<PAGE> 1
Pricing Supplement No. 1 Filed Pursuant to
dated April 11, 1995 Rule 424(b)(2);
to Prospectus Supplement File No. 33-50715 and
dated December 2, 1993, and Post-Effective Amendment No. 1
Prospectus dated December 2, 1993 to Registration Statement
File No. 33-59926
DUKE POWER COMPANY
First and Refunding Mortgage Bonds,
Medium-Term Notes Series
(Fixed Rate)
Interest Payable each April 1 and October 1 and at Maturity
Original Issue Date: 4/19/95
Interest Rate: 8.27%
Stated Maturity Date: 4/1/2025
Price to Public: 100.00%
Proceeds to Company: 99.25%
Initial Redemption Date: 4/1/2000
Initial Redemption Percentage: 106.2025%
Annual Redemption Percentage Reduction: .4135%
The aggregate principal amount of this offering is $50,000,000 and relates
only to Pricing Supplement No. 1. After the date hereof, the Company may issue
Medium-Term Notes in an aggregate principal amount of up to $200,000,000.
SUCCESSOR TRUSTEE
The Company 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. The corporate trust offices of Chemical Bank
are located at 450 West 33rd Street, 15th Floor, New York, NY 10001.
<PAGE> 2
Pricing Supplement No. 2 Filed Pursuant to
dated April 12, 1995 Rule 424(b)(2);
to Prospectus Supplement File No. 33-50715 and
dated December 2, 1993, and Post-Effective Amendment No. 1
Prospectus dated December 2, 1993 to Registration Statement
File No. 33-59926
DUKE POWER COMPANY
First and Refunding Mortgage Bonds,
Medium-Term Notes Series
(Fixed Rate)
Interest Payable each April 1 and October 1 and at Maturity
Original Issue Date: 4/20/95
Interest Rate: 8.27%
Stated Maturity Date: 4/1/2025
Price to Public: 100.00%
Proceeds to Company: 99.25%
Initial Redemption Date: 4/1/2000
Initial Redemption Percentage: 106.2025%
Annual Redemption Percentage Reduction: .4135%
The aggregate principal amount of this offering is $21,000,000 and relates
only to Pricing Supplement No. 2. After the date hereof, the Company may issue
Medium-Term Notes in an aggregate principal amount of up to $172,000,000.
SUCCESSOR TRUSTEE
The Company 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. The corporate trust offices of Chemical Bank
are located at 450 West 33rd Street, 15th Floor, New York, NY 10001.
<PAGE> 3
Pricing Supplement No. 3 Filed Pursuant to
dated April 12, 1995 Rule 424(b)(2);
to Prospectus Supplement File No. 33-50715 and
dated December 2, 1993, and Post-Effective Amendment No. 1
Prospectus dated December 2, 1993 to Registration Statement
File No. 33-59926
DUKE POWER COMPANY
First and Refunding Mortgage Bonds,
Medium-Term Notes Series
(Fixed Rate)
Interest Payable each April 1 and October 1 and at Maturity
Original Issue Date: 4/20/95
Interest Rate: 8.28%
Stated Maturity Date: 4/1/2025
Price to Public: 100.00%
Proceeds to Company: 99.25%
Initial Redemption Date: 4/1/2000
Initial Redemption Percentage: 106.210%
Annual Redemption Percentage Reduction: .414%
The aggregate principal amount of this offering is $2,000,000 and relates
only to Pricing Supplement No. 3. After the date hereof, the Company may issue
Medium-Term Notes in an aggregate principal amount of up to $172,000,000.
SUCCESSOR TRUSTEE
The Company 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. The corporate trust offices of Chemical Bank
are located at 450 West 33rd Street, 15th Floor, New York, NY 10001.
<PAGE> 4
Pricing Supplement No. 4 Filed Pursuant to
dated April 12, 1995 Rule 424(b)(2);
to Prospectus Supplement File No. 33-50715 and
dated December 2, 1993, and Post-Effective Amendment No. 1
Prospectus dated December 2, 1993 to Registration Statement
File No. 33-59926
DUKE POWER COMPANY
First and Refunding Mortgage Bonds,
Medium-Term Notes Series
(Fixed Rate)
Interest Payable each April 1 and October 1 and at Maturity
Original Issue Date: 4/20/95
Interest Rate: 8.30%
Stated Maturity Date: 4/1/2025
Price to Public: 100.00%
Proceeds to Company: 99.25%
Initial Redemption Date: 4/1/2000
Initial Redemption Percentage: 106.225%
Annual Redemption Percentage Reduction: .415%
The aggregate principal amount of this offering is $5,000,000 and relates
only to Pricing Supplement No. 4. After the date hereof, the Company may issue
Medium-Term Notes in an aggregate principal amount of up to $172,000,000.
SUCCESSOR TRUSTEE
The Company 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. The corporate trust offices of Chemical Bank
are located at 450 West 33rd Street, 15th Floor, New York, NY 10001.
<PAGE> 5
Filed pursuant to Rule 424(b)(2)
File No. 33-50715 and
Post-Effective Amendment No. 1 to
Registration Statement File No. 33-59926
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 2, 1993)
DUKE POWER COMPANY
$250,000,000
MEDIUM-TERM NOTES
(A SERIES OF FIRST AND REFUNDING MORTGAGE BONDS)
DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
Duke Power Company (the "Company") may offer from time to time up to
$250,000,000 aggregate principal amount of its First and Refunding Mortgage
Bonds of a series designated as Medium-Term Notes (the "Notes") having
maturities from nine months to thirty years and on other terms to be determined
at the time or times of sales.
The Notes will bear interest at fixed or variable rates ("Fixed Rate Notes"
and "Floating Rate Notes", respectively). The interest rates on Fixed Rate
Notes, the method of determining the interest rates on Floating Rate Notes and
other variable terms of the Notes as described herein will be established by the
Company from time to time and will be set forth in supplements hereto ("Pricing
Supplements"). The interest rates, the methods of determining interest rates and
certain other variable terms are subject to change by the Company, but no such
change will affect any Note theretofore issued or as to which an offer to
purchase has been accepted by the Company. If so specified in the applicable
Pricing Supplement, the Notes will be redeemable prior to maturity at the option
of the Company upon the terms and conditions specified in such Pricing
Supplement. The Notes will be redeemable for the Replacement Fund or upon
application of moneys arising from a taking of any of the mortgaged property by
eminent domain. The Company has agreed not to apply any cash deposited with the
Trustee pursuant to the Replacement Fund to the redemption of the Notes so long
as any of the First and Refunding Mortgage Bonds presently outstanding remain
outstanding. See "Description of the Bonds -- Replacement Fund" in the
accompanying Prospectus. The Notes will be issued in denominations of $100,000
or any amount in excess thereof which is an integral multiple of $1,000. See
"Description of the Notes".
Payment of the principal of and interest on the Notes will be secured by
the lien of the Mortgage described herein and in the accompanying Prospectus.
Interest on each Fixed Rate Note will accrue from its date of issue and
will be payable semiannually on each April 1 and October 1 and at maturity or
earlier redemption, as the case may be. The interest rate on Floating Rate Notes
will be determined by reference to the "Commercial Paper Rate", "LIBOR", the
"Treasury Rate", the "CD Rate" or other interest rate formula as specified in
the applicable Pricing Supplement, and may be adjusted by a "Spread" or "Spread
Multiplier", as defined herein. Interest on each Floating Rate Note will accrue
from its date of issue and will be payable as set forth in the applicable
Pricing Supplement and at maturity or earlier redemption, as the case may be.
The Notes will be issued in fully registered certificated or book-entry
form. Interests in Notes in book-entry form will be shown on, and transfers
thereof will be effected only through, records maintained by The Depository
Trust Company, as Depository, and its participants. Owners of interests in Notes
issued in book-entry form will be entitled to physical delivery of Notes in
certificated form equal in principal amount to their respective interests only
under the limited circumstances described herein.
------------------------
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>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.................. 100% .125%-.750% 99.875%-99.250%
- ----------------------------------------------------------------------------------------------------------
Total..................... $250,000,000 $312,500-$1,875,000 $249,687,500-$248,125,000
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) The Company will pay to Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Morgan Stanley & Co. Incorporated (collectively, the
"Agents") a commission ranging from .125% to .750% of the principal amount
of each Note sold through such Agent, depending upon the maturity of the
Note sold, and may sell Notes to either Agent, as principal, at a discount
for resale to investors or other purchasers at varying prices related to
prevailing market prices at the time or times of resale or otherwise as
determined by such Agent. The Company has agreed to indemnify the Agents
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended (the "Securities Act").
(3) Before deducting expenses payable by the Company estimated at $215,000.
------------------------
Offers to purchase the Notes will be solicited on behalf of the Company
from time to time by the Agents, who have agreed to use their best efforts to
solicit offers to purchase the Notes. The Company reserves the right to sell
Notes directly to investors on its own behalf in those jurisdictions where it is
authorized to do so. The Agents may also purchase Notes on their own behalf. The
Notes are not listed on any securities exchange, and there can be no assurance
that any of the Notes offered by this Prospectus Supplement will be sold or that
there will be a secondary market therefor. The Company or the Agents may reject,
in whole or in part, any offer for a purchase of Notes. No termination date for
the offering of the Notes has been established. See "Plan of Distribution" in
this Prospectus Supplement.
------------------------
MERRILL LYNCH & CO. MORGAN STANLEY & CO. INCORPORATED
------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS DECEMBER 2, 1993.
<PAGE> 6
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued as part of a series of First and Refunding
Mortgage Bonds (the "Bonds") under the Mortgage, which is more fully described
in the accompanying Prospectus. As of September 30, 1993, $675 million principal
amount of Bonds of such series was outstanding. The following summaries of
certain provisions of the Mortgage do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the Mortgage, including the definitions therein of certain terms. The terms
and conditions set forth below will apply to each Note unless otherwise
specified in the applicable Pricing Supplement.
The Mortgage creates a continuing lien to secure the payment of principal
of, and interest on, the Notes issued and to be issued thereunder. The Notes
rank pari passu with all other Bonds issued pursuant to the Mortgage and from
time to time outstanding.
The Notes will be offered on a continuing basis and will mature on any day
from 9 months to 30 years from the date of issue, as selected by the purchaser
and agreed to by the Company. Each Note will bear interest at either (a) a fixed
rate (a "Fixed Rate Note") or (b) a floating rate (a "Floating Rate Note")
determined by reference to a Base Rate (as hereinafter defined), which may be
adjusted by a Spread or Spread Multiplier (as hereinafter defined).
The Notes will be issued only in fully registered certificated or
book-entry form without coupons and in denominations of $100,000 or any amount
in excess thereof which is an integral multiple of $1,000. No charge will be
made for any registration of transfer or exchange of Notes, but the Company may
require payment of a sum sufficient to cover any stamp tax or other governmental
charge that may be imposed in connection therewith. In the case of Notes issued
in book-entry form, all references herein to the "holder" of such Notes are to
The Depository Trust Company or its nominee and not to the owner of a beneficial
interest in such book-entry Notes. See "Book-Entry Notes" below.
Principal and interest will be payable, the transfer of the Notes will be
registrable, and Notes will be exchangeable for Notes bearing identical terms
and provisions at the office or agency of the Company in The City of New York
designated for such purpose; provided, however, that payment of interest, other
than interest at maturity (or on any date of redemption if a Note is redeemed
prior to maturity), may be made at the option of the Company by check mailed to
the address of the person in whose name the applicable Note is registered at the
close of business on the Regular Record Date (as hereinafter defined) as shown
on the bond register maintained by Morgan Guaranty Trust Company of New York
(the "Trustee"); provided, however, that a registered holder of $10,000,000 or
more in aggregate principal amount of Notes having the same Interest Payment
Date shall be entitled to receive payments of interest by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received by the Trustee not less than sixteen days prior to the applicable
Interest Payment Date. Interest will be payable on each date specified in the
Note on which an installment of interest is due and payable (each, an "Interest
Payment Date") and at maturity (or, if applicable, upon redemption). If the
original issue date of a Note is between the Regular Record Date and the
Interest Payment Date, the initial interest payment will be made on the Interest
Payment Date following the next succeeding Regular Record Date to the registered
holder on such next succeeding Regular Record Date.
The principal and interest payable at maturity (or, if applicable, upon
redemption) on each Note will be paid upon maturity (or, if applicable, upon
redemption) in immediately available funds against presentation of the Note at
the corporate trust office of the Trustee located at 60 Wall Street, New York,
New York 10260. Interest payable at maturity (or, if applicable, upon
redemption) will be payable to the person to whom the principal of the Note
shall be paid.
Interest payments shall be made in the amount of interest accrued from, and
including, the next preceding Interest Payment Date in respect of which interest
has been paid or duly provided for (or from, and including, the date of issue,
if no interest has been paid with respect to such Note) to, but excluding, the
Interest Payment Date or the maturity date or date of redemption, as the case
may be (each, an "Interest Accrual Period"). However, in the case of Floating
Rate Notes on which the interest rate is reset daily or
S-2
<PAGE> 7
weekly, the interest payments shall include interest accrued only through, and
including, the Regular Record Date next preceding the applicable Interest
Payment Date, except that the interest payment on the maturity date or date of
redemption will include interest accrued to, but excluding, such maturity or
redemption date.
The Notes will be subject to redemption by the Company on and after the
initial redemption date, if any, fixed at the time of sale and set forth in the
applicable Pricing Supplement (the "Initial Redemption Date"). If no Initial
Redemption Date is indicated with respect to a Note, such Note will not be
redeemable (otherwise than for the Replacement Fund or upon application of
certain moneys included in the trust estate) (see "Description of the
Bonds--Replacement Fund" in the Prospectus) at the option of the Company prior
to maturity. On and after the Initial Redemption Date with respect to any Note,
such Note will be redeemable in whole or in part in increments of $1,000
(provided that any remaining principal amount of such Note shall be at least
$100,000) at the option of the Company at a Redemption Price (as hereinafter
defined), determined in accordance with the following paragraph, together with
interest thereon payable to the date of redemption, on notice given not more
than 60 nor less than 30 days prior to the date of redemption.
The "Redemption Price" for each Note subject to redemption at the option of
the Company shall initially be equal to a certain percentage (the "Initial
Redemption Percentage") of the principal amount of such Note to be redeemed and
shall decline at each anniversary of the Initial Redemption Date with respect to
such Note by a percentage (the "Annual Redemption Percentage Reduction"), if
any, of the principal amount to be redeemed until the Redemption Price is 100%
of such principal amount. The Initial Redemption Percentage and any Annual
Redemption Percentage Reduction with respect to each Note subject to redemption
at the option of the Company prior to maturity will be fixed at the time of sale
and set forth in the applicable Pricing Supplement.
"Business Day" means any day other than a Saturday, Sunday, legal holiday
or other day on which banking institutions in The City of New York (and, with
respect to LIBOR Notes, the City of London) are required or authorized by law or
executive order to close. "London Banking Day" means any day on which dealings
in deposits in U.S. dollars are transacted in the London interbank market.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issue at the rate
per annum stated on the face thereof until the principal amount thereof is paid
or made available for payment. Interest on Fixed Rate Notes will be payable
semiannually on each April 1 and October 1 and at maturity (or, if applicable,
upon redemption). The "Regular Record Date" for Fixed Rate Notes will be the
March 15 or September 15 next preceding the relevant Interest Payment Date.
Interest on the Fixed Rate Notes will be computed on the basis of a 360-day year
of twelve 30-day months. If any Interest Payment Date or the maturity date (or
any date of redemption) on a Fixed Rate Note falls on a day that is not a
Business Day, the required payment due thereon shall be made on the next
Business Day as if it were made on the date such payment was due and no interest
shall accrue on the amount so payable for the period from and after such
Interest Payment Date or the maturity date (or any date of redemption), as the
case may be.
FLOATING RATE NOTES
Interest on Floating Rate Notes will be determined by reference to a "Base
Rate", which shall be the "Commercial Paper Rate" ("Commercial Paper Rate
Notes"), "LIBOR" ("LIBOR Notes"), the "Treasury Rate" ("Treasury Rate Notes"),
or the "CD Rate" ("CD Rate Notes"), each as defined below, or such other
interest rate formula specified in the applicable Pricing Supplement based upon
the Index Maturity and adjusted by a Spread or Spread Multiplier, if any, as
specified in the applicable Pricing Supplement. The "Index Maturity" is the
period to maturity of the instrument or obligation from which the Base Rate is
calculated. The "Spread" is the number of basis points above or below the Base
Rate applicable to such Floating Rate Note, and the "Spread Multiplier" is the
percentage of the Base Rate applicable to the interest rate for such Floating
Rate Note. The Spread, Spread Multiplier, Index Maturity and other variable
terms of the Floating Rate Notes are subject to change by the Company from time
to time, but no such change will
S-3
<PAGE> 8
affect any Floating Rate Note theretofore issued or as to which an offer to
purchase has been accepted by the Company.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually, as specified in the
applicable Pricing Supplement. The "Interest Reset Date" will be, in the case of
Floating Rate Notes which reset (a) daily, each day; (b) weekly, the Wednesday
of each week (with the exception of weekly reset Treasury Rate Notes which reset
the Tuesday of each week, except as specified below); (c) monthly, the third
Wednesday of each month; (d) quarterly, the third Wednesday of March, June,
September and December; (e) semiannually, the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (f) annually, the third
Wednesday of the month specified in the applicable Pricing Supplement. If any
Interest Reset Date for any Floating Rate Note would otherwise be a day that is
not a Business Day, such Interest Reset Date shall be postponed to the next
succeeding day that is a Business Day, except that in the case of a LIBOR Note,
if such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the next preceding Business Day.
The interest rate applicable to each Interest Accrual Period commencing on
an Interest Reset Date will be the rate determined as of the "Interest
Determination Date" and will be calculated either on such Interest Determination
Date or on or prior to the applicable Calculation Date (as hereinafter defined).
The Interest Determination Date with respect to the Commercial Paper Rate Notes
and CD Rate Notes will be the second Business Day preceding the Interest Reset
Date. The Interest Determination Date with respect to LIBOR Notes will be the
second London Banking Day preceding the Interest Reset Date. The Interest
Determination Date with respect to the Treasury Rate Notes will be the day of
the week in which the Interest Reset Date falls on which Treasury bills normally
would be auctioned; provided, however, that if as a result of a legal holiday an
auction is held on the Friday of the week preceding the Interest Reset Date, the
related Interest Determination Date shall be such preceding Friday; and
provided, further, that if an auction shall fall on any day that would otherwise
be an Interest Reset Date then the Interest Reset Date shall instead be the
first Business Day following such auction.
A Floating Rate Note may also have either or both of the following: (i) a
maximum limit ("Maximum Interest Rate"), or ceiling, on the rate of interest
which may accrue during any Interest Accrual Period; and (ii) a minimum limit
("Minimum Interest Rate"), or floor, on the rate of interest which may accrue
during any Interest Accrual Period. In addition to any Maximum Interest Rate
which may be applicable to any Floating Rate Note pursuant to the above
provisions, the interest rate on the Floating Rate Notes will in no event be
higher than the maximum rate permitted by New York law, as the same may be
modified by United States law of general application. Under present New York
law, the maximum rate of interest, subject to certain exceptions, for an amount
of less than $250,000 is 16% per annum and for an amount of $250,000 or more,
but less than $2,500,000, is 25% per annum on a simple interest basis. These
limits do not apply to investors who purchase $2,500,000 or more of Floating
Rate Notes.
The applicable Pricing Supplement will specify each variable term with
respect to each Floating Rate Note, including the following: Initial Interest
Rate, Interest Reset Dates, Interest Payment Dates, Index Maturity, Maturity,
Maximum Interest Rate and Minimum Interest Rate, if any, the Spread or Spread
Multiplier, if any, and terms of redemption, if any.
Each Floating Rate Note will bear interest from the date of issue at the
rates determined as described below until the principal thereof is paid or
otherwise made available for payment. Except as provided below, interest will be
payable, in the case of Floating Rate Notes which reset (a) daily, weekly or
monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year; (b) quarterly, on the third
Wednesday of March, June, September and December of each year; (c) semiannually,
on the third Wednesday of the two months of each year specified in the
applicable Pricing Supplement; (d) annually, on the third Wednesday of the month
specified in the applicable Pricing Supplement; and, in each case, at maturity
or earlier redemption, as the case may be.
If any Interest Payment Date (other than at maturity or earlier redemption)
for any Floating Rate Note would fall on a day that is not a Business Day with
respect to such Note, such Interest Payment Date will be the following day that
is a Business Day with respect to such Note, except that, in the case of a LIBOR
Note,
S-4
<PAGE> 9
if such Business Day is in the next succeeding calendar month, such Interest
Payment Date shall be the immediately preceding day that is a Business Day with
respect to such LIBOR Note. If the maturity date or date of redemption of any
Floating Rate Note would fall on a day that is not a Business Day, the payment
of interest and principal (and premium, if any) shall be made on the next
succeeding Business Day, and no interest on such payment shall accrue for the
period from and after the maturity date or date of redemption, as the case may
be.
The "Regular Record Date" with respect to Floating Rate Notes will be the
date 15 calendar days (whether or not a Business Day) prior to the applicable
Interest Payment Date.
With respect to a Floating Rate Note, accrued interest is calculated by
multiplying the face amount of such Floating Rate Note by an accrued interest
factor. Such accrued interest factor is computed by adding the interest factor
calculated for each day from the date of issue, or from the last date to which
interest has been paid, to the date for which accrued interest is being
calculated. The interest factor for each such day is computed by dividing the
interest rate applicable to such day by 360 in the case of Commercial Paper Rate
Notes, LIBOR Notes and CD Rate Notes or by the actual number of days in the year
in the case of Treasury Rate Notes.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all
dollar amounts used in or resulting from such calculation on Floating Rate Notes
will be rounded to the nearest cent (with one-half cent being rounded upward).
Unless otherwise provided for in the applicable Pricing Supplement, Morgan
Guaranty Trust Company of New York will be the "Calculation Agent". Upon the
request of the registered holder of any Floating Rate Note, the Calculation
Agent will provide the interest rate then in effect and, if determined, the
interest rate that will become effective as a result of a determination made for
the next Interest Reset Date with respect to such Floating Rate Note. The
Company, or the Calculation Agent, will notify the Trustee of each determination
of the interest rate applicable to any such Floating Rate Note promptly after
such determination is made. The "Calculation Date", where applicable, pertaining
to any Interest Determination Date will be the tenth calendar day after such
Interest Determination Date, or, if any such day is not a Business Day, the next
succeeding Business Day.
The interest rate in effect with respect to a Floating Rate Note from the
date of issue to the first Interest Reset Date (the "Initial Interest Rate")
will be specified in the applicable Pricing Supplement. The interest rate for
each subsequent Interest Reset Date will be determined by the Calculation Agent
as follows:
Commercial Paper Rate Notes. Commercial Paper Rate Notes will bear
interest at the interest rates (calculated with reference to the Commercial
Paper Rate and the Spread or Spread Multiplier, if any) specified in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date
relating to a Commercial Paper Rate Note (a "Commercial Paper Rate Interest
Determination Date"), the Money Market Yield (as defined below) on such date of
the rate for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement, as such rate shall be published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)"), under the
heading "Commercial Paper". In the event that such rate is not published prior
to 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Commercial Paper Rate Interest Determination Date, then the Commercial Paper
Rate shall be the Money Market Yield on such Commercial Paper Rate Interest
Determination Date of the rate for commercial paper of the specified Index
Maturity as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" ("Composite Quotations") under the heading "Commercial Paper". If by
3:00 P.M., New York City time, on such Calculation Date such rate is not
published in either H.15(519) or Composite Quotations, then the Commercial Paper
Rate for such Commercial Paper Rate Interest Determination Date shall be
calculated by the Calculation Agent and shall be the Money Market Yield of the
arithmetic mean of
S-5
<PAGE> 10
the offered rates as of 11:00 A.M., New York City time, on such Commercial Paper
Rate Interest Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for commercial paper of
the specified Index Maturity placed for an industrial issuer whose bond rating
is "AA", or the equivalent, from a nationally recognized rating agency;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as set forth above, the Commercial Paper Rate will be the
Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage rounded to
the nearest one hundred-thousandth of a percent, with five one-millionths of a
percent rounded upward) calculated in accordance with the following formula:
<TABLE>
<C> <S> <C>
D x 360
Money Market Yield = -------------- x 100
360-(D x M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Commercial Paper Rate Interest
Determination Date will become effective on and as of the next succeeding
Interest Reset Date; provided, however, that the interest rate in effect for the
period from the date of issue to the first Interest Reset Date will be the
Initial Interest Rate and the interest rate in effect for the ten days
immediately prior to the maturity date (or any date of redemption) will be that
in effect on the tenth day preceding such maturity date (or any date of
redemption).
LIBOR Notes. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread or Spread Multiplier, if any)
specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR with
respect to any Interest Determination Date relating to a LIBOR Note (a "LIBOR
Interest Determination Date") will be the rate determined on the basis of the
offered rates for deposits (in United States dollars for the period of the Index
Maturity specified in the applicable Pricing Supplement), commencing on the
second London Banking Day immediately following such LIBOR Interest
Determination Date, which appear as of 11:00 A.M., London time, on the Reuters
Screen LIBO Page on the Reuters Monitor Money Rates Service on the LIBOR
Interest Determination Date. If at least two such offered rates appear on the
Reuters Screen LIBO Page, LIBOR for such LIBOR Interest Determination Date will
be the arithmetic mean (rounded, if necessary, to the nearest one
hundred-thousandth of a percent) of such offered rates as determined by the
Calculation Agent. If fewer than two such offered rates appear, the Calculation
Agent shall request the principal London office of four major banks in the
London interbank market selected by the Calculation Agent to provide the
Calculation Agent with a quotation of their offered rates for deposits (in
United States dollars for the period of the applicable Index Maturity and in a
principal amount equal to an amount that is representative for a single
transaction in such market at such time) at approximately 11:00 A.M., London
time, on such LIBOR Interest Determination Date commencing on the second London
Banking Day immediately following such LIBOR Interest Determination Date. If at
least two such quotations are provided, LIBOR for such LIBOR Interest
Determination Date will equal the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR for such LIBOR Interest Determination
Date will equal the arithmetic mean of the rates quoted by three major banks in
The City of New York, as selected by the Calculation Agent, at approximately
11:00 A.M., New York City time, on such LIBOR Interest Determination Date for
loans to leading European banks (in United States dollars for the period of the
applicable Index Maturity and in a principal amount equal to an amount that is
representative for a single transaction in such market at such time) commencing
on the second London Banking Day following such LIBOR Interest Determination
Date; provided, however, that if the banks selected as aforesaid by the
Calculation Agent are not quoting as set forth above, LIBOR will be LIBOR in
effect on such LIBOR Interest Determination Date.
S-6
<PAGE> 11
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a LIBOR Interest Determination Date
will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or any date of redemption) will be that in effect on the tenth day
preceding such maturity date (or any date of redemption).
Treasury Rate Notes. Treasury Rate Notes will bear interest at the
interest rates (calculated with reference to the Treasury Rate and the Spread or
Spread Multiplier, if any) specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note (a "Treasury Rate Interest Determination Date"), the rate
applicable to the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable Pricing
Supplement, as such rate is published in H.15(519) under the heading "Treasury
bills-auction average (investment)" or, if not so published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Treasury Rate
Interest Determination Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. Treasury bills are usually sold at auction on Monday of each week
unless that day is a legal holiday, in which case the auction is usually held on
the following Tuesday, except that such auction may be held on the preceding
Friday. In the event that the results of the auction of Treasury bills having
the specified Index Maturity are not reported as provided by 3:00 P.M., New York
City time, on such Calculation Date, or if no such auction is held in a
particular week, then the Treasury Rate shall be calculated by the Calculation
Agent and shall be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates, as of approximately
3:30 P.M., New York City time, on such Treasury Rate Interest Determination
Date, of three leading primary United States government securities dealers
selected by the Calculation Agent, for the issue of Treasury bills with a
remaining maturity closest to the applicable Index Maturity; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting as set forth above, the Treasury Rate will be the Treasury Rate in
effect on such Treasury Rate Interest Determination Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a Treasury Rate Interest Determination
Date will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
for the ten days immediately prior to the maturity date (or any date of
redemption) will be that in effect on the tenth day preceding such maturity date
(or any date of redemption).
CD Rate Notes. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread or Spread Multiplier,
if any) specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note (a "CD Rate Interest Determination Date"), the rate on such date for
negotiable certificates of deposit having the Index Maturity specified in the
applicable Pricing Supplement as published in H.15(519) under the heading "CDs
(Secondary Market)", or, if not so published by 3:00 P.M., New York City time,
on or prior to the Calculation Date pertaining to such CD Rate Interest
Determination Date, the CD Rate will be the rate on such CD Rate Interest
Determination Date for negotiable certificates of deposit of the Index Maturity
specified in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit". If such rate is not yet
published in either H.15(519) or the Composite Quotations by 3:00 P.M., New York
City time, on the Calculation Date, then the CD Rate on such CD Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York
City time, on such CD Rate Interest Determination Date, of three leading nonbank
dealers in
S-7
<PAGE> 12
negotiable U.S. dollar certificates of deposit in The City of New York selected
by the Calculation Agent for negotiable certificates of deposit of major United
States money center banks of the highest credit standing in the market for
negotiable certificates of deposit with a remaining maturity closest to the
Index Maturity designated in the Pricing Supplement in denominations of
$5,000,000; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as set forth above, the CD Rate will be the CD
Rate in effect on such CD Rate Interest Determination Date.
Unless otherwise indicated in the applicable Pricing Supplement, the
interest rate determined with respect to a CD Rate Interest Determination Date
will become effective on and as of the next succeeding Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate and
the interest rate in effect for the ten days immediately prior to the maturity
date (or any date of redemption) will be that in effect on the tenth day
preceding such maturity date (or any date of redemption).
BOOK-ENTRY NOTES
The Notes may be issued in whole or in part in book-entry form ("Book-Entry
Notes"). Upon issuance, all such Book-Entry Notes having identical terms and
provisions will be represented by a single global security (each, a "Global
Note"). Unless otherwise specified in the applicable Pricing Supplement, the
Global Note representing such Book-Entry Notes will be deposited with, or on
behalf of, The Depository Trust Company (the "Depository"), and registered in
the name of a nominee of the Depository. Except as set forth below, a Global
Note may not be transferred except as a whole by the Depository to a nominee of
the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or any nominee to a successor of the Depository or a
nominee of such successor.
The Depository has advised the Company and the Agents that it is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. The Depository was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depository's participants
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations, some of whom
(and/or their representatives) own the Depository. Access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by the Depository only through
participants.
Upon the issuance of Book-Entry Notes by the Company represented by a
Global Note, the Depository will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Book-Entry Notes
represented by such Global Note to the accounts of participants. The accounts to
be credited shall be designated by the Agent through or by which such Book-Entry
Notes are sold. Ownership of beneficial interests in a Global Note will be
limited to participants or persons that may hold interests through participants.
In addition, ownership of interests in a Global Note will be shown on, and the
transfer thereof will be effected only through, records maintained by the
Depository, or by participants or persons that may hold such interests through
participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in certificated form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Note.
So long as the Depository, or its nominee, is the registered owner of a
Global Note, the Depository or its nominee, as the case may be, will be
considered the sole owner or holder of the Book-Entry Notes represented by such
Global Note for all purposes under the Mortgage. Except as provided below,
owners of beneficial interests in a Global Note representing Book-Entry Notes
will not be entitled to have such Book-Entry Notes
S-8
<PAGE> 13
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in certificated form and will not be considered the owners or
holders thereof under the Mortgage. Accordingly, each person owning a beneficial
interest in a Global Note must rely on the procedures of the Depository and, if
such person is not a participant, on the procedures of the participant through
which such person owns its interests, to exercise any rights of a holder under
the Mortgage or such Global Note. The Company understands that, under existing
industry practice, in the event that the Company requests any action of holders
of Book-Entry Notes or an owner of a beneficial interest in a Global Note
desires to take any action that the Depository, as the holder of such Global
Note, is entitled to take, the Depository would authorize the participants to
take such action and that the participants would authorize beneficial owners
owning through such participants to take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
Principal and interest payments on the Book-Entry Notes represented by one
or more Global Notes will be made by the Company through the Trustee to the
Depository, or its nominee, as the case may be, as the registered owner of such
Global Note or Notes. Neither the Company nor the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of a Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests. The
Company expects that the Depository, upon receipt of any payment of principal or
interest in respect of a Global Note, will credit immediately the accounts of
the related participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interests in such Global
Note as shown on the records of the Depository. The Company also expects that
payments by participants to owners of beneficial interests in a Global Note will
be governed by standing customer instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such
participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Notes in certificated form in exchange for the
Global Notes representing Book-Entry Notes. In addition, the Company may at any
time determine not to have Book-Entry Notes represented by one or more Global
Notes and, in such event, will issue Notes in certificated form in exchange for
the Global Note or Notes representing such Book-Entry Notes. In any such
instance, an owner of a beneficial interest in any Global Note will be entitled
to physical delivery of Notes in certificated form which are equal in principal
amount to such beneficial interest and to have such Notes registered in its
name. Such Notes so issued will be issued in registered form only without
coupons and in denominations of $100,000 and integral multiples of $1,000 in
excess thereof.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through the Agents, who have agreed to use their best efforts to solicit offers
to purchase the Notes. The Company reserves the right to sell Notes directly to
investors on its own behalf in those jurisdictions where it is authorized to do
so. The Company will pay an Agent a commission ranging from .125% to .750% of
the principal amount of each Note sold through such Agent, depending upon the
maturity of such Note. In addition, the Agents may offer the Notes they have
purchased as principal to other dealers. The Agents may sell Notes to any dealer
at a discount and such discount allowed to any dealer will not be in excess of
the discount to be received by such Agent from the Company. Unless otherwise
indicated in the applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of the
principal amount thereof less a percentage equal to the commission applicable to
any agency sale of a Note of identical maturity, and may be resold by the Agent
to investors and other purchasers from time to time in one or more transactions,
including negotiated transactions, at varying prices determined by such Agent at
the time of resale or, if specified in the applicable Pricing Supplement, at a
fixed public offering price, or may be resold to certain dealers as described
above. After the initial public offering of Notes to be resold to investors and
other purchasers, the public offering price (in the case of Notes to be resold
on a fixed public offering price basis), concession and discount may be changed.
S-9
<PAGE> 14
The Company reserves the right to withdraw, cancel, suspend or modify the
offering of the Notes at any time without notice and may reject any offer for
the purchase of Notes from the Company in whole or in part. Each Agent shall
have the right, exercisable in its reasonable discretion, to reject any proposed
purchase of Notes in whole or in part.
The Notes have no established trading market. The Agents have informed the
Company that they intend to make a market in the Notes, but are under no
obligation to do so, and either Agent or both Agents may cease making a market
in the Notes at any time. Therefore, no assurance can be given that a trading
market for the Notes will exist in the future. The Notes will not be listed for
trading on any securities exchange.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act. The Company has agreed to indemnify the Agents against certain
liabilities, including liabilities under the Securities Act.
S-10
<PAGE> 15
PROSPECTUS
DUKE POWER COMPANY
$250,000,000
MEDIUM-TERM NOTES
(A SERIES OF FIRST AND REFUNDING MORTGAGE BONDS)
Duke Power Company (the "Company"), directly, through agents designated
from time to time, or through dealers or underwriters also to be designated, may
from time to time offer up to $250 million aggregate principal amount of First
and Refunding Mortgage Bonds, Medium-Term Notes Series (the "Notes") on terms to
be determined at the time or times of sale.
When particular Notes are offered (the "Offered Notes"), a supplement to
this Prospectus will be delivered (each, a "Prospectus Supplement") together
with this Prospectus setting forth the terms of the Offered Notes, including,
where applicable, the aggregate principal amount of the issue, purchase price,
maturity, interest rate or rates (which may be either fixed or variable) and
time of payment of interest, redemption terms, if any, the agents, dealers or
underwriters, if any, and any other terms in connection with the offering and
sale of the Offered Notes.
If an agent of the Company or a dealer or an underwriter is involved in the
sale of the Offered Notes, the agent's commission or dealer's or underwriter's
discount will be set forth in, or may be calculated from, the Prospectus
Supplement. The net proceeds to the Company from such sale will be the purchase
price of the Offered Notes less such commission in the case of an agent, the
purchase price of the Offered Notes in the case of a dealer or the public
offering price less such discount in the case of an underwriter, and less, in
each case, the other attributable issuance expenses. The net proceeds to the
Company from the sale of the Offered Notes will be set forth in the Prospectus
Supplement. See "Plan of Distribution" for possible indemnification arrangements
for any agents, dealers or underwriters.
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 DECEMBER 2, 1993.
<PAGE> 16
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> 17
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> 18
USE OF PROCEEDS
The net proceeds from the sale of the Notes 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 BONDS
The Notes will be issued as First and Refunding Mortgage Bonds (the
"Bonds") of the Medium-Term Notes Series 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. The Indenture, as
heretofore supplemented and amended, 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.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Notes (among others): (i) the percentage or percentages of their
principal amount at which such Offered Notes will be issued; (ii) the date or
dates on which the Offered Notes will mature; (iii) the denominations in which
the Offered Notes are authorized to be issued; and (iv) any other terms or
provisions relating to such Offered Notes which are not inconsistent with the
provisions of the Mortgage.
FORM AND EXCHANGES
Unless otherwise specified in the Prospectus Supplement, the Offered Notes
will be issuable in registered form without coupons. Offered Notes will be
exchangeable without charge, other than for applicable stamp taxes or other
governmental charges, for other Offered Notes of the same or different
authorized denominations, in each case for a like aggregate principal amount of
Offered Notes having the same issue date with identical terms and provisions,
unless otherwise specified in the Prospectus Supplement. Offered Notes may be
transferred without charge, other than for applicable stamp taxes or other
governmental charges, unless otherwise specified in the Prospectus Supplement.
Reference is made to the Prospectus Supplement for additional requirements as to
the form and method of exchange of the Offered Notes. Additionally, Offered
Notes may be represented in whole or in part by global notes and, if so
represented, ownership of beneficial interests in such global notes will be
shown on, and transfers thereof will be effected only through, records
maintained by a designated depository and its participants.
INTEREST AND PAYMENT
Reference is made to the Prospectus Supplement for the interest rate or
rates (which may be either fixed or variable) and/or the method of determination
of such rate or rates of the Offered Notes and the date or dates on which such
interest is payable. Unless otherwise specified in the Prospectus Supplement,
principal and interest are payable at Morgan Guaranty Trust Company of New York,
60 Wall Street, New York, New York 10260.
REDEMPTION
Reference is made to the Prospectus Supplement and to "Replacement Fund"
below.
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.
4
<PAGE> 19
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
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 Notes 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 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 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.
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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 actions 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 Notes
will be solely for the benefit of holders of such Notes and may be modified by
written consent or affirmative vote of holders of 66 2/3% of such Notes
outstanding without the 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
costs, 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 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.
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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 Notes being offered hereby: (i) directly to
purchasers, (ii) through agents, (iii) through underwriters, (iv) through
dealers, or (v) through a combination of any such methods of sale.
The distribution of the Notes may be effected from time to time in one or
more transactions: (i) at a fixed price or prices, which may be changed, (ii) at
market prices prevailing at the time of sale, (iii) at prices related to such
prevailing market prices, or (iv) at negotiated prices.
Offers to purchase the Notes may be solicited directly by the Company or by
agents designated by the Company from time to time. Any such agent, which may be
deemed to be an underwriter as that term is defined in the Securities Act of
1933, as amended (the "Securities Act"), involved in the offer or sale of the
Notes in respect of which this Prospectus is delivered will be named, and any
commissions payable by the Company to such agent will be set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment. Agents may engage in transactions with or perform services for the
Company in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction
will be set forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Notes in respect of which this Prospectus is
delivered to the public.
If a dealer is utilized in the sale of the Notes in respect of which this
Prospectus is delivered, the Company will sell such Notes to the dealer, as
principal. The dealer may then resell such Notes to the public at varying prices
to be determined by such dealer at the time of resale.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with the Company, to indemnification
against certain civil liabilities, including liabilities under the Securities
Act.
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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 Notes 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 the agents or underwriters by Brown & Wood, New York,
New York. In giving their opinions Dewey Ballantine and Brown & Wood 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.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN CONNECTION WITH AN OFFER MADE BY THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON, UNDERWRITER, DEALER OR AGENT. NEITHER THE DELIVERY
OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT 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 OR THEREOF. THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION 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.
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L O G O
