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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
COMMISSION REGISTRANTS; STATE OF INCORPORATION; I.R.S. EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
----------- ----------------------------- ------------------
<S> <C> <C>
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
</TABLE>
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 September 30, 1998, 145,075,152 shares of DTE Energy's Common Stock,
substantially all held by non-affiliates, were outstanding.
================================================================================
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DTE ENERGY COMPANY
AND
THE DETROIT EDISON COMPANY
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
This document contains the Quarterly Reports on Form 10-Q for the quarter ended
September 30, 1998 for each of DTE Energy Company and The Detroit Edison
Company. Information contained herein relating to an individual registrant is
filed by such registrant on its own behalf. Accordingly, except for its
subsidiaries, The Detroit Edison Company makes no representation as to
information relating to any other companies affiliated with DTE Energy Company.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions................................................................................3
Quarterly Report on Form 10-Q for DTE Energy Company:
Part I - Financial Information.........................................................4
Item 1 - Condensed Consolidated Financial Statements (Unaudited)..............4
Notes to Condensed Consolidated Financial
Statements (Unaudited)..............................................15
Independent Accountants' Report.....................................17
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................18
Part II- Other Information............................................................26
Item 5 - Other Information..................................................26
Quarterly Report on Form 10-Q for The Detroit Edison Company:
Part I - Financial Information........................................................27
Item 1 - Condensed Consolidated Financial Statements (Unaudited).............27
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................27
Part II- Other Information............................................................27
Item 5 - Other Information...................................................27
Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit Edison
Company:
Item 6 - Exhibits and Reports on Form 8-K....................................28
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
</TABLE>
2
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DEFINITIONS
<TABLE>
<CAPTION>
<S><C>
Annual Report..............1997 Annual Report to the Securities and Exchange Commission on
Form 10-K for DTE Energy Company or The Detroit Edison Company,
as the case may be
Annual Report Notes........Notes to Consolidated Financial
Statements appearing on pages 39 through 61 and 65
through 67 of the 1997 Annual Report to the
Securities and Exchange Commission on Form 10-K for
DTE Energy Company and The Detroit Edison Company
Company....................DTE Energy Company and Subsidiary Companies
Detroit Edison.............The Detroit Edison Company (a wholly owned subsidiary of DTE
Energy Company) and Subsidiary Companies
Direct Access..............Gives all retail customers equal opportunity to utilize the
transmission system which results in access to competitive
generation resources
DTE Capital................DTE Capital Corporation (a wholly owned subsidiary of DTE Energy
Company)
EPA........................United States Environmental Protection Agency
kWh........................Kilowatthour
MPSC.......................Michigan Public Service Commission
MWh........................Megawatthour
Note(s)....................Note(s) to Condensed Consolidated Financial Statements (Unaudited)
appearing herein
PSCR.......................Power Supply Cost Recovery
Quarterly Report...........Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for
DTE Energy Company or The Detroit Edison Company,
as the case may be, for the quarters ended March
31, 1998 and June 30, 1998
Quarterly Report Notes.....Notes to Condensed Consolidated
Financial Statements (Unaudited) appearing on pages
15 through 16 and pages 15 through 18 of the
Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998, respectively, for
DTE Energy Company and The Detroit Edison Company
QUIDS......................Quarterly Income Debt Securities
Registrant.................Company or Detroit Edison, as the case may be
</TABLE>
3
<PAGE> 4
QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
DTE ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In Millions, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------------------------------
1998 1997 1998 1997
-------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 1,199 $ 1,030 $ 3,208 $ 2,791
- --------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Fuel and purchased power 359 228 852 623
Operation and maintenance 338 290 906 764
Depreciation and amortization 169 159 496 489
Taxes other than income 67 68 207 203
- --------------------------------------------------------------------------------------------------
Total Operating Expenses 933 745 2,461 2,079
- --------------------------------------------------------------------------------------------------
OPERATING INCOME 266 285 747 712
- --------------------------------------------------------------------------------------------------
INTEREST EXPENSE AND OTHER
Interest expense 83 76 236 219
Preferred stock dividends
of subsidiary 1 3 6 9
Other - net 4 - 9 8
- --------------------------------------------------------------------------------------------------
Total Interest Expense and Other 88 79 251 236
- --------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 178 206 496 476
Income Taxes 46 74 159 188
- --------------------------------------------------------------------------------------------------
NET INCOME $ 132 $ 132 $ 337 $ 288
==================================================================================================
AVERAGE COMMON SHARES OUTSTANDING 145 145 145 145
- --------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE -
BASIC AND DILUTED $ 0.91 $ 0.91 $ 2.32 $ 1.98
- --------------------------------------------------------------------------------------------------
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
4
<PAGE> 5
DTE ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Millions)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------------------------
1998 1997 1998 1997
---------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 132 $ 132 $ 337 $ 288
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 169 159 496 489
Other (58) (2) (61) 6
Changes in current assets and liabilities:
Accounts receivable (41) (5) (89) (30)
Inventories (6) 15 (36) (10)
Payables (9) 13 51 (28)
Other 95 - 44 (36)
- ---------------------------------------------------------------------------------------------------------
Net cash from operating activities 282 312 742 679
- ---------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures (391) (108) (632) (535)
Investment in limited partnership 5 - (195) -
Nuclear decommissioning trust funds 8 (8) (33) (45)
Other - 3 (11) 3
- ---------------------------------------------------------------------------------------------------------
Net cash used for investing activities (378) (113) (871) (577)
- ---------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt 163 - 363 250
Increase (decrease) in short-term borrowings 94 (112) 356 97
Redemption of long-term debt - - (187) (185)
Redemption of preferred stock - - (100) -
Dividends on common stock (75) (75) (224) (224)
Other 1 - 3 -
- ---------------------------------------------------------------------------------------------------------
Net cash from (used for) financing activities 183 (187) 211 (62)
- ---------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 87 12 82 40
CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE PERIOD 94 81 99 53
- ---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 181 $ 93 $ 181 $ 93
=========================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 98 $ 74 $ 244 $ 212
Income taxes paid 49 58 115 186
New capital lease obligations 4 - 52 33
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
5
<PAGE> 6
DTE ENERGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In Millions, Except Per Share Amounts and Shares)
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 181 $ 99
Accounts receivable
Customer (less allowance for doubtful
accounts of $20) 371 305
Accrued unbilled revenues 156 137
Other 82 78
Inventories (at average cost)
Fuel 159 130
Materials and supplies 181 173
Other 57 13
------------- -------------
1,187 935
------------- -------------
INVESTMENTS
Nuclear decommissioning trust funds 272 239
Other 252 57
------------- -------------
524 296
------------- -------------
PROPERTY
Property, plant and equipment 14,985 14,495
Property under capital leases 244 256
Nuclear fuel under capital lease 659 607
Construction work in progress 106 16
------------- -------------
15,994 15,374
------------- -------------
Less accumulated depreciation and amortization 6,841 6,440
------------- -------------
9,153 8,934
------------- -------------
OTHER ASSETS
Regulatory assets 693 856
Other 255 202
------------- -------------
948 1,058
------------- -------------
TOTAL ASSETS $ 11,812 $ 11,223
============= =============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
6
<PAGE> 7
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
------------ -----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 284 $ 161
Accrued interest 46 57
Dividends payable 76 78
Accrued payroll 99 81
Short-term borrowings 399 42
Deferred income taxes 70 64
Current portion long-term debt 159 205
Current portion capital leases 124 110
Other 225 219
------------- -------------
1,482 1,017
------------- -------------
OTHER LIABILITIES
Deferred income taxes 1,939 1,983
Deferred investment tax credits 290 301
Capital leases 131 137
Other 253 302
------------- -------------
2,613 2,723
------------- -------------
LONG-TERM DEBT 3,998 3,777
------------- -------------
SHAREHOLDERS' EQUITY
Detroit Edison cumulative preferred stock, $100 par
value, 6,747,484 shares authorized, 5,207,657
issued, 500,000 and 1,501,223 shares
outstanding, respectively 48 144
Common stock, without par value, 400,000,000 shares
authorized, 145,075,152 and 145,097,829 issued
and outstanding, respectively 1,951 1,951
Retained earnings 1,720 1,611
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 3,719 3,706
------------- -------------
CONTINGENCIES (NOTE 5)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,812 $ 11,223
============= =============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
7
<PAGE> 8
DTE ENERGY COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
(In Millions, Except Per Share Amounts; Shares in Thousands)
<TABLE>
<CAPTION>
1998
----------------------------
Shares Amount
----------------------------
<S> <C> <C>
DETROIT EDISON CUMULATIVE PREFERRED STOCK
Balance at beginning of year 1,501 $ 144
Redemption of cumulative preferred stock (1,001) (100)
Preferred stock expense 4
----------- -----------
Balance at September 30, 1998 500 $ 48
- ---------------------------------------------------------------------------------------------
COMMON STOCK
Balance at beginning of year 145,098 $ 1,951
Repurchase and retirement of common stock (23) -
------------ -----------
Balance at September 30, 1998 145,075 $ 1,951
- ---------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of year $ 1,611
Net income 337
Dividends declared on common stock ($1.545 per share) (224)
Preferred stock expense (4)
------------
Balance at September 30, 1998 $ 1,720
- ----------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $ 3,719
==============================================================================================
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
8
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[This page intentionally left blank.]
9
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THE DETROIT EDISON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In Millions)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------------------------------------
1998 1997 1998 1997
-------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 1,105 $ 985 $ 2,998 $ 2,727
- ------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Fuel and purchased power 344 228 818 623
Operation and maintenance 249 247 719 701
Depreciation and amortization 162 157 486 487
Taxes other than income 66 69 206 203
- ------------------------------------------------------------------------------------------------------------
Total Operating Expenses 821 701 2,229 2,014
- ------------------------------------------------------------------------------------------------------------
OPERATING INCOME 284 284 769 713
- ------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE AND OTHER
Interest expense 72 69 208 210
Other - net 3 2 13 11
- ------------------------------------------------------------------------------------------------------------
Total Interest Expense and Other 75 71 221 221
- ------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 209 213 548 492
Income Taxes 84 85 230 204
- ------------------------------------------------------------------------------------------------------------
NET INCOME 125 128 318 288
PREFERRED STOCK DIVIDENDS 1 3 6 9
- ------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE FOR COMMON STOCK $ 124 $ 125 $ 312 $ 279
============================================================================================================
</TABLE>
Note: Detroit Edison's condensed consolidated financial statements (unaudited)
are presented here for ease of reference and are not considered to be
part of Item 1 of the Company's report.
See notes to condensed consolidated financial statements (unaudited).
10
<PAGE> 11
THE DETROIT EDISON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Millions)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------------------------------
1998 1997 1998 1997
-------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 125 $ 128 $ 318 $ 288
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization 162 157 486 487
Other (57) (10) (94) 35
Changes in current assets and liabilities:
Accounts receivable (34) 3 (64) (13)
Inventories 5 19 (29) 6
Payables (31) 20 18 (29)
Other 97 (6) 39 (42)
- -------------------------------------------------------------------------------------------------------------
Net cash from operating activities 267 311 674 732
- -------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures (122) (107) (342) (316)
Nuclear decommissioning trust funds 8 (8) (33) (45)
Other (88) (1) (92) 7
- -------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (202) (116) (467) (354)
- -------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt - - 100 -
Increase (decrease) in short-term borrowings 18 (114) 205 62
Redemption of long-term debt - - (169) (185)
Redemption of preferred stock - - (100) -
Dividends on common and preferred stock (80) (83) (245) (248)
Other - - 3 -
- -------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (62) (197) (206) (371)
- -------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3 (2) 1 7
CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE PERIOD 13 11 15 2
- -------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 16 $ 9 $ 16 $ 9
=============================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 82 $ 74 $ 219 $ 210
Income taxes paid 84 68 195 200
New capital lease obligations 4 - 52 33
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
11
<PAGE> 12
THE DETROIT EDISON COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In Millions, Except Per Share Amounts and Shares)
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 16 $ 15
Accounts receivable
Customer (less allowance for doubtful
accounts of $20) 343 300
Accrued unbilled revenues 156 137
Other 65 63
Inventories (at average cost)
Fuel 159 130
Materials and supplies 153 150
Other 51 11
------------- -------------
943 806
------------- -------------
INVESTMENTS
Nuclear decommissioning trust funds 272 239
Other 133 38
------------- -------------
405 277
------------- -------------
PROPERTY
Property, plant and equipment 14,489 14,204
Property under capital leases 244 256
Nuclear fuel under capital lease 659 607
Construction work in progress 14 12
------------- -------------
15,406 15,079
------------- -------------
Less accumulated depreciation and amortization 6,814 6,431
------------- -------------
8,592 8,648
------------- -------------
OTHER ASSETS
Regulatory assets 693 856
Other 204 158
------------- -------------
897 1,014
------------- -------------
TOTAL ASSETS $ 10,837 $ 10,745
============= =============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
12
<PAGE> 13
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
------------- -------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 250 $ 150
Accrued interest 45 56
Dividends payable 80 83
Accrued payroll 95 80
Short-term borrowings 205 -
Deferred income taxes 72 64
Current portion long-term debt 119 169
Current portion capital leases 124 110
Other 210 218
------------- -------------
1,200 930
------------- -------------
OTHER LIABILITIES
Deferred income taxes 1,907 1,973
Deferred investment tax credits 290 301
Capital leases 131 137
Other 251 300
------------- -------------
2,579 2,711
------------- -------------
LONG-TERM DEBT 3,512 3,531
------------- -------------
SHAREHOLDERS' EQUITY
Cumulative preferred stock, $100 par value, 6,747,484
shares authorized, 5,207,657 issued, 500,000 and
1,501,223 shares outstanding, respectively 48 144
Common stock, $10 par value, 400,000,000 shares
authorized, 145,119,875 issued and outstanding 1,451 1,451
Premium on common stock 548 548
Common stock expense (48) (48)
Retained earnings 1,547 1,478
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 3,546 3,573
------------- -------------
CONTINGENCIES (NOTE 5)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 10,837 $ 10,745
============= =============
</TABLE>
See notes to condensed consolidated financial statements (unaudited).
13
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THE DETROIT EDISON COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
(In Millions, Except Per Share Amounts; Shares in Thousands)
<TABLE>
<CAPTION>
1998
----------------------------
Shares Amount
----------------------------
<S> <C> <C>
CUMULATIVE PREFERRED STOCK
Balance at beginning of year 1,501 $ 144
Redemption of cumulative preferred stock (1,001) (100)
Preferred stock expense 4
----------- -----------
Balance at September 30, 1998 500 $ 48
- ---------------------------------------------------------------------------------------------
COMMON STOCK
Balance at beginning of year 145,120 $ 1,451
----------- -----------
Balance at September 30, 1998 145,120 $ 1,451
- ---------------------------------------------------------------------------------------------
PREMIUM ON COMMON STOCK
Balance at beginning of year $ 548
-----------
Balance at September 30, 1998 $ 548
- ---------------------------------------------------------------------------------------------
COMMON STOCK EXPENSE
Balance at beginning of year $ (48)
-----------
Balance at September 30, 1998 $ (48)
- ---------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of year $ 1,478
Net income 318
Dividends declared
Common stock ($1.65 per share) (239)
Cumulative preferred stock* (6)
Preferred stock expense (4)
-----------
Balance at September 30, 1998 $ 1,547
- ---------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY $ 3,546
=============================================================================================
</TABLE>
* At established rate for each series.
See notes to condensed consolidated financial statements (unaudited).
14
<PAGE> 15
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
NOTE 1 - ANNUAL REPORT NOTES
These condensed consolidated financial statements (unaudited) should be read in
conjunction with the Annual Report Notes and the Quarterly Report Notes. The
Notes contained herein update and supplement matters discussed in the Annual
Report Notes.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The condensed consolidated financial statements are unaudited, but in the
opinion of the Company and Detroit Edison, with respect to its own financial
statements, include all adjustments necessary for a fair statement of the
results for the interim periods. Financial results for this interim period are
not necessarily indicative of results that may be expected for any other interim
period or for the fiscal year.
NOTE 2 - REGULATORY MATTERS
As discussed in Notes 1 and 3 of the Annual Report Notes, the MPSC has
established a capacity factor performance standard which provides for the
disallowance of net incremental replacement power costs if Fermi 2 does not
perform to certain operating criteria. A disallowance is imposed 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%. An estimate of the incremental cost of replacement power is required in
computing the reserve for amounts due customers under this performance standard.
At December 31, 1997, Detroit Edison had an accrual of $74 million for the
disallowance that is expected to be imposed by the MPSC. Due primarily to an
increase in the estimate of the incremental cost of replacement power at
September 30, 1998, Detroit Edison recorded an increase in the Fermi 2 capacity
factor performance standard liability of approximately $34 million. The
additional liability was recorded as a reduction to operating revenues. Fermi 2
was shut down for refueling on September 4, 1998 and began restart activities in
the last week of October, 1998.
As discussed in Note 3 of the Annual Report, in December 1997, litigation was
commenced in the Ingham County Circuit Court of Michigan contending that Detroit
Edison and the MPSC breached a December 1988 MPSC Order by offsetting the
stipulated revenue reduction with the amortization of 1997 storm costs.
Following the denial of Detroit Edison's motion for summary disposition, both
the MPSC and Detroit Edison filed emergency appeals with the Michigan Court of
Appeals. While the Company's appeal was denied, on October 8, 1998, the Michigan
Court of Appeals granted the MPSC's claim of appeal.
15
<PAGE> 16
NOTE 3 - SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
At September 30, 1998, Detroit Edison had total short-term credit arrangements
of approximately $675 million under which $205 million was outstanding. The
amounts outstanding at September 30, 1998 consisted of $155 million of
commercial paper and $50 million secured by its customer accounts receivable and
unbilled revenues portfolio.
At September 30, 1998, DTE Capital had short-term credit arrangements of $400
million, backed by a Support Agreement from the Company, under which $194
million of commercial paper was outstanding.
NOTE 4 - LONG-TERM DEBT
Detroit Edison has effective shelf registrations permitting issuance of $364.5
million in debt securities.
The Company had $124 million in cash and cash equivalents restricted for debt
service at September 30, 1998.
NOTE 5- CONTINGENCIES
LEGAL PROCEEDINGS
Detroit Edison and plaintiffs in a class action pending in the Circuit Court for
Wayne County, Michigan (Gilford, et al v. Detroit Edison), as well as plaintiffs
in two other pending actions which make class claims (Sanchez, et al v. Detroit
Edison, Circuit Court for Wayne County, Michigan; and Frazier v. Detroit Edison,
United States District Court, Eastern District of Michigan), are preparing for
binding arbitration to settle these matters. A July 1998 Consent Judgement has
received preliminary Court approval. A Fairness Hearing with respect to the
terms of the settlement was held in August 1998, and no objections to the
settlement were raised. A second Fairness Hearing is comtemplated following the
results of the arbitration. The settlement agreement provides that Detroit
Edison's monetary liability is to be no less than $17.5 million and no greater
than $65 million after the conclusion of all related proceedings. An amount
related to this proceeding was accrued in 1997.
-----------------------------------
This Quarterly Report on Form 10-Q, including the report of Deloitte & Touche
LLP (on page 17) will automatically be incorporated by reference in the
Prospectuses constituting part of the Registration Statements on Form S-3
(Registration Nos. 33-53207, 33-64296 and 333-65765) of The Detroit Edison
Company and Form S-8 (Registration Nos. 333-00023 and 333-47247) and Form S-3
(Registration No. 33-57545) of DTE Energy Company, filed under the Securities
Act of 1933. Such report of Deloitte & Touche LLP, however, is not a "report" or
"part of the Registration Statement" within the meaning of Sections 7 and 11 of
the Securities Act of 1933 and the liability provisions of Section 11(a) of such
Act do not apply.
16
<PAGE> 17
INDEPENDENT ACCOUNTANTS' REPORT
To the Boards of Directors and Shareholders of DTE Energy Company and
The Detroit Edison Company
We have reviewed the accompanying condensed consolidated balance sheets of DTE
Energy Company and subsidiaries and The Detroit Edison Company and subsidiaries
as of September 30, 1998, and the related condensed consolidated statements of
income and of cash flows for the three-month and nine-month periods ended
September 30, 1998 and 1997, and the condensed consolidated statements of
changes in shareholders' equity for the nine-month period ended September 30,
1998. These financial statements are the responsibility of DTE Energy Company's
management and 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 primarily of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheets of DTE Energy Company and
subsidiaries and The Detroit Edison Company and subsidiaries as of December 31,
1997, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated January 26, 1998, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheets
as of December 31, 1997 is fairly stated, in all material respects, in relation
to the consolidated balance sheets from which they have been derived.
DELOITTE & TOUCHE LLP
Detroit, Michigan
October 28, 1998
17
<PAGE> 18
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
This analysis for the three and nine months ended September 30, 1998, as
compared to the same periods in 1997, should be read in conjunction with the
condensed consolidated financial statements (unaudited), the accompanying Notes,
the Quarterly Report Notes and the Annual Report Notes.
Detroit Edison is the principal subsidiary of the Company, and, as such, unless
otherwise identified, this discussion explains material changes in results of
operations of both the Company and Detroit Edison and identifies recent trends
and events affecting both the Company and Detroit Edison.
ELECTRIC INDUSTRY DEREGULATION
Federal and state legislators and regulators are working to introduce
competition and customer choice into the generation segment of the electric
public utility industry, believing that competition will lead to reduced
electric rates and stimulate economic growth. Traditional utility services are
being unbundled, with many of such services becoming competitive; and a demand
is being created for new energy-related services.
As discussed in the Annual Report and the Quarterly Report, there are ongoing
Michigan legislative, judicial and administrative proceedings, which address
among other things, deregulation of the generation segment of the Michigan
electric public utility industry. Federal legislation relating to deregulation
has also been proposed. Although the Company and Detroit Edison expect a
favorable outcome, neither the Company nor Detroit Edison are able to predict
the outcome or timing of these proceedings.
The Financial Accounting Standards Board (FASB) and the Securities and Exchange
Commission (SEC) have been considering various accounting issues as a result of
the transition to competition.
Regulatory Accounting Issues
As discussed in Note 1 of the Annual Report, Detroit Edison is subject to
regulation by the MPSC and the Federal Energy Regulatory Commission (FERC).
Detroit Edison meets the criteria of Statement of Financial Accounting Standards
(SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation." This
accounting standard recognizes the cost based ratemaking process which results
in differences in the application of generally accepted accounting principles
between regulated and non-regulated businesses. SFAS No. 71 permits the
recording of regulatory assets and liabilities that would have been treated as
revenue and expense in non-regulated businesses. The deferred amounts are being
amortized to revenue and expense as they are included in rates. Continued
applicability of SFAS No. 71 requires that rates be designed to recover specific
costs of providing regulated services and products, including regulatory assets,
and that it be
18
<PAGE> 19
reasonable to assume that rates are set at levels that will recover a utility's
costs and can be charged to and collected from customers.
In guidance issued in 1997, the Emerging Issues Task Force (EITF) of the FASB
concluded that the application of SFAS No. 71 to a separable portion of a
business which is subject to a deregulation plan should cease when legislation
is passed and/or a rate order is issued that contains sufficient detail on a
transition plan. Various MPSC Orders and proposed Michigan legislation would
alter the regulatory process in Michigan and provide a plan for transition to
competition for the generation segment of Detroit Edison's business. However,
Detroit Edison has appealed the MPSC Orders that require the implementation of a
Direct Access program in Michigan. Detroit Edison believes that it continues to
qualify under the accounting model prescribed by SFAS No. 71. The continued
applicability of SFAS No. 71 will depend on the outcome of legal and legislative
proceedings discussed herein.
During the second quarter of 1998, the SEC issued guidance regarding the
accounting treatment for the recovery of stranded costs during the transition to
competition. The SEC concluded that when an entity ceases to apply SFAS No. 71,
any impaired portion of plant assets, identified for recovery in
legislation/rate order by means of a regulated cash flow, should be treated as a
regulatory asset in the separable portion of the enterprise from which the
regulated cash flows are derived. The plant impairment analysis, performed at
the lowest level of identifiable cash flows based on the facts and
circumstances, should be exclusive of the regulated cash flows.
The 1997 EITF guidance also concluded that regulatory assets and liabilities
originating in the separable portion of the business which is no longer under
SFAS No. 71 should not be written off if they are recoverable from a separable
portion of business which still meets the criteria of SFAS No. 71. Detroit
Edison's ability to recover regulatory assets and investment in generation plant
in the transition to competition will depend on the outcome of regulatory and/or
legislative action which provides for and permits recovery of such assets.
Detroit Edison had $355 million of net regulatory assets and $4.8 billion of net
investment in generation plant recorded in Property, Plant and Equipment at
September 30, 1998. At the present time Detroit Edison believes that a
satisfactory mechanism to recover regulatory assets and the investment in
generation plant will be adopted by its regulators and/or legislators, although
there can be no assurances that this will occur.
Michigan Public Service Commission
In July 1998, Detroit Edison filed an application with the MPSC for accounting
authority to accelerate amortization of the Fermi 2 plant and its related
regulatory assets by $164.2 million annually beginning January 1, 1999. Detroit
Edison believes approval of its request will allow a reasonable opportunity,
consistent with SFAS No. 71 and EITF guidance, to recover its stranded assets by
the MPSC imposed deadline for recovery, December 31, 2007. Evidentiary hearings
have concluded in the proceeding to address Detroit Edison's request to
accelerate amortization of Fermi 2 and its related regulatory assets. The
Michigan Attorney General and other parties are opposing the request and have
argued for a reduction in, or complete elimination of, the MPSC's previous
findings on the amount of recoverable stranded costs. An order by the MPSC is
expected to be
19
<PAGE> 20
issued before the end of 1998.
Detroit Edison filed an application with the MPSC in June 1998 requesting
approval of its Customer Choice Plan and accounting authority to defer costs
that would be incurred to implement Direct Access. In its filing, Detroit Edison
estimated that the cost to implement Direct Access would be approximately $100
million. Deferral of $19.9 million has been specifically requested in 1998.
Approximately $3.9 million of costs have been incurred through September 30,
1998.
Detroit Edison also indicated in its filings with the MPSC that recovery of
Fermi 2 assets and other stranded assets must be reasonably assured before
implementation of any Direct Access program begins. Under current accounting
rules, to the extent that Detroit Edison cannot be assured recovery prior to
implementation of a Direct Access program, it would be required to write off
such assets; however, the Company and Detroit Edison do not anticipate a write
off at this time.
Detroit Edison is no longer seeking suspension of its PSCR clause and had filed
motions with the MPSC to withdraw both of its earlier applications for a clause
suspension. On October 26, 1998, the MPSC issued two related orders which
granted Detroit Edison's motions, terminated the PSCR suspension hearing and
ordered that Detroit Edison continue to implement its PSCR clause.
In September 1998, Detroit Edison filed its 1999 PSCR case. Fuel and purchased
power costs for 1999 are projected to increase by up to 25 percent, on average,
over the corresponding forecast for 1998. A hearing schedule has not yet been
established.
As discussed in Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Annual Report, Detroit Edison has been involved in
legal proceedings contesting the statutory authority of the MPSC to order an
experimental retail wheeling program. On October 12, 1998 the Michigan Supreme
Court granted Detroit Edison and other parties to the proceeding leave to appeal
from a January 1998 Order of the Michigan Court of Appeals finding that the MPSC
did have statutory authority to authorize experimental retail wheeling.
GROWTH
Non-regulated businesses are projected to increase over the five-year period
ending 2002, and during this period such businesses could result in earnings of
as much as $150 million annually.
LIQUIDITY AND CAPITAL RESOURCES
CASH PROVIDED BY OPERATING ACTIVITIES
Net cash from operating activities was lower for the three month period due
primarily to increased accounts receivables and lower payables.
20
<PAGE> 21
Net cash from operating activities was higher in the nine month period due
primarily to higher net income and higher payables, partially offset by
increases in accounts receivable and inventories and an increase in other
Detroit Edison non-cash items.
CASH USED FOR INVESTING ACTIVITIES
Net cash used for investing was higher for the three month period due primarily
to higher investment in non-regulated plant and equipment expenditures.
Net cash used for investing was higher for the nine month period due to
increased non-regulated investments and plant and equipment expenditures.
Cash requirements for non-regulated investments are estimated at $607 million in
1998, of which $485 million had been expended as of September 30, 1998.
Detroit Edison's 1998 cash requirements for its capital expenditure program are
estimated at $486 million, of which $342 million had been expended as of
September 30, 1998.
CASH FROM (USED FOR) FINANCING ACTIVITIES
Net cash from financing was higher in the three month period due primarily to
the issuance of long-term debt and an increase in short-term borrowings for
non-regulated plant and equipment expenditures.
Net cash from financing was higher in the nine month period due primarily to the
issuance of long-term debt and the increase in short-term borrowings, partially
offset by the redemption of preferred stock.
In November 1998, Detroit Edison plans to issue $100 million of QUIDS which
will be used to redeem approximately $50 million aggregate principal amount of
its 8.5% Series of QUIDS due 2025 and all outstanding shares of its 7.74% Series
Cumulative Preferred Stock.
YEAR 2000
As discussed in Part II, Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report on
Form 10-K, the Company has been involved in an enterprise-wide program to
address Year 2000 issues. A program office was established in mid-1997 to
implement a rigorous plan to address the impact of Year 2000 to hardware and
software systems, embedded systems (which include microprocessors used in the
production and control of electric power), and critical service providers. The
emphasis has been on mission critical systems that support core business
activities or processes. Core business activities/processes include safety,
environmental and regulatory (Federal Energy Regulatory Commission and Nuclear
Regulatory Commission) compliance, product production and delivery, revenue
collection, employee and supplier payment, and financial asset management.
21
<PAGE> 22
The Company's plan for addressing Year 2000 is divided into several phases
including: raising general awareness of Year 2000 throughout the company,
maintaining an inventory of systems and devices, performing an assessment of
inventoried systems and devices, performing compliance testing of suspect
systems and devices, remediation of non-compliant systems and devices through
replacement, repair, retirement, or identifying an acceptable work around,
testing and remediation of systems and devices in an integrated environment and
preparing business continuity plans.
The inventory and assessment of known systems and devices has been completed.
Compliance testing and remediation for mission critical and other systems and
devices are in process. Completion of remediation and integration
testing/remediation of mission critical systems is expected by the end of
calendar year 1999.
To support the program phases, the program office has been working with major
utility industry associations and organizations, customers and vendors to gather
and share information on Year 2000 issues. The program office has contacted
vendors critical to Company operations to determine their progress on Year 2000.
Based upon information to date, the Company and Detroit Edison anticipate that
abnormal operating conditions may be experienced within the Detroit Edison
production, transmission, and distribution systems as a result of Year 2000
conditions. These conditions could result in temporary interruption of service
to customers. Abnormal operating conditions may also be experienced in other
affiliates of the Company of a magnitude not determined at this time. To address
these issues, a business continuity program is being developed to be operational
in the fourth quarter of 1999. The business continuity program is expected to
provide short and long-term solutions to Year 2000 related issues.
The Company and Detroit Edison believe that with all Year 2000 modifications and
business continuity plans in place, the Year 2000 will not have a material
effect on their financial position, liquidity and results of operations.
However, despite all efforts, there can be no assurances that Year 2000 issues
can be totally eliminated. In addition, no assurances can be given that the
systems of vendors, interconnected utilities, and customers will not result in
Year 2000 problems.
The Company and Detroit Edison estimate that Year 2000 costs will aggregate
between $50 and $75 million, with $13 million expended between January 1, 1998
and September 30, 1998. Operating cash flow is expected to be sufficient to pay
Year 2000 modification costs with no material impact on operating results or
cash flows.
22
<PAGE> 23
RESULTS OF OPERATIONS
For the three months ended September 30, 1998, the Company's net income was $132
million or $0.91 per common share, the same as the three months ended September
30, 1997. For the nine months ended September 30, 1998 net income was $337
million or $2.32 per common share compared to $288 million or $1.98 per common
share earned in the nine months ended September 30, 1997.
The 1998 three month earnings were the same as last year and nine month earnings
were higher than last year due primarily to higher sales and increased earnings
from non-regulated subsidiary operations, offset by an increase in the Fermi 2
capacity factor performance standard liability due primarily to higher power
costs.
OPERATING REVENUES
Increases in operating revenues were due primarily to higher non-regulated
subsidiary revenues and higher system sales, partially offset by an increase in
the Fermi 2 capacity factor performance standard liability.
Detroit Edison kWh sales increased (decreased) as compared to the prior year as
follows:
<TABLE>
<CAPTION>
Three Nine
Months Months
------ ------
<S> <C> <C>
Residential 19.3% 10.1%
Commercial 9.4 7.0
Industrial 3.9 3.4
Other (primarily sales for resale) 22.4 30.5
Total System 11.1 7.6
Sales between utilities (17.5) 84.1
Total 8.9 11.7
</TABLE>
The increase in residential sales in the three month and nine month periods
resulted from growth in the customer base, increased usage and increased cooling
related sales in the third quarter due to unusually warm weather. Commercial
sales increased, reflecting a continuation of favorable economic conditions and
increased cooling related sales. The increase in industrial sales reflects
increased demand in the construction and automotive sectors. Sales to other
customers increased, reflecting increased demand from sales for resale
customers.
Sales between utilities decreased in the three month period due to lower
availability of energy for sale during the Fermi 2 refueling outage. Sales
between utilities increased during the nine month period due to greater demand
for energy and increased overall availability of energy for sale.
23
<PAGE> 24
OPERATING EXPENSES
FUEL AND PURCHASED POWER
Net system output and average fuel and purchased power unit costs for Detroit
Edison were as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
---------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
(Thousands of MWh)
<S> <C> <C> <C> <C>
Power plant generation
Fossil 11,388 10,744 32,784 31,141
Nuclear 1,445 2,342 5,734 3,589
Purchased power 3,200 1,237 5,983 4,849
------- ------- ------- -------
Net system output 16,033 14,323 44,501 39,579
======= ======= ======= =======
Average unit cost ($/MWh) $ 20.36 $ 14.88 $ 17.35 $ 14.76
======= ======= ======= =======
</TABLE>
Fuel and purchased power expense increased in the three month period due to
higher average unit costs as a result of increased market demand for power
during periods of hot weather. The increase was also due to replacing lower cost
nuclear fuel as a result of the Fermi 2 refueling outage with higher cost system
generated and purchased power and higher net system output.
For the nine month period, fuel and purchased power expense increased due to
higher net system output, higher average unit costs as a result of increased
market demand for power during periods of hot weather and the prior-period
receipt of Fermi 2 business insurance proceeds.
OPERATION AND MAINTENANCE
Operation and maintenance expense increased for the three month period due
primarily to new non-regulated subsidiary operation expense ($46 million), the
Conners Creek restart ($6.6 million) and Year 2000 expenses ($6.8 million),
partially offset by lower benefit costs ($5.2 million) and lower thermal energy
expenses ($3.7 million).
Operation and maintenance expense increased for the nine month period due
primarily to non-regulated subsidiary operation expense ($124 million), the
Conners Creek restart ($10.9 million), Year 2000 expense ($11.3 million) and
nuclear generating operating costs ($13.8 million), partially offset by lower
benefit costs ($19.7 million) and lower thermal energy expenses ($6.0 million).
Storm damage costs of $30 million incurred during the first three quarters of
1997 were deferred in the fourth quarter of 1997 and are being amortized to
expense over a 24 month period beginning in January 1998.
24
<PAGE> 25
INCOME TAXES
The effective income tax rate for the Company was lower in 1998 due primarily to
increased alternate fuels credits.
FORWARD-LOOKING STATEMENTS
Certain information presented in this Quarterly Report on Form 10-Q is based
upon the expectations of the Company and Detroit Edison and, as such, is
forward-looking. The Private Securities Litigation Reform Act of 1995 encourages
reporting companies to provide analyses and estimates of future prospects and
also permits reporting companies to point out that actual results may differ
from those anticipated.
Actual results for the Company and Detroit Edison may differ from those expected
due to a number of variables including, but not limited to, actual sales, the
effects of competition, the implementation of utility restructuring in Michigan
(which involves pending regulatory proceedings, pending and proposed statutory
changes and the recovery of stranded costs), environmental (including proposed
regulations to limit nitrogen oxide emissions) and nuclear requirements, the
impact of FERC proceedings and regulations, the success of non-regulated lines
of business and the timely completion of Year 2000 modifications. While the
Company and Detroit Edison believe that estimates given accurately measure the
expected outcome, actual results could vary materially due to the variables
mentioned as well as others.
25
<PAGE> 26
DTE ENERGY COMPANY
PART II - OTHER INFORMATION
ITEM 5 - OTHER INFORMATION.
As discussed in Part II, Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report on
Form 10-K, during 1997 and 1998 the EPA issued ozone transport regulations and
final new air quality standards relating to ozone and particulate air pollution.
In September 1998, the EPA issued a State Implementation Plan (SIP) call, giving
states a year to develop new regulations to limit nitrogen oxide emissions
because of their contribution to ozone formation. The EPA draft proposal
suggests most emission reductions should come from utilities. If Michigan
follows the EPA's recommendations, it is estimated that it will cost Detroit
Edison more than $400 million to comply. Until the state issues its regulations,
it is impossible to predict the full impact of the SIP call. Additional
environmental costs would be expected to be recovered under traditional
ratemaking principles. However, Detroit Edison is unable to predict what effect,
if any, deregulation of the electric utility industry would have on
recoverability of such environmental costs.
26
<PAGE> 27
QUARTERLY REPORT ON FORM 10-Q FOR
THE DETROIT EDISON COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
See pages 10 through 16.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
See the Company's and Detroit Edison's "Item 2 - Management's Discussion and
Analysis of Financial Condition and Results of Operations," which is
incorporated herein by this reference.
PART II - OTHER INFORMATION
ITEM 5 - OTHER INFORMATION.
As discussed in Detroit Edison's Part II, "Item 5 - Other Information" of the
Quarterly Report, on April 14, 1998 the MPSC issued an order granting Detroit
Edison's March 31, 1998 request to waive competitive bidding for Conners Creek
and restart the plant. Although Detroit Edison believes that the plant complies
with all applicable environmental requirements, the Michigan Department of
Environmental Quality (MDEQ) and the Wayne County Michigan Air Quality
Management Division have issued notices of violation contending that Detroit
Edison is required to obtain a series of new licenses prior to plant operation.
Detroit Edison is contesting these notices of violation. A hearing on Detroit
Edison's motion to remand the case to the Ingham County Circuit Court of
Michigan is scheduled for October 30, 1998 in the Eastern District.
See the Company's Part II, "Item 5 - Other Information" which is incorporated
herein by reference.
27
<PAGE> 28
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
-------
11-13 - DTE Energy Company Basic and Diluted Earnings
Per Share of Common Stock.
12-13 - The Detroit Edison Company Computation of
Ratio of Earnings to Fixed Charges.
15-9 - Awareness Letter of Deloitte & Touche LLP
regarding their report dated October 28,
1998.
27-23 - Financial Data Schedule for the period
ended September 30, 1998 for DTE Energy
Company.
27-24 - Financial Data Schedule for the period ended
September 30, 1998 for The Detroit Edison
Company.
(ii) Exhibits incorporated herein by reference.
3(a)- Amended and Restated Articles of
Incorporation of DTE Energy Company, dated
December 13, 1995. (Exhibit 3-5 to Form 10-Q
for quarter ended
September 30, 1997).
3(b)- Certificate of Designation of Series A
Junior Participating Preferred Stock of DTE
Energy Company. (Exhibit 3-6 to Form 10-Q for
quarter ended September 30, 1997).
3(c)- Restated Articles of Incorporation of
Detroit Edison, as filed December 10, 1991
with the State of Michigan, Department of
Commerce - Corporation and Securities Bureau
(Exhibit 4-117 to Form 10-Q for quarter ended
March 31, 1993).
28
<PAGE> 29
3(d)- Certificate containing resolution of the
Detroit Edison Board of Directors establishing
the Cumulative Preferred Stock, 7.75% Series
as filed February 22, 1993 with the State of
Michigan, Department of Commerce - Corporation
and Securities Bureau (Exhibit 4-134 to Form
10-Q for quarter ended March 31, 1993).
3(e)- Certificate containing resolution of the
Detroit Edison Board of Directors establishing
the Cumulative Preferred Stock, 7.74% Series,
as filed April 21, 1993 with the State of
Michigan, Department of Commerce - Corporation
and Securities Bureau (Exhibit 4-140 to Form
10-Q for quarter ended March 31, 1993).
3(f)- Rights Agreement, dated as of September 23,
1997, by and between DTE Energy Company and
The Detroit Edison Company, as Rights Agent
(Exhibit 4-1 to DTE Energy Company Current
Report on Form 8-K, dated September 22, 1997).
3(g)- Agreement and Plan of Exchange (Exhibit 1(2)
to DTE Energy Form 8-B filed January 2, 1996,
File No. 1- 11607).
4(a)- Mortgage and Deed of Trust, dated as of
October 1, 1924, between Detroit Edison (File
No. 1-2198) and Bankers Trust Company as
Trustee (Exhibit B-1 to Registration No.
2-1630) and indentures supplemental thereto,
dated as of dates indicated below, and filed
as exhibits to the filings as set forth
below:
September 1, 1947 Exhibit B-20 to
Registration No.
2-7136
October 1, 1968 Exhibit 2-B-33 to
Registration No.
2-30096
November 15, 1971 Exhibit 2-B-38 to
Registration No.
2-42160
January 15, 1973 Exhibit 2-B-39 to
Registration No.
2-46595
June 1, 1978 Exhibit 2-B-51 to
Registration No.
2-61643
June 30, 1982 Exhibit 4-30 to
Registration No.
2-78941
August 15, 1982 Exhibit 4-32 to
Registration No.
2-79674
October 15, 1985 Exhibit 4-170 to Form
10-K for year ended
December 31, 1994
29
<PAGE> 30
July 15, 1989 Exhibit 4-171 to Form
10-K for year ended
December 31, 1994
December 1, 1989 Exhibit 4-172 to Form
10-K for year ended
December 31, 1994
February 15, 1990 Exhibit 4-173 to Form
10-K for year ended
December 31, 1994
April 1, 1991 Exhibit 4-15 to Form
10-K for year ended
December 31, 1996
May 1, 1991 Exhibit 4-178 to Form
10-K for year ended
December 31, 1996
May 15, 1991 Exhibit 4-179 to Form
10-K for year ended
December 31, 1996
September 1, 1991 Exhibit 4-180 to Form
10-K for year ended
December 31, 1996
November 1, 1991 Exhibit 4-181 to Form
10-K for year ended
December 31, 1996
January 15, 1992 Exhibit 4-182 to Form
10-K for year ended
December 31, 1996
February 29, 1992 Exhibit 4-187 to form
10-Q for quarter
ended March 31, 1998
April 15, 1992 Exhibit 4-188 for
quarter ended March
31, 1998
July 15, 1992 Exhibit 4-189 for
quarter ended March
31, 1998
July 31, 1992 Exhibit 4-190 for
quarter ended March
31, 1998
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 4-191 to form
10-Q for quarter
ended March 31, 1998
March 15, 1993 Exhibit 4-192 to Form
10-Q for quarter
ended March 31, 1998
April 1, 1993 Exhibit 4-143 to Form
10-Q for quarter
ended March 31, 1993
April 26, 1993 Exhibit 4-144 to Form
10-Q for quarter
ended March 31, 1993
May 31, 1993 Exhibit 4-148 to
Registration No.
33-64296
June 30, 1993 Exhibit 4-149 to Form
10-Q for quarter
ended June 30, 1993
(1993 Series AP)
June 30, 1993 Exhibit 4-150 to Form
10-Q for quarter
ended June 30, 1993
(1993 Series H)
30
<PAGE> 31
September 15, 1993 Exhibit 4-158 to Form
10-Q for quarter
ended September 30,
1993
March 1, 1994 Exhibit 4-163 to
Registration No.
33-53207
June 15, 1994 Exhibit 4-166 to Form
10-Q for quarter
ended June 30, 1994
August 15, 1994 Exhibit 4-168 to Form
10-Q for quarter
ended September 30,
1994
December 1, 1994 Exhibit 4-169 to Form
10-K for year ended
December 31, 1994
August 1, 1995 Exhibit 4-174 to Form
10-Q for quarter
ended September 30,
1995
4(b)- Collateral Trust Indenture (notes), dated
as of June 30, 1993 (Exhibit 4-152 to
Registration No. 33-50325).
4(c)- First Supplemental Note Indenture, dated as
of June 30, 1993 (Exhibit 4-153 to
Registration No. 33-50325).
4(d)- Second Supplemental Note Indenture, dated
as of September 15, 1993 (Exhibit 4-159 to
Form 10-Q for quarter ended September 30,
1993).
4(e)- First Amendment, dated as of August 15,
1996, to Second Supplemental Note Indenture
(Exhibit 4-17 to Form 10-Q for quarter ended
September 30, 1996).
4(f)- Third Supplemental Note Indenture, dated as
of August 15, 1994 (Exhibit 4-169 to Form
10-Q for quarter ended September 30, 1994).
4(g)- First Amendment, dated as of December 12,
1995, to Third Supplemental Note Indenture,
dated as of August 15, 1994 (Exhibit 4-12 to
Registration No. 333-00023).
4(h)- Fourth Supplemental Note Indenture, dated
as of August 15, 1995 (Exhibit 4-175 to
Detroit Edison Form 10-Q for quarter ended
September 30, 1995).
4(i)- Fifth Supplemental Note Indenture, dated as
of February 1, 1996 (Exhibit 4-14 to Form
10-K for year ended December 31, 1996).
31
<PAGE> 32
4(j)- Sixth Supplemental Note Indenture, dated as
of May 1, 1998, between Detroit Edison and
Bankers Trust Company, as Trustee, creating
the 7.54% Quarterly Income Debt Securities
("QUIDS"), including form of QUIDS. (Exhibit
4-193 to Form 10-Q for quarter ended June 30,
1998).
4(k)- Standby Note Purchase Credit Facility,
dated as of August 17, 1994, among The
Detroit Edison Company, Barclays Bank PLC,
as Bank and Administrative Agent, Bank of
America, The Bank of New York, The Fuji Bank
Limited, The Long-Term Credit Bank of Japan,
LTD, Union Bank and Citicorp Securities, Inc.
and First Chicago Capital Markets, Inc. as
Remarketing Agents (Exhibit 99-18 to Form
10-Q for quarter ended September 30, 1994).
99(a)- Belle River Participation Agreement between
Detroit Edison and Michigan Public Power
Agency, dated as of December 1, 1982 (Exhibit
28-5 to Registration No. 2-81501).
99(b)- Belle River Transmission Ownership and
Operating Agreement between Detroit Edison
and Michigan Public Power Agency, dated as of
December 1, 1982 (Exhibit 28-6 to
Registration No. 2-81501).
99(c)- 1988 Amended and Restated Loan Agreement,
dated as of October 4, 1988, between
Renaissance Energy Company (an unaffiliated
company) ("Renaissance") and Detroit Edison
(Exhibit 99-6 to Registration No. 33-50325).
99(d)- First Amendment to 1988 Amended and
Restated Loan Agreement, dated as of February
1, 1990, between Detroit Edison and
Renaissance (Exhibit 99-7 to Registration No.
33-50325).
99(e)- Second Amendment to 1988 Amended and
Restated Loan Agreement, dated as of
September 1, 1993, between Detroit Edison and
Renaissance (Exhibit 99-8 to Registration No.
33-50325).
99(f)- Third Amendment, dated as of August 28,
1997, to 1988 Amended and Restated Loan
Agreement between Detroit Edison and
Renaissance. (Exhibit 99-22 to Form 10-Q for
quarter ended September 30, 1997).
32
<PAGE> 33
99(g)- $200,000,000 364-Day Credit Agreement,
dated as of September 1, 1993, among Detroit
Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent (Exhibit 99-12 to
Registration No. 33-50325).
99(h)- First Amendment, dated as of August 31, 1994,
to $200,000,000 364-Day Credit Agreement,
dated September 1, 1993, among The Detroit
Edison Company, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New York
Branch, as Agent (Exhibit 99-19 to Form 10-Q
for quarter ended September 30, 1994).
99(i)- Third Amendment, dated as of March 8, 1996, to
$200,000,000 364-Day Credit Agreement, dated
September 1, 1993, as amended, among Detroit
Edison, Renaissance, the Banks party thereto
and Barclays Bank, PLC, New York Branch, as
Agent (Exhibit 99-11 to Form 10-Q for quarter
ended March 31, 1996).
99(j)- Fourth Amendment, dated as of August 29, 1996,
to $200,000,000 364-Day Credit Agreement dated
as of September 1, 1990, as amended, among
Detroit Edison, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New York
Branch, as Agent (Exhibit 99-13 to Form 10-Q
for quarter ended September 30, 1996).
99(k)- Fifth Amendment, dated as of August 28, 1997
to $200,000,000 364-Day Credit Agreement,
dated as of September 1, 1990, as amended,
among Detroit Edison, Renaissance, the Banks
Party thereto and Barclays Bank PLC, New York
Branch, as Agent. (Exhibit 99-25 to Form 10-Q
for quarter ended September 30, 1997).
99(l)- Sixth Amendment dated as of August 27, 1998,
to $200,000,000 364-Day Credit Agreement
dated as of September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks
Party thereto and Barclays Bank, PLC, New
York Branch, as Agent (Exhibit 99-32
Registration Statement No. 333-65765).
99(m)- $200,000,000 Three-Year Credit Agreement,
dated September 1, 1993, among Detroit
Edison, Renaissance and Barclays Bank, PLC,
New York Branch, as Agent (Exhibit 99-13 to
Registration No. 33-50325).
33
<PAGE> 34
99(n)- 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(o)- Third Amendment, dated as of March 8, 1996,
to $200,000,000 Three-Year Credit Agreement,
dated September 1, 1993, as amended among
Detroit Edison, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New York
Branch, as Agent (Exhibit 99-12 to Form 10-Q
for quarter ended March 31, 1996).
99(p)- Fourth Amendment, dated as of September 1,
1996, to $200,000,000 Multi-Year (formerly
Three-Year) Credit Agreement, dated as of
September 1, 1993, as amended among Detroit
Edison, Renaissance, the Banks party thereto
and Barclays Bank, PLC, New York Branch, as
Agent (Exhibit 99-14 to Form 10-Q for quarter
ended September 30, 1996).
99(q)- Fifth Amendment, dated as of August 28, 1997,
to $200,000,000 Multi-Year Credit Agreement,
dated as of September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks
Party thereto and Barclays Bank PLC, New York
Branch, as Agent. (Exhibit 99-24 to Form 10-Q
for quarter ended September 30, 1997).
99(r)- 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(s)- 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(t)- Second Amendment, dated as of September 1,
1993, to 1988 Amended and Restated Nuclear
Fuel Heat Purchase Contract between Detroit
Edison and Renaissance (Exhibit 99-11 to
Registration No. 33-50325).
34
<PAGE> 35
99(u)- 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(v)- 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(w)- Sixth Amendment, dated as of August 28, 1997,
to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract between Detroit Edison and
Renaissance. (Exhibit 99-23 to Form 10-Q for
quarter ended September 30, 1997).
99(x)- Standby Note Purchase Credit Facility, dated
as of September 12, 1997, among Detroit Edison
and the Bank's Signatory thereto and The
Chase Manhattan Bank, as Administrative
Agent, and Citicorp Securities, Inc., Lehman
Brokers, Inc., as Remarketing Agents and
Chase Securities, Inc. as Arranger.
(Exhibit 999-26 to Form 10-Q for quarter
ended September 30, 1997).
99(y)- Amended and Restated Credit Agreement, Dated
as of January 21, 1998 among DTE Capital
Corporation, the Initial Lenders, Citibank,
N.A., as Agent, and Barclays Bank PLC, New
York Branch and The First National Bank of
Chicago, as Co-Agents, and Citicorp
Securities, Inc., as Arranger.
99(z)- $60,000,000 Support Agreement dated
as of January 21, 1998 between DTE Energy
Company and DTE Capital Corporation.
99(aa)- $400,000,000 Support Agreement, dated as of
January 21, 1998, between DTE Energy Company
and DTE Capital Corporation.
99(bb)- $100,000,000 Support Agreement, dated as of
June 16, 1998 between DTE Energy Company and
DTE Capital Corporation. (Exhibit 4-194 to
Form 10-Q for quarter ended June 30, 1998).
35
<PAGE> 36
99(cc)- Indenture, dated as of June 15, 1998,
between DTE Capital Corporation and The Bank
of New York, as Trustee. (Exhibit 4-196 to
Form 10-Q for quarter ended June 30, 1998).
99(dd)- First Supplemental Indenture, dated as of
June 15, 1998, between DTE Capital
Corporation and The Bank of New York, as
Trustee, creating the $100,000,000 Remarketed
Notes, Series A due 2038, including form of
Note. (Exhibit 4-197 to Form 10-Q for quarter
ended June 30, 1998).
(b) Registrants filed a report on Form 8-K dated October 14, 1998
discussing an increase in the Fermi 2 capacity factor performance
standard liability.
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 October 28, 1998 /s/ SUSAN M. BEALE
---------------- --------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date October 28, 1998 /s/ DAVID E. MEADOR
---------------- --------------------------------------
David E. Meador
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 October 28, 1998 /s/ SUSAN M. BEALE
---------------- ---------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date October 28, 1998 /s/ DAVID E. MEADOR
---------------- ---------------------------------------
David E. Meador
Vice President and Controller
38
<PAGE> 39
QUARTERLY REPORTS ON FORM
10-Q FOR THE QUARTER
ENDED SEPTEMBER 30, 1998
DTE ENERGY COMPANY File No. 1-11607
DETROIT EDISON COMPANY File No. 1-2198
EXHIBIT INDEX
Exhibits filed herewith.
Exhibit
Number
-------
11-13- DTE Energy Company Basic and Diluted
Earnings Per Share of Common Stock.
12-13- The Detroit Edison Company Computation of
Ratio of Earnings to Fixed Charges.
15-9 - Awareness Letter of Deloitte & Touche LLP
regarding their report dated October 28,
1998.
27-23- Financial Data Schedule for the period
ended September 30, 1998 for DTE Energy
Company.
27-24- Financial Data Schedule for the period
ended September 30, 1998 for The Detroit
Edison Company.
Exhibits incorporated herein by reference. See Page No. ___ through
___ for location of exhibits
incorporated by reference
3(a)- Amended and Restated Articles of
Incorporation of DTE Energy Company, dated
December 13, 1995.
3(b)- Certificate of Designation of Series A
Junior Participating Preferred Stock of DTE
Energy Company.
<PAGE> 40
3(c) - Restated Articles of Incorporation of
Detroit Edison, as filed December 10, 1991
with the State of Michigan, Department of
Commerce-Corporation and Securities Bureau.
3(d) - Certificate containing resolution of the
Detroit Edison Board of Directors
establishing the Cumulative Preferred
Stock, 7.75% Series as filed February 22,
1993 with the State of Michigan, Department
of Commerce-Corporation and Securities
Bureau.
3(e) - Certificate containing resolution of the
Detroit Edison Board of Directors
establishing the Cumulative Preferred
Stock, 7.74% Series, as filed April 21,
1993 with the State of Michigan, Department
of Commerce-Corporation and Securities
Bureau.
3(f) - Rights Agreement, dated as of September 23,
1997, by and between DTE Energy Company and
The Detroit Edison Company, as Rights
Agent.
3(g) - Agreement and Plan of Exchange.
4(a) - Mortgage and Deed of Trust, dated as of
October 1, 1924, between Detroit Edison and
Bankers Trust Company as Trustee and
indentures supplemental thereto, dated as
of dates indicated below:
September 1, 1947
October 1, 1968
November 15, 1971
January 15, 1973
June 1, 1978
June 30, 1982
August 15, 1982
October 15, 1985
July 15, 1989
December 1, 1989
February 15, 1990
April 1, 1991
May 1, 1991
May 15, 1991
September 1, 1991
November 1, 1991
January 15, 1992
February 29, 1992
April 15, 1992
July 15, 1992
July 31, 1992
<PAGE> 41
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) - First Amendment, dated as of August 15,
1996, to Second Supplemental Note
Indenture.
4(f) - Third Supplemental Note Indenture, dated
as of August 15, 1994.
4(g) - First Amendment, dated as of December 12,
1995, to Third Supplemental Note Indenture,
dated as of August 15, 1994.
4(h) - Fourth Supplemental Note Indenture, dated
as of August 15, 1995.
4(i) - Fifth Supplemental Note Indenture, dated
as of February 1, 1996.
4(j) - Sixth Supplemental Note Indenture, dated as
of May 1, 1998, between Detroit Edison and
Bankers Trust Company, as Trustee, creating
the 7.54% Quarterly Income Debt Securities
("QUIDS"), including form of QUIDS.
4(k) - Standby Note Purchase Credit Facility,
dated as of August 17, 1994, among The
Detroit Edison Company, Barclays Bank PLC,
as Bank and Administrative Agent, Bank of
<PAGE> 42
America, The Bank of New York, The Fuji
Bank Limited, The Long-Term Credit Bank of
Japan, LTD, Union Bank and Citicorp
Securities, Inc. and First Chicago Capital
Markets, Inc. as Remarketing Agents.
99(a) - Belle River Participation Agreement
between Detroit Edison and Michigan Public
Power Agency, dated as of December 1, 1982.
99(b) - Belle River Transmission Ownership and
Operating Agreement between Detroit Edison
and Michigan Public Power Agency, dated as
of December 1, 1982.
99(c) - 1988 Amended and Restated Loan Agreement,
dated as of October 4, 1988, between
Renaissance Energy Company (an
unaffiliated company) ("Renaissance") and
Detroit Edison.
99(d) - First Amendment to 1988 Amended and
Restated Loan Agreement, dated as of
February 1, 1990, between Detroit Edison
and Renaissance.
99(e) - Second Amendment to 1988 Amended and
Restated Loan Agreement, dated as of
September 1, 1993, between Detroit Edison
and Renaissance.
99(f) - Third Amendment, dated as of August 28,
1997, to 1988 Amended and Restated Loan
Agreement between Detroit Edison and
Renaissance.
99(g) - $200,000,000 364-Day Credit Agreement,
dated as of September 1, 1993, among
Detroit Edison, Renaissance and Barclays
Bank PLC, New York Branch, as Agent.
99(h) - First Amendment, dated as of August 31,
1994, to $200,000,000 364-Day Credit
Agreement, dated September 1, 1993, among
The Detroit Edison Company, Renaissance,
the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent.
99(i) - Third Amendment, dated as of March 8, 1996,
to $200,000,000 364-Day Credit Agreement,
dated September 1, 1993, as amended, among
Detroit Edison, Renaissance, the Banks
party thereto and Barclays Bank, PLC,
New York Branch, as Agent.
<PAGE> 43
99(j) - Fourth Amendment, dated as of August 29,
1996, to $200,000,000 364-Day Credit
Agreement dated as of September 1, 1990, as
amended, among Detroit Edison, Renaissance,
the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent.
99(k) - Fifth Amendment, dated as of August 28,
1997 to $200,000,000 364-Day Credit
Agreement, dated as of September 1, 1990,
as amended, among Detroit Edison,
Renaissance, the Banks Party thereto and
Barclays Bank PLC, New York Branch, as
Agent.
99(l) - Sixth Amendment dated as of August 27,
1998, to $200,000,000 364-Day Credit
Agreement dated as of September 1, 1993,
as amended, among Detroit Edison,
Renaissance, the Banks Party thereto and
Barclays Bank, PLC, New York Branch, as
Agent. (Exhibit 99-32 Registration
Statement No. 333-65765).
99(m) - $200,000,000 Three-Year Credit Agreement,
dated September 1, 1993, among Detroit
Edison, Renaissance and Barclays Bank, PLC,
New York Branch, as Agent.
99(n) - 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(o) - Third Amendment, dated as of March 8, 1996,
to $200,000,000 Three-Year Credit
Agreement, dated September 1, 1993, as
amended among Detroit Edison, Renaissance,
the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent.
99(p) - Fourth Amendment, dated as of September 1,
1996, to $200,000,000 Multi-Year (formerly
Three-Year) Credit Agreement, dated as of
September 1, 1993, as amended among Detroit
Edison, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New York
Branch, as Agent.
99(q) - Fifth Amendment, dated as of August 28,
1997, to $200,000,000 Multi-Year Credit
Agreement, dated as of September 1, 1993,
as amended, among Detroit Edison,
Renaissance, the Banks Party thereto and
Barclays Bank PLC, New York Branch, as
Agent.
<PAGE> 44
99(r) - 1988 Amended and Restated Nuclear Fuel
Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and
Renaissance.
99(s) - First Amendment to 1988 Amended and
Restated Nuclear Fuel Heat Purchase
Contract, dated as of February 1, 1990,
between Detroit Edison and Renaissance.
99(t) - Second Amendment, dated as of September 1,
1993, to 1988 Amended and Restated Nuclear
Fuel Heat Purchase Contract between Detroit
Edison and Renaissance.
99(u) - 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(v) - 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(w) - Sixth Amendment, dated as of August 28,
1997, to 1988 Amended and Restated Nuclear
Fuel Heat Purchase Contract between Detroit
Edison and Renaissance.
99(x) - Standby Note Purchase Credit Facility,
dated as of September 12, 1997, among
Detroit Edison and the Bank's Signatory
thereto and The Chase Manhattan Bank,
as Administrative Agent, and Citicorp
Securities, Inc., Lehman Brokers, Inc.,
as Remarketing Agents and Chase Securities,
Inc. as Arranger.
99(y) - Amended and Restated Credit Agreement,
Dated as of January 21, 1998 among DTE
Capital Corporation, the Initial Lenders,
Citibank, N.A., as Agent, and Barclays Bank
PLC, New York Branch and The First National
Bnak of Chicago, as Co-Agents, and Citicorp
Securities, Inc., as Arranger.
99(z) - $60,000,000 Support Agreement dated as of
January 21, 1998 between DTE Energy Company
and DTE Capital Corporation.
99(aa)- $400,000,000 Support Agreement, dated as of
January 21, 1998, between DTE Energy
Company and DTE Capital Corporation.
<PAGE> 45
99(bb)- $100,000,000 Support Agreement, dated as of
June 16, 1998 between DTE Energy Company
and DTE Capital Corporation.
99(cc)- Indenture, dated as of June 15, 1998,
between DTE Capital Corporation and The
Bank of New York, as Trustee.
99(dd)- First Supplemental Indenture, dated as of
June 15, 1998, between DTE Capital
Corporation and The Bank of New York, as
Trustee, creating the $100,000,000
Remarketed Notes, Series A due 2038,
including form of Note.
<PAGE> 1
EXHIBIT 11-13
DTE ENERGY COMPANY
BASIC AND DILUTED EARNINGS PER SHARE
OF COMMON STOCK
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, 1998 September 30, 1998
------------------ ------------------
(Thousands, except per share amounts)
<S> <C> <C>
BASIC:
Net Income......................................$ 132,037 $ 336,637
Weighted average number of common
shares outstanding (a)........................ 145,075 145,078
Earnings per share of Common Stock
based on weighted average number
of shares outstanding.........................$ 0.91 $ 2.32
DILUTED:
Net Income......................................$ 132,037 $ 336,637
Weighted average number of common
shares outstanding (a)........................ 145,075 145,078
Incremental shares from assumed exercise
of options.................................... 116 95
---------- -----------
145,191 145,173
========== ===========
Earnings per share of Common Stock
assuming exercise of options..................$ 0.91 $ 2.32
</TABLE>
- ------------------------------------------------------
(a) Based on a daily average.
<PAGE> 1
EXHIBIT 12-13
THE DETROIT EDISON COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Nine
Months Year Ended December 31
Ended ----------------------
9/30/98 1997 1996 1995
------- ---- ---- ----
(Millions, except for ratio)
<S> <C> <C> <C> <C>
Net income $ 318 $ 417 $ 328 $ 434
-------- ------- ----- -----
Taxes based on income:
Current income taxes 216 308 224 221
Deferred taxes - net 24 (6) 16 79
Investment tax credit adjustments - net (11) (14) (15) (17)
Municipal and state 3 4 3 3
-------- ------- ----- -----
Total taxes based on income 232 292 228 286
-------- ------- ----- -----
Fixed charges:
Interest on long-term debt 192 262 275 275
Amortization of debt discount, premium
and expense 8 11 12 11
Other interest 8 9 4 10
Interest factor of rents 26 34 34 29
-------- ------- ----- -------
Total fixed charges 234 316 325 325
-------- ------- ----- -------
Earnings before taxes based on income
and fixed charges $ 784 $ 1,025 $ 881 $ 1,045
======== ======= ===== =======
Ratio of earnings to fixed charges 3.35 3.24 2.71 3.21
</TABLE>
<PAGE> 1
Exhibit 15-9
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 subsidiaries and The Detroit Edison
Company and subsidiaries for the periods ended September 30, 1998 and 1997, as
indicated in our report dated October 28, 1998. 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 September 30, 1998, 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
Form S-8 333-47247
The Detroit Edison Company
Form S-3 33-53207
Form S-3 33-64296
Form S-3 333-65765
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Detroit, Michigan
October 28, 1998
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<NAME> DTE ENERGY COMPANY
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<PERIOD-START> JAN-01-1998
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<ALLOWANCES> 20
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<CURRENT-ASSETS> 1,187
<PP&E> 15,994
<DEPRECIATION> 6,841
<TOTAL-ASSETS> 11,812
<CURRENT-LIABILITIES> 1,482
<BONDS> 3,998
0
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<COMMON> 1,951
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<S> <C>
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0
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