<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 11-K
(Mark One)
[X] Annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
OR
[ ] Transition report pursuant to Section 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
-------- --------
COMMISSION FILE NUMBER 1-10070 (MCN Energy Group Inc.)
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
(Full title of the plan and the address of the plan,
if different from that of the issuer named below)
MCN ENERGY GROUP INC. (MCN)
500 Griswold Street
Detroit, Michigan 48226
(Name of issuer of the common stock issued pursuant to the
plan and the address of its principal executive office)
================================================================================
<PAGE> 2
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
Financial Statements for the Years Ended December 31, 1997 and 1996,
Supplemental Schedules for the Year Ended December 31, 1997
and Independent Auditors' Report
<PAGE> 3
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
Financial Statements:
Statement of Assets Available for Benefits as of December 31, 1997 ................. 1
Statement of Assets Available for Benefits as of December 31, 1996 ................. 2
Statement of Changes in Assets Available for Benefits for the Year Ended
December 31, 1997................................................................. 3
Notes to Financial Statements....................................................... 4-8
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1997 ................................................................ 9
Item 27d - Schedule of Reportable Transactions For the Year Ended
December 31, 1997................................................................. 10
</TABLE>
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of
MCN Energy Group Savings and Stock Ownership Plan
Detroit, Michigan
We have audited the accompanying statements of assets available for benefits
of the MCN Energy Group Savings and Stock Ownership Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statement of changes in assets
available for benefits for the year ended December 31, 1997. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the accompanying financial statements present fairly, in all
material respects, the assets available for benefits of the Plan at
December 31, 1997 and 1996, and the changes in assets available for benefits
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in
the Table of Contents are presented for the purpose of additional analysis and
are not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental information by fund in the statement of assets
available for benefits and the statement of changes in assets available for
benefits is presented for the purpose of additional analysis rather than to
present the assets available for benefits and changes in assets available for
benefits of the individual funds. These supplemental schedules and
supplemental information by fund is the responsibility of the Plan's
management. Such supplemental schedules and supplemental information by fund
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
DELOITTE & TOUCHE LLP
Detroit, Michigan
June 25, 1998
<PAGE> 5
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Supplemental Information by Fund
---------------------------------------------------------------------
MCN Global Growth Fixed
Stock Growth & Income Income Voyager
Total Fund Fund Fund Fund Fund
------------- ------------- ------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, (NOTES 1 AND 2):
Common stock - MCN Energy Group Inc. $ 141,792,794 $ 141,792,794
Registered investment companies 119,345,335 $ 17,277,301 $ 46,713,743 $ 42,098,094
Investment in Master Trust (Note 4) 44,192,146 $ 44,192,146
Loans to participants 6,926,815
------------- ------------- ------------ ------------ ------------ ------------
Total Investments 312,257,090 141,792,794 17,277,301 46,713,743 44,192,146 42,098,094
------------- ------------- ------------ ------------ ------------ ------------
OTHER ASSETS:
Cash on deposit and in transit 88,263 (4,635)
------------- ------------- ------------ ------------ ------------ ------------
Total Assets 312,345,353 141,792,794 17,277,301 46,713,743 44,187,511 42,098,094
------------- ------------- ------------ ------------ ------------ ------------
ASSETS AVAILABLE FOR BENEFITS $ 312,345,353 $ 141,792,794 $ 17,277,301 $ 46,713,743 $ 44,187,511 $ 42,098,094
============= ============= ============ ============ ============ =============
Participating Units - December 31, 1997
Number of Units 3,511,896 1,734,669 2,390,673 44,187,511 2,209,874
Value of Units $ 40.38 $ 9.96 $ 19.54 $ 1.00 $ 19.05
</TABLE>
<TABLE>
<CAPTION>
Supplemental Information by Fund
----------------------------------------------------
New
Opportunities Income Loan Forfeiture
Fund Fund Fund Fund
------------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
INVESTMENTS, (NOTES 1 AND 2):
Common stock - MCN Energy Group Inc.
Registered investment companies $ 11,777,680 $ 1,478,517
Investment in Master Trust (Note 4)
Loans to participants $ 6,926,815
------------ ----------- ----------- ---------
Total Investments 11,777,680 1,478,517 6,926,815 -
------------ ----------- ----------- ---------
OTHER ASSETS:
Cash on deposit and in transit 92,898
------------ ------------ ----------- ---------
Total Assets 11,777,680 1,478,517 6,926,815 92,898
------------ ------------ ----------- ---------
ASSETS AVAILABLE FOR BENEFITS $ 11,777,680 $ 1,478,517 $ 6,926,815 $ 92,898
============ ============ =========== =========
Participating Units - December 31, 1997
Number of Units 242,090 207,949
Value of Units $ 48.65 $ 7.11
</TABLE>
The notes to the financial statments are an integral part of this statement.
1
<PAGE> 6
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Supplemental Information by Fund
--------------------------------------------------------
MCN Global Growth Fixed
Stock Growth & Income Income
Total Fund Fund Fund Fund
---------------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, (NOTES 1 AND 2):
Common stock - MCN Energy Group Inc. $ 102,814,974 $ 102,814,974
Registered investment companies 101,307,646 $ 15,673,342 $ 38,298,187
Investment in Master Trust (Note 4) 46,306,194 $ 46,306,194
Loans to participants 6,638,107
---------------------------- ------------- ------------- -------------
Total Investments $ 257,066,921 102,814,974 15,673,342 38,298,187 46,306,194
---------------------------- ------------- ------------- -------------
OTHER ASSETS:
Cash on deposit and in transit 39,281 (6,541)
---------------------------- ------------- ------------- -------------
Total Assets 257,106,202 102,814,974 15,673,342 38,298,187 46,299,653
---------------------------- ------------- ------------- -------------
ASSETS AVAILABLE FOR BENEFITS $ 257,106,202 $ 102,814,974 $ 15,673,342 $ 38,298,187 $ 46,299,653
============================ ============= ============= =============
Participating Units - December 31, 1996
Number of Units 3,560,692 1,448,553 2,125,316 46,299,653
Value of Units $ 28.88 $ 10.82 $ 18.02 $ 1.00
</TABLE>
<TABLE>
<CAPTION>
Supplemental Information by Fund
--------------------------------------------------------------
New
Voyager Opportunities Income Loan Forfeiture
Fund Fund Fund Fund Fund
------------- ------------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, (Notes 1 and 2):
Common stock - MCN Energy Group Inc.
Registered investment companies $ 36,068,077 $ 10,413,670 $ 854,370
Investment in Master Trust (Note 4)
Loans to participants $ 6,638,107
------------- ------------- ---------- ------------- ---------
Total Investments 36,068,077 10,413,670 854,370 6,638,107 -
------------- ------------- ---------- ------------- ---------
OTHER ASSETS:
Cash on deposit and in transit $45,822
------------- ------------- ---------- ------------- ---------
Total Assets 36,068,077 10,413,670 854,370 6,638,107 45,822
------------- ------------- ---------- ------------- ---------
ASSETS AVAILABLE FOR BENEFITS $ 36,068,077 $ 10,413,670 $ 854,370 $ 6,638,107 $ 45,822
============= ============= ========== ============= =========
Participating Units - December 31, 1996
Number of Units 2,237,474 256,305 121,879
Value of Units $ 16.12 $ 40.63 $ 7.01
</TABLE>
2
<PAGE> 7
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Supplemental Information by Fund
------------------------------------------------------
MCN Global Growth Fixed
Stock Growth & Income Income
Total Fund Fund Fund Fund
------------- ------------- ----------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS ATTRIBUTED TO:
Investment income $ 18,115,093 $ 3,489,493 $ 3,117,097 $ 6,089,895 $ 2,601,473
Change in market value of investments 50,834,678 40,592,530 (1,068,167) 3,076,914 -
Transfers by participants between
investment funds (net) - 606,703 (334,688) 1,789,981 (1,122,329)
Transfers to loan fund - (1,242,733) (253,211) (387,166) (310,840)
Transfers from loan fund - 910,848 181,034 276,088 289,214
Interest on loans to participants 652,193 292,958 60,546 85,487 87,725
------------- ------------- ----------------------------------------
69,601,964 44,649,799 1,702,611 10,931,199 1,545,243
------------- ------------- ----------------------------------------
Contributions:
Participant 6,994,402
Employer 3,661,379
Forteitures to be used 47,076
------------- ------------- ----------------------------------------
Total 10,702,857 3,959,405 1,036,546 1,639,111 1,333,949
Total Additions 80,304,821 48,609,204 2,739,157 12,570,310 2,879,192
------------- ------------- ----------------------------------------
DEDUCTIONS FROM ASSETS ATTRIBUTED TO:
Distributions to terminated participants (23,928,639) (9,306,760) (1,061,112) (4,034,722) (4,564,392)
Withdrawals (1,184,074) (365,513) (78,556) (127,086) (418,920)
Transfers by participants between plans (net) 47,043 40,889 4,470 7,054 (8,022)
------------- ------------- ----------------------------------------
Total Deductions (25,065,670) (9,631,384) (1,135,198) (4,154,754) (4,991,334)
------------- ------------- ----------------------------------------
NET INCREASE(DECREASE) 55,239,151 38,977,820 1,603,959 8,415,556 (2,112,142)
ASSETS AVAILABLE FOR BENEFITS:
Beginning of the period 257,106,202 102,814,974 15,673,342 38,298,187 46,299,653
------------- ------------- ----------------------------------------
End of the period $312,345,353 $141,792,794 $ 17,277,301 $ 46,713,743 $ 44,187,511
============= ============= ========================================
</TABLE>
<TABLE>
<CAPTION>
Supplemental Information by Fund
---------------------------------------------------------------
New
Voyager Opportunities Income Loan Forfeiture
Fund Fund Fund Fund Fund
------------- ------------- ------------ ----------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS ATTRIBUTED TO:
Investment income $ 2,492,173 $ 255,743 $ 69,219 - -
Change in market value of investments 6,354,506 1,863,344 15,551 - -
Transfers by participants between
investment funds (net) (1,589,080) (295,358) 944,771 - -
Transfers to loan fund (388,805) (50,455) (3,368) 2,636,578 -
Transfers from loan fund 315,826 85,632 4,381 (2,063,023) -
Interest on loans to participants 95,183 28,482 1,812 - -
------------- ------------- ----------- ------------ --------
7,279,803 1,887,388 1,032,366 573,555 -
------------- ------------- ----------- ------------ --------
Contributions:
Participant
Employer
Forteitures to be used 47,076
------------- ------------- ----------- ------------ --------
Total 1,712,519 913,641 60,610 - 47,076
Total Additions 8,992,322 2,801,029 1,092,976 573,555 47,076
------------- ------------- ----------- ------------ --------
DEDUCTIONS FROM ASSETS ATTRIBUTED TO:
Distributions to terminated participants (2,839,692) (1,384,323) (468,317) (269,321) -
Withdrawals (124,446) (53,515) (512) (15,526) -
Transfers by participants between plans
(net) 1,833 819 - - -
------------- ------------- ----------- ------------- --------
Total Deductions (2,962,305) (1,437,019) (468,829) (284,847) -
------------- ------------- ----------- ------------ --------
NET INCREASE(DECREASE) 6,030,017 1,364,010 624,147 288,708 47,076
ASSETS AVAILABLE FOR BENEFITS:
Beginning of the period 36,068,077 10,413,670 854,370 6,638,107 45,822
------------- ------------- ----------- ------------ --------
End of the period $ 42,098,094 $ 11,777,680 $ 1,478,517 $ 6,926,815 $ 92,898
============= ============= =========== ============ ========
</TABLE>
The notes to the financial statements are an integral part of this statement.
3
<PAGE> 8
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
The following description of the MCN Energy Group Savings and Stock
Ownership Plan (the Plan) provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
GENERAL
The Plan is a defined contribution benefit plan for employees not
covered by the collective bargaining agreements who have attained one
year of service and are age 21 or older. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA). The Plan is sponsored solely by MCN Energy Group Inc. (MCN)
and is maintained for the benefit of employees of MCN and any
subsidiary or affiliate of MCN which may adopt the Plan from time to
time.
The employers participating in the Plan are MichCon, MCN Energy Group
Inc., and MCN Investment Corporation and some of its subsidiaries.
CONTRIBUTIONS
Each employee electing to participate in the Plan is required to make
regular contributions by payroll deduction. Participant contributions,
including any Salary Reduction Allotments, are limited to 15% (for
highly compensated participants) and 20% (for nonhighly compensated
participants) of the participant's compensation as defined in the Plan
("Eligible Compensation"), or such maximum rates as may be approved by
the Internal Revenue Service. Effective April 1, 1998, participant
contributions are limited to 17% (for nonhighly compensated
participants) of the participant's Eligible Compensation. Participants
may elect to have their Eligible Compensation reduced (Salary Reduction
Allotments) by up to 9% (highly compensated participants 8%) and have
that amount contributed to the Plan.
The employers' make matching contributions to the Plan on behalf of
each participant which are limited to 4% of the participant's Eligible
Compensation for individuals with less than 10 years of service. For
those individuals who have completed at least 10 years of service, the
limit is 5% of the participant's Eligible Compensation. Effective
January 1, 1999, after a participant has completed 9 years of service,
the limit is 5% of the participant's Eligible Compensation. However,
some of the participants Eligible Compensation will include overtime
wages and bonuses. Participants with more than 23 years of service are
matched up to 6%. Seventy-five percent of all employer matching
contributions is allocated to the MCN Restricted Stock Fund.
Each Employer shall contribute annually (April 1st) to the MCN
Restricted Stock Fund accounts for each of its participating Employees
on active payroll who have at least 30 years of service, twenty-five
shares of MCN Stock (or an equivalent value determined by the Committee
in a nondiscriminatory manner, which may be used to purchase MCN
Stock).
4
<PAGE> 9
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution,
allocations of the Company's contributions and Plan earnings. Allocations are
based on participant earnings or account balances, as defined. Forfeited
balances of terminated participants' nonvested accounts are used to reduce
future employer contributions. The benefit to which the participant is entitled
is the benefit that can be provided from the participant's vested account.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the employer's matching contribution portion of their
accounts plus actual earnings thereon occurs after completion of five years of
service.
INVESTMENT OPTIONS
Participants may transfer existing account balances in the investment funds on a
daily basis with the exception of the MCN Restricted Stock Fund. However,
participants may change their investment direction and amount of future
contributions effective with the next payroll period. With respect to the MCN
Stock Fund, Company designated insider traders are limited to a 30-day window
following the release of quarterly earnings. Contributions may be directed in
any of the following savings options:
MCN Stock Fund - Fund invests solely in the common stock of MCN Energy
Group Inc. This fund consists of two components, restricted and
unrestricted. The restricted fund includes 75% of the employer match which
is contributed to the employee stock ownership plan (ESOP) portion of the
Plan. The unrestricted fund includes any employee contributions and
possibly any portion of the remaining 25% of the employer matching
contributions. All 1997 MCN dividends accumulated under the ESOP were
passed through to each participant in March 1998 unless the participant
elected not to receive such dividends.
Putnam Global Growth Fund - Fund consists primarily of common stocks traded
in securities markets located in a number of foreign countries and in the
United States.
Putnam Fund for Growth and Income - Fund consists primarily of common
stocks that offer potential for capital growth, current income, or both.
The fund may also purchase corporate bonds, notes and debentures, preferred
stocks, or convertible securities (both debt securities and preferred
stocks) or U.S. government securities.
Fixed Income Fund - Fund consists of higher quality investments
consistent with the Fund's objective to preserve principal while providing
a stable rate of return to the Participant. The investments of the Fixed
Income Fund consists of the following:
- contracts with insurance companies and other
financial institutions providing for fixed rates
of interest, and
- investments in specific government and corporate
marketable fixed income securities, which are managed
by professional investment advisors.
5
<PAGE> 10
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
Amounts invested in marketable securities are invested
through or pursuant to contracts with insurance
companies. These contracts provide for a guarantee of
the principal invested and accrued interest under the
contract. The interest rates under these contracts are
adjusted at least annually to recognize the impacts of
changing interest rate conditions. Investment advisors
for marketable fixed income securities may use fixed
income futures and options to reduce the effect of
market volatility on the Fund.
Putnam Voyager Fund - Fund consists primarily of common
stocks of companies with potential for capital
appreciation which is significantly greater than that of
the market averages and generally invests a significant
portion of its assets in the securities of smaller and
newer issuers.
Putnam New Opportunities Fund - Fund consists primarily
of common stocks of companies in sectors of the economy
with potential for capital appreciation which is
significantly greater than that of the market averages
and generally invests a significant portion of its
assets in the securities of small to mid-sized
companies.
Putnam Income Fund - Fund consists primarily of quality
corporate and government bonds that pay out a rate of
interest in regularly scheduled payments. The fund also
invests in selected below-investment grade bonds, which
have a higher risk of nonpayment of interest and
principal.
ADMINISTRATIVE AND BROKERAGE FEES
Expenses in connection with the purchase or sale of stock or other securities
are charged to the participant for which the purchases or sales are made.
Participants pay 100% of the investment management and other related expenses of
the funds. The participating employers pay 100% of the recordkeeping and Trustee
expenses.
LOANS
Subject to limitations imposed by the Internal Revenue Code and Department of
Labor regulations, Plan provisions allow a participant to borrow from the Plan
an amount up to 50% of the vested value of his or her salary reduction and ESOP
accounts, up to a maximum of $50,000, at an interest rate of 2 1/2% over prime
updated quarterly (rounded to the nearest 1/2 %). The outstanding balances of
loans are reported in the Loan fund. A participant may have only one loan
outstanding at a time and loan refinances are available every twelve months.
TERMINATION OF THE PLAN
Although it has not expressed any intent to do so, the Employers have the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination, the
Plan assets shall be distributed ratably to the participants in proportion to
the total values of their respective Plan accounts.
Each participating employer may withdraw from or terminate its participation in
the Plan at any time. Under these circumstances, the Committee shall direct the
Trustee to (1) segregate, in a separate trust, amounts held under the Plan which
are applicable to the participants of such
6
<PAGE> 11
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
employer (in the event of withdrawal); or (2) distribute to the
participants of such employer amounts attributable to such
participants' investments under the Plan (in the event of termination).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared under the accrual
method of accounting.
Purchase and sales of securities are recorded on the trade date basis.
Dividend income is recorded on the ex-dividend date. Income from other
securities is recorded when earned.
Investments are stated at market value, which is generally based on
quoted prices. A portion of the Fixed Income Fund is reported on a
contract value (which represents contributions made under the contract
plus earnings, less withdrawals and administrative expenses) because
it is fully benefit responsive. Participant loan receivables are
presented at cost which approximates fair value.
The cost of securities sold or distributed is determined on the basis
of average cost. The MCN Stock Fund recognizes gains or losses on stock
distributed to terminated participants in settlement of their accounts
equal to the difference between cost and market value of the shares
distributed.
Benefits are recorded when paid.
3. TAX STATUS
The Internal Revenue Service has determined and informed MCN by a
letter dated November 19, 1997 that the Plan is qualified and related
trust is tax exempt and both are designed in accordance with applicable
sections of the Internal Revenue Code (IRC). The Plan administrator
and the Plan's tax counsel believe that the Plan is designed and is
currently being operated in compliance with the applicable
requirements of the IRC.
4. DEFINED CONTRIBUTION PLANS MASTER TRUST
The Master Trust was established on August 1, 1988 and serves as a
funding medium to certain employee benefit plans of the Corporation and
its subsidiaries and affiliates which are qualified under Section
401(a) of the Internal Revenue Code of 1986 as amended from time to
time.
Currently, the Master Trust consists of certain commingled assets of
the Plan and the MichCon Investment and Stock Ownership Plan. The
Plan's investment in the Master Trust in the Statement of Assets
Available for Benefits represents the Plan's allocated portion
(approximately 80% )of the Master Trust investments. The Plan's
allocated portion of the investments is equal to the market value of
the Plan's assets contributed, adjusted by the Plan's allocated share
of the Master Trust investment income and expenses, employee and
employer contributions and distributions and withdrawals paid to
participants.
A summary of the Master Trust assets as of December 31, 1997 and 1996
is as follows:
7
<PAGE> 12
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1997 1996
------------ -------------
<S> <C> <C>
INVESTMENTS,
Temporary investments, at market . . . . . . . . . . . . $ 3,805,014 $ 7,050,421
Insurance contracts, including
accumulated interest, at contract value . . . . . . . 51,041,890 51,150,305
------------ -------------
TOTAL INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 54,846,904 58,200,726
------------ -------------
ASSETS HELD IN MASTER TRUST . . . . . . . . . . . . . . . . $ 54,846,904 $ 58,200,726
============ =============
<CAPTION>
The following is a summary of the net change in assets held in the
Master Trust for the year ended December 31, 1997:
1997
------------
Transfers into Master Trust . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,174,098
Interest, dividend and other income on investments . . . . . . . . . . . . . 3,438,588
Transfers out of Master Trust . . . . . . . . . . . . . . . . . . . . . . . (50,966,508)
------------
NET CHANGE IN ASSETS HELD . . . . . . . . . . . . . . . . . . . . . . . . . (3,353,822)
NET ASSETS, BEGINNING OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . 58,200,726
------------
NET ASSETS, END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,846,904
============
</TABLE>
5. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Putnam
Investments. Putnam Investments is the trustee as defined by the plan;
therefore, these transactions qualify as party-in-interest.
6. SUBSEQUENT EVENT
The MCN Energy Group stock price as of December 31, 1997 of $40.38
declined to $25.31 at the close of business on June 25, 1998.
In the first quarter of 1998, MichCon implemented an early retirement
program. the program had no material impact on the plan.
8
<PAGE> 13
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
ITEM 27a -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
(c)
(b) Description of investments including (e)
Identity of issue, borrower, maturity date, rate of interest, collateral, (d) Current
(a) lessor or similar party par or maturity value Cost Value
- ---- ---------------------------------- ----------------------------------------------- -------------- -------------
<S> <C> <C> <C>
* MCN Stock Fund MCN Energy Group Inc. Common Stock $ 57,860,288 $141,792,794
* Putnam Global Growth Fund Registered Investment Company 15,848,904 17,277,301
* Putnam Fund for Growth and Income Registered Investment Company 36,444,230 46,713,743
* Fixed Income Fund Investment in Master Trust
Pacific Mutual 20,140,685 20,140,685
AIG Life #GIC-18190 877,136 877,136
AIG Life #GIC-877 2,234,650 2,234,650
Hartford Life #009702 3,076,061 3,076,061
Hartford Life #GA-9950 685,653 685,653
MET Life 2,273,825 2,273,825
The Boston Company #6420-002 3,065,838 3,065,838
New York Life GA #20051 3,021,977 3,021,977
New York Life GA #30783 3,238,143 3,238,143
John Hancock Mutual #8407 GAC 1,843,085 1,843,085
John Hancock Mutual #8868 GAC 3,735,093 3,735,093
* Putnam Voyager Fund Registered Investment Company 27,292,345 42,098,094
* Putnam New Opportunities Fund Registered Investment Companies 8,966,934 11,777,680
* Putnam Income Fund Registered Investment Companies 1,456,848 1,478,517
* Putnam Cash on deposit and in transit 88,263 88,263
* Loan Fund Loans to Participants (Interest rates 9% to 12% 6,926,815 6,926,815
------------ ------------
$199,076,773 $312,345,353
============ ============
</TABLE>
* Represents Party-in-Interest
9
<PAGE> 14
MCN ENERGY GROUP SAVINGS AND STOCK OWNERSHIP PLAN
ITEM 27d -- SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(b)
Description of asset
(a) (include interest (c) (d) (e)
Identity of party rate and maturity Purchase Selling Lease
involved in case of a loan) Price Price rental
----------------- -------------------- -------- ------- ------
<S> <C> <C> <C> <C>
Putnam Investments MCN Stock Fund $ 11,731,876 n/a
Putnam Investments MCN Stock Fund n/a $ 13,346,587
Putnam Investments Fixed Income Fund $ 9,401,815 n/a
Putnam Investments Fixed Income Fund n/a $ 11,513,957
Putnam Investments Growth and Income Fund $ 12,313,184 n/a
Putnam Investments Growth and Income Fund n/a $ 6,974,542
Putnam Investments Voyager Fund $ 6,476,763 n/a
Putnam Investments Voyager Fund n/a $ 6,801,252
</TABLE>
<TABLE>
<CAPTION>
(b) (h)
Description of asset (f) Current value
(a) (include interest Expense (g) of asset on (i)
Identity of party rate and maturity incurred with Cost of transaction Net gain
involved in case of a loan) transaction asset date or (loss)
----------------- -------------------- ------------- ------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Putnam Investments MCN Stock Fund n/a $ 11,731,876 n/a
Putnam Investments MCN Stock Fund $ 6,990,195 $ 13,346,587 $ 6,356,392
Putnam Investments Fixed Income Fund n/a $ 9,401,815 n/a
Putnam Investments Fixed Income Fund $11,568,619 $ 11,513,957 $ (54,662)
Putnam Investments Growth and Income Fund n/a $ 12,313,184 n/a
Putnam Investments Growth and Income Fund $ 5,575,039 $ 6,974,542 $ 1,399,503
Putnam Investments Voyager Fund n/a $ 6,476,763 n/a
Putnam Investments Voyager Fund $ 5,026,101 $ 6,801,252 $ 1,775,151
</TABLE>
10
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustee (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
MCN Energy Group Savings and Stock Ownership Plan
By: /s/ Sebastian Coppola
-----------------------------------
Sebastian Coppola
Senior Vice President and Treasurer
MCN Energy Group Inc.
Dated: June 29, 1998
<PAGE> 16
EXHIBIT INDEX
Number
- -------- -----------------------------------------------
23 Independent Auditors' Consent - Deloitte & Touche LLP
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-02105 of MCN Energy Group Inc. on Form S-8 of our report dated June 25,
1998, appearing in this Annual Report on Form 11-K of the MCN Energy Group
Savings and Stock Ownership Plan for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Detroit, Michigan
June 29, 1998
