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Previous: FREMONT MUTUAL FUNDS INC, 485BPOS, 1999-03-01 |
Next: INTRAMERICA VARIABLE ANNUITY ACCOUNT, NSAR-U, 1999-03-01 |
<PAGE> 1
File No: 69-352
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-3A-2
Statement by Holding Company Claiming
Exemption Under Rule U-3A-2 from the Provisions
of the Public Utility Holding Company Act of 1935
For The Year Ended December 31, 1998
MCN ENERGY GROUP INC.
hereby files with the Securities and Exchange Commission (SEC), pursuant to Rule
2, its statement claiming exemption as a holding company from the provisions of
the Public Utility Holding Company Act of 1935 (PUHCA of 1935), and submits the
following information:
I. NATURE OF BUSINESS OF CLAIMANT AND EVERY SUBSIDIARY THEREOF
MCN ENERGY GROUP INC.: MCN Energy Group Inc. (MCN or the Corporation) is a
diversified energy holding company with markets and investments throughout North
America and in Asia. MCN is organized under the laws of the state of Michigan
and has its principal executive offices at 500 Griswold Street, Detroit,
Michigan 48226. Except where otherwise indicated, the Corporation owns directly
all of the outstanding common stock of MichCon Holdings, Inc., Citizens Gas Fuel
Company (Citizens), Southern Missouri Gas Company (SMGC), MCN Investment
Corporation (MCNIC) and various MCN financing companies. MCN's major business
groups are Gas Distribution and Diversified Energy. Except where otherwise
indicated, the companies set forth below are Michigan corporations located at
500 Griswold Street, Detroit, Michigan 48226.
GAS DISTRIBUTION
MCN, through the following subsidiaries, operates the largest natural gas
distribution and intrastate transmission system in Michigan and one of the
largest in the United States.
A. MICHCON HOLDINGS, INC. is the holding company (formed on September 9,
1998) for Michigan Consolidated Gas Company (MichCon) and MichCon Enterprises,
Inc. MichCon is a public utility engaged in the distribution and transmission of
natural gas in the state of Michigan. MichCon was organized in 1898 and, with
its predecessors, has been in business for nearly 150 years. MichCon serves 1.2
million residential, commercial and industrial customers in the Detroit, Grand
Rapids, Ann Arbor, Traverse City and Muskegon metropolitan areas and in various
other communities throughout the state of Michigan. MichCon conducts
substantially all of its business in the state of Michigan and is subject to the
jurisdiction of the Michigan Public Service Commission (MPSC) as to various
phases of its operations, including gas sales rates, service, and accounting.
MichCon Enterprises, Inc., ( A non-regulated affiliate) was formed on September
9, 1998 to engage in non-regulated activites.
Except where otherwise indicated, the companies set forth below are wholly
owned subsidiaries of MichCon.
1. MichCon Power Company, Inc., formerly MichCon Guardian Corporation, was
formed to participate in power generation projects. MichCon Power Company
and DQE Energy Services intend to enter into a partnership to provide
electricity, heating & cooling to the new Midfield terminal at the
Detroit Metropolitan Airport.
2. MichCon Development Corporation, through its various partnership
arrangements, is engaged in the design, construction and management of
Harbortown, a residential and small commercial development constructed
along the Detroit River in Detroit, Michigan.
3. Blue Lake Holdings, Inc. (Blue Lake), holds a 25% interest in Blue Lake
Gas Storage Company, a partnership that has converted a depleted natural
gas field in northern Michigan into a 46 Bcf natural gas storage field
which it now operates.
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4. MichCon Fuels Enterprises Company markets natural gas as a vehicular fuel
and markets natural gas to residential and commercial customers through
transportation pilot programs in Michigan. During the fourth quarter of
1998, Fuels Enterprises was transferred to MichCon Enterprises, Inc.
5. MichCon Pipeline Company, through the subsidiaries below, is engaged in
pipeline and gathering projects in Michigan.
a.MichCon Gathering Company owns and operates the Antrim Expansion
Pipeline.
b.Saginaw Bay Pipeline Company is the 66% general partner in Saginaw Bay
Area Limited Partnership, a partnership that operates a 126-mile
pipeline which transports natural gas and natural gas liquids from
reserves in east-central Michigan to natural gas processing plants in
northern Michigan.
c.Saginaw Bay Lateral Company is the 46% general partner in a partnership
which owns and operates lateral pipelines interconnecting with the
126-mile pipeline previously described.
d.Westside Pipeline Company invests in various pipeline and gathering
assets in Michigan.
e.Thunder Bay Gathering Company acquired a pipeline in December 1997,
consisting of 44 miles of gathering lines situated in Alpena and Alcona
Counties in northeast Michigan.
f.MichCon Lateral Company was formed in 1997 to own, operate and
construct natural gas pipelines and gathering systems in Michigan.
6. Huron Pipeline Company was formed in 1996 to acquire an ownership
interest in the ANR Link Pipeline, which transports natural gas to Canada
through a pipeline owned by Niagara Gas Transmission Limited, a
subsidiary of The Consumers Gas Co. Ltd.
a.Huron Gas Services Company, formed in 1996, markets pipeline
transportation services.
7. Kalkaska Gas Storage Limited Partnership holds a 53.5% general
partnership interest in the Cold Springs Gas Storage Limited Partnership
in Kalkaska County, Michigan.
Except where otherwise indicated, the companies set forth below are wholly
owned subsidiaries of MichCon Enterprises, Inc.:
1. MichCon HVAC 1 Company was formed on September 14, 1998 to participate
in the acquisition of Flame Furnace Company. MichCon HVAC 1 company is
a wholly owned subsidiary of MCN. The direct relationship with MCN was
done in order to qualify for tax advantage treatment under the
Internal Revenue Code. It is management's intent to transfer the
stock of MichCon HVAC 1 Company to MichCon Enterprises, Inc. in 1999.
a.Flame Furnace Company, is engaged in heating, ventilation and air
conditioning activities.
2. MichCon HVAC, L.L.C. was formed on December 14, 1998 and is a single
member L.L.C. and it's purpose is to hold the assets of HVAC 2 Company.
MichCon HVAC 2 Company is a wholly owned subsidiary of MCN. The direct
relationship with MCN was done in order to qualify for tax advantage
treatment under the Internal Revenue Code. It is management's intent to
transfer the stock of MichCon HVAC 2 Company to MichCon Enterprises, Inc.
in 1999.
a.MichCon HVAC 2 Company was formed to participate in the asset
acquisition of Kopke Heating & Cooling, Inc. and is engaged in heating,
ventilation and air conditioning activities.
3. MichCon HVAC 3 Company was formed on September 22, 1998 to participate
in the asset acquisition of Tri-Masters Heating & Cooling, Inc. and is
engaged in heating, ventilation and air conditioning activities.
a.Tri-Masters Heating & Cooling, Inc. is engaged in heating, ventilation
and air conditioning activities.
B. CITIZENS GAS FUEL COMPANY: Citizens is a public utility engaged in the
distribution of natural gas. Citizens' was organized in 1951 and, with its
predecessors, has been in business for more than 140 years. Citizens serves
approximately 15,000 residential, commercial and industrial customers in and
around Adrian, Michigan. Citizens' principal executive offices are located
at 127 N. Main Street, Adrian, Michigan 49221. Citizens' conducts all of its
business in the state of Michigan and its rates are set by the Adrian Gas
Rate Commission. Other various phases of its operations are subject to the
jurisdiction of the MPSC.
C. SOUTHERN MISSOURI GAS COMPANY: MCN owns a 47.5% interest in Southern
Missouri Gas Company, L.P. (SMGC) which is a public utility engaged in the
distribution of natural gas. SMGC was organized in 1996 and with its
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predecessors, has been in business since 1995. SMGC serves approximately
7,000 residential, commercial, and industrial customers in southern
Missouri. The principal executive offices of SMGC are located at 301 East
17th Street, Mountain Grove, Missouri 65711. SMGC conducts all of its
business in the state of Missouri. Its rates and other various phases of its
operations are subject to the jurisdiction of the Missouri Public Service
Commission.
DIVERSIFIED ENERGY
D. MCN INVESTMENT CORPORATION: Organized in 1986, MCNIC is the holding
company for MCN's various diversified energy subsidiaries. MCNIC, through
its subsidiaries and joint ventures, provides gathering, processing and
transmission services, invests in electric generation and distribution
facilities, engages in energy marketing activities, storage services,
engages in gas and oil exploration, development and production, and is
involved in other energy-related businesses. Except where otherwise
indicated, the companies set forth below are wholly owned subsidiaries of
MCNIC.
Pipelines & Processing
MCNIC's Pipelines & Processing businesses are involved in ventures that
gather and transport natural gas from producing fields to processing plants
and/or markets. This business also includes plants which process natural gas
to remove CO2 and other impurities and recover natural gas liquids.
Additionally this segment has an investment in a methanol production
facility and other energy-related businesses.
1. MCNIC Pipeline & Processing Company engages in pipeline and processing
projects through the following subsidiaries and partnerships.
a. MCNIC Offshore Pipeline & Processing Company holds a 33%
interest in the Blue Dolphin System.
b. MCNIC Michigan Holdings, Inc.
i. MCNIC CSG Pipeline Company holds a 50% interest in
Cardinal States Gathering.
ii. Bagley Processing Company (47% general partnership
interest)
iii. Warner Treating Limited Liability Company (95%
interest)
iv. Terra-Westside Processing Company (85% interest) v.
v. ThunderBay Pipeline Company, L.L.C. (90% interest)
holds CO2 Processing Plants.
c. MCNIC East Coast Pipeline Company holds a 20% interest in
the 250 mile Portland Pipeline Project.
d. MCNIC Jonah Pipeline Company holds a 33% partnership
interest in Jonah Gas Gathering Company.
e. MCNIC Gulf Coast Gathering Company holds a 1% general
partnership interest in Copano Field Services, L.P.
f. MCNIC Gulf Coast Limited, Inc. holds a 49% limited
partnership interest in Copano Field Services, L.P., and a
90% limited partnership interest in CFS/Upper Gulf Coast,
Copano Pipelines/Upper Gulf Coast, L.P., and CES/Upper Gulf
Coast, L.P.
g. MCNIC Mobile Bay Pipeline Company holds a 34.6% interest in
Dauphin Island Gathering Partners.
h. MCNIC Mobile Bay Processing Company holds a 42.8% interest
in Mobile Bay Processing Partners.
i. MCNIC South Texas Gathering Company holds a 1% general
partnership interest in each of CFS/Copano Bay, L.P.,
CFS/South Texas, L.P. and CFS/Agua Dulce, L.P.
j. MCNIC Upper Gulf Coast Pipeline & Processing Company holds a
1% interest in Copano Pipeline/ Upper Gulf Coast, L.P.
k. MCNIC General Methanol Company holds a 1% general
partnership interest in Lyondell Methanol Co. L.P.
l. MCNIC Methanol Holdings Company holds a 24% limited
partnership interest in Lyondell Methanol Co. L.P.
m. American Central Western Oklahoma Gas Company (40% interest)
n. Crown Asphalt Ridge, L.L.C. (75% interest)
o. Indiana Gathering, L.L.C. (69.5% interest)
p. MCNIC East Texas Gathering Company holds a 39.9% limited
partnership interest in American Central Eastern Texas Gas
Company, L.P.
q. MCNIC East Texas Pipeline & Processing Company holds a 0.1%
general partnership interest in American Central Eastern
Texas Gas Company, L.P.
r. MCNIC CO2 Investment Company holds a 41.5% limited
partnership interest in PSCO2, L.P., a CO2 pipeline project.
s. MCNIC Permian Basin Company holds a 0.99% general
partnership interest in PSCO2, L.P.
t. MCNIC Rodeo Gathering Inc. holds a 25% interest in Keyes
Helium Company, L.L.C.
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i. Keyes Helium Company, L.L.C. is a joint venture which
processes helium out of natural gas.
u. Crown Asphalt Distribution, L.L.C. was formed to own and
operate Asphalt Distribution & Processing Facilities.
v. Bitter Creek, L.L.C. was formed to own and operate a
gathering line in Campbell County.
w. MCNIC Millennium Company was formed to participate in the
Millenium Pipeline Project.
x. MCNIC Vector Pipeline was formed to hold a limited
partnership interest in Vector Pipeline, L.P., A Delaware
Limited Partnership, which will construct, own and operate
the Vector Pipeline Project.
y. CRC Holdings, L.L.C. was formed as a holding company for the
following companies:
i. CRC No. 1 L.L.C.
ii. CRC No. 2 L.L.C.
iii. CRC No. 3 L.L.C.
iv. CRC No. 4 L.L.C.
v. CRC No. 5 L.L.C.
vi. CRC No. 6 L.L.C.
Electric Power
MCNIC's Electric Power businesses pursue electric generation and
distribution opportunities throughout North America and in Asia.
2. MCNIC Power Company pursues domestic and international power generation
related opportunities.
a. CDC Ada, Inc. is a 49% limited partner in Ada Cogeneration Limited
Partnership, which owns and operates a 30 megawatt (MW) natural
gas-fueled cogeneration facility in western Michigan.
b. MCNIC Ada GP, Inc. was formed in 1996 and holds a 1% general
partnership interest in the Ada Cogeneration Limited Partnership.
c. Ludington Cogeneration Co. is the 1% general partner in Michigan Power
L.P., a joint venture that built and operates a 123 MW natural
gas-fueled cogeneration plant in western Michigan.
d. Ludington Cogeneration Holdings, Ltd. is a 49% limited partner in the
123 MW cogeneration plant mentioned above.
e. Summit Computing, Inc., a Delaware corporation, holds a 99% limited
partnership interest in Source Midland Limited Partnership. Source
Midland Limited Partnership has an 23.1% general partnership interest
in the Midland Cogeneration Venture Limited Partnership.
f. Source Cogeneration Company, a Delaware corporation, holds a 1%
general partnership interest in Source Midland Limited Partnership.
g. Mobile Bay Energy, L.L.C. is constructing a 40 MW cogeneration
facility in Alabama (50% interest).
h. MCNIC Person GP, Inc. was formed to hold a 94% interest in
Cobisa-Person Limited Partnership, a Delaware LP.
i. South Norwalk Power Partners, L.L.C. was formed on March 2, 1998.
The Michigan Limited Liability Company was formed to participate in
power projects.
Energy Marketing
MCNIC's Energy Marketing businesses pursue opportunities throughout the
Midwest, Gulf Coast and Northeast regions of the United States and eastern
Canada.
3. CoEnergy Trading Company is engaged in the purchase and sale of natural
gas to large-volume gas users and gas and electric utilities in Michigan,
the Midwest, the eastern United States and Canada. CoEnergy Trading
Company holds a 50% interest in the following:
a. U.S. CoEnergy Services, a Wisconsin general partnership
b. Torch CoEnergy, L.L.C.
c. DTE-CoEnergy, L.L.C.
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4. CoEnergy Canadian Holdings, Ltd., a New Brunswick corporation, was formed
to market and sell natural gas in Canada and the northeastern United
States.
5. CoEnergy Supply Company engages in the purchase and sale of natural gas,
a portion of which is produced by subsidiaries of MCNIC Oil & Gas
Company.
6. MCNIC Gas Storage Company engages in the storage of natural gas.
a.South Romeo Gas Storage Company, a Michigan partnership in which MCNIC
Gas Storage Company has a 50% interest, owns and operates the
Washington 28 Gas Storage Field, a 10 Bcf storage field in southeastern
Michigan which provides storage services to MCNIC's Energy Marketing
and Electric Power operations. South Romeo Gas Storage Company holds a
33% interest in South Romeo Gas Storage Corporation.
b.W-10 Holdings, Inc., holds a 40% interest in Washington 10 Storage
Partnership, a partnership that is developing and will operate the
Washington 10 Storage Field, a 42 Bcf storage field in southeastern
Michigan. Washington 10 Storage Partnership owns Washington 10 Storage
Corporation.
c.The Orchards Golf Limited Partnership, a Michigan partnership in which
MCNIC Gas Storage Company has a 50% interest, developed, owns and
operates a residential community and golf course on 520 acres of land
above the South Romeo gas storage field in southeastern Michigan.
Exploration & Production
7. MCNIC Oil & Gas Company (MOG) is engaged in natural gas and oil
exploration, development and production in the Midwest/Appalachia,
Midcontinent/Gulf Coast and Western regions of the U.S. MCN is committed
to the sale of its exploration and production properties and expects the
sale to be completed in mid-1999. Accordingly, MOG has been accounted
for as discontinued operations. The following companies are direct
subsidiaries of MOG:
a. Appalachia Acquisition Properties, Inc.
b. Elmira Antrim Company
c. GeoTrend Exploration, Inc.
d. Green Oak Development Company
e. Green River Antrim Company
f. Gulf Coast Acquisition Properties, Inc.
g. Otsego Exploration Company, L.L.C.
h. MCNIC Enhanced Production, Inc. has a 75% interest in Otsego
EOR, L.L.C.
i. MCNIC Oil & Gas Midcontinent, Inc.
j. MCNIC Oil & Gas Canada, Inc. (a New Brunswick corporation)
k. MCNIC Oil & Gas Properties, Inc.
i. SEM, a 50% owned joint venture, was established to buy
and sell E&P Properties.
l. MCNIC Oil & Gas Reid Properties, Inc. (a Delaware
corporation)
i. Appalachian Methane, Inc., a Delaware corporation,
holds a 50% interest Buchanan Production Co., a
Virginia general partnership.
ii. Appalachian Operators, Inc., (a Delaware corporation)
holds a 50% interest in Buchanan Production Co., a
Virginia general partnership.
iii. MCNIC Oakwood Gathering, Inc. (a Delaware corporation)
m. MCNIC West Coast Company
n. Warner Antrim Company
o. MCNIC Oil & Gas CV Company
p. Michigan Acquisition Properties, Inc.
q. Midcontinent Acquisition Properties, Inc.
r. Pageant Corporation
s. Rockies Acquisition Properties, Inc.
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Other
8. MCNIC International Holdings and MCNIC-GP International Holdings, each
of Grand Cayman, Cayman Islands, hold a 99% and 1% interest,
respectively, in IG-ONE LTD of Port-Louis, Mauritius. IG-ONE LTD. has a
40 percent interest in Torrent Power Limited, a joint venture with
Torrent Group of Ahmedabad, India. The joint venture is involved in the
electric generation and distribution business in western India. IG -ONE
LTD. also holds ownership interests in other power generation projects
in India. In February 1998, MCN has agreed to sell its interest in TPL
to Torrent Group of India.
9. MCNIC Nepal Limited holds a 90% ownership interest in a 36 MW
hydroelectric power project in Nepal.
10. Colombia Holdings was formed to be the shareholder of MCNIC Colombia
International, which had been expected to invest in an urea processing
plant in Colombia.
11. Bridgewater Holdings, Inc. holds a limited partnership interest in
Bridgewater Place, a Grand Rapids, Michigan office building.
12. Combustion Concepts, Inc. holds patents for the development of
pressurized combustion technologies which provide increased fuel
efficiency, heat uniformity and compactness of equipment.
Financing Companies
E. MCN MICHIGAN LIMITED PARTNERSHIP (MCN Michigan): MCN is the 1% general
partner in MCN Michigan, a Michigan limited partnership. MCN Michigan exists
for the sole purpose of issuing its limited partnership interests in the
form of preferred securities and investing the gross proceeds thereof in
MCN debt securities.
F. MCN FINANCING I: MCN is the sole owner of MCN Financing I, a Delaware
Business Trust. MCN Financing I exists for the sole purpose of issuing
preferred securities and investing the gross proceeds thereof in MCN debt
securities.
G. MCN FINANCING II: MCN is the sole owner of MCN Financing II, a Delaware
Business Trust. MCN Financing II exists for the sole purpose of issuing
preferred securities and investing the gross proceeds thereof in MCN debt
securities.
H. MCN FINANCING III: MCN is the sole owner of MCN Financing III, a Delaware
Business Trust. MCN Financing III exists for the sole purpose of issuing
preferred securities and investing the gross proceeds thereof in MCN debt
securities.
I. MCN FINANCING IV: MCN is the sole owner of MCN Financing IV, a Delaware
Business Trust. MCN Financing IV exists for the sole purpose of issuing
preferred securities and investing the gross proceeds thereof in MCN debt
securities.
J. MCN FINANCING V: MCN is the sole owner of MCN Financing V, a Delaware
Business Trust. MCN Financing V exists for the sole purpose of issuing
preferred securities and investing the gross proceeds thereof in MCN debt
securities. During 1998, MCN Financing V redeemed all outstanding shares of
the preferred securities.
K. MCN FINANCING VI: MCN is the sole owner of MCN Financing VI, a Delaware
Business Trust. MCN Financing VI exists for the sole purpose of issuing
preferred securities and investing the gross proceeds thereof in MCN debt
securities.
II. PUBLIC UTILITY PROPERTIES
A. MichCon owns the following integrated distribution, transmission, production
and storage properties and facilities, all of which properties are located
in the state of Michigan.
At December 31, 1998, MichCon's distribution system included 16,722
miles of distribution mains, 1,083,607 service lines and 1,202,722 active
meters. MichCon owns 2,604 miles of transmission and production lines that
deliver natural gas to the distribution districts and interconnect its
storage fields with the sources of supply and the market areas. MichCon's
compressor facilities related to transmission and production, have a total
rated capacity of 28,500 horsepower and 2,285 horsepower, respectively.
Properties relating to five underground natural gas storage fields with an
aggregate working gas storage capacity of approximately 124 Bcf consist,
principally of 374 gas storage wells (66 of which are observation wells),
113 miles of field lines, dehydration plants and compressor facilities with
a total rated capacity of 71,200 horsepower. MichCon also owns district
office
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buildings, service buildings and gas receiving and metering stations. In
January 1998, MichCon purchased its principal office building in Detroit,
the Guardian Building, ending its long-term capital lease obligation.
MichCon occupies its principal office building in Grand Rapids under a
long-term lease. Portions of these buildings are subleased to affiliates and
others.
B. Citizens owns the following properties, all of which are located in Michigan.
At December 31, 1998, Citizens' distribution system included 424 miles
of distribution mains, 16 miles of transmission lines, 13,917 service lines,
and 15,259 active meters. Citizens owns all of its properties used in the
conduct of the utility business including a two-story office building
and a one-story service center.
C. SMGC owns the following properties, all of which are located in Missouri.
At December 31, 1998, SMGC's distribution system included 317 miles of
distribution mains, 8,492 service lines, and 6,720 active meters. SMGC owns
124 miles of transmission lines and metering stations which deliver natural
gas to the various cities it serves. SMGC leases its office/service center.
III. PUBLIC UTILITY DISTRIBUTION AND PURCHASE OF NATURAL GAS
A. During the year ended December 31, 1998, MichCon distributed and purchased
the following volumes of natural gas:
1. 168,906,000 thousand cubic feet (Mcf) of natural gas was distributed at
retail within the state of Michigan. Also, 140,050,533 Mcf of natural gas
was distributed at retail under transportation contracts within the state
of Michigan.
2. No volumes of natural gas were distributed at retail outside the state of
Michigan.
3. No volumes of natural gas were distributed at wholesale outside the state
of Michigan.
4. 133,835,730 Mcf of natural gas was purchased from various suppliers
outside of the state of Michigan. These volumes were transported by
interstate pipeline suppliers to points of delivery within the state of
Michigan.
B. During the year ended December 31, 1998, Citizens distributed and purchased
the following volumes of natural gas:
1. 2,886,000 Mcf of natural gas was distributed at retail within the state
of Michigan and 159,000 Mcf of natural gas was distributed at retail
under transportation contracts within the state of Michigan.
2. No volumes of natural gas were distributed at retail outside the state of
Michigan.
3. No volumes of natural gas were distributed at wholesale outside the state
of Michigan.
4. No volumes of natural gas were purchased outside the state of Michigan.
C. During the year ended December 31, 1998, SMGC distributed and purchased the
following volumes of natural gas:
1. 814,000 Mcf of natural gas was distributed at retail within the state of
Missouri and 219,000 Mcf of natural gas was distributed at retail under
transportation contracts within the state of Missouri.
2. No volumes of natural gas were distributed at retail outside the state of
Missouri.
3. No volumes of natural gas were distributed at wholesale outside the state
of Missouri.
4. 836,000 Mcf of natural gas was purchased from suppliers outside the state
of Missouri. These volumes were transported by Williams Natural Gas
Company to a point of delivery within the state of Missouri.
IV. INTEREST IN EXEMPT WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
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EXEMPT WHOLESALE GENERATORS
A. COBISA-PERSON LIMITED PARTNERSHIP (CPPL)
1. CPPL is a 140 MW gas-fired combustion power plant currently being
developed and constructed in Bernalillo County, New Mexico.
2. MCNIC Person GP, Inc. has a 94% pre-conversion sharing ratio and a 49%
post-conversion sharing ratio of CPPL. MCNIC Power Company also has a
1% pre & post-conversion sharing ratio of CPPL. Conversion date is a
function of adjusted after-tax cash flows of CPPL.
3. As of December 31, 1998, MCN does not have an equity investment in CPPL.
4. CPPL is currently financed with 100% project debt and had a loss of
$9,144 for the year ending December 31, 1998.
5. There are no service, sales or construction contracts between CPPL and
MCN or an affiliate of MCN.
FOREIGN UTILITY COMPANIES
B. BHOTE KOSHI POWER COMPANY PRIVATE LIMITED (BKPC)
1. BKPC is a 36 MW hydroelectric power project currently being developed and
constructed in the Sindhupalchok District of Nepal, at KHA 1-960
Kalimati, Tahachal Kathmandu, Nepal.
2. Panda of Nepal owns 75% of the issued shares of Bhote Koshi Power Company
Private Limited. Panda Bhote Koshi, a Cayman Islands exempted company,
wholly-owns Panda of Nepal. MCNIC Nepal Limited owns 100% of the Class B
Capital Stock of Panda Bhote Koshi (giving MCNIC Nepal a 90% ownership
interest in Panda Bhote Koshi).
3. As of December 31, 1998, MCN has a $7.2 million equity investment in
BKPC.
4. Capitalization and earnings information unavailable.
5. There are no service, sales or construction contracts between BKPC and
MCN or an affiliate of MCN.
C. TORRENT POWER LIMITED (TPL). In 1997, MCN, through a 100% owned subsidiary,
IG-ONE Ltd. of Port Louis, Mauritius, acquired a 40% interest in TPL and as
of December 31, 1998, MCN has a $121,200,000 equity investment in TPL. TPL,
is a public company incorporated with liability under The Companies Act,
India. TPL holds a minority interest in the following distribution and power
generation facilities:
1. The Surat Electricity Company
a. Surat Electricity Company Limited (SECL) is an electricity distributing
company that purchases power from the State of Gujarat Electricity Board
and distributes it to the City of Surat, India. Power is received at
eight receiving stations, with a transmission system consisting of
approximately 512 kilometers of high tension mains and approximately
1,593 kilometers of low tension mains. SECL's principal business address
is at Station Road Surat-395 003, India.
b. TPL has a 43% interest in The Surat Electricity Company Limited.
c. Capitalization and earnings information unavailable.
d. There are no service, sales or construction contracts between SECL and
MCN or an affiliate of MCN.
2. Gujarat Torrent Energy Corporation Limited (GTEC)
a. GTEC is a 655 MW gas/naptha power in Bharuch, India, which became fully
operational in late 1998. GTEC's principal business address is at Ashram
Road Ahmedabad-380 009, India.
b. TPL owns approximately 42% of GTEC.
c. Capitalization and earnings information unavailable.
d. There are no service, sales or construction contracts between GTEC and
MCN or an affiliate of MCN.
3. The Ahmedabad Electricity Company Limited (AEC)
a. AEC currently owns five generating plants in the State of Gujarat in
India with a combined installed capacity of 550 megawatts. Of these
plants, four are located at Sabarmati in Ahmedabad, Gujarat and consist
of one 120 MW unit and three 110 MW coal-fired units. In addition, AEC
owns a 100 MW combined cycle, gas/naptha fired plant at Vatwa, near
Ahmedabad. AEC's transmission system consists of approximately 2,329
kilometers of high tension mains and approximately 7,585 kilometers of
low tension mains. AEC's principal business address is at Bhadra Lal
Darwaja Ahmedabad-380 001, India.
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b. TPL owns approximately 37% of AEC.
c. Capitalization and earnings information unavailable.
d. There are no service, sales or construction contracts between AEC and MCN
or an affiliate of MCN.
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EXHIBITS
Exhibit A - Attached hereto as Exhibit A are the unaudited Consolidating
Statements of Operations for the year ended December 31, 1998 and
Consolidating Statements of Financial Position as of December 31,
1998, for MCN Energy Group Inc., MichCon Holdings, MichCon, MCNIC,
Gas Services Level, MCNIC Pipeline & Processing Company, CoEnery
Trading, MCNIC Oil & Gas and MCN Financing Companies.
Exhibit B - Attached hereto as Exhibit B is the unaudited Financial Data
Schedule summarizing certain financial information for MCN Energy
Group Inc.
Exhibit C - Corporate Structure, Exempt Wholesale Generators and Foreign
Utility Companies
See Items IV.A.2., IV.B.2. and IV.C.
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SIGNATURES
The above-named claimant has caused this statement to be duly executed on
its behalf by its authorized officer on this 1st day of March, 1999.
MCN ENERGY GROUP INC.
By: /s/ Gerard Kabzinski
-------------------------
Gerard Kabzinski
Vice President and Controller
CORPORATE SEAL:
Attest:
/s/ Daniel L. Schiffer
Daniel L. Schiffer
Senior Vice President,
General Counsel and Secretary
Name, title, and address of officer to whom notices and correspondence
concerning this statement should be addressed:
Daniel L. Schiffer
Senior Vice President,
General Counsel and Secretary
MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
11
<PAGE> 12
EXHIBIT B
MCN Energy Group Inc.
Financial Data Schedule
This schedule contains MCN Energy Group Inc.'s summary financial information
extracted from the consolidated balance sheet as of December 31, 1998, and the
related statement of consolidated income for the year ended December 31, 1998,
and is qualified in its entirety by reference to such financial statements.
<TABLE>
<CAPTION>
1998
MCN Energy Group Inc.
Item No. Caption Heading Consolidated (000s)
<S> <C> <C>
1 Total Assets $4,392,486
2 Total Operating Revenue 1,880,194
3 Net Income (Loss) (278,955)
</TABLE>
<PAGE> 13
MCN ENERGY GROUP INC.
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON FINANCING
MCN HOLDINGS CITIZENS COMPANIES
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Gas sales $ - $ 824,111 $14,765 $ -
Transportation - 145,234 259 -
Other - 67,355 50 -
------------------------------------------------------------------------
- 1,036,700 15,074 -
------------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas - 454,236 7,854 -
Operation and maintenance (14,434) 253,298 3,324 1
Depreciation, depletion and amortization 2,314 92,942 832 -
Property and other taxes 1,205 55,448 499 -
Property write-downs and restructuring charges 8,669 24,800 - -
------------------------------------------------------------------------
(2,246) 880,724 12,509 1
------------------------------------------------------------------------
OPERATING INCOME (LOSS) 2,246 155,976 2,565 (1)
------------------------------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES (273,143) 1,946 - -
------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 517 5,649 66 37,307
Interest on long-term debt (628) (44,884) (12) -
Other interest expense (39,046) (12,130) (451) -
Dividends on preferred securities of subsidiaries 36,595 - - -
Investment losses (8,500) - - -
Minority interest - 5,727 - -
Other (319) (232) 3 -
------------------------------------------------------------------------
(11,381) (45,870) (394) 37,307
------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (282,278) 112,052 2,171 37,307
INCOME TAX PROVISION (BENEFIT) (3,323) 35,579 759 -
------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (278,955) 76,473 1,412 37,307
DISCONTINUED OPERATIONS, NET OF TAXES - - - -
------------------------------------------------------------------------
NET INCOME (LOSS) $ (278,955) $ 76,473 $ 1,412 $ 37,307
========================================================================
<CAPTION>
MCNIC ELIMINATIONS MCN
CONSOL. AND RECLASSES CONSOL.
----------------------------------------------------------
OPERATING REVENUES
Gas Sales $ 815,433 $ (3,957) $ 1,650,352
Transportation 12,728 (6,531) 151,690
Other 14,163 (3,416) 78,152
----------------------------------------------------------
842,324 (13,904) 1,880,194
----------------------------------------------------------
OPERATING EXPENSES
Cost of gas 797,248 (8,523) 1,250,815
Operation and maintenance 65,153 (5,381) 301,961
Depreciation, depletion and amortization 2,825 1 98,914
Property and other taxes 2,346 5 59,503
Property write-downs and restructuring charges 141,872 - 175,341
----------------------------------------------------------
1,009,444 (13,898) 1,886,534
----------------------------------------------------------
OPERATING INCOME (LOSS) (167,120) (6) (6,340)
----------------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES 61,242 272,180 62,225
----------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 6,183 (39,256) 10,467
Interest on long-term debt (15,118) (1) (60,643)
Other interest expense (24,275) 57,096 (18,806)
Dividends on preferred securities of subsidiaries - (54,208) (17,613)
Investment losses - - (8,500)
Minority interest 265 - 5,992
Other 12,385 (239) 11,598
----------------------------------------------------------
(20,560) (36,608) (77,505)
----------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (126,438) 235,566 (21,620)
INCOME TAX PROVISION (BENEFIT) (48,444) (27) (15,456)
----------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (77,994) 235,593 (6,164)
DISCONTINUED OPERATIONS, NET OF TAXES (272,791) - (272,791)
----------------------------------------------------------
NET INCOME (LOSS) $ (350,785) $ 235,593 $ (278,955)
==========================================================
</TABLE>
1
<PAGE> 14
MCN ENERGY GROUP INC.
CONSOLIDATING STATEMENT OF FINANCIAL POSITON
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON FINANCING MCNIC ELIMINATIONS MCN
MCN HOLDINGS CITIZENS COMPANIES CONSOL. AND RECLASSES CONSOL.
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents
at cost (which approximates market value) $ 6,863 $ 7,145 $ 59 $ - $ 9,036 $ (6,064) $ 17,039
Accounts receivable 7,713 150,218 1,042 - 262,490 (14,500) 406,963
Less: Allowance for doubtful accounts - 8,937 75 - 653 - 9,665
Accrued unbilled revenues - 86,767 1,121 - - - 87,888
Gas in inventory - 56,969 - - 92,828 - 149,797
Property taxes assessed applicable to
future periods 180 71,165 34 - 1,172 - 72,551
Other 3,838 42,065 489 1,651 11,872 (17,443) 42,472
-----------------------------------------------------------------------------------
18,594 405,392 2,670 1,651 376,745 (38,007) 767,045
-----------------------------------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred income taxes 3,305 - - - 128,807 (81,565) 50,547
Investments in debt and equity securities - 65,556 - - 3,548 601 69,705
Deferred swap losses and receivables - - - - 63,147 - 63,147
Deferred environmental costs - 28,169 2,604 - - - 30,773
Prepaid benefit costs - 113,879 - - - (2,104) 111,775
Other 5,876 58,491 3,044 526,100 26,870 (521,441) 98,940
-----------------------------------------------------------------------------------
9,181 266,095 5,648 526,100 222,372 (604,509) 424,887
-----------------------------------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 1,589,114 19,282 - - 782,471 (1,587,636) 803,231
-----------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 21,161 2,892,227 24,313 - 1,103,716 - 4,041,417
Less: Accumulated depreciation and depletion 6,825 1,398,142 9,184 - 229,944 (1) 1,644,094
-----------------------------------------------------------------------------------
14,336 1,494,085 15,129 - 873,772 1 2,397,323
-----------------------------------------------------------------------------------
$1,631,225 $2,184,854 $ 23,447 $ 527,751 $2,255,360 $ (2,230,151) $4,392,486
===================================================================================
</TABLE>
2
<PAGE> 15
MCN ENERGY GROUP INC.
CONSOLIDATING STATEMENT OF FINANCIAL POSITON
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON FINANCING MCNIC ELIMINATIONS MCN
MCN HOLDINGS CITIZENS COMPANIES CONSOL. AND RECLASSES CONSOL.
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 1,812 $ 100,001 $ 1,287 $ - $ 192,919 $ (17,602) $ 278,417
Notes payable 260,000 221,885 5,970 - 137,762 (6,766) 618,851
Current portion of long-term debt and capital
lease obligations - 58,288 - - 211,433 - 269,721
Federal income, property and other taxes payable 1,311 60,791 397 - 15,895 1 78,395
Deferred gas cost recovery revenues - 14,980 - - - - 14,980
Gas Payable - 25,337 - - 17,332 - 42,669
Customer deposits - 18,769 23 - - (1) 18,791
Other 17,693 66,931 925 1,651 25,276 (4,166) 108,310
-------------------------------------------------------------------------------
280,816 566,982 8,602 1,651 600,617 (28,534) 1,430,134
-------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes (10,308) 88,622 1,756 - - (80,070) -
Unamortized investment tax credit - 29,784 272 - - - 30,056
Tax benefits amortizable to customers - 130,120 - - - - 130,120
Deferred swap gains and payables - - - - 62,956 - 62,956
Accrued environmental costs - 32,000 3,000 - - - 35,000
Minority interest - 8,201 - - 2,697 - 10,898
Other 545,351 51,461 1,322 - 15,741 (538,436) 75,439
-------------------------------------------------------------------------------
535,043 340,188 6,350 - 81,394 (618,506) 344,469
-------------------------------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations - 619,835 - - 687,333 - 1,307,168
Redeemable preferred securities of subsidiaries - - - 502,203 - - 502,203
Common shareholders' equity 815,366 657,849 8,495 23,897 886,016 (1,583,111) 808,512
-------------------------------------------------------------------------------
815,366 1,277,684 8,495 526,100 1,573,349 (1,583,111) 2,617,883
-------------------------------------------------------------------------------
$1,631,225 $2,184,854 $23,447 $527,751 $2,255,360 $(2,230,151) $4,392,486
===============================================================================
</TABLE>
3
<PAGE> 16
MICHCON HOLDINGS, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON MICHIGAN MICHCON
HOLDINGS CONSOLIDATED ENTERPRISES
-------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES
Gas sales $ - $ 823,746 $ 365
Transportation - 145,234 -
Other - 64,678 2,822
-------------------------------------------------------------
- 1,033,658 3,187
-------------------------------------------------------------
OPERATING EXPENSES
Cost of gas - 451,529 2,852
Operation and maintenance - 252,397 901
Depreciation, depletion and amortization - 92,883 59
Property and other taxes - 55,438 (18)
Property write-downs and restructuring charges - 24,800 -
-------------------------------------------------------------
- 877,047 3,794
-------------------------------------------------------------
OPERATING INCOME (LOSS) - 156,611 (607)
-------------------------------------------------------------
EQUITY IN EARNINGS (LOSSES) OF JOINT VENTURES AND SUBSIDIARIES 76,473 1,946 -
-------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income - 5,688 -
Interest on long-term debt - (44,884) -
Other interest expense - (12,113) (56)
Minority interest - 5,727 -
Other - (182) (77)
-------------------------------------------------------------
- (45,764) (103)
-------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 76,473 112,793 (740)
INCOME TAX PROVISION (BENEFIT) - 35,817 (238)
-------------------------------------------------------------
NET INCOME (LOSS) $ 76,473 $ 76,976 $ (502)
=============================================================
<CAPTION>
ELIM. & MICHCON HOLDINGS
RECLASSES CONSOLIDATED
---------------------------------------
OPERATING REVENUES
Gas sales $ - $ 824,111
Transportation - 145,234
Other (145) 67,355
---------------------------------------
(145) 1,036,700
---------------------------------------
OPERATING EXPENSES
Cost of gas (145) 454,236
Operation and maintenance - 253,298
Depreciation, depletion and amortization - 92,942
Property and other taxes 28 55,448
Property write-downs and restructuring charges - 24,800
---------------------------------------
(117) 880,724
---------------------------------------
OPERATING INCOME (LOSS) (28) 155,976
---------------------------------------
EQUITY IN EARNINGS (LOSSES) OF JOINT VENTURES AND SUBSIDIARIES (76,473) 1,946
---------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income (39) 5,649
Interest on long-term debt - (44,884)
Other interest expense 39 (12,130)
Minority interest - 5,727
Other 27 (232)
---------------------------------------
27 (45,870)
---------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (76,474) 112,052
INCOME TAX PROVISION (BENEFIT) - 35,579
---------------------------------------
NET INCOME (LOSS) $ (76,474) $ 76,473
=======================================
</TABLE>
4
<PAGE> 17
MICHCON HOLDINGS, INC.
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON MICHIGAN MICHCON
HOLDINGS CONSOLIDATED ENTERPRISES
---------------------------------------------------------
ASSETS
CURRENT ASSETS
<S> <C> <C> <C>
Cash and cash equivalents
at cost (which approximates market value $ - $ 6,603 $ 542
Accounts receivable - 151,746 2,436
Less: Allowance for doubtful accounts - 8,928 9
Unbilled revenue - 86,767 -
Gas in inventory - 56,969 -
Property taxes assessed applicable to
future periods - 71,165
Other - 30,169 11,896
---------------------------------------------------------
- 394,491 14,865
---------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Investment in debt and equity securities - 65,556 -
Deferred environmental costs - 28,169 -
Prepaid benefit costs - 113,879 -
Other - 59,007 1
---------------------------------------------------------
- 266,611 1
---------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 652,497 19,343 (61)
---------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST - 2,889,020 3,207
Less: Accumulated depreciation and depletion - 1,396,940 1,202
---------------------------------------------------------
- 1,492,080 2,005
---------------------------------------------------------
$ 652,497 $ 2,172,525 $ 16,810
==========================================================
</TABLE>
<TABLE>
<CAPTION>
ELIMINATIONS MICHCON HOLDINGS
AND RECLASSES CONSOL.
----------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents
at cost (which approximates market value $ - $ 7,145
Accounts receivable (3,964) 150,218
Less: Allowance for doubtful accounts - 8,937
Unbilled revenue - 86,767
Gas in inventory - 56,969
Property taxes assessed applicable to
future periods - 71,165
Other - 42,065
----------------------------------------
(3,964) 405,392
----------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Investment in debt and equity securities - 65,556
Deferred environmental costs - 28,169
Prepaid benefit costs - 113,879
Other (517) 58,491
----------------------------------------
(517) 266,095
----------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES (652,497) 19,282
----------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST - 2,892,227
Less: Accumulated depreciation and depletion - 1,398,142
----------------------------------------
- 1,494,085
----------------------------------------
$ (656,978) $ 2,184,854
========================================
</TABLE>
5
<PAGE> 18
MICHCON HOLDINGS, INC.
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON MICHIGAN MICHCON
HOLDINGS CONSOLIDATED ENTERPRISES
--------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ - $ 98,891 $ 1,842
Notes payable - 221,169 4,019
Current portion of long-term debt and capital lease
obligations - 58,288 -
Federal income, property and other taxes payable - 61,059 (267)
Deferred gas cost recovery revenues 14,980
Gas payable 25,337
Customer deposits 18,769
Other - 67,222 (21)
--------------------------------------------------------
- 565,715 5,573
--------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes - 88,567 55
Unamortized investment tax credit 29,784
Deferred swap gains and payables - 130,120 -
Accrued environmental costs 32,000
Minority interest - 8,201 -
Other - 51,460 -
--------------------------------------------------------
- 340,132 55
--------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations - 619,835 -
Common shareholders' equity 652,497 646,843 11,182
--------------------------------------------------------
652,497 1,266,678 11,182
--------------------------------------------------------
$ 652,497 $ 2,172,525 $ 16,810
========================================================
<CAPTION>
ELIMINATIONS MICHCON HOLDINGS
AND RECLASSES CONSOLIDATED
-------------------------------------------
<S> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ (732) $ 100,001
Notes payable (3,303) 221,885
Current portion of long-term debt and capital lease
obligations - 58,288
Federal income, property and other taxes payable (1) 60,791
Deferred gas cost recovery revenues - 14,980
Gas payable - 25,337
Customer deposits - 18,769
Other (270) 66,931
--------------------------------------
(4,306) 566,982
--------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes - 88,622
Unamortized investment tax credit - 29,784
Deferred swap gains and payables - 130,120
Accrued environmental costs - 32,000
Minority interest - 8,201
Other 1 51,461
--------------------------------------
1 340,188
--------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations - 619,835
Common shareholders' equity (652,673) 657,849
--------------------------------------
(652,673) 1,277,684
--------------------------------------
$ (656,978) $ 2,184,854
======================================
</TABLE>
6
<PAGE> 19
MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON FUELS
MICHCON DEVELOPMENT ENTERPRISES
--------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES
Gas sales $ 824,566 $ - $ -
Transportation 117,726 - -
Other 50,001 - -
-----------------------------------------------------
992,293 - -
-----------------------------------------------------
OPERATING EXPENSES
Cost of gas 453,255 - -
Operation and maintenance 233,623 - -
Depreciation, depletion and amortization 86,928 - -
Property and other taxes 51,288 (7) 6
Property write-downs and restructuring charges - - -
-----------------------------------------------------
825,094 (7) 6
-----------------------------------------------------
OPERATING INCOME (LOSS) 167,199 7 (6)
-----------------------------------------------------
EQUITY IN EARNINGS (LOSSES) OF JOINT
VENTURES AND SUBSIDIARIES (1,701) (336) -
-----------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 5,692 378 4
Interest on long-term debt (43,954) - -
Other interest expense (12,641) - (47)
Minority interest - - -
Other (566) (87) (496)
-----------------------------------------------------
(51,459) 291 (539)
-----------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 114,039 (38) (545)
INCOME TAX PROVISION (BENEFIT) 37,063 (13) (191)
-----------------------------------------------------
NET INCOME (LOSS) $ 76,976 $ (25) $ (354)
=====================================================
<CAPTION>
MICHCON BLUE LAKE ELIM. & MICHCON
PIPELINE HOLDING CO. RECLASSES CONSOLIDATED
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Gas sales $ 162 $ - $ (982) $ 823,746
Transportation 28,571 - (1,063) 145,234
Other 14,677 - - 64,678
----------------------------------------------------------------------
43,410 - (2,045) 1,033,658
----------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas - - (1,726) 451,529
Operation and maintenance 18,503 - 271 252,397
Depreciation, depletion and amortization 5,955 - - 92,883
Property and other taxes 1,219 - 2,932 55,438
Property write-downs and restructuring charges 24,800 - - 24,800
----------------------------------------------------------------------
50,477 - 1,477 877,047
----------------------------------------------------------------------
OPERATING INCOME (LOSS) (7,067) - (3,522) 156,611
----------------------------------------------------------------------
EQUITY IN EARNINGS (LOSSES) OF JOINT
VENTURES AND SUBSIDIARIES - 2,281 1,702 1,946
----------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 757 - (1,143) 5,688
Interest on long-term debt (3,137) - 2,207 (44,884)
Other interest expense (564) - 1,139 (12,113)
Minority interest 5,726 - 1 5,727
Other (37) - 994 (182)
----------------------------------------------------------------------
2,745 - 3,198 (45,764)
----------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (4,322) 2,281 1,378 112,793
INCOME TAX PROVISION (BENEFIT) (1,556) 798 (284) 35,817
----------------------------------------------------------------------
NET INCOME (LOSS) $ (2,766) $ 1,483 $ $1,662 $ 76,976
======================================================================
</TABLE>
7
<PAGE> 20
MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON MICHCON
MICHCON DEVELOPMENT PIPELINE
--------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents
at cost (which approximates market value) $ 2,299 $ 36 $ 4,263
Accounts receivable 150,440 866 17,173
Less: Allowance for doubtful accounts 8,928 - -
Unbilled revenue 86,767 - -
Gas in inventory 56,969 - -
Property taxes assessed applicable to
future periods 71,165 - -
Other 26,537 3 473
--------------------------------------------------------
385,249 905 21,909
--------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Investment in debt and equity securities - - -
Deferred environmental costs - - -
Prepaid benefit costs - - -
Other 375,228 270 654
--------------------------------------------------------
375,228 270 654
--------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 48,407 10,522 -
--------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 2,787,305 1,933 124,582
Less: Accumulated depreciation and depletion 1,373,543 116 48,081
--------------------------------------------------------
1,413,762 1,817 76,501
--------------------------------------------------------
$ 2,222,646 $ 13,514 $ 99,064
========================================================
</TABLE>
<TABLE>
<CAPTION>
BLUE LAKE ELIMINATIONS MICHCON
HOLDING CO. AND RECLASSES CONSOLIDATED
---------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents
at cost (which approximates market value) $ 5 $ - $ 6,603
Accounts receivable - (16,733) 151,746
Less: Allowance for doubtful accounts - - 8,928
Unbilled revenue - - 86,767
Gas in inventory - - 56,969
Property taxes assessed applicable to
future periods - - 71,165
Other - 3,156 30,169
-------------------------------------------------
5 (13,577) 394,491
-------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Investment in debt and equity securities - 65,556 65,556
Deferred environmental costs - 28,169 28,169
Prepaid benefit costs - 113,879 113,879
Other 117 (317,262) 59,007
-------------------------------------------------
117 (109,658) 266,611
-------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 8,821 (48,407) 19,343
-------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST - (24,800) 2,889,020
Less: Accumulated depreciation and depletion - (24,800) 1,396,940
-------------------------------------------------
- - 1,492,080
-------------------------------------------------
$ 8,943 $ (171,642) $ 2,172,525
=================================================
</TABLE>
8
<PAGE> 21
MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MICHCON MICHCON
MICHCON DEVELOPMENT PIPELINE
---------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 102,683 $ 5 $ 9,770
Notes payable 228,506 - 2,673
Current portion of long-term debt and capital lease
obligations 50,928 - 7,360
Federal income, property and other taxes payable 59,525 409 890
Other 109,175 - (3,083)
---------------------------------------------------------
550,817 414 17,610
---------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 332,664 2,222 6,041
Unamortized investment tax credit 29,784 - -
Tax benefits amortizable to customers - - -
Deferred swap gains and payables - - -
Accrued environmental costs - - -
Minority interest - - 8,201
Other 78,623 670 -
---------------------------------------------------------
441,071 2,892 14,242
---------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations 583,915 - 35,920
Common shareholders' equity 646,843 10,208 31,292
---------------------------------------------------------
1,230,757 10,208 67,212
---------------------------------------------------------
$ 2,222,646 $ 13,514 $ 99,064
=========================================================
</TABLE>
<TABLE>
<CAPTION>
BLUE LAKE ELIMINATIONS MICHCON
HOLDING CO. AND RECLASSES CONSOLIDATED
----------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 318 $ (13,885) $ 98,891
Notes payable - (10,010) 221,169
Current portion of long-term debt and capital lease
obligations - - 58,288
Federal income, property and other taxes payable 235 - 61,059
Other - 20,216 126,308
----------------------------------------------------------
553 (3,679) 565,715
----------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 1,483 (253,843) 88,567
Unamortized investment tax credit - - 29,784
Tax benefits amortizable to customers - 130,120 130,120
Deferred swap gains and payables - - -
Accrued environmental costs - 32,000 32,000
Minority interest - - 8,201
Other - <27,833> 51,460
----------------------------------------------------------
1,483 (119,556) 340,132
----------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations - - 619,835
Common shareholders' equity 6,907 (48,407) 646,843
----------------------------------------------------------
6,907 (48,407) 1,266,678
----------------------------------------------------------
$ 8,943 $ (171,642) $ 2,172,525
==========================================================
</TABLE>
9
<PAGE> 22
MCN ENERGY GROUP INC.
MCN INVESTMENT CORPORATION
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMBUSTION
MCNIC BRIDGEWATER CONCEPTS
-------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES
Gas and oil sales $ - $ - $ -
Transportation - - -
Other - - -
-------------------------------------------------
- - -
-------------------------------------------------
OPERATING EXPENSES
Cost of gas - - -
Operation and maintenance 19,111 1 1
Depreciation, depletion and amortization (317) - -
Property and other taxes 889 - -
Property write-downs and restructuring charges 1,721 - -
-------------------------------------------------
21,404 1 1
-------------------------------------------------
OPERATING INCOME (LOSS) (21,404) (1) (1)
-------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES (309,849) - -
-------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 52,584 - -
Interest on long-term debt (49,452) - -
Other interest expense (47,738) - -
Minority interest - - -
Other 1,318 - (8)
-------------------------------------------------
(43,288) - (8)
-------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (374,541) (1) (9)
INCOME TAX PROVISION (BENEFIT) (23,756) 4 (12)
-------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (350,785) (5) 3
DISCONTINUED OPERATIONS, NET OF TAXES - - -
-------------------------------------------------
NET INCOME (LOSS) $ (350,785) $ (5) $ 3
=================================================
<CAPTION>
TOTAL
GAS ELIMINATIONS MCNIC
SERVICES AND RECLASSES CONSOL.
-------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES
Gas and oil sales $ 914,050 $ (98,617) $ 815,433
Transportation 12,728 - 12,728
Other 14,163 - 14,163
-------------------------------------------------
940,941 (98,617) 842,324
-------------------------------------------------
OPERATING EXPENSES
Cost of gas 797,248 - 797,248
Operation and maintenance 84,266 (38,226) 65,153
Depreciation, depletion and amortization 3,142 - 2,825
Property and other taxes 1,458 (1) 2,346
UNUSUAL CHARGES 140,151 - 141,872
-------------------------------------------------
1,026,265 (38,227) 1,009,444
-------------------------------------------------
OPERATING INCOME (LOSS) (85,324) (60,390) (167,120)
-------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES 61,242 309,849 61,242
-------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 3,620 (50,021) 6,183
Interest on long-term debt 4,860 29,474 (15,118)
Other interest expense (26,988) 50,451 (24,275)
Minority interest 265 - 265
Other 11,343 (268) 12,385
-------------------------------------------------
(6,900) 29,636 (20,560)
-------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (30,982) 279,095 (126,438)
INCOME TAX PROVISION (BENEFIT) (24,678) (2) (48,444)
-------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (6,304) 279,097 (77,994)
DISCONTINUED OPERATIONS, NET OF TAXES (272,791) - (272,791)
-------------------------------------------------
NET INCOME (LOSS) $ (279,095) $ 279,097 $ (350,785)
=================================================
</TABLE>
10
<PAGE> 23
MCN ENERGY GROUP INC.
MCN INVESTMENT CORPORATION
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMBUSTION
MCNIC BRIDGEWATER CONCEPTS
-------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents
at cost (which approximates market value) $ 797,250 $ 9 $ 22
Accounts receivable 16,561 - -
Less: Allowance for doubtful accounts - - -
Gas in inventory - - -
Property taxes assessed applicable to
future periods - 5 -
Other 4,758 - -
-------------------------------------------------
818,569 14 22
-------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred income taxes - - -
Investment in debt and equity securities - - -
Deferred swap losses and receivables - - -
Other 26,763 79 67
-------------------------------------------------
26,763 79 67
-------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 1,111,735 - -
-------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 1,533 984 -
Less: Accumulated depreciation and depletion 79 - -
-------------------------------------------------
1,454 984 -
-------------------------------------------------
$ 1,958,521 $ 1,077 $ 89
=================================================
<CAPTION>
TOTAL
GAS ELIMINATIONS MCNIC
SERVICES AND RECLASSES CONSOL.
-------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents
at cost (which approximates market value) $ 33,936 $ (822,181) $ 9,036
Accounts receivable 273,831 (27,902) 262,490
Less: Allowance for doubtful accounts 653 - 653
Gas in inventory 92,828 - 92,828
Property taxes assessed applicable to
future periods 1,167 - 1,172
Other (6,415) 13,529 11,872
-------------------------------------------------
394,694 (836,554) 376,745
-------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred income taxes - 128,807 128,807
Investment in debt and equity securities 1,764 1,784 3,548
Deferred swap losses and receivables 51,023 12,124 63,147
Other 118,044 (118,083) 26,870
-------------------------------------------------
170,831 24,632 222,372
-------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 777,756 (1,107,020) 782,471
-------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 1,101,198 1 1,103,716
Less: Accumulated depreciation and depletion 229,865 - 229,944
-------------------------------------------------
871,333 1 873,772
-------------------------------------------------
$ 2,214,614 $ (1,918,941) $ 2,255,360
=================================================
</TABLE>
11
<PAGE> 24
MCN ENERGY GROUP INC.
MCN INVESTMENT CORPORATION
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMBUSTION
MCNIC BRIDGEWATER CONCEPTS
-----------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 7,747 $ 4 $ 1
Notes payable 119,123 - -
Current portion of long-term debt and capital lease
obligations 210,000 - -
Federal income, property and other taxes payable 3,098 (186) 26
Gas Payable - - -
Other 21,289 - -
-----------------------------------------------
361,257 (182) 27
-----------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 2,647 214 (5)
Deferred swap gains and payables - - -
Minority interest - - -
Other 7,687 - 41
-----------------------------------------------
10,334 214 36
-----------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations 684,337 - -
Common shareholders' equity 902,593 1,045 26
-----------------------------------------------
1,586,930 1,045 26
-----------------------------------------------
$ 1,958,521 $ 1,077 $ 89
===============================================
<CAPTION>
TOTAL
GAS ELIMINATIONS MCNIC
SERVICES AND RECLASSES CONSOL.
-----------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 219,650 $ (34,483) $ 192,919
Notes payable 814,360 (795,721) 137,762
Current portion of long-term debt and capital lease
obligations 1,433 - 211,433
Federal income, property and other taxes payable 12,957 - 15,895
Gas Payable 17,332 - 17,332
Other 7,147 (3,160) 25,276
-----------------------------------------------
1,072,879 (833,364) 600,617
-----------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes (28,799) 25,943 -
Deferred swap gains and payables 62,956 - 62,956
Minority interest 2,697 - 2,697
Other 12,495 (4,482) 15,741
-----------------------------------------------
49,349 21,461 81,394
-----------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations 2,996 - 687,333
Common shareholders' equity 1,089,390 (1,107,038) 886,016
-----------------------------------------------
1,092,386 (1,107,038) 1,573,349
-----------------------------------------------
$ 2,214,614 $ (1,918,941) $ 2,255,360
===============================================
</TABLE>
12
<PAGE> 25
MCN ENERGY GROUP INC.
GAS SERVICES
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATED MCNIC CONSOLIDATED
COENERGY COENERGY COENERGY GAS MCNIC
CANADIAN TRADING SUPPLY STORAGE CO. POWER CO.
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Gas and oil sales $ - $ 792,529 $ 72,438 $ 4 $ 49,079
Transportation - - - - -
Other - 2,358 - 5,280 (1,948)
----------------------------------------------------------------------
- 794,887 72,438 5,284 47,131
----------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas - 769,219 64,607 4 44,711
Operation and maintenance 98 27,607 - 3,936 2,164
Depreciation, depletion and amortization - 1,229 - - 8
Property and other taxes 1 269 69 - 136
Property write-downs and restructuring charges - - - - -
----------------------------------------------------------------------
99 798,324 64,676 3,940 47,019
----------------------------------------------------------------------
OPERATING INCOME (LOSS) (99) (3,437) 7,762 1,344 112
----------------------------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES - 886 - 1,812 22,394
----------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 64 687 160 765 107
Interest on long-term debt - - - - -
Other interest expense - (5,348) (181) (196) (1,832)
Investment losses - - - - -
Minority interest - - - - -
Other (3) 6,014 - (220) 5,036
----------------------------------------------------------------------
61 1,353 (21) 349 3,311
----------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (38) (1,198) 7,741 3,505 25,817
INCOME TAX PROVISION (BENEFIT) (22) (382) 2,709 1,229 8,873
----------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (16) (816) 5,032 2,276 16,944
DISCONTINUED OPERATIONS, NET OF TAXES - - - - -
----------------------------------------------------------------------
NET INCOME (LOSS) $ (16) $ (816) $ 5,032 $ 2,276 $ 16,944
======================================================================
<CAPTION>
CONSOLIDATED
MCNIC
CONSOLIDATED CONSOLIDATED PIPELINE & TOTAL
INT'L DISCONTINUED PROCESSING ELIMINATIONS GAS
SERVICES E&P OPERATIONS GROUP AND RECLASSES SERVICES
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Gas and oil sales $ - $ 200,265 $ - $ (200,265) $ 914,050
Transportation - - 12,728 - 12,728
Other - 6,837 8,473 (6,837) 14,163
-----------------------------------------------------------------------
- 207,102 21,201 (207,102) 940,941
-----------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas - - 12,045 (93,338) 797,248
Operation and maintenance 2,464 87,454 15,051 (54,508) 84,266
Depreciation, depletion and amortization 200 80,576 1,705 (80,576) 3,142
Property and other taxes - 10,050 983 (10,050) 1,458
Property write-downs and restructuring charges 2,469 416,977 137,681 (416,976) 140,151
-----------------------------------------------------------------------
5,133 595,057 167,465 (655,448) 1,026,265
-----------------------------------------------------------------------
OPERATING INCOME (LOSS) (5,133) (387,955) (146,264) 448,346 (85,324)
-----------------------------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES 6,152 - 29,987 11 61,242
-----------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 837 426 1,001 (427) 3,620
Interest on long-term debt 1,515 (13,677) 3,346 13,676 4,860
Other interest expense (1,704) (37,381) (17,727) 37,381 (26,988)
Investment losses - (6,135) - 6,135 -
Minority interest - - 265 - 265
Other - 566 260 (310) 11,343
-----------------------------------------------------------------------
648 (56,201) (12,855) 56,310 (6,900)
-----------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 1,667 (444,157) (129,132) 504,812 (30,982)
INCOME TAX PROVISION (BENEFIT) (660) (171,365) (46,892) 181,832 (24,678)
-----------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 2,327 (272,791) (82,240) 322,982 (6,304)
DISCONTINUED OPERATIONS, NET OF TAXES - (272,791) - - (272,791)
-----------------------------------------------------------------------
NET INCOME (LOSS) $ 2,327 $ - $ (82,240) $ 49,924 $(279,095)
=======================================================================
</TABLE>
13
<PAGE> 26
MCN ENERGY GROUP INC.
GAS SERVICES
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATED MCNIC CONSOLIDATED
COENERGY COENERGY COENERGY GAS MCNIC
CANADIAN TRADING SUPPLY CO. STORAGE CO. POWER CO.
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ 1,729 $ 4,068 $ 20 $ 26 $ 599
Accounts receivable - 138,441 13,976 42,791 16,266
Less: Allowance for doubtful account - 653 - - -
Gas in inventory - 91,144 - - 1,684
Property taxes assessed applicable to future periods - - - - -
Other - (12,461) - 40 114
------------------------------------------------------------------------
1,729 220,539 13,996 42,857 18,663
------------------------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred income taxes - - - - -
Investment in debt and equity securities - 42 - 1,250 472
Deferred swap losses and receivables - 51,023 - - -
Other - 12,736 - 1,451 19,299
------------------------------------------------------------------------
- 63,801 - 2,701 19,771
------------------------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES - 2,325 - 19,710 115,627
------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST - 3,781 - 19 3,865
Less: Accumulated depreciation and depletion - 1,454 - 1 45
------------------------------------------------------------------------
- 2,327 - 18 3,820
------------------------------------------------------------------------
$ 1,729 $ 288,992 $ 13,996 $ 65,286 $ 157,881
========================================================================
<CAPTION>
CONSOLIDATED
MCNIC
CONSOLIDATED CONSOLIDATED PIPELINE & TOTAL
INT'L DISCONTINUED PROCESSING ELIMINATIONS GAS
SERVICES E&P OPERATIONS GROUP AND RECLASSES SERVICES
------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ 20 $ 30,493 $ (544) $ (2,475) $ 33,936
Accounts receivable - 71,799 8,961 (18,403) 273,831
Less: Allowance for doubtful account - - - - 653
Gas in inventory - - - - 92,828
Property taxes assessed applicable to future periods - - 1,167 - 1,167
Other 816 736 4,338 2 (6,415)
------------------------------------------------------------------------
836 103,028 13,922 (20,876) 394,694
------------------------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred income taxes - - - - -
Investment in debt and equity securities - - - - 1,764
Deferred swap losses and receivables - - - - 51,023
Other 8,577 72,618 1,808 1,555 118,044
------------------------------------------------------------------------
8,577 72,618 1,807 1,555 170,831
------------------------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 136,541 3 503,548 2 777,756
------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 4,781 1,040,047 48,707 (2) 1,101,198
Less: Accumulated depreciation and depletion 200 224,795 3,371 (1) 229,865
------------------------------------------------------------------------
4,581 815,252 45,336 (1) 871,333
------------------------------------------------------------------------
$ 150,535 $ 990,901 $ 564,614 $ (19,320) $ 2,214,614
========================================================================
</TABLE>
14
<PAGE> 27
MCN ENERGY GROUP INC.
GAS SERVICES
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATED MCNIC CONSOLIDATED
COENERGY COENERGY COENERGY GAS MCNIC
CANADIAN TRADING SUPPLY STORAGE CO. POWER CO.
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 1,320 $ 83,083 $ 9,077 $ 18,679 $ 10,999
Notes payable - 56,606 4,216 3,875 43,888
Current portion of long-term debt and capital lease
obligations - - - - -
Federal income, property and other taxes
payable (126) 1,457 117 1,131 3,729
Gas payable - 17,332 - - -
Other 8 461 14 20 40
------------------------------------------------------------------------
1,202 158,939 13,424 23,705 58,656
------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes - 654 - 1,464 8,044
Deferred swap gains and payables - - - - -
Minority interest - 62,956 - - -
Other - 4,921 - 3,097 1,977
------------------------------------------------------------------------
- 68,531 - 4,561 10,021
------------------------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations - - - 788 1,200
Common shareholders' equity 527 61,522 572 36,232 88,004
------------------------------------------------------------------------
527 61,522 572 37,020 89,204
------------------------------------------------------------------------
$ 1,729 $ 288,992 $ 13,996 $ 65,286 $ 157,881
========================================================================
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED
MCNIC
CONSOLIDATED CONSOLIDATED PIPELINE & TOTAL
INT'L DISCONTINUED PROCESSING ELIMINATIONS GAS
SERVICES E&P OPERATIONS GROUP AND RECLASSES SERVICES
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 640 $ 86,951 $ 28,223 $ (19,322) $ 219,650
Notes payable 26,011 368,836 310,929 (1) 814,360
Current portion of long-term debt and capital lease
obligations - 1,433 - - 1,433
Federal income, property and other taxes
payable 204 6,301 144 - 12,957
Gas payable - - - - 17,332
Other 140 2,908 3,553 3 7,147
------------------------------------------------------------------------
26,995 466,429 342,849 (19,320) 1,072,879
------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes - (28,872) (10,089) - (28,799)
Deferred swap gains and payables - - - - 62,956
Minority interest - - 2,697 - 2,697
Other - 2,500 - - 12,495
------------------------------------------------------------------------
- (26,372) (7,392) - 49,349
------------------------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease obligations - 929 79 - 2,996
Common shareholders' equity 123,540 549,915 229,078 - 1,089,390
------------------------------------------------------------------------
123,540 550,844 229,157 - 1,092,386
------------------------------------------------------------------------
$ 150,535 $ 990,901 $ 564,614 $ (19,320) $2,214,614
========================================================================
</TABLE>
15
<PAGE> 28
MCN ENERGY GROUP INC.
MCNIC PIPELINE & PROCESSING COMPANY
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PIPELINE & OFFSHORE
PROCESSING PIPELINE MICHIGAN MOBILE BAY MCNIC
COMPANY JONAH AND PROC. HOLDINGS PIPELINE INDIANA METHANOL RODEO
PARENT PIPELINE COMPANY INC. COMPANY GATHERING COMPANIES GATHERING
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Gas sales $ - $ - $ - $ - $ - $ - $ - $ -
Transportation 12,080 - - 438 - 210 - -
Other 13 - - 7,946 - 120 - -
-----------------------------------------------------------------------------------------
12,093 - - 8,384 - 330 - -
-----------------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas 12,038 - - 8 - - - -
Operation and maintenance 3,484 - - 2,243 (43) 184 - -
Depreciation, depletion and amortization 141 5 - 1,403 78 61 9 -
Property and other taxes 3 - 26 431 185 10 - -
Property write-downs and
restructuring charges 137,681 - - - - - - -
-----------------------------------------------------------------------------------------
153,347 5 26 4,085 220 255 9 -
-----------------------------------------------------------------------------------------
OPERATING INCOME (141,254) (5) (26) 4,299 (220) 75 (9) -
-----------------------------------------------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES
AND SUBSIDIARIES 15,551 1,890 170 5,708 5,591 - 2,743 562
-----------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 5,616 - - 41 - - - -
Interest on long-term debt 3,096 - - - 250 - - -
Other interest expense (17,718) - (10) (1,562) (3,094) - - -
Other 240 - - (169) - - - -
-----------------------------------------------------------------------------------------
(8,766) - (10) (1,690) (2,844) - - -
-----------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES (134,469) 1,885 134 8,317 2,527 75 2,734 562
INCOME TAX PROVISION (BENEFIT) (52,229) 660 47 3,097 748 - 957 227
-----------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (82,240) $ 1,225 $ 87 $ 5,220 $ 1,779 $ 75 $ 1,777 $ 335
=========================================================================================
<CAPTION>
AMERICAN
MCNIC PSCO2 CENTRAL MOBILE
EAST COAST MCNIC VECTOR PETRO- EASTERN BAY PROC COAL FINES
PIPELINE COPANO/KCS MILLENNIUM COMPANY SOURCE) TEXAS COMPANY CONSOL
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Gas sales $ - $ - $ - $ - $ - $ - $ - $ -
Transportation - - - - - - - -
Other - - - - - - - 394
-----------------------------------------------------------------------------------------
- - - - - - - 394
-----------------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of gas - - - - - - - -
Operation and maintenance - - - - - - - 9,182
Depreciation, depletion and amortization - 6 - - - - - 3
Property and other taxes - - - - - - - 328
Property write-downs and
restructuring charges - - - - - - - -
-----------------------------------------------------------------------------------------
- 6 - - - - - 9,513
-----------------------------------------------------------------------------------------
OPERATING INCOME - (6) - - - - - (9,119)
-----------------------------------------------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES
AND SUBSIDIARIES 2,477 1,877 243 214 1,136 6,215 69 -
-----------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income - - - - - - - -
Interest on long-term debt - - - - - - - -
Other interest expense - - - - - - - -
Other - - - - - - 19 457
-----------------------------------------------------------------------------------------
- - - - - - 19 457
-----------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,477 1,871 243 214 1,136 6,215 88 (8,662)
INCOME TAX PROVISION (BENEFIT) 1 655 - - 398 2,175 31 (3,659)
-----------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 2,476 $ 1,216 $ 243 $ 214 $ 738 $ 4,040 $ 57 $ (5,003)
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
PIPELINE & PIPELINE &
PROCESSING PROCESSING
COMPANY COMPANY
ELIMINATIONS CONSOL.
-------------------------
<S> <C> <C>
OPERATING REVENUES
Gas sales $ - $ -
Transportation - 12,728
Other - 8,473
-------------------------
- 21,201
--------------------------
OPERATING EXPENSE:
Cost of gas (1) 12,045
Operation and maintenance 1 15,051
Depreciation, depletion and amortization (1) 1,705
Property and other taxes - 983
Property write-downs and
restructuring charges - 137,681
--------------------------
(1) 167,264
--------------------------
OPERATING INCOME 1 (146,264)
--------------------------
EQUITY IN EARNINGS OF JOINT VENTURES
AND SUBSIDIARIES (14,459) 29,987
--------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income (4,656) 1,001
Interest on long-term debt - 3,346
Other interest expense 4,657 (17,727)
Other (22) 525
--------------------------
(21) (12,855)
--------------------------
INCOME BEFORE INCOME TAXES (14,479) (129,132)
INCOME TAX PROVISION (BENEFIT) - (46,892)
--------------------------
NET INCOME (LOSS) $(14,479) $ (82,240)
==========================
</TABLE>
16
<PAGE> 29
MCN ENERGY GROUP INC.
MCNIC PIPELINE & PROCESSING COMPANY
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PIPELINE & OFFSHORE
PROCESSING PIPELINE MICHIGAN MOBILE BAY MCNIC
COMPANY JONAH AND PROC. HOLDINGS PIPELINE INDIANA METHANOL RODEO
PARENT PIPELINE COMPANY INC. COMPANY GATHERING COMPANIES GATHERING
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ 93,110 $ - $ - $ 739 $ - $ - $ - $ -
Accounts receivable, net 3,248 394 - 2,792 1,566 230 - -
Property taxes assessed applicable to
future periods - - - - - - - -
Other 1,168 - 14 3,541 36 - - -
-----------------------------------------------------------------------------------
97,526 394 14 7,072 1,602 230 - -
-----------------------------------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Investment in debt and equity securities - - - - - - - -
Other 268 - 115 304 332 - 200 -
-----------------------------------------------------------------------------------
268 - 115 304 332 - 200 -
-----------------------------------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 515,504 11,855 9,133 66,742 91,495 - 53,811 5,990
-----------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST (99,321) 151 - 32,322 3,828 1,223 256 -
Less: Accumulated depreciation and depletion 158 9 - 3,128 (37) 83 15 -
-----------------------------------------------------------------------------------
(99,479) 142 - 29,194 3,865 1,140 241 -
-----------------------------------------------------------------------------------
$ 513,819 $ 12,391 $9,262 $103,312 $ 97,294 $ 1,370 $ 54,252 $ 5,990
===================================================================================
<CAPTION>
AMERICAN
MCNIC PSCO2 CENTRAL MOBILE
EAST COAST COPANO/ MCNIC VECTOR PETRO- EASTERN BAY PROC COAL FINES
PIPELINE KCS MILLENNIUM COMPANY SOURCE) TEXAS CMPANY CONSOL
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ - $ - $ - $ - $ - $ - $ - $ (8)
Accounts receivable, net - - - - - - - 894
Property taxes assessed applicable to
future periods - - - - - - - 340
Other - - - - - - - 905
-----------------------------------------------------------------------------------
- - - - - - - 2,131
-----------------------------------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Investment in debt and equity securities - - - - - - - -
Other - 5 - - - - (100) 684
-----------------------------------------------------------------------------------
- 5 - - - - (100) 684
-----------------------------------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 24,458 43,963 2,701 8,067 25,068 66,327 37,695 -
-----------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 28 189 5 1 610 - 1,146 108,269
Less: Accumulated depreciation and depletion - 11 - - - - - 3
-----------------------------------------------------------------------------------
28 178 5 1 610 - 1,146 108,266
-----------------------------------------------------------------------------------
$ 24,486 $ 44,146 $ 2,706 $ 8,068 $ 25,678 $ 66,327 $38,741 $111,081
===================================================================================
<CAPTION>
PIPELINE & PIPELINE &
PROCESSING PROCESSING
COMPANY COMPANY
ELIMINATICONS CONSOL.
--------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ (94,385) $ (544)
Accounts receivable (163) 8,961
Property taxes assessed applicable to
future periods 827 1,167
Other (1,326) 4,338
----------------------
(95,047) 13,922
----------------------
DEFERRED CHARGES AND OTHER ASSETS
Investment in debt and equity securities - -
Other - 1,808
----------------------
- 1,808
----------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES (459,261) 503,548
----------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST - 48,707
Less: Accumulated depreciation and depletion 1 3,371
----------------------
(1) 45,336
----------------------
$ (554,309) $564,614
======================
</TABLE>
17
<PAGE> 30
MCN ENERGY GROUP INC.
MCNIC PIPELINE & PROCESSING COMPANY
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PIPELINE & OFFSHORE
PROCESSING PIPELINE MICHIGAN MOBILE BAY MCNIC
COMPANY JONAH AND PROC. HOLDINGS PIPELINE INDIANA METHANOL RODEO EAST COAST
PARENT PIPELINE COMPANY INC. COMPANY GATHERING COMPANIES GATHERING PIPELINE
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 18,925 $ - $ 4 $ 838 $ 16 $ 82 $ - $ - $ -
Notes payable 310,929 - - 40,681 53,704 - - - -
Federal income, property and other
taxes payable (641) (159) - 1,107 111 10 (229) 65 -
Other 2,884 - - 211 251 - (1) 706 -
------------------------------------------------------------------------------------------
332,097 (159) 4 42,837 54,082 92 (230) 771 -
------------------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes (47,357) 429 1,210 8,191 11,045 - 11,427 167 (3)
Minority interest - - - 2,235 - - - - -
------------------------------------------------------------------------------------------
(47,357) 429 1,210 10,426 11,045 - 11,427 167 (3)
------------------------------------------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital
lease obligations - - 79 - - - - - -
Common shareholders' equity 229,079 12,121 7,969 50,049 32,167 1,278 43,055 5,052 24,489
------------------------------------------------------------------------------------------
229,079 12,121 8,048 50,049 32,167 1,278 43,055 5,052 24,489
------------------------------------------------------------------------------------------
$513,819 $12,391 $ 9,262 $103,312 $ 97,294 $ 1,370 $54,252 $ 5,990 $ 24,486
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
AMERICAN PIPELINE & PIPELINE &
MCNIC PSCO2 CENTRAL MOBILE PROCESSING PROCESSING
MCNIC VECTOR PETRO- EASTERN BAY PROC COAL FINES COMPANY COMPANY
COPANO/KCS MILLENNIUM COMPANY SOURCE) TEXAS COMPANY CONSOL ELIMINATIONS CONSOL.
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ - $ - $ - $ - $ - $ - $ 8,513 $ (155) $ 28,223
Notes payable - - - - - - - (94,385) 310,929
Federal income, property and other
taxes payable (840) - - (222) 80 - 863 (1) 144
Other (1) - - - - - - (497) 3,553
--------------------------------------------------------------------------------------------
(841) - - (222) 80 - 9,376 (95,038) 342,849
--------------------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 1,221 - - 404 574 (4) 2,607 - (10,089)
Minority interest - - - - - - 72 390 2,697
--------------------------------------------------------------------------------------------
1,221 - - 404 574 (4) 2,679 390 (7,392)
--------------------------------------------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital
lease obligations - - - - - - - - 79
Common shareholders' equity 43,766 2,706 8,068 25,496 65,673 38,745 99,026 (459,661) 229,078
--------------------------------------------------------------------------------------------
43,766 2,706 8,068 25,496 65,673 38,745 99,026 (459,661) 229,157
--------------------------------------------------------------------------------------------
$ 44,146 $ 2,706 $ 8,068 $25,678 $66,327 $38,741 $111,081 $ (554,309) $ 564,614
============================================================================================
</TABLE>
18
<PAGE> 31
MCN ENERGY GROUP INC.
COENERGY TRADING COMPANY
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COENERGY
COENERGY SALES &
TRADING COENERGY
COMPANY DEV. CO. ELIM.
--------------------------------------------------------
OPERATING REVENUES
<S> <C> <C> <C>
Gas sales $ 792,529 $ - $ -
Other 2,358 - -
--------------------------------------------------------
794,887 - -
--------------------------------------------------------
OPERATING EXPENSES
Cost of gas 769,219 - -
Operation and maintenance 27,607 - -
Depreciation, depletion and amortization 1,229 - -
Property and other taxes 269 - -
--------------------------------------------------------
798,324 - -
--------------------------------------------------------
OPERATING INCOME (Loss) (3,437) - -
--------------------------------------------------------
EQUITY IN EARNINGS (LOSSES) OF JOINT VENTURES AND SUBSIDIARIES 1,525 (1,825) 1,186
--------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 687 - -
Other interest expense (5,349) - -
Other 6,014 - -
--------------------------------------------------------
1,352 - -
--------------------------------------------------------
INCOME BEFORE INCOME TAXES (560) (1,825) 1,186
INCOME TAX PROVISION (BENEFIT) 256 (639) -
--------------------------------------------------------
NET INCOME (LOSS) $ (816) $ (1,186) $ 1,186
========================================================
</TABLE>
<TABLE>
<CAPTION>
COENERGY
TRADING
CONSOL.
-------------
OPERATING REVENUES
<S> <C>
Gas sales $ 792,529
Transportation -
Other 2,358
-------------
794,887
-------------
OPERATING EXPENSES
Cost of gas 769,219
Operation and maintenance 27,607
Depreciation, depletion and amortization 1,229
Property and other taxes 269
-------------
798,324
-------------
OPERATING INCOME (3,437)
-------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES 886
-------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 687
Other interest expense (5,349)
Other 6,014
-------------
1,352
-------------
INCOME BEFORE INCOME TAXES (1,199)
INCOME TAX PROVISION (BENEFIT) (383)
-------------
NET INCOME (LOSS) $ (816)
=============
</TABLE>
19
<PAGE> 32
MCN ENERGY GROUP INC.
COENERGY TRADING COMPANIES
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COENERGY
COENERGY SALES &
TRADING COENERGY
COMPANY DEV. CO. ELIM.
--------------------------------------------------------
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ 4,068 $ - $ -
Accounts receivable, net 137,788 - -
Gas in inventory 91,144 - -
Other (12,461) - -
--------------------------------------------------------
220,539 - -
--------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred income taxes - - -
Investments in debt and equity services 42 - -
Deferred swap losses and receivables 51,023 - -
Other 12,736 - -
--------------------------------------------------------
63,801 - -
--------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 2,964 4,835 (5,474)
--------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 3,781 - -
Less: Accumulated depreciation and depletion (1,454) - -
--------------------------------------------------------
2,327 - -
--------------------------------------------------------
$ 289,631 $ 4,835 $ (5,474)
========================================================
</TABLE>
<TABLE>
<CAPTION>
COENERGY
TRADING
COMPANY
CONSOL.
-------------
ASSETS
<S> <C>
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ 4,068
Accounts receivable, net 137,788
Gas in inventory 91,144
Other (12,461)
-------------
220,539
-------------
DEFERRED CHARGES AND OTHER ASSETS
Deferred income taxes -
Investments in debt and equity services 42
Deferred swap losses and receivables 51,023
Other 12,736
-------------
63,801
-------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 2,325
-------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 3,781
Less: Accumulated depreciation and depletion (1,454)
-------------
2,327
-------------
$ 288,992
=============
</TABLE>
20
<PAGE> 33
MCN ENERGY GROUP INC.
COENERGY TRADING COMPANY
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COENERGY COENERGY
COENERGY SALES & TRADING
TRADING COENERGY COMPANY
COMPANY DEV. CO. ELIM. CONSOL.
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ 100,415 $ - $ - $ 100,415
Notes payable 56,606 - - 56,606
Federal income, property and other taxes
payable 1,681 (224) - 1,457
Other 461 - - 461
---------------------------------------------------------------------
159,163 (224) - 158,939
---------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 1,069 (415) - 654
Deferred swap gains and payables 62,956 - - 62,956
Other 4,921 - - 4,921
---------------------------------------------------------------------
68,946 (415) - 68,531
---------------------------------------------------------------------
CAPITALIZATION
Common shareholders' equity 61,522 5,474 (5,474) 61,522
---------------------------------------------------------------------
61,522 5,474 (5,474) 61,522
---------------------------------------------------------------------
$ 289,631 $ 4,835 $ (5,474) $ 288,992
=====================================================================
</TABLE>
21
<PAGE> 34
MCN ENERGY GROUP INC.
MCNIC OIL & GAS COMPANY
(DISCONTINUED E&P OPERATIONS)
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MCNIC GREEN GREEN MCNIC
OIL & GAS ELMIRA WARNER RIVER OAK GEOTREND ENHANCED
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Gas and oil sales $ 17,385 $ 19,268 $ 13,776 $ 1,734 $ - $ 13,779 $ 5,030
Transportation - - - - - - -
Other 624 318 - - (2) 49 (6)
-------------------------------------------------------------------------
18,009 19,586 13,776 1,734 (2) 13,828 5,024
-------------------------------------------------------------------------
OPERATING EXPENSES
Operation and maintenance 14,298 6,770 8,129 845 49 4,368 3,145
Depreciation, depletion and amortization (2,714) 6,682 4,667 597 - 4,529 2,600
Property and other taxes 461 1,042 1,109 26 (102) 1,019 334
Property write-downs 416,977 - - - - - -
-------------------------------------------------------------------------
429,022 14,494 13,905 1,468 (53) 9,916 6,079
-------------------------------------------------------------------------
OPERATING INCOME 411,013) 5,092 (129) 266 51 3,912 (1,055)
-------------------------------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES 3,898 - - - - - -
-------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 35,207 - - - - - 47
Interest on long-term debt (20,109) 129 153 - - 719 1,094
Other interest expense (37,124) - (191) - - (12) (2,411)
Investment losses - - - - - - -
Other (43) - - - - - -
-------------------------------------------------------------------------
(22,069) 129 (38) - - 707 (1,270)
------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPS. BEFORE INCOME TAXES (429,184) 5,221 (167) 266 51 4,619 (2,325)
INCOME TAX PROVISION (BENEFIT) (156,393) (266) 2,050 393 (18) (1,439) 1,024
-------------------------------------------------------------------------
NET INCOME (LOSS) $(272,791) $ 4,955 $ 1,883 $ 659 $ 33 $ 3,180 $ (1,301)
=========================================================================
<CAPTION>
MOG MOG REID MCNIC MCNIC
PROPERTIES PROPERTIES WEST COAST MIDCONTIN
---------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Gas and oil sales $ 57,487 $ 37,688 $ 14,685 $ 18,809
Transportation - - - -
Other 3,635 649 861 1,333
---------------------------------------------
61,122 38,337 15,546 20,142
---------------------------------------------
OPERATING EXPENSES
Operation and maintenance 11,175 21,226 10,530 6,930
Depreciation, depletion and amortization 31,846 12,243 3,339 16,787
Property and other taxes 3,606 1,187 - 1,359
Property write-downs - - - -
---------------------------------------------
46,627 34,656 13,869 25,076
---------------------------------------------
OPERATING INCOME 14,495 3,681 1,677 (4,934)
---------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES - - - -
---------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 247 - - 6
Interest on long-term debt 7,421 - (3,576) 492
Other interest expense (22,746) (4,551) - (5,031)
Investment losses - - - -
Other - - 609 -
---------------------------------------------
(15,078) (4,551) (2,967) (4,533)
---------------------------------------------
INCOME (LOSS) FROM CONTINUING OPS. BEFORE INCOME TAXES
INCOME TAX PROVISION (BENEFIT) (583) (870) (1,290) (9,467)
978 5,455 703 3,805
---------------------------------------------
NET INCOME (LOSS)
$ 395 $ 4,585 $ (587) $ (5,662)
=============================================
<CAPTION>
CONSOLIDATED
PAGEANT MCNIC MCNIC
CORP CANADIAN ELIMINATIONS OIL & GAS
------------------------------------------
OPERATING REVENUES
Gas and oil sales $ - $ - $ 624 $ 200,265
Transportation - - - -
Other - - (624) 6,837
-------------------------------------------
- - - 207,102
-------------------------------------------
OPERATING EXPENSES
Cost of gas - - - -
Operation and maintenance - - (11) 87,454
Depreciation, depletion and amortization - - - 80,576
Property and other taxes - - 9 10,050
Property write-downs - - - 416,977
-------------------------------------------
- - (2) 595,057
-------------------------------------------
OPERATING INCOME - - 2 (387,955)
-------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES - - (3,898) -
-------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income - - (35,081) 426
Interest on long-term debt - - - (13,677)
Other interest expense (399) - 35,084 (37,381)
Investment losses - - - (6,135)
Other (6,135) - - 566
-------------------------------------------
(6,534) - 3 (56,201)
-------------------------------------------
INCOME (LOSS) FROM CONTINUING OPS. BEFORE INCOME TAXES
INCOME TAX PROVISION (BENEFIT) (6,534) - (3,893) (444,156)
2,287 - - (171,365)
-------------------------------------------
NET INCOME (LOSS)
$ (4,247) $ - $ (3,893) $(272,791)
===========================================
</TABLE>
22
<PAGE> 35
MCN ENERGY GROUP INC.
MCNIC OIL & GAS COMPANY
(DISCONTINUED E&P OPERATIONS)
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MCNIC GREEN GREEN MCNIC MOG
OIL & GAS ELMIRA WARNER RIVER OAK GEOTREND ENHANCED PROPERTIES
---------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market
value) $ 589,772 $ - $ - $ - $ - $ - $ 1,085 $ 156
Accounts receivable 9,216 3,260 1,825 326 9 3,568 1,673 35,175
Other 3,444 - 203 - - 21 50 13
---------------------------------------------------------------------------------------
602,432 3,260 2,028 326 9 3,589 2,808 35,344
---------------------------------------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Other 402 14,593 16,385 4,244 123 6,634 1,720 4,434
---------------------------------------------------------------------------------------
402 14,593 16,385 4,244 123 6,634 1,720 4,434
---------------------------------------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES 567,393 - - - - - - 4
---------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST (326,611) 118,959 127,684 25,524 3,763 94,664 65,973 604,358
Less: Accumulated depreciation and
depletion (31,414) 26,800 19,941 4,078 1,353 11,302 6,357 83,476
---------------------------------------------------------------------------------------
(295,197) 92,159 107,743 21,446 2,410 83,362 59,616 520,882
---------------------------------------------------------------------------------------
$ 875,030 $ 110,012 $ 126,156 $ 26,016 $ 2,542 $ 93,585 $ 64,144 $ 560,664
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED
MOG REID MCNIC MCNIC PAGEANT MCNIC MCNIC
PROPERTIES WEST COAST MIDCONTIN CORP CANADIAN ELIM. OIL & GAS
-----------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market
value) $ - $ - $ 1,047 $ 1 $ - $ (561,568) $ 30,493
Accounts receivable 9,639 603 5,550 (37) 1,320 (328) 71,799
Other - - 66 - - (3,061) 736
-----------------------------------------------------------------------------
9,639 603 6,663 (36) 1,320 (564,957) 103,028
-----------------------------------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Other 16,983 (581) 1,764 5,917 (1) 1 72,618
-----------------------------------------------------------------------------
16,983 (581) 1,764 5,917 (1) 1 72,618
-----------------------------------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES - - - - - (567,394) 3
-----------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 117,529 2,485 205,719 - - - 1,040,047
Less: Accumulated depreciation and
depletion 26,877 - 76,025 - - - 224,795
-----------------------------------------------------------------------------
90,652 2,485 129,694 - - - 815,252
-----------------------------------------------------------------------------
$ 117,274 $ 2,507 $ 138,121 $ 5,881 $ 1,319 $(1,132,350) $ 990,901
=============================================================================
</TABLE>
23
<PAGE> 36
MCN ENERGY GROUP INC.
MCNIC OIL & GAS COMPANY
(DISCONTINUED E&P OPERATIONS)
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MCNIC GREEN GREEN MCNIC MOG
OIL & GAS ELMIRA WARNER RIVER OAK GEOTREND ENHANCED PROPERTIES
---------------------------------------------------------------------------------------
LIABILITIES AND CAPITALIZATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 71,571 $ 967 $ 762 $ 47 $ - $ 666 $ 1,615 $ (1,507)
Notes payable 369,036 - - - - - 38,589 343,365
Current portion of long-term debt and
capital lease
obligations 71 - 1,226 - - 74 - 62
Federal income, property and other taxes
payable (5,483) 914 1,267 82 (65) 532 (1,442) 3,729
Other 2,929 1 (1) - - - 362 1,775
---------------------------------------------------------------------------------------
438,124 1,882 3,254 129 (65) 1,272 39,124 347,424
---------------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes (119,537) 10,288 6,309 2,579 637 (1,273) 4,747 49,533
Other 2,670 - 568 - - 44 - 148
---------------------------------------------------------------------------------------
(116,867) 10,288 6,877 2,579 637 (1,229) 4,747 49,681
---------------------------------------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease
obligations - - - - - - - -
Common shareholders' equity 553,773 97,843 116,025 23,308 1,970 93,542 20,273 163,559
---------------------------------------------------------------------------------------
553,773 97,843 116,025 23,308 1,970 93,542 20,273 163,559
---------------------------------------------------------------------------------------
$ 875,030 $110,013 $126,156 $26,016 $2,542 $93,585 $64,144 $560,664
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED
MOG REID MCNIC MCNIC PAGEANT MCNIC MCNIC
PROPERTIES WEST COAST MIDCONTIN CORP CANADIAN ELIMINATION OIL & GAS
----------------------------------------------------------------------------
LIABILITIES AND CAPITALIZATION
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 4,886 $ - $ 8,222 $ 50 $ - $ (328) $ 86,951
Notes payable 93,441 - 79,443 6,529 - (561,567) 368,836
Current portion of long-term debt and
capital lease obligations - - - - - - 1,433
Federal income, property and other taxes
payable 5,135 1,540 76 (40) 54 2 6,301
Other 459 - 413 35 - (3,065) 2,908
-------------------------------------------------------------------------------
103,921 1,540 88,154 6,574 54 (564,958) 466,429
-------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 1,895 (739) 16,690 1 - (2) (28,872)
Other - - - - - (930) 2,500
-------------------------------------------------------------------------------
1,895 (739) 16,690 1 - (932) (26,372)
-------------------------------------------------------------------------------
CAPITALIZATION
Long-term debt, including capital lease
obligations - - - - - 929 929
Common shareholders' equity 11,458 1,706 33,277 (693) 1,265 (567,391) 549,915
-------------------------------------------------------------------------------
11,458 1,706 33,277 (693) 1,265 (566,462) 550,844
-------------------------------------------------------------------------------
$ 117,274 $2,507 $138,121 $ 5,881 $1,319 $(1,132,350) $990,901
===============================================================================
</TABLE>
24
<PAGE> 37
MCN ENERGY GROUP INC.
FINANCING COMPANIES
CONSOLIDATING STATEMENT OF OPERATIONS
(IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MCN MCN MCN MCN
MICHIGAN FIN. I FIN. II FIN. III
----------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Gas sales $ - $ - $ - $ -
Transportation - - - -
Other - - - -
----------------------------------------------------------------
- - - -
----------------------------------------------------------------
OPERATING EXPENSES
Cost of gas - - - -
Operation and maintenance 1 - - -
Depreciation, depletion and amortization - - - -
Property and other taxes - - - -
----------------------------------------------------------------
1 - - -
----------------------------------------------------------------
OPERATING INCOME (LOSS) (1) - - -
----------------------------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES - - - -
----------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 9,478 7,113 1,062 9,885
Interest on long-term debt - - - -
Other interest expense - - - -
Gains related to DIGP - - - -
Other - - - -
----------------------------------------------------------------
9,478 7,113 1,062 9,885
----------------------------------------------------------------
NET INCOME 9,477 7,113 1,062 9,885
================================================================
<CAPTION>
FINANCING
MCN MCN COMPANIES
FIN. V FIN. VI CONSOL.
-------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES
Gas sales $ - $ - $ -
Transportation - - -
Other - - -
-------------------------------------------
- - -
-------------------------------------------
OPERATING EXPENSES
Cost of gas - - -
Operation and maintenance - - 1
Depreciation, depletion and amortization - - -
Property and other taxes - - -
-------------------------------------------
- - 1
-------------------------------------------
OPERATING INCOME (LOSS) - - (1)
-------------------------------------------
EQUITY IN EARNINGS OF JOINT VENTURES AND SUBSIDIARIES - - -
-------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income 2,708 7,062 37,308
Interest on long-term debt - - -
Other interest expense - - -
Gains related to DIGP - - -
Other - - -
-------------------------------------------
2,708 7,062 37,308
-------------------------------------------
NET INCOME 2,708 7,062 37,307
===========================================
</TABLE>
25
<PAGE> 38
MCN ENERGY GROUP INC.
FINANCING COMPANIES
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MCN MCN MCN
MICHIGAN FIN. I FIN. II
-----------------------------------------------------
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ - $ - $ -
Accounts receivable - - -
Property taxes assessed applicable to
future periods - - -
Interest receivable - - 1,062
-----------------------------------------------------
- - 1,062
-----------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Notes receivable - affiliate 101,100 82,474 103,093
-----------------------------------------------------
101,100 82,474 103,093
-----------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES - - -
-----------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST - - -
Less: Accumulated depreciation and depletion - - -
-----------------------------------------------------
- - -
-----------------------------------------------------
$ 101,100 $ 82,474 $ 104,155
=====================================================
<CAPTION>
CONSOLIDATED
MCN MCN FINANCING
FIN. III FIN. VI COMPANIES
-------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and temporary cash investments
at cost (which approximates market value) $ - $ - $ -
Accounts receivable - - -
Property taxes assessed applicable to
future periods - - -
Interest receivable - 589 1,651
-------------------------------------------------
- 589 1,651
-------------------------------------------------
DEFERRED CHARGES AND OTHER ASSETS
Notes receivable - affiliate 136,340 103,093 526,100
-------------------------------------------------
136,340 103,093 526,100
-------------------------------------------------
INVESTMENTS IN AND ADVANCES TO JOINT
VENTURES AND SUBSIDIARIES - - -
-------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST - - -
Less: Accumulated depreciation and depletion - - -
-------------------------------------------------
- - -
-------------------------------------------------
$ 136,340 $ 103,682 $ 527,751
=================================================
</TABLE>
26
<PAGE> 39
MCN ENERGY GROUP INC.
FINANCING COMPANIES
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MCN MCN MCN
MICHIGAN FIN. I FIN. II
------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ - $ - $ -
Notes payable - - -
Current portion of long-term debt and capital lease
obligations - - -
Federal income, property and other taxes
payable - - -
Dividends payable - - 1,062
------------------------------------------------------
- - 1,062
------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
CAPITALIZATION
Preferred securities 96,819 77,068 100,000
Common shareholders' equity 4,281 5,406 3,093
------------------------------------------------------
$ 101,100 $ 82,474 $ 103,093
------------------------------------------------------
$ 101,100 $ 82,474 $ 104,155
======================================================
<CAPTION>
CONSOLIDATED
MCN MCN FINANCING
FIN. III FIN. VI COMPANIES
--------------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Accounts payable $ - $ - $ -
Notes payable - - -
Current portion of long-term debt and capital lease
obligations - - -
Federal income, property and other taxes
payable - - -
Dividends payable - 589 1,651
--------------------------------------------------
- 589 1,651
--------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
CAPITALIZATION
Preferred securities 132,250 99,397 505,534
Common shareholders' equity 4,090 3,696 20,566
--------------------------------------------------
$ 136,340 $ 103,093 $ 526,100
--------------------------------------------------
$ 136,340 $ 103,682 $ 527,751
==================================================
</TABLE>
27
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