Entergy 2002 Annual Report Download - page 30

LIQUIDITY AND CAPITAL RESOURCES
This section discusses Entergy’s capital structure, capital
spending plans and other uses of capital, sources of capital,
and the cash flow activity presented in the cash flow statement.
CAPITAL STRUCTURE
Entergy’s capitalization is balanced between equity and debt, as
shown in the following table. The reduction in the percentage
for 2002 is primarily the result of the sale of Damhead Creek in
December 2002. Debt outstanding on the Damhead Creek
facility was $458 million as of December 31, 2001.
2002 2001 2000
Net debt to net capital at the end of the year 46.3% 49.7% 49.8%
Net debt consists of gross debt less cash and cash equivalents.
Gross debt consists of notes payable, capital lease obligations,
and long-term debt, including the currently maturing portion.
Net capital consists of net debt, common shareholders’ equity,
and preferred stock and securities.
Long-term debt, including the currently maturing portion,
makes up over 90% of Entergy’s total debt outstanding.
Following are Entergy’s long-term debt principal maturities as
of December 31, 2002, by operating segment (in millions):
2006– After
Long-term Debt Maturities 2003 2004 2005 2007 2007
U.S. Utility $1,111 $855 $470 $466 $3,751
Non-Utility Nuclear $ 87 $ 91 $ 95 $205 $ 205
Energy Commodity Services $ 79 – – – –
Parent and Other – $595 – – $ 267
These figures include principal payments on the Entergy
Louisiana and System Energy sale-leaseback transactions,
which are included in long-term debt on the balance sheet.
In the fourth quarter of 2002, the U.S. Utility issued
$640 million of debt with maturities ranging from 2007 to 2032.
Approximately $71 million of the proceeds of the debt issued in
the fourth quarter were used to retire, in 2002, debt that was
scheduled to mature in 2003, and the remainder will be used to
meet certain 2003 maturities as they occur. Entergy Mississippi
issued an additional $100 million of debt in January 2003 that
matures in 2013. The proceeds will be used to repay, prior to
maturity, debt of Entergy Mississippi that is scheduled to mature
in 2003 and 2004. Note 7 to the consolidated financial state-
ments provides more detail concerning long-term debt.
The Energy Commodity Services debt was paid at maturity
in January 2003 using money drawn on Entergy Corporation’s
364-day credit facility.
Capital lease obligations, including nuclear fuel leases, are a
minimal part of Entergy’s overall capital structure, and are
discussed further in Note 10 to the consolidated financial
statements. Following are Entergy’s payment obligations
under those leases (in millions):
2006– After
2003 2004 2005 2007 2007
Capital lease payments,
including nuclear fuel leases $160 $137 $10 $9 $5
Notes payable, which include borrowings outstanding on
credit facilities with original maturities of less than one year,
were less than $1 million as of December 31, 2002. Entergy
Corporation, Entergy Arkansas, Entergy Louisiana, and
Entergy Mississippi each have 364-day credit facilities available
as follows (in millions):
Expiration Amount of Amount Drawn as
Company Date Facility of Dec. 31, 2002
Entergy Corporation May 2003 $1,450 $535
Entergy Arkansas May 2003 $ 63 –
Entergy Louisiana May 2003 $ 15 –
Entergy Mississippi May 2003 $ 25 –
Although the Entergy Corporation credit line expires in May
2003, Entergy has the discretionary option to extend the period
to repay the amount then outstanding for an additional 364-day
term. Because of this option, which Entergy intends to exercise
if it does not renew the credit line or obtain an alternative
source of financing, the debt outstanding under the credit line
is reflected in long-term debt on the balance sheet. The credit
line is reflected as notes payable at December 31, 2001.
Operating Lease Obligations and Guarantees
of Unconsolidated Obligations
In addition to the obligations listed above that are reflected on
the balance sheet, Entergy has a minimal amount of operating
leases and guarantees in support of unconsolidated obliga-
tions that are not reflected as liabilities on the balance sheet.
These items are not on the balance sheet in accordance with
generally accepted accounting principles.
Following are Entergy’s payment obligations on noncance-
lable operating leases with a term over one year as of
December 31, 2002 (in millions):
2006– After
2003 2004 2005 2007 2007
Operating lease payments $98 $91 $73 $98 $140
The operating leases are discussed more thoroughly in Note 10
to the consolidated financial statements.
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS continued
28