ITEM 2. PROPERTIES
UTILITY SERVICES
MichCon operates natural gas distribution, transmission and storage facilities in the state of Michigan. At December 31, 1993, MichCon's distribution system included 14,680 miles of distribution mains, 1,021,739 service lines and 1,145,687 active meters. MichCon owns 2,502 miles of transmission and production lines which deliver natural gas to the distribution districts and interconnect its storage fields with the sources of supply and the market areas. MichCon also owns properties relating to five underground storage fields with an aggregate storage capacity of approximately 130 Bcf. Additionally, MichCon owns district office buildings, service buildings and gas receiving and metering stations. MichCon occupies its principal office buildings, located in Detroit and Grand Rapids, Michigan under long-term leases. Portions of these buildings are subleased.
Most of MichCon's properties are held in fee, by easement, or under lease agreements. The principal plants and properties of MichCon are held subject to the lien of MichCon's Indenture of Mortgage and Deed of Trust under which MichCon's First Mortgage Bonds are issued. Some existing properties are being fully utilized and new properties are being added to meet the requirements of expansion into new areas.
Citizens owns all of the properties used in the conduct of its utility business. Included in these properties is a gas distribution system, a two-story office building in downtown Adrian and a one-story service center.
NONUTILITY SERVICES
The Saginaw Bay partnerships own substantially all of the properties used in the conduct of their business, primarily a 126-mile transmission line and related lateral lines.
The Supply Development Group has interest in properties used for gas production, including compressor facilities and gathering lines.
Genix owns certain properties including land, buildings and computer equipment located in Pittsburgh, Pennsylvania and the metropolitan Detroit area.
MCN's facilities are suitable and adequate for their intended use.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
In addition to utility services' regulatory proceedings and other matters described in Item 1, "Business", MCN is also involved in a number of law suits and administrative proceedings in the ordinary course of business with respect to taxes, environmental matters, personal injury, property damage claims and other matters.
The management of MCN believes that the resolution of these matters will not have a material adverse effect on the financial condition of MCN.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to all executive officers of MCN, as of February 28, 1994, is set forth below. Such officers are appointed by the Board of Directors for terms expiring at the next annual meeting of shareholders scheduled to be held on April 28, 1994.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MCN Common Stock is traded on the New York Stock Exchange. On March 1, 1994 there were 26,248 holders of record of MCN Common Stock. Information regarding the market price of MCN Common Stock and related security holder matters is incorporated by reference herein from the section entitled "Supplementary Financial Information" in MCN's 1993 Annual Report to Shareholders, pages 52 and 53.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Information required pursuant to this item is incorporated by reference herein from the section entitled "Supplementary Financial Information" in MCN's 1993 Annual Report to Shareholders, pages 52 and 53.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information required pursuant to this item is incorporated by reference herein from the section entitled "Management's Discussion and Analysis" in MCN's 1993 Annual Report to Shareholders, pages 30 through 35.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required pursuant to this item is incorporated by reference herein from the following sections of MCN's 1993 Annual Report to Shareholders. The consolidated statement of income, cash flows and capitalization are for each of the years ended December 31, 1993, 1992 and 1991 and the consolidated statement of financial position is as of December 31, 1993 and 1992.
Consolidated Statement of Income, page 36;
Consolidated Statement of Financial Position, page 37;
Consolidated Statement of Capitalization, page 38;
Consolidated Statement of Cash Flows, page 39;
Summary of Accounting Policies, page 40;
Notes to Consolidated Financial Statements, pages 41 through 49;
Independent Auditors' Report, page 50; and
Supplementary Financial Information, pages 52 and 53.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth in the section entitled "Election of Directors" in MCN's March 1994 definitive Proxy Statement is incorporated by reference herein.
Information concerning the executive officers of MCN is set forth in the section entitled "Executive Officers of the Registrant" on page 12 in Part I of this Report.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
The information set forth in the section entitled "Filings Under Section 16(a)" in MCN's March 1994 definitive Proxy Statement is incorporated by reference herein.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the sections entitled "Directors' Compensation," "Executive Compensation," "Change of Control Employment Agreements," "Retirement Plans" and "Compensation Committee Interlocks and Insider Participation" in MCN's March 1994 definitive Proxy Statement is incorporated by reference herein.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the section entitled "Election of Directors" in MCN's March 1994 definitive Proxy Statement is incorporated by reference herein.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth in the section entitled "Executive Compensation" in MCN's March 1994 definitive Proxy Statement is incorporated by reference herein.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) LIST OF DOCUMENTS FILED AS PART OF THE REPORT:
1. For a list of financial statements incorporated by reference, see the section entitled "Financial Statements and Supplementary Data", on page 13 in Part II, Item 8 of this Report.
2. Financial Statement Schedules for each of the three years in the period ended December 31, 1993, unless otherwise noted, are included herein in response to Part II, Item 8:
Independent Auditors' Report
Schedules other than those referred to above are omitted as not applicable or not required, or the required information is shown in the financial statements or notes thereto.
INDEPENDENT AUDITORS' REPORT
MCN Corporation:
We have audited the consolidated financial statements of MCN Corporation and subsidiaries as of December 31, 1993 and 1992, and for each of the three years in the period ended December 31, 1993, and have issued our report thereon dated February 8, 1994; such consolidated financial statements and report are included in your 1993 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedules of MCN Corporation and subsidiaries, listed in Item 14. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
Deloitte & Touche Detroit, Michigan February 8, 1994
SCHEDULE II
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES (THOUSANDS OF DOLLARS)
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NOTES:
(1) Represents unsecured promissory note payable, due August 2004, plus accrued interest thereon. Interest on the promissory note accrues at 9% per annum. The interest is payable upon maturity of the promissory note, but has been paid annually in recent years.
(2) Represents notes payable, due various dates through May 2008, plus accrued interest thereon. Interest on the notes accrues at 16% per annum, compounded at the end of each calendar year. The interest is payable upon maturity of the notes.
(3) Represents note payable, due June 1996, plus accrued interest thereon. Interest on the note accrues at 8 3/4% per annum. The interest is payable upon maturity of the note.
(4) Represents note payable, due June 1992, to temporarily support the construction of gas storage facilities. The note accrued interest at a variable interest rate based on the prime rate, payable quarterly and upon maturity.
SCHEDULE V
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT (THOUSANDS OF DOLLARS)
SCHEDULE V
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT -- (CONCLUDED) (THOUSANDS OF DOLLARS)
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NOTES:
SCHEDULE VI
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT (THOUSANDS OF DOLLARS)
SCHEDULE VI
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT -- (CONCLUDED) (THOUSANDS OF DOLLARS)
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NOTES:
SCHEDULE VII
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE VII -- GUARANTEES OF SECURITIES OF OTHER ISSUERS DECEMBER 31, 1993 (THOUSANDS OF DOLLARS)
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NOTES:
(1) Reference is made to Note 5a to the Consolidated Financial Statements in the 1993 Annual Report to Shareholders of MCN Corporation, page 43.
SCHEDULE VIII
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS (THOUSANDS OF DOLLARS)
SCHEDULE VIII
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS -- (CONCLUDED)
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NOTES:
(1) Reference is made to Note 5b to the Consolidated Financial Statements in the 1993 Annual Report to Shareholders of MCN Corporation, page 44. During the year ended December 31, 1993, $6,575,000 was transferred from Deferred Credits and Other Liabilities -- Other to Current Liabilities -- Other. Similarly, $2,000,000 was transferred during the year ended December 31, 1992. Actual expenditures deducted against the reserve in 1993 and 1992 were $2,073,000 and $781,000, respectively.
(2) During 1991, MCN established a reserve relating to the restructuring of the gas technology business where MCN entered into a partnership with a third party to more effectively market its natural gas torch products.
SCHEDULE IX
MCN CORPORATION AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS (THOUSANDS OF DOLLARS)
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NOTES:
(1) Reference is made to Note 4 to the Consolidated Financial Statements in the 1993 Annual Report to Shareholders of MCN Corporation, page 43. Fees are paid to compensate banks for lines of credit.
(2) Represents amounts payable, net of any discount.
(3) Weighted average effective interest rates were calculated on the net proceeds basis and do not include the effect of line of credit fees.
SCHEDULE X
MCN CORPORATION AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION (THOUSANDS OF DOLLARS)
3. Exhibits, Including Those Incorporated By Reference
(B) REPORTS ON FORM 8-K:
None. - ------------------------- * Indicates document filed herewith.
References are to MCN (File No. 1-10070) for documents incorporated by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
MCN CORPORATION (Registrant)
By: /s/ Patrick Zurlinden Patrick Zurlinden Controller and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the date indicated.