1
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 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
REGISTRANTS; STATE OF
COMMISSION INCORPORATION; ADDRESS; AND I.R.S. EMPLOYER
FILE NUMBER TELEPHONE NUMBER IDENTIFICATION NO.
- ----------- ---------------------------- ------------------
1-11607 DTE Energy Company 38-3217752
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-4000
1-2198 The Detroit Edison Company 38-0478650
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-8000
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES X NO
--- ---
At October 31, 1996, 145,119,875 shares of DTE Energy's Common Stock,
substantially all held by non-affiliates, were outstanding.
2
DTE ENERGY COMPANY
AND
THE DETROIT EDISON COMPANY
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
This document contains the Quarterly Reports on Form 10-Q for the quarter ended
September 30, 1996 for each of DTE Energy Company and The Detroit Edison
Company. Information contained herein relating to an individual registrant is
filed by such registrant on its own behalf. Accordingly, except for its
subsidiaries, The Detroit Edison Company makes no representation as to
information relating to any other companies affiliated with DTE Energy Company.
TABLE OF CONTENTS
Page
----
Definitions ......................................................................... 3
Quarterly Report on Form 10-Q for DTE Energy Company:
Part I- Financial Information ........................................... 4
Item 1 - Financial Statements (Unaudited) ........................ 4
Notes to Consolidated Financial Statements (Unaudited) .. 14
Independent Accountants' Report ......................... 16
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 17
Part II-Other Information ................................................ 29
Item 1 - Legal Proceedings ....................................... 29
Item 5 - Other Information ....................................... 29
Quarterly Report on Form 10-Q for The Detroit Edison Company:
Part I-Financial Information ............................................. 31
Item 1 - Financial Statements (Unaudited) ........................ 31
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 31
Part II-Other Information ................................................ 31
Item 1 - Legal Proceedings ....................................... 31
Item 5 - Other Information ....................................... 31
Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit
Edison Company:
Item 6 - Exhibits and Reports on Form 8-K ....................... 32
Signature Page to DTE Energy Company Quarterly Report on Form 10-Q .................. 39
Signature Page to The Detroit Edison Company Quarterly Report on Form 10-Q .......... 40
2
3
DEFINITIONS
Annual Report ........... 1995 Annual Report to the Securities and Exchange
Commission on Form 10-K for DTE Energy Company or
The Detroit Edison Company, as the case may be
Annual Report Notes ..... Notes to Consolidated Financial Statements appearing
on pages 46 through 57 of the 1995 Annual Report to
the Securities and Exchange Commission on Form
10-K for DTE Energy Company and The Detroit Edison
Company
Company ................. DTE Energy Company and Subsidiary Companies
Detroit Edison .......... The Detroit Edison Company (a wholly owned
subsidiary of DTE Energy Company) and Subsidiary
Companies
EPA ..................... United States Environmental Protection Agency
FERC .................... Federal Energy Regulatory Commission
kWh ..................... Kilowatthour
MDEQ .................... Michigan Department of Environmental Quality
Mortgage Bonds .......... Detroit Edison's General and Refunding Mortgage Bonds
MPSC .................... Michigan Public Service Commission
MW ...................... Megawatts
NOPR .................... Notice of Proposed Rulemaking
Note(s) ................. Note(s) to Consolidated Financial Statements
(Unaudited) appearing herein
PSCR .................... Power Supply Cost Recovery
Quarterly Report ........ Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for quarters ended
March 31, 1996 and June 30, 1996 for DTE Energy
Company or The Detroit Edison Company, as the
case may be
Quarterly Report Notes .. Notes to Consolidated Financial Statements
(Unaudited) appearing in the Quarterly Report to
the Securities and Exchange Commission on Form
10-Q for quarters ended March 31, 1996 and
June 30, 1996 for DTE Energy Company or The
Detroit Edison Company, as the case may be
QUIDS ................... Quarterly Income Debt Securities
Registrant .............. Company or Detroit Edison, as the case may be
Renaissance ............. Renaissance Energy Company (an unaffiliated company)
3
4
QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED):
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
---------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
---------------------------------------------------------------------------------------------
OPERATING REVENUES
Electric - System $958,439 $1,008,450 $2,703,835 $2,710,411 $3,553,894 $3,500,793
Electric - Interconnection 14,346 20,591 33,578 40,230 44,327 45,490
Steam and other 4,549 3,248 20,821 17,877 27,039 24,909
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $977,334 $1,032,289 $2,758,234 $2,768,518 $3,625,260 $3,571,192
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $184,766 $ 193,675 $ 527,120 $ 538,867 $ 704,220 $ 707,835
Purchased power 41,800 51,311 102,925 119,170 117,312 90,715
Other operation 157,582 195,323 466,831 481,694 620,434 648,325
Maintenance 65,218 66,406 217,518 178,780 278,853 253,207
Steam heating special charges 149,231 - 149,231 - 191,260 -
Depreciation and amortization 131,959 125,383 394,563 375,057 520,117 492,730
Deferred Fermi 2 amortization (1,119) (1,493) (3,359) (4,479) (4,852) (6,345)
Amortization of deferred Fermi 2
depreciation and return 25,485 23,248 76,453 69,742 99,701 90,949
Taxes other than income 65,919 64,353 195,674 188,457 259,158 244,454
Income taxes 37,853 88,969 171,628 236,238 225,077 296,384
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $858,694 $ 807,175 $2,298,584 $2,183,526 $3,011,280 $2,818,254
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $118,640 $ 225,114 $ 459,650 $ 584,992 $ 613,980 $ 752,938
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 456 $ 369 $ 1,430 $ 952 $ 1,886 $ 1,061
Other income and (deductions) - net (925) (7,637) (7,550) (25,913) (11,883) (37,906)
Income taxes 733 1,550 2,924 7,720 4,993 12,274
Accretion income 1,967 2,677 6,444 8,536 8,949 11,712
Income taxes - disallowed plant
costs and accretion income (560) (811) (1,870) (2,608) (2,617) (3,588)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Other Income and
(Deductions) $ 1,671 $ (3,852) $ 1,378 $ (11,313) $ 1,328 $ (16,447)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 68,916 $ 69,353 $ 206,537 $ 205,873 $ 276,263 $ 273,679
Amortization of debt discount,
premium and expense 2,959 2,849 8,881 8,427 11,766 11,178
Other 1,421 1,698 3,464 7,912 5,218 5,498
Allowance for borrowed funds used
during construction (credit) (826) (594) (2,588) (1,535) (3,322) (2,241)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 72,470 $ 73,306 $ 216,294 $ 220,677 $ 289,925 $ 288,114
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK DIVIDENDS OF
SUBSIDIARY 2,908 6,544 13,108 21,355 19,490 28,763
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 44,933 $ 141,412 $ 231,626 $ 331,647 $ 305,893 $ 419,614
===================================================================================================================================
COMMON SHARES OUTSTANDING
- - AVERAGE 145,119,875 144,905,909 145,119,875 144,882,040 144,727,881 144,876,686
EARNINGS PER COMMON SHARE $ 0.31 $ 0.98 $ 1.60 $ 2.29 $ 2.11 $ 2.90
DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK $ 0.515 $ 0.515 $ 1.545 $ 1.545 $ 2.06 $ 2.06
See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
5
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
-----------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
-----------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income $ 44,933 $ 141,412 $ 231,626 $ 331,647 $ 305,893 $ 419,614
Adjustments to reconcile net income to net
cash from operating activities:
Accretion income (1,967) (2,677) (6,444) (8,536) (8,949) (11,712)
Depreciation and amortization 131,959 125,383 394,563 375,057 520,117 492,730
Deferred Fermi 2 amortization and return - net 24,366 21,755 73,094 65,263 94,849 84,604
Deferred income taxes and investment
tax credit - net (46,885) 9,328 (18,273) 49,411 (5,161) 88,622
Fermi 2 refueling outage - net (3,062) 3,058 3,454 9,813 6,716 11,080
Steam heating special charges 149,231 - 149,231 - 191,260 -
Other 23,074 8,615 13,618 7,837 11,756 (35,929)
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (7,527) (33,935) (25,253) (226,414) (17,418) (232,394)
Other accounts receivable (8,029) (4,159) (12,768) (7,633) (8,587) (22,135)
Inventories 27,594 16,117 39,815 (11,547) 32,525 (17,216)
Accounts payable (21,608) 12,495 (23,865) 7,352 (13,168) 22,219
Taxes payable 22,308 20,777 10,904 34,031 (25,776) 16,077
Interest payable (14,705) 20,273 (10,086) 19,159 (27,331) 19,624
Other 18,187 13,880 (37,799) (10,049) 3,505 8,289
- -----------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 337,869 $ 352,322 $ 781,817 $ 635,391 $1,060,231 $ 843,473
- -----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $(145,951) $(113,148) $(397,931) $(293,126) $ (558,649) $(400,480)
Nuclear decommissioning trust funds (11,978) (5,901) (34,772) (29,193) (48,930) (36,692)
Non-utility investments (260) 1,173 (6,545) 1,993 (6,673) (9,563)
Other changes in current assets and liabilities 1,753 9,413 906 5,825 855 9,596
Other (2,210) (24,668) (16,464) (30,632) (18,677) (39,306)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $(158,646) $(133,131) $(454,806) $(345,133) $ (632,074) $(476,445)
- ------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ 34,880 $ - $ 219,880 $ - $ 219,880 $ -
Funds received from Trustees: Installment sales
contracts and loan agreements - 22,175 - 22,175 179,350 62,260
Decrease in short-term borrowings (94,988) (138,877) (36,990) (36,489) (3,000) (74,472)
Redemption of long-term debt (6,500) (22,175) (75,714) (41,389) (255,064) (51,539)
Redemption of preferred stock - - (185,000) - (185,955) -
Premiums on reacquired long-term debt - (565) - (565) (5,381) (857)
Dividends on common stock (74,737) (75,474) (224,212) (224,689) (298,887) (299,292)
Other (11) (4,636) (9,986) (5,099) (11,487) (6,041)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $(141,356) $(219,552) $(312,022) $(286,056) $ (360,544) $(369,941)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ 37,867 $ (361) $ 14,989 $ 4,202 $ 67,613 $ (2,913)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 42,070 12,685 64,948 8,122 12,324 15,237
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 79,937 $ 12,324 $ 79,937 $ 12,324 $ 79,937 $ 12,324
==============================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 83,770 $ 49,199 $ 216,944 $ 188,898 $ 302,459 $ 255,496
Income taxes paid 51,248 60,757 165,194 137,237 258,494 183,920
New capital lease obligations 21,700 6,564 33,882 4,455 56,277 6,093
Exchange of preferred stock of subsidiary for
long-term debt - 49,878 - 49,878 - 49,878
==============================================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
5
6
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
September 30 December 31
1996 1995
----------- -----------
UTILITY PROPERTIES
Plant in service $13,670,679 $13,303,992
Less: Accumulated depreciation and amortization (5,315,708) (4,928,316)
- --------------------------------------------------------------------------------------------------
$ 8,354,971 $ 8,375,676
Construction work in progress 137,935 142,726
- --------------------------------------------------------------------------------------------------
Net utility properties $ 8,492,906 $ 8,518,402
- --------------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $106,032 and $99,633, respectively) $ 130,081 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $473,644 and $427,831, respectively) 133,532 145,463
- --------------------------------------------------------------------------------------------------
Net property under capital leases $ 263,613 $ 282,669
- --------------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,756,519 $ 8,801,071
- --------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 63,233 $ 21,576
Investments and special funds 45,111 29,058
Nuclear decommissioning trust funds 154,615 119,843
- --------------------------------------------------------------------------------------------------
$ 262,959 $ 170,477
- --------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 79,937 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $20,000 and $22,000, respectively) 439,656 414,403
Other accounts receivable 50,432 37,664
Inventories (at average cost)
Fuel 122,580 162,796
Materials and supplies 143,310 142,782
Prepayments 45,436 12,910
- --------------------------------------------------------------------------------------------------
$ 881,351 $ 835,503
- --------------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,018,210 $ 1,155,482
Prepaid pensions 93,151 81,865
Unamortized debt expense 45,233 40,936
Other 41,583 45,257
- --------------------------------------------------------------------------------------------------
$ 1,198,177 $ 1,323,540
- --------------------------------------------------------------------------------------------------
TOTAL $11,099,006 $11,130,591
==================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
6
7
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
September 30 December 31
1996 1995
------------ -----------
CAPITALIZATION
Common stock - without par value, 400,000,000 shares
authorized; 145,119,875 shares outstanding $ 1,951,437 $ 1,951,437
Retained earnings used in the business 1,489,484 1,484,871
- ------------------------------------------------------------------------------------------
Total common shareholders' equity $ 3,440,921 $ 3,436,308
Cumulative preferred stock of subsidiary 144,405 326,604
Long-term debt 3,775,301 3,756,094
- ------------------------------------------------------------------------------------------
Total Capitalization $ 7,360,627 $ 7,519,006
- ------------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 119,823 $ 128,362
Other postretirement benefits 14,256 24,381
Other 72,934 58,424
- ------------------------------------------------------------------------------------------
$ 207,013 $ 211,167
- ------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ - $ 36,990
Amounts due within one year
Long-term debt 244,214 119,214
Obligations under capital leases 143,790 154,307
Accounts payable 139,874 165,148
Property and general taxes 18,050 34,416
Income taxes 26,785 -
Accumulated deferred income taxes 52,917 51,697
Interest payable 52,042 62,128
Dividends payable 77,644 81,102
Payrolls 88,019 72,164
Fermi 2 refueling outage 17,796 14,342
Other 112,489 130,689
- ------------------------------------------------------------------------------------------
$ 973,620 $ 922,197
- ------------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,004,851 $ 2,052,875
Accumulated deferred investment tax credits 318,794 330,085
Other 234,101 95,261
- ------------------------------------------------------------------------------------------
$ 2,557,746 $ 2,478,221
- ------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- ------------------------------------------------------------------------------------------
TOTAL $11,099,006 $11,130,591
==========================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
7
8
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
Retained Total
Common Stock Earnings Common
------------------- Used in the Shareholders'
Shares Amount Business Equity
- -----------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 145,119,875 $ 1,951,437 $ 1,484,871 $ 3,436,308
Expense associated with subsidiary
preferred stock redeemed (2,801) (2,801)
Net income 231,626 231,626
Cash dividends declared on
Common stock - $1.545 per share (224,212) (224,212)
- -----------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1996 145,119,875 $ 1,951,437 $ 1,489,484 $ 3,440,921
===============================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
8
9
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
----------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
----------------------------------------------------------------------------------------
OPERATING REVENUES
Electric - System $ 958,439 $ 1,008,450 $ 2,703,835 $ 2,710,411 $ 3,553,894 $ 3,500,793
Electric - Interconnection 14,346 20,591 33,578 40,230 44,327 45,490
Steam 3,447 3,248 18,687 17,877 24,905 24,909
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 976,232 $ 1,032,289 $ 2,756,100 $ 2,768,518 $ 3,623,126 $ 3,571,192
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $ 184,766 $ 193,675 $ 527,120 $ 538,867 $ 704,220 $ 707,835
Purchased power 41,800 51,311 102,925 119,170 117,312 90,715
Other operation 155,251 195,323 461,217 481,694 614,820 648,325
Maintenance 65,218 66,406 217,518 178,780 278,853 253,207
Steam heating special charges 149,231 - 149,231 - 191,260 -
Depreciation and amortization 131,849 125,383 394,242 375,057 519,796 492,730
Deferred Fermi 2 amortization (1,119) (1,493) (3,359) (4,479) (4,852) (6,345)
Amortization of deferred Fermi 2
depreciation and return 25,485 23,248 76,453 69,742 99,701 90,949
Taxes other than income 65,916 64,353 195,566 188,457 259,050 244,454
Income taxes 38,554 88,969 173,424 236,238 226,873 296,384
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $ 856,951 $ 807,175 $ 2,294,337 $ 2,183,526 $ 3,007,033 $ 2,818,254
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $ 119,281 $ 225,114 $ 461,763 $ 584,992 $ 616,093 $ 752,938
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 456 $ 369 $ 1,430 $ 952 $ 1,886 $ 1,061
Other income and (deductions) - net (1,492) (7,637) (9,678) (25,913) (14,011) (37,906)
Income taxes 733 1,550 2,924 7,720 4,993 12,274
Accretion income 1,967 2,677 6,444 8,536 8,949 11,712
Income taxes - disallowed plant
costs and accretion income (560) (811) (1,870) (2,608) (2,617) (3,588)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Other Income and
(Deductions) $ 1,104 $ (3,852) $ (750) $ (11,313) $ (800) $ (16,447)
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 68,916 $ 69,353 $ 206,537 $ 205,873 $ 276,263 $ 273,679
Amortization of debt discount,
premium and expense 2,947 2,849 8,855 8,427 11,740 11,178
Other 1,327 1,698 3,268 7,912 5,022 5,498
Allowance for borrowed funds used
during construction (credit) (826) (594) (2,588) (1,535) (3,322) (2,241)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 72,364 $ 73,306 $ 216,072 $ 220,677 $ 289,703 $ 288,114
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 48,021 $ 147,956 $ 244,941 $ 353,002 $ 325,590 $ 448,377
PREFERRED STOCK DIVIDENDS 2,908 6,544 13,108 21,355 19,490 28,763
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE FOR COMMON
STOCK $ 45,113 $ 141,412 $ 231,833 $ 331,647 $ 306,100 $ 419,614
====================================================================================================================================
Note: Detroit Edison's financial statements are presented here for ease of
reference and are not considered to be part of Item 1 of the Company's
report.
See accompanying Notes to Consolidated Financial Statements (Unaudited).
9
10
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
September 30 December 31
1996 1995
------------ -----------
UTILITY PROPERTIES
Plant in service $ 13,670,679 $13,303,992
Less: Accumulated depreciation and amortization (5,315,708) (4,928,316)
- -----------------------------------------------------------------------------------------------------
$ 8,354,971 $ 8,375,676
Construction work in progress 137,935 142,726
- -----------------------------------------------------------------------------------------------------
Net utility properties $ 8,492,906 $ 8,518,402
- -----------------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $106,032 and $99,633, respectively) $ 130,081 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $473,644 and $427,831, respectively) 133,532 145,463
- -----------------------------------------------------------------------------------------------------
Net property under capital leases $ 263,613 $ 282,669
- -----------------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,756,519 $ 8,801,071
- -----------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 7,731 $ 21,576
Investments and special funds 26,489 29,058
Nuclear decommissioning trust funds 154,615 119,843
- -----------------------------------------------------------------------------------------------------
$ 188,835 $ 170,477
- -----------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 27,697 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $20,000 and $22,000, respectively) 439,656 414,403
Other accounts receivable 47,791 37,664
Inventories (at average cost)
Fuel 122,580 162,796
Materials and supplies 143,310 142,782
Prepayments 45,160 12,910
- -----------------------------------------------------------------------------------------------------
$ 826,194 $ 835,503
- -----------------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,018,210 $ 1,155,482
Prepaid pensions 93,151 81,865
Unamortized debt expense 45,233 40,936
Other 37,061 45,257
- ----------------------------------------------------------------------------------------------------
$ 1,193,655 $ 1,323,540
- ----------------------------------------------------------------------------------------------------
TOTAL $ 10,965,203 $11,130,591
====================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
10
11
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
September 30 December 31
1996 1995
------------ ------------
CAPITALIZATION
Common stock - $10 par value, 400,000,000 shares
authorized; 145,119,875 shares outstanding $ 1,451,199 $ 1,451,199
Premium on common stock 547,799 547,799
Common stock expense (47,561) (47,561)
Retained earnings used in the business 1,391,229 1,484,871
- --------------------------------------------------------------------------------------------
Total common shareholders' equity $ 3,342,666 $ 3,436,308
Cumulative preferred stock 144,405 326,604
Long-term debt 3,740,421 3,756,094
- --------------------------------------------------------------------------------------------
Total Capitalization $ 7,227,492 $ 7,519,006
- --------------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 119,823 $ 128,362
Other postretirement benefits 14,256 24,381
Other 72,934 58,424
- --------------------------------------------------------------------------------------------
$ 207,013 $ 211,167
- --------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ - $ 36,990
Amounts due within one year
Long-term debt 244,214 119,214
Obligations under capital leases 143,790 154,307
Accounts payable 136,328 165,148
Property and general taxes 18,048 34,416
Income taxes 26,881 -
Accumulated deferred income taxes 52,918 51,697
Interest payable 52,041 62,128
Dividends payable 82,723 81,102
Payrolls 87,858 72,164
Fermi 2 refueling outage 17,796 14,342
Other 111,073 130,689
- -------------------------------------------------------------------------------------------
$ 973,670 $ 922,197
- -------------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,004,133 $ 2,052,875
Accumulated deferred investment tax credits 318,794 330,085
Other 234,101 95,261
- -------------------------------------------------------------------------------------------
$ 2,557,028 $ 2,478,221
- -------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- -------------------------------------------------------------------------------------------
TOTAL $10,965,203 $11,130,591
===========================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
11
12
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
-------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income $ 48,021 $ 147,956 $ 244,941 $ 353,002 $ 325,590 $ 448,377
Adjustments to reconcile net income to net
cash from operating activities:
Accretion income (1,967) (2,677) (6,444) (8,536) (8,949) (11,712)
Depreciation and amortization 131,849 125,383 394,242 375,057 519,796 492,730
Deferred Fermi 2 amortization and return - net 24,366 21,755 73,094 65,263 94,849 84,604
Deferred income taxes and investment
tax credit - net (46,921) 9,328 (18,361) 49,411 (5,249) 88,622
Fermi 2 refueling outage - net (3,062) 3,058 3,454 9,813 6,716 11,080
Steam heating special charges 149,231 - 149,231 - 191,260 -
Other 10,968 8,615 4,687 7,837 2,851 (35,929)
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (7,527) (33,935) (25,253) (226,414) (17,418) (232,394)
Other accounts receivable (9,185) (4,159) (10,127) (7,633) (5,946) (22,135)
Inventories 27,594 16,117 39,815 (11,547) 32,525 (17,216)
Accounts payable (14,972) 12,495 (27,411) 7,352 (16,714) 22,219
Taxes payable 24,083 20,777 10,998 34,031 (25,682) 16,077
Interest payable (14,630) 20,273 (10,087) 19,159 (27,332) 19,624
Other 30,627 13,880 (39,100) (10,049) 2,204 8,289
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 348,475 $ 358,866 $ 783,679 $ 656,746 $1,068,501 $ 872,236
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $ (130,084) $(113,148) $(355,461) $(293,126) $ (516,179) $ (400,480)
Nuclear decommissioning trust funds (11,978) (5,901) (34,772) (29,193) (48,930) (36,692)
Non-utility investments - 1,173 - 1,993 (128) (9,563)
Other changes in current assets and liabilities 1,753 9,413 906 5,825 856 9,596
Other (2,591) (24,668) (4,936) (30,632) (7,150) (39,306)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $ (142,900) $(133,131) $(394,263) $(345,133) $ (571,531) $ (476,445)
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ - $ - $ 185,000 $ - $ 185,000 $ -
Funds received from Trustees: Installment sales
contracts and loan agreements - 22,175 - 22,175 179,350 62,260
Decrease in short-term borrowings (94,988) (138,877) (36,990) (36,489) (3,000) (74,472)
Redemption of long-term debt (6,500) (22,175) (75,714) (41,389) (255,064) (51,539)
Redemption of preferred stock - - (185,000) - (185,955) -
Premiums on reacquired long-term debt
and preferred stock - (565) (1,850) (565) (7,231) (857)
Dividends on common and preferred stock (82,724) (82,018) (249,086) (246,044) (330,169) (328,055)
Cash portion of restructuring dividend to parent - - (56,510) - (56,510) -
Other - (4,636) (6,517) (5,099) (8,018) (6,041)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $ (184,212) $(226,096) $(426,667) $(307,411) $ (481,597) $ (398,704)
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ 21,363 $ (361) $ (37,251) $ 4,202 $ 15,373 $ (2,913)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 6,334 12,685 64,948 8,122 12,324 15,237
- ----------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 27,697 $ 12,324 $ 27,697 $ 12,324 $ 27,697 $ 12,324
==================================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 83,613 $ 49,199 $ 216,765 $ 188,898 $ 302,280 $ 255,496
Income taxes paid 51,922 60,757 167,088 137,237 260,388 183,930
New capital lease obligations 21,700 6,564 33,882 4,455 56,277 6,093
Exchange of preferred stock for long-term debt - 49,878 - 49,878 - 49,878
Non-cash portion of restructuring dividend to parent - - 26,716 - 26,716 -
==================================================================================================================================
See accompanying Notes to Consolidated Financial Statements (Unaudited).
12
13
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
Common Stock Premium Retained Total
---------------------- on Common Earnings Common
$10 Par Common Stock Used in the Shareholders'
Shares Value Stock Expense Business Equity
- ----------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 145,119,875 $ 1,451,199 $ 547,799 $ (47,561) $ 1,484,871 $ 3,436,308
Expense associated with preferred
stock redeemed (2,801) (2,801)
Net income 244,941 244,941
Cash dividends declared
Common stock - $1.65 per share (239,448) (239,448)
Cumulative preferred stock* (13,108) (13,108)
Restructuring dividend to parent (83,226) (83,226)
- ----------------------------------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1996 145,119,875 $ 1,451,199 $ 547,799 $ (47,561) $ 1,391,229 $ 3,342,666
======================================================================================================================
*At established rate for each series
See accompanying Notes to Consolidated Financial Statements (Unaudited).
13
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTE 1 - GENERAL
These consolidated financial statements should be read in conjunction with
the Quarterly Report Notes and the Annual Report Notes. The Notes contained
herein update and supplement matters discussed in the Quarterly Report Notes
and the Annual Report Notes.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The preceding consolidated financial statements are unaudited, but, in the
opinion of the Company and Detroit Edison, include all adjustments necessary
for a fair statement of the results for the interim periods. Financial results
for this interim period are not necessarily indicative of results that may be
expected for any other interim period or for the fiscal year.
NOTE 2 - FERMI 2
Fermi 2, a nuclear generating unit, was shut down on September 27, 1996 to
replace one-third of its nuclear fuel and install three new low-pressure
turbines. With the installation of these new turbines the unit is expected to
initially operate at 1085 MW, up from 878 MW prior to this shut down. The
expected cost of replacing the turbines is between $45-50 million. The cost
will be capitalized and is expected to be recovered in rates. The plant is
scheduled to restart in November 1996.
NOTE 3 - STEAM HEATING SPECIAL CHARGES
As discussed in Note 14 of the Annual Report Notes and Note 2 of the
Quarterly Report Notes for the quarter ended June 30, 1996, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 121 in the fourth
quarter of 1995. As the result of continuing losses in the operation of its
steam heating business, upon adoption of SFAS No. 121, Detroit Edison wrote off
the remaining net book value of its steam heating plant assets of $42 million
($32 million after-tax) or $0.22 per share.
During the third quarter of 1996, following the completion of a review of
its steam heating operations, Detroit Edison recorded a special charge to net
income of $149.2 million ($97 million after-tax) or $0.67 per share. The
special charge included a reserve for steam purchase commitments during the
period from 1997 through 2008 under the agreement with the Greater Detroit
Resource Recovery Facility, the retirement and
14
15
closure of a portion of the steam heating system in 1997, and the investment
of $18 million to improve service to remaining customers.
----------------------------
This Quarterly Report on Form 10-Q, including the report of Deloitte &
Touche LLP (on page 16) will automatically be incorporated by reference in the
Prospectuses constituting part of the Registration Statements on Form S-3
(Registration Nos. 33-53207 and 33-64296) of The Detroit Edison Company and
Form S-8 (Registration No. 333-00023) and Form S-3 (Registration No. 33-57545)
of DTE Energy Company, filed under the Securities Act of 1933. Such report of
Deloitte & Touche LLP, however, is not a "report" or "part of the Registration
Statement" within the meaning of Sections 7 and 11 of the Securities Act of
1933 and the liability provisions of Section 11(a) of such Act do not apply.
15
16
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
DTE Energy Company and
The Detroit Edison Company
We have reviewed the accompanying condensed consolidated balance sheets of DTE
Energy Company and subsidiary companies and of The Detroit Edison Company and
subsidiary companies as of September 30, 1996, and the related condensed
consolidated statements of income and of cash flows for the three-month,
nine-month, and twelve-month periods ended September 30, 1996 and 1995, and the
condensed consolidated statements of common shareholders' equity for the
nine-month period ended September 30, 1996. These financial statements are the
responsibility of DTE Energy Company's management and of The Detroit Edison
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheets of DTE Energy Company and subsidiary
companies and of The Detroit Edison Company and subsidiary companies as of
December 31, 1995, and the related consolidated statements of income, common
shareholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated January 22, 1996 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheets
as of December 31, 1995 is fairly stated, in all material respects, in relation
to the consolidated balance sheets from which it has been derived.
DELOITTE & TOUCHE LLP
Detroit, Michigan
November 7, 1996
16
17
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY
COMPANIES
This analysis for the three, nine and twelve months ended September 30,
1996, as compared to the same periods in 1995, should be read in conjunction
with the consolidated financial statements (unaudited), the accompanying Notes,
the Quarterly Report Notes and the Annual Report Notes.
Detroit Edison is the principal subsidiary of the Company and, as such,
this discussion explains material changes in results of operations of both the
Company and Detroit Edison and identifies recent trends and events affecting
both the Company and Detroit Edison. For the periods presented, the Company's
operations and those of Detroit Edison are not materially different.
RESULTS OF OPERATIONS
For the three months ended September 30, 1996, the Company's net income
was $44.9 million, or $0.31 per share, down 68 percent from the $141.4 million,
or $0.98 per share earned in the three months ended September 30, 1995. The
decrease in net income was due to a $149.2 million ($97 million after-tax), or
$0.67 per share, special charge to net income following completion of Detroit
Edison's review of its steam heating operations. Without the special charge,
third quarter earnings would have equaled the $0.98 per share reported for the
same period in 1995.
For the nine months ended September 30, 1996, the Company's net income was
$231.6 million, or $1.60 per share, down 30 percent from the $331.6 million, or
$2.29 per share earned in the nine months ended September 30, 1995. The
nine-month period this year included the steam heating special charge.
For the twelve months ended September 30, 1996, the Company's net income
was $305.9 million, or $2.11 per share, down 27 percent from the $419.6
million, or $2.90 per share earned in the twelve months ended September 30,
1995. The twelve-month period this year included the special charge of $149.2
million ($97 million after-tax), or $0.67 per share and the write off of the
remaining net book value of steam heating plant assets of $42 million ($32
million after-tax), or $0.22 per share.
At September 30, 1996, the book value of the Company's common stock was
$23.68 per share, an increase of $0.06 per share or 0.25 percent since December
31, 1995. Return on average total common shareholders' equity was 8.8% and
12.4% for the twelve months ended September 30, 1996 and 1995, respectively.
Detroit Edison's ratio of earnings to fixed charges was 2.68 and 3.31 for
the twelve months ended September 30, 1996 and 1995, respectively. Detroit
Edison's ratio of
17
18
earnings to fixed charges and preferred stock dividends for the 1996 and 1995
twelve-month periods was 2.44 and 2.89, respectively.
OPERATING REVENUES
Total operating revenues of the Company increased (decreased) due to the
following factors:
Three Nine Twelve
Months Months Months
------ ---------- ------
(Millions)
Rate Changes
Special Manufacturing Contracts $ (3) $ (14) $ (24)
PSCR Clause (3) (27) 8
------ ----- -----
(6) (41) (16)
System sales volume and mix (45) 14 50
Interconnection sales (6) (7) (1)
Fermi 2 capacity factor performance standard reserve - 16 12
Other - net 2 8 9
----- ----- -----
Total $ (55) $ (10) $ 54
===== ===== =====
SPECIAL MANUFACTURING CONTRACTS
In March 1995, the MPSC issued an order approving Detroit Edison's 10-year
special manufacturing contracts with Chrysler Corporation, Ford Motor Company
and General Motors Corporation. In return for their long-term commitments,
these companies receive a reduction in the price paid for electricity. For
additional information, see Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Annual Report.
PSCR CLAUSE
The decreases in PSCR Clause revenues for the three-month and nine-month
periods resulted from lower average unit costs of fuel and purchased power.
The increase in PSCR Clause revenue for the twelve-month period resulted from
higher fuel and purchased power expense.
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19
kWh SALES
kWh sales increased (decreased) as follows:
Three Nine Twelve
Months Months Months
----------- ----------- ----------
Residential (12.6)% (1.9)% (0.2)%
Commercial (1.1) 1.3 2.0
Industrial 5.4 3.2 3.5
Other (includes primarily sales for resale) (1.2) 2.7 2.3
Total System (3.0) 1.0 1.8
Interconnection (44.1) (28.1) (8.9)
Total (6.3) (0.8) 1.2
The decreases in residential sales reflect cooler summer weather in 1996
as compared with 1995. The commercial sales decrease for the three-month
period reflects cooler summer weather, while increases in the nine-month and
twelve-month periods were due to improved economic conditions.
The increases in industrial sales reflect strong demand in the automotive
and construction sectors.
The increased sales to other customers for the nine-month and twelve-month
periods reflect increased load requirements of wholesale for resale customers.
The decreased sales to other customers for the three-month period reflect lower
weather-related demand from the wholesale for resale customers.
Interconnection sales decreases reflect a decreased demand for energy for
all periods.
FERMI 2 CAPACITY FACTOR PERFORMANCE STANDARD RESERVE
Because of a turbine-generator failure in December 1993, Fermi 2, a
nuclear generating unit, was out of service in 1994 and early 1995, and
operated at reduced capacity during the remainder of 1995 and the first three
quarters of 1996. As a result, under the MPSC capacity factor performance
standard, a disallowance of net incremental replacement power cost will be
imposed in each of the years 1994-1998 for the amount by which the Fermi 2
three-year rolling average capacity factor is less than the greater of either
the average of the top 50% of U. S. boiling water reactors or 50%. Detroit
Edison recorded a reserve for such disallowances of $31 million in 1994 and $32
million in 1995, which amounts were charged to operating revenues. For
additional information, see Notes 2 and 3 in the Annual Report.
19
20
Operating revenues have increased due to the absence of Fermi 2 reserve
charges in the 1996 nine-month period, and due to a decrease in Fermi 2 reserve
charges in the 1996 twelve-month period.
OPERATING EXPENSES
FUEL AND PURCHASED POWER
Fuel and purchased power expenses increased (decreased) due to the following
factors:
Three Nine Twelve
Months Months Months
------ ------ ------
(Millions)
Net system output $ (14) $ (5) $ 9
Average unit cost (5) (32) (48)
Fermi 2 business interruption insurance - 6 59
Other 1 3 3
----- ----- ----
Total $ (18) $ (28) $ 23
===== ===== ====
Net system output and average fuel and purchased power unit costs were as
follows:
Three Months Nine Months Twelve Months
---------------------------- ------------------------- --------------------------
1996 1995 1996 1995 1996 1995
------------- ------------- ------------ ------------ ------------ ------------
(Thousands of Megawatthours, "MWh")
Power plant generation
Fossil 11,052 10,830 31,208 31,517 41,328 41,961
Nuclear 1,628 1,917 4,778 3,240 6,629 3,207
Purchased power 1,190 2,018 3,177 4,724 3,876 6,077
------- ------- ------- ------- ------- -------
Net system output 13,870 14,765 39,163 39,481 51,833 51,245
======= ======= ======= ======= ======= =======
Average unit cost ($/MWh) $ 15.16 $ 15.54 $ 14.73 $ 15.54 $ 14.68 $ 15.62
======= ======= ======= ======= ======= =======
Fuel and purchased power expense decreased in the three-month period due
to lower net system output, and lower average unit costs resulting from
increased usage of lower-cost western low-sulfur coal and a decrease in Fermi 2
fuel expense.
For the nine-month period, fuel and purchased power expense decreased due
to lower average unit costs resulting from increased usage of lower-cost
western low-sulfur coal and lower cost nuclear generation, and lower net system
output.
For the twelve-month period, fuel and purchased power expense increased
due to the prior-period receipt of Fermi 2 business interruption insurance and
higher net system output, partially offset by lower average unit costs
resulting from increased
20
21
usage of lower cost nuclear generation and lower-cost western low-sulfur coal.
Fermi 2 was out of service in 1994 and early 1995 as a result of a
turbine-generator failure in December 1993.
OTHER OPERATION
Three Months
Other operation expense decreased due primarily to expenses recorded in
the year-earlier period for the write-off of obsolete and excess stock material
($15 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million) and Electric Power Research Institute dues ($4.8 million), lower major
storm expenses ($9 million) and lower incentive award expenses related to a
shareholder value improvement plan ($3.7 million), partially offset by higher
sales expenses ($2.7 million).
Nine Months
Other operation expense decreased due primarily to expenses recorded in
the year-earlier period for the write-off of obsolete and excess stock material
($15 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million) and Electric Power Research Institute dues ($4.8 million), lower
incentive award expenses related to a shareholder value improvement plan ($9.1
million) and lower major storm ($4 million) and injuries and damages ($3.5
million) expenses. These decreases were partially offset by higher nuclear
plant expenses ($9.1 million), lump sum payments to union employees ($4.3
million) and higher sales ($4.4 million), demand side management ($3 million),
employee retirement plan ($2.6 million) and other expenses.
Twelve Months
Other operation expense decreased due primarily to expenses recorded in
the year-earlier period for the write-off of obsolete and excess stock material
($21 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million), and Electric Power Research Institute dues ($4.8 million), lower
uncollectible expense ($6.3 million), and lower injuries and damages expense
($4.1 million). These decreases were partially offset by higher demand side
management expenses ($6 million), lump sum payments to union employees ($4.3
million) and higher sales expenses ($3.7 million).
MAINTENANCE
Three Months
Maintenance expense decreased due to lower major storm ($8.3 million),
fossil plant ($2.4 million) and nuclear plant ($1.1 million) expenses. These
decreases were partially offset by higher overhead and underground lines
support ($7.1 million), station maintenance ($1.8 million) and general property
($1.5 million) expenses.
21
22
Nine Months
Maintenance expense increased due to higher overhead and underground lines
support ($22.1 million), general property ($7.7 million), station equipment
($6.7 million) and nuclear plant ($4 million) expenses, partially offset by
lower major storm expense ($2.9 million).
Twelve Months
Maintenance expense increased due to higher overhead and underground lines
support ($23.1 million), general property ($7.7 million) and station equipment
($9 million) expenses. These increases were partially offset by lower nuclear
plant ($6.7 million) and fossil plant ($5.7 million) expenses.
STEAM HEATING SPECIAL CHARGES
As the result of continuing losses in the operation of its steam heating
business, upon adoption of Statement of Financial Accounting Standards No. 121
in the fourth quarter of 1995, Detroit Edison wrote off the remaining net book
value of its steam heating plant assets of $42 million. During the third
quarter of 1996, following the completion of a review of its steam heating
operations, Detroit Edison recorded a special charge to net income of $149.2
million ($97 million after-tax). The special charge included a reserve for
steam purchase commitments during the period from 1997 through 2008 under an
agreement with the Greater Detroit Resource Recovery Facility, the retirement
and closure of a portion of the steam heating system in 1997, and an investment
of $18 million to improve service to remaining customers.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased due primarily to increases
in plant in service, including internally developed software costs.
DEFERRED FERMI 2 AMORTIZATION
Deferred Fermi 2 amortization, a non-cash item of income, was recorded
beginning with Detroit Edison's purchase of the Wolverine Power Supply
Cooperative, Inc.'s ownership interest in Fermi 2 in February 1990. The annual
amount deferred decreases each year through 1999.
AMORTIZATION OF DEFERRED FERMI 2 DEPRECIATION AND RETURN
Deferred Fermi 2 depreciation and return, non-cash items of income, were
recorded beginning with the implementation of the Fermi 2 rate phase-in plan in
January 1988. The annual amounts of deferred depreciation and return decreased
each year through
22
23
1992. Beginning in 1993 and continuing through 1998, these deferred amounts
will be amortized to operating expense as the cash recovery is realized through
revenues.
TAXES OTHER THAN INCOME TAXES
Taxes other than income taxes increased due to higher payroll and property
taxes.
INCOME TAXES
Income taxes decreased due to lower pretax operating income.
OTHER INCOME AND DEDUCTIONS
OTHER INCOME AND (DEDUCTIONS) - NET
Three Months
Other deductions decreased due primarily to an increase in income from
merchandising, jobbing and contract work ($2.8 million), a decrease in
corporate contributions ($2.7 million), and a decrease in the write-off of
unamortized expenses related to the open market purchases of Mortgage Bonds
($1.2 million), partially offset by higher promotional practices expense ($1.6
million).
Nine Months
Other deductions decreased due primarily to lower promotional practices
expense ($6.2 million), expenses recorded in the year-earlier period for the
sale of accounts receivables and unbilled revenues ($3.1 million) and the
formation of a holding company ($2.6 million), a decrease in corporate
contributions ($2.7 million) and lower expenses related to merchandising,
jobbing and contract work ($1.3 million), partially offset by an increase in
the write-off of unamortized expenses related to the open market purchases of
Mortgage Bonds ($1.5 million).
Twelve Months
Other deductions decreased due primarily to expenses recorded in the
year-earlier period for the sale of accounts receivable and unbilled revenues
($5.9 million), lower promotional practices expense ($5.9 million), lower
corporate contributions ($4.8 million), a decrease in the write-off of
unamortized expenses related to the open market purchases of Mortgage Bonds
($3.7 million) and lower expenses incurred in the formation of a holding
company ($2.1 million).
23
24
ACCRETION INCOME
Accretion income, a non-cash item of income, was recorded beginning in
January 1988 to restore to income, over the period 1988-1998, losses recorded
due to discounting indirect disallowances of plant costs. The annual amount of
accretion income recorded decreases each year through 1998.
INTEREST CHARGES
LONG-TERM DEBT
Three Months
Long-term debt interest charges were lower due to the early redemption of
Mortgage Bonds, partially offset by the issuance of QUIDS.
Nine Months and Twelve Months
Long-term debt interest charges were higher due to the issuance of QUIDS,
partially offset by the early redemption of Mortgage Bonds.
OTHER
Other interest charges were lower due primarily to lower levels of
short-term borrowings.
PREFERRED STOCK DIVIDENDS OF DETROIT EDISON
Preferred stock dividends of Detroit Edison decreased due to the
redemption of all of the outstanding Cumulative Preferred Stock, 7.68% Series,
7.45% Series and 7.36% Series and the exchange of a portion of the 7.75% Series
for QUIDS and the redemption and/or conversion of all shares of the convertible
5.50% Series.
LIQUIDITY AND CAPITAL RESOURCES
PRIVATE SECURITIES LITIGATION REFORM ACT -
FORWARD-LOOKING STATEMENTS
Certain information presented in this Quarterly Report on Form 10-Q is
based upon the expectations of the Company and Detroit Edison and, as such, is
forward-looking. The Private Securities Litigation Reform Act of 1995
encourages reporting companies to provide analyses and estimates of future
prospects and also permits reporting companies to point out that actual results
may differ from those anticipated.
24
25
Actual results for the Company and Detroit Edison may differ from those
expected due to a number of variables including, but not limited to, the impact
of newly-required FERC tariffs, actual sales, the effects of competition,
pending regulatory proceedings, pending and proposed statutory changes, the
recovery of stranded costs, environmental and nuclear requirements and the
success of non-utility projects. While the Company and Detroit Edison believe
that estimates given accurately measure the expected outcome, actual results
could vary materially due to the variables mentioned as well as others.
COMPETITION
THE DETROIT EDISON COMPANY
FERC. On April 24, 1996, the FERC issued Orders 888 and 889. Order 888
requires public utilities to file open access transmission tariffs for
wholesale transmission services in accordance with non-discriminatory terms and
conditions established by the FERC. On July 9, 1996, Detroit Edison filed its
Pro-Forma Open Access Transmission Tariff in compliance with FERC Order 888.
The tariff sets forth the terms and conditions under which Detroit Edison will
supply wholesale Firm and Non-Firm Point-to-Point Transmission Service as well
as Network Integration Transmission Service (a service which allows the network
customer to integrate, economically dispatch and regulate its network resources
to serve its network load in a manner comparable to that in which the
transmission provider utilizes its transmission system to serve its native load
customers). Detroit Edison's filing also included the development and cost
support for the rates to be charged for transmission service and the various
ancillary services that are required to be offered. Order 888 permits the
recovery of stranded costs on a case by case basis. The FERC has initiated
proceedings to review Detroit Edison's tariff filing.
Effective with the filing, Detroit Edison must take transmission service
(including ancillary services) under the open access tariff for any new
wholesale sales or purchases. Existing economy energy coordination agreements
must be unbundled to take service under the transmission tariff after December
31, 1996. Effective October 1996, all bills submitted to wholesale
requirements customers must include unbundled informational rates as a line
item in order to allow customers to compare rates and evaluate alternative
contracts. By December 31, 1996, Detroit Edison, as a member of a pool, must
file a joint pool-wide pro forma tariff and must begin to take service under
that tariff for all pool transactions. Power pool agreements must be reformed
to establish open, non-discriminatory provisions and to modify any provisions
that are unduly discriminatory or preferential.
By January 3, 1997, public utilities are required by Order 889 to obtain
transmission information for wholesale transactions through a system on the
Internet. Public utilities
25
26
must separate transmission operations and reliability functions from wholesale
marketing functions.
FERC has also issued a NOPR on Capacity Reservation Transmission Tariffs
("CRT"). The NOPR requested comment by October 21, 1996 on whether there are
certain disadvantages inherent in offering transmission service on both a
network and point-to-point basis and whether comparability can be better
accomplished using a single different methodology. The proposed CRT approach
suggests that no later than December 31, 1997, all pro forma point-to-point and
network service be replaced with a single point-to-point tariff that provides
for reservation-based transmission service for all jurisdictional (wholesale
sales and wholesale and retail transmission) service.
Detroit Edison is currently unable to estimate the revenue impact, if any,
of these newly required tariffs and procedures.
MPSC. On April 12, 1996, the MPSC issued a "Scheduling Order" which
required Detroit Edison and Consumers Power Company to file "applications" by
May 15, 1996 containing proposals addressing the recommendation of Michigan
Governor Engler and the Michigan Jobs Commission ("MJC") to "allow new
industrial/commercial electrical load to be negotiated directly from the
generator and wheeled over 'common' transmission" by January 1, 1997.
Detroit Edison filed its application on May 15, 1996, stating that the
MJC's report set out a framework for a transition to a competitive environment
that included six specific recommendations associated with a near term deadline
of January 1, 1997. However, the MPSC's scheduling order only sought proposals
regarding the first recommendation. Detroit Edison indicated it does not
support piecemeal implementation of the MJC's framework. Detroit Edison also
stated that, although the MPSC has no legal authority to compel Michigan
utilities to offer retail wheeling services, it would voluntarily develop a
retail wheeling program as part of a comprehensive implementation of the MJC's
recommendations, including the development of a mechanism to recover stranded
costs.
Detroit Edison also indicated that it will take some time to develop a
tariff that, among other things, identifies and separates the transmission and
distribution facilities as required by FERC Order 888. In the interim, Detroit
Edison requested ex parte authority to immediately offer an Economic Growth
Service Rider to be used as a tool to attract new business. The proposed
rider, which is still before the MPSC, contains significant price discounts for
new commercial and industrial customers.
The MPSC conducted a series of five public hearings during the months of
July and August, 1996, to provide an opportunity for the public to address the
issues surrounding the restructuring of the electric utility industry,
including, but not limited to issues raised by the recommendations of the MJC.
26
27
Detroit Edison is continuing to address its competitive status and the
needs of its customers by entering into long-term (as long as 10 years) service
contracts with large commercial and industrial customers. A number of such
contracts, which must be approved by the MPSC prior to implementation, are
pending before the MPSC.
CASH GENERATION AND CASH REQUIREMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Net cash from operating activities decreased for the three-month period
due primarily to changes in current assets and liabilities. Net cash from
operating activities increased in the nine-month and twelve-month periods due
primarily to changes in current assets and liabilities, primarily as a result
of the 1995 repurchase of customer accounts receivable and unbilled revenues.
Net cash used for investing activities was higher due to increased plant
and equipment expenditures.
Net cash used for financing activities was lower in the three-month and
twelve-month periods due primarily to a decrease in funds used to reduce
short-term borrowings. Net cash used for financing activities for the
nine-month period was higher due to higher redemptions of long-term debt. Net
cash used for financing activities for Detroit Edison was higher in the
nine-month and twelve-month periods due to the cash portion of a restructuring
dividend to the Company.
ADDITIONAL INFORMATION
During the period May through September 1996, Detroit Edison purchased a
total of $56.5 million of Mortgage Bonds on the open market, consisting of
$29.5 million of 7.74% 1993 Series J, $26.0 million of 8.24% 1993 Series C and
$1 million of 8.25% 1993 Series C. These bonds have been canceled.
Detroit Edison's 1996 cash requirements for its capital expenditure
program are estimated at $482 million, of which $351 million had been expended
as of September 30, 1996.
Detroit Edison's internal cash generation is expected to be sufficient to
meet cash requirements for capital expenditures as well as scheduled long-term
debt redemptions.
Detroit Edison had short-term credit arrangements of approximately $450
million at September 30, 1996, under which no borrowings were outstanding.
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28
NON-REGULATED INVESTMENTS
Expenditures for 1996 non-regulated investments are estimated at $80
million, of which $49 million had been expended at September 30, 1996.
A project financing arrangement is in place for affiliate borrowings of up
to $50 million, of which $32.3 million was outstanding at September 30, 1996.
This arrangement is supported by specific project assets.
At September 30, 1996, DTE Capital Corporation had a $200 million
Revolving Credit Agreement, backed by a Support Agreement from the Company,
under which no borrowings were outstanding.
CAPITALIZATION
The Company's capital structure as of September 30, 1996 was 46.7% common
shareholders' equity, 2.0% cumulative preferred stock of subsidiary and 51.3%
long-term debt as compared to 45.7%, 4.3% and 50.0%, respectively, at December
31, 1995.
28
29
DTE ENERGY COMPANY
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
On May 28, 1996 an order was issued by the Circuit Court for Wayne County,
Michigan certifying a plaintiff class (Gilford, et al v Detroit Edison) in a
lawsuit claiming that Detroit Edison had engaged in age and racial
discrimination. Detroit Edison has requested leave to appeal the class
certification to the Michigan Court of Appeals and has, also, filed a motion
for summary disposition of the lawsuit with the Circuit Court for Wayne County.
In October, 1996, the Michigan Court of Appeals issued an order staying
proceedings in the Circuit Court and directing that immediate consideration be
given to the issue of whether to grant Detroit Edison's application for leave
to appeal. Thereafter, the Court of Appeals dissolved the stay and denied
leave for appeal. Detroit Edison has requested reconsideration of these
rulings. Detroit Edison is of the opinion that the allegations of
discrimination are without merit.
ITEM 5 - OTHER INFORMATION.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission" of the Annual
Report, Detroit Edison is subject to the regulatory jurisdiction, including
rates, of the MPSC. On September 30, 1996, Detroit Edison filed its PSCR plan
recommending a fuel adjustment for bills rendered in 1997. Fuel and purchased
power costs are expected to decrease 10.6 percent, on average, in 1997 over the
corresponding forecast for 1996. A pre-hearing conference in this matter is
scheduled for November 1996.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Conservation and
Demand-Side Management Programs" of the Annual Report, on April 11, 1994, the
MPSC issued an order authorizing Detroit Edison to collect a surcharge to
install energy conservation measures in low-income customer households. The
MPSC, at Detroit Edison's request, approved the elimination of the surcharge
in an order dated August 22, 1996.
As discussed in part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Conservation and
Demand-Side Management Programs" of the Annual Report, the MPSC in June 1988
ordered each Michigan gas and electric utility to file a biennial energy
conservation report including a three-year plan. On August 5, 1996, Detroit
Edison filed its fourth biennial plan for 1997 and beyond. In the plan,
Detroit Edison requests that it be allowed to spend in 1997 (and 1998, if
necessary) the remaining funds collected for its 1994-1996 energy conservation
programs. An MPSC order is expected by the end of 1996.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Retail Wheeling"
of the Annual Report and in Item 5 - Other Information of the Quarterly Report
for the quarter ended June 30,
29
30
1996, MascoTech Forming Technologies, Inc., a Detroit Edison industrial
customer currently purchasing approximately 25 MW of electricity annually (with
the potential for an additional 6 MW annually) petitioned the MPSC to establish
a "cost based fair and pro-competitive transportation rate" for its new and
existing electric load. On August 5, 1996, in resolution of this petition
Detroit Edison and MascoTech Forming Technologies, Inc. entered into a
long-term Large Customer Contract. The MPSC issued an order on September 12,
1996 approving the contract and an order was issued on October 7, 1996,
dismissing the MascoTech direct access case.
As discussed in Part 1 - Items 1 and 2 - Business and Properties,
"Environmental Matters - Water" of the Annual Report and Item 5 - Other
Information of the Quarterly Report for the quarter ended June 30, 1996,
National Pollution Discharge Elimination System ("NPDES") permits for Detroit
Edison's power plants are issued by the MDEQ pursuant to delegation by the EPA
under the federal Clean Water Act. The NPDES permit for the Fermi 2 Power
Plant was issued on May 31, 1996. On July 24, an anti-nuclear power group
filed a petition for a contested case hearing challenging the issuance of the
permit. In September, 1996, the MDEQ filed a briefing memo recommending
approval of the hearing request. An October 7, 1996 letter from the
Administrative Law Judge announced the matter will now be moved to hearing.
While it is unknown what the outcome of the hearing will be, the Fermi 2 permit
remains in effect. Permit renewal applications for six other plants have been
submitted (in 1994 and earlier); those existing expired permits remain
effective until new permits are issued or denied.
As discussed in Part 1 - Items 1 and 2 - Business and Properties,
"Environmental Matters - Wastes and Toxic Substances" of the Annual Report and
Item 5 - Other Information of the Quarterly Report for the quarter ended March
31, 1996, in April, 1996, the MDEQ conducted an Integrated Assessment on
Detroit Edison owned property, formerly known as the Monroe City Landfill,
located next to the Monroe Power Plant. The site was on the State of
Michigan's list of contaminated sites and the Comprehensive Environmental
Response, Compensation and Liability Act list. In October, 1996, the company
received a copy of the report and a letter from the MDEQ indicating that it was
recommending that the site be designated "No Further Remedial Action Planned."
An all time peak demand of 10,337 MW was experienced for Detroit Edison's
system on August 7, 1996. The new peak, which included certain loads on the
Company's interruptible rates, was served using a combination of installed
generation, long-term purchases, and seasonal capacity purchases without any
loss of power for firm customers. The previous peak was 10,049 MW set in
August 1995.
30
31
QUARTERLY REPORT ON FORM 10-Q FOR
THE DETROIT EDISON COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED).
See pages 9 through 15.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
See the Company's and Detroit Edison's "Item 2 - Management's Discussion
and Analysis of Financial Condition and Results of Operations," which is
incorporated herein by this reference.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
See the Company's "Item 1 - Legal Proceedings," which is incorporated
herein by this reference.
ITEM 5 - OTHER INFORMATION.
By letter dated October 9, 1996, the Nuclear Regulatory Commission
requested all reactor licensees, including Detroit Edison, to submit
information concerning the adequacy and availability of nuclear power plant
design basis information. This information is due March 1997. Detroit Edison
will make its report submission on a timely basis.
See the Company's "Item 5 - Other Information," which is incorporated
herein by this reference.
31
32
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(i) Exhibits filed herewith.
Exhibit
Number
4-177 - First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture.
11-5 - DTE Energy Company and Subsidiary Companies Primary and Fully
Diluted Earnings Per Share of Common Stock.
15-3 - Awareness Letter of Deloitte & Touche LLP regarding their report
dated November 7, 1996.
27-7 - Financial Data Schedule for the period ended September 30, 1996
for the Company.
27-8 - Financial Data Schedule for the period ended September 30, 1996
for Detroit Edison.
99-13 - Fourth Amendment, dated as of August 29, 1996, to $200,000,000
364-Day Credit Agreement, dated as of September 1, 1990, as
amended, among Detroit Edison, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New York Branch, as Agent.
99-14 - Fourth Amendment, dated as of September 1, 1996, to $200,000,000
Multi-Year (formerly Three-Year) Credit Agreement, dated as of
September 1, 1993, as amended among Detroit Edison, Renaissance,
the Banks party thereto and Barclays Bank, PLC, New York Branch,
as Agent.
(ii) Exhibits incorporated herein by reference.
3(a) - Restated Articles of Incorporation of Detroit Edison, as filed
December 10, 1991 with the State of Michigan, Department of
Commerce - Corporation and Securities Bureau (Exhibit 4-117 to
Form 10-Q for quarter ended March 31, 1993).
32
33
Exhibit
Number
3(b) - Certificate containing resolution of the Detroit Edison Board of
Directors establishing the Cumulative Preferred Stock, 7.75%
Series as filed February 22, 1993 with the State of Michigan,
Department of Commerce - Corporation and Securities Bureau
(Exhibit 4-134 to Form 10-Q for quarter ended March 31, 1993).
3(c) - Certificate containing resolution of the Detroit Edison Board of
Directors establishing the Cumulative Preferred Stock, 7.74%
Series, as filed April 21, 1993 with the State of Michigan,
Department of Commerce - Corporation and Securities Bureau (Exhibit
4-140 to Form 10-Q for quarter ended March 31, 1993).
3(d) - Amended and Restated Articles of Incorporation of the Company,
dated December 13, 1995 (Exhibit 3A (3.1) to the Company's Form 8-B
filed January 2, 1996, File No. 1-11607).
3(e) - Agreement and Plan of Exchange (Exhibit 1(2) to the Company's Form
8-B filed January 2, 1996, File No. 1-11607).
3(f) - Amended and Restated By-Laws, dated as of February 26, 1996, of
the Company (Exhibit 3-3 to Form 10-K for year ended December 31,
1995).
3(g) - Amended and Restated By-Laws, dated as of February 26, 1996, of
Detroit Edison (Exhibit 3-4 to Form 10-K for year ended December
31, 1995).
4(a) - Mortgage and Deed of Trust, dated as of October 1, 1924, between
Detroit Edison (File No. 1-2198) and Bankers Trust Company as
Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures
supplemental thereto, dated as of dates indicated below, and filed
as exhibits to the filings as set forth below:
September 1, 1947 Exhibit B-20 to Registration No. 2-7136
October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096
November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160
January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595
June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643
June 30, 1982 Exhibit 4-30 to Registration No. 2-78941
August 15, 1982 Exhibit 4-32 to Registration No. 2-79674
October 15, 1985 Exhibit 4-170 to Form 10-K for year ended
December 31, 1994
33
34
Exhibit
Number
November 30, 1987 Exhibit 4-139 to Form 10-K for year ended
December 31, 1992
July 15, 1989 Exhibit 4-171 to Form 10-K for year ended
December 31, 1994
December 1, 1989 Exhibit 4-172 to Form 10-K for year ended
December 31, 1994
February 15, 1990 Exhibit 4-173 to Form 10-K for year ended
December 31, 1994
November 1, 1990 Exhibit 4-110 to Form 10-K for year ended
December 31, 1990
April 1, 1991 Exhibit 4-15 to Form 10-K for year ended
December 31, 1995
May 1, 1991 Exhibit 4-112 to Form 10-Q for quarter ended
June 30, 1991
May 15, 1991 Exhibit 4-113 to Form 10-Q for quarter ended
June 30, 1991
September 1, 1991 Exhibit 4-116 to Form 10-Q for quarter ended
September 30, 1991
November 1, 1991 Exhibit 4-119 to Form 10-K for year ended
December 31, 1991
January 15, 1992 Exhibit 4-120 to Form 10-K for year ended
December 31, 1991
February 29, 1992 Exhibit 4-121 to Form 10-Q for quarter ended
March 31, 1992
April 15, 1992 Exhibit 4-122 to Form 10-Q for quarter ended
June 30, 1992
July 15, 1992 Exhibit 4-123 to Form 10-Q for quarter ended
September 30, 1992
July 31, 1992 Exhibit 4-124 to Form 10-Q for quarter ended
September 30, 1992
November 30, 1992 Exhibit 4-130 to Registration No. 33-56496
January 1, 1993 Exhibit 4-131 to Registration No. 33-56496
March 1, 1993 Exhibit 4-141 to Form 10-Q for quarter ended
March 31, 1993
March 15, 1993 Exhibit 4-142 to Form 10-Q for quarter ended
March 31, 1993
April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter ended
March 31, 1993
April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter ended
March 31, 1993
May 31, 1993 Exhibit 4-148 to Registration No. 33-64296
June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter ended
June 30, 1993 (1993 Series AP)
34
35
Exhibit
Number
June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter ended
June 30, 1993 (1993 Series H)
September 15, 1993 Exhibit 4-158 to Form 10-Q for quarter ended
September 30, 1993
March 1, 1994 Exhibit 4-163 to Registration No. 33-53207
June 15, 1994 Exhibit 4-166 to Form 10-Q for quarter ended
June 30, 1994
August 15, 1994 Exhibit 4-168 to Form 10-Q for quarter ended
September 30, 1994
December 1, 1994 Exhibit 4-169 to Form 10-K for year ended
December 31, 1994
August 1, 1995 Exhibit 4-174 to Form 10-Q for quarter ended
September 30, 1995.
4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993
(Exhibit 4-152 to Registration No. 33-50325).
4(c) - First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit
4-153 to Registration No. 33-50325).
4(d) - Second Supplemental Note Indenture, dated as of September 15, 1993
(Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993).
4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994
(Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994).
4(f) - First Amendment, dated as of December 12, 1995, to Third Supplemental
Note Indenture, dated as of August 15, 1994 (Exhibit 4-12 to
Registration No. 333-00023).
4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995
(Exhibit 4-175 to Form 10-Q for quarter ended September 30, 1995).
4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996
(Exhibit 4-14 to Form 10-K for year ended December 31, 1995).
4(i) - Standby Note Purchase Credit Facility, dated as of August 17, 1994,
among The Detroit Edison Company, Barclays Bank PLC, as Bank and
Administrative Agent, Bank of America, The Bank of New York, The Fuji
Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union Bank and
Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as
Remarketing Agents (Exhibit 99-18 to Form 10-Q for quarter ended
September 30, 1994).
35
36
Exhibit
Number
4(j) - Support Agreement, dated as of March 8, 1996, between the Company
and Detroit Edison (Exhibit 4-176 to Form 10-Q for quarter ended
March 31, 1996).
99(a) - Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982
(Exhibit 28-5 to Registration No. 2-81501).
99(b) - Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency, dated as
of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501).
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4,
1988, between Detroit Edison and Renaissance (Exhibit 99-6 to
Registration No. 33-50325).
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement,
dated as of February 1, 1990, between Detroit Edison and
Renaissance (Exhibit 99-7 to Registration No. 33-50325).
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement,
dated as of September 1, 1993, between Detroit Edison and
Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent (Exhibit 99-12 to Registration No.
33-50325).
99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among Detroit
Edison, Renaissance, the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for
quarter ended September 30, 1994).
99(h) - Third Amendment, dated as of March 8, 1996, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-11 to
Form 10-Q for quarter ended March 31, 1996).
36
37
Exhibit
Number
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993,
among Detroit Edison, Renaissance and Barclays Bank PLC, New York
Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325).
99(j) - First Amendment, dated as of September 1, 1994, to $200,000,000
Three-Year Credit Agreement, dated as of September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and Barclays
Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q
for quarter ended September 30, 1994).
99(k) - Third Amendment, dated as of March 8, 1996, to $200,000,000
Three-Year Credit Agreement, dated September 1, 1993, as amended
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-12 to
Form 10-Q for quarter ended March 31, 1996).
99(l) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance
(Exhibit 99-9 to Registration No. 33-50325).
99(m) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance (Exhibit 99-10 to Registration No.
33-50325).
99(n) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance (Exhibit 99-11 to Registration No.
33-50325).
99(o) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and Renaissance (Exhibit 99-21 to Form
10-Q for quarter ended September 30, 1994).
99(p) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of
October 4, 1988, between Detroit Edison and Renaissance (Exhibit
99-10 to Form 10-Q for quarter ended March 31, 1996).
99(q) - Credit Agreement, dated as of March 1, 1996 among DTE Capital
Corporation, the Initial Lenders named therein, and Citibank, N.A.,
as Agent (Exhibit 99-9 to Form 10-Q for quarter ended March 31,
1996).
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38
(b) Reports on Form 8-K
The Registrants each filed a Current Report on Form 8-K, dated
September 9, 1996, during the third quarter of 1996 in which it was
disclosed that Detroit Edison was recording an additional non-cash
charge to net income based upon a review of steam heating operations.
38
39
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DTE ENERGY COMPANY
--------------------------------------
(Registrant)
Date November 7, 1996 /s/ SUSAN M. BEALE
---------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date November 7, 1996 /s/ RONALD W. GRESENS
----------------------------------------
Ronald W. Gresens
Vice President and Controller
39
40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE DETROIT EDISON COMPANY
---------------------------------------
(Registrant)
Date November 7, 1996 /s/ SUSAN M. BEALE
---------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date November 7, 1996 /s/ RONALD W. GRESENS
----------------------------------------
Ronald W. Gresens
Vice President and Controller
40
41
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY (FILE NO. 1-11607) AND
THE DETROIT EDISON COMPANY (FILE NO. 1-2198)
EXHIBIT INDEX
(i) Exhibits filed herewith.
Exhibit Page No.
Number --------
4-177 - First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture.
11-5 - DTE Energy Company and Subsidiary Companies Primary
and Fully Diluted Earnings Per Share of Common Stock.
15-3 - Awareness Letter of Deloitte & Touche LLP regarding
their report dated November 7, 1996.
27-7 - Financial Data Schedule for the period ended
September 30, 1996 for the Company.
27-8 - Financial Data Schedule for the period ended
September 30, 1996 for Detroit Edison.
99-13 - Fourth Amendment, dated as of August 29, 1996, to
$200,000,000 364-Day Credit Agreement, dated as of September 1,
1990, as amended, among Detroit Edison, Renaissance, the Banks
party thereto and Barclays Bank, PLC, New York Branch, as Agent.
99-14 - Fourth Amendment, dated as of September 1, 1996, to
$200,000,000 Multi-Year (formerly Three-Year) Credit Agreement,
dated as of September 1, 1993, as amended among Detroit Edison,
Renaissance, the Banks party thereto and Barclays Bank, PLC, New
York Branch, as Agent.
(ii) Exhibits incorporated by reference. See Pages _____
through ____ for
location of Exhibits
Incorporated by
Reference
3(a) - Restated Articles of Incorporation of Detroit Edison,
as filed December 10, 1991 with the State of Michigan, Department
of Commerce - Corporation and Securities Bureau.
42
Exhibit
Number
- -------
3(b) - Certificate containing resolution of the Detroit
Edison Board of Directors establishing the Cumulative Preferred
Stock, 7.75% Series as filed February 22, 1993 with the State of
Michigan, Department of Commerce - Corporation and Securities
Bureau.
3(c) - Certificate containing resolution of the Detroit
Edison Board of Directors establishing the Cumulative Preferred
Stock, 7.74% Series, as filed April 21, 1993 with the State of
Michigan, Department of Commerce - Corporation and Securities
Bureau.
3(d) - Amended and Restated Articles of Incorporation of the
Company, dated December 13, 1995.
3(e) - Agreement and Plan of Exchange.
3(f) - Amended and Restated By-Laws, dated as of February
26, 1996, of the Company.
3(g) - Amended and Restated By-Laws, dated as of February
26, 1996, of Detroit Edison.
4(a) - Mortgage and Deed of Trust, dated as of October 1,
1924, between Detroit Edison and Bankers Trust Company as Trustee
and indentures supplemental thereto, dated as of dates indicated
below:
September 1, 1947
October 1, 1968
November 15, 1971
January 15, 1973
June 1, 1978
June 30, 1982
August 15, 1982
October 15, 1985
43
Exhibit
Number
- -------
November 30, 1987
July 15, 1989
December 1, 1989
February 15, 1990
November 1, 1990
April 1, 1991
May 1, 1991
May 15, 1991
September 1, 1991
November 1, 1991
January 15, 1992
February 29, 1992
April 15, 1992
July 15, 1992
July 31, 1992
November 30, 1992
January 1, 1993
March 1, 1993
March 15, 1993
April 1, 1993
April 26, 1993
May 31, 1993
June 30, 1993
(1993 Series AP)
June 30, 1993
(1993 Series H)
September 15, 1993
March 1, 1994
June 15, 1994
August 15, 1994
December 1, 1994
August 1, 1995
4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993.
4(c) - First Supplemental Note Indenture, dated as of June 30, 1993.
4(d) - Second Supplemental Note Indenture, dated as of September 15,
1993.
4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994.
4(f) - First Amendment, dated as of December 12, 1995, to Third
Supplemental Note Indenture, dated as of August 15, 1994.
44
Exhibit
Number
- -------
4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995.
4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996.
4(i) - Standby Note Purchase Credit Facility, dated as of August 17,
1994, among The Detroit Edison Company, Barclays Bank PLC, as
Bank and Administrative Agent, Bank of America, The Bank of
New York, The Fuji Bank Limited, The Long-Term Credit Bank of
Japan, LTD, Union Bank and Citicorp Securities, Inc. and First
Chicago Capital Markets, Inc. as Remarketing Agents.
4(j) - Support Agreement, dated as of March 8, 1996, between the
Company and Detroit Edison.
99(a) - Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982.
99(b) - Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency,
dated as of December 1, 1982.
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October
4, 1988, between Detroit Edison and Renaissance.
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement,
dated as of February 1, 1990, between Detroit Edison and
Renaissance.
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement,
dated as of September 1, 1993, between Detroit Edison and
Renaissance.
99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent.
99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
45
Exhibit
Number
- -------
99(h) - Third Amendment, dated as of March 8, 1996, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993,
among Detroit Edison, Renaissance and Barclays Bank PLC, New York
Branch, as Agent.
99(j) - First Amendment, dated as of September 1, 1994, to $200,000,000
Three-Year Credit Agreement, dated as of September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and Barclays
Bank, PLC, New York Branch, as Agent.
99(k) - Third Amendment, dated as of March 8, 1996, to $200,000,000
Three-Year Credit Agreement, dated September 1, 1993, as amended
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
99(l) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance.
99(m) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance.
99(n) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance.
99(o) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and Renaissance.
99(p) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of
October 4, 1988, between Detroit Edison and Renaissance.
99(q) - Credit Agreement, dated as of March 1, 1996 among DTE Capital
Corporation, the Initial Lenders named therein, and Citibank, N.A.,
as Agent.