), (2) an additional 5%
undivided ownership interest in the Certificate, (3) an
additional 5% undivided ownership interest in the land and
common facilities at the Independence Station, and (4) an
additional 5% undivided ownership interest in the Wyoming
Property.<FN9> EPI sold the additional ISES 2 interest and
related assets to CWL for a total purchase price of
approximately $37.5 million, which was approximately the
depreciated book value of such assets at the time of such
sale. As a result of such sale, EPI currently holds a 21.5%
undivided ownership interest in ISES 2.
3. Ownership and Operation of ISES 2.
EPI owns its 21.5% undivided interest in ISES 2 as
tenant in common with (1) Entergy Mississippi (25%), (2) the
Arkansas Electric Cooperative Corporation ("AECC") (35%),
(3) CWL (15%), (4) the City of Conway, Arkansas ("Conway")
(2%), (5) the City of Osceola, Arkansas ("Osceola") (.5%),
and (6) the City of West Memphis, Arkansas ("West Memphis")
(1%) (EPI, Entergy Mississippi, AECC, CWL, Conway, Osceola
and West Memphis, collectively, the "Participants"). AECC
is an electric cooperative corporation engaged in the
business of generating and transmitting electric power and
energy for its member electric cooperative corporations in
the State of Arkansas. CWL is engaged in the business of
generating and acquiring electric power and energy and
distributing such power to its customers in the City of
Jonesboro, Arkansas. Conway is the owner of an electric
generating and distribution system leased to the Conway
Corporation, an Arkansas non-profit corporation, which
distributes electric power and energy in the City of Conway,
Arkansas. Osceola is the owner of an electric generating
and distribution system which distributes electric power and
energy in the City of Osceola, Arkansas. West Memphis is
the owner of an electric generating and distribution system
operated by the West Memphis Utility Commission, which
distributes electric power and energy in the City of West
Memphis, Arkansas.
The rights and obligations of EPI and the other
Participants relating to their respective ownership
interests in ISES 2 are governed by the ISES 2 Ownership
Agreement and the ISES 2 Operating Agreement. The ISES 2
Ownership Agreement sets out the ownership rights and duties
of the various Participants in relation to their investment
in ISES 2.<FN10> The ISES 2 Operating Agreement provides for the
Participants' respective entitlements to the capacity and
energy from ISES 2. The ISES 2 Operating Agreement further
provides for Entergy Arkansas to manage, operate and
maintain ISES 2 for the benefit of the Participants, who
share in the total operating costs of the plant in
proportion to their respective ownership interests in ISES
2. Under the ISES 2 Operating Agreement, Participants
generally are billed monthly by Entergy Arkansas for their
allocated share of operations, maintenance, fuel,
administrative and other costs incurred by Entergy Arkansas
in connection with ISES 2.
Reference is hereby made to Exhibits B-1 and B-2 hereto
for further information with respect to the ISES 2 Ownership
Agreement and the ISES 2 Operating Agreement.
B. Proposed Transactions.
East Texas Electric Cooperative, Inc. ("ETEC"), an
electric cooperative organized under Texas law, is currently
a purchaser of an aggregate of 70 MW of base load capacity
from ISES 2 and 6 MW of reserve capacity from Ritchie 2
under two unit power sales agreements that run through 2009
and 2017, respectively. In light of the pricing and other
terms of such agreements, as well as the projected long-term
capacity needs of its members, ETEC concluded that it would
be more beneficial to replace the contract that runs through
2017 with an ownership stake in ISES 2. In this connection,
ETEC and EPI commenced negotiations in mid-1997 for the sale
of an ownership interest in ISES 2 to ETEC.
EPI and ETEC have entered into an Ownership Interest
Purchase Agreement, dated February 26, 1998 (the "Purchase
Agreement"), pursuant to which, subject to certain
conditions,<FN11> ETEC will acquire from EPI (1) a 7.13%
undivided ownership interest in ISES 2 (which is equivalent
to approximately 60 MW of capacity from ISES 2), (2) a 3.56%
undivided ownership interest in the Certificate, (3) a 3.56%
undivided ownership interest in the land and common
facilities at the Independence Station, (4) a 3.56%
undivided ownership interest in the Wyoming Property, and
(5) a 5.49% undivided ownership interest in certain other
mine equipment (such ownership interests, collectively, the
"ISES 2 Interest"). ETEC will acquire the ISES 2 Interest
for a total purchase price of approximately $30 million.
Upon consummation of the sale, EPI and ETEC would terminate
the existing 36 MW unit power sales agreement that runs
through 2017.<FN12> In addition, EPI shall assign to ETEC, and
ETEC shall assume from EPI, proportionate rights and
obligations under the ISES 2 Ownership Agreement and the
ISES 2 Operating Agreement. ETEC also will secure any
necessary transmission service for the delivery of electric
energy associated with the purchased capacity.<FN13>
In negotiating the proposed purchase price for the ISES
2 Interest, EPI considered, among other factors, (1) the
earnings value of the ISES 2 Interest to EPI (including
EPI's projected earnings from the arrangements currently in
place with ETEC for sales of capacity from ISES 2), (2) the
net benefits to EPI and Entergy, its sole shareholder, from
a sale of the ISES 2 Interest in light of the resulting
reduction in EPI's allocable share of the capital costs and
operating expenses relating to ISES 2, (3) the value of the
ISES 2 Interest in the marketplace in relation to comparable
electric generating facilities, and (4) the desire to
minimize capital losses from any such sale. Based upon
these and other factors, EPI concluded that the proposed
purchase price for the ISES 2 Interest was reasonable and
represented not less than the present market value of the
ISES 2 Interest.
Filed herewith as Exhibit I is a letter from ETEC
expressing its support of the proposed transaction and
requesting the Commission's expedited consideration of this
Declaration.
C. Authorizations Requested.
The Declarants hereby request, pursuant to Section
12(d) of the Act and Rule 44 thereunder, that the Commission
approve the sale by EPI to ETEC, prior to December 31, 1999,
of the ISES 2 Interest on the terms and subject to the
conditions set forth herein.
EPI intends to apply the proceeds from the sale of the
ISES 2 Interest to its general corporate purposes, including
to reduce its operating and maintenance expenses and to meet
its other working capital needs. However, to the extent EPI
does not need such proceeds for its corporate purposes, it
would pay cash dividends from such proceeds to Entergy.
Insofar as such dividend payments would be made from EPI's
unearned surplus and not its current earnings, the
Declarants hereby request, pursuant to Section 12(c) of the
Act and Rule 46 thereunder, that the Commission approve the
payment of such dividends by EPI to Entergy from time to
time through December 31, 1999.
The Declarants represent that, upon effecting any of
the proposed dividend payments to Entergy, EPI's equity
capital will not fall below 30% of its total capitalization.
In this connection, EPI's capital structure currently
consists entirely of equity funds provided by Entergy. EPI
has no current plans to engage in debt financing during the
period through December 31, 1999. The Declarants further
represent that EPI's cash position after any such dividend
payments will be sufficient to allow EPI to continue to meet
its projected capital requirements and other obligations.
Therefore, the proposed payments will not be detrimental to
the financial integrity or working capital of EPI. The
proposed payments are also in the best interests of Entergy,
EPI's sole shareholder.
Reference is hereby made to the Financial Statements
filed herewith, including the pro forma journal entries, for
further information with respect to the anticipated pro
forma effects of the proposed transactions.
D. Compliance With Rules 53 and 54.
The Declarants hereby represent that, pursuant to Rule
54 under the Act, (1) for the reasons discussed below, the
condition set forth in Rule 53(a)(1) that Entergy's
"aggregate investment" in "exempt wholesale generators"
("EWGs") and "foreign utility companies" ("FUCOs") not
exceed 50% of Entergy's "consolidated retained earnings" is
not currently satisfied, and (2) all of the other criteria
of Rule 53(a) and (b) currently are satisfied.<FN14>
Entergy's "aggregate investment" in EWGs and FUCOs as
of March 31, 1998 is equal to approximately 54% of Entergy's
"consolidated retained earnings" as of March 31, 1998.
Entergy's "aggregate investment" currently exceeds the 50%
limitation in Rule 53(a)(1) as a result of certain write-
offs against Entergy's consolidated retained earnings,
including a net decrease of approximately $140 million in
Entergy's consolidated retained earnings from the quarter
ended June 30, 1997 to the quarter ended September 30, 1997.
This $140 million net decrease was attributable primarily to
the recording in July 1997 of a one-time "windfall profits
tax" imposed by the British government on London Electricity
plc ("London Electricity"), an indirect subsidiary of
Entergy and a FUCO, and other privatized companies in the
United Kingdom. This tax, which was approximately US$234
million for London Electricity, was made payable in two
installments, the first of which was paid on December 1,
1997, and the second of which will be due on December 1,
1998. The first installment was paid by London Electricity,
without need for additional investment by Entergy, and it is
not anticipated that there will be a need for any additional
investment by Entergy to fund London Electricity's payment
of the second installment.
Item 2. Fees, Commissions and Expenses.
The estimated fees, commissions and expenses expected
to be paid or incurred, directly or indirectly, in
connection with the transactions described herein will be
supplied by amendment.
Item 3. Applicable Statutory Provisions.
The proposed sale by EPI of utility assets is subject
to Section 12(d) of the Act and Rule 44 thereunder. The
proposed dividend payments by EPI to Entergy out of the
unused proceeds of such sale are subject to Section 12(c) of
the Act and Rule 46 thereunder. In addition, Rules 53 and
54 under the Act are applicable in respect of the proposed
transactions.
To the extent that the proposed transactions are
considered by the Commission to require authorization,
approval or exemption under any Section of the Act or rule
thereunder, other than those specifically referred to above,
request for such authorization, approval or exemption is
hereby made.
Item 4. Regulatory Approval.
ETEC intends to seek the approval of the Public Utility
Commission of Texas of the Ownership Interest Purchase
Agreement. Although ETEC is not subject to the jurisdiction
of the Rural Utilities Service of the Department of
Agriculture (the "RUS"), by Agreement dated March 24, 1994,
the consent of the RUS must be obtained by ETEC prior to
making capital expenditures in excess of $15 million in any
twelve month period and selling firm power to partners other
than ETEC members. No other state or Federal commission,
other than the Commission, has jurisdiction over the
transactions proposed herein.
Item 5. Procedure.
EPI and ETEC wish to consummate the sale of the ISES 2
Interest as soon as practicable. The Declarants therefore
respectfully request that the Commission issue its order
permitting the Declaration to become effective as soon as
practicable, but in any event not later than September 1,
1998.
The Declarants hereby (1) waive a recommended decision
by a hearing officer or any other responsible officer of the
Commission, (2) agree that the Division of Investment
Management may assist in the preparation of the decision of
the Commission, and (3) request that there be no waiting
period between the issuance of the order of the Commission
and the day on which such order is to become effective.
Item 6. Exhibits and Financial Statements.
(a) Exhibits:<FN15>
B-1 -Independence Steam Electric Station
Ownership Agreement, dated as of July 31,
1979, among Arkansas Power & Light Company,
Arkansas Electric Cooperative Corporation,
City Water and Light Plant of the City of
Jonesboro, Arkansas, and City of Conway,
Arkansas (filed as Exhibit 5(r)-7 in 2-
66235).
B-2 -Independence Steam Electric Station
Operating Agreement, dated as of July 31,
1979, among Arkansas Power & Light Company,
Arkansas Electric Cooperative Corporation,
City Water and Light Plant of the City of
Jonesboro, Arkansas, and City of Conway,
Arkansas (filed as Exhibit 5(r)-6 in 2-
66235).
B-3 -Agreement for the Purchase and Sale of
Independence Unit 2, dated August 28, 1990,
between Entergy Power, Inc. and Arkansas
Power & Light Company (filed as Exhibit B-
3(c) to Rule 24 Certificate in File No. 70-
7684).
B-4 -Ownership Interest Purchase Agreement,
dated February 26, 1998, between Entergy
Power, Inc. and East Texas Electric
Cooperative, Inc.
D-1 -Order of the Public Utility Commission
of Texas (to be filed by amendment).
D-2 -Consent of the Rural Utilities Service
of the Department of Agriculture (to be filed
by amendment).
F -Opinion(s) of Counsel (to be filed by
amendment).
G -Financial Data Schedules.
H -Proposed Form of Notice.
I -Letter from ETEC in support of
Declaration (to be filed by amendment).
(b) Financial Statements:
Financial Statements of Entergy Corporation and of
Entergy Corporation and subsidiaries, consolidated, as of
March 31, 1998, including pro forma journal entries
(reference also is made to Exhibit G hereto).
Financial Statements of Entergy Power, Inc. as of March
31, 1998, including pro forma journal entries (reference
also is made to Exhibit G hereto).
Except as reflected in the Financial Statements, no
material changes not in the ordinary course of business have
taken place since March 31, 1998.
Item 7. Information as to Environmental Effects.
The proposed transactions do not involve any major
Federal action significantly affecting the quality of the
human environment. No Federal agency has prepared or is
preparing an environmental impact statement with respect to
the proposed transactions.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned companies have
duly caused this statement to be signed on their behalf by
the undersigned thereunto duly authorized.
ENTERGY CORPORATION
By: /s/ Michael G. Thompson
Senior Vice President,
General Counsel and Secretary
ENTERGY POWER, INC.
By: /s/ Shahid J. Malik
Shahid J. Malik
President and Chief Executive Office
Dated: May 29, 1998
_______________________________
<FN1> See Holding Company Act Release ("HCAR") No. 25136.
The 1990 Order was reaffirmed by the Commission on
remand from the U.S. Court of Appeals for the District
of Columbia Circuit. See HCAR No. 26410 (dated
November 17, 1995) (the "Remand Order").
<FN2> Specifically, EPI acquired (1) Entergy Arkansas' 100%
ownership interest in Ritchie 2, an oil- and gas-fired
plant with an output of 544 MW, and (2) Entergy
Arkansas' 31.5% undivided ownership interest in Unit
No. 2 of the Independence Steam Electric Generating
Station (the "Independence Station"), a coal-fired
electric generating facility located near Newark,
Arkansas.
<FN3> Entergy and certain of its direct and indirect
subsidiary companies comprise the Entergy System (the
"Entergy System" or "System"), which currently includes
(1) five regulated retail electric utility companies -
Entergy Arkansas, Entergy Gulf States, Inc., Entergy
Louisiana, Inc., Entergy Mississippi, Inc. ("Entergy
Mississippi") and Entergy New Orleans, Inc. (such
companies, collectively, being hereinafter referred to
as the "System operating companies"), (2) a wholesale
generating company that sells power to the System
operating companies (other than Entergy Gulf States,
Inc.) - System Energy Resources, Inc., (3) a service
company subsidiary - Entergy Services, Inc., (4) a
nuclear management service company - Entergy
Operations, Inc., and (5) a fuel supply subsidiary -
System Fuels, Inc.
<FN4> See Remand Order.
<FN5> Entergy originally financed EPI's acquisition of the
Transferred Capacity and related facilities and EPI's
ongoing capital requirements primarily through a series
of loans in an aggregate amount of approximately $237
million. In order to eliminate the financial burdens
of EPI's resultant highly leveraged capital structure,
EPI sought and received an order from the Commission in
April 1995 permitting EPI to change its capital
structure from one consisting predominantly of debt to
one consisting entirely of equity. See HCAR No. 26275
(dated April 18, 1995).
<FN6> EPI is presently authorized by the Federal Energy
Regulatory Commission (the "FERC") to sell, at market
based rates, up to an aggregate of 1,500 MW of capacity
and energy.
<FN7> In June 1997, Northeast Texas Electric Cooperative,
Inc. assigned its rights and obligations under this
unit power sales agreement to East Texas Electric
Cooperative, Inc.
<FN8> See Order No. 17, APSC Docket No. 89-128-U, as modified
by Order No. 4, APSC Docket No. 95-396-U. EPI is still
precluded from serving retail loads in Arkansas or
making capacity sales to any affiliate without first
obtaining a waiver from the APSC.
<FN9> Reference is hereby made to File No. 70-8871 for
further information with respect to such transaction.
<FN10> Among other things, the ISES 2 Ownership Agreement
provides that, with certain exceptions, no Participant
may sell any part of its ownership interest in ISES 2
to an entity which would not be a "public utility"
under Arkansas law without the prior consent of the
other Participants. EPI will obtain such consents in
connection with the sale of the ISES 2 interest
proposed herein.
<FN11> Pursuant to Section 5.2.8 of the Original Sale
Agreement, in the event EPI proposes to sell an
interest in its Ownership Share in ISES 2, Entergy
Arkansas has the right to repurchase such interest on
the same basis as it was originally transferred to EPI
(i.e., at the then depreciated book value of such
assets). Entergy Arkansas has notified EPI that it
does not wish to exercise its right of first refusal
under the Original Sale Agreement with respect to any
part of the ISES 2 Interest proposed to be sold to
ETEC.
<FN12> In addition, EPI and ETEC will enter into a Reserve
Power Purchase Agreement pursuant to which EPI will
continue to provide ETEC with 6 MW of reserve capacity
and related energy from Ritchie 2 under terms
substantially similar to those under the unit power
sales agreement that is being terminated in conjunction
with the sale of the ISES 2 Interest.
<FN13> In connection with the transactions contemplated by the
Purchase Agreement, in a separate transaction, ETEC
would sell to Entergy Power Marketing Corp.
approximately 29 MW of capacity and associated energy
from the ISES 2 Interest for a period commencing with
the closing date of ETEC's acquisition of the ISES 2
Interest and ending on December 31, 2000.
<FN14> The terms "aggregate investment" and "consolidated
retained earnings" are used herein as defined in Rule
53.
<FN15> Certain exhibits are incorporated herein by reference
as indicated.
Exhibit B-4
INDEPENDENCE STEAM ELECTRIC
STATION UNIT NO. 2
OWNERSHIP INTEREST PURCHASE AGREEMENT
dated as of February 26, 1998
between
ENTERGY POWER, INC.
and
EAST TEXAS ELECTRIC COOPERATIVE, INC.
<PAGE>
OWNERSHIP INTEREST PURCHASE AGREEMENT
THIS OWNERSHIP INTEREST PURCHASE AGREEMENT, dated as of
this 26th day of February, 1998, is between EAST TEXAS
ELECTRIC COOPERATIVE, Inc., an electric cooperative
organized and existing under the laws of the State of Texas
("ETEC"), and ENTERGY POWER, INC., a corporation organized
and existing under the laws of the State of Delaware
("Entergy Power").
WHEREAS, Entergy Arkansas, Inc. (formerly Arkansas
Power & Light Company), an Arkansas corporation ("Entergy
Arkansas"), has constructed and operates a coal-fired
electric generating plant near Newark, Arkansas, known as
the Independence Steam Electric Station ("Independence
SES"), in which Participants own undivided ownership
interests pursuant to the Ownership Agreement; and
WHEREAS, Entergy Power is a corporation primarily
engaged in the business of acquiring, producing and selling
electric power and energy to other parties for resale, and
ETEC is primarily engaged in the business of acquiring
electric power and energy and reselling such power to its
members in Texas; and
WHEREAS, Entergy Power owns an undivided interests in
the 842 megawatt ("MW") (nominal rating) Independence SES
Unit No. Two ("Independence Unit 2"), and in certain common
facilities and other related properties, as more
particularly described hereinafter; and
WHEREAS, Entergy Power desires to sell, and ETEC
desires to purchase, an ownership interest in Independence
Unit 2 and in such common facilities and related properties,
as more particularly described hereinafter.
NOW THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, ETEC and Entergy Power
hereby agree as follows:
I. CERTAIN DEFINED TERMS.
The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals,
will, except when the context otherwise requires, have the
following meanings:
A. "ETEC's Ownership Share" has the meaning set forth
in Section 2.1 hereof.
A. "ETEC's Wyoming Property" has the meaning set
forth in Section 2.1 hereof
A. "Closing Date" means the date prescribed in this
Agreement on which Entergy Power transfers to ETEC ETEC's
Ownership Share and ETEC's Wyoming Property.
A. "Common Facilities" will have the meaning provided for
in Section 2. 1.
A. "Definitive Agreements" means this Agreement, together
with each other agreement or instrument executed in
connection herewith, whether or not mentioned herein.
A. "Environmental Certificate" means the Certificate of
Environmental Compatibility and Public Need for the
Independence SES.
A. "FERC" means die Federal Energy Regulatory Commission.
A. "including" means including without limiting the
generality of any description preceding such term.
A. "Operating Agreement" means the Independence Operating
Agreement, originally
dated July 31, 1979, as the same has been and may be
amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
A. "Ownership Agreement" means the Independence Ownership
Agreement, originally dated July 31, 1979, among Entergy
Arkansas, Inc. (formerly Arkansas Power & Light Company),
Entergy Mississippi, Inc. (formerly Mississippi Power &
Light Company), Arkansas Electric Cooperative Corporation
("AECC"), ETEC, the City of Conway, Arkansas ("Conway"),
City Water and Light Plant of the City of Jonesboro,
Arkansas ("Jonesboro"), the City of West Memphis, Arkansas
("West Memphis"), and the City of Osceola, Arkansas
("Osceola"), and United States Trust Company of New York, a
New York banking corporation, not in its individual capacity
but as trustee ("Owner Trustee"), as the same has been and
may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms thereof
A. "Entergy Power's Ownership Share" means, collectively,
(i) the 21.5% undivided ownership interest of Entergy Power
in Independence Unit 2, (ii) the 10.75% undivided ownership
interest of Entergy Power in the Environmental Certificate,
and (iii) the 10.75% undivided ownership interest of Entergy
Power in the Common Facilities.
A. "Participant" means each of the parties to the
Ownership Agreement or the Operating Agreement, as the case
may be.
A. "Purchased Capacity" means 60 MW of electric generating
capacity from Independence Unit 2.
I. SALE AND TRANSFER OF ASSETS
A. Sale of Ownership Share and Wyoming Property. Subject
to the terms and conditions hereof, on the Closing Date
provided for in Section 2.4 hereof, Entergy Power will sell
and convey to ETEC, and ETEC will purchase from Entergy
Power, (i) a seven and thirteen one hundredths percent
(7.13%) undivided ownership interest in Independence Unit 2,
(ii) a three and fifty-six one hundredths percent (3.56%)
undivided ownership interest in the Environmental
Certificate, (iii) three and fifty-six one hundredths
percent (3.56%) undivided ownership interest in certain land
and common facilities at Independence SES (as more
particularly described in the Ownership Agreement) (the
"Common Facilities") (items (i), (ii) and (iii),
collectively, the "ETEC's Ownership Share"), and (iv) a
three and fifty-six one hundredths percent (3.56%) undivided
interest in certain mine facilities and mine equipment
located in Wyoming and a five and forty-nine one hundredths
percent (5.49%) undivided interest in other mine equipment
(as more particularly described in the Ownership Agreement
and in Exhibit "A" attached hereto and incorporated herein
by reference) ("ETEC's Wyoming Property"). ETEC's Ownership
Share will be conveyed by Special Warranty Deed and Bill of
Sale and by Assignment substantially in the form of Exhibits
"B" and "C", respectively, attached hereto and made a part
hereof. ETEC's Wyoming Property will be conveyed by Bill of
Sale substantially in the form of Exhibit "D" attached
hereto and made a part hereof.
A. Other Instruments. On the Closing Date, and from time
to time thereafter, ETEC and Entergy Power will execute such
other instruments of conveyance and transfer, and other
documents, as may be necessary or appropriate to carry out
the intent of this Agreement and to vest in ETEC all right,
title and interest in ETEC's Ownership Share and in ETEC's
Wyoming Property.
A. Closing Date. The Closing Date of the sale and
transfer of ETEC's Ownership Share and ETEC's Wyoming
Property as provided for herein will take place on June 1,
1998, or such other date mutually agreed upon by the
parties, at The Woodlands, Texas, or such other place
mutually agreed upon by the parties, provided, however, in
the event the parties have not received all necessary
governmental, regulatory or other required approvals of the
consummation of the transactions contemplated hereby by June
1, 1998, the Closing Date will be postponed from day to day
until all such approvals have been received.
A. Notice of Loss or Damage. Entergy Power hereby agrees
to provide to ETEC written notice, prior to the Closing
Date, of any loss, damage or material adverse change to
Independence SES, the Common Facilities, or the Wyoming
Property suffered between the date of this Agreement and the
Closing Date.
I. PAYMENTS BY ETEC
A. On the Closing Date. The purchase price of ETEC's
Ownership Share and ETEC's Wyoming Property will be together
THIRTY MILLION FOUR HUNDRED EIGHTY ONE THOUSAND DOLLARS
($30,481,000) (the "Purchase Price"). The Purchase Price
will be payable by ETEC to Entergy Power in cash or in
immediately available funds on the Closing Date.
3.2 Adjustments.
1. As of the date hereof, it is agreed by the
parties that the value of supplies and inventory, including
fuel, located at Independence Unit 2 and considered to be
part of ETEC's Ownership Share is $481,000. On the Closing
Date, the Purchase Price will be adjusted to reflect the
actual value of those supplies and inventory as of the
Closing Date.
1. It is recognized and agreed by the parties
that, after the Closing Date, each party will bear
responsibility for costs in proportion to its ownership
share. In the event Entergy Power may have expended, or
been billed for, sums for operating and maintenance costs,
capitalized improvements to Independence Unit 2, fuel
inventory, material and supply inventory, or other charges
for any period after the Closing Date ETEC will pay to
Entergy Power any and all such sums in proportion to ETEC's
Ownership Share within ten (10) days after Entergy Power
furnishes to ETEC a written statement reflecting said sum or
sums.
I. ASSIGNMENT TO AND ASSUMPTION BY ETEC OF
CERTAIN ENTERGY POWER RIGHTS AND OBLIGATIONS
A. Rights of ETEC Under the Ownership Agreement. As of
the Closing Date, Entergy Power hereby assigns to ETEC
certain right, dudes and obligations under the Ownership
Agreement, to the extent of ETEC's Ownership Share and
ETEC's Wyoming Property, and ETEC hereby accepts such
assignment and assumes such rights, duties and obligations.
From and after the Closing Date, ETEC will have the rights
and duties of a Participant under the Ownership Agreement to
the extent of ETEC's Ownership Share and ETEC's Wyoming
Property. All terms and conditions of the Ownership
Agreement, including the definition of terms contained
therein, are incorporated by reference herein to the extent
not in conflict herewith.
A. Rights of ETEC Under the Operating Agreement. As
of the Closing Date, Entergy Power hereby assigns to ETEC
certain rights, duties and obligations under the Operating
Agreement, to the extent of ETEC's Ownership Share and
ETEC's Wyoming Property, and ETEC hereby accepts such
assignment and assumes such rights, duties and obligations.
From and after the Closing Date, ETEC will have the rights
and duties of a Participant under the Operating Agreement to
the extent of ETECW Ownership Share and ETEC's Wyoming
Property. All terms and conditions of the Operating
Agreement, including the definition of terms contained
therein, are incorporated by reference hereby to the extent
not in conflict herewith.
A. Rights of ETEC Under Clean Air Act. As of the
Closing Date, Entergy Power hereby assigns to ETEC certain
rights, duties and obligations arising under Title IV of the
Clean Air Act Amendments of 1990 (the "Act"), to the extent
of ETEC's Ownership Share and ETEC's Wyoming Property, and
ETEC hereby accepts such assignment and assumes such rights,
duties and obligations. Such assignment of rights, duties
and obligations includes, but is not limited to, the
Environmental Protection Agency's Base Allocation of
allowances under the Act and related regulations. From and
after the Closing Date, ETEC will have the rights and duties
of a Participant under the Act to the extent of ETEC's
Ownership Share and ETEC's Wyoming Property.
I. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties by Entergy Power.
Entergy Power hereby represents and warrants as follows:
1. Entergy Power is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and has corporate power to carry on its
business as it is now being conducted.
1. Entergy Power is the owner of, and holds
marketable title to, all real, personal and intangible
property subject to conveyance hereunder. Entergy Power has
full power to transfer said property free and clear of all
liens, encumbrances, security interests, options, claims and
restrictions, except those enumerated in Exhibit "E"
attached hereto.
1. Entergy Power has incurred no debt and is not
in default, or subject to any liabilities or obligations of
any nature whether accrued, absolute, shared, contingent or
otherwise, arising from its ownership in Independence SES,
except as enumerated in Exhibit "F" attached hereto.
1. All information provided to ETEC or its
representatives by Entergy Power or its representatives in
the course of ETEC's evaluation of the transactions
underlying the Definitive Agreements was at the time, and
continues to be as of the Closing Date, complete and
accurate to the best of Entergy Power's knowledge.
1. Entergy Power has paid all income, franchise,
corporate, and other taxes which are payable by it to all
federal, state and local taxing authorities.
1. There are no actions, suits, investigations or
proceedings pending, or to Entergy Power's knowledge
threatened, against Entergy Power arising from its ownership
in Independence SES or the Wyoming Property.
(g) The subject conveyance and assignment to ETEC is
either not subject to Article 6 of the Uniform Commercial
Code (Bulk Transfers) as adopted in Arkansas or, in the
alternative, Entergy Power has complied with the notice and
all other requirements of said Article 6.
A. Representations and Warranties by ETEC. ETEC
hereby represents and warrants as follows:
B.
1. ETEC is an electric cooperative duly organized
and validly existing in good standing under the laws of the
State of Texas and has the requisite power to carry on its
business as it is now being conducted.
I. CONDITIONS PRECEDENT
A. Conditions Precedent to Entergy Powers Obligations
Hereunder. All obligations of Entergy Power under this
Agreement are subject to the fulfillment, prior to or on the
Closing Date, of each of the following conditions (or the
waiver in writing of such conditions by Entergy Power).
1. Entergy Power shall not have discovered any
material error, misstatement or omission in the
representations and warranties made by ETEC in this
Agreement.
1. ETEC's representations and warranties contained
in this Agreement will be deemed to have been made again, at
and as of the Closing Date, and shall then be true in all
material respects; ETEC will have performed and complied
with all agreements, covenants and conditions required by
this Agreement to be performed or complied with by it prior
to or on the Closing Date; and Entergy Power will have been
furnished with a certificate, dated the Closing Date,
certifying in such detail as Entergy Power may request to
the fulfillment of the foregoing conditions.
A. Conditions Precedent to ETEC's Obligations
Hereunder. All obligations of ETEC under this Agreement are
subject to the fulfillment prior to or on the Closing Date,
of each of the following conditions (or the waiver in
writing of such conditions by ETEC).
1. ETEC shall not have received notice from
Entergy Power or otherwise become aware of the occurrence,
during the time between the date of this Agreement and the
Closing Date, of any loss, damage, or material adverse
change to Independence SES, the Common Facilities, or the
Wyoming Property.
1. ETEC shall not have discovered any material
error, misstatement or omission in the representations and
warranties made by Entergy Power in this Agreement.
1. Entergy Power's representations and warranties
contained in this Agreement will be deemed to have been made
again, at and as of the Closing Date, and will then be true
in all material respects; Entergy Power will have performed
and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with
by it prior to or on the Closing Date; and ETEC will have
been furnished with a certificate, dated as of the Closing
Date, certifying in such detail as ETEC may request to the
fulfillment of the foregoing conditions.
A. Conditions Precedent to the Respective Obligations
of Entergy Power and ETEC. The respective obligations of
Entergy Power and ETEC hereunder are, unless waived in
writing by Entergy Power and ETEC prior to or on the Closing
Date, subject to the further conditions that:
1. ETEC shall have secured a commitment to supply
power coordination, interchange and transmission services
with respect to the delivery to ETEC of the electric energy
relating to the Purchased Capacity, on terms satisfactory to
ETEC.
1. ETEC shall have secured financing on terms and
conditions acceptable to ETEC, the proceeds of which will be
used to finance the Purchase Price.
1. Entergy Power shall have received a written
waiver from Entergy Arkansas of Entergy Arkansas's rights of
first refusal with respect to Entergy Power's sale of the
Ownership Share.
1. The boards of directors of Entergy Power and
ETEC shall each have approved the transactions contemplated
by his Agreement and each of the Definitive Agreements.
1. All necessary or appropriate consents, waivers,
approvals or other authorizations from Federal, state or
local governmental or regulatory agencies or other persons
with respect to the transactions contemplated by this
Agreement shall have been received by Entergy Power or ETEC
or both, as the case may be.
1. Entergy Power and ETEC shall have agreed to any
adjustment to the Purchase Price in accordance with Section
3.2(a) hereof.
I. MISCELLANEOUS
A. Indemnification for Obligations Arising Prior to
Closing. Entergy Power agrees to, and does hereby,
indemnify and hold ETEC harmless from and against any and
all expense, liability, claim, fine or loss whatsoever,
including, but not limited to, reasonable legal fees and
expenses (collectively referred to as "Claims") brought or
asserted by any third person, including another Participant
in any way relating to, or arising out of, the assumption by
ETEC of any obligations of Entergy Power under the
Definitive Agreements, where such Claims arose or accrued on
or prior to the Closing Date, including such Claims that are
tolled, undiscovered, or otherwise unrealized until after
the Closing Date.
A. Cross-Indemnification for Obligations Arising
After Closing. ETEC agrees to, and does hereby, indemnify
and hold Entergy Power harmless from and against any and all
Claims brought or asserted by any third person, including
another Participant, in any way arising out of the sole
negligence, gross negligence, recklessness, or willful
misconduct of ETEC occurring after the Closing Date.
Entergy Power agrees to, and does hereby, indemnify and hold
ETEC harmless from and against all Claims brought or
asserted by any third person, including another Participant,
in any way arising out of the sole negligence, gross
negligence, recklessness, or willful misconduct of Entergy
Power occurring after the Closing Date.
A. Waiver of Partition. ETEC and Entergy Power
hereby expressly waive and renounce, until Independence Unit
2 is retired from commercial service, for themselves, their
successors, transferees and assigns, all rights as tenants
in common in Independence Unit 2 to partition and
accounting.
A. No Partnership. Notwithstanding any provisions of
this Agreement, ETEC and Entergy Power do not intend to
create hereby any joint venture, partnership, association
taxable as a corporation, or other entity for the conduct of
any business for profit. ETEC and Entergy Power elect not
to be treated as a partnership for United States income tax
purposes.
A. Notice. Any notice, request, consent or other
communications permitted or required by this Agreement will
be in writing and will be deemed given when deposited in the
United States mail, first class postage paid, and if given
to ETEC, will be addressed to:
East Texas Electric Cooperative
2905 Westward Drive
Nacogdoches, Texas 75961
Attention: General Manager
and if given to Entergy Power, will be addressed to:
Entergy Power, Inc.
Parkwood Two Suite 500
10055 Grogan's Mill Road
The Woodlands, Texas 77380
Attention: President
(copy) General Counsel
unless a different officer or address will have been
designated by the respective party by notice in writing.
A. Amendments. No amendment, modification,
termination or waiver of any provision of this Agreement or
any other Definitive Agreement, or consent to any departure
by either of the parties therefrom, will in any event be
effective without a written instrument duly executed by each
of the parties hereto.
A. Severability. Any provision of this Agreement or
any other Definitive Agreement which is prohibited or
unenforceable in any jurisdiction will, as to such provision
and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating or
impairing the remaining provisions of this Agreement or any
other Definitive Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
A. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference
only and will not constitute a part of this Agreement for
any other purpose or be given substantive effect.
A. Successors and Assigns. This Agreement and the
other Definitive Agreements will be binding upon the parties
hereto and their respective successors and assigns and will
inure to the benefit of the parties hereto and the
successors and assigns of each of the parties hereto.
A. Counterparts; Effectiveness. This Agreement and
any amendments, waivers, consents or supplements hereto or
in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered
will be deemed an original.
A. Entire Agreement. This Agreement, together with
the other Definitive Agreements, is intended by the parties
as a final expression of their agreement and intended to be
a complete and exclusive statement of the agreement and
understanding, written or verbal, of the parties hereto in
respect of the subject matter contained herein and
supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
A. "As Is" Sale. Subject to the representations and
warranties expressly provided herein, ETEC's Ownership Share
and ETEC's Wyoming Property are being sold and conveyed by
Entergy Power to ETEC "as is" and "where is." Entergy Power
makes no representation or warranty whatsoever in this
Agreement, express, implied or statutory, including any
representation or warranty as to the value, quantity,
condition, saleability, obsolescence, merchantability,
fitness or suitability for use or working order of any part
of the Independence SES, nor does Entergy Power represent or
warrant that the use or operation of the Independence SES
will not violate patent, trademark or service mark rights of
any third parties. ETEC is willing to purchase ETEC's
Ownership Share and ETEC's Wyoming Property "as is" and
"where is" and in accordance with the terms and conditions
of this Agreement. Notwithstanding the foregoing, ETEC will
have the benefit, in proportion to ETEC's Ownership Share,
to all manufacturers' and vendors' warranties and all
patent, trademark, and servicemark rights running to the
Participants.
A. Governing Law. THIS AGREEMENT WILL BE GOVERNED
BY, AND WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS.
A. Representations To Survive Closing. The
representations, warranties and mutual indemnity provided by
this Agreement will survive the Closing Date.
A. Remedies. Nothing in this agreement will be
construed to abridge, limit or deprive either of the parties
hereto of any right or remedy it might otherwise have now or
hereinafter existing in law, in equity or by statute,
including the right of injunction and specific performance
for the breach of any provision of this Agreement.
IN WITNESS WHEREOF, the undersigned parties hereto have
duly executed this Agreement in the State of Texas, City of
The Woodlands, on the date first above written.
ATTEST: ENTERGY POWER, INC.
By:_______________________
Title:__________________ Title:______________________
ATTEST: EAST TEXAS ELECTRIC
COOPERATIVE, INC.
By:_______________________
Title:__________________ Title:______________________
EXHIBIT H
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. 35-_______/ File No. 70-________
___________________________________
In the Matter of :
:
ENTERGY POWER, INC. :
ENTERGY CORPORATION :
:
:
___________________________________:
NOTICE OF DECLARATION CONCERNING PROPOSED SALES OF UTILITY
ASSETS
Entergy Corporation ("Entergy"), 639 Loyola Avenue, New
Orleans, Louisiana 70113, a registered holding company, and
Entergy Power, Inc. ("EPI"), 10055 Grogan's Mill Road, Suite
500, The Woodlands, Texas 77380, a wholly-owned subsidiary
of Entergy, have filed a declaration pursuant to Sections
12(c) and 12(d) of the Act and Rules 44, 46, 53 and 54
thereunder.
EPI proposes to sell to East Texas Electric
Cooperative, Inc. ("ETEC"), prior to December 31, 1999, a
portion of EPI's 21.5% undivided ownership interest in Unit
No. 2 of the Independence Steam Electric Generating Station
and certain related assets, for a total purchase price of
approximately $30 million. The consideration to be received
by EPI for such sale was negotiated at arm's length with
ETEC. EPI further proposes to pay dividends to Entergy out
of the unused proceeds from such sale from time to time
during the period through December 31, 1999.
The declaration and any amendments thereto are
available for the public inspection through the Commission's
Office of Public Reference. Interested persons wishing to
comment or request a hearing should submit their views in
writing no later than ___________, 1998, to the Secretary,
Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and serve a copy on the Declarants
at the addresses specified above. Proof of service (by
affidavit or, in case of an attorney at law, by certificate)
should be filed with the request. Any request for a hearing
shall identify specifically the issues of fact or law that
are disputed. A person who so requests will be notified of
any hearing, if ordered, and will receive a copy of any
notice or order issued in this matter. After said date, the
declaration, as filed or as it may be amended, may be
permitted to become effective.
For the Commission, by the Office of Public Utility
Regulation, pursuant to delegated authority.
[NAME OF SECRETARY]
[Secretary]
ENTERGY CORPORATION
PRO FORMA BALANCE SHEET
MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Adjustments to Reflect
Transactions Proposed
Before In Present After
ASSETS Transactions Filing Transactions
(In Thousands)
see NOTE A
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents:
Temporary cash investments - at cost,
which approximates market:
Associated companies $11,549 $11,549
Other 27,224 27,224
---------- ------ ----------
Total cash and cash equivalents 38,773 - 38,773
Accounts receivable:
Associated companies 31,101 31,101
Interest receivable 134 134
Other 30,715 30,715
---------- ------ ----------
Total 100,723 100,723
---------- ------ ----------
Investment in Wholly-owned Subsidiaries 6,827,785 $2,412 6,830,197
---------- ------ ----------
Deferred Debits and Other Assets 87,381 - 87,381
---------- ------ ----------
Total $7,015,889 $2,412 $7,018,301
========== ====== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $267,500 $267,500
Accounts payable:
Associated companies 4,047 4,047
Other 2,055 2,055
Interest accrued 445 445
Other current liabilities 119,142 119,142
---------- ------ ----------
Total 393,189 - 393,189
---------- ------ ----------
Deferred Credits and
Noncurrent Liabilities 70,742 70,742 -
---------- ------ ----------
Shareholders' Equity:
Common stock, $.01 par value, authorized
500,000,000 shares;issued 246,556,946 shares 2,466 2,466
Paid-in capital 4,625,592 4,625,592
Retained earnings 1,984,903 2,412 1,987,315
Cumulative foreign currency translation
adjustment (53,124) (53,124)
Less cost of treasury stock
(306,852 shares in 1997 and 1,496,118
shares in 1996) 7,879 7,879
---------- ------ ----------
Total common shareholders' equity 6,551,958 2,412 6,554,370
---------- ------ ----------
Total $7,015,889 $2,412 $7,018,301
========== ====== ==========
NOTE
(A) To record sale by Entergy Power, Inc. of an undivided 7.13% ownership
interest in ISES 2, at a price of $30,000,000, to East Texas
Electric Cooperative, as if the sale had occurred on
March 31, 1998.
</TABLE>
<PAGE>
ENTERGY CORPORATION
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transactions Filing Transactions
(In Thousands)
see NOTE B
<S> <C> <C> <C>
Income:
Equity in income of subsidiaries $269,257 ($1,360) $267,897
Interest on temporary investments 3,798 3,798
-------- ------- --------
Total 273,055 (1,360) 271,695
-------- ------- --------
Expenses and Other Deductions:
Administrative and general expenses 70,730 70,730
Income taxes (credit) (1,192) (1,192)
Taxes other than income taxes 1,298 1,298
Interest 16,829 16,829
-------- ------- --------
87,665 - 87,665
-------- ------- --------
NET INCOME $185,390 ($1,360) $184,030
======== ======= ========
NOTE
(B) To record revenue and expense effects of sale by Entergy Power, Inc.
of an undivided 7.13% ownership interest in ISES 2, to East
Texas Electric Cooperative, as if the sale had occurred
on April 1, 1997.
</TABLE>
ENTERGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Adjustments to Reflect
Transactions Proposed
Before In Present After
ASSETS Transaction Filing Transaction
(In Thousands)
see NOTE A
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $66,288 $30,000 $96,288
Temporary cash investments - at cost,
which approximates market 716,413 716,413
Special deposits 206,335 206,335
----------- ------- -----------
Total cash and cash equivalents 989,036 30,000 1,019,036
Notes receivable 5,589 5,589
Accounts receivable:
Customer (less allowance for
doubtful accounts of $31.7 million) 419,424 419,424
Other 216,846 216,846
Accrued unbilled revenues 461,651 461,651
Deferred fuel 126,295 126,295
Fuel inventory 109,874 109,874
Materials and supplies - at average cost 388,249 388,249
Rate deferrals 165,615 165,615
Prepayments and other 180,871 180,871
----------- ------- -----------
Total 3,063,450 30,000 3,093,450
----------- ------- -----------
Other Property and Investments:
Decommissioning trust funds 626,356 626,356
Non-regulated investments 588,896 588,896
Other 222,988 222,988
----------- ------- -----------
Total 1,438,240 - 1,438,240
----------- ------- -----------
Utility Plant:
Electric 25,505,909 (40,163) 25,465,746
Plant acquisition adjustment -
Entergy Gulf States 435,094 435,094
Electric plant under leases 674,483 674,483
Property under capital leases-electric 131,197 131,197
Natural gas 176,173 176,173
Steam products 81,881 81,881
Construction work in progress 627,360 627,360
Nuclear fuel under capital leases 245,164 245,164
Nuclear fuel 70,961 70,961
----------- ------- -----------
Total 27,948,222 (40,163) 27,908,059
Less - accumulated depreciation and
amortization 9,798,817 (14,131) 9,784,686
----------- ------- -----------
Utility plant - net 18,149,405 (26,032) 18,123,373
----------- ------- -----------
Deferred Debits and Other Assets:
Regulatory Assets:
Rate deferrals 154,189 154,189
SFAS 109 regulatory asset - net 1,166,144 1,166,144
Unamortized loss on reacquired debt 191,981 191,981
Other regulatory assets 495,678 495,678
Long-term receivables 36,301 36,301
CitiPower license (net of $29.4
million of amortization) 493,991 493,991
London Electricity license (net
of $40.3 million of amortization) 1,342,226 1,342,226
Other 510,221 510,221
----------- ------- -----------
Total 4,390,731 - 4,390,731
----------- ------- -----------
TOTAL $27,041,826 $3,968 $27,045,794
=========== ======= ===========
</TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Adjustments to Reflect
Transactions Proposed
Before In Present After
LIABILITIES AND SHAREHOLDERS' EQUITY Transaction Filing Transaction
(In Thousands)
see NOTE A
<S> <C> <C> <C>
Current Liabilities:
Currently maturing long-term debt $504,687 $504,687
Notes payable 602,118 602,118
Accounts payable 714,245 714,245
Customer deposits 183,736 183,736
Taxes accrued 436,791 $10,839 447,630
Accumulated deferred income taxes 15,500 15,500
Interest accrued 205,739 205,739
Dividends declared 118,865 118,865
Obligations under capital leases 175,979 175,979
Other 61,817 61,817
----------- ------ -----------
Total 3,019,477 10,839 3,030,316
----------- ------ -----------
Deferred Credits and Other
Liabilities:
Accumulated deferred income taxes 4,578,364 (9,283) 4,569,081
Accumulated deferred investment tax credits 574,866 574,866
Obligations under capital leases 200,784 200,784
Other 1,904,456 1,904,456
----------- ------ -----------
Total 7,258,470 (9,283) 7,249,187
----------- ------ -----------
Long-term debt 9,025,711 9,025,711
Subsidiaries' preferred stock
with sinking fund 182,755 182,755
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 holding solely
junior subordinated deferrable debentures 300,000 300,000
Shareholders' Equity:
Subsidiaries' preferred stock
without sinking fund 338,455 338,455
Common stock, $.01par value, authorized
500,000,000 shares;issued 246,556,946 shrs 2,466 2,466
Additional paid-in capital 4,625,592 4,625,592
Retained earnings 1,984,903 2,412 1,987,315
Cumulative foreign currency
translation adjustment (53,124) (53,124)
Less - treasury stock (1,123,923 shares) 7,879 7,879
----------- ------ -----------
Total 6,890,413 2,412 6,892,825
----------- ------ -----------
TOTAL $27,041,826 $3,968 $27,045,794
=========== ====== ===========
NOTE
(A) To record sale by Entergy Power, Inc. of an undivided 7.13% ownership
interest in ISES 2, at a price of $30,000,000, to East Texas Electric
Cooperative, as if the sale had occurred on March 31, 1998.
</TABLE>
<PAGE>
ENTERGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Adjustments to Reflect
Transactions Proposed
Before In Present After
OPERATING REVENUES: Transaction Filing Transaction
(In Thousands)
see NOTE B
<S> <C> <C> <C>
Operating Revenues:
Domestic electric $6,406,958 ($12,027) $6,394,931
Natural gas 130,274 130,274
Steam products 40,975 40,975
Competitive growth businesses 3,250,853 3,250,853
---------- ------- ----------
Total 9,829,060 (12,027) 9,817,033
---------- ------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 1,627,262 (6,099) 1,621,163
Purchased power 2,676,523 2,676,523
Nuclear refueling outage expenses 79,295 79,295
Other operation and maintenance 1,943,750 (2,764) 1,940,986
Depreciation, amortization and
decommissioning 1,004,437 (928) 1,003,509
Taxes other than income taxes 368,242 (122) 368,120
Other regulatory credits (31,765) (31,765)
Amortization of rate deferrals 390,869 390,869
---------- ------- ----------
Total 8,058,613 (9,913) 8,048,700
---------- ------- ----------
Operating Income 1,770,447 (2,114) 1,768,333
---------- ------- ----------
Other Income:
Allowance for equity funds used
during construction 9,373 9,373
Miscellaneous - net (218,523) (218,523)
---------- ------- ----------
Total (209,150) - (209,150)
---------- ------- ----------
Interest Charges:
Interest on long-term debt 803,352 803,352
Other interest - net 49,821 49,821
Distributions on preferred securities
of subsidiaries 28,325 28,325
Allowance for borrowed funds used
during construction (7,380) (7,380)
---------- ------- ----------
Total 874,118 - 874,118
---------- ------- ----------
Income Before Income Taxes 687,179 (2,114) 685,065
Income Taxes 452,711 (673) 452,038
---------- ------- ----------
Net Income 234,468 (1,441) 233,027
Preferred and Preference Dividend
Requirements of Subsidiaries and Other 48,269 48,269
---------- ------- ----------
Earnings Applicable to Common Stock $186,199 ($1,441) $184,758
========== ======= ==========
NOTE
(B) To record revenue and expense effects of sale by Entergy Power, Inc.
of an undivided 7.13% ownership interest in ISES 2, to East
Texas Electric Cooperative, as if the sale had occurred on April 1, 1997.
</TABLE>
ENTERGY POWER, INC.
PRO FORMA BALANCE SHEET
MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Adjustments to
Reflect Transactions
Proposed
Before In Present After
ASSETS Transactions Filing Transaction
(In Thousands)
see NOTE A
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash $739 $30,000 $30,739
Temporary cash investments - at cost, which
approximates market 12,501 12,501
-------- ------- --------
Total cash and cash equivalents 13,240 30,000 43,240
Accounts receivable:
Associated companies 20,724 20,724
Other 11,908 11,908
Fuel inventory - at average cost 834 834
Materials and supplies - at avarage cost 1,956 1,956
-------- ------- --------
Total 48,662 30,000 78,662
-------- ------- --------
Utility Plant:
Electric 184,507 (40,163) 144,344
Electric plant acquisition adjustment 483 483
Construction work in progress 413 413
-------- ------- --------
Total 185,403 (40,163) 145,240
Less - Accumulated depreciation
and amortization 90,684 (14,131) 76,553
-------- ------- --------
Utility plant - net 94,719 (26,032) 68,687
-------- ------- --------
Other Assets:
Deferred losses on hedging 7,909 7,909
-------- ------- --------
Total 7,909 - 7,909
-------- ------- --------
TOTAL $151,290 $3,968 $155,258
======== ======= ========
</TABLE>
<PAGE>
ENTERGY POWER, INC.
PRO FORMA BALANCE SHEET
March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Adjustments to
Reflect Transactions
Proposed
Before In Present After
LIABILITIES AND SHAREHOLDER'S EQUITY Transactions Filing Transaction
(In Thousands)
see NOTE A
<S> <C> <C> <C>
Current Liabilities:
Accounts payable:
Associated Companies $1,635 $1,635
Taxes accrued 5,598 $10,839 16,437
-------- ------- --------
Total 7,233 10,839 18,072
-------- ------- --------
Deferred Credits:
Accumulated deferred income taxes 29,075 (9,283) 19,792
Other 1,792 1,792
-------- ------- --------
Total 30,867 (9,283) 21,584
-------- ------- --------
Shareholder's Equity:
Common stock, $5 par value, authorized
20,000 shares; issued 11,000 shares 55 55
Additional paid-in capital 174,950 174,950
Accumulated deficit (61,815) 2,412 (59,403)
-------- ------- --------
Total 113,190 2,412 115,602
-------- ------- --------
TOTAL $151,290 $3,968 $155,258
======== ======= ========
NOTE
(A) To record sale by Entergy Power, Inc. of an undivided 7.13% ownership interest in
ISES 2, at a price of $30,000,000, to East Texas Electric Cooperative, as if the
sale had occurred on March 31, 1998.
</TABLE>
<PAGE>
ENTERGY POWER, INC.
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Before In Present After
Transactions Filing Transaction
(In Thousands)
see NOTE B
<S> <C> <C> <C>
Revenues:
Associated companies $37,849 $37,849
Others 45,063 ($12,027) 33,036
Natural gas sales 12,672 12,672
------- -------- -------
Total 95,584 (12,027) 83,557
------- -------- -------
Operating expenses:
Fuel and fuel related expenses 55,617 (6,099) 49,518
Purchased power 6,753 6,753
Other operation and maintenance 15,626 (2,764) 12,862
Depreciation and amortization 4,520 (928) 3,592
Taxes other than income taxes 920 (122) 798
------- -------- -------
Total 83,436 (9,913) 73,523
------- -------- -------
Operating income 12,148 (2,114) 10,034
------- -------- -------
Other income (Deductions)
Interest income 1,838 1,838
Miscellaneous income and deductions-net (22) (22)
------- -------- -------
Total 1,816 - 1,816
------- -------- -------
Interest charges 4 - 4
------- -------- -------
Income before income taxes 13,960 (2,114) 11,846
Income Taxes:
Current 3,759 (569) 3,190
Deferred 1,219 (185) 1,034
------- -------- -------
Total 4,978 (754) 4,224
------- -------- -------
Net Income $8,982 ($1,360) $7,622
======= ======== =======
NOTE
(B) To record revenue and expense effects of sale by Entergy Power, Inc.
of an undivided 7.13% ownership interest in ISES 2, to East Texas
Electric Cooperative, as if the sale had occurred on April 1, 1997.
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000065984
<NAME> ENTERGY CORPORATION
<SUBSIDIARY>
<NUMBER> 022
<NAME> ENTERGY CORPORATION
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> MAR-31-1998 MAR-31-1998
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 6,827,785 6,830,197
<TOTAL-CURRENT-ASSETS> 100,723 100,723
<TOTAL-DEFERRED-CHARGES> 87,381 87,381
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 7,015,889 7,018,301
<COMMON> 2,466 2,466
<CAPITAL-SURPLUS-PAID-IN> 4,625,592 4,625,592
<RETAINED-EARNINGS> 1,984,903 1,987,315
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,612,961 6,615,373
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 267,500 267,500
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 135,428 135,428
<TOT-CAPITALIZATION-AND-LIAB> 7,015,889 7,018,301
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 0 0
<OTHER-OPERATING-EXPENSES> 0 0
<TOTAL-OPERATING-EXPENSES> 0 0
<OPERATING-INCOME-LOSS> 0 0
<OTHER-INCOME-NET> 273,055 271,695
<INCOME-BEFORE-INTEREST-EXPEN> 273,055 271,695
<TOTAL-INTEREST-EXPENSE> 87,665 87,665
<NET-INCOME> 185,390 184,030
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 185,390 184,030
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000065984
<NAME> ENTERGY CORPORATION AND SUBSIDIARIES
<SUBSIDIARY>
<NUMBER> 023
<NAME> ENTERGY CORPORATION AND SUBSIDIARIES
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> MAR-31-1998 MAR-31-1998
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 18,149,405 18,123,373
<OTHER-PROPERTY-AND-INVEST> 1,438,240 1,438,240
<TOTAL-CURRENT-ASSETS> 3,063,450 3,093,450
<TOTAL-DEFERRED-CHARGES> 4,390,731 4,390,731
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 27,041,826 27,045,794
<COMMON> 2,466 2,466
<CAPITAL-SURPLUS-PAID-IN> 4,625,592 4,625,592
<RETAINED-EARNINGS> 1,984,903 1,987,315
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,612,961 6,615,373
182,755 182,755
338,455 338,455
<LONG-TERM-DEBT-NET> 9,025,711 9,025,711
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 504,687 504,687
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 175,979 175,979
<LEASES-CURRENT> 200,784 200,784
<OTHER-ITEMS-CAPITAL-AND-LIAB> 10,000,494 10,002,050
<TOT-CAPITALIZATION-AND-LIAB> 27,041,826 27,045,794
<GROSS-OPERATING-REVENUE> 9,829,060 9,817,033
<INCOME-TAX-EXPENSE> 452,711 452,038
<OTHER-OPERATING-EXPENSES> 8,058,613 8,048,700
<TOTAL-OPERATING-EXPENSES> 8,058,613 8,048,700
<OPERATING-INCOME-LOSS> 1,770,447 1,768,333
<OTHER-INCOME-NET> (209,150) (209,150)
<INCOME-BEFORE-INTEREST-EXPEN> 1,561,297 1,559,183
<TOTAL-INTEREST-EXPENSE> 874,118 874,118
<NET-INCOME> 234,468 233,027
48,269 48,269
<EARNINGS-AVAILABLE-FOR-COMM> 186,199 184,758
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000869254
<NAME> ENTERGY POWER, INC.
<SUBSIDIARY>
<NUMBER> 030
<NAME> ENTERGY POWER, INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> MAR-31-1998 MAR-31-1998
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 94,719 68,687
<TOTAL-CURRENT-ASSETS> 48,662 78,662
<TOTAL-DEFERRED-CHARGES> 7,909 7,909
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 151,290 155,258
<COMMON> 55 55
<CAPITAL-SURPLUS-PAID-IN> 174,950 174,950
<RETAINED-EARNINGS> 0 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 113,190 115,602
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> (23,715) (19,747)
<TOT-CAPITALIZATION-AND-LIAB> 151,290 155,258
<GROSS-OPERATING-REVENUE> 95,584 83,557
<INCOME-TAX-EXPENSE> 4,978 4,224
<OTHER-OPERATING-EXPENSES> 83,436 73,523
<TOTAL-OPERATING-EXPENSES> 83,436 73,523
<OPERATING-INCOME-LOSS> 12,148 10,034
<OTHER-INCOME-NET> 1,816 1,816
<INCOME-BEFORE-INTEREST-EXPEN> 13,964 11,850
<TOTAL-INTEREST-EXPENSE> 87,665 87,665
<NET-INCOME> 8,982 7,622
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 8,982 7,622
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
