Entergy 2008 Annual Report Download - page 39

37
ENTERGY CORPORATION AND SUBSIDIARIES 2008
37
Management’s Financial Discussion and Analysis continued
37
Capital lease obligations, including nuclear fuel leases, are a
minimal part of Entergy’s overall capital structure, and are dis-
cussed further in Note 10 to the financial statements. Following are
Entergy’s payment obligations under those leases (in millions):
2012- After
2009 2010 2011 2013 2013
Capital lease payments, including
nuclear fuel leases $162 $307 $3 $5 $28
Notes payable includes borrowings outstanding on credit facilities
with original maturities of less than one year. Entergy Arkansas,
Entergy Gulf States Louisiana, Entergy Louisiana, Entergy
Mississippi, and Entergy Texas each had credit facilities available
as of December 31, 2008 as follows (amounts in millions):
Amount Drawn
Expiration Amount of Interest as of
Date Facility Rate(a) Dec. 31, 2008
Entergy Arkansas April 2009 $100(b) 2.75% –
Entergy Gulf States
Louisiana August 2012 $100(c) .845% –
Entergy Louisiana August 2012 $200(d) .845% –
Entergy Mississippi May 2009 $ 30(e) 1.71% –
Entergy Mississippi May 2009 $ 20(e) 1.71% –
Entergy Texas August 2012 $100(f) 2.285% $100
(a) The interest rate is the weighted average interest rate as of December 31,
2008 applied or that would be applied to the outstanding borrowings under
the facility.
(b) The credit facility requires Entergy Arkansas to maintain a debt ratio of
65% or less of its total capitalization.
(c) The credit facility allows Entergy Gulf States Louisiana to issue letters of
credit against the borrowing capacity of the facility. As of December 31,
2008, no letters of credit were outstanding. The credit facility requires
Entergy Gulf States Louisiana to maintain a consolidated debt ratio of
65% or less of its total capitalization. Pursuant to the terms of the credit
agreement, the amount of debt assumed by Entergy Texas ($770 million
as of December 31, 2008 and $1.079 billion as of December 31, 2007) is
excluded from debt and capitalization in calculating the debt ratio.
(d) The credit facility allows Entergy Louisiana to issue letters of credit against
the borrowing capacity of the facility. As of December 31, 2008, no letters of
credit were outstanding. The credit agreement requires Entergy Louisiana to
maintain a consolidated debt ratio of 65% or less of its total
capitalization.
(e) Borrowings under the Entergy Mississippi credit facilities may be secured by
a security interest in its accounts receivable.
(f) The credit facility allows Entergy Texas to issue letters of credit against the
borrowing capacity of the facility. As of December 31, 2008, no letters of
credit were outstanding. The credit facility requires Entergy Texas to main-
tain a consolidated debt ratio of 65% or less of its total capitalization.
Pursuant to the terms of the credit agreement, the transition bonds issued by
Entergy Gulf States Reconstruction Funding I, LLC are excluded from debt
and capitalization in calculating the debt ratio.
Operating Lease Obligations and Guarantees of
Unconsolidated Obligations
Entergy has a minimal amount of operating lease obligations and
guarantees in support of unconsolidated obligations. Entergy’s
guarantees in support of unconsolidated obligations are not likely
to have a material effect on Entergy’s financial condition or results
of operations. Following are Entergy’s payment obligations as of
December 31, 2008 on non-cancelable operating leases with a
term over one year (in millions):
2012- After
2009 2010 2011 2013 2013
Operating lease payments $90 $114 $53 $73 $119
The operating leases are discussed more thoroughly in Note 10 to
the financial statements.
Summary of Contractual Obligations of Consolidated Entities
(in millions):
2010- 2012- After
Contractual Obligations 2009 2011 2013 2013 Total
Long-term debt(1) $1,114 $2,731 $5,017 $7,654 $16,516
Capital lease payments(2) $ 162 $ 310 $ 5 $ 28 $ 505
Operating leases(2) $ 90 $ 166 $ 73 $ 119 $ 448
Purchase obligations(3) $1,548 $2,791 $1,381 $3,530 $ 9,250
˜
(1) Includes estimated interest payments. Long-term debt is discussed in Note 5
to the financial statements.
(2) Capital lease payments include nuclear fuel leases. Lease obligations are
discussed in Note 10 to the financial statements.
(3) Purchase obligations represent the minimum purchase obligation or cancel-
lation charge for contractual obligations to purchase goods or services.
Almost all of the total are fuel and purchased power obligations.
In addition to the contractual obligations, Entergy expects
to make payments of approximately $243 million for the years
2009-2011 related to Hurricane Katrina, Hurricane Gustav, and
Hurricane Ike restoration work, including approximately $104
million of continued gas rebuild work at Entergy New Orleans.
Entergy Arkansas estimates that it will pay $165 million to $200
million for ice storm restoration costs incurred in January 2009.
Also, Entergy expects to contribute $140 million to its pension
plans and $76 million to other postretirement plans in 2009.
Guidance pursuant to the Pension Protection Act of 2006 rules,
effective for the 2008 plan year and beyond, continues to evolve,
be interpreted through technical corrections bills, and discussed
within the industry and congressional lawmakers. Any changes
to the Pension Protection Act as a result of these discussions and
efforts may affect the level of Entergy’s pension contributions in
the future.
Also in addition to the contractual obligations, Entergy has
$1.825 billion of unrecognized tax benefits and interest for which
the timing of payments beyond 12 months cannot be reasonably
estimated due to uncertainties in the timing of effective settlement
of tax positions. See Note 3 to the financial statements for
additional information regarding unrecognized tax benefits.
Capital Funds Agreement
Pursuant to an agreement with certain creditors, Entergy
Corporation has agreed to supply System Energy with sufficient
capital to:
nmaintain System Energy’s equity capital at a minimum of 35%
of its total capitalization (excluding short-term debt);
n permit the continued commercial operation of Grand Gulf;
npay in full all System Energy indebtedness for borrowed money
when due; and
n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.