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 MARCH 31, 1998
COMMISSION REGISTRANTS; STATE OF INCORPORATION; I.R.S. EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
- ----------- ------------------------------------------ ------------------
1-11607 DTE Energy Company 38-3217752
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-4000
1-2198 The Detroit Edison Company 38-0478650
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-8000
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES X NO
--- ---
At March 31, 1998, 145,075,152 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 MARCH 31, 1998
This document contains the Quarterly Reports on Form 10-Q for the quarter ended
March 31, 1998 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 - Condensed Consolidated Financial Statements (Unaudited).................4
Notes to Condensed Consolidated Financial
Statements (Unaudited).................................................15
Independent Accountants' Report........................................17
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................18
Item 3 - Quantitative and Qualitative Disclosures about Market Risk.............22
Quarterly Report on Form 10-Q for The Detroit Edison Company:
Part I- Financial Information...........................................................23
Item 1 - Condensed Consolidated Financial Statements (Unaudited)................23
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................23
Part II-Other Information...............................................................23
Item 5 - Other Information......................................................23
Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit Edison Company:
Item 6 - Exhibits and Reports on Form 8-K.......................................24
Signature Page to DTE Energy Company Quarterly Report on Form 10-Q........................32
Signature Page to The Detroit Edison Company Quarterly Report on Form 10-Q................33
2
3
DEFINITIONS
Annual Report ..........1997 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 39 through 61 and 65 through 67 of the 1997
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
DTE Capital. ...........DTE Capital Corporation (a wholly owned subsidiary of
DTE Energy Company)
FERC ...................Federal Energy Regulatory Commission
kWh ....................Kilowatthour
MPSC ...................Michigan Public Service Commission
MWh ....................Megawatthour
MW .....................Megawatt
Note(s) ................Note(s) to Condensed Consolidated Financial
Statements (Unaudited) appearing herein
PSCR ...................Power Supply Cost Recovery
QUIDS ..................Quarterly Income Debt Securities
Registrant .............Company or Detroit Edison, as the case may be
Retail Access Tariff ...A rate paid to sell power on a utility system
3
4
QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
DTE ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In Millions, Except Per Share Amounts)
Three Months Ended
March 31
--------------------
1998 1997
--------- ---------
OPERATING REVENUES $ 945 $ 869
--------- ---------
OPERATING EXPENSES
Fuel and purchased power 208 199
Operation and maintenance 266 233
Depreciation and amortization 165 166
Taxes other than income 71 69
Other 2 1
--------- ---------
Total Operating Expenses 712 668
--------- ---------
OPERATING INCOME 233 201
--------- ---------
INTEREST EXPENSE AND OTHER
Interest expense 74 71
Preferred stock dividends of subsidiary 3 3
Other - net - 4
--------- ---------
Total Interest Expense and Other 77 78
--------- ---------
INCOME BEFORE INCOME TAXES 156 123
INCOME TAXES 52 52
--------- ---------
NET INCOME $ 104 $ 71
========= =========
AVERAGE COMMON SHARES OUTSTANDING 145 145
--------- ---------
EARNINGS PER COMMON SHARE - BASIC AND DILUTED $ 0.72 $ 0.49
--------- ---------
See notes to condensed consolidated financial statements (unaudited).
4
5
DTE ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Millions)
Three Months Ended
March 31
--------------------
1998 1997
--------------------
OPERATING ACTIVITIES
Net Income $ 104 $ 71
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 165 166
Other 3 50
Changes in current assets and liabilities:
Accounts receivable 47 (17)
Inventories 12 4
Payables 5 33
Other (97) (72)
- ---------------------------------------------------------------------------------------------------
Net cash from operating activities 239 235
- ---------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures (125) (91)
Investment in limited partnership (200) -
Nuclear decommissioning trust funds (29) (9)
Other 6 (1)
- ---------------------------------------------------------------------------------------------------
Net cash used for investing activities (348) (101)
- ---------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt - 7
Increase (Decrease) in short-term borrowings 377 (6)
Redemption of long-term debt (169) (45)
Dividends on common stock (75) (75)
Other - (1)
- ---------------------------------------------------------------------------------------------------
Net cash from (used for) financing activities 133 (120)
- ---------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 24 14
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 99 53
- ---------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 123 $ 67
===================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 85 $ 77
Income taxes paid 20 1
New capital lease obligations 17 33
See notes to condensed consolidated financial statements (unaudited).
5
6
DTE ENERGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In Millions, Except Per Share Amounts and Shares)
March 31 December 31
1998 1997
-------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 123 $ 99
Accounts receivable
Customer (less allowance for doubtful
accounts of $20) 296 305
Accrued unbilled revenues 124 137
Other 53 78
Inventories (at average cost)
Fuel 127 130
Materials and supplies 165 173
Other 101 13
-------- --------
989 935
-------- --------
INVESTMENTS
Nuclear decommissioning trust funds 268 239
Other 264 57
-------- --------
532 296
-------- --------
PROPERTY
Property, plant and equipment 14,612 14,495
Property under capital leases 256 256
Nuclear fuel under capital lease 623 607
Construction work in progress 18 16
-------- --------
15,509 15,374
-------- --------
Less accumulated depreciation and amortization 6,602 6,440
-------- --------
8,907 8,934
-------- --------
OTHER ASSETS
Regulatory assets 801 856
Other 213 202
-------- --------
1,014 1,058
-------- --------
TOTAL ASSETS $ 11,442 $ 11,223
======== ========
See notes to condensed consolidated financial statements (unaudited).
6
7
March 31 December 31
1998 1997
-------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 146 $ 161
Accrued interest 43 57
Dividends payable 78 78
Accrued payroll 92 81
Short-term borrowings 419 42
Accumulated deferred income taxes 62 64
Current portion long-term debt 55 205
Current portion capital leases 114 110
Other 240 219
-------- -----------
1,249 1,017
-------- -----------
OTHER LIABILITIES
Accumulated deferred income taxes 1,953 1,983
Accumulated deferred investment tax credits 297 301
Capital leases 135 137
Other 316 302
-------- -----------
2,701 2,723
-------- -----------
LONG-TERM DEBT 3,757 3,777
-------- -----------
SHAREHOLDERS' EQUITY
Detroit Edison cumulative preferred stock, $100
par value, 6,747,484 shares authorized,
5,207,657 issued, 1,501,223 shares outstanding 144 144
Common stock, without par value, 400,000,000 shares
authorized, 145,075,152 and 145,097,829 issued
and outstanding, respectively 1,951 1,951
Retained earnings 1,640 1,611
-------- -----------
TOTAL SHAREHOLDERS' EQUITY 3,735 3,706
-------- -----------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,442 $ 11,223
======== ===========
See notes to condensed consolidated financial statements (unaudited).
7
8
DTE ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(In Millions, Except Per Share Amounts; Shares in Thousands)
1998
---------------------
Shares Amount
---------------------
DETROIT EDISON CUMULATIVE PREFERRED STOCK
Balance at beginning of year 1,501 $ 144
------- ------
Balance at March 31, 1998 1,501 $ 144
- ------------------------------------------------------------------------------
COMMON STOCK
Balance at beginning of year 145,098 $1,951
Repurchase and retirement of common stock (23) -
------- ------
Balance at March 31, 1998 145,075 $1,951
- ------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of year $1,611
Net income 104
Dividends declared on common stock ($0.515) per share (75)
------
Balance at March 31, 1998 $1,640
- ------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $3,735
==============================================================================
See notes to condensed consolidated financial statements (unaudited).
8
9
[This page intentionally left blank.]
9
10
THE DETROIT EDISON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In Millions)
Three Months Ended
March 31
--------------------
1998 1997
--------- ---------
OPERATING REVENUES $ 901 $ 864
--------- ---------
OPERATING EXPENSES
Fuel and purchased power 208 199
Operation and maintenance 221 227
Depreciation and amortization 163 165
Taxes other than income 70 68
Other 2 1
--------- ---------
Total Operating Expenses 664 660
--------- ---------
OPERATING INCOME 237 204
--------- ---------
INTEREST EXPENSE AND OTHER
Interest expense 68 71
Other - net 5 5
--------- ---------
Total Interest Expense and Other 73 76
--------- ---------
INCOME BEFORE INCOME TAXES 164 128
INCOME TAXES 66 54
--------- ---------
NET INCOME $ 98 $ 74
PREFERRED STOCK DIVIDENDS 3 3
--------- ---------
NET INCOME AVAILABLE FOR COMMON STOCK $ 95 $ 71
========= =========
Note: Detroit Edison's condensed consolidated 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 notes to condensed consolidated financial statements (unaudited).
10
11
THE DETROIT EDISON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Millions)
Three Months Ended
March 31
------------------
1998 1997
------------------
OPERATING ACTIVITIES
Net Income $ 98 $ 74
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 163 165
Other (1) 53
Changes in current assets and liabilities:
Accounts receivable 54 (15)
Inventories 2 4
Payables 22 32
Other (108) (72)
- ------------------------------------------------------------------------------------------------
Net cash from operating activities 230 241
- ------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures (118) (86)
Nuclear decommissioning trust funds (29) (9)
Other (3) 1
- ------------------------------------------------------------------------------------------------
Net cash used for investing activities (150) (94)
- ------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase (Decrease) in short-term borrowings 164 (6)
Redemption of long-term debt (169) (45)
Dividends on common stock and preferred stock (83) (83)
- ------------------------------------------------------------------------------------------------
Net cash used for financing activities (88) (134)
- ------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (8) 13
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 15 2
- ------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 7 $ 15
================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 79 $ 77
Income taxes paid 26 1
New capital lease obligations 17 33
See notes to condensed consolidated financial statements (unaudited).
11
12
THE DETROIT EDISON COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In Millions, Except Per Share Amounts and Shares)
March 31 December 31
1998 1997
-------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7 $ 15
Accounts receivable
Customer (less allowance for doubtful
accounts of $20) 291 300
Accrued unbilled revenues 124 137
Other 32 63
Inventories (at average cost)
Fuel 127 130
Materials and supplies 155 150
Other 98 11
------- -------
834 806
------- -------
INVESTMENTS
Nuclear decommissioning trust funds 268 239
Other 48 38
------- -------
316 277
------- -------
PROPERTY
Property, plant and equipment 14,316 14,204
Property under capital leases 256 256
Nuclear fuel under capital lease 623 607
Construction work in progress 10 12
------- -------
15,205 15,079
------- -------
Less accumulated depreciation and amortization 6,589 6,431
------- -------
8,616 8,648
------- -------
OTHER ASSETS
Regulatory assets 801 856
Other 168 158
------- -------
969 1,014
------- -------
TOTAL ASSETS $10,735 $10,745
======= =======
See notes to condensed consolidated financial statements (unaudited).
12
13
March 31 December 31
1998 1997
-------- -----------
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 141 $ 150
Accrued interest 42 56
Dividends payable 83 83
Accrued payroll 92 80
Short-term borrowings 164 -
Accumulated deferred income taxes 62 64
Current portion long-term debt 19 169
Current portion capital leases 114 110
Other 237 218
------- -------
954 930
------- -------
OTHER LIABILITIES
Accumulated deferred income taxes 1,937 1,973
Accumulated deferred investment tax credits 297 301
Capital leases 135 137
Other 312 300
------- -------
2,681 2,711
------- -------
LONG-TERM DEBT 3,512 3,531
------- -------
SHAREHOLDER'S EQUITY
Cumulative preferred stock, $100 par value,
6,747,484 shares authorized, 5,207,657 issued,
1,501,223 shares outstanding 144 144
Common stock, $10 par value, 400,000,000 shares
authorized, 145,119,875 issued and outstanding 1,451 1,451
Premium on common stock 548 548
Common stock expense (48) (48)
Retained earnings 1,493 1,478
------- -------
TOTAL SHAREHOLDER'S EQUITY 3,588 3,573
------- -------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $10,735 $10,745
======= =======
See notes to condensed consolidated financial statements (unaudited).
13
14
THE DETROIT EDISON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
(UNAUDITED)
(In Millions, Except Per Share Amounts; Shares in Thousands)
1998
----------------------
Shares Amount
----------------------
CUMULATIVE PREFERRED STOCK
Balance at beginning of year 1,501 $ 144
------- -------
Balance at March 31, 1998 1,501 $ 144
- ------------------------------------------------------------------
COMMON STOCK
Balance at beginning of year 145,120 $1,451
------- -------
Balance at March 31, 1998 145,120 $1,451
- ------------------------------------------------------------------
PREMIUM ON COMMON STOCK
Balance at beginning of year $ 548
-------
Balance at March 31, 1998 $ 548
- ------------------------------------------------------------------
COMMON STOCK EXPENSE
Balance at beginning of year $ (48)
-------
Balance at March 31, 1998 $ (48)
- ------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of year $1,478
Net income 98
Dividends declared
Common stock ($0.55 per share) (80)
Cumulative preferred stock* (3)
-------
Balance at March 31, 1998 $1,493
- ------------------------------------------------------------------
TOTAL SHAREHOLDER'S EQUITY $3,588
=================================================================
* At established rate for each series.
See notes to condensed consolidated financial statements (unaudited).
14
15
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
NOTE 1 - ANNUAL REPORT NOTES
These condensed consolidated financial statements should be read in conjunction
with the Annual Report Notes. The Notes contained herein update and supplement
matters discussed in 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 condensed consolidated financial statements are unaudited, but in the
opinion of the Company and Detroit Edison, with respect to its own financial
statements, include all adjustments necessary for a fair statement of the
results for the interim periods. Financial results for this interim period are
not necessarily indicative of results that may be expected for any other
interim period or for the fiscal year.
NOTE 2 - SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
At March 31, 1998, Detroit Edison had total short-term credit arrangements of
approximately $683 million under which $164 million was outstanding. The
amounts outstanding at March 31, 1998 consisted of $64 million of commercial
paper and $100 million secured by its customer accounts receivable and unbilled
revenues portfolio.
At March 31, 1998, DTE Capital had $255 million of commercial paper
outstanding, backed by a Support Agreement from the Company.
NOTE 3 - LONG-TERM DEBT
The Company had $78.5 million in cash and cash equivalents restricted by debt
covenants at March 31, 1998.
NOTE 4- CONTINGENCIES
LEGAL PROCEEDINGS - Plaintiffs in a class action pending in the Circuit Court
for Wayne County, Michigan (Gilford, et al v. Detroit Edison), as well as
plaintiffs in two other pending actions which make class claims (Sanchez, et al
v. Detroit Edison, Circuit Court for Wayne County, Michigan; and Frazier v.
Detroit Edison, United States District Court, Eastern District of Michigan),
have entered into a settlement with Detroit Edison. The agreement provides
that Detroit Edison's monetary liability is to be no less than $17.5 million
and no greater than $65 million after the conclusion of all related
proceedings. An amount related to this agreement was accrued at December 31,
1997.
15
16
----------------------------------
This Quarterly Report on Form 10-Q, including the report of Deloitte & Touche
LLP (on page 17) 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 Nos. 333-00023 and 333-47247) 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.
16
17
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 subsidiaries and of The Detroit Edison Company and
subsidiaries as of March 31, 1998, and the related condensed consolidated
statements of income and cash flows for the three-month periods ended March 31,
1998 and 1997, and the condensed consolidated statements of changes in
shareholders' equity for the three-month period ended March 31, 1998. 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
subsidiaries and of The Detroit Edison Company and subsidiaries as of December
31, 1997, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated January 26, 1998, 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, 1997 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
April 27, 1998
17
18
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
This analysis for the three months ended March 31, 1998, as compared to the
same period in 1997, should be read in conjunction with the condensed
consolidated financial statements (unaudited), the accompanying Notes, and the
Annual Report Notes.
Detroit Edison is the principal subsidiary of the Company and, as such, unless
otherwise identified, this discussion explains material changes in results of
operations of both the Company and Detroit Edison and identifies recent trends
and events affecting both the Company and Detroit Edison.
GROWTH
During the first quarter of 1998, the Company invested in the following new
non-regulated energy related businesses:
- - DTE Energy Services, Inc. purchased a limited partnership interest in
Indiana Harbor Coke Company, L.P. for $200 million. The partnership will
own and operate four heat-recovery coke batteries consisting of 268 ovens,
to serve the Inland Steel Co. integrated steel mill in East Chicago,
Indiana, and other customers. The batteries are scheduled to begin
operating in the second quarter of 1998.
- - DTE Energy Technologies, Inc. was formed to market systems integrator
solutions to supermarkets, restaurants and retail chains. The subsidiary
acquired the assets of Hy-Save, a refrigerant pump manufacturer.
Detroit Edison plans to put the Conners Creek generation plant back in service
by July 1, 1998. The plant is expected to add 120 MW of coal-fired capacity.
ELECTRIC INDUSTRY DEREGULATION
MICHIGAN PUBLIC SERVICE COMMISSION
As discussed in the Annual Report, there are ongoing Michigan legislative,
judicial and administrative proceedings considering the deregulation of the
generation segment of the Michigan electric public utility industry, among
other things. Neither the Company nor Detroit Edison are able to predict the
outcome or timing of these proceedings.
On February 11, the MPSC issued an order directing Detroit Edison to file its
retail access tariff by February 25, and also directed the MPSC Staff to begin
discussions to amicably resolve implementation issues. In its February 25
filing of the retail access tariffs, Detroit Edison indicated that several
preconditions must be met prior to
18
19
beginning direct access, including assurance of stranded cost recovery
through a statewide true-up mechanism, and a base rate freeze. Several parties
have filed objections to Detroit Edison's retail access tariff and the
preconditions.
In March Detroit Edison filed a proposal to suspend the PSCR clause and to
set the Fermi 2 Performance Standard adjustment at zero. The MPSC has not yet
acted on this request.
On April 6, Detroit Edison submitted a Draft Customer Choice Implementation
Plan to the MPSC Staff. The draft plan outlines the guidelines and processes
necessary to successfully implement retail access in the State of Michigan.
Key aspects of this plan include: rules for supplier and customer
participation, an explanation of the tasks and processes involved in changing
Detroit Edison's business practices to accommodate customer choice, and a
description of an awareness and education campaign to educate employees,
customers, and others on the basics of customer choice. The MPSC Staff has
initiated a series of three public forums to discuss the draft implementation
plans of Detroit Edison and Consumers Energy Company.
The Company is continuing to hold discussions with the MPSC, the Michigan
legislature and other interested parties on all of the above matters.
LIQUIDITY AND CAPITAL RESOURCES
CASH PROVIDED BY OPERATING ACTIVITIES
Net cash from operating activities was comparable in 1998 and 1997.
CASH USED FOR INVESTING ACTIVITIES
Net cash used for investing was higher due to increased non-regulated
investments, plant and equipment expenditures and contributions to the nuclear
decommissioning trust funds.
Cash requirements for non-regulated investments are estimated to be
approximately $488 million in 1998, of which $200 million had been expended as
of March 31, 1998.
Detroit Edison's 1998 cash requirements for its capital expenditure program are
estimated at $512 million, of which $118 million had been expended as of March
31, 1998.
CASH FROM (USED FOR) FINANCING ACTIVITIES
Net cash from financing was higher due to increased DTE Capital and Detroit
Edison short-term borrowings, partially offset by redemptions of
long-term debt.
In May 1998, Detroit Edison plans to issue $100 million of QUID's which will be
used to redeem $100 million of the 7.75% series of Cumulative Preferred Stock.
19
20
RESULTS OF OPERATIONS
For the three months ended March 31, 1998, the Company's net income was $104
million, or $0.72 per common share as compared to $71 million, or $0.49 per
common share earned in the three months ended March 31, 1997.
The 1998 three-month earnings were higher than the 1997 due to increased
earnings from non-regulated subsidiary operations, the 1997 increase in the
Fermi 2 Performance Standard accrual and 1997 expenses for a major ice storm.
Storm damage costs of $30 million incurred during the first three quarters of
1997 were deferred in the fourth quarter of 1997 and are being amortized to
expense over a 24 month period beginning in January 1998.
OPERATING REVENUES
Increases in operating revenues were due primarily to higher non-regulated
subsidiary revenues, higher system and interconnection sales, partially offset
by decreases in total system revenues driven mainly by lower rates.
Detroit Edison kWh sales increased as compared to the prior year as follows:
Three
Months
------
Residential 0.5 %
Commercial 2.8
Industrial 1.3
Other (includes primarily sales for resale) 51.6
Total System 3.4
Sales between utilities 239.2
Total 11.8
The increase in residential sales resulted from growth in the customer base.
Commercial sales increased for the three-month period, reflecting a
continuation of favorable economic conditions. The increase in industrial sales
reflects increased demand in the construction and automotive sectors. Sales to
other customers increased reflecting increased demand from sales for resale
customers. Sales between utilities increased due to greater demand for energy
and increased availability of energy for sale.
20
21
OPERATING EXPENSES
FUEL AND PURCHASED POWER
Net system output and average fuel and purchased power unit costs were as
follows:
Three Months
--------------------------
1998 1997
------- -------
(Thousands of MWh)
Power plant generation
Fossil 11,043 10,366
Nuclear 1,983 (14)
Purchased power 966 2,204
------- -------
Net system output 13,992 12,556
======= =======
Average unit cost ($/MWh) $ 13.54 $ 14.92
======= =======
Fuel and purchased power expense increased due to higher net system output and
the prior-period receipt of Fermi 2 business insurance proceeds, partially
offset by lower average unit costs resulting from replacing higher cost
purchased power with lower cost nuclear generation as a result of Fermi 2 being
back in service.
OPERATION AND MAINTENANCE
Operation and maintenance expense for the Company increased due primarily to
new non-regulated subsidiary operation expense ($40 million) and higher
Detroit Edison compensation expense related to a shareholder value improvement
plan ($5.8 million), partially offset by lower Detroit Edison major storm
expense ($13.1 million).
INCOME TAXES
Although income before income taxes was higher in 1998 than 1997, income tax
expense for the Company did not change due primarily to increased alternate
fuels credits in 1998.
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.
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, the
implementation of utility
21
22
restructuring in Michigan (which involves pending regulatory proceedings,
pending and proposed statutory changes and the recovery of stranded costs),
environmental and nuclear requirements and the success of non-regulated
lines of business. 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.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
DTE Energy Trading Company began operations in the first quarter of 1998. Its
operations did not have a material impact on the Company.
22
23
QUARTERLY REPORT ON FORM 10-Q FOR
THE DETROIT EDISON COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
See pages 10 through 16.
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 5 - OTHER INFORMATION.
A March MPSC Order directed Detroit Edison to refund to customers $24.1 million
in April, the total of the 1996 PSCR Reconciliation and Fermi 2 Performance
Standard disallowance. This amount was accrued at December 31, 1997.
On April 14, the MPSC issued an order granting Detroit Edison's March 31
request to waive competitive bidding for Connors Creek and restart the plant.
Based on a 1995 case, the MPSC concluded that Detroit Edison has a need for at
least 417 MW of additional capacity in 1998, 570 MW of additional capacity in
1999, and additional capacity in future years. The MPSC reiterated findings
from an earlier order which directed Detroit Edison to implement a retail
wheeling experiment covering 90 MW of load once the utility required additional
capacity. The order indicated that if Detroit Edison fails to take reasonable
actions to provide adequate supplies for its customers, then the MPSC will make
corresponding adjustments to the utility's authorized rate of return to reflect
actual service quality. In an April 24 informational filing with the MPSC,
Detroit Edison has proposed customer options that will assist in meeting
customer demand this summer. Detroit Edison also proposed an experimental
program permitting certain industrial customers with interruptible service to
secure their own backup power during the summer peak periods in 1998 and 1999.
The filing also suggests that large customers may be permitted to negotiate for
reduced usage under a capacity release program. Detroit Edison declined to
implement the 90MW retail wheeling experiment for the reason that it would not
contribute to meeting the capacity need.
23
24
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(i) Exhibits filed herewith.
Exhibit
Number
4-187 - Supplemental Mortgage Indenture, dated as of
February 29, 1992, with respect to the 1992 Series AP
Mortgage Bonds.
4-188 - Supplemental Mortgage Indenture, dated as of April 15, 1992,
with respect to the Series KKP No. 13 Mortgage Bonds.
4-189 - Supplemental Mortgage Indenture, dated as of July 15, 1992,
with respect to the 1992 Series CP Mortgage Bonds.
4-190 - Supplemental Mortgage Indenture, dated as of July 31, 1992,
with respect to the 1992 Series D Mortgage Bonds.
4-191 - Supplemental Indenture, dated as of March 1, 1993, with
respect to the 1993 Series E Mortgage Bonds.
4-192 - Supplemental Indenture, dated as of March 15, 1993, with
respect to the 1993 Series D Mortgage Bonds.
10-17* - 1998 Shareholder Value Improvement Plan Measures.
10-18* - 1998 Executive Incentive Plan Measures.
10-19* - Amended and Restated Detroit Edison Savings Reparation Plan
(February 23, 1998).
10-20* - Restricted Stock Agreement, dated March 23, 1998, between
Detroit Edison and Anthony F. Earley, Jr.
10-21* - Amended and Restated Post-Employment Income Agreement, dated
March 23, 1998, between Detroit Edison and Anthony F. Earley,
Jr.
10-22* - Certain Arrangements pertaining to the employment of S. Martin
Taylor.
24
25
Exhibit
Number
10-23* - Certain Arrangements pertaining to the employment of Larry G.
Garberding.
10-24* - Form of Indemnification Agreement between Detroit Edison and
(1) John E. Lobbia, (2) Larry G. Garberding and (3) Anthony F.
Earley, Jr.
10-25* - Form of Indemnification Agreement between Detroit Edison and
its Directors.
11-11 - DTE Energy Company Basic and Diluted Earnings Per Share of
Common Stock.
15-7 - Awareness Letter of Deloitte & Touche LLP regarding their
report dated April 27, 1998.
27-19 - Financial Data Schedule for the period ended March 31, 1998
for DTE Energy Company.
27-20 - Financial Data Schedule for the period ended March 31, 1998
for The Detroit Edison Company.
(ii) Exhibits incorporated herein by reference.
3(a) - Amended and Restated Articles of Incorporation of DTE Energy
Company, dated December 13, 1995. (Exhibit 3-5 to Form 10-Q
for quarter ended September 30, 1997).
3(b) - Certificate of Designation of Series A Junior Participating
Preferred Stock of DTE Energy Company. (Exhibit 3-6 to
Form 10-Q for quarter ended September 30, 1997).
3(c) - 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).
3(d) - 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(e) - Certificate containing resolution of the Detroit Edison
Board of Directors establishing the Cumulative Preferred
Stock, 7.74% Series,
25
26
Exhibit
Number
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(f) - Rights Agreement, dated as of September 23, 1997,
by and between DTE Energy Company and The Detroit Edison
Company, as Rights Agent (Exhibit 4-1 to DTE Energy Company
Current Report on Form 8-K, dated September 22, 1997).
3(g) - Agreement and Plan of Exchange (Exhibit 1(2) to DTE
Energy Form 8-B filed January 2, 1996, File No. 1-11607).
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
July 15, 1989 Exhibit 4-171 to Form 10-K for year ended
December 31, 1994
December 1, 1989 Exhibit 4-172 to Form 10-K for year ended
December 31, 1994
February 15, 1990 Exhibit 4-173 to Form 10-K for year ended
December 31, 1994
April 1, 1991 Exhibit 4-15 to Form 10-K for year ended
December 31, 1996
May 1, 1991 Exhibit 4-178 to Form 10-K for year ended
December 31, 1996
May 15, 1991 Exhibit 4-179 to Form 10-K for year ended
December 31, 1996
September 1, 1991 Exhibit 4-180 to Form 10-K for year ended
December 31, 1996
November 1, 1991 Exhibit 4-181 to Form 10-K for year ended
December 31, 1996
January 15, 1992 Exhibit 4-182 to Form 10-K for year ended
December 31, 1996
26
27
Exhibit
Number
November 30, 1992 Exhibit 4-130 to Registration No. 33-56496
January 1, 1993 Exhibit 4-131 to Registration No. 33-56496
April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter
ended March 31, 1993
April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter
ended March 31, 1993
May 31, 1993 Exhibit 4-148 to Registration No. 33-64296
June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter
ended June 30, 1993 (1993 Series AP)
June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter
ended June 30, 1993 (1993 Series H)
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) - First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture (Exhibit 4-17 to Form 10-Q
for quarter ended September 30, 1996).
4(f) - Third Supplemental Note Indenture, dated as of August 15, 1994
(Exhibit 4-169 to Form 10-Q for quarter ended
September 30, 1994).
4(g) - First Amendment, dated as of December 12, 1995, to Third
Supplemental Note Indenture, dated as of August 15, 1994
(Exhibit 4-12 to Registration No. 333-00023).
27
28
Exhibit
Number
4(h) - Fourth Supplemental Note Indenture, dated as of August 15, 1995
(Exhibit 4-175 to Detroit Edison Form 10-Q for quarter
ended September 30, 1995).
4(i) - Fifth Supplemental Note Indenture, dated as of February 1, 1996
(Exhibit 4-14 to Form 10-K for year ended December 31, 1996).
4(j) - 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).
99(a) - Belle River Participation Agreement between Detroit
Edison and Michigan Public Power Agency, dated as of
December 1, 1982 (Exhibit 28-5 to Registration No. 2-81501).
99(b) - Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency, dated
as of December 1, 1982 (Exhibit 28-6 to Registration
No. 2-81501).
99(c) - 1988 Amended and Restated Loan Agreement, dated as
of October 4, 1988, between Renaissance Energy Company (an
unaffiliated company) ("Renaissance") and Detroit Edison
(Exhibit 99-6 to Registration No. 33-50325).
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement,
dated as of February 1, 1990, between Detroit Edison
and Renaissance (Exhibit 99-7 to Registration No. 33-50325).
99(e) - Second Amendment to 1988 Amended and Restated Loan
Agreement, dated as of September 1, 1993, between Detroit Edison
and Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) - Third Amendment, dated as of August 28, 1997, to
1988 Amended and Restated Loan Agreement between Detroit Edison
and Renaissance. (Exhibit 99-22 to Form 10-Q for quarter ended
September 30, 1997).
99(g) - $200,000,000 364-Day Credit Agreement, dated as of
September 1, 1993, among Detroit Edison, Renaissance and
Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-12 to
Registration No. 33-50325).
28
29
Exhibit
Number
99(h) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among The
Detroit Edison Company, Renaissance, the Banks party thereto
and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-19
to Form 10-Q for quarter ended September 30, 1994).
99(i) - Third Amendment, dated as of March 8, 1996, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks party thereto
and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-11
to Form 10-Q for quarter ended March 31, 1996).
99(j) - Fourth Amendment, dated as of August 29, 1996, to $200,000,000
364-Day Credit Agreement as of September 1, 1990, as amended,
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-13 to
Form 10-Q for quarter ended September 30, 1996).
99(k) - Fifth Amendment, dated as of September 1, 1997, to $200,000,000
Multi-Year Credit Agreement, dated as of September 1, 1993, as
amended, among Detroit Edison, Renaissance, the Banks Party
thereto and Barclays Bank PLC, New York Branch, as Agent.
(Exhibit 99-24 to Form 10-Q for quarter ended September 30,
1997).
99(l) - $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(m) - 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(n) - 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(o) - 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
29
30
Exhibit
Number
York Branch, as Agent (Exhibit 99-14 to Form 10-Q for quarter
ended September 30, 1996).
99(p) - Fifth Amendment, dated as of August 28, 1997, to $200,000,000
364-Day Credit Agreement, dated as of September 1, 1990, as
amended, among Detroit Edison, Renaissance, the Banks Party
thereto and Barclays Bank PLC, New York Branch, as Agent.
(Exhibit 99-25 to Form 10-Q for quarter ended
September 30, 1997).
99(q) - 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(r) - 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(s) - Second Amendment, dated as of September 1, 1993, to
1988 Amended and Restated Nuclear Fuel Heat Purchase Contract
between Detroit Edison and Renaissance (Exhibit 99-11 to
Registration No. 33-50325).
99(t) - 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(u) - 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(v) - Sixth Amendment, dated as of August 28, 1997, to 1988
Amended and Restated Nuclear Fuel Heat Purchase Contract
between Detroit Edison and Renaissance. (Exhibit 99-23 to Form
10-Q for quarter ended September 30, 1997).
99(w) - Standby Note Purchase Credit Facility, dated as of
September 12, 1997, among Detroit Edison and the Bank's
Signatory thereto and The Chase Manhattan Bank, as
Administrative Agent, and Citicorp Securities, Inc., Lehman
Brokers, Inc., as Remarketing Agents and Chase Securities, Inc.
as Arranger. (Exhibit 99-26 to Form 10-Q for quarter ended
September 30, 1997).
30
31
Exhibit
Number
99(x) - Amended and Restated Credit Agreement, Dated as of
January 21, 1998 among DTE Capital Corporation, the Initial
Lenders, Citibank, N.A., as Agent, and Barclays Bank PLC, New
York Branch and The First National Bank of Chicago, as
Co-Agents, and Citicorp Securities, Inc., as Arranger.
(Exhibit 99-27 to Form 10-K for year ended December 31, 1997.)
99(y) - $60,000,000 Support Agreement dated as of January 21, 1998
between DTE Energy Company and DTE Capital Corporation.
(Exhibit 4-183 to Form 10-K for year ended December 31, 1997.)
99(z) - $400,000,000 Support Agreement, dated as of January 21, 1998,
between DTE Energy Company and DTE Capital Corporation.
(Exhibit 4-184 to Form 10-K for year ended December 31, 1997.)
(b) Registrants did not file any reports on Form 8-K during first quarter
1998.
(c) *Denotes management contract or compensatory plan or arrangement
required to be entered as an exhibit to this report.
31
32
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 April 27, 1998 /s/ SUSAN M. BEALE
-------------- --------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date April 27, 1998 /s/ DAVID E. MEADOR
-------------- --------------------------------------
David E. Meador
Vice President and Controller
32
33
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 April 27, 1998 /s/ SUSAN M. BEALE
-------------- --------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date April 27, 1998 /s/ DAVID E. MEADOR
-------------- --------------------------------------
David E. Meador
Vice President and Controller
33
34
QUARTERLY REPORTS ON FORM
10-Q FOR THE QUARTER
ENDED MARCH 31, 1998
DTE ENERGY COMPANY FILE NO. 1-11607
DETROIT EDISON COMPANY FILE NO. 1-2198
Exhibits filed herewith.
Exhibit
Number
4-187- Supplemental Mortgage Indenture,
dated as of February 29, 1992, with
respect to the 1992 Series AP Mortgage
Bonds.
4-188- Supplemental Mortgage Indenture,
dated as of April 15, 1992 with
respect to the Series KKP No. 13
Mortgage Bonds.
4-189- Supplemental Mortgage Indenture, dated
as of July 15, 1992, with respect to
the 1992 Series CP Mortgage Bonds.
4-190- Supplemental Mortgage Indenture, dated
as of July 31, 1992, with respect to
the 1992 Series D Mortgage Bonds.
4-191- Supplemental Indenture, dated as of
March 1, 1993, with respect to the
1993 Series E Mortgage Bonds.
4-192- Supplemental Indenture, dated as of
March 15, 1993, with respect to the
1993 Series D Mortgage Bonds.
10-17*- 1998 Shareholder Value Improvement
Plan Measures.
10-18*- 1998 Executive Incentive Plan
Measures.
10-19* Amended and Restated Detroit Edison
Savings Reparation Plan (February 23,
1998).
10-20* Restricted Stock Agreement, dated
March 23, 1998, between Detroit Edison
and Anthony F. Early, Jr.
35
10-21*- Amended and Restated Post-Employment
Income Agreement, dated March 23,
1998, between Detroit Edison and
Anthony F. Earley, Jr.
10-22*- Certain Arrangements pertaining to the
employment of S. Martin Taylor.
10-23* Certain Arrangements pertaining to the
employment of Larry G. Garberding.
10-24*- Form of Indemnification Agreement
between Detroit Edison and (1) John E.
Lobbia, (2) Larry G. Garberding and
(3) Anthony F. Earley.
10-25* Form of Indemnification Agreement
between Detroit Edison and its
Directors.
11-11- DTE Energy Company Basic and Diluted
Earnings Per Share of Common Stock.
15-7- Awareness Letter of Deloitte & Touche
LLP regarding their report dated April
27, 1998.
27-19- Financial Data Schedule for the period
ended March 31, 1998 for DTE Energy
Company.
27-20- Financial Data Schedule for the period
ended March 31, 1998 for The Detroit
Edison Company.
Exhibits incorporated herein by reference. See Page Nos.___ through
___ for location of exhibits
incorporated by reference
3(a)- Amended and Restated Articles of
Incorporation of DTE Energy Company,
dated December 13, 1995.
3(b)- Certificate of Designation of Series A
Junior Participating Preferred Stock
of DTE Energy Company.
3(c)- Restated Articles of Incorporation of
Detroit Edison, as filed December 10,
1991 with the State of Michigan,
Department of Commerce - Corporation
and Securities Bureau.
36
3(d)- 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(e)- 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(f)- Rights Agreement, dated as of
September 23, 1997, by and between DTE
Energy Company and The Detroit Edison
Company, as Rights Agent.
3(g)- Agreement and Plan of Exchange
(Exhibit 1(2) to DTE Energy Form 8-B
filed January 2, 1996, File No.
1-11607).
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
July 15, 1989
December 1, 1989
February 15, 1990
April 1, 1991
May 1, 1991
May 15, 1991
September 1, 1991
November 1, 1991
January 15, 1992
November 30, 1992
January 1, 1993
April 1, 1993
April 26, 1993
37
May 31, 1993
June 30, 1993
June 30, 1993
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)- First Amendment, dated as of August
15, 1996, to Second Supplemental Note
Indenture.
4(f)- Third Supplemental Note Indenture,
dated as of August 15, 1994.
4(g)- First Amendment, dated as of December
12, 1995, to Third Supplemental Note
Indenture, dated as of August 15,
1994.
4(h)- Fourth Supplemental Note Indenture,
dated as of August 15, 1995.
4(i)- Fifth Supplemental Note Indenture,
dated as of February 1, 1996.
4(j)- 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.
99(a)- Belle River Participation Agreement
between Detroit Edison and Michigan
Public Power Agency, dated as of
December 1, 1982.
38
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 Renaissance Energy
Company (an unaffiliated company)
("Renaissance") and Detroit Edison.
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)- Third Amendment, dated as of August
28, 1997, to 1988 Amended and Restated
Loan Agreement between Detroit Edison
and Renaissance.
99(g)- $200,000,000 364-Day Credit Agreement,
dated as of September 1, 1993, among
Detroit Edison, Renaissance and
Barclays Bank PLC, New York Branch, as
Agent.
99(h)- First Amendment, dated as of August
31, 1994, to $200,000,000 364-Day
Credit Agreement, dated September 1,
1993, among The Detroit Edison
Company, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New
York Branch, as Agent.
99(i)- Third Amendment, dated as of March 8,
1996, to $200,000,000 364-Day Credit
Agreement, dated September 1, 1993, as
amended, among Detroit Edison,
Renaissance, the Banks party thereto
and Barclays Bank, PLC, New York
Branch, as Agent.
99(j)- Fourth Amendment, dated as of August
29, 1996, to $200,000,000 364-Day
Credit Agreement as of September 1,
1990, as amended, among Detroit
Edison, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New
York Branch, as Agent.
99(k)- Fifth Amendment, dated as of September
1, 1997, to $200,000,000 Multi-Year
Credit Agreement, dated as of
39
September 1, 1993, as amended, among
Detroit Edison, Renaissance, the Banks
Party thereto and Barclays Bank PLC,
New York Branch, as Agent.
99(l)- $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(m)- 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(n)- 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(o)- 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.
99(p)- Fifth Amendment, dated as of August
28, 1997, to $200,000,000 364-Day
Credit Agreement, dated as of
September 1, 1990, as amended, among
Detroit Edison, Renaissance, the Banks
Party thereto and Barclays Bank PLC,
New York Branch, as Agent.
99(q)- 1988 Amended and Restated Nuclear Fuel
Heat Purchase Contract, dated October
4, 1988, between Detroit Edison and
Renaissance.
99(r)- First Amendment to 1988 Amended and
Restated Nuclear Fuel Heat Purchase
Contract, dated as of February 1,
1990, between Detroit Edison and
Renaissance.
99(s)- Second Amendment, dated as of
September 1, 1993, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase
Contract between Detroit Edison and
Renaissance.
40
99(t)- 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(u)- 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(v)- Sixth Amendment, dated as of August
28, 1997, to 1988 Amended and Restated
Nuclear Fuel Heat Purchase Contract
between Detroit Edison and
Renaissance.
99(w)- Standby Note Purchase Credit Facility,
dated as of September 12, 1997, among
Detroit Edison and the Bank's
Signatory thereto and The Chase
Manhattan Bank, as Administrative
Agent, and Citicorp Securities, Inc.,
Lehman Brokers, Inc., as Remarketing
Agents and Chase Securities, Inc. as
Arranger.
99(x)- Amended and Restated Credit Agreement,
Dated as of January 21, 1998 among DTE
Capital Corporation, the Initial
Lenders, Citibank, N.A., as Agent, and
Barclays Bank PLC, New York Branch and
The First National Bnak of Chicago, as
Co-Agents, and Citicorp Securities,
Inc., as Arranger.
99(y)- $60,000,000 Support Agreement dated as
of January 21, 1998 between DTE Energy
Company and DTE Capital Corporation.
99(z)- $400,000,000 Support Agreement, dated
as of January 21, 1998, between DTE
Energy Company and DTE Capital
Corporation.
*Denotes management contract or compensatory plan or arrangement
required to be entered as an exhibit to this report.