a04110.htm
__________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
 
X
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the Quarterly Period Ended June 30, 2010
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from ____________ to ____________

 
Commission
File Number
Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, Telephone
Number, and IRS Employer Identification No.
 
 
Commission
File Number
Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, Telephone
Number, and IRS Employer Identification No.
1-11299
ENTERGY CORPORATION
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
72-1229752
 
1-31508
ENTERGY MISSISSIPPI, INC.
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
64-0205830
         
         
1-10764
ENTERGY ARKANSAS, INC.
(an Arkansas corporation)
425 West Capitol Avenue
Little Rock, Arkansas 72201
Telephone (501) 377-4000
71-0005900
 
0-05807
ENTERGY NEW ORLEANS, INC.
(a Louisiana corporation)
1600 Perdido Street
New Orleans, Louisiana 70112
Telephone (504) 670-3700
72-0273040
         
         
0-20371
ENTERGY GULF STATES LOUISIANA, L.L.C.
(a Louisiana limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
74-0662730
 
1-34360
ENTERGY TEXAS, INC.
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 981-2000
61-1435798
         
         
1-32718
ENTERGY LOUISIANA, LLC
(a Texas limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
75-3206126
 
1-09067
SYSTEM ENERGY RESOURCES, INC.
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
72-0752777
         

__________________________________________________________________________________________
 
 
 
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes þ No o

Indicate by check mark whether Entergy Corporation has submitted electronically and posted on Entergy's corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No o

Indicate by check mark whether Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy Resources have submitted electronically and posted on Entergy's corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).  Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.

 
Large
accelerated
filer
 
 
Accelerated
filer
 
Non-
accelerated
filer
 
Smaller
reporting
company
Entergy Corporation
Ö
           
Entergy Arkansas, Inc.
       
Ö
   
Entergy Gulf States Louisiana, L.L.C.
       
Ö
   
Entergy Louisiana, LLC
       
Ö
   
Entergy Mississippi, Inc.
       
Ö
   
Entergy New Orleans, Inc.
       
Ö
   
Entergy Texas, Inc.
       
Ö
   
System Energy Resources, Inc.
       
Ö
   

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No þ

Common Stock Outstanding
 
Outstanding at July 30, 2010
Entergy Corporation
($0.01 par value)
186,815,779

Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q.  Information contained herein relating to any individual company is filed by such company on its own behalf.  Each company reports herein only as to itself and makes no other representations whatsoever as to any other company.  This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2009 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed by the individual registrants with the SEC, and should be read in conjunction therewith.

ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2010

 
Page Number
   
Definitions
1
Entergy Corporation and Subsidiaries
 
Management's Financial Discussion and Analysis
 
Plan to Pursue Separation of Non-Utility Nuclear
3
Results of Operations
4
Liquidity and Capital Resources
11
Rate, Cost-recovery, and Other Regulation
15
Market and Credit Risk Sensitive Instruments
17
Critical Accounting Estimates
18
Consolidated Statements of Income
21
Consolidated Statements of Cash Flows
22
Consolidated Balance Sheets
24
Consolidated Statements of Retained Earnings, Comprehensive Income, and
  Paid-In Capital
 
26
Selected Operating Results
28
Notes to Financial Statements
29
Part 1. Item 4.  Controls and Procedures
72
Entergy Arkansas, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
73
Liquidity and Capital Resources
75
State and Local Rate Regulation
78
Federal Regulation
78
Nuclear Matters
78
Environmental Risks
78
Critical Accounting Estimates
78
Income Statements
80
Statements of Cash Flows
81
Balance Sheets
82
Selected Operating Results
84
Entergy Gulf States Louisiana, L.L.C.
 
Management's Financial Discussion and Analysis
 
Results of Operations
85
Liquidity and Capital Resources
88
State and Local Rate Regulation
91
Federal Regulation
91
Nuclear Matters
92
Environmental Risks
92
Critical Accounting Estimates
92
   
   
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2010

 
Page Number
   
Income Statements
93
Statements of Cash Flows
95
Balance Sheets
96
Statements of Members' Equity and Comprehensive Income
98
Selected Operating Results
99
Entergy Louisiana, LLC
 
Management's Financial Discussion and Analysis
 
Results of Operations
100
Liquidity and Capital Resources
103
State and Local Rate Regulation
106
Federal Regulation
107
Nuclear Matters
107
Environmental Risks
107
Critical Accounting Estimates
107
Income Statements
108
Statements of Cash Flows
109
Balance Sheets
110
Statements of Members' Equity and Comprehensive Income
112
Selected Operating Results
113
Entergy Mississippi, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
114
Liquidity and Capital Resources
117
State and Local Rate Regulation
119
Federal Regulation
119
Critical Accounting Estimates
119
Income Statements
121
Statements of Cash Flows
123
Balance Sheets
124
Selected Operating Results
126
Entergy New Orleans, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
127
Liquidity and Capital Resources
129
State and Local Rate Regulation
131
Federal Regulation
131
Environmental Risks
131
Critical Accounting Estimates
131
Income Statements
132
Statements of Cash Flows
133
Balance Sheets
134
Selected Operating Results
136
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2010

 
Page Number
   
Entergy Texas, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
137
Liquidity and Capital Resources
141
State and Local Rate Regulation
142
Federal Regulation
143
Environmental Risks
143
Critical Accounting Estimates
144
Consolidated Income Statements
145
Consolidated Statements of Cash Flows
147
Consolidated Balance Sheets
148
Selected Operating Results
150
System Energy Resources, Inc.
 
Management's Financial Discussion and Analysis
 
Results of Operations
151
Liquidity and Capital Resources
151
Nuclear Matters
153
Environmental Risks
153
Critical Accounting Estimates
153
Income Statements
154
Statements of Cash Flows
155
Balance Sheets
156
Part II.  Other Information
 
Item 1.    Legal Proceedings
158
Item 1A.  Risk Factors
158
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
158
Item 5.    Other Information
159
Item 6.    Exhibits
165
Signature
168


FORWARD-LOOKING INFORMATION

In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance.  Such statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "may," "will," "could," "project," "believe," "anticipate," "intend," "expect," "estimate," "continue," "potential," "plan," "predict," "forecast," and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements.  Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct.  Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made.  Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties.  There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K, (b) Management's Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):

·  
resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, and other regulatory proceedings, including those related to Entergy's System Agreement, Entergy's utility supply plan, recovery of storm costs, and recovery of fuel and purchased power costs
·  
changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, the operations of the independent coordinator of transmission for Entergy's utility service territory, and the application of more stringent transmission reliability requirements or market power criteria by the FERC
·  
changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those owned or operated by the Non-Utility Nuclear business
·  
resolution of pending or future applications for license renewals or modifications of nuclear generating facilities
·  
the performance of and deliverability of power from Entergy's generation resources, including the capacity factors at its nuclear generating facilities
·  
Entergy's ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities
·  
prices for power generated by Entergy's merchant generating facilities, the ability to hedge, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Non-Utility Nuclear plants, and the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy's ability to meet credit support requirements for fuel and power supply contracts
·  
volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities
·  
changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation
·  
changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, mercury, and other substances, and changes in costs of compliance with environmental and other laws and regulations
·  
uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal
·  
variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes and ice storms and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance

FORWARD-LOOKING INFORMATION (Concluded)

·  
effects of climate change
·  
Entergy's ability to manage its capital projects and operation and maintenance costs
·  
Entergy's ability to purchase and sell assets at attractive prices and on other attractive terms
·  
the economic climate, and particularly economic conditions in Entergy's Utility service territory and the Northeast United States and events that could influence economic conditions in those areas, such as the recent oil spill in the Gulf of Mexico and related moratorium on drilling of deepwater wells
·  
the effects of Entergy's strategies to reduce tax payments
·  
changes in the financial markets, particularly those affecting the availability of capital and Entergy's ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions
·  
actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies' ratings criteria
·  
changes in inflation and interest rates
·  
the effect of litigation and government investigations or proceedings
·  
advances in technology
·  
the potential effects of threatened or actual terrorism and war
·  
Entergy's ability to attract and retain talented management and directors
·  
changes in accounting standards and corporate governance
·  
declines in the market prices of marketable securities and resulting funding requirements for Entergy's defined benefit pension and other postretirement benefit plans
·  
changes in decommissioning trust fund values or earnings or in the timing of or cost to decommission nuclear plant sites
·  
the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture
·  
risks and uncertainties associated with unwinding the business infrastructure associated with the contemplated Non-Utility Nuclear spin-off, joint venture, and related transactions.

DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:

Abbreviation or Acronym
Term
AEEC
Arkansas Electric Energy Consumers
AFUDC
Allowance for Funds Used During Construction
ALJ
Administrative Law Judge
ANO 1 and 2
Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC
Arkansas Public Service Commission
ASC
FASB Accounting Standards Codification
ASU
FASB Accounting Standards Update
Board
Board of Directors of Entergy Corporation
capacity factor
Actual plant output divided by maximum potential plant output for the period
City Council or Council
Council of the City of New Orleans, Louisiana
Entergy
Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation
Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.
Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana
Entergy Gulf States Louisiana, L.L.C., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes.  The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Texas
Entergy Texas, Inc., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc.  The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
EPA
United States Environmental Protection Agency
ERCOT
Electric Reliability Council of Texas
FASB
Financial Accounting Standards Board
FERC
Federal Energy Regulatory Commission
FitzPatrick
James A. FitzPatrick Nuclear Power Plant (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
Form 10-K
Annual Report on Form 10-K for the calendar year ended December 31, 2009 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
Grand Gulf
Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy
GWh
Gigawatt-hour(s), which equals one million kilowatt-hours
Independence
Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power
Indian Point 2
Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
Indian Point 3
Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
IRS
Internal Revenue Service
ISO
Independent System Operator
kW
Kilowatt, which equals one thousand watts
kWh
Kilowatt-hour(s)
LPSC
Louisiana Public Service Commission
MMBtu
One million British Thermal Units
 
 
1

 
DEFINITIONS (Continued)

Abbreviation or Acronym
Term
MPSC
Mississippi Public Service Commission
MW
Megawatt(s), which equals one thousand kilowatts
MWh
Megawatt-hour(s)
Net MW in operation
Installed capacity owned or operated
Non-Utility Nuclear
Entergy's business segment that owns and operates six nuclear power plants and sells electric power produced by those plants to wholesale customers
NRC
Nuclear Regulatory Commission
NYPA
New York Power Authority
Palisades
Palisades Power Plant (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
Pilgrim
Pilgrim Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
PPA
Purchased power agreement
PUCT
Public Utility Commission of Texas
PUHCA 1935
Public Utility Holding Company Act of 1935, as amended
PUHCA 2005
Public Utility Holding Company Act of 2005, which repealed PUHCA 1935, among other things
Registrant Subsidiaries
Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend
River Bend Station (nuclear), owned by Entergy Gulf States Louisiana
RTO
Regional transmission organization
SEC
Securities and Exchange Commission
System Agreement
Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources
System Energy
System Energy Resources, Inc.
TWh
Terawatt-hour(s), which equals one billion kilowatt-hours
Unit Power Sales Agreement
Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf
Utility
Entergy's business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies
Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Vermont Yankee
Vermont Yankee Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Non-Nuclear Utility segment
Waterford 3
Unit No. 3 (nuclear) of the Waterford Steam Electric Station, 100% owned or leased by Entergy Louisiana
weather-adjusted usage
Electric usage excluding the effects of deviations from normal weather
 
 
2

 

 
ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS


Entergy operates primarily through its two, reportable, operating segments: Utility and Non-Utility Nuclear.

·  
Utility generates, transmits, distributes, and sells electric power in service territories in four states that include portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business.
·  
Non-Utility Nuclear owns and operates six nuclear power plants located in the northern United States and sells the electric power produced by those plants primarily to wholesale customers.  This business also provides services to other nuclear power plant owners.

In addition to its two primary, reportable, operating segments, Entergy also operates the non-nuclear wholesale assets business.  The non-nuclear wholesale assets business sells to wholesale customers the electric power produced by power plants that it owns while it focuses on improving performance and exploring sales or restructuring opportunities for its power plants.  Such opportunities are evaluated consistent with Entergy's market-based point-of-view.

In June 2010, Entergy announced that it plans to integrate the Non-Utility Nuclear and non-nuclear wholesale assets businesses into a new organization called Entergy Wholesale Commodities.

Plan to Pursue Separation of Non-Utility Nuclear

See the Form 10-K for a discussion of the Board-approved plan to pursue a tax-free spin-off of the Non-Utility Nuclear business to Entergy shareholders.  On March 2, 2010, Entergy proposed conditions for review by the New York Public Service Commission (NYPSC), including an incremental $500 million reduction in Enexus's long-term debt, restrictions on Enexus's ability to make dividend payments and returns of capital to shareholders until certain conditions are met, and the potential for disbursements to New York's energy efficiency funds if power prices exceed certain levels.  At its hearing held on March 4, 2010, the NYPSC discussed Entergy's petition and proposed conditions and, after that meeting, issued a notice soliciting comments "on a set of conditions that could potentially be developed" regarding Entergy's planned spin-off transaction.  At its hearing held on March 25, 2010, the NYPSC voted 5-0 to reject Entergy's planned spin-off transaction.

On April 5, 2010, Entergy announced that, effective immediately, it planned to unwind the business infrastructure associated with the proposed separate Non-Utility Nuclear generation (Enexus) and nuclear services (EquaGen) companies while it evaluates and works to preserve its legal rights.  Entergy also declared its next quarterly dividend on its common shares of $0.83 per share, an increase from the previous $0.75 per share, and announced that it expected to execute on the $750 million share repurchase program authorized by the Board in the fourth quarter 2009.  The amount of repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities.  As a result of the plan to unwind the business infrastructure, Entergy recorded expenses for the write-off of certain capitalized costs incurred in connection with the planned spin-off transaction.  These costs are discussed in more detail throughout the "Results of Operations" section below.  Entergy expects that it will incur approximately $40 million, after-tax, in additional expenses in unwinding this business, primarily through the remainder of 2010, including additional write-offs, dis-synergies, and certain other costs.

In July 2010, Entergy withdrew its spin-off transaction petition that was filed with the NYPSC.

In June 2010 the Vermont Public Service Board denied Entergy's spin-off transaction petition.
 
3

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Results of Operations

Second Quarter 2010 Compared to Second Quarter 2009

Following are income statement variances for Utility, Non-Utility Nuclear, Parent & Other, and Entergy comparing the second quarter 2010 to the second quarter 2009 showing how much the line item increased or (decreased) in comparison to the prior period:

   
 
Utility
 
Non-Utility
Nuclear
 
Parent &
Other (1)
 
 
Entergy
   
(In Thousands)
                 
2nd Qtr 2009 Consolidated Net Income
 
$151,575 
 
$80,211 
 
$25 
 
$231,811 
                 
Net revenue (operating revenue less fuel
  expense, purchased power, and other
  regulatory charges/credits)
 
 
 
128,372 
 
 
 
32,788 
 
 
 
1,036 
 
 
 
162,196 
Other operation and maintenance expenses
 
(12,375)
 
31,151 
 
(14,917)
 
3,859 
Taxes other than income taxes
 
2,897 
 
1,002 
 
668 
 
4,567 
Depreciation and amortization
 
(5,590)
 
315 
 
153 
 
(5,122)
Other income
 
(10,133)
 
64,479 
 
(10,658)
 
43,688 
Interest charges
 
16,040 
 
(14,838)
 
(7,507)
 
(6,305)
Other expenses
 
2,322 
 
4,823 
 
 
7,147 
Income taxes
 
36,347 
 
35,525 
 
41,394 
 
113,266 
                 
2nd Qtr 2010 Consolidated Net Income
 
$230,173 
 
$119,500 
 
($29,390)
 
$320,283 

(1)
Parent & Other includes eliminations, which are primarily intersegment activity.

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

  
 
Amount
  
 
(In Millions)
     
2009 net revenue
 
$1,165 
Volume/weather
 
51 
Retail electric price
 
43 
Rough production cost equalization
 
19 
2009 capitalization of Ouachita plant service charges
 
13 
Other
 
2010 net revenue
 
$1,293 
 
4

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

The volume/weather variance is primarily due to an increase of 1,966 GWh, or 9%, in billed electricity usage in all sectors, including the effect of warmer-than-normal weather on the residential sector.

The retail electric price variance is primarily due to increases in the formula rate plan riders at Entergy Gulf States Louisiana effective January 2010 and November 2009, at Entergy Louisiana effective November 2009, and at Entergy Mississippi effective July 2009.  See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan increases.  The retail electric price increase was partially offset by the recovery in 2009 by Entergy Arkansas of 2008 extraordinary storm costs as approved by the APSC and a base rate decrease at Entergy New Orleans effective June 2009.

The rough production cost equalization variance is due to an additional $18.6 million allocation recorded in the second quarter of 2009 of 2007 rough production cost equalization receipts ordered by the PUCT to Texas retail customers over what was originally allocated to Entergy Texas prior to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 2007, as discussed in Note 2 to the financial statements.

In 2009, Entergy Arkansas capitalized $12.5 million of Ouachita plant service charges that were previously expensed.  The result of the capitalization in 2009 was a decrease in net revenues with an offsetting decrease in other operation and maintenance expenses.

Non-Utility Nuclear

Following is an analysis of the change in net revenue comparing the second quarter 2010 to the second quarter 2009.

  
 
Amount
  
 
(In Millions)
     
2009 net revenue
 
$492 
Volume
 
60 
Realized price changes
 
(22)
Other
 
(5)
2010 net revenue
 
$525 

As shown in the table above, net revenue for Non-Utility Nuclear increased by $33 million, or 7%, in the second quarter 2010 compared to the second quarter 2009 primarily due to higher volume resulting from more refueling outage days in 2009, partially offset by lower pricing in its contracts to sell power.  Included in net revenue is $12 million and $13 million of amortization of the Palisades purchased power agreement in the second quarters 2010 and 2009, respectively, which is non-cash revenue and is discussed in Note 15 to the financial statements in the Form 10-K.  Following are key performance measures for Non-Utility Nuclear for the second quarter 2010 and 2009:

   
2010
 
2009
         
Net MW in operation at June 30
 
4,998
 
4,998
Average realized price per MWh
 
$57.69
 
$59.22
GWh billed
 
9,868
 
8,980
Capacity factor
 
90%
 
81%
Refueling Outage Days:
       
Indian Point 2
 
11
 
-
Indian Point 3
 
-
 
15
Palisades
 
-
 
32
Pilgrim
 
-
 
31
Vermont Yankee
 
29
 
-

 
5

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 
Realized Price per MWh

See the Form 10-K for a discussion of Non-Utility Nuclear's realized price per MWh, including the factors that influence it and the increase in the annual average realized price per MWh from $39.40 for 2003 to $61.07 for 2009.  Non-Utility Nuclear is likely to experience a decrease in realized price per MWh in 2010, however, because the realized price for the first six months of 2010 was $58.22 and, as shown in the contracted sale of energy table in "Market and Credit Risk Sensitive Instruments," Non-Utility Nuclear has sold forward 91% of its planned energy output for the remainder of 2010 for an average contracted energy price of $58 per MWh.

Other Income Statement Items

Utility

Other operation and maintenance expenses decreased from $483 million for the second quarter 2009 to $471 million for the second quarter 2010 primarily due to:

·  
a decrease of $9 million due to higher write-offs of uncollectible customer accounts in 2009;
·  
a decrease of $4 million due to 2008 storm costs at Entergy Arkansas which were deferred per an APSC order and were expensed as they were recovered through revenues in 2009;
·  
a decrease of $4 million in legal expenses in 2010 due to the deferral of certain litigation expenses in accordance with regulatory treatment; and
·  
a decrease of $3 million due to the deferral of 2009 Entergy Arkansas rate case expenses to be amortized effective July 2010.

The decrease was partially offset by an increase of $12.5 million due to the capitalization in 2009 of Ouachita plant service charges previously expensed.

Other income decreased primarily due to a decrease of $11 million in carrying charges on storm restoration costs.

Interest charges increased primarily due to an increase in long-term debt outstanding resulting from debt issuances by certain of the Utility operating companies in late 2009 and early 2010.

Non-Utility Nuclear

           Other operation and maintenance expenses increased from $204 million for the second quarter 2009 to $235 million for the second quarter 2010 primarily due to higher spending on other operation and maintenance expenses resulting from fewer refueling outage days.  Also contributing to the increase were higher pension and benefits expense, an increase in costs related to spin-off dis-synergies, and tritium remediation work at the Vermont Yankee site.

Other income increased in the second quarter 2010 primarily due to $69 million in charges in 2009 resulting from the recognition of impairments that are not considered temporary of certain equity securities held in Non-Utility Nuclear's decommissioning trust funds.

Parent & Other

Interest charges decreased primarily due to lower borrowings, including the redemption of $267 million of notes payable in December 2009, as well as lower interest rates on borrowings under Entergy Corporation's revolving credit facility.
 
6

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Income Taxes

           The effective income tax rate for the second quarter 2010 was 38.9%.  The difference in the effective income tax rate versus the statutory rate of 35% for the second quarter 2010 is primarily due to state income taxes and certain book and tax differences for Utility plant items.

The effective income tax rate for the second quarter 2009 was 28.1%.  The reduction in the effective income tax rate versus the statutory rate of 35% for the second quarter 2009 was primarily due to:

·  
an adjustment to state income taxes for Non-Utility Nuclear to reflect the effect of a change in the methodology of computing Massachusetts state income taxes as required by that state's taxing authority;
·  
the recognition of state loss carryovers by the parent company, Entergy Corporation, that had been subject to a valuation allowance; and
·  
the recognition of a federal capital loss carryover by Entergy Asset Management, Inc. that had been subject to a valuation allowance.

The reduction was partially offset by state income taxes at the Utility operating companies.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009

Following are income statement variances for Utility, Non-Utility Nuclear, Parent & Other, and Entergy comparing the six months ended June 30, 2010 to the six months ended June 30, 2009 showing how much the line item increased or (decreased) in comparison to the prior period:

   
 
Utility
 
Non-Utility
Nuclear
 
Parent &
Other (1)
 
 
Entergy
   
(In Thousands)
                 
2009 Consolidated Net Income
 
$267,544 
 
$261,092 
 
($56,492)
 
$472,144 
                 
Net revenue (operating revenue less fuel
  expense, purchased power, and other
  regulatory charges/credits)
 
 
 
221,068 
 
 
 
(15,339)
 
 
 
4,808 
 
 
 
210,537 
Other operation and maintenance expenses
 
134 
 
77,857 
 
(16,688)
 
61,303 
Taxes other than income taxes
 
6,323 
 
(1,135)
 
394 
 
5,582 
Depreciation and amortization
 
1,596 
 
4,365 
 
269 
 
6,230 
Other income
 
(17,335)
 
97,245 
 
(9,538)
 
70,372 
Interest charges
 
32,009 
 
18,260 
 
(22,824)
 
27,445 
Other expenses
 
5,217 
 
10,272 
 
 
15,490 
Income taxes
 
52,854 
 
19,653 
 
25,399 
 
97,906 
                 
2010 Consolidated Net Income
 
$373,144 
 
$213,726 
 
($47,773)
 
$539,097 

(1)
Parent & Other includes eliminations, which are primarily intersegment activity.

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.
 
 
 
7

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

 
Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

  
 
Amount
  
 
(In Millions)
     
2009 net revenue
 
$2,202 
Volume/weather
 
114 
Retail electric price
 
69 
Rough production cost equalization
 
19 
2009 capitalization of Ouachita plant service charges
 
13 
Net gas revenue
 
13 
Other
 
(7)
2010 net revenue
 
$2,423 

The volume/weather variance is primarily due to an increase of 4,621 GWh, or 10%, in billed electricity usage in all sectors, including the effect on the residential sector of colder-than-normal weather in the first quarter 2010 and warmer-than-normal weather in the second quarter 2010.

The retail electric price variance is primarily due to increases in the formula rate plan riders at Entergy Gulf States Louisiana effective January 2010 and November 2009, at Entergy Louisiana effective November 2009, and at Entergy Mississippi effective July 2009.  See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan increases.  The retail electric price increase was partially offset by the recovery in 2009 by Entergy Arkansas of 2008 extraordinary storm costs as approved by the APSC and a base rate decrease at Entergy New Orleans effective June 2009.

The rough production cost equalization variance is due to an additional $18.6 million allocation recorded in the second quarter of 2009 of 2007 rough production cost equalization receipts ordered by the PUCT to Texas retail customers over what was originally allocated to Entergy Texas prior to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 2007, as discussed in Note 2 to the financial statements.

In 2009, Entergy Arkansas capitalized $12.5 million of Ouachita plant service charges that were previously expensed.  The result of the capitalization in 2009 was a decrease in net revenues with an offsetting decrease in other operation and maintenance expenses.

The net gas revenue variance is primarily due to the effect of colder-than-normal weather on residential sales in the first quarter 2010.
 
 
8

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Non-Utility Nuclear

Following is an analysis of the change in net revenue comparing the six months ended June 30, 2010 to the six months ended June 30, 2009.

  
 
Amount
  
 
(In Millions)
     
2009 net revenue
 
$1,095 
Realized price changes
 
(82)
Volume
 
79 
Other
 
(12)
2010 net revenue
 
$1,080 

As shown in the table above, net revenue for Non-Utility Nuclear decreased by $15 million, or 1%, in the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to lower pricing in its contracts to sell power, substantially offset by higher volume resulting from more refueling outage days in 2009.  Included in net revenue is $23 million and $26 million of amortization of the Palisades purchased power agreement in the six months ended June 30, 2010 and 2009, respectively, which is non-cash revenue and is discussed in Note 15 to the financial statements in the Form 10-K.  Following are key performance measures for Non-Utility Nuclear for the six months ended June 30, 2010 and 2009:

   
2010
 
2009
         
Net MW in operation at June 30
 
4,998
 
4,998
Average realized price per MWh
 
$58.22
 
$61.66
GWh billed
 
20,123
 
19,054
Capacity factor
 
92%
 
87%
Refueling Outage Days:
       
Indian Point 2
 
33
 
-
Indian Point 3
 
-
 
36
Palisades
 
-
 
41
Pilgrim
 
-
 
31
Vermont Yankee
 
29
 
-

Other Income Statement Items

Utility

Other operation and maintenance expenses were flat for the six months ended June 30, 2010 compared to the six months ended June 30, 2009.   Increases of $15 million in payroll-related and benefits costs and $12.5 million due to the capitalization in 2009 of Ouachita plant service charges previously expensed were offset by decreases of $13 million due to higher write-offs of uncollectible customer accounts in 2009 and $10 million due to 2008 storm costs at Entergy Arkansas which were deferred per an APSC order and were recovered through revenues in 2009.

Other income decreased primarily due to a decrease of $23 million in carrying charges on storm restoration costs, partially offset by an increase of $9 million resulting from higher earnings on decommissioning trust funds.

Interest charges increased primarily due to an increase in long-term debt outstanding resulting from net debt issuances by certain of the Utility operating companies in the second half of 2009 and the first half of 2010.
 
9

 
Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Non-Utility Nuclear

Other operation and maintenance expenses increased from $404 million for the six months ended June 30, 2009 to $481 million for the six months ended June 30, 2010 primarily due to the write-off of $32 million of capital costs, primarily for software that will not be utilized, in connection with Entergy's decision to unwind the infrastructure created for the planned Non-Utility Nuclear spin-off transaction.  Also contributing to the increase were higher spending on other operation and maintenance expenses resulting from fewer refueling outage days, tritium remediation work at the Vermont Yankee site, higher pension and benefits expense, and higher insurance expense.

Other income increased primarily due to $85 million in charges in 2009 resulting from the recognition of impairments that are not considered temporary of certain equity securities held in Non-Utility Nuclear's decommissioning trust funds, increases in realized earnings on the decommissioning trust funds, and interest income from loans to Entergy subsidiaries.

Interest charges increased primarily due to the write-off of $39 million of debt financing costs, primarily incurred for Enexus's $1.2 billion credit facility, in connection with Entergy's decision to unwind the infrastructure created for the planned Non-Utility Nuclear spin-off transaction.  Partially offsetting the increase was a decrease in fees paid to Entergy Corporation for providing collateral in the form of guarantees in connection with some of Non-Utility Nuclear's agreements to sell power.  The guarantee fees paid are intercompany transactions and are eliminated in consolidation.

Parent & Other

Interest charges decreased primarily due to lower borrowings, including the redemption of $267 million of notes payable in December 2009, as well as lower interest rates on borrowings under Entergy Corporation's revolving credit facility.

Income Taxes

The effective income tax rate for the six months ended June 30, 2010 was 39.5%.  The difference in the effective income tax rate versus the statutory rate of 35% for the six months ended June 30, 2010 is primarily due to a charge of $16 million resulting from a change in tax law associated with the recently enacted federal healthcare legislation, as discussed below in "Critical Accounting Estimates".  Also contributing to the increased effective rate were state income taxes and certain book and tax differences for utility plant items.  These factors were partially offset by a $19 million tax benefit recorded in connection with Entergy's decision to unwind the infrastructure created for the planned Non-Utility Nuclear spin-off transaction resulting from implementation expenses that previously were not deductible for tax purposes.  Also offsetting the increased effective rate are book and tax differences related to storm cost financing and allowance for equity funds used during construction.

The effective income tax rate for the six months ended June 30, 2009 was 35.0%.  The effective income tax rate is equal to the statutory rate of 35% for the six months ended June 30, 2009 primarily due to the reductions in the effective income tax rate discussed below being offset by increases related to state income taxes at the Utility operating companies and book and tax differences for utility plant items. The effective income tax rate for the six months ended June 30, 2009 reflected reductions related to:

·  
an adjustment to state income taxes for Non-Utility Nuclear to reflect the effect of a change in the methodology of computing Massachusetts state income taxes as required by that state's taxing authority;
·  
the recognition of state loss carryovers by the parent company, Entergy Corporation, that had been subject to a valuation allowance; and
·  
the recognition of a federal capital loss carryover by Entergy Asset Management, Inc. that had been subject to a valuation allowance.
 
 
10

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

 
Liquidity and Capital Resources

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy's capital structure, capital expenditure plans and other uses of capital, and sources of capital.  Following are updates to that discussion.

Capital Structure

Entergy's capitalization is balanced between equity and debt, as shown in the following table.

   
June 30,
 2010
 
December 31,
2009
         
Net debt to net capital, excluding the Texas securitization
  bonds, which are non-recourse to Entergy Texas
 
 
51.6%
 
 
51.5%
Effect of excluding the Texas securitization bonds
 
2.1%
 
2.1%
Net debt to net capital
 
53.7%
 
53.6%
Effect of subtracting cash from debt
 
2.9%
 
3.8%
Debt to capital
 
56.6%
 
57.4%

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, common shareholders' equity, and subsidiaries' preferred stock without sinking fund.  Net capital consists of capital less cash and cash equivalents. Entergy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy's financial condition.

As discussed in the Form 10-K, Entergy Corporation has in place a revolving credit facility that expires in August 2012.  Entergy Corporation has the ability to issue letters of credit against the total borrowing capacity of the facility.  As of June 30, 2010, the capacity and amounts outstanding under the credit facility are:

 
Capacity
 
 
Borrowings
 
Letters
of Credit
 
Capacity
Available
(In Millions)
             
$3,477 
 
$2,659 
 
$25 
 
$793

Entergy Corporation's credit facility requires it to maintain a consolidated debt ratio of 65% or less of its total capitalization.  The calculation of this debt ratio under Entergy Corporation's credit facility and in the indenture governing the Entergy Corporation senior notes is different than the calculation of the debt to capital ratio above.  Entergy is currently in compliance with this covenant.  If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility's maturity date may occur, and there may be an acceleration of amounts due under Entergy Corporation's senior notes.

See Note 4 to the financial statements herein for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries' credit facilities.

Capital Expenditure Plans and Other Uses of Capital

See the table and discussion in the Form 10-K under "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital," that sets forth the amounts of planned construction and other capital investments by operating segment for 2010 through 2012.  See Part II, Item 5 in this report for an update regarding Entergy Arkansas’s White Bluff project.  Following are additional updates to the discussion in the Form 10-K.
 
11

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 

Acadia Unit 2 Purchase Agreement

As discussed more fully in the Form 10-K, in October 2009, Entergy Louisiana announced that it has signed an agreement to acquire Unit 2 of the Acadia Energy Center, a 580 MW generating unit located near Eunice, La., from Acadia Power Partners, LLC, an independent power producer.  Entergy Louisiana and Acadia Power Partners also have entered into two purchase power agreements that are intended to provide access to the capacity and energy output of the unit during the period before the acquisition closes.  The first agreement is a tolling arrangement pursuant to which Entergy Louisiana will purchase 100 percent of the output of Acadia Unit 2.  This agreement is available to Entergy Louisiana when the federal reviews of the transaction are complete.  The second purchase power agreement is a call option agreement that commenced on June 1, 2010 and will remain in place either until deliveries commence under the tolling agreement or the acquisition closes.  Entergy Louisiana's purchase is contingent upon, among other things, obtaining necessary approvals, including full cost recovery, from various federal and state regulatory and permitting agencies.  The LPSC has approved both purchase power agreements.  The parties have agreed to a procedural schedule for review of the acquisition that includes a hearing before the ALJ in December 2010.  Currently the closing is expected to occur in early 2011.

Little Gypsy Repowering Project

See the Form 10-K for a discussion of the Little Gypsy repowering project.  In October 2009, Entergy Louisiana made a filing with the LPSC seeking permission to cancel the project and seeking recovery over a five-year period of the project costs.  In June 2010, the LPSC Staff and Intervenors filed testimony.  The LPSC Staff (1) agreed that it was prudent to move the project from long-term suspension to cancellation and that the timing of the decision to suspend on a longer-term basis was not imprudent; (2) indicated that, except for $0.8 million in compensation-related cotst, the costs incurred should be deemed prudent; (3) recommended recovery from customers over ten years but stated that the LPSC may want to consider 15 years; (4) allowed for recovery of carrying costs and earning a return on project costs, but at a reduced rate approximating the cost of debt, while also acknowledging that the LPSC may consider ordering no return; and (5) indicated that Entergy Louisiana should be directed to securitize project costs, if legally feasible and in the public interest.  The procedural schedule calls for hearings to begin in November 2010.

Dividends and Stock Repurchases

In the fourth quarter 2009 the Board granted authority for a $750 million share repurchase program.  As discussed above, at the same time that it announced its plans to unwind the business infrastructure associated with the proposed spin-off of the Non-Utility Nuclear business, Entergy also announced in April 2010 that it expected to execute on the $750 million share repurchase program and also declared that its next quarterly dividend on its common shares would be $0.83 per share, an increase from the previous $0.75 per share.  The amount of repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities.

Sources of Capital

Entergy Arkansas January 2009 Ice Storm

As discussed in the Form 10-K, in January 2009 a severe ice storm caused significant damage to Entergy Arkansas' transmission and distribution lines, equipment, poles, and other facilities.  A law was enacted in April 2009 in Arkansas that authorizes securitization of storm damage restoration costs.  In June 2010 the APSC issued a financing order authorizing the issuance of approximately $126.3 million in storm cost recovery bonds, which includes carrying costs of $11.5 million and $4.6 million of up-front financing costs.  Entergy Arkansas expects the bonds to be issued in the third quarter 2010.
 
 
12

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Hurricane Gustav and Hurricane Ike

As discussed in the Form 10-K, in September 2008, Hurricane Gustav and Hurricane Ike caused catastrophic damage to Entergy's service territory.  Entergy Gulf States Louisiana and Entergy Louisiana filed their Hurricane Gustav and Hurricane Ike storm cost recovery case with the LPSC in May 2009.  In September 2009, Entergy Gulf States Louisiana and Entergy Louisiana and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed with the LPSC an application requesting that the
 
LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana’s and Entergy Louisiana’s storm costs, storm reserves, and issuance costs pursuant to Act 55 of
the Louisiana Regular Session of 2007 (Act 55 financings).  Entergy Gulf States Louisiana’s and Entergy Louisiana’s Hurricane Katrina and Hurricane Rita storm costs were financed primarily by Act 55 financings, as discussed in the Form 10-K.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and Act 55 financing savings to customers via a Storm Cost Offset rider.  On December 30, 2009, Entergy Gulf States Louisiana and Entergy Louisiana entered into a stipulation agreement with the LPSC Staff that provides for total recoverable costs of approximately $234 million for Entergy Gulf States Louisiana and $394 million for Entergy Louisiana, including carrying costs.  Under this stipulation, Entergy Gulf States Louisiana agrees not to recover $4.4 million and Entergy Louisiana agrees not to recover $7.2 million of their storm restoration spending.  The stipulation also permits replenishing Entergy Gulf States Louisiana's storm reserve in the amount of $90 million and Entergy Louisiana's storm reserve in the amount of $200 million when the Act 55 financings are accomplished.  In March and April 2010, Entergy Gulf States Louisiana, Entergy Louisiana, and other parties to the proceeding filed with the LPSC an uncontested stipulated settlement that includes these terms and also includes Entergy Gulf States Louisiana’s and Entergy Louisiana's proposals under the Act 55 financings, which includes a commitment to pass on to customers a minimum of $15.5 million and $27.75 million of customer benefits, respectively, through prospective annual rate reductions of $3.1 million and $5.55 million, respectively, for five years.  A stipulation hearing was held before the ALJ on April 13, 2010.  On April 21, 2010, the LPSC approved the settlement and subsequently issued two financing orders and one ratemaking order intended to facilitate the implementation of the Act 55 financings.  In June 2010 the Louisiana State Bond Commission approved the Act 55 financings.

On July 22, 2010, the Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA) issued $468.9 million in bonds under Act 55.  From the $462.4 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $200 million in a restricted escrow account as a storm damage reserve for Entergy Louisiana and transferred $262.4 million directly to Entergy Louisiana. From the bond proceeds received by Entergy Louisiana from the LURC, Entergy Louisiana used $262.4 million to acquire 2,624,297.11 Class B preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 9% annual distribution rate. Distributions are payable quarterly commencing on September 15, 2010, and the membership interests have a liquidation price of $100 per unit.  The preferred membership interests are callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net worth of at least $1 billion.

On July 22, 2010, the LCDA issued another $244.1 million in bonds under Act 55. From the $240.3 million of bond proceeds loaned by the LCDA to the LURC, the LURC deposited $90 million in a restricted escrow account as a storm damage reserve for Entergy Gulf States Louisiana and transferred $150.3 million directly to Entergy Gulf States Louisiana. From the bond proceeds received by Entergy Gulf States Louisiana from the LURC, Entergy Gulf States Louisiana used $150.3 million to acquire 1,502,643.04 Class B preferred, non-voting, membership interest units of Entergy Holdings Company LLC, a company wholly-owned and consolidated by Entergy, that carry a 9% annual distribution rate. Distributions are payable quarterly commencing on September 15, 2010, and the membership interests have a liquidation price of $100 per unit.  The preferred membership interests are callable at the option of Entergy Holdings Company LLC after ten years under the terms of the LLC agreement. The terms of the membership interests include certain financial covenants to which Entergy Holdings Company LLC is subject, including the requirement to maintain a net worth of at least $1 billion.
 
 
13

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Entergy, Entergy Gulf States Louisiana, and Entergy Louisiana do not report the bonds on their balance sheets because the bonds are the obligation of the LCDA, and there is no recourse against Entergy, Entergy Gulf States Louisiana or Entergy Louisiana in the event of a bond default.  To service the bonds, Entergy Gulf States Louisiana and Entergy Louisiana collect a system restoration charge on behalf of the LURC, and remit the collections to the bond indenture trustee.  Entergy Gulf States Louisiana and Entergy Louisiana will not report the collections as revenue because they are merely acting as the billing and collection agents for the state.
 

Cash Flow Activity
As shown in Entergy's Consolidated Statements of Cash Flows, cash flows for the six months ended June 30, 2010 and 2009 were as follows:

   
2010
 
2009
   
(In Millions)
         
Cash and cash equivalents at beginning of period
 
$1,710 
 
$1,920 
         
Cash flow provided by (used in):
       
Operating activities
 
1,468 
 
1,016 
Investing activities
 
(1,173)
 
(1,120)
Financing activities
 
(670)
 
(536)
Effect of exchange rates on cash and cash equivalents
 
 
Net decrease in cash and cash equivalents
 
(374)
 
(640)
         
Cash and cash equivalents at end of period
 
$1,336 
 
$1,280 

Operating Activities

Entergy's cash flow provided by operating activities increased by $452 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009, primarily due to the absence of the Hurricane Gustav, Hurricane Ike, and Arkansas ice storm restoration spending that occurred in 2009.  In addition, an increase in Utility net revenue also contributed to the increase.  These increases were partially offset by decreased collection of fuel costs and an $87.8 million fuel cost refund made by Entergy Texas in the first quarter 2010 that is discussed further in Note 2 to the financial statements in the Form 10-K.  Operating cash flow provided by the Non-Utility Nuclear business increased by approximately $80 million, with its slight decline in net revenue offset by various, individually insignificant, factors.

Investing Activities

Net cash used in investing activities increased by $53 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009, primarily due to an increase in nuclear fuel purchases, partially offset by an increase in collateral deposits received from Non-Utility Nuclear counterparties.  The variance in construction expenditures was relatively flat, as decreases resulting from Hurricane Gustav, Hurricane Ike, and Arkansas ice storm restoration spending in 2009 were offset by spending on nuclear plant security upgrades, the Waterford 3 steam generator replacement project, and other projects.

Financing Activities

Net cash used in financing activities increased by $134 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily because Entergy repurchased $137.7 million of its common stock during the six months ended June 30, 2010.  Entergy made no common stock repurchases during the six months ended June 30, 2009.

For details regarding Entergy's long-term debt activity in 2010 see Note 4 to the financial statements herein.
 
 
14

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Rate, Cost-recovery, and Other Regulation

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation" in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.

State and Local Rate Regulation and Fuel-Cost Recovery

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.

Federal Regulation

See the Form 10-K for a discussion of federal regulatory proceedings.  Following are updates to that discussion.

System Agreement Proceedings

Rough Production Cost Equalization Rates

2010 Rate Filing Based on Calendar Year 2009 Production Costs

In May 2010, Entergy filed with the FERC the 2010 rates in accordance with the FERC's orders in the System Agreement proceeding.  The filing shows the following payments/receipts among the Utility operating companies for 2010, based on calendar year 2009 production costs, commencing for service in June 2010, are necessary to achieve rough production cost equalization under the FERC's orders:

 
 Payments or
(Receipts)
 
(In Millions)
Entergy Arkansas
$27
Entergy Gulf States Louisiana
$-
Entergy Louisiana
($13)
Entergy Mississippi
($14)
Entergy New Orleans
$-
Entergy Texas
$-

Several parties intervened in the proceeding at the FERC, including the LPSC and the City Council, which have also filed protests.  On July 23, 2010, the FERC accepted Entergy's proposed rates for filing, effective June 1, 2010, subject to refund, and set the proceeding for hearing and settlement procedures.

2009 Rate Filing Based on Calendar Year 2008 Production Costs

Several parties intervened in the 2009 rate proceeding at the FERC, including the LPSC and Ameren, which have also filed protests.  On July 27, 2009, the FERC accepted Entergy's proposed rates for filing, effective June 1, 2009, subject to refund, and set the proceeding for hearing and settlement procedures.  Settlement procedures were terminated and a hearing before the ALJ was held in April 2010.  An initial decision is scheduled for August 2010.

Entergy Arkansas and Entergy Mississippi Notices of Termination of System Agreement Participation and Related APSC Investigation

In February 2010 the APSC issued an order announcing a refocus of its ongoing investigation of Entergy Arkansas' post-System Agreement operation.  The order describes the APSC's "stated purpose in opening this inquiry to conduct an investigation regarding the prudence of [Entergy Arkansas] entering into a successor ESA [Entergy System Agreement] as opposed to becoming a stand-alone utility upon its exit from the ESA, and whether [Entergy Arkansas], as a standalone utility, should join the SPP RTO.  It is the
 
15

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
 [APSC's] intention to render a decision regarding the prudence of [Entergy Arkansas] entering into a successor ESA as opposed to becoming a stand-alone utility upon its exit from the ESA, as well as [Entergy Arkansas'] RTO participation by the end of calendar year 2010.  In parallel with this Docket, the [APSC] will be actively involved and will be closely watching to see if any meaningful enhancement will be made to a new Enhanced Independent Coordinator of Transmission (“E-ICT") Agreement through the efforts of the [Entergy Transmission System] stakeholders, Entergy, and the newly formed and federally-recognized [Entergy Regional State Committee] in 2010."

Entergy Arkansas filed testimony and participated in a March 2010 evidentiary hearing in the proceeding.  Entergy Arkansas noted in its testimony that it is not reasonable to complete a comprehensive evaluation of strategic options by the end of 2010 and that forcing a decision would place parties in the untenable position of making critical decisions based on insufficient information.  Entergy Arkansas outlined three options for post-System Agreement operation of its electrical system:  1) Entergy Arkansas self providing its generation planning and operating functions as a stand-alone company; 2) Entergy Arkansas plus new coordination agreements with third parties in which Entergy Arkansas self provides some planning and operations functions, but also enters into one or more coordinating or pooling agreements with third parties; and 3) Successor Arrangements under which Entergy Arkansas plans for its own generation resources but enters into a new generation commitment and dispatch agreement with other Utility operating companies under a successor agreement intended to avoid the litigation previously experienced.  Entergy Arkansas’s plan is expected to lead to a decision in late 2011 regarding which option to implement; however, Entergy Arkansas anticipates pursuing in 2010-2011 several elements that are common to all options.  In an attempt to reach understanding of complex issues, Entergy Arkansas proposes to hold a series of five technical conferences in the coming months targeting specific subjects.  The first two technical conferences were held in May and July 2010.  A second evidentiary hearing in the proceeding is scheduled for August 2010.

In early April 2010, Entergy Corporation and the Utility operating companies determined in connection with their decision-making process that it is appropriate to agree and commit that no Utility operating company will enter voluntarily into successor arrangements with the other Utility operating companies if its retail regulator finds successor arrangements are not in the public interest.  Hugh McDonald, chief executive officer of Entergy Arkansas, notified the APSC of this decision, and explained the decision and commitment, in a letter filed with the APSC on April 26, 2010.

June 2009 LPSC Complaint Proceeding

See the Form 10-K for a discussion of the complaint that the LPSC filed in June 2009 requesting that the FERC determine that certain of Entergy Arkansas' sales of electric energy to third parties: (a) violated the provisions of the System Agreement that allocate the energy generated by Entergy System resources, (b) imprudently denied the Entergy System and its ultimate consumers the benefits of low-cost Entergy System generating capacity, and (c) violated the provision of the System Agreement that prohibits sales to third parties by individual companies absent an offer of a right-of-first-refusal to other Utility operating companies.  Settlement procedures were unsuccessful, and a hearing in the matter is scheduled to commence in August 2010.  On April 16, 2010, the LPSC filed direct testimony in the proceeding alleging, among other things, (1) that Entergy violated the System Agreement by permitting Entergy Arkansas to make non-requirements sales to non-affiliated third parties rather than making such energy available to the other Utility operating companies’ customers; and (2) that over the period 2000 – 2009, these non-requirements sales caused harm to the Utility operating companies’ customers of $144.4 million and these customers should be compensated for this harm by Entergy’s shareholders.  The Utility operating companies believe the LPSC's allegations are without merit.

Independent Coordinator of Transmission (ICT)

See the Form 10-K for a discussion of Entergy's ICT and transmission issues.  As discussed in the Form 10-K, the Entergy Regional State Committee (E-RSC), which is comprised of representatives from all of the Utility operating companies' retail regulators, has been formed to consider several of these issues related to Entergy's transmission system.  Among other things, the E-RSC in concert with the FERC plan to conduct a cost/benefit analysis comparing the ICT arrangement and a proposal under which Entergy would join the Southwest Power Pool RTO.  The scope of the study was expanded in July 2010 to consider Entergy joining the Midwest ISO RTO as another alternative.  The E-RSC is also
 
 
16

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
considering proposed modifications to the ICT arrangement that could be implemented commencing November 2010, when the initial term of the ICT ends.  Pursuant to a September 1, 2006, order of the LPSC, ELL and EGSL filed an initial report with the LPSC describing, among other things, Entergy’s proposal to modify the current ICT arrangement and to give the E-RSC the authority, upon a unanimous vote, to direct Entergy  (a) to make a filing pursuant to section 205 of the Federal Power Act to change the way transmission upgrade costs are allocated under the Entergy Open Access Transmission Tariff and (b) to add specific projects to Entergy’s construction plan.  As noted in the report, the E-RSC is considering these and other modifications and has not reached a final conclusion.  The Utility operating companies anticipate making the necessary filing with the FERC to extend the ICT, likely with modifications, in September 2010.

Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As discussed more fully in the Form 10-K, the sale of electricity from the power generation plants owned by Entergy's Non-Utility Nuclear business, unless otherwise contracted, is subject to the fluctuation of market power prices.  Following is an updated summary of the amount of the Non-Utility Nuclear business's output that is currently sold forward under physical or financial contracts (2010 represents the remainder of the year):

   
2010
 
2011
 
2012
 
2013
 
2014
 
Non-Utility Nuclear:
                     
Percent of planned generation sold forward:
                     
Unit-contingent (1)
 
53%
 
73%
 
40%
 
15%
 
14%
 
     Unit-contingent with availability guarantees (2)
 
38%
 
17%
 
14%
 
 6%
 
 3%
 
Firm LD (3)
 
0%
 
2%
 
2%
 
0%
 
0%
 
Offsetting positions (4)
 
0%
 
(2)%
 
(2)%
 
0%
 
0%
 
Total (net)
 
91%
 
90%
 
54%
 
21%
 
17%
 
Planned generation (TWh)
 
20
 
41
 
41
 
40
 
41
 
Average contracted price per MWh (5)
 
$58
 
$54
 
$53
 
$50
 
$50
 

(1)
Unit-contingent is a transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages.
(2)
Unit-contingent with availability guarantees is a transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages, unless the actual availability over a specified period of time is below an availability threshold specified in the contract.
(3)
Firm LD is a transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, the defaulting party must compensate the other party as specified in the contract.
(4)
Offsetting positions are transactions for the purchase of energy, generally to offset a Firm LD transaction that was used as a placeholder until a unit-contingent transaction could be originated and executed.
(5)
The Vermont Yankee acquisition included a PPA under which the former owners will buy most of the power produced by the plant through the expiration in 2012 of the current operating license for the plant.  The PPA includes an adjustment clause under which the prices specified in the PPA will be adjusted downward monthly if twelve month rolling average power market prices drop below prices specified in the PPA, which has not happened thus far.
 
 
17

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Some of the agreements to sell the power produced by Entergy's Non-Utility Nuclear power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations under the agreements.  The Entergy subsidiary is required to provide collateral based upon the difference between the current market and contracted power prices in the regions where Non-Utility Nuclear sells power.  The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty.  Cash and letters of credit are also acceptable forms of collateral.  At June 30, 2010, based on power prices at that time, Entergy had credit exposure of $13 million under the guarantees in place supporting Entergy Nuclear Power Marketing (a Non-Utility Nuclear subsidiary) transactions, $20 million of guarantees that support letters of credit, and $3 million of posted cash collateral.  As of June 30, 2010, the credit exposure associated with Non-Utility Nuclear assurance requirements would increase by $64 million for a $1 per MMBtu increase in gas prices in both the short-and long-term markets.   In the event of a decrease in Entergy Corporation's credit rating to below investment grade, based on power prices as of June 30, 2010, Entergy would have been required to provide approximately $77 million of additional cash or letters of credit under some of the agreements.

As of June 30, 2010, the counterparties or their guarantors for 99.5% of the planned energy output under contract for Non-Utility Nuclear through 2014 have public investment grade credit ratings and 0.5% is with load-serving entities without public credit ratings.

In addition to selling the power produced by its plants, Non-Utility Nuclear sells unforced capacity that is used to meet requirements placed on load-serving distribution companies by the ISO in their area.  Following is a summary of the amount of Non-Utility Nuclear's unforced capacity that is currently sold forward, and the blended amount of Non-Utility Nuclear's planned generation output and unforced capacity that is currently sold forward (2010 represents the remainder of the year):

   
2010
 
2011
 
2012
 
2013
 
2014
Non-Utility Nuclear:
                   
Percent of capacity sold forward (net):
                   
Bundled capacity and energy contracts
 
26%
 
25%
 
18%
 
16%
 
16%
Capacity contracts
 
46%
 
26%
 
30%
 
13%
 
 0%
Total
 
72%
 
51%
 
48%
 
29%
 
16%
Planned net MW in operation
 
4,998
 
4,998
 
4,998
 
4,998
 
4,998
Average capacity contract price per kW per month
 
$3.2
 
$3.5
 
$2.9
 
$2.6
 
$-
Blended Capacity and Energy (based on revenues)
                   
% of planned generation and capacity sold forward
 
92%
 
90%
 
57%
 
21%
 
15%
Average contract revenue per MWh
 
$60
 
$55
 
$55
 
$53
 
$50

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy's accounting for nuclear decommissioning costs, unbilled revenue, impairment of long-lived assets and trust fund investments, qualified pension and other postretirement benefits, and other contingencies.  Following is an update to that discussion.

Federal Healthcare Legislation

The Patient Protection and Affordable Care Act (PPACA) became federal law on March 23, 2010, and, on March 30, 2010, the Health Care and Education Reconciliation Act of 2010 became federal law and amended certain provisions of the PPACA.  These new federal laws change the law governing employer-sponsored group health plans, like Entergy's plans.  All of the effects of these changes are not yet determinable because technical guidance regarding application must still be issued, and Entergy will monitor these developments.
 
 
18

Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
One provision of the new law that is effective in 2013 eliminates the federal income tax deduction for prescription drug expenses of Medicare beneficiaries for which the plan sponsor also receives the retiree drug subsidy under Part D.  Entergy receives subsidy payments under the Medicare Part D plan and therefore in the first quarter 2010 recorded a reduction to the deferred tax asset related to the unfunded other postretirement benefit obligation.  The offset was recorded as a $16 million charge to income tax expense or, for the Utility, including each Registrant Subsidiary, as a regulatory asset, as detailed in Note 2 to the financial statements herein.

 
19

 

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20

 


ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
Three Months Ended
   
Six Months Ended
 
   
2010
   
2009
   
2010
   
2009
 
      (In Thousands, Except Share Data)  
                         
OPERATING REVENUES
                       
Electric
  $ 2,214,108     $ 1,918,446     $ 4,221,038     $ 3,945,363  
Natural gas
    31,136       28,834       127,163       102,884  
Competitive businesses
    617,706       573,509       1,274,095       1,261,654  
TOTAL
    2,862,950       2,520,789       5,622,296       5,309,901  
                                 
OPERATING EXPENSES
                               
Operating and Maintenance:
                               
   Fuel, fuel-related expenses, and
                               
     gas purchased for resale
    631,546       521,071       1,190,214       1,367,060  
   Purchased power
    416,458       322,919       891,361       646,174  
   Nuclear refueling outage expenses
    64,221       60,234       126,510       117,013  
   Other operation and maintenance
    700,204       696,345       1,402,692       1,341,389  
Decommissioning
    52,467       49,307       104,043       98,050  
Taxes other than income taxes
    126,968       122,401       262,380       256,798  
Depreciation and amortization
    255,567       260,689       524,771       518,541  
Other regulatory charges (credits) - net
    (10,722 )     13,327       17,370       (16,147 )
TOTAL
    2,236,709       2,046,293       4,519,341       4,328,878  
                                 
OPERATING INCOME
    626,241       474,496       1,102,955       981,023  
                                 
OTHER INCOME (DEDUCTIONS)
                               
Allowance for equity funds used during construction
    17,630       15,782       30,926       32,730  
Interest and dividend income
    35,792       58,892       84,213       105,278  
Other than temporary impairment losses
    (837 )     (69,203 )     (1,049 )     (84,939 )
Miscellaneous - net
    (16,780 )     (13,354 )     (17,302 )     (26,653 )
TOTAL
    35,805       (7,883 )     96,788       26,416  
                                 
INTEREST AND OTHER CHARGES
                               
Interest on long-term debt
    127,302       125,157       294,237       253,123  
Other interest - net
    20,877       27,487       33,142       46,780  
Allowance for borrowed funds used during construction
    (10,323 )     (8,483 )     (18,325 )     (18,294 )
TOTAL
    137,856       144,161       309,054       281,609  
                                 
INCOME BEFORE INCOME TAXES
    524,190       322,452       890,689       725,830  
                                 
Income taxes
    203,907       90,641       351,592       253,686  
                                 
CONSOLIDATED NET INCOME
    320,283       231,811       539,097       472,144  
                                 
Preferred dividend requirements of subsidiaries
    5,017       4,998       10,033       9,996  
                                 
NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION
  $ 315,266     $ 226,813     $ 529,064     $ 462,148  
                                 
                                 
Earnings per average common share:
                               
    Basic
  $ 1.67     $ 1.16     $ 2.80     $ 2.38  
    Diluted
  $ 1.65     $ 1.14     $ 2.77     $ 2.35  
Dividends declared per common share
  $ 0.83     $ 0.75     $ 1.58     $ 1.50  
                                 
Basic average number of common shares outstanding
    188,776,240       196,105,002       188,988,284       194,359,001  
Diluted average number of common shares outstanding
    190,717,958       198,243,169       190,999,699       198,150,768  
                                 
See Notes to Financial Statements.
                               
 
 
21

 



ENTERGY CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
   
2010
   
2009
 
   
(In Thousands)
 
             
OPERATING ACTIVITIES
           
Consolidated net income
  $ 539,097     $ 472,144  
Adjustments to reconcile consolidated net income to net cash flow
               
 provided by operating activities:
               
  Reserve for regulatory adjustments
    (515 )     (1,630 )
  Other regulatory charges (credits) - net
    17,370       (16,147 )
  Depreciation, amortization, and decommissioning, including nuclear fuel amortization
    831,785       697,205  
  Deferred income taxes, investment tax credits, and non-current taxes accrued
    342,641       249,448  
  Changes in working capital:
               
     Receivables
    (177,445 )     1,888  
     Fuel inventory
    5,002       (3,963 )
     Accounts payable
    23,094       (58,177 )
     Taxes accrued
    -       5,193  
     Interest accrued
    (28,815 )     (37,043 )
     Deferred fuel
    (2,070 )     266,062  
     Other working capital accounts
    (116,720 )     (157,092 )
  Provision for estimated losses and reserves
    (30,218 )     (18,642 )
  Changes in other regulatory assets
    (22,703 )     (455,577 )
  Changes in pensions and other postretirement liabilities
    (74,187 )     (44,961 )
  Other
    161,518       117,641  
Net cash flow provided by operating activities
    1,467,834       1,016,349  
                 
  INVESTING ACTIVITIES
               
Construction/capital expenditures
    (918,582 )     (932,056 )
Allowance for equity funds used during construction
    30,926       32,730  
Nuclear fuel purchases
    (218,829 )     (149,568 )
Proceeds from sale/leaseback of nuclear fuel
    -       21,210  
Proceeds from sale of assets and businesses
    9,675       8,654  
Changes in transition charge account
    (22,528 )     2,962  
NYPA value sharing payment
    (72,000 )     (72,000 )
Decrease in other investments
    62,325       17,111  
Proceeds from nuclear decommissioning trust fund sales
    1,487,387       1,282,206  
Investment in nuclear decommissioning trust funds
    (1,531,275 )     (1,330,730 )
Net cash flow used in investing activities
    (1,172,901 )     (1,119,481 )
                 
See Notes to Financial Statements.
               
 
 
22

 
 
 
 
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2010 and 2009
(Unaudited)
      2010       2009  
   
(In Thousands)
 
                 
FINANCING ACTIVITIES
               
Proceeds from the issuance of:
               
  Long-term debt
    525,789       783,304  
  Common stock and treasury stock
    8,716       2,691  
Retirement of long-term debt
    (774,772 )     (1,022,790 )
Repurchase of common stock
    (137,749 )     -  
Changes in credit line borrowings - net
    17,123       -  
Dividends paid:
               
  Common stock
    (298,796 )     (289,159 )
  Preferred stock
    (10,033 )     (9,995 )
Net cash flow used in financing activities
    (669,722 )     (535,949 )
                 
Effect of exchange rates on cash and cash equivalents
    762       (503 )
                 
Net decrease in cash and cash equivalents
    (374,027 )     (639,584 )
                 
Cash and cash equivalents at beginning of period
    1,709,551       1,920,491  
                 
Cash and cash equivalents at end of period
  $ 1,335,524     $ 1,280,907  
                 
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
  Cash paid/(received) during the period for:
               
    Interest - net of amount capitalized
  $ 309,311     $ 321,186  
    Income taxes
  $ 26,054     $ (3,139 )
                 
   Noncash financing activities:
               
     Long-term debt retired (equity unit notes)
    -     $ (500,000 )
     Common stock issued in settlement of equity unit purchase contracts
    -     $ 500,000  
     Proceeds from long-term debt issued for the purpose of refunding prior long-term debt
  $ 150,000       -  
     Long-term debt refunded with proceeds from long-term debt issued in prior period
  $ (150,000 )     -  
                 
See Notes to Financial Statements.
               
 
 
23

 



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2010 and December 31, 2009
(Unaudited)
             
   
2010
   
2009
 
   
(In Thousands)
 
             
CURRENT ASSETS
           
Cash and cash equivalents:
           
  Cash
  $ 77,155     $ 85,861  
  Temporary cash investments
    1,258,369       1,623,690  
     Total cash and cash equivalents
    1,335,524       1,709,551  
Securitization recovery trust account
    35,626       13,098  
Accounts receivable:
               
  Customer
    646,714       553,692  
  Allowance for doubtful accounts
    (31,269 )     (27,631 )
  Other
    177,162       152,303  
  Accrued unbilled revenues
    373,548       302,463  
     Total accounts receivable
    1,166,155       980,827  
Deferred fuel costs
    19,155       126,798  
Accumulated deferred income taxes
    25,403       -  
Fuel inventory - at average cost
    191,852       196,855  
Materials and supplies - at average cost
    846,344       825,702  
Deferred nuclear refueling outage costs
    251,237       225,290  
System agreement cost equalization
    23,424       70,000  
Prepayments and other
    467,802       386,040  
TOTAL
    4,362,522       4,534,161  
                 
OTHER PROPERTY AND INVESTMENTS
               
Investment in affiliates - at equity
    38,239       39,580  
Decommissioning trust funds
    3,206,900       3,211,183  
Non-utility property - at cost (less accumulated depreciation)
    254,222       247,664  
Other
    112,313       120,273  
TOTAL
    3,611,674       3,618,700  
                 
PROPERTY, PLANT AND EQUIPMENT
               
Electric
    36,644,117       36,343,772  
Property under capital lease
    782,343       783,096  
Natural gas
    319,034       314,256  
Construction work in progress
    1,679,226       1,547,319  
Nuclear fuel under capital lease
    -       527,521  
Nuclear fuel
    1,262,635       739,827  
TOTAL PROPERTY, PLANT AND EQUIPMENT
    40,687,355       40,255,791  
Less - accumulated depreciation and amortization
    17,195,687       16,866,389  
PROPERTY, PLANT AND EQUIPMENT - NET
    23,491,668       23,389,402  
                 
DEFERRED DEBITS AND OTHER ASSETS
               
Regulatory assets:
               
  Regulatory asset for income taxes - net
    606,779       619,500  
  Other regulatory assets (includes Texas securitization transition
       property of $793,286 as of June 30, 2010)
    4,015,339       3,647,154  
  Deferred fuel costs
    172,202       172,202  
Goodwill
    377,172       377,172  
Accumulated deferred income taxes
    74,754       -  
Other
    1,039,964       1,006,306  
TOTAL
    6,286,210       5,822,334  
                 
TOTAL ASSETS
  $ 37,752,074     $ 37,364,597  
                 
See Notes to Financial Statements.
               
 
 
24

 
 
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2010 and December 31, 2009
(Unaudited)
                 
      2010       2009  
   
(In Thousands)
 
                 
CURRENT LIABILITIES
               
Currently maturing long-term debt
  $ 590,454     $ 711,957  
Notes payable
    203,974       30,031  
Accounts payable
    976,740       998,228  
Customer deposits
    327,805       323,342  
Accumulated deferred income taxes
    5,330       48,584  
Interest accrued
    171,219       192,283  
Deferred fuel costs
    109,926       219,639  
Obligations under capital leases
    2,432       212,496  
Pension and other postretirement liabilities
    41,288       55,031  
System agreement cost equalization
    79,018       187,204  
Other
    298,318       215,202  
TOTAL
    2,806,504       3,193,997  
                 
NON-CURRENT LIABILITIES
               
Accumulated deferred income taxes and taxes accrued
    8,003,988       7,422,319  
Accumulated deferred investment tax credits
    299,892       308,395  
Obligations under capital leases
    35,998       354,233  
Other regulatory liabilities
    524,962       421,985  
Decommissioning and asset retirement cost liabilities
    3,042,067       2,939,539  
Accumulated provisions
    98,956       141,315  
Pension and other postretirement liabilities
    2,180,595       2,241,039  
Long-term debt (includes Texas securitization bonds
       of $828,816 as of June 30, 2010)
    11,020,326       10,705,738  
Other
    657,324       711,334  
TOTAL
    25,864,108       25,245,897  
                 
Commitments and Contingencies
               
                 
Subsidiaries' preferred stock without sinking fund
    216,724       217,343  
                 
EQUITY
               
Common Shareholders' Equity:
               
Common stock, $.01 par value, authorized 500,000,000 shares;
               
  issued 254,752,788 shares in 2010 and in 2009
    2,548       2,548  
Paid-in capital
    5,377,119       5,370,042  
Retained earnings
    8,273,153       8,043,122  
Accumulated other comprehensive income (loss)
    (31,065 )     (75,185 )
Less - treasury stock, at cost (67,257,674 shares in 2010 and
               
  65,634,580 shares in 2009)
    4,851,017       4,727,167  
Total common shareholders' equity
    8,770,738       8,613,360  
Subsidiaries' preferred stock without sinking fund
    94,000       94,000  
TOTAL
    8,864,738       8,707,360  
                 
TOTAL LIABILITIES AND EQUITY
  $ 37,752,074     $ 37,364,597  
                 
See Notes to Financial Statements.
               

 
25

 



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL
For the Three Months Ended June 30, 2010 and 2009
(Unaudited)
                         
   
2010
   
2009
 
   
(In Thousands)
 
                         
RETAINED EARNINGS
                       
Retained Earnings - Beginning of period
  $ 8,115,010           $ 7,482,329        
                             
     Add:
                           
        Net income attributable to Entergy Corporation
    315,266     $ 315,266       226,813     $ 226,813  
                                 
     Deduct:
                               
        Dividends declared on common stock
    157,123               146,555          
                                 
Retained Earnings - End of period
  $ 8,273,153             $ 7,562,587          
                                 
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
                               
Balance at beginning of period:
                               
  Accumulated derivative instrument fair value changes
  $ 260,481             $ 208,544          
                                 
  Pension and other postretirement liabilities
    (266,134 )             (233,089 )        
                                 
  Net unrealized investment gains (losses)
    89,003               (36,184 )        
                                 
  Foreign currency translation
    2,042               2,263          
     Total
    85,392               (58,466 )        
                                 
Net derivative instrument fair value changes
                               
  arising during the period (net of tax benefit of $(50,672) and ($14,567))
    (83,467 )     (83,467 )     (23,728 )     (23,728 )
                                 
Pension and other postretirement liabilities (net of tax expense (benefit) of $1,650 and ($493))
    3,205       3,205       (41 )     (41 )
                                 
Net unrealized investment gains (losses) (net of tax expense (benefit) of ($33,891) and $74,927)
    (36,043 )     (36,043 )     70,275       70,275  
                                 
Foreign currency translation (net of tax expense (benefit) of ($82) and $725)
    (152 )     (152 )     1,346       1,346  
                                 
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