Financings And Capitalization

12 Months Ended

Dec. 31, 2014

5:FINANCINGS AND CAPITALIZATION

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



In Millions
	Interest Rate (%)		Maturity	2014			2013
CMS Energy parent
Senior notes	6.875	1	2015		$	-		$	125
	4.250	2	2015			-			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			300
	3.875		2024			250			-
	5.500	3	2029			-			172
	4.700		2043			250			250
	4.875		2044			300			-
Total CMS Energy senior notes					$	2,200		$	2,197
Term loan facility	variable	4	2017			180			180
Total CMS Energy parent					$	2,380		$	2,377
Consumers					$	5,283		$	4,625
Other CMS Energy subsidiaries
EnerBank certificates of deposits	1.218	5	2015-2024		$	884		$	652
Total other CMS Energy subsidiaries					$	884		$	652
Total CMS Energy principal amount outstanding					$	8,547		$	7,654
Current amounts						(519)			(541)
Net unamortized discounts						(12)			(12)
Total CMS Energy long-term debt					$	8,016		$	7,101

In April 2014, CMS Energy retired its 6.875 percent senior notes.

In December 2014, CMS Energy retired its 4.25 percent senior notes.

In June 2014, CMS Energy retired its remaining 5.50 percent contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversions.

⁴

Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 1.25 percent (1.42 percent at December 31, 2014).

⁵

The weighted-average interest rate for EnerBank’s certificates of deposit was 1.22 percent at December 31, 2014 and 1.09 percent at December 31, 2013. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000.

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



In Millions
	Interest Rate (%)		Maturity	2014			2013
Consumers
FMBs1	2.600		2015		$	50		$	50
	5.500	2	2016			173			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			375
	3.375		2023			325			325
	3.190		2024			52			52
	3.125		2024			250			-
	3.390		2027			35			35
	5.800		2035			175			175
	6.170		2040			50			50
	4.970		2040			50			50
	4.310		2042			263			263
	3.950		2043			425			425
	4.350		2064			250			-
					$	4,573		$	4,250
Securitization bonds	5.760	3	2015			49			92
	2.597	4	2020-2029	5		378			-
					$	427		$	92
Senior notes	6.875		2018			180			180
Tax-exempt pollution control revenue bonds	various		2018-2035			103			103
Total Consumers principal amount outstanding					$	5,283		$	4,625
Current amounts						(124)			(43)
Net unamortized discounts						(5)			(3)
Total Consumers long-term debt					$	5,154		$	4,579

The weighted-average interest rate for Consumers’ FMBs was 4.75 percent at December 31, 2014 and 4.90 percent at December 31, 2013.

In August 2014, Consumers retired $177 million of its 5.50 percent FMBs.

The interest rate for Consumers’ Securitization bonds issued through its subsidiary Consumers Funding was 5.76 percent at December 31, 2014 and 2013.

⁴

The weighted-average interest rate for Consumers’ Securitization bonds issued through its subsidiary Consumers 2014 Securitization Funding was 2.60 percent at December 31, 2014.

⁵

Principal and interest payments are made semiannually beginning in 2015.

Financings: Presented in the following table is a summary of major long-term debt transactions during the year ended December 31, 2014:



	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy parent
Senior notes		$	250	3.875	%	February 2014	March 2024
Senior notes			300	4.875		February 2014	March 2044
Total CMS Energy parent		$	550
Consumers
Securitization bonds1		$	124	1.334	%	July 2014	November 2020
Securitization bonds1			139	2.962		July 2014	November 2025
Securitization bonds1			115	3.528		July 2014	May 2029
FMBs			250	3.125		August 2014	August 2024
FMBs			250	4.350		August 2014	August 2064
Total Consumers		$	878
Total CMS Energy		$	1,428
Debt retirements
CMS Energy parent
Senior notes2		$	125	6.875	%	April 2014	December 2015
Senior notes			155	5.500		June 2014	June 2029
Senior notes3			250	4.250		December 2014	September 2015
Total CMS Energy parent		$	530
Consumers
FMBs		$	177	5.500	%	August 2014	August 2016
Total Consumers		$	177
Total CMS Energy		$	707

For additional details regarding the Securitization, see Note 3, Regulatory Matters and the “Securitization Bonds” section in this Note.

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

CMS Energy retired this debt at a premium and recorded a loss on extinguishment of $7 million in other expense on its consolidated statements of income.

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: Consumers is required to maintain FERC authorization for financings. In June 2014, Consumers received authorization from FERC to have outstanding, at any one time, up to $800 million of secured and unsecured short-term securities for general corporate purposes. At December 31, 2014, Consumers had entered into short-term borrowing programs allowing it to issue up to $800 million in short-term securities; $60 million of securities were outstanding under these programs. 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 $1.4 billion at December 31, 2014. The authorizations were effective July 1, 2014 and terminate June 30, 2016. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements.

Securitization Bonds: Certain regulatory assets held by two of Consumers’ subsidiaries, Consumers Funding and Consumers 2014 Securitization Funding, collateralize Consumers’ Securitization bonds. The bondholders have no recourse to Consumers’ assets except for those held by the subsidiary that issued the bonds. Consumers collects Securitization surcharges to cover the principal and interest on the bonds as well as certain other qualified costs. The surcharges collected are remitted to a trustee and are not available to creditors of Consumers or creditors of Consumers’ affiliates other than the subsidiary that issued the bonds.

Debt Maturities: At December 31, 2014, the aggregate annual contractual maturities for long-term debt for the next five years were:



In Millions
	2015			2016			2017			2018			2019
CMS Energy, including Consumers
Long-term debt		$	519		$	542		$	734		$	866		$	1,234
Consumers
Long-term debt		$	124		$	198		$	375		$	523		$	876

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at December 31, 2014:



In Millions
	Amount of			Amount			Letters of Credit			Amount
Expiration Date	Facility			Borrowed			Outstanding			Available
CMS Energy parent
December 20, 20181		$	550		$	-		$	3		$	547
Consumers
December 20, 20182		$	650		$	-		$	35		$	615
May 9, 20182			30			-			30			-

Obligations under this facility are secured by Consumers common stock.

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, 2014, no accounts receivable had been transferred under the program. During the year ended December 31, 2014, Consumers’ average short-term borrowings totaled $11 million, with a weighted-average annual interest rate of 0.85 percent.

In September 2014, Consumers entered into a commercial paper program. Under the program, Consumers may issue, in one or more placements, commercial paper notes with maturities of up to 365 days and that bear interest at fixed or floating rates. These issuances are supported by Consumers’ $650 million revolving credit facility and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the revolver’s available capacity, Consumers would not issue commercial paper in an amount exceeding the available revolver capacity. At December 31, 2014, $60 million of commercial paper notes were outstanding under this program, with a weighted-average annual interest rate of 0.49 percent.

Contingently Convertible Securities: Presented in the following table are details about conversions of contingently convertible securities for the year ended December 31, 2014:

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)

5.50% senior notes due 2029

February 2014

1,968

605,531

5.50% senior notes due 2029

June 2014

155

2,215

6,372,578

155

Dividend Restrictions: At December 31, 2014, payment of dividends by CMS Energy on its common stock was limited to $3.7 billion under provisions of the Michigan Business Corporation Act of 1972.

Under the provisions of its articles of incorporation, at December 31, 2014, Consumers had $768 million of unrestricted retained earnings available to pay dividends on its common stock 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 dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

For the year ended December 31, 2014, Consumers paid $457 million in dividends on its common stock to CMS Energy.

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



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

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



				Optional			Number of	Balance
				Redemption			Shares	Outstanding
	Series			Price			Outstanding	(In Millions)
December 31								2014			2013
Cumulative, $100 par value, authorized 7,500,000 shares, with no mandatory redemption		$	4.50		$	110.00	373,148		$	37		$	37

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	2014			2013
CMS Energy parent
Senior notes	6.875	1	2015		$	-		$	125
	4.250	2	2015			-			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			300
	3.875		2024			250			-
	5.500	3	2029			-			172
	4.700		2043			250			250
	4.875		2044			300			-
Total CMS Energy senior notes					$	2,200		$	2,197
Term loan facility	variable	4	2017			180			180
Total CMS Energy parent					$	2,380		$	2,377
Consumers					$	5,283		$	4,625
Other CMS Energy subsidiaries
EnerBank certificates of deposits	1.218	5	2015-2024		$	884		$	652
Total other CMS Energy subsidiaries					$	884		$	652
Total CMS Energy principal amount outstanding					$	8,547		$	7,654
Current amounts						(519)			(541)
Net unamortized discounts						(12)			(12)
Total CMS Energy long-term debt					$	8,016		$	7,101

In April 2014, CMS Energy retired its 6.875 percent senior notes.

In December 2014, CMS Energy retired its 4.25 percent senior notes.

⁴

Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 1.25 percent (1.42 percent at December 31, 2014).

⁵

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



In Millions
	Interest Rate (%)		Maturity	2014			2013
Consumers
FMBs1	2.600		2015		$	50		$	50
	5.500	2	2016			173			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			375
	3.375		2023			325			325
	3.190		2024			52			52
	3.125		2024			250			-
	3.390		2027			35			35
	5.800		2035			175			175
	6.170		2040			50			50
	4.970		2040			50			50
	4.310		2042			263			263
	3.950		2043			425			425
	4.350		2064			250			-
					$	4,573		$	4,250
Securitization bonds	5.760	3	2015			49			92
	2.597	4	2020-2029	5		378			-
					$	427		$	92
Senior notes	6.875		2018			180			180
Tax-exempt pollution control revenue bonds	various		2018-2035			103			103
Total Consumers principal amount outstanding					$	5,283		$	4,625
Current amounts						(124)			(43)
Net unamortized discounts						(5)			(3)
Total Consumers long-term debt					$	5,154		$	4,579

The weighted-average interest rate for Consumers’ FMBs was 4.75 percent at December 31, 2014 and 4.90 percent at December 31, 2013.

In August 2014, Consumers retired $177 million of its 5.50 percent FMBs.

The interest rate for Consumers’ Securitization bonds issued through its subsidiary Consumers Funding was 5.76 percent at December 31, 2014 and 2013.

⁴

The weighted-average interest rate for Consumers’ Securitization bonds issued through its subsidiary Consumers 2014 Securitization Funding was 2.60 percent at December 31, 2014.

⁵

Principal and interest payments are made semiannually beginning in 2015.

Financings: Presented in the following table is a summary of major long-term debt transactions during the year ended December 31, 2014:



	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt issuances
CMS Energy parent
Senior notes		$	250	3.875	%	February 2014	March 2024
Senior notes			300	4.875		February 2014	March 2044
Total CMS Energy parent		$	550
Consumers
Securitization bonds1		$	124	1.334	%	July 2014	November 2020
Securitization bonds1			139	2.962		July 2014	November 2025
Securitization bonds1			115	3.528		July 2014	May 2029
FMBs			250	3.125		August 2014	August 2024
FMBs			250	4.350		August 2014	August 2064
Total Consumers		$	878
Total CMS Energy		$	1,428
Debt retirements
CMS Energy parent
Senior notes2		$	125	6.875	%	April 2014	December 2015
Senior notes			155	5.500		June 2014	June 2029
Senior notes3			250	4.250		December 2014	September 2015
Total CMS Energy parent		$	530
Consumers
FMBs		$	177	5.500	%	August 2014	August 2016
Total Consumers		$	177
Total CMS Energy		$	707

For additional details regarding the Securitization, see Note 3, Regulatory Matters and the “Securitization Bonds” section in this Note.

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

CMS Energy retired this debt at a premium and recorded a loss on extinguishment of $7 million in other expense on its consolidated statements of income.

Debt Maturities: At December 31, 2014, the aggregate annual contractual maturities for long-term debt for the next five years were:



In Millions
	2015			2016			2017			2018			2019
CMS Energy, including Consumers
Long-term debt		$	519		$	542		$	734		$	866		$	1,234
Consumers
Long-term debt		$	124		$	198		$	375		$	523		$	876

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at December 31, 2014:



In Millions
	Amount of			Amount			Letters of Credit			Amount
Expiration Date	Facility			Borrowed			Outstanding			Available
CMS Energy parent
December 20, 20181		$	550		$	-		$	3		$	547
Consumers
December 20, 20182		$	650		$	-		$	35		$	615
May 9, 20182			30			-			30			-

Obligations under this facility are secured by Consumers common stock.

Obligations under this facility are secured by FMBs of Consumers.

Contingently Convertible Securities: Presented in the following table are details about conversions of contingently convertible securities for the year ended December 31, 2014:

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)

5.50% senior notes due 2029

February 2014

1,968

605,531

5.50% senior notes due 2029

June 2014

155

2,215

6,372,578

155

Dividend Restrictions: At December 31, 2014, payment of dividends by CMS Energy on its common stock was limited to $3.7 billion under provisions of the Michigan Business Corporation Act of 1972.

For the year ended December 31, 2014, Consumers paid $457 million in dividends on its common stock to CMS Energy.

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.



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

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



				Optional			Number of	Balance
				Redemption			Shares	Outstanding
	Series			Price			Outstanding	(In Millions)
December 31								2014			2013
Cumulative, $100 par value, authorized 7,500,000 shares, with no mandatory redemption		$	4.50		$	110.00	373,148		$	37		$	37

- 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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