Entergy 2009 Annual Report Download - page 101

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Entergy Corporation and Subsidiaries
Notes to Financial Statements
97
Qualified research expenditures for purposes of the research credit
Inclusion of nuclear decommissioning liabilities in cost of goods sold
It is anticipated that IRS Appeals proceedings on these disputed issues will commence in the second quarter of 2010.
2006-2007 IRS Audit
The IRS commenced an examination of Entergy's 2006 and 2007 U.S. federal income tax returns in the third
quarter 2009. To date, the IRS has not proposed any adjustments in the audit of these returns.
Other Tax Matters
When Entergy Louisiana, Inc. restructured effective December 31, 2005, Entergy Louisiana agreed, under
the terms of the merger plan, to indemnify its parent, Entergy Louisiana Holdings, Inc. (formerly, Entergy Louisiana,
Inc.) for certain tax obligations that arose from the 2002-2003 IRS partial agreement. Because the agreement with
the IRS was settled in the fourth quarter 2009, Entergy Louisiana paid Entergy Louisiana Holdings approximately
$289 million pursuant to these intercompany obligations in the fourth quarter 2009.
On November 20, 2009, Entergy Corporation and subsidiaries amended the Entergy Corporation and
Subsidiary Companies Intercompany Income Tax Allocation Agreement such that Entergy Corporation shall be
treated, under all provisions of such Agreement, in a manner that is identical to the treatment afforded all
subsidiaries, direct or indirect, of Entergy Corporation.
In the fourth quarter 2009, Entergy filed Applications for Change in Method of Accounting for certain costs
under Section 263A of the Internal Revenue Code. In the Application, Entergy is requesting permission to treat the
nuclear decommissioning liability associated with the operation of its nuclear power plants as a production cost
properly includable in cost of goods sold. The effect of this change for Entergy is a $5.7 billion reduction in 2009
taxable income within Non-Utility Nuclear.
NOTE 4. REVOLVING CREDIT FACILITIES, LINES OF CREDIT AND SHORT-TERM
BORROWINGS
Entergy Corporation has a revolving credit facility that expires in August 2012 and has a borrowing capacity
of $3.5 billion. Entergy Corporation also has the ability to issue letters of credit against the total borrowing capacity
of the credit facility. The facility fee is currently 0.09% of the commitment amount. Facility fees and interest rates
on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy
Corporation. The weighted average interest rate for the year ended December 31, 2009 was 1.377% on the drawn
portion of the facility. Following is a summary of the borrowings outstanding and capacity available under the
facility as of December 31, 2009.
Capacity Borrowings
Letters
of Credit
Capacity
Available
(In Millions)
$3,500 $2,566 $28 $906
Entergy Corporation's facility requires it to maintain a consolidated debt ratio of 65% or less of its total
capitalization. Entergy is in compliance with this covenant. If Entergy fails to meet this ratio, or if Entergy
Corporation or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness
or is in bankruptcy or insolvency proceedings, an acceleration of the facility maturity date may occur.
99