1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1996 <TABLE> <CAPTION> COMMISSION REGISTRANTS; STATE OF INCORPORATION; I.R.S. EMPLOYER FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO. - ----------- ------------------------------ ------------------ <S> <C> <C> 1-11607 DTE Energy Company 38-3217752 (a Michigan corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-4000 1-2198 The Detroit Edison Company 38-0478650 (a Michigan corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-8000 </TABLE> Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. YES X NO --- --- At April 30, 1996, 145,119,875 shares of DTE Energy's Common Stock, substantially all held by non-affiliates, were outstanding. ===============================================================================
2 DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 This document contains the Quarterly Reports on Form 10-Q for the quarter ended March 31, 1996 for each of DTE Energy Company and The Detroit Edison Company. Information contained herein relating to an individual registrant is filed by such registrant on its own behalf. Accordingly, except for its subsidiaries, The Detroit Edison Company makes no representation as to information relating to any other companies affiliated with DTE Energy Company. TABLE OF CONTENTS <TABLE> <CAPTION> Page ---- <S> <C> Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Quarterly Report on Form 10-Q for DTE Energy Company: Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Item 1 - Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 4 Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . 14 Independent Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . . 16 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . 17 Part II - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Quarterly Report on Form 10-Q for The Detroit Edison Company: Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Item 1 - Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 29 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . 29 Part II - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit Edison Company: Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . 30 Signature Page to DTE Energy Company Quarterly Report on Form 10-Q . . . . . . . . . . . . . . . . . . . 36 Signature Page to The Detroit Edison Company Quarterly Report on Form 10-Q . . . . . . . . . . . . . . . 37 </TABLE> 2
3 DEFINITIONS <TABLE> <S> <C> ALJ . . . . . . . . . . . . . Administrative Law Judge Annual Report . . . . . . . . 1995 Annual Report to the Securities and Exchange Commission on Form 10-K for DTE Energy Company or The Detroit Edison Company, as the case may be Annual Report Notes . . . . . Notes to Consolidated Financial Statements appearing on pages 46 through 57 of the 1995 Annual Report to the Securities and Exchange Commission on Form 10-K for DTE Energy Company and The Detroit Edison Company CERCLA . . . . . . . . . . . Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 Company . . . . . . . . . . . DTE Energy Company and Subsidiary Companies Detroit Edison . . . . . . . The Detroit Edison Company (a wholly owned subsidiary of DTE Energy Company) and Subsidiary Companies EPA . . . . . . . . . . . . . Environmental Protection Agency FERC . . . . . . . . . . . . Federal Energy Regulatory Commission kWh . . . . . . . . . . . . . Kilowatthour MDEQ . . . . . . . . . . . . Michigan Department of Environmental Quality MPSC . . . . . . . . . . . . Michigan Public Service Commission MW . . . . . . . . . . . . . Megawatts NOPR . . . . . . . . . . . . Notice of Proposed Rulemaking Note(s) . . . . . . . . . . . Note(s) to Consolidated Financial Statements (Unaudited) appearing herein NRC . . . . . . . . . . . . . Nuclear Regulatory Commission PFD . . . . . . . . . . . . . Proposal for Decision PSCR . . . . . . . . . . . . Power Supply Cost Recovery QUIDS . . . . . . . . . . . . Quarterly Income Debt Securities Registrant . . . . . . . . . Company or Detroit Edison, as the case may be Renaissance . . . . . . . . . Renaissance Energy Company (an unaffiliated company) </TABLE> 3
4 QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED): DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (Dollars in Thousands) <TABLE> <CAPTION> Three Months Ended Twelve Months Ended March 31 March 31 ----------------------------------------------------------- 1996 1995 1996 1995 ----------------------------------------------------------- <S> <C> <C> <C> <C> OPERATING REVENUES Electric - System $887,627 $863,048 $3,585,049 $3,440,893 Electric - Interconnection 11,244 7,339 54,884 33,841 Steam and other 10,708 9,887 24,916 25,292 - ------------------------------------------------------------------------------------------------------------- Total Operating Revenues $909,579 $880,274 $3,664,849 $3,500,026 - ------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Operation Fuel $175,667 $169,660 $ 721,974 $ 693,845 Purchased power 23,496 35,112 121,941 108,253 Other operation 151,022 137,373 648,946 618,098 Maintenance 73,611 52,471 261,255 258,710 Steam plant impairment loss - - 42,029 - Depreciation and amortization 132,011 125,044 507,578 485,476 Deferred Fermi 2 amortization (1,120) (1,493) (5,599) (7,092) Amortization of deferred Fermi 2 depreciation and return 25,483 23,247 95,226 86,868 Taxes other than income 66,761 62,645 256,057 249,204 Income taxes 76,104 82,051 283,740 282,425 - ------------------------------------------------------------------------------------------------------------- Total Operating Expenses $723,035 $686,110 $2,933,147 $2,775,787 - ------------------------------------------------------------------------------------------------------------- OPERATING INCOME $186,544 $194,164 $ 731,702 $ 724,239 - ------------------------------------------------------------------------------------------------------------- OTHER INCOME AND (DEDUCTIONS) Allowance for other funds used during construction $ 388 $ 315 $ 1,481 $1,556 Other income and (deductions) - net (956) (13,335) (17,867) (35,387) Income taxes 303 4,998 5,094 12,337 Accretion income 2,327 3,014 10,354 13,013 Income taxes - disallowed plant costs and accretion income (686) (929) (3,112) (4,037) - ------------------------------------------------------------------------------------------------------------- Net Other Income and (Deductions) $ 1,376 $ (5,937) $ (4,050) $ (12,518) - ------------------------------------------------------------------------------------------------------------- INTEREST CHARGES Long-term debt $ 68,360 $ 68,424 $ 275,535 $ 272,242 Amortization of debt discount, premium and expense 2,955 2,799 11,468 11,015 Other 1,574 3,901 7,339 10,077 Allowance for borrowed funds used during construction (credit) (702) (387) (2,584) (2,142) - ------------------------------------------------------------------------------------------------------------- Net Interest Charges $ 72,187 $74,737 $ 291,758 $ 291,192 - ------------------------------------------------------------------------------------------------------------- PREFERRED STOCK DIVIDENDS OF SUBSIDIARY 7,293 7,407 27,623 29,634 - ------------------------------------------------------------------------------------------------------------- NET INCOME $108,440 $106,083 $ 408,271 $ 390,895 ============================================================================================================= COMMON SHARES OUTSTANDING - AVERAGE 145,119,875 144,864,103 144,613,380 145,612,411 EARNINGS PER COMMON SHARE $ 0.75 $ 0.73 $ 2.82 $ 2.68 DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $ 0.515 $ 0.515 $ 2.06 $ 2.06 </TABLE> See accompanying Notes to Consolidated Financial Statements (Unaudited). 4
5 DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (Dollars in Thousands) <TABLE> <CAPTION> Three Months Ended Twelve Months Ended March 31 March 31 -------------------------------------------- 1996 1995 1996 1995 -------------------------------------------- <S> <C> <C> <C> <C> OPERATING ACTIVITIES Net Income $ 108,440 $106,083 $ 408,271 $ 390,895 Adjustments to reconcile net income to net cash from operating activities: Accretion income (2,327) (3,014) (10,354) (13,013) Depreciation and amortization 132,011 125,044 507,578 485,476 Deferred Fermi 2 amortization and return - net 24,363 21,754 89,627 79,776 Deferred income taxes and investment tax credit - net 17,063 26,276 53,310 107,718 Fermi 2 refueling outage - net 3,258 3,800 12,533 (18,504) Steam plant impairment loss - - 42,029 - Other (21,800) (21,889) 5,202 (35,602) Changes in current assets and liabilities: Customer accounts receivable and unbilled revenues 1,542 (124,393) (92,644) (157,739) Other accounts receivable (5,508) 5,282 (14,242) 4,471 Inventories 18,579 (4,876) 4,618 (31,197) Accounts payable (270) (7,202) 24,981 (3,118) Taxes payable 51,355 46,136 2,570 (3,125) Interest payable 14,705 (910) 17,529 (3,447) Other (85,602) (72,120) 17,773 8,054 - ---------------------------------------------------------------------------------------------------------- Net cash from operating activities $ 255,809 $ 99,971 $1,068,781 $ 810,645 - ---------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Plant and equipment expenditures $(115,759) $(85,234) $ (484,369) $(375,243) Nuclear decommissioning trust funds (13,687) (11,971) (45,067) (38,020) Non-utility investments (5,584) 1,461 (5,184) (12,213) Other changes in current assets and liabilities 921 853 5,842 10,697 Other 64 (1,081) (31,696) (13,019) - ---------------------------------------------------------------------------------------------------------- Net cash used for investing activities $(134,045) $(95,972) $ (560,474) $(427,798) - ---------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of long-term debt $ 185,000 $ - $ 185,000 $200,000 Funds received from Trustees: Installment sales contracts and loan agreements - - 201,525 50,470 Increase (decrease) in short-term borrowings (36,990) 98,447 (137,936) 5,515 Redemption of long-term debt - (19,214) (201,525) (258,034) Redemption of preferred stock (185,000) - (185,955) - Premiums on reacquired long-term debt and preferred stock (1,850) - (7,796) (11,563) Purchase of common stock - - - (59,855) Dividends on common stock (74,737) (74,606) (298,633) (300,681) Other (7,958) (159) (14,399) (2,675) - ---------------------------------------------------------------------------------------------------------- Net cash (used for) from financing activities $(121,535) $ 4,468 $ (459,719) $(376,823) - ---------------------------------------------------------------------------------------------------------- NET INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS $ 229 $ 8,467 $ 48,588 $ 6,024 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF THE PERIOD 64,948 8,122 16,589 10,565 - ---------------------------------------------------------------------------------------------------------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF THE PERIOD $ 65,177 $ 16,589 $ 65,177 $ 16,589 ========================================================================================================== SUPPLEMENTARY CASH FLOW INFORMATION Interest paid (excluding interest capitalized) $ 54,557 $ 69,793 $ 259,177 $ 281,685 Income taxes paid 618 240 230,915 181,155 New capital lease obligations 297 327 29,356 2,741 Exchange of preferred stock of subsidiary for long-term debt - - 49,878 - ========================================================================================================== </TABLE> See accompanying Notes to Consolidated Financial Statements (Unaudited). 5
6 DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (UNAUDITED) ASSETS (Dollars in Thousands) <TABLE> <CAPTION> March 31 December 31 1996 1995 ------------ ----------- <S> <C> <C> UTILITY PROPERTIES Plant in service $13,432,705 $13,303,992 Less: Accumulated depreciation and amortization (5,059,724) (4,928,316) - --------------------------------------------------------------------------------------------- $ 8,372,981 $ 8,375,676 Construction work in progress 117,566 142,726 - --------------------------------------------------------------------------------------------- Net utility properties $ 8,490,547 $ 8,518,402 - --------------------------------------------------------------------------------------------- Property under capital leases (less accumulated amortization of $100,900 and $99,633, respectively) $ 135,430 $ 137,206 Nuclear fuel under capital lease (less accumulated amortization of $445,062 and $427,831, respectively) 128,530 145,463 - --------------------------------------------------------------------------------------------- Net property under capital leases $ 263,960 $ 282,669 - --------------------------------------------------------------------------------------------- Total owned and leased properties $ 8,754,507 $ 8,801,071 - --------------------------------------------------------------------------------------------- OTHER PROPERTY AND INVESTMENTS Non-utility property $ 35,998 $ 21,576 Investments and special funds 34,087 29,058 Nuclear decommissioning trust funds 133,530 119,843 - --------------------------------------------------------------------------------------------- $ 203,615 $ 170,477 - --------------------------------------------------------------------------------------------- CURRENT ASSETS Cash and temporary cash investments $ 65,177 $ 64,948 Customer accounts receivable and unbilled revenues (less allowance for uncollectible accounts of $21,000 and $22,000, respectively) 412,861 414,403 Other accounts receivable 43,172 37,664 Inventories (at average cost) Fuel 142,374 162,796 Materials and supplies 145,761 142,782 Prepayments 78,448 12,910 - --------------------------------------------------------------------------------------------- $ 887,793 $ 835,503 - --------------------------------------------------------------------------------------------- DEFERRED DEBITS Regulatory assets $ 1,110,827 $ 1,155,482 Prepaid pensions 95,963 81,865 Unamortized debt expense 46,722 40,936 Other 46,809 45,257 - --------------------------------------------------------------------------------------------- $ 1,300,321 $ 1,323,540 - --------------------------------------------------------------------------------------------- TOTAL $11,146,236 $11,130,591 ============================================================================================= </TABLE> See accompanying Notes to Consolidated Financial Statements (Unaudited). 6
7 DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (UNAUDITED) LIABILITIES (Dollars in Thousands) <TABLE> <CAPTION> March 31 December 31 1996 1995 ---------- ----------- <S> <C> <C> CAPITALIZATION Common stock - without par value, 400,000,000 shares authorized; 145,119,875 shares outstanding $ 1,951,437 $ 1,951,437 Retained earnings used in the business 1,515,773 1,484,871 - ------------------------------------------------------------------------------- Total common shareholders' equity $ 3,467,210 $ 3,436,308 Cumulative preferred stock of subsidiary 144,405 326,604 Long-term debt 3,921,894 3,756,094 - ------------------------------------------------------------------------------- Total Capitalization $ 7,533,509 $ 7,519,006 - ------------------------------------------------------------------------------- OTHER NON-CURRENT LIABILITIES Obligations under capital leases $ 126,130 $ 128,362 Other postretirement benefits 5,194 24,381 Other 67,404 58,424 - ------------------------------------------------------------------------------- $ 198,728 $ 211,167 - ------------------------------------------------------------------------------- CURRENT LIABILITIES Short-term borrowings $ - $ 36,990 Amounts due within one year Long-term debt 138,428 119,214 Obligations under capital leases 137,830 154,307 Accounts payable 164,354 165,148 Property and general taxes 25,821 34,416 Income taxes 59,603 - Accumulated deferred income taxes 52,916 51,697 Interest payable 76,833 62,128 Dividends payable 77,644 81,102 Payrolls 87,904 72,164 Fermi 2 refueling outage 17,600 14,342 Other 97,813 130,689 - ------------------------------------------------------------------------------- $ 936,746 $ 922,197 - ------------------------------------------------------------------------------- DEFERRED CREDITS Accumulated deferred income taxes $ 2,058,833 $ 2,052,875 Accumulated deferred investment tax credits 326,322 330,085 Other 92,098 95,261 - ------------------------------------------------------------------------------- $ 2,477,253 $ 2,478,221 - ------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES (NOTE 2) - ------------------------------------------------------------------------------- TOTAL $11,146,236 $11,130,591 =============================================================================== </TABLE> See accompanying Notes to Consolidated Financial Statements (Unaudited). 7
8 DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED) (Dollars in Thousands) <TABLE> <CAPTION> Retained Total Common Stock Earnings Common ----------------------- Used in the Shareholders' Shares Amount Business Equity - ------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> BALANCE AT DECEMBER 31, 1995 145,119,875 $1,951,437 $1,484,871 $3,436,308 Expense associated with subsidiary preferred stock redeemed (2,801) (2,801) Net income 108,440 108,440 Cash dividends declared on Common stock - $0.515 per share (74,737) (74,737) - ------------------------------------------------------------------------------------------- BALANCE AT MARCH 31, 1996 145,119,875 $1,951,437 $1,515,773 $3,467,210 =========================================================================================== </TABLE> See accompanying Notes to Consolidated Financial Statements (Unaudited). 8
9 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (Dollars in Thousands) <TABLE> <CAPTION> Three Months Ended Twelve Months Ended March 31 March 31 -------------------------------------------- 1996 1995 1996 1995 -------------------------------------------- <S> <C> <C> <C> <C> OPERATING REVENUES Electric - System $887,627 $863,048 $3,585,049 $3,440,893 Electric - Interconnection 11,244 7,339 54,884 33,841 Steam 10,020 9,887 24,228 25,292 - -------------------------------------------------------------------------------------------- Total Operating Revenues $908,891 $880,274 $3,664,161 $3,500,026 - -------------------------------------------------------------------------------------------- OPERATING EXPENSES Operation Fuel $175,667 $169,660 $ 721,974 $ 693,845 Purchased power 23,496 35,112 121,941 108,253 Other operation 149,211 137,373 647,135 618,098 Maintenance 73,611 52,471 261,255 258,710 Steam plant impairment loss - - 42,029 - Depreciation and amortization 131,904 125,044 507,471 485,476 Deferred Fermi 2 amortization (1,120) (1,493) (5,599) (7,092) Amortization of deferred Fermi 2 depreciation and return 25,483 23,247 95,226 86,868 Taxes other than income 66,761 62,645 256,057 249,204 Income taxes 76,672 82,051 284,308 282,425 - -------------------------------------------------------------------------------------------- Total Operating Expenses $721,685 $686,110 $2,931,797 $2,775,787 - -------------------------------------------------------------------------------------------- OPERATING INCOME $187,206 $194,164 $ 732,364 $ 724,239 - -------------------------------------------------------------------------------------------- OTHER INCOME AND (DEDUCTIONS) Allowance for other funds used during construction $ 388 $ 315 $ 1,481 $ 1,556 Other income and (deductions) - net (1,613) (13,335) (18,524) (35,387) Income taxes 303 4,998 5,094 12,337 Accretion income 2,327 3,014 10,354 13,013 Income taxes - disallowed plant costs and accretion income (686) (929) (3,112) (4,037) - -------------------------------------------------------------------------------------------- Net Other Income and (Deductions) $ 719 $ (5,937) $ (4,707) $ (12,518) - -------------------------------------------------------------------------------------------- INTEREST CHARGES Long-term debt $ 68,360 $ 68,424 $ 275,535 $ 272,242 Amortization of debt discount, premium and expense 2,952 2,799 11,465 11,015 Other 1,551 3,901 7,316 10,077 Allowance for borrowed funds used during construction (credit) (702) (387) (2,584) (2,142) - -------------------------------------------------------------------------------------------- Net Interest Charges $ 72,161 $ 74,737 $ 291,732 $ 291,192 - -------------------------------------------------------------------------------------------- NET INCOME $115,764 $113,490 $ 435,925 $ 420,529 PREFERRED STOCK DIVIDENDS 7,293 7,407 27,623 29,634 - -------------------------------------------------------------------------------------------- NET INCOME AVAILABLE FOR COMMON STOCK $108,471 $106,083 $ 408,302 $ 390,895 ============================================================================================ </TABLE> Note: Detroit Edison's financial statements are presented here for ease of reference and are not considered to be part of Item 1 of the Company's report. See accompanying Notes to Consolidated Financial Statements (Unaudited). 9
10 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (UNAUDITED) ASSETS (Dollars in Thousands) <TABLE> <CAPTION> March 31 December 31 1996 1995 ----------- ----------- <S> <C> <C> UTILITY PROPERTIES Plant in service $13,432,705 $13,303,992 Less: Accumulated depreciation and amortization (5,059,724) (4,928,316) - --------------------------------------------------------------------------------------------- $ 8,372,981 $ 8,375,676 Construction work in progress 117,566 142,726 - --------------------------------------------------------------------------------------------- Net utility properties $ 8,490,547 $ 8,518,402 - --------------------------------------------------------------------------------------------- Property under capital leases (less accumulated amortization of $100,900 and $99,633, respectively) $ 135,430 $ 137,206 Nuclear fuel under capital lease (less accumulated amortization of $445,062 and $427,831, respectively) 128,530 145,463 - --------------------------------------------------------------------------------------------- Net property under capital leases $ 263,960 $ 282,669 - --------------------------------------------------------------------------------------------- Total owned and leased properties $ 8,754,507 $ 8,801,071 - --------------------------------------------------------------------------------------------- OTHER PROPERTY AND INVESTMENTS Non-utility property $ 7,723 $ 21,576 Investments and special funds 16,694 29,058 Nuclear decommissioning trust funds 133,530 119,843 - --------------------------------------------------------------------------------------------- $ 157,947 $ 170,477 - --------------------------------------------------------------------------------------------- CURRENT ASSETS Cash and temporary cash investments $ 25,658 $ 64,948 Customer accounts receivable and unbilled revenues (less allowance for uncollectible accounts of $21,000 and $22,000, respectively) 412,861 414,403 Other accounts receivable 40,936 37,664 Inventories (at average cost) Fuel 142,374 162,796 Materials and supplies 145,761 142,782 Prepayments 78,300 12,910 - --------------------------------------------------------------------------------------------- $ 845,890 $ 835,503 - --------------------------------------------------------------------------------------------- DEFERRED DEBITS Regulatory assets $ 1,110,827 $ 1,155,482 Prepaid pensions 95,963 81,865 Unamortized debt expense 46,624 40,936 Other 44,133 45,257 - --------------------------------------------------------------------------------------------- $ 1,297,547 $ 1,323,540 - --------------------------------------------------------------------------------------------- TOTAL $11,055,891 $11,130,591 ============================================================================================= </TABLE> See accompanying Notes to Consolidated Financial Statements (Unaudited). 10
11 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (UNAUDITED) LIABILITIES (Dollars in Thousands) <TABLE> <CAPTION> March 31 December 31 1996 1995 ---------- ----------- <S> <C> <C> CAPITALIZATION Common stock - $10 par value, 400,000,000 shares authorized; 145,119,875 shares outstanding $ 1,451,199 $ 1,451,199 Premium on common stock 547,799 547,799 Common stock expense (47,561) (47,561) Retained earnings used in the business 1,427,499 1,484,871 - --------------------------------------------------------------------------------------- Total common shareholders' equity $ 3,378,936 $ 3,436,308 Cumulative preferred stock 144,405 326,604 Long-term debt 3,921,894 3,756,094 - --------------------------------------------------------------------------------------- Total Capitalization $ 7,445,235 $ 7,519,006 - --------------------------------------------------------------------------------------- OTHER NON-CURRENT LIABILITIES Obligations under capital leases $ 126,130 $ 128,362 Other postretirement benefits 5,194 24,381 Other 67,404 58,424 - --------------------------------------------------------------------------------------- $ 198,728 $ 211,167 - --------------------------------------------------------------------------------------- CURRENT LIABILITIES Short-term borrowings $ - $ 36,990 Amounts due within one year Long-term debt 138,428 119,214 Obligations under capital leases 137,830 154,307 Accounts payable 157,331 165,148 Property and general taxes 25,821 34,416 Income taxes 60,300 - Accumulated deferred income taxes 52,916 51,697 Interest payable 76,812 62,128 Dividends payable 82,723 81,102 Payrolls 87,856 72,164 Fermi 2 refueling outage 17,600 14,342 Other 97,809 130,689 - --------------------------------------------------------------------------------------- $ 935,426 $ 922,197 - --------------------------------------------------------------------------------------- DEFERRED CREDITS Accumulated deferred income taxes $ 2,058,183 $ 2,052,875 Accumulated deferred investment tax credits 326,322 330,085 Other 91,997 95,261 - --------------------------------------------------------------------------------------- $ 2,476,502 $ 2,478,221 - --------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES (NOTE 2) - --------------------------------------------------------------------------------------- TOTAL $11,055,891 $11,130,591 ======================================================================================= </TABLE> See accompanying Notes to Consolidated Financial Statements (Unaudited). 11
12 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (Dollars in Thousands) <TABLE> <CAPTION> Three Months Ended Twelve Months Ended March 31 March 31 --------------------------------------------- 1996 1995 1996 1995 --------------------------------------------- <S> <C> <C> <C> <C> OPERATING ACTIVITIES Net Income $ 115,764 $113,490 $ 435,925 $ 420,529 Adjustments to reconcile net income to net cash from operating activities: Accretion income (2,327) (3,014) (10,354) (13,013) Depreciation and amortization 131,904 125,044 507,471 485,476 Deferred Fermi 2 amortization and return - net 24,363 21,754 89,627 79,776 Deferred income taxes and investment tax credit - net 16,935 26,276 53,182 107,718 Fermi 2 refueling outage - net 3,258 3,800 12,533 (18,504) Steam plant impairment loss - - 42,029 - Other (19,125) (21,889) 7,877 (35,602) Changes in current assets and liabilities: Customer accounts receivable and unbilled revenues 1,542 (124,393) (92,644) (157,739) Other accounts receivable (3,272) 5,282 (12,006) 4,471 Inventories 18,579 (4,876) 4,618 (31,197) Accounts payable (7,293) (7,202) 17,958 (3,118) Taxes payable 52,052 46,136 3,267 (3,125) Interest payable 14,684 (910) 17,508 (3,447) Other (98,395) (72,120) 4,980 8,054 - ---------------------------------------------------------------------------------------------------------- Net cash from operating activities $ 248,669 $107,378 $1,081,971 $ 840,279 - ---------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Plant and equipment expenditures $(101,225) $(85,234) $ (469,835) $(375,243) Nuclear decommissioning trust funds (13,687) (11,971) (45,067) (38,020) Non-utility investments - 1,461 - (12,213) Other changes in current assets and liabilities 921 853 5,842 10,697 Other 11,369 (1,081) (19,991) (13,019) - ---------------------------------------------------------------------------------------------------------- Net cash used for investing activities $(102,622) $(95,972) $ (529,051) $(427,798) - ---------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of long-term debt $ 185,000 $ - $ 185,000 $ 200,000 Funds received from Trustees: Installment sales contracts and loan agreements - - 201,525 50,470 Increase (decrease) in short-term borrowings (36,990) 98,447 (137,936) 5,515 Redemption of long-term debt - (19,214) (201,525) (258,034) Redemption of preferred stock (185,000) - (185,955) - Premiums on reacquired long-term debt and preferred stock (1,850) - (7,796) (11,563) Purchase of common stock - - - (59,855) Dividends on common and preferred stock (85,509) (82,013) (329,735) (330,315) Cash portion of restructuring dividend to parent (56,510) - (56,510) - Other (4,478) (159) (10,919) (2,675) - ---------------------------------------------------------------------------------------------------------- Net cash used for financing activities $(185,337) $(2,939) $ (543,851) $(406,457) - ---------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS $ (39,290) $ 8,467 $ 9,069 $ 6,024 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF THE PERIOD 64,948 8,122 16,589 10,565 - ---------------------------------------------------------------------------------------------------------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF THE PERIOD $ 25,658 $16,589 $ 25,658 $ 16,589 - ---------------------------------------------------------------------------------------------------------- SUPPLEMENTARY CASH FLOW INFORMATION Interest paid (excluding interest capitalized) $ 54,557 $69,793 $ 259,177 $ 281,685 Income taxes paid 618 240 230,915 181,155 New capital lease obligations 297 327 29,356 2,741 Exchange of preferred stock for long-term debt - - 49,878 - Non-cash portion of restructuring dividend to parent 26,716 - 26,716 - ========================================================================================================== </TABLE> See accompanying Notes to Consolidated Financial Statements (Unaudited). 12
13 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED) (Dollars in Thousands) <TABLE> <CAPTION> Common Stock Premium Retained Total -------------------------- on Common Earnings Common $10 Par Common Stock Used in the Shareholders' Shares Value Stock Expense Business Equity - -------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> BALANCE AT DECEMBER 31, 1995 145,119,875 $1,451,199 $547,799 $(47,561) $1,484,871 $3,436,308 Expense associated with preferred stock redeemed (2,801) (2,801) Net income 115,764 115,764 Cash dividends declared Common stock - $0.55 per share (79,816) (79,816) Cumulative preferred stock* (7,293) (7,293) Restructuring dividend to parent (83,226) (83,226) - -------------------------------------------------------------------------------------------------------------------------- BALANCE AT MARCH 31, 1996 145,119,875 $1,451,199 $547,799 $(47,561) $1,427,499 $3,378,936 ========================================================================================================================== </TABLE> *At established rate for each series See accompanying Notes to Consolidated Financial Statements (Unaudited). 13
14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES NOTE 1 - ANNUAL REPORT NOTES These consolidated financial statements should be read in conjunction with the Annual Report Notes. The Notes contained herein update and supplement matters discussed in the Annual Report Notes. The preceding consolidated financial statements are unaudited, but, in the opinion of the Company and Detroit Edison, include all adjustments necessary for a fair statement of the results for the interim periods. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year. NOTE 2 - COMMITMENTS AND CONTINGENCIES As discussed in Note 12 of the Annual Report Notes, in January 1989, the EPA issued an administrative order under the CERCLA ordering Detroit Edison and 23 other potentially responsible parties to begin removal activities at the Carter Industrials Superfund site. In March 1996, it was determined that the site met all applicable cleanup standards. Agreement has been reached with the EPA on an appropriate remediation for the sewers related to the operation of the Carter site. It is expected that upon completion of the sewer remediation, the Carter site will be removed from the National Priorities List. As discussed in Note 12 of the Annual Report Notes, in January 1996, the FERC issued an order approving the Ludington Pumped Storage Project Settlement Agreement. On February 22, 1996, with the MDEQ's issuance of the plant's National Pollutant Discharge Elimination System permit, all regulatory approvals are in place. The settlement becomes effective May 1. NOTE 3 - EMPLOYEE BENEFITS As discussed in Note 13 of the Annual Report Notes, the expected long-term rate of return on retirement plan assets for pension cost determination was 9.5% for 1993, 1994 and 1995. The expected long-term rate of return assumption was changed to 9% for 1996, which will result in an increase in pension cost of $5.6 million. 14
15 This Quarterly Report on Form 10-Q, including the report of Deloitte & Touche LLP (on page 16) will automatically be incorporated by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (Registration Nos. 33-53207 and 33-64296) of The Detroit Edison Company and Form S-8 (Registration No. 333-00023) and Form S-3 (Registration No. 33-57545) of DTE Energy Company, filed under the Securities Act of 1933. Such report of Deloitte & Touche LLP, however, is not a "report" or "part of the Registration Statement" within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11(a) of such Act do not apply. 15
16 INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Shareholders of DTE Energy Company and The Detroit Edison Company We have reviewed the accompanying consolidated balance sheets of DTE Energy Company and subsidiary companies and of The Detroit Edison Company and subsidiary companies as of March 31, 1996, and the related consolidated statements of income and of cash flows for the three-month and twelve-month periods ended March 31, 1996 and 1995, and the consolidated statements of common shareholders' equity for the three-month period ended March 31, 1996. These financial statements are the responsibility of DTE Energy Company and The Detroit Edison Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheets of DTE Energy Company and subsidiary companies and of The Detroit Edison Company and subsidiary companies as of December 31, 1995, and the related consolidated statements of income, common shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated January 22, 1996 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheets as of December 31, 1995 is fairly stated, in all material respects, in relation to the consolidated balance sheets from which it has been derived. DELOITTE & TOUCHE LLP Detroit, Michigan May 7, 1996 16
17 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES This analysis for the three and twelve months ended March 31, 1996, as compared to the same periods in 1995, should be read in conjunction with the consolidated financial statements (unaudited), the accompanying Notes and the Annual Report Notes. Detroit Edison is the principal subsidiary of the Company and, as such, this discussion explains material changes in results of operations of both the Company and Detroit Edison and identifies recent trends and events affecting both the Company and Detroit Edison. For the periods presented, the Company's operations and those of Detroit Edison are not materially different. RESULTS OF OPERATIONS For the three months ended March 31, 1996, the Company's net income was $108.4 million, or $0.75 per common share, up 2.2 percent from the $106.1 million, or $0.73 per common share earned in the three months ended March 31, 1995. For the twelve months ended March 31, 1996, the Company's net income was $408.3 million, or $2.82 per common share, up 4.4 percent from the $390.9 million, or $2.68 per common share earned in the twelve months ended March 31, 1995. The increases in net income were due to increases in electricity sales and decreases in non-operating expenses, partially offset by higher operating expenses. At March 31, 1996, the book value of the Company's common stock was $23.83 per share, an increase of $0.21 per share or 0.9% since December 31, 1995. Return on average total common shareholders' equity was 11.8% and 11.6% for the twelve months ended March 31, 1996 and 1995, respectively. Detroit Edison's ratio of earnings to fixed charges was 3.22 and 3.17 for the twelve months ended March 31, 1996 and 1995, respectively. Detroit Edison's ratio of earnings to fixed charges and preferred stock dividends for the 1996 and 1995 twelve-month periods was 2.83 and 2.76, respectively. 17
18 OPERATING REVENUES - ------------------------------------------------------------------------ Total operating revenues of the Company increased (decreased) due to the following factors: <TABLE> <CAPTION> Three Twelve Months Months ------ ------ <S> <C> <C> (Millions) Rate Changes Special Manufacturing Contracts $ (9) $(36) PSCR Clause (16) (11) --- ---- (25) (47) System sales volume and mix 41 177 Interconnection sales 4 21 Fermi 2 capacity factor performance standard reserve 5 9 Other - net 4 5 --- ---- Total $29 $165 === ==== </TABLE> SPECIAL MANUFACTURING CONTRACTS In March 1995, the MPSC issued an order approving Detroit Edison's 10-year special manufacturing contracts with Chrysler Corporation, Ford Motor Company and General Motors Corporation. In return for their long-term commitment, these companies receive a reduction in the price paid for electricity. For additional information, see Management's Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report. PSCR CLAUSE The decreases in PSCR Clause revenues resulted from lower average unit costs of fuel and purchased power. kWh SALES kWh sales increased as follows: <TABLE> <CAPTION> Three Twelve Months Months ------ ------ <S> <C> <C> Residential 6.0% 8.7% Commercial 5.0 3.5 Industrial 2.2 3.0 Other (includes primarily sales for resale) 7.9 7.0 Total System 4.6 4.9 Interconnection 74.1 93.5 Total 6.8 8.2 </TABLE> 18
19 The increases in residential and commercial sales reflect colder winter weather and customer growth, and for the twelve-month period, substantially warmer summer weather. Commercial sales also reflect an improvement in economic conditions. Increased industrial sales in the three-month period reflect strong demand in the automotive and construction sectors. The increases in industrial sales for the twelve-month period reflect higher sales to automotive, steel and other customers due to improved economic conditions. The increased sales to other customers reflect increased load requirements of wholesale for resale customers. Interconnection sales increases were due to the improved availability of energy for sale in meeting the increased demand for energy during these periods. FERMI 2 CAPACITY FACTOR PERFORMANCE STANDARD RESERVE Because of a turbine-generator failure in December 1993, Fermi 2, a nuclear generating unit, was out of service in 1994 and early 1995. As a result, under the MPSC capacity factor performance standard, a disallowance of net incremental replacement power cost will be imposed in each of the years 1994-1998 for the amount by which the Fermi 2 three-year rolling average capacity factor is less than the greater of either the average of the top 50% of U. S. boiling water reactors or 50%. Detroit Edison recorded a reserve for such disallowances of $31 million in 1994 and $32 million in 1995, which amounts were charged to operating revenues. For additional information, see Notes 2 and 3 in the Annual Report. Operating revenues have increased due to the absence of Fermi 2 reserve charges in the 1996 three-month period and due to a decrease in Fermi 2 reserve charges in the 1996 twelve-month period. 19
20 OPERATING EXPENSES - ------------------------------------------------------------------------------ FUEL AND PURCHASED POWER Fuel and purchased power expenses increased (decreased) due to the following factors: <TABLE> <CAPTION> Three Twelve Months Months ------ ------ <S> <C> <C> (Millions) Net system output $ 12 $ 66 Average unit cost (23) (81) Fermi 2 business interruption insurance 5 59 Other - (2) ---- ---- Total $ (6) $ 42 ==== ==== </TABLE> Net system output and average fuel and purchased power unit costs were as follows: <TABLE> <CAPTION> Three Months Twelve Months ----------------- -------------- 1996 1995 1996 1995 ------ ------ ------ ------ (Thousands of Megawatthours, "MWh") <S> <C> <C> <C> <C> Power plant generation Fossil 10,503 10,331 41,809 42,012 Nuclear 1,785 245 6,630 188 Purchased power 621 1,564 4,480 6,669 ------ ------ ------ ------ Net system output 12,909 12,140 52,919 48,869 ====== ====== ====== ====== Average unit cost ($/MWh) $14.03 $15.79 $14.88 $16.41 ====== ====== ====== ====== </TABLE> Fuel and purchased power expense decreased in the three-month period due to lower average unit costs resulting from increased usage of lower cost nuclear generation and lower-cost Western low-sulfur coal, partially offset by higher net system output. For the twelve-month period, fuel and purchased power expense increased due to higher net system output and the prior-period receipt of Fermi 2 business interruption insurance, partially offset by lower average unit costs resulting from increased usage of lower cost nuclear generation and lower-cost Western low-sulfur coal. Fermi 2 was out of service in 1994 and early 1995 as a result of a turbine-generator failure in December 1993. 20
21 OTHER OPERATION Three Months Other operation expense increased due primarily to higher major storm ($4.0 million), nuclear plant ($3.7 million), fossil plant ($3.5 million), demand side management ($2.3 million) and employee retirement plan ($1.5 million) expenses. These increases were partially offset by lower uncollectible ($1.3 million) and injuries and damages ($1.0 million) expenses, and expenses recorded in the year-earlier period for competitive sales programs ($2.9 million). Twelve Months Other operation expense increased due primarily to higher major storm expenses ($15.9 million), higher incentive award expenses related to a shareholder value improvement plan ($11.2 million), demand side management expenses ($9.4 million), an increase in a reserve for the write-off of obsolete and excess stock material ($9.0 million), expenses related to the settlement of the Ludington Pumped Storage Plant fish mortality case ($8.4 million) and Electric Power Research Institute dues ($4.8 million). These increases were partially offset by lower nuclear plant ($10.5 million) and lower uncollectible ($8.9 million) expenses, and expenses recorded in the year-earlier period for service quality claims ($8.7 million). MAINTENANCE Three Months Maintenance expense increased due to higher major storm ($7.1 million), overhead and underground lines ($7.4 million), general property ($2.9 million), station maintenance ($2.6 million) and nuclear plant ($1.9 million) expenses. Twelve Months Maintenance expense increased due primarily to higher major storm ($14.6 million) and overhead and underground lines ($2.3 million) expenses, partially offset by lower nuclear plant expenses ($13.8 million). STEAM PLANT IMPAIRMENT LOSS As the result of continuing losses in the operation of its steam heating business, upon adoption of Statement of Financial Accounting Standards No. 121 in the fourth quarter of 1995, Detroit Edison wrote off the remaining net book value of its steam heating plant assets of $42 million. 21
22 DEPRECIATION AND AMORTIZATION Depreciation and amortization expense increased due primarily to increases in plant in service, including internally developed software costs. DEFERRED FERMI 2 AMORTIZATION Deferred Fermi 2 amortization, a non-cash item of income, was recorded beginning with Detroit Edison's purchase of the Wolverine Power Supply Cooperative, Inc.'s ownership interest in Fermi 2 in February 1990. The annual amount deferred decreases each year through 1999. AMORTIZATION OF DEFERRED FERMI 2 DEPRECIATION AND RETURN Deferred Fermi 2 depreciation and return, non-cash items of income, were recorded beginning with the implementation of the Fermi 2 rate phase-in plan in January 1988. The annual amounts of deferred depreciation and return decreased each year through 1992. Beginning in 1993 and continuing through 1998, these deferred amounts will be amortized to operating expense as the cash recovery is realized through revenues. TAXES OTHER THAN INCOME TAXES Taxes other than income taxes increased due to higher payroll and property taxes. INCOME TAXES Three Months Income taxes decreased due to lower pretax operating income and lower prior years' federal income tax accrual. Twelve Months Income taxes increased due to higher pretax operating income. OTHER INCOME AND DEDUCTIONS OTHER INCOME AND (DEDUCTIONS) - NET Three Months Other deductions decreased due to lower promotional practices expenses ($7.8 million) and lower expenses related to the sale of accounts receivable and unbilled revenues ($2.6 million). 22
23 Twelve Months Other deductions decreased due to lower expenses related to the sale of accounts receivable and unbilled revenues ($9.6 million), lower promotional practices expense ($6.5 million), and a decrease in the write-off of premiums and expenses related to the portion of Detroit Edison's 1989 Series A General and Refunding Mortgage Bonds not refinanced ($3.5 million), partially offset by expenses incurred in the formation of a holding company ($3.1 million). ACCRETION INCOME Accretion income, a non-cash item of income, was recorded beginning in January 1988 to restore to income, over the period 1988-1998, losses recorded due to discounting indirect disallowances of plant costs. The annual amount of accretion income recorded decreases each year through 1998. INTEREST CHARGES LONG-TERM DEBT Long-term debt interest charges were higher in the twelve-month period due to the issuance of QUIDS. OTHER Other interest charges were lower due to lower levels of short-term borrowings. PREFERRED STOCK DIVIDENDS OF DETROIT EDISON Preferred stock dividends of Detroit Edison decreased due to the exchange of a portion of Cumulative Preferred Stock 7.75% Series for QUIDS and the conversion and redemption of preferred stock. LIQUIDITY AND CAPITAL RESOURCES COMPETITION THE DETROIT EDISON COMPANY FERC. In March 1995, the FERC issued a NOPR seeking comments on several proposals for encouraging more competitive wholesale electric power markets. On April 24, 1996, the FERC issued Orders 888 and 889. Order 888 requires public utilities to file open access transmission tariffs for wholesale transmission services in accordance with non-discriminatory terms and conditions established by the FERC within 60 days of Federal Register publication (approximately July 1, 1996). By July 1, 23
24 1996, Detroit Edison is required to take transmission service for wholesale transactions under the terms and conditions of the newly-established tariff. By December 31, 1996, Detroit Edison is also required to establish a joint transmission tariff with Consumers Power Company for coordinated joint dispatch operations. Order 888 permits the recovery of stranded costs. By November 1, 1996, public utilities are required by Order 889 to obtain transmission information for wholesale transactions through a system on the Internet. Public utilities must separate transmission operations and reliability functions from wholesale marketing functions. FERC has also issued a NOPR on Capacity Reservation Transmission Tariffs ("CRT"). The NOPR requests comment by August 1, 1996 on whether there are certain disadvantages inherent in offering transmission service on both a network and point-to-point basis and whether comparability can be better accomplished using a single different methodology. The proposed CRT approach suggests that no later than December 31, 1997, all pro forma point-to-point and network service be replaced with a single point-to-point tariff that provides for reservation-based transmission service for all jurisdictional (wholesale sales and wholesale and retail transmission) service. Detroit Edison is currently unable to estimate the revenue impact, if any, of these newly required tariffs and procedures. MPSC. The MPSC was expected to take action with respect to a report on economic development recommendations for Michigan electric and gas reform. On April 12, 1996, the MPSC issued a "Scheduling Order" which requires Detroit Edison and Consumers Power Company to file "applications" by May 15, 1996. These applications are to contain proposals that address the recommendation of Michigan Governor Engler and the Michigan Jobs Commission to "allow new industrial/commercial electrical load to be negotiated directly from the generator and wheeled over 'common' transmission." The MPSC emphasizes in its order "that this is the first step toward consideration of the recommendations made by the Michigan Jobs Commission. Further proceedings for both electric and gas utilities may be ordered as necessary for consideration of all relevant issues." Detroit Edison is continuing to address its competitive status and the needs of its customers by entering into long-term (10 years) service contracts with large commercial and industrial customers. Such contracts must be approved by the MPSC prior to implementation. In addition, Detroit Edison has also filed an application with the MPSC requesting ex parte approval of an industrial process heat rider. This rider will replace two existing riders that will expire at the end of 1996. Customers who elect this service agree to retain Detroit Edison as their supplier for 10 years. The new proposed tariff provides for prices at or below the current rate levels. NRC. The NRC has issued an advance NOPR on amending its regulations relating to financial assurance requirements for the decommissioning of nuclear power plants. 24
25 The NRC believes that potential deregulation of the power generating industry has created uncertainty with respect to decommissioning funds not contemplated when the NRC's current financial assurance requirements were promulgated. The NRC is considering amendments which would: (1) require that electric utility reactor licensees provide assurance that the full estimated cost of decommissioning will be available through an acceptable guarantee mechanism if the licensees are no longer subject to rate regulation by State public utility commissions or FERC, and do not have a guaranteed source of income, (2) allow licensees to assume a positive real rate of return on decommissioning funds during the safe storage period, and (3) establish periodic reporting requirements. Detroit Edison has established external trust funds for decommissioning costs and believes that current provisions are adequate for decommissioning. For further information on decommissioning, see Note 2 in the Annual Report. CASH GENERATION AND CASH REQUIREMENTS CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Net cash from operating activities increased due to changes in current assets and liabilities, primarily as a result of the 1995 repurchase of $150 million of customer accounts receivable and unbilled revenues and higher net income before non-cash charges. Net cash used for investing activities was higher due to increased plant and equipment expenditures. Net cash used for financing activities was higher due to decreases in short-term borrowings and the cash portion of a restructuring dividend to the Company. ADDITIONAL INFORMATION On February 13, 1996, Detroit Edison issued $185 million of 7-5/8% QUIDS. On March 21, 1996, the proceeds of this issue were used to redeem all of the outstanding Cumulative Preferred Stock, 7.68% Series, 7.45% Series and 7.36% Series, totaling $185 million, at per share redemption prices of $101 plus accrued dividends. On May 6 and 7, 1996, Detroit Edison purchased a total of $34 million of General and Refunding Mortgage Bonds on the open market, consisting of $16 million of 8.24% 1993 Series C, $1 million of 8.25% 1993 Series C and $17 million of 7.74% 1993 Series J. These bonds will be submitted to the trustee for cancellation. 25
26 Detroit Edison's 1996 cash requirements for its capital expenditure program are estimated at $482 million, of which $100 million had been expended as of March 31, 1996. Detroit Edison's internal cash generation is expected to be sufficient to meet cash requirements for capital expenditures as well as scheduled long-term debt redemptions. Expenditures for 1996 non-regulated investments are estimated to range from $100 million to $200 million of which $15 million had been expended as of March 31, 1996. The Company had short-term credit arrangements of approximately $662 million at March 31, 1996, under which no borrowings were outstanding. Of the total amount, $200 million represents a DTE Capital Corporation Revolving Credit Agreement, backed by a Support Agreement from the Company. The remaining $462 million results from Detroit Edison arrangements. CAPITALIZATION The Company's capital structure as of March 31, 1996 was 46.0% common shareholders' equity, 1.9% cumulative preferred stock of subsidiary and 52.1% long-term debt as compared to 45.7%, 4.3% and 50.0%, respectively, at December 31, 1995. 26
27 DTE ENERGY COMPANY PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS. As discussed in Part I, Item 3 - Legal Proceedings of the Annual Report, the amortized costs of Detroit Edison's abandoned Greenwood Unit Nos. 2 and 3 were the subject of pending appeals. By stipulation of the parties to these proceedings, all appeals have been dismissed. ITEM 5 - OTHER INFORMATION. As discussed in Part 1, Items 1 and 2 - Business and Properties, "Regulation and Rates - Michigan Public Service Commission" of the Annual Report, in December 1995, the MPSC approved a partial settlement agreement resolving most of the issues regarding the 1994 PSCR reconciliation and the Fermi 2 capacity factor performance standard disallowance for 1994. A final MPSC order was issued on April 10, 1996 which resolved all outstanding contested issues. As a result of the order, no additional refunds to customers will be required. On March 29, 1996, Detroit Edison submitted its 1995 PSCR reconciliation filing with the MPSC. Detroit Edison is proposing to carry its 1995 PSCR under-recovery of approximately $14.8 million forward to its 1996 PSCR reconciliation rather than collect the under-recovery from customers at this time. If Detroit Edison's proposal is adopted, the under-recovery would be banked to offset future Fermi 2 power plant performance standard disallowances. On April 26, 1996, an MPSC ALJ issued his PFD in the Detroit Edison PSCR Plan for 1996. The ALJ adopted the adjustment proposed by the Michigan Attorney General to reduce 1996 PSCR expenses by $8.3 million because of lost fuel efficiency at Fermi 2 while the unit is operated at a reduced power output until the installation of major turbine components during a scheduled refueling and maintenance outage in September 1996. As discussed in Part I, Items 1 and 2 - Business and Properties, "Regulation and Rates - Michigan Public Service Commission - Retail Wheeling" of the Annual Report, the MPSC has been considering the propriety of retail wheeling programs. Detroit Edison proposed to implement the MPSC's experimental program in 2004, and the MPSC Staff proposed an implementation date in 1998. On March 29, 1996, an MPSC ALJ issued a PFD finding a capacity need and recommending immediate implementation of the retail wheeling experiment. The PFD did not recommend that competitive capacity solicitation be undertaken at this time. Exceptions to the PFD have been filed and Detroit Edison awaits the final order of the MPSC. As discussed in Part I, Items 1 and 2 - Business and Properties, "Regulation and Rates - Michigan Public Service Commission - Retail Wheeling" of the Annual Report, on March 1, 1996, MascoTech Forming Technologies, Inc., a Detroit Edison industrial 27
28 customer currently purchasing approximately 25 MW of electricity annually (with the potential for an additional 6 MW annually), petitioned the MPSC to establish a "cost based fair and pro-competitive transportation rate" for its new and existing electric load. A March 19, 1996 Detroit Edison motion to dismiss asserting that the MPSC lacks jurisdiction to establish the requested rate is currently under advisement. The Michigan Attorney General has been permitted to intervene and another public utility has been denied intervention. Pending resolution of the motion to dismiss, hearings have been scheduled for June 24, 1996. As discussed in Part I - Items 1 and 2 - Business and Properties, "Environmental Matters - Waste and Toxic Substances" of the Annual Report, the Michigan Environmental Response Act ("Act 307") gives the MDEQ authority to list sites of environmental contamination and bring about environmental clean-ups within the State of Michigan. A portion of the Monroe Power Plant site was listed on the MDEQ Act 307 list. On April 1, 1996, Detroit Edison received a request from the MDEQ, acting as an agent for the EPA, for voluntary access (under section 104(e) of the federal CERCLA) to a portion of the Monroe Power Plant property which included the former City of Monroe Landfill. The purpose of the access is to conduct an integrated assessment to determine whether the property should remain active in the Federal Superfund process toward possible inclusion on the National Priorities List. Detroit Edison is presently working with the MDEQ to provide the access based on an appropriate sampling plan. At this time, it is unknown what impact, if any, this situation will have upon Detroit Edison. On April 4, 1996, Detroit Edison received from the EPA a general notice of potential liability and request for information on its involvement with the Ramona Park Landfill Site in Utica, Michigan. Detroit Edison is presently examining its records and it is unknown what impact, if any, this situation will have. 28
29 QUARTERLY REPORT ON FORM 10-Q FOR THE DETROIT EDISON COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED). See pages 4 through 15. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. See the Company's and Detroit Edison's "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations," which is incorporated herein by this reference. PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS. See the Company's "Item 1 - Legal Proceedings," which is incorporated herein by this reference. ITEM 5 - OTHER INFORMATION. William R. Roller, an employee of Detroit Edison for in excess of five years, was elected Vice President - Power Generation effective April 22, 1996. See the Company's "Item 5 - Other Information" which is incorporated herein by this reference. 29
30 QUARTERLY REPORTS ON FORM 10-Q FOR DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (i) Exhibits filed herewith. Exhibit Number 4-176 - Support Agreement, dated as of March 8, 1996, between the Company and Detroit Edison. 10-4 - Amended and Restated Savings Reparation Plan. 11-3 - DTE Energy Company and Subsidiary Companies Primary and Fully Diluted Earnings Per Share of Common Stock. 15-1 - Awareness Letter of Deloitte & Touche LLP regarding their report dated May 7, 1996. 27-3 - Financial Data Schedule for the period ended March 31, 1996 for the Company. 27-4 - Financial Data Schedule for the period ended March 31, 1996 for Detroit Edison. 99-9 - Credit Agreement, dated as of March 1, 1996 among DTE Capital Corporation, the Initial Lenders named therein, and Citibank, N.A., as Agent. 99-10 - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of October 4, 1988, between Detroit Edison and Renaissance. 99-11 - Third Amendment, dated as of March 8, 1996, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 30
31 Exhibit Number ------ 99-12 - Third Amendment, dated as of March 8, 1996, to $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. (ii) Exhibits incorporated herein by reference. 3(a) - Restated Articles of Incorporation of Detroit Edison, as filed December 10, 1991 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-117 to Form 10-Q for quarter ended March 31, 1993). 3(b) - Certificate containing resolution of the Detroit Edison Board of Directors establishing the Cumulative Preferred Stock, 7.75% Series as filed February 22, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-134 to Form 10-Q for quarter ended March 31, 1993). 3(c) - Certificate containing resolution of the Detroit Edison Board of Directors establishing the Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-140 to Form 10-Q for quarter ended March 31, 1993). 3(d) - Amended and Restated Articles of Incorporation of DTE Energy Company, dated December 13, 1995 (Exhibit 3A (3.1) to DTE Energy Form 8-B filed January 2, 1996, File No. 1-11607). 3(e) - Agreement and Plan of Exchange (Exhibit 1(2) to DTE Energy Form 8-B filed January 2, 1996, File No. 1-11607). 3(f) - Amended and Restated By-Laws, dated as of February 26, 1996, of the Company (Exhibit 3-3 to Form 10-K for year ended December 31, 1995). 3(g) - Amended and Restated By-Laws, dated as of February 26, 1996, of Detroit Edison (Exhibit 3-4 to Form 10-K for year ended December 31, 1995). 31
32 Exhibit Number 4(a) - Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison (File No. 1-2198) and Bankers Trust Company as Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings as set forth below: September 1, 1947 Exhibit B-20 to Registration No. 2-7136 October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096 November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160 January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595 June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643 June 30, 1982 Exhibit 4-30 to Registration No. 2-78941 August 15, 1982 Exhibit 4-32 to Registration No. 2-79674 October 15, 1985 Exhibit 4-170 to Form 10-K for year ended December 31, 1994 November 30, 1987 Exhibit 4-139 to Form 10-K for year ended December 31, 1992 July 15, 1989 Exhibit 4-171 to Form 10-K for year ended December 31, 1994 December 1, 1989 Exhibit 4-172 to Form 10-K for year ended December 31, 1994 February 15, 1990 Exhibit 4-173 to Form 10-K for year ended December 31, 1994 November 1, 1990 Exhibit 4-110 to Form 10-K for year ended December 31, 1990 April 1, 1991 Exhibit 4-15 to Form 10-K for year ended December 31, 1995 May 1, 1991 Exhibit 4-112 to Form 10-Q for quarter ended June 30, 1991 May 15, 1991 Exhibit 4-113 to Form 10-Q for quarter ended June 30, 1991 September 1, 1991 Exhibit 4-116 to Form 10-Q for quarter ended September 30, 1991 November 1, 1991 Exhibit 4-119 to Form 10-K for year ended December 31, 1991 January 15, 1992 Exhibit 4-120 to Form 10-K for year ended December 31, 1991 February 29, 1992 Exhibit 4-121 to Form 10-Q for quarter ended March 31, 1992 April 15, 1992 Exhibit 4-122 to Form 10-Q for quarter ended June 30, 1992 July 15, 1992 Exhibit 4-123 to Form 10-Q for quarter ended September 30, 1992 32
33 Exhibit Number - ------- July 31, 1992 Exhibit 4-124 to Form 10-Q for quarter ended September 30, 1992 November 30, 1992 Exhibit 4-130 to Registration No. 33-56496 January 1, 1993 Exhibit 4-131 to Registration No. 33-56496 March 1, 1993 Exhibit 4-141 to Form 10-Q for quarter ended March 31, 1993 March 15, 1993 Exhibit 4-142 to Form 10-Q for quarter ended March 31, 1993 April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter ended March 31, 1993 April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter ended March 31, 1993 May 31, 1993 Exhibit 4-148 to Registration No. 33-64296 June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter ended June 30, 1993 (1993 Series AP) June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993 Series H) September 15, 1993Exhibit 4-158 to Form 10-Q for quarter ended September 30, 1993 March 1, 1994 Exhibit 4-163 to Registration No. 33-53207 June 15, 1994 Exhibit 4-166 to Form 10-Q for quarter ended June 30, 1994 August 15, 1994 Exhibit 4-168 to Form 10-Q for quarter ended September 30, 1994 December 1, 1994 Exhibit 4-169 to Form 10-K for year ended December 31, 1994 August 1, 1995 Exhibit 4-174 to Form 10-Q for quarter ended September 30, 1995. 4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325). 4(c) - First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration No. 33-50325). 4(d) - Second Supplemental Note Indenture, dated as of September 15, 1993 (Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993). 4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994). 33
34 Exhibit Number - ------- 4(f) - First Amendment, dated as of December 12, 1995, to Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-12 to Registration No. 333-00023). 4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995 (Exhibit 4-175 to Form 10-Q for quarter ended September 30, 1995). 4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996 (Exhibit 4-14 to Form 10-K for year ended December 31, 1995). 4(i) - Standby Note Purchase Credit Facility, dated as of August 17, 1994, among The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative Agent, Bank of America, The Bank of New York, The Fuji Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents (Exhibit 99-18 to Form 10-Q for quarter ended September 30, 1994). 99(a) - Belle River Participation Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-5 to Registration No. 2-81501). 99(b) - Belle River Transmission Ownership and Operating Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501). 99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Detroit Edison and Renaissance (Exhibit 99-6 to Registration No. 33-50325). 99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between Detroit Edison and Renaissance (Exhibit 99-7 to Registration No. 33-50325). 99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between Detroit Edison and Renaissance (Exhibit 99-8 to Registration No. 33-50325). 99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-12 to Registration No. 33-50325). 34
35 Exhibit Number - ------- 99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for quarter ended September 30, 1994). 99(h) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325). 99(i) - First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q for quarter ended September 30, 1994). 99(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance (Exhibit 99-9 to Registration No. 33-50325). 99(k) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between Detroit Edison and Renaissance (Exhibit 99-10 to Registration No. 33-50325). 99(l) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract dated as of September 1, 1993, between Detroit Edison and Renaissance (Exhibit 99-11 to Registration No. 33-50325). 99(m) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance (Exhibit 99-21 to Form 10-Q for quarter ended September 30, 1994). (b) Reports on Form 8-K Detroit Edison filed a Current Report on Form 8-K, dated January 1, 1996, disclosing that DTE Energy Company had become the parent holding company of Detroit Edison. Registrants filed a Current Report on Form 8-K, dated January 22, 1996, discussing the write-off of the remaining net book value of Detroit Edison's steam heating plant assets. 35
36 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DTE ENERGY COMPANY -------------------------------------- (Registrant) Date May 7, 1996 /s/ SUSAN M. BEALE -------------------- -------------------------------------- Susan M. Beale Vice President and Corporate Secretary Date May 7, 1996 /s/ RONALD W. GRESENS -------------------- -------------------------------------- Ronald W. Gresens Vice President and Controller 36
37 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE DETROIT EDISON COMPANY --------------------------------------- (Registrant) Date May 7, 1996 /s/ SUSAN M. BEALE -------------------- --------------------------------------- Susan M. Beale Vice President and Corporate Secretary Date May 7, 1996 /s/ RONALD W. GRESENS -------------------- --------------------------------------- Ronald W. Gresens Vice President and Controller 37
38 FILE NO. DTE ENERGY COMPANY 1-11607 THE DETROIT EDISON COMPANY 1-2198 QUARTERLY REPORTS ON FORM 10-Q FOR DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY FOR QUARTER ENDED MARCH 31, 1996 Exhibits Exhibits filed herewith. Exhibit Number ------- 4-176 - Support Agreement, dated as of March 8, 1996, between the Company and Detroit Edison. 10-4 - Amended and Restated Savings Reparation Plan. 11-3 - DTE Energy Company and Subsidiary Companies Primary and Fully Diluted Earnings Per Share of Common Stock. 15-1 - Awareness Letter of Deloitte & Touche LLP regarding their report dated May 7, 1996. 27-3 - Financial Data Schedule for the period ended March 31, 1996 for the Company. 27-4 - Financial Data Schedule for the period ended March 31, 1996 for Detroit Edison. 99-9 - Credit Agreement, dated as of March 1, 1996 among DTE Capital Corporation, the Initial Lenders named therein, and Citibank, N.A., as Agent. 99-10 - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of October 4, 1988, between Detroit Edison and Renaissance.
39 99-11 - Third Amendment, dated as of March 8, 1996, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99-12 - Third Amendment, dated as of March 8, 1996, to $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. See Page Nos. ____ thru ____ for location of Exhibits Incorporated by Reference Exhibits incorporated herein by reference. 3(a) - Restated Articles of Incorporation of Detroit Edison, as filed December 10, 1991 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau. 3(b) - Certificate containing resolution of the Detroit Edison Board of Directors establishing the Cumulative Preferred Stock, 7.75% Series as filed February 22, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau. 3(c) - Certificate containing resolution of the Detroit Edison Board of Directors establishing the Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau. 3(d) - Amended and Restated Articles of Incorporation of DTE Energy Company, dated December 13, 1995. 3(e) - Agreement and Plan of Exchange. 3(f) - Amended and Restated By-Laws, dated as of February 26, 1996, of the Company. 3(g) - Amended and Restated By-Laws, dated as of February 26, 1996, of Detroit Edison. ii
40 Exhibit Number ------- 4(a) - Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison and Bankers Trust Company as Trustee and indentures supplemental thereto, dated as of dates indicated below: September 1, 1947 October 1, 1968 November 15, 1971 January 15, 1973 June 1, 1978 June 30, 1982 August 15, 1982 October 15, 1985 November 30, 1987 July 15, 1989 December 1, 1989 February 15, 1990 November 1, 1990 April 1, 1991 May 1, 1991 May 15, 1991 September 1, 1991 November 1, 1991 January 15, 1992 February 29, 1992 April 15, 1992 July 15, 1992 July 31, 1992 November 30, 1992 January 1, 1993 March 1, 1993 March 15, 1993 April 1, 1993 April 26, 1993 May 31, 1993 June 30, 1993 June 30, 1993 September 15, 1993 March 1, 1994 June 15, 1994 August 15, 1994 December 1, 1994 August 1, 1995 iii
41 Exhibit Number ------- 4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993. 4(c) - First Supplemental Note Indenture, dated as of June 30, 1993. 4(d) - Second Supplemental Note Indenture, dated as of September 15, 1993. 4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994. 4(f) - First Amendment, dated as of December 12, 1995, to Third Supplemental Note Indenture, dated as of August 15, 1994. 4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995. 4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996. 4(i) - Standby Note Purchase Credit Facility, dated as of August 17, 1994, among The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative Agent, Bank of America, The Bank of New York, The Fuji Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents. 99(a) - Belle River Participation Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982. 99(b) - Belle River Transmission Ownership and Operating Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982. 99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Detroit Edison and Renaissance. 99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between Detroit Edison and Renaissance. 99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between Detroit Edison and Renaissance. iv
42 99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New York Branch, as Agent. v
43 Exhibit Number - ------- 99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(h) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New York Branch, as Agent. 99(i) - First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance . 99(k) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between Detroit Edison and Renaissance . 99(l) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract dated as of September 1, 1993, between Detroit Edison and Renaissance. 99(m) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance. vi