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Financings And Capitalization

6 Months Ended

Jun. 30, 2014

Financings And Capitalization

4: FINANCINGS AND CAPITALIZATION

Presented in the following table is a summary of major long-term debt transactions during the six months ended June 30, 2014:

	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy
Senior notes1		$	250	3.875	%	February 2014	March 2024
Senior notes1			300	4.875		February 2014	March 2044
Total debt issuances		$	550
Debt retirements
CMS Energy
Senior notes2		$	125	6.875	%	April 2014	December 2015
Senior notes			155	5.500		June 2014	June 2029
Total debt retirements		$	280

¹ CMS Energy used a portion of these proceeds to retire its $125 million 6.875 percent senior notes due December 2015 and its $155 million 5.5 percent convertible senior notes due June 2029.  CMS Energy intends to use the remaining proceeds for general corporate purposes.

² CMS Energy retired this debt at a premium and recorded a loss on extinguishment of $13 million in other expense on its consolidated statements of income.

In July 2014, Consumers, through its subsidiary Consumers 2014 Securitization Funding, issued $124 million of 1.334 percent Securitization bonds due 2020,  $139 million of 2.962 percent Securitization bonds due 2025, and $115 million of 3.528 percent Securitization bonds due 2029.  These Securitization bonds are collateralized by certain regulatory assets held by Consumers 2014 Securitization Funding.  The bondholders have no recourse to Consumers’ other assets.  Through its rate structure, Consumers will collect from its retail electric customers, with some exceptions, Securitization charges to cover the principal and interest on the bonds as well as certain other qualified costs.  The surcharges collected will be remitted to a trustee and will not be available to creditors of Consumers or creditors of Consumers’ affiliates other than Consumers 2014 Securitization Funding.  Consumers will use the proceeds from the Securitization property to retire a portion of its existing debt and equity.  For additional details regarding the Securitization, see Note 2, Regulatory Matters.

Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for financings.  In June 2014, Consumers received authorization from FERC to have outstanding, at any one time, up to $800 million of secured and unsecured short-term securities for general corporate purposes.  FERC has also authorized Consumers to issue and sell up to $1.9 billion of secured and unsecured long-term securities for general corporate purposes.  The authorization, which is effective July 1, 2014 and terminates on June 30, 2016, exceeds Consumers’ anticipated financing needs for this period.

Revolving Credit Facilities:  The following secured revolving credit facilities with banks were available at June 30, 2014:

In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
December 20, 20181		$	550		$	-		$	2		$	548
Consumers
December 20, 20182		$	650		$	-		$	-		$	650
May 9, 20182			30			-			30			-

¹ Obligations under this facility are secured by Consumers common stock.

² Obligations under this facility are secured by FMBs of Consumers.

Short-term Borrowings:  Under Consumers’ revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements.  These transactions are accounted for as short-term secured borrowings.  At June 30, 2014, $250 million of accounts receivable were eligible for transfer.  During the six months ended June 30, 2014, Consumers’ average short-term borrowings totaled $22 million, with a weighted-average annual interest rate of 0.85 percent.

Contingently Convertible Securities:  Presented in the following table are details about conversions of contingently convertible securities during the six months ended June 30, 2014:

Weighted-Average

Shares

Principal

Conversion

of Common

Cash Paid on

Conversion

Converted

Value per $1,000

Stock Issued

Settlement

Date

(In Millions)

of Principal

on Settlement

(In Millions)

5.50% senior notes due 2029

February 2014

$

17

$

1,968

605,531

$

17

5.50% senior notes due 2029

June 2014

155

2,215

6,372,578

155

Dividend Restrictions: Under provisions of the Michigan Business Corporation Act of 1972, as amended, at June 30, 2014, payment of common stock dividends by CMS Energy was limited to $3.6 billion.

Under the provisions of its articles of incorporation, at June 30, 2014, Consumers had $735 million of unrestricted retained earnings available to pay common stock dividends to CMS Energy.  Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings.  Several decisions from FERC suggest that under a variety of circumstances common stock dividends from Consumers would not be limited to amounts in Consumers’ retained earnings.  Any decision by Consumers to pay common stock dividends in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

For the six months ended June 30, 2014, CMS Energy received $255 million of common stock dividends from Consumers.

Issuance of Common Stock:  In April 2013, CMS Energy entered into a continuous equity offering program permitting it to sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million per program.  Presented in the following table are the transactions that CMS Energy entered into under the program:

	Number of	Average			Proceeds
	Shares Issued	Price per Share			(In Millions)
March 2014	1,070,080		$	28.04		$	30

Consumers Energy Company [Member]

Financings And Capitalization

4: FINANCINGS AND CAPITALIZATION

Presented in the following table is a summary of major long-term debt transactions during the six months ended June 30, 2014:

	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy
Senior notes1		$	250	3.875	%	February 2014	March 2024
Senior notes1			300	4.875		February 2014	March 2044
Total debt issuances		$	550
Debt retirements
CMS Energy
Senior notes2		$	125	6.875	%	April 2014	December 2015
Senior notes			155	5.500		June 2014	June 2029
Total debt retirements		$	280

¹ CMS Energy used a portion of these proceeds to retire its $125 million 6.875 percent senior notes due December 2015 and its $155 million 5.5 percent convertible senior notes due June 2029.  CMS Energy intends to use the remaining proceeds for general corporate purposes.

² CMS Energy retired this debt at a premium and recorded a loss on extinguishment of $13 million in other expense on its consolidated statements of income.

In July 2014, Consumers, through its subsidiary Consumers 2014 Securitization Funding, issued $124 million of 1.334 percent Securitization bonds due 2020,  $139 million of 2.962 percent Securitization bonds due 2025, and $115 million of 3.528 percent Securitization bonds due 2029.  These Securitization bonds are collateralized by certain regulatory assets held by Consumers 2014 Securitization Funding.  The bondholders have no recourse to Consumers’ other assets.  Through its rate structure, Consumers will collect from its retail electric customers, with some exceptions, Securitization charges to cover the principal and interest on the bonds as well as certain other qualified costs.  The surcharges collected will be remitted to a trustee and will not be available to creditors of Consumers or creditors of Consumers’ affiliates other than Consumers 2014 Securitization Funding.  Consumers will use the proceeds from the Securitization property to retire a portion of its existing debt and equity.  For additional details regarding the Securitization, see Note 2, Regulatory Matters.

Regulatory Authorization for Financings: Consumers is required to maintain FERC authorization for financings.  In June 2014, Consumers received authorization from FERC to have outstanding, at any one time, up to $800 million of secured and unsecured short-term securities for general corporate purposes.  FERC has also authorized Consumers to issue and sell up to $1.9 billion of secured and unsecured long-term securities for general corporate purposes.  The authorization, which is effective July 1, 2014 and terminates on June 30, 2016, exceeds Consumers’ anticipated financing needs for this period.

Revolving Credit Facilities:  The following secured revolving credit facilities with banks were available at June 30, 2014:

In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
December 20, 20181		$	550		$	-		$	2		$	548
Consumers
December 20, 20182		$	650		$	-		$	-		$	650
May 9, 20182			30			-			30			-

¹ Obligations under this facility are secured by Consumers common stock.

² Obligations under this facility are secured by FMBs of Consumers.

Short-term Borrowings:  Under Consumers’ revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements.  These transactions are accounted for as short-term secured borrowings.  At June 30, 2014, $250 million of accounts receivable were eligible for transfer.  During the six months ended June 30, 2014, Consumers’ average short-term borrowings totaled $22 million, with a weighted-average annual interest rate of 0.85 percent.

Contingently Convertible Securities:  Presented in the following table are details about conversions of contingently convertible securities during the six months ended June 30, 2014:

Weighted-Average

Shares

Principal

Conversion

of Common

Cash Paid on

Conversion

Converted

Value per $1,000

Stock Issued

Settlement

Date

(In Millions)

of Principal

on Settlement

(In Millions)

5.50% senior notes due 2029

February 2014

$

17

$

1,968

605,531

$

17

5.50% senior notes due 2029

June 2014

155

2,215

6,372,578

155

Dividend Restrictions: Under provisions of the Michigan Business Corporation Act of 1972, as amended, at June 30, 2014, payment of common stock dividends by CMS Energy was limited to $3.6 billion.

Under the provisions of its articles of incorporation, at June 30, 2014, Consumers had $735 million of unrestricted retained earnings available to pay common stock dividends to CMS Energy.  Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings.  Several decisions from FERC suggest that under a variety of circumstances common stock dividends from Consumers would not be limited to amounts in Consumers’ retained earnings.  Any decision by Consumers to pay common stock dividends in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

For the six months ended June 30, 2014, CMS Energy received $255 million of common stock dividends from Consumers.

Issuance of Common Stock:  In April 2013, CMS Energy entered into a continuous equity offering program permitting it to sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million per program.  Presented in the following table are the transactions that CMS Energy entered into under the program:

	Number of	Average			Proceeds
	Shares Issued	Price per Share			(In Millions)
March 2014	1,070,080		$	28.04		$	30

X

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 505

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644



Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Section 02

-Paragraph 19, 20, 22

-Article 5



Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 210

-SubTopic 10

-Section S99

-Paragraph 1

-Subparagraph (SX 210.5-02.19,20,22)

-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

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