Entergy 2011 Annual Report Download - page 95

Entergy Corporation and Subsidiaries 2011
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
pension plans. The fair value of the trust assets is determined by
the trustee and certain investment managers. The trustee calculates
a daily earnings factor, including realized and unrealized gains or losses,
collected and accrued income, and administrative expenses, and
allocates earnings to each plan in the master trust on a pro rata basis.
Further, within each pension plan, the record of each Registrant
Subsidiary’s beneficial interest in the plan assets is maintained by the
plan’s actuary and is updated quarterly. Assets for each Registrant
Subsidiary are increased for investment income and contributions,
and decreased for benefit payments. A plan’s investment net income/
(loss) (i.e. interest and dividends, realized gains and losses and
expenses) is allocated to the Registrant Subsidiaries participating in
that plan based on the value of assets for each Registrant Subsidiary
at the beginning of the quarter adjusted for contributions and benefit
payments made during the quarter.
Entergy Corporation and its subsidiaries fund pension costs
in accordance with contribution guidelines established by the
Employee Retirement Income Security Act of 1974, as amended,
and the Internal Revenue Code of 1986, as amended. The assets
of the plans include common and preferred stocks, fixed-income
securities, interest in a money market fund, and insurance contracts.
The Registrant Subsidiaries’ pension costs are recovered from
customers as a component of cost of service in each of their
respective jurisdictions.
Components of Qualified Net Pension Cost and
Other Amounts Recognized as a Regulatory
Asset and/or Accumulated Other Comprehensive
Income (AOCI)
Entergy Corporation and its subsidiaries’ total 2011, 2010, and 2009
qualified pension costs and amounts recognized as a regulatory asset
and/or other comprehensive income, including amounts capitalized,
included the following components (in thousands):
2011 2010 2009
Net periodic pension cost:
Service cost - benefits earned
during the period $ 121,961 $ 104,956 $ 89,646
Interest cost on projected
benefit obligation 236,992 231,206 218,172
Expected return on assets (301,276) (259,608) (249,220)
Amortization of prior
service cost 3,350 4,658 4,997
Recognized net loss 92,977 65,901 22,401
Net periodic pension costs $ 154,004 $ 147,113 $ 85,996
Other changes in plan assets
and benefit obligations
recognized as a regulatory asset
and/or AOCI (before tax)
Arising this period:
Net loss $1,045,624 $ 232,279 $ 76,799
Amounts reclassified from
regulatory asset and/or AOCI
to net periodic pension cost in
the current year:
Amortization of prior
service cost (3,350) (4,658) (4,997)
Amortization of net loss (92,977) (65,901) (22,401)
Total $ 949,297 $ 161,720 $ 49,401
Total recognized as net periodic
pension cost, regulatory asset,
and/or AOCI (before tax) $1,103,301 $ 308,833 $ 135,397
Estimated amortization
amounts from regulatory
asset and/or AOCI to net
periodic cost in
the following year
Prior service cost $ 2,733 $ 3,350 $ 4,658
Net loss $ 169,064 $ 92,977 $ 65,901
Qualified Pension Obligations, Plan Assets, Funded
Status, Amounts Recognized in the Balance Sheet
for Entergy Corporation and Its Subsidiaries as of
December 31, 2011 and 2010 (in thousands):
2011 2010
Change in Projected Benefit Obligation (PBO)
Balance at beginning of year $ 4,301,218 $ 3,837,744
Service cost 121,961 104,956
Interest cost 236,992 231,206
Actuarial loss 703,895 293,189
Employee contributions 828 894
Benefits paid (177,259) (166,771)
Balance at end of year $ 5,187,635 $ 4,301,218
Change in Plan Assets
Fair value of assets at beginning of year $ 3,216,268 $ 2,607,274
Actual return on plan assets (40,453) 320,517
Employer contributions 400,532 454,354
Employee contributions 828 894
Benefits paid (177,259) (166,771)
Fair value of assets at end of year $ 3,399,916 $ 3,216,268
Funded status $ (1,787,719) $ (1,084,950)
Amount recognized in the balance sheet
Non-current liabilities $ (1,787,719) $ (1,084,950)
Amount recognized as a regulatory asset
Prior service cost $ 9,836 $ 12,979
Net loss 2,048,743 1,350,616
$ 2,058,579 $ 1,363,595
Amount recognized as AOCI (before tax)
Prior service cost $ 2,648 $ 2,855
Net loss 551,613 297,093
$ 554,261 $ 299,948
Other Postretirement Benefits
Entergy also currently provides health care and life insurance
benefits for retired employees. Substantially all employees may
become eligible for these benefits if they reach retirement age and
meet certain eligibility requirements while still working for Entergy.
Entergy uses a December 31 measurement date for its postretirement
benefit plans.
Effective January 1, 1993, Entergy adopted an accounting standard
requiring a change from a cash method to an accrual method
of accounting for postretirement benefits other than pensions.
At January 1, 1993, the actuarially determined accumulated
postretirement benefit obligation (APBO) earned by retirees and
active employees was estimated to be approximately $241.4 million
for Entergy (other than the former Entergy Gulf States) and $128
million for the former Entergy Gulf States (now split into Entergy
Gulf States Louisiana and Entergy Texas). Such obligations are being
amortized over a 20-year period that began in 1993. For the most part,
the Registrant Subsidiaries recover accrued other postretirement
benefit costs from customers and are required to contribute the
other postretirement benefits collected in rates to an external trust.
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