Entergy 2002 Annual Report Download - page 69

The annual long-term debt maturities (excluding lease obli-
gations) and annual cash sinking fund requirements for debt
outstanding as of December 31, 2002, for the next five years are
as follows (in thousands):
2003 2004 2005 2006 2007
$1,150,786 $925,005 $540,372 $139,952 $475,288
Not included are other sinking fund requirements of
approximately $30.2 million annually, which may be satisfied
by cash or by certification of property additions at the rate of
167% of such requirements.
In December 2002, when the Damhead Creek project was
sold, the buyer of the project assumed all obligations under the
Damhead Creek credit facilities and the Damhead Creek
interest rate swap agreements.
In November 2000, Entergy’s Non-Utility Nuclear business
purchased the FitzPatrick and Indian Point 3 power plants in
a seller-financed transaction. Entergy issued notes to NYPA
with seven annual installments of approximately $108 million
commencing one year from the date of the closing, and eight
annual installments of $20 million commencing eight years
from the date of the closing. These notes do not have a stated
interest rate, but have an implicit interest rate of 4.8%. In
accordance with the purchase agreement with NYPA, the
purchase of Indian Point 2 resulted in Entergy’s Non-Utility
Nuclear business becoming liable to NYPA for an additional
$10 million per year for 10 years, beginning in September
2003. This liability was recorded upon the purchase of Indian
Point 2 in September 2001.
Covenants in the Entergy Corporation 7.75% notes require it
to maintain a consolidated debt ratio of 65% or less of its total
capitalization. If Entergy’s debt ratio exceeds this limit, or if
Entergy or certain of the domestic utility companies default on
other credit facilities or are in bankruptcy or insolvency
proceedings, an acceleration of the facility’s maturity may occur.
In January 2003, Entergy paid in full, at maturity, the out-
standing debt relating to the Top of Iowa wind project.
CAPITAL FUNDS AGREEMENT
Pursuant to an agreement with certain creditors, Entergy
Corporation has agreed to supply System Energy with sufficient
capital to:
maintain System Energy’s equity capital at a minimum of
35% of its total capitalization (excluding short-term debt);
permit the continued commercial operation of Grand Gulf 1;
pay in full all System Energy indebtedness for borrowed
money when due; and
enable System Energy to make payments on specific System
Energy debt, under supplements to the agreement assigning
System Energy’s rights in the agreement as security for the
specific debt.
The Capital Funds Agreement and other Grand Gulf 1-related
agreements are more thoroughly discussed in Note 9 to the
consolidated financial statements.
NOTE 8. DIVIDEND RESTRICTIONS
Provisions within the Articles of Incorporation or pertinent
indentures and various other agreements relating to the long-
term debt and preferred stock of certain of Entergy
Corporation’s subsidiaries restrict the payment of cash
dividends or other distributions on their common and
preferred stock. As of December 31, 2002, Entergy Arkansas and
Entergy Mississippi had restricted retained earnings unavailable
for distribution to Entergy Corporation of $296.1 million and
$36.2 million, respectively. Additionally, the Public Utility
Holding Company Act of 1935 (PUHCA) prohibits Entergy
Corporation’s subsidiaries from making loans or advances to
Entergy Corporation. In 2002, Entergy Corporation received
dividend payments totaling $618.4 million from subsidiaries. In
addition, Entergy Louisiana repurchased $120 million of its
common shares from Entergy Corporation in 2002.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Entergy is involved in a number of legal, tax, and regulatory
proceedings before various courts, regulatory commissions, and
governmental agencies in the ordinary course of its business.
While management is unable to predict the outcome of such
proceedings, management does not believe that the ultimate
resolution of these matters will have a material adverse effect on
Entergy’s results of operations, cash flows, or financial condition.
CAPITAL REQUIREMENTS AND FINANCING
Entergy plans to spend approximately $3.4 billion on construc-
tion and other capital investments during 2003-2005. This plan
reflects capital required to support existing businesses as well as
the approval by the Board of the Arkansas Nuclear One Unit
1(ANO 1) steam generator replacement project. The estimated
capital expenditures are subject to periodic review and modifi-
cation and may vary based on the ongoing effects of business
restructuring, regulatory constraints, business opportunities,
market volatility, economic trends, and the ability to access
capital. Entergy’s estimated construction and other capital
expenditures by year for 2003-2005 are as follows (in millions):
Planned Construction and Capital Investment 2003 2004 2005
U.S. Utility $924 $915 $965
Non-Utility Nuclear $201 $142 $109
Energy Commodity Services $ 24 $ 76 $ 3
Other $ 7 $ 7 $ 9
The U.S. Utility will focus its planned spending on projects that
will support continued reliability improvements and customer
growth. Non-Utility Nuclear will focus its planned spending on
routine construction projects and power uprates. Energy
Commodity Services expenditures will primarily be on a
merchant power plant project currently under construction and
a $73 million cash contribution to Entergy-Koch in January 2004.
ENTERGY CORPORATION AND SUBSIDIARIES 2002 67