1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNESEPTEMBER 30, 1996
COMMISSION
REGISTRANTS; STATE OF
COMMISSION INCORPORATION; ADDRESS; AND I.R.S. EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
- ----------- ---------------------------------------------------------------------- ------------------
1-11607 DTE Energy Company 38-3217752
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-4000
1-2198 The Detroit Edison Company 38-0478650
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-8000
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES X NO
--- ---
At JulyOctober 31, 1996, 145,119,875 shares of DTE Energy's Common Stock,
substantially all held by non-affiliates, were outstanding.
2
DTE ENERGY COMPANY
AND
THE DETROIT EDISON COMPANY
FORM 10-Q
FOR THE QUARTER ENDED JUNESEPTEMBER 30, 1996
This document contains the Quarterly Reports on Form 10-Q for the quarter ended
JuneSeptember 30, 1996 for each of DTE Energy Company and The Detroit Edison
Company. Information contained herein relating to an individual registrant is
filed by such registrant on its own behalf. Accordingly, except for its
subsidiaries, The Detroit Edison Company makes no representation as to
information relating to any other companies affiliated with DTE Energy Company.
TABLE OF CONTENTS
Page
----
Definitions..............................................................3
Quarterly Report on Form 10-Q for DTE Energy Company:
Part I-Financial Information...........................................4
Item 1 -Financial Statements (Unaudited).......................4
Notes to Consolidated Financial Statements (Unaudited)........14
Independent Accountants' Report...............................15
Item 2 -Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................16
Part II-Other Information.............................................27
Item 1 -Legal Proceedings.....................................27
Item 4 -Submission of Matters to a Vote of Security Holders...27
Item 5 -Other Information.....................................28
Quarterly Report on Form 10-Q for The Detroit Edison Company:
Part I-Financial Information..........................................30
Item 1 -Financial Statements (Unaudited)......................30
Item 2 -Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................30
Part II-Other Information.............................................30
Item 1 -Legal Proceedings.....................................30
Item 5 -Other Information.....................................30
Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit
Edison Company:
Item 6 -Exhibits and Reports on Form 8-K......................31
Signature Page to DTE Energy Company Quarterly Report on Form 10-Q......37
Signature Page to The Detroit Edison Company Quarterly Report on
Form 10-Q..............................................................38
Page
----
Definitions ......................................................................... 3
Quarterly Report on Form 10-Q for DTE Energy Company:
Part I- Financial Information ........................................... 4
Item 1 - Financial Statements (Unaudited) ........................ 4
Notes to Consolidated Financial Statements (Unaudited) .. 14
Independent Accountants' Report ......................... 16
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 17
Part II-Other Information ................................................ 29
Item 1 - Legal Proceedings ....................................... 29
Item 5 - Other Information ....................................... 29
Quarterly Report on Form 10-Q for The Detroit Edison Company:
Part I-Financial Information ............................................. 31
Item 1 - Financial Statements (Unaudited) ........................ 31
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 31
Part II-Other Information ................................................ 31
Item 1 - Legal Proceedings ....................................... 31
Item 5 - Other Information ....................................... 31
Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit
Edison Company:
Item 6 - Exhibits and Reports on Form 8-K ....................... 32
Signature Page to DTE Energy Company Quarterly Report on Form 10-Q .................. 39
Signature Page to The Detroit Edison Company Quarterly Report on Form 10-Q .......... 40
2
3
DEFINITIONS
ALJ ..................... Administrative Law Judge
Annual Report ........... 1995 Annual Report to the Securities and Exchange
Commission on Form 10-K for DTE Energy Company or
The Detroit Edison Company, as the case may be
Annual Report Notes ..... Notes to Consolidated Financial Statements appearing
on pages 46 through 57 of the 1995 Annual Report to
the Securities and Exchange Commission on Form
10-K for DTE Energy Company and The Detroit Edison
Company
Company ................. DTE Energy Company and Subsidiary Companies
Detroit Edison .......... The Detroit Edison Company (a wholly owned
subsidiary of DTE Energy Company) and Subsidiary
Companies
EPA ..................... United States Environmental Protection Agency
FERC .................... Federal Energy Regulatory Commission
kWh ..................... Kilowatthour
MDEQ .................... Michigan Department of Environmental Quality
Mortgage Bonds .......... Detroit Edison's General and Refunding Mortgage Bonds
MPSC .................... Michigan Public Service Commission
MW ...................... Megawatts
NOPR .................... Notice of Proposed Rulemaking
Note(s) ................. Note(s) to Consolidated Financial Statements
(Unaudited) appearing herein
NRC ..................... Nuclear Regulatory Commission
PFD ..................... Proposal for Decision
PSCR .................... Power Supply Cost Recovery
Quarterly Report ........ Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for quarterquarters ended
March 31, 1996 and June 30, 1996 for DTE Energy
Company or The Detroit Edison Company, as the
case may be
Quarterly Report Notes .. Notes to Consolidated Financial Statements
(Unaudited) appearing in the Quarterly Report to
the Securities and Exchange Commission on Form
10-Q for quarterquarters ended March 31, 1996 and
June 30, 1996 for DTE Energy Company or The
Detroit Edison Company, as the case may be
QUIDS ................... Quarterly Income Debt Securities
Registrant .............. Company or Detroit Edison, as the case may be
Renaissance ............. Renaissance Energy Company (an unaffiliated company)
3
4
QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED):
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
Three Months Ended SixNine Months Ended Twelve Months Ended
JuneSeptember 30 JuneSeptember 30 JuneSeptember 30
------------------------ --------------------------- ---------------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
-------- --------- ----------- -------------- -------------- -----------------------------------------------------------------------------------------------------------
OPERATING REVENUES
Electric - System $857,769 $838,913 $1,745,396 $1,701,961 $3,603,905 $3,425,899$958,439 $1,008,450 $2,703,835 $2,710,411 $3,553,894 $3,500,793
Electric - Interconnection 7,988 12,300 19,232 19,639 50,572 32,45914,346 20,591 33,578 40,230 44,327 45,490
Steam and other 5,564 4,742 16,272 14,629 25,738 24,9334,549 3,248 20,821 17,877 27,039 24,909
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $871,321 $855,955 $1,780,900 $1,736,229 $3,680,215 $3,483,291$977,334 $1,032,289 $2,758,234 $2,768,518 $3,625,260 $3,571,192
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $166,687 $175,532$184,766 $ 342,354 $345,192 $713,129193,675 $ 693,747527,120 $ 538,867 $ 704,220 $ 707,835
Purchased power 37,629 32,747 61,125 67,859 126,823 93,93141,800 51,311 102,925 119,170 117,312 90,715
Other operation 158,227 148,998 309,249 286,371 658,175 619,590157,582 195,323 466,831 481,694 620,434 648,325
Maintenance 78,689 59,903 152,300 112,374 280,041 251,97965,218 66,406 217,518 178,780 278,853 253,207
Steam plant impairment lossheating special charges 149,231 - 149,231 - - - 42,029191,260 -
Depreciation and amortization 130,593 124,630 262,604 249,674 513,541 490,042131,959 125,383 394,563 375,057 520,117 492,730
Deferred Fermi 2 amortization (1,120)(1,119) (1,493) (2,240) (2,986) (5,226) (6,718)(3,359) (4,479) (4,852) (6,345)
Amortization of deferred Fermi 2
depreciation and return 25,485 23,247 50,968 46,494 97,464 88,90823,248 76,453 69,742 99,701 90,949
Taxes other than income 62,994 61,459 129,755 124,104 257,592 239,42465,919 64,353 195,674 188,457 259,158 244,454
Income taxes 57,671 65,218 133,775 147,269 276,193 284,26637,853 88,969 171,628 236,238 225,077 296,384
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $716,855 $690,241 $1,439,890 $1,376,351 $2,959,761 $2,755,169$858,694 $ 807,175 $2,298,584 $2,183,526 $3,011,280 $2,818,254
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $154,466 $165,714$118,640 $ 341,010 $359,878 $720,454 $728,122225,114 $ 459,650 $ 584,992 $ 613,980 $ 752,938
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 586456 $ 268369 $ 9741,430 $ 583952 $ 1,7991,886 $ 1,2741,061
Other income and (deductions) - net (5,669) (4,941) (6,625) (18,276) (18,595) (37,695)(925) (7,637) (7,550) (25,913) (11,883) (37,906)
Income taxes 1,888 1,172 2,191 6,170 5,810 12,413733 1,550 2,924 7,720 4,993 12,274
Accretion income 2,150 2,845 4,477 5,859 9,659 12,3671,967 2,677 6,444 8,536 8,949 11,712
Income taxes - disallowed plant
costs and accretion income (624) (868) (1,310) (1,797) (2,868) (3,814)(560) (811) (1,870) (2,608) (2,617) (3,588)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net Other Income and
(Deductions) $ (1,669)1,671 $ (1,524)(3,852) $ (293)1,378 $ (7,461)(11,313) $ (4,195)1,328 $ (15,455)(16,447)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 69,26168,916 $ 68,09669,353 $ 137,621206,537 $ 136,520205,873 $ 276,700276,263 $ 270,679273,679
Amortization of debt discount,
premium and expense 2,967 2,779 5,922 5,578 11,656 11,1742,959 2,849 8,881 8,427 11,766 11,178
Other 469 2,313 2,043 6,214 5,495 8,1611,421 1,698 3,464 7,912 5,218 5,498
Allowance for borrowed funds used
during construction (credit) (1,060) (554) (1,762) (941) (3,090) (2,148)(826) (594) (2,588) (1,535) (3,322) (2,241)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 71,63772,470 $ 72,63473,306 $ 143,824216,294 $ 147,371220,677 $ 290,761289,925 $ 287,866288,114
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK DIVIDENDS OF
SUBSIDIARY 2,907 7,404 10,200 14,811 23,126 29,6272,908 6,544 13,108 21,355 19,490 28,763
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 78,253 $84,15244,933 $ 186,693141,412 $ 190,235231,626 $ 402,372331,647 $ 395,174
================================================================================================================================305,893 $ 419,614
===================================================================================================================================
COMMON SHARES OUTSTANDING
- - AVERAGE 145,119,875 144,875,672144,905,909 145,119,875 144,869,919 144,674,097 145,069,229144,882,040 144,727,881 144,876,686
EARNINGS PER COMMON SHARE $0.54 $0.58 $1.29 $1.31 $2.78 $2.72$ 0.31 $ 0.98 $ 1.60 $ 2.29 $ 2.11 $ 2.90
DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK $0.515 $0.515 $1.03 $1.03 $2.06 $2.06$ 0.515 $ 0.515 $ 1.545 $ 1.545 $ 2.06 $ 2.06
See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
5
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
Three Months Ended SixNine Months Ended Twelve Months Ended
JuneSeptember 30 JuneSeptember 30 JuneSeptember 30
---------------------- ---------------------- ---------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ---------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income $ 78,25344,933 $ 84,152141,412 $ 186,693231,626 $ 190,235331,647 $ 402,372305,893 $ 395,174419,614
Adjustments to reconcile net income to net
cash from operating activities:
Accretion income (2,150) (2,845) (4,477) (5,859) (9,659) (12,367)(1,967) (2,677) (6,444) (8,536) (8,949) (11,712)
Depreciation and amortization 130,593 124,630 262,604 249,674 513,541 490,042131,959 125,383 394,563 375,057 520,117 492,730
Deferred Fermi 2 amortization and return - net 24,365 21,754 48,728 43,508 92,238 82,19024,366 21,755 73,094 65,263 94,849 84,604
Deferred income taxes and investment
tax credit - net 11,549 13,807 28,612 40,083 51,052 83,295(46,885) 9,328 (18,273) 49,411 (5,161) 88,622
Fermi 2 refueling outage - net 3,258 2,955 6,516 6,755 12,836 388(3,062) 3,058 3,454 9,813 6,716 11,080
Steam plant impairment lossheating special charges 149,231 - 149,231 - - - 42,029191,260 -
Other 12,343 21,111 (9,457) (778) (3,566) (2,481)23,074 8,615 13,618 7,837 11,756 (35,929)
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (19,268) (68,086) (17,726) (192,479) (43,826) (196,790)(7,527) (33,935) (25,253) (226,414) (17,418) (232,394)
Other accounts receivable 769 (8,756) (4,739) (3,474) (4,717) (8,716)(8,029) (4,159) (12,768) (7,633) (8,587) (22,135)
Inventories (6,358) (22,788) 12,221 (27,664) 21,048 (35,987)27,594 16,117 39,815 (11,547) 32,525 (17,216)
Accounts payable (1,987) 2,059 (2,257) (5,143) 20,935 (10,075)(21,608) 12,495 (23,865) 7,352 (13,168) 22,219
Taxes payable (62,759) (32,882) (11,404) 13,254 (27,307) 1,24022,308 20,777 10,904 34,031 (25,776) 16,077
Interest payable (14,705) 20,273 (10,086) (204) 4,619 (1,114) 7,647 (9,127)19,159 (27,331) 19,624
Other 29,616 48,191 (55,986) (23,929) (802) 3,24518,187 13,880 (37,799) (10,049) 3,505 8,289
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 188,138337,869 $ 183,098352,322 $ 443,947781,817 $ 283,069 $1,073,821635,391 $1,060,231 $ 780,031843,473
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $(145,951) $(113,148) $(397,931) $(293,126) $ (136,221) $ (94,744) $ (251,980) $(179,978) $ (525,846) $ (375,195)(558,649) $(400,480)
Nuclear decommissioning trust funds (9,107) (11,321) (22,794) (23,292) (42,853) (41,219)(11,978) (5,901) (34,772) (29,193) (48,930) (36,692)
Non-utility investments (701) (2,013) (6,285) (552) (5,240) (13,384)(260) 1,173 (6,545) 1,993 (6,673) (9,563)
Other changes in current assets and liabilities (1,768) (4,441) (847) (3,588) 8,515 3,9441,753 9,413 906 5,825 855 9,596
Other (14,318) (3,511) (14,254) (4,592) (41,135) (24,737)(2,210) (24,668) (16,464) (30,632) (18,677) (39,306)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $(158,646) $(133,131) $(454,806) $(345,133) $ (162,115) $(116,030) $ (296,160) $(212,002) $ (606,559) $ (450,591)(632,074) $(476,445)
- ------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ -34,880 $ - $ 185,000219,880 $ - $ 185,000219,880 $ 200,000-
Funds received from Trustees: Installment sales
contracts and loan agreements - 22,175 - - - 201,525 42,935
Increase (decrease)22,175 179,350 62,260
Decrease in short-term borrowings 94,988 3,941 57,998 102,388 (46,889) 49,941(94,988) (138,877) (36,990) (36,489) (3,000) (74,472)
Redemption of long-term debt (69,214) - (69,214) (19,214) (270,739) (250,499)(6,500) (22,175) (75,714) (41,389) (255,064) (51,539)
Redemption of preferred stock - - (185,000) - (185,955) -
Premiums on reacquired long-term debt - (565) - - - (5,946) (11,350)
Purchase of common stock - - - - - (59,855)(565) (5,381) (857)
Dividends on common stock (74,737) (74,609) (149,474) (149,215) (298,761) (299,556)(75,474) (224,212) (224,689) (298,887) (299,292)
Other (167) (304) (9,975) (463) (16,112) (2,552)(11) (4,636) (9,986) (5,099) (11,487) (6,041)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $(49,130)$(141,356) $(219,552) $(312,022) $(286,056) $ (70,972) $ (170,665) $ (66,504) $ (437,877) $ (330,936)(360,544) $(369,941)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ (23,107)37,867 $ (3,904)(361) $ (22,878)14,989 $ 4,5634,202 $ 29,38567,613 $ (1,496)(2,913)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 65,177 16,58942,070 12,685 64,948 8,122 12,685 14,18112,324 15,237
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 42,07079,937 $ 12,68512,324 $ 42,07079,937 $ 12,68512,324 $ 42,07079,937 $ 12,68512,324
==============================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 78,61783,770 $ 69,90749,199 $ 133,174216,944 $ 139,699188,898 $ 267,888302,459 $ 284,290255,496
Income taxes paid 113,328 76,240 113,946 76,480 268,003 190,44751,248 60,757 165,194 137,237 258,494 183,920
New capital lease obligations 11,885 100 12,182 427 41,141 1,31621,700 6,564 33,882 4,455 56,277 6,093
Exchange of preferred stock of subsidiary for
long-term debt - - -49,878 - 49,878 - 49,878
==============================================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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6
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
JuneSeptember 30 December 31
1996 1995
------------------ -----------
UTILITY PROPERTIES
Plant in service $13,529,342$13,670,679 $13,303,992
Less: Accumulated depreciation and amortization (5,185,452)(5,315,708) (4,928,316)
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 8,343,8908,354,971 $ 8,375,676
Construction work in progress 147,222137,935 142,726
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net utility properties $ 8,491,1128,492,906 $ 8,518,402
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $104,039$106,032 and $99,633, respectively) $ 132,075130,081 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $458,486$473,644 and $427,831, respectively) 126,989133,532 145,463
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net property under capital leases $ 259,064263,613 $ 282,669
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,750,1768,756,519 $ 8,801,071
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 47,61263,233 $ 21,576
Investments and special funds 44,35045,111 29,058
Nuclear decommissioning trust funds 142,637154,615 119,843
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 234,599262,959 $ 170,477
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 42,07079,937 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $20,000 and $22,000, respectively) 432,129439,656 414,403
Other accounts receivable 42,40350,432 37,664
Inventories (at average cost)
Fuel 149,257122,580 162,796
Materials and supplies 144,931143,310 142,782
Prepayments 48,39345,436 12,910
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 859,183881,351 $ 835,503
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,063,7981,018,210 $ 1,155,482
Prepaid pensions 94,06193,151 81,865
Unamortized debt expense 45,89045,233 40,936
Other 45,60541,583 45,257
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 1,249,3541,198,177 $ 1,323,540
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL $11,093,312$11,099,006 $11,130,591
===============================================================================================================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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7
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
JuneSeptember 30 December 31
1996 1995
------------------- -----------
CAPITALIZATION
Common stock - without par value, 400,000,000 shares
authorized; 145,119,875 shares outstanding $1,951,437 $1,951,437$ 1,951,437 $ 1,951,437
Retained earnings used in the business 1,519,2891,489,484 1,484,871
------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------
Total common shareholders' equity $3,470,726 $3,436,308$ 3,440,921 $ 3,436,308
Cumulative preferred stock of subsidiary 144,405 326,604
Long-term debt 3,746,9063,775,301 3,756,094
------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------
Total Capitalization $7,362,037 $7,519,006
------------------------------------------------------------------------------$ 7,360,627 $ 7,519,006
- ------------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $121,704 $128,362$ 119,823 $ 128,362
Other postretirement benefits 4,50914,256 24,381
Other 69,61072,934 58,424
------------------------------------------------------------------------------
$195,823 $211,167
------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------
$ 207,013 $ 211,167
- ------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $94,988 $36,990$ - $ 36,990
Amounts due within one year
Long-term debt 244,214 119,214
Obligations under capital leases 137,360143,790 154,307
Accounts payable 162,798139,874 165,148
Property and general taxes 20,90118,050 34,416
Income taxes 1,68026,785 -
Accumulated deferred income taxes 54,45952,917 51,697
Interest payable 66,74752,042 62,128
Dividends payable 77,644 81,102
Payrolls 74,92888,019 72,164
Fermi 2 refueling outage 20,85817,796 14,342
Other 107,931112,489 130,689
------------------------------------------------------------------------------
$1,064,508 $922,197
------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------
$ 973,620 $ 922,197
- ------------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $2,060,022 $2,052,875$ 2,004,851 $ 2,052,875
Accumulated deferred investment tax credits 322,558318,794 330,085
Other 88,364234,101 95,261
- -------------------------------------------------------------------------------
$2,470,944 $2,478,221------------------------------------------------------------------------------------------
$ 2,557,746 $ 2,478,221
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL $11,093,312$11,099,006 $11,130,591
=========================================================================================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
7
8
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
Retained Total
Common Stock Earnings Common
------------------- Used in the Shareholders'
Shares Amount Business Equity
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 145,119,875 $1,951,437 $1,484,871 $3,436,308$ 1,951,437 $ 1,484,871 $ 3,436,308
Expense associated with subsidiary
preferred stock redeemed (2,801) (2,801)
Net income 186,693 186,693231,626 231,626
Cash dividends declared on
Common stock - $1.03$1.545 per share (149,474) (149,474)(224,212) (224,212)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNESEPTEMBER 30, 1996 145,119,875 $1,951,437 $1,519,289 $3,470,726
===========================================================================================$ 1,951,437 $ 1,489,484 $ 3,440,921
===============================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
8
9
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
Three Months Ended SixNine Months Ended Twelve Months Ended
JuneSeptember 30 JuneSeptember 30 JuneSeptember 30
------------------------ --------------------------- ----------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
-------- --------- ----------- -------------- -------------- ------------------------------------------------------------------------------------------------------
OPERATING REVENUES
Electric - System $857,769 $838,913 $1,745,396 $1,701,961 $3,603,905 $3,425,899$ 958,439 $ 1,008,450 $ 2,703,835 $ 2,710,411 $ 3,553,894 $ 3,500,793
Electric - Interconnection 7,988 12,300 19,232 19,639 50,572 32,45914,346 20,591 33,578 40,230 44,327 45,490
Steam 5,220 4,742 15,240 14,629 24,706 24,9333,447 3,248 18,687 17,877 24,905 24,909
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $870,977 $855,955 $1,779,868 $1,736,229 $3,679,183 $3,483,291$ 976,232 $ 1,032,289 $ 2,756,100 $ 2,768,518 $ 3,623,126 $ 3,571,192
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $166,687 $175,532 $ 342,354184,766 $ 345,192193,675 $ 713,129527,120 $ 693,747538,867 $ 704,220 $ 707,835
Purchased power 37,629 32,747 61,125 67,859 126,823 93,93141,800 51,311 102,925 119,170 117,312 90,715
Other operation 156,755 148,998 305,966 286,371 654,892 619,590155,251 195,323 461,217 481,694 614,820 648,325
Maintenance 78,689 59,903 152,300 112,374 280,041 251,97965,218 66,406 217,518 178,780 278,853 253,207
Steam plant impairment lossheating special charges 149,231 - 149,231 - - - 42,029191,260 -
Depreciation and amortization 130,489 124,630 262,393 249,674 513,330 490,042131,849 125,383 394,242 375,057 519,796 492,730
Deferred Fermi 2 amortization (1,120)(1,119) (1,493) (2,240) (2,986) (5,226) (6,718)(3,359) (4,479) (4,852) (6,345)
Amortization of deferred Fermi 2
depreciation and return 25,485 23,247 50,968 46,494 97,464 88,90823,248 76,453 69,742 99,701 90,949
Taxes other than income 62,889 61,459 129,650 124,104 257,487 239,42465,916 64,353 195,566 188,457 259,050 244,454
Income taxes 58,198 65,218 134,870 147,269 277,288 284,26638,554 88,969 173,424 236,238 226,873 296,384
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $715,701 $690,241 $1,437,386 $1,376,351 $2,957,257 $2,755,169$ 856,951 $ 807,175 $ 2,294,337 $ 2,183,526 $ 3,007,033 $ 2,818,254
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $155,276 $165,714 $ 342,482119,281 $ 359,878225,114 $ 721,926461,763 $ 728,122584,992 $ 616,093 $ 752,938
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 586456 $ 268369 $ 9741,430 $ 583952 $ 1,7991,886 $ 1,2741,061
Other income and (deductions) - net (6,573) (4,941) (8,186) (18,276) (20,156) (37,695)(1,492) (7,637) (9,678) (25,913) (14,011) (37,906)
Income taxes 1,888 1,172 2,191 6,170 5,810 12,413733 1,550 2,924 7,720 4,993 12,274
Accretion income 2,150 2,845 4,477 5,859 9,659 12,3671,967 2,677 6,444 8,536 8,949 11,712
Income taxes - disallowed plant
costs and accretion income (624) (868) (1,310) (1,797) (2,868) (3,814)(560) (811) (1,870) (2,608) (2,617) (3,588)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net Other Income and
(Deductions) $ (2,573)1,104 $ (1,524)(3,852) $ (1,854)(750) $ (7,461)(11,313) $ (5,756)(800) $ (15,455)(16,447)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 69,26168,916 $ 68,09669,353 $ 137,621206,537 $ 136,520205,873 $ 276,700276,263 $ 270,679273,679
Amortization of debt discount,
premium and expense 2,956 2,779 5,908 5,578 11,642 11,1742,947 2,849 8,855 8,427 11,740 11,178
Other 390 2,313 1,941 6,214 5,393 8,1611,327 1,698 3,268 7,912 5,022 5,498
Allowance for borrowed funds used
during construction (credit) (1,060) (554) (1,762) (941) (3,090) (2,148)(826) (594) (2,588) (1,535) (3,322) (2,241)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 71,54772,364 $ 72,63473,306 $ 143,708216,072 $ 147,371220,677 $ 290,645289,703 $ 287,866288,114
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 81,15648,021 $ 91,556147,956 $ 196,920244,941 $ 205,046353,002 $ 425,525325,590 $ 424,801448,377
PREFERRED STOCK DIVIDENDS 2,907 7,404 10,200 14,811 23,126 29,6272,908 6,544 13,108 21,355 19,490 28,763
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE FOR COMMON
STOCK $ 78,24945,113 $ 84,152141,412 $ 186,720231,833 $ 190,235331,647 $ 402,399306,100 $ 395,174
================================================================================================================================419,614
====================================================================================================================================
Note: Detroit Edison's financial statements are presented here for ease of
reference and are not considered to be part of Item 1 of the Company's
report.
See accompanying Notes to Consolidated Financial Statements (Unaudited).
9
10
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
JuneSeptember 30 December 31
1996 1995
------------------- -----------
UTILITY PROPERTIES
Plant in service $13,529,342$ 13,670,679 $13,303,992
Less: Accumulated depreciation and amortization (5,185,452)(5,315,708) (4,928,316)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 8,343,8908,354,971 $ 8,375,676
Construction work in progress 147,222137,935 142,726
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net utility properties $ 8,491,1128,492,906 $ 8,518,402
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $104,039$106,032 and $99,633, respectively) $ 132,075130,081 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $458,486$473,644 and $427,831, respectively) 126,989133,532 145,463
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net property under capital leases $ 259,064263,613 $ 282,669
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,750,1768,756,519 $ 8,801,071
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 7,7307,731 $ 21,576
Investments and special funds 26,15726,489 29,058
Nuclear decommissioning trust funds 142,637154,615 119,843
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 176,524188,835 $ 170,477
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 6,33427,697 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $20,000 and $22,000, respectively) 432,129439,656 414,403
Other accounts receivable 38,60647,791 37,664
Inventories (at average cost)
Fuel 149,257122,580 162,796
Materials and supplies 144,931143,310 142,782
Prepayments 46,44945,160 12,910
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 817,706826,194 $ 835,503
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,063,7981,018,210 $ 1,155,482
Prepaid pensions 94,06193,151 81,865
Unamortized debt expense 45,89045,233 40,936
Other 42,00437,061 45,257
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 1,245,7531,193,655 $ 1,323,540
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL $10,990,159$ 10,965,203 $11,130,591
=================================================================================================================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
10
11
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
JuneSeptember 30 December 31
1996 1995
------- ----------------------- ------------
CAPITALIZATION
Common stock - $10 par value, 400,000,000 shares
authorized; 145,119,875 shares outstanding $ 1,451,199 $ 1,451,199
Premium on common stock 547,799 547,799
Common stock expense (47,561) (47,561)
Retained earnings used in the business 1,425,9321,391,229 1,484,871
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total common shareholders' equity $ 3,377,3693,342,666 $ 3,436,308
Cumulative preferred stock 144,405 326,604
Long-term debt 3,746,9063,740,421 3,756,094
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 7,268,6807,227,492 $ 7,519,006
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 121,704119,823 $ 128,362
Other postretirement benefits 4,50914,256 24,381
Other 69,61072,934 58,424
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 195,823207,013 $ 211,167
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ 94,988- $ 36,990
Amounts due within one year
Long-term debt 244,214 119,214
Obligations under capital leases 137,360143,790 154,307
Accounts payable 152,616136,328 165,148
Property and general taxes 20,89918,048 34,416
Income taxes 26,881 -
Accumulated deferred income taxes 54,45952,918 51,697
Interest payable 66,67152,041 62,128
Dividends payable 82,723 81,102
Payrolls 74,85287,858 72,164
Fermi 2 refueling outage 20,85817,796 14,342
Other 105,854111,073 130,689
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 1,055,494973,670 $ 922,197
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,059,3402,004,133 $ 2,052,875
Accumulated deferred investment tax credits 322,558318,794 330,085
Other 88,264234,101 95,261
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
$ 2,470,1622,557,028 $ 2,478,221
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL $10,990,159$10,965,203 $11,130,591
========================================================================================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
11
12
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
Three Months Ended SixNine Months Ended Twelve Months Ended
JuneSeptember 30 JuneSeptember 30 JuneSeptember 30
---------------------- ---------------------- -----------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- -----------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income $ 81,15648,021 $ 91,556147,956 $ 196,920244,941 $ 205,046353,002 $ 425,525325,590 $ 424,801448,377
Adjustments to reconcile net income to net
cash from operating activities:
Accretion income (2,150) (2,845) (4,477) (5,859) (9,659) (12,367)(1,967) (2,677) (6,444) (8,536) (8,949) (11,712)
Depreciation and amortization 130,489 124,630 262,393 249,674 513,330 490,042131,849 125,383 394,242 375,057 519,796 492,730
Deferred Fermi 2 amortization and return-net 24,365 21,754 48,728 43,508 92,238 82,190return - net 24,366 21,755 73,094 65,263 94,849 84,604
Deferred income taxes and investment
tax credit - net 11,625 13,807 28,560 40,083 51,000 83,295(46,921) 9,328 (18,361) 49,411 (5,249) 88,622
Fermi 2 refueling outage - net 3,258 2,955 6,516 6,755 12,836 388(3,062) 3,058 3,454 9,813 6,716 11,080
Steam plant impairment lossheating special charges 149,231 - 149,231 - - - 42,029191,260 -
Other 12,843 21,111 (6,282) (778) (391) (2,481)10,968 8,615 4,687 7,837 2,851 (35,929)
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (19,268) (68,086) (17,726) (192,479) (43,826) (196,790)(7,527) (33,935) (25,253) (226,414) (17,418) (232,394)
Other accounts receivable 2,330 (8,756) (942) (3,474) (920) (8,716)(9,185) (4,159) (10,127) (7,633) (5,946) (22,135)
Inventories (6,358) (22,788) 12,221 (27,664) 21,048 (35,987)27,594 16,117 39,815 (11,547) 32,525 (17,216)
Accounts payable (5,146) 2,059 (12,439) (5,143) 10,753 (10,075)(14,972) 12,495 (27,411) 7,352 (16,714) 22,219
Taxes payable (65,137) (32,882) (13,085) 13,254 (28,988) 1,24024,083 20,777 10,998 34,031 (25,682) 16,077
Interest payable (10,141) (204) 4,543 (1,114) 7,571 (9,127)(14,630) 20,273 (10,087) 19,159 (27,332) 19,624
Other 28,668 48,191 (69,727) (23,929) (14,543) 3,24530,627 13,880 (39,100) (10,049) 2,204 8,289
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 186,534348,475 $ 190,502358,866 $ 435,203783,679 $ 297,880 $1,078,003656,746 $1,068,501 $ 809,658872,236
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $(124,152) $ (94,744)(130,084) $(113,148) $(355,461) $(293,126) $ (225,377)(516,179) $ (179,978) $ (499,243) $(375,195)(400,480)
Nuclear decommissioning trust funds (9,107) (11,321) (22,794) (23,292) (42,853) (41,219)(11,978) (5,901) (34,772) (29,193) (48,930) (36,692)
Non-utility investments - (2,013)1,173 - (552) - (13,384)1,993 (128) (9,563)
Other changes in current assets and liabilities (1,768) (4,441) (847) (3,588) 8,515 3,9441,753 9,413 906 5,825 856 9,596
Other (13,714) (3,511) (2,345) (4,592) (28,181) (24,737)(2,591) (24,668) (4,936) (30,632) (7,150) (39,306)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $(148,741) $ (116,030)(142,900) $(133,131) $(394,263) $(345,133) $ (251,363)(571,531) $ (212,002) $ (561,762) $(450,591)(476,445)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ - $ - $ 185,000 $ - $ 185,000 $ 200,000-
Funds received from Trustees: Installment sales
contracts and loan agreements - 22,175 - - - 201,525 42,935
Increase (decrease)22,175 179,350 62,260
Decrease in short-term borrowings 94,988 3,941 57,998 102,388 (46,889) 49,941(94,988) (138,877) (36,990) (36,489) (3,000) (74,472)
Redemption of long-term debt (69,214) - (69,214) (19,214) (270,739) (250,499)(6,500) (22,175) (75,714) (41,389) (255,064) (51,539)
Redemption of preferred stock - - (185,000) - (185,955) -
Premiums on reacquired long-term debt
and preferred stock - -(565) (1,850) - (7,796) (11,350)
Purchase of common stock - - - - - (59,855)(565) (7,231) (857)
Dividends on common and preferred stock (80,852) (82,013) (166,361) (164,026) (328,574) (329,183)(82,724) (82,018) (249,086) (246,044) (330,169) (328,055)
Cash portion of restructuring dividend to parent - - (56,510) - (56,510) -
Other (2,039) (304)- (4,636) (6,517) (463) (12,654) (2,552)(5,099) (8,018) (6,041)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $ (57,117)(184,212) $(226,096) $(426,667) $(307,411) $ (78,376)(481,597) $ (242,454) $ (81,315) $ (522,592) $(360,563)(398,704)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ (19,324)21,363 $ (3,904)(361) $ (58,614)(37,251) $ 4,5634,202 $ (6,351)15,373 $ (1,496)(2,913)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 25,658 16,5896,334 12,685 64,948 8,122 12,685 14,18112,324 15,237
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 6,33427,697 $ 12,68512,324 $ 6,33427,697 $ 12,68512,324 $ 6,33427,697 $ 12,685
================================================================================================================================12,324
==================================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 78,59583,613 $ 69,90749,199 $ 133,152216,765 $ 139,699188,898 $ 267,866302,280 $ 284,290255,496
Income taxes paid 114,548 76,240 115,166 76,480 269,223 190,44751,922 60,757 167,088 137,237 260,388 183,930
New capital lease obligations 11,885 100 12,182 427 41,141 1,31621,700 6,564 33,882 4,455 56,277 6,093
Exchange of preferred stock for long-term debt - - -49,878 - 49,878 - 49,878
Non-cash portion of restructuring dividend to parent - - 26,716 - 26,716 -
==================================================================================================================================================================================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
12
13
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
Common Stock Premium Retained Total
------------------------------------------ on Common Earnings Common
$10 Par Common Stock Used in the Shareholders'
Shares Value Stock Expense Business Equity
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 145,119,875 $ 1,451,199 $ 547,799 $ (47,561) $ 1,484,871 $ 3,436,308
Expense associated with preferred
stock redeemed (2,801) (2,801)
Net income 196,920 196,920244,941 244,941
Cash dividends declared
Common stock - $1.10$1.65 per share (159,632) (159,632)(239,448) (239,448)
Cumulative preferred stock* (10,200) (10,200)(13,108) (13,108)
Restructuring dividend to parent (83,226) (83,226)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNESEPTEMBER 30, 1996 145,119,875 $ 1,451,199 $ 547,799 $ (47,561) $ 1,425,9321,391,229 $ 3,377,369
===============================================================================================================3,342,666
======================================================================================================================
*At established rate for each series
See accompanying Notes to Consolidated Financial Statements (Unaudited).
13
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTE 1 - GENERAL
These consolidated financial statements should be read in conjunction with
the Quarterly Report Notes and the Annual Report Notes. The Notes contained
herein update and supplement matters discussed in the Quarterly Report Notes
and the Annual Report Notes.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The preceding consolidated financial statements are unaudited, but, in the
opinion of the Company and Detroit Edison, include all adjustments necessary
for a fair statement of the results for the interim periods. Financial results
for this interim period are not necessarily indicative of results that may be
expected for any other interim period or for the fiscal year.
NOTE 2 - COMMITMENTS AND CONTINGENCIESFERMI 2
Fermi 2, a nuclear generating unit, was shut down on September 27, 1996 to
replace one-third of its nuclear fuel and install three new low-pressure
turbines. With the installation of these new turbines the unit is expected to
initially operate at 1085 MW, up from 878 MW prior to this shut down. The
expected cost of replacing the turbines is between $45-50 million. The cost
will be capitalized and is expected to be recovered in rates. The plant is
scheduled to restart in November 1996.
NOTE 3 - STEAM HEATING SPECIAL CHARGES
As discussed in Note 14 of the Annual Report Notes and Note 2 of the
Quarterly Report Notes for the quarter ended June 30, 1996, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 121 in the fourth
quarter of 1995. As the result of continuing losses in the operation of its
steam heating business, upon adoption of SFAS No. 121, Detroit Edison wrote off
the remaining net book value of its steam heating plant assets of $42 million
($32 million after-tax) or $0.22 per common share.
Based on current market conditions,During the steam heating operations continue
to generate losses. Therefore, Detroit Edison will continue tothird quarter of 1996, following the completion of a review of
its steam heating operations, Detroit Edison recorded a special charge to determine what actions, if any, may be necessary.
---------------------------------------net
income of $149.2 million ($97 million after-tax) or $0.67 per share. The
special charge included a reserve for steam purchase commitments during the
period from 1997 through 2008 under the agreement with the Greater Detroit
Resource Recovery Facility, the retirement and
14
15
closure of a portion of the steam heating system in 1997, and the investment
of $18 million to improve service to remaining customers.
----------------------------
This Quarterly Report on Form 10-Q, including the report of Deloitte &
Touche LLP (on page 15)16) will automatically be incorporated by reference in the
Prospectuses constituting part of the Registration Statements on Form S-3
(Registration Nos. 33-53207 and 33-64296) of The Detroit Edison Company and
Form S-8 (Registration No. 333-00023) and Form S-3 (Registration No. 33-57545)
of DTE Energy Company, filed under the Securities Act of 1933. Such report of
Deloitte & Touche LLP, however, is not a "report" or "part of the Registration
Statement" within the meaning of Sections 7 and 11 of the Securities Act of
1933 and the liability provisions of Section 11(a) of such Act do not apply.
1415
1516
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
DTE Energy Company and
The Detroit Edison Company
We have reviewed the accompanying condensed consolidated balance sheets of DTE
Energy Company and subsidiary companies and of The Detroit Edison Company and
subsidiary companies as of JuneSeptember 30, 1996, and the related condensed
consolidated statements of income and of cash flows for the three-month,
six-month,nine-month, and twelve-month periods ended JuneSeptember 30, 1996 and 1995, and the
condensed consolidated statements of common shareholders' equity for the
six-monthnine-month period ended JuneSeptember 30, 1996. These financial statements are the
responsibility of DTE Energy Company's management and of The Detroit Edison
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheets of DTE Energy Company and subsidiary
companies and of The Detroit Edison Company and subsidiary companies as of
December 31, 1995, and the related consolidated statements of income, common
shareholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated January 22, 1996 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheets
as of December 31, 1995 is fairly stated, in all material respects, in relation
to the consolidated balance sheets from which it has been derived.
DELOITTE & TOUCHE LLP
Detroit, Michigan
August 8,November 7, 1996
1516
1617
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY
COMPANIES
This analysis for the three, sixnine and twelve months ended JuneSeptember 30,
1996, as compared to the same periods in 1995, should be read in conjunction
with the consolidated financial statements (unaudited), the accompanying Notes,
the Quarterly Report Notes and the Annual Report Notes.
Detroit Edison is the principal subsidiary of the Company and, as such,
this discussion explains material changes in results of operations of both the
Company and Detroit Edison and identifies recent trends and events affecting
both the Company and Detroit Edison. For the periods presented, the Company's
operations and those of Detroit Edison are not materially different.
RESULTS OF OPERATIONS
For the three months ended JuneSeptember 30, 1996, the Company's net income
was $78.3$44.9 million, or $0.54$0.31 per common share, down 768 percent from the $84.2$141.4 million,
or $0.58$0.98 per common share earned in the three months ended JuneSeptember 30, 1995. The
decrease in net income was due to a $149.2 million ($97 million after-tax), or
$0.67 per share, special charge to net income following completion of Detroit
Edison's review of its steam heating operations. Without the special charge,
third quarter earnings would have equaled the $0.98 per share reported for the
same period in 1995.
For the sixnine months ended JuneSeptember 30, 1996, the Company's net income was
$186.7$231.6 million, or $1.29$1.60 per common share, down 1.930 percent from the $190.2$331.6 million, or
$1.31$2.29 per common share earned in the sixnine months ended JuneSeptember 30, 1995. The
decreases in net income were due to higher operating expenses caused
by an increase in storms and related restoration costs, higher nuclear plant
expenses, and increased depreciation and amortization expenses, partially
offset by increases in electricity sales.nine-month period this year included the steam heating special charge.
For the twelve months ended JuneSeptember 30, 1996, the Company's net income
was $402.4$305.9 million, or $2.78$2.11 per common share, up 1.8down 27 percent from the $395.2$419.6
million, or $2.72$2.90 per common share earned in the twelve months ended JuneSeptember 30,
1995. The twelve-month period this year included the special charge of $149.2
million ($97 million after-tax), or $0.67 per share and the write off of the
remaining net book value of steam heating plant assets of $42 million ($32
million after-tax), or $0.22 per share.
At JuneSeptember 30, 1996, the book value of the Company's common stock was
$23.88$23.68 per share, an increase of $0.26$0.06 per share or 1.10.25 percent since December
31, 1995. Return on average total common shareholders' equity was 11.6%8.8% and
11.7%12.4% for the twelve months ended JuneSeptember 30, 1996 and 1995, respectively.
Detroit Edison's ratio of earnings to fixed charges was 3.142.68 and 3.203.31 for
the twelve months ended JuneSeptember 30, 1996 and 1995, respectively. Detroit
Edison's ratio of
17
18
earnings to fixed charges and preferred stock dividends for the 1996 and 1995
twelve-month periods was 2.822.44 and 2.79,2.89, respectively.
16
17
OPERATING REVENUES
- --------------------------------------------------------------------------------
Total operating revenues of the Company increased (decreased) due to the
following factors:
Three SixNine Twelve
Months Months Months
------ ---------- ------
(Millions)
Rate Changes
Special Manufacturing Contracts $ (2) $(11) $(31)(3) $ (14) $ (24)
PSCR Clause (8) (23) (4)
----(3) (27) 8
------ ----- -----
(10) (34) (35)(6) (41) (16)
System sales volume and mix 16 57 178(45) 14 50
Interconnection sales (4)(6) (7) (1) 18
Fermi 2 capacity factor performance standard reserve 11- 16 3212
Other - net 2 7 4
----8 9
----- ----- -----
Total $ 15 $45 $197
====(55) $ (10) $ 54
===== ===== =====
SPECIAL MANUFACTURING CONTRACTS
In March 1995, the MPSC issued an order approving Detroit Edison's 10-year
special manufacturing contracts with Chrysler Corporation, Ford Motor Company
and General Motors Corporation. In return for their long-term commitments,
these companies receive a reduction in the price paid for electricity. For
additional information, see Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Annual Report.
PSCR CLAUSE
The decreases in PSCR Clause revenues for the three-month and nine-month
periods resulted from lower average unit costs of fuel and purchased power.
The increase in PSCR Clause revenue for the twelve-month period resulted from
higher fuel and purchased power expense.
18
19
kWh SALES
kWh sales increased (decreased) as follows:
Three SixNine Twelve
Months Months Months
----------- ----------- -------------------
Residential 4.8 (12.6)% 5.4 (1.9)% 9.7 (0.2)%
Commercial 0.4 2.7 3.0(1.1) 1.3 2.0
Industrial 1.9 2.0 2.25.4 3.2 3.5
Other (includes primarily sales for resale) 0.9 4.6 6.2(1.2) 2.7 2.3
Total System 2.0 3.3 4.7(3.0) 1.0 1.8
Interconnection (54.5) (12.6) 55.3(44.1) (28.1) (8.9)
Total (1.7) 2.5 6.7(6.3) (0.8) 1.2
17
18The decreases in residential sales reflect cooler summer weather in 1996
as compared with 1995. The commercial sales decrease for the three-month
period reflects cooler summer weather, while increases in the nine-month and
twelve-month periods were due to improved economic conditions.
The increases in residential and commercial sales reflect colder winter
weather and customer growth, and for the twelve-month period, substantially
warmer summer weather. Commercial sales also reflect an improvement in
economic conditions.
Increased industrial sales in the three-month and six-month periods reflect strong demand in the automotive
and construction sectors.
The increases in industrial sales for the twelve-month period reflect higher sales
to automotive, steel and other customers due to improved economic conditions.
The increased sales to other customers for the nine-month and twelve-month
periods reflect increased load requirements of wholesale for resale customers.
The decreased sales to other customers for the three-month period reflect lower
weather-related demand from the wholesale for resale customers.
Interconnection sales decreases for the three-month and six-month periods
reflect a decreased demand for energy. The increase in interconnection salesenergy for
the twelve-month period reflects the improved availability of energy available
for sale in meeting demand during the substantially warmer summer weather in
1995.all periods.
FERMI 2 CAPACITY FACTOR PERFORMANCE STANDARD RESERVE
Because of a turbine-generator failure in December 1993, Fermi 2, a
nuclear generating unit, was out of service in 1994 and early 1995.1995, and
operated at reduced capacity during the remainder of 1995 and the first three
quarters of 1996. As a result, under the MPSC capacity factor performance
standard, a disallowance of net incremental replacement power cost will be
imposed in each of the years 1994-1998 for the amount by which the Fermi 2
three-year rolling average capacity factor is less than the greater of either
the average of the top 50% of U. S. boiling water reactors or 50%. Detroit
Edison recorded a reserve for such disallowances of $31 million in 1994 and $32
million in 1995, which amounts were charged to operating revenues. For
additional information, see Notes 2 and 3 in the Annual Report.
19
20
Operating revenues have increased due to the absence of Fermi 2 reserve
charges in the 1996 three-month and six-month periods,nine-month period, and due to a decrease in Fermi 2 reserve
charges in the 1996 twelve-month period.
OPERATING EXPENSES
- --------------------------------------------------------------------------------
FUEL AND PURCHASED POWER
Fuel and purchased power expenses increased (decreased) due to the following
factors:
18
19
Three SixNine Twelve
Months Months Months
------ ------ ------
(Millions)
Net system output $ (3)(14) $ 9(5) $ 559
Average unit cost (4) (27) (64)(5) (32) (48)
Fermi 2 business interruption insurance - 6 59
Other 1 3 2 2
---- ----3
----- ----- ----
Total $ (4) $(10)(18) $ 52
==== ====(28) $ 23
===== ===== ====
Net system output and average fuel and purchased power unit costs were as
follows:
Three Months SixNine Months Twelve Months
----------------- -------------- ------------------------------------------- ------------------------- --------------------------
1996 1995 1996 1995 1996 1995
------------- ------------- ------------ ------------ ------------ ------------
(Thousands of Megawatthours, "MWh")
Power plant generation
Fossil 9,653 10,355 20,156 20,687 41,106 41,83611,052 10,830 31,208 31,517 41,328 41,961
Nuclear 1,365 1,078 3,150 1,323 6,918 1,3231,628 1,917 4,778 3,240 6,629 3,207
Purchased power 1,366 1,143 1,987 2,706 4,699 6,1431,190 2,018 3,177 4,724 3,876 6,077
------- ------- ------- ------- ------- -------
Net system output 12,384 12,576 25,293 24,716 52,723 49,30213,870 14,765 39,163 39,481 51,833 51,245
======= ======= ======= ======= ======= =======
Average unit cost ($/MWh) $ 14.98 $ 15.31 $ 14.4915.16 $ 15.54 $ 14.8014.73 $ 16.0215.54 $ 14.68 $ 15.62
======= ======= ======= ======= ======= =======
Fuel and purchased power expense decreased in the three-month period due
to lower net system output, and six-month periodslower average unit costs resulting from
increased usage of lower-cost western low-sulfur coal and a decrease in Fermi 2
fuel expense.
For the nine-month period, fuel and purchased power expense decreased due
to lower average unit costs resulting from increased usage of lower-cost
western low-sulfur coal and lower cost nuclear generation, and lower-cost Western low-sulfur coal,
and, in the three-month period, lower net system output. The decrease in the
six-month period was partially offset by higher net system
output.
For the twelve-month period, fuel and purchased power expense increased
due to higher net system output and the prior-period receipt of Fermi 2 business interruption insurance and
higher net system output, partially offset by lower average unit costs
resulting from increased
20
21
usage of lower cost nuclear generation and lower-cost Westernwestern low-sulfur coal.
Fermi 2 was out of service in 1994 and early 1995 as a result of a
turbine-generator failure in December 1993.
OTHER OPERATION
Three Months
Other operation expense increaseddecreased due primarily to higher salesexpenses recorded in
the year-earlier period for the write-off of obsolete and excess stock material
($15 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million) and Electric Power Research Institute dues ($4.8 million), lower major
storm expenses ($4.5 million), nuclear plant expenses ($4.1 million), lump sum payments to
union employees ($3.69 million) and higher employee retirement and savings plan
expenses ($2.6 million). These increases were partially offset by lower
incentive award expenses related to a
19
20
shareholder value improvement plan ($5.4 million) and lower fossil plant
expenses ($3.2 million).
Six Months
Other operation expense increased due primarily to higher nuclear plant
($7.8 million) and major storm ($4.8 million) expenses, lump sum payments to
union employees ($3.6 million) and higher employee retirement plan ($3.0
million) and demand side management ($3.9 million) expenses. These increases
were partially offset by lower incentive award expenses related to a
shareholder value improvement plan ($5.43.7 million), partially offset by higher
sales expenses ($2.7 million).
TwelveNine Months
Other operation expense increaseddecreased due primarily to higher major storm
expenses ($14.8 million), an increaserecorded in
a reservethe year-earlier period for the write-off of obsolete and excess stock material
($9.015 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million) and Electric Power Research Institute dues ($4.8 million), lower
incentive award expenses related to a shareholder value improvement plan ($9.1
million) and lower major storm ($4 million) and injuries and damages ($3.5
million) expenses. These decreases were partially offset by higher nuclear
plant expenses ($9.1 million), lump sum payments to union employees ($4.3
million) and higher sales ($4.4 million), demand side management ($3 million),
employee retirement plan ($2.6 million) and other expenses.
Twelve Months
Other operation expense decreased due primarily to expenses recorded in
the settlementyear-earlier period for the write-off of obsolete and excess stock material
($21 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million), higher demand side management expenses ($8.8 million),and Electric Power Research Institute dues ($4.8 million), lower
uncollectible expense ($6.3 million), and lower injuries and damages expense
($4.1 million). These decreases were partially offset by higher incentive awarddemand side
management expenses related
to a shareholder value improvement plan ($3.96 million), lump sum payments to union employees ($3.64.3
million) and higher sales expenses ($2.83.7 million).
MAINTENANCE
Three Months
Maintenance expense decreased due to lower major storm ($8.3 million),
fossil plant ($2.4 million) and nuclear plant ($1.1 million) expenses. These
increasesdecreases were partially offset by expenses recorded in the year-earlier period
for service quality claimshigher overhead and underground lines
support ($8.77.1 million), and lower uncollectiblestation maintenance ($7.7
million), postretirement benefits ($6.41.8 million) and nuclear plantgeneral property
($5.51.5 million) expenses.
MAINTENANCE
Three21
22
Nine Months
Maintenance expense increased due to higher overhead and underground lines
support ($9.622.1 million), general property ($3.37.7 million), station equipment
($6.7 million) and nuclear plant ($3.24 million) and station equipmentexpenses, partially offset by
lower major storm expense ($2.22.9 million) expenses.
Six.
Twelve Months
Maintenance expense increased due to higher overhead and underground lines
support ($16.323.1 million), general property ($6.2 million), major storm ($5.4
million), nuclear plant ($5.17.7 million) and station equipment
($4.8 million)
expenses.
Twelve Months
Maintenance expense increased due primarily to higher overhead and
underground lines support ($19.6 million), major storm ($15.7 million), general
property ($6.2 million) and station equipment ($4.89 million) expenses. These increases were
20
21 partially offset by lower nuclear
plant ($12.96.7 million) and fossil plant ($2.95.7 million) expenses.
STEAM PLANT IMPAIRMENT LOSSHEATING SPECIAL CHARGES
As the result of continuing losses in the operation of its steam heating
business, upon adoption of Statement of Financial Accounting Standards No. 121
in the fourth quarter of 1995, Detroit Edison wrote off the remaining net book
value of its steam heating plant assets of $42 million. Based on current market conditions,During the steam heating operations continue
to generate losses. Therefore, Detroit Edison will continue tothird
quarter of 1996, following the completion of a review of its steam heating
operations, Detroit Edison recorded a special charge to determine what actions, if any, may be necessary.net income of $149.2
million ($97 million after-tax). The special charge included a reserve for
steam purchase commitments during the period from 1997 through 2008 under an
agreement with the Greater Detroit Resource Recovery Facility, the retirement
and closure of a portion of the steam heating system in 1997, and an investment
of $18 million to improve service to remaining customers.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased due primarily to increases
in plant in service, including internally developed software costs.
DEFERRED FERMI 2 AMORTIZATION
Deferred Fermi 2 amortization, a non-cash item of income, was recorded
beginning with Detroit Edison's purchase of the Wolverine Power Supply
Cooperative, Inc.'s ownership interest in Fermi 2 in February 1990. The annual
amount deferred decreases each year through 1999.
AMORTIZATION OF DEFERRED FERMI 2 DEPRECIATION AND RETURN
Deferred Fermi 2 depreciation and return, non-cash items of income, were
recorded beginning with the implementation of the Fermi 2 rate phase-in plan in
January 1988. The annual amounts of deferred depreciation and return decreased
each year through
22
23
1992. Beginning in 1993 and continuing through 1998, these deferred amounts
will be amortized to operating expense as the cash recovery is realized through
revenues.
TAXES OTHER THAN INCOME TAXES
Taxes other than income taxes increased due to higher payroll and property
taxes.
INCOME TAXES
Income taxes decreased due to lower pretax operating income.
21
22
OTHER INCOME AND DEDUCTIONS
- --------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS) - NET
Three Months
Other deductions increaseddecreased due primarily to an increase in income from
merchandising, jobbing and contract work ($2.8 million), a decrease in
corporate contributions ($2.7 million), and a decrease in the write-off of
unamortized expenses related to merchandise, jobbing
and contract work.
Sixthe open market purchases of Mortgage Bonds
($1.2 million), partially offset by higher promotional practices expense ($1.6
million).
Nine Months
Other deductions decreased due primarily to lower promotional practices
expense ($7.26.2 million) and lower, expenses related torecorded in the year-earlier period for the
sale of accounts receivables and unbilled revenues ($3.1 million) and the
formation of a holding company ($2.6 million), a decrease in corporate
contributions ($2.7 million) and lower expenses related to merchandising,
jobbing and contract work ($1.3 million), partially offset by an increase in
the write-off of unamortized expenses related to the open market purchases of
Mortgage Bonds ($1.5 million).
Twelve Months
Other deductions decreased due primarily to lower expenses related torecorded in the
year-earlier period for the sale of accounts receivable and unbilled revenues
($8.45.9 million), lower promotional practices expense ($5.05.9 million), lower
corporate contributions ($4.8 million), a decrease in the write-off of
unamortized expenses related to the open market purchases of Mortgage Bonds
($3.7 million) and contributions expenselower expenses incurred in the formation of a holding
company ($3.72.1 million).
23
24
ACCRETION INCOME
Accretion income, a non-cash item of income, was recorded beginning in
January 1988 to restore to income, over the period 1988-1998, losses recorded
due to discounting indirect disallowances of plant costs. The annual amount of
accretion income recorded decreases each year through 1998.
INTEREST CHARGES
- --------------------------------------------------------------------------------
LONG-TERM DEBT
Three Months
Long-term debt interest charges were lower due to the early redemption of
Mortgage Bonds, partially offset by the issuance of QUIDS.
Nine Months and Twelve Months
Long-term debt interest charges were higher due to the issuance of QUIDS.QUIDS,
partially offset by the early redemption of Mortgage Bonds.
OTHER
Other interest charges were lower due primarily to lower levels of
short-term borrowings.
PREFERRED STOCK DIVIDENDS OF DETROIT EDISON
- --------------------------------------------------------------------------------
Preferred stock dividends of Detroit Edison decreased due to the
redemption of all of the outstanding Cumulative Preferred Stock, 7.68% Series,
7.45% Series and 7.36%
22
23 Series and the exchange of a portion of the 7.75% Series
for QUIDS and the redemption and/or conversion of all shares of the convertible
5.50% Series.
LIQUIDITY AND CAPITAL RESOURCES
COMPETITIONPRIVATE SECURITIES LITIGATION REFORM ACT -
--------------------------------------------------------------------------------FORWARD-LOOKING STATEMENTS
Certain information presented in this Quarterly Report on Form 10-Q is
based upon the expectations of the Company and Detroit Edison and, as such, is
forward-looking. The Private Securities Litigation Reform Act of 1995
encourages reporting companies to provide analyses and estimates of future
prospects and also permits reporting companies to point out that actual results
may differ from those anticipated.
24
25
Actual results for the Company and Detroit Edison may differ from those
expected due to a number of variables including, but not limited to, the impact
of newly-required FERC tariffs, actual sales, the effects of competition,
pending regulatory proceedings, pending and proposed statutory changes, the
recovery of stranded costs, environmental and nuclear requirements and the
success of non-utility projects. While the Company and Detroit Edison believe
that estimates given accurately measure the expected outcome, actual results
could vary materially due to the variables mentioned as well as others.
COMPETITION
THE DETROIT EDISON COMPANY
FERC. On April 24, 1996, the FERC issued Orders 888 and 889. Order 888
requires public utilities to file open access transmission tariffs for
wholesale transmission services in accordance with non-discriminatory terms and
conditions established by the FERC. On July 9, 1996, the Detroit Edison
Company filed its
Pro-Forma Open Access Transmission Tariff in compliance with FERC Order 888.
The tariff sets forth the terms and conditions under which Detroit Edison will
supply wholesale Firm and Non-Firm Point-to-Point Transmission Service as well
as Network Integration Transmission Service (a service which allows the network
customer to integrate, economically dispatch and regulate its network resources
to serve its network load in a manner comparable to that in which the
transmission provider utilizes its transmission system to serve its native load
customers). Detroit Edison's filing also included the development and cost
support for the rates to be charged for transmission service and the various
ancillary services that are required to be offered. Order 888 permits the
recovery of stranded costs on a case by case basis. The FERC has initiated
proceedings to review Detroit Edison's tariff filing.
Effective with the filing, Detroit Edison must take transmission service
(including ancillary services) under the open access tariff for any new
wholesale sales or purchases. Existing economy energy coordination agreements
must be unbundled to take service under the transmission tariff after December
31, 1996. Effective October 1996, all bills submitted to wholesale
requirements customers must include unbundled informational rates as a line
item in order to allow customers to compare rates and evaluate alternative
contracts. By December 31, 1996, Detroit Edison, as a member of a pool, must
file a joint pool-wide pro forma tariff and must begin to take service under
that tariff for all pool transactions. Power pool agreements must be reformed
to establish open, non-discriminatory provisions and to modify any provisions
that are unduly discriminatory or preferential.
By November 1, 1996,January 3, 1997, public utilities are required by Order 889 to obtain
transmission information for wholesale transactions through a system on the
Internet. Public utilities
25
26
must separate transmission operations and reliability functions from wholesale
marketing functions.
FERC has also issued a NOPR on Capacity Reservation Transmission Tariffs
("CRT"). The NOPR requestsrequested comment by October 21, 1996 on whether there are
certain disadvantages inherent in offering transmission service on both a
network and
23
24 point-to-point basis and whether comparability can be better
accomplished using a single different methodology. The proposed CRT approach
suggests that no later than December 31, 1997, all pro forma point-to-point and
network service be replaced with a single point-to-point tariff that provides
for reservation-based transmission service for all jurisdictional (wholesale
sales and wholesale and retail transmission) service.
Detroit Edison is currently unable to estimate the revenue impact, if any,
of these newly required tariffs and procedures.
MPSC. On April 12, 1996, the MPSC issued a "Scheduling Order" which
required Detroit Edison and Consumers Power Company to file "applications" by
May 15, 1996 containing proposals addressing the recommendation of Michigan
Governor Engler and the Michigan Jobs Commission ("MJC") to "allow new
industrial/commercial electrical load to be negotiated directly from the
generator and wheeled over 'common' transmission" by January 1, 1997. The MPSC
emphasized in its order "that this is the first step toward consideration of
the recommendations made by the MJC. Further proceedings for both electric and
gas utilities may be ordered as necessary for consideration of all relevant
issues."
Detroit Edison filed its application on May 15, 1996, stating that the
MJC's report set out a framework for a transition to a competitive environment
that included six specific recommendations associated with a near term deadline
of January 1, 1997. However, the MPSC's scheduling order only sought proposals
regarding the first recommendation. Detroit Edison indicated it does not
support piecemeal implementation of the MJC's framework. Detroit Edison also
stated that, although the MPSC has no legal authority to compel Michigan
utilities to offer retail wheeling services, it would voluntarily develop a
retail wheeling program as part of a comprehensive implementation of the MJC's
recommendations, including the development of a mechanism to recover stranded
costs.
Detroit Edison also indicated that it will take some time to develop a
tariff that, among other things, identifies and separates the transmission and
distribution facilities as required by FERC Order 888. In the interim, Detroit
Edison requested ex parte authority to immediately offer an Economic Growth
Service Rider to be used as a tool to attract new business. The proposed
rider, which is still before the MPSC, contains significant price discounts for
new commercial and industrial customers.
The MPSC conducted a series of five public hearings during the months of
July and August, 1996, to provide an opportunity for the public to address the
issues surrounding the restructuring of the electric utility industry,
including, but not limited to issues raised by the recommendations of the MJC.
26
27
Detroit Edison is continuing to address its competitive status and the
needs of its customers by entering into long-term (10(as long as 10 years) service
contracts with large commercial and industrial customers. A number of such
contracts, which must be approved by the MPSC prior to implementation, are
pending before the MPSC.
The MPSC is also considering a Detroit Edison request for approval
of an industrial process heat rider.
24
25
CASH GENERATION AND CASH REQUIREMENTS
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Net cash from operating activities decreased for the three-month period
due primarily to changes in current assets and liabilities. Net cash from
operating activities increased in the nine-month and twelve-month periods due
primarily to changes in current assets and liabilities, primarily as a result
of the 1995 repurchase of customer accounts receivable and unbilled revenues and for the twelve-month
period, higher non-cash charges to income and higher net income. Net cash from
operating activities for Detroit Edison decreased for the three-month period
due to lower net income.revenues.
Net cash used for investing activities was higher due to increased plant
and equipment expenditures.
Net cash used for financing activities was lower in the three-month periodand
twelve-month periods due primarily to an increasea decrease in funds used to reduce
short-term borrowings, partially offset by the redemption
of long-term debt.borrowings. Net cash used for financing activities for the
six-monthnine-month period was higher due to decreases in short-term borrowings and higher redemptions of long-term debt. Net
cash used for financing activities for the
twelve-month periodDetroit Edison was higher in the
nine-month and twelve-month periods due to the redemptioncash portion of preferred stock and a decrease in short-term borrowings, partially offset by increased funds received
from Trustees andrestructuring
dividend to the purchase of common stock in the prior period.Company.
ADDITIONAL INFORMATION
InDuring the period May and Junethrough September 1996, Detroit Edison purchased a
total of $50$56.5 million of
General and Refunding Mortgage Bonds on the open market, consisting of
$29.5 million of 7.74% 1993 Series J, $19.5$26.0 million of 8.24% 1993 Series C and
$1 million of 8.25% 1993 Series C. These bonds have been canceled.
Detroit Edison's 1996 cash requirements for its capital expenditure
program are estimated at $482 million, of which $222$351 million had been expended
as of JuneSeptember 30, 1996.
Detroit Edison's internal cash generation is expected to be sufficient to
meet cash requirements for capital expenditures as well as scheduled long-term
debt redemptions.
Detroit Edison had short-term credit arrangements of approximately $450
million at September 30, 1996, under which no borrowings were outstanding.
27
28
NON-REGULATED INVESTMENTS
Expenditures for 1996 non-regulated investments are estimated to range
from $100 million to $200at $80
million, of which $27$49 million had been expended as of
Juneat September 30, 1996.
The Company had short-term credit arrangementsA project financing arrangement is in place for affiliate borrowings of approximately $658up
to $50 million, of which $32.3 million was outstanding at JuneSeptember 30, 1996.
This arrangement is supported by specific project assets.
At September 30, 1996, under which $95 million of borrowings were
outstanding. Of the total amount, $200 million represents a DTE Capital Corporation had a $200 million
Revolving Credit Agreement, backed by a Support Agreement from the Company. The remaining $458 million results from Detroit Edison arrangements.
25
26Company,
under which no borrowings were outstanding.
CAPITALIZATION
- --------------------------------------------------------------------------------
The Company's capital structure as of JuneSeptember 30, 1996 was 47.1%46.7% common
shareholders' equity, 2.0% cumulative preferred stock of subsidiary and 50.9%51.3%
long-term debt as compared to 45.7%, 4.3% and 50.0%, respectively, at December
31, 1995.
2628
2729
DTE ENERGY COMPANY
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
On May 28, 1996 an order was issued by the Circuit Court for Wayne County,
Michigan certifying a plaintiff class (Gilford, et al v Detroit Edison) in a
lawsuit claiming that Detroit Edison had engaged in age and racial
discrimination. Detroit Edison has appealedrequested leave to appeal the class
certification to the Michigan Court of Appeals and has, also, filed a motion
for summary disposition of the lawsuit with the Circuit Court for Wayne County.
In October, 1996, the Michigan Court of Appeals issued an order staying
proceedings in the Circuit Court and directing that immediate consideration be
given to the issue of whether to grant Detroit Edison's application for leave
to appeal. Thereafter, the Court of Appeals dissolved the stay and denied
leave for appeal. Detroit Edison has requested reconsideration of these
rulings. Detroit Edison is of the opinion that the allegations of
discrimination are without merit.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of the holders of Common Stock of the Company was
held on April 22, 1996. Proxies for the meeting were solicited pursuant
to Regulation 14(a).
(b) There was no solicitation in opposition to the Board of Directors'
nominees, as listed in the proxy statement, for directors to be elected
at the meeting and all such nominees were elected.
The terms of the previously elected eight directors listed below continue
until the annual meeting dates shown after each name:
John E. Lobbia April 28, 1997
Patricia S. Longe April 28, 1997
Eugene A. Miller April 28, 1997
Dean E. Richardson April 28, 1997
Terence E. Adderley April 27, 1998
Anthony F. Earley, Jr. April 27, 1998
Allan D. Gilmour April 27, 1998
Theodore S. Leipprandt April 27, 1998
(c) At the annual meeting of the holders of Common Stock of the Company
held on April 22, 1996, the following five directors were elected to
serve until the 1999 annual meeting with the votes shown:
Total Vote
Total Vote Withheld
for Each from Each
Director Director
----------- ---------
Lillian Bauder 109,326,967 1,824,032
David Bing 109,137,150 2,013,849
Larry G. Garberding 109,154,855 1,998,644
Alan E. Schwartz 107,586,022 3,564,977
William Wegner 109,201,430 1,949,569
27
28
Shareholders ratified the appointment of Deloitte & Touche LLP as
the Company's independent auditors for the year 1996 with the votes
shown:
For Against Abstain
--- ------- -------
109,431,465 676,579 1,044,255
Shareholders also voted on the two items below:
(1) A shareholder proposal regarding criterion for closing the
nuclear power plant.
For Against Abstain
--------- ---------- ---------
6,960,710 85,513,799 6,613,725
(2) A shareholder proposal regarding the cost of closing the
nuclear power plant before its license expires.
For Against Abstain
--------- ---------- ---------
7,840,120 82,673,496 6,574,620
(d) Not applicable.
ITEM 5 - OTHER INFORMATION.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission" of the Annual
Report, Detroit Edison is subject to the regulatory jurisdiction, including
rates, of the MPSC. On September 30, 1996, Detroit Edison filed its PSCR plan
recommending a fuel adjustment for bills rendered in 1997. Fuel and purchased
power costs are expected to decrease 10.6 percent, on average, in 1997 over the
corresponding forecast for 1996. A pre-hearing conference in this matter is
scheduled for November 1996.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Conservation and
Demand-Side Management Programs" of the Annual Report, on April 11, 1994, the
MPSC issued an order authorizing Detroit Edison to collect a surcharge to
install energy conservation measures in low-income customer households. The
MPSC, at Detroit Edison's request, approved the elimination of the surcharge
in an order dated August 22, 1996.
As discussed in part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Conservation and
Demand-Side Management Programs" of the Annual Report, the MPSC in June 1988
ordered each Michigan gas and electric utility to file a biennial energy
conservation report including a three-year plan. On August 5, 1996, Detroit
Edison filed its fourth biennial plan for 1997 and beyond. In the plan,
Detroit Edison requests that it be allowed to spend in 1997 (and 1998, if
necessary) the remaining funds collected for its 1994-1996 energy conservation
programs. An MPSC order is expected by the end of 1996.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Retail Wheeling"
of the Annual Report and in Item 5 - Other Information of the Quarterly Report
on March 1,for the quarter ended June 30,
29
30
1996, MascoTech Forming Technologies, Inc., a Detroit Edison industrial
customer currently purchasing approximately 25 MW of electricity annually (with
the potential for an additional 6 MW annually), petitioned the MPSC to establish
a "cost based fair and pro-competitive transportation rate" for its new and
existing electric load. A March 19,On August 5, 1996, in resolution of this petition
Detroit Edison motion
to dismiss asserting thatand MascoTech Forming Technologies, Inc. entered into a
long-term Large Customer Contract. The MPSC issued an order on September 12,
1996 approving the MPSC lacks jurisdiction to establishcontract and an order was issued on October 7, 1996,
dismissing the requested rate is pending at the MPSC. The Michigan Attorney General has been
permitted to intervene and another public utility that had been denied
intervention by the ALJ has been granted intervenor status on appeal to the
MPSC. Hearings commenced on June 24, 1996. The current procedural schedule
provides that the ALJ will issue a PFD by September 30, 1996 and a final MPSC
order will be issued in early December 1996.
On May 8, 1996, the NRC issued the fifteenth Systematic Assessment of
Licensee Performance report on Fermi 2 operations during the period from April
1994 through March 1996. The NRC assessment of nuclear activities was good
overall.
28
29
On May 21, 1996, the NRC issued Detroit Edison a Notice of Violation and
Proposed Imposition of Civil Penalty in the amount of $50,000 for failure to
take prompt action to identify and correct a potential common mode failure of
water pumps at the Fermi 2 plant on February 5, 1996. Detroit Edison did not
contest the violation or civil penalty. The civil penalty was paid on June 20,
1996.
The state of Michigan's Mercury Pollution Prevention Task Force's final
report, released in April 1996, reviewed sources of mercury and recommended
action programs for reduction of mercury discharges to the environment from six
main segments of society. The recommendations for the utility industry focused
on encouraging the EPA to finalize its mercury study reports to Congress and
the MPSC and utilities to support additional research to determine the full
environmental costs of mercury emissions. The report also urged continued
Michigan utility support of renewable energy projects and asked the utilities
to develop a plan with timetables and goals to further reduce mercury usage or
emissions. At this time, until studies are complete and resulting regulations,
if any, are promulgated, the impact upon Detroit Edison cannot be determined.MascoTech direct access case.
As discussed in Part I1 - Items 1 and 2 - Business and Properties,
"Environmental Matters - Water" of the Annual Report and Item 5 - Other
Information of the Quarterly Report for the quarter ended June 30, 1996,
National Pollution Discharge Elimination System ("NPDES") permits for Detroit
Edison's power plants are issued by the MDEQ pursuant to delegation by the EPA
under the federal Clean Water Act. OneThe NPDES permit renewalfor the Fermi 2 Power
Plant was issued on May 31, 1996. On July 24, an anti-nuclear power group
filed a petition for a contested case hearing challenging the issuance of the
permit. In September, 1996, the MDEQ filed a briefing memo recommending
approval of the hearing request. An October 7, 1996 letter from the
Administrative Law Judge announced the matter will now be moved to hearing.
While it is unknown what the outcome of the hearing will be, the Fermi 2 permit
remains in June 1996 and one permit renewal
application was filed, leaving six permiteffect. Permit renewal applications (submitted in
1996,for six other plants have been
submitted (in 1994 and earlier) pending. The; those existing expired permits remain
effective until new permits are issued or denied.
As discussed in Part 1 - Items 1 and 2 - Business and Properties,
"Employees"Environmental Matters - Wastes and Executive Officers - Employees"Toxic Substances" of the Annual Report and
Item 5 - Other Information of the CompanyQuarterly Report for the quarter ended March
31, 1996, in April, 1996, the MDEQ conducted an Integrated Assessment on
Detroit Edison owned property, formerly known as the Monroe City Landfill,
located next to the Monroe Power Plant. The site was on the State of
Michigan's list of contaminated sites and its directorsthe Comprehensive Environmental
Response, Compensation and officersLiability Act list. In October, 1996, the company
received a copy of the report and a letter from the MDEQ indicating that it was
recommending that the site be designated "No Further Remedial Action Planned."
An all time peak demand of 10,337 MW was experienced for Detroit Edison's
system on August 7, 1996. The new peak, which included certain loads on the
Company's interruptible rates, was served using a combination of installed
generation, long-term purchases, and seasonal capacity purchases without any
loss of power for firm customers. The previous peak was 10,049 MW set in
their capacities as such are insured
against liability for wrongful acts (to the extent defined) under three
insurance policies. The aggregate coverage under the policies has been
increased from $85 million to $95 million.
29August 1995.
30
3031
QUARTERLY REPORT ON FORM 10-Q FOR
THE DETROIT EDISON COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED).
See pages 9 through 14.15.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
See the Company's and Detroit Edison's "Item 2 - Management's Discussion
and Analysis of Financial Condition and Results of Operations," which is
incorporated herein by this reference.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
See the Company's "Item 1 - Legal Proceedings," which is incorporated
herein by this reference.
ITEM 5 - OTHER INFORMATION.
By letter dated October 9, 1996, the Nuclear Regulatory Commission
requested all reactor licensees, including Detroit Edison, to submit
information concerning the adequacy and availability of nuclear power plant
design basis information. This information is due March 1997. Detroit Edison
will make its report submission on a timely basis.
See the Company's "Item 5 - Other Information," which is incorporated
herein by this reference.
3031
3132
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(i) Exhibits filed herewith.
Exhibit
Number
-------
11-44-177 - First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture.
11-5 - DTE Energy Company and Subsidiary Companies Primary and Fully
Diluted Earnings Per Share of Common Stock.
15-215-3 - Awareness Letter of Deloitte & Touche LLP regarding their report
dated August 8,November 7, 1996.
27-527-7 - Financial Data Schedule for the period ended JuneSeptember 30, 1996
for the Company.
27-627-8 - Financial Data Schedule for the period ended JuneSeptember 30, 1996
for Detroit Edison.
99-13 - Fourth Amendment, dated as of August 29, 1996, to $200,000,000
364-Day Credit Agreement, dated as of September 1, 1990, as
amended, among Detroit Edison, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New York Branch, as Agent.
99-14 - Fourth Amendment, dated as of September 1, 1996, to $200,000,000
Multi-Year (formerly Three-Year) Credit Agreement, dated as of
September 1, 1993, as amended among Detroit Edison, Renaissance,
the Banks party thereto and Barclays Bank, PLC, New York Branch,
as Agent.
(ii) Exhibits incorporated herein by reference.
3(a) -Restated- Restated Articles of Incorporation of Detroit Edison, as filed
December 10, 1991 with the State of Michigan, Department of
Commerce - Corporation and Securities Bureau (Exhibit 4-117 to
Form 10-Q for quarter ended March 31, 1993).
32
33
Exhibit
Number
3(b) -Certificate- Certificate containing resolution of the Detroit Edison Board of
Directors establishing the Cumulative Preferred Stock, 7.75%
Series as filed February 22, 1993 with the State of Michigan,
Department of Commerce - Corporation and Securities Bureau
(Exhibit 4-134 to Form 10-Q for quarter ended March 31, 1993).
3(c) -Certificate- Certificate containing resolution of the Detroit Edison Board of
Directors establishing the Cumulative Preferred Stock, 7.74%
Series, as filed April 21, 1993 with the State of Michigan,
Department of Commerce - Corporation and Securities Bureau (Exhibit
4-140 to Form 10-Q for quarter ended March 31, 1993).
3(d) -Amended- Amended and Restated Articles of Incorporation of the Company,
dated December 13, 1995 (Exhibit 3A (3.1) to the Company's Form 8-B
filed January 2, 1996, File No. 1-11607).
31
32
Exhibit
Number
------
3(e) - Agreement and Plan of Exchange (Exhibit 1(2) to the Company's Form
8-B filed January 2, 1996, File No. 1-11607).
3(f) - Amended and Restated By-Laws, dated as of February 26, 1996, of
the Company (Exhibit 3-3 to Form 10-K for year ended December 31,
1995).
3(g) - Amended and Restated By-Laws, dated as of February 26, 1996, of
Detroit Edison (Exhibit 3-4 to Form 10-K for year ended December
31, 1995).
4(a) - Mortgage and Deed of Trust, dated as of October 1, 1924, between
Detroit Edison (File No. 1-2198) and Bankers Trust Company as
Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures
supplemental thereto, dated as of dates indicated below, and filed
as exhibits to the filings as set forth below:
September 1, 1947 Exhibit B-20 to Registration No. 2-7136
October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096
November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160
January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595
June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643
June 30, 1982 Exhibit 4-30 to Registration No. 2-78941
August 15, 1982 Exhibit 4-32 to Registration No. 2-79674
October 15, 1985 Exhibit 4-170 to Form 10-K for year ended
December 31, 1994
33
34
Exhibit
Number
November 30, 1987 Exhibit 4-139 to Form 10-K for year ended
December 31, 1992
July 15, 1989 Exhibit 4-171 to Form 10-K for year ended
December 31, 1994
December 1, 1989 Exhibit 4-172 to Form 10-K for year ended
December 31, 1994
February 15, 1990 Exhibit 4-173 to Form 10-K for year ended
December 31, 1994
November 1, 1990 Exhibit 4-110 to Form 10-K for year ended
December 31, 1990
April 1, 1991 Exhibit 4-15 to Form 10-K for year ended
December 31, 1995
May 1, 1991 Exhibit 4-112 to Form 10-Q for quarter ended
June 30, 1991
May 15, 1991 Exhibit 4-113 to Form 10-Q for quarter ended
June 30, 1991
32
33
Exhibit
Number
- -------
September 1, 1991 Exhibit 4-116 to Form 10-Q for quarter ended
September 30, 1991
November 1, 1991 Exhibit 4-119 to Form 10-K for year ended
December 31, 1991
January 15, 1992 Exhibit 4-120 to Form 10-K for year ended
December 31, 1991
February 29, 1992 Exhibit 4-121 to Form 10-Q for quarter ended
March 31, 1992
April 15, 1992 Exhibit 4-122 to Form 10-Q for quarter ended
June 30, 1992
July 15, 1992 Exhibit 4-123 to Form 10-Q for quarter ended
September 30, 1992
July 31, 1992 Exhibit 4-124 to Form 10-Q for quarter ended
September 30, 1992
November 30, 1992 Exhibit 4-130 to Registration No. 33-56496
January 1, 1993 Exhibit 4-131 to Registration No. 33-56496
March 1, 1993 Exhibit 4-141 to Form 10-Q for quarter ended
March 31, 1993
March 15, 1993 Exhibit 4-142 to Form 10-Q for quarter ended
March 31, 1993
April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter ended
March 31, 1993
April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter ended
March 31, 1993
May 31, 1993 Exhibit 4-148 to Registration No. 33-64296
June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter ended
June 30, 1993 (1993 Series AP)
34
35
Exhibit
Number
June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter ended
June 30, 1993 (1993 Series H)
September 15, 1993 Exhibit 4-158 to Form 10-Q for quarter ended
September 30, 1993
March 1, 1994 Exhibit 4-163 to Registration No. 33-53207
June 15, 1994 Exhibit 4-166 to Form 10-Q for quarter ended
June 30, 1994
August 15, 1994 Exhibit 4-168 to Form 10-Q for quarter ended
September 30, 1994
December 1, 1994 Exhibit 4-169 to Form 10-K for year ended
December 31, 1994
August 1, 1995 Exhibit 4-174 to Form 10-Q for quarter ended
September 30, 1995.
4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993
(Exhibit 4-152 to Registration No. 33-50325).
33
34
Exhibit
Number
- ------
4(c) - First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit
4-153 to Registration No. 33-50325).
4(d) - Second Supplemental Note Indenture, dated as of September 15, 1993
(Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993).
4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994
(Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994).
4(f) - First Amendment, dated as of December 12, 1995, to Third Supplemental
Note Indenture, dated as of August 15, 1994 (Exhibit 4-12 to
Registration No. 333-00023).
4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995
(Exhibit 4-175 to Form 10-Q for quarter ended September 30, 1995).
4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996
(Exhibit 4-14 to Form 10-K for year ended December 31, 1995).
4(i) - Standby Note Purchase Credit Facility, dated as of August 17, 1994,
among The Detroit Edison Company, Barclays Bank PLC, as Bank and
Administrative Agent, Bank of America, The Bank of New York, The Fuji
Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union Bank and
Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as
Remarketing Agents (Exhibit 99-18 to Form 10-Q for quarter ended
September 30, 1994).
35
36
Exhibit
Number
4(j) - Support Agreement, dated as of March 8, 1996, between the Company
and Detroit Edison (Exhibit 4-176 to Form 10-Q for quarter ended
March 31, 1996).
99(a) - Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982
(Exhibit 28-5 to Registration No. 2-81501).
99(b) - Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency, dated as
of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501).
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4,
1988, between Detroit Edison and Renaissance (Exhibit 99-6 to
Registration No. 33-50325).
34
35
Exhibit
Number
- -------
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement,
dated as of February 1, 1990, between Detroit Edison and
Renaissance (Exhibit 99-7 to Registration No. 33-50325).
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement,
dated as of September 1, 1993, between Detroit Edison and
Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent (Exhibit 99-12 to Registration No.
33-50325).
99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among Detroit
Edison, Renaissance, the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for
quarter ended September 30, 1994).
99(h) - Third Amendment, dated as of March 8, 1996, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-11 to
Form 10-Q for quarter ended March 31, 1996).
36
37
Exhibit
Number
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993,
among Detroit Edison, Renaissance and Barclays Bank PLC, New York
Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325).
99(j) - First Amendment, dated as of September 1, 1994, to $200,000,000
Three-Year Credit Agreement, dated as of September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and Barclays
Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q
for quarter ended September 30, 1994).
99(k) - Third Amendment, dated as of March 8, 1996, to $200,000,000
Three-Year Credit Agreement, dated September 1, 1993, as amended
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-12 to
Form 10-Q for quarter ended March 31, 1996).
35
36
Exhibit
Number
- -------
99(l) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance
(Exhibit 99-9 to Registration No. 33-50325).
99(m) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance (Exhibit 99-10 to Registration No.
33-50325).
99(n) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance (Exhibit 99-11 to Registration No.
33-50325).
99(o) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and Renaissance (Exhibit 99-21 to Form
10-Q for quarter ended September 30, 1994).
99(p) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of
October 4, 1988, between Detroit Edison and Renaissance (Exhibit
99-10 to Form 10-Q for quarter ended March 31, 1996).
99(q) - Credit Agreement, dated as of March 1, 1996 among DTE Capital
Corporation, the Initial Lenders named therein, and Citibank, N.A.,
as Agent (Exhibit 99-9 to Form 10-Q for quarter ended March 31,
1996).
37
38
(b) Reports on Form 8-K
The Registrants did not file anyeach filed a Current ReportsReport on Form 8-K, dated
September 9, 1996, during the secondthird quarter of 1996.
361996 in which it was
disclosed that Detroit Edison was recording an additional non-cash
charge to net income based upon a review of steam heating operations.
38
3739
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DTE ENERGY COMPANY
----------------------------------------------------------------------
(Registrant)
Date August 8,November 7, 1996 /s/ SUSAN M. BEALE
--------------------- -----------------------------------------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date August 8,November 7, 1996 /s/ RONALD W. GRESENS
--------------------- ------------------------------------------------------------------------
Ronald W. Gresens
Vice President and Controller
3739
3840
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE DETROIT EDISON COMPANY
-----------------------------------------------------------------------
(Registrant)
Date August 8,November 7, 1996 /s/ SUSAN M. BEALE
--------------------- -----------------------------------------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date August 8,November 7, 1996 /s/ RONALD W. GRESENS
--------------------- ------------------------------------------------------------------------
Ronald W. Gresens
Vice President and Controller
3840
3941
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY (FILE NO. 1-11607) AND
THE DETROIT EDISON COMPANY (FILE NO. 1-2198)
QUARTERLY REPORTS ON FORM 10-Q FOR THE
QUARTER ENDED JUNE 30, 1996
EXHIBIT INDEX
(a)(i) Exhibits filed herewith.
Exhibit Number Page No.
Number --------
4-177 - ------- --------
11-4First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture.
11-5 - DTE Energy Company and Subsidiary Companies Primary
and Fully Diluted Earnings Per Share of Common Stock.
15-215-3 - Awareness Letter of Deloitte & Touche LLP regarding
their report dated August 8,November 7, 1996.
27-527-7 - Financial Data Schedule for the period ended
JuneSeptember 30, 1996 for the Company.
27-627-8 - Financial Data Schedule for the period ended
JuneSeptember 30, 1996 for Detroit Edison.
99-13 - Fourth Amendment, dated as of August 29, 1996, to
$200,000,000 364-Day Credit Agreement, dated as of September 1,
1990, as amended, among Detroit Edison, Renaissance, the Banks
party thereto and Barclays Bank, PLC, New York Branch, as Agent.
99-14 - Fourth Amendment, dated as of September 1, 1996, to
$200,000,000 Multi-Year (formerly Three-Year) Credit Agreement,
dated as of September 1, 1993, as amended among Detroit Edison,
Renaissance, the Banks party thereto and Barclays Bank, PLC, New
York Branch, as Agent.
(ii) Exhibits incorporated by reference. See Page Nos. __Pages _____
through _______ for
location of exhibits
incorporatedExhibits
Incorporated by
reference
(b) Exhibits incorporated by reference.Reference
3(a) - Restated Articles of Incorporation of Detroit Edison,
as filed December 10, 1991 with the State of Michigan, Department
of Commerce - Corporation and Securities Bureau. 42
Exhibit
Number
- -------
3(b) - Certificate containing resolution of the Detroit
Edison Board of Directors establishing the Cumulative Preferred
Stock, 7.75% Series as filed February 22, 1993 with the State of
Michigan, Department of Commerce - Corporation and Securities
Bureau.
3(c) - Certificate containing resolution of the Detroit
Edison Board of Directors establishing the Cumulative Preferred
Stock, 7.74% Series, as filed April 21, 1993 with the State of
Michigan, Department of Commerce - Corporation and Securities
Bureau. 40
3(d) - Amended and Restated Articles of Incorporation of the
Company, dated December 13, 1995.
3(e) - Agreement and Plan of Exchange.
3(f) - Amended and Restated By-Laws, dated as of February
26, 1996, of the Company.
3(g) - Amended and Restated By-Laws, dated as of February
26, 1996, of Detroit Edison.
4(a) - Mortgage and Deed of Trust, dated as of October 1,
1924, between Detroit Edison and Bankers Trust Company as Trustee
and indentures supplemental thereto, dated as of dates indicated
below:
September 1, 1947
October 1, 1968
November 15, 1971
January 15, 1973
June 1, 1978
June 30, 1982
August 15, 1982
October 15, 1985
43
Exhibit
Number
- -------
November 30, 1987
July 15, 1989
December 1, 1989
February 15, 1990
November 1, 1990
April 1, 1991
May 1, 1991
May 15, 1991 41
September 1, 1991
November 1, 1991
January 15, 1992
February 29, 1992
April 15, 1992
July 15, 1992
July 31, 1992
November 30, 1992
January 1, 1993
March 1, 1993
March 15, 1993
April 1, 1993
April 26, 1993
May 31, 1993
June 30, 1993
(1993 Series AP)
June 30, 1993
(1993 Series H)
September 15, 1993
March 1, 1994
June 15, 1994
August 15, 1994
December 1, 1994
August 1, 1995
4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993.
4(c) - First Supplemental Note Indenture, dated as of June 30, 1993.
4(d) - Second Supplemental Note Indenture, dated as of September 15,
1993.
4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994.
4(f) - First Amendment, dated as of December 12, 1995, to Third
Supplemental Note Indenture, dated as of August 15, 1994. 44
Exhibit
Number
- -------
4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995.
4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996.
4(i) - Standby Note Purchase Credit Facility, dated as of August 17,
1994, among The Detroit Edison Company, Barclays Bank PLC, as
Bank and Administrative Agent, Bank of America, The Bank of
New York, The Fuji Bank Limited, The Long-Term Credit Bank of
Japan, LTD, Union Bank and Citicorp Securities, Inc. and First
Chicago Capital Markets, Inc. as Remarketing Agents.
4(j) - Support Agreement, dated as of March 8, 1996, between the
Company and Detroit Edison. 42
99(a) - Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982.
99(b) - Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency,
dated as of December 1, 1982.
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October
4, 1988, between Detroit Edison and Renaissance.
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement,
dated as of February 1, 1990, between Detroit Edison and
Renaissance.
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement,
dated as of September 1, 1993, between Detroit Edison and
Renaissance.
99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent.
99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
45
Exhibit
Number
- -------
99(h) - Third Amendment, dated as of March 8, 1996, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993,
among Detroit Edison, Renaissance and Barclays Bank PLC, New York
Branch, as Agent.
99(j) - First Amendment, dated as of September 1, 1994, to $200,000,000
Three-Year Credit Agreement, dated as of September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and Barclays
Bank, PLC, New York Branch, as Agent.
99(k) - Third Amendment, dated as of March 8, 1996, to $200,000,000
Three-Year Credit Agreement, dated September 1, 1993, as amended
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
43
99(l) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance.
99(m) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance (Exhibit 99-10 to Registration No.
33-50325).Renaissance.
99(n) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance.
99(o) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and Renaissance.
99(p) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of
October 4, 1988, between Detroit Edison and Renaissance.
99(q) - Credit Agreement, dated as of March 1, 1996 among DTE Capital
Corporation, the Initial Lenders named therein, and Citibank, N.A.,
as Agent.