Dominion Power 2003 Annual Report Download - page 79

77.Dominion 2003
(4)Convertible into Dominion common stock at any time after March 31, 2004
when the average closing price of Dominion common stock is at least $88.32
per share. At the option of holders on December 15, 2006, December 15,
2008, December 15, 2013, or December 15, 2018, this security is subject to
redemption at 100% of the principal amount plus accrued interest.
(5)New debt reflected on Dominion’s Consolidated Balance Sheet as a result of
FIN 46R.
(6)Substantially all of Virginia Power’s property ($11.7 billion at December 31,
2003) is subject to the lien of the mortgage, securing its mortgage bonds.
(7)On December 15, 2008, $225 million of the 4.10% Callable and Puttable
Enhanced SecuritiesSM due 2038 are subject to redemption at par plus
accrued interest, unless holders of related options exercise rights to purchase
and remarket the notes.
(8)Certain pollution control equipment at Virginia Power’s generating facilities has
been pledged to support these financings. The variable rate tax-exempt
financings are supported by a stand-alone $200 million three-year credit
facility that terminates in May 2006.
(9)Aggregate principal amount of CAD$335 million of securities denominated in
Canadian dollars and presented in US dollars, based on exchange rates as of
year-end.
Based on stated maturity dates rather than early redemption dates that could be elected by the instrument holders, the scheduled
principal payments of long-term debt at December 31, 2003 were as follows:
2004 2005 2006 2007 2008 Thereafter Total
(millions, except percentages)
Secured First and Refunding Mortgage Bonds $ 250
—— $ 215 — $ 512 $ 977
Secured Senior Notes 8 $ 29 $ 9 10 $ 10 193 259
Unsecured Senior Notes (including Medium-Term Notes) 725 1,340 1,656 850 1,000 6,680 12,251
Unsecured Callable and Puttable Enhanced SecuritiesSM
————— 225 225
Tax-Exempt Financings
——— 15 152 432 599
Secured Bank Debt —— 688 370 —— 1,058
Unsecured Senior Subordinated Debt 88 ————— 88
Unsecured Junior Subordinated Notes Payable to
Affiliated Trusts
————— 1,443 1,443
Other 168 2 —— 4 — 174
Total $1,239 $1,371 $2,353 $1,460 $1,166 $9,485 $17,074
Weighted average coupon 6.10% 6.05% 4.94% 4.91% 5.07% 6.31%
Dominion’s short-term credit facilities and long-term debt
agreements contain customary covenants and default provisions.
As of December 31, 2003, there were no events of default under
these covenants.
Equity — Linked Securities
In 2002 and 2000, Dominion issued equity-linked debt securi-
ties, consisting of stock purchase contracts and senior notes. The
stock purchase contracts obligate the holders to purchase shares
of Dominion common stock from Dominion by a settlement date,
two years prior to the senior notes’ maturity date. The purchase
price is $50 and the number of shares to be purchased will be
determined under a formula based upon the average closing
price of Dominion common stock near the settlement date. The
senior notes, or treasury securities in some instances, are
pledged as collateral to secure the purchase of common stock
under the related stock purchase contracts. The holders may sat-
isfy their obligations under the stock purchase contracts by allow-
ing the senior notes to be remarketed with the proceeds being
paid to Dominion as consideration for the purchase of stock.
Alternatively, holders may choose to continue holding the senior
notes and use other resources as consideration for the purchase
of stock under the stock purchase contracts.
Dominion makes quarterly interest payments on the senior
notes and quarterly payments on the stock purchase contracts at
the rates described below. Dominion has recorded the present
value of the stock purchase contract payments as a liability, offset
by a charge to common stock in shareholders’ equity. Interest
payments on the senior notes are recorded as interest expense
and stock purchase contract payments are charged against the
liability. Accretion of the stock purchase contract liability is
recorded as interest expense. In calculating diluted earnings per
share, Dominion applies the treasury stock method to the equity-
linked debt securities. These securities did not have a significant
effect on diluted earnings per share for 2003.
Under the terms of the stock purchase contracts, Dominion will
issue between 6.7 million and 8.1 million shares of its common
stock in November 2004 and between 4.1 million and 5.5 million
shares of its common stock in May 2006. A total of 13.6 million
shares of Dominion common stock has been reserved for
issuance in connection with the stock purchase contracts.