Entergy 2004 Annual Report Download - page 81

Entergy Corporation and Subsidiaries 2004
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Other Postretirement Benefits
Entergy also currently provides health care and life insurance bene-
fits for retired employees. Substantially all domestic employees may
become eligible for these benefits if they reach retirement age
while still working for Entergy. Entergy uses a December 31
measurement date for its postretirement benefit plans.
Effective January 1, 1993, Entergy adopted SFAS 106, which
required a change from a cash method to an accrual method
of accounting for postretirement benefits other than pensions.
AtJanuary 1, 1993, the actuarially determined accumulated
postretirement benefit obligation (APBO) earned by retirees and
active employees was estimated to be approximately $241.4 million
for Entergy (other than Entergy Gulf States) and $128 million for
Entergy Gulf States. Such obligations are being amortized over a
20-year period that began in 1993. For the most part, the domestic
utilities and System Energy recover SFAS 106 costs from customers
and are required to fund postretirement benefits collected in rates to
an external trust.
Components ofNet Postretirement
Benefit Cost
Total 2004, 2003, and 2002 other postretirement benefit costs of
EntergyCorporationand its subsidiaries, including amounts
capitalized and deferred, included the following components
(in thousands):
2004 2003 2002
Service cost - benefits earned
during the period $30,947 $ 37,799 $ 29,199
Interest cost onAPBO 53,801 52,746 44,819
Expected return on assets (18,825) (15,810) (14,066)
Amortizationof
transitionobligation 9,429 15,193 17,874
Amortization of
prior service cost (5,222) (925) 992
Recognized net (gain)/loss 15,546 12,369 1,874
Curtailment loss – 57,958 –
Special terminationbenefits – 5,444 –
Net other postretirement
benefit cost $85,676 $164,774 $ 80,692
Other Postretirement Benefit Obligations,
Plan Assets, Funded Status, and Amounts Not
Yet Recognized and Recognized in the Balance
Sheet as of December 31, 2004 and 2003
(in thousands):
2004 2003
Change in APBO
Balance at beginning of year $ 941,803 $ 799,506
Service cost 30,947 37,799
Interest cost 53,801 52,746
Actuarial loss 73,890 115,966
Benefits paid (66,456) (48,379)
Plan amendments (a) (60,231) (84,722)
Plan participant contributions 9,312 7,074
Curtailment – 56,369
Special termination benefits – 5,444
Balance at end of year $ 983,066 $ 941,803
Change in Plan Assets
Fair value of assets at
beginning of year $ 227,446 $ 182,692
Actual return on plan assets 15,550 22,794
Employer contributions 63,399 63,265
Plan participant contributions 9,312 7,074
Benefits paid (66,455) (48,379)
Fair value of assets
at end of year $ 249,252 $ 227,446
Funded status $(733,814) $ (714,357)
Amounts not yet recognized
in the balance sheet
Unrecognized transition obligation 5,594 44,815
Unrecognized prior service cost (39,560) (20,746)
Unrecognized net loss 391,940 336,005
Accrued other postretirement benefit
cost recognized in the balance sheet $ (375,840) $ (354,283)
(a) Reflects plan design changes, including a change in the participation
assumption for the majority of non-bargaining employees effective August 1,
2003 and certain bargaining employees and additional non-bargaining
employees effective January 1, 2004.
Pension and Other Postretirement
Plans’Assets
Entergy’s pension and postretirement plans weighted-average asset
allocations by asset category at December 31, 2004 and 2003 are
as follows:
Pension Postretirement
2004 2003 2004 2003
Domestic Equity Securities 46% 56% 38% 37%
International Equity Securities 21% 14% 14% 0%
Fixed–Income Securities 31% 28% 47% 60%
Other 2% 2% 1% 3%
NOTES to CONSOLIDATED FINANCIAL STATEMENTS continued