<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 THE QUARTER ENDED JUNE 30, 1996
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 July 31, 1996, 145,119,875 shares of DTE Energy's Common Stock,
substantially all held by non-affiliates, were outstanding.
<PAGE> 2
DTE ENERGY COMPANY
AND
THE DETROIT EDISON COMPANY
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
This document contains the Quarterly Reports on Form 10-Q for the quarter ended
June 30, 1996 for each of DTE Energy Company and The Detroit Edison Company.
Information contained herein relating to an individual registrant is filed by
such registrant on its own behalf. Accordingly, except for its subsidiaries,
The Detroit Edison Company makes no representation as to information relating
to any other companies affiliated with DTE Energy Company.
TABLE OF CONTENTS
Page
----
Definitions..............................................................3
Quarterly Report on Form 10-Q for DTE Energy Company:
Part I-Financial Information...........................................4
Item 1 -Financial Statements (Unaudited).......................4
Notes to Consolidated Financial Statements (Unaudited)........14
Independent Accountants' Report...............................15
Item 2 -Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................16
Part II-Other Information.............................................27
Item 1 -Legal Proceedings.....................................27
Item 4 -Submission of Matters to a Vote of Security Holders...27
Item 5 -Other Information.....................................28
Quarterly Report on Form 10-Q for The Detroit Edison Company:
Part I-Financial Information..........................................30
Item 1 -Financial Statements (Unaudited)......................30
Item 2 -Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................30
Part II-Other Information.............................................30
Item 1 -Legal Proceedings.....................................30
Item 5 -Other Information.....................................30
Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit
Edison Company:
Item 6 -Exhibits and Reports on Form 8-K......................31
Signature Page to DTE Energy Company Quarterly Report on Form 10-Q......37
Signature Page to The Detroit Edison Company Quarterly Report on
Form 10-Q..............................................................38
2
<PAGE> 3
DEFINITIONS
ALJ ..................... Administrative Law Judge
Annual Report ........... 1995 Annual Report to the Securities and Exchange
Commission on Form 10-K for DTE Energy Company or
The Detroit Edison Company, as the case may be
Annual Report Notes ..... Notes to Consolidated Financial Statements appearing
on pages 46 through 57 of the 1995 Annual Report to
the Securities and Exchange Commission on Form 10-K
for DTE Energy Company and The Detroit Edison
Company
Company ................. DTE Energy Company and Subsidiary Companies
Detroit Edison .......... The Detroit Edison Company (a wholly owned
subsidiary of DTE Energy Company) and Subsidiary
Companies
EPA ..................... United States Environmental Protection Agency
FERC .................... Federal Energy Regulatory Commission
kWh ..................... Kilowatthour
MDEQ .................... Michigan Department of Environmental Quality
MPSC .................... Michigan Public Service Commission
MW ...................... Megawatts
NOPR .................... Notice of Proposed Rulemaking
Note(s) ................. Note(s) to Consolidated Financial Statements
(Unaudited) appearing herein
NRC ..................... Nuclear Regulatory Commission
PFD ..................... Proposal for Decision
PSCR .................... Power Supply Cost Recovery
Quarterly Report ........ Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for quarter ended March 31,
1996 for DTE Energy Company or The Detroit Edison
Company, as the case may be
Quarterly Report Notes .. Notes to Consolidated Financial Statements
(Unaudited) appearing in the Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for
quarter ended March 31, 1996 for DTE Energy Company
or The Detroit Edison Company, as the case may be
QUIDS ................... Quarterly Income Debt Securities
Registrant .............. Company or Detroit Edison, as the case may be
Renaissance ............. Renaissance Energy Company (an unaffiliated company)
3
<PAGE> 4
QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED):
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------------ --------------------------- ------------------------------
1996 1995 1996 1995 1996 1995
-------- --------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $857,769 $838,913 $1,745,396 $1,701,961 $3,603,905 $3,425,899
Electric - Interconnection 7,988 12,300 19,232 19,639 50,572 32,459
Steam and other 5,564 4,742 16,272 14,629 25,738 24,933
- --------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $871,321 $855,955 $1,780,900 $1,736,229 $3,680,215 $3,483,291
- --------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $166,687 $175,532 $ 342,354 $345,192 $713,129 $ 693,747
Purchased power 37,629 32,747 61,125 67,859 126,823 93,931
Other operation 158,227 148,998 309,249 286,371 658,175 619,590
Maintenance 78,689 59,903 152,300 112,374 280,041 251,979
Steam plant impairment loss - - - - 42,029 -
Depreciation and amortization 130,593 124,630 262,604 249,674 513,541 490,042
Deferred Fermi 2 amortization (1,120) (1,493) (2,240) (2,986) (5,226) (6,718)
Amortization of deferred Fermi 2
depreciation and return 25,485 23,247 50,968 46,494 97,464 88,908
Taxes other than income 62,994 61,459 129,755 124,104 257,592 239,424
Income taxes 57,671 65,218 133,775 147,269 276,193 284,266
- --------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $716,855 $690,241 $1,439,890 $1,376,351 $2,959,761 $2,755,169
- --------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $154,466 $165,714 $ 341,010 $359,878 $720,454 $728,122
- --------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 586 $ 268 $ 974 $ 583 $ 1,799 $ 1,274
Other income and (deductions) -
net (5,669) (4,941) (6,625) (18,276) (18,595) (37,695)
Income taxes 1,888 1,172 2,191 6,170 5,810 12,413
Accretion income 2,150 2,845 4,477 5,859 9,659 12,367
Income taxes - disallowed plant
costs and accretion income (624) (868) (1,310) (1,797) (2,868) (3,814)
- --------------------------------------------------------------------------------------------------------------------------------
Net Other Income and
(Deductions) $ (1,669) $ (1,524) $ (293) $ (7,461) $ (4,195) $ (15,455)
- --------------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 69,261 $ 68,096 $ 137,621 $ 136,520 $ 276,700 $ 270,679
Amortization of debt discount,
premium and expense 2,967 2,779 5,922 5,578 11,656 11,174
Other 469 2,313 2,043 6,214 5,495 8,161
Allowance for borrowed funds used
during construction (credit) (1,060) (554) (1,762) (941) (3,090) (2,148)
- --------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 71,637 $ 72,634 $ 143,824 $ 147,371 $ 290,761 $ 287,866
- --------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK DIVIDENDS OF
SUBSIDIARY 2,907 7,404 10,200 14,811 23,126 29,627
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 78,253 $84,152 $ 186,693 $ 190,235 $ 402,372 $ 395,174
================================================================================================================================
COMMON SHARES OUTSTANDING
- AVERAGE 145,119,875 144,875,672 145,119,875 144,869,919 144,674,097 145,069,229
EARNINGS PER COMMON SHARE $0.54 $0.58 $1.29 $1.31 $2.78 $2.72
DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK $0.515 $0.515 $1.03 $1.03 $2.06 $2.06
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
<PAGE> 5
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
---------------------- ---------------------- ----------------------
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 78,253 $ 84,152 $ 186,693 $ 190,235 $ 402,372 $ 395,174
Adjustments to reconcile net income to net
cash from operating activities:
Accretion income (2,150) (2,845) (4,477) (5,859) (9,659) (12,367)
Depreciation and amortization 130,593 124,630 262,604 249,674 513,541 490,042
Deferred Fermi 2 amortization and return
- net 24,365 21,754 48,728 43,508 92,238 82,190
Deferred income taxes and investment
tax credit - net 11,549 13,807 28,612 40,083 51,052 83,295
Fermi 2 refueling outage - net 3,258 2,955 6,516 6,755 12,836 388
Steam plant impairment loss - - - - 42,029 -
Other 12,343 21,111 (9,457) (778) (3,566) (2,481)
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (19,268) (68,086) (17,726) (192,479) (43,826) (196,790)
Other accounts receivable 769 (8,756) (4,739) (3,474) (4,717) (8,716)
Inventories (6,358) (22,788) 12,221 (27,664) 21,048 (35,987)
Accounts payable (1,987) 2,059 (2,257) (5,143) 20,935 (10,075)
Taxes payable (62,759) (32,882) (11,404) 13,254 (27,307) 1,240
Interest payable (10,086) (204) 4,619 (1,114) 7,647 (9,127)
Other 29,616 48,191 (55,986) (23,929) (802) 3,245
- ------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 188,138 $ 183,098 $ 443,947 $ 283,069 $1,073,821 $ 780,031
- ------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $ (136,221) $ (94,744) $ (251,980) $(179,978) $ (525,846) $ (375,195)
Nuclear decommissioning trust funds (9,107) (11,321) (22,794) (23,292) (42,853) (41,219)
Non-utility investments (701) (2,013) (6,285) (552) (5,240) (13,384)
Other changes in current assets and liabilities (1,768) (4,441) (847) (3,588) 8,515 3,944
Other (14,318) (3,511) (14,254) (4,592) (41,135) (24,737)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $ (162,115) $(116,030) $ (296,160) $(212,002) $ (606,559) $ (450,591)
- ------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ - $ - $ 185,000 $ - $ 185,000 $ 200,000
Funds received from Trustees: Installment sales
contracts and loan agreements - - - - 201,525 42,935
Increase (decrease) in short-term borrowings 94,988 3,941 57,998 102,388 (46,889) 49,941
Redemption of long-term debt (69,214) - (69,214) (19,214) (270,739) (250,499)
Redemption of preferred stock - - (185,000) - (185,955) -
Premiums on reacquired long-term debt - - - - (5,946) (11,350)
Purchase of common stock - - - - - (59,855)
Dividends on common stock (74,737) (74,609) (149,474) (149,215) (298,761) (299,556)
Other (167) (304) (9,975) (463) (16,112) (2,552)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $(49,130) $ (70,972) $ (170,665) $ (66,504) $ (437,877) $ (330,936)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ (23,107) $ (3,904) $ (22,878) $ 4,563 $ 29,385 $ (1,496)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 65,177 16,589 64,948 8,122 12,685 14,181
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 42,070 $ 12,685 $ 42,070 $ 12,685 $ 42,070 $ 12,685
==============================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 78,617 $ 69,907 $ 133,174 $ 139,699 $ 267,888 $ 284,290
Income taxes paid 113,328 76,240 113,946 76,480 268,003 190,447
New capital lease obligations 11,885 100 12,182 427 41,141 1,316
Exchange of preferred stock of subsidiary for
long-term debt - - - - 49,878 -
==============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
5
<PAGE> 6
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------- -----------
<S> <C> <C>
UTILITY PROPERTIES
Plant in service $13,529,342 $13,303,992
Less: Accumulated depreciation and amortization (5,185,452) (4,928,316)
- ---------------------------------------------------------------------------------------------
$ 8,343,890 $ 8,375,676
Construction work in progress 147,222 142,726
- ---------------------------------------------------------------------------------------------
Net utility properties $ 8,491,112 $ 8,518,402
- ---------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $104,039 and $99,633, respectively) $ 132,075 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $458,486 and $427,831, respectively) 126,989 145,463
- ---------------------------------------------------------------------------------------------
Net property under capital leases $ 259,064 $ 282,669
- ---------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,750,176 $ 8,801,071
- ---------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 47,612 $ 21,576
Investments and special funds 44,350 29,058
Nuclear decommissioning trust funds 142,637 119,843
- ---------------------------------------------------------------------------------------------
$ 234,599 $ 170,477
- ---------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 42,070 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $20,000 and $22,000, respectively) 432,129 414,403
Other accounts receivable 42,403 37,664
Inventories (at average cost)
Fuel 149,257 162,796
Materials and supplies 144,931 142,782
Prepayments 48,393 12,910
- ---------------------------------------------------------------------------------------------
$ 859,183 $ 835,503
- ---------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,063,798 $ 1,155,482
Prepaid pensions 94,061 81,865
Unamortized debt expense 45,890 40,936
Other 45,605 45,257
- ---------------------------------------------------------------------------------------------
$ 1,249,354 $ 1,323,540
- ---------------------------------------------------------------------------------------------
TOTAL $11,093,312 $11,130,591
=============================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
6
<PAGE> 7
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------- -----------
<S> <C> <C>
CAPITALIZATION
Common stock - without par value, 400,000,000 shares
authorized; 145,119,875 shares outstanding $1,951,437 $1,951,437
Retained earnings used in the business 1,519,289 1,484,871
------------------------------------------------------------------------------
Total common shareholders' equity $3,470,726 $3,436,308
Cumulative preferred stock of subsidiary 144,405 326,604
Long-term debt 3,746,906 3,756,094
------------------------------------------------------------------------------
Total Capitalization $7,362,037 $7,519,006
------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $121,704 $128,362
Other postretirement benefits 4,509 24,381
Other 69,610 58,424
------------------------------------------------------------------------------
$195,823 $211,167
------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $94,988 $36,990
Amounts due within one year
Long-term debt 244,214 119,214
Obligations under capital leases 137,360 154,307
Accounts payable 162,798 165,148
Property and general taxes 20,901 34,416
Income taxes 1,680 -
Accumulated deferred income taxes 54,459 51,697
Interest payable 66,747 62,128
Dividends payable 77,644 81,102
Payrolls 74,928 72,164
Fermi 2 refueling outage 20,858 14,342
Other 107,931 130,689
------------------------------------------------------------------------------
$1,064,508 $922,197
------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $2,060,022 $2,052,875
Accumulated deferred investment tax credits 322,558 330,085
Other 88,364 95,261
- -------------------------------------------------------------------------------
$2,470,944 $2,478,221
- -------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- -------------------------------------------------------------------------------
TOTAL $11,093,312 $11,130,591
===============================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
7
<PAGE> 8
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Retained Total
Common Stock Earnings Common
------------------- Used in the Shareholders'
Shares Amount Business Equity
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 145,119,875 $1,951,437 $1,484,871 $3,436,308
Expense associated with subsidiary
preferred stock redeemed (2,801) (2,801)
Net income 186,693 186,693
Cash dividends declared on
Common stock - $1.03 per share (149,474) (149,474)
- -------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1996 145,119,875 $1,951,437 $1,519,289 $3,470,726
===========================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
8
<PAGE> 9
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------------ --------------------------- ------------------------------
1996 1995 1996 1995 1996 1995
-------- --------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $857,769 $838,913 $1,745,396 $1,701,961 $3,603,905 $3,425,899
Electric - Interconnection 7,988 12,300 19,232 19,639 50,572 32,459
Steam 5,220 4,742 15,240 14,629 24,706 24,933
- --------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $870,977 $855,955 $1,779,868 $1,736,229 $3,679,183 $3,483,291
- --------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $166,687 $175,532 $ 342,354 $ 345,192 $ 713,129 $ 693,747
Purchased power 37,629 32,747 61,125 67,859 126,823 93,931
Other operation 156,755 148,998 305,966 286,371 654,892 619,590
Maintenance 78,689 59,903 152,300 112,374 280,041 251,979
Steam plant impairment loss - - - - 42,029 -
Depreciation and amortization 130,489 124,630 262,393 249,674 513,330 490,042
Deferred Fermi 2 amortization (1,120) (1,493) (2,240) (2,986) (5,226) (6,718)
Amortization of deferred Fermi 2
depreciation and return 25,485 23,247 50,968 46,494 97,464 88,908
Taxes other than income 62,889 61,459 129,650 124,104 257,487 239,424
Income taxes 58,198 65,218 134,870 147,269 277,288 284,266
- --------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $715,701 $690,241 $1,437,386 $1,376,351 $2,957,257 $2,755,169
- --------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $155,276 $165,714 $ 342,482 $ 359,878 $ 721,926 $ 728,122
- --------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 586 $ 268 $ 974 $ 583 $ 1,799 $ 1,274
Other income and (deductions)
- net (6,573) (4,941) (8,186) (18,276) (20,156) (37,695)
Income taxes 1,888 1,172 2,191 6,170 5,810 12,413
Accretion income 2,150 2,845 4,477 5,859 9,659 12,367
Income taxes - disallowed plant
costs and accretion income (624) (868) (1,310) (1,797) (2,868) (3,814)
- --------------------------------------------------------------------------------------------------------------------------------
Net Other Income and
(Deductions) $ (2,573) $ (1,524) $ (1,854) $ (7,461) $ (5,756) $ (15,455)
- --------------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 69,261 $ 68,096 $ 137,621 $ 136,520 $ 276,700 $ 270,679
Amortization of debt discount,
premium and expense 2,956 2,779 5,908 5,578 11,642 11,174
Other 390 2,313 1,941 6,214 5,393 8,161
Allowance for borrowed funds used
during construction (credit) (1,060) (554) (1,762) (941) (3,090) (2,148)
- --------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 71,547 $ 72,634 $ 143,708 $ 147,371 $ 290,645 $ 287,866
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 81,156 $ 91,556 $ 196,920 $ 205,046 $ 425,525 $ 424,801
PREFERRED STOCK DIVIDENDS 2,907 7,404 10,200 14,811 23,126 29,627
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE FOR COMMON
STOCK $ 78,249 $ 84,152 $ 186,720 $ 190,235 $ 402,399 $ 395,174
================================================================================================================================
</TABLE>
Note: Detroit Edison's financial statements are presented here for ease of
reference and are not considered to be part of Item 1 of the Company's
report.
See accompanying Notes to Consolidated Financial Statements (Unaudited).
9
<PAGE> 10
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------- -----------
<S> <C> <C>
UTILITY PROPERTIES
Plant in service $13,529,342 $13,303,992
Less: Accumulated depreciation and amortization (5,185,452) (4,928,316)
- ---------------------------------------------------------------------------------------------
$ 8,343,890 $ 8,375,676
Construction work in progress 147,222 142,726
- ---------------------------------------------------------------------------------------------
Net utility properties $ 8,491,112 $ 8,518,402
- ---------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $104,039 and $99,633, respectively) $ 132,075 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $458,486 and $427,831, respectively) 126,989 145,463
- ---------------------------------------------------------------------------------------------
Net property under capital leases $ 259,064 $ 282,669
- ---------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,750,176 $ 8,801,071
- ---------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 7,730 $ 21,576
Investments and special funds 26,157 29,058
Nuclear decommissioning trust funds 142,637 119,843
- ---------------------------------------------------------------------------------------------
$ 176,524 $ 170,477
- ---------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 6,334 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $20,000 and $22,000, respectively) 432,129 414,403
Other accounts receivable 38,606 37,664
Inventories (at average cost)
Fuel 149,257 162,796
Materials and supplies 144,931 142,782
Prepayments 46,449 12,910
- ---------------------------------------------------------------------------------------------
$ 817,706 $ 835,503
- ---------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,063,798 $ 1,155,482
Prepaid pensions 94,061 81,865
Unamortized debt expense 45,890 40,936
Other 42,004 45,257
- ---------------------------------------------------------------------------------------------
$ 1,245,753 $ 1,323,540
- ---------------------------------------------------------------------------------------------
TOTAL $10,990,159 $11,130,591
=============================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
10
<PAGE> 11
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------- -----------
<S> <C> <C>
CAPITALIZATION
Common stock - $10 par value, 400,000,000 shares
authorized; 145,119,875 shares outstanding $ 1,451,199 $ 1,451,199
Premium on common stock 547,799 547,799
Common stock expense (47,561) (47,561)
Retained earnings used in the business 1,425,932 1,484,871
- -----------------------------------------------------------------------------
Total common shareholders' equity $ 3,377,369 $ 3,436,308
Cumulative preferred stock 144,405 326,604
Long-term debt 3,746,906 3,756,094
- -----------------------------------------------------------------------------
Total Capitalization $ 7,268,680 $ 7,519,006
- -----------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 121,704 $ 128,362
Other postretirement benefits 4,509 24,381
Other 69,610 58,424
- -----------------------------------------------------------------------------
$ 195,823 $ 211,167
- -----------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ 94,988 $ 36,990
Amounts due within one year
Long-term debt 244,214 119,214
Obligations under capital leases 137,360 154,307
Accounts payable 152,616 165,148
Property and general taxes 20,899 34,416
Accumulated deferred income taxes 54,459 51,697
Interest payable 66,671 62,128
Dividends payable 82,723 81,102
Payrolls 74,852 72,164
Fermi 2 refueling outage 20,858 14,342
Other 105,854 130,689
- -----------------------------------------------------------------------------
$ 1,055,494 $ 922,197
- -----------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,059,340 $ 2,052,875
Accumulated deferred investment tax credits 322,558 330,085
Other 88,264 95,261
- -----------------------------------------------------------------------------
$ 2,470,162 $ 2,478,221
- -----------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- -----------------------------------------------------------------------------
TOTAL $10,990,159 $11,130,591
=============================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
11
<PAGE> 12
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
---------------------- ---------------------- ----------------------
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 81,156 $ 91,556 $ 196,920 $ 205,046 $ 425,525 $ 424,801
Adjustments to reconcile net income to net
cash from operating activities:
Accretion income (2,150) (2,845) (4,477) (5,859) (9,659) (12,367)
Depreciation and amortization 130,489 124,630 262,393 249,674 513,330 490,042
Deferred Fermi 2 amortization and return-net 24,365 21,754 48,728 43,508 92,238 82,190
Deferred income taxes and investment
tax credit - net 11,625 13,807 28,560 40,083 51,000 83,295
Fermi 2 refueling outage - net 3,258 2,955 6,516 6,755 12,836 388
Steam plant impairment loss - - - - 42,029 -
Other 12,843 21,111 (6,282) (778) (391) (2,481)
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (19,268) (68,086) (17,726) (192,479) (43,826) (196,790)
Other accounts receivable 2,330 (8,756) (942) (3,474) (920) (8,716)
Inventories (6,358) (22,788) 12,221 (27,664) 21,048 (35,987)
Accounts payable (5,146) 2,059 (12,439) (5,143) 10,753 (10,075)
Taxes payable (65,137) (32,882) (13,085) 13,254 (28,988) 1,240
Interest payable (10,141) (204) 4,543 (1,114) 7,571 (9,127)
Other 28,668 48,191 (69,727) (23,929) (14,543) 3,245
- --------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 186,534 $ 190,502 $ 435,203 $ 297,880 $1,078,003 $ 809,658
- --------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $(124,152) $ (94,744) $ (225,377) $ (179,978) $ (499,243) $(375,195)
Nuclear decommissioning trust funds (9,107) (11,321) (22,794) (23,292) (42,853) (41,219)
Non-utility investments - (2,013) - (552) - (13,384)
Other changes in current assets and liabilities (1,768) (4,441) (847) (3,588) 8,515 3,944
Other (13,714) (3,511) (2,345) (4,592) (28,181) (24,737)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $(148,741) $ (116,030) $ (251,363) $ (212,002) $ (561,762) $(450,591)
- --------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ - $ - $ 185,000 $ - $ 185,000 $ 200,000
Funds received from Trustees: Installment sales
contracts and loan agreements - - - - 201,525 42,935
Increase (decrease) in short-term borrowings 94,988 3,941 57,998 102,388 (46,889) 49,941
Redemption of long-term debt (69,214) - (69,214) (19,214) (270,739) (250,499)
Redemption of preferred stock - - (185,000) - (185,955) -
Premiums on reacquired long-term debt
and preferred stock - - (1,850) - (7,796) (11,350)
Purchase of common stock - - - - - (59,855)
Dividends on common and preferred stock (80,852) (82,013) (166,361) (164,026) (328,574) (329,183)
Cash portion of restructuring dividend to parent - - (56,510) - (56,510) -
Other (2,039) (304) (6,517) (463) (12,654) (2,552)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $ (57,117) $ (78,376) $ (242,454) $ (81,315) $ (522,592) $(360,563)
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ (19,324) $ (3,904) $ (58,614) $ 4,563 $ (6,351) $ (1,496)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 25,658 16,589 64,948 8,122 12,685 14,181
- --------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 6,334 $ 12,685 $ 6,334 $ 12,685 $ 6,334 $ 12,685
================================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 78,595 $ 69,907 $ 133,152 $ 139,699 $ 267,866 $ 284,290
Income taxes paid 114,548 76,240 115,166 76,480 269,223 190,447
New capital lease obligations 11,885 100 12,182 427 41,141 1,316
Exchange of preferred stock for long-term debt - - - - 49,878 -
Non-cash portion of restructuring dividend to parent - - 26,716 - 26,716 -
================================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
12
<PAGE> 13
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Common Stock Premium Retained Total
-------------------- on Common Earnings Common
$10 Par Common Stock Used in the Shareholders'
Shares Value Stock Expense Business Equity
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 145,119,875 $ 1,451,199 $ 547,799 $ (47,561) $ 1,484,871 $ 3,436,308
Expense associated with
preferred stock redeemed (2,801) (2,801)
Net income 196,920 196,920
Cash dividends declared
Common stock - $1.10 per share (159,632) (159,632)
Cumulative preferred stock* (10,200) (10,200)
Restructuring dividend
to parent (83,226) (83,226)
- ---------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1996 145,119,875 $ 1,451,199 $ 547,799 $ (47,561) $ 1,425,932 $ 3,377,369
===============================================================================================================
</TABLE>
*At established rate for each series
See accompanying Notes to Consolidated Financial Statements (Unaudited).
13
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTE 1 - GENERAL
These consolidated financial statements should be read in conjunction with
the Quarterly Report Notes and the Annual Report Notes. The Notes contained
herein update and supplement matters discussed in the Quarterly Report Notes
and the Annual Report Notes.
The preceding consolidated financial statements are unaudited, but, in the
opinion of the Company and Detroit Edison, include all adjustments necessary
for a fair statement of the results for the interim periods. Financial results
for this interim period are not necessarily indicative of results that may be
expected for any other interim period or for the fiscal year.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
As discussed in Note 14 of the Annual Report Notes, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 121 in the fourth
quarter of 1995. As the result of continuing losses in the operation of its
steam heating business, upon adoption of SFAS No. 121, Detroit Edison wrote off
the remaining net book value of its steam heating plant assets of $42 million
($32 million after-tax) or $0.22 per common share.
Based on current market conditions, the steam heating operations continue
to generate losses. Therefore, Detroit Edison will continue to review its
steam heating operations to determine what actions, if any, may be necessary.
---------------------------------------
This Quarterly Report on Form 10-Q, including the report of Deloitte &
Touche LLP (on page 15) will automatically be incorporated by reference in the
Prospectuses constituting part of the Registration Statements on Form S-3
(Registration Nos. 33-53207 and 33-64296) of The Detroit Edison Company and
Form S-8 (Registration No. 333-00023) and Form S-3 (Registration No. 33-57545)
of DTE Energy Company, filed under the Securities Act of 1933. Such report of
Deloitte & Touche LLP, however, is not a "report" or "part of the Registration
Statement" within the meaning of Sections 7 and 11 of the Securities Act of
1933 and the liability provisions of Section 11(a) of such Act do not apply.
14
<PAGE> 15
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
DTE Energy Company and
The Detroit Edison Company
We have reviewed the accompanying condensed consolidated balance sheets
of DTE Energy Company and subsidiary companies and of The Detroit Edison
Company and subsidiary companies as of June 30, 1996, and the related
condensed consolidated statements of income and of cash flows for the
three-month, six-month, and twelve-month periods ended June 30, 1996 and
1995, and the condensed consolidated statements of common shareholders'
equity for the six-month period ended June 30, 1996. These financial
statements are the responsibility of DTE Energy Company's management and
of The Detroit Edison Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and of making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of
an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications
that should be made to such condensed consolidated financial statements
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheets of DTE Energy
Company and subsidiary companies and of The Detroit Edison Company and
subsidiary companies as of December 31, 1995, and the related
consolidated statements of income, common shareholders' equity, and cash
flows for the year then ended (not presented herein); and in our report
dated January 22, 1996 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheets as of
December 31, 1995 is fairly stated, in all material respects, in
relation to the consolidated balance sheets from which it has been
derived.
DELOITTE & TOUCHE LLP
Detroit, Michigan
August 8, 1996
15
<PAGE> 16
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY
COMPANIES
This analysis for the three, six and twelve months ended June 30, 1996, as
compared to the same periods in 1995, should be read in conjunction with the
consolidated financial statements (unaudited), the accompanying Notes, the
Quarterly Report Notes and the Annual Report Notes.
Detroit Edison is the principal subsidiary of the Company and, as such,
this discussion explains material changes in results of operations of both the
Company and Detroit Edison and identifies recent trends and events affecting
both the Company and Detroit Edison. For the periods presented, the Company's
operations and those of Detroit Edison are not materially different.
RESULTS OF OPERATIONS
For the three months ended June 30, 1996, the Company's net income was
$78.3 million, or $0.54 per common share, down 7 percent from the $84.2
million, or $0.58 per common share earned in the three months ended June 30,
1995. For the six months ended June 30, 1996, the Company's net income was
$186.7 million, or $1.29 per common share, down 1.9 percent from the $190.2
million, or $1.31 per common share earned in the six months ended June 30,
1995. The decreases in net income were due to higher operating expenses caused
by an increase in storms and related restoration costs, higher nuclear plant
expenses, and increased depreciation and amortization expenses, partially
offset by increases in electricity sales. For the twelve months ended June 30,
1996, the Company's net income was $402.4 million, or $2.78 per common share,
up 1.8 percent from the $395.2 million, or $2.72 per common share earned in the
twelve months ended June 30, 1995.
At June 30, 1996, the book value of the Company's common stock was $23.88
per share, an increase of $0.26 per share or 1.1 percent since December 31,
1995. Return on average total common shareholders' equity was 11.6% and 11.7%
for the twelve months ended June 30, 1996 and 1995, respectively.
Detroit Edison's ratio of earnings to fixed charges was 3.14 and 3.20 for
the twelve months ended June 30, 1996 and 1995, respectively. Detroit Edison's
ratio of earnings to fixed charges and preferred stock dividends for the 1996
and 1995 twelve-month periods was 2.82 and 2.79, respectively.
16
<PAGE> 17
OPERATING REVENUES
- --------------------------------------------------------------------------------
Total operating revenues of the Company increased (decreased) due to the
following factors:
<TABLE>
<CAPTION>
Three Six Twelve
Months Months Months
------ ---------- ------
(Millions)
<S> <C> <C> <C>
Rate Changes
Special Manufacturing Contracts $ (2) $(11) $(31)
PSCR Clause (8) (23) (4)
---- ----- -----
(10) (34) (35)
System sales volume and mix 16 57 178
Interconnection sales (4) (1) 18
Fermi 2 capacity factor performance standard reserve 11 16 32
Other - net 2 7 4
---- ----- -----
Total $ 15 $45 $197
==== ===== =====
</TABLE>
SPECIAL MANUFACTURING CONTRACTS
In March 1995, the MPSC issued an order approving Detroit Edison's 10-year
special manufacturing contracts with Chrysler Corporation, Ford Motor Company
and General Motors Corporation. In return for their long-term commitments,
these companies receive a reduction in the price paid for electricity. For
additional information, see Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Annual Report.
PSCR CLAUSE
The decreases in PSCR Clause revenues resulted from lower average unit
costs of fuel and purchased power.
kWh SALES
kWh sales increased (decreased) as follows:
<TABLE>
<CAPTION>
Three Six Twelve
Months Months Months
----------- ----------- ---------
<S> <C> <C> <C>
Residential 4.8 % 5.4 % 9.7 %
Commercial 0.4 2.7 3.0
Industrial 1.9 2.0 2.2
Other (includes primarily sales for resale) 0.9 4.6 6.2
Total System 2.0 3.3 4.7
Interconnection (54.5) (12.6) 55.3
Total (1.7) 2.5 6.7
</TABLE>
17
<PAGE> 18
The increases in residential and commercial sales reflect colder winter
weather and customer growth, and for the twelve-month period, substantially
warmer summer weather. Commercial sales also reflect an improvement in
economic conditions.
Increased industrial sales in the three-month and six-month periods
reflect strong demand in the automotive and construction sectors. The
increases in industrial sales for the twelve-month period reflect higher sales
to automotive, steel and other customers due to improved economic conditions.
The increased sales to other customers reflect increased load requirements
of wholesale for resale customers.
Interconnection sales decreases for the three-month and six-month periods
reflect decreased demand for energy. The increase in interconnection sales for
the twelve-month period reflects the improved availability of energy available
for sale in meeting demand during the substantially warmer summer weather in
1995.
FERMI 2 CAPACITY FACTOR PERFORMANCE STANDARD RESERVE
Because of a turbine-generator failure in December 1993, Fermi 2, a
nuclear generating unit, was out of service in 1994 and early 1995. As a
result, under the MPSC capacity factor performance standard, a disallowance of
net incremental replacement power cost will be imposed in each of the years
1994-1998 for the amount by which the Fermi 2 three-year rolling average
capacity factor is less than the greater of either the average of the top 50%
of U. S. boiling water reactors or 50%. Detroit Edison recorded a reserve for
such disallowances of $31 million in 1994 and $32 million in 1995, which
amounts were charged to operating revenues. For additional information, see
Notes 2 and 3 in the Annual Report.
Operating revenues have increased due to the absence of Fermi 2 reserve
charges in the 1996 three-month and six-month periods, and due to a decrease in
Fermi 2 reserve charges in the 1996 twelve-month period.
OPERATING EXPENSES
- --------------------------------------------------------------------------------
FUEL AND PURCHASED POWER
Fuel and purchased power expenses increased (decreased) due to the following
factors:
18
<PAGE> 19
<TABLE>
<CAPTION>
Three Six Twelve
Months Months Months
------ ------ ------
(Millions)
<S> <C> <C> <C>
Net system output $ (3) $ 9 $ 55
Average unit cost (4) (27) (64)
Fermi 2 business interruption insurance - 6 59
Other 3 2 2
---- ---- ----
Total $ (4) $(10) $ 52
==== ==== ====
</TABLE>
Net system output and average fuel and purchased power unit costs were as
follows:
<TABLE>
<CAPTION>
Three Months Six Months Twelve Months
----------------- -------------- ---------------
1996 1995 1996 1995 1996 1995
------------- ------------- ------------ ------------ ------------ ------------
(Thousands of Megawatthours, "MWh")
<S> <C> <C> <C> <C> <C> <C>
Power plant generation
Fossil 9,653 10,355 20,156 20,687 41,106 41,836
Nuclear 1,365 1,078 3,150 1,323 6,918 1,323
Purchased power 1,366 1,143 1,987 2,706 4,699 6,143
------- ------- ------- ------- ------- -------
Net system output 12,384 12,576 25,293 24,716 52,723 49,302
======= ======= ======= ======= ======= =======
Average unit cost ($/MWh) $ 14.98 $ 15.31 $ 14.49 $ 15.54 $ 14.80 $ 16.02
======= ======= ======= ======= ======= =======
</TABLE>
Fuel and purchased power expense decreased in the three-month and
six-month periods due to lower average unit costs resulting from increased
usage of lower cost nuclear generation and lower-cost Western low-sulfur coal,
and, in the three-month period, lower net system output. The decrease in the
six-month period was partially offset by higher net system output.
For the twelve-month period, fuel and purchased power expense increased
due to higher net system output and the prior-period receipt of Fermi 2
business interruption insurance, partially offset by lower average unit costs
resulting from increased usage of lower cost nuclear generation and lower-cost
Western low-sulfur coal. Fermi 2 was out of service in 1994 and early 1995 as
a result of a turbine-generator failure in December 1993.
OTHER OPERATION
Three Months
Other operation expense increased due primarily to higher sales expenses
($4.5 million), nuclear plant expenses ($4.1 million), lump sum payments to
union employees ($3.6 million) and higher employee retirement and savings plan
expenses ($2.6 million). These increases were partially offset by lower
incentive award expenses related to a
19
<PAGE> 20
shareholder value improvement plan ($5.4 million) and lower fossil plant
expenses ($3.2 million).
Six Months
Other operation expense increased due primarily to higher nuclear plant
($7.8 million) and major storm ($4.8 million) expenses, lump sum payments to
union employees ($3.6 million) and higher employee retirement plan ($3.0
million) and demand side management ($3.9 million) expenses. These increases
were partially offset by lower incentive award expenses related to a
shareholder value improvement plan ($5.4 million).
Twelve Months
Other operation expense increased due primarily to higher major storm
expenses ($14.8 million), an increase in a reserve for the write-off of
obsolete and excess stock material ($9.0 million), expenses related to the
settlement of the Ludington Pumped Storage Plant fish mortality case ($8.4
million), higher demand side management expenses ($8.8 million), Electric Power
Research Institute dues ($4.8 million), higher incentive award expenses related
to a shareholder value improvement plan ($3.9 million), lump sum payments to
union employees ($3.6 million) and higher sales expenses ($2.8 million). These
increases were partially offset by expenses recorded in the year-earlier period
for service quality claims ($8.7 million), and lower uncollectible ($7.7
million), postretirement benefits ($6.4 million) and nuclear plant ($5.5
million) expenses.
MAINTENANCE
Three Months
Maintenance expense increased due to higher overhead and underground lines
support ($9.6 million), general property ($3.3 million), nuclear plant ($3.2
million) and station equipment ($2.2 million) expenses.
Six Months
Maintenance expense increased due to higher overhead and underground lines
support ($16.3 million), general property ($6.2 million), major storm ($5.4
million), nuclear plant ($5.1 million) and station equipment ($4.8 million)
expenses.
Twelve Months
Maintenance expense increased due primarily to higher overhead and
underground lines support ($19.6 million), major storm ($15.7 million), general
property ($6.2 million) and station equipment ($4.8 million) expenses. These
increases were
20
<PAGE> 21
partially offset by lower nuclear plant ($12.9 million) and fossil plant ($2.9
million) expenses.
STEAM PLANT IMPAIRMENT LOSS
As the result of continuing losses in the operation of its steam heating
business, upon adoption of Statement of Financial Accounting Standards No. 121
in the fourth quarter of 1995, Detroit Edison wrote off the remaining net book
value of its steam heating plant assets of $42 million.
Based on current market conditions, the steam heating operations continue
to generate losses. Therefore, Detroit Edison will continue to review its
steam heating operations to determine what actions, if any, may be necessary.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased due primarily to increases
in plant in service, including internally developed software costs.
DEFERRED FERMI 2 AMORTIZATION
Deferred Fermi 2 amortization, a non-cash item of income, was recorded
beginning with Detroit Edison's purchase of the Wolverine Power Supply
Cooperative, Inc.'s ownership interest in Fermi 2 in February 1990. The annual
amount deferred decreases each year through 1999.
AMORTIZATION OF DEFERRED FERMI 2 DEPRECIATION AND RETURN
Deferred Fermi 2 depreciation and return, non-cash items of income, were
recorded beginning with the implementation of the Fermi 2 rate phase-in plan in
January 1988. The annual amounts of deferred depreciation and return decreased
each year through 1992. Beginning in 1993 and continuing through 1998, these
deferred amounts will be amortized to operating expense as the cash recovery is
realized through revenues.
TAXES OTHER THAN INCOME TAXES
Taxes other than income taxes increased due to higher payroll and property
taxes.
INCOME TAXES
Income taxes decreased due to lower pretax operating income.
21
<PAGE> 22
OTHER INCOME AND DEDUCTIONS
- --------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS) - NET
Three Months
Other deductions increased due to expenses related to merchandise, jobbing
and contract work.
Six Months
Other deductions decreased due to lower promotional practices expense
($7.2 million) and lower expenses related to the sale of accounts receivables
and unbilled revenues ($3.1 million).
Twelve Months
Other deductions decreased due to lower expenses related to the sale of
accounts receivable and unbilled revenues ($8.4 million), promotional practices
expense ($5.0 million) and contributions expense ($3.7 million).
ACCRETION INCOME
Accretion income, a non-cash item of income, was recorded beginning in
January 1988 to restore to income, over the period 1988-1998, losses recorded
due to discounting indirect disallowances of plant costs. The annual amount of
accretion income recorded decreases each year through 1998.
INTEREST CHARGES
- --------------------------------------------------------------------------------
LONG-TERM DEBT
Long-term debt interest charges were higher due to the issuance of QUIDS.
OTHER
Other interest charges were lower due primarily to lower levels of
short-term borrowings.
PREFERRED STOCK DIVIDENDS OF DETROIT EDISON
- --------------------------------------------------------------------------------
Preferred stock dividends of Detroit Edison decreased due to the
redemption of all of the outstanding Cumulative Preferred Stock, 7.68% Series,
7.45% Series and 7.36%
22
<PAGE> 23
Series and the exchange of a portion of the 7.75% Series for QUIDS and the
redemption and/or conversion of all shares of the convertible 5.50% Series.
LIQUIDITY AND CAPITAL RESOURCES
COMPETITION
- --------------------------------------------------------------------------------
THE DETROIT EDISON COMPANY
FERC. On April 24, 1996, the FERC issued Orders 888 and 889. Order 888
requires public utilities to file open access transmission tariffs for
wholesale transmission services in accordance with non-discriminatory terms and
conditions established by the FERC. On July 9, 1996, the Detroit Edison
Company filed its Pro-Forma Open Access Transmission Tariff in compliance with
FERC Order 888. The tariff sets forth the terms and conditions under which
Detroit Edison will supply wholesale Firm and Non-Firm Point-to-Point
Transmission Service as well as Network Integration Transmission Service (a
service which allows the network customer to integrate, economically dispatch
and regulate its network resources to serve its network load in a manner
comparable to that in which the transmission provider utilizes its transmission
system to serve its native load customers). Detroit Edison's filing also
included the development and cost support for the rates to be charged for
transmission service and the various ancillary services that are required to be
offered. Order 888 permits the recovery of stranded costs on a case by case
basis.
Effective with the filing, Detroit Edison must take transmission service
(including ancillary services) under the open access tariff for any new
wholesale sales or purchases. Existing economy energy coordination agreements
must be unbundled to take service under the transmission tariff after December
31, 1996. Effective October 1996, all bills submitted to wholesale
requirements customers must include unbundled informational rates as a line
item in order to allow customers to compare rates and evaluate alternative
contracts. By December 31, 1996, Detroit Edison, as a member of a pool, must
file a joint pool-wide pro forma tariff and must begin to take service under
that tariff for all pool transactions. Power pool agreements must be reformed
to establish open, non-discriminatory provisions and to modify any provisions
that are unduly discriminatory or preferential.
By November 1, 1996, public utilities are required by Order 889 to obtain
transmission information for wholesale transactions through a system on the
Internet. Public utilities must separate transmission operations and
reliability functions from wholesale marketing functions.
FERC has also issued a NOPR on Capacity Reservation Transmission Tariffs
("CRT"). The NOPR requests comment by October 21, 1996 on whether there are
certain disadvantages inherent in offering transmission service on both a
network and
23
<PAGE> 24
point-to-point basis and whether comparability can be better accomplished using
a single different methodology. The proposed CRT approach suggests that no
later than December 31, 1997, all pro forma point-to-point and network service
be replaced with a single point-to-point tariff that provides for
reservation-based transmission service for all jurisdictional (wholesale sales
and wholesale and retail transmission) service.
Detroit Edison is currently unable to estimate the revenue impact, if any,
of these newly required tariffs and procedures.
MPSC. On April 12, 1996, the MPSC issued a "Scheduling Order" which
required Detroit Edison and Consumers Power Company to file "applications" by
May 15, 1996 containing proposals addressing the recommendation of Michigan
Governor Engler and the Michigan Jobs Commission ("MJC") to "allow new
industrial/commercial electrical load to be negotiated directly from the
generator and wheeled over 'common' transmission" by January 1, 1997. The MPSC
emphasized in its order "that this is the first step toward consideration of
the recommendations made by the MJC. Further proceedings for both electric and
gas utilities may be ordered as necessary for consideration of all relevant
issues."
Detroit Edison filed its application on May 15, 1996, stating that the
MJC's report set out a framework for a transition to a competitive environment
that included six specific recommendations associated with a near term deadline
of January 1, 1997. However, the MPSC's scheduling order only sought proposals
regarding the first recommendation. Detroit Edison indicated it does not
support piecemeal implementation of the MJC's framework. Detroit Edison also
stated that, although the MPSC has no legal authority to compel Michigan
utilities to offer retail wheeling services, it would voluntarily develop a
retail wheeling program as part of a comprehensive implementation of the MJC's
recommendations, including the development of a mechanism to recover stranded
costs.
Detroit Edison also indicated that it will take some time to develop a
tariff that, among other things, identifies and separates the transmission and
distribution facilities as required by FERC Order 888. In the interim, Detroit
Edison requested ex parte authority to immediately offer an Economic Growth
Service Rider to be used as a tool to attract new business. The proposed
rider, which is still before the MPSC, contains significant price discounts for
new commercial and industrial customers.
Detroit Edison is continuing to address its competitive status and the
needs of its customers by entering into long-term (10 years) service contracts
with large commercial and industrial customers. A number of such contracts,
which must be approved by the MPSC prior to implementation, are pending before
the MPSC. The MPSC is also considering a Detroit Edison request for approval
of an industrial process heat rider.
24
<PAGE> 25
CASH GENERATION AND CASH REQUIREMENTS
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Net cash from operating activities increased due primarily to changes in
current assets and liabilities, primarily as a result of the 1995 repurchase of
customer accounts receivable and unbilled revenues and for the twelve-month
period, higher non-cash charges to income and higher net income. Net cash from
operating activities for Detroit Edison decreased for the three-month period
due to lower net income.
Net cash used for investing activities was higher due to increased plant
and equipment expenditures.
Net cash used for financing activities was lower in the three-month period
due to an increase in short-term borrowings, partially offset by the redemption
of long-term debt. Net cash used for financing activities for the six-month
period was higher due to decreases in short-term borrowings and higher
redemptions of long-term debt. Net cash used for financing activities for the
twelve-month period was higher due to the redemption of preferred stock and a
decrease in short-term borrowings, partially offset by increased funds received
from Trustees and the purchase of common stock in the prior period.
ADDITIONAL INFORMATION
In May and June 1996, Detroit Edison purchased a total of $50 million of
General and Refunding Mortgage Bonds on the open market, consisting of $29.5
million of 7.74% 1993 Series J, $19.5 million of 8.24% 1993 Series C and $1
million of 8.25% 1993 Series C. These bonds have been canceled.
Detroit Edison's 1996 cash requirements for its capital expenditure
program are estimated at $482 million, of which $222 million had been expended
as of June 30, 1996.
Detroit Edison's internal cash generation is expected to be sufficient to
meet cash requirements for capital expenditures as well as scheduled long-term
debt redemptions.
Expenditures for 1996 non-regulated investments are estimated to range
from $100 million to $200 million of which $27 million had been expended as of
June 30, 1996.
The Company had short-term credit arrangements of approximately $658
million at June 30, 1996, under which $95 million of borrowings were
outstanding. Of the total amount, $200 million represents a DTE Capital
Corporation Revolving Credit Agreement, backed by a Support Agreement from the
Company. The remaining $458 million results from Detroit Edison arrangements.
25
<PAGE> 26
CAPITALIZATION
- --------------------------------------------------------------------------------
The Company's capital structure as of June 30, 1996 was 47.1% common
shareholders' equity, 2.0% cumulative preferred stock of subsidiary and 50.9%
long-term debt as compared to 45.7%, 4.3% and 50.0%, respectively, at December
31, 1995.
26
<PAGE> 27
DTE ENERGY COMPANY
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
On May 28, 1996 an order was issued by the Circuit Court for Wayne County,
Michigan certifying a plaintiff class (Gilford, et al v Detroit Edison) in a
lawsuit claiming that Detroit Edison had engaged in age and racial
discrimination. Detroit Edison has appealed the class certification to the
Michigan Court of Appeals and has, also, filed a motion for summary disposition
of the lawsuit with the Circuit Court for Wayne County. Detroit Edison is of
the opinion that the allegations of discrimination are without merit.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of the holders of Common Stock of the Company was
held on April 22, 1996. Proxies for the meeting were solicited pursuant
to Regulation 14(a).
(b) There was no solicitation in opposition to the Board of Directors'
nominees, as listed in the proxy statement, for directors to be elected
at the meeting and all such nominees were elected.
The terms of the previously elected eight directors listed below continue
until the annual meeting dates shown after each name:
John E. Lobbia April 28, 1997
Patricia S. Longe April 28, 1997
Eugene A. Miller April 28, 1997
Dean E. Richardson April 28, 1997
Terence E. Adderley April 27, 1998
Anthony F. Earley, Jr. April 27, 1998
Allan D. Gilmour April 27, 1998
Theodore S. Leipprandt April 27, 1998
(c) At the annual meeting of the holders of Common Stock of the Company
held on April 22, 1996, the following five directors were elected to
serve until the 1999 annual meeting with the votes shown:
<TABLE>
<CAPTION>
Total Vote
Total Vote Withheld
for Each from Each
Director Director
----------- ---------
<S> <C> <C>
Lillian Bauder 109,326,967 1,824,032
David Bing 109,137,150 2,013,849
Larry G. Garberding 109,154,855 1,998,644
Alan E. Schwartz 107,586,022 3,564,977
William Wegner 109,201,430 1,949,569
</TABLE>
27
<PAGE> 28
Shareholders ratified the appointment of Deloitte & Touche LLP as
the Company's independent auditors for the year 1996 with the votes
shown:
For Against Abstain
--- ------- -------
109,431,465 676,579 1,044,255
Shareholders also voted on the two items below:
(1) A shareholder proposal regarding criterion for closing the
nuclear power plant.
For Against Abstain
--------- ---------- ---------
6,960,710 85,513,799 6,613,725
(2) A shareholder proposal regarding the cost of closing the
nuclear power plant before its license expires.
For Against Abstain
--------- ---------- ---------
7,840,120 82,673,496 6,574,620
(d) Not applicable.
ITEM 5 - OTHER INFORMATION.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Retail Wheeling"
of the Annual Report and in Item 5 - Other Information of the Quarterly Report,
on March 1, 1996, MascoTech Forming Technologies, Inc., a Detroit Edison
industrial customer currently purchasing approximately 25 MW of electricity
annually (with the potential for an additional 6 MW annually), petitioned the
MPSC to establish a "cost based fair and pro-competitive transportation rate"
for its new and existing electric load. A March 19, 1996 Detroit Edison motion
to dismiss asserting that the MPSC lacks jurisdiction to establish the
requested rate is pending at the MPSC. The Michigan Attorney General has been
permitted to intervene and another public utility that had been denied
intervention by the ALJ has been granted intervenor status on appeal to the
MPSC. Hearings commenced on June 24, 1996. The current procedural schedule
provides that the ALJ will issue a PFD by September 30, 1996 and a final MPSC
order will be issued in early December 1996.
On May 8, 1996, the NRC issued the fifteenth Systematic Assessment of
Licensee Performance report on Fermi 2 operations during the period from April
1994 through March 1996. The NRC assessment of nuclear activities was good
overall.
28
<PAGE> 29
On May 21, 1996, the NRC issued Detroit Edison a Notice of Violation and
Proposed Imposition of Civil Penalty in the amount of $50,000 for failure to
take prompt action to identify and correct a potential common mode failure of
water pumps at the Fermi 2 plant on February 5, 1996. Detroit Edison did not
contest the violation or civil penalty. The civil penalty was paid on June 20,
1996.
The state of Michigan's Mercury Pollution Prevention Task Force's final
report, released in April 1996, reviewed sources of mercury and recommended
action programs for reduction of mercury discharges to the environment from six
main segments of society. The recommendations for the utility industry focused
on encouraging the EPA to finalize its mercury study reports to Congress and
the MPSC and utilities to support additional research to determine the full
environmental costs of mercury emissions. The report also urged continued
Michigan utility support of renewable energy projects and asked the utilities
to develop a plan with timetables and goals to further reduce mercury usage or
emissions. At this time, until studies are complete and resulting regulations,
if any, are promulgated, the impact upon Detroit Edison cannot be determined.
As discussed in Part I - Items 1 and 2 - Business and Properties,
"Environmental Matters - Water" of the Annual Report, National Pollution
Discharge Elimination System permits for Detroit Edison's power plants are
issued by the MDEQ pursuant to delegation by the EPA under the federal Clean
Water Act. One permit renewal was issued in June 1996 and one permit renewal
application was filed, leaving six permit renewal applications (submitted in
1996, 1994 and earlier) pending. The expired permits remain effective until
new permits are issued or denied.
As discussed in Part 1 - Items 1 and 2 - Business and Properties,
"Employees and Executive Officers - Employees" of the Annual Report, the
Company and its directors and officers in their capacities as such are insured
against liability for wrongful acts (to the extent defined) under three
insurance policies. The aggregate coverage under the policies has been
increased from $85 million to $95 million.
29
<PAGE> 30
QUARTERLY REPORT ON FORM 10-Q FOR
THE DETROIT EDISON COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED).
See pages 9 through 14.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
See the Company's and Detroit Edison's "Item 2 - Management's Discussion
and Analysis of Financial Condition and Results of Operations," which is
incorporated herein by this reference.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
See the Company's "Item 1 - Legal Proceedings," which is incorporated
herein by this reference.
ITEM 5 - OTHER INFORMATION.
See the Company's "Item 5 - Other Information," which is incorporated
herein by this reference.
30
<PAGE> 31
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(i) Exhibits filed herewith.
Exhibit
Number
-------
11-4 - DTE Energy Company and Subsidiary Companies Primary
and Fully Diluted Earnings Per Share of Common Stock.
15-2 - Awareness Letter of Deloitte & Touche LLP regarding
their report dated August 8, 1996.
27-5 - Financial Data Schedule for the period ended June 30,
1996 for the Company.
27-6 - Financial Data Schedule for the period ended June 30,
1996 for Detroit Edison.
(ii) Exhibits incorporated herein by reference.
3(a) -Restated Articles of Incorporation of Detroit Edison,
as filed December 10, 1991 with the State of Michigan, Department
of Commerce - Corporation and Securities Bureau (Exhibit 4-117 to
Form 10-Q for quarter ended March 31, 1993).
3(b) -Certificate containing resolution of the Detroit
Edison Board of Directors establishing the Cumulative Preferred
Stock, 7.75% Series as filed February 22, 1993 with the State of
Michigan, Department of Commerce - Corporation and Securities
Bureau (Exhibit 4-134 to Form 10-Q for quarter ended March 31,
1993).
3(c) -Certificate containing resolution of the Detroit
Edison Board of Directors establishing the Cumulative Preferred
Stock, 7.74% Series, as filed April 21, 1993 with the State of
Michigan, Department of Commerce - Corporation and Securities
Bureau (Exhibit 4-140 to Form 10-Q for quarter ended March 31,
1993).
3(d) -Amended and Restated Articles of Incorporation of the
Company, dated December 13, 1995 (Exhibit 3A (3.1) to the
Company's Form 8-B filed January 2, 1996, File No. 1-11607).
31
<PAGE> 32
Exhibit
Number
------
3(e) - Agreement and Plan of Exchange (Exhibit 1(2) to the
Company's Form 8-B filed January 2, 1996, File No. 1-11607).
3(f) - Amended and Restated By-Laws, dated as of February
26, 1996, of the Company (Exhibit 3-3 to Form 10-K for year
ended December 31, 1995).
3(g) - Amended and Restated By-Laws, dated as of February
26, 1996, of Detroit Edison (Exhibit 3-4 to Form 10-K for year
ended December 31, 1995).
4(a) - Mortgage and Deed of Trust, dated as of October 1,
1924, between Detroit Edison (File No. 1-2198) and Bankers Trust
Company as Trustee (Exhibit B-1 to Registration No. 2-1630) and
indentures supplemental thereto, dated as of dates indicated
below, and filed as exhibits to the filings as set forth below:
September 1, 1947 Exhibit B-20 to Registration No. 2-7136
October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096
November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160
January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595
June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643
June 30, 1982 Exhibit 4-30 to Registration No. 2-78941
August 15, 1982 Exhibit 4-32 to Registration No. 2-79674
October 15, 1985 Exhibit 4-170 to Form 10-K for year ended
December 31, 1994
November 30, 1987 Exhibit 4-139 to Form 10-K for year ended
December 31, 1992
July 15, 1989 Exhibit 4-171 to Form 10-K for year ended
December 31, 1994
December 1, 1989 Exhibit 4-172 to Form 10-K for year ended
December 31, 1994
February 15, 1990 Exhibit 4-173 to Form 10-K for year ended
December 31, 1994
November 1, 1990 Exhibit 4-110 to Form 10-K for year ended
December 31, 1990
April 1, 1991 Exhibit 4-15 to Form 10-K for year ended
December 31, 1995
May 1, 1991 Exhibit 4-112 to Form 10-Q for quarter ended
June 30, 1991
May 15, 1991 Exhibit 4-113 to Form 10-Q for quarter ended
June 30, 1991
32
<PAGE> 33
Exhibit
Number
- -------
September 1, 1991 Exhibit 4-116 to Form 10-Q for quarter ended
September 30, 1991
November 1, 1991 Exhibit 4-119 to Form 10-K for year ended
December 31, 1991
January 15, 1992 Exhibit 4-120 to Form 10-K for year ended
December 31, 1991
February 29, 1992 Exhibit 4-121 to Form 10-Q for quarter ended
March 31, 1992
April 15, 1992 Exhibit 4-122 to Form 10-Q for quarter ended
June 30, 1992
July 15, 1992 Exhibit 4-123 to Form 10-Q for quarter ended
September 30, 1992
July 31, 1992 Exhibit 4-124 to Form 10-Q for quarter ended
September 30, 1992
November 30, 1992 Exhibit 4-130 to Registration No. 33-56496
January 1, 1993 Exhibit 4-131 to Registration No. 33-56496
March 1, 1993 Exhibit 4-141 to Form 10-Q for quarter ended
March 31, 1993
March 15, 1993 Exhibit 4-142 to Form 10-Q for quarter ended
March 31, 1993
April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter ended
March 31, 1993
April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter ended
March 31, 1993
May 31, 1993 Exhibit 4-148 to Registration No. 33-64296
June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter ended
June 30, 1993 (1993 Series AP)
June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter ended
June 30, 1993 (1993 Series H)
September 15, 1993 Exhibit 4-158 to Form 10-Q for quarter ended
September 30, 1993
March 1, 1994 Exhibit 4-163 to Registration No. 33-53207
June 15, 1994 Exhibit 4-166 to Form 10-Q for quarter ended
June 30, 1994
August 15, 1994 Exhibit 4-168 to Form 10-Q for quarter ended
September 30, 1994
December 1, 1994 Exhibit 4-169 to Form 10-K for year ended
December 31, 1994
August 1, 1995 Exhibit 4-174 to Form 10-Q for quarter ended
September 30, 1995.
4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993
(Exhibit 4-152 to Registration No. 33-50325).
33
<PAGE> 34
Exhibit
Number
- ------
4(c) - First Supplemental Note Indenture, dated as of June 30, 1993
(Exhibit 4-153 to Registration No. 33-50325).
4(d) - Second Supplemental Note Indenture, dated as of September 15,
1993 (Exhibit 4-159 to Form 10-Q for quarter ended September 30,
1993).
4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994
(Exhibit 4-169 to Form 10-Q for quarter ended September 30,
1994).
4(f) - First Amendment, dated as of December 12, 1995, to Third
Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit
4-12 to Registration No. 333-00023).
4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995
(Exhibit 4-175 to Form 10-Q for quarter ended September 30,
1995).
4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996
(Exhibit 4-14 to Form 10-K for year ended December 31, 1995).
4(i) - Standby Note Purchase Credit Facility, dated as of August 17,
1994, among The Detroit Edison Company, Barclays Bank PLC, as
Bank and Administrative Agent, Bank of America, The Bank of New
York, The Fuji Bank Limited, The Long-Term Credit Bank of Japan,
LTD, Union Bank and Citicorp Securities, Inc. and First Chicago
Capital Markets, Inc. as Remarketing Agents (Exhibit 99-18 to
Form 10-Q for quarter ended September 30, 1994).
4(j) - Support Agreement, dated as of March 8, 1996, between the Company
and Detroit Edison (Exhibit 4-176 to Form 10-Q for quarter ended
March 31, 1996).
99(a) - Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982
(Exhibit 28-5 to Registration No. 2-81501).
99(b) - Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency, dated as
of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501).
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4,
1988, between Detroit Edison and Renaissance (Exhibit 99-6 to
Registration No. 33-50325).
34
<PAGE> 35
Exhibit
Number
- -------
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement,
dated as of February 1, 1990, between Detroit Edison and
Renaissance (Exhibit 99-7 to Registration No. 33-50325).
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement,
dated as of September 1, 1993, between Detroit Edison and
Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent (Exhibit 99-12 to Registration No.
33-50325).
99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among Detroit
Edison, Renaissance, the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for
quarter ended September 30, 1994).
99(h) - Third Amendment, dated as of March 8, 1996, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-11 to
Form 10-Q for quarter ended March 31, 1996).
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent (Exhibit 99-13 to Registration No.
33-50325).
99(j) - First Amendment, dated as of September 1, 1994, to $200,000,000
Three-Year Credit Agreement, dated as of September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and Barclays
Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q
for quarter ended September 30, 1994).
99(k) - Third Amendment, dated as of March 8, 1996, to $200,000,000
Three-Year Credit Agreement, dated September 1, 1993, as amended
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-12 to
Form 10-Q for quarter ended March 31, 1996).
35
<PAGE> 36
Exhibit
Number
- -------
99(l) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance
(Exhibit 99-9 to Registration No. 33-50325).
99(m) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance (Exhibit 99-10 to Registration No.
33-50325).
99(n) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance (Exhibit 99-11 to Registration No.
33-50325).
99(o) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and Renaissance (Exhibit 99-21 to Form
10-Q for quarter ended September 30, 1994).
99(p) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of
October 4, 1988, between Detroit Edison and Renaissance (Exhibit
99-10 to Form 10-Q for quarter ended March 31, 1996).
99(q) - Credit Agreement, dated as of March 1, 1996 among DTE Capital
Corporation, the Initial Lenders named therein, and Citibank, N.A.,
as Agent (Exhibit 99-9 to Form 10-Q for quarter ended March 31,
1996).
(b) Reports on Form 8-K
Registrants did not file any Current Reports on Form 8-K during the
second quarter of 1996.
36
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DTE ENERGY COMPANY
--------------------------------
(Registrant)
Date August 8, 1996 /s/ SUSAN M. BEALE
--------------------- --------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date August 8, 1996 /s/ RONALD W. GRESENS
--------------------- --------------------------------
Ronald W. Gresens
Vice President and Controller
37
<PAGE> 38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE DETROIT EDISON COMPANY
--------------------------------
(Registrant)
Date August 8, 1996 /s/ SUSAN M. BEALE
--------------------- --------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date August 8, 1996 /s/ RONALD W. GRESENS
--------------------- --------------------------------
Ronald W. Gresens
Vice President and Controller
38
<PAGE> 39
DTE ENERGY COMPANY (FILE NO. 1-11607) AND
THE DETROIT EDISON COMPANY (FILE NO. 1-2198)
QUARTERLY REPORTS ON FORM 10-Q FOR THE
QUARTER ENDED JUNE 30, 1996
EXHIBIT INDEX
(a) Exhibits filed herewith.
Exhibit
Number Page No.
- ------- --------
11-4 - DTE Energy Company and Subsidiary Companies Primary
and Fully Diluted Earnings Per Share of Common Stock.
15-2 - Awareness Letter of Deloitte & Touche LLP regarding
their report dated August 8, 1996.
27-5 - Financial Data Schedule for the period ended June 30,
1996 for the Company.
27-6 - Financial Data Schedule for the period ended June 30,
1996 for Detroit Edison.
See Page Nos. __ through
___ for location of exhibits
incorporated by reference
(b) Exhibits incorporated by reference.
3(a) - Restated Articles of Incorporation of Detroit Edison,
as filed December 10, 1991 with the State of Michigan,
Department of Commerce - Corporation and Securities Bureau.
3(b) - Certificate containing resolution of the Detroit
Edison Board of Directors establishing the Cumulative Preferred
Stock, 7.75% Series as filed February 22, 1993 with the State of
Michigan, Department of Commerce - Corporation and Securities
Bureau.
3(c) - Certificate containing resolution of the Detroit
Edison Board of Directors establishing the Cumulative Preferred
Stock, 7.74% Series, as filed April 21, 1993 with the State of
Michigan, Department of Commerce - Corporation and Securities
Bureau.
<PAGE> 40
3(d) - Amended and Restated Articles of Incorporation of the
Company, dated December 13, 1995.
3(e) - Agreement and Plan of Exchange.
3(f) - Amended and Restated By-Laws, dated as of February
26, 1996, of the Company.
3(g) - Amended and Restated By-Laws, dated as of February
26, 1996, of Detroit Edison.
4(a) - Mortgage and Deed of Trust, dated as of October 1,
1924, between Detroit Edison and Bankers Trust Company as Trustee
and indentures supplemental thereto, dated as of dates indicated
below:
September 1, 1947
October 1, 1968
November 15, 1971
January 15, 1973
June 1, 1978
June 30, 1982
August 15, 1982
October 15, 1985
November 30, 1987
July 15, 1989
December 1, 1989
February 15, 1990
November 1, 1990
April 1, 1991
May 1, 1991
May 15, 1991
<PAGE> 41
September 1, 1991
November 1, 1991
January 15, 1992
February 29, 1992
April 15, 1992
July 15, 1992
July 31, 1992
November 30, 1992
January 1, 1993
March 1, 1993
March 15, 1993
April 1, 1993
April 26, 1993
May 31, 1993
June 30, 1993
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) - Third Supplemental Note Indenture, dated as of August 15, 1994.
4(f) - First Amendment, dated as of December 12, 1995, to Third
Supplemental Note Indenture, dated as of August 15, 1994.
4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995.
4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996.
4(i) - Standby Note Purchase Credit Facility, dated as of August 17, 1994,
among The Detroit Edison Company, Barclays Bank PLC, as Bank and
Administrative Agent, Bank of America, The Bank of New York, The
Fuji Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union
Bank and Citicorp Securities, Inc. and First Chicago Capital
Markets, Inc. as Remarketing Agents.
4(j) - Support Agreement, dated as of March 8, 1996, between the Company
and Detroit Edison.
<PAGE> 42
99(a) - Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982.
99(b) - Belle River Transmission Ownership and Operating Agreement between
Detroit Edison and Michigan Public Power Agency, dated as of
December 1, 1982.
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4,
1988, between Detroit Edison and Renaissance.
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated
as of February 1, 1990, between Detroit Edison and Renaissance.
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement, dated
as of September 1, 1993, between Detroit Edison and Renaissance.
99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New
York Branch, as Agent.
99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among Detroit
Edison, Renaissance, the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent.
99(h) - Third Amendment, dated as of March 8, 1996, to $200,000,000 364-Day
Credit Agreement, dated September 1, 1993, as amended, among
Detroit Edison, Renaissance, the Banks party thereto and Barclays
Bank, PLC, New York Branch, as Agent.
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993,
among Detroit Edison, Renaissance and Barclays Bank PLC, New York
Branch, as Agent.
99(j) - First Amendment, dated as of September 1, 1994, to $200,000,000
Three-Year Credit Agreement, dated as of September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and Barclays
Bank, PLC, New York Branch, as Agent.
99(k) - Third Amendment, dated as of March 8, 1996, to $200,000,000
Three-Year Credit Agreement, dated September 1, 1993, as amended
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
<PAGE> 43
99(l) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance.
99(m) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance (Exhibit 99-10 to Registration No.
33-50325).
99(n) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance.
99(o) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and Renaissance.
99(p) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of
October 4, 1988, between Detroit Edison and Renaissance.
99(q) - Credit Agreement, dated as of March 1, 1996 among DTE Capital
Corporation, the Initial Lenders named therein, and Citibank, N.A.,
as Agent.
<PAGE> 1
EXHIBIT 11-4
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
OF COMMON STOCK
<TABLE>
<CAPTION>
Three Six Twelve
Months Months Months
Ended Ended Ended
June 30, 1996 June 30, 1996 June 30, 1996
------------- -------------- -------------
(Thousands, except per share amounts)
PRIMARY:
<S> <C> <C> <C>
Net Income $ 78,253 $ 186,693 $ 402,372
Weighted average number of common
shares outstanding (a) 145,120 145,120 144,674
Earnings per share of Common Stock
based on weighted average number
of shares outstanding $ 0.54 $ 1.29 $ 2.78
FULLY DILUTED:
Net Income $ 78,253 $ 186,693 $ 402,372
Convertible Preferred Stock
dividends - - 53
-------- --------- ---------
$ 78,253 $ 186,693 $ 402,425
======== ========= =========
Weighted average number of common
shares outstanding (a) 145,120 145,120 144,674
Conversion of convertible
Preferred Stock - - 112
-------- --------- ---------
145,120 145,120 144,786
======== ========= =========
Earnings per share of Common Stock
assuming conversion of outstanding
convertible Preferred Stock $ 0.54 $ 1.29 $ 2.78
</TABLE>
- ---------------
(a) Based on a daily average.
<PAGE> 1
Exhibit 15-2
August 8, 1996
DTE Energy Company and
The Detroit Edison Company
Detroit, Michigan
We have made reviews, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim financial information of DTE Energy Company and subsidiary
companies and of The Detroit Edison Company and subsidiary companies for
the three-month, six-month and twelve-month periods ended June 30, 1996,
as indicated in our report dated August 8, 1996. 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 June 30, 1996,
is incorporated by reference in the following Registration Statements:
FORM REGISTRATION NUMBER
DTE Energy Company
Form S-3 33-57545
Form S-8 333-00023
The Detroit Edison Company
Form S-3 33-53207
Form S-3 33-64296
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 Statements listed above which is 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 DTE
ENERGY COMPANY AND SUBSIDIARY COMPANIES 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>
<CIK> 0000936340
<NAME> DTE ENERGY COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,491,112
<OTHER-PROPERTY-AND-INVEST> 493,663
<TOTAL-CURRENT-ASSETS> 859,183
<TOTAL-DEFERRED-CHARGES> 1,249,354
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 11,093,312
<COMMON> 1,951,437
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,519,289
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,470,726
0
144,405
<LONG-TERM-DEBT-NET> 3,746,906
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 94,988
<LONG-TERM-DEBT-CURRENT-PORT> 244,214
0
<CAPITAL-LEASE-OBLIGATIONS> 121,704
<LEASES-CURRENT> 137,360
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,133,009
<TOT-CAPITALIZATION-AND-LIAB> 11,093,312
<GROSS-OPERATING-REVENUE> 1,780,900
<INCOME-TAX-EXPENSE> 133,775
<OTHER-OPERATING-EXPENSES> 1,306,115
<TOTAL-OPERATING-EXPENSES> 1,439,890
<OPERATING-INCOME-LOSS> 341,010
<OTHER-INCOME-NET> (293)
<INCOME-BEFORE-INTEREST-EXPEN> 340,717
<TOTAL-INTEREST-EXPENSE> 143,824
<NET-INCOME> 186,693
10,200
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 149,474
<TOTAL-INTEREST-ON-BONDS> 137,621
<CASH-FLOW-OPERATIONS> 443,947
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DETROIT
EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME,
BALANCE SHEET, STATEMENT OF CASH FLOWS AND STATEMENT OF COMMON SHAREHOLDERS'
EQUITY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000028385
<NAME> THE DETROIT EDISON COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,491,112
<OTHER-PROPERTY-AND-INVEST> 435,588
<TOTAL-CURRENT-ASSETS> 817,706
<TOTAL-DEFERRED-CHARGES> 1,245,753
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 10,990,159
<COMMON> 1,451,199
<CAPITAL-SURPLUS-PAID-IN> 500,238
<RETAINED-EARNINGS> 1,425,932
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,377,369
0
144,405
<LONG-TERM-DEBT-NET> 3,746,906
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 94,988
<LONG-TERM-DEBT-CURRENT-PORT> 244,214
0
<CAPITAL-LEASE-OBLIGATIONS> 121,704
<LEASES-CURRENT> 137,360
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,123,213
<TOT-CAPITALIZATION-AND-LIAB> 10,990,159
<GROSS-OPERATING-REVENUE> 1,779,868
<INCOME-TAX-EXPENSE> 134,870
<OTHER-OPERATING-EXPENSES> 1,302,516
<TOTAL-OPERATING-EXPENSES> 1,437,386
<OPERATING-INCOME-LOSS> 342,482
<OTHER-INCOME-NET> (1,854)
<INCOME-BEFORE-INTEREST-EXPEN> 340,628
<TOTAL-INTEREST-EXPENSE> 143,708
<NET-INCOME> 196,920
10,200
<EARNINGS-AVAILABLE-FOR-COMM> 186,720
<COMMON-STOCK-DIVIDENDS> 159,632
<TOTAL-INTEREST-ON-BONDS> 137,621
<CASH-FLOW-OPERATIONS> 435,203
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
