Dominion Power 2007 Annual Report Download - page 93

Based on stated maturity dates rather than early redemption dates that could be elected by instrument holders, the scheduled principal
payments of long-term debt at December 31, 2007, were as follows:
2008 2009 2010 2011 2012 Thereafter Total
(millions, except percentages)
Secured Senior Notes $ 10 $ 11 $ 12 $ 13 $ 13 $ 145 $ 204
Unsecured Senior Notes (including Medium-Term Notes) 1,315 313 822 484 1,470 7,305 11,709
Unsecured Callable and Puttable Enhanced SecuritiesSM ———— — 225 225
Tax-Exempt Financings 153 111 1 — — 392 657
Unsecured Junior Subordinated Notes Payable to Affiliated Trusts ———— — 681 681
Enhanced Junior Subordinated Notes ———— — 800 800
Other ———— — 460 460
Total $1,478 $ 435 $ 835 $ 497 $1,483 $10,008 $14,736
Weighted-average coupon 5.19% 5.36% 5.39% 6.35% 5.62% 5.75%
We repaid $5.5 billion of long-term debt and notes payable
during 2007, which includes the completion of a debt tender
offer repurchasing $2.5 billion of our debt securities in July 2007.
We recognized charges of $242 million ($148 million after-tax)
primarily in connection with the early redemption of this debt.
Of this amount, $234 million ($143 million after-tax) was
recorded in interest and related charges in our Consolidated
Statement of Income.
Our short-term credit facilities and long-term debt agree-
ments contain customary covenants and default provisions. As of
December 31, 2007, there were no events of default under these
covenants.
Convertible Securities
In 2004, we entered into an exchange transaction with respect to
$220 million of our outstanding contingent convertible senior
notes in contemplation of the transition method provided by
EITF Issue No. 04-8, The Effect of Contingently Convertible
Instruments on Diluted Earnings per Share (EITF 04-8). We
exchanged the outstanding notes for new notes with a conversion
feature that requires that the principal amount of each note be
repaid in cash. At issuance, the notes were valued at a conversion
rate of 27.173 shares of common stock per $1,000 principal
amount of senior notes, which represented a conversion price of
$36.80, recast to reflect our November 2007 stock split. Amounts
payable in excess of the principal amount will be paid in common
stock. The conversion rate is subject to adjustment upon certain
events such as subdivisions, splits, combinations of common stock
or the issuance to all common stock holders of certain common
stock rights, warrants or options and certain dividend increases.
As of December 31, 2007, the conversion rate had been adjusted
to 27.5294, primarily due to individual dividend payments above
the level paid at issuance.
The notes outstanding on December 31, 2004 were included
in the diluted EPS calculation retroactive to the date of their issu-
ance using the method described in EITF 04-8, when appro-
priate. Under this method, the number of shares included in the
denominator of the diluted EPS calculation is calculated as the
net shares issuable for the reporting period based upon the average
market price for the period. This results in an increase in the
average shares outstanding used in the calculation of our diluted
EPS when the conversion price of $36.80 is lower than the aver-
age market price of our common stock over the period, and
results in no adjustment when the conversion price exceeds the
average market price.
The senior notes are convertible by holders into a combina-
tion of cash and shares of our common stock under any of the
following circumstances:
(1) The closing price of our common stock exceeds the appli-
cable conversion price ($43.51 as of February 27, 2008) for
at least 20 out of the last 30 consecutive trading days ending
on the last trading day of the previous calendar quarter;
(2) The senior notes are called for redemption by us;
(3) The occurrence of specified corporate transactions; or
(4) The credit rating assigned to the senior notes by Moody’s
Investors Service (Moody’s) is below Baa3 and by Stan-
dard & Poor’s Ratings Services, a division of the McGraw-
Hill Companies, Inc. (Standard & Poor’s), is below BBB- or
the ratings are discontinued for any reason.
As of December 31, 2007, the closing price of our common
stock was equal to $44.16 per share or higher for at least 20 out of
the last 30 consecutive trading days. Therefore, the senior notes
are eligible for conversion during the first quarter of 2008.
Beginning in 2007, the notes have been eligible for contingent
interest if the average trading price as defined in the indenture
equals or exceeds 120% of the principal amount of the senior
notes. Holders have the right to require us to purchase these
senior notes for cash at 100% of the principal amount plus
accrued interest in December 2008, 2013 or 2018, or if we
undergo certain fundamental changes. We continue to classify
these senior notes as long-term debt in our Consolidated Balance
Sheet since we have the intent and ability to refinance them on a
long-term basis.
Equity-Linked Securities
In 2002, we issued 6.6 million equity-linked debt securities, con-
sisting of stock purchase contracts and senior notes. Total net
proceeds were $320 million. Long-term debt of $330 million and
an equity charge of $36 million were recorded in our Con-
solidated Balance Sheet related to the issuance.
The stock purchase contracts obligated the holders to pur-
chase shares of our common stock from us by May 2006. The
purchase price, recast to reflect our November 2007 stock split,
was $25 and the number of shares to be purchased was
determined under a formula based upon the average closing price
of our common stock near the settlement date. The senior notes,
or treasury securities in some instances, were pledged as collateral
to secure the purchase of common stock under the related stock
purchase contracts. The holders were given the option to either
satisfy their obligations under the stock purchase contracts by
Dominion 2007 Annual Report 91