Duke Energy Annual Report 2001

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Notes to Consolidated Financial Statements for the
Years Ended December 31, 2001, 2000 and 1999

10. DEBT AND CREDIT FACILITIES

	1.	Summary of Significant Accounting Policies
	2.	Business Acquisitions and Dispositions
	3.	Business Segments
	4.	Regulatory Matters
	5.	Joint Ownership of Generating Facilities
	6.	Income Taxes
	7.	Derivative Instruments, Hedging Activities and Credit Risk
	8.	Investment in Affiliates and Related Party Transactions
	9.	Property, Plant and Equipment
	10.	Debt and Credit Facilities
	11.	Nuclear Decommissioning Costs
	12.	Guaranteed Preferred Beneficial Interests in Subordinated Notes of Duke Energy or Subsidiaries
	13.	Minority Interest Financing
	14.	Preferred and Preference Stock
	15.	Commitments and Contingencies
	16.	Common Stock and Equity Offerings
	17.	Stock-Based Compensation
	18.	Employee Benefit Plans
	19.	Quarterly Financial Data (Unaudited)
	20.	Subsequent Event

DEBT			December 31
In millions	Year Due		2001			2000

DUKE ENERGY
First and refunding mortgage bonds
6.125% - 6.625%	2003	$	175		$	175
6.75% - 7.5%	2023 - 2025		450			450
7.0% - 8.95%	2027 - 2033		165			165
Pollution control debt, 3.85% - 5.8%	2012 - 2017		172			172
Notes
5.375% - 9.21%	2009 - 2016		809			811
6.0% - 6.6%	2028 - 2038		500			500
Commercial paper, 1.93% and 6.52% weighted- average rate at December 31, 2001 and 2000, respectively^a			1,087			1,256
Other debt			19			18
Fair value hedge carrying value adjustment	2010 - 2014		(10	)		–
Notes matured during 2001			–			661

DUKE CAPITAL CORPORATION^b
Senior notes
4.73% - 7.5%	2003 - 2009		1,400			1,400
6.75% - 8.5%	2018 - 2019		650			650
4.32%^c	2006		750			–
5.87%^c	2006		875			–
Commercial paper, 2.16% and 6.71% weighted- average rate at December 31, 2001 and 2000, respectively^a			1,456			1,378
Note payable to D/FD, 4.05% and 6.14% weighted- average rate at December 31, 2001 and 2000, respectively			568			141
Fair value hedge carrying value adjustment	2009 - 2025		30			–

SUBSIDIARY DEBT GUARANTEED BY DUKE CAPITAL CORPORATION
Duke Energy Australia Pty Ltd.
Medium-term note, 7.25%^d	2004		128			139
Credit facilities, 6.41% and 6.13% weighted-average rate at December 31, 2001 and 2000, respectively			38			44
Commercial paper, 5.96% and 6.4% weighted- average rate at December 31, 2001 and 2000, respectively^d			231			223
Hidroelectrica Cerros Colorados S.A. Notes, 3.8%	2002		68			95
Duke Energy South Bay, LLC Capital leases	2009		94			272

PANENERGY CORP
Bonds
7.75%	2022		328			328
8.625% debentures	2025		100			100
Notes, 7.0% - 9.9%, maturing serially	2003 - 2006		372			384
Fair value hedge carrying value adjustment			7			–

TEXAS EASTERN TRANSMISSION, LP
Notes
7.3% - 8.25%	2002 - 2010		500			500
Medium-term, Series A, 7.92% - 9.07%	2004 - 2012		35			51
Notes matured during 2001			–			100

ALGONQUIN GAS TRANSMISSION COMPANY
Notes, 9.13%	2002 - 2003		67			100

DUKE ENERGY FIELD SERVICES, LLC
Notes
7.5% - 8.125%	2005 - 2030		1,700			1,700
5.75% - 6.875%	2006 - 2011		550			–
Commercial paper, 2.53% and 7.39% weighted- average rate at December 31, 2001 and 2000, respectively			213			346
Capital leases			3			–
Fair value hedge carrying value adjustment	2009 - 2025		(5	)		–

CRESCENT, LLC^e
Construction and mortgage loans, 2.73% - 10.0%	2002 - 2005		73			67

OTHER DEBT OF SUBSIDIARIES
Duke Energy Western Australia Holdings Notes, 5.35%^d	2004 - 2013		124			138
Paranapanema Notes, 6.0%-10.0%^f	2002 - 2017		427			477
Duke Energy Vermillion Notes, 6.8%	2002		5			–
Other international debt of subsidiaries			76			127
Other domestic debt of subsidiaries			61			103
Unamortized debt discount and premium, net			(106	)		(91	)

Total debt			14,185			12,980
Current maturities of long- term debt			(261	)		(437	)
Short-term notes payable and commercial paper			(1,603	)		(1,826	)

Total long-term debt		$	12,321		$	10,717

^a Amounts include extendible commercial notes.
^b Duke Capital Corporation is a wholly owned subsidiary of Duke Energy that provides financing and credit enhancement services for its subsidiaries.
^c Component of mandatorily convertible securities (Equity Units) (See Note 16.)
^d Debt denominated in Australian dollars
^e A portion of Crescent’s real estate development projects, land and buildings are pledged as collateral.
^f Debt denominated in Brazilian reais and principal is indexed annually to inflation

In January 2002, Duke Energy issued $750 million of 6.25% senior unsecured bonds due in 2012 and $250 million of floating rate (based on the three-month London Interbank Offered Rate (LIBOR) plus 0.35%) senior unsecured bonds due in 2005. The proceeds from these issuances were used to manage working capital needs.

In February 2002, Duke Capital Corporation issued $500 million of 6.25% senior unsecured bonds due in 2013 and $250 million of 6.75% senior unsecured bonds due in 2032. In addition, Duke Capital Corporation, through a private placement transaction, issued $500 million of floating rate (based on the one-month LIBOR plus 0.65%) senior unsecured bonds due in 2003. The proceeds from these issuances will be used to manage working capital needs and to fund a portion of the cash consideration for the pending acquisition of Westcoast.

The weighted-average interest rate on outstanding short-term notes payable and commercial paper was 3.13% as of December 31, 2001 and 6.8% as of December 31, 2000.

ANNUAL MATURITIES
In millions

2002	$	261
2003		576
2004		883
2005		1,016
2006		2,101
Thereafter		7,745

Total long-term debt	$	12,582

Annual maturities after 2006 include $1,360 million of long-term debt with call options, meaning Duke Energy has the option to repay the debt early. Based on the years in which Duke Energy may first exercise its redemption options, it could potentially repay $1,033 million in 2002, $227 million in 2003 and $100 million in 2005.

In 2000, Duke Energy issued $250 million 7.125% senior unsecured bonds due in 2012 with a put option that gives investors the choice to put the bond to Duke Energy at par value in September 2002 or extend the maturity until 2012. If extended, the bonds would be recouponed at 5.7% plus the Duke Energy 10-year credit spread on the extension date. Also in 2000, Duke Capital Corporation issued $150 million senior unsecured bonds due in 2003 that become due and payable if Duke Capital Corporation’s debt ratings fall below BBB.

CREDIT FACILITIES
In millions		December 31, 2001				December 31, 2000

	Credit Facilities		Outstanding		Credit Facilities		Outstanding

Bridge facility	$	250	$	–	$	–	$	–
364-day facilities^a		2,716		–		1,796		–
Three-year revolving facilities^a		1,640		38		84		44
Four-year revolving facilities		–		–		125		–
Five-year revolving facilities^a		–		–		2,200		–

Total consolidated	$	4,606	$	38	$	4,205	$	44

^a Majority of facilities support commercial paper facilities

The credit facilities expire from 2002 to 2004 and are not subject to minimum cash requirements; however, borrowings and issuances of letters of credit under approximately $1,100 million of these facilities are subject to and dependent on the senior unsecured debt ratings of Duke Capital Corporation (currently rated A3/A/A). Ratings of Baa2, BBB or the equivalent by at least two of Moody’s Investors Service, Standard & Poor’s and Fitch, Inc. must be maintained to obtain additional borrowings and issuances of letters of credit. Any outstanding borrowings would not become due and payable.