Entergy 2010 Annual Report Download - page 40

Management’s Financial Discussion and Analysis continued
Net debt consists of debt less cash and cash equivalents. Debt
consists of notes payable, capital lease obligations, and long-term
debt, including the currently maturing portion. Capital consists of
debt, common shareholders’ equity, and subsidiaries’ preferred
stock without sinking fund. Net capital consists of capital less
cash and cash equivalents. Entergy uses the net debt to net
capital ratio in analyzing its financial condition and believes it
provides useful information to its investors and creditors in
evaluating Entergy’s financial condition.
Long-term debt, including the currently maturing portion,
makes up substantially all of Entergy’s total debt outstanding.
Following are Entergy’s long-term debt principal maturities
and estimated interest payments as of December 31, 2010. To
estimate future interest payments for variable rate debt, Entergy
used the rate as of December 31, 2010. The amounts below
include payments on the Entergy Louisiana and System Energy
sale-leaseback transactions, which are included in long-term debt
on the balance sheet (in millions):
Long-term Debt Maturities 2014- After
and Estimated Interest Payments 2011 2012 2013 2015 2015
Utility $ 653 $ 677 $ 1,205 $1,354 $ 10,554
Entergy Wholesale Commodities 34 31 20 43 46
Parent and Other 143 1,683 43 630 559
Total $830 $2,391 $1,268 $2,027 $11,159
Note 5 to the financial statements provides more detail concerning
long-term debt outstanding.
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 0.125% 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, 2010 was 0.78% on the drawn portion
of the facility.
As of December 31, 2010, amounts outstanding and capacity
available under the $3.5 billion credit facility are (in millions):
Capacity Borrowings Letters of Credit Capacity Available
$3,466 $1,632 $25 $1,809
Under covenants contained in Entergy Corporation’s credit facility
and in one of the indentures governing Entergy Corporation’s
senior notes, Entergy is required to maintain a consolidated debt
ratio of 65% or less of its total capitalization. The calculation of this
debt ratio under Entergy Corporation’s credit facility and in one
of the indentures governing the Entergy Corporation senior notes
is different than the calculation of the debt to capital ratio above.
Entergy is currently in compliance with these covenants. If Entergy
fails to meet this ratio, or if Entergy 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 Entergy Corporation credit facility’s maturity
date may occur and there may be an acceleration of amounts due
under Entergy Corporation’s senior notes.
Capital lease obligations are a minimal part of Entergy’s overall
capital structure, and are discussed in Note 10 to the financial
statements. Following are Entergy’s payment obligations under
those leases (in millions):
2014- After
2011 2012 2013 2015 2015
Capital lease payments $6 $6 $7 $9 $44
Entergy Arkansas, Entergy Gulf States Louisiana, Entergy
Louisiana, Entergy Mississippi, and Entergy Texas each had credit
facilities available as of December 31, 2010 as follows (amounts
in millions):
Amount Drawn
Expiration Amount of Interest as of
Company Date Facility Rate(a) Dec. 31, 2010
Entergy Arkansas April 2011 $75.125(b) 2.75% –
Entergy Gulf States
Louisiana August 2012 $100(c) 0.67% –
Entergy Louisiana August 2012 $200(d) 0.67% –
Entergy Mississippi May 2011 $ 35(e) 2.01% –
Entergy Mississippi May 2011 $ 25(e) 2.01% –
Entergy Mississippi May 2011 $ 10(e) 2.01% –
Entergy Texas August 2012 $ 100(f) 0.74% –
(a) The interest rate is the weighted average interest rate as of December 31,
2010 applied, or that would be applied, to 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. Borrowings under the Entergy
Arkansas credit facility may be secured by a security interest in its
accounts receivable.
(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,
2010, 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.
(d) The credit facility allows Entergy Louisiana to issue letters of credit
against the borrowing capacity of the facility. As of December 31, 2010,
no letters of credit were outstanding. The credit facility 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. Entergy Mississippi is
required to maintain a consolidated debt ratio of 65% or less of its total
capitalization.
(f) The credit facility allows Entergy Texas to issue letters of credit against
the borrowing capacity of the facility. As of December 31, 2010, no letters
of credit were outstanding. The credit facility requires Entergy Texas to
maintain a consolidated debt ratio of 65% or less of its total capitalization.
Pursuant to the terms of the credit agreement, securitization bonds 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, 2010 on non-cancelable operating leases with
a term over one year (in millions):
2014- After
2011 2012 2013 2015 2015
Operating lease payments $88 $77 $69 $124 $188
The operating leases are discussed in Note 10 to the financial
statements.
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