Entergy 2005 Annual Report Download - page 91

ENTERGY CORPORATION AND SUBSIDIARIES 2005
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NOTES to CONSOLIDATED FINANCIAL STATEMENTS continuedNOTES to CONSOLIDATED FINANCIAL STATEMENTS continued
NOTE 10. RETIREMENT, OTHER
POSTRETIREMENT BENEFITS, AND
DEFINED CONTRIBUTION PLANS
QUALIFIED PENSION PLANS
Entergy has seven qualified pension plans covering substantially all
of its employees: “Entergy Corporation Retirement Plan for Non-
Bargaining Employees,” “Entergy Corporation Retirement Plan for
Bargaining Employees,” “Entergy Corporation Retirement Plan II for
Non-Bargaining Employees,” “Entergy Corporation Retirement Plan
II for Bargaining Employees,” “Entergy Corporation Retirement Plan
III,” “Entergy Corporation Retirement Plan IV for Non-Bargaining
Employees,” and “Entergy Corporation Retirement Plan IV for
Bargaining Employees.” Except for the Entergy Corporation
Retirement Plan III, the pension plans are noncontributory and pro-
vide pension benefits that are based on employees’ credited service
and compensation during the final years before retirement. The
Entergy Corporation Retirement Plan III includes a mandatory
employee contribution of 3% of earnings during the first 10 years of
plan participation, and allows voluntary contributions from 1% to
10% of earnings for a limited group of employees. Entergy
Corporation and its subsidiaries fund pension costs in accordance
with contribution guidelines established by the Employee
Retirement Income Security Act of 1974, as amended, and the
Internal Revenue Code of 1986, as amended. The assets of the plans
include common and preferred stocks, fixed-income securities,
interest in a money market fund, and insurance contracts. As of
December 31, 2005 and 2004, Entergy recognized an additional
minimum pension liability for the excess of the accumulated benefit
obligation over the fair market value of plan assets. In accordance
with SFAS 87, an offsetting intangible asset, up to the amount of any
unrecognized prior service cost, was also recorded, with the remain-
ing offset to the liability recorded as a regulatory asset reflective of
the recovery mechanism for pension costs in the U.S. Utility’s juris-
dictions or to other comprehensive income for Entergy’s non-
regulated business. Entergy’s domestic utility companies’ and
System Energy’s pension costs are recovered from customers as a
component of cost of service in each of its jurisdictions. Entergy
uses a December 31 measurement date for its pension plans. As a
result of the Entergy New Orleans bankruptcy filing, Entergy has
discontinued the consolidation of Entergy New Orleans retroactive
to January 1, 2005, and is reporting Entergy New Orleans’ results
under the equity method of accounting.
COMPONENTS OF QUALIFIED NET PENSION COST
Total 2005, 2004, and 2003 qualified pension costs of Entergy
Corporation and its subsidiaries, including amounts capitalized,
included the following components (in thousands):
2005 2004 2003
Service cost – benefits
earned during the period $ 82,520 $ 76,946 $ 70,337
Interest cost on projected
benefit obligation 155,477 148,092 134,403
Expected return on assets (159,544) (153,584) (155,460)
Amortization of transition asset (662) (763) (763)
Amortization of prior service cost 4,863 5,143 5,886
Recognized net loss 35,604 21,687 6,399
Curtailment loss – – 14,864
Special termination benefits – – 32,006
Net pension costs $ 118,258 $ 97,521 $ 107,672
QUALIFIED PENSION OBLIGATIONS, PLAN ASSETS,
FUNDED STATUS, AMOUNTS NOT YET RECOGNIZED
AND RECOGNIZED IN THE BALANCE SHEET AS OF
DECEMBER 31, 2005 AND 2004 (IN THOUSANDS):
2005 2004
Change in Projected Benefit
Obligation (PBO)
Balance at beginning of year $2,555,086 $2,349,565
Service cost 82,520 76,946
Interest cost 155,477 148,092
Amendments 6,467 3,709
Actuarial loss 211,194 171,146
Employee contributions 1,032 1,212
Benefits paid (117,768) (117,234)
Balance at end of year $2,894,008 $2,633,436
Change in Plan Assets
Fair value of assets at
beginning of year $1,841,929 $1,744,975
Actual return on plan assets 137,885 170,964
Employer contributions 131,801 72,825
Employee contributions 1,032 1,212
Benefits paid (117,768) (117,234)
Fair value of assets
at end of year $1,994,879 $1,872,742
Funded status $ (889,129) $(760,694)
Amounts not yet recognized
in the balance sheet
Unrecognized transition asset – (662)
Unrecognized prior service cost 29,393 29,053
Unrecognized net loss 713,285 542,391
Accrued pension cost recognized
in the balance sheet $(156,451) $ (189,912)
Amounts recognized in
the balance sheet
Accrued pension cost $ (156,451) $ (189,912)
Additional minimum
pension liability (406,463) (244,280)
Intangible asset 24,159 26,167
Accumulated other
comprehensive income (before taxes) 24,243 10,781
Regulatory asset 358,061 207,332
Net amount recognized $(156,451) $ (189,912)