Duke Energy 2011 Annual Report Download - page 164

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
December 31, 2010
(in millions) Duke Energy
Duke Energy
Carolinas
Duke Energy
Ohio
Duke Energy
Indiana
Tax exempt bonds(a)(b)(c)(d) $ 632 $ 95 $161 $352
Notes payable and Commercial paper(e) 450 300 — 150
DERF(f) 300 300 — —
Total $1,382 $695 $161 $502
(a) Of the $632 million of tax-exempt bonds outstanding at December 31, 2010, at Duke Energy, the master credit facility served as a backstop for $311 million of these tax-exempt bonds
(of which $27 million is in the form of letters of credit), with the remaining balance backstopped by other specific long-term credit facilities separate from the master credit facility.
(b) For Duke Energy Carolinas, the master credit facility served as a backstop for the $95 million of tax-exempt bonds outstanding at December 31, 2010.
(c) Of the $161 million of tax-exempt bonds outstanding at December 31, 2010 at Duke Energy Ohio, $111 million were backstopped by Duke Energy’s master credit facility (of which $27
million is in the form of letters of credit), with the remaining balance backstopped by other specific long-term credit facilities separate from the master credit facility.
(d) Of the $352 million of tax-exempt bonds outstanding at December 31, 2010 at Duke Energy Indiana, $81 million were backstopped by Duke Energy’s master credit facility, with the
remaining balance backstopped by other specific long-term credit facilities separate from the master credit facility.
(e) Duke Energy has issued $450 million in Commercial Paper, which is backstopped by the master credit facility, and the proceeds are in the form of loans through the money pool to Duke
Energy Carolinas of $300 million and Duke Energy Indiana of $150 million as of December 31, 2010.
(f) DERF is a short-term obligation backed by a credit facility which expires in August 2013.
In January 2012, Duke Energy Indiana and Duke Energy
Kentucky collectively entered into a $156 million two-year bilateral
letter of credit agreement, under which Duke Energy Indiana and
Duke Energy Kentucky may request the issuance of letters of credit
up to $129 million and $27 million, respectively, on their behalf to
support various series of variable rate demand bonds. In addition,
Duke Energy Indiana entered into a $78 million two-year bilateral
letter of credit facility. These credit facilities may not be used for any
purpose other than to support the variable rate demand bonds issued
by Duke Energy Indiana and Duke Energy Kentucky. In February
2012, letters of credit were issued corresponding to the amount of
the facilities to support various series of tax-exempt bonds at Duke
Energy Indiana and Duke Energy Kentucky.
In April 2010, Duke Energy and Duke Energy Carolinas entered
into a $200 million four-year unsecured revolving credit facility which
expires in April 2014. Duke Energy and Duke Energy Carolinas are
co-borrowers under this facility, with Duke Energy having a
maximum borrowing sublimit of $100 million and Duke Energy
Carolinas having no maximum borrowing sublimit. Upon closing of
the facility, Duke Energy made an initial borrowing of $75 million for
general corporate purposes, which is classified as Long-term debt on
the Consolidated Balance Sheets.
In September 2008, Duke Energy Indiana and Duke Energy
Kentucky collectively entered into a $330 million three-year letter of
credit agreement with a syndicate of banks, under which Duke
Energy Indiana and Duke Energy Kentucky may request the issuance
of letters of credit up to $279 million and $51 million, respectively,
on their behalf to support various series of variable rate demand
bonds issued or to be issued on behalf of either Duke Energy Indiana
or Duke Energy Kentucky. This credit facility, which is not part of
Duke Energy’s master credit facility, may not be used for any purpose
other than to support the variable rate demand bonds issued by Duke
Energy Indiana and Duke Energy Kentucky. In September 2010, the
letter of credit agreement was amended to reduce the size to $327
million and extended the maturity date to September 2012. In
September 2011, the maturity date for the agreement was extended
to December 2012 and in December 2011, the maturity date was
extended to March 2013 and the facility size was reduced to $208
million. The facility was subsequently terminated in 2012.
Restrictive Debt Covenants.
The Duke Energy Registrants’ debt and credit agreements
contain various financial and other covenants. Failure to meet those
covenants beyond applicable grace periods could result in accelerated
due dates and/or termination of the agreements. As of December 31,
2011, each of the Duke Energy Registrants were in compliance with
all covenants related to their significant debt agreements. In addition,
some credit agreements may allow for acceleration of payments or
termination of the agreements due to nonpayment, or the
acceleration of other significant indebtedness of the borrower or some
of its subsidiaries. None of the significant debt or credit agreements
may contain material adverse change clauses.
Other Financing Matters.
In September 2010, Duke Energy filed a registration statement
(Form S-3) with the SEC. Under this Form S-3, which is uncapped,
Duke Energy, Duke Energy Carolinas, Duke Energy Ohio and Duke
Energy Indiana may issue debt and other securities in the future at
amounts, prices and with terms to be determined at the time of future
offerings. The registration statement also allows for the issuance of
common stock by Duke Energy.
At December 31, 2011 and 2010, $2.0 billion of debt issued
by Duke Energy Carolinas was guaranteed by Duke Energy.
Other Loans.
During 2011 and 2010, Duke Energy had loans outstanding
against the cash surrender value of the life insurance policies that it
owns on the lives of its executives. The amounts outstanding were
$457 million as of December 31, 2011 and $444 million as of
December 31, 2010. The amounts outstanding were carried as a
reduction of the related cash surrender value that is included in Other
within Investments and Other Assets on the Consolidated Balance
Sheets.
144