Duke Energy 2012 Annual Report Download - page 78

58
PART II
The decrease in net cash provided by fi nancing activities in 2012 as
compared to 2011 was due primarily to the following:
• A $620 million decrease in net issuances of long-term debt, primarily
due to the timing of issuances and redemptions between years and
• A $420 million increase in quarterly dividends primarily due to an
increase in common shares outstanding, resulting from the merger with
Progress Energy and an increase in dividends per share from $0.75 to
$0.765 in the third quarter of 2012. The total annual dividend per share
was $3.03 in 2012 compared to $2.97 in 2011;
These decreases in cash provided were partially offset by:
• A $70 million increase in proceeds from net issuances of notes payable
and commercial paper, primarily due to the PremierNotes program, net
of paydown of commercial paper.
The increase in net cash provided by fi nancing activities in 2011 as
compared to 2010 was due primarily to the following:
• A $1,200 million net increase in long-term debt primarily due to
fi nancings associated with the ongoing fl eet modernization program and
• A $260 million increase in proceeds from net issuances of notes
payable and commercial paper, primarily due to PremierNotes and
commercial paper issuances.
These increases in cash provided were partially offset by:
• A $240 million decrease in proceeds from the issuances of common
stock primarily related to the Dividend Reinvestment Plan (DRIP) and
other internal plans, due to the discontinuance of new share issuances
in the fi rst quarter of 2011 and
• A $50 million increase in dividends paid in 2011 due to an increase in
dividends per share from $0.735 to $0.75 in the third quarter of 2011.
The total annual dividend per share was $2.97 in 2011 compared to
$2.91 in 2010.
Signifi cant Notes Payable and Long-Term Debt Activities – 2012 - 2013.
Duke Energy’s outstanding long-term debt, including current maturities
as of December 31, 2012, includes approximately $17.8 billion assumed in the
merger with Progress Energy. This amount includes $2.3 billion of fair value
adjustments recorded in connection with purchase accounting for the Progress
Energy merger, which are not part of future principal payments and will amortize
over the remaining life of the debt. See Note 2 to the Consolidated Financial
Statements “Acquisitions, Dispositions and Sales of Other Assets” for additional
information related to the merger with Progress Energy.
On February 6, 2013, Duke Energy announced that it will redeem all shares
of the three and fi ve series of preferred stock issued by Progress Energy Carolinas
and Progress Energy Florida, respectively, of $93 million on March 8, 2013.
In January 2013, Duke Energy issued $500 million of unsecured junior
subordinated debentures, which carry a fi xed interest rate of 5.125%, are
callable at par after fi ve years and mature January 15, 2073. Proceeds from the
issuance were used to redeem at par $300 million of 7.10% junior subordinated
debt in February 2013, with the remainder to repay a portion of commercial
paper as it matures, to fund capital expenditures of our unregulated businesses
and for general corporate purposes.
In December 2012, Duke Energy entered credit agreements with a
commercial bank for a $190 million bridge loan and a $200 million revolving
loan. The bridge loan carries a variable interest rate equal to the 180-day Libor
rate plus 0.80% and matures on June 20, 2013. The revolving loan carries a
variable interest rate equal to the 360-day Libor rate plus 1.35% and is payable
in full on December 20, 2013; Duke Energy has the right to extend the term of
the revolving loan for an additional 1-year terms, not to exceed a fi nal maturity
of 13 years from the date of the initial funding. Both loans are collateralized
with cash deposits equal to 101% of the loan amounts, and therefore no net
proceeds from the fi nancings exist as of December 31, 2012.
In December 2012, Los Vientos Windpower IA, LLC (Los Vientos 1A) and
Los Vientos Windpower 1B, LLC (Los Vientos 1B), subsidiaries of Duke Energy
Generation Services, Inc. (DEGS) an indirect wholly owned subsidiary of Duke
Energy, each entered into long-term loan agreements of $246 million and
$177 million, respectively. Of the total loan amounts for Los Vientos 1A and
Los Vientos 1B, $110 million for each is at a fi xed interest rate of 4.740% that
mature in June, 2037 and June, 2036, respectively. The remainder of the Los
Vientos 1A and Los Vientos 1B loan amounts of $136 million and $67 million,
respectively, is at the six month adjusted London Interbank Offered Rate (LIBOR)
plus an applicable margin that was initially set at 2.774% for each loan. In
connection with the variable rate portion of the loans, Los Vientos 1A and Los
Vientos 1B entered into interest rate swaps to convert the substantial majority
of the variable rate loan interest payments from a variable rate to a fi xed rate
of 2.055% and 2.0175%, respectively, plus the applicable margin, which was
2.25% as of December 31, 2012 for each loan and each of these loans is due
to mature June 30, 2030. The collateral for the loans are substantially all of
the assets of Los Vientos Windpower IA, LLC and Los Vientos Windpower 1B,
LLC. Proceeds from the issuances will be used to help fund the existing wind
portfolio.
In November 2012, Progress Energy Florida issued $650 million principal
amount of fi rst mortgage bonds, of which $250 million carry a fi xed interest
rate of 0.65% and mature November 15, 2015 and $400 million carry a fi xed
interest rate of 3.85% and mature November 15, 2042. Proceeds from the
issuances will be used to repay $425 million 4.80% fi rst mortgage bonds due
March 1, 2013, as well as for general corporate purposes.
In September 2012, Duke Energy Carolinas issued $650 million principal
amount of fi rst mortgage bonds, which carry a fi xed interest rate of 4.00% and
mature September 30, 2042. Proceeds from the issuance were used to repay at
maturity the $420 million debentures due through November 2012, as well as
for general corporate purposes, including the funding of capital expenditures.
In August 2012, Duke Energy Corporation issued $1.2 billion of senior
unsecured notes, of which $700 million carry a fi xed interest rate of 1.625%
and mature August 15, 2017 and $500 million carry a fi xed interest rate
of 3.05% and mature August 15, 2022. Proceeds from the issuances were
used to repay at maturity Duke Energy Ohio’s $500 million debentures due
September 15, 2012 as well as for general corporate purposes, including the
repayment of commercial paper.
In April 2012, Duke Energy executed a joint venture agreement with
Sumitomo Corporation of America (SCOA). Under the terms of the agreement,
Duke Energy and SCOA each own a 50% interest in the joint venture
(DS Cornerstone, LLC), which owns two wind generation projects. The facilities
began commercial operations in June 2012 and August 2012. Duke Energy and
SCOA also negotiated a $330 million, Construction and 12-year amortizing
Term Loan Facility, on behalf of the borrower, a wholly owned subsidiary of the
joint venture. The loan agreement is non-recourse to Duke Energy. Duke Energy
received proceeds of $319 million upon execution of the loan agreement. This
amount represents reimbursement of a signifi cant portion of Duke Energy’s
construction costs incurred as of the date of the agreement. See Note 18 to
the Consolidated Financial Statements, “Variable Interest Entities” for further
information.