FORM 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
Commission file number 1-11607
DETROIT EDISON COMPANY SAVINGS & STOCK OWNERSHIP PLAN
FOR EMPLOYEES REPRESENTED BY LOCAL 223 OF THE
UTILITY WORKERS UNION OF AMERICA
(Full title of the plan and the address of the plan,
if different from that of the issuer named below)
DTE ENERGY COMPANY
One Energy Plaza
Detroit, Michigan 48226-1279
(Name of issuer of the common stock issued pursuant to the
plan and the address of its principal executive office)
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
June 26, 2009
To the
Participants, Benefit Plan Administration Committee, and Investment Committee
Detroit Edison Company Savings & Stock Ownership Plan for Employees Represented by
Local 223 of the Utility Workers Union of America
Detroit, Michigan
We have audited the accompanying statements of net assets available for benefits of the Detroit
Edison Company Savings & Stock Ownership Plan for Employees Represented by Local 223 of the Utility
Workers Union of America (the “Plan”) as of December 31, 2008 and 2007, and the related statement
of changes in net assets available for benefits for the year ended December 31, 2008. These
financial statements are the responsibility of the Plan’s management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly, in all material respects,
the net assets available for benefits of the Plan as of December 31, 2008 and 2007, and the changes
in net assets available for benefits for the year ended December 31, 2008, in conformity with
accounting principles generally accepted in the United States of America.
As
discussed in Note 3, effective January 1, 2008, the Plan has adopted the fair value measurement
and disclosure provisions contained in Statement of Financial Accounting Standards (“SFAS”) No.
157, “Fair Value Measurements,” and SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities – Including an Amendment of FASB Statement No. 115.”
Our audits were conducted for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplemental schedule of assets held for investment purposes as of December
31, 2008 is presented for purposes of complying with the Department of Labor’s Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974,
as amended, and is not a required part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in our audits of the basic financial statements and,
in our opinion, is fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
/s/ George
Johnson & Company
CERTIFIED PUBLIC ACCOUNTANTS
Detroit, Michigan
1
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Statement of Net Assets Available for Benefits
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December 31 |
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| (Thousands) |
|
2008 |
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2007 |
|
ASSETS |
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|
|
|
|
|
|
|
Investment in DTE Energy Master Plan Trust (Note 5) |
|
$ |
298,219 |
|
|
$ |
419,308 |
|
|
|
|
|
|
|
|
|
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Loans due from Participants |
|
|
17,986 |
|
|
|
17,857 |
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|
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NET ASSETS AVAILABLE FOR BENEFITS |
|
$ |
316,205 |
|
|
$ |
437,165 |
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|
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|
|
|
See accompanying Notes to Financial Statements
2
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Statement of Changes in Net Assets Available For Benefits
For the Year Ended December 31, 2008
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| (Thousands) |
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ADDITIONS TO NET ASSETS ATTRIBUTED TO: |
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Investment Income: |
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Dividends and interest |
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$ |
9,986 |
|
Interest on loans to Participants |
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|
1,050 |
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|
|
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11,036 |
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Contributions: |
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Employer |
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7,153 |
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Participants |
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17,130 |
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|
|
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|
|
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24,283 |
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Total Additions |
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35,319 |
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: |
|
|
|
|
Net depreciation in fair value of investments
in the DTE Energy Master Plan Trust |
|
|
(105,732 |
) |
Distributions and withdrawals |
|
|
(30,609 |
) |
Administrative fees |
|
|
(81 |
) |
Transfers of assets between sponsored plans (net) |
|
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(19,857 |
) |
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|
|
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|
|
|
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Total Deductions |
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(156,279 |
) |
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|
|
|
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NET DECREASE |
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(120,960 |
) |
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NET ASSETS AVAILABLE FOR BENEFITS |
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|
|
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Beginning of year |
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437,165 |
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|
|
|
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|
|
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End of year |
|
$ |
316,205 |
|
|
|
|
|
See accompanying Notes to Financial Statements
3
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
NOTE 1 — PLAN DESCRIPTION
The following description of the Detroit Edison Company Savings & Stock Ownership Plan for
Employees Represented by Local 223 of the Utility Workers Union of America (Plan) provides only
general information. Participants should refer to the Plan document for a more complete
description of the Plan’s provisions.
General
The Plan is a voluntary, defined contribution plan. Regular full-time and part-time employees of
Detroit Edison Company (Company), DTE Energy Corporate Services, LLC, Michigan Consolidated Gas
Company (MichCon) — Gas, and Transmission and Storage Operations (T&SO) or a DTE Energy Company
non-regulated business (Participating Affiliates) represented by Local 223 of the Utility Workers
Union of America are able to participate in the Plan as soon as administratively practical upon
hire (Participant). The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA).
DTE Energy
Corporate Services, LLC, as the Plan sponsor, has delegated
responsibility for the investment aspects of the Plan to the
Investment Committee and for the administration of the Plan to the
Benefit Plan Administration Committee (BPAC).
Brokerage fees, transfer taxes and other expenses incidental to the purchase or sale of securities
are paid from Plan assets. Investment management fees are paid from Plan assets. These expenses
are reflected as a reduction in the fair value of the Funds.
Contributions
A Participant may contribute to the Plan on a pre-tax (Tax Deferred Contributions), post-tax
(Employee Contributions) and, if applicable, a catch-up contribution basis (Catch-Up
Contributions). Participants age 50 or older are eligible to make pre-tax Catch-Up Contributions in
accordance with, and subject to the limitations of, Section 414 (v) of the Internal Revenue Code
Section of 1986, as amended (IRC). Participants may contribute up to 100 percent of eligible
compensation (defined in the Plan), on a combined Tax Deferred Contributions, Employee
Contributions, and Catch-Up Contributions (if applicable) basis, after required withholdings and
voluntary payroll deductions. Tax Deferred Contributions, Employee Contributions and Catch-Up
Contributions are automatically adjusted downward if the full deferral amounts elected cannot be
taken. Participants may also directly roll over into the Plan distributions of certain assets from
a tax-qualified plan of a prior employer, including Roth 401(k) Rollover, beginning May 1, 2008
(Direct Rollover Contributions).
Effective May 1, 2008, Participants are able to make Roth 401(k) Contributions and Roth 401(k)
Catch-Up Contributions. These contributions must be aggregated with a Participant’s Tax Deferred
Contributions and Catch-Up Contributions, respectively, when applying the IRC limit on the amount
of pre-tax and Catch-Up contributions that are permitted for a year.
The IRC limits the amount of Tax Deferred Contributions, Roth 401(k) Contributions, Catch-Up
Contributions and Roth 401(k) Catch-Up Contributions which may be contributed to the Plan annually.
These amounts are indexed for inflation annually. In the event a Participant’s Tax Deferred
Contributions reach the maximum
4
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
amount permitted by the IRC, further contributions for the remainder of the Plan year will automatically
be deemed to be Employee Contributions. If a Participant’s total annual additions (Tax Deferred
Contributions, Employee Contributions, Roth 401(k) Contributions and Company Contributions) reach
the IRC limit for the Plan year, the Participant’s contributions will be stopped or refunded, as
applicable.
After the Participant completes six months of service, the Company makes contributions as follows:
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For Detroit Edison Participants Company Contributions are 75 percent of the first 4
percent of the aggregate of Employee Contributions and Tax Deferred Contributions and 50
percent of the next 4 percent of the aggregate of Employee Contributions and Tax Deferred
Contributions. There are no Company Contributions for Employee Contributions and Tax
Deferred Contributions, which in the aggregate exceed 8 percent of basic compensation. |
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• |
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For MichCon Gas Participants hired prior to August 3, 2004 and MichCon T&SO Participants
hired prior to November 1, 2004, the Company Contributions are 100 percent up to the first
5 percent of the aggregate of a Participant’s Tax Deferred Contributions and Employee
Contributions for Participants who have at least six months of service but less than 23
years of service. For Participants who have completed 23 or more years of service, the
Company Contributions are increased to 6 percent as long as the aggregate of the
Participant’s Tax Deferred Contribution and Employee Contributions are at least 6 percent. |
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• |
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For MichCon Gas Participants hired on or after August 3, 2004 and MichCon T&SO
Participants hired on or after November 1, 2004, the Company Contributions are 75 percent
of the first 4 percent of the aggregate of Employee Contributions and Tax Deferred
Contributions and 50 percent of the next 4 percent of the aggregate of Employee
Contributions and Tax Deferred Contributions. There are no Company Contributions for
Employee Contributions and Tax Deferred Contributions, which in the aggregate exceed 8
percent of basic compensation. |
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For Participating Affiliate employees, the Participating Affiliate will contribute $1 to
a Participant’s Plan account for each $1 the Participant contributes, but not more than 4
percent of the Participant’s eligible compensation. The Participating Affiliate will
contribute $0.50 for each $1 the Participant contributes on the next 4 percent of eligible
compensation. There are no Company Contributions for Employee Contributions and Tax
Deferred Contributions, which in the aggregate exceed 8 percent of basic compensation. |
Catch-Up Contributions, Roth 401(k) Contributions and Roth 401(k) Catch-Up Contributions are not
eligible for Company Contributions.
While the Company has made its contributions to the Trustee with respect to a Plan year on a
current basis, the Plan permits the Company to make Company Contributions for a Plan year no later
than the due date (including extensions of time) for filing DTE Energy Company’s consolidated
federal income tax return for such year. Employee Contributions and Tax Deferred Contributions are
paid to the Plan when amounts can be reasonably segregated. The Company expects to continue to make
Plan contributions on a current basis.
5
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
Participant Accounts
Each Participant’s account is credited with the Participant’s contributions, including eligible
Direct Rollover Contributions, allocations of the Company Contributions and Plan earnings.
Allocations are based on Participant earnings or account balances, as defined. Forfeited balances
of terminated Participants’ nonvested accounts are used to reduce future Company Contributions.
The benefit to which a Participant is entitled is the benefit that can be provided from the
Participant’s vested account.
Vesting
A Detroit Edison Participant or MichCon Participant vests in all Company Contributions on a graded
five-year schedule (for Participants hired before August 1, 2004 or November 1, 2004, as
applicable) or a graded six-year schedule (for Participants hired on or after August 1, 2004 or
November 1, 2004, as applicable), with Participants being 20 percent vested after completing two
years of service. In addition, a Participant will have a fully vested interest in Company
Contributions upon (a) attainment of age 65, (b) termination due to total disability, if entitled
to benefits under the Company’s Long Term Disability Benefits Plan, or (c) death.
A Participating Affiliate employee is fully vested in Company Contributions immediately.
Employee Contributions, Tax Deferred Contributions, Roth 401(k) Contributions, Catch-Up
Contributions, Roth 401(k) Catch-Up Contributions and Direct Rollover Contributions are fully
vested at all times.
Investment Options
Participants may elect to have their Employee Contributions, Tax Deferred Contributions, Roth
401(k) Contributions, Catch-Up Contributions, Roth 401(k) Catch-Up Contributions and Direct
Rollover Contributions invested entirely in any one of the investment funds or in any combination
of the investment funds. Participants may transfer existing account balances in the investment
funds on a daily basis. Participants may change their investment direction and amount of future
contributions effective with the next payroll period.
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• |
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For Detroit Edison employees, prior to January 1, 2008,
100 percent of Company
Contributions were required to be invested in the restricted DTE Energy Stock Fund until
they matured. Company Contributions matured on January 1 of the second calendar year
following the calendar year during which they were contributed to the Plan. Effective
January 1, 2008, the restriction to keep Company Contributions invested in the DTE Energy
Stock Fund until maturity was lifted and this amount may be redirected to another
investment at any time. |
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• |
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For MichCon Participants prior to January 1, 2008, 100 percent(60% for MichCon Gas Participants hired prior to August 3, 2004) of Company Contributions were required to be invested in the restricted DTE Energy Stock Fund until they matured, Company
Contributions made in DTE Energy common stock could not be redirected to another investment
fund in the Plan until after one full calendar year following
the year in which the contribution was made. |
6
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
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Effective January 1, 2008, the
restriction to keep Company Contributions invested in the DTE Energy Stock Fund for one full
calendar year following the year in which the Company Contributions were made was lifted and
this amount may be redirected to another investment at any time. In
addition, effective January 1, 2008 for MichCon Gas Participants
hired prior to August 3, 2004, the percentage of Company
Contributions required to be invested in the DTE Energy Stock Fund
was increased from 60% to 100%. |
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• |
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For Participating Affiliate Participants, the Company Contributions on 100 percent of
the first 4 percent of eligible compensation will be invested in restricted shares in the
restricted DTE Energy Stock Fund and the Company Contributions on the next 4 percent of
eligible compensation will be invested in the unrestricted DTE Energy Stock Fund and may be
redirected to another investment option at any time. Company contributions for a Plan year
that are invested in restricted stock may be redirected to another investment fund in the
Plan when they are mature, that is, after one full calendar year following the year in
which the contribution was made. |
The entire DTE Energy Stock Fund is considered to be the Employee Stock Ownership Plan (ESOP)
portion of the Plan. Quarterly dividends from DTE Energy common stock are automatically reinvested
in DTE Energy common stock. DTE Energy common stock dividends accumulated under the ESOP in a
Participant’s account may be paid out in cash to the Participant (at the Participant’s election)
within 90 days of the end of the previous Plan year.
The DTE Energy Stock Fund also contains participant-directed investments. The changes in the
participant-directed and nonparticipant-directed portions of the DTE Energy Stock Fund are not
separately disclosed in Note 6.
Contributions received by the Trustee for the DTE Energy Stock Fund are invested in DTE Energy
common stock. The Trustee currently purchases and sells shares of DTE Energy common stock in open
market transactions at prevailing market prices. However, the Trustee may purchase or sell DTE
Energy common stock from or to DTE Energy if the purchase or sale price is for adequate
consideration. Brokerage commissions are charged against the DTE Energy Stock Fund.
A Participant’s interest in the DTE Energy Stock Fund is measured by share trading. A share-traded
investment is traded and valued on a share basis.
Transfers
Net transfers represent Participants transferring between different plans of the affiliated group
due to a change in employment status.
Administrative and Brokerage Fees
Expenses in connection with the purchase or sale of stock or other securities are charged to the
Participant for whom the purchases or sales are made. Participants pay 100 percent of the
investment management and other related expenses of the funds. The Trustee and the Company pay all
costs of administering the Plan.
7
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
Forfeited Accounts
During 2008 and 2007, approximately $11,000 and $16,000 of forfeited nonvested accounts were used
to reduce Company Contributions.
Distributions, Withdrawals and Loans
Distributions of Tax Deferred Contributions will be made only upon retirement or disability as
defined under the Plan, termination of employment, death, attainment of age 591/2, or hardship. A
hardship distribution of Tax Deferred Contributions (and generally not the earnings thereon) is
permitted only for (a) medical expenses for the Participant, his or her spouse, children or
dependents, (b) tuition expenses for the Participant, his or her spouse, children or dependents,
(c) expenditures to purchase a principal residence, (d) payments to prevent eviction or foreclosure
on a principal residence, (e) payment of funeral expenses for the Participant’s deceased parent,
spouse, child or dependents, or (f) payment of expenses for the repair of damage to the
Participant’s principal residence due to casualty loss.
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Detroit Edison, MichCon Gas Participants hired on or after August 3, 2004 and
Participating Affiliate Participants may borrow funds from their accounts attributable to
Employee Contributions, Tax Deferred Contributions, Catch-up Contributions, Direct Rollover
Contributions, Roth 401(k) Contributions, and Roth 401(k) Catch-Up Contributions no more
frequently than once during any calendar year and cannot have more than five loans
outstanding at one time, only one of which can be a principal residence loan. Participants
may borrow from their fund accounts, subject to certain terms and conditions, for a period
of five years for a general purpose loan, and 25 years for principal residence loans, at
fixed rates of interest determined monthly based on an average of the interest rates
charged by local lending institutions for similar types of loans at a minimum of $1,000 up
to the lesser of: |
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$50,000 reduced by (a) the highest outstanding balance of loans from the
Plan during the one-year period ending on the day before the loan was made, over (b)
the outstanding balance of loans from the Plan on the date the loan is made, or |
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o |
|
50 percent of the Participant’s Account at the time the loan is made. |
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|
MichCon Gas Participants hired prior to August 3, 2004 may borrow funds from their
accounts attributable to Tax Deferred Contributions, Employee Contributions, Catch-Up
Contributions, Direct Rollover Contributions, Roth 401(k) Contributions and Roth 401(k)
Catch-Up Contributions no more frequently than once during any calendar year and cannot
have more than two loans outstanding at one time, only one of which can be a principal
residence loan. Participants may borrow from their fund accounts, subject to certain terms
and conditions, for a period of one to five years, and for principal residence loans up to
15 years, at a fixed rate, updated quarterly, at the prime interest rate plus 21/2 percent (up to
the nearest 1/2 percent) at a minimum of $500 up to the lesser of: |
8
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
| |
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$50,000 reduced by (a) the highest outstanding balance of loans from the
Plan during the one-year period ending on the day before the loan was made, over (b)
the outstanding balance of loans from the Plan on the date the loan is made, or |
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50 percent of the Participant’s Account at the time the loan is made. |
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MichCon T&SO Participants may borrow funds from their accounts attributable to Tax
Deferred Contributions, Employee Contributions, Catch-Up Contributions, Direct Rollover
Contributions, Roth 401(k) Contributions and Roth 401(k) Catch-Up Contributions no more
frequently than once during any calendar year and cannot have more than two loans
outstanding at one time, only one of which can be a principal residence loan. Participants
may borrow from their fund accounts, subject to certain terms and conditions, for a period
of one to five years, and for principal residence loans up to 25 years, at a fixed rate,
updated monthly, at the prime interest rate plus 1 percent at a minimum of $1,000 up to the
lesser of: |
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$50,000 reduced by (a) the highest outstanding balance of loans from the
Plan during the one-year period ending on the day before the loan was made, over (b)
the outstanding balance of loans from the Plan on the date the loan is made, or |
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50 percent of the Participant’s Account at the time the loan is made. |
Proceeds for any loan are obtained through the pro rata liquidation of the Participant’s account,
then transferred to the Participant’s loan account and thereupon paid in cash to the Participant by
the Trustee. Loan repayments of principal and interest are invested as received according to the
Participant’s current investment direction. Prepayment of loans can be made without penalty
provided such prepayment is made in full.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to
discontinue its contributions at any time and to terminate the Plan subject to the provisions of
ERISA, except as otherwise agreed to pursuant to collective bargaining. In the event of Plan
termination, Participants will become 100 percent vested in their accounts.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying financial statements of the Plan are prepared on the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires Plan management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
9
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
the reported amounts of additions to and deductions from net assets available for benefits during the reporting period. Actual results
could differ from those estimates.
Valuation of Investments and Income Recognition
Investments are stated at fair market value. Participant loans receivable are valued at cost,
which approximates fair value. The average cost basis is used for determining the cost of
investments sold. Unrealized appreciation and/or depreciation resulting from changes in fair value
are included in the Statement of Changes in Net Assets Available for Benefits.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded
on the accrual basis. Dividends are recorded on the ex-dividend date.
The DTE Energy Stock Fund recognizes gains and losses on stock distributed to terminated
Participants in settlement of their accounts equal to the difference between the cost and the fair
value of the shares distributed.
Payment of Benefits
Benefits are recorded when paid.
Risks and Uncertainties
The DTE Energy Master Plan Trust (Master Trust) invests in various securities, including government
securities and bonds, corporate debt instruments, stocks, investment partnerships, and derivative
instruments. Investment securities, in general, are exposed to various risks, such as interest
rate, credit, and overall market volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the values of investment
securities will occur in the near term and such changes could materially affect the amounts
reported in the financial statements.
NOTE 3 — FAIR VALUE
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standard (SFAS) No. 157, Fair Value Measurements. SFAS No. 157 defines fair value,
establishes a framework for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. It emphasizes that fair value is a market-based
measurement, not an entity-specific measurement. Effective January 1, 2008, the Plan adopted
SFAS No. 157.
SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date
in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs,
which refer broadly to assumptions that market participants use in pricing assets or liabilities.
These inputs can be readily observable, market corroborated or generally unobservable inputs. The
Plan makes certain assumptions it believes that market participants would use in pricing assets or
liabilities, including assumptions about risk, and
10
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
the risks inherent in the inputs to valuation
techniques. The Plan believes it uses valuation techniques that maximize the use of observable
market-based inputs and minimize the use of unobservable inputs.
SFAS No. 157 establishes a fair value hierarchy, which prioritizes the inputs to valuation
techniques used to measure fair value in three broad levels. The fair value hierarchy gives the
highest priority to quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the
inputs used to measure fair value might fall in different levels of the fair value hierarchy.
SFAS No. 157 requires that assets and liabilities be classified in their entirety based on the
lowest level of input that is significant to the fair value measurement in its entirety. Assessing
the significance of a particular input may require judgment considering factors specific to the
asset or liability, and may affect the valuation of the asset or liability and its placement within
the fair value hierarchy. SFAS 157 defines fair value based on the following levels:
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• |
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Level 1 — Consists of unadjusted quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access as of the reporting date. |
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• |
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Level 2 — Consists of inputs other than quoted prices included within Level 1 that are
directly observable for the asset or liability or indirectly observable through
corroboration with observable market data. |
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• |
|
Level 3 — Consists of unobservable inputs for assets or liabilities whose fair value is
estimated based on internally developed models or methodologies using inputs that are
generally less readily observable and supported by little, if any, market activity at the
measurement date. Unobservable inputs are developed based on the best available information
and subject to cost-benefit constraints. |
As of December 31, 2008, $17,986,000 of Loans Due from Participants specific to the Plan are
classified as Level 3 investments in accordance with SFAS 157. See Note 5 for a reconciliation of
Master Trust investments measured at fair value.
The
following table presents the reconciliation of Level 3
investments:
| |
|
|
|
|
(Thousands) |
|
|
|
|
Investment balance as of January 1, 2008 |
|
$ |
17,857 |
|
Purchases, sales, and issuances, net |
|
|
129 |
|
|
|
|
|
|
|
|
|
|
Investment balance as of December 31, 2008 |
|
$ |
17,986 |
|
|
|
|
|
NOTE 4 — FEDERAL INCOME TAX STATUS
On May 8, 2003, the Internal Revenue Service issued a favorable determination letter with respect
to the qualified status of the Plan and the conversion of the DTE Energy Stock Fund to an ESOP.
The favorable determination letter indicates that the terms of the Plan and related Trust conform
to the requirements of Sections 401(a)
11
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
and 401(k) of the IRC. The Company, therefore, has a basis
for deducting contributions to the Plan. The Participants are not taxed currently on Tax Deferred
Contributions and Company Contributions to the Plan or on Plan earnings (including appreciation)
allocated to their accounts. The Plan has been amended since receiving the determination letter.
However, the Plan administrator and the Plan’s legal counsel believe that the Plan and related
Trust are currently designed and being operated in compliance with the applicable requirements of
the IRC.
The Plan requires distributions under IRC Section 415 for contributions in excess of the annual IRC
Section 415(c) limits. There were no excess contributions in 2008 and 2007.
NOTE 5 — THE DTE ENERGY MASTER PLAN TRUST
The Master Trust consists of certain commingled assets of the Plan, the DTE Energy Company Savings
and Stock Ownership Plan, the Detroit Edison Company Savings & Stock Ownership Plan for Employees
Represented by Local 17 of the International Brotherhood of Electrical Workers, and the MichCon
Investment and Stock Ownership Plan.
The Plan’s investment in the Master Trust in the Statement of Net Assets Available for Benefits
represents the Plan’s allocated portion (approximately 28 percent in both December 31, 2008 and
2007, respectively). The Plan’s allocated portion of the investments is equal to the fair value of
the Plan’s assets contributed, adjusted by the Plan’s allocated share of the Master Trust
investment income and expenses, Employee and Company Contributions, and distributions and
withdrawals paid to Participants.
A summary of the Master Trust assets as of December 31, 2008 and 2007 is as follows:
| |
|
|
|
|
|
|
|
|
| (Thousands) |
|
2008 |
|
|
2007 |
|
Investments, at fair value |
|
|
|
|
|
|
|
|
DTE Energy Stock Fund |
|
$ |
236,233 |
|
|
$ |
279,031 |
|
Common/collective trust |
|
|
121,604 |
|
|
|
68,152 |
|
Registered investment companies |
|
|
712,541 |
|
|
|
1,160,983 |
|
|
|
|
|
|
|
|
Assets held in Master Trust |
|
$ |
1,070,378 |
|
|
$ |
1,508,166 |
|
|
|
|
|
|
|
|
12
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
The following is a summary of investment loss in the Master Trust for the year ended December 31,
2008:
| |
|
|
|
|
| (Thousands) |
|
|
|
|
Interest, dividend and other income on investments |
|
$ |
39,146 |
|
Net depreciation in common/collective trust |
|
|
(30,449 |
) |
Net depreciation in registered investment companies |
|
|
(375,701 |
) |
Net depreciation in DTE Energy Stock Fund |
|
|
(53,254 |
) |
|
|
|
|
|
|
|
|
|
Total investment loss |
|
$ |
(420,258 |
) |
|
|
|
|
The following table presents investments of the Master Trust measured at fair value as of
December 31, 2008:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| (Thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Total |
|
DTE Energy Stock Fund |
|
$ |
236,233 |
|
|
$ |
— |
|
|
$ |
236,233 |
|
Registered investment companies |
|
|
712,541 |
|
|
|
— |
|
|
|
712,541 |
|
Common/collective trusts |
|
|
— |
|
|
|
121,604 |
|
|
|
121,604 |
|
|
|
|
|
|
|
|
|
|
|
Total Investments at fair value |
|
$ |
948,774 |
|
|
$ |
121,604 |
|
|
$ |
1,070,378 |
|
|
|
|
|
|
|
|
|
|
|
NOTE 6 — DTE ENERGY STOCK FUND
The entire DTE Energy Stock Fund is considered to be the Employee Stock Ownership Plan (ESOP)
portion of the Plan. Quarterly dividends from DTE Energy common stock are automatically reinvested
in DTE Energy common stock. DTE Energy common stock dividends accumulated under the ESOP in a
Participant’s account may be paid out in cash to the Participant (at the Participant’s election)
within 90 days of the end of the previous Plan year.
13
Detroit Edison Company Savings & Stock Ownership Plan
for Employees Represented by Local 223
of the Utility Workers Union of America
Notes To Financial Statements
Significant components of the changes in net assets available for plan benefits in 2008 relating to
the DTE Energy Stock Fund are as follows:
| |
|
|
|
|
| (Thousands) |
|
|
|
|
Additions To Net Assets Attributed to: |
|
|
|
|
Dividends and interest |
|
$ |
2,753 |
|
Interest on loans to Participants |
|
|
141 |
|
Employer contributions |
|
|
6,772 |
|
Participant contributions |
|
|
1,586 |
|
|
|
|
|
Total Additions |
|
|
11,252 |
|
|
|
|
|
|
|
|
|
|
Deductions from Net Assets Attributed to: |
|
|
|
|
Net depreciation in fair value of investments in the Master Trust |
|
|
(13,969 |
) |
Distributions and withdrawals |
|
|
(6,088 |
) |
Net transfers from (to) other sponsored plans and other deductions |
|
|
(7,750 |
) |
|
|
|
|
Total Deductions |
|
|
(27,807 |
) |
|
|
|
|
|
|
|
|
|
Net Decrease |
|
|
(16,555 |
) |
Net Assets Available for Benefits |
|
|
|
|
Beginning of year |
|
|
93,853 |
|
|
|
|
|
End of year |
|
$ |
77,298 |
|
|
|
|
|
NOTE 7 — RELATED PARTY TRANSACTIONS
Certain Master Trust investments are shares of registered investment companies managed by Fidelity
Investments. Fidelity Investments is the Trustee as defined by the Plan; therefore, these
transactions qualify as party-in-interest.
14
DETROIT
EDISON COMPANY SAVINGS & STOCK OWNERSHIP PLAN FOR EMPLOYEES REPRESENTED BY LOCAL 223 OF THE UTILITY WORKERS UNION OF AMERICA
(Federal Employer Identification Number: 38-0478650; Plan Number: 003)
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
(Form 5500, Schedule H, Item 4i)
December 31, 2008
(in Thousands)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Description of Investment |
|
|
|
|
|
|
| |
|
|
|
Identity of Issue |
|
(Including Maturity Date |
|
|
|
|
|
|
| Party- in- |
|
Borrower, Lessor |
|
Rate of Interest, Collateral |
|
|
|
|
|
Current |
| Interest |
|
or Similar Party |
|
and Par or Maturity Value) |
|
Cost |
|
Value |
| |
* |
|
|
Plan participants |
|
Loan receivable, interest rates
ranged from 4.82 percent to
12 percent during 2008,
maturing through 2033 |
|
$ |
-0- |
|
|
$ |
17,986 |
|
16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustee (or other persons who administer the employee benefit plan) has duly caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
|
|
|
|
|
|
DETROIT EDISON COMPANY |
|
|
|
|
SAVINGS & STOCK OWNERSHIP PLAN |
|
|
|
|
FOR EMPLOYEES REPRESENTED BY |
|
|
|
|
LOCAL 223 OF THE |
|
|
|
|
UTILITY WORKERS UNION OF AMERICA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Douglas A. Green
Douglas A. Green, Chair
|
|
|
June 26, 2009
17
EXHIBIT INDEX
| |
|
|
|
|
| Number |
| |
|
|
|
|
| |
23 |
|
|
Consent of Independent Registered Public Accounting Firm — George Johnson & Company |