Entergy 2011 Annual Report Download - page 42

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS continued
As of December 31, 2011, amounts outstanding and capacity
available under the $3.5 billion credit facility are (in millions):
Capacity Borrowings Letters of Credit Capacity Available
$3,451 $1,920 $28 $1,503
A covenant in Entergy Corporation’s credit facility requires Entergy
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 is different than the calculation of the
debt to capital ratio above. Entergy is currently in compliance with
the covenant. 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.
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):
2015- After
2012 2013 2014 2016 2016
Capital lease payments $7 $6 $5 $9 $38
Entergy Arkansas, Entergy Gulf States Louisiana, Entergy
Louisiana, Entergy Mississippi, and Entergy Texas each had credit
facilities available as of December 31, 2011 as follows (amounts
in millions):
Amount Drawn
Expiration Amount of Interest as of
Company Date Facility Rate(a) Dec. 31, 2011
Entergy Arkansas April 2012 $ 78(b) 3.25% –
Entergy Gulf States
Louisiana August 2012 $100(c) 0.71% –
Entergy Louisiana August 2012 $200(d) 0.67% $50
Entergy Mississippi May 2012 $ 35(e) 2.05% –
Entergy Mississippi May 2012 $ 25(e) 2.05% –
Entergy Mississippi May 2012 $ 10(e) 2.05% –
Entergy Texas August 2012 $100(f) 0.77% –
(a) The interest rate is the weighted average interest rate as of December 31,
2011 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,
2011, 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, 2011,
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, 2011, 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.
OPE R ATI N G LE A S E OBLI G ATION S AN D GUA R AN TE ES
OF UN CON S O LIDATED OB LIGAT IONS
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, results
of operations, or cash flows. Following are Entergy’s payment
obligations as of December 31, 2011 on non-cancelable operating
leases with a term over one year (in millions):
2015- After
2012 2013 2014 2016 2016
Operating lease payments $85 $78 $79 $100 $166
The operating leases are discussed in Note 10 to the financial statements.
SUMMARY OF CON TR AC TUA L OBLI G ATIO N S OF
CONSO LIDATED EN TITIES (I N M I L LIO N S ) :
2013- 2015- After
Contractual Obligations 2012 2014 2016 2016 Total
Long-term debt(1) $ 2,717 $1,928 $2,155 $11,466 $18,266
Capital lease payments(2) $ 7 $ 11 $ 9 $ 38 $ 65
Operating leases(2) $ 85 $ 157 $ 100 $ 166 $ 508
Purchase obligations(3) $1,803 $2,604 $1,654 $ 5,199 $11,260
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(1) Includes estimated interest payments. Long-term debt is discussed in
Note 5 to the financial statements.
(2) Lease obligations are discussed in Note 10 to the financial statements.
(3) Purchase obligations represent the minimum purchase obligation or
cancellation 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 currently expects
to contribute approximately $162.9 million to its pension plans and
approximately $80.4 million to other postretirement plans in 2012,
although the required pension contributions will not be known with
more certainty until the January 1, 2012 valuations are completed
by April 1, 2012. Entergy’s preliminary estimates of 2012 funding
requirements indicate that the contributions will not exceed historical
levels of pension contributions.
Also in addition to the contractual obligations, Entergy has
$812 million of unrecognized tax benefits and interest net of
unused tax attributes 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.
CAP ITAL FUNDS AG R E E M E NT
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.
Capital Expenditure Plans and Other Uses of Capital
Following are the amounts of Entergy’s planned construction and
other capital investments by operating segment for 2012 through
2014 (in millions):
40