Exhibit 99.1
November 4, 2004
DTE ENERGY REPORTS THIRD QUARTER EARNINGS
DETROIT — DTE Energy (NYSE:DTE) today reported earnings for the third quarter ended Sept. 30, 2004, of $93 million, or $0.54 per diluted share, compared with $176 million, or $1.04 per diluted share in the third quarter 2003.
Operating earnings (which exclude non-recurring items, tax credit-driven normalization, discontinued operations and cumulative effect of accounting changes) for the 2004 third quarter were $69 million, or $0.40 per diluted share, which is comparable with operating earnings of $114 million, or $0.67 per diluted share for the same period in 2003.
Reported earnings for the nine months ended Sept. 30, 2004 were $318 million, or $1.84 per diluted share versus $292 million or $1.73 per diluted share in 2003. Year-to-date operating earnings through Sept. 30 were $263 million, or $1.52 per diluted share, compared with $362 million, or $2.15 per diluted share in 2003.
A reconciliation of reported to operating earnings for both the quarter ended and nine months ended Sept. 30, 2004 and 2003 is at the end of this release.
“Our third quarter earnings results clearly demonstrate the continuation of a difficult year for our two utilities, Detroit Edison and MichCon,” said Anthony F. Earley Jr., DTE Energy chairman and CEO.“Detroit Edison was particularly hard-hit this quarter, with its operating earnings down nearly 45 percent from the third quarter last year.”
While mild summer weather was a significant factor in Detroit Edison’s quarterly earnings decline, the loss of customer load to Michigan’s Electric Choice program also played a large role in the utility’s financial results.
“Detroit Edison and MichCon are nearing the end of a regulatory cycle that started nearly ten years ago, which was the last time they had base rate increases,” Earley said. “The good news is that as 2004 comes to a close, we anticipate that our utilities will soon be on a path to return them to financial health, with the resolution of their rate cases expected shortly, and hopefully, improvements to Michigan’s Electric Choice program which would ensure fairness to all program participants.”
“Our non-regulated businesses continue to perform very well,” Earley said, “and combined with timely rate orders providing reasonable rate adjustments for our utilities, DTE Energy’s earnings and cash flow should strengthen considerably.”
Operating earnings results for the third quarter 2004, by business unit, were as follows:
| • | DTE Energy Resourcesoperating earnings were $0.56 per diluted share versus $0.73 per diluted share in the third quarter 2003. The regulated operations of this business unit, which are the power generation services of Detroit Edison, declined $0.27 per diluted share versus last year. The decrease was driven by reduced gross margins, due primarily to the loss of retail customer sales to the Electric Choice program, as well as milder summer weather versus last year. Increased operation and |
| maintenance expenses, reflecting costs associated with maintaining the generation fleet, higher allocations for customer support services, and costs associated with the DTE2 project, a company-wide initiative to implement new core information systems, also negatively impacted quarterly results. Earnings for the quarter benefited from increased interim base rates and transition charge revenues, and the recording of $23 million (after tax) of regulatory deferrals. |
The non-regulated operations of this business unit include the company’s energy services, energy marketing and trading, coal services and biomass businesses. Earnings at these non-regulated operations increased $0.10 per diluted share from last year. The increase was mainly attributable to higher gains recognized from selling majority interests in the company’s synfuel plants, as well as higher production of synthetic fuel, reflecting the company’s decision to produce synfuel primarily from plants in which we have sold interests. During the third quarter 2004, the company produced 4.4 million tons of synfuel, versus 1.6 million tons in the same period last year. Also benefiting quarterly earnings were higher revenues from coke sales, due to higher coke sales volumes combined with higher market prices, and increased revenues from on-site energy projects, reflecting the completion in the second quarter of new long-term utility service contracts with a large automotive company and a large manufacturer of paper products. Partially offsetting these increases were reduced earnings at energy marketing and trading, due to higher unrealized losses on economic hedge contracts related to storage assets at CoEnergy.
| • | DTE Energy Distributionhad operating earnings of $0.13 per diluted share versus $0.19 per diluted share last year. The regulated operations of this business unit are the electric distribution services of Detroit Edison. These regulated operations experienced a year-over-year decrease of $0.05 per diluted share, driven by lower revenues due to milder summer weather, and increased operation and maintenance expenses, due to higher reserves for uncollectable accounts receivable, costs associated with the DTE 2 project and higher transmission expenses, resulting from a refund in the 2003 third quarter. The impact of increased interim base rates partially offset the earnings decline. |
The non-regulated operations of this business unit consist primarily of DTE Energy Technologies, which markets and distributes a portfolio of distributed generation products and services. Year-over-year performance at this business declined by $0.01 per diluted share.
| • | DTE Energy Gashad an operating loss of $0.28 per diluted share versus an operating loss of $0.20 per diluted share last year. The regulated operations include the gas distribution services provided by MichCon. Regulated operations were down $0.04 per diluted share due mainly to an unfavorable effective tax rate adjustment driven by lower estimated annual earnings, as well as the impact of mild weather. |
Non-regulated operations include the production of gas in northern Michigan and the gathering, transporting, processing and storage of gas. Operating earnings from these businesses declined by $0.04 per diluted share year-over-year due to gains recorded in the 2003 third quarter from selling our 16 percent pipeline interest in the Portland Natural Gas Transmission System.
| • | Corporate & Otherincludes interest costs, as well as certain non-regulated investments, including assets held for sale and investments in emerging energy technologies. Corporate & Other had an operating loss of $0.01 per diluted share, compared with an operating loss of $0.05 per diluted share in 2003, due to lower financing costs. |
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| • | Use of Operating Earnings Information— DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measurement for external communications with analysts and investors. Internally, DTE Energy uses operating earnings to measure performance against budget and to report to the Board of Directors. |
DTE Energy’s executive vice president and CFO, David E. Meador, indicated that 2005 holds the potential for financial progress. “We believe that the coming year will provide closure on a number of significant financial uncertainties for our company. With our utilities returning to financial health, continued growth from our non-regulated businesses, and a dividend yield of approximately 5%, DTE Energy is an attractive investment opportunity.”
Recent Events and Developments
FERC Approval for Sale of Gas-Fired Peaker Units
On Oct. 27, 2004, DTE Energy Services received FERC approval for the sale of 2 gas-fired peaker units at its Georgetown, Indiana power plant. The sale of the two units, representing 160 MW, is expected to close in the fourth quarter of this year. The sale of the Georgetown units is consistent with DTE Energy’s plan to optimize the value of its merchant generation portfolio.
Renewal of Revolving Credit Facilities
On Oct. 15, 2004, DTE Energy entered into a $525 million, five-year unsecured revolving credit facility and lowered its existing three-year revolving credit facility from $350 million to $175 million. Detroit Edison and MichCon also entered into similar revolving credit facilities. Detroit Edison entered into a $206.25 million, five-year facility and lowered its three-year facility from $137.5 million to $68.75 million. MichCon entered into a $243.75 million, five-year facility and lowered its three-year facility from $162.5 million to $81.25 million. The five-year facilities replace the October 2003 364-day facilities, which expired. The credit facilities may be utilized for general corporate borrowings, but are intended primarily to provide liquidity support for each of the companies’ commercial paper programs.
Michigan Public Service Commission Issues MichCon Interim Rate Order
On Sept. 21, 2004, the MPSC issued an order granting interim rate relief to MichCon. The interim rate increase, which took effect Sept. 22, would total $35.3 million if it were in effect for a full year.
MPSC Staff Recommendation on Final Rate Relief for MichCon
On July 26, 2004, the MPSC staff recommended a $76 million increase in base rates compared to MichCon’s requested base rate relief of $194 million. MichCon proposed a provision, which was subsequently supported by the MPSC staff that would allow MichCon to recover or refund 90% of uncollectable accounts receivables expense above or below the amount that is reflected in base rates. In addition, the MPSC staff proposed a 50% debt and 50% equity capital structure utilizing a rate of return on common equity of 11%. MichCon’s current allowed rate of return on common equity is 11.5%. MichCon expects a final order in the first quarter of 2005.
Administrative Law Judge Recommendation on Detroit Edison Final Rate Relief
On Aug. 26, 2004, the Administrative Law Judge (ALJ) issued a Proposal for Decision regarding final rate relief requested by Detroit Edison. The ALJ agreed with the MPSC staff and recommended a $254 million base rate increase, which excluded $93 million of stranded costs. The recommended base rate increase is predicated upon Detroit Edison being allowed to retain third-party wholesale sales due to
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electric Customer Choice to recover the $93 million of stranded costs. The ALJ endorsed the MPSC staff’s position on regulatory assets and historical stranded costs. Detroit Edison expects a final rate order this month.
This earnings announcement, as well as a package of detailed financial information, is available on the company’s website at www.dteenergy.com on the “Investors” page.
DTE Energy will conduct a conference call with the investment community at 9 a.m. EDT Friday, Nov. 5, to discuss third quarter earnings results. Investors, the news media and the public may listen to a live Internet broadcast of the DTE Energy conference call at www.dteenergy.com. A replay will be available approximately one hour after the conference call until Dec. 4, and the internet broadcast will be archived on the company’s website.
DTE Energy is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. DTE Energy’s largest operating subsidiaries are Detroit Edison, an electric utility serving 2.1 million customers in Southeastern Michigan, and MichCon, a natural gas utility serving 1.2 million customers in Michigan. Information about DTE Energy is available at www.dteenergy.com.
The information contained in this document is as of the date of this press release. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as “anticipate,” “believe,” “expect,” “projected” and “goals” signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various assumptions, risks and uncertainties. This press release contains forward-looking statements about DTE Energy’s financial results and estimates of future prospects, and actual results may differ materially. Factors that may impact forward-looking statements include, but are not limited to the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers; economic climate and growth or decline in the geographic areas where we do business; environmental issues, laws and regulations, and the cost of remediation and compliance associated therewith; nuclear regulations and operations associated with nuclear facilities; the higher price of oil and its impact on the value of Section 29 tax credits, and the ability to utilize and/or sell interests in facilities producing such credits; implementation of electric and gas Customer Choice programs; impact of electric and gas utility restructuring in Michigan, including legislative amendments; employee relations and the impact of collective bargaining agreements; unplanned outages; access to capital markets and capital market conditions and the results of other financing efforts which can be affected by credit agency ratings; the timing and extent of changes in interest rates; the level of borrowings; changes in the cost of coal and the availability of coal and other raw materials, purchased power and natural gas and oil; effects of competition; impacts of FERC, MPSC, NRC and other applicable governmental proceedings and regulations; contributions to earnings by non-regulated businesses; changes in federal, state and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings and audits; the ability to recover costs through rate increases; the availability, cost, coverage and terms of insurance; the cost of protecting assets against, or damage due to, terrorism; changes in accounting standards and financial reporting regulations; changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business issues; and changes in the economic and financial viability of our suppliers, customers and trading counterparties, and the continued ability of such parties to perform their obligations to the company. This press release should also be read in conjunction with the forward-looking statements in each of DTE Energy’s, MichCon’s and Detroit Edison’s 2003 Form 10-K, and in conjunction with other SEC reports filed by DTE Energy, MichCon and Detroit Edison.
Members of the Media — For Further Information:
| Lorie N. Kessler | Scott Simons | |
| (313) 235-8807 | (313) 235-8808 | |
| Analysts — For Further Information: | ||
| Investor Relations | ||
| (313) 235-8030 |
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DTE ENERGY COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| (in Millions, Except per Share Amounts) | 2004 | 2003 | 2004 | 2003 | ||||||||||||
Operating Revenues | $ | 1,594 | $ | 1,654 | $ | 5,188 | $ | 5,349 | ||||||||
Operating Expenses | ||||||||||||||||
| Fuel, purchased power and gas | 316 | 452 | 1,434 | 1,758 | ||||||||||||
| Operation and maintenance | 884 | 742 | 2,517 | 2,298 | ||||||||||||
| Depreciation, depletion and amortization | 190 | 170 | 536 | 547 | ||||||||||||
| Taxes other than income | 86 | 71 | 231 | 255 | ||||||||||||
| Gains on sale of assets, net | (55 | ) | (13 | ) | (166 | ) | (29 | ) | ||||||||
| 1,421 | 1,422 | 4,552 | 4,829 | |||||||||||||
Operating Income | 173 | 232 | 636 | 520 | ||||||||||||
Other (Income) and Deductions | ||||||||||||||||
| Interest expense | 131 | 135 | 391 | 412 | ||||||||||||
| Interest income | (14 | ) | (7 | ) | (41 | ) | (22 | ) | ||||||||
| Minority interest | (66 | ) | (20 | ) | (147 | ) | (72 | ) | ||||||||
| Other income | (27 | ) | (44 | ) | (86 | ) | (75 | ) | ||||||||
| Other expenses | 20 | 31 | 65 | 82 | ||||||||||||
| 44 | 95 | 182 | 325 | |||||||||||||
Income Before Income Taxes | 129 | 137 | 454 | 195 | ||||||||||||
Income Tax Provision (Benefit) | 36 | (43 | ) | 129 | (56 | ) | ||||||||||
Income from Continuing Operations | 93 | 180 | 325 | 251 | ||||||||||||
Income (Loss) from Discontinued Operations, net of tax | — | (4 | ) | (7 | ) | 68 | ||||||||||
Cumulative Effect of Accounting Changes, net of tax | — | — | — | (27 | ) | |||||||||||
Net Income | $ | 93 | $ | 176 | $ | 318 | $ | 292 | ||||||||
Basic Earnings per Common Share | ||||||||||||||||
| Income from continuing operations | $ | .54 | $ | 1.07 | $ | 1.89 | $ | 1.49 | ||||||||
| Discontinued operations | — | (.02 | ) | (.04 | ) | .41 | ||||||||||
| Cumulative effect of accounting changes | — | — | — | (.16 | ) | |||||||||||
| Total | $ | .54 | $ | 1.05 | $ | 1.85 | $ | 1.74 | ||||||||
Diluted Earnings per Common Share | ||||||||||||||||
| Income from continuing operations | $ | .54 | $ | 1.06 | $ | 1.88 | $ | 1.49 | ||||||||
| Discontinued operations | — | (.02 | ) | (.04 | ) | .40 | ||||||||||
| Cumulative effect of accounting changes | — | — | — | (.16 | ) | |||||||||||
| Total | $ | .54 | $ | 1.04 | $ | 1.84 | $ | 1.73 | ||||||||
Average Common Shares | ||||||||||||||||
| Basic | 173 | 168 | 172 | 168 | ||||||||||||
| Diluted | 174 | 168 | 173 | 168 | ||||||||||||
Dividends Declared per Common Share | $ | .515 | $ | .515 | $ | 1.545 | $ | 1.545 | ||||||||
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DTE ENERGY COMPANY
SEGMENT NET INCOME (UNAUDITED)
| Three Months Ended September 30 | ||||||||||||||||||||||||
| 2004 | 2003 | |||||||||||||||||||||||
| Reported | Operating | Reported | Operating | |||||||||||||||||||||
| (in Millions) | Earnings | Adjustments | Earnings | Earnings | Adjustments | Earnings | ||||||||||||||||||
Energy Resources | ||||||||||||||||||||||||
| Regulated — Power Generation | $ | 34 | $ | — | $ | 34 | $ | 61 | $ | 16 | L | $ | 77 | |||||||||||
| Non-regulated | ||||||||||||||||||||||||
| Energy Services | 51 | — | 51 | 23 | — | 23 | ||||||||||||||||||
| Energy Marketing & Trading | 12 | — | 12 | 23 | — | 23 | ||||||||||||||||||
| Other | 1 | — | 1 | (1 | ) | — | (1 | ) | ||||||||||||||||
| Total Non-regulated | 64 | — | 64 | 45 | — | 45 | ||||||||||||||||||
| 98 | — | 98 | 106 | 16 | 122 | |||||||||||||||||||
Energy Distribution | ||||||||||||||||||||||||
| Regulated — Power Distribution | 28 | — | 28 | 35 | — | 35 | ||||||||||||||||||
| Non-regulated | (4 | ) | — | (4 | ) | (3 | ) | — | (3 | ) | ||||||||||||||
| 24 | — | 24 | 32 | — | 32 | |||||||||||||||||||
Energy Gas | ||||||||||||||||||||||||
| Regulated — Gas Distribution | (55 | ) | — | (55 | ) | (45 | ) | — | (45 | ) | ||||||||||||||
| Non-regulated | 5 | — | 5 | 12 | — | 12 | ||||||||||||||||||
| (50 | ) | — | (50 | ) | (33 | ) | — | (33 | ) | |||||||||||||||
Corporate and Other | 21 | (24) | B | (3 | ) | 75 | (82 | )B | (7 | ) | ||||||||||||||
| 21 | (24 | ) | (3 | ) | 75 | (82 | ) | (7 | ) | |||||||||||||||
Income from Continuing Operations | ||||||||||||||||||||||||
| Regulated | 7 | — | 7 | 51 | 16 | 67 | ||||||||||||||||||
| Non-regulated | 65 | — | 65 | 54 | — | 54 | ||||||||||||||||||
| Corporate and Other | 21 | (24 | ) | (3 | ) | 75 | (82 | ) | (7 | ) | ||||||||||||||
| 93 | (24 | ) | 69 | 180 | (66 | ) | 114 | |||||||||||||||||
Discontinued Operations | ||||||||||||||||||||||||
| Income from operations | — | — | — | — | — | — | ||||||||||||||||||
| Impairment loss/ Gain on sale | — | — | — | (4 | ) | 4 | I | — | ||||||||||||||||
| — | — | — | (4 | ) | 4 | — | ||||||||||||||||||
Cumulative Effect of Accounting Changes | ||||||||||||||||||||||||
| Asset retirement obligations | — | — | — | — | — | — | ||||||||||||||||||
| Energy trading activities | — | — | — | — | — | — | ||||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||||
Net Income | $ | 93 | $ | (24 | ) | $ | 69 | $ | 176 | $ | (62 | ) | $ | 114 | ||||||||||
ADJUSTMENTS KEY
| A) | Adjustment for contract termination / modification | Terminated a long-term gas exchange agreement and modified a related transportation agreement with a pipeline company | ||
| B) | Tax credit driven normalization | Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual results not impacted | ||
| C) | Impairment loss / Discontinued operations | Impairment charge relating to the expected loss on sale of Southern Missouri Gas Company | ||
| D) | Adjustment of EITF 98-10 accounting change | Flowback of the cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10 | ||
| E) | Loss on sale of steam heating business | Sold Detroit Edison steam heating business | ||
| F) | Disallowance of gas costs | Reserve for the potential disallowance of MichCon 2002 gas procurement costs | ||
| G) | Contribution to DTE Energy Foundation | Used a portion of International Transmission Company (ITC) sale proceeds to fund the DTE Energy Foundation | ||
| H) | Adjustment for discontinued operations | Sold ITC | ||
| I) | Gain on sale of ITC | Sold ITC | ||
| J) | Asset retirement obligations | Cumulative effect of a change in accounting principle from adoption of SFAS 143 | ||
| K) | Adjustment of EITF 98-10 accounting change | Cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10 | ||
| L) | Blackout costs | Costs associated with the August 2003 blackout |
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DTE ENERGY COMPANY
SEGMENT DILUTED EARNINGS PER SHARE (UNAUDITED)
| Three Months Ended September 30 | ||||||||||||||||||||||||
| 2004 | 2003 | |||||||||||||||||||||||
| Reported | Operating | Reported | Operating | |||||||||||||||||||||
| Earnings | Adjustments | Earnings | Earnings | Adjustments | Earnings | |||||||||||||||||||
Energy Resources | ||||||||||||||||||||||||
| Regulated — Power Generation | $ | 0.19 | $ | — | $ | 0.19 | $ | 0.36 | $ | 0.10 | L | $ | 0.46 | |||||||||||
| Non-regulated | ||||||||||||||||||||||||
| Energy Services | 0.29 | — | 0.29 | 0.14 | — | 0.14 | ||||||||||||||||||
| Energy Marketing & Trading | 0.07 | — | 0.07 | 0.14 | — | 0.14 | ||||||||||||||||||
| Other | 0.01 | — | 0.01 | (0.01 | ) | — | (0.01 | ) | ||||||||||||||||
| Total Non-regulated | 0.37 | — | 0.37 | 0.27 | — | 0.27 | ||||||||||||||||||
| 0.56 | — | 0.56 | 0.63 | 0.10 | 0.73 | |||||||||||||||||||
Energy Distribution | ||||||||||||||||||||||||
| Regulated — Power Distribution | 0.16 | — | 0.16 | 0.21 | — | 0.21 | ||||||||||||||||||
| Non-regulated | (0.03 | ) | — | (0.03 | ) | (0.02 | ) | — | (0.02 | ) | ||||||||||||||
| 0.13 | — | 0.13 | 0.19 | — | 0.19 | |||||||||||||||||||
Energy Gas | ||||||||||||||||||||||||
| Regulated — Gas Distribution | (0.31 | ) | — | (0.31 | ) | (0.27 | ) | — | (0.27 | ) | ||||||||||||||
| Non-regulated | 0.03 | — | 0.03 | 0.07 | — | 0.07 | ||||||||||||||||||
| (0.28 | ) | — | (0.28 | ) | (0.20 | ) | — | (0.20 | ) | |||||||||||||||
Corporate and Other | 0.13 | (0.14 | )B | (0.01 | ) | 0.44 | (0.49 | )B | (0.05 | ) | ||||||||||||||
| 0.13 | (0.14 | ) | (0.01 | ) | 0.44 | (0.49 | ) | (0.05 | ) | |||||||||||||||
Income from Continuing Operations | ||||||||||||||||||||||||
| Regulated | 0.04 | — | 0.04 | 0.30 | 0.10 | 0.40 | ||||||||||||||||||
| Non-regulated | 0.37 | — | 0.37 | 0.32 | — | 0.32 | ||||||||||||||||||
| Corporate and Other | 0.13 | (0.14 | ) | (0.01 | ) | 0.44 | (0.49 | ) | (0.05 | ) | ||||||||||||||
| 0.54 | (0.14 | ) | 0.40 | 1.06 | (0.39 | ) | 0.67 | |||||||||||||||||
Discontinued Operations | ||||||||||||||||||||||||
| Income from operations | — | — | — | — | — | — | ||||||||||||||||||
| Impairment loss/ Gain on sale | — | — | — | (0.02 | ) | 0.02 | I | — | ||||||||||||||||
| — | — | — | (0.02 | ) | 0.02 | — | ||||||||||||||||||
Cumulative Effect of Accounting Changes | ||||||||||||||||||||||||
| Asset retirement obligations | — | — | — | — | — | — | ||||||||||||||||||
| Energy trading activities | — | — | — | — | — | — | ||||||||||||||||||
| — | — | — | — | — | — | |||||||||||||||||||
Net Income | $ | 0.54 | $ | (0.14 | ) | $ | 0.40 | $ | 1.04 | $ | (0.37 | ) | $ | 0.67 | ||||||||||
ADJUSTMENTS KEY
| A) | Adjustment for contract termination / modification | Terminated a long-term gas exchange agreement and modified a related transportation agreement with a pipeline company | ||
| B) | Tax credit driven normalization | Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual results not impacted | ||
| C) | Impairment loss / Discontinued operations | Impairment charge relating to the expected loss on sale of Southern Missouri Gas Company | ||
| D) | Adjustment of EITF 98-10 accounting change | Flowback of the cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10 | ||
| E) | Loss on sale of steam heating business | Sold Detroit Edison steam heating business | ||
| F) | Disallowance of gas costs | Reserve for the potential disallowance of MichCon 2002 gas procurement costs | ||
| G) | Contribution to DTE Energy Foundation | Used a portion of International Transmission Company (ITC) sale proceeds to fund the DTE Energy Foundation | ||
| H) | Adjustment for discontinued operations | Sold ITC | ||
| I) | Gain on sale of ITC | Sold ITC | ||
| J) | Asset retirement obligations | Cumulative effect of a change in accounting principle from adoption of SFAS 143 | ||
| K) | Adjustment of EITF 98-10 accounting change | Cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10 | ||
| L) | Blackout costs | Costs associated with the August 2003 blackout |
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DTE ENERGY COMPANY
SEGMENT NET INCOME (UNAUDITED)
| Nine Months Ended September 30 | ||||||||||||||||||||||||
| 2004 | 2003 | |||||||||||||||||||||||
| Reported | Operating | Reported | Operating | |||||||||||||||||||||
| (in Millions) | Earnings | Adjustments | Earnings | Earnings | Adjustments | Earnings | ||||||||||||||||||
Energy Resources | ||||||||||||||||||||||||
| Regulated — Power Generation | $ | 51 | $ | — | $ | 51 | $ | 132 | $ | 16 | L | $ | 148 | |||||||||||
| Non-regulated | ||||||||||||||||||||||||
| Energy Services | 145 | — | 145 | 151 | — | 151 | ||||||||||||||||||
| Energy Marketing & Trading | 62 | (48 | )A | 14 | 52 | (16 | )D | 36 | ||||||||||||||||
| Other | (1 | ) | — | (1 | ) | (1 | ) | — | (1 | ) | ||||||||||||||
| Total Non-regulated | 206 | (48 | ) | 158 | 202 | (16 | ) | 186 | ||||||||||||||||
| 257 | (48 | ) | 209 | 334 | — | 334 | ||||||||||||||||||
Energy Distribution | ||||||||||||||||||||||||
| Regulated — Power Distribution | 63 | — | 63 | 15 | 14 | E | 29 | |||||||||||||||||
| Non-regulated | (15 | ) | — | (15 | ) | (12 | ) | — | (12 | ) | ||||||||||||||
| 48 | — | 48 | 3 | 14 | 17 | |||||||||||||||||||
Energy Gas | ||||||||||||||||||||||||
| Regulated — Gas Distribution | (22 | ) | — | (22 | ) | 5 | 17 | F | 22 | |||||||||||||||
| Non-regulated | 14 | — | 14 | 26 | — | 26 | ||||||||||||||||||
| (8 | ) | — | (8 | ) | 31 | 17 | 48 | |||||||||||||||||
| 10 | G | 10 | ||||||||||||||||||||||
Corporate and Other | 28 | (14 | )B | 14 | (117 | ) | 70 | B | (47 | ) | ||||||||||||||
| 28 | (14 | ) | 14 | (117 | ) | 80 | (37 | ) | ||||||||||||||||
Income from Continuing Operations | ||||||||||||||||||||||||
| Regulated | 92 | — | 92 | 152 | 47 | 199 | ||||||||||||||||||
| Non-regulated | 205 | (48 | ) | 157 | 216 | (16 | ) | 200 | ||||||||||||||||
| Corporate and Other | 28 | (14 | ) | 14 | (117 | ) | 80 | (37 | ) | |||||||||||||||
| 325 | (62 | ) | 263 | 251 | 111 | 362 | ||||||||||||||||||
Discontinued Operations | ||||||||||||||||||||||||
| Income from operations | — | — | — | 5 | (5 | )H | — | |||||||||||||||||
| Impairment loss/ Gain on sale. | (7 | ) | 7 | C | — | 63 | (63 | )I | — | |||||||||||||||
| (7 | ) | 7 | — | 68 | (68 | ) | — | |||||||||||||||||
Cumulative Effect of Accounting Changes | ||||||||||||||||||||||||
| Asset retirement obligations | — | — | — | (11 | ) | 11 | J | — | ||||||||||||||||
| Energy trading activities | — | — | — | (16 | ) | 16 | K | — | ||||||||||||||||
| — | — | — | (27 | ) | 27 | — | ||||||||||||||||||
Net Income | $ | 318 | $ | (55 | ) | $ | 263 | $ | 292 | $ | 70 | $ | 362 | |||||||||||
ADJUSTMENTS KEY
| A) | Adjustment for contract termination / modification | Terminated a long-term gas exchange agreement and modified a related transportation agreement with a pipeline company | ||
| B) | Tax credit driven normalization | Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual results not impacted | ||
| C) | Impairment loss / Discontinued operations | Impairment charge relating to the expected loss on sale of Southern Missouri Gas Company | ||
| D) | Adjustment of EITF 98-10 accounting change | Flowback of the cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10 | ||
| E) | Loss on sale of steam heating business | Sold Detroit Edison steam heating business | ||
| F) | Disallowance of gas costs | Reserve for the potential disallowance of MichCon 2002 gas procurement costs | ||
| G) | Contribution to DTE Energy Foundation | Used a portion of International Transmission Company (ITC) sale proceeds to fund the DTE Energy Foundation | ||
| H) | Adjustment for discontinued operations | Sold ITC | ||
| I) | Gain on sale of ITC | Sold ITC | ||
| J) | Asset retirement obligations | Cumulative effect of a change in accounting principle from adoption of SFAS 143 | ||
| K) | Adjustment of EITF 98-10 accounting change | Cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10 | ||
| L) | Blackout costs | Costs associated with the August 2003 blackout |
8
DTE ENERGY COMPANY
SEGMENT DILUTED EARNINGS PER SHARE (UNAUDITED)
| Nine Months Ended September 30 | ||||||||||||||||||||||||
| 2004 | 2003 | |||||||||||||||||||||||
| Reported | Operating | Reported | Operating | |||||||||||||||||||||
| Earnings | Adjustments | Earnings | Earnings | Adjustments | Earnings | |||||||||||||||||||
Energy Resources | ||||||||||||||||||||||||
| Regulated — Power Generation | $ | 0.29 | $ | — | $ | 0.29 | $ | 0.78 | $ | 0.10 | L | $ | 0.88 | |||||||||||
| Non-regulated | ||||||||||||||||||||||||
| Energy Services | 0.84 | — | 0.84 | 0.89 | — | 0.89 | ||||||||||||||||||
| Energy Marketing & Trading | 0.36 | (0.28 | )A | 0.08 | 0.31 | (0.10 | )D | 0.21 | ||||||||||||||||
| Other | (0.01 | ) | — | (0.01 | ) | — | — | — | ||||||||||||||||
| Total Non-regulated | 1.19 | (0.28 | ) | 0.91 | 1.20 | (0.10 | ) | 1.10 | ||||||||||||||||
| 1.48 | (0.28 | ) | 1.20 | 1.98 | — | 1.98 | ||||||||||||||||||
Energy Distribution | ||||||||||||||||||||||||
| Regulated — Power Distribution | 0.37 | — | 0.37 | 0.09 | 0.08 | E | 0.17 | |||||||||||||||||
| Non-regulated | (0.09 | ) | — | (0.09 | ) | (0.07 | ) | — | (0.07 | ) | ||||||||||||||
| 0.28 | — | 0.28 | 0.02 | 0.08 | 0.10 | |||||||||||||||||||
Energy Gas | ||||||||||||||||||||||||
| Regulated — Gas Distribution | (0.13 | ) | — | (0.13 | ) | 0.04 | 0.10 | F | 0.14 | |||||||||||||||
| Non-regulated | 0.08 | — | 0.08 | 0.15 | — | 0.15 | ||||||||||||||||||
| (0.05 | ) | — | (0.05 | ) | 0.19 | 0.10 | 0.29 | |||||||||||||||||
| — | — | — | — | 0.06 | G | 0.06 | ||||||||||||||||||
Corporate and Other | 0.17 | (0.08 | )B | 0.09 | (0.70 | ) | 0.42 | B | (0.28 | ) | ||||||||||||||
| 0.17 | (0.08 | ) | 0.09 | (0.70 | ) | 0.48 | (0.22 | ) | ||||||||||||||||
Income from Continuing Operations | ||||||||||||||||||||||||
| Regulated | 0.53 | — | 0.53 | 0.91 | 0.28 | 1.19 | ||||||||||||||||||
| Non-regulated | 1.18 | (0.28 | ) | 0.90 | 1.28 | (0.10 | ) | 1.18 | ||||||||||||||||
| Corporate and Other | 0.17 | (0.08 | ) | 0.09 | (0.70 | ) | 0.48 | (0.22 | ) | |||||||||||||||
| 1.88 | (0.36 | ) | 1.52 | 1.49 | 0.66 | 2.15 | ||||||||||||||||||
Discontinued Operations | ||||||||||||||||||||||||
| Income from operations | — | — | — | 0.03 | (0.03 | )H | — | |||||||||||||||||
| Impairment loss/ Gain on sale | (0.04 | ) | 0.04 | C | — | 0.37 | (0.37 | )I | — | |||||||||||||||
| (0.04 | ) | 0.04 | — | 0.40 | (0.40 | ) | — | |||||||||||||||||
Cumulative Effect of Accounting Changes | ||||||||||||||||||||||||
| Asset retirement obligations | — | — | — | (0.07 | ) | 0.07 | J | — | ||||||||||||||||
| Energy trading activities | — | — | — | (0.09 | ) | 0.09 | K | — | ||||||||||||||||
| — | — | — | (0.16 | ) | 0.16 | — | ||||||||||||||||||
Net Income | $ | 1.84 | $ | (0.32 | ) | $ | 1.52 | $ | 1.73 | $ | 0.42 | $ | 2.15 | |||||||||||
ADJUSTMENTS KEY
| A) | Adjustment for contract termination / modification | Terminated a long-term gas exchange agreement and modified a related transportation agreement with a pipeline company | ||
| B) | Tax credit driven normalization | Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual results not impacted | ||
| C) | Impairment loss / Discontinued operations | Impairment charge relating to the expected loss on sale of Southern Missouri Gas Company | ||
| D) | Adjustment of EITF 98-10 accounting change | Flowback of the cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10 | ||
| E) | Loss on sale of steam heating business | Sold Detroit Edison steam heating business | ||
| F) | Disallowance of gas costs | Reserve for the potential disallowance of MichCon 2002 gas procurement costs | ||
| G) | Contribution to DTE Energy Foundation | Used a portion of International Transmission Company (ITC) sale proceeds to fund the DTE Energy Foundation | ||
| H) | Adjustment for discontinued operations | Sold ITC | ||
| I) | Gain on sale of ITC | Sold ITC | ||
| J) | Asset retirement obligations | Cumulative effect of a change in accounting principle from adoption of SFAS 143 | ||
| K) | Adjustment of EITF 98-10 accounting change | Cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10 | ||
| L) | Blackout costs | Costs associated with the August 2003 blackout |
9
