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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarter Ended
September 30, 1999March 31, 2000
Registrants; State of Commission Incorporation; Address; and I.R.S. Employer File Number Telephone Number Identification No. 1-11607 DTE Energy Company
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-400038-3217752 1-2198 The Detroit Edison Company
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-800038-0478650 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 NoAt
October 29, 1999, 145,045,159April 30, 2000, 142,660,170 shares of DTE Energy’s Common Stock, substantially all held by non-affiliates, were outstanding.
DTE ENERGY COMPANY
andTHE DETROIT EDISON COMPANYFORM 10-QFor The Quarter EndedSeptember 30, 1999March 31, 2000This document contains the Quarterly Reports on Form 10-Q for the quarter ended
September 30, 1999March 31, 2000 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 4 Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations 2019Item 3 — Quantitative and Qualitative Disclosures About Market Risk 21 Part II — Other Information 2823Item 5 — Other Information 2823Quarterly Report on Form 10-Q for The Detroit Edison Company: Part I — Financial Information 2924Item 1 — Financial Statements 2924Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations 2924Part II — Other Information 2924Item 1 — Legal Proceedings 2924Item 5 — Other Information 24 Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit Edison Company: Item 6 — Exhibits and Reports on Form 8-K 3026Signature Page to DTE Energy Company Quarterly Report on Form 10-Q 3831Signature Page to The Detroit Edison Company Quarterly Report on Form 10-Q 3932
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DEFINITIONS
Annual Report 19981999 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 beAnnual Report Notes Notes to Consolidated Financial Statements appearing on pages 4543 through7270 and7674 through7977 of the19981999 Annual Report to the Securities and Exchange Commission on Form10-K for DTE Energy Company and The Detroit Edison Company, as the case may beABATE Association of Businesses Advocating Tariff Equity Company DTE Energy Company and Subsidiary Companies Detroit Edison The Detroit Edison Company (a wholly owned subsidiary of DTE Energy Company) and Subsidiary Companies DTE Capital DTE Capital Corporation (a wholly owned subsidiary of DTE Energy Company) Electric Choice Gives all retail customers equal opportunity to utilize the transmission system which results in access to competitive generation resources EPA United States Environmental Protection Agency ERISA Employee Retirement Income Security Act FERC Federal Energy Regulatory Commission kWh Kilowatthour MCN MCN Energy Group Inc. MPSC Michigan Public Service Commission MW Megawatt MWh Megawatthour Note(s) Note(s) to Condensed Consolidated Financial Statements (Unaudited) appearing herein PSCR Power Supply Cost Recovery Quarterly ReportQuarterly Report to the Securities and Exchange Commission on Form 10-Q for DTE Energy Company or The Detroit Edison Company, as the case may be, for the quarters ended March 31, 1999 and June 30, 1999Quarterly Report NotesNotes to Condensed Consolidated Financial Statements (Unaudited) appearing on pages 16 through 18 of the Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the quarters ended March 31, 1999 and June 30, 1999 for DTE Energy Company and The Detroit Edison Company, as the case may beRegistrant Company or Detroit Edison, as the case may be 3
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QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANYPART I — FINANCIAL INFORMATION
Item 1 — Condensed Consolidated Financial Statements (Unaudited).The following condensed consolidated financial statements (unaudited) are included herein.
Page DTE Energy Company: Condensed Consolidated Statement of Income 5 Condensed Consolidated Balance Sheet 6 Condensed Consolidated Statement of Cash Flows 8 Condensed Consolidated Statement of Changes in Shareholders’ Equity 9 The Detroit Edison Company: Condensed Consolidated Statement of Income 11 Condensed Consolidated Balance Sheet 12 Condensed Consolidated Statement of Cash Flows 14 Condensed Consolidated Statement of Changes in Shareholder’s Equity 15 Notes to Condensed Consolidated Financial Statements (Unaudited) 16 Independent Accountants’ Report 1918
| Note: | Detroit Edison’s Condensed Consolidated Financial Statements are presented here for ease of reference and are not considered to be part of Item I of the Company’s report. |
4
DTE Energy Company
| Three Months | |||||||||||||||||||||
| Ended | |||||||||||||||||||||
| 1999 | |||||||||||||||||||||
| Operating Revenues | $ | $ | |||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||
| Fuel and purchased power | |||||||||||||||||||||
| Operation and maintenance | |||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||
| Taxes other than income | |||||||||||||||||||||
| Total Operating Expenses | |||||||||||||||||||||
| Operating Income | |||||||||||||||||||||
| Interest Expense and Other | |||||||||||||||||||||
| Interest expense | 83 | ||||||||||||||||||||
| Other — net | |||||||||||||||||||||
| Total Interest Expense and Other | |||||||||||||||||||||
| Income Before Income Taxes | |||||||||||||||||||||
| Income Taxes | |||||||||||||||||||||
| Net Income | $ | $ | |||||||||||||||||||
| Average Common Shares Outstanding | 145 | 145 | |||||||||||||||||||
| Earnings per Common Share — | |||||||||||||||||||||
| Basic and Diluted | $ | $ | |||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
5
DTE Energy Company
| December 31 | |||||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Accounts receivable | |||||||||||
|
Customer (less allowance for doubtful accounts of respectively) |
|||||||||||
| Accrued unbilled revenues | |||||||||||
| Other | |||||||||||
| Inventories (at average cost) | |||||||||||
| Fuel | |||||||||||
| Materials and supplies | |||||||||||
| Asset from risk management activities | 109 | 67 | |||||||||
| Other | |||||||||||
| Investments | |||||||||||
| Nuclear decommissioning trust funds | |||||||||||
| Other | |||||||||||
| Property | |||||||||||
| Property, plant and equipment | |||||||||||
| Property under capital leases | |||||||||||
| Nuclear fuel under capital lease | |||||||||||
| Construction work in progress | |||||||||||
| Less accumulated depreciation and amortization | |||||||||||
| Regulatory Assets | |||||||||||
| Other Assets | |||||||||||
| Total Assets | $ | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
6
| December 31 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable | $ | $ | ||||||||
| Accrued interest | 57 | |||||||||
| Dividends payable | 75 | 75 | ||||||||
| Accrued payroll | ||||||||||
| Short-term borrowings | ||||||||||
| Income taxes | ||||||||||
| Current portion long-term debt | ||||||||||
| Current portion capital leases | 104 | 75 | ||||||||
| Liability from risk management activities | 87 | |||||||||
| Other | ||||||||||
| Other Liabilities | ||||||||||
| Deferred income taxes | ||||||||||
| Capital leases | ||||||||||
| Regulatory liabilities | ||||||||||
| Other | ||||||||||
| Long-Term Debt | ||||||||||
| Shareholders’ Equity | ||||||||||
|
Common stock, without par value, 400,000,000 shares authorized,
|
||||||||||
| Retained earnings | ||||||||||
|
Contingencies (Note |
||||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
7
DTE Energy Company
| Ended | |||||||||||||||
| Operating Activities | |||||||||||||||
| Net Income | $ | $ | |||||||||||||
| Adjustments to reconcile net income to net cash from operating activities: | |||||||||||||||
| Depreciation and amortization | |||||||||||||||
| Other | |||||||||||||||
| Changes in current assets and liabilities: | |||||||||||||||
| Restricted cash | ( |
) | |||||||||||||
| Accounts receivable | |||||||||||||||
| Inventories | |||||||||||||||
| Payables | ( |
) | ) | ||||||||||||
| Other | ( |
) | ) | ||||||||||||
| Net cash from operating activities | |||||||||||||||
| Investing Activities | |||||||||||||||
| Plant and equipment expenditures | ( |
) | ( | ||||||||||||
| ) | |||||||||||||||
| Net cash used for investing activities | ( |
) | ( |
) | |||||||||||
| Financing Activities | |||||||||||||||
| Issuance of long-term debt | |||||||||||||||
| Increase in short-term borrowings | |||||||||||||||
| Redemption of long-term debt | ( |
) | ( |
) | |||||||||||
|
| (62 | ) | — | ||||||||||||
| Dividends on common stock | ( |
) | ( |
) | |||||||||||
|
Net cash |
( |
) | ) | ||||||||||||
|
Net |
( |
) | ) | ||||||||||||
| Cash and Cash Equivalents at Beginning of the Period | |||||||||||||||
| Cash and Cash Equivalents at End of the Period | $ | $ | |||||||||||||
| Supplementary Cash Flow Information | |||||||||||||||
| Interest paid (excluding interest capitalized) | $ | $ | |||||||||||||
| Income taxes paid | |||||||||||||||
| New capital lease obligations | |||||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
8
DTE Energy Company
| Shares | Amount | |||||||||
| Common Stock | ||||||||||
| Balance at beginning of year | $ | |||||||||
| Repurchase and retirement of common stock | ( |
) | ( |
) | ||||||
|
Balance at |
$ | |||||||||
| Retained Earnings | ||||||||||
| Balance at beginning of year | $ | |||||||||
| Net income | ||||||||||
|
Dividends declared on common stock ($ |
( |
) | ||||||||
| Repurchase and retirement of common stock | ( |
) | ||||||||
|
Balance at |
$ | |||||||||
| Total Shareholders’ Equity | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
9
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10
The Detroit Edison Company
| Three Months | ||||||||||||||||||||
| Ended | ||||||||||||||||||||
| 1999 | ||||||||||||||||||||
| Operating Revenues | $ | $ | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||
| Fuel and purchased power | ||||||||||||||||||||
| Operation and maintenance | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Taxes other than income | ||||||||||||||||||||
| Total Operating Expenses | ||||||||||||||||||||
| Operating Income | ||||||||||||||||||||
| Interest Expense and Other | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Other — net | 3 | |||||||||||||||||||
| Total Interest Expense and Other | ||||||||||||||||||||
| Income Before Income Taxes | ||||||||||||||||||||
| Income Taxes | ||||||||||||||||||||
| Net Income | ||||||||||||||||||||
| $ | $ | |||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
11
The Detroit Edison Company
| December 31 | |||||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable | |||||||||||
| Customer (less allowance for doubtful accounts of $20) | |||||||||||
| Accrued unbilled revenues | |||||||||||
| Other | |||||||||||
| Inventories (at average cost) | |||||||||||
| Fuel | |||||||||||
| Materials and supplies | |||||||||||
| Other | |||||||||||
| Investments | |||||||||||
| Nuclear decommissioning trust funds | |||||||||||
| Other | |||||||||||
| Property | |||||||||||
| Property, plant and equipment | |||||||||||
| Property under capital leases | |||||||||||
| Nuclear fuel under capital lease | |||||||||||
| Construction work in progress | |||||||||||
| Less accumulated depreciation and amortization | |||||||||||
| Regulatory Assets | |||||||||||
| Other Assets | |||||||||||
| Total Assets | $ | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
12
| December 31 | ||||||||||
| LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable | $ | $ | ||||||||
| Accrued interest | 54 | |||||||||
| Dividends payable | 80 | 80 | ||||||||
| Accrued payroll | ||||||||||
| Short-term borrowings | ||||||||||
| Income taxes | ||||||||||
| Current portion long-term debt | ||||||||||
| Current portion capital leases | ||||||||||
| Other | ||||||||||
| Other Liabilities | ||||||||||
| Deferred income taxes | ||||||||||
| Capital leases | ||||||||||
| Regulatory liabilities | ||||||||||
| Other | ||||||||||
| Long-Term Debt | ||||||||||
| Shareholder’s Equity | ||||||||||
| Common stock, $10 par value, 400,000,000 shares authorized, 145,119,875 issued and outstanding | 1,451 | 1,451 | ||||||||
| Premium on common stock | 548 | 548 | ||||||||
| Common stock expense | (48 | ) | (48 | ) | ||||||
| Retained earnings | ||||||||||
|
Contingencies (Note |
||||||||||
| Total Liabilities and Shareholder’s Equity | $ | $ | ||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
13
The Detroit Edison Company
| Ended | ||||||||||||
| Operating Activities | ||||||||||||
| Net Income | $ | $ | ||||||||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Other | ||||||||||||
| Changes in current assets and liabilities: | ||||||||||||
| Accounts receivable | ||||||||||||
| Inventories | ||||||||||||
| Payables | ( |
) | ) | |||||||||
| Other | ( |
) | ( |
) | ||||||||
| Net cash from operating activities | ||||||||||||
| Investing Activities | ||||||||||||
| Plant and equipment expenditures | ( |
) | ( |
) | ||||||||
| Net cash used for investing activities | ( |
) | ( |
) | ||||||||
| Financing Activities | ||||||||||||
| Issuance of long-term debt | ||||||||||||
| (Decrease) Increase in short-term borrowings | ||||||||||||
| ( |
) | |||||||||||
| Redemption of long-term debt | ( |
) | ( | |||||||||
| ) | ||||||||||||
|
Dividends on common |
( |
) | ( |
) | ||||||||
| Net cash used for financing activities | ( |
) | ( |
) | ||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | ) | |||||||||||
| Cash and Cash Equivalents at Beginning of the Period | ||||||||||||
| Cash and Cash Equivalents at End of the Period | $ | $ | ||||||||||
| Supplementary Cash Flow Information | ||||||||||||
| Interest paid (excluding interest capitalized) | $ | $ | ||||||||||
| Income taxes paid | ||||||||||||
| New capital lease obligations | ||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
14
The Detroit Edison Company
| Shares | Amount | ||||||||
| Common Stock | |||||||||
| Balance at beginning of year | 145,120 | $ | 1,451 | ||||||
|
Balance at |
145,120 | $ | 1,451 | ||||||
| Premium on Common Stock | |||||||||
| Balance at beginning of year | $ | 548 | |||||||
|
Balance at |
$ | 548 | |||||||
| Common Stock Expense | |||||||||
| Balance at beginning of year | $ | (48 | ) | ||||||
|
Balance at |
$ | (48 | ) | ||||||
| Retained Earnings | |||||||||
| Balance at beginning of year | $ | ||||||||
| Net income | |||||||||
|
Dividends declared on common stock ($ |
( |
) | |||||||
|
Balance at |
$ | ||||||||
| Total Shareholder’s Equity | $ | ||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
15
DTE Energy Company and The Detroit Edison Company
NOTE 1 — ANNUAL REPORT NOTES
These condensed consolidated financial statements
(unaudited) should be read in conjunction with the Annual
Report Notes and the Quarterly Report Notes. The Notes contained herein update and supplement
matters discussed in the Annual
Report Notes and the Quarterly 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 condensed consolidated financial statements are unaudited, but in the opinion of the Company and Detroit Edison, with respect to its own financial statements, 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.
Certain prior year balances have been reclassified to conform to the current year’s presentation.
NOTE 2 — MERGER AGREEMENT
On October 4, 1999, the Company entered into a definitive
merger agreement with MCN. MCN, a Michigan corporation, is
primarily involved in natural gas production, gathering,
processing, transmission, storage and distribution, electric
power generation and energy marketing. MCN’s largest
subsidiary is Michigan Consolidated Gas Company, a natural gas
utility serving 1.2 million customers in more than 500
communities throughout Michigan. Shareholders of the Company have
approved the issuance of the necessary shares of common stock to
complete the merger and shareholders of MCN have approved the
Agreement and Plan of Merger. The merger which is also subject to a
number of regulatory approvals is expected toand other agreed upon conditions.
Discussions continue with the Federal Trade Commission and a
final closing date cannot be completed in six to nine months. The merger agreement provides
that the Company will acquire all outstanding shares of MCN for
$28.50 per share in cash or 0.775 shares of Company
common stock for each share of MCN common stock, subject to
certain allocation procedures requiring that the aggregate number
of shares of MCN common stock that will be converted into cash
and the Companydetermined with certainty.
NOTE 3 — SHAREHOLDERS’s common stock will be equal to 55% and 45%,
respectively, of the total number of shares of MCN common stock
outstanding immediately prior to the merger. The transaction was
preliminarily valued at $4.6 billion, which includes the
assumption of approximately $2 billion of MCN’s debt. EQUITY
The merger agreement provides for termination under certain
circumstances; in such event, (1)Company’s board of directors has authorized the
Company may be
required to pay MCN a termination fee of $85 million plus expense
reimbursementrepurchase of up to $1510 million common shares, with the
current program tentatively set to not exceed $100 million.
Stock purchases are made from time to time on the open market or
(2) MCN maythrough negotiated transactions. All common stock repurchased
will be required to paycanceled. During the first quarter of 2000, the Company
a termination feerepurchased approximately 2.3 million shares at an aggregate
cost of $55 million
plus expense reimbursement of up to $15approximately $70 million.
16
NOTE 3 — REGULATORY MATTERS
As discussed in Note 2 of the Annual Report, proceedings
were pending regarding Detroit Edison’s recovery of certain
extraordinary storm costs over a 24-month period commencing
January 1998. On June 11, 1999, in an unpublished
opinion, the Michigan Court of Appeals remanded back to the MPSC
for hearing a November 1997 order that permitted Detroit
Edison to amortize extraordinary storm damage expenses incurred
in 1997 over the following two years. The MPSC had approved
Detroit Edison’s request to offset the storm damage expense
against a $53 million revenue requirement reduction from the
1988 Fermi settlement on an ex-parte basis. The Attorney General
appealed the MPSC ruling. Detroit Edison filed a motion for
rehearing with the Michigan Court of Appeals on July 1,
1999. Detroit Edison is unable to determine the timing or the
outcome of these proceedings.
NOTE 4 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
At September 30, 1999,March 31, 2000, Detroit Edison had total short-term
credit arrangements of approximately $505$496 million under
which $96$116 million of commercial paper was outstanding.
Additionally, Detroit Edison had a $200 million trade
receivables sales agreement under which $200 million was
outstanding at September 30, 1999.March 31, 2000.
At September 30, 1999,March 31, 2000, DTE Capital had $185 million of
commercial paper outstanding. A $400 million short-term
credit arrangements of $400 million,arrangement, backed by a Support Agreement from the
Company, under which no amounts were outstanding.provided credit support for this commercial paper.
In addition,During the first quarter, plans were announced to discontinue DTE
Capital’s operations. At March 31, 2000, the Company
had assumed all $165 million of DTE Capital’s
outstanding guarantees of various affiliate obligations. The
remainder of DTE Capital’s financial obligations are
expected to be assumed by the Company.
NOTE 5 — FINANCIAL INSTRUMENTS
The Company has entered into a totalseries of $550 millionforward starting
interest rate swaps and Treasury locks in order to limit the
Company’s sensitivity to interest rate fluctuations
associated with its anticipated issuance of Support Agreementslong-term debt to be
used to finance the merger with DTE Capital for the
purpose of DTE Capital’s credit enhancing activities on
behalf of DTE Energy affiliates.MCN. The Company expects to issue
this debt
NOTE 5 — CONTINGENCIES
Legal Proceedings
Detroit Edison and plaintiffs in a class action pending in the
Circuit Court for Wayne County, Michigan (Gilford, et al
v. Detroit Edison), as well as plaintiffs in two
other pending actions which make class claims (Sanchez,
et al v. Detroit Edison, Circuit Court for Wayne
County, Michigan; and Frazier v. Detroit Edison,
United States District Court, Eastern District of Michigan),
agreed to binding arbitration to settle these matters. The
settlement agreement provides that Detroit Edison’s monetary
liability would be no less than $17.5 million and no
greater than $65 million after the conclusion of all related
proceedings. In July 1998, the Consent Judgement received
preliminary Court approval. The Fairness Hearing with respect to
the terms of the settlement was held in August 1998, and no
objections to the settlement were raised. On October 28,
1999, a panel of arbitrators awarded the plaintiffs
$45.15 million. As a result of the arbitration award,
Detroit Edison must deposit $40.15 million in an escrow fund
for the plaintiffs by November 27, 1999. Due to sufficient
prior accruals and insurance coverage, Detroit Edison does not
anticipate a material 1999 earnings impact due to this award.
1716
NOTE 6 — CONTINGENCIES
As discussed in the Company’s Annual Report, in July 1999, the ABATE made a filing with the MPSC indicating that Detroit Edison’s retail rates produce approximately $333 million of excess revenues. Of this amount, approximately $202 million is related to ABATE’s proposed reversal of the December 28, 1998 MPSC Order authorizing the accelerated amortization of Fermi 2. On March 17, 2000, the Administrative Law Judge issued his Proposal for Decision (PFD) recommending that Detroit Edison’s rates be reduced by $101.6 million. Of this amount, $14.9 million is associated with the expiration of the storm damage amortization which has already been reflected in rates effective January 1, 2000. The PFD recommended lowering Detroit Edison’s authorized return on equity to 10.5% from 11.0%. The PFD rejected ABATE’s proposal, also supported by the Michigan Attorney General, to reverse the December 28, 1998 Fermi 2 Amortization Order. A final order has yet to be issued by the MPSC. The Company is unable to predict the outcome of this proceeding.
NOTE 7 — SEGMENT AND RELATED INFORMATION
Effective December 31, 1998, the Company adopted Statement
of Financial Accounting Standards No. 131, “Disclosure
about Segments of an Enterprise and Related Information.”
The Company’s reportable business segment is its electric
utility, Detroit Edison, which is engaged in the generation,
purchase, transmission, distribution and sale of electric energy
in a 7,600 square mile area in Southeastern Michigan. All otherOther
includes non-regulated energy-related businesses and services,
which develop and manage electricity and other energy-related
projects, and engage in domestic energy trading and marketing.
Inter-segment revenues are not material. Income taxes are
allocated based on intercompany tax sharing agreements, which
generally allocate the tax benefit of alternative fuels tax
credits and accelerated depreciation to the respective
subsidiary, without regard to the subsidiary’s own net
income or whether such tax benefits are realized by the Company.
Financial data for business segments are as follows:
| Electric | All | Reconciliations | |||||||||||||||
| Utility | Other | and Eliminations | Consolidated | ||||||||||||||
| (Millions) | |||||||||||||||||
|
Three Months Ended | |||||||||||||||||
| Operating revenues | $ | 949 | $ | 233 | $ | — | $ | 1,182 | |||||||||
| Net income | 97 | 22 | (2 | ) | 117 | ||||||||||||
| Three Months Ended March 31, 1999 | |||||||||||||||||
| Operating revenues | $ | $ | $ | — | $ | ||||||||||||
| Net income | |||||||||||||||||
| ( |
) | ||||||||||||||||
This Quarterly Report on Form 10-Q, including the report of
Deloitte & Touche LLP (on page 19)18) will automatically be
incorporated by reference in the Prospectuses constituting part
of the Registration Statements on Form S-3 (Registration
Nos. 33-53207, 33-64296 and 333-65765) of The Detroit Edison
Company and Form S-8 (Registration No. 333-00023),
Form S-4 (Registration No. 333-89175) 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.
1817
Independent Accountants’ Report
To the Board of Directors and Shareholders of DTE Energy Company and
We have reviewed the accompanying condensed consolidated balance
sheets of DTE Energy Company and subsidiaries and of The Detroit
Edison Company and subsidiaries as of September 30, 1999,March 31, 2000, and
the related condensed consolidated statements of income and cash
flows for the three-month and nine-month periods ended September 30,March 31, 2000 and
1999, and 1998, the condensed consolidated statements of cash
flows for the nine-month periods ended September 30, 1999
and 1998, and the condensed consolidated statement of changes in
shareholders’ equity for the nine-monththree-month period ended
September 30, 1999.March 31, 2000. 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 auditing standards generally
accepted auditing
standards,in the United States of America, 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 accounting
principles generally accepted accounting principles.in the United States of America.
We have previously audited, in accordance with auditing standards
generally accepted auditing standards,in the United States of America, the
consolidated balance sheets of DTE Energy Company and
subsidiaries and of The Detroit Edison Company and subsidiaries
as of December 31, 1998,1999, and the related consolidated
statements of income, changes in shareholders’ equity, and
cash flows for the year then ended (not presented herein); and in
our report dated January 27, 1999,26, 2000, 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,
19981999 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
1918
| Item 2 — | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
This analysis for the three and nine months ended September 30, 1999,March 31, 2000, as
compared to the same periodsperiod in 1998,1999, should be read in
conjunction with the condensed consolidated financial statements
(unaudited), the accompanying Notes, the
Quarterly Report Notes, and the Annual Report Notes.
Detroit Edison is the principal operating subsidiary of the Company and, as such, unless otherwise identified, 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.
GROWTH
As discussed in the Annual Report, in order to sustain earnings
growth with an objective of 6% growth annually, the Company and
Detroit Edison have developed a business strategy focused on core
competencies, consisting of expertise in developing, managing
and operating energy assets, including coal sourcing, blending
and transportation skills.
As part of this strategy it was
expected that one new line of business would be developed in 1999
through acquisition or start-up.
As discussed in Note 2, the Company and MCN have entered
into a merger agreement. Subject to the receipt of all regulatory
approvals, as well as the approval of the shareholders of each
company, scheduled for December 20, 1999, the merger is
expected to be completed in six to nine months. The Company expects that completion of
the merger will result in the issuance of approximately
30 million additional shares of its common stock and approximately
$1.4 billion in additional external financing.
The merger of the Company and MCN is expected
to create a fully integrated electric and natural gas company
that would be able to
achieve an average of $60 million in (after-tax) cost savings
per year over the first ten years of the merger. This business
combination is also expected to be accretive to the
Company’s earnings per share by 2001 and is expected to strongly support the Company’s
commitment to a long-term earnings growth rate of 6%.
The merger agreement also provides for a Company affiliate to
purchase all of MCN’s membership interest in several limited
liability companies that own and operate synthetic fuel
manufacturing facilities (coal fines plants).
The successful completion and implementation of the merger is
subject to a number of risks, including the satisfactory receipt
of all necessary regulatory approvals, as well as the approval of
the shareholders of each company. While the Company expects that
the combined entity will provide for operating cost reductions,
there can be no assurances that such reductions will occur. The merger
is expected to create fully integrated electric and gas
operations which will permit the Company to continue to
successfully compete in the energy markets as competition is
fully introduced and implemented; however, there can be no
assurances that the new company will be successfully responsive to competitive
pressures. The external financing needs of the
20
merger may create
a sensitivity to interest rate changes; and the Company will
need to successfully integrate the two operations in order to be
able to service the expected debt requirements and achieve
aggregate operating cost reductions. The merger is
anticipatedSee Note 5 for further
discussion of the financial instruments used to strategically placehedge the
Company ininterest rate risk associated with financing the energy
markets, but there can be no assurances that the combination will
be successful.merger.
ELECTRIC INDUSTRY RESTRUCTURING
Various bills have been introduced and proposed for introduction
at the Federalfederal level and in the Michigan Legislature addressing
competition in the electric markets. The Company and Detroit
Edison are reviewing these bills;bills and continue to work with the
impact, which may
include generation divestiture,parties involved to develop proposals that are fair for the
Company and its shareholders. While the impacts of the adoption
and implementation of one or more of these legislative proposals
is
unknown.are unknown, they may include generation divestiture,
securitization, and possible reductions in rates and earnings. In
the meantime, Detroit Edison is voluntarily proceeding with the
implementation of Electric Choice as provided for in MPSC Orders.
Michigan Public Service CommissionOrders
and pursuing the recovery of stranded costs.
In March 1999, the MPSC approved an interim code of conduct
filed by Detroit Edison. The interim code allows DTE Energy
affiliated companies to participate in the Electric Choice
program. The MPSC also opened a proceeding to develop a permanent
code of conduct. A final order from the MPSC is not expected
until the third quarter of 2000.
In March 1999, Detroit Edison filed an application with the
MPSC for true-up of its stranded costs, including Electric Choice
implementation costs, and on September 17, 1999, filed its
direct testimony. The testimony recommended Detroit Edison
continue to provide exclusive metering and billing service, as
set forth in its approved Electric Choice Implementation Plan, at
least through the transition period ending in 2007; supported
itsMichigan Governor John Engler has proposed true-up methodology including estimated initial
transition charge levelsMichigan electric
restructuring legislation. If adopted, this legislation would
allow for the year 2002 by customer class;full and supportedimmediate recovery of Detroit
Edison’s proposed calculation of stranded costs during the bidding period.through securitization. The testimony also supported
revised stranded cost balances; presented Detroit Edison’s
position concerning the true-upseries
of stranded costs for actual
market clearing price, andbills proposed a method for identifying
resale mitigation resources. In addition, the testimony supported
adjustment to calculations in the PSCR proceeding to account for
the resale of load lost due to the Electric Choice program; and
presented its proposed method for recovery of Electric Choice
implementation costs. MPSC Staff and intervenors have filed
testimony in opposition to Detroit Edison’s position. A
final order is not expected until the first quarter of 2000.
On July 22, 1999, the Association of Businesses Advocating
Tariff Equity (ABATE) made a filing with the MPSC indicating that
Detroit Edison’s retail rates produce approximately
$333 million of excess revenues. Of this amount,
approximately $202 million is related to ABATE’s
proposed reversal of the December 28, 1998 MPSC order
authorizing the accelerated amortization of Fermi 2. On
September 22, 1999, Detroit Edison, the MPSC Staff (Staff),
the Michigan Environmental Council and Public Research Group in
Michigan, and the Attorney General (AG) filed their direct
cases in
21
the ABATE Complaint Case. Of particular significance is the
proposal by the Staff thatGovernor include a rate reduction. The
Governor has indicated his intent to seek the MPSC establish three profitability
bands for return on equity which would produce predefined
benefits or penalties. Detroit Edison’s testimony supports a
revenue deficiency of $33 million. The Staff concluded that
no revenue sufficiency exists when Detroit Edison’s pending
required review of its depreciation rates is taken into account.
The Staff also assumed that the Fermi 2 Amortization Order
will not be reversed. The AG proposes the reversal of the Fermi 2
Amortization Order. Detroit Edison will file rebuttal testimony
in mid-November 1999. A final MPSC order is not expected
until spring 2000. Detroit Edison is unable to predict the
outcomeadoption of this
proceeding.
On September 30, 1999, Detroit Edison filed its 2000 PSCR
plan case. Fuel and purchased power costs for 2000 are projected
to increaselegislation by up to 6 percent, on average, over the
corresponding forecast for 1999. Detroit Edison is seeking a
corresponding increase in its PSCR Factor for 2000. An order is
expected in the third quarter of 2000.
Electric Choice
On June 29, 1999, the Michigan Supreme Court, on a 4-3 vote,
issued an opinion determining that the MPSC lacked authority to
order retail wheeling in the context of an Electric Choice
program. The Court reversed an earlier Michigan Court of Appeals
opinion finding such authority and vacated two MPSC orders
directing implementation of the experimental program. The Court
held that the MPSC possesses no common law powers and may only
exercise authority clearly conferred upon it by the Legislature.
It stated that retail wheeling issues involve many policy
concerns and stated that the Legislature, not the Court, is the
body that must consider and weigh the economic and social costs
and benefits of electric restructuring.
On August 17, 1999, the MPSC issued an order setting a
deadline of September 1, 1999 for Detroit Edison and
Consumers Energy to notify the MPSC if they choose to voluntarily
implement the Electric Choice program previously ordered by the
MPSC. On September 1, 1999, Detroit Edison filed a letter
with the MPSC reaffirming the decision to expeditiously move
ahead with the voluntary implementation of Electric Choice.
Consumers Energy has likewise agreed to proceed with the Electric
Choice program. On September 20, 1999, the bidding on the
225 MW allotted for Detroit Edison and 150 MW allotted
for Consumers Energy for the first phase of Electric Choice was
fully subscribed. Four additional bidding phases are
contemplated, 225 MW closing on November 19, 1999 and
225 MW each closing in January, March and
November 2000.
LIQUIDITY AND CAPITAL RESOURCES
Cash From Operating Activities
Net cash from operating activities for the Company and Detroit
Edison was higherincreased due primarily to
increased net incomedecreases in accounts receivable and changes in other current
assets and liabilities.
22
Cash Used Forfor Investing Activities
Net cash used for investing activities for the Company was lowerhigher due to
an investment in coke oven battery businesses in the prior
period and lower plant and equipment expenditures.
Net cash used for investing activities was higher for Detroit
Edison due to higherincreased plant and equipment expenditures.
Cash (Used for) FromUsed for Financing Activities
Net cash used for financing activities was lower for the Company
fordue primarily to increased short-term borrowings, partially
offset by the nine month period ended September 30, 1999 was
$283 million compared to net cash from financing activitiesredemption of $211 million for the same period in 1998. This
fluctuation was mainly due to a decreased usage of short-term
borrowings.common stock.
Net cash used for financing activities was higher for Detroit
Edison increased due primarily to an increase in restricted cash for
debt redemptions and a decreased usage of short-term borrowings.
Detroit Edison has an effective shelf registration statement on
file with the Securities and Exchange Commission pursuant to
which it may issue up to $225 million in debt securities.
In August 1999, Detroit Edison issued $40 million of General
and Refunding Mortgage Bonds.
In August and September 1999, Detroit Edison issued three series
of 30-year collateralized tax-exempt bonds totaling
$225 million. The proceeds were used to redeem
$40 million of debt in September 1999 and the remainder will
be used for December 1999 redemptions.
In November 1999, Detroit Edison purchased $24 million of
Mortgage Bonds in the open market. These bonds have been
canceled.
Year 2000
The Company and Detroit Edison have been involved in an
enterprise-wide program to address Year 2000 issues. A
program office was established in mid-1997 to implement a
rigorous plan to address the impact of Year 2000 on hardware
and software systems, embedded systems (which include
microprocessors used in the production and control of electric
power), and critical service providers. The emphasis has been on
mission critical systems that support core business activities or
processes. Core business activities/processes include safety,
environmental and regulatory compliance, product production and
delivery, revenue collection, employee and supplier payment and
financial asset management.
The plan for addressing Year 2000 is divided into several
phases including raising general awareness of Year 2000
throughout the Company and Detroit Edison; maintaining an
inventory of systems and devices; performing an assessment of
inventoried systems and devices; performing compliance testing of
suspect systems and devices; remediation of non-compliant
systems and devices through replacement,
2319
repair, retirement, or identifying an acceptable work around;
testing and remediation of systems and devices in an integrated
environment and preparing business continuity plans.
Inventory, assessment and compliance testing phases have been
completed for known systems and devices. Remediation of mission
critical assets is complete. Integration planning, including the
mapping of critical business processes, is complete for Detroit
Edison. Integration testing for Detroit Edison is also complete.
To support the program, the Year 2000 office has been
working with major utility industry associations and
organizations, customers and vendors to gather and share
information on Year 2000 issues. Letters were sent to the
North American Electric Reliability Council (NERC) and the
U.S. Nuclear Regulatory Commission (NRC) concerning
Year 2000 readiness on June 29, 1999 and June 30,
1999, respectively. These letters confirmed that Detroit Edison
systems critical to the generation, transmission and distribution
of power are ready for operation into the new millennium. The
NRC responded on October 1, 1999, confirming that all
requested information has been provided. The program office has
contacted vendors critical to Company operations to determine
their progress on Year 2000.
To further assist in identifying potential problems, tests of
generating facilities have been conducted by advancing control
systems dates to the Year 2000. Results of these tests have
shown that the generating facilities operated successfully in
this induced “millennium mode.” Exercises were
conducted on December 31, 1998 and January 1, 1999 to
assess the ability to reach employees and the regional security
centers of the East Central Area Reliability Group through
various communication channels. The exercised communication
channels operated properly. Detroit Edison back-up
telecommunication systems worked as designed in a North
America-wide drill conducted on April 9, 1999. Detroit
Edison participated in the NERC nationwide Year 2000 drill
for all utility systems on September 8 and 9, 1999. As a
result of the drill, Detroit Edison was able to demonstrate its
ability to deploy resources, perform operation and administrative
procedures, use backup telecommunication systems and implement
some contingency plans.
In the event that an unknown Year 2000 condition adversely
affects service to customers or an internal business process,
contingency and business continuity plans and procedures have
been developed to provide rapid restoration to normal conditions.
The Company and Detroit Edison have always maintained a
comprehensive operational emergency response plan. The business
continuity function of the Year 2000 program supplements the
existing emergency plan to include Year 2000 specific
events. To manage and coordinate operations, including
mobilization of all employees as necessary during the transition
to the new millennium, a Year 2000 emergency coordination
center was fully operational as of September 30, 1999.
During the rollover event, the emergency management staffing plan
calls for 1,300 working and on-call employees to manage
Year 2000 issues. This is in addition to the normal
holiday-weekend staff. Most of the employees work in the Fossil
Generation, Nuclear Generation, Energy Delivery and Information
Systems organizations. Key facilities, including substations,
will be staffed during the rollover. The emergency coordination
center will continuously monitor the impact of Year 2000 as
it is experienced in other parts of the world and moves to the
Eastern Standard Time zone.
24
The Company and Detroit Edison believe that with all
Year 2000 modifications, business continuity and emergency
management plans in place, the Year 2000 will not have a
material effect on their financial position, liquidity and
results of operations. Despite all efforts, there can be no
assurances that Year 2000 issues can be totally eliminated.
Results of modifications and testing done through
September 30, 1999 have demonstrated that Detroit Edison
should be able to maintain normal operating conditions into the
Year 2000, although there may be isolated electric service
interruptions. Detroit Edison’s internal business systems
may be affected by a Year 2000 related failure that could
temporarily interrupt the ability to communicate with customers,
collect revenue, or complete cash transactions. In addition, no
assurances can be given that the systems of vendors,
interconnected utilities and customers will not result in
Year 2000 problems.
The Company estimates that Year 2000 costs will approximate
$87 million with $81 million expended through
September 30, 1999. Operating cash flow is expected to be
sufficient to pay Year 2000 modification costs with no
material impact on operating results or cash flows.
RESULTS OF OPERATIONS
For the three months ended September 30, 1999,March 31, 2000, the
Company’s net income was $161$117 million, or $1.11 per
common share as compared to $132 million or $0.91 per
common share during the same period in 1998. For the nine months
ended September 30, 1999, net income was $386 million or
$2.66$0.81 per common
share, compared to $337$115 million, or $2.32$0.79 per common share
duringfor the same period in 1998.three months ended March 31, 1999.
The 1999 three and nine month2000 three-month earnings were higher than 19981999 due to
higher electric system sales andincreased earnings resulting from increased utilization of tax
credits generated by non-regulated businesses and increased
electric system sales in the commercial and industrial sectors,
partially offset by higher operating expenses, primarily Year 2000, fuel and
purchased power, and depreciation and amortization expenses.costs related to the acquisition of MCN.
Operating Revenues
Increases inOperating revenues were $1.18 billion, up approximately 15%
from 1999 operating revenues were due primarily to higher
non-regulated subsidiaryof $1.02 billion. Operating
revenues principally energy trading and
coke oven battery operations, higher system salesincreased (decreased) due to increased customer base and electric usage and increased heating
load for the nine month period, partially offset by decreased
sales between utilities and regulated rate decreases.
25
following:
| 2000 | ||||||
| (Millions) | ||||||
| Detroit Edison | ||||||
| Rate change | $ | 4 | ||||
| System sales volume and mix | 36 | |||||
| Wholesale sales | (7 | ) | ||||
| Other — net | 5 | |||||
| Total Detroit Edison | 38 | |||||
| Non-regulated | ||||||
| DTE Energy Resources | 26 | |||||
| DTE Energy Trading | 99 | |||||
| Other — net | (5 | ) | ||||
| Total Non-Regulated | 120 | |||||
| Total | $ | 158 | ||||
Detroit Edison kWh sales increased (decreased) as compared to the prior year as follows:
| Three | |||||||||
| Months | |||||||||
| Residential | |||||||||
| Commercial | |||||||||
| Industrial | |||||||||
| Other (includes primarily sales for resale) | |||||||||
| Total System | |||||||||
| Sales between utilities | ( | ) | |||||||
| Total | |||||||||
The increase in residential sales resulted from growth in the
customer base and electric usage, and more heating related demand
for the nine month period. Industrial sales increased,
reflecting more heating related demand along with replacement
energy sales for the Ford Rouge Power Plant for the nine month
period and a continuation of favorable economic conditions.
Commercial sales decreased for the three month period due to
cooler weather. Sales to other customers increased reflecting
increased demand from sales for resale customers. Sales between
utilities decreased due to less power available for sale.
Operating Expenses
Fuel and Purchased Power
For the three and nine month periods ended, fuelFuel and purchased power expense increased for the Company due
primarily to new non-regulated subsidiary expenses, principally
energy trading operations. Detroit Edison fuel and purchased
power expense increased due to increased purchases of higher cost
power and higher system output,output. The increased costs are
partially offset by lower coal generation due to increased plant
maintenance and decreased usage of lowerhigh cost systemgas and oil
generation as a resultunits.
20
Net systemSystem output and average fuel and purchased power unit costs for
Detroit Edison were as follows:
| Three Months | ||||||||||||||||||
| 1999 | ||||||||||||||||||
| (Thousands of | ||||||||||||||||||
| MWh) | ||||||||||||||||||
| Power plant generation | ||||||||||||||||||
| Fossil | ||||||||||||||||||
| Nuclear | ||||||||||||||||||
| Purchased power | ||||||||||||||||||
|
|
||||||||||||||||||
| Average unit cost ($/MWh) | ||||||||||||||||||
| Generation | $ | $ | ||||||||||||||||
| Purchased power | $ | $ | 25.01 | |||||||||||||||
26
Operation and Maintenance
OperationThe Company’s operation and maintenance expenseexpenses were higher
by $30 million. Higher non-regulated expenses of
$27 million were due primarily to an increased forlevel of
operations. Higher Detroit Edison expenses of $3 million
were due primarily to increased system and customer enhancements
($8 million), costs associated with the threepending MCN merger
($6 million), generation reliability and nine month periods due to new non-regulated subsidiary operation
expensemaintenance
($33 million) and ($1263 million), respectively,
higher transmission and distribution relatedother expenses for the
three month period ($264 million) and higher expenses for,
partially offset by Year 2000 testing and remediation for the nine month periodexpenses
included last year ($2718 million).
The increase in non-regulated subsidiary
operation
Depreciation and Amortization
Depreciation and amortization expense was higher due to the increased levelhigher
levels of operationplant in service and the additionaccelerated amortization of
new businesses.unamortized nuclear costs.
Income Taxes
Income tax expense for the Company decreased in 1999 due primarily to
increased utilization of alternate fuels credits generated from
non-regulated businesses and the end of the
Fermi 2 phase-in plan.businesses.
FORWARD-LOOKING STATEMENTS
Certain information presented herein is based on 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.
Actual results for the Company and Detroit Edison may differ from
those expected due to a number of variables including, but not
limited to, interest rates, the level of borrowings, weather,
actual sales, the effects of competition and the phased-in
implementation of Electric Choice, the implementation of utility
restructuring in Michigan (which involves pending and proposed
regulatory and legislative proceedings, and the recovery of stranded
costs)costs, and possible reductions in rates and earnings),
environmental
(including proposed regulations to limit nitrogen oxide
emissions) and nuclear requirements, the impact of FERC
proceedings and regulations, and the success of non-regulated
lines of business and the timely completion and functioning of Year
2000 modifications.business. In addition, expected results will be dependent upon the successful completion and implementation ofaffected
by the Company’s pending merger with MCN. 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.
This
Item 3 — Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
The Company is subject to interest rate risk in conjunction with the anticipated issuance of long-term debt to be used to finance the merger with MCN. The Company’s exposure to interest rate risk arises from market fluctuations in interest rates until the date of the anticipated debt issuance. In order to limit the sensitivity to interest rate fluctuations, the Company has entered into a series of forward starting
21
A sensitivity analysis model was used to calculate the fair
values of the Company’s derivative financial instruments,
utilizing applicable market interest rates in effect at
March 31, 2000. The sensitivity analysis involved increasing
and decreasing the market rates by a Year 2000 readiness disclosure.hypothetical 10% and
calculating the resulting change in the fair values of the
interest rate sensitive instruments. The favorable (unfavorable)
changes in fair value are as follows:
| Assuming | Assuming | ||||||||
| A 10% | A 10% | ||||||||
| Increase in | Decrease in | ||||||||
| Rates | Rates | ||||||||
| (Millions) | |||||||||
| Interest Rate Risk | |||||||||
| Interest Rate Sensitive | |||||||||
| Forward Starting Swap — 5-year | 9.1 | (5.9 | ) | ||||||
| — 10-year | 26.4 | (17.2 | ) | ||||||
| Treasury Lock — 30-year | 14.3 | (10.7 | ) | ||||||
2722
A special meetingEffective March 22, 2000 and April 14, 2000, Theodore
J. Vogel was elected Vice President and Assistant Controller,
respectively, of the Company’s common shareholders will
be held on December 20, 1999. At this meeting, Shareholders will
be asked and Detroit Edison. From 1997 to
approve the issuance2000, he was Vice President — Taxes and Tax Counsel of
common stock in connection
with the MCN merger. The affirmative voteCMS Energy Corporation. He previously served as Director of
a majority of shares
voting is required for passage.Corporate Taxes and Tax Counsel from 1987 to 1997.
28
David E. Meador has been elected Senior Vice President and
Treasurer effective May 15, 2000.
23
See pages 11 through 15.
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.
InOn February 25, 2000, Ricci, et al v. Detroit
Edison was filed in the U.S. Federal District Court for the
Eastern District of Michigan. The complaint alleges that Detroit
Edison employees formerly employed by contractors of Detroit
Edison should be treated as if they are entitled to various
retirement benefits under ERISA and other benefits that have been
available to Detroit Edison employees. The complaint also seeks
class action certification. Detroit Edison believes this matter
is without merit.
As discussed in Item 3 — Legal Proceedings of
Detroit Edison’s Annual Report, a lawsuit filed in January 1999pending in the
Circuit Court for Wayne County, Michigan (Cook,Coch, et al v.
Detroit EdisonEdison)), a
number seeks class action certification for
claims of individual plaintiffs have claimed employment-related sex, gender and race discrimination
as well asand harassment. In March 2000, Lotharp, et al v.
Detroit Edison was filed in the Circuit Court for Wayne
County, Michigan claiming that certain of Detroit Edison’s
employment testing programs discriminated against African
American, women and race/ethnic applicants, with Plaintiffs
seeking to represent such group. A hearing on plaintiffs’the Coch request
for class action certification is scheduled to be held in December 1999.has not yet been held. Detroit
Edison believes that the claims made in both lawsuits are without
merit and that class action certification is not appropriate.
29
On February 8, 2000, Detroit Edison filed a capacity plan with the MPSC outlining its plans assessing its generation and transmission capacity for the summer and identified its plans for meeting the demand of its electric customers. The plan indicated that Detroit Edison has added additional generating capacity since the beginning of last summer, that DTE River Rouge Unit No. 1, LLC (DTE River Rouge) will refurbish River Rouge Unit No. 1, that Detroit Edison has acquired firm transmission capacity within the region, and that it plans to purchase approximately 2,100 MW of additional capacity from other suppliers.
On March 6, 2000, DTE River Rouge filed for Exempt Wholesale Generator (EWG) status with the FERC. On April 11, 2000, the FERC approved this request. Additionally, DTE River Rouge filed for approval from the FERC to sell energy and capacity from DTE River Rouge at market based rates, and requested expedited consideration by the FERC. On March 27, 2000, Nordic Electric protested the request, alleging that the Company and certain affiliates are engaging in practices that deter competition. On April 27, 2000, DTE River Rouge filed an answer denying the claims made by Nordic Electric.
On March 31, 2000, Nordic Electric filed a complaint with the FERC against Detroit Edison, DTE Energy, DTE River Rouge, and DTE Energy Trading alleging that the Company is hoarding transmission capacity, that the pending merger with MCN may increase its market power, and that the transfer of facilities by Detroit Edison to DTE River Rouge is illegal under Section 203 of the Federal Power Act. On April 14, 2000, the Company and certain affiliates filed an answer and a motion to dismiss the complaint.
On March 14, 2000, the MPSC approved a settlement agreement that provides for a program of system improvements designed to address areas in Detroit Edison’s service territory that have been subject to severe storm damage and multiple outages. Detroit Edison will undertake improvement projects on specific circuits.
On May 1, 2000, the MPSC Staff issued a report proposing electric distribution performance standards that would apply to Michigan utilities including Detroit Edison. The Staff indicated that these proposed standards represent achievable goals within current utility rates. The Staff proposed that quarterly reports be filed with the MPSC and that a twelve-month rolling average of data will be used to determine
24
On March 31, 2000, Detroit Edison filed for reconciliation of its MPSC jurisdictional 1999 PSCR revenues and expenses. Detroit Edison, in a filing on April 28, 2000, indicated that an over recovery of $12.2 million, including interest, existed, and when coupled with a Fermi 2 performance standard credit of $19.0 million, a net amount of $31.2 million should be refunded to customers. This refund was accrued for in a prior year.
On March 31, 2000, Detroit Edison filed with the MPSC for recovery of $21 million of costs incurred in 1999 that were associated with the implementation of the Electric Choice program. Detroit Edison continues to estimate that expenditures of up to $120 million may be required through 2001 to fully implement the program.
On April 5, 2000, Energy Michigan filed with the MPSC to reopen the Fermi 2 Amortization case, raising similar issues that Nordic Electric raised in the complaint filed at the FERC. Energy Michigan alleges that Detroit Edison has violated its commitment to implement Electric Choice, and requests that a hearing be conducted before the full MPSC. Energy Michigan alleges that Detroit Edison is monopolizing available electric import capability from other United State utilities, and is refusing to allow Nordic Electric to import electric supplies from Ontario Hydro. Detroit Edison believes that the allegations are without merit.
On April 15, 2000, First Chicago Trust Company of New York was appointed Trustee under the Detroit Edison Mortgage and Deed of Trust and Bank One Trust Company, National Association was appointed Trustee under the Detroit Edison Collateral Note Indenture.
On May 6, 2000, Detroit Edison filed an application with the FERC to create a new wholly owned transmission subsidiary. The filing requests FERC authorization for transfer of Detroit Edison’s transmission system (net book value of approximately $400 million) into the new subsidiary. Upon approval by FERC, Detroit Edison will transfer 100 percent ownership interest in substantially all of its integrated transmission business assets and facilities with voltage ratings of 120 kilovolts (kV) or above to the transmission subsidiary. The new company will also take over Detroit Edison’s responsibilities related to open access transmission service.
25
(a) Exhibits
(i) Exhibits filed herewith.
| Exhibit | ||||||
| Number | ||||||
| — |
Supplemental Indenture, dated as of |
|||||
| — |
Eighth Supplemental Indenture, dated as of |
|||||
| * | — | 2000 Executive Incentive Plan Measures. | ||||
| 10- 35 | * | — | Amended and Restated Executive Incentive Plan. | |||
| 10- 36 | * | — | Detroit Edison Long-Term Incentive Plan, as amended through February 22, 2000. | |||
| 10- 37 | * | — | 2000 Long-Term Incentive Plan Measures. | |||
| 10- 38 | * | — | Certain arrangements pertaining to the employment of Theodore J. Vogel. | |||
| 11-18 | — | DTE Energy Company Basic and Diluted Earnings Per Share of Common Stock. | ||||
| — | DTE Energy Company Computation of Ratio of Earnings to Fixed Charges. | |||||
| — | The Detroit Edison Company Computation of Ratio of Earnings to Fixed Charges. | |||||
| — |
Awareness Letter of Deloitte & Touche LLP regarding
their report dated |
|||||
| — |
Financial Data Schedule for the period ended |
|||||
| — |
Financial Data Schedule for the period ended |
|||||
| — |
| |||||
30
(ii) Exhibits incorporated herein by reference.
| 2 | (a) | — |
Agreement and Plan of Merger, among DTE Energy,
|
|||
| 3 | (a) | — |
Amended and Restated Articles of Incorporation of DTE
Energy Company Energy Company dated December 13, 1995.
(Exhibit 3-5 to Form 10-Q for quarter ended
September 30, |
|||
| 3 | (b) | — |
Certificate of Designation of Series A Junior Participating
Preferred Stock of DTE Energy Company. |
|||
| 3 | (c) | — |
|
|||
| 3 | (d) | — |
Articles of Incorporation of DTE Enterprises, Inc.
(Exhibit 3.5 to Registration No. |
|||
| 3 | (e) | |||||
| — |
Rights Agreement, dated as of September 23, 1997, by and
between DTE Energy Company and The Detroit Edison Company,
as Rights Agent (Exhibit 4-1 to DTE Energy Company
Current Report on Form 8-K, dated September 23, |
|||||
| 3 | — |
Agreement and Plan of Exchange (Exhibit 1(2) to
DTE Energy Form 8-B filed January 2, 1996, File
No. |
26
| 3 | (g) | — | Bylaws of DTE Energy Company, as amended through September 22, 1999. (Exhibit 3-3 to Registration No. 333-89175.) | |||
| 3 | (h) | — | Bylaws of The Detroit Edison Company, as amended through September 22, 1999. (Exhibit 3-14 to Form 10-Q for quarter ended September 30, 1999.) | |||
| 3 | (i) | — | Bylaws of DTE Enterprises, Inc. (Exhibit 3.6 to Registration No. 333-89175.) | |||
| 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 | |||||||
|
| ||||||||
| November 15, 1971 | Exhibit 2-B-38 to Registration No. 2-42160 |
31
| 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 | |||||||
| 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 | |||||||
| April 1, 1991 | Exhibit 4-15 to Form 10-K for year ended December 31, 1996 | |||||||
|
| ||||||||
| November 1, 1991 | Exhibit 4-181 to Form 10-K for year ended December 31, 1996 | |||||||
| January 15, 1992 | Exhibit 4-182 to Form 10-K for year ended December 31, 1996 | |||||||
| February 29, 1992 | Exhibit 4-187 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| April 15, 1992 | Exhibit 4-188 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| July 15, 1992 | Exhibit 4-189 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| July 31, 1992 |
Exhibit 4-190 to Form 10-Q for quarter ended
| |||||||
| January 1, 1993 | Exhibit 4-131 to Registration No. 33-56496 | |||||||
| March 1, 1993 | Exhibit 4-191 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| March 15, 1993 | Exhibit 4-192 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| 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) | |||||||
| June 30, 1993 | Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993 Series H) |
32
| 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 | |||||||
| August 1, 1999 | Exhibit 4-204 to Form 10-Q for quarter ended September 30, 1999 | |||||||
| August 15, 1999 | Exhibit 4-205 to Form 10-Q for quarter ended September 30, 1999 | |||||||
| January 1, 2000 | Exhibit 4-205 to Form 10-K for year ended December 31, 1999 |
27
| 4 | (b) | — | Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325). | |||
| 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) | — | First Amendment, dated as of August 15, 1996, to Second Supplemental Note Indenture (Exhibit 4-17 to Form 10-Q for quarter ended September 30, 1996). | |||
| 4 | (f) | — | Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994). | |||
| 4 | (g) | — | 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 | (h) | — |
| |||
| Sixth Supplemental Note Indenture, dated as of May 1, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.54% Quarterly Income Debt Securities (“QUIDS”), including form of QUIDS. (Exhibit 4-193 to Form 10-Q for quarter ended June 30, 1998.) | ||||||
| 4 | — | Seventh Supplemental Note Indenture, dated as of October 15, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.375% QUIDS, including form of QUIDS. (Exhibit 4-198 to Form 10-K for year ended December 31, 1998.) |
33
| 4 | — |
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
|
||||
| 4 | — | $60,000,000 Support Agreement dated as of January 21, 1998 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-183 to Form 10-K for year ended December 31, 1997.) | ||||
| 4 | — | $100,000,000 Support Agreement, dated as of June 16, 1998, between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-194 to Form 10-Q for quarter ended June 30, 1998.) | ||||
| 4 | — | $300,000,000 Support Agreement, dated as of November 18, 1998, between DTE Energy and DTE Capital Corporation. (Exhibit 4-199 to Form 10-K for year ended December 31, 1998.) | ||||
| 4 | — | $400,000,000 Support Agreement, dated as of January 19, 1999, between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-201 to Form 10-K for year ended December 31, 1998.) | ||||
| 4 | — | $40,000,000 Support Agreement, dated as of February 24, 1999 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-202 to Form 10-Q for quarter ended March 31, 1999.) | ||||
| 4 | (p) | — |
$50,000,000 Support Agreement, dated as of June 10, 1999
between DTE Energy Company and DTE Capital |
|||
| 4 | — | Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee. (Exhibit 4-196 to Form 10-Q for quarter ended June 30, 1998.) | ||||
| 4 | — |
First Supplemental Indenture, dated as of June 15, 1998,
between DTE Capital Corporation and The Bank of
New York, as Trustee, creating the $100,000,000 Remarketed
Notes, Series A due 2038, including form of Note.
|
||||
| 4 | — | Second Supplemental Indenture, dated as of November 1, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee, creating the $300,000,000 Remarketed Notes, 1998 Series B, including form of Note. (Exhibit 4-200 to Form 10-K for year ended December 31, 1998.) | ||||
34
| 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). |
28
| 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 Renaissance Energy Company (an unaffiliated company) (“Renaissance”) and Detroit Edison (Exhibit 99-6 to Registration No. 33-50325). | |||
| 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) | — |
Third Amendment, dated as of August 28, 1997, to 1988
Amended and Restated Loan Agreement between Detroit Edison and
|
|||
| 99 | (g) | — | $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 | (h) | — | First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, 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 | (i) | — | 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). |
35
| 99 | (j) | — | Fourth Amendment, dated as of August 29, 1996, to $200,000,000 364-Day Credit Agreement as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-13 to Form 10-Q for quarter ended September 30, 1996). | |||
| 99 | (k) | — | Fifth Amendment, dated as of September 1, 1997, to $200,000,000 Multi-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. (Exhibit 99-24 to Form 10-Q for quarter ended September 30, 1997.) | |||
| 99 | (l) | — | Seventh Amendment, dated as of August 26, 1999, to $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, as amended among The Detroit Edison Company, Renaissance Energy Company, the Banks parties thereto and Barclays Bank PLC, New York branch as Agent. (Exhibit 99-30 to Form 10-Q for quarter ended September 30, 1999.) | |||
| 99 | (m) | — | $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 | — | First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, 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 | (o) | — | 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). | |||
| 99 | (p) | — | 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 (Exhibit 99-14 to Form 10-Q for quarter ended September 30, 1996). |
29
| 99 | — |
Fifth Amendment, dated as of August 28, 1997, 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 |
||||
| 99 | — | Sixth Amendment, dated as of August 27, 1998, 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. (Exhibit 99-32 to Registration No. 333-65765.) |
36
| 99 | — | 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 | — | 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 | ||||||
| (u) | — |
|
||||
| 99 | (v) | — |
|
|||
| 99 | (w) | |||||
| — |
Standby Note Purchase Credit Facility, dated as of
September 12, 1997, among The Detroit Edison Company and the
Bank’s Signatory thereto and The Chase Manhattan Bank, as
Administrative Agent, and Citicorp Securities, Inc., Lehman
Brokers, Inc., as Remarketing Agents and Chase Securities, Inc.
as Arranger. (Exhibit |
|||||
| 99 | (x) | — | Third Amended and Restated Credit Agreement, Dated as of January 18, 2000 among DTE Capital Corporation, the Initial Lenders, Citibank, N.A., as Agent, and ABN AMRO Bank N.V., Bank One N.A., Barclays Bank PLC, Bayerische Landesbank Girozertrale, Cayman Islands Branch, Comerica Bank and Den Daske Bank Aktieselskab, as Co-Agents. |
(b) On October 5, 1999February 16, 2000, the Company filed a Current
Report on Form 8-K discussing the proposed merger with MCN.its common share buyback
program.
37
| * | Denotes management contract or compensatory plan or arrangement required to be entered as an exhibit to this report. |
30
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 |
|
/s/ SUSAN M. BEALE Susan M. Beale Vice President and Corporate Secretary |
||
| Date |
|
/s/ Executive Vice President and Chief Financial Officer |
||
3831
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 |
|
/s/ SUSAN M. BEALE Susan M. Beale Vice President and Corporate Secretary |
||
| Date |
|
/s/ DANIEL G. BRUDZYNSKI Daniel G. Brudzynski Controller |
||
3932
| Exhibit | ||||||||||
| Number | Description | |||||||||
| — |
Supplemental Indenture, dated as of | |||||||||
| — |
Eighth Supplemental Indenture, dated as of | |||||||||
| * | — | 2000 Executive Incentive Plan Measures. | ||||||||
| 10- 35 | * | — | Amended and Restated Executive Incentive Plan. | |||||||
| 10- 36 | * | — | Detroit Edison Long-Term Incentive Plan, as amended through February 22, 2000. | |||||||
| 10- 37 | * | — | 2000 Long-Term Incentive Plan Measures. | |||||||
| 10- 38 | * | — | Certain arrangements pertaining to the employment of Theodore J. Vogel. | |||||||
| 11-18 | — | DTE Energy Company Basic and Diluted Earnings Per Share of Common Stock. | ||||||||
| — | DTE Energy Company Computation of Ratio of Earnings to Fixed Charges. | |||||||||
| — | The Detroit Edison Company Computation of Ratio of Earnings to Fixed Charges. | |||||||||
| — |
Awareness Letter of Deloitte & Touche LLP regarding
their report dated | |||||||||
| — |
Financial Data Schedule for the period ended |
|||||||||
| — |
Financial Data Schedule for the period ended |
|||||||||
| — |
| |||||||||
40
(ii) Exhibits incorporated herein by reference.
| 2 | (a) | — |
Agreement and Plan of Merger, among DTE Energy,
|
|||
| 3 | (a) | — |
Amended and Restated Articles of Incorporation of DTE
Energy Company Energy Company dated December 13, 1995.
(Exhibit 3-5 to Form 10-Q for quarter ended
September 30, |
|||
| 3 | (b) | — |
Certificate of Designation of Series A Junior Participating
Preferred Stock of DTE Energy Company. |
|||
| 3 | (c) | — |
|
|||
| 3 | (d) | — |
Articles of Incorporation of DTE Enterprises, Inc.
(Exhibit 3.5 to Registration No. |
|||
| 3 | (e) | |||||
| — |
Rights Agreement, dated as of September 23, 1997, by and
between DTE Energy Company and The Detroit Edison Company,
as Rights Agent (Exhibit 4-1 to DTE Energy Company
Current Report on Form 8-K, dated September 23, |
|||||
| 3 | — |
Agreement and Plan of Exchange (Exhibit 1(2) to
DTE Energy Form 8-B filed January 2, 1996, File
No. | ||||
| 3 | (g) | — | Bylaws of DTE Energy Company, as amended through September 22, 1999. (Exhibit 3-3 to Registration No. 333-89175.) | |||
| 3 | (h) | — | Bylaws of The Detroit Edison Company, as amended through September 22, 1999. (Exhibit 3-14 to Form 10-Q for quarter ended September 30, 1999.) | |||
| 3 | (i) | — | Bylaws of DTE Enterprises, Inc. (Exhibit 3.6 to Registration No. 333-89175.) |
33
| 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 | |||||||
|
| ||||||||
| November 15, 1971 | Exhibit 2-B-38 to Registration No. 2-42160 |
41
| 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 | |||||||
| 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 | |||||||
| April 1, 1991 | Exhibit 4-15 to Form 10-K for year ended December 31, 1996 | |||||||
|
| ||||||||
| November 1, 1991 | Exhibit 4-181 to Form 10-K for year ended December 31, 1996 | |||||||
| January 15, 1992 | Exhibit 4-182 to Form 10-K for year ended December 31, 1996 | |||||||
| February 29, 1992 | Exhibit 4-187 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| April 15, 1992 | Exhibit 4-188 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| July 15, 1992 | Exhibit 4-189 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| July 31, 1992 |
Exhibit 4-190 to Form 10-Q for quarter ended
| |||||||
| January 1, 1993 | Exhibit 4-131 to Registration No. 33-56496 | |||||||
| March 1, 1993 | Exhibit 4-191 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| March 15, 1993 | Exhibit 4-192 to Form 10-Q for quarter ended March 31, 1998 | |||||||
| 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) | |||||||
| June 30, 1993 | Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993 Series H) |
42
| 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 | |||||||
| August 1, 1999 | Exhibit 4-204 to Form 10-Q for quarter ended September 30, 1999 | |||||||
| August 15, 1999 | Exhibit 4-205 to Form 10-Q for quarter ended September 30, 1999 | |||||||
| January 1, 2000 | Exhibit 4-205 to Form 10-K for year ended December 31, 1999 |
| 4 | (b) | — | Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325). | |||
| 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). |
34
| 4 | (e) | — | First Amendment, dated as of August 15, 1996, to Second Supplemental Note Indenture (Exhibit 4-17 to Form 10-Q for quarter ended September 30, 1996). | |||
| 4 | (f) | — | Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994). | |||
| 4 | (g) | — | 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 | (h) | — |
| |||
| Sixth Supplemental Note Indenture, dated as of May 1, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.54% Quarterly Income Debt Securities (“QUIDS”), including form of QUIDS. (Exhibit 4-193 to Form 10-Q for quarter ended June 30, 1998.) | ||||||
| 4 | — | Seventh Supplemental Note Indenture, dated as of October 15, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.375% QUIDS, including form of QUIDS. (Exhibit 4-198 to Form 10-K for year ended December 31, 1998.) |
43
| 4 | — |
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
|
||||
| 4 | — | $60,000,000 Support Agreement dated as of January 21, 1998 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-183 to Form 10-K for year ended December 31, 1997.) | ||||
| 4 | — | $100,000,000 Support Agreement, dated as of June 16, 1998, between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-194 to Form 10-Q for quarter ended June 30, 1998.) | ||||
| 4 | — | $300,000,000 Support Agreement, dated as of November 18, 1998, between DTE Energy and DTE Capital Corporation. (Exhibit 4-199 to Form 10-K for year ended December 31, 1998.) | ||||
| 4 | — | $400,000,000 Support Agreement, dated as of January 19, 1999, between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-201 to Form 10-K for year ended December 31, 1998.) | ||||
| 4 | — | $40,000,000 Support Agreement, dated as of February 24, 1999 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-202 to Form 10-Q for quarter ended March 31, 1999.) | ||||
| 4 | (p) | — |
$50,000,000 Support Agreement, dated as of June 10, 1999
between DTE Energy Company and DTE Capital |
|||
| 4 | — | Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee. (Exhibit 4-196 to Form 10-Q for quarter ended June 30, 1998.) | ||||
| 4 | — |
First Supplemental Indenture, dated as of June 15, 1998,
between DTE Capital Corporation and The Bank of
New York, as Trustee, creating the $100,000,000 Remarketed
Notes, Series A due 2038, including form of Note.
|
||||
| 4 | — | Second Supplemental Indenture, dated as of November 1, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee, creating the $300,000,000 Remarketed Notes, 1998 Series B, including form of Note. (Exhibit 4-200 to Form 10-K for year ended December 31, 1998.) | ||||
44
| 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 Renaissance Energy Company (an unaffiliated company) (“Renaissance”) and Detroit Edison (Exhibit 99-6 to Registration No. 33-50325). |
35
| 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) | — |
Third Amendment, dated as of August 28, 1997, to 1988
Amended and Restated Loan Agreement between Detroit Edison and
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| 99 | (g) | — | $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 | (h) | — | First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, 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 | (i) | — | 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). |
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| 99 | (j) | — | Fourth Amendment, dated as of August 29, 1996, to $200,000,000 364-Day Credit Agreement as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-13 to Form 10-Q for quarter ended September 30, 1996). | |||
| 99 | (k) | — | Fifth Amendment, dated as of September 1, 1997, to $200,000,000 Multi-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. (Exhibit 99-24 to Form 10-Q for quarter ended September 30, 1997.) | |||
| 99 | (l) | — | Seventh Amendment, dated as of August 26, 1999, to $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, as amended among The Detroit Edison Company, Renaissance Energy Company, the Banks parties thereto and Barclays Bank PLC, New York branch as Agent. (Exhibit 99-30 to Form 10-Q for quarter ended September 30, 1999.) | |||
| 99 | (m) | — | $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 | — | First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, 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 | (o) | — | 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). | |||
| 99 | (p) | — | 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 (Exhibit 99-14 to Form 10-Q for quarter ended September 30, 1996). | |||
| 99 | — |
Fifth Amendment, dated as of August 28, 1997, 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 |
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| 99 | — | Sixth Amendment, dated as of August 27, 1998, 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. (Exhibit 99-32 to Registration No. 333-65765.) |
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| 99 | — | 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 | — | 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 | ||||||
| (u) | — |
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| 99 | (v) | — |
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| 99 | (w) | |||||
| — |
Standby Note Purchase Credit Facility, dated as of
September 12, 1997, among The Detroit Edison Company and the
Bank’s Signatory thereto and The Chase Manhattan Bank, as
Administrative Agent, and Citicorp Securities, Inc., Lehman
Brokers, Inc., as Remarketing Agents and Chase Securities, Inc.
as Arranger. (Exhibit |
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| 99 | (x) | — | Third Amended and Restated Credit Agreement, Dated as of January 18, 2000 among DTE Capital Corporation, the Initial Lenders, Citibank, N.A., as Agent, and ABN AMRO Bank N.V., Bank One N.A., Barclays Bank PLC, Bayerische Landesbank Girozertrale, Cayman Islands Branch, Comerica Bank and Den Daske Bank Aktieselskab, as Co-Agents. |
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(b) On February 16, 2000, the Company filed a Current
Report on Form 8-K discussing its common share buyback
program.
| * | Denotes management contract or compensatory plan or arrangement required to be entered as an exhibit to this report. |
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