SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 2-62223
SAVINGS PLAN OF ENTERGY CORPORATION AND SUBSIDIARIES
(Full title of the plan)
ENTERGY CORPORATION
639 Loyola Avenue
New Orleans, Louisiana 70113
(Issuer and address of principal executive office)
SAVINGS PLAN OF ENTERGY CORPORATION AND SUBSIDIARIES
Table of Contents
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Page |
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(a) |
Financial Statements: |
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Report of Independent Registered Public Accounting Firm |
2 |
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Statements of Net Assets Available for Benefits as of December 31, 2005 and 2004 |
3 |
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Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2005 |
4 |
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Notes to Financial Statements |
5 |
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(b) |
Signature |
13 |
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(c) |
Exhibit: |
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Consent of Independent Registered Public Accounting Firm |
14 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustee and Participants of the
Savings Plan of Entergy Corporation and Subsidiaries
We have audited the accompanying statements of net assets available for benefits of the Savings Plan of Entergy Corporation and Subsidiaries ("the Plan") as of December 31, 2005 and 2004, and the related statement of changes in net assets available for benefits for the year ended December 31, 2005. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005 and 2004, and the changes in net assets available for benefits for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
June 28, 2006
| SAVINGS PLAN OF ENTERGY CORPORATION AND SUBSIDIARIES | ||||
| STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS | ||||
| December 31, | ||||
| 2005 | 2004 | |||
| INVESTMENTS: | ||||
| Plan interest in Master Trust | $2,337,428,140 | $2,150,060,296 | ||
| Net Assets Available for Benefits | $2,337,428,140 | $2,150,060,296 | ||
| See Notes to Financial Statements. | ||||
| SAVINGS PLAN OF ENTERGY CORPORATION AND SUBSIDIARIES | ||||||
| STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS | ||||||
| For the Year Ended December 31, 2005 | ||||||
| Participant | Non-Participant | |||||
| Directed | Directed | Total | ||||
| Additions to Net Assets attributed to: | ||||||
| Investment income: | ||||||
| Plan interest in Master Trust investment income | $ 105,607,477 | $ 29,037,272 | $ 134,644,749 | |||
| Contributions: | ||||||
| Participant | 90,205,579 | - | 90,205,579 | |||
| Employer - net of forfeitures | 32,551,842 | (13,751) | 32,538,091 | |||
| Total contributions | 122,757,421 | (13,751) | 122,743,670 | |||
| Other credit adjustments - net | 11,377 | 2,935 | 14,312 | |||
| Total additions | 228,376,275 | 29,026,456 | 257,402,731 | |||
| Deductions from Net Assets attributed to: | ||||||
| Payments to participants or beneficiaries | 109,873,871 | 32,216,050 | 142,089,921 | |||
| Loan and brokerage fees | 52,665 | - | 52,665 | |||
| Total deductions | 109,926,536 | 32,216,050 | 142,142,586 | |||
| Net increase (decrease) before transfers | 118,449,739 | (3,189,594) | 115,260,145 | |||
| Transfers: | ||||||
| Plans transferred in | 70,856,289 | - | 70,856,289 | |||
| Loans transferred in | 1,251,410 | - | 1,251,410 | |||
| Interfund transfers | 81,350,944 | (81,350,944) | - | |||
| Total transfers | 153,458,643 | (81,350,944) | 72,107,699 | |||
| Net increase (decrease) | 271,908,382 | (84,540,538) | 187,367,844 | |||
| Net Assets Available for Benefits | ||||||
| Beginning of Year | 1,581,604,308 | 568,455,988 | 2,150,060,296 | |||
| End of Year | $1,853,512,690 | $ 483,915,450 | $2,337,428,140 | |||
| See Notes to Financial Statements. | ||||||
SAVINGS PLAN OF ENTERGY CORPORATION AND
SUBSIDIARIES
Notes to Financial Statements
Note 1. General Description of the Plan
The following description of the Savings Plan of Entergy Corporation and Subsidiaries (Entergy Savings Plan) is provided for general information only. Entergy Savings Plan participants should refer to the Entergy Savings Plan summary plan description for a more complete description of the Entergy Savings Plan's provisions.
General: The Entergy Savings Plan is a defined contribution plan of Entergy Corporation and Subsidiaries, collectively the Entergy System Companies, subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The ERISA provisions set forth the requirements for participation, vesting of benefits, fiduciary conduct for administering and handling of assets, and disclosure of Entergy Savings Plan information.
The Entergy Savings Plan constitutes two types of plans qualified under Internal Revenue Code Section 401 as follows:
Plan amendments in 2005: The Entergy Savings Plan was amended in 2005 to i) recognize the merger of the Savings Plan of Entergy Corporation and Subsidiaries V (Savings Plan V) into the Entergy Savings Plan, effective December 31, 2005; ii) eliminate disaggregation of ESOP and non-ESOP contributions for nondiscrimination testing; iii) modify provisions regarding hardship withdrawals; iv) allow contributions on earnings received within two and one-half months of termination; v) enact IRA rollover procedures for mandatory distributions greater than $1,000; and vi) expand withdrawal provisions and allow hardship withdrawals until September 30, 2006 for expenses incurred for temporary housing for employees or their lineal descendents or ascendants due to Hurricane Katrina.
Entergy has implemented expanded distribution options which will be effective in 2006 with the intention of retroactively amending the Entergy Savings Plan in accordance with Katrina Emergency Tax Relief Act of 2005 (KETRA) regulations.
The significant changes to the Entergy Savings Plan resulting from these amendments are described throughout this note.
Trustee: The Entergy Savings Plan utilizes T. Rowe Price Trust Company as its trustee and T. Rowe Price Retirement Plan Services, Inc. as its recordkeeper and provider of other administrative services. The Entergy Savings Plan's investment options, which are managed by its trustee or affiliates of its trustee, are:
In addition, the trustee manages the participant loan fund which is discussed below.
Eligibility: The Entergy Savings Plan is available to participating Entergy System Company employees as soon as administratively practicable following the employee's employment commencement date, including Vermont Yankee bargaining employees transferred from Savings Plan V effective December 31, 2005.
Contributions: Entergy Savings Plan contributions made by or on behalf of participants are deposited with the trustee. Participants may elect to contribute, through payroll deductions, up to a total of 6% of their eligible earnings each pay period (basic contributions) for which the employing Entergy System Company will make matching contributions. Participants may make supplemental contributions up to 24% of their eligible earnings each pay period for which there are no matching contributions. Basic and supplemental contributions may be made on a before-tax basis (401(k) contributions), an after-tax basis, or a combination of both. Contributions are limited by federal tax legislation. The 401(k) contribution dollar limit for the calendar year 2005 was $14,000 per participant.
The employer matching contribution for all non-bargaining and certain bargaining participants is equal to 70% of the participant's basic contribution. The employing Entergy System Company's matching contribution for other bargaining participants is equal to 75% of the participant's basic contribution if a participant's employer matching investment election is directed entirely to the Entergy Stock Fund and 50% of the participants' basic contributions if the a participant's employer matching investment election is directed to other investment funds.
The Entergy Savings Plan provides that certain taxable amounts received by an employee that originated from an employee benefit plan qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended, may be accepted under the Entergy Savings Plan as rollover contributions (rollover contributions).
Investments: Participant contributions are invested as directed by participants in accordance with the Entergy Savings Plan's investment options. Earnings on participant contributions are allocated based on participants' account balances.
The employer matching contributions for all non-bargaining and certain bargaining participants are invested as directed by participants. For other bargaining participants, the 50% matching contributions on participant-elected contributions were invested as directed by participants in accordance with the Entergy Savings Plan's investment options and the 75% matching contributions on participant-elected deferrals were invested in the Entergy Stock Fund.
The value of investments may fluctuate with changes in market conditions. The amount of risk varies based on the fund's investment goals and composition. Participants should realize the risk associated with each investment when determining how to invest their contributions.
Participant accounts: Each participant's account is credited with the participant's contribution and allocation of the Entergy System Companies' matching contribution and net earnings of the Entergy Savings Plan's interest in the Master Trust (see Note 4). Allocations are based on participant earnings or account balances, as defined.
Vesting: Participants are fully vested at all times in participant contributions and company matching contributions.
In-service withdrawals: While employed, participants may, with certain restrictions, withdraw all or a portion of the value of their basic and supplemental after-tax contributions, rollover contributions, and System Individual Retirement Accounts. Withdrawals may be subject to a 10% premature distribution tax unless the participant is age 59-1/2 or older. A participant who has attained age 59-1/2 may withdraw all or a portion of the value from all sources in the Entergy Savings Plan. A participant may also apply for a hardship withdrawal from his 401(k) contributions if the participant satisfies certain financial hardship withdrawal criteria.
A dividend pass through feature under the Entergy Savings Plan allows participants to either receive a cash distribution of their ESOP Entergy Stock Fund dividends or reinvest the dividends in the ESOP Entergy Stock Fund.
Employed participants may, with certain restrictions, transfer from the ESOP Entergy Stock Fund a portion of the amount credited to their ESOP accounts to other investment funds (or withdraw such amount, in the case of certain Tax Credit ESOP accounts) after the participant completes an 84-month holding period or after the participant reaches age 50 and completes 10 years of plan participation. The amount of in-service withdrawal is limited by provisions of the Code applicable to the ESOP and may be subject to an additional 10% premature distribution tax unless the participant is age 59-1/2 or older. Withdrawals from the ESOP accounts are in the form of stock certificates, plus cash for the value of any fractional share, unless the participant makes a request to receive the withdrawal in the form of cash.
Loans to participants: The Entergy Savings Plan has a loan provision whereby participants who are actively employed may borrow an amount, with a minimum of $1,000, from their eligible account up to a maximum of 50% of the balance of their account or $50,000, whichever is less. The amount borrowed is deducted from the participant's eligible account and repaid with interest based on the prime rate plus 1% in accordance with an established schedule. The loan must be repaid within 4-1/2 years, or 20 years if for the acquisition of the participant's primary residence. If a participant with an outstanding loan separates from service, the remaining principal balance of the loan is treated as a taxable distribution to the participant unless the amount is repaid in full within a specified period from the date of separation.
Payment of benefits: Participants become eligible to receive a single-sum distribution of the entire vested value of the participant's Entergy Savings Plan accounts upon termination of employment, retirement, disability, or death. There are certain provisions regarding deferral of distributions; installment distributions for terminated participants, retirees, and disabled participants; minimum account balances; and mandatory distributions.
Generally, there are tax consequences associated with receiving a distribution from the Entergy Savings Plan, unless the taxable portion is rolled over to an individual retirement account or another retirement plan account which qualifies under Sections 408(a) or 401(a) of the Code. Additionally, a 10% penalty tax for early withdrawal applies, unless the distribution is received after age 59-1/2 or the participant satisfies one of the legal exemptions to such tax.
Inactive accounts: Participants with an account balance of at least $5,000 (excluding rollovers) are allowed, under the provisions of the Entergy Savings Plan, to defer receipt of their vested account balance upon separation from the Entergy Savings Plan until age 70-1/2. The amount allocated to such participants was $363,409,235 at December 31, 2005 and $373,513,987 at December 31, 2004.
Forfeitures: All costs and expenses of administering the Entergy Savings Plan, except expenses incurred in the direct acquisition or disposition of stock and investment manager fees, are paid first by the remaining balance in the forfeiture account and then by the participating employers. The residual amount in the forfeiture account, if any, is to reduce employer contributions. As of December 31, 2005 and 2004, the forfeiture account totaled approximately $1.3 million for both periods. The balance as of 2005 includes the amount transferred from Savings Plan V as a result of the merger. During 2005, administrative expenses of $135,998 were paid out of the forfeiture account.
Transfers: As a result of the merger of Savings Plan V effective December 31, 2005, assets totaling $72,107,699 were transferred into the Entergy Savings Plan and are included in the line titled "Plans transferred in" on the Statement of Changes in Net Assets Available for Benefits.
Note 2. Summary of Significant Accounting Policies
Basis of presentation: The accompanying financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.
Use of estimates in the preparation of financial statements: The preparation of the Entergy Savings Plan financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect reported amounts in the Statements of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits, such as those regarding fair value. Adjustments to the reported amounts may be necessary in the future to the extent that future estimates or actual results are different from the estimates used in the financial statements.
The values of guaranteed investment contracts (GICs) are recorded at contract value, which approximates fair market value. Contract value represents amounts invested under the GICs, plus interest earned and reinvested through the valuation date at the contracted rate. The values of synthetic investment contracts (SICs) are recorded at contract value, which approximates fair market value, because participants are guaranteed a return of principal and accrued interest. SICs are similar to GICs except that the assets of a SIC are placed in a trust with ownership by the Master Trust and a financially responsible third party issues a wrapper contract. A wrapper contract is an insurance policy that guarantees a stated rate of return on specific Master Trust assets placed in the trust.
Concentration of credit risk: The Stable Income Fund of the Master Trust invests in GICs and SICs which are subject to credit risk with respect to the insurance companies that back them. The potential credit risk of the GICs as of December 31, 2005 and 2004 was $78,608,115 and $76,531,701, respectively. The potential credit risk for the SICs represents the amount by which the contract value exceeds the fair value of the SIC assets in the trust. The potential credit risk for the SICs for 2005 was $717,544. As of December 31, 2005, the contract value and the fair value of the SIC assets were $272,575,900 and $271,858,356, respectively. As of December 31, 2004, the contract value and the fair value of the SIC assets were $263,710,078 and $268,813,771, respectively. There are no reserves against the contract values of the GICs or SICs for credit risk of the contract issuers or otherwise. The Entergy Savings Plan provisions set investment guidelines addressing investment diversification, quality, maturity, and performance standards prescribed to mitigate the potential credit risk.
Payment of benefits: Benefits payable for terminations and withdrawals are recorded when paid. This accounting method differs from that required in the Internal Revenue Service and Department of Labor Form 5500, which requires benefits payable to be accrued and charged to net assets in the period the liability arises. Refer to Note 8 to the Financial Statements for the reconciliation to the Form 5500.
Income recognition: The difference in fair value of the assets in the Master Trust from one period to the next is recognized and included in investment income in the accompanying Statement of Changes in Net Assets Available for Benefits. The investment income also includes realized gains and losses.
Purchases and sales of securities are accounted for on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Note 3. Investment Contracts With Insurance Companies
The Master Trust invests in a diversified portfolio of GICs and SICs issued by insurance companies and other financial institutions. The average yield for the GICs and SICs was approximately 4.6% for both 2005 and 2004. The crediting interest rates varied from 3.5% - 5.6% as of December 31, 2005 and from 3.5% - 6.02% as of December 31, 2004.
Note 4. Interest in Master Trust
The Entergy Savings Plan investments are held in a bank-administered trust (Master Trust) established by Entergy Corporation and maintained by T. Rowe Price Trust Company (the Trustee). The Entergy Savings Plan maintains an undivided beneficial interest in each of the investment accounts of the Master Trust. Use of the Master Trust permits the commingling of the trust assets of the savings plans of Entergy Corporation and its subsidiaries for investment and administrative purposes. Although assets are commingled in the Master Trust, the Trustee maintains supporting records for the purpose of allocating the equity in net earnings (losses) and the administrative expenses of the investment accounts to the participating plans. Equity in an investment account's net earnings is comprised of interest and dividends and realized and unrealized investment gains and losses. As of December 31, 2005 and 2004, the Entergy Savings Plan's interest in the net assets of the Master Trust was approximately 98% and 95%, respectively.
The fair values of investments in the Master Trust as of December 31, 2005 and 2004 are as follows:
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2005 |
2004 |
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Cash and cash equivalents |
$30,385,158 |
$31,858,475 |
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Common stock* |
688,894,736 |
774,891,190 |
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Mutual funds |
1,047,788,197 |
862,823,520 |
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Common trust funds |
179,158,261 |
180,273,585 |
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Guaranteed investment contracts |
78,608,115 |
76,531,701 |
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Synthetic investment contracts |
272,575,900 |
263,710,078 |
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Brokerage accounts |
31,298,056 |
16,236,448 |
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Loans to participants |
46,041,363 |
46,015,475 |
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$2,374,749,786 |
$2,252,340,472 |
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*As of December 31, 2005 and 2004, $484,179,779 and $568,595,107, respectively, of the Entergy Corporation common stock was non-participant directed.
Dividend and interest income and net realized and unrealized appreciation of investments in the Master Trust for the year ended December 31, 2005 are summarized as follows:
Dividend and interest income:
|
Common stock |
$21,746,705 |
|
|
Mutual funds |
32,674,605 |
|
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Common trust funds |
7,339 |
|
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Loans to participants |
2,790,714 |
|
|
$57,219,363 |
Net realized and unrealized appreciation of investments:
|
Common stock |
$17,440,777 |
|
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Mutual funds |
36,048,102 |
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Common trust funds |
8,600,094 |
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Synthetic investment contracts |
15,875,220 |
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Brokerage accounts |
3,147,987 |
|
|
$81,112,180 |
Note 5. Tax Status
Entergy Savings Plan obtained its latest determination letter on December 24, 2003, in which the Internal Revenue Service stated that the Entergy Savings Plan was in compliance with the applicable requirements of the Code subject to the adoption of the proposed amendments submitted in June 2003. The Entergy Savings Plan has been amended since receiving the determination. However, the plan administrator and the plan's tax counsel believe, to the best of their knowledge, that the Entergy Savings Plan is currently designed and being operated in material compliance with the applicable requirements of the Code. Accordingly, no provision for income taxes has been included in the Entergy Savings Plan's financial statements.
Note 6. Entergy Savings Plan Termination
Although they have not expressed any intent to do so, the participating employers have the right under the Entergy Savings Plan to discontinue their contributions at any time and the Entergy Corporation Board of Directors (Board) or Personnel Committee of the Board has the right to terminate the Entergy Savings Plan subject to the provisions of ERISA. In the event that the Entergy Savings Plan is terminated, subject to conditions set forth in ERISA, the Entergy Savings Plan provides that all participants will be fully vested and the net assets of the Entergy Savings Plan be distributed to participants in proportion to their respective vested interests in such net assets at that date.
Note 7. Related Party Transactions
Certain of the Master Trust investments are shares in funds managed by T. Rowe Price Trust Company who is the trustee, as defined by the Entergy Savings Plan and, therefore, these investments and investment transactions qualify as party-in-interest transactions. As the Master Trust holds common stock of Entergy Corporation as an investment, these investments and investment transactions also qualify as party-in-interest transactions. The year-end market price of Entergy Corporation common stock was $68.65 and $67.59 per share at December 31, 2005 and 2004, respectively.
Note 8. Reconciliation to Form 5500
As of December 31, 2005, the Entergy Savings Plan had no pending distributions to participants withdrawing all or a portion of their investments from the Entergy Savings Plan. As of December 31, 2005 and 2004, the Entergy Savings Plan had approximately $0 and $1.6 million, respectively, of pending distributions to participants withdrawing all or a portion of their investments from the Entergy Savings Plan. These amounts were recorded as a liability in the Entergy Savings Plan's Form 5500; however, these amounts are not recorded as a liability in the accompanying statements of net assets available for benefits which is in accordance with accounting principles generally accepted in the United States of America. In addition, for the plan year ending December 31, 2005 and 2004, the plan's assets includes deemed distributions of participant loans and accrued interest on deemed distributions and plan loan offsets which should be excluded from the assets of the Entergy Savings Plan in the Entergy Savings Plan Form 5500 as of December 31, 2005 and 2004.
The following reconciles the benefits paid to participants per the financial statements to the Entergy Savings Plan Form 5500 for the plan year ended December 31, 2005:
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Benefits paid to participants per financial statements |
$142,089,921 |
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Plus: Pending distributions to participants at December 31, 2005 |
- |
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Less: Pending distributions to participants at December 31, 2004 |
1,580,754 |
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Benefits paid to participants per Form 5500 |
$140,509,167 |
The following reconciles the financial statements to the Entergy Savings Plan Form 5500 for the plan year ended December 31, 2005 and 2004:
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Net Assets Available for Benefits |
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2005 |
2004 |
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Per financial statements |
$2,337,428,140 |
$2,150,060,296 |
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Pending distributions to participants |
- |
(1,580,754) |
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Deemed distributions of participant loans, including accrued interest, net of deemed distributions under repayments |
|
|
||
|
Per Form 5500 |
$2,337,249,255 |
$2,148,459,460 |
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SIGNATURE
The Entergy Savings Plan. Pursuant to the requirements of the Securities and Exchange Act of 1934, the Employee Benefits Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
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SAVINGS PLAN OF ENTERGY |
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By: /s/ Kevin Gardner |
Dated: June 26, 2006
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Post-Effective Amendments No. 3 and 5A on Form S-8 and their related prospectuses to Registration Statement No. 33-54298 of Entergy Corporation on Form S-4 of our report dated June 28, 2006 appearing in this Annual Report on Form 11-K of the Savings Plan of Entergy Corporation and Subsidiaries for the year ended December 31, 2005.
/s/ Deloitte & Touche LLP
New Orleans, Louisiana
June 28, 2006