DTE Energy 2012 Annual Report Download - page 39

Table of Contents
Capital spending within our non-utility businesses is primarily for ongoing maintenance and expansion. The balance of non-utility spending is for
growth, which we manage very carefully. We look to make investments that meet strict criteria in terms of strategy, management skills, risks and returns. All
new investments are analyzed for their rates of return and cash payback on a risk adjusted basis. We have been disciplined in how we deploy capital and will
not make investments unless they meet our criteria. For new business lines, we initially invest based on research and analysis. We start with a limited
investment, we evaluate results and either expand or exit the business based on those results. In any given year, the amount of growth capital will be
determined by the underlying cash flows of the Company with a clear understanding of any potential impact on our credit ratings.
Net cash used for investing activities was higher in both 2012 and 2011 due primarily to increased capital expenditures by our utility and non-utility
businesses. The 2012 increase includes higher capital expenditures for the Bluestone Pipeline project and the Power and Industrial Projects acquisition of
fourteen on-site energy projects, partially offset by the proceeds from the sale of the Unconventional Gas Production business.
Cash from Financing Activities
We rely on both short-term borrowing and long-term financing as a source of funding for our capital requirements not satisfied by our operations.
Our strategy is to have a targeted debt portfolio blend of fixed and variable interest rates and maturity. We continually evaluate our leverage target, which
is currently 50 percent to 52 percent, to ensure it is consistent with our objective to have a strong investment grade debt rating.
Net cash used for financing activities was $443 million in 2012, compared to net cash used for financing activities of approximately $445 million for
the same period in 2011. The change was primarily attributable to lower redemptions of long-term debt, offset by a reduction in short-term borrowings.
Net cash used for financing activities was $445 million in 2011, compared to net cash used for financing activities of approximately $586 million for
the same period in 2010. The change was primarily attributable to increased short-term borrowings and long-term debt issuances, partially offset by increased
long-term debt redemptions.
Outlook
We expect cash flow from operations to increase over the long-term primarily as a result of growth from our utilities and non-utility businesses. We
expect growth in our utilities to be driven primarily by capital spending to maintain and improve our electric generation and electric and gas distribution
infrastructure and to comply with new and existing state and federal regulations that will result in additional environmental and renewable energy investments
which will increase the base from which rates are determined. Our non-utility growth is expected from additional investments primarily in our Gas Storage and
Pipelines and Power and Industrial Projects segments.
We may be impacted by the delayed collection of underrecoveries of our various recovery and tracking mechanisms as a result of timing of MPSC
orders. Energy prices are likely to be a source of volatility with regard to working capital requirements for the foreseeable future. We are continuing our efforts
to identify opportunities to improve cash flow through working capital initiatives and maintaining flexibility in the timing and extent of our long-term capital
projects.
We have approximately $800 million in long-term debt maturing in the next twelve months. The repayment of the principal amount of the Securitization
debt is funded through a surcharge payable by DTE Electric’s customers. The repayment of the other debt is expected to be paid through internally generated
funds or the issuance of long-term debt.
DTE Energy has approximately $1.6 billion of available liquidity at December 31, 2012, consisting of cash and amounts available under unsecured
revolving credit agreements.
We expect to issue equity of approximately $300 million in 2013 through our dividend reinvestment plan and pension and other employee benefit plans.
At the discretion of management, and depending upon financial market conditions, we anticipate making up to a $315 million contribution to the
pension plans in 2013. In January 2013, the Company contributed $145 million to its postretirement benefit plans. At the discretion of management, the
Company may make up to an additional $120 million contribution to its postretirement benefit plans in 2013.
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