Commission | Registrant; State of Incorporation; | IRS Employer | ||
File Number | Address; and Telephone Number | Identification No. | ||
1-9513 | CMS Energy Corporation (A Michigan Corporation) One Energy Plaza, Jackson, Michigan 49201 (517) 788-0550 | 38-2726431 | ||
1-5611 | Consumers Energy Company (A Michigan Corporation) One Energy Plaza, Jackson, Michigan 49201 (517) 788-0550 | 38-0442310 |
Name of Each Exchange | ||||
Registrant | Title of Class | on Which Registered | ||
CMS Energy Corporation | Common Stock, $.01 par value | New York Stock Exchange | ||
CMS Energy Trust I | 7.75% Quarterly Income Preferred Securities | New York Stock Exchange | ||
Consumers Energy Company | Preferred Stocks, $100 par value: $4.16 Series, $4.50 Series | New York Stock Exchange |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Page | ||||
Glossary | 4 | |||
PART I: | ||||
Item 1. | Business | 11 | ||
Item 1A. | Risk Factors | 25 | ||
Item 1B. | Unresolved Staff Comments | 32 | ||
Item 2. | Properties | 32 | ||
Item 3. | Legal Proceedings | 32 | ||
Item 4. | Submission of Matters to a Vote of Security Holders | 37 | ||
PART II: | ||||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 38 | ||
Item 6. | Selected Financial Data | 38 | ||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 39 | ||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 39 | ||
Item 8. | Financial Statements and Supplementary Data | 40 | ||
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | CO-1 | ||
Item 9A. | Controls and Procedures | CO-1 | ||
Item 9B. | Other Information | CO-2 | ||
PART III: | ||||
Item 10. | Directors, Executive Officers and Corporate Governance | CO-3 | ||
Item 11. | Executive Compensation | CO-3 | ||
Item 12. | Security Ownership of Certain Beneficial Owners and Management Related Stockholder Matters | CO-4 | ||
Item 13. | Certain Relationships and Related Transactions, and Director Independence | CO-5 | ||
Item 14. | Principal Accountant Fees and Services | CO-5 | ||
PART IV: | ||||
Item 15. | Exhibits, Financial Statement Schedules | CO-5 |
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ABATE | Association of Businesses Advocating Tariff Equity | |
ABO | Accumulated Benefit Obligation. The liabilities of a pension plan based on service and pay to date. This differs from the Projected Benefit Obligation that is typically disclosed in that it does not reflect expected future salary increases. | |
AEI | Ashmore Energy International, a non-affiliated company | |
AFUDC | Allowance for Funds Used During Construction | |
ALJ | Administrative Law Judge | |
AMT | Alternative minimum tax | |
AOC | Administrative Order on Consent | |
AOCI | Accumulated Other Comprehensive Income | |
AOCL | Accumulated Other Comprehensive Loss | |
APB | Accounting Principles Board | |
APB Opinion No. 18 | APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock” | |
APT | Australian Pipeline Trust | |
ARO | Asset retirement obligation | |
Bay Harbor | A residential/commercial real estate area located near Petoskey, Michigan. In 2002, CMS Energy sold its interest in Bay Harbor. | |
bcf | One billion cubic feet of gas | |
Big Rock | Big Rock Point nuclear power plant | |
Big Rock ISFSI | Big Rock Independent Spent Fuel Storage Installation | |
Board of Directors | Board of Directors of CMS Energy | |
Broadway Gen Funding LLC | Broadway Gen Funding LLC, a non-affiliated company | |
Btu | British thermal unit; one Btu equals the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit | |
CAMR | Clean Air Mercury Rule | |
CEO | Chief Executive Officer | |
CFO | Chief Financial Officer | |
CFTC | Commodity Futures Trading Commission | |
City gate arrangement | The arrangement made for the point at which a local distribution company physically receives gas from a supplier or pipeline | |
CKD | Cement kiln dust | |
Clean Air Act | Federal Clean Air Act, as amended | |
CMS Capital | CMS Capital, L.L.C., a wholly owned subsidiary CMS Energy | |
CMS Energy | CMS Energy Corporation, the parent of Consumers and Enterprises | |
CMS Energy Common Stock or common stock | Common stock of CMS Energy, par value $.01 per share | |
CMS Electric and Gas | CMS Electric & Gas Company, L.L.C., a subsidiary of Enterprises | |
CMS ERM | CMS Energy Resource Management Company, formerly CMS MST, a subsidiary of Enterprises | |
CMS Field Services | CMS Field Services, Inc., a former wholly owned subsidiary of CMS Gas Transmission | |
CMS Gas Transmission | CMS Gas Transmission Company, a wholly owned subsidiary of Enterprises | |
CMS Generation | CMS Generation Co., a former wholly owned subsidiary of Enterprises |
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CMS International Ventures | CMS International Ventures LLC, a subsidiary of Enterprises | |
CMS Land | CMS Land Company, a wholly owned subsidiary of CMS Energy | |
CMS Midland | Midland Cogeneration Venture Group II, LLC, successor to CMS Midland Inc., formerly a subsidiary of Consumers that had a 49 percent ownership interest in the MCV Partnership | |
CMS MST | CMS Marketing, Services and Trading Company, a wholly owned subsidiary of Enterprises, whose name was changed to CMS ERM effective January 2004 | |
CMS Oil and Gas | CMS Oil and Gas Company, formerly a subsidiary of Enterprises | |
Consumers | Consumers Energy Company, a subsidiary of CMS Energy | |
Court of Appeals | Michigan Court of Appeals | |
CPEE | Companhia Paulista de Energia Eletrica, in which CMS International Ventures formerly owned a 94 percent interest | |
Customer Choice Act | Customer Choice and Electricity Reliability Act, a Michigan statute enacted in June 2000 | |
DCCP | Defined Company Contribution Plan | |
DC SERP | Defined Contribution Supplemental Executive Retirement Plan | |
Dekatherms/day | A measure of the heat content value of gas per day; one dekatherm/day is equivalent to 1,000,000 British thermal units (Btu) per day | |
Detroit Edison | The Detroit Edison Company, a non-affiliated company | |
DIG | Dearborn Industrial Generation, LLC, a wholly owned subsidiary of CMS Energy | |
DOE | U.S. Department of Energy | |
DOJ | U.S. Department of Justice | |
Dow | The Dow Chemical Company, a non-affiliated company | |
DTE Energy | DTE Energy Company, a non-affiliated company | |
EISP | Executive Incentive Separation Plan | |
EITF | Emerging Issues Task Force | |
EITF Issue02-03 | EITF Issue No. 02-03, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities” | |
EITF Issue06-11 | EITF Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” | |
El Chocon | A 1,200 MW hydro power plant located in Argentina, in which CMS Generation formerly held a 17.2 percent ownership interest | |
Entergy | Entergy Corporation, a non-affiliated company | |
Enterprises | CMS Enterprises Company, a subsidiary of CMS Energy | |
EPA | U.S. Environmental Protection Agency | |
EPS | Earnings per share | |
Exchange Act | Securities Exchange Act of 1934, as amended | |
FASB | Financial Accounting Standards Board | |
FERC | Federal Energy Regulatory Commission | |
FIN 14 | FASB Interpretation No. 14, Reasonable Estimation of Amount of a Loss | |
FIN 46(R) | Revised FASB Interpretation No. 46, Consolidation of Variable Interest Entities | |
FIN 47 | FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations | |
FIN 45 | FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others |
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FIN 48 | FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 | |
First Mortgage Bond Indenture | The indenture dated as of September 1, 1945 between Consumers and The Bank of New York (ultimate successor to City Bank Farmers Trust Company), as Trustee, and as amended and supplemented | |
FMB | First Mortgage Bonds | |
FMLP | First Midland Limited Partnership, a partnership that holds a lessor interest in the MCV Facility | |
FSP | FASB Staff Position | |
FSPFIN 39-1 | FASB Staff Position on FASB Interpretation No. 39-1, Amendment of FASB Interpretation No. 39 | |
GAAP | Generally Accepted Accounting Principles | |
GasAtacama | GasAtacama Holding Limited, a limited liability partnership that manages GasAtacama S.A., which includes an integrated natural gas pipeline and electric generating plant in Argentina and Chile and Atacama Finance Company, in which CMS International Ventures formerly owned a 50 percent interest | |
GCR | Gas cost recovery | |
Goldfields | A pipeline business in Australia, in which CMS Energy formerly held a 39.7 percent ownership interest | |
GVK | GVK Facility, a 250 MW gas fired power plant located in South Central India, in which CMS Generation formerly held a 33 percent interest | |
GWh | Gigawatt hour (a unit of energy equal to one million kilowatt hours) | |
Hydra-Co | Hydra-Co Enterprises, Inc., a wholly owned subsidiary of Enterprises | |
ICSID | International Centre for the Settlement of Investment Disputes | |
IPP | Independent power producer | |
IRS | Internal Revenue Service | |
ISFSI | Independent spent fuel storage installation | |
ITC | Income tax credit | |
Jamaica | Jamaica Private Power Company, Limited, a 63 MW diesel-fueled power plant in Jamaica, in which CMS Generation formerly owned a 42 percent interest | |
Jorf Lasfar | A 1,356 MW coal-fueled power plant in Morocco, in which CMS Generation formerly owned a 50 percent interest | |
Jubail | A 240 MW natural gas cogeneration power plant in Saudi Arabia, in which CMS Generation formerly owned a 25 percent interest | |
kilovolts | One thousand volts (unit used to measure the difference in electrical pressure along a current) | |
kWh | Kilowatt-hour (a unit of energy equal to one thousand watt hours) | |
LS Power Group | LS Power Group, a non-affiliated company | |
Lucid Energy | Lucid Energy LLC, a non-affiliated company | |
Ludington | Ludington pumped storage plant, jointly owned by Consumers and Detroit Edison | |
mcf | One thousand cubic feet of gas | |
MCV Facility | A natural gas-fueled, combined-cycle cogeneration facility operated by the MCV Partnership | |
MCV GP II | Successor of CMS Midland, Inc. | |
MCV Partnership | Midland Cogeneration Venture Limited Partnership |
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MCV PPA | The Power Purchase Agreement between Consumers and the MCV Partnership with a 35-year term commencing in March 1990, as amended, and as interpreted by the Settlement Agreement dated as of January 1, 1999 between the MCV Partnership and Consumers | |
MD&A | Management’s Discussion and Analysis | |
MDEQ | Michigan Department of Environmental Quality | |
MDL | Multidistrict Litigation | |
METC | Michigan Electric Transmission Company, LLC, a non-affiliated company owned by ITC Holdings Corporation and a member of MISO | |
Midwest Energy Market | An energy market developed by the MISO to provide day-ahead and real-time market information and centralized dispatch for market participants | |
MISO | Midwest Independent Transmission System Operator, Inc. | |
MMBtu | Million British Thermal Units | |
Moody’s | Moody’s Investors Service, Inc. | |
MPSC | Michigan Public Service Commission | |
MRV | Market-Related Value of Plan assets | |
MSBT | Michigan Single Business Tax | |
MW | Megawatt (a unit of power equal to one million watts) | |
MWh | Megawatt hour (a unit of energy equal to one million watt hours) | |
Neyveli | CMS Generation Neyveli Ltd, a 250 MW lignite-fired power station located in India, in which CMS International Ventures formerly owned a 50 percent interest | |
NMC | Nuclear Management Company LLC, formed in 1999 by Northern States Power Company (now Xcel Energy Inc.), Alliant Energy, Wisconsin Electric Power Company, and Wisconsin Public Service Company to operate and manage nuclear generating facilities owned by the utilities | |
NREPA | Michigan Natural Resources and Environmental Protection Act | |
NYMEX | New York Mercantile Exchange | |
OPEB | Postretirement benefit plans other than pensions | |
Palisades | Palisades nuclear power plant, formerly owned by Consumers | |
Panhandle | Panhandle Eastern Pipe Line Company, including its subsidiaries Trunkline, Pan Gas Storage, Panhandle Storage, and Panhandle Holdings, a former wholly owned subsidiary of CMS Gas Transmission | |
Parmelia | A business located in Australia comprised of a pipeline, processing facilities, and a gas storage facility, a former subsidiary of CMS Gas Transmission | |
PCB | Polychlorinated biphenyl | |
PDVSA | Petroleos de Venezuela S.A., a non-affiliated company | |
Peabody Energy | Peabody Energy Corporation, a non-affiliated company | |
Pension Plan | The trusteed, non-contributory, defined benefit pension plan of Panhandle, Consumers and CMS Energy | |
PowerSmith | A 124 MW natural gas power plant located in Oklahoma, in which CMS Generation formerly held a 6.25% limited partner ownership interest | |
PSCR | Power supply cost recovery | |
PUHCA | Public Utility Holding Company Act | |
PURPA | Public Utility Regulatory Policies Act of 1978 | |
Quicksilver | Quicksilver Resources, Inc., a non-affiliated company |
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RAKTL | Ronald A. Katz Technology Licensing L.P., a non-affiliated company | |
RCP | Resource Conservation Plan | |
Reserve Margin | The amount of unused available electric capacity at peak demand as a percentage of total electric capacity | |
ROA | Retail Open Access, which allows electric generation customers to choose alternative electric suppliers pursuant to the Customer Choice Act. | |
S&P | Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. | |
SEC | U.S. Securities and Exchange Commission | |
Section 10d(4) Regulatory Asset | Regulatory asset as described in Section 10d(4) of the Customer Choice Act, as amended | |
Securitization | A financing method authorized by statute and approved by the MPSC which allows a utility to sell its right to receive a portion of the rate payments received from its customers for the repayment of securitization bonds issued by a special purpose entity affiliated with such utility | |
SENECA | Sistema Electrico del Estado Nueva Esparta C.A., a former subsidiary of CMS International Ventures | |
SERP | Supplemental Executive Retirement Plan | |
SFAS | Statement of Financial Accounting Standards | |
SFAS No. 5 | SFAS No. 5, “Accounting for Contingencies” | |
SFAS No. 13 | SFAS No. 13, “Accounting for Leases” | |
SFAS No. 71 | SFAS No. 71, “Accounting for the Effects of Certain Types of Regulation” | |
SFAS No. 87 | SFAS No. 87, “Employers’ Accounting for Pensions” | |
SFAS No. 98 | SFAS No. 98, “Accounting for Leases” | |
SFAS No. 106 | SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions” | |
SFAS No. 109 | SFAS No. 109, “Accounting for Income Taxes” | |
SFAS No. 132(R) | SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits” | |
SFAS No. 133 | SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted” | |
SFAS No. 143 | SFAS No. 143, “Accounting for Asset Retirement Obligations” | |
SFAS No. 144 | SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” | |
SFAS No. 157 | SFAS No. 157, “Fair Value Measurement” | |
SFAS No. 158 | SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)” | |
SFAS No. 159 | SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment to FASB Statement No. 115” | |
SFAS No. 160 | SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” | |
Shuweihat | A power and desalination plant located in the United Arab Emirates, in which CMS Generation formerly owned a 20 percent interest | |
SLAP | Scudder Latin American Power Fund | |
SRLY | Separate Return Limitation Year |
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Stranded Costs | Costs incurred by utilities in order to serve their customers in a regulated monopoly environment, which may not be recoverable in a competitive environment because of customers leaving their systems and ceasing to pay for their costs. These costs could include owned and purchased generation and regulatory assets. | |
Superfund | Comprehensive Environmental Response, Compensation and Liability Act | |
Takoradi | A 200 MW open-cycle combustion turbine crude oil power plant located in Ghana, in which CMS Generation formerly owned a 90 percent interest | |
TAQA | Abu Dhabi National Energy Company, a subsidiary of Abu Dhabi Water and Electricity Authority, a non-affiliated company | |
Taweelah | Al Taweelah A2, a power and desalination plant of Emirates CMS Power Company located in the United Arab Emirates, in which CMS Generation formerly held a 40 percent interest | |
TGN | A natural gas transportation and pipeline business located in Argentina, in which CMS Gas Transmission owns a 23.54 percent interest | |
TRAC | Terminal Rental Adjustment Clause, a provision of a leasing agreement which permits or requires the rental price to be adjusted upward or downward by reference to the amount realized by the lessor under the agreement upon sale or other disposition of formerly leased property | |
Trunkline | CMS Trunkline Gas Company, LLC, formerly a subsidiary of CMS Panhandle Holdings, LLC | |
Trust Preferred Securities | Securities representing an undivided beneficial interest in the assets of statutory business trusts, the interests of which have a preference with respect to certain trust distributions over the interests of either CMS Energy or Consumers, as applicable, as owner of the common beneficial interests of the trusts | |
TSR | Total shareholder return | |
TTT | Gas title transfer tracking fees and services | |
Union | Utility Workers Union of America, AFL-CIO | |
VEBA | VEBA employees’ beneficiary association trusts accounts established to set aside specifically employer contributed assets to pay for future expenses of the OPEB plan | |
Zeeland | A 935 MW gas-fired power plant located in Zeeland, Michigan |
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2007 | 2007 Net | |||||||||
Summer Net | Generation | |||||||||
Size and Year | Demonstrated | (Millions | ||||||||
Name and Location (Michigan) | Entering Service | Capability (MW) | of kWh) | |||||||
Coal Generation | ||||||||||
J H Campbell 1 & 2 — West Olive | 2 Units, 1962-1967 | 615 | 4,320 | |||||||
J H Campbell 3 — West Olive | 1 Unit, 1980 | 765 | (a) | 3,540 | ||||||
D E Karn — Essexville | 2 Units, 1959-1961 | 515 | 3,663 | |||||||
B C Cobb — Muskegon | 2 Units, 1956-1957 | 312 | 2,151 | |||||||
J R Whiting — Erie | 3 Units, 1952-1953 | 328 | 2,394 | |||||||
J C Weadock — Essexville | 2 Units, 1955-1958 | 306 | 1,835 | |||||||
Total coal generation | 2,841 | 17,903 | ||||||||
Oil/Gas Generation | ||||||||||
B C Cobb — Muskegon | 3 Units, 1999-2000(b) | 183 | 7 | |||||||
D E Karn — Essexville | 2 Units, 1975-1977 | 1,276 | 215 | |||||||
Zeeland — Zeeland | 1 Unit, 2002 | — | — | (c) | ||||||
Total oil/gas generation | 1,459 | 222 | ||||||||
Hydroelectric | ||||||||||
Conventional Hydro Generation | 13 Plants, 1906-1949 | 73 | 416 | |||||||
Ludington Pumped Storage | 6 Units, 1973 | 955 | (d) | (478 | )(e) | |||||
Total hydroelectric | 1,028 | (62 | ) | |||||||
Nuclear Generation | ||||||||||
Palisades — South Haven | 1 Unit, 1971 | — | 1,781 | (f) | ||||||
Gas/Oil Combustion Turbine | ||||||||||
Various Plants | 7 Plants, 1966-1971 | 345 | 19 | |||||||
Zeeland — Zeeland | 2 Units, 2001 | — | — | (c) | ||||||
Total gas/Oil Combustion Turbine | 345 | 19 | ||||||||
Total owned generation | 5,673 | 19,863 | ||||||||
Purchased and Interchange Power | ||||||||||
Capacity | 3,627 | (g) | ||||||||
Total | 9,300 | |||||||||
(a) | Represents Consumers’ share of the capacity of the J H Campbell 3 unit, net of the 6.69 percent ownership interest of the Michigan Public Power Agency and Wolverine Power Supply Cooperative, Inc. |
(b) | Cobb 1-3 are retired coal-fired units that were converted to gas-fired. Units were placed back into service in the years indicated. | |
(c) | Zeeland was purchased on December 21, 2007. It consists of two simple cycle combustion turbines and a combined cycle plant consisting of two combustion turbines and one steam turbine. The plant was not used by Consumers during 2007. | |
(d) | Represents Consumers’ 51 percent share of the capacity of Ludington. Detroit Edison owns 49 percent. | |
(e) | Represents Consumers’ share of net pumped storage generation. This facility electrically pumps water during off-peak hours for storage to generate electricity later during peak-demand hours. | |
(f) | Palisades was sold in April 2007 and Consumers entered into a15-year power purchase agreement for all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. |
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(g) | Includes 1,240 MW of purchased contract capacity from the MCV Facility and 778 MW of purchased contract capacity from the Palisades plant. |
• | 390 miles of high-voltage distribution radial lines operating at 120 kilovolts and above; | |
• | 4,216 miles of high-voltage distribution overhead lines operating at 23 kilovolts and 46 kilovolts; | |
• | 17 subsurface miles of high-voltage distribution underground lines operating at 23 kilovolts and 46 kilovolts; | |
• | 55,656 miles of electric distribution overhead lines; | |
• | 9,780 miles of underground distribution lines; and | |
• | substations having an aggregate transformer capacity of 23,143,920 kilovoltamperes. |
Millions of kWh | ||||||||||||||||||||
Power Generated | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||
Coal | 17,903 | 17,744 | 19,711 | 18,810 | 20,091 | |||||||||||||||
Nuclear | 1,781 | 5,904 | 6,636 | 5,346 | 6,151 | |||||||||||||||
Oil | 112 | 48 | 225 | 193 | 242 | |||||||||||||||
Gas | 129 | 161 | 356 | 38 | 129 | |||||||||||||||
Hydro | 416 | 485 | 387 | 445 | 335 | |||||||||||||||
Net pumped storage | (478 | ) | (426 | ) | (516 | ) | (538 | ) | (517 | ) | ||||||||||
Total net generation | 19,863 | 23,916 | 26,799 | 24,294 | 26,431 | |||||||||||||||
Cost per Million Btu | ||||||||||||||||||||
Fuel Consumed | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||
Coal | $ | 2.04 | $ | 2.09 | $ | 1.78 | $ | 1.43 | $ | 1.33 | ||||||||||
Oil | 8.21 | 8.68 | 5.98 | 4.68 | 3.92 | |||||||||||||||
Gas | 10.29 | 8.92 | 9.76 | 10.07 | 7.62 | |||||||||||||||
Nuclear | 0.42 | 0.24 | 0.34 | 0.33 | 0.34 | |||||||||||||||
All Fuels(a) | 2.07 | 1.72 | 1.64 | 1.26 | 1.16 |
(a) | Weighted average fuel costs. |
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• | 26,404 miles of distribution mains; | |
• | 1,669 miles of transmission lines; | |
• | 7 compressor stations with a total of 162,000 installed horsepower; and | |
• | 15 gas storage fields with an aggregate storage capacity of 308 bcf and a working storage capacity of 143 bcf. |
Volume | ||||||||||||
(dekatherms/day) | Expiration | |||||||||||
ANR Pipeline Company | 50,000 | March | 2017 | |||||||||
Great Lakes Gas Transmission, L.P. | 100,000 | March | 2011 | |||||||||
Great Lakes Gas Transmission, L.P. | 50,000 | March | 2017 | |||||||||
Trunkline Gas Company | 290,000 | October | 2008 | |||||||||
Trunkline Gas Company (starting 11/01/08) | 240,000 | October | 2012 | |||||||||
Panhandle Eastern Pipe Line Company | 50,000 | October | 2008 | |||||||||
Panhandle Eastern Pipe Line Company (starting 4/01/08) | 50,000 | October | 2008 | |||||||||
Panhandle Eastern Pipe Line Company (starting 4/01/09) | 50,000 | October | 2009 | |||||||||
Panhandle Eastern Pipe Line Company (starting 4/01/10) | 50,000 | October | 2010 | |||||||||
Panhandle Eastern Pipe Line Company (starting 4/01/11) | 50,000 | October | 2011 | |||||||||
Panhandle Eastern Pipe Line Company (starting 4/01/12) | 50,000 | October | 2012 | |||||||||
Panhandle Eastern Pipe Line Company (starting 11/01/08) | 50,000 | October | 2013 | |||||||||
Panhandle Eastern Pipe Line Company (starting 4/01/13) | 50,000 | October | 2013 | |||||||||
Vector Pipeline | 50,000 | March | 2012 |
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Percentage of | ||||||||||||||
Gross Capacity | ||||||||||||||
Under Long-Term | ||||||||||||||
Ownership Interest | Gross Capacity | Contract | ||||||||||||
Location | Fuel Type | (%) | (MW) | (%) | ||||||||||
California | Wood | 37.8 | 36 | 100 | ||||||||||
Connecticut | Scrap tire | 100 | 31 | 0 | ||||||||||
Michigan | Coal | 50 | 70 | 100 | ||||||||||
Michigan | Natural gas | 100 | 710 | 61 | ||||||||||
Michigan | Natural gas | 100 | 224 | 0 | ||||||||||
Michigan | Wood | 50 | 40 | 100 | ||||||||||
Michigan | Wood | 50 | 38 | 100 | ||||||||||
North Carolina | Wood | 50 | 50 | 0 | ||||||||||
Total | 1,199 | |||||||||||||
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• | industrial customers relocating all or a portion of their production capacity outside Consumers’ service territory for economic reasons; | |
• | municipalities owning or operating competing electric delivery systems; | |
• | customer self-generation; and | |
• | adjacent utilities that extend lines to customers in contiguous service territories. |
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Name | Age | Position | Period | |||
David W. Joos | 54 | President and CEO of CMS Energy | 2004-Present | |||
CEO of Consumers | 2004-Present | |||||
Chairman of the Board, CEO of Enterprises | 2003-Present | |||||
President, Chief Operating Officer of CMS Energy | 2001-2004 | |||||
President, Chief Operating Officer of Consumers | 2001-2004 | |||||
President, Chief Operating Officer of Enterprises | 2001-2003 | |||||
Director of CMS Energy | 2001-Present | |||||
Director of Consumers | 2001-Present | |||||
Director of Enterprises | 2000-Present | |||||
Thomas J. Webb | 55 | Executive Vice President, CFO of CMS Energy | 2002-Present | |||
Executive Vice President, CFO of Consumers | 2002-Present | |||||
Executive Vice President, CFO of Enterprises | 2002-Present | |||||
Executive Vice President, CFO of CMS Generation | 2006-5/2007 | |||||
Director of Enterprises | 2002-Present | |||||
Director of CMS Generation | 2003-5/2007 | |||||
James E. Brunner* | 55 | Senior Vice President and General Counsel of CMS Energy | 11/2006-Present | |||
Senior Vice President and General Counsel of Consumers | 11/2006-Present | |||||
Senior Vice President and General Counsel of Enterprises | 11/2007-Present | |||||
Senior Vice President of Enterprises | 2006-11/2007 | |||||
Senior Vice President of CMS Generation | 2006-5/2007 | |||||
Senior Vice President, General Counsel and Chief Compliance Officer of CMS Energy | 5/2006-11/2006 | |||||
Senior Vice President, General Counsel and Chief Compliance Officer of Consumers | 5/2006-11/2006 | |||||
Senior Vice President, General Counsel and Interim Chief Compliance Officer of Consumers | 2/2006-5/2006 | |||||
Senior Vice President and General Counsel of CMS Energy | 2/2006-5/2006 | |||||
Senior Vice President and General Counsel of Consumers | 2/2006-5/2006 | |||||
Vice President and General Counsel of Consumers | 7/2004-2/2006 | |||||
Vice President of Consumers | 2004 | |||||
Director of Enterprises | 2006-Present |
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Name | Age | Position | Period | |||
John M. Butler ** | 43 | Senior Vice President of CMS Energy | 2006-Present | |||
Senior Vice President of Consumers | 2006-Present | |||||
Senior Vice President of Enterprises | 2006-Present | |||||
Senior Vice President of CMS Generation | 2006-5/2007 | |||||
David G. Mengebier | 50 | Senior Vice President and Chief Compliance Officer of CMS Energy | 11/2006-Present | |||
Senior Vice President and Chief Compliance Officer of Consumers | 11/2006-Present | |||||
Senior Vice President of Enterprises | 2003-Present | |||||
Senior Vice President of CMS Energy | 2001-11/2006 | |||||
Senior Vice President of Consumers | 2001-11/2006 | |||||
Thomas W. Elward | 59 | President, Chief Operating Officer of Enterprises | 2003-Present | |||
President, CEO of CMS Generation | 2002-5/2007 | |||||
Senior Vice President of Enterprises | 2002-2003 | |||||
Director of Enterprises | 2003-Present | |||||
Director of CMS Generation | 2002-5/2007 | |||||
John G. Russell | 50 | President and Chief Operating Officer of Consumers | 2004-Present | |||
Executive Vice President and President — Electric & Gas of Consumers | 7/2004-10/2004 | |||||
Executive Vice President, President and CEO — Electric of Consumers | 2001-2004 | |||||
Glenn P. Barba | 42 | Vice President, Controller and Chief Accounting Officer of CMS Energy | 2003-Present | |||
Vice President, Controller and Chief Accounting Officer of Consumers | 2003-Present | |||||
Vice President, Chief Accounting Officer and Controller of Enterprises | 11/2007-Present | |||||
Vice President and Chief Accounting Officer of Enterprises | 2003-11/2007 | |||||
Vice President and Controller of Consumers | 2002-2003 |
* | From 1993 until July 2004, Mr. Brunner was Assistant General Counsel of Consumers. | |
** | From 2002 until 2004, Mr. Butler was Global Compensation and Benefits Resource Center Director at Dow and from 2004 until June 2006, Mr. Butler was Human Resources Director, Manufacturing and Engineering at Dow. |
Name | Age | Position | Period | |||
David W. Joos | 54 | President and CEO of CMS Energy | 2004-Present | |||
CEO of Consumers | 2004-Present | |||||
Chairman of the Board, CEO of Enterprises | 2003-Present | |||||
President, Chief Operating Officer of CMS Energy | 2001-2004 | |||||
President, Chief Operating Officer of Consumers | 2001-2004 | |||||
President, Chief Operating Officer of Enterprises | 2001-2003 | |||||
Director of CMS Energy | 2001-Present | |||||
Director of Consumers | 2001-Present | |||||
Director of Enterprises | 2000-Present |
22
Name | Age | Position | Period | |||
Thomas J. Webb | 55 | Executive Vice President, CFO of CMS Energy | 2002-Present | |||
Executive Vice President, CFO of Consumers | 2002-Present | |||||
Executive Vice President, CFO of Enterprises | 2002-Present | |||||
Executive Vice President, CFO of CMS Generation | 2006-5/2007 | |||||
Director of Enterprises | 2002-Present | |||||
Director of CMS Generation | 2003-5/2007 | |||||
James E. Brunner* | 55 | Senior Vice President and General Counsel of CMS Energy | 11/2006-Present | |||
Senior Vice President and General Counsel of Consumers | 11/2006-Present | |||||
Senior Vice President and General Counsel of Enterprises | 11/2007-Present | |||||
Senior Vice President of Enterprises | 2006-11/2007 | |||||
Senior Vice President of CMS Generation | 2006-5/2007 | |||||
Senior Vice President, General Counsel and Chief Compliance Officer of CMS Energy | 5/2006-11/2006 | |||||
Senior Vice President, General Counsel and Chief Compliance Officer of Consumers | 5/2006-11/2006 | |||||
Senior Vice President, General Counsel and Interim Chief Compliance Officer of Consumers | 2/2006-5/2006 | |||||
Senior Vice President and General Counsel of CMS Energy | 2/2006-5/2006 | |||||
Senior Vice President and General Counsel of Consumers | 2/2006-5/2006 | |||||
Vice President and General Counsel of Consumers | 7/2004-2/2006 | |||||
Vice President of Consumers | 2004 | |||||
Director of Enterprises | 2006-Present | |||||
John M. Butler ** | 43 | Senior Vice President of CMS Energy | 2006-Present | |||
Senior Vice President of Consumers | 2006-Present | |||||
Senior Vice President of Enterprises | 2006-Present | |||||
Senior Vice President of CMS Generation | 2006-5/2007 | |||||
David G. Mengebier | 50 | Senior Vice President and Chief Compliance Officer of CMS Energy | 11/2006-Present | |||
Senior Vice President and Chief Compliance Officer of Consumers | 11/2006-Present | |||||
Senior Vice President of Enterprises | 2003-Present | |||||
Senior Vice President of CMS Energy | 2001-11/2006 | |||||
Senior Vice President of Consumers | 2001-11/2006 | |||||
John G. Russell | 50 | President and Chief Operating Officer of Consumers | 2004-Present | |||
Executive Vice President and President — Electric & Gas of Consumers | 7/2004-10/2004 | |||||
Executive Vice President, President and CEO — Electric of Consumers | 2001-2004 | |||||
William E. Garrity | 59 | Senior Vice President of Consumers | 2005-Present | |||
Vice President of Consumers | 1999-2005 | |||||
Frank Johnson | 59 | Senior Vice President of Consumers | 2001-Present | |||
Paul N. Preketes | 58 | Senior Vice President of Consumers | 1999-Present |
23
Name | Age | Position | Period | |||
Glenn P. Barba | 42 | Vice President, Controller and Chief Accounting Officer of CMS Energy | 2003-Present | |||
Vice President, Controller and Chief Accounting Officer of Consumers | 2003-Present | |||||
Vice President, Chief Accounting Officer and Controller of Enterprises | 11/2007-Present | |||||
Vice President and Chief Accounting Officer of Enterprises | 2003-11/2007 | |||||
Vice President and Controller of Consumers | 2002-2003 |
* | From 1993 until July 2004, Mr. Brunner was Assistant General Counsel of Consumers. | |
** | From 2002 until 2004, Mr. Butler was Global Compensation and Benefits Resource Center Director at Dow and from 2004 until June 2006, Mr. Butler was Human Resources Director, Manufacturing and Engineering at Dow. |
• | Corporate Governance Principles; | |
• | Codes of Conduct (Code of Business Conduct and Statement of Ethics); | |
• | Board committee charters (including the Audit Committee, the Compensation and Human Resources Committee, the Finance Committee and the Governance and Public Responsibility Committee); and | |
• | Articles of Incorporation (and amendments) and Bylaws. |
24
• | a significant portion of its cash flow from operations will be dedicated to the payment of principal and interest on its indebtedness and will not be available for other purposes; | |
• | covenants contained in its existing debt arrangements require it to meet certain financial tests, which may affect its flexibility in planning for, and reacting to, changes in its business; | |
• | its ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate and other purposes may be limited; | |
• | it may be at a competitive disadvantage to its competitors that are less leveraged; and | |
• | its vulnerability to adverse economic and industry conditions may increase. |
25
26
• | retain specified preexisting liabilities such as for taxes, pensions, or environmental conditions; | |
• | indemnify the buyers against specified risks, including the inaccuracy of representations and warranties it makes; and | |
• | make payments to the buyers depending on the outcome of post-closing adjustments, litigation, audits or other reviews. |
27
28
29
30
31
• | BUSINESS — GENERAL — Consumers — Consumers’ Properties — General; | |
• | BUSINESS — BUSINESS SEGMENTS — Consumers Electric Utility — Electric Utility Properties; | |
• | BUSINESS — BUSINESS SEGMENTS — Consumers Gas Utility — Gas Utility Properties; | |
• | BUSINESS — BUSINESS SEGMENTS — Independent Power Production — Independent Power Production Properties; and | |
• | BUSINESS — BUSINESS SEGMENTS — Natural Gas Transmission — Natural Gas Transmission Properties. |
32
33
34
35
36
37
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Total Number of | Maximum Number of | |||||||||||||||
Shares Purchased | Shares That May Yet | |||||||||||||||
Total Number | as Part of Publicly | Be Purchased Under | ||||||||||||||
of Shares | Average Price | Announced | Publicly Announced | |||||||||||||
Period | Purchased* | Paid per Share | Plans or Programs | Plans or Programs | ||||||||||||
October 1, 2007 to October 31, 2007 | — | — | — | — | ||||||||||||
November 1, 2007 to November 30, 2007 | 1,062 | $ | 16.97 | — | — | |||||||||||
December 1, 2007 to December 31, 2007 | 1,233 | $ | 17.09 | — | — |
* | We repurchase certain restricted shares upon vesting under the Performance Incentive Stock Plan (“Plan”) from participants in the Plan, equal to our minimum statutory income tax withholding obligation. Shares repurchased have a value based on the market price on the vesting date. |
38
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
39
Page | ||
Index to Financial Statements: | ||
CMS Energy Corporation | ||
Selected Financial Information | CMS - 2 | |
Management’s Discussion and Analysis Forward-Looking Statements and Information | CMS - 3 | |
Executive Overview | CMS - 4 | |
Results of Operations | CMS - 6 | |
Critical Accounting Policies | CMS - 15 | |
Capital Resources and Liquidity | CMS - 21 | |
Outlook | CMS - 25 | |
Implementation of New Accounting Standards | CMS - 32 | |
New Accounting Standards Not Yet Effective | CMS - 33 | |
Consolidated Financial Statements | ||
Consolidated Statements of Income (Loss) | CMS - 35 | |
Consolidated Statements of Cash Flows | CMS - 37 | |
Consolidated Balance Sheets | CMS - 39 | |
Consolidated Statements of Common Stockholders’ Equity | CMS - 41 | |
Notes to Consolidated Financial Statements: | ||
1. Corporate Structure and Accounting Policies | CMS - 44 | |
2. Asset Sales, Discontinued Operations and Impairment Charges | CMS - 51 | |
3. Contingencies | CMS - 56 | |
4. Financings and Capitalization | CMS - 68 | |
5. Earnings Per Share | CMS - 72 | |
6. Financial and Derivative Instruments | CMS - 73 | |
7. Retirement Benefits | CMS - 77 | |
8. Asset Retirement Obligations | CMS - 83 | |
9. Income Taxes | CMS - 85 | |
10. Stock Based Compensation | CMS - 88 | |
11. Leases | CMS - 90 | |
12. Property, Plant, and Equipment | CMS - 92 | |
13. Equity Method Investments | CMS - 93 | |
14. Jointly Owned Regulated Utility Facilities | CMS - 96 | |
15. Reportable Segments | CMS - 96 | |
16. Consolidation of Variable Interest Entities | CMS - 99 | |
17. Quarterly Financial and Common Stock Information (Unaudited) | CMS - 99 | |
Reports of Independent Registered Public Accounting Firms | CMS - 101 |
40
Page | ||
Consumers Energy Company | ||
Selected Financial Information | CE - 2 | |
Management’s Discussion and Analysis | ||
Forward-Looking Statements and Information | CE - 3 | |
Executive Overview | CE - 4 | |
Results of Operations | CE - 6 | |
Critical Accounting Policies | CE - 12 | |
Capital Resources and Liquidity | CE - 16 | |
Outlook | CE - 20 | |
Implementation of New Accounting Standards | CE - 26 | |
New Accounting Standards Not Yet Effective | CE - 27 | |
Consolidated Financial Statements | ||
Consolidated Statements of Income (Loss) | CE - 29 | |
Consolidated Statements of Cash Flows | CE - 30 | |
Consolidated Balance Sheets | CE - 32 | |
Consolidated Statements of Common Stockholder’s Equity | CE - 34 | |
Notes to Consolidated Financial Statements: | ||
1. Corporate Structure and Accounting Policies | CE - 37 | |
2. Asset Sales and Impairment Charges | CE - 43 | |
3. Contingencies | CE - 45 | |
4. Financings and Capitalization | CE - 53 | |
5. Financial and Derivative Instruments | CE - 55 | |
6. Retirement Benefits | CE - 57 | |
7. Asset Retirement Obligations | CE - 63 | |
8. Income Taxes | CE - 65 | |
9. Stock Based Compensation | CE - 68 | |
10. Leases | CE - 70 | |
11. Property, Plant, and Equipment | CE - 72 | |
12. Jointly Owned Regulated Utility Facilities | CE - 73 | |
13. Reportable Segments | CE - 73 | |
14. Quarterly Financial and Common Stock Information (Unaudited) | CE - 75 | |
Reports of Independent Registered Public Accounting Firms | CE - 76 |
41
CMS-1
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||||||
Operating revenue (in millions) | ($ | ) | 6,464 | 6,126 | 5,879 | 5,154 | 5,232 | |||||||||||||||||
Earnings from equity method investees (in millions) | ($ | ) | 40 | 89 | 125 | 115 | 164 | |||||||||||||||||
Income (loss) from continuing operations (in millions) | ($ | ) | (126 | ) | (133 | ) | (141 | ) | 112 | — | ||||||||||||||
Cumulative effect of change in accounting (in millions) | ($ | ) | — | — | — | (2 | ) | (24 | ) | |||||||||||||||
Income (loss) from discontinued operations (in millions)(a) | ($ | ) | (89 | ) | 54 | 57 | 11 | (19 | ) | |||||||||||||||
Net income (loss) (in millions) | ($ | ) | (215 | ) | (79 | ) | (84 | ) | 121 | (43 | ) | |||||||||||||
Net income (loss) available to common stockholders (in millions) | ($ | ) | (227 | ) | (90 | ) | (94 | ) | 110 | (44 | ) | |||||||||||||
Average common shares outstanding (in thousands) | 222,644 | 219,857 | 211,819 | 168,553 | 150,434 | |||||||||||||||||||
Net income (loss) from continuing operations per average common share | ||||||||||||||||||||||||
CMS Energy — Basic | ($ | ) | (0.62 | ) | (0.66 | ) | (0.71 | ) | 0.59 | (0.01 | ) | |||||||||||||
— Diluted | ($ | ) | (0.62 | ) | (0.66 | ) | (0.71 | ) | 0.58 | (0.01 | ) | |||||||||||||
Cumulative effect of change in accounting per average common share | ||||||||||||||||||||||||
CMS Energy — Basic | ($ | ) | — | — | — | (0.01 | ) | (0.16 | ) | |||||||||||||||
— Diluted | ($ | ) | — | — | — | (0.01 | ) | (0.16 | ) | |||||||||||||||
Net income (loss) per average common share | ||||||||||||||||||||||||
CMS Energy — Basic | ($ | ) | (1.02 | ) | (0.41 | ) | (0.44 | ) | 0.65 | (0.30 | ) | |||||||||||||
— Diluted | ($ | ) | (1.02 | ) | (0.41 | ) | (0.44 | ) | 0.64 | (0.30 | ) | |||||||||||||
Cash provided by (used in) operations (in millions) | ($ | ) | 27 | 686 | 598 | 353 | (250 | ) | ||||||||||||||||
Capital expenditures, excluding acquisitions and capital lease additions (in millions) | ($ | ) | 1,263 | 670 | 593 | 525 | 535 | |||||||||||||||||
Total assets (in millions)(b) | ($ | ) | 14,196 | 15,371 | 16,041 | 15,872 | 13,838 | |||||||||||||||||
Long-term debt, excluding current portion (in millions)(b) | ($ | ) | 5,385 | 6,200 | 6,778 | 6,414 | 5,981 | |||||||||||||||||
Long-term debt-related parties, excluding current portion (in millions) | ($ | ) | 178 | 178 | 178 | 504 | 684 | |||||||||||||||||
Non-current portion of capital leases and finance lease obligations (in millions) | ($ | ) | 225 | 42 | 308 | 315 | 58 | |||||||||||||||||
Total preferred stock (in millions) | ($ | ) | 294 | 305 | 305 | 305 | 305 | |||||||||||||||||
Cash dividends declared per common share | ($ | ) | 0.20 | — | — | — | — | |||||||||||||||||
Market price of common stock at year-end | ($ | ) | 17.38 | 16.70 | 14.51 | 10.45 | 8.52 | |||||||||||||||||
Book value per common share at year-end | ($ | ) | 9.46 | 10.03 | 10.53 | 10.62 | 9.84 | |||||||||||||||||
Number of employees at year-end (full-time equivalents) | 7,898 | 8,640 | 8,713 | 8,660 | 8,411 | |||||||||||||||||||
Electric Utility Statistics | ||||||||||||||||||||||||
Sales (billions of kWh) | 39 | 38 | 39 | 38 | 38 | |||||||||||||||||||
Customers (in thousands) | 1,799 | 1,797 | 1,789 | 1,772 | 1,754 | |||||||||||||||||||
Average sales rate per kWh | (c | ) | 8.65 | 8.46 | 6.73 | 6.88 | 6.91 | |||||||||||||||||
Gas Utility Statistics | ||||||||||||||||||||||||
Sales and transportation deliveries (bcf) | 340 | 309 | 350 | 385 | 380 | |||||||||||||||||||
Customers (in thousands)(c) | 1,710 | 1,714 | 1,708 | 1,691 | 1,671 | |||||||||||||||||||
Average sales rate per mcf | ($ | ) | 10.66 | 10.44 | 9.61 | 8.04 | 6.72 |
(a) | Prior year amounts have been reclassified to discontinued operations. | |
(b) | Until their sale in November 2006, we were the primary beneficiary of the MCV Partnership and the FMLP. As a result, we consolidated their assets, liabilities and activities into our consolidated financial statements through the date of sale and for the years ended December 31, 2005 and 2004. These partnerships had third party obligations totaling $482 million at December 31, 2005 and $582 million at December 31, 2004. Property, plant and equipment serving as collateral for these obligations had a carrying value of $224 million at December 31, 2005 and $1.426 billion at December 31, 2004. | |
(c) | Excludes off-system transportation customers. |
CMS-2
• | the price of CMS Energy Common Stock, capital and financial market conditions, and the effect of such market conditions on the Pension Plan, interest rates, and access to the capital markets, including availability of financing to CMS Energy, Consumers, or any of their affiliates, and the energy industry, | |
• | market perception of the energy industry, CMS Energy, Consumers, or any of their affiliates, | |
• | factors affecting utility and diversified energy operations, such as unusual weather conditions, catastrophic weather-related damage, unscheduled generation outages, maintenance or repairs, environmental incidents, or electric transmission or gas pipeline system constraints, | |
• | the impact of any future regulations or laws regarding carbon dioxide and other greenhouse gas emissions, | |
• | national, regional, and local economic, competitive, and regulatory policies, conditions and developments, | |
• | adverse regulatory or legal decisions, including those related to environmental laws and regulations, and potential environmental remediation costs associated with such decisions, including but not limited to those that may affect Bay Harbor, | |
• | potentially adverse regulatory treatment or failure to receive timely regulatory orders concerning a number of significant questions currently or potentially before the MPSC, including: |
• | recovery of Clean Air Act capital and operating costs and other environmental and safety-related expenditures, | |
• | recovery of power supply and natural gas supply costs when fuel prices are fluctuating, | |
• | timely recognition in rates of additional equity investments and additional operation and maintenance expenses at Consumers, | |
• | adequate and timely recovery of additional electric and gas rate-based investments, | |
• | adequate and timely recovery of higher MISO energy and transmission costs, | |
• | recovery of Stranded Costs incurred due to customers choosing alternative energy suppliers, | |
• | recovery of Palisades plant sale-related costs, | |
• | timely recovery of costs associated with energy efficiency investments and any state or federally mandated renewables resource standards, | |
• | approval of the Balanced Energy Initiative, and | |
• | authorization of a new clean coal plant, |
CMS-3
• | the effects on our ability to purchase capacity to serve our customers and fully recover the cost of these purchases, if the owners of the MCV Facility exercise their right to terminate the MCV PPA, | |
• | the ability of Consumers to prevail in the exercise of its regulatory out rights under the MCV PPA, | |
• | adverse consequences due to the assertion of indemnity or warranty claims or future assertion of such claims, with respect to previously owned assets and businesses, including claims related to attempts by the governments of Equatorial Guinea and Morocco to assess taxes on past operations or transactions, | |
• | the ability of Consumers to recover Big Rock decommissioning funding shortfalls and nuclear fuel storage costs due to the DOE’s failure to accept spent nuclear fuel on schedule, including the outcome of pending litigation with the DOE, | |
• | federal regulation of electric sales and transmission of electricity, including periodic re-examination by federal regulators of our market-based sales authorizations in wholesale power markets without price restrictions, | |
• | energy markets, including availability of capacity and the timing and extent of changes in commodity prices for oil, coal, natural gas, natural gas liquids, electricity and certain related products due to lower or higher demand, shortages, transportation problems, or other developments, | |
• | our ability to collect accounts receivable from our customers, | |
• | earnings volatility resulting from the GAAP requirement that we apply mark-to-market accounting on certain energy commodity contracts and interest rate swaps, | |
• | the effect on our utility and utility revenues of the direct and indirect impacts of the continued economic downturn in Michigan, | |
• | potential disruption or interruption of facilities or operations due to accidents, war, or terrorism, and the ability to obtain or maintain insurance coverage for such events, | |
• | technological developments in energy production, delivery, and usage, | |
• | achievement of capital expenditure and operating expense goals, | |
• | changes in financial or regulatory accounting principles or policies, | |
• | changes in tax laws or new IRS interpretations of existing or past tax laws, | |
• | changes in federal or state regulations or laws that could have an impact on our business, | |
• | the outcome, cost, and other effects of legal or administrative proceedings, settlements, investigations, or claims resulting from the investigation by the DOJ regarding round-trip trading and price reporting, | |
• | disruptions in the normal commercial insurance and surety bond markets that may increase costs or reduce traditional insurance coverage, particularly terrorism and sabotage insurance, performance bonds, and tax exempt debt insurance, | |
• | credit ratings of CMS Energy or Consumers, and | |
• | other business or investment considerations that may be disclosed from time to time in CMS Energy’s or Consumers’ SEC filings, or in other publicly issued written documents. |
CMS-4
• | weather, especially during the normal heating and cooling seasons, | |
• | economic conditions, primarily in Michigan, | |
• | regulation and regulatory issues that affect our electric and gas utility operations, | |
• | energy commodity prices, | |
• | interest rates, and | |
• | our debt credit rating. |
CMS-5
• | continuing investment in our utility business, | |
• | growing earnings while controlling operating costs and parent debt, and | |
• | maintaining principles of safe, efficient operations, customer value, fair and timely regulation, and consistent financial performance. |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions (Except for Per Share Amounts) | ||||||||||||
Net Loss Available to Common Stockholders | $ | (227 | ) | $ | (90 | ) | $ | (94 | ) | |||
Basic Loss Per Share | $ | (1.02 | ) | $ | (0.41 | ) | $ | (0.44 | ) | |||
Diluted Loss Per Share | $ | (1.02 | ) | $ | (0.41 | ) | $ | (0.44 | ) | |||
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Electric Utility | $ | 196 | $ | 199 | $ | (3 | ) | $ | 199 | $ | 153 | $ | 46 | |||||||||||
Gas Utility | 87 | 37 | 50 | 37 | 48 | (11 | ) | |||||||||||||||||
Enterprises | (391 | ) | (227 | ) | (164 | ) | (227 | ) | (217 | ) | (10 | ) | ||||||||||||
Corporate Interest and Other | (30 | ) | (153 | ) | 123 | (153 | ) | (135 | ) | (18 | ) | |||||||||||||
Discontinued Operations | (89 | ) | 54 | (143 | ) | 54 | 57 | (3 | ) | |||||||||||||||
Net Loss Available to Common Stockholders | $ | (227 | ) | $ | (90 | ) | $ | (137 | ) | $ | (90 | ) | $ | (94 | ) | $ | 4 | |||||||
CMS-6
In Millions | ||||
• costs incurred by CMS ERM due to the rescission of a contract with Quicksilver and the termination of certain electricity sales agreements, | $ | (217 | ) | |
• impact from discontinued operations as losses recorded on the disposal of international businesses in 2007 replaced earnings recorded for these businesses in 2006, | (143 | ) | ||
• reduction in earnings from equity method investees primarily due to the absence of earnings from international businesses sold in 2007, | (32 | ) | ||
• additional environmental remediation expenses at Bay Harbor, | (29 | ) | ||
• additional taxes at our corporate and Enterprises segments as the absence of tax benefits associated with the resolution of an IRS income tax audit in 2006 more than offset the net tax benefits associated with the sale of international businesses recorded in 2007, | (16 | ) | ||
• absence of a 2006 net charge resulting from our agreement to settle shareholder class action lawsuits, | 80 | |||
• absence of activities related to our former interest in the MCV Partnership including asset impairments and mark-to-market activities, | 60 | |||
• earnings from non-MCV-related mark-to-market activity primarily at CMS ERM, asmark-to-market gains in 2007 replaced losses in 2006, | 49 | |||
• increase in combined net earnings at our gas utility and electric utility, primarily due to the positive effects of MPSC gas rate orders and increased weather-related deliveries, | 47 | |||
• decrease in non-MCV-related asset impairment charges, net of insurance reimbursement, and | 38 | |||
• additional increase at Enterprises and corporate primarily due to gains on the sale of international businesses in 2007, a reduction in interest expense, and increased interest income. | 26 | |||
Total change | $ | (137 | ) | |
CMS-7
In Millions | ||||||
• | decrease in asset impairment charges as the $385 million impairment related to the MCV Partnership recorded in 2005 exceeded the $169 million impairment related to GasAtacama recorded in 2006, | $ | 216 | |||
• | increase from Enterprises due to favorable arbitration and property tax awards, | 48 | ||||
• | increase in earnings from our electric utility primarily due to an increase in revenue from an electric rate order, the return to full service-rates of customers previously using alternative energy suppliers, and the expiration of rate caps in December 2005 partially offset by higher operating expense and lower deliveries due to milder weather, | 46 | ||||
• | decrease in Enterprise and corporate interest and other expenses primarily due to an insurance reimbursement received for previously incurred legal expenses, and a reduction in debt retirement charges and other expenses, | 26 | ||||
• | lower incremental environmental remediation expenses recorded in 2006 related to our involvement in Bay Harbor, | 20 | ||||
• | decrease in earnings from mark-to-market valuation adjustments primarily at the MCV Partnership and CMS ERM as losses recorded in 2006 replaced gains recorded in 2005, | (203 | ) | |||
• | net charge resulting from our agreement to settle shareholder class action lawsuits, | (80 | ) | |||
• | net loss on the sale of our investment in the MCV Partnership including the negative impact of the associated impairment charge recorded in 2006 and the positive impact of the recognition of certain derivative instruments, | (41 | ) | |||
• | decrease in various corporate and Enterprises tax benefits as the absence of tax benefits recorded in 2005 related to the American Jobs Creation Act more than offset benefits recorded in 2006, primarily related to the restoration and utilization of income tax credits due to the resolution of an IRS income tax audit, | (14 | ) | |||
• | decrease in earnings from our gas utility primarily due to a reduction in deliveries resulting from increased customer conservation efforts and warmer weather in 2006 partially offset by other gas revenue associated with pipeline capacity optimization and a reduction in operation and maintenance expenses, and | (11 | ) | |||
• | reduced earnings from discontinued operations as the positive impact of an arbitration award and a reduction of contingent liabilities recorded in 2005 exceeded income recorded in 2006 from the favorable resolution of certain accrued liabilities. | (3 | ) | |||
Total change | $ | 4 | ||||
CMS-8
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Net income | $ | 196 | $ | 199 | $ | (3 | ) | $ | 199 | $ | 153 | $ | 46 | |||||||||||
Reasons for the change: | ||||||||||||||||||||||||
Electric deliveries | $ | 18 | $ | 193 | ||||||||||||||||||||
Surcharge revenue | 6 | 61 | ||||||||||||||||||||||
Palisades revenue to PSCR | (136 | ) | — | |||||||||||||||||||||
Power supply costs and related revenue | (17 | ) | 57 | |||||||||||||||||||||
Other operating expenses, other income, and non-commodity revenue | 159 | (236 | ) | |||||||||||||||||||||
Regulatory return on capital expenditures | 5 | 22 | ||||||||||||||||||||||
General taxes | (15 | ) | (7 | ) | ||||||||||||||||||||
Interest charges | (18 | ) | (34 | ) | ||||||||||||||||||||
Income taxes | (5 | ) | (10 | ) | ||||||||||||||||||||
Total change | $ | (3 | ) | $ | 46 | |||||||||||||||||||
CMS-9
CMS-10
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Net income | $ | 87 | $ | 37 | $ | 50 | $ | 37 | $ | 48 | $ | (11 | ) | |||||||||||
Reasons for the change: | ||||||||||||||||||||||||
Gas deliveries | $ | 10 | $ | (61 | ) | |||||||||||||||||||
Gas rate increase | 81 | 14 | ||||||||||||||||||||||
Gas wholesale and retail services, other gas revenues, and other income | 14 | 24 | ||||||||||||||||||||||
Other operating expenses | (19 | ) | 7 | |||||||||||||||||||||
General taxes and depreciation | (11 | ) | (10 | ) | ||||||||||||||||||||
Interest charges | 4 | (6 | ) | |||||||||||||||||||||
Income taxes | (29 | ) | 21 | |||||||||||||||||||||
Total change | $ | 50 | $ | (11 | ) | |||||||||||||||||||
CMS-11
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Net loss | $ | (391 | ) | $ | (227 | ) | $ | (164 | ) | $ | (227 | ) | $ | (217 | ) | $ | (10 | ) | ||||||
Reasons for the change: | ||||||||||||||||||||||||
Operating revenues | $ | (9 | ) | $ | (253 | ) | ||||||||||||||||||
Cost of gas and purchased power | 36 | 128 | ||||||||||||||||||||||
Earnings from equity method investees | (48 | ) | (37 | ) | ||||||||||||||||||||
Gain (loss) on sale of assets, net | 21 | (6 | ) | |||||||||||||||||||||
Operation and maintenance | (7 | ) | 19 | |||||||||||||||||||||
Electric sales contract termination | (279 | ) | — | |||||||||||||||||||||
General taxes, depreciation, and other income, net | 20 | 7 | ||||||||||||||||||||||
Asset impairment charges, net of insurance reimbursement | 29 | (216 | ) | |||||||||||||||||||||
Environmental remediation | (35 | ) | 31 | |||||||||||||||||||||
Fixed charges | 14 | (9 | ) | |||||||||||||||||||||
Minority interest | (7 | ) | (2 | ) | ||||||||||||||||||||
Income taxes | 41 | 103 | ||||||||||||||||||||||
The MCV Partnership | 60 | 225 | ||||||||||||||||||||||
Total change | $ | (164 | ) | $ | (10 | ) | ||||||||||||||||||
CMS-12
CMS-13
CMS-14
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Net loss | $ | (30 | ) | $ | (153 | ) | $ | 123 | $ | (153 | ) | $ | (135 | ) | $ | (18 | ) | |||||||
CMS-15
• | the nature of the assets, | |
• | projected future economic benefits, | |
• | regulatory and political environments, | |
• | historical and future cash flow and profitability measurements, and | |
• | other external market conditions and factors. |
CMS-16
• | they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas), | |
• | they qualify for the normal purchases and sales exception, or | |
• | there is not an active market for the commodity. |
CMS-17
Non- | ||||||||||||
Trading | Trading | Total | ||||||||||
In Millions | ||||||||||||
Fair value of contracts outstanding at December 31, 2006 | $ | 31 | $ | (68 | ) | $ | (37 | ) | ||||
Fair value of new contracts when entered into during the period(a) | — | (1 | ) | (1 | ) | |||||||
Contracts realized or otherwise settled during the period(b) | (6 | ) | 74 | 68 | ||||||||
Other changes in fair value(c) | (43 | ) | (10 | ) | (53 | ) | ||||||
Fair value of contracts outstanding at December 31, 2007 | $ | (18 | ) | $ | (5 | ) | $ | (23 | ) | |||
(a) | Reflects premiums paid (received) for new contracts. | |
(b) | CMS ERM terminated certain trading gas contracts during 2007. CMS ERM had recorded derivative liabilities, representing cumulative unrealized mark-to-market losses, associated with these contracts. Therefore, upon the termination of those contracts, the fair value of CMS ERM’s trading contracts increased significantly. | |
(c) | Reflects changes in the fair value of contracts over the period, as well as increases or decreases to credit reserves. The fair value of CMS ERM’s non-trading electric and gas contracts decreased significantly during 2007 for two reasons. First, a natural gas contract with Quicksilver was prospectively rescinded by court action. CMS ERM had recorded a derivative asset for this contract, representing cumulative unrealized mark-to-market gains. See Note 3, Contingencies, “Other Contingencies — Quicksilver Resources, Inc.” for additional details. In addition, CMS ERM recorded a derivative liability of $18 million related to the amendment of an electricity sales agreement. For additional details of this amendment, see the “Outlook” section included in this MD&A. |
Fair Value of Non-Trading Contracts at December 31, 2007 | ||||||||||||||||||||
Total | Maturity (in years) | |||||||||||||||||||
Source of Fair Value | Fair Value | Less than 1 | 1 to 3 | 4 to 5 | Greater than 5 | |||||||||||||||
In Millions | ||||||||||||||||||||
Prices actively quoted | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Prices obtained from external sources or based on models and other valuation methods | (18 | ) | (2 | ) | (6 | ) | (5 | ) | (5 | ) | ||||||||||
Total | $ | (18 | ) | $ | (2 | ) | $ | (6 | ) | $ | (5 | ) | $ | (5 | ) | |||||
Fair Value of Trading Contracts at | ||||||||||||||||||||
December 31, 2007 | ||||||||||||||||||||
Total | Maturity (in years) | |||||||||||||||||||
Source of Fair Value | Fair Value | Less than 1 | 1 to 3 | 4 to 5 | Greater than 5 | |||||||||||||||
In Millions | ||||||||||||||||||||
Prices actively quoted | $ | 1 | $ | — | $ | 1 | $ | — | $ | — | ||||||||||
Prices obtained from external sources or based on models and other valuation methods | (6 | ) | (6 | ) | — | — | — | |||||||||||||
Total | $ | (5 | ) | $ | (6 | ) | $ | 1 | $ | — | $ | — | ||||||||
CMS-18
December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Variable-rate financing — before-tax annual earnings exposure | $ | 2 | $ | 4 | ||||
Fixed-rate financing — potentialreductionin fair value(a) | 172 | 193 |
(a) | Fair value reduction could only be realized if we transferred all of our fixed-rate financing to other creditors. |
December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Potentialreductionin fair value: | ||||||||
Trading contracts | ||||||||
Electricity-related contracts | 4 | 2 | ||||||
Gas-related contracts | 1 | — |
CMS-19
December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Potentialreductionin fair value of available-for-sale equity securities (primarily SERP investments): | $ | 6 | $ | 6 |
• | life expectancies, | |
• | present-value discount rates, | |
• | expected long-term rate of return on plan assets, | |
• | rate of compensation increases, and | |
• | anticipated health care costs. |
CMS-20
Expected Costs | Pension Cost | OPEB Cost | Contributions | |||||||||
In Millions | ||||||||||||
2008 | $ | 106 | $ | 27 | $ | 49 | ||||||
2009 | 112 | 25 | 49 | |||||||||
2010 | 116 | 24 | 133 |
• | results of operations, | |
• | capital expenditures, | |
• | energy commodity and transportation costs, | |
• | contractual obligations, | |
• | regulatory decisions, | |
• | debt maturities, | |
• | credit ratings, | |
• | working capital needs, and | |
• | collateral requirements. |
CMS-21
• | our current level of cash and revolving credit facilities, | |
• | our anticipated cash flows from operating and investing activities, and | |
• | our ability to access secured and unsecured borrowing capacity in the capital markets, if necessary. |
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Net cash provided by (used in): | ||||||||||||
Operating activities | $ | 27 | $ | 686 | $ | 598 | ||||||
Investing activities | 658 | (749 | ) | (493 | ) | |||||||
Net cash provided by (used in) operating and investing activities | 685 | (63 | ) | 105 | ||||||||
Financing activities | (690 | ) | (434 | ) | 74 | |||||||
Effect of exchange rates on cash | 2 | 1 | (1 | ) | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | $ | (3 | ) | $ | (496 | ) | $ | 178 | ||||
• | absence, in 2007, of the sale of accounts receivable, | |
• | payments made to fund our Pension Plan and to settle a shareholder class action lawsuit, | |
• | refunds to customers of excess Palisades decommissioning funds, and | |
• | reduced cash distributions from international investments sold during 2007 and other timing differences. |
• | a decrease in expenditures for gas inventory, as the milder winter in 2006 allowed us to accumulate more gas in our storage facilities, and | |
• | the absence of the release of the MCV Partnership gas supplier funds on deposit due to the sale of our interest in the MCV Partnership in 2006. |
CMS-22
• | decreases in accounts receivable primarily due to the collection of receivables in 2006 reflecting higher gas prices billed during the latter part of 2005 and reduced billings in the latter part of 2006 due to milder weather, | |
• | reduced inventory purchases, | |
• | cash proceeds from the sale of excess sulfur dioxide allowances, and | |
• | a return of funds formerly held as collateral under certain gas hedging arrangements. |
CMS-23
Payments Due | ||||||||||||||||||||
Less Than | One to | Three to | More Than | |||||||||||||||||
Contractual Obligations at December 31, 2007 | Total | One Year | Three Years | Five Years | Five Years | |||||||||||||||
In Millions | ||||||||||||||||||||
Long-term debt(a) | $ | 6,077 | $ | 542 | $ | 1,078 | $ | 1,146 | $ | 3,311 | ||||||||||
Long-term debt — related parties(a) | 178 | — | — | — | 178 | |||||||||||||||
Interest payments on long-term debt(b) | 2,736 | 330 | 593 | 457 | 1,356 | |||||||||||||||
Capital and finance leases(c) | 255 | 30 | 48 | 44 | 133 | |||||||||||||||
Interest payments on capital and finance leases(d) | 139 | 14 | 27 | 24 | 74 | |||||||||||||||
Operating leases(e) | 207 | 26 | 45 | 42 | 94 | |||||||||||||||
Purchase obligations(f) | 21,286 | 2,502 | 2,897 | 2,275 | 13,612 | |||||||||||||||
Total contractual obligations | $ | 30,878 | $ | 3,444 | $ | 4,688 | $ | 3,988 | $ | 18,758 | ||||||||||
(a) | Principal amounts due on outstanding debt obligations, current and long-term, at December 31, 2007. For additional details on long-term debt, see Note 4, Financings and Capitalization. | |
(b) | Currently scheduled interest payments on both variable and fixed rate long-term debt and long-term debt — related parties, current and long-term. Variable interest payments are based on contractual rates in effect at December 31, 2007. | |
(c) | Principal portion of lease payments under our capital and finance leases, comprised mainly of leased service vehicles, leased office furniture, and certain power purchase agreements. | |
(d) | Imputed interest on the capital leases. | |
(e) | Minimum noncancelable lease payments under our leases of railroad cars, certain vehicles, and miscellaneous office buildings and equipment, which are accounted for as operating leases. | |
(f) | Long-term contracts for purchase of commodities and services. These obligations include operating contracts used to assure adequate supply with generating facilities that meet PURPA requirements. These commodities and services include: |
• | natural gas and associated transportation, | |
• | electricity, and | |
• | coal and associated transportation. |
CMS-24
Years Ending December 31 | 2008 | 2009 | 2010 | |||||||||
In Millions | ||||||||||||
Electric utility operations(a)(b) | $ | 684 | $ | 717 | $ | 783 | ||||||
Gas utility operations(b) | 234 | 263 | 232 | |||||||||
Enterprises | 28 | 55 | 26 | |||||||||
Total | $ | 946 | $ | 1,035 | $ | 1,041 | ||||||
(a) | These amounts include estimates for capital expenditures that may be required by revisions to the Clean Air Act’s national air quality standards or potential renewable energy programs. | |
(b) | These amounts include estimates for capital expenditures related to information technology projects, facility improvements, and vehicle leasing. |
• | energy conservation measures, |
CMS-25
• | fluctuations in weather conditions, and | |
• | changes in economic conditions, including utilization and expansion or contraction of manufacturing facilities. |
CMS-26
• | operating our selective catalytic reduction control technology units throughout the year, | |
• | completing the installation of a fourth selective catalytic reduction control unit, | |
• | installing low nitrogen oxides burners, and | |
• | purchasing emission allowances. |
• | construction commodity prices, especially construction material and labor, | |
• | project completion schedules and spending plans, | |
• | cost escalation factor used to estimate future years’ costs of 3.2 percent, and | |
• | an AFUDC capitalization rate of 7.9 percent. |
CMS-27
Phase I | Phase II | |||
Proposed State Mercury Rule | 30% reduction by 2010 | 90% reduction by 2015 |
CMS-28
CMS-29
CMS-29.1
• | fluctuations in weather conditions, | |
• | use by independent power producers, | |
• | availability of renewable energy sources, | |
• | changes in gas commodity prices, | |
• | Michigan economic conditions, | |
• | the price of competing energy sources or fuels, | |
• | gas consumption per customer, and | |
• | improvements in gas appliance efficiency. |
CMS-30
• | an option to buy CMS Gas Transmission’s ownership interest in TGN, subject to the rights of other third parties, | |
• | the rights to certain proceeds that may be awarded and received by CMS Gas Transmission in connection with certain legal proceedings, including an ICSID arbitration award, and | |
• | the rights to proceeds that Enterprises will receive if it sells its interest in CMS Generation San Nicolas Company. |
• | the impact of indemnity and environmental remediation obligations at Bay Harbor, | |
• | the outcome of certain legal proceedings, | |
• | the impact of representations, warranties, and related indemnities in connection with the sales of our international assets, and | |
• | changes in commodity prices and interest rates on certain derivative contracts that do not qualify for hedge accounting and must be marked to market through earnings. |
CMS-31
CMS-32
• | AROs, | |
• | most of the nonfinancial assets and liabilities acquired in a business combination, and | |
• | fair value measurements performed in conjunction with impairment analyses. |
CMS-33
CMS-34
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Operating Revenue | $ | 6,464 | $ | 6,126 | $ | 5,879 | ||||||
Earnings from Equity Method Investees | 40 | 89 | 125 | |||||||||
Operating Expenses | ||||||||||||
Fuel for electric generation | 422 | 711 | 644 | |||||||||
Fuel costs mark-to-market at the MCV Partnership | — | 204 | (200 | ) | ||||||||
Purchased and interchange power | 1,407 | 709 | 441 | |||||||||
Cost of gas sold | 2,273 | 2,131 | 2,296 | |||||||||
Electric sales contract termination | 279 | — | — | |||||||||
Other operating expenses | 976 | 1,136 | 1,030 | |||||||||
Maintenance | 201 | 297 | 230 | |||||||||
Depreciation and amortization | 540 | 550 | 504 | |||||||||
General taxes | 222 | 151 | 226 | |||||||||
Asset impairment charges, net of insurance recoveries | 204 | 459 | 1,184 | |||||||||
Gain on asset sales, net | (21 | ) | (79 | ) | (6 | ) | ||||||
6,503 | 6,269 | 6,349 | ||||||||||
Operating Income (Loss) | 1 | (54 | ) | (345 | ) | |||||||
Other Income (Deductions) | ||||||||||||
Interest and dividends | 96 | 76 | 60 | |||||||||
Regulatory return on capital expenditures | 31 | 26 | 4 | |||||||||
Foreign currency gain (loss), net | 1 | — | (5 | ) | ||||||||
Other income | 40 | 31 | 33 | |||||||||
Other expense | (39 | ) | (21 | ) | (45 | ) | ||||||
129 | 112 | 47 | ||||||||||
Fixed Charges | ||||||||||||
Interest on long-term debt | 382 | 448 | 458 | |||||||||
Interest on long-term debt — related parties | 14 | 15 | 29 | |||||||||
Other interest | 48 | 27 | 14 | |||||||||
Capitalized interest | (6 | ) | (10 | ) | (38 | ) | ||||||
Preferred dividends of subsidiaries | 2 | 5 | 5 | |||||||||
440 | 485 | 468 | ||||||||||
Loss Before Income Taxes | (310 | ) | (427 | ) | (766 | ) | ||||||
Income Tax Benefit | (195 | ) | (188 | ) | (180 | ) | ||||||
Loss Before Minority Interests (Obligations), Net | (115 | ) | (239 | ) | (586 | ) | ||||||
Minority Interests (Obligations), Net | 11 | (106 | ) | (445 | ) | |||||||
Loss From Continuing Operations | (126 | ) | (133 | ) | (141 | ) | ||||||
Income (Loss) From Discontinued Operations, Net of Tax (Tax Benefit) of $(1), $32, and $20 | (89 | ) | 54 | 57 | ||||||||
Net Loss | (215 | ) | (79 | ) | (84 | ) | ||||||
Preferred Dividends | 11 | 11 | 10 | |||||||||
Redemption Premium on Preferred Stock | 1 | — | — | |||||||||
Net Loss Available to Common Stockholders | $ | (227 | ) | $ | (90 | ) | $ | (94 | ) | |||
CMS-35
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions, Except Per | ||||||||||||
Share Amounts | ||||||||||||
CMS Energy | ||||||||||||
Net Loss | ||||||||||||
Net Loss Available to Common Stockholders | $ | (227 | ) | $ | (90 | ) | $ | (94 | ) | |||
Basic Earnings (Loss) Per Average Common Share | ||||||||||||
Loss from Continuing Operations | $ | (0.62 | ) | $ | (0.66 | ) | $ | (0.71 | ) | |||
Gain (Loss) from Discontinued Operations | (0.40 | ) | 0.25 | 0.27 | ||||||||
Net Loss Attributable to Common Stock | $ | (1.02 | ) | $ | (0.41 | ) | $ | (0.44 | ) | |||
Diluted Earnings (Loss) Per Average Common Share | ||||||||||||
Loss from Continuing Operations | $ | (0.62 | ) | $ | (0.66 | ) | $ | (0.71 | ) | |||
Gain (Loss) from Discontinued Operations | (0.40 | ) | 0.25 | 0.27 | ||||||||
Net Loss Attributable to Common Stock | $ | (1.02 | ) | $ | (0.41 | ) | $ | (0.44 | ) | |||
Dividends Declared Per Common Share | $ | 0.20 | $ | — | $ | — | ||||||
CMS-36
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net loss | $ | (215 | ) | $ | (79 | ) | $ | (84 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization, net of nuclear decommissioning of $4, $6, and $6 | 545 | 576 | 525 | |||||||||
Deferred income taxes and investment tax credit | (221 | ) | (271 | ) | (199 | ) | ||||||
Minority obligations, net | (10 | ) | (100 | ) | (440 | ) | ||||||
Asset impairment charges, net of insurance recoveries | 204 | 459 | 1,184 | |||||||||
Postretirement benefits expense | 131 | 131 | 112 | |||||||||
Electric sales contract termination | 279 | — | — | |||||||||
Shareholder class action settlement expense | — | 125 | — | |||||||||
Fuel costs mark-to-market at the MCV Partnership | — | 204 | (200 | ) | ||||||||
Regulatory return on capital expenditures | (31 | ) | (26 | ) | (4 | ) | ||||||
Capital lease and other amortization | 55 | 44 | 40 | |||||||||
Bad debt expense | 37 | 28 | 23 | |||||||||
Loss (gain) on the sale of assets | 112 | (79 | ) | (20 | ) | |||||||
Earnings from equity method investees | (40 | ) | (89 | ) | (125 | ) | ||||||
Cash distributions from equity method investees | 18 | 75 | 108 | |||||||||
Postretirement benefits contributions | (184 | ) | (69 | ) | (63 | ) | ||||||
Shareholder class action settlement payment | (125 | ) | — | — | ||||||||
Changes in other assets and liabilities: | ||||||||||||
Decrease (increase) in accounts receivable and accrued revenues | (451 | ) | 75 | (246 | ) | |||||||
Decrease (increase) in accrued power supply and gas revenue | 99 | (91 | ) | (65 | ) | |||||||
Increase in inventories | (10 | ) | (105 | ) | (245 | ) | ||||||
Increase (decrease) in accounts payable | (45 | ) | (43 | ) | 170 | |||||||
Increase (decrease) in accrued expenses | (31 | ) | 39 | 8 | ||||||||
Increase (decrease) in the MCV Partnership gas supplier funds on deposit | — | (147 | ) | 173 | ||||||||
Decrease (increase) in other current and non-current assets | 41 | 56 | (38 | ) | ||||||||
Increase (decrease) in other current and non-current liabilities | (131 | ) | (27 | ) | (16 | ) | ||||||
Net cash provided by operating activities | 27 | 686 | 598 | |||||||||
Cash Flows from Investing Activities | ||||||||||||
Capital expenditures (excludes assets placed under capital lease) | (1,263 | ) | (670 | ) | (593 | ) | ||||||
Cost to retire property | (28 | ) | (78 | ) | (27 | ) | ||||||
Restricted cash and restricted short-term investments | 49 | 124 | (151 | ) | ||||||||
Investments in nuclear decommissioning trust funds | (1 | ) | (21 | ) | (6 | ) | ||||||
Proceeds from nuclear decommissioning trust funds | 333 | 22 | 39 | |||||||||
Purchases of available-for-sale SERP investments | (68 | ) | (4 | ) | (2 | ) | ||||||
Proceeds from available-for-sale SERP investments | 64 | 6 | 3 | |||||||||
Proceeds from short-term investments | — | — | 295 | |||||||||
Purchase of short-term investments | — | — | (186 | ) | ||||||||
Maturity of the MCV Partnership restricted investment securities held-to-maturity | — | 130 | 318 | |||||||||
Purchase of the MCV Partnership restricted investment securities held-to-maturity | — | (131 | ) | (270 | ) | |||||||
Proceeds from sale of assets | 1,717 | 69 | 61 | |||||||||
Cash relinquished from sale of assets | (113 | ) | (148 | ) | — | |||||||
Decrease (increase) in non-current notes receivable | (32 | ) | (50 | ) | 1 | |||||||
Other investing | — | 2 | 25 | |||||||||
Net cash provided by (used in) investing activities | 658 | (749 | ) | (493 | ) | |||||||
CMS-37
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Cash Flows from Financing Activities | ||||||||||||
Proceeds from notes, bonds, and other long-term debt | $ | 515 | $ | 100 | $ | 1,385 | ||||||
Issuance of common stock | 15 | 8 | 295 | |||||||||
Retirement of bonds and other long-term debt | (1,095 | ) | (493 | ) | (1,509 | ) | ||||||
Redemption of preferred stock | (32 | ) | — | — | ||||||||
Payment of common stock dividends | (45 | ) | — | — | ||||||||
Payment of preferred stock dividends | (11 | ) | (11 | ) | (11 | ) | ||||||
Payment of capital lease and financial lease obligations | (20 | ) | (26 | ) | (29 | ) | ||||||
Debt issuance costs, financing fees, and other | (17 | ) | (12 | ) | (57 | ) | ||||||
Net cash provided by (used in) financing activities | (690 | ) | (434 | ) | 74 | |||||||
Effect of Exchange Rates on Cash | 2 | 1 | (1 | ) | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (3 | ) | (496 | ) | 178 | |||||||
Cash and Cash Equivalents, Beginning of Period | 351 | 847 | 669 | |||||||||
Cash and Cash Equivalents, End of Period | $ | 348 | $ | 351 | $ | 847 | ||||||
Other cash flow activities and non-cash investing and financing activities were: | ||||||||||||
Cash transactions | ||||||||||||
Interest paid (net of amounts capitalized) | $ | 432 | $ | 487 | $ | 454 | ||||||
Income taxes paid (net of refunds of $- , $2, and $11) | 14 | 98 | 3 | |||||||||
Non-cash transactions | ||||||||||||
Other assets placed under capital lease | $ | 229 | $ | 7 | $ | 12 | ||||||
CMS-38
December 31 | ||||||||
2007 | 2006 | |||||||
In Millions | ||||||||
ASSETS | ||||||||
Plant and Property (At cost) | ||||||||
Electric utility | $ | 8,555 | $ | 8,504 | ||||
Gas utility | 3,467 | 3,273 | ||||||
Enterprises | 391 | 453 | ||||||
Other | 34 | 33 | ||||||
12,447 | 12,263 | |||||||
Less accumulated depreciation, depletion and amortization | 4,166 | 5,194 | ||||||
8,281 | 7,069 | |||||||
Constructionwork-in-progress | 447 | 639 | ||||||
8,728 | 7,708 | |||||||
Investments | ||||||||
Enterprises | 6 | 556 | ||||||
Other | 5 | 10 | ||||||
11 | 566 | |||||||
Current Assets | ||||||||
Cash and cash equivalents at cost, which approximates market | 348 | 249 | ||||||
Restricted cash at cost, which approximates market | 34 | 71 | ||||||
Accounts receivable and accrued revenue, less allowances of $21 in 2007 and $25 in 2006 | 837 | 502 | ||||||
Notes receivable | 68 | 48 | ||||||
Accrued power supply and gas revenue | 45 | 156 | ||||||
Accounts receivable and notes receivable — related parties | 2 | 62 | ||||||
Inventories at average cost | ||||||||
Gas in underground storage | 1,123 | 1,129 | ||||||
Materials and supplies | 86 | 87 | ||||||
Generating plant fuel stock | 125 | 126 | ||||||
Regulatory assets — postretirement benefits | 19 | 19 | ||||||
Deferred income taxes | — | 155 | ||||||
Deferred property taxes | 158 | 150 | ||||||
Assets held for sale | — | 239 | ||||||
Price risk management assets | 1 | 45 | ||||||
Prepayments and other | 38 | 105 | ||||||
2,884 | 3,143 | |||||||
Non-current Assets | ||||||||
Regulatory Assets | ||||||||
Securitized costs | 466 | 514 | ||||||
Postretirement benefits | 921 | 1,131 | ||||||
Customer Choice Act | 149 | 190 | ||||||
Other | 504 | 497 | ||||||
Nuclear decommissioning trust funds | — | 602 | ||||||
Deferred income taxes | 99 | — | ||||||
Notes receivable, less allowances of $31 in 2007 and $50 in 2006 | 170 | 137 | ||||||
Notes receivable — related parties, less allowance of $50 in 2006 | — | 125 | ||||||
Assets held for sale | — | 412 | ||||||
Price risk management assets | 1 | 19 | ||||||
Other | 263 | 327 | ||||||
2,573 | 3,954 | |||||||
Total Assets | $ | 14,196 | $ | 15,371 | ||||
CMS-39
December 31 | ||||||||
2007 | 2006 | |||||||
In Millions | ||||||||
STOCKHOLDERS’ INVESTMENT AND LIABILITIES | ||||||||
Capitalization | ||||||||
Common stockholders’ equity | ||||||||
Common stock, authorized 350.0 shares; outstanding 225.1 shares and 222.8 shares, respectively | $ | 2 | $ | 2 | ||||
Other paid-in capital | 4,480 | 4,468 | ||||||
Accumulated other comprehensive loss | (144 | ) | (318 | ) | ||||
Retained deficit | (2,208 | ) | (1,918 | ) | ||||
2,130 | 2,234 | |||||||
Preferred stock of subsidiary | 44 | 44 | ||||||
Preferred stock | 250 | 261 | ||||||
Long-term debt | 5,385 | 6,200 | ||||||
Long-term debt — related parties | 178 | 178 | ||||||
Non-current portion of capital and finance lease obligations | 225 | 42 | ||||||
8,212 | 8,959 | |||||||
Minority Interests | 53 | 52 | ||||||
Current Liabilities | ||||||||
Current portion of long-term debt, capital and finance lease obligations | 722 | 563 | ||||||
Notes payable | 1 | 2 | ||||||
Accounts payable | 432 | 481 | ||||||
Accrued rate refunds | 19 | 37 | ||||||
Accounts payable — related parties | 1 | 2 | ||||||
Accrued interest | 103 | 126 | ||||||
Accrued taxes | 308 | 301 | ||||||
Regulatory liabilities | 164 | — | ||||||
Deferred income taxes | 41 | — | ||||||
Electric sales contract termination liability | 279 | — | ||||||
Argentine currency impairment reserve | 197 | — | ||||||
Legal settlement liability | — | 200 | ||||||
Liabilities held for sale | — | 144 | ||||||
Price risk management liabilities | 9 | 70 | ||||||
Other | 201 | 230 | ||||||
2,477 | 2,156 | |||||||
Non-current Liabilities | ||||||||
Regulatory Liabilities | ||||||||
Regulatory liabilities for cost of removal | 1,127 | 1,166 | ||||||
Income taxes, net | 533 | 539 | ||||||
Other regulatory liabilities | 313 | 249 | ||||||
Postretirement benefits | 858 | 1,066 | ||||||
Deferred income taxes | — | 123 | ||||||
Deferred investment tax credit | 58 | 62 | ||||||
Asset retirement obligation | 198 | 498 | ||||||
Liabilities held for sale | — | 59 | ||||||
Price risk management liabilities | 16 | 31 | ||||||
Other | 351 | 411 | ||||||
3,454 | 4,204 | |||||||
Commitments and Contingencies (Notes 3, 4, 6, 9 and 11) | ||||||||
Total Stockholders’ Investment and Liabilities | $ | 14,196 | $ | 15,371 | ||||
CMS-40
Years Ended December 31 | ||||||||||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | |||||||||||||||||||
Number of Shares in Thousands | In Millions | |||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||
At beginning and end of period | $ | 2 | $ | 2 | $ | 2 | ||||||||||||||||||
Other Paid-in Capital | ||||||||||||||||||||||||
At beginning of period | 222,783 | 220,497 | 194,997 | 4,468 | 4,436 | 4,140 | ||||||||||||||||||
Common stock repurchased | (318 | ) | (98 | ) | (88 | ) | (5 | ) | (2 | ) | (1 | ) | ||||||||||||
Common stock reacquired | (19 | ) | (59 | ) | — | — | — | — | ||||||||||||||||
Common stock issued | 2,339 | 2,375 | 25,493 | 30 | 33 | 296 | ||||||||||||||||||
Common stock reissued | 361 | 68 | 95 | 6 | 1 | 1 | ||||||||||||||||||
Redemption of preferred stock | — | — | — | (19 | ) | — | — | |||||||||||||||||
At end of period | 225,146 | 222,783 | 220,497 | 4,480 | 4,468 | 4,436 | ||||||||||||||||||
Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||
Retirement benefits liability | ||||||||||||||||||||||||
At beginning of period | (23 | ) | (19 | ) | (17 | ) | ||||||||||||||||||
Retirement benefits liability adjustments(a) | — | 3 | (2 | ) | ||||||||||||||||||||
Net gain arising during the period(a) | 7 | — | — | |||||||||||||||||||||
Amortization of net actuarial loss(a) | 1 | — | — | |||||||||||||||||||||
Adjustment to initially apply FASB Statement No. 158 | — | (7 | ) | — | ||||||||||||||||||||
At end of period | (15 | ) | (23 | ) | (19 | ) | ||||||||||||||||||
Investments | ||||||||||||||||||||||||
At beginning of period | 14 | 9 | 9 | |||||||||||||||||||||
Unrealized gain on investments(a) | 1 | 5 | — | |||||||||||||||||||||
Reclassification adjustments included in net loss(a) | (15 | ) | — | — | ||||||||||||||||||||
At end of period | — | 14 | 9 | |||||||||||||||||||||
Derivative instruments | ||||||||||||||||||||||||
At beginning of period | (12 | ) | 35 | (9 | ) | |||||||||||||||||||
Unrealized gain (loss) on derivative instruments(a) | (3 | ) | (15 | ) | 51 | |||||||||||||||||||
Reclassification adjustments included in net loss(a) | 14 | (32 | ) | (7 | ) | |||||||||||||||||||
At end of period | (1 | ) | (12 | ) | 35 | |||||||||||||||||||
Foreign currency translation | ||||||||||||||||||||||||
At beginning of period | (297 | ) | (313 | ) | (319 | ) | ||||||||||||||||||
Sale of Argentine assets(a) | 128 | — | — | |||||||||||||||||||||
Sale of Brazilian assets(a) | 36 | — | — | |||||||||||||||||||||
Other foreign currency translations(a) | 5 | 16 | 6 | |||||||||||||||||||||
At end of period | (128 | ) | (297 | ) | (313 | ) | ||||||||||||||||||
At end of period | (144 | ) | (318 | ) | (288 | ) | ||||||||||||||||||
Retained Deficit | ||||||||||||||||||||||||
At beginning of period | (1,918 | ) | (1,828 | ) | (1,734 | ) | ||||||||||||||||||
Adjustment to initially apply FIN 48 | (18 | ) | — | — | ||||||||||||||||||||
Net loss(a) | (215 | ) | (79 | ) | (84 | ) | ||||||||||||||||||
Preferred stock dividends declared | (11 | ) | (11 | ) | (10 | ) | ||||||||||||||||||
Common stock dividends declared | (45 | ) | — | — | ||||||||||||||||||||
Redemption of preferred stock(a) | (1 | ) | — | — | ||||||||||||||||||||
At end of period | (2,208 | ) | (1,918 | ) | (1,828 | ) | ||||||||||||||||||
Total Common Stockholders’ Equity | $ | 2,130 | $ | 2,234 | $ | 2,322 | ||||||||||||||||||
CMS-41
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
(a) Disclosure of Comprehensive Loss: | ||||||||||||
Net loss | $ | (215 | ) | $ | (79 | ) | $ | (84 | ) | |||
Retirement benefits liability: | ||||||||||||
Retirement benefits liability adjustments, net of tax (tax benefit) of$1 in 2006 and $(1) in 2005 | — | 3 | (2 | ) | ||||||||
Net gain arising during the period, net of tax of $5 | 7 | — | — | |||||||||
Amortization of net actuarial loss, net of tax of $- | 1 | — | — | |||||||||
Investments: | ||||||||||||
Unrealized gain on investments, net of tax of $- in 2007 and $2 in 2006 | 1 | 5 | — | |||||||||
Reclassification adjustments included in net loss, net of tax benefit of $(7) | (15 | ) | — | — | ||||||||
Derivative instruments: | ||||||||||||
Unrealized gain (loss) on derivative instruments, net of tax (tax benefit) | ||||||||||||
of $2 in 2007, $(11) in 2006, and $29 in 2005 | (3 | ) | (15 | ) | 51 | |||||||
Reclassification adjustments included in net loss, net of tax (tax benefit) of $7 in 2007, $(19) in 2006, and $(9) in 2005 | 14 | (32 | ) | (7 | ) | |||||||
Foreign currency translation: | ||||||||||||
Sale of Argentine assets, net of tax of $68 | 128 | — | — | |||||||||
Sale of Brazilian assets, net of tax of $20 | 36 | — | — | |||||||||
Other foreign currency translations, net of tax of $2 in 2007, $9 in 2006, and $- in 2005 | 5 | 16 | 6 | |||||||||
Redemption of preferred stock, net of tax benefit of $1 | (1 | ) | — | — | ||||||||
Total Comprehensive Loss | $ | (42 | ) | $ | (102 | ) | $ | (36 | ) | |||
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CMS-43
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In Millions | ||||
Balance at January 1, 2006 | $ | 27 | ||
Currency translation adjustment | (1 | ) | ||
Balance at December 31, 2006 | $ | 26 | ||
Currency translation adjustment | 2 | |||
Sale of CMS Energy Brasil S.A. | (28 | ) | ||
Balance at December 31, 2007 | $ | — | ||
CMS-45
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Electric utility property | 3.0 | % | 3.1 | % | 3.1% | |||||||
Gas utility property | 3.6 | % | 3.6 | % | 3.6% | |||||||
Other property | 8.7 | % | 8.2 | % | 7.6% |
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Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions | ||||||||||||
Other income | ||||||||||||
Interest and dividends — related parties | $ | — | $ | 8 | $ | 9 | ||||||
Gain on SERP investment | 22 | — | — | |||||||||
Return on stranded and security costs | 6 | 5 | 6 | |||||||||
MCV Partnership emmission allowance sales | — | 8 | 2 | |||||||||
Electric restructuring return | 2 | 4 | 6 | |||||||||
Gain on investment | 7 | 1 | — | |||||||||
Settlement of contingent liability | — | — | 3 | |||||||||
Refund of surety bond premium | — | 1 | — | |||||||||
All other | 3 | 4 | 7 | |||||||||
Total other income | $ | 40 | $ | 31 | $ | 33 | ||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions | ||||||||||||
Other expense | ||||||||||||
Accretion expense | $ | — | $ | (4 | ) | $ | (18 | ) | ||||
Loss on SERP investment | — | — | (2 | ) | ||||||||
Loss on reacquired and extinguished debt | (22 | ) | (5 | ) | (16 | ) | ||||||
Abandoned Midland project | (8 | ) | — | — | ||||||||
Derivative loss on debt tender offer | (3 | ) | — | — | ||||||||
Civic and political expenditures | (2 | ) | (2 | ) | (2 | ) | ||||||
Donations | — | (9 | ) | — | ||||||||
All other | (4 | ) | (1 | ) | (7 | ) | ||||||
Total other expense | $ | (39 | ) | $ | (21 | ) | $ | (45 | ) | |||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Composite AFUDC capitalization rate | 7.4 | % | 7.5 | % | 7.6% |
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CMS-48
December 31 | End of Recovery Period | 2007 | 2006 | |||||||
In Millions | ||||||||||
Assets Earning a Return: | ||||||||||
Customer Choice Act | 2010 | $ | 149 | $ | 190 | |||||
Unamortized debt costs | 2035 | 74 | 86 | |||||||
Stranded Costs | See Note 3 | 68 | 65 | |||||||
Electric restructuring implementation plan | 2008 | 14 | 40 | |||||||
Manufactured gas plant sites (Note 3) | 2016 | 33 | 15 | |||||||
Abandoned Midland project | n/a | — | 9 | |||||||
Other(a) | various | 50 | 21 | |||||||
Assets Not Earning a Return: | ||||||||||
SFAS No. 158 transition adjustment (Note 7) | various | 851 | 1,038 | |||||||
Securitized costs (Note 4) | 2015 | 466 | 514 | |||||||
Postretirement benefits (Note 7) | 2011 | 89 | 112 | |||||||
ARO (Note 8) | n/a | 85 | 177 | |||||||
Big Rock nuclear decommissioning and | n/a | 129 | 35 | |||||||
related costs (Note 3) | ||||||||||
Manufactured gas plant sites (Note 3) | n/a | 17 | 41 | |||||||
Palisades sales transaction costs (Note 2) | n/a | 28 | — | |||||||
Other(a) | 2011 | 6 | 8 | |||||||
Total regulatory assets(b) | $ | 2,059 | $ | 2,351 | ||||||
Palisades refund — Current (Note 2)(c) | $ | 164 | $ | — | ||||||
Cost of removal (Note 8) | 1,127 | 1,166 | ||||||||
Income taxes, net (Note 9) | 533 | 539 | ||||||||
ARO (Note 8) | 141 | 180 | ||||||||
Palisades refund — Noncurrent (Note 2)(c) | 140 | — | ||||||||
Other(a) | 32 | 69 | ||||||||
Total regulatory liabilities(b) | $ | 2,137 | $ | 1,954 | ||||||
(a) | At December 31, 2007 and 2006, other regulatory assets include a gas inventory regulatory asset and OPEB and pension expense incurred in excess of the MPSC-approved amount. Consumers will recover these regulatory assets from its customers by 2011. Other regulatory liabilities include liabilities related to the sale of sulfur dioxide allowances and AFUDC collected in excess of the MPSC-approved amount. | |
(b) | At December 31, 2007, we classified $19 million of regulatory assets as current regulatory assets and $2.040 billion of regulatory assets as non-current regulatory assets. At December 31, 2006, we classified $19 million of regulatory assets as current regulatory assets and $2.332 billion of regulatory assets as non-current regulatory assets. At December 31, 2007, we classified $164 million of regulatory liabilities as current regulatory liabilities and $1.973 billion of regulatory liabilities as non-current regulatory liabilities. At December 31, 2006, all of our regulatory liabilities represented non-current regulatory liabilities. | |
(c) | The MPSC order approving the Palisades and Big Rock ISFSI transaction requires that Consumers credits $255 million of excess proceeds and decommissioning amounts to its retail customers beginning in June 2007 through December 2008. The current portion of regulatory liabilities for Palisades refunds represents the remaining portion of this obligation, plus interest. There are additional excess sales proceeds and |
CMS-49
decommissioning fund balances above the amount in the MPSC order. The non-current portion of regulatory liabilities for Palisades refunds represents this obligation, plus interest. For additional details on the sale of Palisades and the Big Rock ISFSI, see Note 2, Asset Sales, Discountinued Operations, and Impairment Charges. |
Years Ended December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Regulatory Assets for PSCR and GCR | ||||||||
Underrecoveries of power supply costs | $ | 45 | $ | 156 | ||||
Regulatory Liabilities for PSCR and GCR | ||||||||
Overrecoveries of gas | $ | 19 | $ | 37 | ||||
• | AROs, | |
• | most of the nonfinancial assets and liabilities acquired in a business combination, and | |
• | fair value measurements performed in conjunction with impairment analyses. |
CMS-50
Disposal of | ||||||||||||||
Continuing | Discontinued | |||||||||||||
Operations | Operations | |||||||||||||
Cash | Pretax | Pretax | ||||||||||||
Month sold | Business | Proceeds | Gain (Loss) | Gain (Loss) | ||||||||||
In Millions | ||||||||||||||
March | El Chocon(a) | $ | 50 | $ | 34 | $ | — | |||||||
March | Argentine/Michigan businesses(b) | 130 | (5 | ) | (278 | ) | ||||||||
April | Palisades(c) | 333 | — | — | ||||||||||
April | SENECA(d) | 106 | — | 46 | ||||||||||
May | Middle East, Africa, and India businesses(e) | 792 | (15 | ) | 96 | |||||||||
June | CMS Energy Brasil S.A.(f) | 201 | — | 3 | ||||||||||
August | GasAtacama(g) | 80 | — | — | ||||||||||
October | Jamaica(h) | 14 | 1 | — | ||||||||||
Various | Other | 11 | 6 | — | ||||||||||
Total | $ | 1,717 | $ | 21 | $ | (133 | ) | |||||||
CMS-51
(a) | We sold our interest in El Chocon to Endesa, S.A. | |
(b) | We completed the sale of a portfolio of our businesses in Argentina and our northern Michigan non-utility natural gas assets to Lucid Energy. We also entered into agreements that grant Lucid Energy: |
• | an option to buy CMS Gas Transmission’s ownership interest in TGN, subject to the rights of other third parties, | |
• | the rights to certain proceeds that may be awarded and received by CMS Gas Transmission in connection with certain legal proceedings, including an ICSID arbitration award, and | |
• | the rights to proceeds that Enterprises will receive if it sells its interest in CMS Generation San Nicolas Company. |
Under these agreements, we have assigned our rights to certain awards or proceeds that we may receive in the future. Of the total consideration received in the sale, we allocated $32 million to these agreements and recorded this amount as a deferred credit on our Consolidated Balance Sheets. Due to the settlement of certain legal proceedings in 2007, a portion of CMS Gas Transmission’s obligations under these agreements has been satisfied. Accordingly, we recognized $17 million of the deferred credit as a gain. | ||
For details on the ICSID arbitration award, see Note 3, Contingencies. | ||
(c) | In April 2007, we sold Palisades to Entergy for $380 million, and received $363 million after various closing adjustments such as working capital and capital expenditure adjustments and nuclear fuel usage and inventory adjustments. We also paid Entergy $30 million to assume ownership and responsibility for the Big Rock ISFSI. Because of the sale of Palisades, we paid the NMC, the former operator of Palisades, $7 million in exit fees and forfeited our $5 million investment in the NMC. | |
Entergy assumed responsibility for the future decommissioning of Palisades and for storage and disposal of spent nuclear fuel located at Palisades and the Big Rock ISFSI sites. At closing, we transferred $252 million in decommissioning trust fund balances to Entergy. We are presently crediting excess decommissioning funds, which totaled $189 million to our retail customers through the end of 2008. Modification to the terms of the transaction allowed us immediate access to additional excess decommissioning trust funds of $123 million. The distribution of these funds is currently under review by the MPSC in our electric rate case filing. We have recorded this obligation, plus interest, as a regulatory liability on our Consolidated Balance Sheets. | ||
The MPSC order approving the Palisades transaction allows us to recover the book value of Palisades. As a result, we are presently crediting proceeds in excess of book value of $66 million to our retail customers through the end of 2008. After closing adjustments, which are subject to MPSC review, proceeds in excess of the book value were $77 million. We recorded the excess proceeds as a regulatory liability on our Consolidated Balance Sheets. Recovery of our transaction costs of $28 million, which includes the NMC exit fees and investment forfeiture, is presently under review by the MPSC in our current electric rate case. We recorded these costs as a regulatory asset on our Consolidated Balance Sheets as recovery is probable. | ||
We accounted for the disposal of Palisades as a financing for accounting purposes and thus we recognized no gain on the Consolidated Statements of Income (Loss). We accounted for the remaining non-real estate assets and liabilities associated with the transaction as a sale. For additional details on the Palisades finance obligation, see Note 11, Leases. | ||
(d) | We sold our ownership interest in SENECA and certain associated generating equipment to PDVSA, which is owned by the Bolivarian Republic of Venezuela. | |
(e) | We sold our ownership interest in businesses in the Middle East, Africa, and India to TAQA. Gross proceeds from the sale included $792 million in cash proceeds and TAQA’s assumption of $108 million in debt. Businesses included in the sale were Takoradi, Taweelah, Shuweihat, Jorf Lasfar, Jubail, and Neyveli. | |
(f) | We sold CMS Energy Brasil S.A. to CPFL Energia S.A., a Brazilian utility. Gross proceeds included $201 million in cash proceeds and CPFL Energia S.A.’s assumption of a $10 million tax liability. |
CMS-52
(g) | We sold our investment in GasAtacama to Endesa S.A. | |
(h) | We sold our investment in Jamaica to AEI. |
Continuing | ||||||||||
Operations | ||||||||||
Gross Cash | Pretax | |||||||||
Month sold | Business/Project | Proceeds | Gain | |||||||
In Millions | ||||||||||
October | Land in Ludington, Michigan(a) | $ | 6 | $ | 2 | |||||
November | MCV GP II(b) | 61 | 77 | |||||||
Various | Other | 2 | — | |||||||
Total | $ | 69 | $ | 79 | ||||||
(a) | We sold 36 parcels of land near Ludington, Michigan. Consumers held a majority share of the land, which we co-owned with DTE Energy. | |
(b) | In November 2006, we sold all of our interests in the Consumers’ subsidiaries that held the MCV Partnership and the MCV Facility to an affiliate of GSO Capital Partners and Rockland Capital Energy Investments. |
Continuing | ||||||||||
Operations | ||||||||||
Gross Cash | Pretax | |||||||||
Month sold | Business/Project | Proceeds | Gain | |||||||
In Millions | ||||||||||
February | GVK | $ | 21 | $ | 4 | |||||
April | SLAP | 23 | 2 | |||||||
April | Gas turbine and auxiliary equipment | 15 | — | |||||||
Various | Other | 2 | — | |||||||
Total | $ | 61 | $ | 6 | ||||||
CMS-53
In Millions | ||||
Assets | ||||
Cash | $ | 102 | ||
Accounts receivable, net | 105 | |||
Notes receivable | 110 | |||
Goodwill | 25 | |||
Investments | 33 | |||
Property, plant and equipment, net | 233 | |||
Other | 43 | |||
Total assets | $ | 651 | ||
Liabilities | ||||
Accounts payable | $ | 82 | ||
Accrued taxes | 30 | |||
Minority interest | 40 | |||
Other | 51 | |||
Total liabilities | $ | 203 | ||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions | ||||||||||||
Revenues | $ | 235 | $ | 684 | $ | 409 | ||||||
Discontinued operations: | ||||||||||||
Pretax income (loss) from discontinued operations | $ | (90 | ) | $ | 86 | $ | 77 | |||||
Income tax expense (benefit) | (1 | ) | 32 | 20 | ||||||||
Income (Loss) From Discontinued Operations | $ | (89 | )(a) | $ | 54 | $ | 57 | |||||
(a) | Includes a loss on disposal of our Argentine and northern Michigan non-utility assets of $278 million ($171 million after-tax and after minority interest), a gain on disposal of SENECA of $46 million ($33 million after-tax and after minority interest), a gain on disposal of our ownership interest in businesses in the Middle East, Africa, and India of $96 million ($62 million after-tax), and a gain on disposal of CMS Energy Brasil S.A. of $3 million ($2 million after-tax). | |
Income (Loss) From Discontinued Operations includes a provision for anticipated closing costs and a portion of CMS Energy’s parent company interest expense. Interest expense of $7 million for 2007, $17 million for 2006, and $16 million for 2005 has been allocated based on the net book value of the asset to be sold divided by CMS Energy’s total capitalization of each discontinued operation multiplied by CMS Energy’s interest expense. |
CMS-54
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions | ||||||||||||
Asset impairments: | ||||||||||||
Enterprises: | ||||||||||||
TGN(a) | $ | 140 | $ | — | $ | — | ||||||
GasAtacama(b) | 35 | 239 | — | |||||||||
Jamaica(c) | 22 | — | — | |||||||||
PowerSmith(d) | 5 | — | — | |||||||||
Prairie State(e) | 2 | — | — | |||||||||
MCV Partnership(f) | — | 218 | 1,184 | |||||||||
Other | — | 2 | — | |||||||||
Total asset impairments | $ | 204 | $ | 459 | $ | 1,184 | ||||||
(a) | In the first quarter of 2007, we recorded a $215 million impairment charge to recognize the reduction in fair value of our investment in TGN, a natural gas business in Argentina. The impairment included a cumulative net foreign currency translation loss of approximately $197 million. | |
In December 2005, certain insurance underwriters paid $75 million to CMS Gas Transmission in respect of their insurance obligations resulting from the non-payment of the ICSID award. We recorded this payment as a deferred credit on our Consolidated Balance Sheets because of a contingent obligation to refund the proceeds if the arbitration decision was annulled. In September 2007, the contingent repayment obligation was eliminated by agreement and a separate arbitration panel ruling on the annulment issue upheld the prior ICSID award. As a result, we recognized the $75 million deferred credit in Asset impairment charges, net of insurance recoveries on our Consolidated Statements of Income (Loss). For additional details on this settlement, see Note 3, Contingencies, “Other Contingencies — Argentina.” | ||
(b) | In August 2006, a major gas supplier notified GasAtacama that it would no longer deliver gas to GasAtacama due to the Argentine government’s decision to increase the cost of its gas exports using a special tax. We performed an impairment analysis of our investment in GasAtacama and concluded that there had been a decline in fair value that was other than temporary. We recorded an impairment charge in the third quarter of 2006. As a result, our consolidated net income was reduced by $169 million, net of tax and minority interest. | |
In the second quarter of 2007, we recorded a further impairment charge to reflect expected proceeds from the pending sale of our investment in GasAtacama. | ||
(c) | In the first quarter of 2007, we recorded an impairment charge to reflect the fair value of our investment in an electric generating plant in Jamaica by discounting a set of probability-weighted streams of future operating cash flows. | |
(d) | In the first quarter of 2007, we recorded an impairment charge to reflect the fair value of our investment in PowerSmith as determined in sale negotiations. | |
(e) | In the second quarter of 2007, we recorded an impairment charge to reflect our withdrawal from theco-development of Prairie State with Peabody Energy because it did not meet our investment criteria. | |
(f) | In November 2006, we recorded an impairment charge of $218 million to recognize the reduction in fair value of the MCV Facility’s real estate assets. The result was an $80 million reduction to our consolidated net income after considering tax effects and minority interest. | |
In the third quarter of 2005, based on forecasts for higher natural gas prices, the MCV Partnership determined an impairment analysis considering revised forward natural gas price assumptions was required. The MCV Partnership determined the fair value of its fixed assets by discounting a set of probability-weighted streams of future operating cash flows. The carrying value of the MCV Partnership’s fixed assets exceeded the estimated |
CMS-55
fair value resulting in impairment charges of $1.159 billion to recognize the reduction in fair value of the MCV Facility’s fixed assets and $25 million of interest capitalized during the construction of the MCV Facility. Our 2005 consolidated net income was reduced by $385 million, after considering tax effects and minority interest. | ||
We report our interests in the MCV Partnership as a component of our “Enterprises” business segment. |
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CMS-57
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Power Supply Cost Recovery Reconciliation | ||||||||||
Net Under- | PSCR Cost | |||||||||
PSCR Year | Date Filed | Order Date | recovery | of Power Sold | Description of Net Underrecovery | |||||
2005 Reconciliation | March 2006 | July 2007 | $36 million | $1.081 billion | MPSC approved the recovery of our $36 million underrecovery, including interest, related to our commercial and industrial customers. | |||||
2006 Reconciliation | March 2007 | Pending | $105 million(a) | $1.490 billion | Underrecovery relates to our increased METC costs and coal supply costs, certain increased sales, and other cost increases beyond those included in the 2006 PSCR plan filings. |
(a) | $99 million as recommended by a February 2008 ALJ Proposal for Decision. In a separate matter, this ALJ also recommended that we refund $62 million in proceeds from the sale of excess sulfur dioxide allowances. In accordance with FERC regulations, we previously reserved these proceeds as a regulatory liability pending final direction on disposition of the proceeds from the MPSC. |
CMS-60
• | recovery of the purchase of the Zeeland power plant, | |
• | approval to remove the costs associated with Palisades, | |
• | approval of a plan for the distribution of additional excess proceeds from the sale of Palisades to customers, effectively offsetting the partial and immediate rate relief for up to nine months, and | |
• | partial and immediate rate relief associated with 2007 capital investments, a $400 million equity infusion into Consumers, and increased distribution system operation and maintenance costs including employee pension and health care costs. |
CMS-61
CMS-62
Gas Cost Recovery Reconciliation | ||||||||||
Net Over- | GCR Cost | |||||||||
GCR Year | Date Filed | Order Date | recovery | of Gas Sold | Description of Net Overrecovery | |||||
2005-2006 | June 2006 | April 2007 | $3 million | $1.8 billion | The net overrecovery includes $1 million interest income through March 2006, which resulted from a net underrecovery position during most of the GCR period. | |||||
2006-2007 | June 2007 | Pending | $5 million | $1.7 billion | The total overrecovery amount reflects an overrecovery of $1 million plus $4 million in accrued interest owed to customers. |
CMS-63
• | a base GCR ceiling factor of $8.17 per mcf, plus | |
• | a quarterly GCR ceiling price adjustment contingent upon future events. |
CMS-64
CMS-65
FIN 45 | ||||||||||||
Maximum | Carrying | |||||||||||
Guarantee Description | Issue Date | Expiration Date | Obligation | Amount | ||||||||
In Millions | ||||||||||||
Indemnifications from asset sales and other agreements | Various | Indefinite | $ | 1,446 | (a) | $ | 88 | (a) | ||||
Surety bonds and other indemnifications | Various | Indefinite | 24 | — | ||||||||
Guarantees and put options | Various | Various through September 2027 | 99 | (b) | 1 |
(a) | The majority of this amount arises from provisions in stock and asset sales agreements under which we indemnify the purchaser for losses resulting from claims related to tax disputes, claims related to power purchase agreements and the failure of title to the assets or stock sold by us to the purchaser. As of December 31, 2007, we have an $88 million liability in connection with indemnities related to the sale of certain subsidiaries. We believe the likelihood of loss for the remaining indemnifications to be remote. | |
(b) | Maximum obligation includes $85 million related to the MCV Partnership’s non-performance under a steam and electric power agreement with Dow. We sold our interests in the MCV Partnership and the FMLP. The sales agreement calls for the purchaser, an affiliate of GSO Capital Partners and Rockland Capital Energy Investments, to pay $85 million, subject to certain reimbursement rights, if Dow terminates an agreement under which the MCV Partnership provides it steam and electric power. This agreement expires in March 2016, subject to certain terms and conditions. The purchaser secured its reimbursement obligation with an irrevocable letter of credit of up to $85 million. |
CMS-66
Guarantee Description | How Guarantee Arose | Events That Would Require Performance | ||
Indemnifications from asset sales and other agreements | Stock and asset sales agreements | Findings of misrepresentation, breach of warranties, tax claims and other specific events or circumstances | ||
Surety bonds and other indemnifications | Normal operating activity, permits and licenses | Nonperformance | ||
Guarantees and put options | Normal operating activity Agreement to provide power and steam to Dow, Bay Harbor remediation efforts | Nonperformance or non-payment by a subsidiary under a related contract, MCV Partnership’s nonperformance or non-payment under a related contract, Owners exercising put options requiring us to purchase property |
CMS-67
Interest Rate (%) | Maturity | 2007 | 2006 | |||||||||||
In Millions | ||||||||||||||
CMS Energy Corporation | ||||||||||||||
Senior notes | 9.875 | 2007 | $ | — | $ | 289 | ||||||||
8.900 | 2008 | — | 260 | |||||||||||
7.500 | 2009 | — | 409 | |||||||||||
7.750 | 2010 | 300 | 300 | |||||||||||
8.500 | 2011 | 300 | 300 | |||||||||||
6.300 | 2012 | 150 | 150 | |||||||||||
Variable | (a) | 2013 | 150 | — | ||||||||||
6.875 | 2015 | 125 | 125 | |||||||||||
6.550 | 2017 | 250 | — | |||||||||||
3.375 | (b) | 2023 | 150 | 150 | ||||||||||
2.875 | (b) | 2024 | 288 | 288 | ||||||||||
1,713 | 2,271 | |||||||||||||
Other | — | 1 | ||||||||||||
Total — CMS Energy Corporation | 1,713 | 2,272 | ||||||||||||
Consumers Energy Company | ||||||||||||||
First mortgage bonds | 4.250 | 2008 | 250 | 250 | ||||||||||
4.800 | 2009 | 200 | 200 | |||||||||||
4.400 | 2009 | 150 | 150 | |||||||||||
4.000 | 2010 | 250 | 250 | |||||||||||
5.000 | 2012 | 300 | 300 | |||||||||||
5.375 | 2013 | 375 | 375 | |||||||||||
6.000 | 2014 | 200 | 200 | |||||||||||
5.000 | 2015 | 225 | 225 | |||||||||||
5.500 | 2016 | 350 | 350 | |||||||||||
5.150 | 2017 | 250 | 250 | |||||||||||
5.650 | 2020 | 300 | 300 | |||||||||||
5.650 | 2035 | 145 | 147 | |||||||||||
5.800 | 2035 | 175 | 175 | |||||||||||
3,170 | 3,172 | |||||||||||||
Senior notes | 6.375 | 2008 | 159 | 159 | ||||||||||
6.875 | 2018 | 180 | 180 | |||||||||||
Securitization bonds | 5.442 | (c) | 2008-2015 | 309 | 340 | |||||||||
Nuclear fuel disposal liability | (d) | 159 | 152 | |||||||||||
Tax-exempt pollution control revenue bonds | Various | 2010-2035 | 161 | 161 | ||||||||||
Total — Consumers Energy Company | 4,138 | 4,164 | ||||||||||||
Other Subsidiaries | 236 | 328 | ||||||||||||
Total principal amount outstanding | 6,087 | 6,764 | ||||||||||||
Current amounts | (692 | ) | (550 | ) | ||||||||||
Net unamortized discount | (10 | ) | (14 | ) | ||||||||||
Total long-term debt | $ | 5,385 | $ | 6,200 | ||||||||||
(a) | The variable rate senior notes bear interest at three-month LIBOR plus 95 basis points (6.1925 percent at December 31, 2007). |
CMS-68
(b) | Contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversion features. | |
(c) | Represents the weighted average interest rate at December 31, 2007 (5.384 percent at December 31, 2006). | |
(d) | The maturity date is uncertain. |
Principal | ||||||||||||
(In millions) | Interest Rate (%) | Issue/Retirement Date | Maturity Date | |||||||||
Debt Issuances | ||||||||||||
CMS Energy | ||||||||||||
Senior notes | $ | 250 | 6.55 | % | July 2007 | July 2017 | ||||||
Senior notes | 150 | Variable | July 2007 | January 2013 | ||||||||
Total | $ | 400 | ||||||||||
Debt Retirements: | ||||||||||||
CMS Energy | ||||||||||||
Senior notes | $ | 260 | 8.90 | % | June 2007 | July 2008 | ||||||
Senior notes | 409 | 7.50 | % | July and August 2007 | January 2009 | |||||||
Senior notes | 289 | 9.875 | % | October 2007 | October 2007 | |||||||
Enterprises | ||||||||||||
CMS Generation | ||||||||||||
Investment Co. IV | ||||||||||||
Bank Loan | 108 | Variable | May 2007 | December 2008 | ||||||||
Total | $ | 1,066 | ||||||||||
Debenture and related party | Interest Rate (%) | Maturity | 2007 | 2006 | ||||||||||||
In Millions | ||||||||||||||||
Convertible subordinated debentures, CMS Energy Trust I | 7.75 | 2027 | $ | 178 | $ | 178 |
CMS-69
Payments Due | ||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | ||||||||||||||||
In Millions | ||||||||||||||||||||
Long-term debt and long-term debt — related parties | $ | 542 | $ | 414 | $ | 664 | $ | 642 | $ | 504 |
• | up to $1.5 billion of new issuance for general corporate purposes and | |
• | up to $1.0 billion for purposes of refinancing or refunding existing long-term debt. |
Outstanding | ||||||||||||||||||
Amount of | Amount | Letters of | Amount | |||||||||||||||
Company | Expiration Date | Facility | Borrowed | Credit | Available | |||||||||||||
In Millions | ||||||||||||||||||
CMS Energy(a) | April 2, 2012 | $ | 300 | $ | — | $ | 278 | $ | 22 | |||||||||
Consumers(b) | March 30, 2012 | 500 | — | 203 | 297 | |||||||||||||
Consumers(c) | November 28, 2008 | 200 | NA | 185 | 15 |
(a) | In January 2008, the lenders increased the commitments for CMS Energy’s credit facility from $300 million to $550 million. | |
(b) | In January 2008, $185 million of letters of credit were cancelled, resulting in the amount of credit available of $482 million under this facility. | |
(c) | Secured revolving letter of credit facility. |
CMS-70
Years Ended December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Net cash flow as a result of accounts receivable financing | $ | (325 | ) | $ | — | |||
Collections from customers | $ | 5,881 | $ | 5,684 |
• | 350 million shares of CMS Energy Common Stock, par value $0.01 per share, and | |
• | 10 million shares of CMS Energy Preferred Stock, par value $0.01 per share. |
Number of Shares | ||||||||||||||||
December 31 | 2007 | 2006 | 2007 | 2006 | ||||||||||||
In Millions | ||||||||||||||||
Preferred stock | ||||||||||||||||
4.50% convertible, | ||||||||||||||||
Authorized 10,000,000 shares(a) | 5,000,000 | 5,000,000 | $ | 250 | $ | 250 | ||||||||||
Preferred subsidiary interest(b) | — | 11 | ||||||||||||||
Total preferred stock | $ | 250 | $ | 261 | ||||||||||||
(a) | See the “Contingently Convertible Securities” section in this Note for further discussion of the convertible preferred stock. | |
(b) | In February 2007, we repurchased our non-voting preferred subsidiary interest of $11 million and redeemed it for a cash payment of $32 million. We reversed the original $19 million addition topaid-in-capital and charged a $1 million redemption premium to retained deficit. |
Optional | ||||||||||||||||||||||||
Redemption | Number of Shares | |||||||||||||||||||||||
December 31 | Series | Price | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||
Cumulative $100 par value, Authorized 7,500,000 shares, with no mandatory redemption | $ | 4.16 | $ | 103.25 | 68,451 | 68,451 | $ | 7 | $ | 7 | ||||||||||||||
$ | 4.50 | $ | 110.00 | 373,148 | 373,148 | 37 | 37 | |||||||||||||||||
Total Preferred stock of subsidiary | $ | 44 | $ | 44 | ||||||||||||||||||||
CMS-71
Adjusted | Adjusted | |||||||||||||||
Outstanding | Conversion | Trigger | ||||||||||||||
Security | Maturity | (In millions) | Price | Price | ||||||||||||
4.50% preferred stock | — | $ | 250 | $ | 9.78 | $ | 11.73 | |||||||||
3.375% senior notes | 2023 | $ | 150 | $ | 10.55 | $ | 12.66 | |||||||||
2.875% senior notes | 2024 | $ | 288 | $ | 14.58 | $ | 17.49 |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions, Except | ||||||||||||
per Share Amounts | ||||||||||||
Loss Available to Common Stockholders | ||||||||||||
Loss from Continuing Operations | $ | (126 | ) | $ | (133 | ) | $ | (141 | ) | |||
Less Preferred Dividends and Redemption Premiums | (12 | ) | (11 | ) | (10 | ) | ||||||
Loss from Continuing Operations Available to Common Stockholders — Basic and Diluted | (138 | ) | (144 | ) | (151 | ) | ||||||
Average Common Shares Outstanding Applicable to Basic and Diluted EPS | ||||||||||||
Weighted Average Shares — Basic and Diluted | 222.6 | 219.9 | 211.8 | |||||||||
Loss Per Average Common Share Available to Common Stockholders | ||||||||||||
Basic | $ | (0.62 | ) | $ | (0.66 | ) | $ | (0.71 | ) | |||
Diluted | $ | (0.62 | ) | $ | (0.66 | ) | $ | (0.71 | ) |
CMS-72
• | increased the numerator of diluted EPS by $9 million from an assumed reduction of interest expense, net of tax, and | |
• | increased the denominator of diluted EPS by 4.2 million shares. |
2007 | 2006 | |||||||||||||||
December 31 | Book Value | Fair Value | Book Value | Fair Value | ||||||||||||
In Millions | ||||||||||||||||
Long-term debt(a) | $ | 6,077 | $ | 6,287 | $ | 6,750 | $ | 6,946 | ||||||||
Long-term debt — related parties | 178 | 173 | 178 | 155 |
(a) | Includes current maturities of $692 million at December 31, 2007 and $550 million at December 31, 2006. Settlement of long-term debt is generally not expected until maturity. |
2007 | 2006 | |||||||||||||||||||||||||||||||
Unrealized | Unrealized | Fair | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||
December 31 | Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | ||||||||||||||||||||||||
In Millions | ||||||||||||||||||||||||||||||||
Nuclear decommissioning investments: | ||||||||||||||||||||||||||||||||
Equity securities | $ | — | $ | — | $ | — | $ | — | $ | 140 | $ | 150 | $ | (4 | ) | $ | 286 | |||||||||||||||
Debt securities | — | — | — | — | 307 | 4 | (2 | ) | 309 | |||||||||||||||||||||||
SERP: | ||||||||||||||||||||||||||||||||
Equity securities | 62 | — | — | 62 | 36 | 21 | — | 57 | ||||||||||||||||||||||||
Debt securities | 13 | — | — | 13 | 13 | — | — | 13 |
CMS-73
In Millions | ||||
Due after one year through five years | $ | 5 | ||
Due after five years through ten years | 7 | |||
Due after ten years | 1 | |||
Total | $ | 13 | ||
• | the relationship between the derivative instrument and the forecasted transaction being hedged must be formally documented at inception, | |
• | the derivative instrument must be highly effective in offsetting the hedged transaction’s cash flows, and | |
• | the forecasted transaction being hedged must be probable. |
CMS-74
• | they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas), | |
• | they qualify for the normal purchases and sales exception, or | |
• | there is not an active market for the commodity. |
December 31 | 2007 | 2006 | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||||
Derivative Instruments | Cost | Value | Loss | Cost | Value | Gain (Loss) | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
CMS ERM derivative contracts: | ||||||||||||||||||||||||
Non-trading electric/gas contracts(a) | $ | — | $ | (18 | ) | $ | (18 | ) | $ | — | $ | 31 | $ | 31 | ||||||||||
Trading electric/gas contracts(b) | — | (5 | ) | (5 | ) | (11 | ) | (68 | ) | (57 | ) | |||||||||||||
Derivative contracts associated with equity investments in: | ||||||||||||||||||||||||
Shuweihat(c) | — | — | — | — | (14 | ) | (14 | ) | ||||||||||||||||
Taweelah(c) | — | — | — | (35 | ) | (11 | ) | 24 | ||||||||||||||||
Jorf Lasfar(c) | — | — | — | — | (5 | ) | (5 | ) | ||||||||||||||||
Other | — | — | — | — | 1 | 1 |
(a) | The fair value of CMS ERM’s non-trading electric and gas contracts decreased significantly during 2007 for two reasons. First, a natural gas contract with Quicksilver was prospectively rescinded by court action. CMS ERM had recorded a derivative asset for this contract, representing cumulative unrealized mark-to-market gains. See Note 3, Contingencies, “Other Contingencies — Quicksilver Resources, Inc.” for additional details. In addition, CMS ERM recorded a derivative liability of $18 million related to the amendment of an electricity sales agreement. See Note 3, Contingencies, “Other Contingencies — CMS ERM Electricity Sales Agreements” for additional details. | |
(b) | The fair value of CMS ERM’s trading electric and gas contracts increased significantly during 2007 due to the termination of certain gas contracts. CMS ERM had recorded derivative liabilities, representing cumulative unrealized mark-to-market losses, associated with these contracts. | |
(c) | We sold our equity investments in Shuweihat, Taweelah, and Jorf Lasfar in May 2007. Therefore, we no longer reflect our share of the fair value of the derivatives contracts held by these businesses in our consolidated financial statements. |
CMS-75
Net Exposure | Net Exposure | |||||||||||||||||||
Exposure | from Investment | from Investment | ||||||||||||||||||
Before | Collateral | Net | Grade | Grade | ||||||||||||||||
Collateral(a) | Held | Exposure | Companies | Companies (%) | ||||||||||||||||
(In Millions) | ||||||||||||||||||||
CMS ERM | $ | 1 | $ | — | $ | 1 | $ | 1 | 100 | % |
(a) | Exposure is reflected net of payables or derivative liabilities if netting arrangements exist. |
CMS-76
• | a non-contributory, qualified defined benefit Pension Plan (closed to new non-union participants as of July 1, 2003 and closed to new union participants as of September 1, 2005), | |
• | a qualified cash balance Pension Plan for certain employees hired between July 1, 2003 and August 31, 2005, | |
• | a non-contributory, qualified DCCP for employees hired on or after September 1, 2005, | |
• | benefits to certain management employees under a non-contributory, nonqualified defined benefit SERP (closed to new participants as of March 31, 2006), | |
• | benefits to certain management employees under a non-contributory, nonqualified DC SERP hired on or after April 1, 2006, | |
• | health care and life insurance benefits under OPEB, | |
• | benefits to a selected group of management under a non-contributory, nonqualified EISP, and | |
• | a contributory, qualified defined contribution 401(k) plan. |
Pension | OPEB | |||||||
Plan liability transferred to Entergy | $ | 38 | $ | 20 | ||||
Trust assets transferred to Entergy | 22 | 5 | ||||||
Net adjustment | $ | 16 | $ | 15 | ||||
CMS-77
One Percentage | One Percentage | |||||||
Point Increase | Point Decrease | |||||||
(In Millions) | ||||||||
Effect on total service and interest cost component | $ | 21 | $ | (17 | ) | |||
Effect on postretirement benefit obligation | $ | 208 | $ | (176 | ) |
CMS-78
Pension & SERP | OPEB | |||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||
Discount rate(a) | 6.40% | 5.65% | 5.75% | 6.50% | 5.65% | 5.75% | ||||||||||||||||||
Expected long-term rate of return on plan assets(b) | 8.25% | 8.25% | 8.50% | 7.75% | 7.75% | 8.00% | ||||||||||||||||||
Mortality table(c) | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | ||||||||||||||||||
Rate of compensation increase: | ||||||||||||||||||||||||
Pension | 4.00% | 4.00% | 4.00% | |||||||||||||||||||||
SERP | 5.50% | 5.50% | 5.50% |
Pension & SERP | OPEB | |||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||
Discount rate(a) | 5.65% | 5.75% | 5.75% | 5.65% | 5.75% | 5.75% | ||||||||||||||||||
Expected long-term rate of return on plan assets(b) | 8.25% | 8.50% | 8.75% | 7.75% | 8.00% | 8.25% | ||||||||||||||||||
Mortality table(c) | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | ||||||||||||||||||
Rate of compensation increase: | ||||||||||||||||||||||||
Pension | 4.00% | 4.00% | 3.50% | |||||||||||||||||||||
SERP | 5.50% | 5.50% | 5.50% |
(a) | The discount rate represents the market rate for high-quality AA-rated corporate bonds with durations corresponding to the expected durations of the benefit obligations and is used to calculate the present value of the expected future cash flows for benefit obligations under our pension plans. | |
(b) | We determine our long-term rate of return by considering historical market returns, the current and expected future economic environment, the capital market principles of risk and return, and the expert opinions of individuals and firms with financial market knowledge. We consider the asset allocation of the portfolio in forecasting the future expected total return of the portfolio. The goal is to determine a long-term rate of return that can be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, we review for reasonableness and appropriateness of the forecasted returns for various classes of assets used to construct an expected return model. | |
(c) | We utilize the Combined Healthy RP-2000 Table from the 2000 Group Annuity Mortality Tables. |
CMS-79
Pension & SERP | ||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions | ||||||||||||
Net periodic pension cost | ||||||||||||
Service cost | $ | 50 | $ | 51 | $ | 44 | ||||||
Interest expense | 91 | 88 | 83 | |||||||||
Expected return on plan assets | (79 | ) | (85 | ) | (97 | ) | ||||||
Amortization of: | ||||||||||||
Net loss | 46 | 43 | 35 | |||||||||
Prior service cost | 7 | 7 | 6 | |||||||||
Net periodic pension cost | 115 | 104 | 71 | |||||||||
Regulatory adjustment(a) | (22 | ) | (11 | ) | — | |||||||
Net periodic pension cost after regulatory adjustment | $ | 93 | $ | 93 | $ | 71 | ||||||
OPEB | ||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions | ||||||||||||
Net periodic OPEB cost | ||||||||||||
Service cost | $ | 25 | $ | 23 | $ | 23 | ||||||
Interest expense | 69 | 64 | 61 | |||||||||
Expected return on plan assets | (62 | ) | (57 | ) | (54 | ) | ||||||
Amortization of: | ||||||||||||
Net loss | 22 | 20 | 20 | |||||||||
Prior service credit | (10 | ) | (10 | ) | (9 | ) | ||||||
Net periodic OPEB cost | 44 | 40 | 41 | |||||||||
Regulatory adjustment(a) | (6 | ) | (2 | ) | — | |||||||
Net periodic OPEB cost after regulatory adjustment | 38 | 38 | $ | 41 | ||||||||
(a) | Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated pursuant to SFAS No. 87 and SFAS No. 106. These adjustments are deferred as a regulatory asset and will be included in future rate cases. The pension regulatory asset had a balance of $33 million at December 31, 2007 and $11 million at December 31, 2006. The OPEB regulatory asset had a balance of $8 million at December 31, 2007 and $2 million at December 31, 2006. |
CMS-80
Pension Plan | SERP | OPEB | ||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Benefit obligation at beginning of period | $ | 1,576 | $ | 1,510 | $ | 92 | $ | 91 | $ | 1,243 | $ | 1,136 | ||||||||||||
Service cost | 49 | 49 | 1 | 2 | 25 | 23 | ||||||||||||||||||
Interest cost | 86 | 83 | 5 | 5 | 69 | 64 | ||||||||||||||||||
Actuarial loss (gain) | 30 | 51 | 1 | (2 | ) | (128 | ) | 70 | ||||||||||||||||
Palisades sale | (38 | ) | — | — | — | (20 | ) | — | ||||||||||||||||
Benefits paid | (138 | ) | (117 | ) | (4 | ) | (4 | ) | (53 | ) | (50 | ) | ||||||||||||
Benefit obligation at end of period(a) | 1,565 | 1,576 | 95 | 92 | 1,136 | 1,243 | ||||||||||||||||||
Plan assets at fair value at beginning of period | 1,040 | 1,018 | — | — | 798 | 714 | ||||||||||||||||||
Actual return on plan assets | 89 | 126 | — | — | 55 | 73 | ||||||||||||||||||
Company contribution | 109 | 13 | 4 | 4 | 52 | 58 | ||||||||||||||||||
Palisades sale | (22 | ) | — | — | — | (5 | ) | — | ||||||||||||||||
Actual benefits paid(b) | (138 | ) | (117 | ) | (4 | ) | (4 | ) | (48 | ) | (47 | ) | ||||||||||||
Plan assets at fair value at end of period | 1,078 | 1,040 | — | — | 852 | 798 | ||||||||||||||||||
Funded status at end of measurement period | (487 | ) | (536 | ) | (95 | ) | (92 | ) | (284 | ) | (445 | ) | ||||||||||||
Additional VEBA Contributions or Non-Trust Benefit Payments | — | — | — | — | 12 | 14 | ||||||||||||||||||
Funded status at December 31(c) | $ | (487 | ) | $ | (536 | ) | $ | (95 | ) | $ | (92 | ) | $ | (272 | ) | $ | (431 | ) | ||||||
(a) | The Medicare Prescription Drug, Improvement and Modernization Act of 2003 establishes a prescription drug benefit under Medicare (Medicare Part D) and a federal subsidy, which is tax-exempt, to sponsors of retiree health care benefit plans that provide a benefit that is actuarially equivalent to Medicare Part D. The Medicare Part D annualized reduction in net OPEB cost was $28 million for 2007 and 2006. The reduction includes $7 million for the years ended December 31, 2007 and December 31, 2006 in capitalized OPEB costs. | |
(b) | We received $4 million in 2007 and $3 million in 2006 for Medicare Part D Subsidy payments. | |
(c) | Liabilities for retirement benefits are $850 million non-current and $4 million current for year ended December 31, 2007 and $1.055 billion non-current and $4 million current for year ended December 31, 2006. |
Years Ended December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Pension ABO | $ | 1,231 | $ | 1,240 | ||||
Fair value of pension plan assets | 1,078 | 1,040 | ||||||
Pension ABO in excess of Pension Plan assets | $ | 153 | $ | 200 | ||||
CMS-81
Pension & SERP | OPEB | |||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2007 | 2006 | ||||||||||||
In Millions | ||||||||||||||||
Regulatory assets | ||||||||||||||||
Net loss | $ | 636 | $ | 676 | $ | 265 | $ | 416 | ||||||||
Prior service cost (credit) | 39 | 45 | (89 | ) | (99 | ) | ||||||||||
AOCI | ||||||||||||||||
Net loss (gain) | 46 | 46 | (22 | ) | (11 | ) | ||||||||||
Prior service cost (credit) | 3 | 4 | (3 | ) | (4 | ) | ||||||||||
Total amounts recognized in regulatory assets and AOCL | $ | 724 | $ | 771 | $ | 151 | $ | 302 | ||||||||
Pension | OPEB | |||||||||||||||
November 30 | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Asset Category: | ||||||||||||||||
Fixed Income | 30 | % | 28 | % | 34 | % | 37 | % | ||||||||
Equity Securities | 60 | % | 62 | % | 66 | % | 63 | % | ||||||||
Alternative Strategy | 10 | % | 10 | % | — | — |
CMS-82
Pension | SERP | OPEB(a) | ||||||||||
In Millions | ||||||||||||
2008 | $ | 64 | $ | 4 | $ | 57 | ||||||
2009 | 71 | 4 | 60 | |||||||||
2010 | 78 | 4 | 62 | |||||||||
2011 | 88 | 4 | 65 | |||||||||
2012 | 101 | 4 | 66 | |||||||||
2013-2017 | 664 | 22 | 364 |
(a) | OPEB benefit payments are net of employee contributions and expected Medicare Part D prescription drug subsidy payments. The subsidies to be received are estimated to be $6 million for 2008 and 2009, $7 million for 2010, $8 million for 2011 and 2012 and $50 million combined for 2013 through 2017. |
CMS-83
In Service | ||||
ARO Description | Date | Long-Lived Assets | ||
December 31, 2007 | ||||
JHCampbell intake/discharge water line | 1980 | Plant intake/discharge water line | ||
Closure of coal ash disposal areas | Various | Generating plants coal ash areas | ||
Closure of wells at gas storage fields | Various | Gas storage fields | ||
Indoor gas services equipment relocations | Various | Gas meters located inside structures | ||
Asbestos abatement | 1973 | Electric and gas utility plant | ||
Gas distribution cut, purge & cap | Various | Gas distribution mains & services | ||
Natural gas-fired power plant | 1997 | Gas fueled power plant | ||
Close gas treating plant and gas wells | Various | Gas transmission and storage |
ARO | ARO | |||||||||||||||||||||||
Liability | Cash flow | Liability | ||||||||||||||||||||||
ARO Description | 12/31/05 | Incurred | Settled(a) | Accretion | Revisions | 12/31/06 | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Palisades-decommission | $ | 375 | $ | — | $ | — | $ | 26 | $ | — | $ | 401 | ||||||||||||
Big Rock-decommission | 27 | — | (28 | ) | 3 | — | 2 | |||||||||||||||||
JHCampbell intake line | — | — | — | — | — | — | ||||||||||||||||||
Coal ash disposal areas | 54 | — | (2 | ) | 5 | — | 57 | |||||||||||||||||
Wells at gas storage fields | 1 | — | — | — | — | 1 | ||||||||||||||||||
Indoor gas services relocations | 1 | — | — | — | — | 1 | ||||||||||||||||||
Asbestos abatement | 36 | — | (3 | ) | 2 | — | 35 | |||||||||||||||||
Gas distribution cut, purge, cap | — | — | — | — | — | — | ||||||||||||||||||
Natural gas-fired power plant | 1 | — | — | — | — | 1 | ||||||||||||||||||
Close gas treating plant and gas wells | 1 | — | — | 1 | — | 2 | ||||||||||||||||||
Total | $ | 496 | $ | — | $ | (33 | ) | $ | 37 | $ | — | $ | 500 | (b) | ||||||||||
ARO | ARO | |||||||||||||||||||||||
Liability | Cash flow | Liability | ||||||||||||||||||||||
ARO Description | 12/31/06 | Incurred | Settled(a) | Accretion | Revisions | 12/31/07 | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Palisades-decommission | $ | 401 | $ | — | $ | (410 | ) | $ | 7 | $ | 2 | $ | — | |||||||||||
Big Rock-decommission | 2 | — | (3 | ) | 1 | — | — | |||||||||||||||||
JHCampbell intake line | — | — | — | — | — | — | ||||||||||||||||||
Coal ash disposal areas | 57 | — | (4 | ) | 6 | — | 59 | |||||||||||||||||
Wells at gas storage fields | 1 | — | — | — | — | 1 | ||||||||||||||||||
Indoor gas services relocations | 1 | — | — | — | — | 1 | ||||||||||||||||||
Asbestos abatement | 35 | — | (1 | ) | 2 | — | 36 | |||||||||||||||||
Gas distribution cut, purge, cap | — | 101 | — | — | — | 101 | ||||||||||||||||||
Natural gas-fired power plant | 1 | — | (1 | ) | — | — | — | |||||||||||||||||
Close gas treating plant and gas wells | 2 | — | (2 | ) | — | — | — | |||||||||||||||||
Total | $ | 500 | (b) | $ | 101 | $ | (421 | ) | $ | 16 | $ | 2 | $ | 198 | ||||||||||
(a) | Cash payments of $5 million in 2007 and $33 million in 2006 are included in the Other current and non-current liabilities line in Net cash provided by operating activities in our Consolidated Statements of Cash Flows. In |
CMS-84
April 2007, we sold Palisades to Entergy and paid Entergy to assume ownership and responsibility for the Big Rock ISFSI. Our AROs related to Palisades and the Big Rock ISFSI ended with the sale, and we removed the related ARO liabilities from our Consolidated Balance Sheets. We also removed the Big Rock ARO related to the plant in the second quarter of 2007 due to the completion of decommissioning. | ||
(b) | We reclassified $2 million in ARO liabilities to Noncurrent liabilities held for sale on our Consolidated Balance Sheets at December 31, 2006. These AROs were subsequently settled as a result of the sale of our businesses in Argentina and our northern Michigan non-utility natural gas assets to Lucid Energy. |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Current income taxes: | ||||||||||||
Federal | $ | 229 | $ | 133 | $ | 82 | ||||||
Federal income tax benefit of operating loss carryforwards | (209 | ) | (31 | ) | (70 | ) | ||||||
State and local | 1 | — | (3 | ) | ||||||||
Foreign | — | (2 | ) | — | ||||||||
$ | 21 | $ | 100 | $ | 9 | |||||||
Deferred income taxes: | ||||||||||||
Federal | $ | (212 | ) | $ | (281 | ) | $ | (149 | ) | |||
Federal tax benefit of American Jobs Creation Act of 2004 | — | — | (30 | ) | ||||||||
State | — | — | — | |||||||||
Foreign | — | (3 | ) | 3 | ||||||||
$ | (212 | ) | $ | (284 | ) | $ | (176 | ) | ||||
Deferred ITC, net | (4 | ) | (4 | ) | (13 | ) | ||||||
Tax benefit | $ | (195 | ) | $ | (188 | ) | $ | (180 | ) | |||
CMS-85
December 31 | 2007 | 2006 | ||||||
(In Millions) | ||||||||
Current Assets and (Liabilities): | ||||||||
Tax loss and credit carryforwards | $ | — | $ | 150 | ||||
Deferred charges | 107 | 44 | ||||||
Employee benefits | 8 | 10 | ||||||
Other | 48 | — | ||||||
Current Assets | $ | 163 | $ | 204 | ||||
Gas inventory | (204 | ) | — | |||||
Other | — | (49 | ) | |||||
Current Liabilities | $ | (204 | ) | $ | (49 | ) | ||
Net Current Asset/(Liability) | $ | (41 | ) | $ | 155 | |||
Noncurrent Assets and (Liabilities): | ||||||||
Tax loss and credit carryforwards | $ | 761 | $ | 717 | ||||
SFAS No. 109 regulatory liability | 207 | 189 | ||||||
Reserves and accruals | 92 | — | ||||||
Currency translation adjustment | 77 | 159 | ||||||
Foreign investments inflation indexing | 23 | 42 | ||||||
Nuclear decommissioning (including unrecovered costs) | — | 57 | ||||||
Employee benefits | 64 | 28 | ||||||
Other | — | — | ||||||
Noncurrent Assets | $ | 1,224 | $ | 1,192 | ||||
Valuation allowance | (32 | ) | (72 | ) | ||||
Net Noncurrent Asset | $ | 1,192 | $ | 1,120 | ||||
Property | $ | (840 | ) | $ | (790 | ) | ||
Securitized costs | (180 | ) | (177 | ) | ||||
Gas inventory | — | (168 | ) | |||||
Nuclear decommisioning (including unrecovered costs) | (18 | ) | — | |||||
Other | (55 | ) | (108 | ) | ||||
Noncurrent Liabilities | $ | (1,093 | ) | $ | (1,243 | ) | ||
Net Noncurrent Asset/(Liability) | $ | 99 | $ | (123 | ) | |||
CMS-86
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Income (loss) from continuing operations before income taxes | ||||||||||||
Domestic | $ | (124 | ) | $ | (118 | ) | $ | (451 | ) | |||
Foreign | (197 | ) | (203 | ) | 130 | |||||||
Total | (321 | ) | (321 | ) | (321 | ) | ||||||
Statutory federal income tax rate | x 35 | % | x 35 | % | x 35 | % | ||||||
Expected income tax expense (benefit) | (112 | ) | (112 | ) | (112 | ) | ||||||
Increase (decrease) in taxes from: | ||||||||||||
Property differences | 9 | 13 | 18 | |||||||||
Income tax effect of foreign investments | 47 | (29 | ) | (32 | ) | |||||||
AJCA foreign dividends benefit | — | — | (30 | ) | ||||||||
ITC amortization | (4 | ) | (4 | ) | (4 | ) | ||||||
State and local income taxes, net of federal benefit | — | — | (2 | ) | ||||||||
Medicare Part D exempt income | (10 | ) | (10 | ) | (6 | ) | ||||||
Tax exempt income | (1 | ) | (3 | ) | (3 | ) | ||||||
Tax contingency reserves | — | (15 | ) | (5 | ) | |||||||
Valuation allowance | (121 | ) | 23 | — | ||||||||
IRS Settlement/Credit Restoration | — | (49 | ) | — | ||||||||
Other, net | (3 | ) | (2 | ) | (4 | ) | ||||||
Recorded income tax benefit | $ | (195 | ) | $ | (188 | ) | $ | (180 | ) | |||
Effective tax rate | 60.7 | % | 58.6 | % | 56.1 | % | ||||||
CMS-87
(In Millions) | ||||
Balance at January 1, 2007 | $ | 151 | ||
Reductions for prior year tax positions | (101 | ) | ||
Additions for prior year tax positions | 1 | |||
Additions for current year tax positions | — | |||
Statute lapses | — | |||
Settlements | — | |||
Balance at December 31, 2007 | $ | 51 | ||
CMS-88
Weighted-Average | ||||||||
Number of | Grant Date | |||||||
Restricted Stock | Shares | Fair Value | ||||||
Nonvested at December 31, 2006 | 1,902,438 | $ | 12.10 | |||||
Granted(a) | 721,870 | $ | 14.18 | |||||
Vested(a) | (923,329 | ) | $ | 16.21 | ||||
Forfeited | (19,525 | ) | $ | 13.41 | ||||
Nonvested at December 31, 2007 | 1,681,454 | $ | 13.52 | |||||
(a) | During 2007, we granted 411,600 TSR shares and 105,020 time-lapse shares of restricted stock. In addition, we granted 205,250 shares that immediately vested as a result of achieving 150 percent of the market conditions on our 2004 TSR restricted stock grant. The fair value at the date of grant in 2004 was $9.73. We excluded the impact of these shares from the weighted-average grant date fair value for the 2007 shares granted. |
2007 | 2006 | 2005 | ||||||||||
Expected Volatility | 19.11 | % | 20.51 | % | 48.70 | % | ||||||
Expected Dividend Yield | 1.20 | % | 0.00 | % | 0.00 | % | ||||||
Risk-free rate | 4.59 | % | 4.82 | % | 4.14 | % |
CMS-89
Options | ||||||||||||||||
Outstanding, | ||||||||||||||||
Fully Vested, | Weighted-Average | Aggregate | ||||||||||||||
and | Weighted-Average | Remaining | Intrinsic | |||||||||||||
Stock Options | Exercisable | Exercise Price | Contractual Term | Value | ||||||||||||
(In millions) | ||||||||||||||||
Outstanding at December 31, 2006 | 2,913,270 | $ | 20.29 | 4.7 years | $ | (10 | ) | |||||||||
Granted | — | — | ||||||||||||||
Exercised | (900,400 | ) | $ | 8.14 | ||||||||||||
Cancelled or Expired | (798,965 | ) | $ | 32.14 | ||||||||||||
Outstanding at December 31, 2007 | 1,213,905 | $ | 21.51 | 3.8 years | $ | (5 | ) | |||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Weighted average grant date fair value | ||||||||||||
Restricted stock granted | $ | 14.18 | $ | 13.84 | $ | 15.61 | ||||||
Stock options granted(a) | — | — | — |
(a) | No stock options were granted in 2007, 2006, or 2005. |
CMS-90
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Capital lease expense | $ | 34 | $ | 15 | $ | 14 | ||||||
Operating lease expense | 23 | 19 | 18 | |||||||||
Income from subleases | (2 | ) | (2 | ) | (2 | ) |
Capital | Finance | |||||||||||
Leases | Lease(b) | Operating | ||||||||||
(In Millions) | ||||||||||||
2008 | $ | 21 | $ | 13 | $ | 26 | ||||||
2009 | 16 | 13 | 24 | |||||||||
2010 | 15 | 13 | 21 | |||||||||
2011 | 13 | 13 | 21 | |||||||||
2012 | 14 | 13 | 21 | |||||||||
2013 and thereafter | 53 | 122 | 94 | |||||||||
Total minimum lease payments(a) | 132 | 187 | $ | 207 | ||||||||
Less imputed interest | 64 | — | ||||||||||
Present value of net minimum lease payments | 68 | 187 | ||||||||||
Less current portion | 17 | 13 | ||||||||||
Non-current portion | $ | 51 | $ | 174 | ||||||||
(a) | Minimum payments have not been reduced by minimum sublease rentals of $3 million due in the future under noncancelable subleases. | |
(b) | In April 2007, we sold Palisades to Entergy and entered into a15-year power purchase agreement to buy all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. We provided $30 million in security to Entergy for our power purchase agreement obligation in the form of a letter of credit. We estimate that capacity and energy payments under the Palisades power purchase agreement will average $300 million annually. Our total purchases of capacity and energy under the Palisades power purchase agreement were $180 million in 2007. |
CMS-91
Estimated | ||||||||||||
Depreciable | ||||||||||||
December 31 | Life in Years | 2007 | 2006 | |||||||||
(In Millions) | ||||||||||||
Electric: | ||||||||||||
Generation | 13-85 | $ | 3,328 | $ | 3,573 | |||||||
Distribution | 12-75 | 4,496 | 4,425 | |||||||||
Other | 7-40 | 438 | 421 | |||||||||
Capital and finance leases(a) | 293 | 85 | ||||||||||
Gas: | ||||||||||||
Underground storage facilities(b) | 30-65 | 267 | 263 | |||||||||
Transmission | 15-75 | 570 | 465 | |||||||||
Distribution | 40-75 | 2,286 | 2,216 | |||||||||
Other | 7-50 | 320 | 300 | |||||||||
Capital leases(a) | 24 | 29 | ||||||||||
Enterprises: | ||||||||||||
IPP | 3-40 | 378 | 415 | |||||||||
CMS Gas Transmission | 3-40 | — | 25 | |||||||||
CMS Electric and Gas | 2-30 | 2 | 2 | |||||||||
Other | 4-25 | 11 | 11 | |||||||||
Other: | 7-71 | 34 | 33 | |||||||||
Constructionwork-in-progress | 447 | 639 | ||||||||||
Less accumulated depreciation, depletion, and amortization(c) | 4,166 | 5,194 | ||||||||||
Net property, plant, and equipment(d) | $ | 8,728 | $ | 7,708 | ||||||||
(a) | Capital and finance leases presented in this table are gross amounts. Accumulated amortization of capital and finance leases was $62 million at December 31, 2007 and $59 million at December 31, 2006. Additions were $229 million during 2007, which includes $197 million related to assets under the Palisades finance lease. Retirements and adjustments were $26 million during 2007. Additions were $7 million and Retirements and adjustments were $6 million during 2006. | |
(b) | Includes unrecoverable base natural gas in underground storage of $26 million at December 31, 2007 and December 31, 2006, which is not subject to depreciation. | |
(c) | At December 31, 2007, accumulated depreciation, depletion, and amortization included $3.992 billion from our utility plant assets and $174 million from other plant assets. At December 31, 2006, accumulated depreciation, depletion, and amortization included $5.017 billion from our utility plant assets and $177 million from other plant assets. |
CMS-92
(d) | At December 31, 2007, utility plant additions, including capital leases, were $1.303 billion and utility plant retirements, including other plant adjustments, were $1.094 billion. At December 31, 2006, utility plant additions were $470 million and utility plant retirements, including other plant adjustments, were $82 million. |
Amortization | 2007 | 2006 | ||||||||||||||||||
December 31 | Life in | Accumulated | Accumulated | |||||||||||||||||
Description | years | Gross Cost | Amortization | Gross Cost | Amortization | |||||||||||||||
In Millions | ||||||||||||||||||||
Software development | 7-15 | $ | 207 | $ | 170 | $ | 204 | $ | 153 | |||||||||||
Rights of way | 50-75 | 116 | 32 | 114 | 31 | |||||||||||||||
Leasehold improvements | various | 19 | 16 | 19 | 15 | |||||||||||||||
Franchises and consents | various | 14 | 5 | 19 | 10 | |||||||||||||||
Other intangibles | various | 20 | 14 | 23 | 14 | |||||||||||||||
Total | $ | 376 | $ | 237 | $ | 379 | $ | 223 | ||||||||||||
CMS-93
Year Ended | ||||
December 31, 2007 | ||||
Total(b) | ||||
(In Millions) | ||||
Operating revenue | $ | 598 | ||
Operating expenses | 448 | |||
Operating income | 150 | |||
Other expense, net | 69 | |||
Net income | $ | 81 | ||
Year Ended | ||||||||
December 31, 2006 | ||||||||
Jorf | ||||||||
Lasfar(a) | Total(b) | |||||||
(In Millions) | ||||||||
Operating revenue | $ | 482 | $ | 2,093 | ||||
Operating expenses | 317 | 1,600 | ||||||
Operating income | 165 | 493 | ||||||
Other expense, net | 57 | 252 | ||||||
Net income | $ | 108 | $ | 241 | ||||
Year Ended | ||||||||
December 31, 2005 | ||||||||
Jorf | ||||||||
Lasfar(a) | Total(b) | |||||||
(In Millions) | ||||||||
Operating revenue | $ | 508 | $ | 2,058 | ||||
Operating expenses | 340 | 1,530 | ||||||
Operating income | 168 | 528 | ||||||
Other expense, net | 56 | 243 | ||||||
Net income | $ | 112 | $ | 285 | ||||
CMS-94
December 31, 2007 | ||||
Total(b) | ||||
(In Millions) | ||||
Assets | ||||
Current assets | $ | 7 | ||
Property, plant and equipment, net | 6 | |||
Other assets | 177 | |||
$ | 190 | |||
Liabilities | ||||
Current liabilities | $ | 4 | ||
Long-term debt and other non-current liabilities | — | |||
Equity | 186 | |||
$ | 190 | |||
December 31, 2006 | ||||||||
Jorf | ||||||||
Lasfar(a) | Total(b) | |||||||
Assets | ||||||||
Current assets | $ | 239 | $ | 794 | ||||
Property, plant and equipment, net | 15 | 2,946 | ||||||
Other assets | 1,047 | 1,527 | ||||||
$ | 1,301 | $ | 5,267 | |||||
Liabilities | ||||||||
Current liabilities | $ | 272 | $ | 818 | ||||
Long-term debt and other non-current liabilities | 403 | 3,124 | ||||||
Equity | 626 | 1,325 | ||||||
$ | 1,301 | $ | 5,267 | |||||
(a) | We sold our investment in Jorf Lasfar in 2007. At December 31, 2006 our investment in Jorf Lasfar was $313 million. Our share of net income from Jorf Lasfar was $16 million for the period January 1, 2007 through May 1, 2007, $54 million for the year ended December 31, 2006, and $56 million for the year ended December 31, 2005. | |
(b) | Amounts include financial data from our international equity method investments through the date of sale. |
CMS-95
Ownership | Accumulated | Construction | ||||||||||||||||||||||||||
Share | Net Investment(a) | Depreciation | Work in Progress | |||||||||||||||||||||||||
December 31 | (%) | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||||
(In Millions) | ||||||||||||||||||||||||||||
Campbell Unit 3 | 93.3 | $ | 664 | $ | 262 | $ | 337 | $ | 370 | $ | 44 | $ | 353 | |||||||||||||||
Ludington | 51.0 | 65 | 68 | 104 | 95 | 1 | 1 | |||||||||||||||||||||
Distribution | Various | 89 | 98 | 44 | 47 | 5 | 4 |
(a) | Net investment is the amount of utility plant in service less accumulated depreciation. |
• | electric utility, consisting of regulated activities associated with the generation and distribution of electricity in Michigan through our subsidiary, Consumers, | |
• | gas utility, consisting of regulated activities associated with the transportation, storage, and distribution of natural gas in Michigan through our subsidiary, Consumers, and | |
• | enterprises, consisting of various subsidiaries engaging primarily in domestic independent power production. |
CMS-96
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Operating Revenues | ||||||||||||
Electric utility | $ | 3,443 | $ | 3,302 | $ | 2,695 | ||||||
Gas utility | 2,621 | 2,373 | 2,483 | |||||||||
Enterprises | 383 | 438 | 693 | |||||||||
Other | 17 | 13 | 8 | |||||||||
$ | 6,464 | $ | 6,126 | $ | 5,879 | |||||||
Earnings from Equity Method Investees | ||||||||||||
Enterprises | $ | 39 | $ | 87 | $ | 124 | ||||||
Other | 1 | 2 | 1 | |||||||||
$ | 40 | $ | 89 | $ | 125 | |||||||
Depreciation, Depletion, and Amortization | ||||||||||||
Electric utility | $ | 397 | $ | 380 | $ | 292 | ||||||
Gas utility | 127 | 122 | 117 | |||||||||
Enterprises | 12 | 44 | 93 | |||||||||
Other | 4 | 4 | 2 | |||||||||
$ | 540 | $ | 550 | $ | 504 | |||||||
Interest Charges | ||||||||||||
Electric utility | $ | 192 | $ | 164 | $ | 132 | ||||||
Gas utility | 69 | 73 | 68 | |||||||||
Enterprises | 9 | 66 | 69 | |||||||||
Other | 168 | 177 | 194 | |||||||||
$ | 438 | $ | 480 | $ | 463 | |||||||
Income Tax Expense (Benefit) | ||||||||||||
Electric utility | $ | 100 | $ | 95 | $ | 85 | ||||||
Gas utility | 47 | 18 | 39 | |||||||||
Enterprises | (183 | ) | (145 | ) | (203 | ) | ||||||
Other | (159 | ) | (156 | ) | (101 | ) | ||||||
$ | (195 | ) | $ | (188 | ) | $ | (180 | ) | ||||
Net Income (Loss) Available to Common Stockholders | ||||||||||||
Electric utility | $ | 196 | $ | 199 | $ | 153 | ||||||
Gas utility | 87 | 37 | 48 | |||||||||
Enterprises | (391 | ) | (227 | ) | (217 | ) | ||||||
Discontinued operations(a) | (89 | ) | 54 | 57 | ||||||||
Other | (30 | ) | (153 | ) | (135 | ) | ||||||
$ | (227 | ) | $ | (90 | ) | $ | (94 | ) | ||||
CMS-97
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Investments in equity method investees | ||||||||||||
Enterprises | $ | 6 | $ | 556 | $ | 698 | ||||||
Other | 5 | 10 | 13 | |||||||||
$ | 11 | $ | 566 | $ | 711 | |||||||
Total Assets | ||||||||||||
Electric utility(b) | $ | 8,492 | $ | 8,516 | $ | 7,755 | ||||||
Gas utility(b) | 4,102 | 3,950 | 3,609 | |||||||||
Enterprises | 986 | 1,947 | 3,616 | |||||||||
Other | 616 | 958 | 1,061 | |||||||||
$ | 14,196 | $ | 15,371 | $ | 16,041 | |||||||
Capital Expenditures(c) | ||||||||||||
Electric utility | $ | 1,319 | $ | 462 | $ | 384 | ||||||
Gas utility | 168 | 172 | 168 | |||||||||
Enterprises | 5 | 42 | 50 | |||||||||
Other | — | 1 | 3 | |||||||||
$ | 1,492 | $ | 677 | $ | 605 | |||||||
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
United States | ||||||||||||
Operating revenue | $ | 6,462 | $ | 6,123 | $ | 5,877 | ||||||
Operating income (loss) | 151 | 85 | (468 | ) | ||||||||
Total Assets | $ | 14,191 | $ | 14,123 | $ | 14,675 | ||||||
International | ||||||||||||
Operating revenue | $ | 2 | $ | 3 | $ | 2 | ||||||
Operating income (loss) | (150 | ) | (139 | ) | 123 | |||||||
Total Assets | $ | 5 | $ | 1,248 | $ | 1,366 |
(a) | Amounts include an income tax benefit of $1 million for December 31, 2007, and income tax expense of $32 million for December 31, 2006 and $20 million for December 31, 2005. | |
(b) | Amounts include a portion of Consumers’ other common assets attributable to both the electric and gas utility businesses. | |
(c) | Amounts include purchase of nuclear fuel and capital lease additions. Amounts also include a portion of Consumers’ capital expenditures for plant and equipment attributable to both the electric and gas utility businesses. | |
(d) | Revenues are based on the country location of customers. |
CMS-98
• | T.E.S. Filer City Station Limited Partnership, | |
• | Grayling Generating Station Limited Partnership, and | |
• | Genesee Power Station Limited Partnership. |
2007 | ||||||||||||||||
Quarters Ended | March 31 | June 30 | Sept. 30 | Dec. 31(d) | ||||||||||||
(In Millions, Except Per Share Amounts) | ||||||||||||||||
Operating revenue | $ | 2,189 | $ | 1,319 | $ | 1,282 | $ | 1,674 | ||||||||
Operating income (loss) | (24 | ) | 7 | 212 | (194 | ) | ||||||||||
Income (loss) from continuing operations | (33 | ) | (55 | ) | 84 | (122 | ) | |||||||||
Income (loss) from discontinued operations(a) | (178 | ) | 91 | — | (2 | ) | ||||||||||
Net income (loss) | (211 | ) | 36 | 84 | (124 | ) | ||||||||||
Preferred dividends | 3 | 3 | 2 | 3 | ||||||||||||
Redemption premium on preferred stock | 1 | — | — | — | ||||||||||||
Net income (loss) available to common stockholders | (215 | ) | 33 | 82 | (127 | ) | ||||||||||
Income (loss) from continuing operations per average common share — basic | (0.17 | ) | (0.26 | ) | 0.37 | (0.56 | ) | |||||||||
Income (loss) from continuing operations per average common share — diluted | (0.17 | ) | (0.26 | ) | 0.34 | (0.56 | ) | |||||||||
Basic earnings (loss) per average common share(b) | (0.97 | ) | 0.15 | 0.37 | (0.57 | ) | ||||||||||
Diluted earnings (loss) per average common share(b) | (0.97 | ) | 0.15 | 0.34 | (0.57 | ) | ||||||||||
Common stock prices(c) | ||||||||||||||||
High | 18.21 | 18.93 | 17.90 | 17.91 | ||||||||||||
Low | 16.00 | 16.78 | 15.48 | 16.06 |
CMS-99
2006 | ||||||||||||||||
Quarters Ended | March 31 | June 30 | Sept. 30 | Dec. 31(e) | ||||||||||||
(In Millions, Except Per Share Amounts) | ||||||||||||||||
Operating revenue | $ | 1,897 | $ | 1,219 | $ | 1,288 | $ | 1,722 | ||||||||
Operating income (loss) | (21 | ) | 69 | (27 | ) | (75 | ) | |||||||||
Income (loss) from continuing operations | (33 | ) | 63 | (112 | ) | (51 | ) | |||||||||
Income from discontinued operations(a) | 9 | 12 | 11 | 22 | ||||||||||||
Net income (loss) | (24 | ) | 75 | (101 | ) | (29 | ) | |||||||||
Preferred dividends | 3 | 3 | 2 | 3 | ||||||||||||
Net income (loss) available to common stockholders | (27 | ) | 72 | (103 | ) | (32 | ) | |||||||||
Income (loss) from continuing operations per average common share — basic | (0.16 | ) | 0.27 | (0.52 | ) | (0.25 | ) | |||||||||
Income (loss) from continuing operations per average common share — diluted | (0.16 | ) | 0.26 | (0.52 | ) | (0.25 | ) | |||||||||
Basic earnings (loss) per average common share(b) | (0.12 | ) | 0.33 | (0.47 | ) | (0.15 | ) | |||||||||
Diluted earnings (loss) per average common share(b) | (0.12 | ) | 0.31 | (0.47 | ) | (0.15 | ) | |||||||||
Common stock prices(c) | ||||||||||||||||
High | 15.22 | 13.66 | 14.79 | 16.95 | ||||||||||||
Low | 12.95 | 12.46 | 12.92 | 14.55 |
(a) | Net of tax. | |
(b) | Sum of the quarters may not equal the annual loss per share due to changes in shares outstanding. | |
(c) | Based on New York Stock Exchange composite transactions. | |
(d) | The quarter ended December 31, 2007, includes a $181 million net after-tax charge resulting from an electricity sales agreement termination. For additional details, see Note 3, Contingencies — “Other Contingencies.” | |
(e) | The quarter ended December 31, 2006 includes a $41 million net loss on the sale of our investment in the MCV Partnership, including the associated asset impairment charge. The quarter also includes an $80 million net after-tax charge resulting from our agreement to settle shareholder class action lawsuits. For additional details, see Note 2, Asset Sales, Discontinued Operations and Impairment Charges and Note 3, Contingencies. |
CMS-100
/s/ PricewaterhouseCoopers LLP |
CMS-101
/s/ PricewaterhouseCoopers LLP |
CMS-102
CMS-103
CE-1
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||||||
Operating revenue (in millions) | ($ | ) | 6,064 | 5,721 | 5,232 | 4,711 | 4,435 | |||||||||||||||||
Earnings from equity method investees (in millions) | ($ | ) | — | 1 | 1 | 1 | 42 | |||||||||||||||||
— | ||||||||||||||||||||||||
Income (loss) before cumulative effect of change in accounting principle (in millions) | ($ | ) | 312 | 186 | (96 | ) | 280 | 196 | ||||||||||||||||
Cumulative effect of change in accounting (in millions) | ($ | ) | — | — | — | (1 | ) | — | ||||||||||||||||
Net income (loss) (in millions) | ($ | ) | 312 | 186 | (96 | ) | 279 | 196 | ||||||||||||||||
Net income (loss) available to common stockholder (in millions) | ($ | ) | 310 | 184 | (98 | ) | 277 | 194 | ||||||||||||||||
Cash provided by operations (in millions) | ($ | ) | 442 | 473 | 639 | 595 | 5 | |||||||||||||||||
Capital expenditures, excluding capital lease additions (in millions) | ($ | ) | 1,258 | 646 | 572 | 508 | 486 | |||||||||||||||||
Total assets (in millions)(a) | ($ | ) | 13,401 | 12,845 | 13,178 | 12,811 | 10,745 | |||||||||||||||||
Long-term debt, excluding current portion (in millions)(a) | ($ | ) | 3,692 | 4,127 | 4,303 | 4,000 | 3,583 | |||||||||||||||||
Long-term debt — related parties, excluding current portion (in millions) | ($ | ) | — | — | — | 326 | 506 | |||||||||||||||||
Non-current portion of capital and finance lease obligations (in millions) | ($ | ) | 225 | 42 | 308 | 315 | 58 | |||||||||||||||||
Total preferred stock (in millions) | ($ | ) | 44 | 44 | 44 | 44 | 44 | |||||||||||||||||
Number of preferred shareholders at year-end | 1,641 | 1,728 | 1,823 | 1,931 | 2,032 | |||||||||||||||||||
Book value per common share at year-end | ($ | ) | 43.37 | 35.17 | 33.03 | 28.68 | 24.51 | |||||||||||||||||
Number of full-time equivalent employees at year-end | 7,614 | 8,026 | 8,114 | 8,050 | 7,947 | |||||||||||||||||||
Electric statistics | ||||||||||||||||||||||||
Sales (billions of kWh) | 39 | 38 | 39 | 38 | 38 | |||||||||||||||||||
Customers (in thousands) | 1,799 | 1,797 | 1,789 | 1,772 | 1,754 | |||||||||||||||||||
Average sales rate per kWh | (c | ) | 8.65 | 8.46 | 6.73 | 6.88 | 6.91 | |||||||||||||||||
Gas Utility Statistics | ||||||||||||||||||||||||
Sales and transportation deliveries (bcf) | 340 | 309 | 350 | 385 | 380 | |||||||||||||||||||
Customers (in thousands)(b) | 1,710 | 1,714 | 1,708 | 1,691 | 1,671 | |||||||||||||||||||
Average sales rate per mcf | ($ | ) | 10.66 | 10.44 | 9.61 | 8.04 | 6.72 |
(a) | Until their sale in November 2006 , we were the primary beneficiary of both the MCV Partnership and the FMLP. As a result, we consolidated their assets, liabilities and activities into our consolidated financial statements as of and for the years ended December 31, 2005 and 2004. These partnerships had third party obligations totaling $482 million at December 31, 2005 and $582 million at December 31, 2004. Property, plant and equipment serving as collateral for these obligations had a carrying value of $224 million at December 31, 2005 and $1.426 billion at December 31, 2004. | |
(b) | Excludes off-system transportation customers. |
CE-2
• | the price of CMS Energy Common Stock, capital and financial market conditions, and the effect of such market conditions on the Pension Plan, interest rates, and access to the capital markets, including availability of financing to Consumers, CMS Energy, or any of their affiliates, and the energy industry, | |
• | market perception of the energy industry, Consumers, CMS Energy, or any of their affiliates, | |
• | factors affecting utility and diversified energy operations, such as unusual weather conditions, catastrophic weather-related damage, unscheduled generation outages, maintenance or repairs, environmental incidents, or electric transmission or gas pipeline system constraints, | |
• | the impact of any future regulations or laws regarding carbon dioxide and other greenhouse gas emissions, | |
• | national, regional, and local economic, competitive, and regulatory policies, conditions and developments, | |
• | adverse regulatory or legal decisions, including those related to environmental laws and regulations, and potential environmental remediation costs associated with such decisions, | |
• | potentially adverse regulatory treatment or failure to receive timely regulatory orders concerning a number of significant questions currently or potentially before the MPSC, including: |
• | recovery of Clean Air Act capital and operating costs and other environmental and safety-related expenditures, | |
• | recovery of power supply and natural gas supply costs, | |
• | timely recognition in rates of additional equity investments and additional operation and maintenance expenses at Consumers, | |
• | adequate and timely recovery of additional electric and gas rate-based investments, | |
• | adequate and timely recovery of higher MISO energy and transmission costs, | |
• | recovery of Stranded Costs incurred due to customers choosing alternative energy suppliers, | |
• | timely recovery of costs associated with energy efficiency investments and any state or federally mandated renewables resource standard, | |
• | recovery of Palisades sale related costs, | |
• | approval of the Balanced Energy Initiative, and |
CE-3
• | authorization of a new clean coal plant. |
• | the effects on our ability to purchase capacity to serve our customers and fully recover the cost of these purchases, if the owners of the MCV Facility exercise their right to terminate the MCV PPA, | |
• | our ability to prevail in the exercise of our regulatory out rights under the MCV PPA, | |
• | our ability to recover Big Rock decommissioning funding shortfalls and nuclear fuel storage costs due to the DOE’s failure to accept spent nuclear fuel on schedule, including the outcome of pending litigation with the DOE, | |
• | federal regulation of electric sales and transmission of electricity, including periodic re-examination by federal regulators of our market-based sales authorizations in wholesale power markets without price restrictions, | |
• | energy markets, including availability of capacity and the timing and extent of changes in commodity prices for oil, coal, natural gas, natural gas liquids, electricity and certain related products due to lower or higher demand, shortages, transportation problems, or other developments, | |
• | our ability to collect accounts receivable from our customers, | |
• | earnings volatility resulting from the GAAP requirement that we apply mark-to-market accounting on certain energy commodity contracts and interest rate swaps, | |
• | the effect on our utility and utility revenues of the direct and indirect impacts of the continued economic downturn in Michigan, | |
• | potential disruption or interruption of facilities or operations due to accidents, war, or terrorism, and the ability to obtain or maintain insurance coverage for such events, | |
• | technological developments in energy production, delivery, and usage, | |
• | achievement of capital expenditure and operating expense goals, | |
• | changes in financial or regulatory accounting principles or policies, | |
• | changes in tax laws or new IRS interpretations of existing or past tax laws, | |
• | changes in federal or state regulations or laws that could have an impact on our business, | |
• | the outcome, cost, and other effects of legal or administrative proceedings, settlements, investigations or claims, | |
• | disruptions in the normal commercial insurance and surety bond markets that may increase costs or reduce traditional insurance coverage, particularly terrorism and sabotage insurance, performance bonds, and tax exempt debt insurance, | |
• | credit ratings of Consumers or CMS Energy, and | |
• | other business or investment considerations that may be disclosed from time to time in Consumers’ or CMS Energy’s SEC filings, or in other publicly issued written documents. |
CE-4
• | weather, especially during the normal heating and cooling seasons, | |
• | economic conditions, | |
• | regulation and regulatory issues, | |
• | energy commodity prices, | |
• | interest rates, and | |
• | our debt credit rating. |
• | investing in our utility system to enable us to meet our customer commitments, comply with increasing environmental performance standards, improve system performance, and maintain adequate supply and capacity, | |
• | growing earnings while controlling operating and fuel costs, | |
• | managing cash flow issues, and |
CE-5
• | maintaining principles of safe, efficient operations, customer value, fair and timely regulation, and consistent financial performance. |
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Electric | $ | 196 | $ | 199 | $ | (3 | ) | $ | 199 | $ | 153 | 46 | ||||||||||||
Gas | 87 | 37 | 50 | 37 | 48 | (11 | ) | |||||||||||||||||
Other (Includes The MCV Partnership interest) | 27 | (52 | ) | 79 | (52 | ) | (299 | ) | 247 | |||||||||||||||
Net Income (Loss) Available to Common Stockholder | $ | 310 | $ | 184 | $ | 126 | $ | 184 | $ | (98 | ) | $ | 282 | |||||||||||
In Millions | ||||||
• | lower operating and maintenance costs primarily due to the sale of Palisades in April 2007, | $ | 82 | |||
• | decrease in losses from our ownership interest in the MCV Partnership primarily due to the absence, in 2007, of mark-to-market losses on certain long-term gas contracts and financial hedges, | 60 | ||||
• | increase in gas delivery revenue primarily due to the MPSC’s November 2006 and August 2007 gas rate orders, | 47 | ||||
• | decrease in other income tax adjustments primarily due to higher expected utilization of capital loss carryforwards, | 14 | ||||
• | increase in electric revenue primarily due to favorable weather and higher surcharge revenue, | 16 | ||||
• | increase in gas delivery revenue primarily due to colder weather, | 12 | ||||
• | decrease due to electric revenue being used to offset costs incurred under our power purchase agreement with Entergy, | (88 | ) | |||
• | increase in general taxes, primarily due to higher property tax expense, | (14 | ) | |||
• | increase in interest charges, and | (7 | ) | |||
• | other net increases to income. | 4 | ||||
Total change | $ | 126 | ||||
CE-6
In Millions | ||||||
• | the net impact of activities associated with the MCV Partnership as the absence of a 2005 impairment charge and improved operations in 2006 more than offset the negative effects of mark-to-market activity and charges related to the sale of our interest in the MCV Partnership, | $ | 225 | |||
• | increase in electric delivery revenue primarily due to a December 2005 electric rate order, | 165 | ||||
• | increase in earnings due to the expiration of rate caps that, in 2005, would not allow us to recover fully our power supply costs from our residential customers, | 37 | ||||
• | increase in gas wholesale and retail services and other gas revenue associated with pipeline capacity optimization, | 16 | ||||
• | increase in return on electric utility capital expenditures in excess of depreciation base as allowed by the Customer Choice Act, | 14 | ||||
• | decrease in income taxes primarily due to an IRS audit settlement, | 14 | ||||
• | increase in operating expenses primarily due to higher depreciation and amortization expense, higher electric maintenance expense, and higher customer service expense, | (101 | ) | |||
• | decrease in gas delivery revenue primarily due to lower, weather-driven sales, | (31 | ) | |||
• | increase in operating expenses primarily due to costs related to a planned refueling outage at our Palisades nuclear plant, | (29 | ) | |||
• | increase in interest charges, and | (20 | ) | |||
• | increase in general tax expense, primarily due to higher property tax expense. | (8 | ) | |||
Total change | $ | 282 | ||||
CE-7
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Net income | $ | 196 | $ | 199 | $ | (3 | ) | $ | 199 | $ | 153 | $ | 46 | |||||||||||
Reasons for the change: | ||||||||||||||||||||||||
Electric deliveries | $ | 18 | $ | 193 | ||||||||||||||||||||
Surcharge revenue | 6 | 61 | ||||||||||||||||||||||
Palisades revenue to PSCR | (136 | ) | — | |||||||||||||||||||||
Power supply costs and related revenue | (17 | ) | 57 | |||||||||||||||||||||
Other operating expenses, other income, and non-commodity revenue | 159 | (236 | ) | |||||||||||||||||||||
Regulatory return on capital expenditures | 5 | 22 | ||||||||||||||||||||||
General taxes | (15 | ) | (7 | ) | ||||||||||||||||||||
Interest charges | (18 | ) | (34 | ) | ||||||||||||||||||||
Income taxes | (5 | ) | (10 | ) | ||||||||||||||||||||
Total change | $ | (3 | ) | $ | 46 | |||||||||||||||||||
CE-8
CE-9
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Net income | $ | 87 | $ | 37 | $ | 50 | $ | 37 | $ | 48 | $ | (11 | ) | |||||||||||
Reasons for the change: | ||||||||||||||||||||||||
Gas deliveries | $ | 10 | $ | (61 | ) | |||||||||||||||||||
Gas rate increase | 81 | 14 | ||||||||||||||||||||||
Gas wholesale and retail services, other gas revenues, and other income | 14 | 24 | ||||||||||||||||||||||
Other operating expenses | (19 | ) | 7 | |||||||||||||||||||||
General taxes and depreciation | (11 | ) | (10 | ) | ||||||||||||||||||||
Interest charges | 4 | (6 | ) | |||||||||||||||||||||
Income taxes | (29 | ) | 21 | |||||||||||||||||||||
Total change | $ | 50 | $ | (11 | ) | |||||||||||||||||||
CE-10
Years Ended December 31 | 2007 | 2006 | Change | 2006 | 2005 | Change | ||||||||||||||||||
In Millions | ||||||||||||||||||||||||
Net income (loss) | $ | 27 | $ | (52 | ) | $ | 79 | $ | (52 | ) | $ | (299 | ) | $ | 247 | |||||||||
CE-11
• | the nature of the assets, | |
• | projected future economic benefits, | |
• | regulatory and political environments, | |
• | historical and future cash flow and profitability measurements, and | |
• | other external market conditions and factors. |
CE-12
• | they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas), | |
• | they qualify for the normal purchases and sales exception, or | |
• | there is not an active market for the commodity. |
CE-13
December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Variable-rate financing — before tax annual earnings exposure | $ | 1 | $ | 3 | ||||
Fixed-rate financing — potentialreductionin fair value(a) | 116 | 134 |
(a) | Fair value reduction could only be realized if we transferred all of our fixed-rate financing to other creditors. |
December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Potentialreductionin fair value of available-for-sale equity securities (SERP investments and investment in CMS Energy common stock) | $ | 7 | $ | 6 |
CE-14
• | life expectancies, | |
• | present-value discount rates, | |
• | expected long-term rate of return on plan assets, | |
• | rate of compensation increases, and | |
• | anticipated health care costs. |
Expected Costs | Pension Cost | OPEB Cost | Contributions | |||||||||
In Millions | ||||||||||||
2008 | $ | 103 | $ | 29 | $ | 48 | ||||||
2009 | 109 | 28 | 48 | |||||||||
2010 | 112 | 26 | 129 |
CE-15
• | purchase and sale of electricity from and to Enterprises, | |
• | payment of parent company overhead costs to CMS Energy, and | |
• | investment in CMS Energy Common Stock. |
• | results of operations, | |
• | capital expenditures, | |
• | energy commodity and transportation costs, | |
• | contractual obligations, | |
• | regulatory decisions, | |
• | debt maturities, | |
• | credit ratings, | |
• | working capital needs, and | |
• | collateral requirements. |
• | our current level of cash and revolving credit facilities, | |
• | our anticipated cash flows from operating and investing activities, and | |
• | our ability to access secured and unsecured borrowing capacity in the capital markets, if necessary. |
CE-16
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Net cash provided by (used in): | ||||||||||||
Operating activities | $ | 442 | $ | 473 | $ | 639 | ||||||
Investing activities | (585 | ) | (672 | ) | (661 | ) | ||||||
Net cash used in operating and investing activities | (143 | ) | (199 | ) | (22 | ) | ||||||
Financing activities | 301 | (180 | ) | 267 | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | $ | 158 | $ | (379 | ) | $ | 245 | |||||
• | the absence, in 2007, of the sale of accounts receivable, | |
• | a payment to fund our Pension Plan, | |
• | refunds to customers of excess Palisades decommissioning funds, and | |
• | other timing differences. |
• | the absence, in 2007, of tax payments made to the parent related to the 2006 IRS income tax audit, | |
• | the absence of the release of the MCV Partnership gas supplier funds on deposit due to the sale of our interest in the MCV Partnership in 2006, and | |
• | a decrease in expenditures for gas inventory as the milder winter in 2006 allowed us to accumulate more gas in our storage facilities. |
• | decreases in the MCV Partnership gas supplier funds on deposit resulting in refunds to suppliers from decreased exposure to declining gas prices in 2006, | |
• | income tax payments to the parent related to the 2006 IRS income tax audit, and | |
• | decreases in accounts payable mainly due to payments for higher-priced gas that were accrued at December 31, 2005. |
• | a decrease in accounts receivable due to the collection of receivables in 2006 reflecting higher gas prices billed during the latter part of 2005 and reduced billings in the latter part of 2006 due to milder weather, and | |
• | reduced inventory purchases. |
CE-17
Payments Due | ||||||||||||||||||||
Contractual Obligations | Less Than | One to | Three to | More Than | ||||||||||||||||
at December 31, 2007 | Total | One Year | Three Years | Five Years | Five Years | |||||||||||||||
In Millions | ||||||||||||||||||||
Long-term debt(a) | $ | 4,132 | $ | 440 | $ | 727 | $ | 376 | $ | 2,589 | ||||||||||
Interest payments on long-term debt(b) | 1,712 | 198 | 342 | 298 | 874 | |||||||||||||||
Capital and finance leases(c) | 255 | 30 | 48 | 44 | 133 | |||||||||||||||
Interest payments on capital and finance leases(d) | 139 | 14 | 27 | 24 | 74 | |||||||||||||||
Operating leases(e) | 204 | 25 | 44 | 42 | 93 | |||||||||||||||
Purchase obligations(f) | 21,286 | 2,502 | 2,897 | 2,275 | 13,612 | |||||||||||||||
Purchase obligations — related parties(f) | 1,492 | 78 | 154 | 154 | 1,106 | |||||||||||||||
Total contractual obligations | $ | 29,220 | $ | 3,287 | $ | 4,239 | $ | 3,213 | $ | 18,481 | ||||||||||
(a) | Principal amounts due on outstanding debt obligations, current and long-term, at December 31, 2007. For additional details on long-term debt, see Note 4, Financings and Capitalization. | |
(b) | Currently scheduled interest payments on both variable and fixed rate long-term debt, current and long-term. Variable interest payments are based on contractual rates in effect at December 31, 2007. | |
(c) | Principal portion of lease payments under our capital and finance leases, comprised mainly of leased service vehicles, leased office furniture, and certain power purchase agreements. | |
(d) | Imputed interest on the capital leases. | |
(e) | Minimum noncancelable lease payments under our leases of railroad cars, certain vehicles, and miscellaneous office buildings and equipment, which are accounted for as operating leases. |
CE-18
(f) | Long-term contracts for purchase of commodities and services. These obligations include operating contracts used to assure adequate supply with generating facilities that meet PURPA requirements. These commodities and services include: |
• | natural gas and associated transportation, | |
• | electricity, and | |
• | coal and associated transportation. |
Years Ending December 31 | 2008 | 2009 | 2010 | |||||||||
In Millions | ||||||||||||
Construction | $ | 523 | $ | 589 | $ | 575 | ||||||
Clean Air(a) | 112 | 135 | 94 | |||||||||
Cost of Removal | 44 | 56 | 48 | |||||||||
New Customers | 83 | 84 | 116 | |||||||||
Other(b) | 156 | 116 | 182 | |||||||||
Total | $ | 918 | $ | 980 | $ | 1,015 | ||||||
Electric utility operations(a)(b) | $ | 684 | $ | 717 | $ | 783 | ||||||
Gas utility operations(b) | 234 | 263 | 232 | |||||||||
Total | $ | 918 | $ | 980 | $ | 1,015 | ||||||
(a) | These amounts include estimates for capital expenditures that may be required by revisions to the Clean Air Act’s national air quality standards or potential renewable energy programs. | |
(b) | These amounts include estimates for capital expenditures related to information technology projects, facility improvements, and vehicle leasing. |
CE-19
• | energy conservation measures, | |
• | fluctuations in weather conditions, and | |
• | changes in economic conditions, including utilization and expansion or contraction of manufacturing facilities. |
CE-20
CE-21
• | operating our selective catalytic reduction control technology units throughout the year, | |
• | completing the installation of a fourth selective catalytic reduction control unit, | |
• | installing low nitrogen oxides burners, and | |
• | purchasing emission allowances. |
• | construction commodity prices, especially construction material and labor, | |
• | project completion schedules and spending plans, | |
• | cost escalation factor used to estimate future years’ costs of 3.2 percent, and | |
• | an AFUDC capitalization rate of 7.9 percent. |
Phase I | Phase II | |||
Proposed State Mercury Rule | 30% reduction by 2010 | 90% reduction by 2015 |
CE-22
CE-23
• | fluctuations in weather conditions, | |
• | use by independent power producers, | |
• | availability of renewable energy sources, | |
• | changes in gas commodity prices, | |
• | Michigan economic conditions, | |
• | the price of competing energy sources or fuels, | |
• | gas consumption per customer, and | |
• | improvements in gas appliance efficiency. |
CE-24
CE-25
CE-26
• | AROs, | |
• | most of the nonfinancial assets and liabilities acquired in a business combination, and | |
• | fair value measurements performed in conjunction with impairment analyses. |
CE-27
CE-28
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Operating Revenue | $ | 6,064 | $ | 5,721 | $ | 5,232 | ||||||
Earnings from Equity Method Investees | — | 1 | 1 | |||||||||
Operating Expenses | ||||||||||||
Fuel for electric generation | 385 | 672 | 605 | |||||||||
Fuel costs mark-to-market at the MCV | ||||||||||||
Partnership | — | 204 | (200 | ) | ||||||||
Purchased and interchange power | 1,370 | 647 | 347 | |||||||||
Purchased power — related parties | 79 | 74 | 68 | |||||||||
Cost of gas sold | 1,918 | 1,770 | 1,844 | |||||||||
Other operating expenses | 808 | 895 | 841 | |||||||||
Maintenance | 183 | 284 | 218 | |||||||||
Depreciation and amortization | 524 | 527 | 484 | |||||||||
General taxes | 217 | 150 | 214 | |||||||||
Asset impairment charges | — | 218 | 1,184 | |||||||||
Gain on asset sales, net | (2 | ) | (79 | ) | — | |||||||
5,482 | 5,362 | 5,605 | ||||||||||
Operating Income (Loss) | 582 | 360 | (372 | ) | ||||||||
Other Income (Deductions) | ||||||||||||
Interest and dividends | 69 | 62 | 45 | |||||||||
Interest and dividends — related parties | 1 | — | — | |||||||||
Regulatory return on capital expenditures | 31 | 26 | 4 | |||||||||
Other income | 32 | 20 | 20 | |||||||||
Other expense | (14 | ) | (12 | ) | (15 | ) | ||||||
119 | 96 | 54 | ||||||||||
Interest Charges | ||||||||||||
Interest on long-term debt | 234 | 281 | 289 | |||||||||
Interest on long-term debt — related parties | 2 | 5 | 16 | |||||||||
Other interest | 34 | 13 | 5 | |||||||||
Capitalized interest | (6 | ) | (10 | ) | (38 | ) | ||||||
264 | 289 | 272 | ||||||||||
Income (Loss) Before Income Taxes | 437 | 167 | (590 | ) | ||||||||
Income Tax Expense (Benefit) | 125 | 91 | (47 | ) | ||||||||
Income (Loss) Before Minority Obligations, Net | 312 | 76 | (543 | ) | ||||||||
Minority Obligations, Net | — | (110 | ) | (447 | ) | |||||||
Net Income (Loss) | 312 | 186 | (96 | ) | ||||||||
Preferred Stock Dividends | 2 | 2 | 2 | |||||||||
Net Income (Loss) Available to Common Stockholder | $ | 310 | $ | 184 | $ | (98 | ) | |||||
CE-29
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net income (loss) | $ | 312 | $ | 186 | $ | (96 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||||||
Depreciation and amortization (includes nuclear decommissioning of $4, $6 and $6) | 524 | 527 | 484 | |||||||||
Deferred income taxes and investment tax credit | 55 | (113 | ) | (225 | ) | |||||||
Regulatory return on capital expenditures | (31 | ) | (26 | ) | (4 | ) | ||||||
Minority obligations, net | — | (110 | ) | (447 | ) | |||||||
Fuel costs mark-to-market at the MCV Partnership | — | 204 | (200 | ) | ||||||||
Asset impairment charges | — | 218 | 1,184 | |||||||||
Postretirement benefits expense | 124 | 122 | 107 | |||||||||
Capital lease and other amortization | 44 | 37 | 34 | |||||||||
Bad debt expense | 33 | 30 | 24 | |||||||||
Gain on sale of assets | (2 | ) | (79 | ) | — | |||||||
Earnings from equity method investees | — | (1 | ) | (1 | ) | |||||||
Postretirement benefits contributions | (173 | ) | (68 | ) | (62 | ) | ||||||
Changes in assets and liabilities: | ||||||||||||
Decrease (increase) in accounts receivable, notes receivable and accrued revenue | (442 | ) | 24 | (229 | ) | |||||||
Decrease (increase) in accrued power supply and gas revenue | 99 | (91 | ) | (65 | ) | |||||||
Increase in inventories | (5 | ) | (114 | ) | (235 | ) | ||||||
Increase (decrease) in accounts payable | (23 | ) | (32 | ) | 154 | |||||||
Increase (decrease) in accrued expenses | (15 | ) | 35 | (13 | ) | |||||||
Increase (decrease) in accrued taxes | 80 | (101 | ) | 146 | ||||||||
Increase (decrease) in the MCV Partnership gas supplier funds on deposit | — | (147 | ) | 173 | ||||||||
Increase in other current and non-current assets | (5 | ) | (51 | ) | (20 | ) | ||||||
Increase (decrease) in other current and non-current liabilities | (133 | ) | 23 | (70 | ) | |||||||
Net cash provided by operating activities | 442 | 473 | 639 | |||||||||
Cash Flows from Investing Activities | ||||||||||||
Capital expenditures (excludes assets placed under capital lease) | (1,258 | ) | (646 | ) | (572 | ) | ||||||
Cost to retire property | (28 | ) | (78 | ) | (27 | ) | ||||||
Restricted cash and restricted short-term investments | 32 | 126 | (162 | ) | ||||||||
Investments in nuclear decommissioning trust funds | (1 | ) | (21 | ) | (6 | ) | ||||||
Proceeds from nuclear decommissioning trust funds | 333 | 22 | 39 | |||||||||
Purchases of available-for-sale SERP investments | (31 | ) | (2 | ) | (1 | ) | ||||||
Proceeds from available-for-sale SERP investments | 29 | 3 | 2 | |||||||||
Proceeds from short-term investments | — | — | 145 | |||||||||
Purchase of short-term investments | — | — | (141 | ) | ||||||||
Maturity of the MCV Partnership restricted investment securities held-to-maturity | — | 130 | 318 | |||||||||
Purchase of the MCV Partnership restricted investment securities held-to-maturity | — | (131 | ) | (270 | ) | |||||||
Cash proceeds from sale of assets | 337 | 69 | 2 | |||||||||
Cash relinquished from sale of assets | — | (148 | ) | — | ||||||||
Other investing | 2 | 4 | 12 | |||||||||
Net cash used in investing activities | (585 | ) | (672 | ) | (661 | ) | ||||||
CE-30
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Cash Flows from Financing Activities | ||||||||||||
Proceeds from issuance of long term debt | — | — | 910 | |||||||||
Retirement of long-term debt | (34 | ) | (217 | ) | (1,028 | ) | ||||||
Payment of common stock dividends | (251 | ) | (147 | ) | (277 | ) | ||||||
Payment of capital and finance lease obligations | (20 | ) | (26 | ) | (29 | ) | ||||||
Stockholder’s contribution, net | 650 | 200 | 700 | |||||||||
Payment of preferred stock dividends | (1 | ) | (2 | ) | (2 | ) | ||||||
Increase (decrease) in notes payable | (42 | ) | 15 | 27 | ||||||||
Debt issuance and financing costs | (1 | ) | (3 | ) | (34 | ) | ||||||
Net cash provided by (used in) financing activities | 301 | (180 | ) | 267 | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 158 | (379 | ) | 245 | ||||||||
Cash and Cash Equivalents, Beginning of Period | 37 | 416 | 171 | |||||||||
Cash and Cash Equivalents, End of Period | $ | 195 | $ | 37 | $ | 416 | ||||||
Other cash flow activities and non-cash investing and financing activities were: | ||||||||||||
Cash transactions | ||||||||||||
Interest paid (net of amounts capitalized) | $ | 242 | $ | 279 | $ | 250 | ||||||
Income taxes paid (net of refunds, $98, $39, and $8) | — | 306 | 35 | |||||||||
Non-cash transactions | ||||||||||||
Other assets placed under capital lease | $ | 229 | $ | 7 | $ | 12 | ||||||
CE-31
December 31 | ||||||||
2007 | 2006 | |||||||
In Millions | ||||||||
ASSETS | ||||||||
Plant and Property (at cost) | ||||||||
Electric | $ | 8,555 | $ | 8,504 | ||||
Gas | 3,467 | 3,273 | ||||||
Other | 15 | 15 | ||||||
12,037 | 11,792 | |||||||
Less accumulated depreciation, depletion, and amortization | 3,993 | 5,018 | ||||||
8,044 | 6,774 | |||||||
Constructionwork-in-progress | 447 | 639 | ||||||
8,491 | 7,413 | |||||||
Investments | ||||||||
Stock of affiliates | 32 | 36 | ||||||
Other | — | 5 | ||||||
32 | 41 | |||||||
Current Assets | ||||||||
Cash and cash equivalents at cost, which approximates market | 195 | 37 | ||||||
Restricted cash at cost, which approximates market | 25 | 57 | ||||||
Accounts receivable and accrued revenue, less allowances of $16 in 2007 and $14 in 2006 | 810 | 389 | ||||||
Notes receivable | 67 | 46 | ||||||
Accrued power supply and gas revenue | 45 | 156 | ||||||
Accounts receivable — related parties | 4 | 5 | ||||||
Inventories at average cost | ||||||||
Gas in underground storage | 1,123 | 1,129 | ||||||
Materials and supplies | 79 | 81 | ||||||
Generating plant fuel stock | 100 | 105 | ||||||
Deferred property taxes | 158 | 150 | ||||||
Regulatory assets — postretirement benefits | 19 | 19 | ||||||
Prepayments and other | 28 | 50 | ||||||
2,653 | 2,224 | |||||||
Non-current Assets | ||||||||
Regulatory assets | ||||||||
Securitized costs | 466 | 514 | ||||||
Postretirement benefits | 921 | 1,131 | ||||||
Customer Choice Act | 149 | 190 | ||||||
Other | 504 | 497 | ||||||
Nuclear decommissioning trust funds | — | 602 | ||||||
Other | 185 | 233 | ||||||
2,225 | 3,167 | |||||||
Total Assets | $ | 13,401 | $ | 12,845 | ||||
CE-32
December 31 | ||||||||
2007 | 2006 | |||||||
In Millions | ||||||||
STOCKHOLDER’S INVESTMENT AND LIABILITIES | ||||||||
Capitalization | ||||||||
Common stockholder’s equity | ||||||||
Common stock, authorized 125.0 shares; outstanding 84.1 shares for both periods | $ | 841 | $ | 841 | ||||
Paid-in capital | 2,482 | 1,832 | ||||||
Accumulated other comprehensive income | — | 15 | ||||||
Retained earnings | 324 | 270 | ||||||
3,647 | 2,958 | |||||||
Preferred stock | 44 | 44 | ||||||
Long-term debt | 3,692 | 4,127 | ||||||
Non-current portion of capital and finance lease obligations | 225 | 42 | ||||||
7,608 | 7,171 | |||||||
Current Liabilities | ||||||||
Current portion of long-term debt, capital and finance lease obligations | 470 | 44 | ||||||
Notes payable — related parties | — | 42 | ||||||
Accounts payable | 403 | 421 | ||||||
Accrued rate refunds | 19 | 37 | ||||||
Accounts payable — related parties | 13 | 18 | ||||||
Accrued interest | 65 | 62 | ||||||
Accrued taxes | 353 | 295 | ||||||
Deferred income taxes | 151 | 11 | ||||||
Regulatory liabilities | 164 | — | ||||||
Other | 150 | 184 | ||||||
1,788 | 1,114 | |||||||
Non-current Liabilities | ||||||||
Deferred income taxes | 713 | 847 | ||||||
Regulatory liabilities | ||||||||
Regulatory liabilities for cost of removal | 1,127 | 1,166 | ||||||
Income taxes, net | 533 | 539 | ||||||
Other regulatory liabilities | 313 | 249 | ||||||
Postretirement benefits | 813 | 993 | ||||||
Asset retirement obligations | 198 | 497 | ||||||
Deferred investment tax credit | 58 | 62 | ||||||
Other | 250 | 207 | ||||||
4,005 | 4,560 | |||||||
Commitments and Contingencies (Notes 3, 4, 5, 8, and 10) | ||||||||
Total Stockholder’s Investment and Liabilities | $ | 13,401 | $ | 12,845 | ||||
CE-33
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
Common Stock | ||||||||||||
At beginning and end of period(a) | $ | 841 | $ | 841 | $ | 841 | ||||||
Other Paid-in Capital | ||||||||||||
At beginning of period | 1,832 | 1,632 | 932 | |||||||||
Stockholder’s contribution | 650 | 200 | 700 | |||||||||
At end of period | 2,482 | 1,832 | 1,632 | |||||||||
Accumulated Other Comprehensive Income | ||||||||||||
Retirement benefits liability | ||||||||||||
At beginning of period | (8 | ) | (2 | ) | (1 | ) | ||||||
Retirement benefits liability adjustments(b) | — | — | (1 | ) | ||||||||
Net loss arising during the period(b) | (7 | ) | — | — | ||||||||
Adjustment to initially apply FASB Statement No. 158, net of tax | — | (6 | ) | — | ||||||||
At end of period | (15 | ) | (8 | ) | (2 | ) | ||||||
Investments | ||||||||||||
At beginning of period | 23 | 18 | 12 | |||||||||
Unrealized gain (loss) on investments(b) | (1 | ) | 5 | 6 | ||||||||
Reclassification adjustments included in net income (loss)(b) | (7 | ) | — | — | ||||||||
At end of period | 15 | 23 | 18 | |||||||||
Derivative instruments | ||||||||||||
At beginning of period | — | 56 | 20 | |||||||||
Unrealized gain (loss) on derivative instruments(b) | — | (21 | ) | 53 | ||||||||
Reclassification adjustments included in net income (loss)(b) | — | (35 | ) | (17 | ) | |||||||
At end of period | — | — | 56 | |||||||||
Total Accumulated Other Comprehensive Income | — | 15 | 72 | |||||||||
Retained Earnings | ||||||||||||
At beginning of period | 270 | 233 | 608 | |||||||||
Adjustment to initially apply FIN 48 | (5 | ) | — | — | ||||||||
Net income (loss)(b) | 312 | 186 | (96 | ) | ||||||||
Cash dividends declared — Common Stock | (251 | ) | (147 | ) | (277 | ) | ||||||
Cash dividends declared — Preferred Stock | (2 | ) | (2 | ) | (2 | ) | ||||||
At end of period | 324 | 270 | 233 | |||||||||
Total Common Stockholder’s Equity | $ | 3,647 | $ | 2,958 | $ | 2,778 | ||||||
CE-34
Years Ended December 31 | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||
(a) Number of shares of common stock outstanding was 84,108,789 for all periods presented. | ||||||||||||
(b) Disclosure of Comprehensive Income (Loss): | ||||||||||||
Net income (loss) | $ | 312 | $ | 186 | $ | (96 | ) | |||||
Retirement benefits liability | ||||||||||||
Retirement benefits liability adjustment, net of tax benefit of $— | — | — | (1 | ) | ||||||||
Net loss arising during the period, net of tax benefit of $(4) | (7 | ) | — | — | ||||||||
Investments | ||||||||||||
Unrealized gain (loss) on investments, net of tax (tax benefit) of $(1) in 2007, $2 in 2006, and $3 in 2005 | (1 | ) | 5 | 6 | ||||||||
Reclassification adjustments included in net income (loss), net of tax benefit of $(3) | (7 | ) | — | — | ||||||||
Derivative instruments | ||||||||||||
Unrealized gain (loss) on derivative instruments, net of tax (tax benefit) of $(11) in 2006, and $28 in 2005 | — | (21 | ) | 53 | ||||||||
Reclassification adjustments included in net income (loss), net of tax benefit of $(19) in 2006, and $(10) in 2005 | — | (35 | ) | (17 | ) | |||||||
Total Comprehensive Income (Loss) | $ | 297 | $ | 135 | $ | (55 | ) | |||||
CE-35
CE-36
CE-37
CE-38
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Electric utility property | 3.0% | 3.1% | 3.1% | |||||||||
Gas utility property | 3.6% | 3.6% | 3.6% | |||||||||
Other property | 8.7% | 8.2% | 7.6% |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions | ||||||||||||
Other income | ||||||||||||
Electric restructuring return | $ | 2 | $ | 4 | $ | 6 | ||||||
Return on stranded and security costs | 6 | 5 | 6 | |||||||||
MCV Partnership emmission allowance sales | — | 8 | 2 | |||||||||
Gain on SERP investment | 10 | — | — | |||||||||
Gain on investment | 7 | — | — | |||||||||
Gain on stock | 4 | 1 | 1 | |||||||||
All other | 3 | 2 | 5 | |||||||||
Total other income | $ | 32 | $ | 20 | $ | 20 | ||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
In Millions | ||||||||||||
Other expense | ||||||||||||
Loss on reacquired debt | $ | — | $ | — | $ | (6 | ) | |||||
Civic and political expenditures | (2 | ) | (2 | ) | (2 | ) | ||||||
Donations | — | (9 | ) | — | ||||||||
Abandoned Midland Project | (8 | ) | — | — | ||||||||
Loss on SERP investment | — | — | (1 | ) | ||||||||
All other | (4 | ) | (1 | ) | (6 | ) | ||||||
Total other expense | $ | (14 | ) | $ | (12 | ) | $ | (15 | ) | |||
CE-39
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
AFUDC capitalization rate | 7.4 | % | 7.5 | % | 7.6 | % |
Description | Related Party | 2007 | 2006 | 2005 | ||||||||||
In Millions | ||||||||||||||
Type of Income: | ||||||||||||||
Income from our investments in related party trusts | Consumers’ affiliated Trust Preferred Securities Companies | $ | — | $ | — | $ | 1 | |||||||
Dividend Income | CMS Energy | 1 | — | — | ||||||||||
Type of Expense: | ||||||||||||||
Electric generating capacity and energy | Affiliates of Enterprises | (79 | ) | (74 | ) | (68 | ) | |||||||
Interest expense on long-term debt | Consumers’ affiliated Trust Preferred Securities Companies | — | (1 | ) | (15 | ) | ||||||||
Interest expense on note payable | CMS Energy | (2 | ) | (4 | ) | (1 | ) | |||||||
Overhead expense(a) | CMS Energy | (1 | ) | (1 | ) | (1 | ) | |||||||
Gas transportation(b) | CMS Bay Area Pipeline, L.L.C. | (1 | ) | (4 | ) | (4 | ) |
(a) | We base our related party transactions on regulated prices, market prices, or competitive bidding. We pay overhead costs to CMS Energy based on an industry allocation methodology, such as the Massachusetts Formula. | |
(b) | CMS Bay Area Pipeline, L.L.C. was sold to Lucid Energy in March 2007. |
CE-40
End of | ||||||||||
Recovery | ||||||||||
December 31 | Period | 2007 | 2006 | |||||||
In Millions | ||||||||||
Assets Earning a Return: | ||||||||||
Customer Choice Act | 2010 | $ | 149 | $ | 190 | |||||
Unamortized debt costs | 2035 | 74 | 86 | |||||||
Stranded Costs | See Note 3 | 68 | 65 | |||||||
Electric restructuring implementation plan | 2008 | 14 | 40 | |||||||
Manufactured gas plant sites (Note 3) | 2016 | 33 | 15 | |||||||
Abandoned Midland project | n/a | — | 9 | |||||||
Other(a) | various | 50 | 21 | |||||||
Assets Not Earning a Return: | ||||||||||
SFAS No. 158 transition adjustment (Note 6) | various | 851 | 1,038 | |||||||
Securitized costs (Note 4) | 2015 | 466 | 514 | |||||||
Postretirement benefits (Note 6) | 2011 | 89 | 112 | |||||||
ARO (Note 7) | n/a | 85 | 177 | |||||||
Big Rock nuclear decommissioning and related costs (Note 3) | n/a | 129 | 35 | |||||||
Manufactured gas plant sites (Note 3) | n/a | 17 | 41 | |||||||
Palisades sales transaction costs (Note 2) | n/a | 28 | — | |||||||
Other(a) | 2011 | 6 | 8 | |||||||
Total regulatory assets(b) | $ | 2,059 | $ | 2,351 | ||||||
Palisades refund — Current (Note 2)(c) | $ | 164 | $ | — | ||||||
Cost of removal (Note 7) | 1,127 | 1,166 | ||||||||
Income taxes, net (Note 8) | 533 | 539 | ||||||||
ARO (Note 7) | 141 | 180 | ||||||||
Palisades refund — Noncurrent (Note 2)(c) | 140 | — | ||||||||
Other(a) | 32 | 69 | ||||||||
Total regulatory liabilities(b) | $ | 2,137 | $ | 1,954 | ||||||
(a) | At December 31, 2007 and 2006, other regulatory assets include a gas inventory regulatory asset and OPEB and pension expense incurred in excess of the MPSC-approved amount. We will recover these regulatory assets from our customers by 2011. Other regulatory liabilities include liabilities related to the sale of sulfur dioxide allowances and AFUDC collected in excess of the MPSC-approved amount. |
CE-41
(b) | At December 31, 2007, we classified $19 million of regulatory assets as current regulatory assets and $2.040 billion of regulatory assets as non-current regulatory assets. At December 31, 2006, we classified $19 million of regulatory assets as current regulatory assets and $2.332 billion of regulatory assets as non-current regulatory assets. At December 31, 2007, we classified $164 million of regulatory liabilities as current regulatory liabilities and $1.973 billion of regulatory liabilities as non-current regulatory liabilities. At December 31, 2006, all of our regulatory liabilities represented non-current regulatory liabilities. | |
(c) | The MPSC order approving the Palisades and Big Rock ISFSI transaction requires that we credit $255 million of excess proceeds and decommissioning amounts to our retail customers beginning in June 2007 through December 2008. The current portion of regulatory liabilities for Palisades refunds represents the remaining portion of this obligation, plus interest. There are additional excess sales proceeds and decommissioning fund balances above the amount in the MPSC order. The non-current portion of regulatory liabilities for Palisades refunds represents this obligation, plus interest. For additional details on the sale of Palisades and the Big Rock ISFSI, see Note 2, Asset Sales and Impairment Charges. |
Years Ended December 31 | 2007 | 2006 | ||||||
In Millions | ||||||||
Regulatory Assets for PSCR and GCR | ||||||||
Underrecoveries of power supply costs | $ | 45 | $ | 156 | ||||
Regulatory Liabilities for PSCR and GCR | ||||||||
Overrecoveries of gas costs | $ | 19 | $ | 37 | ||||
• | AROs, | |
• | most of the nonfinancial assets and liabilities acquired in a business combination, and | |
• | fair value measurements performed in conjunction with impairment analyses. |
CE-42
2: | ASSET SALES AND IMPAIRMENT CHARGES |
Pretax | After-tax | |||||||||
Month sold | Business/Project | Gain | Gain | |||||||
In Millions | ||||||||||
April | Palisades(a) | $ | — | $ | — | |||||
Various | Other | 2 | 1 | |||||||
Total gain on asset sales | $ | 2 | $ | 1 | ||||||
(a) | Sale of Nuclear Assets: In April 2007, we sold Palisades to Entergy for $380 million, and received $363 million after various closing adjustments such as working capital and capital expenditure adjustments and nuclear fuel usage and inventory adjustments. We also paid Entergy $30 million to assume ownership and responsibility for the Big Rock ISFSI. Because of the sale of Palisades, we paid the NMC, the former operator of Palisades, $7 million in exit fees and forfeited our $5 million investment in the NMC. |
CE-43
Pretax | After-tax | |||||||||
Month sold | Business/Project | Gain | Gain | |||||||
In Millions | ||||||||||
October | Land in Ludington, Michigan(a) | $ | 2 | $ | 2 | |||||
November | MCV GP II(b) | 77 | 38 | |||||||
Total gain on asset sales | $ | 79 | $ | 40 | ||||||
(a) | We sold 36 parcels of land near Ludington, Michigan. We held a majority share of the land, which we co-owned with DTE Energy. Our portion of the proceeds was $6 million. | |
(b) | In November 2006, we sold all of our interests in the Consumers’ subsidiaries that held the MCV Partnership and the MCV Facility to an affiliate of GSO Capital Partners and Rockland Capital Energy Investments. |
CE-44
3: | CONTINGENCIES |
CE-45
CE-46
Net Under- | PSCR Cost | |||||||||
PSCR Year | Date Filed | Order Date | recovery | of Power Sold | Description of Net Underrecovery | |||||
2005 Reconciliation | March 2006 | July 2007 | $36 million | $1.081 billion | MPSC approved the recovery of our $36 million underrecovery, including interest, related to our commercial and industrial customers. | |||||
2006 Reconciliation | March 2007 | Pending | $105 million(a) | $1.490 billion | Underrecovery relates to our increased METC costs and coal supply costs, certain increased sales, and other cost increases beyond those included in the 2006 PSCR plan filings. |
(a) | $99 million as recommended by a February 2008 ALJ Proposal for Decision. In a separate matter, this ALJ also recommended that we refund $62 million in proceeds from the sale of excess sulfur dioxide allowances. In accordance with FERC regulations, we previously reserved these proceeds as a regulatory liability pending final direction on disposition of the proceeds from the MPSC. |
CE-47
• | recovery of the purchase of the Zeeland power plant, | |
• | approval to remove the costs associated with Palisades, | |
• | approval of a plan for the distribution of additional excess proceeds from the sale of Palisades to customers, effectively offsetting the partial and immediate rate relief for up to nine months, and | |
• | partial and immediate rate relief associated with 2007 capital investments, a $400 million equity infusion into Consumers, and increased distribution system operation and maintenance costs including employee pension and health care costs. |
CE-48
CE-49
Net Over- | GCR Cost | |||||||||
GCR Year | Date Filed | Order Date | recovery | of Gas Sold | Description of Net Overrecovery | |||||
2005-2006 | June 2006 | April 2007 | $3 million | $1.8 billion | The net overrecovery includes $1 million interest income through March 2006, which resulted from a net underrecovery position during most of the GCR period. | |||||
2006-2007 | June 2007 | Pending | $5 million | $1.7 billion | The total overrecovery amount reflects an overrecovery of $1 million plus $4 million in accrued interest owed to customers. |
CE-50
• | a base GCR ceiling factor of $8.17 per mcf, plus | |
• | a quarterly GCR ceiling price adjustment contingent upon future events. |
Expiration | Maximum | |||||||||||
Guarantee Description | Issue Date | Date | Obligation | |||||||||
In Millions | ||||||||||||
Surety bonds and other indemnifications | Various | Various | $ | 1 | (a) | |||||||
Guarantee | January 1987 | March 2016 | 85 | (b) |
(a) | In the normal course of business, we issue surety bonds and indemnities to third parties to facilitate commercial transactions. We would be required to pay a counterparty if it incurs losses due to a breach of contract terms or nonperformance under the contract. | |
(b) | At December 31, 2007, only our guarantee to provide power and steam to Dow contained provisions reimbursing us for payments made under the guarantee. The purchaser of our interest in the MCV Partnership and FMLP, an affiliate of GSO Capital Partners and Rockland Capital Energy Investments, |
CE-51
agreed to pay us $85 million, subject to certain reimbursement rights, if Dow terminates the agreement under which the MCV Partnership provides it steam and electric power. This agreement expires in March 2016, subject to certain terms and conditions. The purchaser secured its reimbursement obligation with an irrevocable letter of credit of up to $85 million. At December 31, 2007, the guarantee liability recorded for surety bonds and indemnities and for the guarantee to provide power and steam to Dow was immaterial. |
CE-52
Interest Rate (%) | Maturity | 2007 | 2006 | |||||||||||
(In Millions) | ||||||||||||||
First mortgage bonds | 4.250 | 2008 | $ | 250 | $ | 250 | ||||||||
4.800 | 2009 | 200 | 200 | |||||||||||
4.400 | 2009 | 150 | 150 | |||||||||||
4.000 | 2010 | 250 | 250 | |||||||||||
5.000 | 2012 | 300 | 300 | |||||||||||
5.375 | 2013 | 375 | 375 | |||||||||||
6.000 | 2014 | 200 | 200 | |||||||||||
5.000 | 2015 | 225 | 225 | |||||||||||
5.500 | 2016 | 350 | 350 | |||||||||||
5.150 | 2017 | 250 | 250 | |||||||||||
5.650 | 2020 | 300 | 300 | |||||||||||
5.650 | 2035 | 145 | 147 | |||||||||||
5.800 | 2035 | 175 | 175 | |||||||||||
3,170 | 3,172 | |||||||||||||
Senior notes | 6.375 | 2008 | 159 | 159 | ||||||||||
6.875 | 2018 | 180 | 180 | |||||||||||
Securitization bonds | 5.442 | (a) | 2008-2015 | 309 | 340 | |||||||||
Nuclear fuel disposal liability | (b) | 159 | 152 | |||||||||||
Tax-exempt pollution control revenue bonds | Various | 2010-2035 | 161 | 161 | ||||||||||
Total principal amount outstanding | 4,138 | 4,164 | ||||||||||||
Current amounts | (440 | ) | (31 | ) | ||||||||||
Net unamortized discount | (6 | ) | (6 | ) | ||||||||||
Total long-term debt | $ | 3,692 | $ | 4,127 | ||||||||||
(a) | Represents the weighted average interest rate at December 31, 2007 (5.384 percent at December 31, 2006). | |
(b) | The maturity date is uncertain. |
CE-53
Payments Due | ||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | ||||||||||||||||
(In Millions) | ||||||||||||||||||||
Long-term debt | $ | 440 | $ | 384 | $ | 343 | $ | 37 | $ | 339 |
• | up to $1.5 billion of new issuance for general corporate purposes and | |
• | up to $1.0 billion for purposes of refinancing or refunding existing long-term debt. |
Outstanding | ||||||||||||||||||||
Amount of | Amount | Letters of | Amount | |||||||||||||||||
Company | Expiration Date | Facility | Borrowed | Credit | Available | |||||||||||||||
(In Millions) | ||||||||||||||||||||
Consumers(a) | March 30, 2012 | $ | 500 | $ | — | $ | 203 | $ | 297 | |||||||||||
Consumers(b) | November 28, 2008 | 200 | NA | 185 | 15 |
(a) | In January 2008, $185 million of letters of credit were cancelled, resulting in the amount of credit available of $482 million under this facility. | |
(b) | Secured revolving letter of credit facility. |
CE-54
Years Ended December 31 | 2007 | 2006 | ||||||
(In Millions) | ||||||||
Net cash flow as a result of accounts receivable financing | $ | (325 | ) | $ | — | |||
Collections from customers | $ | 5,881 | $ | 5,684 |
Optional | ||||||||||||||||||||||||
Redemption | Number of Shares | |||||||||||||||||||||||
December 31 | Series | Price | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
(In Millions) | ||||||||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||
Cumulative $100 par value, Authorized 7,500,000 shares, with no mandatory redemption | $ | 4.16 | $ | 103.25 | 68,451 | 68,451 | $ | 7 | $ | 7 | ||||||||||||||
$ | 4.50 | $ | 110.00 | 373,148 | 373,148 | 37 | 37 | |||||||||||||||||
Total Preferred stock | $ | 44 | $ | 44 | ||||||||||||||||||||
2007 | 2006 | |||||||||||||||
Book | Fair | Book | Fair | |||||||||||||
December 31 | Value | Value | Value | Value | ||||||||||||
In Millions | ||||||||||||||||
Long-term debt(a) | $ | 4,132 | $ | 4,099 | $ | 4,158 | $ | 4,111 |
(a) | Includes current maturities of $440 million at December 31, 2007 and $31 million at December 31, 2006. Settlement of long-term debt is generally not expected until maturity. |
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2007 | 2006 | |||||||||||||||||||||||||||||||
Unrealized | Unrealized | Fair | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||
December 31 | Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | ||||||||||||||||||||||||
In Millions | ||||||||||||||||||||||||||||||||
Common stock of CMS Energy(a) | $ | 8 | $ | 24 | $ | — | $ | 32 | $ | 10 | $ | 26 | $ | — | $ | 36 | ||||||||||||||||
Nuclear decommissioning investments: | ||||||||||||||||||||||||||||||||
Equity securities | — | — | — | — | 140 | 150 | (4 | ) | 286 | |||||||||||||||||||||||
Debt securities | — | — | — | — | 307 | 4 | (2 | ) | 309 | |||||||||||||||||||||||
SERP: | ||||||||||||||||||||||||||||||||
Equity securities | 35 | — | — | 35 | 17 | 9 | — | 26 | ||||||||||||||||||||||||
Debt securities | 7 | — | — | 7 | 6 | — | — | 6 |
(a) | At December 31, 2007, we held 1.8 million shares, and at December 31, 2006, we held 2.2 million shares of CMS Energy Common Stock. |
(In Millions) | ||||
Due after one year through five years | $ | 3 | ||
Due after five years through ten years | 4 | |||
Total | $ | 7 | ||
• | they do not have a notional amount (that is, a number of units specified in a derivative instrument, such as MWh of electricity or bcf of natural gas), |
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• | they qualify for the normal purchases and sales exception, or | |
• | there is not an active market for the commodity. |
• | a non-contributory, qualified defined benefit Pension Plan (closed to new non-union participants as of July 1, 2003 and closed to new union participants as of September 1, 2005), | |
• | a qualified cash balance Pension Plan for certain employees hired between July 1, 2003 and August 31, 2005, | |
• | a non-contributory, qualified DCCP for employees hired on or after September 1, 2005, | |
• | benefits to certain management employees under a non-contributory, nonqualified defined benefit SERP (closed to new participants as of March 31, 2006), | |
• | benefits to certain management employees under a non-contributory, nonqualified DC SERP hired on or after April 1, 2006, | |
• | health care and life insurance benefits under OPEB, | |
• | benefits to a selected group of management under a non-contributory, nonqualified EISP, and | |
• | a contributory, qualified defined contribution 401(k) plan. |
Pension | OPEB | |||||||
Plan liability transferred to Entergy | $ | 38 | $ | 20 | ||||
Trust assets transferred to Entergy | 22 | 5 | ||||||
Net adjustment | $ | 16 | $ | 15 | ||||
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One | ||||||||
One Percentage | Percentage | |||||||
Point Increase | Point Decrease | |||||||
(In Millions) | ||||||||
Effect on total service and interest cost component | $ | 20 | $ | (16 | ) | |||
Effect on postretirement benefit obligation | $ | 201 | $ | (169 | ) | |||
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Pension & SERP | OPEB | |||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||
Discount rate(a) | 6.40% | 5.65% | 5.75% | 6.50% | 5.65% | 5.75% | ||||||||||||||||||
Expected long-term rate of return on plan assets(b) | 8.25% | 8.25% | 8.50% | 7.75% | 7.75% | 8.00% | ||||||||||||||||||
Mortality table(c) | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | ||||||||||||||||||
Rate of compensation increase: | ||||||||||||||||||||||||
Pension | 4.00% | 4.00% | 4.00% | |||||||||||||||||||||
SERP | 5.50% | 5.50% | 5.50% |
Pension & SERP | OPEB | |||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||||||
Discount rate(a) | 5.65% | 5.75% | 5.75% | 5.65% | 5.75% | 5.75% | ||||||||||||||||||
Expected long-term rate of return on plan assets(b) | 8.25% | 8.50% | 8.75% | 7.75% | 8.00% | 8.25% | ||||||||||||||||||
Mortality table(c) | 2000 | 2000 | 2000 | 2000 | 2000 | 2000 | ||||||||||||||||||
Rate of compensation increase: | ||||||||||||||||||||||||
Pension | 4.00% | 4.00% | 3.50% | |||||||||||||||||||||
SERP | 5.50% | 5.50% | 5.50% |
(a) | The discount rate represents the market rate for high-quality AA-rated corporate bonds with durations corresponding to the expected durations of the benefit obligations and is used to calculate the present value of the expected future cash flows for benefit obligations under our pension plans. | |
(b) | We determine our long-term rate of return by considering historical market returns, the current and expected future economic environment, the capital market principles of risk and return, and the expert opinions of individuals and firms with financial market knowledge. We consider the asset allocation of the portfolio in |
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forecasting the future expected total return of the portfolio. The goal is to determine a long-term rate of return that can be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, we review for reasonableness and appropriateness of the forecasted returns for various classes of assets used to construct an expected return model. | ||
(c) | We utilize the Combined Healthy RP-2000 Table from the 2000 Group Annuity Mortality Tables. |
Pension & SERP | ||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Net periodic pension cost | ||||||||||||
Service cost | $ | 47 | $ | 47 | $ | 41 | ||||||
Interest expense | 84 | 81 | 76 | |||||||||
Expected return on plan assets | (75 | ) | (80 | ) | (89 | ) | ||||||
Amortization of: | ||||||||||||
Net loss | 44 | 41 | 33 | |||||||||
Prior service cost | 7 | 7 | 5 | |||||||||
Net periodic pension cost | 107 | 96 | 66 | |||||||||
Regulatory adjustment(a) | (22 | ) | (11 | ) | — | |||||||
Net periodic pension cost after regulatory adjustment | $ | 85 | $ | 85 | $ | 66 | ||||||
OPEB | ||||||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Net periodic OPEB cost | ||||||||||||
Service cost | $ | 24 | $ | 22 | $ | 21 | ||||||
Interest expense | 65 | 60 | 58 | |||||||||
Expected return on plan assets | (57 | ) | (53 | ) | (49 | ) | ||||||
Amortization of: | ||||||||||||
Net loss | 23 | 20 | 20 | |||||||||
Prior service credit | (10 | ) | (10 | ) | (9 | ) | ||||||
Net periodic OPEB cost | 45 | 39 | 41 | |||||||||
Regulatory adjustment(a) | (6 | ) | (2 | ) | — | |||||||
Net periodic OPEB cost after regulatory adjustment | $ | 39 | $ | 37 | $ | 41 | ||||||
(a) | Regulatory adjustments are the differences between amounts included in rates and the periodic benefit cost calculated pursuant to SFAS No. 87 and SFAS No. 106. These adjustments are deferred as a regulatory asset and will be included in future rate cases. The pension regulatory asset had a balance of $33 million at December 31, 2007 and $11 million at December 31, 2006. The OPEB regulatory asset had a balance of $8 million at December 31, 2007 and $2 million at December 31, 2006. |
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Pension Plan | SERP | OPEB | ||||||||||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
(In Millions) | ||||||||||||||||||||||||
Benefit obligation at beginning of period | $ | 1,576 | $ | 1,510 | $ | 47 | $ | 46 | $ | 1,179 | $ | 1,065 | ||||||||||||
Service cost | 49 | 49 | 1 | 1 | 24 | 22 | ||||||||||||||||||
Interest cost | 86 | 83 | 3 | 3 | 65 | 60 | ||||||||||||||||||
Actuarial loss (gain) | 30 | 51 | 12 | (1 | ) | (115 | ) | 79 | ||||||||||||||||
Palisades sale | (38 | ) | — | — | — | (20 | ) | — | ||||||||||||||||
Benefits paid | (138 | ) | (117 | ) | (2 | ) | (2 | ) | (51 | ) | (47 | ) | ||||||||||||
Benefit obligation at end of period(a) | 1,565 | 1,576 | 61 | 47 | 1,082 | 1,179 | ||||||||||||||||||
Plan assets at fair value at beginning of period | 1,040 | 1,018 | — | — | 734 | 655 | ||||||||||||||||||
Actual return on plan assets | 89 | 126 | — | — | 51 | 67 | ||||||||||||||||||
Company contribution | 109 | 13 | 2 | 2 | 51 | 57 | ||||||||||||||||||
Palisades sale | (22 | ) | — | — | — | (5 | ) | — | ||||||||||||||||
Actual benefits paid(b) | (138 | ) | (117 | ) | (2 | ) | (2 | ) | (46 | ) | (45 | ) | ||||||||||||
Plan assets at fair value at end of period | 1,078 | 1,040 | — | — | 785 | 734 | ||||||||||||||||||
Funded status at end of measurement period | (487 | ) | (536 | ) | (61 | ) | (47 | ) | (297 | ) | (445 | ) | ||||||||||||
Additional VEBA Contributions or Non-Trust Benefit Payments | — | — | — | — | 12 | 14 | ||||||||||||||||||
Funded status at December 31(c)(d) | $ | (487 | ) | $ | (536 | ) | $ | (61 | ) | $ | (47 | ) | $ | (285 | ) | $ | (431 | ) | ||||||
(a) | The Medicare Prescription Drug, Improvement and Modernization Act of 2003 establishes a prescription drug benefit under Medicare (Medicare Part D), and a federal subsidy, which is tax-exempt, to sponsors of retiree health care benefit plans that provide a benefit that is actuarially equivalent to Medicare Part D. The Medicare Part D annualized reduction in net OPEB cost was $27 million for 2007 and 2006. The reduction includes $7 million for the years ended December 31, 2007 and December 31, 2006 in capitalized OPEB costs. | |
(b) | We received $4 million in 2007 and $3 million in 2006 for Medicare Part D Subsidy payments. | |
(c) | Liabilities for retirement benefits are $805 million non-current and $2 million current for year ended December 31, 2007 and $983 million non-current and $2 million current for year ended December 31, 2006. | |
(d) | Of the $487 million funded status of Pension Plan at December 31, 2007, $461 million is attributable to Consumers; and of the $536 million funded status of the Pension Plan at December 31, 2006, $507 million is attributable to Consumers, based on allocation of expenses. |
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Years Ended December 31 | 2007 | 2006 | ||||||
(In Millions) | ||||||||
Pension ABO | $ | 1,231 | $ | 1,240 | ||||
Fair value of Pension Plan assets | 1,078 | 1,040 | ||||||
Pension ABO in excess of Pension Plan assets | $ | 153 | $ | 200 | ||||
Pension & SERP | OPEB | |||||||||||||||
Years Ended December 31 | 2007 | 2006 | 2007 | 2006 | ||||||||||||
(In Millions) | ||||||||||||||||
Regulatory assets | ||||||||||||||||
Net loss | $ | 636 | $ | 676 | $ | 265 | $ | 416 | ||||||||
Prior service cost (credit) | 39 | 45 | (89 | ) | (99 | ) | ||||||||||
AOCI | ||||||||||||||||
Net loss (gain) | 18 | 7 | — | — | ||||||||||||
Prior service cost (credit) | 1 | 1 | — | — | ||||||||||||
Total amounts recognized in regulatory assets and AOCI | $ | 694 | $ | 729 | $ | 176 | $ | 317 | ||||||||
Pension | OPEB | |||||||||||||||
November 30 | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Asset Category: | ||||||||||||||||
Fixed Income | 30 | % | 28 | % | 34 | % | 37 | % | ||||||||
Equity Securities | 60 | % | 62 | % | 66 | % | 63 | % | ||||||||
Alternative Strategy | 10 | % | 10 | % | — | — |
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Pension | SERP | OPEB(a) | ||||||||||
(In Millions) | ||||||||||||
2008 | $ | 64 | $ | 2 | $ | 53 | ||||||
2009 | 71 | 2 | 56 | |||||||||
2010 | 78 | 2 | 58 | |||||||||
2011 | 88 | 2 | 60 | |||||||||
2012 | 101 | 2 | 61 | |||||||||
2013-2017 | 664 | 10 | 339 |
(a) | OPEB benefit payments are net of employee contributions and expected Medicare Part D prescription drug subsidy payments. The subsidies to be received are estimated to be $5 million for 2008, $6 million for 2009 and 2010, $7 million for 2011, $8 million for 2012 and $47 million combined for 2013 through 2017. |
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In Service | ||||||
ARO Description | Date | Long-Lived Assets | ||||
December 31, 2007 | ||||||
JHCampbell intake/discharge water line | 1980 | Plant intake/discharge water line | ||||
Closure of coal ash disposal areas | Various | Generating plants coal ash areas | ||||
Closure of wells at gas storage fields | Various | Gas storage fields | ||||
Indoor gas services equipment relocations | Various | Gas meters located inside structures | ||||
Asbestos abatement | 1973 | Electric and gas utility plant | ||||
Gas distribution cut, purge & cap | Various | Gas distribution mains & services |
ARO | ARO | |||||||||||||||||||||||
Liability | Cash flow | Liability | ||||||||||||||||||||||
ARO Description | 12/31/05 | Incurred | Settled(a) | Accretion | Revisions | 12/31/06 | ||||||||||||||||||
(In Millions) | ||||||||||||||||||||||||
Palisades-decommission | $ | 375 | $ | — | $ | — | $ | 26 | $ | — | $ | 401 | ||||||||||||
BigRock-decommission | 27 | — | (28 | ) | 3 | — | 2 | |||||||||||||||||
JHCampbell intake line | — | — | — | — | — | — | ||||||||||||||||||
Coal ash disposal areas | 54 | — | (2 | ) | 5 | — | 57 | |||||||||||||||||
Wells at gas storage fields | 1 | — | — | — | — | 1 | ||||||||||||||||||
Indoor gas services relocations | 1 | — | — | — | — | 1 | ||||||||||||||||||
Asbestos abatement | 36 | — | (3 | ) | 2 | — | 35 | |||||||||||||||||
Gas distribution cut, purge, cap | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 494 | $ | — | $ | (33 | ) | $ | 36 | $ | — | $ | 497 | |||||||||||
ARO | ARO | |||||||||||||||||||||||
Liability | Cash flow | Liability | ||||||||||||||||||||||
ARO Description | 12/31/06 | Incurred | Settled(a) | Accretion | Revisions | 12/31/07 | ||||||||||||||||||
(In Millions) | ||||||||||||||||||||||||
Palisades-decommission | $ | 401 | $ | — | $ | (410 | ) | $ | 7 | $ | 2 | $ | — | |||||||||||
BigRock-decommission | 2 | — | (3 | ) | 1 | — | — | |||||||||||||||||
JHCampbell intake line | — | — | — | — | — | — | ||||||||||||||||||
Coal ash disposal areas | 57 | — | (4 | ) | 6 | — | 59 | |||||||||||||||||
Wells at gas storage fields | 1 | — | — | — | — | 1 | ||||||||||||||||||
Indoor gas services relocations | 1 | — | — | — | — | 1 | ||||||||||||||||||
Asbestos abatement | 35 | — | (1 | ) | 2 | — | 36 | |||||||||||||||||
Gas distribution cut, purge, cap | — | 101 | — | — | — | 101 | ||||||||||||||||||
Total | $ | 497 | $ | 101 | $ | (418 | ) | $ | 16 | $ | 2 | $ | 198 | |||||||||||
(a) | Cash payments of $5 million in 2007 and $33 million in 2006 are included in the Other current and non-current liabilities line in Net cash provided by operating activities in our Consolidated Statements of Cash Flows. In April 2007, we sold Palisades to Entergy and paid Entergy to assume ownership and responsibility for the Big |
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Rock ISFSI. Our AROs related to Palisades and the Big Rock ISFSI ended with the sale, and we removed the related ARO liabilities from our Consolidated Balance Sheets. We also removed the Big Rock ARO related to the plant in the second quarter of 2007 due to the completion of decommissioning. |
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Current federal income taxes | $ | 114 | $ | 212 | $ | 176 | ||||||
Current federal income tax benefit of operating loss carryforwards | (44 | ) | (8 | ) | (9 | ) | ||||||
Deferred federal income taxes | 59 | (109 | ) | (201 | ) | |||||||
Deferred ITC, net | (4 | ) | (4 | ) | (13 | ) | ||||||
Income tax expense (benefit) | $ | 125 | $ | 91 | $ | (47 | ) | |||||
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December 31 | 2007 | 2006 | ||||||
(In Millions) | ||||||||
Current Assets and (Liabilities): | ||||||||
Tax loss and credit carryforwards | $ | — | $ | 32 | ||||
Employee benefits | 5 | 6 | ||||||
Other | 48 | — | ||||||
Current Assets | $ | 53 | $ | 38 | ||||
Gas inventory | (204 | ) | — | |||||
Other | — | (49 | ) | |||||
Current Liabilities | $ | (204 | ) | $ | (49 | ) | ||
Net Current Asset/(Liability) | $ | (151 | ) | $ | (11 | ) | ||
Noncurrent Assets and (Liabilities): | ||||||||
Tax loss and credit carryforwards | $ | 249 | $ | 177 | ||||
SFAS No. 109 regulatory liability | 207 | 189 | ||||||
Nuclear decommissioning (including unrecovered costs) | — | 57 | ||||||
Employee benefits | 39 | 30 | ||||||
Noncurrent Assets | $ | 495 | $ | 453 | ||||
Valuation Allowance | — | (15 | ) | |||||
Net Noncurrent Assets | $ | 495 | $ | 438 | ||||
Property | $ | (919 | ) | $ | (814 | ) | ||
Securitized costs | (180 | ) | (177 | ) | ||||
Gas inventory | — | (168 | ) | |||||
Nuclear decommisioning (including unrecovered costs) | (18 | ) | — | |||||
Other | (91 | ) | (126 | ) | ||||
Noncurrent Liabilities | $ | (1,208 | ) | $ | (1,285 | ) | ||
Net Noncurrent Asset/(Liability) | $ | (713 | ) | $ | (847 | ) | ||
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Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Net Income (Loss) | $ | 312 | $ | 186 | $ | (96 | ) | |||||
Income tax expense (benefit) | 125 | 91 | (47 | ) | ||||||||
Income (loss) before income taxes | 437 | 277 | (143 | ) | ||||||||
Statutory federal income tax rate | x 35 | % | x 35 | % | x 35 | % | ||||||
Expected income tax expense (benefit) | 153 | 97 | (50 | ) | ||||||||
Increase (decrease) in taxes from: | ||||||||||||
Property differences | 9 | 13 | 18 | |||||||||
IRS Settlement/Credit Restoration | — | (19 | ) | — | ||||||||
Medicare Part D exempt income | (9 | ) | (10 | ) | (6 | ) | ||||||
ITC amortization | (3 | ) | (4 | ) | (4 | ) | ||||||
Expiration of general business credits | — | — | 6 | |||||||||
Valuation allowance | (23 | ) | 15 | (9 | ) | |||||||
Other, net | (2 | ) | (1 | ) | (2 | ) | ||||||
Recorded income tax expense (benefit) | $ | 125 | $ | 91 | $ | (47 | ) | |||||
Effective tax rate | 28.6 | % | 32.9 | % | 32.9 | % | ||||||
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(In Millions) | ||||
Balance at January 1, 2007 | $ | 51 | ||
Reductions for prior year tax positions | (11 | ) | ||
Additions for prior year tax positions | 1 | |||
Additions for current year tax positions | — | |||
Statute lapses | — | |||
Settlements | — | |||
Balance at December 31, 2007 | $ | 41 | ||
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Weighted-Average | ||||||||
Restricted Stock | Number of Shares | Grant Date Fair Value | ||||||
Nonvested at December 31, 2006 | 1,422,000 | $ | 12.26 | |||||
Granted(a) | 606,083 | $ | 14.12 | |||||
Vested(a) | (641,004 | ) | $ | 16.09 | ||||
Forfeited | (12,000 | ) | $ | 13.95 | ||||
Nonvested at December 31, 2007 | 1,375,079 | $ | 13.54 | |||||
(a) | During 2007, we granted 369,150 TSR shares and 83,020 time-lapse shares of restricted stock. In addition, we granted 153,913 shares that immediately vested as a result of achieving 150 percent of the market conditions on our 2004 TSR restricted stock grant. The fair value at the date of grant in 2004 was $9.73. We excluded the impact of these shares from the weighted-average grant date fair value for the 2007 shares granted. |
2007 | 2006 | 2005 | ||||||||||
Expected Volatility | 19.11 | % | 20.51 | % | 48.70 | % | ||||||
Expected Dividend Yield | 1.20 | % | 0.00 | % | 0.00 | % | ||||||
Risk-free rate | 4.59 | % | 4.82 | % | 4.14 | % |
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Weighted- | ||||||||||||||||
Options | Weighted- | Average | ||||||||||||||
Outstanding, | Average | Remaining | Aggregate | |||||||||||||
Fully Vested, | Exercise | Contractual | Intrinsic | |||||||||||||
Stock Options | and Exercisable | Price | Term | Value | ||||||||||||
(In Millions) | ||||||||||||||||
Outstanding at December 31, 2006 | 1,601,784 | $ | 18.16 | 5.0 years | $ | (2 | ) | |||||||||
Granted | — | — | ||||||||||||||
Exercised | (631,565 | ) | 7.54 | |||||||||||||
Cancelled or Expired | (283,993 | ) | 32.90 | |||||||||||||
Outstanding at December 31, 2007 | 686,226 | $ | 21.83 | 3.6 years | $ | (3 | ) | |||||||||
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
Weighted average grant date fair value | ||||||||||||
Restricted stock granted | $ | 14.12 | $ | 13.82 | $ | 15.60 | ||||||
Stock options granted(a) | — | — | — |
(a) | No stock options were granted in 2007, 2006, or 2005. |
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Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Capital lease expense | $ | 34 | $ | 15 | $ | 14 | ||||||
Operating lease expense | 23 | 19 | 17 |
Capital | Finance | Operating | ||||||||||
Leases | Lease(a) | Leases | ||||||||||
(In Millions) | ||||||||||||
2008 | $ | 21 | $ | 13 | $ | 25 | ||||||
2009 | 16 | 13 | 23 | |||||||||
2010 | 15 | 13 | 21 | |||||||||
2011 | 13 | 13 | 21 | |||||||||
2012 | 14 | 13 | 21 | |||||||||
2013 and thereafter | 53 | 122 | 93 | |||||||||
Total minimum lease payments | 132 | 187 | $ | 204 | ||||||||
Less imputed interest | 64 | — | ||||||||||
Present value of net minimum lease payments | 68 | 187 | ||||||||||
Less current portion | 17 | 13 | ||||||||||
Non-current portion | $ | 51 | $ | 174 | ||||||||
(a) | In April 2007, we sold Palisades to Entergy and entered into a15-year power purchase agreement to buy all of the capacity and energy produced by Palisades, up to the annual average capacity of 798 MW. We provided $30 million in security to Entergy for our power purchase agreement obligation in the form of a letter of credit. We estimate that capacity and energy payments under the Palisades power purchase agreement will average $300 million annually. Our total purchases of capacity and energy under the Palisades power purchase agreement were $180 million in 2007. |
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Estimated | ||||||||||||
Depreciable | ||||||||||||
December 31 | Life in Years | 2007 | 2006 | |||||||||
(In Millions) | ||||||||||||
Electric: | ||||||||||||
Generation | 13-85 | $ | 3,328 | $ | 3,573 | |||||||
Distribution | 12-75 | 4,496 | 4,425 | |||||||||
Other | 7-40 | 438 | 421 | |||||||||
Capital and finance leases(a) | 293 | 85 | ||||||||||
Gas: | ||||||||||||
Underground storage facilities(b) | 30-65 | 267 | 263 | |||||||||
Transmission | 15-75 | 570 | 465 | |||||||||
Distribution | 40-75 | 2,286 | 2,216 | |||||||||
Other | 7-50 | 320 | 300 | |||||||||
Capital leases(a) | 24 | 29 | ||||||||||
Other: | ||||||||||||
Non-utility property | 7-71 | 15 | 15 | |||||||||
Constructionwork-in-progress | 447 | 639 | ||||||||||
Less accumulated depreciation, depletion, and amortization(c) | 3,993 | 5,018 | ||||||||||
Net property, plant, and equipment(d) | $ | 8,491 | $ | 7,413 | ||||||||
(a) | Capital and finance leases presented in this table are gross amounts. Accumulated amortization of capital and finance leases was $62 million at December 31, 2007 and $59 million at December 31, 2006. Additions were $229 million during 2007, which includes $197 million related to assets under the Palisades finance lease. Retirements and adjustments were $26 million during 2007. Additions were $7 million and Retirements and adjustments were $6 million during 2006. | |
(b) | Includes unrecoverable base natural gas in underground storage of $26 million at December 31, 2007 and December 31, 2006, which is not subject to depreciation. | |
(c) | At December 31, 2007, accumulated depreciation, depletion, and amortization included $3.992 billion from our utility plant and $1 million related to our non-utility plant assets. At December 31, 2006, accumulated depreciation, depletion, and amortization included $5.017 billion from our utility plant and $1 million related to our non-utility plant assets. | |
(d) | At December 31, 2007, utility plant additions were $1.303 billion and utility plant retirements, including other plant adjustments, were $1.094 billion. At December 31, 2006, utility plant additions were $470 million and utility plant retirements, including other plant adjustments, were $82 million. Included in net property, plant and equipment are intangible assets. |
CE-72
December 31 | 2007 | 2006 | ||||||||||||||||||
Amortization | Accumulated | Accumulated | ||||||||||||||||||
Description | Life in years | Gross Cost | Amortization | Gross Cost | Amortization | |||||||||||||||
(In Millions) | ||||||||||||||||||||
Software development | 7-15 | $ | 207 | $ | 170 | $ | 204 | $ | 153 | |||||||||||
Rights of way | 50-75 | 116 | 32 | 114 | 31 | |||||||||||||||
Leasehold improvements | various | 19 | 16 | 19 | 15 | |||||||||||||||
Franchises and consents | various | 14 | 5 | 19 | 10 | |||||||||||||||
Other intangibles | various | 18 | 13 | 18 | 13 | |||||||||||||||
Total | $ | 374 | $ | 236 | $ | 374 | $ | 222 | ||||||||||||
Accumulated | Construction | |||||||||||||||||||||||||||
Ownership | Net Investment(a) | Depreciation | Work in Progress | |||||||||||||||||||||||||
December 31 | Share | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||||
(%) | (In Millions) | |||||||||||||||||||||||||||
Campbell Unit 3 | 93.3 | $ | 664 | $ | 262 | $ | 337 | $ | 370 | $ | 44 | $ | 353 | |||||||||||||||
Ludington | 51.0 | 65 | 68 | 104 | 95 | 1 | 1 | |||||||||||||||||||||
Distribution | Various | 89 | 98 | 44 | 47 | 5 | 4 |
(a) | Net investment is the amount of utility plant in service less accumulated depreciation. |
CE-73
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Operating Revenues | ||||||||||||
Electric | $ | 3,443 | $ | 3,302 | $ | 2,701 | ||||||
Gas | 2,621 | 2,374 | 2,483 | |||||||||
Other | — | 45 | 48 | |||||||||
$ | 6,064 | $ | 5,721 | $ | 5,232 | |||||||
Earnings from Equity Method Investees | ||||||||||||
Electric | $ | — | $ | 1 | $ | — | ||||||
Other | — | — | 1 | |||||||||
$ | — | $ | 1 | $ | 1 | |||||||
Depreciation and Amortization | ||||||||||||
Electric | $ | 397 | $ | 380 | $ | 292 | ||||||
Gas | 127 | 122 | 117 | |||||||||
Other | — | 25 | 75 | |||||||||
$ | 524 | $ | 527 | $ | 484 | |||||||
Interest Charges | ||||||||||||
Electric | $ | 193 | $ | 167 | $ | 133 | ||||||
Gas | 70 | 73 | 68 | |||||||||
Other | 1 | 49 | 71 | |||||||||
$ | 264 | $ | 289 | $ | 272 | |||||||
Income Tax Expense (Benefit) | ||||||||||||
Electric | $ | 100 | $ | 95 | $ | 85 | ||||||
Gas | 47 | 18 | 39 | |||||||||
Other | (22 | ) | (22 | ) | (171 | ) | ||||||
$ | 125 | $ | 91 | $ | (47 | ) | ||||||
Net Income (Loss) Available to Common Stockholder | ||||||||||||
Electric | $ | 196 | $ | 199 | $ | 153 | ||||||
Gas | 87 | 37 | 48 | |||||||||
Other | 27 | (52 | ) | (299 | ) | |||||||
$ | 310 | $ | 184 | $ | (98 | ) | ||||||
Investments in Equity Method Investees | ||||||||||||
Electric | $ | — | $ | 5 | $ | 3 | ||||||
Other | — | — | 4 | |||||||||
$ | — | $ | 5 | $ | 7 | |||||||
CE-74
Years Ended December 31 | 2007 | 2006 | 2005 | |||||||||
(In Millions) | ||||||||||||
Total Assets | ||||||||||||
Electric(a) | $ | 8,492 | $ | 8,516 | $ | 7,755 | ||||||
Gas(a) | 4,102 | 3,950 | 3,609 | |||||||||
Other | 807 | 379 | 1,814 | |||||||||
$ | 13,401 | $ | 12,845 | $ | 13,178 | |||||||
Capital Expenditures(b) | ||||||||||||
Electric | $ | 1,319 | $ | 462 | $ | 384 | ||||||
Gas | 168 | 172 | 168 | |||||||||
Other | — | 19 | 32 | |||||||||
$ | 1,487 | $ | 653 | $ | 584 | |||||||
(a) | Amounts include a portion of our other common assets attributable to both the electric and gas utility businesses. | |
(b) | Amounts include purchase of nuclear fuel and capital lease additions. Amounts also include a portion of our capital expenditures for plant and equipment attributable to both the electric and gas utility businesses. |
2007 | ||||||||||||||||
Quarters Ended | March 31 | June 30 | Sept. 30 | Dec. 31 | ||||||||||||
In Millions | ||||||||||||||||
Operating revenue | $ | 2,055 | $ | 1,247 | $ | 1,172 | $ | 1,590 | ||||||||
Operating income | 209 | 104 | 124 | 145 | ||||||||||||
Net income | 113 | 44 | 60 | 95 | ||||||||||||
Preferred stock dividends | 1 | — | — | 1 | ||||||||||||
Net income available to common stockholder | 112 | 44 | 60 | 94 |
2006 | ||||||||||||||||
Quarters Ended | March 31 | June 30 | Sept. 30 | Dec. 31(a) | ||||||||||||
In Millions | ||||||||||||||||
Operating revenue | $ | 1,782 | $ | 1,138 | $ | 1,191 | $ | 1,610 | ||||||||
Operating income (loss) | 7 | 78 | 239 | 36 | ||||||||||||
Net income | 10 | 36 | 99 | 41 | ||||||||||||
Preferred stock dividends | — | 1 | — | 1 | ||||||||||||
Net income available to common stockholder | 10 | 35 | 99 | 40 |
(a) | The quarter ended December 31, 2006 includes a $41 million net loss on the sale of our investment in the MCV Partnership, including the associated asset impairment charge. For additional details, see Note 2, Asset Sales and Impairment Charges. |
CE-75
CE-76
CE-77
CE-78
ON ACCOUNTING AND FINANCIAL DISCLOSURE
• | pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of CMS Energy; | |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures of CMS Energy are being made only in accordance with authorizations of management and directors of CMS Energy; and | |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of CMS Energy’s assets that could have a material effect on its financial statements. |
CO-1
• | pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Consumers; | |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures of Consumers are being made only in accordance with authorizations of management and directors of Consumers; and | |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Consumers’ assets that could have a material effect on its financial statements. |
CO-2
CO-3
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
CO-4
AND DIRECTOR INDEPENDENCE
(a)(1) | Financial Statements and Reports of Independent Public Accountants for CMS Energy and Consumers are included in each company’s ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA and are incorporated by reference herein. |
(a)(2) | Index to Financial Statement Schedules. |
Page | ||||
Schedule II | Valuation and Qualifying Accounts and Reserves | |||
CMS Energy Corporation | CO-11 | |||
Consumers Energy Company | CO-11 | |||
Report of Independent Registered Public Accounting Firm | ||||
CMS Energy Corporation | CMS-101 | |||
Consumers Energy Company | CE-75 |
(a)(3) | Exhibits for CMS Energy and Consumers are listed after Item 15(b) below and are incorporated by reference herein. |
(b) | Exhibits, including those incorporated by reference. |
CO-5
Previously Filed | ||||||||
With File | As Exhibit | |||||||
Exhibits | Number | Number | Description | |||||
(3)(a) | 1-9513 | (99)(a) | — | Restated Articles of Incorporation of CMS Energy dated June 1, 2004 (Form 8-K filed June 3, 2004) | ||||
(3)(b) | 1-9513 | (3)(b) | — | CMS Energy Corporation Bylaws, amended and restated as of August 10, 2007 (3rd qtr. 2007 Form 10-Q) | ||||
(3)(c) | 1-5611 | 3(c) | — | Restated Articles of Incorporation dated May 26, 2000, of Consumers (2000 Form 10-K) | ||||
(3)(d) | 1-5611 | (3)(d) | — | Consumers Energy Company Bylaws, amended and restated as of August 10, 2007 (3rd qtr. 2007 Form 10-Q) | ||||
(4)(a) | 2-65973 | (b)(1)-4 | — | Indenture dated as of September 1, 1945, between Consumers and Chemical Bank (successor to Manufacturers Hanover Trust Company), as Trustee, including therein indentures supplemental thereto through the Forty-third Supplemental Indenture dated as of May 1, 1979 (Designated in Consumers Power Company’s Registration No. 2-65973 as Exhibit (b)(1)(4)) | ||||
— | Indentures Supplemental thereto: | |||||||
1-5611 | (4)(a) | — | 70th dated as of 2/01/98 (1997 Form 10-K) | |||||
1-5611 | (4)(a) | — | 71st dated as of 3/06/98 (1997 Form 10-K) | |||||
1-5611 | (4)(b) | — | 75th dated as of 10/1/99 (1999 Form 10-K) | |||||
1-5611 | (4)(d) | — | 77th dated as of 10/1/99 (1999 Form 10-K) | |||||
1-5611 | (4)(d) | — | 90th dated as of 4/30/03 (1st qtr. 2003 Form 10-Q) | |||||
1-5611 | (4)(a) | — | 91st dated as of 5/23/03 (3rd qtr. 2003 Form 10-Q) | |||||
1-5611 | (4)(b) | — | 92nd dated as of 8/26/03 (3rd qtr. 2003 Form 10-Q) | |||||
1-5611 | (4)(a) | — | 96th dated as of 8/17/04 (Form 8-K filed August 20, 2004) | |||||
333-120611 | (4)(e)(xv) | — | 97th dated as of 9/1/04 (Consumers Form S-3 dated November 18, 2004) | |||||
1-5611 | 4.4 | — | 98th dated as of 12/13/04 (Form 8-K filed December 13, 2004) | |||||
1-5611 | (4)(a)(i) | — | 99th dated as of 1/20/05 (2004 Form 10-K) | |||||
1-5611 | 4.2 | — | 100th dated as of 3/24/05 (Form 8-K filed March 30, 2005) | |||||
1-5611 | (4)(a) | — | 101st dated as of 4/1/05 (1st qtr 2005 Form 10-Q) | |||||
1-5611 | 4.2 | — | 102nd dated as of 4/13/05 (Form 8-K filed April 13, 2005) | |||||
1-5611 | 4.2 | — | 104th dated as of 8/11/05 (Form 8-K filed August 11, 2005) | |||||
— | 106th dated as of November 30, 2007 | |||||||
(4)(b) | — | 105th Supplemental Indenture (dated as of March 30, 2007) to the Indenture dated as of September 1, 1945 between Consumers and Chemical Bank (successor to Manufacturers Hanover Trust Company), as Trustee | ||||||
(4)(c) | 1-5611 | (4)(b) | — | Indenture dated as of January 1, 1996 between Consumers and The Bank of New York, as Trustee (1995 Form 10-K) | ||||
(4)(d) | 1-5611 | (4)(c) | — | Indenture dated as of February 1, 1998 between Consumers and JPMorgan Chase Bank, N.A. (formerly The Chase Manhattan Bank), as Trustee (1997 Form 10-K) | ||||
(4)(e) | 33-47629 | (4)(a) | — | Indenture dated as of September 15, 1992 between CMS Energy and NBD Bank, as Trustee (Form S-3 filed May 1, 1992) | ||||
— | Indentures Supplemental thereto: | |||||||
333-58686 | (4)(a) | — | 11th dated as of 3/29/01 (Form S-8 filed April 11, 2001) | |||||
1-9513 | (4)(d)(i) | — | 15th dated as of 9/29/04 (2004 Form 10-K) | |||||
1-9513 | (4)(d)(ii) | — | 16th dated as of 12/16/04 (2004 Form 10-K) | |||||
1-9513 | 4.2 | — | 17th dated as of 12/13/04 (Form 8-K filed December 13, 2004) | |||||
1-9513 | 4.2 | — | 18th dated as of 1/19/05 (Form 8-K filed January 20, 2005) | |||||
1-9513 | 4.2 | — | 19th dated as of 12/13/05 (Form 8-K filed December 15, 2005) |
CO-6
Previously Filed | ||||||||
With File | As Exhibit | |||||||
Exhibits | Number | Number | Description | |||||
1-9513 | 4.2 | — | 20th dated as of July 3, 2007 (Form 8-K filed July 5, 2007) | |||||
1-9513 | 4.3 | — | 21st dated as of July 3, 2007 (Form 8-K filed July 5, 2007) | |||||
(4)(f) | 1-9513 | (4a) | — | Indenture dated as of June 1, 1997, between CMS Energy and The Bank of New York, as trustee (Form 8-K filed July 1, 1997) | ||||
— | Indentures Supplemental thereto: | |||||||
1-9513 | (4)(b) | — | 1st dated as of 6/20/97 (Form 8-K filed July 1, 1997) | |||||
(4)(g) | 1-9513 | (4)(i) | — | Certificate of Designation of 4.50% Cumulative Convertible Preferred Stock of CMS Energy dated as of December 2, 2003 (2003 Form 10-K) | ||||
(10)(a) | 1-9513 | 10.2 | — | $300 million Seventh Amended and Restated Credit Agreement dated as of April 2, 2007 among CMS Energy Corporation, the Banks, the Administrative Agent, Collateral Agent, Syndication Agent and Documentation Agents all defined therein (Form 8-K filed April 3, 2007) | ||||
— | Amendments thereto: | |||||||
Amendment No. 1 dated December 19, 2007 | ||||||||
1-9513 | 10.1 | — | Assumptions thereto: | |||||
Assumption and Acceptance dated January 8, 2008 (Form 8-K filed January 11, 2008) | ||||||||
(10)(b) | — | Fourth Amended and Restated Pledge and Security Agreement dated as of April 2, 2007 among CMS Energy, and Collateral Agent, as defined therein | ||||||
(10)(c) | — | Cash Collateral Agreement dated as of April 2, 2007, made by CMS Energy to the Administrative Agent for the lenders and Collateral Agent, as defined therein | ||||||
(10)(d) | 1-5611 | 10.1 | — | $500 million Fourth Amended and Restated Credit Agreement dated as of March 30, 2007 among Consumers Energy Company, the Banks, the Administrative Agent, the Collateral Agent, the Syndication Agent and the Documentation Agents all as defined therein (Form 8-K filed April 3, 2007) | ||||
(10)(e) | — | 2004 Form of Executive Severance Agreement | ||||||
(10)(f) | — | 2004 Form of Officer Severance Agreement | ||||||
(10)(g) | — | 2004 Form of Change-in-Control Agreement | ||||||
(10)(h) | — | CMS Energy’s Performance Incentive Stock Plan effective June 1, 2004 and as further amended effective November 30, 2007 | ||||||
(10)(i) | — | CMS Deferred Salary Savings Plan effective December 1, 1989 and as further amended effective December 1, 2007 | ||||||
(10)(j) | — | Annual Officer Incentive Compensation Plan for CMS Energy Corporation and its Subsidiaries effective January 1, 2004, amended and restated effective as of January 1, 2007 and further amended November 30, 2007 | ||||||
(10)(k) | — | Supplemental Executive Retirement Plan for Employees of CMS Energy/Consumers Energy Company effective January 1, 1982, as further amended December 1, 2007 | ||||||
(10)(l) | — | Defined Contribution Supplemental Executive Retirement Plan effective April 1, 2006 and as further amended effective December 1, 2007 | ||||||
(10)(m) | 1-9513 | (10)(v) | — | Amended and Restated Investor Partner Tax Indemnification Agreement dated as of June 1, 1990 among Investor Partners, CMS Midland as Indemnitor and CMS Energy as Guarantor (1990 Form 10-K) |
CO-7
Previously Filed | ||||||||
With File | As Exhibit | |||||||
Exhibits | Number | Number | Description | |||||
(10)(n) | 1-9513 | (19)(d)* | — | Environmental Agreement dated as of June 1, 1990 made by CMS Energy to The Connecticut National Bank and Others (1990 Form 10-K) | ||||
(10)(o) | 1-9513 | (10)(z)* | — | Indemnity Agreement dated as of June 1, 1990 made by CMS Energy to Midland Cogeneration Venture Limited Partnership (1990 Form 10-K) | ||||
(10)(p) | 1-9513 | (10)(aa)* | — | Environmental Agreement dated as of June 1, 1990 made by CMS Energy to United States Trust Company of New York, Meridian Trust Company, each Subordinated Collateral Trust Trustee and Holders from time to time of Senior Bonds and Subordinated Bonds and Participants from time to time in Senior Bonds and Subordinated Bonds (1990 Form 10-K) | ||||
(10)(q) | 33-37977 | 10.4 | — | Power Purchase Agreement dated as of July 17, 1986 between MCV Partnership and Consumers (MCV Partnership) (Designated in Midland Cogeneration Venture Limited Partnership’s Form S-1 filed November 23, 1999, File No. 33-37977 as Exhibit 10.4) | ||||
Amendments thereto: | ||||||||
33-37977 | 10.5 | — | Amendment No. 1 dated September 10, 1987 (MCV Partnership) | |||||
33-37977 | 10.6 | — | Amendment No. 2 dated March 18, 1988 (MCV Partnership) | |||||
33-37977 | 10.7 | — | Amendment No. 3 dated August 28, 1989 (MCV Partnership) | |||||
33-37977 | 10.8 | — | Amendment No. 4A dated May 25, 1989 (MCV Partnership) | |||||
(10)(r) | 1-5611 | (10)(y) | — | Unwind Agreement dated as of December 10, 1991 by and among CMS Energy, Midland Group, Ltd., Consumers, CMS Midland, Inc., MEC Development Corp. and CMS Midland Holdings Company (1991 Form 10-K) | ||||
(10)(s) | 1-5611 | (10)(z) | — | Stipulated AGE Release Amount Payment Agreement dated as of June 1, 1990, among CMS Energy, Consumers and The Dow Chemical Company (1991 Form 10-K) | ||||
(10)(t) | 1-5611 | (10)(aa)* | — | Parent Guaranty dated as of June 14, 1990 from CMS Energy to MCV, each of the Owner Trustees, the Indenture Trustees, the Owner Participants and the Initial Purchasers of Senior Bonds in the MCV Sale Leaseback transaction, and MEC Development (1991 Form 10-K) | ||||
(10)(u) | 1-8157 | 10.41 | — | Contract for Firm Transportation of Natural Gas between Consumers Power Company and Trunkline Gas Company, dated November 1, 1989, and Amendment, dated November 1, 1989 (1989 Form 10-K of PanEnergy Corp.) | ||||
(10)(v) | 1-8157 | 10.41 | — | Contract for Firm Transportation of Natural Gas between Consumers Power Company and Trunkline Gas Company, dated November 1, 1989 (1991 Form 10-K of PanEnergy Corp.) | ||||
(10)(w) | 1-2921 | 10.03 | — | Contract for Firm Transportation of Natural Gas between Consumers Power Company and Trunkline Gas Company, dated September 1, 1993 (1993 Form 10-K) | ||||
(10)(x) | 1-5611 | (10)(a) | — | Asset Sale Agreement dated as of July 11, 2006 by and among Consumers Energy Company as Seller and Entergy Nuclear Palisades, LLC as Buyer (2nd qtr 2006 Form 10-Q) | ||||
(10)(y) | 1-5611 | (10)(b) | — | Palisades Nuclear Power Plant Power Purchase Agreement dated as of July 11, 2006 between Entergy Nuclear Palisades, LLC and Consumers Energy Company (2nd qtr 2006 Form 10-Q) | ||||
(10)(z) | 1-9513 | 99.2 | — | Letter of Intent dated January 31, 2007 between CMS Enterprises Company and Lucid Energy LLC (Form 8-K filed February 1, 2007) |
CO-8
Previously Filed | ||||||||
With File | As Exhibit | |||||||
Exhibits | Number | Number | Description | |||||
(10)(aa) | 1-9513 | 99.2 | — | Agreement of Purchase and Sale, by and between CMS Enterprises Company and Abu Dhabi National Energy Company PJSC dated as of February 3, 2007 (Form 8-K filed February 6, 2007) | ||||
(10)(bb) | 1-9513 | 99.2 | — | Memorandum of Understanding dated February 13, 2007 between CMS Energy Corporation and Petroleos de Venezuela, S.A. (Form 8-K filed February 14, 2007) | ||||
(10)(cc) | 1-9513 | 10.1 | — | Common Agreement dated March 12, 2007 between CMS Enterprises Company and Lucid Energy, LLC (Form 8-K filed March 14, 2007) | ||||
(10)(dd) | 1-9513 | 10.2 | — | Agreement of Purchase and Sale dated March 12, 2007 by and among CMS Enterprises Company, CMS Energy Investment, LLC, and Lucid Energy, LLC and Michigan Pipeline and Processing, LLC (Form 8-K filed March 14, 2007) | ||||
(10)(ee) | 1-9513 | 10.3 | — | Agreement of Purchase and Sale Dated March 12, 2007 by and among CMS Enterprises Company, CMS Generation Holdings Company, CMS International Ventures, LLC, and Lucid Energy, LLC and New Argentine Generation Company, LLC (Form 8-K filed March 14, 2007) | ||||
(10)(ff) | 1-9513 | 10.1 | — | Agreement of Purchase and Sale by and between CMS Energy Corporation and Petroleos de Venezuela, S.A. dated March 30, 2007 (Form 8-K filed April 5, 2007) | ||||
(10)(gg) | 1-9513 | 10.1 | — | Share Purchase Agreement dated as of April 12, 2007 by and among CMS Electric and Gas, L.L.C., CMS Energy Brasil S.A. and CPFL Energia S.A. together with CMS Energy Corporation (solely for the limited purposes of Section 8.9) (Form 8-K filed April 17, 2007) | ||||
(10)(hh) | 1-5611 | 99.2 | — | Purchase and Sale Agreement by and between Broadway Gen Funding, LLC as Seller and Consumers Energy Company as Buyer (Form 8-K filed May 29, 2007) | ||||
(10)(ii) | 1-9513 | 99.2 | — | Amended and Restated Securities Purchase Agreement by and among CMS International Ventures, L.L.C., CMS Capital L.L.C., CMS Gas Argentina Company and CMS Enterprises and AEI Chile Holdings LTD together with Ashmore Energy International (for purposes of the Parent Guarantee) dated as of June 1, 2007 (Form 8-K filed June 4, 2007) | ||||
(10)(jj) | 1-9513 | 99.3 | — | Stock Purchase Agreement by and among Hydra-Co Enterprises, Inc., HCO-Jamaica, Inc., and AEI Central America LTD together with Ashmore Energy International dated as of May 31, 2007 (Form 8-K filed June 4, 2007) | ||||
(10)(kk) | 1-9513 | 99.1 | — | Securities Purchase Agreement by and among CMS International Ventures, L.L.C., CMS Capital, L.L.C., CMS Gas Argentina Company and CMS Enterprises Company and Pacific Energy LLC together with Empresa Nacional De Electricdad S.A. (for purposes of the Parent Guarantee) dated as of July 11, 2007 (Form 8-K filed July 11, 2007) | ||||
(10)(ll) | 1-9513 | (10)(a) | — | Form of Indemnification Agreement between CMS Energy Corporation and its Directors, effective as of November 1, 2007 (3rd qtr. 2007 Form 10-Q) | ||||
(10)(mm) | 1-5611 | (10)(b) | — | Form of Indemnification Agreement between Consumers Energy Company and its Directors, effective as of November 1, 2007 (3rd qtr. 2007 Form 10-Q) |
CO-9
Previously Filed | ||||||||
With File | As Exhibit | |||||||
Exhibits | Number | Number | Description | |||||
(10)(nn) | 1-9513 | 10.1 | — | $200 million Letter of Credit Reimbursement Agreement dated as of November 30, 2007 between Consumers Energy Company and the Bank of Nova Scotia (Form 8-K filed December 6, 2007) | ||||
(12)(a) | — | Statement regarding computation of CMS Energy’s Ratio of Earnings to Fixed Charges and Preferred Dividends | ||||||
(12)(b) | — | Statement regarding computation of Consumers’ Ratio of Earnings to Fixed Charges and Preferred Dividends and Distributions | ||||||
(16)(a) | 1-9513 | 16.1 | — | Letter from Ernst & Young to the Securities and Exchange Commission dated January 25, 2007 (Form 8-K filed January 25, 2007) | ||||
(16)(b) | 1-9513 | 16.1 | — | Letter from Ernst & Young to the Securities and Exchange Commission dated February 28, 2007 (Form 8-K filed February 28, 2007) | ||||
(21) | — | Subsidiaries of CMS Energy and Consumers | ||||||
(23)(a) | — | Consent of PricewaterhouseCoopers LLP for CMS Energy | ||||||
(23)(b) | — | Consent of Ernst & Young for CMS Energy | ||||||
(23)(c) | — | Consent of PricewaterhouseCoopers LLP for CMS Energy re: MCV | ||||||
(23)(d) | — | Consent of PricewaterhouseCoopers LLP for Consumers Energy | ||||||
(23)(e) | — | Consent of Ernst & Young for Consumers Energy | ||||||
(23)(f) | — | Consent of PricewaterhouseCoopers LLP for Consumers Energy re: MCV | ||||||
(24)(a) | — | Power of Attorney for CMS Energy | ||||||
(24)(b) | — | Power of Attorney for Consumers | ||||||
(31)(a) | — | CMS Energy’s certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||
(31)(b) | — | CMS Energy’s certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||
(31)(c) | — | Consumers’ certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||
(31)(d) | — | Consumers’ certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||
(32)(a) | — | CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||||
(32)(b) | — | Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Obligations of only CMS Energy but not of Consumers. |
CO-10
Charged/ | ||||||||||||||||||||
Balance at | Accrued | Balance | ||||||||||||||||||
Beginning | Charged | to other | at End | |||||||||||||||||
Description | of Period | to Expense | Accounts | Deductions | of Period | |||||||||||||||
(In Millions) | ||||||||||||||||||||
Accumulated provision for uncollectible accounts: | ||||||||||||||||||||
2007 | $ | 25 | $ | 37 | $ | 7 | $ | 34 | $ | 21 | ||||||||||
2006 | $ | 25 | $ | 30 | $ | — | $ | 30 | $ | 25 | ||||||||||
2005 | $ | 32 | $ | 23 | $ | — | $ | 30 | $ | 25 | ||||||||||
Deferred tax valuation allowance: | ||||||||||||||||||||
2007 | $ | 72 | $ | — | $ | 81 | $ | 121 | $ | 32 | ||||||||||
2006 | $ | 10 | $ | 31 | $ | 42 | $ | 11 | $ | 72 | ||||||||||
2005 | $ | 42 | $ | 1 | $ | — | $ | 33 | $ | 10 | ||||||||||
Allowance for notes receivable, including related parties: | ||||||||||||||||||||
2007 | $ | 101 | $ | — | $ | 1 | $ | 69 | $ | 33 | ||||||||||
2006 | $ | 49 | $ | 55 | $ | 1 | $ | 4 | $ | 101 | ||||||||||
2005 | $ | 40 | $ | 9 | $ | — | $ | — | $ | 49 |
Charged/ | ||||||||||||||||||||
Balance at | Accrued | Balance | ||||||||||||||||||
Beginning | Charged | to other | at End | |||||||||||||||||
Description | of Period | to Expense | Accounts | Deductions | of Period | |||||||||||||||
(In Millions) | ||||||||||||||||||||
Accumulated provision for uncollectible accounts: | ||||||||||||||||||||
2007 | $ | 14 | $ | 33 | $ | — | $ | 31 | $ | 16 | ||||||||||
2006 | $ | 13 | $ | 30 | $ | — | $ | 29 | $ | 14 | ||||||||||
2005 | $ | 10 | $ | 24 | $ | — | $ | 21 | $ | 13 | ||||||||||
Deferred tax valuation allowance: | ||||||||||||||||||||
2007 | $ | 15 | $ | — | $ | 8 | $ | 23 | $ | — | ||||||||||
2006 | $ | — | $ | 16 | $ | — | $ | 1 | $ | 15 | ||||||||||
2005 | $ | 9 | $ | 1 | $ | — | $ | 10 | $ | — |
CO-11
By�� | /s/ David W. Joos |
Signature | Title | |||
(i) | Principal executive officer: | |||
/s/ David W. Joos David W. Joos | President and Chief Executive Officer | |||
(ii) | Principal financial officer: | |||
/s/ Thomas J. Webb Thomas J. Webb | Executive Vice President and Chief Financial Officer | |||
(iii) | Controller or principal accounting officer: | |||
/s/ Glenn P. Barba Glenn P. Barba | Vice President, Controller and Chief Accounting Officer | |||
(iv) | A majority of the Directors including those named above: | |||
* Merribel S. Ayres | Director | |||
* Jon E. Barfield | Director | |||
* Richard M. Gabrys | Director | |||
* David W. Joos | Director | |||
* Philip R. Lochner, Jr. | Director | |||
* Michael T. Monahan | Director | |||
* Joseph F. Paquette, Jr. | Director |
CO-12
Signature | Title | |||
* Percy A. Pierre | Director | |||
* Kenneth L. Way | Director | |||
* Kenneth Whipple | Director | |||
* John B. Yasinsky | Director | |||
*By | /s/ Thomas J. Webb Thomas J. Webb, Attorney-in-Fact |
CO-13
By | /s/ David W. Joos |
Signature | Title | |||
(i) | Principal executive officer: | |||
/s/ David W. Joos David W. Joos | Chief Executive Officer | |||
(ii) | Principal financial officer: | |||
/s/ Thomas J. Webb Thomas J. Webb | Executive Vice President and Chief Financial Officer | |||
(iii) | Controller or principal accounting officer: | |||
/s/ Glenn P. Barba Glenn P. Barba | Vice President, Controller and Chief Accounting Officer | |||
(iv) | A majority of the Directors including those named above: | |||
* Merribel S. Ayres | Director | |||
* Jon E. Barfield | Director | |||
* Richard M. Gabrys | Director | |||
* David W. Joos | Director | |||
* Philip R. Lochner, Jr. | Director | |||
* Michael T. Monahan | Director | |||
* Joseph F. Paquette, Jr. | Director |
CO-14
Signature | Title | |||
* Percy A. Pierre | Director | |||
* Kenneth L. Way | Director | |||
* Kenneth Whipple | Director | |||
* John B. Yasinsky | Director | |||
*By | /s/ Thomas J. Webb Thomas J. Webb, Attorney-in-Fact |
CO-15
Exhibits | Description | |||||
(4)(a) | — | 106th Supplemental Indenture dated as of November 30, 2007, supplement to Indenture dated as of September 1, 1945, between Consumers and Chemical Bank | ||||
(4)(b) | — | 105th Supplemental Indenture (dated as of March 30, 2007) to the Indenture dated as of September 1, 1945 between Consumers and Chemical Bank | ||||
(10)(a) | — | Amendment No. 1 dated December 19, 2007 to $300 million Seventh Amended and Restated Credit Agreement dated as of April 2, 2007 among CMS Energy Corporation, the Banks, the Administrative Agent, Collateral Agent, Syndication Agent and Documentation Agents | ||||
(10)(b) | Fourth Amended and Restated Pledge and Security Agreement dated as of April 2, 2007 among CMS Energy, and Collateral Agent, as defined therein | |||||
(10)(c) | Cash Collateral Agreement dated as of April 2, 2007, made by CMS Energy to the Administrative Agent for the lenders and Collateral Agent, as defined therein | |||||
(10)(e) | — | 2004 Form of Executive Severance Agreement | ||||
(10)(f) | — | 2004 Form of Officer Severance Agreement | ||||
(10)(g) | — | 2004 Form ofChange-in-Control Agreement | ||||
(10)(h) | — | CMS Energy’s Performance Incentive Stock Plan effective February 3, 1988, as amended June 1, 2004 and as further amended effective November 30, 2007 | ||||
(10)(i) | — | CMS Deferred Salary Savings Plan effective December 1, 1989 and as further amended effective December 1, 2007 | ||||
(10)(j) | — | Annual Officer Incentive Compensation Plan for CMS Energy Corporation and its Subsidiaries effective January 1, 2004, amended and restated effective as of January 1, 2007 and further amended November 30, 2007 | ||||
(10)(k) | — | Supplemental Executive Retirement Plan for Employees of CMS Energy/Consumers Energy Company effective January 1, 1982, as further amended December 1, 2007 | ||||
(10)(l) | — | Defined Contribution Supplemental Executive Retirement Plan effective April 1, 2006 and as further amended effective December 1, 2007 | ||||
(12)(a) | — | Statement regarding computation of CMS Energy’s Ratio of Earnings to Fixed Charges and Preferred Dividends | ||||
(12)(b) | — | Statement regarding computation of Consumers’ Ratio of Earnings to Fixed Charges and Preferred Dividends and Distributions | ||||
(21) | — | Subsidiaries of CMS Energy and Consumers | ||||
(23)(a) | — | Consent of PricewaterhouseCoopers LLP for CMS Energy | ||||
(23)(b) | — | Consent of Ernst & Young for CMS Energy | ||||
(23)(c) | — | Consent of PricewaterhouseCoopers LLP for CMS Energy re: MCV | ||||
(23)(d) | — | Consent of PricewaterhouseCoopers LLP for Consumers Energy | ||||
(23)(e) | — | Consent of Ernst & Young for Consumers Energy | ||||
(23)(f) | — | Consent of PricewaterhouseCoopers LLP for Consumers Energy re: MCV | ||||
(24)(a) | — | Power of Attorney for CMS Energy | ||||
(24)(b) | — | Power of Attorney for Consumers | ||||
(31)(a) | — | CMS Energy’s certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
(31)(b) | — | CMS Energy’s certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
(31)(c) | — | Consumers’ certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
(31)(d) | — | Consumers’ certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
(32)(a) | — | CMS Energy’s certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||
(32)(b) | — | Consumers’ certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |