Entergy 2006 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 of the 2006 Entergy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

ENTERGY CORPORATION AND SUBSIDIARIES 2
2000066
36
2005 Compared to 2004
Net cash used in investing activities increased by $849 million in
2005 compared to 2004 primarily due to the following activity:
■Construction expenditures were $47 million higher in 2005 than
in 2004, including an increase of $147 million in the Utility
business and a decrease of $82 million in the Non-Utility Nuclear
business. Utility construction expenditures in 2005 include
$302 million caused by Hurricanes Katrina and Rita.
■The non-nuclear wholesale assets business realized $75 million in
net proceeds from sales of portions of three of its power plants
in 2004.
■Entergy Louisiana purchased the 718 MW Perryville power plant
in June 2005 for $162 million.
■Entergy received net returns of invested capital from Entergy-
Koch of $49 million in 2005 compared to $284 million in 2004
after the sale by Entergy-Koch of its trading and pipeline
businesses. This activity is reported in the “Decrease in other
investments” line in the cash flow statement.
■Approximately $60 million of the cash collateral for a letter of
credit that secured the installment obligations owed to NYPA for
the acquisition of the FitzPatrick and Indian Point 3 nuclear
power plants was released to Entergy in 2004.
■The Utility used $390 million in 2005 and $54 million in 2004
for other regulatory investments as a result of fuel cost under-
recovery. See Note 1 to the financial statements for discussion of
the accounting treatment of these fuel cost under-recoveries.
Offsetting these factors was the following:
■The non-nuclear wholesale assets business received a return of
invested capital of $34 million in 2005 from the Top Deer wind
power joint venture after Top Deer obtained debt financing.
Financing Activities
2006 Compared to 2005
Net cash used in financing activities was $1,084 million in 2006
compared to net cash flow provided by financing activities of
$496 million in 2005. Following is a description of the significant
financing activity affecting this comparison:
■Entergy Louisiana Holdings, Inc. redeemed all $100.5 million of
its outstanding preferred stock in June 2006.
■Entergy Corporation increased the net borrowings on its credit
facilities by $35 million in 2006 and increased the net borrowings
by $735 million in 2005. See Note 4 to the financial statements
for a description of the Entergy Corporation credit facilities.
■Net issuances of long-term debt by the Utility provided $50
million in 2006 and provided $462 million in 2005. See Note 5
to the financial statements for the details of long-term debt.
■Entergy Corporation repurchased $584 million of its common
stock in 2006 and $878 million of its common stock in 2005.
2005 Compared to 2004
Financing activities provided $496 million of cash in 2005 compared
to using $1,672 million of cash in 2004 primarily due to the follow-
ing activity:
■Net issuances of long-term debt by the Utility segment provided
$462 million of cash in 2005 compared to retirements of long-
term debt net of issuances using $345 million in 2004. See Note
5 to the financial statements for the details of long-term debt
outstanding at December 31, 2005.
■Entergy Corporation increased the net borrowings on its credit
facility by $735 million in 2005 compared to $50 million during
2004. See Note 4 to the financial statements for a description of
the Entergy Corporation credit facility.
■Entergy Corporation repurchased $878 million of its common
stock in 2005 compared to $1,018 million in 2004.
■Entergy Corporation issued $500 million of long-term notes in
connection with its equity units offering in December 2005.
■Entergy Louisiana, LLC issued $100 million of preferred
membership interests in December 2005.
SIGNIFICANT FACTORS AND KNOWN TRENDS
Following are discussions of significant factors and known trends
affecting Entergy’s business, including rate regulation and
fuel-cost recovery, federal regulation, and market and credit risk
sensitive instruments.
STATE AND LOCAL RATE REGULATION AND FUEL-COST RECOVERY
The rates that the Utility operating companies and System Energy
charge for their services significantly influence Entergy’s financial
position, results of operations, and liquidity. These companies are
closely regulated and the rates charged to their customers are deter-
mined in regulatory proceedings. Governmental agencies, including
the APSC, the City Council, the LPSC, the MPSC, the PUCT, and
the FERC, are primarily responsible for approval of the rates charged
to customers. The status of material retail rate proceedings is summa-
rized below and described in more detail in Note 2 to the consolidated
financial statements.
MANAGEMENT’S FINANCIAL DISCUSSION and ANALYSIS continued