Entergy 2003 Annual Report Download - page 70

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ENTERGY CORPORATION AND SUBSIDIARIES 2003
Significant components of net deferred and noncurrent
accrued tax liabilities as of December 31, 2003 and 2002 are
as follows (in thousands):
2003 2002
Deferred and Noncurrent
Accrued Tax Liabilities:
Net regulatory liabilities $(1,072,898) $(1,085,287)
Plant-related basis differences (3,574,593) (3,064,130)
Power purchase agreements (945,495) (866,976)
Nuclear decommissioning (624,429) (237,944)
Other (379,875) (406,703)
Total (6,597,290) (5,661,040)
Deferred Tax Assets:
Accumulated deferred investment
tax credit 141,723 151,930
Capital loss carryforwards 92,423 68,378
Net operating loss carryforwards 129,122 23,086
Sale and leaseback 223,134 232,228
Unbilled/deferred revenues 18,983 309,346
Pension-related items 204,083 139,058
Reserve for regulatory adjustments 138,933 103,843
Customer deposits 108,591 58,165
Nuclear decommissioning 377,952 104,555
Other 399,080 229,555
Valuation allowance (39,210) (36,372)
Total 1,794,814 1,383,772
Net deferred and noncurrent
accrued tax liability $(4,802,476) $(4,277,268)
At December 31, 2003, Entergy had $192 million in net
realized federal capital loss carryforwards that will expire
as follows: $12 million in 2006, $163 million in 2007, and
$17 million in 2008.
At December 31, 2003, Entergy had state net operating
loss carryforwards of $1.9 billion, primarily resulting from
Entergy Louisiana’s mark-to-market tax election. If the
state net operating loss carryforwards are not utilized, they
will expire in the years 2010 through 2016.
The 2003 and 2002 valuation allowances are provided
against UK capital loss and UK net operating loss carryfor-
wards, which can be utilized against future UK taxable income.
For UK tax purposes, these carryforwards do not expire.
At December 31, 2003, Entergy had $9.8 million of
indefinitely reinvested undistributed earnings from sub-
sidiary 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.
NOTE 4. LINES OF CREDIT AND RELATED
SHORT-TERM BORROWINGS
Entergy Corporation has in place a 364-day bank credit
facility with a borrowing capacity of $1.45 billion, none of
which was outstanding as of December 31, 2003. The
commitment fee for this facility is currently 0.20% of the
line amount. Commitment fees and interest rates on loans
under the credit facility can fluctuate depending on the
senior debt ratings of the domestic utility companies.
Although the Entergy Corporation credit facility expires
in May 2004, 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 credit
line is reflected in long-term debt on the balance sheet.
Entergy Corporation’s facility requires it to maintain a con-
solidated debt ratio of 65% or less of its total capitalization,
and maintain an interest coverage ratio of 2 to 1. If Entergy
fails to meet these limits, or if Entergy or the domestic
utility companies default on other indebtedness or are in
bankruptcy or insolvency proceedings, an acceleration of
the facility’s maturity date may occur.
The short-term borrowings of Entergy’s subsidiaries are
limited to amounts authorized by the SEC. The current
limits authorized are effective through November 30, 2004.
Also, under the SEC order authorizing the short-term bor-
rowing limits, the domestic utility companies and System
Energy cannot incur new short-term indebtedness if the
issuer’s common equity would comprise less than 30% of its
capital. In addition to borrowing from commercial banks,
Entergy’s subsidiaries are authorized to borrow from the
Entergy System Money Pool (money pool). The money pool
is an inter-company borrowing arrangement designed to
reduce Entergy’s subsidiaries’ dependence on external
short-term borrowings. Borrowings from the money pool
and external borrowings combined may not exceed the SEC
authorized limits. As of December 31, 2003, Entergy’s
subsidiaries’ authorized limit was $1.6 billion and the out-
standing borrowing from the money pool was $147.1 million.
There were no borrowings outstanding from external
sources. There is further discussion of commitments for
long- term financing arrangements in Note 5 to the consol-
idated financial statements.
Entergy Arkansas, Entergy Louisiana, and Entergy
Mississippi each have 364-day credit facilities available
as follows:
Expiration Amount of Amount Drawn as
Company Date Facility of Dec. 31, 2003
Entergy Arkansas April 2004 $63 million –
Entergy Louisiana May 2004 $15 million –
Entergy Mississippi May 2004 $25 million –
The facilities have variable interest rates and the average
commitment fee is 0.14%.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continued