<PAGE> 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 QUARTER ENDED COMMISSION FILE NUMBER
MARCH 31, 1995 1-2198
__________________________________
THE DETROIT EDISON COMPANY
(Exact name of registrant as specified in its charter)
MICHIGAN 38-0478650
(State of incorporation) (I.R.S. Employer
Identification No.)
2000 SECOND AVENUE, DETROIT, MICHIGAN 48226
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(313) 237-8000
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS 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
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
----- ------
AT APRIL 30, 1995, 144,875,094 SHARES OF THE COMPANY'S $10 PAR VALUE COMMON
STOCK WERE OUTSTANDING.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1 - Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . . 8
Independent Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . 11
Part II - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 19
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
DEFINITIONS
<TABLE>
<S> <C>
Annual Report . . . . . . . . The Company's 1994 Annual Report to the Securities and Exchange Commission on Form 10-K
Annual Report Notes . . . . . Notes to Consolidated Financial Statements appearing on pages 37 through 48 of the
Company's 1994 Annual Report to the Securities and Exchange Commission on Form 10-K
Company . . . . . . . . . . . The Detroit Edison Company and subsidiary companies
Consumers . . . . . . . . . . Consumers Power Company
FERC . . . . . . . . . . . . Federal Energy Regulatory Commission
kWh . . . . . . . . . . . . . Kilowatthour
MPSC . . . . . . . . . . . . Michigan Public Service Commission
MW . . . . . . . . . . . . . Megawatts
Note(s) . . . . . . . . . . . Note(s) to Consolidated Financial Statements (Unaudited) appearing herein
NRC . . . . . . . . . . . . . Nuclear Regulatory Commission
PSCR . . . . . . . . . . . . Power Supply Cost Recovery
Registrant . . . . . . . . . The Detroit Edison Company
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED).
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
March 31 March 31
---------------------------------------------------------------
1995 1994 1995 1994
---------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $ 863,048 $ 870,506 $ 3,440,893 $ 3,484,612
Electric - Interconnection 7,339 16,639 33,841 66,683
Steam 9,887 12,444 25,292 28,657
- --------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 880,274 $ 899,589 $ 3,500,026 $ 3,579,952
- --------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $ 169,660 $ 195,030 $ 693,845 $ 770,109
Purchased power 35,112 43,806 108,253 107,398
Other operation 137,373 140,341 618,098 616,691
Maintenance 52,471 56,171 258,710 245,588
Depreciation and amortization 125,044 115,983 485,476 438,179
Deferred Fermi 2 amortization (1,493) (1,866) (7,092) (8,585)
Amortization of deferred Fermi 2 depreciation
and return 23,247 21,207 86,868 44,372
Taxes other than income 62,645 69,314 249,204 263,018
Income taxes 82,051 70,284 282,425 291,648
- --------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $ 686,110 $ 710,270 $ 2,775,787 $ 2,768,418
- --------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $ 194,164 $ 189,319 $ 724,239 $ 811,534
- --------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS
Allowance for other funds used
during construction $ 315 $ 443 $ 1,556 $ 2,123
Other income and (deductions) - net (13,335) (3,073) (35,387) (24,407)
Income taxes 4,998 925 12,337 8,309
Accretion income 3,014 3,645 13,013 36,614
Income taxes - disallowed plant costs and
accretion income (929) (1,144) (4,037) (11,415)
- --------------------------------------------------------------------------------------------------------------------
Net Other Income and Deductions $ (5,937) $ 796 $ (12,518) $ 11,224
- --------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INTEREST CHARGES $ 188,227 $ 190,115 $ 711,721 $ 822,758
- --------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 68,424 $ 69,945 $ 272,242 $ 304,877
Amortization of debt discount, premium
and expense 2,799 2,617 11,015 10,257
Other 3,901 4,993 10,077 9,416
Allowance for borrowed funds used during
construction (credit) (387) (310) (2,142) (1,361)
- --------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 74,737 $ 77,245 $ 291,192 $ 323,189
- --------------------------------------------------------------------------------------------------------------------
NET INCOME $ 113,490 $ 112,870 $ 420,529 $ 499,569
PREFERRED STOCK DIVIDEND REQUIREMENTS 7,407 7,412 29,634 30,104
- --------------------------------------------------------------------------------------------------------------------
EARNINGS FOR COMMON STOCK $ 106,083 $ 105,458 $ 390,895 $ 469,465
====================================================================================================================
COMMON SHARES OUTSTANDING - AVERAGE 144,864,103 147,050,429 145,612,411 147,038,591
EARNINGS PER SHARE $ 0.73 $ 0.72 $ 2.68 $ 3.19
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $ 0.515 $ 0.515 $ 2.06 $ 2.06
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
3
<PAGE> 4
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31 December 31
1995 1994
----------------- -----------------
<S> <C> <C>
UTILITY PROPERTIES
Plant in service
Electric $ 13,001,033 $ 12,941,414
Steam 70,426 69,813
- -------------------------------------------------------------------------------------------------------------------
$ 13,071,459 $ 13,011,227
Less: Accumulated depreciation and amortization (4,646,022) (4,529,692)
- -------------------------------------------------------------------------------------------------------------------
$ 8,425,437 $ 8,481,535
Construction work in progress 124,761 104,431
- -------------------------------------------------------------------------------------------------------------------
Net utility properties $ 8,550,198 $ 8,585,966
- -------------------------------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $96,055 and $94,678, respectively) $ 132,626 $ 134,542
Nuclear fuel under capital lease (less accumulated amortization
of $378,625 and $374,405, respectively) 186,982 193,411
- -------------------------------------------------------------------------------------------------------------------
Net property under capital leases $ 319,608 $ 327,953
- -------------------------------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,869,806 $ 8,913,919
- -------------------------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 11,163 $ 11,281
Investments and special funds 17,260 18,722
Nuclear decommissioning trust funds 88,463 76,492
- -------------------------------------------------------------------------------------------------------------------
$ 116,886 $ 106,495
- -------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 16,589 $ 8,122
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $29,000 and $30,000, respectively) 320,217 195,824
Other accounts receivable 28,930 34,212
Inventories (at average cost)
Fuel 140,165 136,331
Materials and supplies 156,703 155,921
Prepayments 75,978 10,516
- -------------------------------------------------------------------------------------------------------------------
$ 738,582 $ 540,926
- -------------------------------------------------------------------------------------------------------------------
DEFERRED DEBITS
Unamortized debt expense $ 42,438 $ 42,876
Unamortized loss on reacquired debt 121,809 123,996
Recoverable income taxes 650,916 663,101
Other postretirement benefits 31,933 36,562
Fermi 2 phase-in plan 367,517 390,764
Fermi 2 deferred amortization 53,752 52,259
Other 148,379 122,080
- -------------------------------------------------------------------------------------------------------------------
$ 1,416,744 $ 1,431,638
- -------------------------------------------------------------------------------------------------------------------
TOTAL $ 11,142,018 $ 10,992,978
===================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
<PAGE> 5
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31 December 31
1995 1994
----------------- -----------------
<S> <C> <C>
CAPITALIZATION
Common stock - $10 par value, 400,000,000 shares authorized;
144,865,754 and 144,863,447 shares outstanding, respectively
(309,483 and 311,804 shares, respectively, reserved for conversion
of preferred stock) $ 1,448,658 $ 1,448,635
Premium on common stock 545,843 545,825
Common stock expense (47,462) (47,461)
Retained earnings used in the business 1,410,558 1,379,081
- --------------------------------------------------------------------------------------------------------------------------------
Total common shareholders' equity $ 3,357,597 $ 3,326,080
Cumulative preferred stock - $100 par value, 6,747,484 shares
authorized; 3,905,057 and 3,905,470 shares outstanding,
respectively (1,539,827 shares unissued)
Redeemable solely at the option of the Company 380,243 380,283
Long-term debt 3,825,311 3,825,296
- --------------------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 7,563,151 $ 7,531,659
- --------------------------------------------------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 124,094 $ 126,076
Other postretirement benefits 34,477 37,143
Other 49,135 48,707
- --------------------------------------------------------------------------------------------------------------------------------
$ 207,706 $ 211,926
- --------------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ 137,936 $ 39,489
Amounts due within one year
Long-term debt - 19,214
Obligations under capital leases 195,514 201,877
Accounts payable 139,105 147,020
Property and general taxes 25,527 31,608
Income taxes 57,284 5,304
Accumulated deferred income taxes 36,395 32,625
Interest 59,304 60,214
Dividends payable 82,013 82,012
Payrolls 80,115 71,958
Fermi 2 refueling outage 5,067 1,267
Other 83,943 97,215
- --------------------------------------------------------------------------------------------------------------------------------
$ 902,203 $ 789,803
- --------------------------------------------------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,028,901 $ 2,014,821
Accumulated deferred investment tax credits 342,620 346,379
Other 97,437 98,390
- --------------------------------------------------------------------------------------------------------------------------------
$ 2,468,958 $ 2,459,590
- --------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 5)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL $ 11,142,018 $ 10,992,978
================================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
5
<PAGE> 6
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
March 31 March 31
----------------------------------------------------------
1995 1994 1995 1994
----------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 113,490 $ 112,870 $ 420,529 $ 499,569
Adjustments to reconcile net income to net cash
from operating activities:
Accretion income (3,014) (3,645) (13,013) (36,614)
Depreciation and amortization 125,044 115,983 485,476 438,179
Deferred Fermi 2 amortization and return - net 21,754 19,341 79,776 35,787
Deferred income taxes and investment tax credit - net 26,276 11,845 107,718 67,050
Fermi 2 refueling outage - net 3,800 2,797 (18,504) 15,799
Other (21,889) (17,378) (35,602) 24,736
Changes in current assets and liabilities:
Customer accounts receivable and unbilled revenues (124,393) 32,841 (157,739) 21,984
Other accounts receivable 5,282 (6,782) 4,471 (11,633)
Inventories (4,876) 24,547 (31,197) 52,423
Accounts payable (7,202) (17,942) (3,118) 7,798
Taxes payable 46,136 31,230 (3,125) (7,264)
Interest payable (910) (3,637) (3,447) (24,667)
Other (72,120) (82,363) 8,054 956
- --------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 107,378 $ 219,707 $ 840,279 $ 1,084,103
- --------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $ (85,234) $ (76,383) $ (375,243) $ (386,781)
Purchase of leased equipment - (11,500) - (13,902)
Nuclear decommissioning trust funds (11,971) (20,514) (38,020) (24,314)
Non-utility investments 1,461 (356) (12,213) (987)
Changes in current assets and liabilities 853 (4,802) 10,697 11,516
Other (1,081) 1,588 (13,019) (13,908)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $ (95,972) $(111,967) $ (427,798) $ (428,376)
- --------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Sale of cumulative preferred stock $ - $ - $ - $ 50,000
Sale of general and refunding mortgage bonds - - 200,000 835,000
Funds received from Trustees: Installment sales
contracts and loan agreements - - 50,470 76,510
Increase (decrease) in short-term borrowings 98,447 (5,783) 5,515 132,421
Redemption of long-term debt (19,214) (19,214) (258,034) (1,709,289)
Redemption of preferred stock - - - (49,908)
Premiums on reacquired long-term debt and preferred stock - - (11,563) (63,269)
Purchase of common stock - - (59,855) -
Dividends on common and preferred stock (82,013) (83,143) (330,315) (331,857)
Other (159) (106) (2,675) (10,817)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $ (2,939) $(108,246) $ (406,457) $(1,071,209)
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ 8,467 $ (506) $ 6,024 $ (415,482)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 8,122 11,071 10,565 426,047
- --------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 16,589 $ 10,565 $ 16,589 $ 10,565
- --------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 69,793 $ 77,483 $ 281,685 $ 334,884
Income taxes paid 240 2,257 181,155 229,913
New capital lease obligations 327 4,377 2,741 39,141
================================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
6
<PAGE> 7
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Common Stock Premium Retained
-------------------------- on Common Earnings
$10 Par Common Stock Used in the
Shares Value Stock Expense Business
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 144,863,447 $ 1,448,635 $ 545,825 $ (47,461) $ 1,379,081
Issuance of common stock on conversion
of convertible cumulative preferred
stock, 5 1/2% series 2,307 23 18 (1)
Net income 113,490
Cash dividends declared
Common stock - $0.515 per share (74,606)
Cumulative preferred stock* (7,407)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1995 144,865,754 $ 1,448,658 $ 545,843 $ (47,462) $ 1,410,558
=================================================================================================================================
</TABLE>
*At established rate for each series.
See accompanying Notes to Consolidated Financial Statements (Unaudited).
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - ANNUAL REPORT NOTES
These consolidated financial statements (unaudited) 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 preceding consolidated financial statements are unaudited, but, in
the opinion of the Company, 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
As discussed in Note 2 of the Annual Report Notes, Fermi 2 was out of
service in 1994. On December 25, 1993, the reactor automatically shut down
following a turbine-generator failure. Major repairs have been completed. The
unit has been synchronized to the grid and the power ascension and testing
program is continuing. The Company expects that most repair costs related to
returning the Fermi 2 turbine-generator to service will be covered by
insurance. These costs are estimated to be in the $70 million to $80 million
range. The Company has received partial insurance payments of $45 million for
property damage. In addition, the Company has received insurance payments of
$71.5 million for replacement power costs.
NOTE 3 - RATE MATTERS
As discussed in Note 3 of the Annual Report Notes, Fermi 2 was out of
service in 1994 and will operate at a reduced power output until the
installation of major turbine components during the next refueling outage in
1996. As a result, the three-year rolling average capacity factor utilized in
the Fermi 2 performance standard calculation will be unfavorably affected in
1994-1998. The plant's three-year rolling average capacity factor was 53.7%
for 1994 utilizing a capacity of 1,093 MW for 1992 and 1993 and 1,139 MW for
1994. The average capacity factor for the top 50% of U.S. boiling water
reactors for the 35-month period ending November 1994 was 78.3%. At March 31,
1995, the Company had accrued $34.7 million for the Fermi 2 capacity factor
performance standard disallowances that are expected to be imposed during the
period 1994-1998.
NOTE 4 - SALE OF ACCOUNTS RECEIVABLE AND UNBILLED REVENUES
As discussed in Note 5 of the Annual Report Notes, the Company has an
agreement providing for the sale, assignment and repurchase, from time to time,
of an undivided ownership interest in up to $200 million of the Company's
customer accounts
8
<PAGE> 9
receivable and unbilled revenues. At March 31, 1995, the Company had
repurchased $150 million under this agreement.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
As discussed in Note 12 of the Annual Report Notes, in 1986, the
Michigan Attorney General and the Michigan Natural Resources Commission filed a
state lawsuit against the Company and Consumers as co-owners of the Ludington
Pumped Storage Plant ("Ludington") for claimed aquatic losses. The Company is
a 49% co-owner of Ludington. On October 5, 1994, the Company and all other
parties to the state action and a related FERC proceeding, except certain
Indian tribes, reached a tentative settlement. On February 28, 1995, the
Company and Consumers jointly submitted to FERC the Ludington Pumped Storage
Project ("LPSP") Settlement Agreement -- FERC Offer of Settlement. On March
15, 1995, the Michigan Supreme Court remanded the case to the trial court. On
March 17, 1995, the Circuit Court for Ingham County, Michigan (the trial court)
entered an order adopting the settlement as final upon the receipt of
regulatory approvals. This agreement would resolve all matters before FERC
relating to fish mortality or angler access resulting from the operation of the
LPSP during the present term of the license. The settlement remains contingent
upon FERC and MPSC approval. FERC action is expected by the end of the summer.
____________________
This Quarterly Report on Form 10-Q, including the report of Deloitte &
Touche LLP (on page 10) will automatically be incorporated by reference in the
Prospectuses constituting part of the Company's Registration Statements on Form
S-3 (Registration Nos. 33-30809, 33-50325, 33-53207, 33-57095 and 33-64296),
Form S-8 (Registration No. 33-32449) and Form S-4 (Registration No. 33-57545)
of DTE Holdings, Inc., 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.
9
<PAGE> 10
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
The Detroit Edison Company
We have reviewed the accompanying consolidated balance sheet of The
Detroit Edison Company and subsidiary companies as of March 31, 1995, the
related consolidated statements of income and of cash flows for the three-month
and twelve-month periods then ended and the consolidated statement of
shareholders' equity for the three-month period then ended. These financial
statements are the responsibility of the Company's management.
We conducted our review 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 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 review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
The interim financial statements as of March 31, 1994, and for the
three-month and twelve-month periods then ended were reviewed by other
accountants whose report dated May 10, 1994 stated that they were not aware of
any material modifications that should be made to those statements in order for
them to be in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Detroit, Michigan
May 8, 1995
10
<PAGE> 11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This analysis for the three and twelve months ended March 31, 1995, as
compared to the same periods in 1994, should be read in conjunction with the
consolidated financial statements (unaudited), the accompanying Notes and the
Annual Report Notes.
RESULTS OF OPERATIONS
Total and per share earnings for common stock increased in the
three-month period due to a 1.3 percent rise in electricity sales and lower
operation and maintenance expenses (including lower fuel and purchased power
expenses). However, operating revenues decreased due to lower PSCR clause
revenues resulting from lower fuel and purchased power expenses. A reduction
in interconnection sales, an additional reserve for estimated future Fermi 2
nuclear power plant performance and lower rates also contributed to the
decrease.
For the twelve-month period, total and per share earnings for common
stock decreased due in part to a January 1994 order by the MPSC which reduced
rates by $78 million annually and increased depreciation and operation
expenses. In addition, accretion income decreased and amortization of the
Fermi 2 nuclear power plant phase-in plan increased significantly. Also, since
Fermi 2 was down for repair during 1994, the Company elected to upgrade various
plant facilities, which increased maintenance expense, and also established a
reserve for estimated performance disallowances in 1994-1998. The earnings
drop was limited by higher system sales and lower interest expense on long-term
debt.
At March 31, 1995, the book value of the Company's common stock was
$23.11 per share, an increase of $0.22 per share or 1.0% since December 31,
1994. Return on average total common shareholders' equity was 11.6% and 14.4%
for the twelve months ended March 31, 1995 and 1994, respectively.
The ratio of earnings to fixed charges was 3.17 and 3.25 for the twelve
months ended March 31, 1995 and 1994, respectively. The ratio of earnings to
fixed charges and preferred stock dividend requirements for the 1995 and 1994
twelve-month periods was 2.76 and 2.87, respectively.
11
<PAGE> 12
OPERATING REVENUES
Total operating revenues increased (decreased) due to the following factors:
<TABLE>
<CAPTION>
Three Twelve
Months Months
------ ------
(Millions)
<S> <C> <C>
Rate changes
MPSC rate reduction $ (5) $ (70)
PSCR Clause (14) (35)
----- -----
(19) (105)
System sales volume and mix 15 99
Interconnection sales (9) (33)
Fermi 2 capacity factor performance standard reserve (5) (36)
Other - net (1) (5)
----- -----
Total $ (19) $ (80)
===== =====
</TABLE>
RATE CHANGES
The January 1994 MPSC rate order reduced the Company's rates by $78
million annually. In keeping with the MPSC's recognition of the need for
industrial customers to be competitive, the January 1994 rate reduction was
allocated among the various classes of customers approximately as follows:
Industrial - $43 million, Commercial - $24 million, Residential - $10 million
and Governmental - $1 million.
kWh SALES
kWh sales increased (decreased) as follows:
<TABLE>
<CAPTION>
Three Twelve
Months Months
------ ------
<S> <C> <C>
Residential (1.1) % 0.1 %
Commercial 0.8 3.2
Industrial 4.1 5.2
Other (includes primarily sales for resale) 1.8 (10.8)
Total System 1.3 2.4
Interconnection (44.4) (54.9)
Total (1.4) (2.2)
</TABLE>
The decrease in residential sales for the three-month period was
primarily due to warmer weather in the first quarter of 1995 resulting in
decreased heating-related sales. The increase in industrial sales reflects
higher sales to automotive, steel and other
12
<PAGE> 13
industrial customers. The increased sales to other customers reflects
increased load requirements of wholesale for resale customers.
The increase in commercial sales for the twelve-month period was due
primarily to improved economic conditions. Industrial sales increased due to
higher sales to automotive customers as a result of strong demand for both
autos and trucks and increased sales to steel and other industrial customers
due to increased sales in the automotive market. The decreased sales to other
customers reflects decreased load requirements of wholesale for resale
customers.
Interconnection sales decreased for the three-month period due to lower
sales to Consumers. For the twelve-month period, interconnection sales
decreased due to the reduced availability of energy for sale as a result of the
Fermi 2 outage and also lower sales to Consumers.
OPERATING EXPENSES
FUEL AND PURCHASED POWER
Fuel and purchased power expenses increased (decreased) due to the following
factors:
<TABLE>
<CAPTION>
Three Twelve
Months Months
------ ------
(Millions)
<S> <C> <C>
Net system output $ (3) $ (17)
Average unit cost (25) 10
Fermi 2 business interruption insurance proceeds (5) (71)
Other (1) 3
------ -----
Total $ (34) $ (75)
====== =====
</TABLE>
Net system output and average unit costs were as follows:
<TABLE>
<CAPTION>
Three Months Twelve Months
---------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
(Thousands of Megawatthours, "MWh")
<S> <C> <C> <C> <C>
Power plant generation
Fossil 10,331 10,788 42,012 40,879
Nuclear 245 - 188 6,060
Purchased power 1,564 1,493 6,669 2,959
-------- ------- ------- -------
Net system output 12,140 12,281 48,869 49,898
======== ======= ======= =======
Average unit cost ($/MWh) $ 15.79 $ 17.90 $ 16.41 $ 16.22
======== ======= ======= =======
</TABLE>
13
<PAGE> 14
Fuel and purchased power expenses decreased for the three-month period
due to lower net system output, increased usage of lower-cost low sulfur
western coal and the receipt of Fermi 2 business interruption insurance
proceeds. For the twelve-month period, fuel and purchased power expenses
decreased due to lower net system output and the receipt of Fermi 2 business
interruption insurance proceeds, partially offset by increased average unit
costs resulting from replacing lower-cost nuclear generation due to the Fermi 2
outage and meeting demand for energy with higher-cost generation and purchased
power. Fermi 2 was out of service in 1994 as a result of a turbine-generator
failure in December 1993.
OTHER OPERATION
Three Months
Other operation expense decreased due to expenses recorded in the
year-earlier period for lump sum payments to non-represented employees and
lower injuries and damages, employee retirement plan and steam heating
expenses. These decreases were partially offset by higher sales and other
postretirement health care and life insurance benefits expenses and higher
incentive award expenses related to a shareholder value improvement plan.
Twelve Months
Other operation expense increased due to higher expenses related to other
postretirement health care and life insurance benefits, nuclear plant and
demand-side management and service quality claims expenses. These increases
were partially offset by expenses recorded in the year-earlier period for the
write-off of obsolete and excess stock material, a reserve for steam purchases
under the agreement with the Greater Detroit Resource Recovery Authority and
employee reorganization expenses and lower injuries and damages expense, lower
incentive award expenses related to a shareholder value improvement plan and
lower uncollectible and fossil plant expenses.
MAINTENANCE
Three Months
Maintenance expense decreased due primarily to lower storm and nuclear
plant expenses, partially offset by higher fossil plant expenses.
Twelve Months
Maintenance expense increased due primarily to higher nuclear plant and
storm expenses, partially offset by lower line clearance expenses.
14
<PAGE> 15
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased due to increased Fermi 2
decommissioning costs authorized by a January 1994 MPSC rate order and to
increases in plant in service.
DEFERRED FERMI 2 AMORTIZATION
Deferred Fermi 2 amortization, a non-cash item of income, was recorded
beginning with the Company'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 deferred decreased each year through 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 decreased due to lower property taxes and
payroll taxes, partially offset in the twelve-month period by higher Michigan
Single Business Tax.
INCOME TAXES
Three Months
Income taxes increased due to higher pretax income and a tax reduction
recorded in the prior period related to the 1987-1988 Internal Revenue Service
audit.
Twelve Months
Income taxes decreased due to lower pretax income, partially offset by
higher prior years' federal income tax accrual and higher taxes due to the
increase in amortization of deferred Fermi 2 depreciation and return.
OTHER INCOME AND DEDUCTIONS
OTHER INCOME AND (DEDUCTIONS) - NET
Three Months
Other deductions increased due to promotional practices expenses.
15
<PAGE> 16
Twelve Months
Other deductions increased due to promotional practices expenses, a
contribution to the Detroit Edison Foundation and the write-off of premiums and
expenses related to the $50 million portion of 1989 Series A General and
Refunding Mortgage Bonds not refinanced, partially offset by the accrual for
decommissioning expenses for Fermi 1 in the prior period.
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. Also, effective in
January 1994, accretion income decreased due to the return to rate base of
Greenwood Unit No. 1.
INTEREST CHARGES
LONG-TERM DEBT
Interest expense on long-term debt decreased due to the early redemption
and refinancing of securities when economic and the redemption of maturing
securities.
LIQUIDITY AND CAPITAL RESOURCES
CASH GENERATION AND CASH REQUIREMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Net cash from operating activities decreased due to changes in current
assets and liabilities, primarily as a result of the repurchase of $150 million
of customer accounts receivable and unbilled revenues under the agreement for
the sale and repurchase of the Company's customer accounts receivable and
unbilled revenues, and for the twelve-month period, lower net income.
Net cash used for investing activities was lower in the 1995 three-month
period due to the additional funding in the 1994 three-month period of the
nuclear decommissioning trust fund for Fermi 1. Net cash used for investing
activities was lower in the twelve-month period due to lower plant and
equipment expenditures and purchases of leased equipment in the prior period,
substantially offset by increased funding of nuclear decommissioning trust
funds.
Net cash used for financing activities decreased due to reduced activity
in the Company's extensive debt refinancing program, partially offset in the
twelve-month period
16
<PAGE> 17
by the one-time purchase of common stock from the trustee of the Detroit Edison
Savings & Investment Plans as a result of a plan change.
ADDITIONAL INFORMATION
The Company's 1995 cash requirements for its capital expenditure program
are estimated at $394 million, of which $85 million had been expended as of
March 31, 1995.
The Company's internal cash generation in 1995 is expected to be
sufficient to meet cash requirements for capital expenditures as well as
scheduled redemption requirements.
The Company had short-term credit arrangements of approximately $405
million at March 31, 1995, under which $138 million of borrowings were
outstanding.
CAPITALIZATION
The Company's capital structure as of March 31, 1995 was 44.4% common
shareholders' equity, 5.0% preferred stock and 50.6% long-term debt as compared
to 44.2%, 5.0% and 50.8%, respectively, at December 31, 1994.
COMPETITION
On December 5, 1994, the Company's Board of Directors approved the
formation of a holding company. The Company's shareholders approved this
organizational structure at the Company's April 24, 1995 Annual Meeting of
Common Shareholders. This organizational structure is subject to additional
regulatory approvals.
On March 29, 1995, the FERC issued a Notice of Proposed Rulemaking
seeking comment on several proposals for encouraging more competitive electric
power markets. The proposals address several fundamental issues facing the
electric power industry including transmission open access, stranded costs,
jurisdiction over transmission in interstate commerce including retail wheeling
and over local distribution, real-time information networks and implementation
of open access. The Company is currently studying these proposals and is
unable to predict the ultimate impact of these proposals on its operations.
17
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS. SEE NOTE 5.
ITEM 5 - OTHER INFORMATION.
As discussed in Part I, Items 1 and 2 - Business and Properties, "Fuel
Costs and Supply - Nuclear" of the Annual Report, the Company has a contract
with the United States Department of Energy ("DOE") for the future storage and
disposal of spent nuclear fuel from Fermi 2. The DOE has stated that it will
be unable to store spent nuclear fuel at a permanent repository until after
2010. Currently the Company estimates that existing temporary storage capacity
at Fermi 2 will be sufficient until the year 2000 or until 2018 with the
expansion of such storage capacity.
As discussed in Part I, Items 1 and 2 - Business and Properties,"
Regulation and Rates - Michigan Public Service Commission" of the Annual
Report, in 1994 the MPSC issued an order approving a settlement agreement
resolving the issues concerning the reconciliation of the Company's 1993 PSCR
plan. On March 30, 1995, the Company submitted its 1994 PSCR reconciliation
filing with the MPSC. The application states that expenses exceeded revenues by
$49.9 million. However, after calculation of the Fermi 2 performance standard
disallowance pursuant to the methodology approved by the MPSC in a January 25,
1995 settlement agreement, the Company experienced a net over-recovery of
approximately $5 million. The Company seeks MPSC approval to refund this
amount to its customers. A prehearing conference in this matter is scheduled
in May 1995.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Federal Energy Regulatory Commission" of the Annual
Report, on February 14, 1995, the Company filed an Application with FERC
seeking authority to establish a holding company. On April 21, 1995, the
Company received FERC approval.
On March 27, 1995, the Company requested that the NRC consent to the
transfer of control of its NRC licenses as part of the formation of the holding
company. The Company anticipates that the NRC will issue such consent in a
timely manner.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Nuclear Regulatory Commission" of the Annual Report, on
May 18, 1994, the NRC issued the fourteenth Systematic Assessment of Licensee
Performance ("SALP") report on Fermi 2 operations. The next SALP period is
expected to end approximately six months after the current Fermi 2 testing and
power ascension program is completed.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Environmental Matters - Water" of the Annual Report, National Pollutant
Discharge Elimination System ("NPDES") permits for the Company's power plants
are issued by the Michigan Department of Natural Resources pursuant to
delegation by the Environmental Protection Agency ("EPA") under the federal
Clean Water Act. On March 13, 1995, the EPA issued
18
<PAGE> 19
its final rule promulgating the Water Quality Guidance for the Great Lakes.
This rule establishes water quality criteria for the Great Lakes region for
toxic pollutants. Each Great Lakes state, including Michigan, must revise its
water quality standards within two years to make them consistent with the
federal rule. Such new rules would be used to determine wastewater discharge
limitations in the Company's NPDES permits. Until Michigan adopts new water
quality standards, it is impossible to determine what the impact on the Company
will be.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(i) Exhibits filed herewith.
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
11-22 - Primary and Fully Diluted Earnings Per Share of Common Stock.
15-58 - Awareness Letter of Deloitte & Touche LLP regarding their report dated May 8, 1995.
27-3 - Financial Data Schedule for the period ended March 31, 1995.
(ii) Exhibits incorporated herein by reference.
4(a) - Restated Articles of Incorporation of the Company, 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).
4(b) - Certificate containing resolution of the 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).
4(c) - Certificate containing resolution of the 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).
4(d) - By-Laws of the Company as amended November 25, 1991 (Exhibit 4-118 to Form 10-K for year ended
December 31, 1991).
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C>
4(e) - Mortgage and Deed of Trust, dated as of October 1, 1924, between the Company (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
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 4-111 to Form 10-Q for quarter ended March 31, 1991
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
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
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)
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
4(f) - Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325).
4(g) - First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration No. 33-50325).
4(h) - Second Supplemental Note Indenture, dated as of September 15, 1993 (Exhibit 4-159 to Form 10-Q for quarter
ended September 30, 1993).
4(i) - Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended
September 30, 1994).
4(j) - Amended and Restated Standby Note Purchase Credit Facility, dated as of April 26, 1994, among The Detroit
Edison Company, The Bank of New York, The Toronto-Dominion Bank, acting through its Houston Agency,
Toronto-Dominion (Texas), Inc., as Administrative Agent and Citicorp Securities, Inc., as Remarketing Agent
(Exhibit 99-5 to Registration No. 33-50325).
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
4(k) - 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 the Company 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 the Company 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 the Company (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 the
Company 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 the
Company and Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase
Contract, dated October 4, 1988, between The Detroit Edison Company and Renaissance Energy Company
(Exhibit 99-21 to Form 10-Q for quarter ended September 30, 1994).
99(g) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among the Company, Renaissance and
Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-12 to Registration No. 33-50325).
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
99(h) - First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1,
1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for quarter ended September 30, 1994).
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among the Company, Renaissance and
Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325).
99(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between the Company
and Renaissance (Exhibit 99-9 to Registration No. 33-50325).
99(k) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1,
1990, between the Company and Renaissance (Exhibit 99-10 to Registration No. 33-50325).
99(l) - Second Amendment, dated as of September 1, 1993, to 1988 Amended and Restated Nuclear Fuel Heat Purchase
Contract between the Company and Renaissance (Exhibit 99-11 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 The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q for quarter ended September 30,
1994).
</TABLE>
(b) Reports on Form 8-K
During the first quarter of 1995, Registrant filed two reports on
Form 8-K: (i) In a report dated January 27, 1995, Registrant disclosed that,
subject to ratification of its Common Shareholders, Deloitte & Touche LLP had
been appointed as the Company's Independent Accountants for 1995; and (ii) in a
report dated March 1, 1995, Registrant released its audited consolidated
financial statements for 1994.
23
<PAGE> 24
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 May 8, 1995 /s/ SUSAN M. BEALE
--------------- --------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date May 8, 1995 /s/ RONALD W. GRESENS
--------------- --------------------------------------
Ronald W. Gresens
Vice President and Controller
24
<PAGE> 25
THE DETROIT EDISON COMPANY
QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED MARCH 31, 1995
EXHIBIT INDEX
FILE NO. 1-2198
Page No.
(i) Exhibits filed herewith.
Exhibit
Number
-------
11 - 22 Primary and Fully Diluted Earnings Per Share
of Common Stock.
15 - 58 Awareness Letter of Deloitte & Touche LLP
regarding their report dated May 8, 1995.
27 - 3 Financial Data Schedule for the period ended
March 31, 1995.
See Page Nos.
_____ through
_____ for
location
of Exhibits
Incorporated
by Reference
------------
(ii) Exhibits incorporated hereby by reference.
4 (a) - Restated Articles of Incorporation of the Company,
as filed December 10, 1991 with the State of
Michigan.
4 (b) - Certificate containing resolution of the Board of
Directors establishing the Cumulative Preferred
Stock, 7.75% Series, as filed February 22, 1993
with the State of Michigan.
4 (c) - Certificate containing resolution of the Board of
Directors establishing the Cumulative Preferred
Stock, 7.74% Series, as filed April 21, 1993 with
the State of Michigan.
<PAGE> 26
4 (d) - By-Laws of the Company as amended November 25, 1991.
4 (e) - Mortgage and Deed of Trust, dated as of October 1,
1924, between the Company 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
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
4 (f) - Collateral Trust Indenture (Notes), dated as of
June 30, 1993.
4 (g) - First Supplemental Note Indenture, dated as of
June 30, 1993.
2
<PAGE> 27
4 (h) - Second Supplemental Note Indenture, dated as of
September 15, 1993.
4 (i) - Third Supplemental Note Indenture, dated as of
August 15, 1994.
4 (j) - Amended and Restated Standby Note Purchase Credit
Facility dated as of April 26, 1994, among The
Detroit Edison Company, The Bank of New York, The
Toronto-Dominion Bank, acting through its Houston
Agency, Toronto-Dominion (Texas), Inc., as
Administrative Agent and Citicorp Securities, Inc.,
as Remarketing Agent.
4 (k) - 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 the Company
and Michigan Public Power Agency, dated as of
December 1, 1982.
99(b) - Belle River Transmission Ownership and Operating
Agreement between the Company 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 the Company.
99(d) - First Amendment to 1988 Amended and Restated Loan
Agreement, dated as of February 1, 1990, between the
Company and Renaissance.
99(e) - Second Amendment to 1988 Amended and Restated Loan
Agreement, dated as of September 1, 1993, between the
Company and Renaissance.
3
<PAGE> 28
99(f) - Third Amendment, dated as of August 31, 1994, to
1988 Amended and Restated Nuclear Fuel Heat Purchase
Contract, dated October 4, 1988, between The Detroit
Edison Company and Renaissance Energy Company.
99(g) - $200,000,000 364-Day Credit Agreement, dated as of
September 1, 1993, among the Company, 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 Energy Company, 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 the Company, Renaissance and
Barclays Bank PLC, New York Branch, as Agent.
99(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase
Contract, dated October 4, 1988, between the Company
and Renaissance.
99(k) - First Amendment to 1988 Amended and Restated Nuclear
Fuel Heat Purchase Contract, dated as of
February 1, 1990, between the Company and Renaissance.
99(l) - Second Amendment, dated as of September 1, 1993, to
1988 Amended and Restated Nuclear Fuel Heat Purchase
Contract between the Company and Renaissance.
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 The Detroit Edison Company,
Renaissance Energy Company, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
4
<PAGE> 1
EXHIBIT 11-22
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
OF COMMON STOCK
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended Ended
March 31, 1995 March 31, 1995
---------------- ----------------
(Thousands, except per share amounts)
<S> <C> <C>
PRIMARY:
Earnings for Common Stock . . . . . . . . . . . . . . . . . $ 106,083 $ 390,895
Weighted average number of common
shares outstanding(a) . . . . . . . . . . . . . . . . . . 144,864 145,612
Earnings per share of Common Stock
based on weighted average number
of shares outstanding . . . . . . . . . . . . . . . . . . $0.73 $2.68
FULLY DILUTED:
Earnings for Common Stock . . . . . . . . . . . . . . . . . $ 106,083 $ 390,895
Convertible Preferred Stock dividends . . . . . . . . . . . 76 309
------------ -----------
$ 106,159 $ 391,204
============ ===========
Weighted average number of common
shares outstanding(a) . . . . . . . . . . . . . . . . . . 144,864 145,612
Conversion of convertible Preferred Stock . . . . . . . . . 311 319
------------ -----------
145,175 145,931
============ ===========
Earnings per share of Common Stock
assuming conversion of outstanding
convertible Preferred Stock . . . . . . . . . . . . . . . $0.73 $2.68
</TABLE>
- ----------------------------------
(a) Based on a daily average.
<PAGE> 1
Exhibit 15-58
May 8, 1995
The Detroit Edison Company
Detroit, Michigan
We have conducted a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of The Detroit Edison Company and subsidiary companies
for the three-month and twelve-month periods ended March 31, 1995, as indicated
in our report dated May 8, 1995. Because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, is
incorporated by reference in the Registration Statement on Form S-4
(Registration No. 33-57545) of DTE Holdings, Inc., and is also incorporated by
reference in the following Registration Statements of The Detroit Edison
Company:
Form Registration No.
-------- ----------------
Form S-3 33-30809
Form S-3 33-50325
Form S-3 33-53207
Form S-3 33-57095
Form S-3 33-64296
Form S-8 33-32449
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> The Schedule contains summary financial information extracted from
the Consolidated Statement of Income, Balance Sheet, Statement of Cash Flows,
Statement of Common Shareholders' Equity and Primary and Fully Diluted Earnings
per Share of Common Stock and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,550,198
<OTHER-PROPERTY-AND-INVEST> 436,494
<TOTAL-CURRENT-ASSETS> 738,582
<TOTAL-DEFERRED-CHARGES> 1,416,744
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 11,142,018
<COMMON> 1,448,658
<CAPITAL-SURPLUS-PAID-IN> 498,381
<RETAINED-EARNINGS> 1,410,558
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,357,597
0
380,243
<LONG-TERM-DEBT-NET> 3,825,311
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 137,936
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 124,094
<LEASES-CURRENT> 195,514
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,121,323
<TOT-CAPITALIZATION-AND-LIAB> 11,142,018
<GROSS-OPERATING-REVENUE> 880,274
<INCOME-TAX-EXPENSE> 82,051
<OTHER-OPERATING-EXPENSES> 604,059
<TOTAL-OPERATING-EXPENSES> 686,110
<OPERATING-INCOME-LOSS> 194,164
<OTHER-INCOME-NET> (5,937)
<INCOME-BEFORE-INTEREST-EXPEN> 188,227
<TOTAL-INTEREST-EXPENSE> 74,737
<NET-INCOME> 113,490
7,407
<EARNINGS-AVAILABLE-FOR-COMM> 106,083
<COMMON-STOCK-DIVIDENDS> 74,606
<TOTAL-INTEREST-ON-BONDS> 68,424
<CASH-FLOW-OPERATIONS> 107,378
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.73
</TABLE>
