Financings And Capitalization

12 Months Ended

Dec. 31, 2012

5:FINANCINGS and Capitalization

Presented in the following table is CMS Energy’s long-term debt at December 31:



In Millions
	Interest Rate (%)		Maturity	2012			2011
CMS Energy
Senior notes	variable	¹	2013		$	-		$	150
	2.750		2014			250			250
	6.875		2015			125			125
	4.250		2015			250			250
	6.550		2017			250			250
	5.050		2018			250			250
	8.750		2019			300			300
	6.250		2020			300			300
	5.050		2022			300			-
	2.875	²	2024			-			226
	5.500	²	2029			172			172
Total CMS Energy senior notes					$	2,197		$	2,273
Term loan facility	variable	³	2016			180			-
Total CMS Energy parent					$	2,377		$	2,273
Consumers					$	4,341		$	4,329
Other CMS Energy subsidiaries
EnerBank certificates of deposits	1.164	⁴	2013-2020		$	527		$	462
Trust preferred securities	7.750	⁵	2027			-			29
Total other CMS Energy subsidiaries					$	527		$	491
Total CMS Energy principal amount outstanding					$	7,245		$	7,093
Current amounts						(519)			(1,033)
Net unamortized discounts						(16)			(20)
Total CMS Energy long-term debt					$	6,710		$	6,040

¹	CMS Energy’s variable-rate senior notes bore interest at three-month LIBOR plus 95 basis points (1.35 percent at December 31, 2011). In July 2012, CMS Energy retired these notes.

²	CMS Energy’s contingently convertible notes. CMS Energy’s 2.875 percent senior notes were converted in January and April 2012. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversion features.

³	Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.50 percent (2.71 percent at December 31, 2012). In February 2013, the term loan facility was amended, reducing the annual interest rate to LIBOR plus 2.00 percent.

⁴	The weighted-average interest rate for EnerBank’s certificates of deposit was 1.16 percent at December 31, 2012 and 1.33 percent at December 31, 2011. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000.

⁵	In February 2012, CMS Energy retired the 7.75 percent Trust Preferred Securities.

Presented in the following table is Consumers’ long-term debt at December 31:



In Millions
	Interest Rate (%)		Maturity	2012			2011
Consumers
FMBs¹	5.000		2012		$	-		$	300
	5.375	²	2013			-			375
	6.000		2014			200			200
	5.000		2015			225			225
	2.600		2015			50			50
	5.500		2016			350			350
	5.150		2017			250			250
	3.210		2017			100			100
	5.650		2018			250			250
	6.125		2019			350			350
	6.700		2019			500			500
	5.650		2020			300			300
	3.770		2020			100			100
	5.300		2022			250			250
	2.850		2022			375			-
	3.190		2024			52			-
	3.390		2027			35			-
	5.800		2035			175			175
	6.170		2040			50			50
	4.970		2040			50			50
	4.310		2042			263			-
					$	3,925		$	3,875
Senior notes	6.875		2018			180			180
Securitization bonds	5.718	³	2013-2015			133			171
Tax-exempt pollution control revenue bonds	various		2018-2035			103			103
Total Consumers principal amount outstanding					$	4,341		$	4,329
Current amounts						(41)			(339)
Net unamortized discounts						(3)			(3)
Total Consumers long-term debt					$	4,297		$	3,987

¹	The weighted-average interest rate for Consumers’ FMBs was 5.19 percent at December 31, 2012 and 5.52 percent at December 31, 2011.

²	In May 2012, Consumers retired its 5.375 percent FMBs.

³	The weighted-average interest rate for Consumers’ Securitization bonds was 5.72 percent at December 31, 2012 and 5.65 percent at December 31, 2011.

Financings: Presented in the following table is a summary of major long-term debt transactions during the year ended December 31, 2012:



	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy
Senior notes		$	300	5.050	%	March 2012	March 2022
Term loan facility¹			180	variable		February 2012 and July 2012	December 2016
Total CMS Energy parent			480
Consumers
FMB			375	2.850	%	May 2012	May 2022
Term loan facility²			350	variable		July 2012	March 2013
Tax-exempt bonds³			68	variable		August 2012	April 2018
Tax-exempt bonds³			35	variable		August 2012	April 2035
FMB			52	3.190	%	December 2012	December 2024
FMB			35	3.390	%	December 2012	December 2027
FMB			263	4.310	%	December 2012	December 2042
Total Consumers			1,178
Total debt issuances		$	1,658
Debt retirements
CMS Energy
Contingently convertible senior notes⁴		$	226	2.875	%	January 2012 and April 2012	December 2024
Trust Preferred Securities			29	7.750	%	February 2012	July 2027
Senior notes			150	variable		July 2012	January 2013
Total CMS Energy parent			405
Consumers
FMB			300	5.000	%	February 2012	February 2012
FMB			375	5.375	%	May 2012	April 2013
Tax-exempt bonds³			68	variable		August 2012	April 2018
Tax-exempt bonds³			35	variable		August 2012	April 2035
Term loan facility²			350	variable		December 2012	March 2013
Total Consumers			1,128
Total debt retirements		$	1,533

Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.50 percent (2.71 percent at December 31, 2012). CMS Energy used these proceeds to retire the 7.75 percent Trust Preferred Securities and floating-rate senior notes due January 2013. In February 2013, the term loan facility was amended, reducing the annual interest rate to LIBOR plus 2.00 percent.

²	In June 2012, Consumers entered into a short-term credit agreement permitting Consumers to borrow up to $375 million. This agreement was terminated using proceeds from FMBs issued in December 2012.

In August 2012, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund revenue bonds. The bonds, which are backed by letters of credit and collateralized by Consumers’ FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in August 2012.

⁴	CMS Energy’s contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversions.

FMBs: Consumers secures its FMBs by a mortgage and lien on substantially all of its property. Consumers’ ability to issue FMBs is restricted by certain provisions in the First Mortgage Bond Indenture and the need for regulatory approvals under federal law. Restrictive issuance provisions in the First Mortgage Bond Indenture include achieving a two-times interest coverage ratio and having sufficient unfunded net property additions.

Regulatory Authorization for Financings: FERC has authorized Consumers to have outstanding at any one time, up to $500 million of secured and unsecured short-term securities for general corporate purposes. The remaining availability was $500 million at December 31, 2012. FERC has also authorized Consumers to issue and sell up to $1.9 billion of secured and unsecured long-term securities for general corporate purposes. The remaining availability was $1.6 billion at December 31, 2012. The authorizations are for the period ending June 30, 2014. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements.

Securitization Bonds: Certain regulatory assets owned by Consumers’ subsidiary Consumers Funding collateralize Consumers’ Securitization bonds. The bondholders have no recourse to Consumers’ other assets. Through its rate structure, Consumers bills customers for Securitization surcharges to fund the payment of principal, interest, and other related expenses. The surcharges collected are remitted to a trustee and are not available to creditors of Consumers or creditors of Consumers’ affiliates other than Consumers Funding.

Debt Maturities: At December 31, 2012, the aggregate annual contractual maturities for long-term debt for the next five years were:



In Millions
	2013			2014			2015			2016			2017
CMS Energy, including Consumers
Long-term debt		$	347		$	583		$	738		$	563		$	630
Consumers
Long-term debt		$	41		$	243		$	324		$	350		$	350

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at December 31, 2012:



In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
December 21, 2017¹		$	550		$	-		$	2		$	548
Consumers
December 21, 2017²		$	500		$	-		$	2		$	498
April 18, 2017²			150			-			-			150
September 9, 2014²			30			-			30			-

¹	Obligations under this facility are secured by Consumers common stock. CMS Energy’s average borrowings during the year ended December 31, 2012 were $12 million, with a weighted-average annual interest rate of 2.26 percent, representing LIBOR plus 2.00 percent.

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

Short-term Borrowings: Under Consumers’ revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements. These transactions are accounted for as short-term secured borrowings. At December 31, 2012, $140 million of accounts receivable were eligible for transfer, and $110 million had been transferred under the program. During the year ended December 31, 2012, Consumers’ average short-term borrowings totaled $20 million, with a weighted-average annual interest rate of 0.94 percent.

Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at December 31, 2012:



		Outstanding			Adjusted			Adjusted
Security	Maturity	(In Millions)			Conversion Price			Trigger Price
5.50% senior notes	2029		$	172		$	13.94		$	18.12

The securities become convertible for a calendar quarter if the price of CMS Energy’s common stock remains at or above the trigger price for 20 of 30 consecutive trading days ending on the last trading day of the previous quarter. The trigger price at which these securities become convertible is 130 percent of the conversion price. The conversion and trigger prices are subject to adjustments in certain circumstances, including payments or distributions to CMS Energy’s common stockholders. The conversion and trigger price adjustment is made when the cumulative change in conversion and trigger prices is one percent or more. During 20 of the last 30 trading days ended December 31, 2012, the adjusted trigger-price contingencies were met for the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the note holders for the three months ending March 31, 2013.

CMS Energy’s contingently convertible securities, if converted, require CMS Energy to pay cash up to the principal amount of the securities. Any conversion value in excess of the principal amount can be paid in cash or in shares of CMS Energy’s common stock, at the election of CMS Energy.

Presented in the following table are details about conversions of contingently convertible securities during the year ended December 31, 2012:

Conversion

Principal

Value per

of Common

Cash Paid on

Conversion

Converted

$1,000 of

Stock Issued

Settlement

Date

(In Millions)

Principal

on Settlement

(In Millions)

2.875% senior notes due 2024

January 2012

1,738.99

2,464,138

April 2012

153

1,774.98

5,381,349

153

Dividend Restrictions: Under provisions of CMS Energy’s senior notes indenture, at December 31, 2012, payment of common stock dividends by CMS Energy was limited to $1.4 billion.

Under the provisions of its articles of incorporation, at December 31, 2012, Consumers had $536 million of unrestricted retained earnings available to pay common stock dividends to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that under a variety of circumstances common stock dividends from Consumers would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay common stock dividends in excess of retained earnings would be based on specific facts and circumstances and would result only after a formal regulatory filing process.

For the year ended December 31, 2012, CMS Energy received $393 million of common stock dividends from Consumers.

Capitalization: The authorized capital stock of CMS Energy consists of:

·	350 million shares of CMS Energy Common Stock, par value $0.01 per share, and

·	10 million shares of CMS Energy Preferred Stock, par value $0.01 per share.

Issuance of Common Stock: In June 2011, CMS Energy entered into a continuous equity offering program under which CMS Energy may sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million. In June 2012, under this program, CMS Energy issued 650,235 shares of common stock at an average price of $23.07 per share, resulting in net proceeds of $15 million. CMS Energy has issued a total of 1,413,160 shares of common stock under this program, resulting in net proceeds of $30 million.

Preferred Stock of Subsidiary: Presented in the following table are details about Consumers’ preferred stock outstanding:



				Optional			Number of	Balance
				Redemption			Shares	Outstanding
December 31, 2012 and 2011	Series			Price			Outstanding	In Millions
Cumulative, $100 par value, authorized 7,500,000 shares, with no mandatory redemption		$	4.16		$	103.25	68,451		$	7
			4.50			110.00	373,148			37
Total preferred stock of Consumers									$	44

Consumers Energy Company [Member]

Financings And Capitalization

5:FINANCINGS and Capitalization

Presented in the following table is CMS Energy’s long-term debt at December 31:



In Millions
	Interest Rate (%)		Maturity	2012			2011
CMS Energy
Senior notes	variable	¹	2013		$	-		$	150
	2.750		2014			250			250
	6.875		2015			125			125
	4.250		2015			250			250
	6.550		2017			250			250
	5.050		2018			250			250
	8.750		2019			300			300
	6.250		2020			300			300
	5.050		2022			300			-
	2.875	²	2024			-			226
	5.500	²	2029			172			172
Total CMS Energy senior notes					$	2,197		$	2,273
Term loan facility	variable	³	2016			180			-
Total CMS Energy parent					$	2,377		$	2,273
Consumers					$	4,341		$	4,329
Other CMS Energy subsidiaries
EnerBank certificates of deposits	1.164	⁴	2013-2020		$	527		$	462
Trust preferred securities	7.750	⁵	2027			-			29
Total other CMS Energy subsidiaries					$	527		$	491
Total CMS Energy principal amount outstanding					$	7,245		$	7,093
Current amounts						(519)			(1,033)
Net unamortized discounts						(16)			(20)
Total CMS Energy long-term debt					$	6,710		$	6,040

¹	CMS Energy’s variable-rate senior notes bore interest at three-month LIBOR plus 95 basis points (1.35 percent at December 31, 2011). In July 2012, CMS Energy retired these notes.

²	CMS Energy’s contingently convertible notes. CMS Energy’s 2.875 percent senior notes were converted in January and April 2012. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversion features.

³	Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.50 percent (2.71 percent at December 31, 2012). In February 2013, the term loan facility was amended, reducing the annual interest rate to LIBOR plus 2.00 percent.

⁴	The weighted-average interest rate for EnerBank’s certificates of deposit was 1.16 percent at December 31, 2012 and 1.33 percent at December 31, 2011. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000.

⁵	In February 2012, CMS Energy retired the 7.75 percent Trust Preferred Securities.

Presented in the following table is Consumers’ long-term debt at December 31:



In Millions
	Interest Rate (%)		Maturity	2012			2011
Consumers
FMBs¹	5.000		2012		$	-		$	300
	5.375	²	2013			-			375
	6.000		2014			200			200
	5.000		2015			225			225
	2.600		2015			50			50
	5.500		2016			350			350
	5.150		2017			250			250
	3.210		2017			100			100
	5.650		2018			250			250
	6.125		2019			350			350
	6.700		2019			500			500
	5.650		2020			300			300
	3.770		2020			100			100
	5.300		2022			250			250
	2.850		2022			375			-
	3.190		2024			52			-
	3.390		2027			35			-
	5.800		2035			175			175
	6.170		2040			50			50
	4.970		2040			50			50
	4.310		2042			263			-
					$	3,925		$	3,875
Senior notes	6.875		2018			180			180
Securitization bonds	5.718	³	2013-2015			133			171
Tax-exempt pollution control revenue bonds	various		2018-2035			103			103
Total Consumers principal amount outstanding					$	4,341		$	4,329
Current amounts						(41)			(339)
Net unamortized discounts						(3)			(3)
Total Consumers long-term debt					$	4,297		$	3,987

¹	The weighted-average interest rate for Consumers’ FMBs was 5.19 percent at December 31, 2012 and 5.52 percent at December 31, 2011.

²	In May 2012, Consumers retired its 5.375 percent FMBs.

³	The weighted-average interest rate for Consumers’ Securitization bonds was 5.72 percent at December 31, 2012 and 5.65 percent at December 31, 2011.

Financings: Presented in the following table is a summary of major long-term debt transactions during the year ended December 31, 2012:



	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy
Senior notes		$	300	5.050	%	March 2012	March 2022
Term loan facility¹			180	variable		February 2012 and July 2012	December 2016
Total CMS Energy parent			480
Consumers
FMB			375	2.850	%	May 2012	May 2022
Term loan facility²			350	variable		July 2012	March 2013
Tax-exempt bonds³			68	variable		August 2012	April 2018
Tax-exempt bonds³			35	variable		August 2012	April 2035
FMB			52	3.190	%	December 2012	December 2024
FMB			35	3.390	%	December 2012	December 2027
FMB			263	4.310	%	December 2012	December 2042
Total Consumers			1,178
Total debt issuances		$	1,658
Debt retirements
CMS Energy
Contingently convertible senior notes⁴		$	226	2.875	%	January 2012 and April 2012	December 2024
Trust Preferred Securities			29	7.750	%	February 2012	July 2027
Senior notes			150	variable		July 2012	January 2013
Total CMS Energy parent			405
Consumers
FMB			300	5.000	%	February 2012	February 2012
FMB			375	5.375	%	May 2012	April 2013
Tax-exempt bonds³			68	variable		August 2012	April 2018
Tax-exempt bonds³			35	variable		August 2012	April 2035
Term loan facility²			350	variable		December 2012	March 2013
Total Consumers			1,128
Total debt retirements		$	1,533

²	In June 2012, Consumers entered into a short-term credit agreement permitting Consumers to borrow up to $375 million. This agreement was terminated using proceeds from FMBs issued in December 2012.

⁴	CMS Energy’s contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversions.

Debt Maturities: At December 31, 2012, the aggregate annual contractual maturities for long-term debt for the next five years were:



In Millions
	2013			2014			2015			2016			2017
CMS Energy, including Consumers
Long-term debt		$	347		$	583		$	738		$	563		$	630
Consumers
Long-term debt		$	41		$	243		$	324		$	350		$	350

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at December 31, 2012:



In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
December 21, 2017¹		$	550		$	-		$	2		$	548
Consumers
December 21, 2017²		$	500		$	-		$	2		$	498
April 18, 2017²			150			-			-			150
September 9, 2014²			30			-			30			-

¹	Obligations under this facility are secured by Consumers common stock. CMS Energy’s average borrowings during the year ended December 31, 2012 were $12 million, with a weighted-average annual interest rate of 2.26 percent, representing LIBOR plus 2.00 percent.

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

Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at December 31, 2012:



		Outstanding			Adjusted			Adjusted
Security	Maturity	(In Millions)			Conversion Price			Trigger Price
5.50% senior notes	2029		$	172		$	13.94		$	18.12

Presented in the following table are details about conversions of contingently convertible securities during the year ended December 31, 2012:

Conversion

Principal

Value per

of Common

Cash Paid on

Conversion

Converted

$1,000 of

Stock Issued

Settlement

Date

(In Millions)

Principal

on Settlement

(In Millions)

2.875% senior notes due 2024

January 2012

1,738.99

2,464,138

April 2012

153

1,774.98

5,381,349

153

Dividend Restrictions: Under provisions of CMS Energy’s senior notes indenture, at December 31, 2012, payment of common stock dividends by CMS Energy was limited to $1.4 billion.

For the year ended December 31, 2012, CMS Energy received $393 million of common stock dividends from Consumers.

Capitalization: The authorized capital stock of CMS Energy consists of:

·	350 million shares of CMS Energy Common Stock, par value $0.01 per share, and

·	10 million shares of CMS Energy Preferred Stock, par value $0.01 per share.

Preferred Stock of Subsidiary: Presented in the following table are details about Consumers’ preferred stock outstanding:



				Optional			Number of	Balance
				Redemption			Shares	Outstanding
December 31, 2012 and 2011	Series			Price			Outstanding	In Millions
Cumulative, $100 par value, authorized 7,500,000 shares, with no mandatory redemption		$	4.16		$	103.25	68,451		$	7
			4.50			110.00	373,148			37
Total preferred stock of Consumers									$	44

- Definition

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

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