ENTERGY NEW ORLEANS, INC.  MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS Results of Operations Net Income (Loss) 2004 Compared to 2003 Net income increased $20.2 million primarily due to higher net revenue.2003 Compared to 2002 Entergy New Orleans had net income of $7.9 million in 2003 compared to a net loss in 2002.
The increase was due to higher net revenue and lower interest expense, partially offset by higher other operation and maintenance expenses and depreciation and amortization expenses.
Net Revenue 2004 Compared to 2003 Net revenue, which is Entergy New Orleans' measure of gross margin, consists of operating revenues net of: 1) fuel, fuel-related, and purchased power expenses and 2) other regulatory credits.
Following is an analysis of the change in net revenue comparing 2004 to 2003.
## Table 0 ##
The increase in base rates was effective June 2003.
The rate increase is discussed in Note 2 to the domestic utility companies and System Energy financial statements.
The volume/weather variance is primarily due to increased billed electric usage of 162 GWh in the industrial service sector.
The increase was partially offset by milder weather in the residential and commercial sectors.
The 2004 deferrals variance is due to the deferral of voluntary severance plan and fossil plant maintenance expenses in accordance with a stipulation approved by the City Council in August 2004.
The stipulation allows for the recovery of these costs through amortization of a regulatory asset.
The voluntary severance plan and fossil plant maintenance expenses are being amortized over a five-year period that became effective January 2004 and January 2003, respectively.
The formula rate plan is discussed in Note 2 to the domestic utility companies and System Energy financial statements.
The price applied to unbilled electric sales variance is due to an increase in the fuel price applied to unbilled sales.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in thousands except per share data) Note 1—Significant Accounting Policies (continued) its Waddell & Reed litigation.
All of these cases related to litigation arising many years ago.
The Waddell & Reed litigation was settled with Torchmark recording the $13.5 million proceeds net of costs as “Other income.
” The other two settlements resulted in a $15 million pre-tax charge to “Other operating expenses.
” Four significant legal and tax matters were settled in Torchmark’s favor in 2006.
The first settlement involved a subsidiary disposed of several years ago, resulting in proceeds of $5.1 million after expenses.
The second involved state income tax refunds of $6.7 million related to prior years.
The third settlement related to the Company’s investments in Worldcom, amounting to $6.3 million, and representing a partial recovery of investment losses incurred prior to 2004.
The final settlement involved Federal income tax issues related to prior years, and consisted of a benefit due of $7.4 million.
The litigation receipt related to the disposed subsidiary and the Worldcom receipt were included in “Other income” on the Consolidated Statement of Operations.
The state income tax refunds and the Federal income tax benefit reduced “Income taxes.
” In 2007, Torchmark incurred $933 thousand additional costs in connection with its race-distinct litigation which was settled in 2005.
Also in 2007, the Company received $515 thousand in additional settlement proceeds from the WorldCom litigation mentioned above.
Postretirement Benefits: Torchmark adopted FASB Statement of Financial Accounting Standards (SFAS) No.158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, effective as of December 31, 2006.
This Statement requires Torchmark to recognize the funded status of its postretirement benefit plans on its Consolidated Balance Sheets.
Periodic gains and losses attributable to changes in plan assets and liabilities that are not recognized as components of net periodic benefit costs are to be recognized as components of other comprehensive income, net of tax.
This Statement does not modify the procedures for measuring plan assets, liabilities, or net periodic benefit cost.
The information required by this Standard is found in Note 9—Postretirement Benefits.
Upon adoption of this Standard, “Accumulated other comprehensive income,” net of tax, was decreased $9 million.
The incremental effect of applying this Statement to affected line items on Torchmark’s Balance Sheet at December 31, 2006 was as follows:
## Table 1 ##
Stock Options: As of January 1, 2006, Torchmark adopted revised SFAS No.123—Share-Based Payment (SFAS 123R) to account for its stock options.
This Statement requires companies to recognize an expense in their financial statements for stock options based on the “fair value method.
” The fair value method requires that a fair value be assigned to a stock option on its grant date and that this value be amortized over the grantees’ service period.
Prior to January 1, 2006, Torchmark accounted for stock options in accordance with SFAS 123—Accounting for Stock-Based Compensation as amended by SFAS 148—Accounting for Stock-Based Compensation—Transition.
These Statements permitted companies to choose between two methods of recording the expense for stock options in their financial statements; either the fair value method, or the “intrinsic value method,” in accordance with Accounting Principles Board Opinion No.25, Accounting for Stock Issued to Employees (APB 25) and related interpretations.
Under the intrinsic value method, compensation expense for Torchmark’s option grants was only recognized if the exercise price of the employee stock option was less than the market price of the underlying stock on the date of grant.
If a company elected to use the intrinsic value method, pro forma
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (Dollar amounts in thousands except per share data) Note 14—Business Segments (continued)
## Table 2 ##
(1) Medicare Part D items adjusted to GAAP from the segment analysis, which matches expected benefits with policy premium.
(2) Reclassification of interest amount due to accounting rule requiring deconsolidation of Trust Preferred Securities.
(3) Administrative expense is not allocated to insurance segments.
(4) Elimination of intersegment commission.
(5) Loss on Company-occupied property.
Torchmark holds a sizeable investment portfolio to support its insurance liabilities, the yield from which is used to offset policy benefit, acquisition, administrative and tax expenses.
This yield or investment income is taken into account when establishing premium rates and profitability expectations of its insurance products.
In holding such a portfolio, investments are sold, called, or written down from time to time, resulting in a realized gain or loss.
These gains or losses generally occur as a result of disposition due to issuer calls, a downgrade in credit quality, compliance with Company investment policies, or other reasons often beyond management’s control.
Unlike investment income, realized gains and losses are incidental to insurance operations, and only overall yields are considered when setting premium rates or insurance product profitability expectations.
While these gains and losses are not relevant to segment profitability or core operating results, they can have a material positive or negative result on net income.
For these reasons, management removes realized investment gains and losses when it views its segment operations.
Share Purchases Torchmark has in place an ongoing share repurchase program which began in 1986.
With no specified authorization amount, we determine the amount of repurchases based on the amount of the excess cash flow at the Parent Company, general market conditions, and other alternative uses.
The majority of these purchases are made from excess cash flow.
Excess cash flow at the Parent Company is primarily comprised of dividends received from the insurance subsidiaries less interest expense paid on its debt, dividends paid to Torchmark shareholders, and other limited operating activities.
Additionally, when stock options are exercised, proceeds from these exercises and the resulting tax benefit are used to repurchase additional shares on the open market to minimize dilution as a result of the option exercises.
The Board of Directors has authorized the Company’s share repurchase program in amounts and with timing that management, in consultation with the Board, determines to be in the best interest of the Company and its shareholders.
The following chart summarizes share purchase activity for each of the last three years.
Analysis of Share Purchases (Amounts in thousands)

<table><tr><td></td><td>(In Millions)</td></tr><tr><td>2003 net revenue</td><td>$208.3</td></tr><tr><td>Base rates</td><td>10.6</td></tr><tr><td>Volume/weather</td><td>8.3</td></tr><tr><td>2004 deferrals</td><td>7.5</td></tr><tr><td>Price applied to unbilled electric sales</td><td>3.7</td></tr><tr><td>Other</td><td>0.6</td></tr><tr><td>2004 net revenue</td><td>$239.0</td></tr></table>
<table><tr><td></td><td> Before Application of Statement 158 </td><td>Adjustments</td><td> After Application of Statement 158 </td></tr><tr><td>Other assets</td><td>$192,623</td><td>$-12,083</td><td>$180,540</td></tr><tr><td>Other liabilities</td><td>236,214</td><td>1,632</td><td>237,846</td></tr><tr><td>Deferred and accrued income taxes</td><td>1,015,418</td><td>-4,800</td><td>1,010,618</td></tr><tr><td>Accumulated other comprehensive income</td><td>149,012</td><td>-8,915</td><td>140,097</td></tr><tr><td>Shareholders’ equity</td><td>3,468,108</td><td>-8,915</td><td>3,459,193</td></tr></table>
<table><tr><td></td><td colspan="8">For the Year 2009</td></tr><tr><td></td><td>Life</td><td>Health</td><td>Annuity</td><td>Investment</td><td>Other</td><td>Corporate</td><td> Adjustments</td><td>Consolidated</td></tr><tr><td>Revenue:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Premium</td><td>$1,591,853</td><td>$1,020,202</td><td>$541</td><td></td><td></td><td></td><td>$-2,491 (1)</td><td>$2,610,105</td></tr><tr><td>Net investment income</td><td></td><td></td><td></td><td>$632,276</td><td></td><td></td><td>264-2</td><td>632,540</td></tr><tr><td>Other income</td><td></td><td></td><td></td><td></td><td>$2,914</td><td></td><td>-994 (4)</td><td>1,920</td></tr><tr><td>Total revenue</td><td>1,591,853</td><td>1,020,202</td><td>541</td><td>632,276</td><td>2,914</td><td></td><td>-3,221</td><td>3,244,565</td></tr><tr><td>Expenses:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Policy benefits</td><td>1,040,248</td><td>679,810</td><td>35,762</td><td></td><td></td><td></td><td>-2,491 (1)</td><td>1,753,329</td></tr><tr><td>Required interest on net reserves</td><td>-410,917</td><td>-34,243</td><td>-41,840</td><td>487,000</td><td></td><td></td><td></td><td>0</td></tr><tr><td>Amortization of acquisition costs</td><td>462,837</td><td>147,151</td><td>6,040</td><td>-200,042</td><td></td><td></td><td></td><td>415,986</td></tr><tr><td>Commissions and premium tax</td><td>72,273</td><td>57,074</td><td>267</td><td></td><td></td><td></td><td>-994 (4)</td><td>128,620</td></tr><tr><td>Insurance administrative expense<sup>-3</sup></td><td></td><td></td><td></td><td></td><td>150,325</td><td></td><td>355-5</td><td>150,680</td></tr><tr><td>Parent expense</td><td></td><td></td><td></td><td></td><td></td><td>$9,590</td><td></td><td>9,590</td></tr><tr><td>Stock-based compensation expense</td><td></td><td></td><td></td><td></td><td></td><td>9,860</td><td></td><td>9,860</td></tr><tr><td>Interest expense</td><td></td><td></td><td></td><td>69,668</td><td></td><td></td><td>264-2</td><td>69,932</td></tr><tr><td>Total expenses</td><td>1,164,441</td><td>849,792</td><td>229</td><td>356,626</td><td>150,325</td><td>19,450</td><td>-2,866</td><td>2,537,997</td></tr><tr><td>Subtotal</td><td>427,412</td><td>170,410</td><td>312</td><td>275,650</td><td>-147,411</td><td>-19,450</td><td>-355</td><td>706,568</td></tr><tr><td>Nonoperating items</td><td></td><td></td><td></td><td></td><td></td><td></td><td>355-5</td><td>355</td></tr><tr><td>Measure of segment profitability (pretax)</td><td>$427,412</td><td>$170,410</td><td>$312</td><td>$275,650</td><td>$-147,411</td><td>$-19,450</td><td>$0</td><td>706,923</td></tr><tr><td colspan="8">Deduct applicable income taxes</td><td>-238,153</td></tr><tr><td colspan="8">Segment profits after tax</td><td>468,770</td></tr><tr><td colspan="8">Add back income taxes applicable to segment profitability</td><td>238,153</td></tr><tr><td colspan="8">Add (deduct) realized investment gains (losses) and impairments</td><td>-129,492</td></tr><tr><td colspan="8">Deduct loss on Company-occupiedproperty -5</td><td>-355</td></tr><tr><td colspan="8">Pretax income per Consolidated Statement of Operations</td><td>$577,076</td></tr></table>

Question: what portion of the net change in net revenue during 2004 occurred due to the volume/weather?
Answer: 0.27036