PG&E 2009 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2009 PG&E annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

NOTE 4: DEBT
LONG-TERM DEBT
The following table summarizes PG&E Corporation’s and
the Utility’s long-term debt:
December 31,
(in millions) 2009 2008
PG&E Corporation
Convertible subordinated notes,
9.50%, due 2010 $ 247 $ 280
Less: current portion (247) —
Total convertible subordinated notes — 280
Senior notes, 5.75%, due 2014 350 –
Unamortized discount (2) –
Total senior notes 348 –
Total PG&E Corporation long-term debt,
net of current portion 348 280
Utility
Senior notes:
3.60% due 2009 –600
4.20% due 2011 500 500
6.25% due 2013 400 400
4.80% due 2014 1,000 1,000
5.625% due 2017 700 700
8.25% due 2018 800 800
6.05% due 2034 3,000 3,000
5.80% due 2037 700 700
6.35% due 2038 400 400
6.25% due 2039 550 –
5.40% due 2040 550 –
Less: current portion –(600)
Unamortized discount, net of premium (35) (22)
Total senior notes 8,565 7,478
Pollution control bonds:
Series 1996 C, E, F, 1997 B, variable
rates(1), due 2026(2) 614 614
Series 1996 A, 5.35%, due 2016 200 200
Series 2004 A–D, 4.75%, due 2023 345 345
Series 2008 A–D, variable rates, due
2016 and 2026 –309
Series 2008 G and F, 3.75%(3), due 2018
and 2026 95 95
Series 2009 A–D, variable rates(4), due
2016 and 2026(5) 309 –
Less: current portion (95) –
Total pollution control bonds 1,468 1,563
Total Utility long-term debt, net of
current portion 10,033 9,041
Total consolidated long-term debt, net of
current portion $10,381 $9,321
(1) At December 31, 2009, interest rates on these bonds and the related
loans ranged from 0.20% to 0.25%.
(2) Each series of these bonds is supported by a separate letter of credit
that expires on February 26, 2012. Although the stated maturity date is
2026, each series will remain outstanding only if the Utility extends or
replaces the letter of credit related to the series or otherwise obtains a
consent from the issuer to the continuation of the series without a
credit facility.
(3) These bonds bear interest at 3.75% per year through September 19,
2010; are subject to mandatory tender on September 20, 2010; and
may be remarketed in a fixed or variable rate mode.
(4) At December 31, 2009, interest rates on these bonds and the related
loans ranged from 0.18% to 0.24%.
(5) Each series of these bonds is supported by a separate direct-pay letter
of credit that expires on October 29, 2011. The Utility may choose to
provide a substitute letter of credit for any series of these bonds,
subject to a rating requirement.
PG&E CORPORATION
Senior Notes
On March 12, 2009, PG&E Corporation issued $350
million principal amount of 5.75% Senior Notes due
April 1, 2014. The PG&E Corporation senior notes are
unsecured and rank equally with the other senior
unsecured and unsubordinated debt.
Convertible Subordinated Notes
At December 31, 2009, PG&E Corporation had
outstanding $247 million of 9.50% Convertible
Subordinated Notes that are scheduled to mature on
June 30, 2010. These Convertible Subordinated Notes may
be converted (at the option of the holder) at any time prior
to maturity into 16,370,789 shares of PG&E Corporation
common stock, at a conversion price of $15.09 per share.
The conversion price is subject to adjustment for
significant changes in the number of outstanding shares of
PG&E Corporation’s common stock.
In addition, holders of the Convertible Subordinated
Notes are entitled to receive “pass-through dividends”
determined by multiplying the cash dividend paid by
PG&E Corporation per share of common stock by a
number equal to the principal amount of the Convertible
Subordinated Notes divided by the conversion price.
During 2009, PG&E Corporation paid $28 million of pass-
through dividends to the holders of Convertible
Subordinated Notes. On January 15, 2010, PG&E
Corporation paid $7 million of pass-through dividends.
The dividend participation rights of the Convertible
Subordinated Notes are considered to be embedded
derivative instruments and, therefore, must be bifurcated
from the Convertible Subordinated Notes and recorded at
fair value in PG&E Corporation’s Consolidated Financial
Statements. The payment of pass-through dividends is
recognized as an operating cash flow in PG&E
Corporation’s Consolidated Statements of Cash Flows.
Changes in the fair value are recognized in PG&E
71