ML20024H180
| ML20024H180 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 12/31/1990 |
| From: | ENTERGY OPERATIONS, INC. |
| To: | |
| Shared Package | |
| ML20024H177 | List: |
| References | |
| NUDOCS 9105290229 | |
| Download: ML20024H180 (14) | |
Text
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Deloitte&
O Touche Sete 37DD kiephone tLOM LB1-2727 one Sheh Squre F ats m e (500 %17293 701 hn aras Street Nea oners. tou s ona 70139 3700 INDEPENDENT AUDITORS' REPORT To the Board of Directors of Entergy Operations Inc.:
We have audited the accompanying balance sheet of Entergy Operations, Inc. as of December 31,1990, and the related statements of income and cash flows for the period from June 6,1990 (date of inception) to December 31,1990. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable i.
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and x
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material resuts, the financial position of the Company as of December 31,1990, and the resu' ts cf its operations and its cash flows for the period then ended in conformity with generally accepted principles.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules - analysis of charges for service associate and nonassociate companies (page 11) and expense distribution by department or service function (pages L2 and 13) for the period from June 6,1990 to December 31,1990 are presented for the purpose of additional analysis and are not a required part of the basic financial statements. These schedules are the responsibility of the Company's management. Such schedules have been subjected to the auditing procedurgs applied in our audit of ihe basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements tsken as a whole.
Mf 04 O
rebre ry15.1991 m m e,1e m PDR ADOE 05000416 Wt -
1 FDR DRTintemational
ENTERGY ODERATIONS, INC.
BALANCE SHEET AT DECEMBEA 31, 1990 ASSETS rROPERTY AND FACILITIES - at cost Service company property (including leasehold improvements)....
$ 6.557,036 Con s t ruc t ion wo rk in p rog re s s..................................
455,179 Tota 1....................................
7,012.215 Less - accumulated depreciation and amortization (Note 1)......
453,715 Property and facilities - net.............................
6.55H,500 CURRENT ASSETS:
Cash...........................................................
33.685 Accounts receivable-associa+ed companies.......................
5.232,516 0ther..........................................................
2.403 Tota 1.....................................................
5.268.604 I
DEFERRED DEBITS:
Other (Note 1)...................................,.............
136,931 T0TAl......................................................
$ 11,964,035
}
See Notes to Financial Statements l
ENTERGY OPERATIONS, INC.
BALANCE SHEET AT DECEMBER 31, 1990 CAPITALIZATION AND LIABILITIES CAPITALIZATION:
Common stock, $$ par value, authorized 1,000 shares; issued and outstariding 1,000 shares (Note 3)...
5,000 Paid in capita 1................................................
995,000 Tota 1.....................................................
1,000,000 CURRENT LIABILITIES:
Notes payable to associated companies (Note 2).................
5,270.000 Accounts payable:
Associated companies.........................................
1,382,961 0thers.......................................................
4,216.098 0ther..........................................................
34,802 Total.....................................................
10,903,861 DEFERRED CREDITSt Accumulated deferred income taxes (Note 1).....................
60,174 T0TAL.....................................................
$ 11,964,035 l
l See Notes to Financial Statements _____________ -___ -_____ _ _
___.___..m._____
ENTERGY OPERATIONS, INC.
STATEMENT OF INCOME 1
"JR THE PERIOD FROM JUNE 6, 1990 TO DECEMBER 31, 1990 REVENUE:
Services rendered to associated companies......................
$414.167.018 Miscellaneous income...........................................
98,156 Total....................................................
414,265.174 EXPENSES:
Salaries and wages.............................................
105.202.775 Outside services employed......................................
190.771,421 Other general and administrative...............................
106.763.525 Rent expense...................................................
6.227.806 1
Depreciation and amortization..................................
453,715 j
Taxes other than income taxes..................................
4.596.620 Interest expense...............................................
249.312 Income tax expense.............................................
O Total...................................................
414,265.174 NET INC0ME.......................................................
NONE I
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l See Notes to Financial Statements I
t, _... _. _
ENTERGY OPERATIONS. INC.
()
STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JUNE 6, 1990 TO DECEMBER 31, 1990 OPERATING ACTIVITIES:
Net income.....................................................
NONE Non-cash items included in net income Depreciation and amortization................................
453,715 Changes in:
Accounts receivable..................................
(5,232,516)
Accounts payable.............................................
5,599,059 other current assets and 11 abilities.........................
32,399 0ther..........................................................
(76,757)
Net cash flow provided by operating activities.................
775,900 INVESTING ACTIVITIES:
Con s t ruc t ion and a c qui s i t ion o f pl an t..........................
(7,012,2,151 Net cash flow used by investing activities.....................
__L7,012,215)
FINANCING ACTIVITIES:
P roc eeds f rom i s suance o f common s tock.........................
1.000,000 Notes payable to associated companies..........................
5,270,000 Net cash flow provided by financing activities.................
6.270,000 Net change in cash.............................................
33,685 Cash at beginning of period....................................
Cash at end of period..........................................
33.685 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest.......................
215,453 I
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See Notes to Financial Statements
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t ENTERGY OPERATIONS, INC.
NOTES To FINANCIAL STATEMENTS FOR THE PERIOD FROM JUNF 6 TO DECEMBER 31, 1990 Note 1.
Summary of Significant Accounting Policies A.
Organization and System of Accounts Entergy Operations, Inc. (Entergy Operations), a nuclear management service company wholly-owned by Entergy Corporation, was formed on June 6, 1990 to assume operating responsibility for Arkansas Power & Light's (AP&L) Arkansas Nuclear one Generating Station Units 1 and 2 (ANO), Louisiana Power &
Light's (LP&L) Waterford Steam Electric Generating Station Unit No. 3 (Waterford 3) and System Energy Retources Inc.'s (System Energy) Grand Gulf Nuclear Station Unit 1 (Grand Gulf 1),
subject, respectively, to AP&L's, LP&L's and System Energy's oversight.
AP&L, LP&L, System Energy and the other Grand Gulf 1 and Waterford 3 co-owners retained their ownership interests in their respective nuclear generating units.
Further, AP&L, LP&L and System ' Energy retained their associated capacity and energy t,
entitlements and pay directly or reimburse Entergy operations at cost for service associated with the operation and maintenance of these units.
Entergy Corporation entered into separate guarantee agreements with AP&L LP&L and System Energy whereby O-Entergy Corporation guaranteed the financial ability of Entergy Operations to meet its various financial obligations to AP&L, LP&L and System Energy under the operating agreements, as long l
as AP&L LP&L and System Energy continue to meet their payment l
obligations-to Entergy Operations under the applicable operating l
agreements.
Applications for approval of or non-opposition to, as applicable, nuclear management consolidation were flied with the Nuclear Regulatory Commission (NRC), the Louisiana Public Service Commission (LPSC), the Arkansas Public Service Commission (APSC), the Council of the City of New Orleans, Louisiana and the Securities and Exchange Commission (SEC), and all such approvals were received by June 5, 1990.
However, the APSC's order is being appealed by the Arkansas Electric Energy Consumers an intervenor in the APSC proceeding.
The APSC Order l
approving the nuclear management consolidation included, among other things, a provision whereby the APSC Staff and AP&L would designate an independent consultant to audit Entergy Operations to determine the extent of savings achieved as a result of the consolidation, The Staff agreed to the consolidation on the basis that the independent evaluation would be performed and that the APSC could cause AP&L to terminate the operating agreement with Entergy Operations if the APSC determined that the agreement was not in the public interest (the LPSC also reserved this right).
The audit is scheduled to begin in the second quarter of 1991 and is estimated to extend over a nine-month period.
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i ENTERGY OPERATIONS, INC.
(f1 NOTES'TO FINANCIAL STATEMENTS (Continued)
The accounts of Entergy operations are maintained in accordance with the system of accounts prescribed by the SEC.
'B.
Depreciation and Amortization Depreciation is computed on.the straight-line b. sis at rates based on the estimated service lives of the various classes of property.
Amortizat ion of leasehold improvements is computed on the straight-line brtis over the-lease terms.
C.
Income Taxes Entergy Operati,ons joins its parent and affiliates (System Companies) in the filing of a consolidated Federal income tax retu rn.
Income taxes are allocate.1 to Entergy Operations in proportion to its contribution to consolidated taxable income.
In accordance with SEC regulations, no System company is reraired to pay more income taxes than would have been paid had a separate income tax return been filed.
In addition. Entergy Operations files a consolidated Mississir91 State income tax return with certain other Syster4 Cowrantes.
O Entergy Operatiorm had no net income tax erpense for.1990.
A deferred tax benefit of $60,1//. and a corresponding deferred tax liability of $60,174 were recorded by Entergy Operations.
These deferred items result from the utilization of a liberalized I
depreciation method for tax purposes in excess of book deprecietion.
The tax net operating loss carryforward at December 31.-1990 is
$154,000 and is available to offset federal taxable income in l
future-years.
If not utilized,_the carryforward will expire in the year 2u05.
In' December 1987, the Financial Accounting ftandards Board (FASB) issued SFAS No. 96 " Accounting for Income Taxes," whien was scheduled to be-effective for fiscal years beginning after December 15, 1988.
The FASB subsequently issued statement numbers 100 and 103, which delay the effective date of SFAS No.
96 ta fiscal years beginning after December 15, 1991.
The FASB is expected to issue a new exposure draft in the second quarter of 1991. This exposure' draf t may further delay the effective date and simplify the implementation of SFAS No. 96.
It is not expected that Entergy Operacions 'muld be impacted by the adoption of SFAS No. 96 in its present form.
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ENTERGY OPERATIONS, INC.
NOTES TO FINANCIAL-STATEMENTS (Continued)
Postretirement Benefits Entergy Ope ations' employees participate in the postretirement plans-of AP&L, LP&L and System Energy.
The System's policy is to fund pension costs in accordance with contribution guidelines established by ~ the Employee Retirament Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended, and to fund and record other postretirement plan costs on a cash basis.
See Note 5 "Postretirement Benefits."
Note 2.
Lines of Credit Entergy Operations has a line of credit (at an interest rate-of prime)-through June 30, 1992 with Entergy Corporation for $15 million, subject to increase to a maximum of $20 million with further SEP approval.
This line of credit was not used during 1990.
Entergy Operations participates with the other System companies in a System Money Pool (Money Pool) arrangement whereby those companies-with available funds may invest in the Money Pool while other System companies, except Entergy Corporation, having short-term needs may borrow from the Mcney Pool., thereby reducing the System's dependence on external short-term borrowings.
As authorized by the SEC, the borrowings by Entergy Operations from the Money Pool may not exceed the amount of the unused portion of the line of credit discussed above.
The borrowings and applicable interest rate under the Money Pool arrangement were aa follows:
1990 i=
L Average borrowing...................................
$5,367,000 l
Maximum borrowing at any month end..................
$5,740,000 Average interest rate:
During the year................................
8.0%
At.end of year...................................
8.1%
Note 3.
Common-Stock On June 6, 1990, Entergy Operations. issued 1000 shares of $5 par value commen stock to Entergy Corporation for an aggregate censideration of $1 million.
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ENTERGY OPERATIONS. INC.
g NOTES To FINANCIAL STATEMENTS (Continued)
Note 4.
Operating Leases Effective with the formation of Entergy Operations, certain operating leases were either assigned to Entergy Operations by System Energy or entered into directly by Entergy Operations.
Total rentals charged to expense for 1990 were approximately $6.2 million, of which approximately $5 million related to rent expense associated with AP&L, LP&L or System Energy leaves and approximately
$1.2 million related to rent expense ossociated with Entergy Operations leases discussed above.
At December 31, 1990 Entergy Operat.ons had noncancelable operating leases with future minimum rental commitments on building space, vehicles, computer,c.ipment and other office equipment as follows:
Minimum Lease Payments (In Thousands) 1991...................................................
$ 2,849 1992.....-..............................................
2,779 1993...................................................
2,740 1994..............................................
2,505
\\s 1995...................................................
2,505 For yea rs the rea f te r............
16.162 Total
$29,540 Note 5.
Postretirement Benefits Effective June 6, 1990, all of-System Energy's employees became employees of Entergy Operations. However, the employees still remain under System Energy's postre+1rement. benefit plea and no transfers of I
related pension liabilities and assets have been made.
In addition.
[
ANO and Vaterford 3 employees who transferred to Entergy Operations on June 6, 1990, remain under AP&L's and LP&L's plans, respectively, and no transfers of related pension liabilities and assets have been made.
Entergy Operations' employees, not formerly in the Entergy System, participate in the postratirement plans of either System Energy. AP&L or LP&L, depending upon their work location.
i
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ENTERGY OPERATIONS, INC.
lh NOTES TO FINANCIAL STATEMENTS (Continued)
Entergy Operations provides certain health care and life insurance benefits.
Substantially all employees may become eligible for these benefits if they reach retirement age while still working for the Entergy System.
These benefits and similar benefits for active employees are provided through payments of premiums to insurance companies, and Entergy Operations recognizes the cost of providing these benefits by expensing the amounts as incurred.
Entergy Operations is then reimbursed by AP&L LP&L, and System Energy for their share of these expenses. These reimbursements totaled approximately $1.6 million, $1.9 million and $1.9 million for AP&L, LP&L, and System Energy, respectively, in 1990.
In December 1990, the FASB issued SFAS No. 106, " Employers' Accounting for Postretire.aent Benefit s Other Than Pensions " which is generally effective for fiscal years beginning after December 15, 1992.
The new standard requires a change in sctounting requirements for postretirement benefits other than pensions ftom a cash method to an accrual method.
The impact of this new standard has not been fully determined, but the change likely will result in significantly greater expease being recognized for provision of these benefits.
Entergy npe~ations will be reimbursed by System Energy, AP&L and LP&L to the extent of such increased costs.
Entergy
(
)
Operations plans to adopt this statement in 1993.
\\_ /
Note 6.
Transactions with Affiliates Pursuant to operating agreements, Entergy Operations has been authorized to act as general agent for AP&L, LP&L and System Energy and has assumed operating responsibility for, but not ownership of, ANO, Waterf ord 3 and Grand Gulf 1.
In return, AP&L. LP&L and System Energy pay directly or reimburse Entergy Operations for the costs ascociated with operating those units.
System Energy sold approximately $5.9 million of corporate assets, at net book value, to Entergy operations upon its formation on June 6, 1990.
Pursuant to a service agreement, Entergy Operations receives te:hnical and advisory services from Entergy Services. Inc.
These charges amounted to approximately $11.6 million for 1990, with AP&L, i
LP&L and System Energy reimbursing Entergy Operations for their l
respective portions.
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Q ANNUAL REPORT OF ENTERGY OPERATIONO, INC, For the Year Ended Decernher 31,1990 Schedule XVI - Analysis of Charges for Service Associate and NOnassociate Companies Instrue: ion:
Total cost of service will equal for associale and nonassociate companies the total amount billed under their.cparate analysis of billing schedules.
Associate Company Charges Nonassociate Comr my Charges Tual Charges for Service Disect Indirect Direct Indirect Darcct Indirect Account Description of items Cost Cost Tual Cost Cost Total Cost Coat Total 920 Salaries and Weges 594,028,121 511,174,654 5105.202,775 594,028,121 511,174,654 5105.202,775 92i Office Supplies and Expenses 86.8I1.495 10,762,333 97,573,828 86.811,495 10,762,333 97,573,1t28 922 Adrainistrative Exxase Transferred - Crcat 0
0 0
0 0
0 923 Outside Services Linployed 179,775,862 10,995,559 190,771,421 179,775.362 10,995,559 190,771,421 924 Property insurance 382.858 211,869 594.727 382,858 211,869 594,727 925 Injuries mad Damagca 0
147,904 147,904 0
147,904 147,904 926 Ernployee Pensions and Benefirs 7,192,244 352,869 7,545,113 7.172,244 352,869 7,545,113 928 Regulatory Commission Expense 0
587,236 587,236 0
587,236 587.236 930.1 Generel Advertising Expenses O
C 0
0 0
0 8
930 2 Miscellaneous General Expenses 1,500 190,534 192,034 1,500 190,534 192.034 y
931 Rents 4,872,403 1,355,403 6,227,806 4.872,403 1,355,403 6.227,806 932 Maintenance of Structures and Equipment 0
0 0
0 0
0 403 Depreciation and Amortization Expense 0
453,715 453,715 0
453,715 453,715 408 Taxes Other Than Income Taxes 4,596,620 0
4,596,620 4,596,620 0
4.596,620 409 lacorne Taxes (60,174) 0 (60,174)
(60,174) 0 (60,174) 410 Provision for Deferred laceme Taxes 60,174 0
60,174 60,174 0
60,174 411 Provision for Def:rred Income Taxes - Credit 0
0 0
0 0
0 f
411.5 Investment Tax Credit 0
0 0
0 0
0 426.1 Donations 78.413 0
78,4!3 78,413 0
78,413 426.5 Other Dcductions 44,270 0
44,270 44,270 0
44,270 427 Interest on long-Term Debt 0
0 0
0 0
0 431 Other Interest Expense 268 249,684 249,312 268 249,044 249,312 TOTAL EXPENSES 377.784,054 36,481,120 414,265,174 377,784,054 36,481.120
, 414,265,174 Compensation for use of Equity Capital 430 Imerest on Debt to Associate Companies TOTAL COST OF SERVICE
$377,784,054 536,481,120
$414,265,174
{
$377,784,055 536.481.120
$414,265.174
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G ANNUAL REPORT OF ENTERGY OPERATIONS, INC.
For the Year Ended December 31,1990 Schedule XVII-Schedule of Expense Distribution by Department or Service Function Instruction:
Indicate each department or service function. (See Instruction 01-3 General Structure of Accountmg System: Uniform System of Accounts).
DEPARTMENT OR SERVICE FUNCTION Arkansas Grand Gulf Accounting President Legal and 2
Total Overhead Nuclear Nuclear Waterford 3 and and External Human Account Description s Number Amount One Statica Treasury CEO A#eirs Resources 920 Salaries and Weges 5105.202,775 0
539,561,782 530,203,875 524,262,464 51,546,258 5203,4M
$625,892 55,531,939 92i Office Supplies and Expenses 97.573,828 0
37,459,003 30,388,168 18,964,323 375 271 57,695 364,626 8,977.207 922 Administrative Expense Trsasferred - Credit 0
0 0
0 0
0 0
0 0
923 Outside Services Employed 190,771,421 0
102.069,361 53,566,432 24,140,068 4,027,299 (4,6%)
1,541.019 4,055,901 924 Property lasurance 594,727 0
0 382,858 0
211,869 0
0 0
925 Injuries and Da nsge's 147,904 0
0 0
0 3,000 0
15.380 129,524 g
926 Emplevec Pensions and Benefits 7,545,113 0
2,069,414 3,030,8!5 2,092,015 0
0 0
352,869 8
928 Regulatory Cocmission Expense 587,236 0
0 0
0 471,200 0
115,260 776 930.1 General Advertising Expense 0
0 0
0 0
0 0
0 0
930.2 Miscellaneous General Expense 192.034 0
0 1,500 0
189,038 1.4 %
0 0
931 Rents 6,227,806 0
3,083.613 1,457,405 331,386 304,932 2,952 13.463 95!,752 932 Mainterance of Structures and Equipment 0
0 0
0 0
0 0
0 0
403 Depreciation and Arnortization Expense 453,715 453,715 0
0 0
0 0
0 0
408 Taxes Other Than Income Tames 4.596,620 0
1,944,843 1,264,181 1,387,596 0
0 0
0 409 income Taxes (60,174)
(60,174) 0 0
0 0
0 0
0 410 Provision for Deferred locome Temes 60,174 60,174 0
0 0
0 0
0 4
411 Provision for Deferred income Taxes - Credd 0
0 0
0 0
0 c
0 0
411.5 Investment Tax Credd 0
0 0
0 0
0 0
0 0
426.1 Donations 78,413 0
1,352 76.547 514 0
0 0
0 426.5 Other Deductions 44,270 0
11.051
!s,; 3 14,646 0
0 0
0 427 Intered on Long-Term Debt 0
0 0
0 0
0 0
0 0
430 Interest on Debt to Anociate Companies 0
0 0
0 0
0 0
0 0
431 Other Interest Expense 2G,312 249,04; 9
13 246 0
0 0
0 i
l TOTAL EXPENSES 5414.265,174 5702,759 5186,200,428 5120,390.367 571,193,258 57,128,867 5260,907 52,675.620
$19,999,968 l
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ANNUAL REPORT OF ENTERGY OPERATIONS, INC.
l For the Year Ended December 31,1990 Schedule XVII - Schedule of Expense Distribution by Department or Service Function DEPARTMENT OR SERVICE FUNCTION l
1 Nuc1 car Acce.! --
Operstions &
Purchasing Number Engineering 920 52,102,305 5564,800 921 779 251 208,284 9n 0
0 923 1,250,244 125,793 924 O
i 925 o
O C
926 0
0 978 0
0 930.1 0
0 930.2 0
0 931 62,561 19,742 932 0
0 403 0
0 408 0
0 409 0
0 t
410 0
0 411 O
O 411.5 0
0 426.1 0
0 426.5 0
0 427 0
0 4M 0
0 431 0
0 54,794,361 5918,619
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