<PAGE> 1
Filed pursuant to Rule 424b(2)
Registration No. 33-50543
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 20, 1993)
$200,000,000
DUKE POWER COMPANY
FIRST AND REFUNDING MORTGAGE BONDS,
8% SERIES B DUE 1999
------------------------
Interest payable May 1 and November 1
------------------------
The Bonds offered hereby (the Offered Bonds) are not redeemable at the
option of the Company. The Offered Bonds are subject to redemption for the
Replacement Fund or upon application of moneys arising from a taking of any of
the mortgaged property by eminent domain or similar action, at any time or from
time to time, at the special redemption price. The Company has agreed not to
apply any cash deposited with the Trustee pursuant to the Replacement Fund to
the redemption of the Offered Bonds so long as any of the Bonds presently
outstanding remain outstanding. See "Certain Terms of the Offered Bonds" in this
Prospectus Supplement and "Description of the New Bonds" in the accompanying
Prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- -------------------------------------------------------------------------------------------------
Per Offered Bond.................. 99.917% .2% 99.717%
- -------------------------------------------------------------------------------------------------
Total............................. $199,834,000 $400,000 $199,434,000
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest from November 1, 1994.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting estimated expenses of $250,000 payable by the Company.
------------------------
The Offered Bonds are offered, subject to prior sale, when, as and if
issued by the Company and accepted by the Underwriters and subject to approval
of certain legal matters by counsel for the Underwriters. It is expected that
delivery of the Offered Bonds will be made in New York, New York on or about
November 29, 1994.
------------------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PRUDENTIAL SECURITIES INCORPORATED
UTENDAHL CAPITAL PARTNERS, L.P.
------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS NOVEMBER 16, 1994.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
HEREBY OFFERED AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------
RECENT FINANCIAL DATA
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
12 MONTHS ENDED
----------------------------
SEPTEMBER DECEMBER
30, 31,
1994 1993
------------ -----------
<S> <C> <C>
RESULTS OF OPERATIONS:
Electric Revenues............................................ $4,299,840 $4,281,876
Net Income................................................... 666,212 626,415
Earnings for Common Stock.................................... 616,083 573,986
Earnings Per Share of Common Stock........................... $3.00 $2.80
Ratio of Earnings to Fixed Charges........................... 5.03 4.68
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER
30,
1994 %
------------ -----
<S> <C> <C>
CAPITAL STRUCTURE:
Long-Term Debt............................................... $3,406,808 39
Preferred Stocks............................................. 779,500 9
Common Equity................................................ 4,552,192 52
------------ -----
Total Capitalization.................................... $8,738,500 100
============ =====
Current Maturities of Long-Term Debt
and Preferred Stocks and Short-Term Debt................... $ 132,293
</TABLE>
The foregoing amounts with respect to the 12 months ended September 30,
1994 are unaudited but in the opinion of the Company include all adjustments
necessary for a fair presentation of such amounts.
SUCCESSOR TRUSTEE
The Company has appointed Chemical Bank as successor Trustee for its First
and Refunding Mortgage Bonds, effective August 30, 1994, following the
resignation as Trustee of Morgan Guaranty Trust Company of New York. Chemical
Bank is a participant in the Company's $355 million credit facility, under which
Chemical Bank's commitment is $25 million.
S-2
<PAGE> 3
CERTAIN TERMS OF THE OFFERED BONDS
The following information concerning the Offered Bonds supplements and
should be read in conjunction with the statements under "Description of the New
Bonds" in the accompanying Prospectus.
GENERAL
The Offered Bonds will be issued as a new series of the Company's First and
Refunding Mortgage Bonds under the Indenture, as supplemented and amended by
various supplemental indentures, including the Supplemental Indenture dated as
of November 1, 1994 relating to the Offered Bonds.
INTEREST, MATURITY AND PAYMENT
The Offered Bonds are to bear interest from November 1, 1994 at the rate
shown in their title, payable May 1 and November 1 in each year, commencing May
1, 1995, and are to be due November 1, 1999. Interest will be paid to the
persons in whose names the Offered Bonds are registered at the close of business
on the 15th day (whether or not a business day) of the month preceding the
interest payment date, except for defaulted interest and unmatured accrued
interest on the Offered Bonds called for redemption on a date other than an
interest payment date. Principal and interest are payable in New York City.
REDEMPTION
The Offered Bonds are not redeemable at the option of the Company. The
Offered Bonds are subject to redemption for the Replacement Fund or upon
application of moneys arising from a taking of any of the mortgaged property by
eminent domain or similar action, at any time or from time to time, at the
special redemption price of 100% of their principal amount, together with
interest accrued thereon to the date of redemption, and upon not less than
thirty days' and not more than sixty days' notice.
S-3
<PAGE> 4
UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms
and conditions of the Underwriting Agreement dated November 16, 1994, to
purchase from the Company the principal amount of the Offered Bonds opposite
their respective names.
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................ $ 90,000,000
Bear, Stearns & Co. Inc. ............................ 35,000,000
Donaldson, Lufkin & Jenrette Securities
Corporation........................................ 35,000,000
Prudential Securities Incorporated................... 35,000,000
Utendahl Capital Partners, L.P. ..................... 5,000,000
----------------
Total................................. $200,000,000
===============
</TABLE>
The Underwriting Agreement provides that the several obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Offered Bonds if any are
purchased.
The Underwriters propose to offer the Offered Bonds to the public initially
at the offering price set forth on the cover page hereof and to certain dealers
at such price less a concession not in excess of .15% of the principal amount of
the Offered Bonds. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of .125% of the principal amount of the Offered Bonds on
sales to certain other dealers.
After the initial public offering, the public offering prices, concessions
and discounts may be changed.
The Underwriting Agreement provides that, subject to certain conditions,
the Company will indemnify the several Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
There is at present no trading market for the Offered Bonds. The
Underwriters are not obligated to make a market in the Offered Bonds, and the
Company cannot predict whether a trading market for the Offered Bonds will
develop or, if developed, will be maintained.
S-4
<PAGE> 5
PROSPECTUS
DUKE POWER COMPANY
FIRST AND REFUNDING
MORTGAGE BONDS
Duke Power Company (the Company) may from time to time issue up to $750
million aggregate principal amount of its First and Refunding Mortgage Bonds
(New Bonds) in one or more series on terms to be determined at the time or times
of sale. The terms of the New Bonds in respect of which this Prospectus is being
delivered (Offered Bonds) including, where applicable, the series designation,
the principal amount of the series, the maturity, the rate and time of payment
of interest, the initial public offering price, the provisions for redemption
and other provisions are set forth in the accompanying Prospectus Supplement
(Prospectus Supplement), together with the terms of offering of the Offered
Bonds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 20, 1993.
<PAGE> 6
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the Commission).
Information, as of particular dates, concerning directors and officers, their
remuneration, the principal holders of securities of the Company and any
material interest of such persons in transactions with the Company is disclosed
in proxy statements distributed to shareholders of the Company and filed with
the Commission. Reports, proxy statements and other information filed with the
Commission by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C., Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Ill. and Seven World Trade Center, 13th Floor, New York, N.Y.
Copies of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at its principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Common Stock and certain other securities of
the Company are listed on the New York Stock Exchange. Reports, proxy statements
and other information concerning the Company can be inspected and copied at the
library of the New York Stock Exchange at 20 Broad Street, New York, N.Y.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus:
- Annual report on Form 10-K for the year ended December 31, 1992.
- Amendment to Form 10-K on Form 8 dated March 12, 1993.
- Quarterly reports on Form 10-Q for the quarters ended March 31, 1993 and
June 30, 1993.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
Prospectus and prior to the termination of the offering made by this Prospectus
shall be deemed to be incorporated by reference in this Prospectus and to be
made a part hereof from the date of filing of such documents; provided, however,
that documents enumerated above or subsequently filed by the Company pursuant to
Section 13 of the Securities Exchange Act of 1934 prior to the filing with the
Commission of the Company's most recent Annual Report on Form 10-K shall not be
incorporated by reference in this Prospectus or be a part hereof from and after
the filing of such Annual Report on Form 10-K.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS HAS BEEN DELIVERED, UPON ORAL OR WRITTEN REQUEST OF ANY SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN
OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
THEREIN. REQUESTS FOR COPIES OF SUCH DOCUMENTS SHOULD BE ADDRESSED TO INVESTOR
RELATIONS DEPARTMENT, DUKE POWER COMPANY, P.O. BOX 1005, CHARLOTTE, NORTH
CAROLINA 28201-1005 (TELEPHONE NO. 704-382-3853 OR 800-488-3853 (TOLL-FREE)).
2
<PAGE> 7
THE COMPANY
The Company is engaged in the generation, transmission, distribution and
sale of electric energy in the central portion of North Carolina and the western
portion of South Carolina, comprising the area in both States known as the
Piedmont Carolinas. Its service area, approximately two-thirds of which lies in
North Carolina, covers about 20,000 square miles with an estimated population of
4,800,000 and includes a number of cities, of which the largest are Charlotte,
Greensboro, Winston-Salem and Durham in North Carolina and Greenville,
Spartanburg and Anderson in South Carolina. The Company supplies electric
service directly to approximately 1,684,000 retail customers in more than 200
cities, towns and unincorporated communities in North Carolina and South
Carolina. Electricity is sold through contractual arrangements to the North
Carolina Municipal Power Agency Number 1, North Carolina Electric Membership
Corporation, Saluda River Electric Cooperative Inc. and Piedmont Municipal Power
Agency and at wholesale to nine other incorporated municipalities and to several
private utilities. The Company renders electric service in a total of 56
counties and is the principal supplier of electric energy in 44 of these
counties. The Company's wholly-owned subsidiary, Nantahala Power and Light
Company, supplies electric service directly to approximately 51,000 customers
located in five counties in western North Carolina. During the 12 months ended
June 30, 1993, the Company's electric revenues amounted to approximately $4
billion, of which about 70% was derived from North Carolina and about 30% from
South Carolina. The Company ranks seventh in the United States among
investor-owned utilities in kilowatt-hour sales. Its executive offices are
located in the Power Building, 422 South Church Street, Charlotte, North
Carolina 28242-0001 (Telephone No. 704-594-0887).
RECENT FINANCIAL DATA
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
12 MONTHS ENDED
------------------------
JUNE 30, DEC. 31,
1993 1992
---------- ----------
<S> <C> <C>
Electric Revenues.................................. $4,075,836 $3,961,484
Net Income......................................... 578,934 508,083
Earnings for Common Stock.......................... 523,280 451,676
Earnings Per Share of Common Stock................. $2.56 $2.21
</TABLE>
The foregoing amounts with respect to the 12 months ended June 30, 1993 are
unaudited but in the opinion of the Company include all adjustments necessary
for a fair presentation of such amounts.
The foregoing information has been selected from or is based upon the
detailed information and financial statements incorporated by reference into
this Prospectus and is qualified in its entirety by reference thereto and should
be read together therewith.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
12 MONTHS ENDED
---------------------------------------------------------------
JUNE 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges........................... 4.02 3.48 3.85 3.66 4.26 4.25*
</TABLE>
--------------------
* Includes cumulative effect of the accounting change for unbilled
revenues.
For purposes of this ratio (i) earnings consist of income from continuing
operations before income taxes and fixed charges and (ii) fixed charges consist
of all interest deductions and the interest component of rentals.
3
<PAGE> 8
USE OF PROCEEDS
The Company is offering hereby a maximum of $750 million aggregate
principal amount of its First and Refunding Mortgage Bonds (the New Bonds) on
terms to be determined when an agreement to sell is made.
The net proceeds from the sale of the New Bonds will be used for (a)
financing the construction of additions to the Company's electric plant
facilities and the acquisition of nuclear fuel and (b) redeeming from time to
time the Company's presently outstanding indebtedness when such transactions
will result in an overall cost savings to the Company.
DESCRIPTION OF THE NEW BONDS
The New Bonds will be issued as one or more series of First and Refunding
Mortgage Bonds (the Bonds) under a First and Refunding Mortgage, dated as of
December 1, 1927 (the Indenture), between the Company and Guaranty Trust Company
of New York (now Morgan Guaranty Trust Company of New York), as Trustee (the
Trustee), as supplemented and amended and as to be supplemented by one or more
supplemental indentures relating to the New Bonds. The Indenture, as heretofore
supplemented and amended and as to be supplemented by said supplemental
indenture or indentures, is hereinafter called the "Mortgage". The statements
under this heading are subject to the detailed provisions of the Mortgage. They
are summaries which make use of terms defined in the Mortgage but do not purport
to be complete.
FORM, DENOMINATIONS AND EXCHANGEABILITY
The New Bonds will be issuable only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof and will be
exchangeable for a like aggregate principal amount of New Bonds of other
authorized denominations of the same series. No charge will be made for any
transfer or exchange of the New Bonds, but the Company may require payment of a
sum sufficient to cover any stamp tax or other governmental charge incident
thereto. Transfers and exchanges of the New Bonds may be made at Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York 10260.
INTEREST, MATURITY AND PAYMENT
See the accompanying Prospectus Supplement.
REDEMPTION
See the accompanying Prospectus Supplement.
REPLACEMENT FUND
The Company is required to deposit with the Trustee annually, for a
Replacement Fund, the sum of the replacement requirements (as defined) for all
years beginning with 1949 and ending with the last calendar year preceding the
date of the deposit, after deducting therefrom (1) the aggregate original cost
of all fixed property (electric) retired during such period, which amount shall
not exceed the aggregate of the gross amounts of additional property (electric)
acquired or constructed by the Company during the same period; and (2) the
aggregate amount of cash theretofore deposited by the Company with the Trustee,
or which would have been required to be so deposited except for permitted
reductions, under the Replacement Fund.
The "replacement requirement" in respect of any year is 2 1/2% of the
average "amount of depreciable fixed property" (electric) as at the beginning
and end of such year but shall not exceed the depreciation or retirement charges
permitted by any governmental authority, or the amount deductible as
depreciation or similar expense for Federal income tax purposes. The "amount of
4
<PAGE> 9
depreciable fixed property" (electric) is the amount by which the sum of
$192,913,385, plus the aggregate gross amount of all depreciable additional
property (electric) acquired or constructed by the Company from January 1, 1949
to the date as of which such amount is determined, exceeds the original cost of
all depreciable fixed property (electric) retired during such period or released
from the lien of the Mortgage.
Upon application of the Company, the amount of cash at any time required to
be deposited in the Replacement Fund may be reduced, and any cash previously so
deposited and then held by the Trustee may be withdrawn, (1) in an amount equal
to 150% of the principal amount of Bonds previously authenticated and delivered
under the Mortgage, or refundable prior lien bonds, which shall be deposited
with the Trustee and on the basis of which the Company would otherwise have been
entitled to the authentication and delivery of additional Bonds; and (2) in an
amount equal to 150% of the principal amount of Bonds to the authentication and
delivery of which the Company would otherwise be entitled on the basis of
additional property (electric).
Upon application of the Company, the Trustee shall apply cash deposited in
the Replacement Fund (and not theretofore withdrawn by the Company) to the
payment, purchase or redemption of Bonds issued under the Mortgage or to the
purchase of refundable prior lien bonds.
The Company has never deposited any cash with the Trustee pursuant to the
Replacement Fund. If any cash should be deposited in the future, the Company has
agreed not to apply such cash to the redemption of the New Bonds as long as any
of the Bonds presently outstanding remain outstanding.
SECURITY
The Mortgage creates a continuing lien to secure the payment of the
principal of, and interest on, all Bonds issued thereunder, which are in all
respects equally and ratably secured without preference, priority or
distinction. The lien of the Mortgage covers substantially all of the properties
(real, personal and mixed) and franchises of the Company, whether now owned or
hereafter acquired, with certain exceptions including certain after-acquired
non-electric properties, cash, accounts receivable, choses in action,
inventories of materials and supplies, merchandise held for sale, securities
held by the Company, certain after-acquired property not useful in the Company's
electric business and certain after-acquired franchises.
The lien of the Mortgage is subject to certain permitted liens and to liens
which may exist upon properties acquired subsequent to the making of the
Mortgage to the extent of the amounts of prior lien bonds secured by such
properties (which shall not exceed 75% of the cost or value thereof) and
additions thereto.
ISSUANCE OF ADDITIONAL BONDS
The aggregate amount of Bonds which may be issued under the Mortgage is
unlimited. The Bonds of each series shall be of such denominations, date,
maturity and interest rate, and may have such redemption or sinking fund
provisions and such other terms as the Board of Directors of the Company may
determine.
Subject to the provisions of the Mortgage, additional Bonds may be
authenticated and delivered in an aggregate principal amount not exceeding (1)
the amount of cash deposited with the Trustee therefor, (2) the amount of
previously authenticated and delivered Bonds and/or refundable prior lien bonds
retired or to be retired and which, with certain exceptions, are deposited with
the Trustee therefor, or (3) as to additional property (electric) certified to
the Trustee subsequent to February 18, 1949, 66 2/3% of the aggregate of the net
amounts thereof.
No additional Bonds may be authenticated and delivered under the Mortgage,
other than certain types of refunding Bonds, unless the Company's available net
earnings for twelve consecutive calendar months within the fifteen calendar
months immediately preceding shall have been at least twice the
5
<PAGE> 10
amount of the annual interest charges on all Bonds outstanding under the
Mortgage, including the Bonds applied for, and on all outstanding prior lien
bonds not held by the Trustee under the Mortgage.
The Company may not apply for the authentication and delivery of any Bonds
(1) in an aggregate principal amount exceeding $26 million on the basis of
additional property (electric) acquired or constructed prior to January 1, 1949,
or (2) on the basis of Bonds or prior lien bonds paid, purchased or redeemed
prior to February 1, 1949; and the Company may not certify any additional
property (electric) which is subject to the lien of any prior lien bonds for the
purpose of establishing such prior lien bonds as refundable if the aggregate
principal amount of such prior lien bonds exceeds 66 2/3% of the net amount of
such additional property subject to the lien of such prior lien bonds.
RELEASE PROVISIONS
The Mortgage permits the Company to dispose of certain property and take
certain other action without release by the Trustee, and permits mortgaged
property to be released upon the deposit of cash or equivalent consideration
equal to the value of the property to be released. The Mortgage contains
provisions under which, in certain events and within certain limitations, cash
received by the Trustee (other than for the Replacement Fund or as the basis for
the issuance of Bonds) shall be paid out by the Trustee upon application of the
Company.
Cash deposited with the Trustee for the Replacement Fund may be withdrawn
by the Company as outlined under the subcaption "Replacement Fund" above. Cash
deposited with the Trustee as the basis for the issuance of Bonds may be
withdrawn by the Company, upon application to the Trustee, in an amount equal to
the aggregate principal amount of any Bonds, the authentication and delivery of
which the Company shall have become entitled to on the basis of additional
property (electric), on the basis of Bonds previously authenticated and
delivered, or on the basis of refundable prior lien bonds.
AMENDMENTS OF MORTGAGE
Amendments of the Mortgage may be made with the consent of the holders of
66 2/3% of the Bonds; but no amendment shall affect the terms of payment of the
principal at maturity of, or the interest or premium on, any Bond or affect the
rights of Bondholders to sue to enforce any such payment at maturity, or reduce
the percentage required to effect a valid amendment; nor shall any amendment
affect the rights under the Mortgage of the holders of less than all of the
series of Bonds outstanding unless consented to by the holders of 66 2/3% of the
Bonds of each of the series so affected.
The covenants to be included in the supplemental indenture for the Offered
Bonds will be solely for the benefit of holders of such Offered Bonds and may be
modified by written consent or affirmative vote of holders of 66 2/3% of such
Offered Bonds outstanding, without consent of Bondholders of any other series.
DEFAULT
The Trustee may, and upon written request by the holders of not less than a
majority of the outstanding Bonds shall, declare the principal of all
outstanding Bonds due upon the happening of any of the events of default
specified in the Mortgage, but the holders of a majority of the outstanding
Bonds may waive such default and rescind any declaration if such default has
been cured. The Trustee is under no obligation to exercise any of its powers at
the request of any of the holders of the Bonds unless such Bondholders have
offered to the Trustee security or indemnity satisfactory to it against the
cost, expenses and liabilities to be incurred therein or thereby. The holders of
a majority in principal amount of the Bonds outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, and the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with any such direction.
Events of default are defined in the Mortgage as including (a) default in
the payment of principal, (b) default for 60 days in the payment of interest,
(c) default in the performance of any other
6
<PAGE> 11
covenants in the Mortgage continuing for a period of 60 days after notice by the
Trustee or by the holders of not less than 10% in principal amount of the Bonds
then outstanding, and (d) certain events in bankruptcy or insolvency. The
Company is required to furnish annually to the Trustee a certificate in respect
of compliance or non-compliance by the Company with the covenants of the
Mortgage.
CONCERNING THE TRUSTEE
The Trustee, Morgan Guaranty Trust Company of New York, is a depositary of
part of the Company's funds and acts as agent bank for the Company's $300
million credit facility under which it and its affiliates have a commitment of
$50 million.
PLAN OF DISTRIBUTION
The Company may sell the New Bonds in any of three ways: (a) through
underwriters or dealers, (b) directly to a limited number of purchasers or to a
single purchaser or (c) through agents. Each Prospectus Supplement with respect
to a series of the Offered Bonds will set forth the terms of the offering of
such series, including the name or names of any underwriters, the initial public
offering price or purchase price from the Company, the proceeds to the Company,
any underwriting discounts and other items constituting underwriters'
compensation and any discounts or concessions to be allowed or reallowed or paid
to dealers. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale of any series of the Offered Bonds,
such series will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed offering price or at varying prices determined at the
time of sale. Such series may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more underwriters. Any underwriters with respect to any
series of the Offered Bonds will be named in the Prospectus Supplement relating
thereto and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be named on the cover page of such Prospectus Supplement.
Unless otherwise set forth in such Prospectus Supplement, the obligations of the
underwriters to purchase any series of the Offered Bonds will be subject to
certain conditions precedent, the underwriters will be obligated to purchase all
the Bonds of such series if any are purchased and the Company will have agreed
to indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act of 1933.
If any series of the Offered Bonds is sold through agents designated by the
Company from time to time, any agent involved in the offer or sale of such
series will be named, and any commissions payable by the Company to such agent
will be set forth, in the Prospectus Supplement relating thereto. Unless
otherwise indicated in such Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment.
EXPERTS
The financial statements included in the Company's annual report on Form
10-K, which are incorporated herein by reference, have been audited by Deloitte
& Touche, as stated in their report appearing therein, and are incorporated
herein in reliance upon such report given upon the authority of that firm as
experts in accounting and auditing.
LEGAL OPINIONS
The validity of the New Bonds will be passed upon for the Company by Steve
C. Griffith, Jr., Esq., Charlotte, North Carolina, and by Dewey Ballantine, New
York, New York, and for any agent, dealer or underwriter by Willkie Farr &
Gallagher, New York, New York. In giving their opinions, Dewey Ballantine and
Willkie Farr & Gallagher may rely as to matters of local law upon the opinion of
Mr. Griffith, who is a Director and Executive Vice President and the General
Counsel of the Company. Mr. Griffith owns 37,396 shares of Common Stock of the
Company, including 36,846 shares held under the Stock Purchase-Savings Program
for Employees and the Employees' Stock Ownership Plan.
7
<PAGE> 12
=================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH AN OFFER MADE BY THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Recent Financial Data.................. S-2
Successor Trustee...................... S-2
Certain Terms of the Offered Bonds..... S-3
Underwriting........................... S-4
PROSPECTUS
Available Information.................. 2
Documents Incorporated by Reference.... 2
The Company............................ 3
Recent Financial Data.................. 3
Ratio of Earnings to Fixed Charges..... 3
Use of Proceeds........................ 4
Description of the New Bonds........... 4
Plan of Distribution................... 7
Experts................................ 7
Legal Opinions......................... 7
</TABLE>
=================================================
=================================================
$200,000,000
DUKE POWER COMPANY
FIRST AND REFUNDING
MORTGAGE BONDS,
8% SERIES B DUE 1999
-----------------
PROSPECTUS SUPPLEMENT
-----------------
MERRILL LYNCH & CO.
BEAR, STEARNS, & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PRUDENTIAL SECURITIES INCORPORATED
UTENDAHL CAPITAL PARTNERS, L.P.
NOVEMBER 16, 1994
=================================================
