Entergy 2002 Annual Report Download - page 63

NOTE 3. INCOME TAXES
Income tax expenses for 2002, 2001, and 2000 consist of the
following (in thousands):
For the years ended December 31, 2002 2001 2000
Current:
Federal(a) $510,109 $321,085 $291,616
Foreign (3,295) 3,355 11,555
State(a) 43,788 53,565 51,293
Total(a) 550,602 378,005 354,464
Deferred – net (233,532) 110,944 150,018
Investment tax credit
adjustments – net (23,132) (23,192) (25,561)
Recorded income tax expense $293,938 $465,757 $478,921
(a) The actual cash taxes paid/(received) were $57,856 in 2002, ($113,466) in
2001, and $345,361 in 2000. Entergy Louisiana’s mark-to-market tax
accounting election has significantly reduced taxes paid in 2001 and 2002.
For a more detailed discussion of the tax accounting election, see the discussion
of Entergy Louisiana Tax Accounting Election in Management’s Financial
Discussion and Analysis section.
Total income taxes differ from the amounts computed by
applying the statutory income tax rate to income before taxes.
The reasons for the differences for the years 2002, 2001, and
2000 are (in thousands):
For the years ended December 31, 2002 2001 2000
Computed at statutory rate (35%) $320,954 $425,692 $416,443
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 44,835 45,124 47,504
Depreciation 29,774 11,890 49,741
Amortization of investment
tax credits (22,294) (22,488) (23,783)
Flow-through/permanent
differences (38,197) (20,698) (18,495)
U.S. tax on foreign income (28,416) 21,422 1,472
Other – net (12,718) 4,815 6,039
Total income taxes $293,938 $465,757 $478,921
Effective income tax rate 32.1% 38.3% 40.3%
Significant components of net deferred and noncurrent
accrued tax liabilities as of December 31, 2002 and 2001 are as
follows (in thousands):
For the years ended December 31, 2002 2001
Deferred and Noncurrent
Accrued Tax Liabilities
Net regulatory assets/(liabilities) $(1,085,287) $(1,195,100)
Plant-related basis differences (3,064,130) (3,107,827)
Power purchase agreements (866,976) (400,000)
Nuclear decommissioning (237,944) (163,869)
Other (406,703) (174,219)
Total (5,661,040) (5,041,015)
Deferred Tax Assets
Accumulated deferred investment
tax credit 151,930 160,003
Capital loss carryforwards 68,378 55,845
Foreign tax credits 3,355 73,741
Sale and leaseback 232,228 230,157
Unbilled/deferred revenues 309,346 64,178
Pension-related items 139,058 117,675
Reserve for regulatory adjustments 103,843 109,370
Customer deposits 58,165 77,321
Nuclear decommissioning 104,555 15,599
Other 240,266 266,961
Valuation allowance (27,352) (98,011)
Total 1,383,772 1,072,839
Net deferred and noncurrent
accrued tax liability $(4,277,268) $(3,968,176)
The 2002 valuation allowance is provided against United
Kingdom (UK) capital loss and UK net operating loss carry-
forwards, which can be utilized against future UK taxable
income. For UK tax purposes, these carryforwards do not expire.
The 2001 valuation allowance is provided primarily against
foreign tax credit carryforwards, which can be utilized against
future United States taxes on foreign source income. If these
carryforwards are not utilized, they will expire between 2002
and 2006.
At December 31, 2002, Entergy had $11.2 million of
indefinitely reinvested undistributed earnings from subsidiary
companies outside the U.S. Upon distribution of these earnings
in the form of dividends or otherwise, Entergy could be subject
to U.S. income taxes (subject to foreign tax credits) and
withholding taxes payable to various foreign countries.
ENTERGY CORPORATION AND SUBSIDIARIES 2002 61