ML20073D161
| ML20073D161 | |
| Person / Time | |
|---|---|
| Site: | Waterford  |
| Issue date: | 12/31/1990 |
| From: | ENTERGY OPERATIONS, INC. |
| To: | |
| Shared Package | |
| ML20073D148 | List: |
| References | |
| NUDOCS 9104260194 | |
| Download: ML20073D161 (81) | |
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wa m..m OTutR PRINCIPAL SunsintARits ENTERGY OPERATIONS, INC.
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Formed in 1990 and headquartered in Jackson, y Wa ky[h[;gW~ h fh'A & Qcy k
g' yNg.y,fd.hg hiississippi, Entergy Operations has management and
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plants: Arkansas Nuclear One, Waterford 3, and gp Grand Gulf.
SYSTEM ENERGY RESOURCES, INC.
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g f.-,;4pn*,u%emdk Headquartered in Jackson, hiississippi. System Energy 7
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has a 90 percent interest in the Grand Gulf Nuclear w
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., jap + p-Station, k>cated near Port Gibson, hiississippi. System yn
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ENTERGY POWE R, INC.
,e*./ yf ut ig Formed in 1990. Entergy Power is an independent jg y;da d,,,g[
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power producer, selling its capacity and energy M'k!
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El EcTEC, INC.
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,o ya ch R[k, -,h A min 4egulated, n n. utility subsidiary, Electec markets J
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'"si"ahnology and openise wmldwide to mMa S
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INiltcf Cottot siink AND ll BilDl4 Rlli t LCENT DLVELOPMENTS i
o NOPSI PRULH NG (MM IOwML In the midst of pnxluaion of this Annual Repon, the Louisiana i aurth Circuit Coun of Appeal rendered a decision in connection with appeals from the February 4,1988 resolution of the New Orleans City Council regarding retail rates of New Orleans Public Service Inc. The February 4 Resolution required NOPSI to write ofTand not recover from its retail electric customen $135 million ofits previously deferred costs related to Grand Gulf 1. This write olTwas taken in 1987 in addition to $51 million originally not recovered by NOPSI. In late 1989, a state Civil Coun aHirmed the February 4 Resolution, denying petitions of NOPSI (which claimed the Februarv 4 Resolution should be ovenurned) and of the Alliance ihr AtTordable Energy,Inc. (whish assened that the February 4 Resolution should be amended to order a signincantly greater dis dlowance).
On appeal, the Fourth Circuit issued a decision on April 4.1991, that rejected NOPSl's federal preemption claims and affirmed the fmdings of the Council, emixxlied in the I ebruary 4 Resolution, that NOPSI had imprudently incurred approximately $477 million of Grand Gulf 1 related costs. Ilowever, the Fourth Circuit concluded that the Council acted contrary to law and public policy w hen, in weighing the cRect ofin ruling upon NOPSl's financial condson, it decided to disallow only a portion of the Grand Gulf 1.related costs found imprudent. The i ourth Circuit petx>rted to amend the February 4 Resolution to disallow the recovery by NOPSI fmm its retail electric customers of ara costs found to have been imprudently incurred, including an additional $290 million not previously disallowed.
NOPSI intends to vigorously contest the Fourth Circuit's decision.
In related proceedings before federal couns, NOPSI has petitioned the United States Supreme Loun ihr a writ of certiorari seeking a review oflower thieral coun mlings staying federal proceedings ihr resiew of the February 4 Resolution due in part to the pending proceedings in state court. A ruling from the United States Supreme Coun on this matter is expected as early as the middle of April 1991.
The ultimate outcome of these various federal and state coun proceedings cannot be predicted. Entergy Corporation and NOPSI are in the pnxess of assessing the potentialimpact of the Fourth Circuit decision. Ilowever,if the Fourth Circuit decision were uhimately sustained NOPSFs earnings, hquidity, and financial condition would be materially adversely atTected and NOPSI could be rendered insolvent.
Sem nu m anv imonMa tion The recent developments described abme and the information in the Annual Report si,uld be considered together with intbrmation included in repons filed by Entergy Corporation with the Securities and Exchange Commission, induding its Annual Report on Form 104 for the year ended December 31,1990. Fihngs updating infonnation herein for material developments may be made before the Annual Meeting of Sutkholden of Entergy Corporation to be held on May 17,1991. Copies of any such reports filed with the SEC may be obtained without charge by calling System Investor Relations at 1-800 292-9960.
April 5,1991
ENTERGY CORPORATION-Headauarteredin New Orleans, Entergy is one ofthe nations units utilizing coal, gas, nudear, oil, andsome hydroelectric
..largat investor-ownedpublic utility holding companies, serving pourr. Thispouer is antndly dispatched across more more than 1.7 million retailcustomers inportions ofArkansas, than 80,000 miln ofinterconnuted transmission and liuisiana, Mississippi, and Mizouri. Entergy also provida distnbution lines.
wholnale datricity ofSystem to neighlvring utilitin, and
& Entergy Syston inchula the rightprincipal markets its energy opertise uvildwide.
subsidiaries decribed bdous and Enterxy Services. Inc., which
& Entergy Sywn has a disvn:pedgenemting providn tuhnical, administrative, andwrporate servicn to all capaciry ofI5.2 thousand megauurts, induding 50 generating the wmpanies in the Ensergy Sywn.
RETAit SUBslDIARIES ARKANSAS POWER & LIGilT COMPANY (AP&L) f Headquartered in Litde Rock, AP&L provides dfN h^ 5ENQ electric service to 600,000 customers in 63 of Arkansas'
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a 75 c unties and in 10 counties in Missouri.
% gf Louis!ANA POWER & LIGHT COMPANY (LP&L) gd(Oh.$ gg.pph Headquartered in New Orleans, LP&L provides electric
[If(h service to 582,000 customers in 46 of Louisianis 4
Ma$hglfiY;,;jX) gry ' d 64 parishes.
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MississlPPl POWER & LIGitT COMPANY (MP&L) n[m%n
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service to 350,000 customers in 45 counties of g"5 $ $h3
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&pdi$th cF' NOPSI provides electric service to 191,000 customers
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i E RI'O Rhl ANC E HIG H LIGilTS t.
I990 1989 I988 (Dollan in mi!! ions. exapt per share amauntJ I:lNANCIAu Tota! operating revenues 5 3,982
$ 3,724
$ 3,565 Operating income 5 1,047
$ 1,000
$ 1,070 Net income (low) 5 478 5 (473) 5 411 Earnings (loss) per common share 5 2.44
$ (2.31)
$ 2.01 Rate of return on average common equity 11.47 %
8.72 %
Common equity ratio at year end 39.1%
38.7 %
41.2 %
1.ong-term debt ratio at year end 54.8 %
55.0 %
52.1 %
Net utility plant at year-end
$ 10,928 510,998 511,111 Construction expenditures 5 400 5 371 5 350 (Atyar-end. acept dividemb rard)
Coststos Stock DATA:
Suwk price 5 22 %
$ 23 %
16 Ilook value 5 22.25
$ 20.68 5 23.96 Market price to book value ratio 10l%
112 %
67 %
Dividends paid per share 5 1.05
$ 0.90
$ 0.20 Shaies outstanding 185.257,192 203,991,592 204,581,092 GENE.RAu Retail elecu;e customers at year end 1,722,022 1,706,579 1,693,592 Retail electric energy saics (millions of kwh) 55,777 54,007 52,575 System peak demand (megawatts) 12,189 11,485 11,442 Employees at year-end 13,373 13,190 13,145 Chairmani f.et er 2
Retail Operating Comyanics 4
Creation: Bnnging ideas To Reality How Does Man Create!
6 Baoming A Mre Fifative Competuor 8
Creating FinancialStrength 12 Buoming Sre Customer-Oriented I6 Maing Drtanu Come True For Others 20 Frequenti:s Uwd lernn 24 FinancialReview 25 Boards OfDiruton
.o investor Information
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q Q n ~always a pleasure to report good news,
( Earnings this year rose significantly.:Thh u
_w quarterly dividend grew by 20 percent; Return i
. on equity is also up significantly-to nearly -
LThis double-pronged campaign - to control.
11,5 percent, We are achieving a financial costs and increase revenues - is the essence of our drive.
. turaaround and are working now on consistent lto financial strength. In 1990 we made progress on both :
L linancial strength.
fronts Interest expense and preferred dividend s
We count all bf these as milestonesi requirements fell by 538 million, a result of the System's toward fulfillment of the company. vision:
aggressive program to reduce capital costs. Employee
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' *to become, and be reedgnized as, a customer-efforts to control O&M costs unleashed a flood of.
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onented, socially responsible, financially; creative measures, ranging from improving the fuel i strong; successful competitor in'the evolving electric -
economy of company trucks to restructuring our contracts ~
energy business." In the three years since that vision was -
with surpliers and vendors. In all, employee-sponsored introduced, we have come a long, long way toward
-initiatives saved more than $17 million in 1990.
making it a reality.
The company's most significant cost control Two new subsidiaries were bom this year.
initiatives, however, are the several functional Entergy Operations, Inc., our sueamlined nuclear realignments now under way. Following the lead of our nunagement company, was created to imnrove the successful nuclear consolidation, we have begun to performance of our nuclear power plants and hold the structure other areas along functional lines. Thusithe
' line on nuclear costs. Entergy Power, Inc., our wholesale generation and transmission functions of the four g
electricity generator, was created to tap a growing and operating companies are being merged into a single potentially lucrative new market, organization. A similar restructuring of the Systens Already, our attention to these areas is having distribution and customer service functions is also under
- an impact. In 1990 we kept operations and maintenance way. Both will be operationalin 1991.
1(0&M) costs under budget, despite unanticipated Our studies show th' t these ftmctional a
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expenses at' Arkansas Nuclear One. Our sharper focus consolidations will enable us to collapse several layers of
- on wholesale power transactions also paid off.
management, spread functional responsibilities over a Wholesale electricity revenues rose to nearly $213 million larger geographic area, eliminate duplicate efforts, and '
. lait year-up 20 percent.. We expect additional growth substantially reduce cost 3 - without reducing service.
B
.in this area as Entergy Power enters the marketplace.
These will be increasingly important results in the more h'
competitive days ahead.
The other, equally rewarding part of our drive to financial strength is increasing revenues - and with revenues, profits. Sales were up this year - partially due to a long, hot summer - but more significandy, due to the entrepreneurial spirit of the System's marketing personnel.
.b 0 Oun STOCKilOLDERS =
-. Our region lias not' had the vigorous growth we all would like, but'that has not dampened sales or.
spirits. In 1990 we unveiled new programs to increase
- sales to existing markets, positioned ourselves for future related businesses we might acquire or regions we increases in off-System wholesale transactions, worked might profitably serve, in the next few years we intend
' with our industrial customers to keep them pmfitably to invest our substantial industry expertise and cash on-line, and continued to support our region's economic resems in supplying electricity to a growing number
' development elforts, ofcustomers.
In fact, in 1990 our Arkansas Ibwer & Light We are pursuing other underdeveloped markets subsidiary won the prestigious J. William Fulbright as well. One of 1990's most exciting accomplishments was our regionalIrast Cost Planning
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a Conference, held in October, with J,p participation from all four of our state and 4
local regulatory bodies. Least cost planning ofTers an opportunity for us to 1
work cooperatively with customers and
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- regulators in preparing for future energy needs. It holds out the prospect of
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economically and socially sound I
investments in conservation and other f
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- demand-side management" strategies.
Just as important, it foreshadows a more s
- cooperative, productive era in our
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progress toward bringing our ideas to
.I reality. While we are not yet the company Award for International Trade Development. AP&L we envision, we know that lasting progress is not along with our other subsidiaries, has, in se last few achieved in a day. We will continue our etTorts to create years, dramatically boosted its economic development ourselves in the image of a successful competitor.
. programs - with promising resuhs.
In addition to supporting the growth of our Sincerely, service area, in 1990 Entergy created a Planning and Development department for the purpose ofidentifying s
Edwin i upberger Chamun and CEO Afanh I5,1991 two I threr
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>m %.w, O; Arkansas' hirgest c%tricity supplieri Arkansas" ILOU151 AN AL POWER & 13GHT COMPANY.
ey a L6uisiana Pder & Lhht has brought-l, ' ecsnoniy is Imlanced betw:een ind$try and agricidturep w.
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' while lakes, rivers, and forests make *The Natural state" =
- electricity to Louisians since 1927 and now serves 46 of 4
a major tourist attraction;
[the state's 64 parishedcounties), including most of-
' ltkansas egerienced dramatic manufacturing.
r nonhern and southeastern louisiana and parts of cast
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F l growth in the 1980s and is becoming a major retail cer. tral louisiana.-
distrib'ution centeri Two of the country's retailing giants, t Th'e stre is a major pstiochimical producer, 4
o Wal-Mart and Dillard's, are headquartered in Arkansas.
supplying approximately 25 percent of the nation's The McClellan4 err Arkansas RNet Navigation Project,-
chemicals and 16 percent of total U.S, oil production.
completed in 1972, opened the state to the markets of '
~ The state is also the U.S.'second-largest producer of -
the world.
. natural gas Chemical and petroleum refming plants Arkansas leads the country in production and scanered along the Mississippi River account for more pmcessing of pouhry and rice and is a major pmducer of.
than 75 percent of LP&L industrial sales.
cotton and soybeans. Timber, paper, and wood pmducts louisiana aho lives up to its nickname, a are aho major industriesc
" sportsman's paradise " louisiana waters supply the 1
To encourage industrial growth, AP&L ofTers U.S. with more fuh and shellfish than any other state.
mcennve rates for new or expanding businesses and a And, covered by 14 million acres of forest, the state
- Precision Pricing" program that enables the company to attracts recreationists and hunters and has a strong compete for new plants.
timber industry.
AP&l's " Teamwork Arkansas" economic LP&L st.pports Louisiana's growth ar.d development program received the 1990 J. Widliam development through a variety of programs. These fulbright Award for its leadership in identifying new include incentive rates for new or expanding businesses markets ' abroad and in encouraging foreign investments and " SHOWCASE." a marketing program that in the region.
highlights the state's positive anributes.
1 n gif 3 -
' AP&L also participates in pmgrams to assist improsing public education is also an.
n public education and to preserve the state's natural important part of LPNI\\ economic development -
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- resources. 'One program," Rights-of-Way for Wildlife,"
efforts. The company's award. winning" Dial-A Teacher" g
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prenrves 4,900 miles of transmission line access for program, for example, provides a toll-free number wildlife habitat.
through which children or parents can get certified teacher assistance with homework assignments. The W
program has been so successful it is being duplicated elsewhere in the Entergy service area.
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- Mississippi Power & Light provides electricity; I o thiwedettihalf of Mississippi, including thb fenile -
NEw 0RLEANS[ PUB 1[1c SERV 1CE INC.-
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- Delta and cities such as Jackson, Vicksburg, and Natchet J For a ceniury, electricity has fueled New Orleans' One of the richest agricuhural states,'
_ gmwth and, since the early 1920s, New Orleans Public Missinippi is the nation's leading pmducer of catfish :
Service Inc. has delivered it. Today, NOPSI provides.
- and among the top 10 producers of cotton, rice, sweet electric and gas service to approximately 191,000 New potatoes, pecans, soybearts, and broiler chickens.
- Odcans residences and businesses.
Catde production accounts for over $1 billion ini The city's busy commercial sector accounts for yarly revenues.
39 percent of electricity sales, and public authorities Indmtrially, Missinippi is the nation's leading.
another 15 percent. The remainder comes fmm producer of CO, and ranks 11th and 12th in natural residential and industrial customers.
2 gas and oil production, respectively. Apparel and food The Ibrt of New Orleans is one of the country's products, lumb' r and wood pmducts, electrical largest, handling more tonnage per year than Houston, e
machinery, transportation equipment, and furniture New York, or Los Angeles. Along with this world of and ficules are other leading industries.
goods, New Orleans embraces a rich heritage of scenic, -
MP&L has built its business on a commitment historic,ctdinary, cuhural, and ethnic divenity. In fact, to " Helping Build Mississippi." The company's the city is often called " America's international City."
econmaic development chrts created 2.523 new jobs in This diversity and historic charm are part of 1990, through a wide range ofservices, induding the city's appeal as a meeting site - for con entions, incentive rates to new or expanding industries.
trade shows,'and events as large as the Super Bowl, MP&Lalso supports the state's education the Republican National Convention, and the visit of improvement e%rts by sponsoring an array of programs Pope John Paul!!i aimed at reducing dropout and illiteracy rates and
.NOPSI supports New Orleans through
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strengthening science and math education. included are economic and cuhural development programs such as o
'" Choices? an innovative program that sends 100
? Operation Mainstream 7 an adult literacy program, and '
q company volunteers into classrooms to urge ninth the sponsonhip of" Christmas in the Oaks," an annual' s
graders to conttnue their education, and " Stay-in-School festivaloflights in City Park.
. Challenge Grants," a joint ehrt with Entergy Corporation t
.i to assist public schools and nonprofit agencies.
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j here is nothing more powerful than an idea. Yet, not allideas live up to their potential. Manv are forgotten, lost, discarded, or abandoned. Others For those whc are up to the challenge of their die, then are resurrected.
ideas, everything that follows becoma an expression of How is an idea brought to _
tha: fiith. The idea flows out of their actions, as the pot
. reality? How does a dream take shape fk.ws fmm the hands of thc patter.
and dwell arnong us?
At Entergy Corporation, our vision is to The powerful ideas are those that live in the become, and be recognized as, a cmromer oriented, hearts of men and women. As long as an idea stays socially responsible, financially strong, suecasful ofTin the distance - an elusive mirage on the horizon competitor in the evohing electric energy business."
of the imponible -it cannot be brought to prescu-Three years ago,it was only a dream - a dream day reality, that reality denied. But we knew that the dream expressed To become real, an idea mmt be ingested it who we are, as a people and as a company. We h.we been must be chewed on, slept over, and lived in. It must hard at work on achieving that vision ever since, make the journey from "how things could be," inward, to "how things are." It inust be believed in as fact, and
' then it becomes fact.
Then, too, we ourselves must be ready for the L-idea. We must possess the knowledge and skilk to give birth to it, and to shape it once it is born.
- Yet in the long run, knowledge and ability are not enough. Ifwe haven't sufficient stainina or courage, the dream may die before it has a chance to bear fruit.
- Giving life to ideas takes sweat and staying power.
It takes willingness to risk failure. To make mistak A then try again.
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ICOMING A MORI.
EliiLTivt CoMPITilon he goal of the wmpany's vision is to become a successful wn pentor. Since 1988, when the vision was adopted, we have come a long way toward making stockholders and customers. We base identified what that vision a reality, in fact, we have we mmt do to be<ome a top-perh>rming utihty, and executed a turnaround in our financial base begun the creative work of getting there.
wndition, customer satisfactia in 1990 we introduced two new subsidiatics:
ratinp. and other succeu indicators.
Entergy Operations,Inc. and Entergy Power,Inc. The The pmgren of the last few yeaa has resuhed former was created to better nunage the costs and in an alute average live year return to stottholders -
perfornunce of our nuclear generating plants. The due primarily to stock price appreciation. Our goal now latter, to impmvc revenues by selling power on the is to tramlate the finJncial stability We bJve achieved wholVsale mdtket. Ibese twin motivatiom -
into consistently strong financial performance. Ily 1995 controlling wsts and increasing revenun - fuel our we want to rank acnong the natioi6 top performing drive to top-quartile competitivenen, uti'ities -in measurements meaningful to both in 1990 we aho undenool consolidation of our fossil generation and transminion capabilitiet This restructuring mergn management of *G AT" activities, formeriv spread throughout four separate subsidiaries, it's The little Thing That Add Up
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into a single functional unit. The results will reduce costs, ll'c'thJimmie liirdon. Left, and Wilham speed decision-making, and increase economies of scale.
Smith imprmd the way blankingpLttes Larlv in 1991 we announced a similar are irutalled on i>cilers at the Sterlington restructuring of our distribution and cmtomer service Mn Plant. wing time and money.
activities. When this third realignment is fully implemented. management of the Entergy System will be refocused along functional lines.
Our employees have joined the drive to competitivenen, identifying areas where we can eut costs, impnwe elliciencies, or streamline procedures. Some of
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their accomplishments are profiled in these pages.
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l l i ICOMING A MOlti i El I i C11VI: C O M P l.1110 ft l ( A changed attitiale is an ewential element of becoming a succcuful wmpetitor. Realizing that [
- nothing is comtant euert change " we are dneloping a l
culture bami on continual improvement. We are aho preparing oursches to compete l This means casting a new light on our succcufu4y in the electric utihty indutry of the future. I j challenges, identifying new solutiom, and bending our Our Proiett 2000 Task I:orce k cumining the t j rnental and physical powers to the task of brihping those tornpetitive and technological trends that will shape the i solutions to reality. eintrit utility industry by the year 2000, and is i l 'lo the challenge ofincreasing sales in a identifying the actium we need to take to ensure our sluggish service area twnomy, we hne re ynded by future competitivenen. I l in(feasing off* System wholetale transactiom. We have beeing into the future - and seeing whJt We worked with our indmtrial emtomers to knp them mmt bewme to be suuenful in that future - is a profitab!c - and keep them profnably "on the prid.' relatively painins process. Itringing that vkion to reality. And, we are identifying new nurkns and new ways m howner, takn smtained cfTort. We at Entergy are package our product to increa.e toenun, harneuing our creathe talents to the star of competitive cuellence - and are steadily giving form to that vision. l l l Bright idea 11'c'Li litde Grpy l' Lint u illwve alwwands ofdalbmfrorn Glen Bennett's sugation to rept.we shorter hfe light bulbs u.ith rno,* expensive, hmger-lili bulbs. e B 4 9 a tru i ein en _,,,%e,
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_ _. _. ~. _. _. _. _ _ - _ _ _. - _. _ - _ l l I (y R i ff l N G ~ FIN ANCI At S'I RI NGT}l two-pronged (an1pJigf1 is bringirig to life ollr vision o becofiling a finarKl. Illy sitofiglon1petitor.' Tliis double-prongcJ l j initiatisc Comists ofloritit Ihng costs the restill of die phase in of Grand Gtilf rates and ri<,ing Erld rJisirig reveilliet in 1990 we ellergy salet l$ctail rescriues were up b.2 pertent over nmic progress on both fronts. last year - to 53.6 billion, and wholesale electricity Team 5 haring, our Systemwide resenues were up 20 percent - to 5212.5 million. "p.ly for perIormance* cinployee Arlotlier effort diat in1 pros ed earnings per incentive progrant, wat l,uinched in 1990 with ambitious share was the (ompanyi stock repurchase program. (ost-Control goa}L Oespite utlanticipJted j!1testnletits in Sirhe Novernber 1989 we have invested 5400 riullion in Arkansas Nuclear One, APNii nuclear station,1.ntergy 1:ntergy tommon stock, reducing by 10 percent the employees pulled (opedier to niect our hysternwide goalk riurliber of dlares outstanding. holding the line on O&M and comtruction costt All of these efforts improved earnings, to 52.44 in 1990 revenues increased - up to nearly per share, up from $1.91 per share in 1989 (adjusted for 54 billion, from approximately 53.7 billion in 1980, as the effects of Project O!! e liranch). Tbc yeari progren enabled IShterg[s board of directort last OClober, to raise d1e quarterly sloskholder A ; ' nd by 20 perant, to 30 cents per share. While we $. hdlNla Clb* i l ~? MPc'll Garmen Davis. Gwp Furr, and we were pleased to take that step toward our uhimate John }ohwon grouped their ordmfbr objectivc a dividend pay-out ratio typical of the electric billing documenn with AP&L and I.P&l)NOPS!, saving D50,000 in I990. l utility industry, I The year's progress also produced substantial j growth in the company's average return on common equity, w hich rose to 11,47 percent. This is df amatic improvement aver last yeari performance (7.8 percent, exduJing the etTects of Project Olive tiranch)- and indeed, a dramatic improvement over our performance of the last seseral years. Although our financial 1 Ice rlIl i 10 'lff ri H
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l '[j k t AT I N G flN ANCI AL ST RI NG'lli turnatounJ is not complete, we are worLing to adiieve returns comparable to those carned by the nation's top-performing electric utilities, 1990's resula will be a tough act to follow, but important contributor to resenue growth in the ytan we are poiwd fkir the cballenge. Te ate undertaking long-aheJd. It wkil focus its reWurtes on Sales to the growing range pmgrams to increase our potential for growth. wholesale electric market. These indude economic development pmgrann to expand i:lectec, oui technology-and expertise. the economic capacity of our senite region and effi>rn to marketing subddiary, is another potential contributor. cap new markets within and beyond our scrvice area.
- l. Inia signed several promising agreemenn in 1990.
In 1990 the company formed a Planning and One, with Pl N, the national clninc utility of Development depanment to identify relc ed bminesses Indonesia, is to nuxlernite Java's distribution system. in which we might invest, or other regions we might Another, a strategic alliance with Coopen and lybrand, profitably serve, will market an advanced Customer infiirmation $ystem Meanwhile, we expect our new wholes.de software application (developed by System ernphiyces). electric wmpany, Entergy Power, Inc., to be an And with I' int Pacific Networks, a Cahfornia bawd high tech company, lilatec is working to dnelop a national telecommunicationoystem for Costa Rica. The steps we have taken toward financial Ikurrung $30,000 A D,sy strength are evident in this year's bottom line resula. Intergy Services' Mark Margario and Understanding how tramitory succcu can be, we are Swan Engleput elvirSnanci.dsany expanding our optiom for the years ahead. lly to U'ork during tlWfnancirag ofbu,~y smtairiing the progreu made in 1990, our vision of nmer, earning the wnpany $10.000 financial strength will add musde every year. a day in inmtment inwne. / l I l 1 in tun !JUran /g~ \\
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iCOMING MORI Cus lOM t R ORil.NTI D reating (ustomer satisfastion is a bit hLe patkaging pKK!will or phnperity. Ahhough it's our most impttant cre,ltion, it & a!f.o our ruost tMeriurkal. afKl [Inancing o[elet!!otedlnolo{its (klat Lart i!11 prove belatne different L thtornen indthirtal plosc%es or pnRlu(tt bome - bke dectri( define satisfaction difftrently, in 1989 drying Lilm and microwave induct:an heaten - are we began to systematitally ask our aheady changing the way Mnsiaippilumber, plastie, cuuomen' advice on m w pmgrams and ford and intile indmtries do hminest senices.14nt year, we devdoped sev(ral test pmgrams to Onte we've identified a technologv, we're fulfill their *wann and needt' bdping out t miomen anluire it, as well, through low-Our indmirial couomen an always hioling for cou leasing and finanting progrann deuloped by our a competitive edge. $o,in 1900 our Mioiuippi Power i ouisiana Ibwer & l.ight subsidiary. Our commerdal & l.ight sulnidiary created an 'cic(tmtechnologies" and induurial(uuomm tomi&r this propam pmgram to hdp ;ive them one. Working with in 'nidence of a new partnenhip"- a parinenhip we are cuunmen, MPNI. has begun to assiu in the marketing detern ned to make profitable for all concerned. e Company ananged finandng has aho overcome a maior hurdle to air (onditioning the region's sshoolt Our APNI subsidiary pioneered the ' Cool Sshooh" Collaborating For The Futun program in 1990,imtalling wall mounted heat pumps G,ulsering ngulnors and etiner corunruenn in Arkansas dassnnimt APNI arranges the financing, from)ourjurhdinioru, l'aulIsmi leg, and which coven 100 pcrtent of the cost, including imtallation IEol tert Swaim Organitrdn Itaal Con ark! any coln!ruilion coot Tlie loan is repaid ditough I'lanning Confennce to preparr to mur flexible, low-interest paymenn on the schools dectric bilk. [*#"" '*"U ""' All ofihne pmgrann. onte pan en in the '5 marketplace, will be shared with cunomen ihmughout the i niergy System. N In 1990 we aho began an istitiative th.it, g I kh a m eem tau o he,hm<.,,hemad # n, i l $h N f(N .f $ ( hff0
i--=.-------,.,,__,,,__,.,.___,_ _ __
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's'J 4 s 2 i i t 1 5 f(O t .h ' j' lCOMING Mont i CusloMt n Onit Nnt> first 1. cast Cost Planning Conference. "least cosi planning
- is a wilaturative prwco tiir idennfying and developing future energy rnourcn. It brinp regulamr>
and mstomen into the process at the outso - linally, in 1990 we began a praess that will improving the likelihooJ that programs dnti.n. wntinue to renew and revitalize our etTorn to oeate meet cmtomer needs and regulatory requiremenn. wstomer satisfaction. That process is ' local Quality An important wmponent ofleau cost improvement. TQI fiicusn all wmpany pawnses and planning is the wnsideration of wmervation and every System employee on satisfying customer needs. " demand side management" strategin hah as load live hundnd of Entergs senior nautives and cycling and time of.use rain),a rnourcn as valuable as managen went through TQI training in 1990. In 1991 nns generating plants. Investments in mmervation and a third of our work force will be nposed to this training. demand 4ide management strategies approved by our Our eflinn to imprme customer satisfaction l regulators represent " win. win" rnouren: customen are already producing enwuraging roula. Our 1990 i reduce their encipy bills, while we wntinue to earn a customer survey showed that approval of Entergy and its return for our stoskholden. subdJiaries has improved signifnamly in a surpridngly short period of time. The resuhs provide enmuraging nidente that our efforts are paying off where they count most - in the eyes of the people we sene. Gunning for Top-Quartile Competitiveneu Al'&lh larry find.r nwrivares emplonus wid, a rurwperfornuna marupmentp,vpam cal;<d 'Th Gun.
- Qualirr, sakts. andproductirin t
lung insprowd i l tophsren I runettres l N_ m% Nx s h hncy n
- l' Knumno, a h~ &. il! 4 yif p qd m' k
}, p '@ " > 4.l q f ~ j Yi j iy lLi? j,[v 3 &, 'i +y w ~;4 ~ q9, Q,w, .5 l V g-h j jf q' y a gwp, $o!, q':);<y - i ' m. c - ! i: g y'a ]'lf ..Iy d n y: -y hU i? ge (/4.g]Yr apit: i t3
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+ e-. ' Y .g a T ~ 4 - -4 8 ~ %] m{ ' 8 ,m &~~n m, ~ s..... ,_ f,' ; i / w. 'bih-g y jr y, @a%m ; 1 g'l /Af q ! g e p 'I [c vi d{Qg 1 3 i )/ zu Q.y hty, ,,.i p / jk:0 & &. 7 =f f.ip, m,w. (;ll .x O; ^ 3. o +g 7 Q ;thi r . d. - pfp, h _m >u e?!f'" %j;n!l :Miyjyd' - Q ls qm,pf;i W}?Yli Y tuNQy'. 9: g .n m & )btg N - d nlh;' l y b_ ? ' W lG g*:;qh QM,, m %c G+N: y S M bk q%Q.. + YffiW((i ',UQSqlq jJ)(llyt Wmp!. f,, x 1:Mg mu
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/ 3,,p wymf e t i ') ~MW7 4: h"- up p; 5 , 9, ',, t ,Ns5 (,;-Q A$te - y ;! 3 .,M ' by % w Q y '. *' n,y, g,,,..%lo., gl $g;, w,.nM A I' }l Q,k. If 4 y, l v %yJ'y~ m;. O T 8 / / ---. ~ ~ Ns i AKING Dal Ahth COht! Tnvi Fon 0lut.as usincues - like civilizatiorn - are buik on shared dreann. Indudmg g, others in our vision has been part of the way we do budnesoince 191.5, when neighborhoods, out region, and our world - is a "' \\ liarvey Couch formed the Arkansas acathe act in which we must all participate. We all Power Company - the fornunner benefit fiom a world of heakh, beauty, and opportunity. 1 )f of todayii;ntergy Corporation. We are all diminished by a world of pmerty, ignorance. i E Couch's dream w as to electrify and hopelcunew. the Middle South so tliat *coriomic dmelopment At Entergy, we aho understarid that we nunt wouldni pass the region by. Our vision is to support invnt in our wmmunitin if we are to tontinue to have the regiors dntlopment so that each inhabitant has a communities to wrve. chance to fulfill his or her own dreann. Many people think of emnomic development Thati not just an akruistic notion. It's pan as industrial recruitment. Ahhough Entergy tields an of our corporate respondbility - auitiiens and as aggresdve industrial recruhment efTort, we have aho creators. We beline that " quality oflife"- in our shouldered injundbility for dneloping the regioin long term capacity to generate its own self-smtaining economic growth. In 1990 we pledged a $1 million matching Learnding The Reach OfOpportunig start up grant for the ioundation for the Mid South, a Al'&ll Kathleen Reynokh unu cited by a gourrnor' wnnuinionfbr hiring disabled s coordinacion and continuity for initiati es in three uvrkm, u bile %yne bw Jnigns trhydn specific arcat economic dnelopment, education, and for handicapped <bildren at Chrimw. families and children. llecause educational strength is tey to our q suaiion erograms ihai m as suansfai as ihey are innovative. They indude computerized literacy labs. d located where the need is greatesc mobile learning labs
- /
~ j _ tatingiob stiii.iiteracy.ana othe,t,aining enthe I l I Ili (*ll,k ! lit THl} U *t t ? lh1180T (ORPDB All0h AhD $0t$1DI Alll$ i 3 d4 g i * ' .y ,.3 - ' 3 e5 - e
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e A K I N C, D R I. A M S C O M t.
Taut Fon 0111t us l
n,ad" to rural areau our *chauenge Grams? supponing efforts to keep Lids in sshmh whool partnenhips, supplernenting Lical school remurses and a " Dial-A-er" fIo{IdIn, frovhdin{ cerikf ed teacbcI aM stanic enIIefreneur al and nl rlorlr[ hus IleM WorksbofM ca for whookhikiren strugghng with homework.
" Operation lloontrap - an award winning program l'resiJent liush acknowledged our longstanding that hdps hical entrepreneurs bring their produen to suppon of education by n.uning us his 51st " Point of market; wmmunity development institutes: and l
1.ight," in 1990 our educational development efli>rts
" Operation hlainstreet" - a program to help local also earned an 1 diwn IJectric imtitute Cornmon Goals plannen rejuvenate downtow n areas.
Award and selection by the U.S. Depanment of We have conduted programs to help local Education as a prototype wmmitment to literacy and wmpanin npon their produtn to Asian. Diropean.
]
bIelong learning.
and Central and South Annrican markets. We have aim Entergy and its subsidiaries aho sponmr plated host to foreign bminew necutives internted in l
]
many busineu development programs,induding intnting in our region In fact, our international trade development etrons carned AlWl., our Arkansas subsidiary, the 1990 fulbright Award for International l
l Removing Barriers Trade Developmem.
l l
Igcirts nub at ihmc ly Interp krria,,
Finally, Entergy Corporation and in
'haries suppon a host of smial programs ranging Stan Alnaruler to npandandprrwir in nurit}'14'iTN $1nin$, /*lanafrfnful, an/
from peration CcnnebxV - a pu, gram u, renovate i
ent>rprrneurship, earnedInwy corporation thc NMcFs /Wo / air deteriorating urban neighborhoods - to the 1
I""i"""I UdII#' I" Ik^""' bIi"i"IPP'i l
Wrr Corporar< Au>ard.
We beline our suppon of the region's cuhural Tesources is as sound as our il1Vntment in its human resources. Cultural resouren not only buiki local pride, l
they generate local economic activity.
That's one of the joys of bringing one's vision l
to reality: seeing the multiplier efTect in realiicd dreams I
for others.
IU(*Ily Ik0 /ticrNIy-flurr u
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j AND 5L'lllDI Akill
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REQUENTn, USED Trnus'>
e. set
.m p-s
(&
4
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June 13 Onision An order wurdby sk FERConjune 1.t 1981(Opinion Na 23t*
.(
nlating to tk Unis Iker Sale &www and tk Snwm Agwment.
k Rate Settlement M.tra 25 I936 agwment kturen NOPSI awlik Neu. Orka>u j
+
l{
Cm Conwilnganimg NOPSIi Grand GulfI vrlaudrate muet
\\
L 1
Ritdie2 Unit 2 ofdv R, E. Ritdir Suam Eirctrac Gennating Statwn toilg.u) t L
l, Systnn Agreernent Janu. ors 1,1983 agement, a> modified by dvJun 13 ikrision.
imang dv Sprem operating compnws relating to ok darmg ofgruniting cajuay and ods purrmounn d
. An Ente y Spren. comper unpruibkforpnnwrment. delian and
)
t.
j Syston fuels scontgr offudwpf ia.
^
l Unit Pouer Sales Agreement June 10, I982 agwonent, a: anended. cnwng ok Syttm operating compa virs andSysum Enczy relating to tk sak ofcapcip andrurgy Jkm Sysum Encryl dwr ofGrand Gulf 1.
Etterford3 Unit 3(nudrar)ofIk %tterprdStram [kctric Generatir3 tarion S
1
>=
Q./ N ANCI A1. REvitw i
t--
l 7einiOjvernng Neu Ald! won of huk 1:Intrw flAJLun se ntwawab)
Rnenuer lowne ka + kle, twowut(AIM Casuomm
$rucnh1990 DATA Entetgy 5ystem
$ 3,982,062 $ 478,318 62,069 12,189 1,722.038 Arkansu Pown & L.ight Company 1,481,408 129,765 28,657 3,993 598,546 1.ouhiana Power & l.ight Company 1,485,572 155,049 27,169 4,884 581,911 Mininippi Power & 1.ight Company 761,188 60,8.30 10,287 2.235 350,364 New Oricam Public Service inc, 485.246 27,542 5,627 1,159 191,222 System Energy Remurces,inc.
801,618 168,677 6.666 4
Managonenti Financial Dhcuuion andA nalpis 26 Awl:t Cornmitter Chainnaniletter 34 Rejvrt ofManagonent M
Inderoulent Awliton' Report 35 FinancialSt unnents 36
' Notes to Canalid,urdFirwwialStatements 40 n
Cornelid,ned Summary offinamiallnfurr wien (a
ru.enryfaur i ou,entj.j;:.e
t hilkM ( Olhtk ATiph Ah D st $11Dl4Rili OV1RVliv The Entergy Sptem's financial condition continued to strengthen during 1990. Most of 1990i casiuntuirements were met with internally generated funds.1.ntergy continued to pay ituguanctly common s%k dividend and in the founh quaner of 1990 the dividend was increawd. Revenun increawd, as did energy saln. primarily in the rnidential anJ conunctcial sectors. In addition, the system's tost-reduction progranuontinuco to roult in a lower cost of capital.
A discussion of thne and other selected factors is presented herein.
Rrweis 01 OrmTION$
t v'n o Iw) lwun1%8 ant 4m m millwn.)
17m twv twt immwn[k,me %
humu ulkmtw %
Net income (low)
$ 478.3 $ (472.6) $ 4Ii A
$ 950.9
$ (883.6) U Electrie operating revenues 5 3,894.1
$ 3,6334 53,4734
$ 260.5 7
5 160.0-5 I ucl and fuel-related expenses
$ 808.2 5 766.8 $ 778.1 5
41,4 5
$ (11,3) (1)
Purchawd power expense 5 155.6 $ 186.8 $ 1429
$ 01.2) (17) 5 44.8 32 Other operation expense 5 827h 5 725.8 5 751.3 5 101.8 14 5 (25.5) (3)-
Rate deferrals - net
$ (33.0) $ (149.3) 5 (292.1) 5 (116.3) (78)
$ (142.8) (49)
Maintenance expenw 5 2n ? 5 278.8 5 235J (1.1) 5 43.1 18 Depicciation and decomminioning expenw
$ 392.9 5 406.0 $ 390.6 5 (13.1)
(3) 15.4 4
income taxes
$ 315,3 $
5.6 $ 240.9
$ 309.7 5 (235.3) (98)
Project Olive llranch Settlements
- $(1,105.21
$ I,105.2 5(1,105.2)
Miscellaneous odier income - net
$ 168.5 ~$
102.8 5 11.18 5
65.7 64
$ (l1.0) (10)
Interest expense and preferred dividend requirements 5 698.0 $ 736.2 $ 786.1
$ (38.2)
(5)
(49.9) (6)
Eticinic Rmmw Residential
$ 1,449.8 $ 1,331.2 5 1,285.5
$ 118.6 9
45.7 4
Commercial 988.4 930.3 877.0 58.1 6
53.3 6
Industrial 1,051.8 1,021,5 956.1 30.3 3
65.4 7
Governraental 124.6 121,9 122.0 2.7 2
(0.1)
Total retail 3 A14.6 3,404.9 3,240.6 209.7 6
164.3 5
- Sales for rnale 212.5 177.0 185,3 35.5 20 (8.3) (4)
Other 67.0
$1.7 47.7 15.3 30 4.0 8
L Total 5 3,894.1
$ 3.633.6 53,4734
$ ' 260.5 7
$ 160.0 Emacy Sms:
(Alillem ofikh) l-Residential 18,174 17,245 17,155 929 5
90 l
l Commercial 12,977 12,533 12,192 444 4
341 3
Indmtrial 22,795 22,396 21,282 399 2
1,114 5
l-
' Governmental 1,831 1,833 1,946 (2)
(113)
(6) l Totai retail 55,777 54,007 52,575 1,770 3
1 A32 3
1' l
Sales for resale 6,292 4,857 5,496 1A35 30 (639) (12) l Total 62,069 58,864-58,071 3.205 5
793 1
L..
_ _ _.. _ _ _ _ _ _ _ _. _. - ~ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _
AN AGl hll NT'$ flN ANCI AL Di$CUSSION AND AN AlY$ls Nii Iv om (luv.)
Conmlidated net inuime maeased in 1990 a. wmpared to 1989 and deocased in 1989 a mmpa ed to 1988 duc 1.uply to the lost incurred in 1989 as a roult ofimplementation of the II.NC hettlement (the largest wrnponent of w hich was the 5900 inillion pre-tas write off of $ystent I:riefg5 inves,truent in Gran(I(iulf 2) and variom related uate and local aprecruelits (such aprectnefit% together with the l I.NC henlement, wmpriw the Project Ohve ll ranch bettlernena).
f,4ludir y the eIIetts of the Ptoject Oh\\ e litanch hettlementL net inwrne for 1989 would have been approsirinately
$389.9 million.
Conwlidated net inwme was favorably affeded in 1990 by a numhet of other fadort indudmg. among other (Idng% irh reawd energy sales lowrr deptaiation esperne, and redused internt expenw and p eferred sto L dividend retjuirement% as diWuurd irt die liillowirig Sectiont l.!ICl klO ON R$11NG l{tYt NL 15 1:leutic ojverating revenon increawd in both 1990 and 1989 due primarily in inaeawd retail enerp saln and the j
step-up provisions of Al'Al., MP&l,, and NOPhi a rate phaw-in plan % w hkh provided for greater t utreni rnovery in i
1990 and 1989 of Grand Gulf 1 reiated wut inacased operating rnenun from ihne step-up provid.in dkl not inuh in increased operating intome due to the amortiration ofprevioudy rnorded rate deferralt It:I L ANIIIl'Il Rt i AIID I.Al't NW l uti and fliel re!ared experises increawd in 1990 due priinarily to girater gav and oil-fired geiieration rniuirements rnuhing from inneased demand and from a shght draeaw in the number ofdays Grand Gulf I (with its low er fuel cous) operated Juring 1990 auumpared to 1989, Pracnw n Powi n tan su Purchased power expeme inaeawd in 1989 and dedined in 1990, wmpared to the prior > ear in each (aw, due primarily to inaeasnt amounts of power purcha ed in 1989 from outside utilitin as a result ofwheduled and unwhnluled outagn at (enain Systern generating units.
p.ym ;, < m cycy
..w e
QKitowATT; HOUR $AU$ M Cli$T0h451t.
SOUkcts OF RtytNUE j
N y
- y-e i
t c3
,%, (
p
.v.m.,,;,w n '
h= >*
i' Gummer &lJ% y.
unu,sia, n
(
n lebenutj'%
Anden!dM% ~
f e
Gwwmuii% -
4 ; $,emuln%
% Rrrawd29%
, id werW 2'%.
It rury-m / twenty m en
i r
(N166&T OttHitafloh a
d'--
Ah D 8Msillitsfis t
f-O t ni k Ort RAnoN 11Pt N51 Other operation expenw increerd in 1990 auompaint to 1989 due prim 6 to a general increme in the unt of operations throughout the System, including increawd nudcar operation np mm rnulting from the comprehemite action plan to improve operations and safety at ANO, a. well as the recordinp f approximately $ 15.5 million as a rnluction in 1989 pemion expense to re0cct the $ctilement of NOPSl's pension plan, p
iktr De rtanAis - Nrr Rate deferrals - net decreard in each comparable perial as (criain System operatinpumpanies recovered a larger por-tion of their current Grand Gtdf 1 relatal cmts through inc reawd rates, thereby deferring a leswr amount of such costs.
Mwnswa lirtNu Maintenance expeme wu relatively level for 1990 as compared to 1989, Maintenance expense inoeced as a rnult of the comprehensive action plan at ANO, but wu ofTwt by rnlucal maintenance expense at other kicatiom and cenain nuterials and supplies inventory adjustnwnis. Maintename expenw increawd in 1989 uimparni to 1988 due primarily to scheduled refueling and maintenance outagn at two of the System's nudcar units in 1989, plus a raluction in 1988 maintenance expense resulting from the capitalintion of certain materials and supphes inventory that had been previously expemed.
r DmirctAnos rNo DenntsnssiostNo laruot Depreciation and dwommissioning expeme decreasn! by appmximately $13 million in 1990 as comparnt to 1989 due, in part, to the deferral ofdepreciation expeme related to Systeni Energy's sale and leceback pmirny. (See Note 9.
- l.casn - Sale and trueback Transactiom," for additional informati6n on the deferral of depreciation expense.)
INCOstl TAMS Income taxes incremed significandy in 1990 as compared to 1989 and decreced significantly in 1989 as compued to 1988, tc0ecting tas benefits of approximately $242.7 million recordat in 1989 in connection with cenain write offs l
asmciatnl with the Pmiect Olive tiranch Settlements.
i l(
Miscruastoes O niin INCOMt - Nr t L
Miscellaneous other income - net increawd in 1990 due primarily to increawd imernt income on higher temporaif cash imestment balances. Miscellaneous other income - net decreased in 1989 due primarily to AP&l?s discontinuance j.
' in July 1988 of deferring a return on inintment in allegni ncess capacity and to an 58,2 million gain from the sale of C
AP&lls wholly owned subsidiary, Asmciated Natural Gu Company, in June 1988.
Ivner fmxu AND Pnutanu) Dmotsu RiquintMINis interest expense and preferred dividend requirements decteued in 1990 and 1989, reflecting the System's aist. reduction program under which certain high cost debt and preferred stock is being retired or refinanced with lower-cost debt or i
- preferred stock. Additionally, the 1989 decrease from 1988 was alTected by a 1988 agreement among 1.PNI. the Internal Revenue Service, and the State oflouisiana that requind LP&l. to record $ 10.7 million of additional internt l
expeme in 1988, 1'67p e
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A N AGi:MI NT'S FIN A NCI AL Dl5CUS$10N AND ANALYSIS l
l lb 1 Alt LNincy Suis j
lietail encrp saln increawd in 1990 and 1989. The 1990 increa e was due to inucawd sales to rnidential and commercial custorners as a rnalt of a general upward trend in usage and extendnt perioth of hot weather eywriented throughout the Systemi sen ice area during the sununer montht The 1989 increase was due primarily to volume growth in the industrial wetor rnulting from vanous enarketing incentive plans.
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Cash in}uiremerits stein primarily from working (apital ricedt comtruction expenditurn, costs aumiated with rate pha e-in plans, maturing debt, sinking fund requirements, and preferred unck dnidend requirementt in 1990 the rnajority of thne need3 were met with internally generated fundt Net cash prmiJed by operatiom totaled approximately l
51,021.7 million increaws in the amount of Grand Gulf 1.related com currently being tuovered, punnant to rate l
pha e in plans, contributed to the Systemi strengtheningliquidity. As detailed in the Statements of Consolidated Cash l
l' lows, ush flow from operating activitin w as alTected by a number of factors reprnentative of normal operations.
Inynting activities for the year resuhnl in a twt ush outflow of approximately $720.4 million due primarily to 6 omtruction expenditures of approximately 54005 million, temporary imestments other than cash equivalents of
$282.4 million, and net investment in nuclear fuel of approxirnately 550.2 rnillion. Temporary investments other than l
cash equivalents are,luauw of their short-term nature, available for ush nenh.
Financing activitin remhnt in a net ush outflow of approximately 5487 million. Among thne astivitin was the i
retirement or refinancing ofcertain high cost debt with lower <ost debt. During 1990 54415 million ofnew lint mortgage bonds and G&ll llonds were inuni and approximately 5384.8 million of high-mst first mortgage lumds were retired. Approximately 5%9.1 million was expended to retire common stosk during 1990 in wnnection with i:nterp4 ongoing program to reacquire and retire a portion of us outstanding mnunon stos L In addition, mmmon stock dividends of approximately 5205.8 million were paid in 1990.
)
Cmi At ann 10 HvNrisc lbyt'im sunts Construction expenditures for the System during the years 1991,1992, and 1993 are cywcted to aggregate 5412.3 mil-lion,5447.8 million, and $441.9 million. rnpectively, in addition to mouruction eywnditure rnluirements, the System
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- $ysttM RETAll CU$TOMER.
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- twentp-rigi.
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t h il $ c) ( O R MI 4110 F, A % ti il $ 4 t bl 4 t ill I
l will require 5980.8 milhon during the perial In9130 to meet long tctm debt matunties and to sansfy sinking fund requirements. It is expecial that a substantial poroon of the alxne requirements during the period 1991W3 will be satisfied from internally generated funds and cash on hand. APN1,l.PNL and htPNl will requite funds fmm external wurces during the period. In thh regard, APNI. nwntially sathfied in full esumated requirements for external finansing for the period 1991-93 during January 1991.
Pursuant to their rate phaw-in plans during the period 1991M3, APNL N1PNL and NOPSI will be colkinng Grand Gulf I costs and 1.PNI. will be wllecting Waterford 3 tosa incuned but not collected in previous years. These wllectionuomtitute cash availabic to meet capital requirements and long-term debt obligationt Certain Syuem wmpanin are pnseeding with arrangemenn for the powibic redemption, punbase, or other aajunition of all or a ponion of certain outuanding serin of high-cost debt and pnferred uosk. Alm, APNI has entered into arrangcments hubject to regulatory appnn a9 for the sale ofits hiiwouri retail properties of w hish a portion of the pnweeds (apprm.imately 570 milhon) could be used to redeem all or a portion of certain series of APN1/s outstanding Iltht mortp,lge bonds at special reder11ption prkte% at or near par, purwlant to ath! kn orHplialke w Mh applKable provkion of APNils mortgage and deal of trust. The wn ummation of these arrangemenn depends upon, among otStr thinp the reuipt of regulatory approvals 1.nterp> don not haic any present plans in wniunction wah its existing utihty business to iwuc additional sharn of its common susk or otherwiw m obtain funds fmm external souncs through iwoancn of snurities or other financingt Ilasing no outstanding debt or preferred susk,1:ntergyi capual rniuiremenn derive prindpally imm the need to imest periodically in its subsidiaries, I.ntergy Pow cr was initially finanted in August 1990 by the sale of wmmon siott (55sHH and notes (511M million) to Entergy, whkh noin are mntemplated to be subsniuently retinanad by 1:ntergv Power with external funds.1:ntergy utibied funds on hand to make thesc invntments. Entergy has no present plam to make signifwant additional investmenn in common simL of the ' system operating wmpanies or System Energy, Entergv nceh n funth throuFh dicidend paymenn on outstanding sharn of nuuhsidurin' wmmon simk, all of which are owned by Enietgy. Cenain rntrictions hmii the amounn that can be distributal to Entern fmn, the subsidury mmpanies in the form of dividends or other distributiont in addition, the subsidiary mmpanies are prohibited from making loam or advanto to I ntergv. During 1990 the subsidiary mmpanie, dedarni dividen(b to timergy totahng 5545.2 nuhon, while 1:niergy dedarni dividends of $206.2 milhon on ituommon sm, L (See Note 7,"Ruaincd liarninp," for information on retained earninp available for dntribution to wmmon sawkhoklen.)
in 1989 Entergy rneived 51 C authorization to repurchase, from time to time,ihmugh Dnember 31,1991, up to 20M8,109 sharn ofits outstandmg wmmon sawk either on the open market or through negotiated purchaws or tender otTert As of December 31,1990, under thh authoritation, I ntergy had repunhaud and retired (returned to authorirni but uniwurd status) 19,323,90(hhares ofits common simL at an aggregate unt of appmsimately 5382,3 million.
Of this amount,18,734 A0(hhain were repurchased and retirniin 1990 at an appeg.uc cmt of appmximately 5369.1 milhon. In November 1990 Entergv rneived funher 51 C authorization to repurchaw, fmm time to time,ihmugh December 31,1992, up to an additional 18,575,009 shares ofits outstanding common susk either on the open market or through negotiatal purchaws or tender oilert Punhases are made from time m time depending upon market conditionund authorization dthe i ntergy board of daccion. There is no awurante as to the actual amount of purchase that will occur.
Additional mortgage Innds and preferred stock that can be issued by the Syvem operating wmpanies and System Energy are limited by earninp coverage inn; available bondable propeny; for hlPNI. and NOP51, the cumulathe Grand Gulf 1-related rate deferrah recorded as assets available to suppon the i suance of additional GNR lionds and for Syuem Energy, cenain provisium ofin Reimbunement Aprement related to its sale and leawback trans.wtions.
AN AG! hil'NT'S FIN A NCI AL Dl5CUSSION AND AN AlYSI5 B.tsed upon the most restrictive of the ents at Ihember 31,1990, the Sysicm oper.ning conipanin u,ulJ have iuued fuortgage honds or preferled stak, and System linergy usukl have iuued mortgage honds in the folkming approsimate amounts, at an auumed annualinterest or dividend rate of 10%
iin md;:on.1 hsi
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n AP&l.(l)
$26)
$202 1.PNI.
509 223 h tPA1.
195 M
N OPSim 48
'3 System I.nergycf s 03 a> cotain navym-ra envua.uwrui. arst u.hou,atproiur w at Asoare tvms ad.irn oia, pa,s v!a.vovrawm a. sum plou dorpedw nymfi,anu) imprmr the epo.stu v anduten afANt) lhv a,twnpim omwm!.larre owrea,uiefcarwm arulnunavun 1 npondon ro>> I"919 t T a o
rew!t. mp. ort. of thno pvrain npeu.n. Al'el ocuruso ;ius nu carnngue:rragn are likeh to tallleiou dv in,[ on va9 toymun the wuan.e of addom tai Inoub er prfermt a k (nzrp f>a urh ndag puynorM > Lw 199) und m renuve briew ou. h in vl> dom.ph I"<>2 in r pn t tv (n.nd and dovugh Iu% u,,
e mpact ostrdmrd um k Airl newalk sorv!vd ar< h.llriri"wted mp.ne ent for ntaru!6 un mx tor sh< pr*v d t wl 9 t rinnog laman luvi w liv unan,r b Nol%I ur'wwr on urano acivdr ti&k hmi or preferrrd <t.& wnkt euquor s oum nyuinen arpprma!, u.n ladurg appm a!
Jnon she hl L Tiv bl C h.n hurorual, requmdtisa dr row vii b wwerue Iwr a arw <lainr< rov.n na npan w u tal apu duarwn an.iudory du.st omn ibn lnos ire ttun appmumaid> Mr lu jigbr ufNOf%li semmooo r, pan ratw of y;u,. a; f y,,,rd,o ;I, t um,;,,,,JJd, g,u Sotst,g,,5j e
obuire dr rajumre cryuiston appenab fun ou.h faan, mg at rin row LU hr< ton i nop ' ducto d.c.wr pennah).rwuirpn wuart,r ofprderord v.n &
s In addition, the System operating wmpanies and System linctgy had the abihty.u l b rmher 31 PNO bub;ett to meeting certain wndition0 to issue bonds against the f etirement of honds without meetinn an earninp un ctage ent.
Also, AP& L may issue preferred stock to refund outstanding preferred stock ssithout mc.
,,:n canunm uwetage test.
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I Short term lines of credit ate generally maintained to provide flexibility in metting short. term tapital requirernentt Lhted below are the available bank linn of credit and amounts outstanding at Detember 31,1990. (I or informanon on short terrD borf oWknp autlFirLLltion of the bystem operating cotDpanies afld bystem 1.ncrpy, the moritT pool arrangt ment among the $ysts m companies and arnounts available to be borrowed thereunder, and (erta;n hmitat with respect to short-term burrowings, see Note 4. " Lines of Credit and Related liarrowings.")
As.n Sla Ousandmg Icud I am ILmb Mmnlui iinsk w nda
~
5'6.165 APNL
'3.8so 1.pA L 30,000
$3,000 MpAL N OPSI System Energy AaotNnNG IMU SFAS No.96 in Deandier 198-' the I: ASin hsued $1' AS No % " Auounting for income Taxn." w his b was scheduled to be efTecove for fncal years beginning after Decendxt 15.1988. The 1/\\$15 subsequently hsued statanent numbers 100 and 103, which delay the etIn the date of hi AS No. 96 to lheal year, beginning after Deamber 15,1"91. The i A$li is npected to inue a new ex;msure draft in the wxond quaner of 1991 This n;usure draft may f urther delay the etretthe date and simphfy the implementation of $1 AS No.%
liased upon a preliminary study,1 ntergy npet ts that the adoption of SI: AS No. 46 in its present (brm would re a net increase in aaumulated deferred inwme taxes with a wnesponding inacaw in awets. It imot npected that resuhs of operatiom for Enterg, the System o;xrating wmpanin, and $ystem Energy would be significantly impacted by th adoption of hl Ah No. 96 in its present form. (See Note 3 " income Taxn.")
SFAE No.106 In December 1940 the 1 AStiissued Si As Na.1%"I.mployed Aucunting for Postretirement lienetits Other Than Pemiom " which h generally etTective for the,d yeau beginning after Deumber 15,1992. The new standard requires a change in accounting requirenu m far postrairement benefits other than pensiom from a cash method to an accru methat. 'I he impact of thh new standard has not been fully determined. but the change !!Lely will rnuit in dgnificantly greater expenw being awgniicd for provhion of these benefm. The etTea of the increased benetit npense on net income muld be reduced to the nient such increased wm are rewsered through rates or through the rewrthng of a regulatory awet to be recmered in the future. Entergy plans m adopt this statement in 1993 ENvutossuxta MArrins Ctus Ain bcistAttos On November 15,1990, the President signed into law the Clean Air Act Amendments of 1990 (Act' that, among other things, place hmits on emiwinns of sulfur dioxiJe and nitrogen oxide from fowibfueled generating plants. The Act ma require imtallation oflow nitrogen oude burner technologv on the System's generating units, depending on the emiwionslevels that are set by the Environmental Protection Agency (EPA). There are several other areas, such..s air toxicity and visibility, that will require regulatory study and rule promulgation to determine w hether p(dlution a ntro equipment h necenary. The System has evaluated the Aci to determine the impact on the Sptem of overall co nitrogen oxide emiwions mntrol and monitoring equipment.
A N AGl MIL N'I's flN ANCI A L t"
Dl5CU5SION ANI) ANALYSIS 1
l llard on in evaluation in tonnection with cw ting generating fadhrics, the ! stem has determincJ that no addnional cquipmete wdl be requned to control sulfur diodde cmiwions in order to.omply with the Au. Ilown cr. the Sprem wdl be required to imtall mirogen onde emiwiom (ontmh ou in tour (oal unin bv ihe year 2000. liased on esumatn from the uniti designen, the System antkipates the total upital mst retptired to wntrol nitrogen oxide enuwiom to be appmximately 511.35 n.ilhon, although the wst muld be wmewhat higher if the I.PA imposn more stnngent nitrogen odde eminium hmitations by regulation.
In adJnion, the System w ni be ic pired to imrall mnnnoom emisdom nomtorin:.-.tems at the other fowil-fueled unin at a upital wst of approximately 56 5 milk.in and will incur an adthrional opo., wst ntimated to range from 51,1 million to $is rnilhon annually in permit fen, dependmg on the Ices imp sed by the state regulatory authoritin.
l'he At-t prinido additional"allowantn" with respeu to sulfur diodb cmidom, staning in the yut 2000, to the
" dean
- utihtin (i e., utihties with emiuions levels below spctificJ amounts > in ru -. aion of their carher emhdom reductions. lih unit of allowante h an entitlement to emit one ton of sulf ur dio.
per year. Under the Aa, unhties will be requircJ to ath; eve spedfied ernkdom ratn or pouco alkmanto fo any n
.cminiom. The Sysicm behevn that it will be able to operate in unin ef ficiently without installing saubbers or purchadng allowanen hum outdde wur(n. Ubirnatdv, if the $ystem tontinun its reunt operation.d and fuel comumption trendt it nuy bcwmc enntled to n6ns allowanto th a wuld be sold in the new idlowanu trading market c reated by the Aa.
- l. nculos M Arti its lasuin h.nc been fikd against AP&l in wr neuion with in opuation of rwo dann during a period of heavy rainfall and flooshng Although an adcrne outcome muld atico the $ptem's liquiday and resuhs ofoperations APAl belion it ha mentoriom defemn and that the manen will h,n e no material financial impaa. (Sec Note 8. Tonunittncnts and Contingencin - APNI. Ihd I,itigation.")
1 1
1
_... _ _Getting Om Brat +p AllW ' HenryJanmm rednignedaa s
l oding sdenu o conect bearingproldom on vacuumpumps. Jannon aho uw ytrty w a :alce reruftpnyram dut ledw dwwamb ofdolim in stringt Ih rip f k <> ! lbert> Ibv t
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- - _ - _ _ ~ _ _ _
noeu waranums AhD seputHakH5 AUprr Ontutrrti OlitRMAN'S l!Til R The lauergy Corporation l\\oard of Directors' Audit Conuniace iuompeJ of five diitttors, who are not oAkers of 1.ntergy Corporation: William C. !\\attle (chairmanh James it Campbell. John A. Cooper J r., Kancaster I hsiges J r.,
and Admiral Kinnaird 11. hk Kev. The mmmittee held three meetings during IWo.
The Audit Committee oversees Enterg's financial reponing process on twhalf of the Enterp Corporation l\\oard of Directors. In fulfilling ituesponsibility, the committee rewmmended to the board, subject to stmLholder appmval, the selection of Enterp's independent public atwuntants (Deloitte & Touche). Alm, the wmmittee oversen and wordinates the activities and policies of the subsidiny wmpanin' audit mmmittees.
The Audit Committee discuswd with the internal auditor and the independent public acwuntants the overall scope and specific phns fbr their respective audits-as well as Lntern's consolidated financial statements and the adequacy of Emergn internal wntrob. '!he committee met separately with Entergv's internal auditor and independent pubiie auonntants, without management prnent, to discuss the rnuhs ofits euminatiom. its evaluations of Entergn internal controh, and the overallquality of Entergy's financial reponing. The meetings were dnigned to facilitate and enwurage any private mmmunication lxtween the wmmittee and the internal auditor or independent public acwuntants.
Nf3 $
$N-Wdliam C. liattle Clwrman Awht Committer RuoRr Or M ANAcaixt The managemem of Enterp Corporation has prepared and is responsible for the financial siatements and relate.1 fmantial infbrmation included in this annual report. The financial statements are bawd on generally aaepted accounting principles. Iinancialinformation included chewhere in this regun h consistent with the financial statements.
To meet its res;unsibilities with respect to financial information, management maintain, and enforces a s> stem of internal aaounting controls that is designed to prmide rcasonabk assurance, on a cost etTective bash, as to the integrity, objectivity, and reliability of the finantial rewrds and as to the protection of assets. This system includes communication through written policies and pnxedures, an employee Code of Conduct, and an organiiational structure that provides for appropriate divhion of respon ibility and the trainingof personnel. This system is also tested by a comprehensive internal audit program.
The independent public accountants pmvide an objecth e aswssment of the degree to which management meets its respinsibihty for fairness of financial reguning. They regularly evaluate the system ofir,;: rnal accounting controls and perfbrm such tests and other pnulures as they deem necessary to reach and exprns an opinion on the fairness of the financial statements.
Management believes that these policies and procedures provide reasonable assurance that it: operations are carried out with a high standard of business conduct.
L, en? y k (O Q b
/
py-Llwin Lupberger Jerry D. J ackson Chairman and Cl.D Erene:Ir ticel' resident, Tiwur and Evremal Afain
-. ~. - - - -
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llDIT COMMITTI.E l.l TTI R, l
M A N AGl.M t.NT'S A N D Alf DITo Rs' RI.ro RTs 1
INDirl NDix At Drrons' Rt. 'oiti To the Shareholders and the Itoard of Directon of Ent:rgy Corp > ration:
We have audited the accompanying consahdated balante shnts ofI ntergy Corporation and sulnidiaries as of December 31,1990:.nd 1989, and the related statements ofconsolidated intome (low), retained earnings and paid in capital, and cash flows fiir each of the three years in the perial ended December 31, IWO. These financial staternents are the responsibility of Entergy Corporation's management. Our rnponsibility is to npress an opinion on thest financial l
statements bawd en our audits.
l We conducted our audits in anordante with generally aucpted auduing standards. Thow standards rn{une that we I
plan and perfiirm the audit to obtain renonah!c auurance about w hether - he firuntial statements are free of material j
misstatement. An audit includes examining, on a test basis, nidente supporting the amounts and diwlosures in the financial statements. An audit also includn aswssing the accounting principles used and significant ntimates made by i
management, as well as evaluating the overall financiai statement presentation. We behn e that our audits provide a reamnable basis for our opinion.
In our opinion, sush consolidated financial staternents present fairly,in all material respects the financial pnition of Entergy Corporation and its subsidiaries at Duember 31,1990 and 1989, and the results of thcu operations and their cash flows for each of the three years in the period ended December 31,1990, in conformity w ich generally auepted aaounting pnnciples.
Yu + foueAL.-
1 Deloitte & Touche New Odraru, Iouusana lebruary 15,1991 AllClear iniergy Operations'Andy llrvant uns vnrraly cited by alw Irutitutefor hicar Power Operatioru for derrioping resin-testingprograms to remver ciremicabfrom water,
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O N SO LID AT L D ll ALANCE $11t LT5 I m enber.tl.
(/n shon and 1 19W IWY Assiis Unun Puvt (Nous /.4xt 9h Electric
$ 13,039,585
$12.760,886 Electric plant undet leases (Note 9) 660,291 655,212 Property under capital leases - electric 111A05 115,875 Natural pas 100,356 97,875 Property under capitallease - gas 799 900 Construction work in progress 305,889 240,808 Nuclear fuel under capitallene 367,533 420,125 Nuclear fuel 5,483 5,061 Total 14,591,341 14,296,742 Less - aaumulatetl depreciation and amortiration 3,663,287 3,298,370 Utility plant - net 10,928,054 10.998,372 OrmsPronanAxo/Amtwwn 99,621 92,395 ComxrAurn:
Cash and cash equivaients (Note i1):
Cash 22,821 5,110 9 Temporary cnh investments 729,761 932,384 Total cash and cash equivalents 752,585 938,193 Other temporary investments (Note 11) 282,2 0 Special deposits 14,067 14,647 Notes receivable 20,976 9,968 Accounts receivable:
Customer [less allowance for doubtful accounts of(in thousands) 58,100 in 1990 and 58 A 12 in 1989]
195,615 216,867 Other 35,179 33,619 Accrued unbilled revenues (Note 1) 50,215
$4,009 Fuel inventory - at average cost (Note 4) 66,118 68,744 Materials and supplies - at average cost 271,084 226,548 11 ate deferrals (Note 1) 101,472 84,787 Prepay ments and other 81,634 79A44 Total 1,871,188 1,726,826 Durms Dain:
llate deferrah (Note 1) 1,655,287 1,644,430 Other 277,244 253,218 Total 1,932 531 1,897,648 Total
$14,831,391
$14,715,241 5er h ra to GnwMurd hnanaalhwemenn
7
/
(')O N S O LI D AT E D BAl ANCE SHEETS
[Wrmber 31 (in ihnutrub1 19%)
1989 CAPfl AllM flON AND [JABl!!1115 Cerrauranout Common stock, $5 par v due, authoriied 500,v00,000 shares:
issued and outstar, ding 185,257,192, hare, in 1990 and 203 991,592 shares in 1980 (N.te 5;
$ 926,286
$ 1,019,958 Paid in capital 1,419,883 1.563,313 Retained earnings (Note 7) 1,775,000 1,636,254 Total common sharehoklers' equity 4,121,169 4,219,525 Subsidiaries' preferred stock, net of premmm and expense (Note 5):
Without sinking fund 330,967 330,967 With sinking fund 311,230 350,363 Long-term debt (Notes 6 and 9) 5,765,885 5,991,084 Total 10,529,251 10,891,939 Orurn Noxccsuxr I.zasturits: Obligations under capital lcases (Note %
306,137 355,835 Other 62,858 57,435 Total 368,995 413,270 Cv&xtrr h4s/t.ints:
Currently maturing long-term debt (Note 6) 339,717 29,427 Notes payable (Note 4) 667 667 Accounts payable 366,311 339,500 Customer deposits 86,036 80,069 Taxes accrued 196,599 199,645 Accumulated deferred income taes (Note 3) i1,299 14,909 Interest accrued 182,811 169,460 Preferred dividends declared 15,176 16,472 Gas contract settlements -liability to customers (Nete 8) 60,253 60,010 Deferred revenue-gas supplier judgment (Note 2) 35,663 33,802 Deferred fuel cost 15,570 2,465 Obligations under capital leases (Note 9) 201,222 210,476 Other 88,349 81,111 Total 1,599,673 1,238,013 Durano Cuorrs:
Accumulated deferred income taxes - net (Note 3) 1,67I,577 1,598,593 Accumulated deferred investment tax credits (Note 3) 170,297 47,238 Gas contract settlement - liability to customers (Note 8) 112,430 168,782 Deferred revenue - gas supplier judgment (Note 2) 103,749 139,596 Other 275,422 217,E,10 Total 2,333,475 2,172,019 CountrurNrs Aso CONrlNGENCus (Norrs 2 Aso 8)
Toeal
$ 14,83 I,394
$ 14,715,241 See Men to Comolulated hnanaalStatemem.
thirty-snx I thurty-seven
I N ii t ti (O R PO R 4'ilO N TATEM ENTS OF CONSOIlD ATF.D INCOME (LO55) lvr the pr.m ended Eks reder.i),
tin tkw oni?
1940 1959 l'MX Orrrinw; Rmut n Electric
$3,894.119 5 3,633.637
$3A73,552 Natural gas 87,943 90,367 91,853 Total 3,982,062 3,724,004 3,565A05 O rtni n u; E v'r w s:
Operation:
1 uel for electric generation and fuel-related expenses 808,214 766,787 778,138 Purchased power 155,570 186,835 141,992 Gas purchased for resale 61.718 62,705 62,661 Other 827,577 725,842 751,274 Maintenance 277,732 278,832 235,733 Depreciation and decommissioning 392,895 406,011 390,554 Taxes other than income taxes 178,810 185,660 172,135 income taxes (Note 3) 261,145 211,973 152,638 Rate deferrals:
Rate deferrals (Note 1)
(l40,365)
(252,541)
(372A80)
Amortiration of rate deferrals 107A07 103,211 80A02 Income taxes (Note 3) 4,274 48,304 102,789 Total 2,934,977 2,723,619 2A95,836 Onxinyc INcosit 1,047,085 1,000,385 1,069,569 Ontrk Ixcoarr:
Project Olive Branch Settlements (Note 2)
(1,105.185)
Allowance for equity funds used during construction 5,199 6,052 7,818 Miscellaneous - net 168A64 102,844 113,845 income taxes -(debit) credit (Note 3)
(49,855) 254,680 14,549 Total 123,808 (741,609) 136.212 Imperr.txn Oniru Cuma:
Interest on long term debt 612,064 631,600 663A77 Other interest - net 23,151 28,607 35,826 Allowance for borrowed funds used during construction (5A26)
(4,793) 8,680 Preferred dividend requirements of subsidiaries 62,786 75,947 86,770 Total 692,575 731,361 794,753 Nr r /scoarr (l.ou)
$ 478,318
$ (472,585)
$ 411,028 EARNINGS ([.0%) l'tR AVrR 3G1 Coataiox S'itRE
$2A4
$(2.31)
$2.01
- D:viorsin [hclAREn l'rs CostsroxSutat (Norr 7)
$ l.05
$ 0.90
$0.20 Atirtct Nt>31sts at Co3atox Si/ ARES Ot 7srasotw (Nort 5) 195,876,850 204,576,247 204,581,092 See Mw to Gmwisdaud Foun u!Sumnenu I
' TATEMI:NTS O F CON SOL ll) Al LI)
,^
CA511 FLOWS Ior dw mm endedIanrmbersL tin dwanda I9%
1089 Ius8 Onx4 nw; Arnt run; Net income Goss) 5 478,318
$ (47238%)
1 411,028 Noncash items included in net inwmc (loss):
Rate deferrah-net (Note 1)
(32,958)
(149,330)
(292,078) 1)cpreciation and decomminioning 392,895 406,011 390354 Deferred income taxes and investment tax credns 252,823 (19A07) 209,219 Project Obvc Ibanch Setilemenn (Note 2) 1,017,565 Allowance for equity fund, used during wnstruction (5,199)
(6.052)
(7,818)
Amortization of deferred revenues 0 3,865)
(25.641)
Provhion for estimated loues (Note 1) 12,962 5.17N 12,302 Deferred interest related to Waterford 3 sale and leasebask transactions 23,791 Net gain on the sale of ANG (5,3s0)
Changes in working capital:
Receivables (15,950)
(71,970)
(37,6s7) 1 uelinven ary 2,626 (4,005) 30,573 Accounts payable 26,811 52,511 15,696 Other working capital accouan (10,620) 6,998 (43,687)
Gas suppher judgment proceeds -
liability to customen (Note 2) 196,x35 Refunds to customers - gauantract seulements (Note 8)
(55,979)
(56,122)
(57,152)
Change in bondmg trust arrangement 101.202 Change in decommiuioning trust (22,375)
(13,314)
(26,'05)
Other 8,465 873 7,200 Net cash How pmvided by operating activines 1,021,745 700.710 904,162
/mmw; Acnunis:
Construction expenditures (400A65) 0 63,788)
(338,09I)
AUnwance for equity funds used during construction 5,199 6,052 7,818 Nuclear fuel sdes (expenditeres)- net (50,155) 2,779 (40,123) imestments in other temporary investmenn (282,243)
Expendnures on suspended wnstruction project (7.175)
(12,194)
Pmceeds received from the sale of ANG 27,095 Other 7,296 1,319 1,724 Net wh dow med by investmg activnics (720,368) 0 60,813) 0 53,77I)
Fmxaw; Arnvn,ws:
Pnxceds from iuuance of:
Fint mortgage bonds 114,520 73,282 75,000 General and refunding mortgage bonds 30,000 100.000 l15,000 Bank notes and other long term debt (Note 91 25,768 300,259 510.369 Retirement of:
Fint mortgage bonds (384,806)
(1,023,397)
(106,603)
Bank notes and other long-term debt (5,58 %)
(6, t 10) 0 81,250)
Common stock 069,110)
(13,201)
Redemption of prefernd stock (40,586)
(117A49) 00A20)
Proceeds from sale and leaschack of nuclear fuel 48,607 73,863 129,827 Common mnk dividends paid (205,793)
(183,834)
(40,916)
Proceeds from letter of credit ewrow 192,885 1.etter of eredit ewrow payments (84,323)
Funds released by first mortgage bond truster
(,0,000 Changes in short-term borrowings (46,990)
(208,010)
Other 29 (71) 99 Net cash Row provi led (used) by financing activities (486,985)
(783,648 j 231,0s8 Net increase (detrease) io cash and cash equivalena (185,608)
(443,75I) 782,049 Cash and cash equivalents at beginning of period 938,193 1,381,944 599,895 Cash and cash equivalents at end of p-riod (Note i 1) 5 752,585
$ 938.193
$ 1,381,944 See Mreuo Conudul,wd nnamd swrmenn
4 thlitGT (ORPOB 4 flDN
- TATEMENTS OF CONSOLIDATED RETAINED EARNINGS AND PAlb lN CAPITAL Fe d>e mm ended Dnmber.tI, un h wuN 1900 1989 Isys kna/xw 15mx/xas,faxvaur 1 51,636,254
$2Jl0,242
$1,939,757 Add:
Net inwme (loss) 478,318 (472,585) 411,028 Total 2,114,572 1,837,657 2,350,785 Deduct:
Dividends declared on common stock (Note 7) 206,167 184,123 40,916 Capital stock and other expenses IA43 i1,542 (373)
Common stock retirements (Note 5) 131,962 5,738 Total 339,572 201 A03 40,543 Rua!xm Eauixus, Dacrum Jl (Noit 7)
$ 1,775,000
$ 1,636,254
$2,310,242 Pa/n-/x C4 man f txmr I
$1,563,313
$1,567,781
$1,565,466 Add:
Gain on reacquisition of preferred stock 75 48 2,315 Deduct:
Common stock retirements (Note 5) 143,505 4,516 Palo-lx Ceirat Drceum 3 /
$ 1,419,883
$ 1,563,313
$ 1,567,781 sa nn to conwuned FouwulSwmew Non: 1. SuuMAny Or SicNmcar AccownNG Poucits The accompanying consolidated financial statements include the accounts of Entergy Corporation and its direct and indirect subsidiaries: AP&L, LP&L MP&L NOPSI, System Energy, Entergy Operations Entergy Power, Entergv Senices, System Fuels, and Electec. Entergy Operations and Entergy Powrr commenced operations during 1990. All significant intercompany transactions have twen climinated.
Sysnus or Accouxrs The accounts of the System operating companies are maintained in acwrdance with the systems of accounts, prescribed by the applicable regulatory bodies, which substantially conform to those prescribed by the Federal Energy Regulatory Commission (FERC). The accounts of the generating subsidiaries, System Energy and Entergy Power, are maintained in accordance with the system of accounts prescribed by the FERC. The accounts of Entergy; its service subsidiaries, Entergy Services and Entergy Operations; its non. utility subsidiary, Electcc; and System Fuels are maintained in accordance with the system of accounts prescribed by the Securities and Exchange Commission (SEC).
RfsENUt5 AND EUR COm Three of the System operating companies record electric and gas revenues as billed to their customers on a cycle-billing basis. Revenues are not accrued for energy delivered but not yet billed by the end of the fiscal periott LP&L accrues revenue for the non-fuel portion of estimated unbilled revenue.s. Unbilled revenues result fmm energy delivered since the period covered by the latest billings to customers.
Subwantially all of the System operating companies' rate schedules include adjustment clauses under which the cost of fuel used for generation and gas purchased for resale above or below specified base levels is permitted to be billed or required to be credited to customers. MP&L has a fuel adjustment clause that allows current recovery of fuel costs.
AP&L LP&L and NOPSI utilie.e a deferral method of accounting for those fuel costs recoverable under fuel adjustment dauses. Under this method, such costs are deferred until related revenues are billed.
1 A
[ /OTES TO CONSOllDATLD
(~-
FIN ANCI Al. ST ATLht LNTS The fuel adiostment factor for AP&l contaim an amount for a nuclear rnerve estimated ic cover the cost of replacement energv when the nuclear plani i down for wheduled maintenance and refueling. The reserve bean interest and is used to reduce fuel expense for fuel adjustment purpmes during maintenance and refueling outages.
U tuin PLAVI AND DIPRICLAflON Utility plant is stated at original cost. Partial diullowanen of plant cost ordered by the regulators have twen recorded as an adjustment to utility plant. The cost of additions to utihty plant includes contracted work, direct labor and materiah, allocable overheads, and an allowance fiir the wmposite cost of funds med during wmtruction. The cost of units of property retired are removed from utility plant and such cosn, plus removal wsts, less salvage, are charged to ascumuLted deptcciation. hiaintenance and repairs of proiwrty and replacement ofitems determined to l' 'ns than units of property are (harged to operating expenses.
In accordance with Statement of Financial Accounting Standards (SFAS) No. 98," Accounting for leaws," due to "wntinuing invohement" by System Energv and 1.P&L the sales and leawbacks of the undivided ponions of Grand Gulf I and Waterford 3 are required to be retlected for financial reptming purposes as financing transactions in the wnsolidated financial statementt For financial reporting purpmes, utility plant includes the poniom of Grand Gulf I and Waterford 3 that were soki and are currendy under lease. Both wmpanies have retired such property from their continuing propen; records as formerly ow ned propeny released from and no longer subject to System Energy and LP&l/s mortgages ai d deeds of trust. Syuem Energy and 1.P&l. are redetting suth property on their book 3 and records for financial reporting purposes as property under lease from others. The leased properties are being depreciated over the livn of the basic lea ;e terms. The transactions are acwunted for as sale and leaseback transactions, as opposed to financing transactions, 'or inwme tax purpmes and constitute saics and leases under applicable state law.
Depreciation is wmputed on the straight-line basis at rates based on the estimated sen ice lises of the various classes of property. Depreciation provisions on average depreciable property approximated 3.P!o,3. P4, and 390 in 1990.1989, and 1988, respectively.
Substantially all of the utihty plant owned by the System is subject to the liens of the subsidiaries' mortgage bond indentures.
IbrE Diriants The System operating wmpanics have in afect variom rate moderation or rate phase-in piam in order to reduce the immediate etrect on ratepayen of the inclusion of Grand Gulf I and Waterfiird 3 msts in rates. Under these plans, cenain costs are either permanendy retained (and not recovered from ratepayent deferred in the early years of Driving Competitor AP&l.'s BillRoderick cutfuelcosts in half by downsiaing his urrice whicle, which stillhmdles 90perant ofthe work a larger
\\
truck can do.
9 me lb r!) !)a rt p ure r
rhtttM (ORP08 AtloN AND $1 $$1DI A$nt commercial operation and collectal in the later years, or recovered currently from customers. These plam vary both in
. the proponions ofcosts that each company retains, defers, or recovers and in the length of the deferral / recovery periods.
.lly deferring costs associated with the rate moderation plans to 'the future when they will be collected through increasal
. rates billed to customers, the impact of the deferral aspect of these plans has been removed from the income statement.
Only those costs permanently retained and not recovered through rates or through sales to third parties result in a reduction of net income. Ilecause the actual collection of revenues to recover the deferred amounts will not occur until the future, each company records a deferred asset representing the amount of the deferrals and, at the same time, incurs additional capital requirements associated with the cosa being deferred for future collection. In most cases, the carrying charges associated with the unamonient deferrals are recoveral currently from customers. The deferred cost balance increases in the early years of the rate phase in plans; As higher revenues are collectal in rates, these rate deferrals are amortiud into operating expenses. During periods w hen deferred costs are recovered, revenue collections will exceal, to the extent of such current recovery, current cash ratuirements for Grand Gulf I or Waterford 3 costs. Recovery of I
_ previously deferred amounts does not increase net mcome because the related deferred costs are concurrently amonized
- into operating expense.
L With respect to permanently retained costs, AP&t 's retained share (stated as a percentage of System Energy's 90%
owned and leased share of Grand Gulf 1) ranges fmm 5.67% in 1989 to 7.92% in 1994 and all succeeding years of Grand Gulf l's commercial operation. In the event AP&L is not able to sell its retained share to third parties,it has the -
right to sell such energy to its retail customers at a price equal to its avoided energy costs. in 19851.P&L agreed to permanently absorb 18% ofits FERC allocated share of Grand Gulf 1 related costs l.P&L is allowed to recover 4.6 cents per kwh for the energy related to such retainal portion through the fuel adimtment clause. This recovery amount has been mporarily reduced to 2.55 cents per kwh pursuant to a 1989 agreement between LP&L and the Louisiana Public Service Commission (LPSC). LP&L retains the right m sell such energy to nonafliliated panics at pnces m excess of the fuel adjustment clause recovery amount, subject to LPSC appmval.
In 1989 NOPSI agreed to temporarily absorb, and not recover from its retail ratepayers,18% ofits FERC-aihxated -
. share of Grand Gulf 1.related costs. net of any sales ofenergy from the 18% absorbed ponion to NOPSPs ratepayers at I
4.6 cents per kwh; until such time as the present value savings to NOPSI's retail ratepayers total $23.5 million, projected to be approximately hlay 1991; (However, NOPSI is permitted to sell the energy from such ponion to other panies at -
- more than 4.6 cents per kwh.) For the year ended December 31,1990, System Energy's billings to AP&L, LP&L and NOPSI totaled appmximately $288.2 million, $112.1 million, and $ 136.1 million, respecthcly.
Posmunutwr ilENrftB
- Entergy and its subsidiaries haYe Various postretirement benelit plans covering substantially all of their employees. The policy of Entergy and its subsidiaries is to fund pension costs in accordance with contribution guidelines established by L the Employee Retirement income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended, and m fund and record other postretirenient plan costs on a cash basis. (See Note 10 "Postretirement -
IlenefitsJ' for additional information.) -
'IscomTms Entergy and its subsidiaries file a consolidated federal mcome tax return. Pursuant to an intra System income tax allacat:on agreement, income taxes are aH.,cated to the System companies in proponion to their contribution to consoli-dated taxabic income. In accordance with SEC regulations, no System company is required to pay more income taxes than would have been paid had a separate income tax remrn been filnL Deferred income taxes are recorded based on differences between book and taxable income to the extent permitted by the regulatory bodies for race-making purpses.
l' gInvestment t' x credits utiliud are deferred and amoniud based upon the average useful life of the related pmpeny.
a
r a'/OTrs To CONSOLID ATI D I
/'
FIN ANCI Al. STATLM LNTS AttouNci Fon FUNos Ustn Dennc Cossintriios (AFUDC)
To the extent that the System operating companin and System Energy are not permitted by their regulatory bodies to recover in current rates the carrying cmts of funds med for comtruction, they capitalize, as an appmpriate cost of utility plant. AFUDC that is calculated and recoided as provided by the regulatory systems of aaounts. Under this utility industry practice, comtruction work in progress on the balance sheet is charged and the income statement is credited fbr the approximate net composite interest cmt of hormwed fimds and for a reasonable return on the equity funds used ihr construction. This pmcedure removes fmm the income statement the ellect of the cost of financing the construction program. It effectively results in treating the AFUDC charges in the same manner as construction latnir and material costs,in that each is capitaluni rather than expensed. As noncash itenu, these income statement credits have no effect on current cash earnings. After the proiwrty is placed in service, the Al UDC charged to construction costs is retmerable from customers through depreciation provisions included in utility service rates. Effective composite rates of the System operating companies for AFUDC were 8.7% 9.3% and 9.6% for 1990,1989, and 1988, respectively. System Energy's etTeetive composite AFUDC rate was 10.2% 10.7% and 10A% lbr 1ono,1989, and 1988, rnpectively Ontta Noxct'antsT LtAiuttnis AP&L, LP& L, MP&l., and NOPSI record pmvisions for uninsured property risks and claims ihr injuries and damages through charges to operating expemes on an accrual basis. Accruals for these provisions, dnsified as other noncurrent liabihties, have been allowed for rate making purposes.
Non 2. RAn Aso Rrcuinony M Arruts Paonct Ouu linssco St i ritsiswTs in the July 21,1989 FERC Settlement, System Energy and the System operating companies agreed with the i ERC statT, state and hical regulators and oiliciah, and other interested parties to resolve a number of Grand Gulf Station-related issues, litigation, and other rare matters that had been adverwly alTecting the System fbr a number of years.
Implementation of the FERC Settlement and related state and kwal settlements in 1989 resulted in, among other thingu (1) a $900 million pre tax write-oiTofSystem Energy's investment in Grand Gulf 2 (2) a $60 million write-otTof a portion of M P&L's presiously deferrni Grand Gulf l-related costs; (3) a $50 million one-time credit by System Energy to the System operating companies (w hich was substantially reftmded to ratepayersh (i) a $43 million write-off by System Energy of Grand Gulf 1 AFUDC-equity; and (5 Weal settlements recorded by LP& L and NOPSI that reduced operating revenues by $ 1 R A million and increased operating expemes by 526 million.
A Hoa in One Anure that a tiny hole in apipe can shut down a nuckarplant. Entergy i'..
Operations' Rick Courtney, kJi. and v
laty Stricklanddmlopedtuhniques to inspur piping without interrupting
)
dailyplant operations.
Ib rty-aus I (hrryiIve m._.
INTitcf Cot POk ATIO4 AND srRODIARMS Implementation of the FERC Settlement (including the cancellation of Grand Gtdf 2 and the relatal write-of0 and of the related state and local settlements reducal comolidated net income and retained earninp in 1989 by approximately
$862 million and reduen! earnings per share by approximately $4.22. As a resuh of these setclemenn, the System reponed a net loss of approximately $473 million and a loss per common share of $2.31 for 1989.
While all parties to the FERC Settlement agreed not to punae any prudence disallowance ofGrand Gulf I -
3
-comtruction costs and operating and maintenance expenses recorded through June 9,1989, the l'ERC Senlement, among other things, does not prejudice any party a nght to seek disallowance of such costs recorded after that date or the right of the panies to seek future changes to the Unit Power Sales Agreement that are not inconsistent with the FERC
- Settlement. In addition, the FERC Settlement did not prejudice the right of any pany to funher punue litigation with rnpect to the February 4 Resolution. (See 'FERC Complaint Case" and 'FERC Audit' herein and Note 8,
" Commitments and Contingencies - NOPSI Prudence Disallowance.")
FERC'sjun 13 DmstON The June 13 Decision alh>cating the capacity and energy fmm System Energy's share of Grand Gulf I and the costs associated therewith among the System operating companies was rea0irmed by the FERC in in November 30,1987 I
order. The challenges to this decision terminamd on April 16,1990, when the U.S. Supreme Coun denied a petition for writ ofceniorari seeking review of the U.S. Cwut of Appeak for the D.C. Circuit's a0irmance of the November 30, 1987 order, thereby ending the appeak process with respect to the June 13 Dechion.
MAncu 1989 ORDfR A March 1989 order issued by the LPSC pmvided, among other thinp, that LP&L was entitled m an annual increase
-in retail rates ofappmximately $45 9 million but that in lieu of a rate increase i P&L retain the LPSC jurisdictional.
portion of $_193.7 million of proceeds (stated to appmximate $188.6 million) received by 1 P&L in October 1988 as a' result oflitigation with,a gas supplier, and, for the benefit of ratepayers, begin in March 1989 to amonize such
- jur_isdictional pmceeds plus interest thereon acct aed through February 28,1989, punuant to a rate amortization schedule that currently is scheduled to extend for 5.3 years. At December 31,1990, the unamortized balance of these jurhdictional proceeds was appmximately $ 139.4 million. LP&L believes that the March 1989 order shouki have the elTect'of pnwiding appnnimately_the same amount of additional net income available for conymon suxk as would an annual r.ue increase of $45.9 million (the amount of1.P&L's revenue deficiency as determined by the LPSC) over the i
5.3-year period. LP&L' agreed to a five-year base rate freeze, at the then current level, subject to certain conditions, LP&L may apply for rate reliefin cenain instances, such as changes in the federal tax laws or catutniphic events. _
~
In April 1989 the Louisiana Energy Users Group (LEUG), a group of1.P&1/s large industrial customers, and the -
-members ofsuch group individually, filed a petition for appeal and judicial review of the March 1989 order inl the Nineteenth Judicial Dhtrict Court for the Parish of Eadaron Rouge, louisiana (State District Coun). The i EUG contends that the LP$C was without jurisdiction or authority to permit LP&L to retain the judgment pmceeds; Further,
.the LEUG requests that LP&L be directed to keep and maintain in a separate account, pending a decision _of the State
~
-District Court, the judgment pmceeds, or alternatively, the remainder of the pmceca after payment of the initial.
- amount required to meet the first year's revenue requirements of approximately $45,9 million. Tejal of the appeal had been scheduled for March 22,1990. However, on March I,1990, the LEUG filed a motion with the State District Court requesting continuance, without date, of these proceedings. LP& L did_not oppose this continuance and the State
~
District Court granted such continuance on March 1,1990. LP&L will defend vigoromly against the appeal ifit is prosecuted.'The LEUG has stated its intention to offer a witness at the trial of the appeal. If this occun, LP&L intends, and the LPSC has stated its intention, to offer countervailing witnesses. The trial judge has stated his intention to send a -
1 y-7 e-++-
-e. I
- 4. a
,me.-,.,
,w.,,
w
i /*
/OTLs To CONSollDATl D
/
v flN ANCI AL STATLhtLNTS tranwript of the pnweniing to the L.PSC for its consideration. Should this occur, the 1.PSC may take fluther actions in accordance with the additional evidence. As permitted by the htarch 1989 erder,1 PNL is expending the judgment proceeds in the normal course ofits bminess. LP&L twlieses the intem of the Alarch 1989 order k that the l PSC recognites that LP&l is entitled to an annual revenue increase of approximately $45.9 million and that sush intent and the htarch 1989 ordet will be uphekt by the courts if the matter is prosecuted. The maaer is pending.
Pnmost o NOPSI Nu.oittit o BUYolrg On March 29,1988, the New Orleans City Council pmposed to Entergy to discuw a negotiated buyout of NOPSI (and of LP&lls electric distribution facilities in Algiers) by the city of New Orleam. Entergy responded by indicating a willingness to consider any alternatises that the council might propose if they are in the best interests of Entergv's stockholders, customers, and employees. In early March 1990, diwuwions by the city and Entergy culminated in a conceptual proposal setting forth terms and conditions of the negotiated buyout proposal. This proposal was the subiest of public heuings by the council in April 1990, and at a conneil public meeting held on htay 17,1990, the council s oted agaimt the adoption of a resolution to proseed with the buyout proposal. In July 1990 the council adopted a resolution that provided a framework for further discussions and research concerning severaliwues ofinterest to the council, NOPSI, and LP&L hiembers of the council, NOPSI, and LPNL are continuing to meet to dhcuss three specilie areas of study: rate matters, induding rate disparity, deferral collection, and consolidation of1 P&l and NOPSl; capacity manen, including least cost planning and NOPSI's vs distribution properties; and socio-economic development, including industrial development.
ExTram Powin Upon receipt of all necessary regulamry approvals, Entergy Power was (brmed as a new subsidiary of Entergy, Some of the regulatory authorizations related to this transaction have been appe,ded. On August 28,1990 Entergy Power (utili2ing timds it had borrowed from Entergy) purchased AP&lls interests in Independence 2 and Ritchie 2 (with net capacity of 809 megawatts) for an aggregate purchase price of approximately $1714 million. Entergy Power will market its capacity on a wholesale basis outside Arkansas and hiiwouri and in markets not currently served by the System. Although not a party to the System Agreement, Entergy Power will sell energy, when not required by its customers, to AP&L AP&L may then, at its option, sell such energy to the other System operating companies.
For the period August 28,1990, through Detember 31,1990, Entergy Power operated at a lost Keeping The Lid On Costs NOPSI's EdwardDwouas balkedat the price he was quotedforplant replurment parti, dwppedaround, andfbund
~
idernical equipmentfor h,dfthe price.
1 1
e forty }bu r lloravfh e 1
___m__
ismo (onoamos u D u kol44 tits FERC Costelmi Cw On February 1,1990, the Arkansas Pubhc Service Commission (Al'SCL the 1.PSC, the Miniwippi Pubhe Service Commiwion (MPSC), the Mississippi Attorney General, and the city of New Orleam (collectively, Complainanta tiled a complaint with the i ERC against System Energy and Entergv Senkes (as agent for Entergv and the System operating companiest alleging that the rates currendy being charged to the System operating companies by System Energv for capacity and energy from Grand Gulf I are not inst and reamnable. The issues raiwd by the complaint involve:
(1) reducing System Energi rate of return on common equity from 14% (2) plasing a ceiling for rate-making purposes on System Energy's common equity ratio; (M reducing System Energv's cash working capital allowance: (4) investigating the transfer of cenain Grand Gulf 2 awets to Grand Gulf 1; and (5) investigating plant costs related to income tax aauunting issues. (See 'FERC Audit" below for more inf mnation on inwme tax acwunting iwues.)
A reduction in System Energy's rate of return on mmmon equity by 1% would cause annual revenues to be reducal by approximately $16 million. System Energ4 cash working capital allowance cunendy pmdutes annual revenues of approximately $4 million. Revenues currently being collected relatise to equipment determined to be meful and transfened to Grand Gulf I at the time of the Grand Gulf 2 write-ofTbee
- Pmiect Olive Branch Setdements" herein) are appmximately $3 million annually.
On May 24,1990, the FERC inued an order that, among other things, set these matters for investigation, wnsolidated these issues with System Energy's pending decommissioning tiling (see Note 8 " Commitments and Comingencies - Spene Nuclear f uel and Decommissioning Costs") and established April 2,1990, as the refund dicctive date. Any adjustments to System Energv's rates found necewary by the FERC pursuant to this complaint would be effective retroactively to the refund efTective date. In addition, testimony has been filed by the Complainants and the FERC statTproposing certain nmdifications to System Energs rate accounting for the portian of Grand Gulf I sold and leased back. Such modifications, if adopted by the FERC, wouhl reduce System Energs rev: nues by apprmimately
$1,8 million annually. A public hearing is scheduled to commence on September i 1,1991. Emergy cannot predict the uhimate outcome of this case. Accordingly, no provision has been made in the consolidated financial statements for the possible effects of a decision adverse to System Energy with respect to any of the issues raised in the complaint. Ilowever, the cumulative etTect through December 31,1990, of a potential reduction of System Energv's return on common equny and of the income tax issues referred to in "FERC Audit" below, in the event of adverse outcomes, would not i e expected to have a material efTect on Enterni wnsolidatnl financial condition or resuhs of operations.
FERC Acurr On December 21,1990, the FERC Division of Audits issued an audit report for System Energy for the years 1986 thmugh 1988. The repon recommends that System Energy (1) write ofTand not recmer in its rates approximately
$95 million of Grand Gulf I costs induded in utility plant related to the System's income tax alkication procedures (and System Energy's accounting resuhing fmm certain allocated income tax charges) alleged to be inconsistent with FERC's acwunting requirements and (2) compute refunds for the years 1987 to-date to correct for overcollections of depreciation and return on rate base related thereto from the System operating companies. Syuem Energy believes the System's income tax alh> cation procedures are consistent with the SEC's mles and that System Energy's accounting for alkicated benefits and costs pursuant thereto are just and teamnable under the FERC's accounting rules and rate making policies. A write offof $95 million by System Energy would be substantially otTset by the write-otTof wrresponding deferred credits on the financial statements of the System operating compania, with no resuhing significant efTect on the conmlidated financiahtatements.
Should this recommendation be adopted. System Energy would have a refimd obligation to the System operating companies, w hich, as of December 31,1990, would have been approximately $40 million (including imerest).
The ongoing effect of this change,if adopted, would be to reduce System Energy's 1991 revenues by approximately
{
3
/
OTLS To CONSOLIDATLD FIN ANCI AL STATLMENTS l
I
$ 19 ndition and subsequent yean' rnenues by a comparable anmunt, but decreasing at the rate of approximately
)
l 50.5 million in each year thereafier As of December 31,1990, the after. tax efTect on the consolidatal financial l
statements would be to reduce net income by approximaiely $20 million.
System Energy intends to vigoroudy contest this issue through a hearing, scheduled August 13,1991, before a FERC administrative law judge, and believes that its income tax accounting procedures are in compliance with FERC and SEC requiremenn. However, the uhimate resolution of this issue is uncertain. Accordingly, no pnnision has been made in the consolidated financial statements for the possible eficcts of a decision advene to System Energy.
I 1
SysnM AGRITMINI On Augmt 9,1990, the LPSC filed a complaint with the FERC seeking a reduction, from 14% in the i LRC. approved j
rate of retum on common equity as a comimnent ofintercompany capacity equaliiation charges under the System Agreement, and requesting that the complaint be consolidated with pending procenhngs before the FERC involving System Energy (see "FERC Complaint Case," herein). Petitions to intervene have been filed by various parties. On September 13,1990, Entergy requested that the FERC dismiss the LPSC's complaint. In February 1991 the i ERC consolidated this pmceeding with the FERC proceeding involving Systen Energy discussed under "FERC Complaint Case" and set the refund effective date for December 24,1990.
On August 20,1930, the city of New Orleans filed a complaint at the I ERC agaimt Entergy, the System operating companies, and System Energy requesting the FERC to investigate certain issues related to the transfer ofindependence 2 and Ritchie 2 to Entergy Power and its efTect upon the System operating companies and their ratepayen. On September 21c 1990. Entergy, the System operating companies, and System Energy tiled with the FERC an answer to the city's complain:asking that the complaint be dismissed. Numerous parties have intervened in this proceeding. In the fint quarter of 1991, the FERC issued an order (1) denying motions to dismiss the complaint. (2) dismissing the complaint, in part, without prejudice, (3) setring tin investigation the question of w hether overall billings under the System Agreement willincrease as a resuh of the transfer of the two units to Emergy Power and, if so, whether those higher chaiges reflect prudently incurred cmts that may be reasonably passed through the System Agreement, and (4) providing that rates charged under the System Agreement afier the transfer of the two units be subject to refund, effective October 19,1990. The matter is pending.
SmDMINT dGRELMLKf 4H H Cb SUPPt.lER During 1990 three lawsuits, filed during the period 1986-90 by MPN L against United Gas Pipe 1 ine Company (United), arising out of a December 8,1967 " Gas Sales Agreement" between MP&L and United were senled. A settlement agreement between the parties was approved by the MPSCon October 29,1990, and the three suin were dismissed by the U.S. District Court Ihr the Southern District of Mississippi on November 1,1990. Punuant to the serdement agreement, MP&L received appmximately $8.2 million that was applied, pursuant to a December 1990 MPSC order, to reduce the phase-in/ recovery adjustment portion of M P&lh rate deferral balance, in addition, MP&L and United entered into a new four year gas purchase agreement under which MP&L will purchase from United apnroximately 34.1 billion cubic feet of gas.
O t ut a RAn so RmutM ony MA t ii ns See Note 8," Commitments and Contingencies - NOPSI Prudence Disallowance " fix infbrmadon with rnpect to the NOPSI prudence disallowance.
forty urx l&tyattrH
I Aritu (untanthos A N ti s t t hlitt alli t i
Non 3. Iscom Trus income tax expenut (credit) consists of the following:
1ur abr yees endal (>r,emist.iI.
the tivuwnd,)
14 %
twv 1938 Current:
1:ederal
$ 35,000
$ 17,144 State 35,231
$ 25,004 14,509 Total 70,231 25,004 31,653 Deferred - net:
Reclawilication due to net operating loss carryforward i12.046 (43,652) 227,278 Tax gain on sale and leaseback transactions (12,060)
(78,980)
(126,286)
Rate deferrals - net 4.274 48,304 102,789 Gas contract settlement 13.325 10A58 (69,201) liberalized depreciation 109,616 95,016 72,001 Amortization of excess deferred income cases (5,304)
(17,860)
(22.644)
Unbilled resenue (4,901)
(24,307)
(20A55)
Customer deposits (23)
(717) 18,735 Project Olive llranch Settlements 8.299 14,319 Nuclear refueling and maintenance (8,881) 1,991 11,827 Deferred fuel (4,534) 898 11A98 Alternative minimum tax (58,578)
(1,808)
(15,864)
Other 7,959 (3,687) 7,157 Total 161,238 (25) 196,835 investment tax credit adjustments - net 83,805 (19,382) 12,390 Recorded income tax expense
$315,274
$ 5.597
$240,878 Charged to operations
$265 A 19
$260,277
$255,427 Charged (credited) to other income 49,855 (254,680)
(14,549)
Recorded income tax expense 315,274 5,597 240,878 locome taxes applied against the debt component of AFUDC 471 556 (8.520)
Total income taxes
$315,745
$ 6,153
$232,358
r
,9
/ [OTLs TO CONSollD ATLD FIN ANCI AL STATLhtLNTS Total intome taxes ditler fmm the amounts computed by applying the statutory feder.il income tax raie to income befiire taxes. The reasons for the ditTerenus are:
1:or ulv rean routedI><gonber.41.
I9'x)
Iwv I9mt
% of
% of
% of 1+e - l e br-le 1+r :lc flMuars in thouundJ A mou nt in, v one A mou rut ton A mou nt in.ome Computed at statutory rate
$291,164 34.0 : $(132,954) 34.0 l $ 251,149 34.0 increases (reductiom) in tax resuking from:
Project Olive Branch Settlements 150,191 (38A)
Amortization of excess deferred income taxes (5J04)
(0.6)
(17,860) 4.6 (22,644)
(3.1)
State income taxes net of federal income tax etTect 28,696 3A (242) 0.1 4,833 0.7 Amortization ofinvestment tax credit (16.655)
(1.9)
(7,747) 2.0 (17,758)
(2A)
Depreciation 10,701 1,2 23,790 (6.1) 17,262 2A Other - net 6,667 0.7 -
(9.581) 2A 8,036 1.0 Recorded income tax expense 315,274 36.8 5,597 (1 A) 240,878 32.6 income taxes applied againu the debt component of Al:UDC 471 0.1 556 (0.1)
(8,520)
(1.1)
Totalincome taxes
$315,745 36.9
$ 6,153 (l.5) 5232.358 31.5 During 1990 the Entergy System tidly utilized ituonsolidated net operatingloss carryforw ard. Unused imestment tax credits at December 31,1990, amounted to $330.2 million after the 3590 reduction required by the Tax Reflirm Act of 1986. These credits may be aPf ed againn federalincome tax liabilities in future years. If not used, they will expire in li the years 1992 through 2004.
The alternative minimum tax (AhrI credit at December 31,1990, was $92.1 million. This ANIT credit am be carried forward indefinitely and will reduce federal regular income tax in the future.
. Cumulative income tax timing ditTerences for which deferred income tax expenses have not been provided are 5554.9 million, $515.1 million, and $538.7 million at December 31,1990,1989, and 1988, rmspectively.
Trees for l'or:wrrow e
'~
Ll'UI. Karen Ballardorymbed treegiveawayfbrEntergy Earth Dapelebrations.
fbety eght ! lurty mine
__._____.___-.___m_
t h ritM CottoR4tt0A AhD it $UDI Atlh in December 1987 the Financial Accounting Standards Ikiard (FASB) issued SFAS Na % " Accounting for income Taxes? which was scheduled to be effective fin fiscal years beginning after December 15,1988. The FASI subsequently luued statement numbers 100 and 103, which delay the effective date of St AS No. 96 to fiscal years beginning after Detember 15.1991. The FASB is expected to issue a new expmure draft in the second quarter of 1991. This exposure draft may funher delay the efTective date and simplify the implementation of SFAS No. 96. SI AS No. 96 expands the rniuirements to record deferred income taxes fin all temporary ditTerences that are reimrted in one year for financial reponing puriuses and a different year for tax purposes. This will require the rewgnition of defened tax balances fiir cenain items not previously reflected in the financial statements, such as a deferred tax liability relating to AFUDC, Under the liability method adopted by SFAS No. % defened tax balances will be based on enacted tax laws at tax rates that are expected to lx in enect when the temporary differences reverse.
It is expected that reductions in defened taxes resuhing from ihe lower corporate federal income tax rates will be reflected as liabilities to customers since the regulators may require any such saving to be passed ihmugh to the ratepayers. Based on a preliminary study, Entergy, the System operating wmpanies, and Sysicm Energy expect that the adoption of SFAS No. 96 in its present form would resuh in a net increase in accumulated deferred income taxes with a conesponding increase in assets. It is not expe cted that resuhs of operatiom fi>r Entergy, the System operating companies, and Sprem Energy would he significantly impacted by the adoption of SEAS No. 96 in its present form.
Nott 4. laxis Ot Canni AND RuArto llonnowiscs The System operating wmpanies and System Energy are authorimi ihrough November 1992 by the SEC to effect shon. term bonowings in an agpegate amount outstanding at any one time of up to a specified dollar amount fiir each company (AP&L- $125 million: LP&L- $ 125 million; h1P& L - $ 100 milliom NOPSI - $30 million; and System Energy - $125 million), subject to incre.tse to a maximum of a specified dollar amount for each company (AP& L - $240 milliom LP& L - $260 million; hlP&L- $110 million: NOPSI- $35 million; and System Energy - $290 million), with further SEC appmval However, the ability of each of the System operating companies and System Energy to borrow is subject to the availability of funds through bank lines and other credit sources. ht P& L and NOPSI are limited by the terms of their respective General and Refunding htortgage Bonds (G& R Bonds) indentures to shon term lmtrowing in an aggregate amount not exceeding, in general, the greater of 10% of capitalization or 50% of Grand Gulf I rate deferrah available to suppon the issuance ofG&R Bonds. In addition, NOPSI is subject to an SEC order that pmbibits incunence of shon term indebtedness ifwmmon stock equiry (including retained earninp) is, or would thereby become,less than 30% of the sum of total capitalization phis shon term indebtedness. As a result of NOPSPs
$135 million write-otTof previously deferred Grand Gulf 1-related costs and the reduction of NOPSI's common stock equity caused thereby (NOPSPs (ommon equity ratio was 27.2% of total capitalization as of December 31,1990),
NOPSI is currently precluded fram efTecting any shon-term bonowinp, whether thmugh bank loans or money pool borrowing, and will continue to be so restricted unless the 30% common equity restramt is eliminated or modified, or until NOPSl's common equity ratio exceeds 30%.
AP&L, LP&L, and AIP&L have lines ofcredit, not cequiring commitment fees, providing for shon term borrowings of $180 million through loans from banks within their service territory. Additionally, the fi ur System operating companies, together with Entergy, System Energy, Entergy Services, Entergy Operations, and System Fuch, are authorized to panicipate in a System money pool, whereby those companies with available funds can imest in the money pool w hile other companies (except Entergy) having shon-term needs can bonow from the money pool thereby reducing the System's dependence on external short term borrowinp. The maximum borrowing and average lmrrowing by participants from the money pool during 1990 were $94.5 million and $48.9 million, resputively. At December 31, 1990, the funds avail 4ble in the money pool (br bonowing aggregated $595.5 million. In addition, Entergy Services, Entergy Operatiom, and Entergy Power hase authorization for honowing from Emergy (at an interest rate of prime) of $35 million, $ 15 mi: lion, and $200 million, respectively, of which only Entergy Power had bormwinp (of $148.9 million) outstanding at December 31,1990.
1
r 4
/
)TEs To CONSOL.!D ATLD FIN ANCI Al. STATEM ENTS
~
System Fuels has two bank uedit agreements for use in financing its fuel oil and nuclear fuel inventories, respectively.
The fuel oil financing agreement allows for lorrowings of up to $30 million subject to a hmit equivalent to 8090 of the lower ofcost or fair market value ofits fuel oil imentory smred at cenain sites. The nuclear fuel financing agreement allows ihr lmtrowings of up to $45 million. llorrowings under these agreements are restrkted as to use and are secured respectively by System Fuels' fuel oil and nuclear fuel inventories and certain accounts receivable arising from the sales of these inventories. In addition, AP&L 1.P&l., and Sy tem Energv have agreed to purchase the nuclear fuel inventory in the event System Fuels is unable to fulfill its obligation under the agreement Fees are paid on the unused portion of j
these agreements. At December 31,1990, there were no lorrowings outstanding under these agreements.
The shon term Imrrowings (excluding money pool Imtrowings) and the interest rates (determined by dividing applictble interest expense by the average amount lorrowed) for the System were:
)hm endaliMemivr J1.
(lumi> timuuld Ini tsn iqu Average Borrowing:
Bank loans 5 7,953
$ 6,023
$ 52,933 Commercial paper
$ 53,216 Other
$ 667
$ 2,097
$ 19,127 Alaximum llorrowing:
Bank loans
$62,465
$30,300
$ 100,805 Commercial paper
$ 65,000 Other 5 667 5 4,137
$ 32,667 Year End Borrowing:
Commercial paper
$ 26A)0 Other 5 667
$ 667
$ 21,657 Average Interest Rate:
During period -
Bank loans 9.9%
11.1 %
9.3%
Commercial paper 9.19u Other 10.0 %
9.0%
10.4 %
At end of period -
Commercial paper 9.3%
Ocher 10.0 %
10.5 %
11.0 %
Credit facilities (excluding the money pool) and borrowings thereunder of the System companies were:
)ha rtided th ember J/.
19W
/wy
/%u Credit Cmbt Crrdit (In dwwandJ Fanhrm (kmtving faahrm thrmwir faahnn florrerang Short term:
System Fuch
$ 105,000
$43,500 System operating companies
$ 180,015
$667
$ I66,4 l 5 5667
$ I40,588
$ 4,I57
!.ong term:
System Fuels 5 75,000
$ 75,000
)ipy /lilty.or
INTIIG) C ORPOR ATION A h t) 51 B ilDi t kit i Non. 5, PiunnRin AND COMMON S10cx The number of shares of the System operating companies' preferred stock x, of the end of 1990 and 1989 was;
% m Aurvrual
%m Oute,Jm;;
s As l)n emher.41, IH In)
I%9 C.d:1%,r l'er %rr Cumulativ;, $100 par value Without sinking fund:
4,16 % - 5.56 %
1,070,774 1.070,10(>
1,()7(),106 $ 1()2.50 to $107.00 6.08 % - 8.56 %
1,180,000 1,180,000 1,180,000 $102.80 to $103.78 9.16 % - 11.48 %
795.000 795 000 e 795.000 $104.06 to $108.24 Total 3,045.774 3,04 5,1(k>
3,045,106 With sinking fund 8.52% - 9,76 %
1,185,000 1,185,000 1,2001x)0 $106.51 to $109.00 10.60 % - 12.00 %
277,700 277,700 317,700 $ 104.09 to $109.00 15.44 % - 16.16 %
l39,495 139,495 169 A95 $107.72 to $112.12 Total 1,602,195 1,602.195 1,687,195 Unissued 5,451,500 Total 10,099,469 Cumulative, $25 par vahte Without sinking fund:
8.84 %
400,000 400,000 400,000
$27,11 10.40 %
600,000 600,000 600,000
$27.30 Total 1 J)00,000 1,000.000 I,000,000 With sinking fund:
9.92 % - 12,64 %
4,171,666 4,171,666 4,778.099 526.M to $27.37 13.12 % - 15,20 %
2,376,697 2,376,697 3.056,697
$26 64 to $28.22 Total 6,548,363 6,548,363 7,834,796 Unis>.,
15,838,915 Total 23,387,278 Cumulative, $0.01 par value Unissued i5,0 m 000 Total 15,000,000 1
p r
/
/
OTI.s TO CONS'3I.lD AT E D F'N ANCI Al STATEhlLNTS Changes in the number of shares of preferred stock of the System operating companies, all of which were with sinking fund, during the last three years were:
Nu& of Slum 1%,
1%49 19e Retirements:
AP&l.
8.52% $100 par
(! 5,000) 9.92% $ 25 par (66,433)
(81,960)
(137,043) 10.60% $100 par (l0,000)
(8,000)
(l8,012)
! 1,04% $100 par (20,000)
(40,000)
(35,325) 13.28% $ 25 par (200,000)
(l17,126)
(200,175) 1.P& l.
10.72% $ 25 par (240,000)
(l16,004)
(93,635) 12.64% $ 25 par U00,000)
(300,000)
(165,130) i3.I2% $ 25 par (l60,000)
(l60,000)
(291.390) 14.72% $ 25 par (200,000)
(832,000)
(900) 15.20% $ 25 par (l20,000)
(480,000)
(119,880) 19.20% $ 25 par (2,000,000)
AIP&l 12.00% $100 par (l 0,0(K))
(7,300)
(5,000) 16.16% $ 100 par (15,000)
(90,000)
N OPS, 15 4% $100 par (l5,000)
(7,500)
Total (1,371 A33)
(4,239,890)
(1,066A90)
The amounts of preferred stock of the System operating wmpanies at December 31,1990 and 1989 were:
an sivumia iw ius9 Without sinking fund:
Stated at $ 100 a share
$304,511
$304,511 Stated at $25 a share 25,000 25,000 Premium 1,456 1,456
_ Total without sinking fund
$330,967
$330,967 With sinking fund:
Stated at $100 a share
$ 160,220
$ 168,720 Stated at $25 a share l63,709 195,870 Premium 463 518 lssuance and discount expense (13,162)
(14.745)
Total wich sinking fimd
$311,230
$350.363 fifty-tun ! fifty three
IN ritcY C08POR Atl0N 3D $0t$1DI Atit5 Cash sinking fund requirements for the ensuing five years for preferred smck outstanding at December 31,1990, are (in thousands): 1991,531,750; 1992,531,750; 1993,538,750; 1994,538,629; and 1995,537,250.
In 1989 Entergy received SEC authorization to repurchase, from time to time, through December 31,1991, up to 20,458,109 shares ofits outstanding common stock either on the open market or through negotiated purchases or tender oiTers. As of December 31,1990, Entergy had repurchased and retired (returned io authorized but unissued status)
)
19,323,900 shares ofits common stock at an aggregate cost of approximately $382.3 million. Of this anwunt,
{
l8,734,400 shares were repurchased and retired in 1990 at an aggregate cost of approximately 5369.1 million.
[
The effect of these transactions reduced common stock, paid in capital, and retained earnings by approximately 593.7 million,5143.5 million, and $131,9 million, respectively,in 1990 and $3 million,54,5 million, and $5,7 million, respectively,in 1989.
In November 1990 Entergy received further SEC authoritation to repurchase, from time to time, through December 31,1992, up'to an additional 18,575,009 shares ofits outstanding common stock either on the open market or through
- negotiated purchases or tender ofTers.
Under the repurchase program, purchases are made from time to time depending upon favorable market conditions
- and authorization of the Entergy board. There is no assurance as to the actual amount of purchases that will occur.
Nort 6. LONc-Trmt DEBT The long-term debt of Entergy and its subsidiaries at December 31,1990 and 1989 was:
- (br tkw.amiQ l990 1989 First mortgage bonds -
$3,870,529
_53,830,313 G&R Bonds - due 199 l-97,9.90% - 14.959o 320,000 -
290,000 -
Other:
Long-term obligation - Department of Energy (Note 8) 89,053
-82,393 Municipal revenue bonds - due serially through 2004, 2,75% - 8%
17A64 20A66
' Pollution control revenue borids and installment
- purchase contracts:
Due serially through 2014,6A% - 9.5% -
57,235 58,600 Due 1995 2016,6 %%- 12 %90 915.710 896,050 Purchase obligations under inventory supply agreement -
125,131 26,163 Grand Gulf I lease obligations (Note 9) 500,000 500,000
' Waterford 3 lease obligations (Note 9) 353/00 353,600 -
Miscellaneous 279 Total other 1,958A72 1,937,272 =
~ Unamortized premium and discount - uct.
(43,399)
(37,074)
Total long-term debt 6,105,602-6,020.511 less - amount due within one year 339,717 29A27
. Long-term debt excluding amount due within one year
$5,765,885 55,991,084
.l u
l
',M
/ /01 ts TO CONSOL ID ATED u
FIN ANCI Al STAT LM LNTS Maturitics and sinking fund requirements for the en<,uing live years on long term debt outstanding at Dec mber 31, 1990 are:
sv&ou Fnmi Reauir, menn (In dvu,retab)
Alatunne Goh (Ither
- I941
$328,162 * *
$ b0
$15,928 1992
$ 188,510
$16,550
$ 15,948 1993
$304,655
$45,800
$15,748 1994 5278,892
$45,800
$ 15,748 l995
$ 182,793
$45,800
$15,248
- Hvw nn bngfwuimi""Ym"' "U1 k '"'i'II"I bt h h1 '"'iIi*" "ff"I*
- aid'"" 'iY M" Ol'I6?h' of'* I ml""YW"
"%e matunein eulude AlltI ) $10 mdlwn 9 h% wrie pauunan contrviminue kmdu ukb rea< h civir next find anarros rate d,ne onJuly I. J WI Itamilwalen u !!hns dv ng t to kur drt kmst repurowrdby Alld on sivfh 4 r.ste iLite Allti nnten v to rrnwker drw k>mb on luh I, I991 h
.6 culwlalare $ '$ $Jkkiof Alti ipullutwn certtr l rnenue koub, a h b are subject to miav:pnan at dv optw. ofdw kilen ofn h huul, at a o
mlonyswnpu ef'l00%
'Ute outstanding first mortgage bonds of Entergy's subsidiaries as of December 31 1990 were:
AI.cunty 1%%-5%%
6% - 8 %%
0% - 1I 'i.%
- .'% - 11 %%
Total iin sivuwuld 1991 5 27,000
$294,000
$ 321,000 1992
$ 8,000
$ 175,000 183,000 1993
$ 15,000
$200,000 215,000 1994
$ 25,000
$200,000 225,000 1995
$ 45,000
$ 75,000 120,000 1996-2005
$166,250
$501,110
$830,850 1,501,210 200 4 2015
$ 40,000
$285,000 325,t00 2016-2020
$980,319 980,319 Total first mortgage bonda
$3,870,529 Out OfHann's Way MMi 's Paul Wynne, left, and
~
Tony Harrhon inventeda dip to ucure g
the smice boxn that cover undnground utilitin -- prernering tampering and saving time andmoney
~.
fifty lour !)ilty lits t
J m
I Nil $ 6 % f o4 POh 4'rl0%
Ahti si BuMatill Nort 7. RrrAINFn ErasiNos The pmvisions ofvarious apeements relating to the long-term debt and preferred stock of Entergv'aubsidiario restrici j
the amount of dividends or other diuributions on common stock of the subsidiario. In addition, without appmval of
. the SEC under the Public Utility Holding Company Act of 1935 (PUllCA), the unrestticted, undistributed retained earninp of any Entergy subsidiary are not available for distribution to the common stockholders of Entergy until such earning are made available to Entergy through the declaration of dividends by such subsidiary.
Consolidated retained earninp at December 31,1990, included $689.6 million of retained earninp of Entergy, which are unrestricted as to the payment of dividends, and $166.7 million of unrestricted, undistributed retained earning of Entergv's subsidiaries.
In addition to retained earning distribution restrictions, the PUI(CA prohibits Entergv's subshliaries from making loans or ath ances to Entergy The total invesunent of Entergy in the common equity ofituubsidiaries at December 31, 1990, amounted to appmximately $3,736 million, Of this amount, approumately $326 million, including $166 7 million of unrestricted, undistributed retained earning, was available for distribution to Entergy under the restrktive agreements di,cuued herein, NoTr.8. CoststrmFxn AND CMUNGENOM NOPSI PRUDENCE DISAltOWANCI:
A disallowance by the New Orleans City Council in the February 4 linolution of $ 135 million of NOPSI's previously deferred Grand Gulf I related costs is still being litigated by NOPS1 in both federal and state courts. (The $ 135 million disallowance ns written offin 1987.) NOPSI believes that the February 4 itemlution is contrary to the evidence presented to the council iIowever, NOPSI cannot predict the outcome of the federal and state court proceeding or whether the February 4 Reschpion will ultimately be overturned by the courts.
The February 4 Resolution continues to constrain NOPSI's ability, over the near term, to raise funds from external -
sources. Flowever, even if there were no iudicial reversal of the February 4 Pesolution and assuming no catasemphic or other extraordinary event NOPSI now estimates that its available cash resources shouki be sufTicient to permit it to meet
- its projected cash requirements for the foreseeable future, CmrAs. RII UIRDtFN'i$ ANc FINANCING Q
Construction expenditures for the System during the ycan 1991,1992, and 1993 are estimated to aggregate 54 f.!.3
_ million, $447.8 million, and $441.9 million, respectively. In addition to construction expenditure requirements, the System will require approximately $986.8 inillion during the perimi 1991 93 to meer long. term debt matinities and to satisfy sinking fund requirements, it is expected that a substantial portion of the above requirements during the period 1199193 will be satisfied from internally generated funds and cash on hand. AP&L I P&L and AIP& L will require funds from external sources during the period in this regard, AP&Lessentially s.uisfied its full estimated requisents -
' for external financing for the period 1991-93 during January 1991, (See "ANO Operatiom Imjirovement Plan" % rein for information on increases in AP&l/s capital expenditures and operatiom and maintenance ex;wnses in connection with the comprehensive action plan to imprme performance at AN0, and its effect on AP&Ils ability to obtain external fin.mcing.)
. Pursuant to their rate phase in plans, during the penod 1991-93, AP&l, M P&L and NOPSI will be collecting _
Grand Gulf I costs and LP&L will be collecting Waterford 3 cmts incurred but not collected in previous years. These collections constitute cash available to meet capital requirements and long term debt obligations.
Certain System companies are proceeding with arrangements (br the ponible redemption, purchase, or other acqidsition of all or a portion ofcertain outstanding series of high-cost debt and preferred stock. Further, AP&I. has entered into arrangements (subject to galatory approval) thr the sale ofits Minouri retail properties, Missouri accounts receivable, and material arid supplies inventories fbr approximately $76 million (which is in excos of book value), of
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w hich a portion of the procteds (approximately 5'O million) could be used to redeem all or a portion ofcertain serin of AP&l/s outstanding first mortgage bonds at special redemption prises, at or near par, put uam to and in compliante with applicable pmvisions of APNI!s mortgage and deed of trust. The consummation of these arrangemenu depends upon, among other thinp, the reteipt of regularon approvals.
Cunu FeNos UNu Powut Suu, AvAnAanm, ann Rutuonos AOlDH Ni5 Under the June 21,1974 Capital i unds Agreement Entergy has agreed to supply or cause to be supphed to Sptem Energy (1) such amounn of capital as may be required in order to maintain System Energy's equny capital at an amount equal to at least 35% of System Energv's total capitalization (excluding shon-term debt) and (2) such amounts of capital as shall be required in order to permit the continuation of commercul operation of Grand Gulf I and to pay in fidl all l
indebtedness for bormwed money of System Enerp, w hether at maturity, on prepayment, on au cleration, or otherwise.
In addition. Entergy has agreed to makt cash capital contributiom to enable System Energv to make payments w hen due on its long-term debt as specified therein. Sprem Energv haw with the consent of f ntergy, assigned in rights under the Capital Funds Agreement to certain creditors.
Pursuant to the alhication specified in theJune 10. !%2 Unit Power Sales Agreement among System Energv and the System operating companics as ordered by FERC in the June 13 Detidon, System Energy agreed m sell to the System operating (ompanies all ofits 90% owned and leased share of the capacity and energy from Grand Gulf 1 in accordante with specified percentages (AP&L - 36% I P&l - 14%, MP&l - 33% and NOPSI-1N. Charges under the Uni t Power Sales Agreement, w hich are billed monthl:,, are based on Spiem Energy's total cost of service,induJing System Energy s operating expenses. depreciation, and capital costs. The Unit Power Sales Agreement will remain in efTect until terminated by the parties and apprmed by the FERC, which most likely woaki occur after Grand Gulf I is retired from senice.
The System operating companies are aho sescrally obligated to System i nergv under the June 21,1974 As ailability Agreement in accordance with stated percentages (AP&l - 17.1"u, LP&L-26.9"o, MP&l.- 31.3% NOP51 - 24.7%)
to make paymenu or subordinated ads ances in amounn that, when added to any amounts received by Sptem Energy under the Unit Power Sales Agreement or otherwise. are adequate to cover all of the operating expenscs,induding depreciation and interest charges, ofSprem Energv. System Enerp has, with the consent of the System operating companies, assigned its righn to paymenu and advances from the System operating companies to certain creditors as security for certain ofits indebtedness for bormwed money. Payments or advances under the Availability Agreement are only required to be made to the extent System Energ's receipts from all sources, including under the Unit Pow er Sales Streamlining With Semitivity FredJohnson guidaithe realipment of AP&L 's 1.inte koek organizrtion
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from three districts into one, with spadand wui:iviry to employee tonarns.
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tNtith) C otPDR t TION s%f' M SUDl4 Rill Agreement as approved by the i ERC, are less than the amount required under tne Availability Agre :oent.
In June 1989 System Energy and the System operating companies, with the prior consent of such creditors, amended the Availability Agreement so that the Grand Gulf 2 write-otrwould be amonized for Availability Agreement purposes over 27 years rather than in the month the write-otTwas recogniecd on Svstem i nergy's loob. This amendment was made so that the write offof Grand Gulf 2 in September 1989 would not cause a payment by the System operating companies to be required under the Availability Agreement. Since commercial operation of Grand Gulf 1, payments under the Unit Power Sales Agreement (which include a ieturn on equity) have exceeded the amounts payable under the Availability Agreement (which does not provide for a return on equity). Accordingly, no payments have ever been required under the Availability Agreement.
In November 1981 the System operating companies emered into the Reallocation Agreement, whish alkwated the capacity and energy available to System Energy from the Grand Gulf Station and the related cmts to 1 P&L, MP&L and NOPSI. These companies thus agreed to assume all the responsibilities and obligations of AP& L with respect to the Grand Gulf Station under the Availability Agreement, with AP& L rehnquishingits rights to capacity and energy fmm the Grand Gulf Station. Each of the System opera.ing companies, including AP&L wouki have remained primari!y liable to System Energy and its anignees for payments or advances under the Availability Agreement and assignments thereof. AP&L was obligated to make its share of the payments or advances only ifihe other System operating co.np.mies w cre unable to meet their contractual obligations. However, the FERCs June 13 Decision alkwating a ponion of Grand Gulf I capacity and energy to APNL supersedes the Realkwation Agreement insofar as it relates to Grand Gulf 1.
Responsibility for any Grand Gulf 2 amonintion amounts has been alkwated to 1.P&L (26.23%), MP&L H3.9%),
and NOPSI (29.80%) under the terms of the Real!ocation Agreement. AP&L would be liable for its share of such amounts only if the other System operating companies were unable to meet their contractual obligatiom. No payments of any amoniution amounts will be required as long as amounts paid to System Energy under the Unit Power Sale 3 Agreement, together with other funds availab'e to System Energy, exceed amounts required under the Availability Agreement, which is expected to be the case ihr the foreseeable ftaure.
ANO Onaxnoss 1straouwm PL AN Cenain management, organiutionah and technical problems at ANO are being addressed as part of a comprehensive action plan designed to signi6cantly imprme the operations and safety of ANO. This action plan bas resuhed in an increase in estimated capital expenditures aseraging approximately $ 16 million per annum for the period 199193 and contemplates an approximate $33 million per annum average increase in operations and maintenance expenditures for that period. These incn.ases in operations and maintenance expenditures, along with increased interest expense and preferred stock dividend requirements anociated with external financing planned for the period 1991-93, are expected to have a negative etTect on AP&L and Enterp's results of operations and on APNL's earninp cm etages required for the issuance of additional first mongage bonds and preferred suwk. AP&L estimates that its earnings coverages ate likely to fall below the levels necessary to permit the issuance of additional bonds or preferrcJ stock (except for refunding purpmes) by late 1991 and may remain below such levels through 1992 in respect to Imnds and ihmugh 1993 in respect to preferred stock. AP&L essentially s.uisfied its ftdl estimated requirements for exteinal financing for the period 1991-93 during January 1991, SnAntitotot n LrnGATION Entergy and cenair. other System compames arid individuals were defendants in a consolidated purponed class action suit filed in the U.S. District Coun for the Eastern District of Louisiana in 1985 by Entergv shareholders (purponing to represent classes that purchased Entergy common saxk). On October 5,1990, the panies to the suit entered into a settlement agreement, subject to the approval of the court, providing thr, among other thinp, payment to the memben of the asserted plaintiffclasses from en interest. bearing $15.3 milhon settlement timd established by Entergy. On
'oTLs To CONsolloATro FIN ANCI AL STATEhtLNTS January 31,1991, the coort entered an Order and Final judgment approving the ettlement agreement and dismissing the suit w:th prejudice. The time for filing appeals of this order expired with no such appeals tving filed. The etTects of the wttlemen agreement were recorded in 1990 on Entergy s comolidated financial statements with an insignifiant efTect on resulu of operations.
AP&L Fioon Lrecanos On hlay 19 and 20,1990. exceptional amounts of rainfall caused tha!ing in the area around the city ofI tot Springs, Arkansas. As a resuh of the (hioding, lawsuits were filed in state and federal courts in Arkansas naming AP&l. as defendant. The amount ofdamages sought was not specified. By agreement among AP&l and the plaintith in the state court law suit, that proceeding was dismissed on October 16,1990, and on October 25, ' 990, thow [wrmm were permittal to intenene in the federal court lawsuit. In the federal court lawsuit, w hich was filed in the U.S. District Court for the Western District of Arkansa, Ib Springs Division (Arkansas District Court) on June 22,1990, the sserted liability of AP&Lis based upon allegatiom of violations o the I ederal Power Act in connection with its operation of two f
dann licensed by the FERC, wmmon law negligence, and trespass, AP&L has responded denying substantially all of the allegations against it and asserting as aRirmative defemes, among other things, that the events complained of nsuhed fmm an Act ofGod for which AP&L could not be held respomible; that AP&L owns and maintains flowage emements giving it the permanent right to inundate the lands owned or occupial by the plaintitTs in connection with the construction, maintenance, and operation of the dams; and that the plaimitTs were guilty ofcontributory neghgence and assumed the risk of damage to their property due to flooding. APNL aho filed pleadings in opposition to the plaintitTs' request to be certified as representatives of a class of similarly situated persons and, on February 7,1991, the federal judge assigned to the case denied the plaintitTs' motion for class certification. This lawsuit was mnsolidated in i ebruary 1991 with the litigation described in the following paragraph, On Noven:ber 30,1990, an additionallawsuit relating to such ihnling wu filed in the Arkansas District Court naming, among others, AP&L and Entergy as defendants. The awerted liability of AP&L and Entergy is based upon allegations ofviciations of the Feder,d Power Act in connection with AP&l/s operation of two dams licemed by the FERC, negligence and public nuisance, and, with respect to AP&L only, trespru and intentional infliction of emotional distreu. The suit seeks, among other things, approximately $16 million in property lowes and other compensatory damages and $500 million in punitive damages. Entergy filed a motion, which was denied, to be dismissed from the lawsuit asserting that there is no basis for the allegations made against it. AP&L responded to the complaint denying the r
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substantive allegations upon which the claina against it are based and asserting the aflinnative defemn it awerted in connection with the federal court litigation previously discuned, among other thir:gs. AP&l. funher maintains that the danu' operators fallowed proper pmcedures in the operation of floodgates, did not violate any provisions of the federal Power Act, and were not neghgent in the performance of their duties. This lawsuit was consolidatalin i ebruary 1991 wi:h the federal court litigation prnloudy described.
While the outcome of these maners and their impact,if any,on AP&L and Emergv's fmancul condition cannot be predicted with cenaimy at this time, AP&L bdieves it ha merimrious defenses, which it intends to asscri aggressivdy, and that the outcome will have no material advene financial impact. The nunen are pending.
I ONG-Ti nu Comnacts The Entergy System has several long term contracts to purchae varium quantities of natural ga and low sulfur coal for use as fuel at certain ofits generating units.
LP&L has entered into a long-term purchae agreement with the owner of a hydroelectric generating fadlity, wnsisting of eight separate generating units, to purchac, at sixdfied prices, certain percentages of the energy generated by and made available from the plant from the date of commercial operation through 203). The plant began commerda! operstion with censin of the eight generating units in hlay 1990 and the remaining unin went into commercial operation in the third quaner of 1990. Assuming 1.P&L purchases the maximum penentage (9 N of the energy made avaliable to 1.P&l, and based on current production projections, required payments under the contract are estimated to be $47.2 millien, $47.2 million, $47.2 million, $%J milhon, and $3.7 million, for 1991 95, respectively, and a total of $3.6 billion for the ytan 1996 through 203 L !.PN L recovers the costs of purchaed energv through its fuel adjustment dame pursuant to 1.PSC authorization.
Nectran INWRANG The Price-Anderson Act provides a limit of public liability for a single nudear inddent. At December 3 L 1990, the limit of public liability for such type ofincident was approximately $7.807 billion. AP& L LP&L and System Energv have protection with respect to this hability through a combination of private insurance (currently $200 million) and an industry assessment program. Under the assessment program, the maximum amount AP&L LP& L or System Energy would be required to pay, with re3pect to each nudear incident at a licensed nuclear facility, would be $66.15 million per reactor (to be indexed every five years for inflation and indudes a 5% surcharge in the event the total public liabihty claims and legal costs appmach or exceed the limit of protection otherwise established), payable at a rate of $10 million per licensed reactor per incident per year. As a co-licensee of Grand Gulf I with System Energy South Mississippi Electric Power Association (ShlEPA) woukt share in this obligation The System has fbur licensed reactors.
AP&L LP&L and System Energy on behalf of themsdves and other insured interests (induding, in the case of System Energy and LP&L the co-owners of Grand Gulf I and Waterford 3. respectively) are members of certain insurance programs that provide cm erage for property damage, induding decontamination expense, to members' nudear generating plants. At December 31,1990, each company was insured against such losses up to $2,185 billion (increased to $2.325 billion for LPNL as ofJanuary 1,1991) with a $200 million sublimit for premature decommissioning coverage for ANO and Grand Gulf 1. (This $200 million sublimit was efkctive January 11,1991, for Waterfbrd 3.) in addition AP&L 1.P&L hlP&L and NOPSI are members of an insurance program that pnnides inmrance coverage Ihr certain costs of replacement power incurred due to certain prolonged outages of nudear un n. Under the property damage and replacement power irnurance programs, these System companies couhl be subject to assessments iflosses exceed the accumulated funds available to the insurers. At December 31,1990, the maximum amounts of such possible anessments were: AP&l - $11.77 million: LP&L- $17.61 million; hlPNI - $0.41 milliom NOPSI - $0.27 milliam and System Energy - $17.91 million. Under its agreement with System Energy SMEPA would share in System Energy's obligation.
4
/. OTLs TO CONSOLIDATED FIN ANCI AL STATEM ENTS The amount of propeny insurance presently carried by AP&l., LP&L, and System Energy exceeds the Nudear Regulatory Commission's (NRC) minimum requirement liir nudear power plant licemees of 51.06 billion per site.
Ellective April 2,1990, NRC repdations pmvide that the proceeth of this insurance must be used, first, to place and maintain the reactor in a safe and stable condition and, setond, to complete required decontamination operations. Only after proceed, are used or deshcated fiir such use and appmpriate regulatory approval is obtained would the balance of these procceth, if any, be available for plant owners' or their creditors' benefit.
Semt Nect:An Ftit Axo Dtcouuiwiosisc Covis Under the Nudear Taste Policy Act of 1982 (NWPA), the Depanment of Energy (DOE) is required, fi>r a specified fee, to construct storage facihties for and dispose of all spent nudear fuel and other high-level radioactive waste generated by domestic nuclear piwer reactors. The NRC, pursuant to the NTPe\\, aho requires operators of nudear power reactors to enter into spent fuel disposal contracts with the DOL. The atTected System companies have entered into such contracts with the DOE whereby the DOE will Srnish disposal service at a cost of one mill per kwh of net generation after April 7, 1983, plus a one-time fee for generation prior to that date AP&l., the only System company that generated dectricity with nuclear fuel prior to that date, has dected to pay the one time fee, plus accrued interest, no eadier than 1998, and had recorded a, a liability at December 31,1990, appmximately $89.1 million (induding accrued interest) for this payment. The fees payable to the DOE maylw adjusted in the future to assure tidl wst recovery. A 1989 federal court ruling effectively changed the basis for the fee to one mill per net kwh sold rather than generated, which could reduce the affected System companies' payments. AP&L, LP&L, and System Energy conside all costs incurred or to tw incurred in connection with disposal of spent nudear fuel to be proper compments of nudear fud emense and pmvisions to recover such costs have been or will be made in applications to regulamry authorities, Ily law, the DOE was to twgin accepting spent fud in 1998 and to continue accepting spent fod until the disposal of all fuel liom reactor sites is accomplished. Ilowever, the DOE's repository program has been ddayed. Ilased on the DOE's current schedule for acceptance of spent nuclear fuel, initial shipments ofspent fuel from ANO, Waterford 3.
and Grand Gulf I to the DOE's storage facilities will occur in 2011,2016, and 2016, respectively. In the meantime, the affected companies will be respomible for storage of spent fuel. Currcer on site spent fuel storage capacity at ANO, Waterfi>rd 3, and Grand Gulf 1 is estimated to be suHicient to store fud from normal operations until 1995,2000,and 2004, respectivdy, it is expected that any additional storage capacity required due to, among other things, delay of the DOE repository program will have to be pmvided by the afTected companies. Entergy Operations estimates that the cost of providing the additional on-site spent fuel storage capability required at ANO by 1995 will be approximately
$10 million to $15 million (in 1990 dollars). In addition, approximately $5 million to $10 million (in 1990 dollars) will UsingA Teamwork Approach Diane Park, lep, CaroGn Coley, andJeanne Scolesledthe team that dmlapedtraining, recognition, and d
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Entergy Operations projects that similar expenditures are likely to be required thr additional on-site storage capability fhr Waterford 3 and Grand Gulf I for periodic additions as storage capability requirements occur in the early 2000s.
APNL, LP&L, and System Energy are recovering decommissioning costs fbr ANO, Waterford 3, and Grand Gulf 1, respectively. These amounts are being deposited in external trust funds that can only be used for future decommissioning costs. At December 31,1990, the after-tax nurket value of these external trusts aggregated approxinutely $72.6 million.
AP&L, LP&L and System Energy regularly review and update estinuted deconunissioning costs to reRect innation and changes in regulatory requiremems and technologv. Decommissioning costs for ANO and Waterfbrd 3 are estimated to be approximately $399A million (in 1986 dollars) and $203 million (in 1988 dollarsh respectively. AP&L and 1 P&l hase been authorized to recmer through rates amounts that, when added to estimated trust investment income dunng the collection perimL should be suflicient to meet currently estimated decommiuioning cost,. Applications will be made to the appropriate regubtory authorities to recover in rates any projected increase in decommiuioning costs aoove that cterently estimated.
On April 4,1990, LP&L filed a reque:.t with the LPSC for approvai 'f a decommhsioning plan for Waterford 3. In orders issucJ hlay 29,1990, the LPSC required that LP&L nuintain a qu.uSed nuclear decommissioning trust, including approximately $4.2 million of previously collected decomminioning Unds. In its hlav 29,1990 orders the LPSC forther authorized 1 P&L to increase its funding thr Waterford 3 decommissuing costs from $2.1 million to
$4 million annually, etTective hlay 29,1990 through 1993, as pan of1.P&L's existing cmt of service. The recording of the increase to the new annual level of $4 million became etrective June 1,1990, in 1993 the i PSC will review the 54 million funJing level and future funding levcis to determine their appropriateness = The estinuted cost of decommissioning for Waterford 3 will be periodically resiewed during the licensed operating life of the unit.
With respect to System Energy, an outside engineering Grm completed a new decommksioning study for Grand Gulf 1 in 1989. Based upon the study, System Energy estimates that the costs of decommissioning System Energy's 90%
owned and leased interest in Grand Gulf I would approximate $248.7 million in 1989 dollars. In a petition filed with the FERC on September 29,1989. System Energy requested an increase in annual decommissioning expense collections from $L1 milhon per year to 59.7 million effective Januaiy 1990. The FERC accepted System Energy, proposed rates for filing and suspended the proposed ra:es for five months, to become e0-ctive June 1,1990. subject to reftmd. On Ntay 24,1990, the FERC issued an order that consolidated System Energy's decommissioning tiling with a pending FERC proceeding concering System Energv's rates under the Unit Power Sales Agreement. (See Note 2," Rate and Regulatory hlatters - FERC Complaint Case.")
Scrrumm Acau3nm wrrn G As Scret na A dispute between a gas supplier and LP&L arising from the ps supplier's claimed inability to deliver the ftdl quantities of fuel gas due I.PNL under several natural ps contracts was settled by the execution of a settlement agreement in 1982.
The settlement agreement provides for the payment of $1.087 billion in cash plus a guaranty of savings of at least $585 million in certain gas acquisition costs between 1982 and 1996. In 1983 the L.PSC ordered LP&L to refund the settlement proceeds to customers over the period 1983-93 At December 31,1990, the renuining liability to customers was approsimately $168.8 millior (of which $564 million was clawined as a current liabilityL Or;tta Comnrstmis Aso Covnscrscus See Note 2," Rate and Regulatory hiatters." thr inlbrnution with respect to the i EUG appeal of the hlarch 1989 order, the FERC Complaint Case, the FERC Audit, and the System Agreement complaints.
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FIN ANCI AL STATEMLhiS Nort 9.1.iuis C1.Ni RAI in accordance uith SFAS No. I 3. " Accounting for Leases," the System rewrds the assets and related obligations applicable to capital leases as mjuired by Si AS No. 71,"Accountitig for the EtTects of Certain Types of Regulation."
At Decemtwr 31,1990, the System wrnpanies had capitalleases and noncancelable operating leases (excluding nuclear fuel leases and the sale ar. I leaseback transactions) with minimum rental mmmitments a3 follows:
iln omamLl capl.a tea e.
0;earsg ita>e>
1991
$ 29,615
$ 48A48 1992 29,317 43,996 1993 28AS8 40,982 1994 24,269 37,767 1995 20,122 31,594 Years thereafter 107,084 125,345 Minimum rental commitments 238,895
$328,132 1.ess: amount representing interest 99,069 Present value of net minimum lease payments
$ 139,826 Rental expense for capital and operating leases (excluding nuclear fuel leases and the sale and leaseback transactions) amounted to approximately $81.3 million, $80 million, and $85.3 million in 1990,1989, and 1988, respectively.
NucuAR FUR LLW.s APNI., LP&l, and Syste:a Energy have nuclear fuel leasing arrangemerns that permit the leasing of nuclear fuel with an aggregate value of $540 million. Under the current arrangements. which were entered into in December 1988 by AP&L and in February 1989 by LP&L and System Energy, each lessor Snances its acquisition and ownership of nuclear fuel
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' live years'and the intermediate term notes have varying maturities ofone and one-half to 10 years. It is contemplated that these arrangements will be extended or ahernative financing will be secured by each lessor upon the maturity of the current arrangements, based on the panicular lessee's nuclear fuel requirementt if a lessor cannot arrange for aherna.
tive financing upon the regularly scheduled maturity ofits borrowings, the panicular lessee must purchase nuclear fuel in an amount equal to the amount required by the lessor to retire such borrowings. Each of these companies had prior nuclear fuelleasing arrangements that were etrectively canceled with the start of the new nuclear fuel lease arrangements.
Lease payments are based on nuclear fuel use. Nuclear fuellease expeme of $199.9 million, $ 188.9 million. and
$219.7 million was charged to operations in 1990,1989, and 1988, respectively. The unrecovered cost base of the leases was $367.5 million, $420.1 million, and $396.1 million at December 31,1990.1989, and 1988, respectively.
Sru Aso truuactTamsacums Arrangements for the sales and leasebacks of an aggregate i 1.5% undivided ownership interest in Grand Gulf I and of three undivided ponions of Waterford 3, equivalent on an aggregate cost bois to 9.3% of Waterford 3, were entered into by System Energy on December 28,1988, and by LPNL on September 28,1989, for aggregate cash considerations of $500 million and $353.6 million. respectively. The sales were made to owner trmtees under trust agreements with owner participants. Sprem Energy and LP&L are lening back the sold interests on a net lease basis over 26 %-year and year lusic lease temu, respectively. Aptem Energy and LP&L have options to terminate the leases and to repurchase l
- the sold interests in Grand Gulf I and.Waterford 3 at certain intervah during the basic lease terms. Funher, at the end
- t of the basic lease terms, both companies have an option to renew the leases or to repurchase the interests sold in Grand
' l Gulf I and Waterford 3.
- In connection with the equity funding of System Energy's sale and leaseback arrangements, letters ofcredit are 4
- required to be maintained to secure certain amounts payable by System Energy under the leases. The initial letters of
. credit, which were scheduled to expire on December 28,1991, were replaced on January 14,1991, with new leuers of credit that are scheduled to upire on January 15,1994.
In connection with System Energy's sale and leaseback transactions, the amounts charged, im financial reponing purposes, to expense include the interest ponion of the :cae obligatiom and depreciation of the plani. Ilowever, operating revenues include the recovery of the lease payments since the tranuctions are accounted for as sales and -
leasebacks for rare making purposes. Total interest and depreciation expense exceeds the correspondirg revenues
- realided during the early part of the lease term. In December 1990 consistent with a recommendation contained in a -
1 recent I;ERC audit report, System Energy recorded as a deferred a sset the current and prior year difTerence between the
- recovery of the lease payments and the amounts expensed for interest and depreciation, resulting in an increase in net income on the consolidated financial statements of approximately $24 million in 1990.- The effect of the deferral was to decrease depreciation expense by approximately $30 million and interest expense by approximately $2 milton and _
increase related taxes by approximately $8 million. The deferral will increase in the early years of the lease term and reverse over the later years of the lease term as the revenues associated with the leases exceed the charges for depreciation and lease imerest.
In connection with LP&L's sale and leaseback arrangement, if LP&L does not exercise its option to repurchase the undivided interests in Waterford 3 on the fifth 1 niversary of the closing date of the sale and leaseback tramactions, LP&L will be required to provide collateral to tne owner panicipants for the equity ponion ofcertain amounts payable by LP&L under the lease. Such collateral requirements are to be in the form of either a bank letter ofcredit or new series of first mangage bonds issued by LP&L under its first mongage bond indenture. (See Note 1, " Summary of Significant Accounting Policies - Utility Plant and Depreciation," li>r information with respect to the financial
. reporting treatnient of the sale and leaseback transactions.)
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At 1)eternber 31,1990, hystem I..ergy and 1.1W1 had future minimum leaw papnents aciln ting overall unplisit rates of 9.h6% aiid 8.76%, respectively) in wnnettion with the ude and leawb,wl transactiom as follows:
(In sinuoulo
.%Irm I wp i l't'l 1991 5 49,333 5 32,C1 1992 49,333 32.s69 1993 49,333 32,$68 1904 61,295 32,669 1995 52.247 32,569 Years thettalter l.195,873 843,159 Total SI,4C Ali 51,006.005 Noit 10. PosTailiitiatixr llistitis The System wmpanies bas e various ;mtretirement twncfit plam wvering substantially all of their employees. The pension plam are nonwmributory and provide pemion benefits that are bawd on the employce:/ uedited senice and aserage compensation. generady during the last the yean befiire retirement. The pohcy of l.ntergy and its sub,idiaries k to fund pemion costs in a6cordance with wntribution guidelines estabbshed by the l'.mployee Retirement inwmc Security Act of 1974, as amended, and the Internal Res enae Code of 1986, as amended.
IitTective October 1,1988, NOPSI terminated its defined benefit pemion plan and as of that same date adopted, as a participating employer, a defined benefit pension plan spomoted by 1.lW L Thh suurssor plan prmides employees with substantially the same benefit pmgram with no lou of au rued benefin as pmvided under the terminaicd plan, in January 1989 the accumulated bene 6: obbgation of he terminated plan was settled by purchadng annuity wntracts. As a result, NOP51 recorded a settlement gain, net of applicable cases, of approximately $8A million in the first quarter of 1989, in acwrdance with the provkions of $FAS No. 88,'l;mployen' Acwunting for Seulements and Curtailments ofIktined liene6: Pension Plans and for Terr nation lienefin? On January 31,1989, NOPS1 was refunded appmximately $16.7 million (net of a 10% exciw tax) from the teiminated plan in euru of amounts tequired to purchaw the annuity contractb pay certain plan participants a pm-rata portion (approximately 51,3 million) ofenen plan auets as requited by law, and suisfy other related cmts and expenses mnnected with the settlement.
Total 1990,1989, and 1988 pemion wst of Enterg; and its subsidiaries, including amounts capitaliicd, was:
tu kuu,uh Ini isw I%vt Savice mst.beneks car 5 during the period 519A82
$ 16,291 5 16,391 Interest wst on projected beuellt - bli+ tion 40,117 36,689 40,504 Actual return on plan aswts 2,848 (105,129)
(67,794)
Net amortization and deferral (52,978) 56,517 5,167 1988 l.P&l/NOPSI carly retirement program 12,150 Net pension (mt 5 94'9 5 4,368 5 6.418 The assets of the plans consist prim rily of common and preferred stocks, fixed income securities, interest in a money market fund, and imurance contracts.
m r, jw i u a, p
iuno wucunn A s D tl 6 %11614 R11 s l
l The funded statuud l'ntergy's various pendon plans at Dnember 31, IWO and lo89 w at aa,u,,,a >
1ow tow)
Actuarial prnent value of auumulated penuon plan benefits:
Vnted
$363,80 s
$ 337,300 Nom esied 24.366 27,0 6 Accumulated benefit obligation
$388,171 53M,345 Plan anets at fair value
$ 546,161 5578,402 Proiccted benefit obligation 60s.375 478,908 Plan awen in ce ns of tuoiccted benefit obhption 10.786 99,994 Unrnognk/nl prior wrvise Unt i2d39 SlM e
Unrnognized tramition anet (83.619)
(90.97l)
Untraignized net gain (25,070)
(54,672)
Acerued pemien liabihty 5 (s s,4M) 5(as,985)
Weighted average diwount ratn of 8.75% m 1990 and 8.5% in 1989, and a 5% rate of increase in future wmpemation were med in determining the 1900 and 1989 aouarial prewnt value of the pmietted benefit obligation.
The npteted long-term rate of return on plan awer lin 1990,1989, and 1988 was 8.5% Trandtion auets are being amortired mer the greater of the remaining sense perial of active participants or I; yean.
The System wmp nies abo provide certain heahh ure and hfe insurance benetits for retirni employen. Substantially all employees may baome ehpible for thne benetin if they icach retirement age while still working for the System wmpanies. The wst of providing posuctirement heahh ute and hfe imuranse benefits is recordnt on a ush basis. The unt of prm; Jing thne benefit, for retiren is not separable from the cost of paniding benttits tbr actise employees.
The total cmt of pnniding thne benefits and the number of active employen and retirees for the law three yean were:
iw iwsv i v.u Total mst of heahh care and life imuranse (in thousandy 542s47 541,100
$36,730 Number of active emplo3cn 12,920 12,884 13.049 Number of retiren 3,709 3,528 3,322 in Desember 1990 the FASliinued SI'AS No.106,"l mployen' Acwunting for Pmiretirement lienefits Other Than Pemions? which is generally etTntive for tiscal yean beginning after December 15,1992. The new standard requirn a change in acwunting rniairemenn for postretirement benefits other than pensiom from a cash method to an accrual method The impact of thh new standard has not been fully determined, but the change hkely will snult in significantly greater open,e being rewgnized ihr provision ofihne benefin. The effect of the increased benefit espeme on net income muld be reduced to the extent such increawd ants are remveted through rates or through the recording of a regulatory auct to be remvered in the future,1:ntergv plam to adopt this statemeni in 1993.
r,..
/Oli s TO CON $0llDAll D
~
FIN ANCI Al. STAIU11:NTS Noir 11. Casu ANiiGwi Drinuxis l'or purposes of the Staternents of Conmlidated Cash Ilows, l.ntergy wnsiders all unrestricted highly hquid dcht instruments purchawd with a inaturity of three rnonths or less to bc tadi equivalents. Temporary (ash investinents are stated at tost, w hith approximatn the tuarket value. The supplemental dislosurn required by Si A$i No. 95. "$taterncnt of Cadi flows,' are given in the table below:
Iou siv v.m rsuirdiMruder.sI.
il,,,/wuw,@
lo'o tw9 lam Cadi paid during' the period for:
Interest (nct of amount sapitahird of $5,739,
$4.213, and $6,954 in 1990, 1989, and 1988, inputively)
$659A 15
$'02h68
$767,311 Income tan
$ 62,864
$ 16,301 5 4.098 Noncash investing and financing:
Capitallcasc obhpatiom inc uned
$ 69,615
$381,792
$129,629 17irst mortgage bonds awumed in the sale by APNI.of Amsiated Natural Gas
$ (3,780)
Noit 12. Quriti'iim Itin'iis (Uswoirio)
Conchdated operating results for the four quarters of 1990 and 1989 wcre:
t) win i oui <d Opratmg Opo.m ng Mrinvv iavw g, tim,1 (In skwuL rurpro hur anwantu knrnuro fr v v cimu IH um I990:
March
$ 889A30
$ 225,702 5 88,676
$UA4 June
$ 939,281
$ 248,928
$ 109,371
$ 0.55 September
$ 1,227,248
$ 349,076
$ 209,593
$ 1.07 Dnember
$ 926,103
$ 223,379
$ 70,678
$0.38 1989.
Mat (h
$ 836,630
$ 247.872
$ 97,033
$ 0 47 June
$ 901,2N2
$ 243,110
$ 94,566
$OA6 September
$ 1,103.273
$ 312.679
$ (679,257)'
$(3.32) '
Dnember 5 882.820
$ 196,724
$ 15.073'
$0.0S'
'Ik quanen rwled Srparndon.40 and Dnrmlvr 3I. I' x4. ion lude cert.am u r:or-ef!, rei.ited to av 1%,c, t Olur lu.isu le.% ssemeno< (.%e Mir J. %rse.crul kyndum Atarren - I'mynt Olur kn:nd. %niemnsts 3 The businew of the $ystem is subject to seamnal fluctuations, with the peak period oscurring during the sununer months. Accordingly, earnings information for any three-month period should not be considered as a buis for estimating results of operations for a tidl year.
u tty-nx / n nry-seven
INilkt) ( 0 5 t O 8 4110 %
A h t, t l Billtl 4 t it h fl4/lan 18r fl+>wuidi. (b e,f't pt' dv'Y at'*mb4fi' l93I
/VSY IVM
/ 9A '
I
$11.lCll D IINANCI Al. D AI At Operating revenues 5 3,982,062 5 3,~24.004 5 3,565 A05 5 3A54,820 Net inwme (lour 5 478.318 5 (4'2.58si 5 411,02b 5 356.604 Larninp don) per share '
5 2.44 5
(2,31 )
5 2.01 5
1.74 Dividends dedared per share 5
1.05 5
0.90 5
0.20 Ibok value per share, year-end 5
22.25 5
20.68 5
23.96 5
22.13
'Ibtal awets
$ 14,831 J94 514,715,241 515,041,816 515,156,832 tong-term obligations '
5 6.383,252 5 6.697,282 5 6,911,265 5 6.686.936 Capitalitation:
Preferred storL (indudmg premium and iuuans e expensch Without sinking fund 5 330,967 5
330,96' 5
330,967 5 330,967 With sinking fund 311,230 350363 462,965 496,405 tong-term debt (exduding current & m.nuring dd>i) 5,765,885 5,991,084 6.187 Ai2 5,945,054 Common stock and paid in capital 2,346,169 2,s83.271 2,590.686 2,588,371 Retained earninp 1,775.000 1,636,254 2,310.242 1,939,757
'Iotal capitalitation 510,529,251 510,891,039 51I.882,302 511J00,554 Utility plant
$ 14,591,341 514.296,742 514,101,255 513.955,459 1.eu - accumulated depreciation and amortiration 3,663,287 3.298,370 2,989,863 2,715,314 Utility plant - net
$ 10,928,054
$ 10.998,372 511,111,392 511,240,145 El t elRic RIVINt'IN Residential 5 1,449,768 5 1,331,154 5 1,285 A72 5 1,239,877 Commercial 988A09 930345 877,029 bl4.586 Industrial 1,051,796 1,021 A56 956,165 938,541 Governtnental 124,597 121,912 121,983 121.234 Total retail 3,614,570 3 A04,86' 3,240,649 3,114,238 Sales for rea, ale 212,504 177,014 185,2 %
181Ai1 Other 67,045 51,756 47,648 31A68 Total 5 3,894,119 5 3,633,637 5 3A73,552 5 3,327,117 EN1RGY5At.ts sid!,0.u,/ tuM Residential 18,174 17,245 17,155 17.053 Commercial 12,97?
12,533 12,192 11,693 Industrial 22,795 22,396 21,282 20,615 Governmental 1,831 1,833 1,946 2,050 Total retail 55,777 54.007 52,575 SI All Sales for resale 6,292 4,857 5A96 6,220 Total 62,069 58,864 58,071 57,631 NUMatu of Ct' stout.ns:
vii tv,<mter 3 / >
Residential I A97,121 I A85,102 1 A75,022 1 A62,917 Commercial 186A35 183,666 181,054 178,504 Industrial 29,255 28Al2 27,801 27,379 Governmental 9,211 9,399 9,715 9A84
'Ibtal retail 1,722,022 1,706,579 1,693,592 1,678,284 Sales for resale 16 16 17 18 Total 1,722,038 1,706,595 1,693,609 1,6'8,302 (t1 Theyear I989 undudn ariam wrne-ofb relaud to tier 1%yt Olis< isranch Senkment: Der Noir.' 'Rau and k<gulatorp $f. nun - 1%ya Ging than, b henkment> i W Includn long-term debt truluding anently nuaturing debth freNerrd nod wah nnkurg fiand and nm uornt capaalirase chligawm (%r to i4% capa,dkant obhgarwm urre not required to be recorded as auen and Isaidasn on the balan e dwt
l 7
D O N S O L. l D A'l l. D S U M M A ltY i
01 IIN ANCI Al. INIOltM ATION l4%
) US $
! VS1 I 98.4 I48,'
I 98l l ')SO
$ 3,485,912 5 3,238,459
$ 3,146,035
$ 2,909,657
$ 2,846,2(vi 5 2,722.020
$ 2,295,299
$ 454A65 5 215,598 5 508A37
$ 378.050
$ 310,595 5 281,483 195,90' 2.22 1.08 5
2.86 2A6 2.33 2A4 2.01 0.89 l.75 1,' l 5
1,67 l.63 1,59 20.39 5
18.19 5
18.36 5
18.07 5
17,81 17,66 17 71
$ 14,090A31
$ 13,390,015
$12,565,5 6
$ 11,107,166
$ 10,364,653 5 8,318,556
$ 7,334,030 4
$ 6A99,530
$ 6,147,883
$ 6,342,232 5 5,461,'76 5 4,784 A04 5 4,196,589 5 3,675A74
$ 330,967
$ 330,907
$ 330,967
$ 330,967
$ 330,967
$ 330,967
$ 330,967 508,165 467.293 476,928 429,601 354,957 3(10,219 283,165 5,983 029 5,680,590 5,865,301 5.032,175 4 A 29A i7 3.896,370 3,392,309 2,588,794 2,590,771 2,3Hl A07 2,101,563 1,691 A29 l A'9,770 1,285,956 1,583 A02 1,130,995 1,090,839 899,979
- 790AH,
,05,776 615,248
$ 10,994,357
$10,200,616
$ 10,145 A45 5 M,794,285
$ 7,597,287 5 6,713.102 5 5,907,645
$ 13,193,137
$ 13,866,838
$ 13,291,825
$ l 1,942 A l'
$ 10A64,188 5 9,080436
$ ,893,636 2,386,723 2,078,960 1,856,279 1,691 A75 1,551,'00 l A07,584 1,2(i4,525
$ 10,806A 14
$ 11,787.878
$11 A38,546
$ 10,247,9 i 2
$ 8,912A88
$ 7,672,852
$ 6,629,111
$ 1,228,556
$ 1,083,86i
$ 1,034,940
$ 958,540
$ 926,645 5
8'4,505 5 732,202 799,256 702,318 660,33" 590,380 566,656 533,721 443,940 936,573 965,688 1,022,873 931.369 954,195 925A13 718,358 118,360 111,922 115,755 108,805 107,791 97,042 76,746 3,082,745 2,863,793 2,833,905 2,589,094 2,555,287 2 A30.681 1,971,246 220,076 171,039 90,39' 90,720 95,959 127,996 184,760 36,311 50,045 35,268 36,515 22,326 24,101 23.226
$ 3,339,132 5 3,084,877 5 2,959,570
$ 2,716,329 5 2.673,572
$ 2,582,778 5 2,l'9,232 17,118 16,748 16,069 15,465 15,596 15 A72 16,065 11,539 11,235 10,516 9.776 9,620 9.396 9,277 19 A60 21,206 22A94 21,084 22,092 23A62 22,87(>
2,016 2,043 2,059 2,025 2,045 1,902 1,837 50,133 51,232 51,138 48,350 49,353 50,232 50,055 7,674 5,031 1,852 2,072 2,103 2,803 5,099 57,807 56,263 52,990 50A22 51,456 53,035 55,154 1 A56,594 1 A47,121 l A32,022 l A09,022 1,38 e,389 1,372,106 1,351,838 177,054 176,050 172,662 168,652 165 A60 164,070 161,864 27A68 27,957 26,637 26,134 24,390 24,631 23,880 9,293 9,062 10,370 9,989 9,635 9A44 9,079 1,670 A09 1,660,190 1,641,691 1,613,797 1,586,874 1,570,251 1,546,661 21 22 25 32 30 43 72 1,670 A30 1,660,212 1,641,716 1,613,829 1,586.90i 1.570,296 1,546,733 l
1 nxty etylug / Inty-sting
nniu ournium A A D 111411:14:11 5 NTI'RGY CORPOR ATION DIRICTORs Adm. Kinnaird R. hkKee Jerry D. Jackwn U.S. Naty (RaJ Erecuritr \\1a hnuknt, William C. l\\attle 0$rd. Afaryland Finana and EvrernalAftin Retiredlusident and ChiefEvecutive Ogiar James R. Nichok William Cavanaugh 111 ifFiddant bfilh, Inc.
Partna ofNichob &l>att Senior \\'ia Ivnident, by\\1rginia Boston, hfa.uachusetu S. vion Executin, - Nuckar.
hnident and Cl0 of W. Frank Illouni Robert D. Pugh Entern Opvations Gnrup Prnident.
Chainnan ofthe Board Gunmunications lioduas, ofIbrdand Gin Company Jack L King AT&TGnnpany Ibriland, Arkansu Senior \\'ia nnkknt, Basking Ridge, NewJeney Snoon Erecuritr - Opvations i1. Duke Shackelford James 11. Campbeli lvesident <f S. ht. Ilenty tirown Jr.
Chainnan ifthe Board Shachdfind Co., Inc.
\\ ia l><sident, andhnident of Bonita, Louisi.ina GotvrnmentalAgain AfISSCO Corporation Jackwn. Alichsi/pi Wm. ClitTord Smith Glenn H. Parsons finident<{
\\ 'ia />nident, John A. Cooper Jr.
T lLiker Smith & Son, Inc.
Corporate Gn,;munications
\\ia Chainnan of flouma Louisiana Cooper Communitin, Inc.
AlanN1. Wright Bdla \\'ista, Arkanuu Dr. Walter Washington
\\ 7cc linident. Finana nrsident of l\\moke H. Duncan Akern State University H. Stuart l\\all l+nident of Lennan, Afisshsippi 1reasurer Foster Company, Inc.
New Odeans, Louhiana Dan E. Stapp Omct ks Sectnar>
Kaneaster Hodges Jr.
Attormy Edwin 1.upberger Neutort. Arkansu Chainnan and CEO Edwin Lupberger James hl. Cain Chairman and CEO of
\\ia Chainnan Entny Corporation New Orkaru, Louhiana Jerry L hiaulden Group 1+nident,
&ston Executiir-Dhtribution and Cuitomer Service, Chainnan and CEO ofAP&L LP&LINOPSI, andhfP&L
6' gNTI RGY S U BSIDI AR h;S' ll O A R I)$ Ol' [)I R [_ (rg () g s AP&l.
Woothon D. Waller h1 PAL NOPSI walker. M ct.,pl,,ti
%,illiam L,avanaugh !!!
fn,,, c. Is,ao,,
hiichael B. Bemis lames hi. Cain junic RuJ. A4a,,w Ivodent a Jcoa Cathy. C,unm.ngham Brooke H. Duncan kullaiar< tver4 "
Gus B. T,dton Jr.
Daid C. Bramlette IU 7
Ikkua. Adan#
fw 7,,,,,f a,t,,,,, 7,,,,,,,,, 7,u S JacL L King iink Rmk. Ada,sw
$" sal & liram!rne I"b".b bdkC Neul,ce, hj.,,ppi jmph J. Krebs Jr.
n,h laA,r. tu.6,.
Atichael1;. Wihon MI6eK4 he wibe,n c ce,,pa,9 James B. Campbell IMwin 1.upherger linkla A4anw g.,;,,,,,4,,,,,,,
Frank R. Dav Jerry L hiaulden Richard it Herget Jr.
7,m,,,,a4 syl;,,; g,,a Donald L. hiriners AlanA 6 Alclennan. Inc
['pg~
ladu,,s. En,pjn Istik kod, Arka,uas l%'wkn! and Ct K1 Id" bI' Cdi"
' "'#'f j' John B. Smallpage
'Ibmmy 11. Ilillman
, c, Tiliam CaanauEh 111
("u"awd Smyre 9""" " * ^ ##""^ #*
nrod ienn. l.,c.
Arw I 4 *+ foumana Carh11t. A4anw Tilliam K. Ilood Norman 11. Gillis Jr.
L,harles L,..Icamer Sr.
k.ancaster Hodges Jr.
3,s 3 3,,,,, g,,,,,,,,,,,
(;,ffy e (;a3,
^"nu. lc unsa,us M"nli. Alnuurrin
,',',fj;,,,,,u, Hal L Hunter Jr.
Huntye'nunte' Tex R. Kilpatrick Robert L Kennington 11 N<w Atadnt nouru
(,,,,,,,,,,,,,,,y a,,,,,y,, 5,,4,, sp,,,,,
R. Drake Keith I'"""" C""?d '
""I'""'"'"
"""I"""'
""ll' kident a,dLt10 Jamc5h1.Cain Jack L King Jxk L King jaa t_ wng
),,c,3 ga, ctt Joseph J. Krebs Jr, IMwin 1upberger gWwm Lupberger j j g 7, g 3,, j,,
M, hand,avanaugh Hi Jerry L hiau:Jen New O'l<du leasa'u Jeny L hiaulden Jose h hi. Hendrie Dr. Raymond 11 hiiller Sr.
Edwin 1.upberger Richard D. hitRae Sr.
Na *e G""al'd*"
IWler, here n4 Als R.us, In.
i linkRod Interrue!
Jerry L h1aulden lkk>"" bi"Tri y (,
Aleduine Clinic little Ruk. Adaruai Dodd L hieiners John N. Palmer St.
lauaan nia /*nukui Nd'"'"d COO
- "#'.7'l"""""""#' d"""
Roy L hiurP v h
Tul. Lorpo anon r
AbdSt.& Engnuring Ca,npan]
H. Duke Shackelford Jaken. bwqpi Edwin Lupherget HotSjainp. Ada w
- m. CErd Smith L B. Robinson Jr.
Jeny L hiaulden William C. Nolan Jr.
Ikro<it Gua any N, tan 6 A s.,,,,
"'..""^"d N' hI' k.CC N"u"ud A',4 nitrado. A4anw Jadet. bimppi Rohen D. VuE,h Robert D. Pugh _
Dr. Walter Washington Wm. CErd Smith Robert ht. Williams Jr.
Run o. wilha,,v. Inc.
Sout hann. Alunvipps i
y,,
j l,1r llsu1W s{,,y,g,s y/.ou. gffjj,,.gn,,y y,, j
9 l % f l 4 r.) t o $ t ol A f 1o %
A N D n! t,nllil4 5114 ANNt'Al hillllNG The 1991 Annual hlecting of stoskholden will bt held on lnday, Alas l',1991, at the Pme liluA Comenoon Center, s001.ast 8th 5treet. Pint lilutt Arkamat The meeting wdi begin at to a.m (Cl)T) anJ will be followed by a tour of the $yuem Operatiom Center. A notise of the meeting prmy nattment, and prosy tard w di be mailtd to un kholden in cady Arnt $to,Lholden unalk to s
anend this yeati mnong are entourapd to etqunt an Around 3lumg kninc dewnbed bekiw.
I oku 10.K Aso IlN ANClAl ANo $I Af hI'lcAt Rf Vil4 Copin of the 1 merp $yuemi 1990 Annual Repon on f orm 10=K in the Sesuritin and i uhang Commimon and 1990 Iinantia and Statatial Review, a uanuiul supplement to the 1990 annual report and larm 10-K that indado 11 ytan of financial and operating data, may be obtained without charp by talhng 1800 2924960, or by wnung to: I nterp Corporanon. $yuem Im nwr Relations P.O. l\\ox 61005, New Orleans IA '0161.
ANNUAL AND Qt9.ltilRti Rirotts 1.ntergy maintaim a maihng hu of nostholden who,e sharn are hellin "strni name? i.e.,in the name of their bioter, to prmi&
more timdy rucipt of annual and quarterly repont To be added to our ihrect maihng Ini, call $yuem Imnior Rdations 1 800-292A960.
Pitik Poun Ntvsti ntR Copin of 7hr Tntegi Gounnunt, I nierpi newdetter on lepidation anJ pubbs pokey iwues may be obtained without tharp by wriiing to; 7hc ha<gt Gounturnt,1.ntup Corporation, $tm Lhoklen Pubbs Po!Q infornation Organuation. PO. lios 61236.
New Orleans lA 701619968.
ANNUAL hitnlNG RIVltW Copin of1.merpi 19nt Annu.d Alumg kainn a report on budnew conducted and prnentatiom made at the 1991 Annual Alecting of Sinstholden, may be obtained wahout charp by ulhng Synem Imnior Rdations 1 800-292 9960.
twutosi OstActs
$HARIHotDIR account INIokurnoN The Chase Klanhanan 14ank N A k the tramfer apnt, regiurar, and dividend paymg apnt for the mmmon stost of1 merp Corporation Commumcationuon6erning dividend paymenn, dnidend rein,eument, uock tramfer. addinuhangn, replasem lou teroficain, and oiber adminiurativt nutten shoull bt dacued to: The Chase hlanhanan liank, NA,1 New York Plua -
noth floor, New York, NY 10081t 1800-520 0801.
Inquirin regarding financial and operating pufonnanse of I nierp Corporation and in subsidiarin should be duccted io-Richard Al. Strawn, hlanapt, synem invntor Rdatiom, 1 800-292-9960.
CouvoN Stock 1.tstisc "Ihe common nock ofI mergy Corporation is hued and traded on the New York, hlidweu, and Pacitie uock cubanpt The ticker symbol h "ETR.* !)aily trading prico and mlume can be found in the "NYSI Composite'section of mou maior newspann.
The nosk table huing innterp "
CouuoN Stock Orst usuir At the chne of 1990, there were 74,175 nockhokler of rnord of1.nterp Corporation. Appmsimaidy 70 pacent ofI nierpi wmmon uosk is held by institutional invnton, wi:h the balante heki by indniduak.
Y NYl.STult INI Olt ht ATION e
OntMON S KK A Pkitt 11 ANGt 19W 19NU quartro H gl.
Iow H:rl.
Iow f irst 23 %
19 'll 17 %
15 h 5euind 21 '/.
18 %
19 %
16 %
Third 20'l-18 23 19 h I ourth 23 %
19 23 %
20 '/.
OlMMON $KK K Dh1DENL6 Common stock dividends paid per share were:
- qusare, twt tvw losu lirit 50.30 50.2%
50.20 heuind
$0.25
$0.20 Third 50.2%
50.25 Iourth
$0.30 50.25 Thr entire amount of common siosk tiivideads paid during 1990 is uuble e ordinary intome.
Dnidends are payable as declared by 1.nterryi biurd of diteuon. Antiapated sommon sto$k dnidend dedaration, rnord, and payment datn for the remainder of 1991 are:
1)nisratwn i Aan M rdI)arn hirment Erne Manh 22 hia) 10 June 3 July 26 Augmt 9 Septendier 3 Doober 24 Nmember 8 Dnember 3 Dn1DIND IlHNRGliM PMN I.ntergy Corporation offers an autonutic lbidend licinvestment Plan that provides sharehoklers a con enient and nonomisal w ay of invnting cash dividends and optional cah (qments in additional sharn of 1.ntergy common stock. The plan is adminiucted by The Chac Manhanan llank. N.A. Twenty.one penent of f.nterpfutakhoklen of rnord were partidpating in the plan at > car end 1990.
To enroll or to obtain more informacian, call The Chee Manluttan llank, N.A., 1 800 5 26 0801.
CouuoN $nx:K INus1 Mixt PtRionM ANct i rom year 4nd 1985 through 1990, I niergy provided ituharehokiers a cumulative total return - the sum of market prite thange and wh dividends - cureding that pourd by the clearic utility industry in general, e rnenured by the 23 wmpanin that wmprise the Standard & Poor's 1.lcuric l\\mcr Company index.
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