EXHIBIT 99.1
Aug. 14, 2003
DTE ENERGY RECONFIRMS 2003 OPERATING EARNINGS GUIDANCE FOLLOWING MODIFICATION TO
SECOND QUARTER ANNOUNCED EARNINGS
DETROIT -- DTE Energy (NYSE: DTE) today will file its second quarter
2003 Form 10-Q for the quarter ended June 30, 2003, with the Securities and
Exchange Commission. The company will report a loss for the quarter of $39
million, or $0.23 per diluted share. This includes an additional $16 million
negative earnings impact not reflected in the unaudited loss of $23 million, or
$0.13 per diluted share that was announced July 28, 2003. The earnings revision
was due to a change in the interpretation of insurance coverage for an April ice
storm. The revision does not change the company's 2003 operating earnings
guidance. Reported earnings for the second quarter 2002 were $68 million or
$0.42 per diluted share.
Revised operating earnings for the quarter were $70 million, or $0.42
per diluted share, compared to operating earnings of $86 million, or $0.53 per
diluted share for the same period in 2002.
Reported earnings for the six months ended June 30, 2003 were $116
million, or $0.69 per share versus $268 million or $1.66 per share in 2002.
Year-to-date operating earnings were $248 million, or $1.47 per share, compared
to $267 million, or $1.65 per share in 2002. An updated income statement for the
three months and six months ended June 30, 2003 is at the end of this release,
as well as an updated balance sheet as of June 30, 2003.
After experiencing back-to-back catastrophic storms in April and July,
the company initiated a review of its storm-related insurance portfolio. The
April storm, occurring in the second quarter, had a pre-insurance cost of $50
million and the July storm, in the third quarter, had a pre-insurance cost of
$20 million. The recently completed review recognized that the insurance
coverage and the level of risk retained by the company for the second quarter
and third quarter storms were different than previously understood. The level of
risk retained and the after-insurance cost of the April storm was higher than
previously understood, and the level of risk retained for the July storm was
lower.
The company determined that it is appropriate to increase operating
expenses in the second quarter to reflect that less of the April storm was
covered by insurance than had been previously determined and recorded, even
though this adjustment is small. The third quarter storm is substantially
covered by insurance. Therefore, the revision of second quarter earnings results
does not impact the company's 2003 operating earnings guidance, which it
reaffirmed at $3.10 - $3.30 per share. This guidance assumes no additional storm
expense through year-end.
A reconciliation of reported to operating earnings per share for both
the quarter ended and six months ended June 30, 2003 and 2002 are at the end of
this release. DTE Energy management believes that operating earnings provide a
more meaningful representation of the company's earnings power from ongoing
operations and uses operating earnings as the primary performance measurement
for external communications with analysts and investors regarding its earnings
outlook and results. Internally, DTE Energy uses operating earnings to measure
performance against budget and to report to the DTE Energy Board of Directors.
1
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
news 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
news 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, timing and extent of changes in interest rates; access to the
capital markets and capital market conditions and other financing efforts which
can be affected by credit agency ratings required; resolution of the IRS review
of chemical change at synthetic fuel facilities; ability to utilize Section 29
tax credits or sell interest in facilities producing such credits; the level of
borrowings; the effects of weather and other natural phenomena on operations and
actual sales; economic climate and growth in the geographic areas in which DTE
Energy does business; unplanned outages; the cost of protecting assets against
or damage due to terrorism; nuclear regulations and risks associated with
nuclear operations; the grant of rate relief by the MPSC for the utilities;
changes in the cost of fuel, purchased power and natural gas; the effects of
competition; the implementation of electric and gas customer choice programs;
the implementation of electric and gas utility restructuring in Michigan;
environmental issues, including changes in the climate, and regulations, and the
contributions to earnings by non-regulated businesses. This news release should
also be read in conjunction with the forward-looking statements in DTE Energy's
and Detroit Edison's 2002 Form 10-K Item 1, and in conjunction with other SEC
reports filed by DTE Energy 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
2
DTE ENERGY COMPANY
STATEMENT OF OPERATIONS
FORM 10-Q EARNINGS AS COMPARED TO OPERATING EARNINGS
JUNE 30, 2003
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------- ---------------------------------------
Results Results
Released Form 10-Q Released Form 10-Q
July 28, 2003 Adjustments Results July 28, 2003 Adjustments Results
------------- ----------- ------- ------------- ----------- -------
(in Millions, Except per Share Data)
OPERATING REVENUES............................ $ 1,600 $ - $ 1,600 $ 3,695 $ - $ 3,695
------- ------- ------- ------- ------- -------
OPERATING EXPENSES
Fuel, purchased power and gas............... 493 - 493 1,306 - 1,306
Operation and maintenance................... 720 13 733 1,475 13 1,488
Depreciation, depletion and amortization.... 180 - 180 377 - 377
Taxes other than income..................... 87 - 87 184 - 184
------- ------- ------- ------- ------- -------
1,480 13 1,493 3,342 13 3,355
------- ------- ------- ------- ------- -------
OPERATING INCOME.............................. 120 (13) 107 353 (13) 340
------- ------- ------- ------- ------- -------
OTHER (INCOME) AND DEDUCTIONS
Interest expense............................ 132 - 132 265 - 265
Preferred stock dividends of subsidiaries... 6 - 6 12 - 12
Interest income............................. (7) - (7) (15) - (15)
Other income................................ (18) - (18) (31) - (31)
Other expenses.............................. 18 - 18 51 - 51
------- ------- ------- ------- ------- -------
131 - 131 282 - 282
------- ------- ------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES (11) (13) (24) 71 (13) 58
INCOME TAX EXPENSE (BENEFIT).................. 10 3 13 (16) 3 (13)
------- ------- ------- ------- ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS (21) (16) (37) 87 (16) 71
DISCONTINUED OPERATIONS (ITC).................
Income from operations...................... - - - 5 - 5
Gain on sale................................ (2) - (2) 67 - 67
------- ------- ------- ------- ------- -------
(2) - (2) 72 - 72
------- ------- ------- ------- ------- -------
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Asset retirement obligations................ - - - (11) - (11)
Energy trading activities................... - - - (16) - (16)
------- ------- ------- ------- ------- -------
- - - (27) - (27)
------- ------- ------- ------- ------- -------
NET INCOME (LOSS)............................. $ (23) $ (16) $ (39) $ 132 $ (16) $ 116
======= ======= ======= ======= ======= =======
BASIC EARNINGS (LOSS) PER COMMON SHARE
Continuing operations...................... $ (0.12) $ (0.10) $ (0.22) $ 0.53 $ (0.10) $ 0.43
Discontinued operations.................... (0.01) - (0.01) 0.43 - 0.43
Cumulative effect of accounting changes.... - - - (0.17) - (0.17)
------- ------- ------- ------- ------- -------
$ (0.13) $ (0.10) $ (0.23) $ 0.79 $ (0.10) $ 0.69
======= ======= ======= ======= ======= =======
DILUTED EARNINGS (LOSS) PER COMMON SHARE
Continuing operations...................... $ (0.12) $ (0.10) $ (0.22) $ 0.52 $ (0.10) $ 0.42
Discontinued operations.................... (0.01) - (0.01) 0.43 - 0.43
Cumulative effect of accounting changes.... - - - (0.16) - (0.16)
------- ------- ------- ------- ------- -------
$ (0.13) $ (0.10) $ (0.23) $ 0.79 $ (0.10) $ 0.69
======= ======= ======= ======= ======= =======
3
DTE ENERGY COMPANY
STATEMENT OF FINANCIAL POSITION
AS OF JUNE 30, 2003
Results Form
Released 10-Q
(in Millions) July 28, 2003 Adjustments Results
------------- ----------- -------
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................................. $ 103 $ - $ 103
Restricted cash........................................................... 126 - 126
Accounts receivable
Customer, less allowance for doubtful accounts.......................... 930 - 930
Accrued unbilled revenues............................................... 190 - 190
Other................................................................... 370 - 370
Inventories
Fuel and gas............................................................ 367 - 367
Materials and supplies.................................................. 159 - 159
Assets from risk management and trading activities........................ 349 - 349
Other..................................................................... 114 - 114
--------- ------- ---------
2,708 - 2,708
--------- ------- ---------
INVESTMENTS
Nuclear decommissioning trust funds....................................... 466 - 466
Other..................................................................... 484 - 484
--------- ------- ---------
950 - 950
--------- ------- ---------
PROPERTY
Property, plant and equipment............................................. 17,534 - 17,534
Less accumulated depreciation and depletion............................... (7,856) - (7,856)
--------- ------- ---------
9,678 - 9,678
--------- ------- ---------
OTHER ASSETS
Goodwill.................................................................. 2,086 - 2,086
Regulatory assets......................................................... 2,066 - 2,066
Securitized regulatory assets............................................. 1,571 - 1,571
Assets from risk management and trading activities........................ 247 - 247
Prepaid pension assets.................................................... 177 - 177
Other..................................................................... 539 - 539
--------- ------- ---------
6,686 - 6,686
--------- ------- ---------
TOTAL ASSETS................................................................ $ 20,022 $ - $ 20,022
========= ======= =========
4
DTE ENERGY COMPANY
STATEMENT OF FINANCIAL POSITION
AS OF JUNE 30, 2003
Results Form
Released 10-Q
(in Millions, Except Shares) July 28, 2003 Adjustments Results
------------- ----------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.......................................................... $ 839 $ 13 $ 852
Accrued interest.......................................................... 114 - 114
Dividends payable......................................................... 91 - 91
Accrued payroll........................................................... 41 - 41
Short-term borrowings..................................................... 231 - 231
Current portion of long-term debt, including capital leases............... 744 - 744
Liabilities from risk management and trading activities................... 404 - 404
Other..................................................................... 550 3 553
--------- ------- ---------
3,014 16 3,030
--------- ------- ---------
OTHER LIABILITIES
Deferred income taxes..................................................... 1,154 - 1,154
Regulatory liabilities.................................................... 171 - 171
Asset retirement obligations.............................................. 841 - 841
Unamortized investment tax credit......................................... 162 - 162
Liabilities from risk management and trading activities................... 345 - 345
Liabilities from transportation and storage contracts..................... 497 - 497
Accrued pension liability................................................. 389 - 389
Nuclear decommissioning................................................... 59 - 59
Other..................................................................... 691 - 691
--------- ------- ---------
4,309 - 4,309
--------- ------- ---------
LONG-TERM DEBT
Mortgage bonds, notes and other........................................... 5,671 - 5,671
Securitization bonds...................................................... 1,539 - 1,539
Equity-linked securities.................................................. 188 - 188
Capital lease obligations................................................. 79 - 79
--------- ------- ---------
7,477 - 7,477
--------- ------- ---------
OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARIES HOLDING SOLELY DEBENTURES OF DTE ENERGY OR ENTERPRISES....... 271 - 271
--------- ------- ---------
SHAREHOLDERS' EQUITY
Common stock, without par value, 400,000,000 shares authorized,
168,012,997 shares issued and outstanding.............................. 3,076 - 3,076
Retained earnings......................................................... 2,096 (16) 2,080
Accumulated other comprehensive loss...................................... (221) - (221)
--------- ------- ---------
4,951 (16) 4,935
--------- ------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................................. $ 20,022 $ - $ 20,022
========= ======= =========
5
DTE ENERGY COMPANY
STATEMENT OF OPERATIONS
FORM 10-Q EARNINGS AS COMPARED TO OPERATING EARNINGS
JUNE 30, 2003
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------------- ------------------------------------
Form 10-Q Operating Form 10-Q Operating
Results Adjustments Earnings Results Adjustments Earnings
------- ----------- -------- ------- ----------- --------
(in Millions, Except per Share Data)
(25)A
OPERATING REVENUES.............................. $ 1,600 $ - $ 1,600 $ 3,695 $ 26 B $ 3,696
------- ------- ------- ------- ------- -------
OPERATING EXPENSES
Fuel, purchased power and gas................. 493 - 493 1,306 - 1,306
Operation and maintenance..................... 733 - 733 1,488 (21)C 1,467
Depreciation, depletion and amortization...... 180 - 180 377 - 377
Taxes other than income....................... 87 - 87 184 - 184
------- ------- ------- ------- ------- -------
1,493 - 1,493 3,355 (21) 3,334
------- ------- ------- ------- ------- -------
OPERATING INCOME................................ 107 - 107 340 22 362
------- ------- ------- ------- ------- -------
OTHER (INCOME) AND DEDUCTIONS
Interest expense.............................. 132 - 132 265 - 265
Preferred stock dividends of subsidiaries..... 6 - 6 12 - 12
Interest income............................... (7) - (7) (15) - (15)
Other income.................................. (18) - (18) (31) - (31)
Other expenses................................ 18 - 18 51 (15)D 36
------- ------- ------- ------- ------- -------
131 - 131 282 (15) 267
------- ------- ------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES............... (24) - (24) 58 37 95
12 E
INCOME TAX EXPENSE (BENEFIT).................... 13 107 F (94) (13) 152 F (153)
------- ------- ------- ------- ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS........ (37) 107 70 71 177 248
DISCONTINUED OPERATIONS (ITC)
Income from operations........................ - - - 5 (5)G -
Gain on sale.................................. (2) 2 H - 67 (67)H -
------- ------- ------- ------- ------- -------
(2) 2 - 72 (72) -
------- ------- ------- ------- ------- -------
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
Asset retirement obligations.................. - - - (11) 11 I -
Energy trading activities..................... - - - (16) 16 J -
------- ------- ------- ------- ------- -------
- - - (27) 27 -
------- ------- ------- ------- ------- -------
NET INCOME (LOSS)............................... $ (39) $ 109 $ 70 $ 116 $ 132 $ 248
======= ======= ======= ======= ======= =======
BASIC EARNINGS (LOSS) PER COMMON SHARE
Continuing operations........................ $ (0.22) $ 0.64 $ 0.42 $ 0.43 1.05 $ 1.48
Discontinued operations...................... (0.01) 0.01 - 0.43 (0.43) -
Cumulative effect of accounting changes...... - - - (0.17) 0.17 -
------- ------- ------- ------- ------- -------
$ (0.23) $ 0.65 $ 0.42 $ 0.69 $ 0.79 $ 1.48
======= ======= ======= ======= ======= =======
DILUTED EARNINGS (LOSS) PER COMMON SHARE
Continuing operations........................ $ (0.22) 0.64 $ 0.42 $ 0.42 1.05 $ 1.47
Discontinued operations...................... (0.01) 0.01 - 0.43 (0.43) -
Cumulative effect of accounting changes...... - - - (0.16) 0.16 -
------- ------- ------- ------- ------- -------
$ (0.23) $ 0.65 $ 0.42 $ 0.69 $ 0.78 $ 1.47
======= ======= ======= ======= ======= =======
A) 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
B) Disallowance of gas costs.................... Reserve for the potential disallowance of MichCon 2002 gas procurement costs
C) Loss on sale of steam heating business....... Sold Detroit Edison steam heating business
D) Contribution to DTE Energy Foundation........ Used portion of ITC sale proceeds to fund the DTE Energy Foundation
E) Tax effects of items A, B, C and D...........
F) Tax credit driven normalization.............. Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual
results not impacted
G) Adjust for discontinued operations of ITC.... Sold International Transmission Company
H) Gain on sale of ITC.......................... Sold International Transmission Company
I) Asset retirement obligations................. Cumulative effect of a change in accounting principle from adoption of SFAS 143
J) Adjustment of EITF 98-10 accounting change.... Cumulative effect of a change in accounting principle from rescission of EITF
Issue No. 98-10
6
DTE ENERGY COMPANY
STATEMENT OF OPERATIONS
FORM 10-Q EARNINGS AS COMPARED TO OPERATING EARNINGS
JUNE 30, 2002
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------- ---------------------------------------
Form 10-Q Operating Form 10-Q Operating
Results Adjustments Earnings Results Adjustments Earnings
--------- ----------- --------- ------- ----------- --------
(in Millions, Except per Share Data)
OPERATING REVENUES............................ $ 1,474 $ - $ 1,474 $ 3,368 $ - $ 3,368
------- -------- ------- ------- -------- -------
OPERATING EXPENSES
Fuel, purchased power and gas............... 403 - 403 1,138 - 1,138
Operation and maintenance................... 623 - 623 1,166 - 1,166
Depreciation, depletion and amortization.... 180 - 180 369 - 369
Taxes other than income..................... 81 - 81 174 - 174
------- -------- ------- ------- -------- -------
1,287 - 1,287 2,847 - 2,847
------- -------- ------- ------- -------- -------
OPERATING INCOME.............................. 187 - 187 521 - 521
------- -------- ------- ------- -------- -------
OTHER (INCOME) AND DEDUCTIONS
Interest expense............................ 136 - 136 272 - 272
Preferred stock dividends of subsidiaries... 5 - 5 13 - 13
Interest income............................. (6) - (6) (11) - (11)
Other income................................ (28) - (28) (37) - (37)
Other expenses.............................. 27 - 27 42 - 42
------- -------- ------- ------- -------- -------
134 - 134 279 - 279
------- -------- ------- ------- -------- -------
INCOME BEFORE INCOME TAXES.................... 53 - 53 242 - 242
INCOME TAX BENEFIT............................ (8) 25 A (33) (11) 14 A (25)
------- -------- ------- ------- ------- -------
INCOME FROM CONTINUING OPERATIONS............. 61 25 86 253 14 267
DISCONTINUED OPERATIONS (ITC.................. 7 (7)B - 15 (15)B -
------- -------- ------- ------- ------- -------
NET INCOME.................................... $ 68 $ 18 $ 86 $ 268 $ (1) $ 267
======= ======== ======= ======= ======= =======
BASIC EARNINGS PER COMMON SHARE
Continuing operations...................... $ 0.38 $ 0.15 $ 0.53 $ 1.57 $ 0.08 $ 1.65
Discontinued operations.................... 0.04 (0.04) - 0.09 (0.09) -
------- --------- ------- ------- --------- -------
$ 0.42 $ 0.11 $ 0.53 $ 1.66 $ (0.01) $ 1.65
======= ========= ======= ======= ========= =======
DILUTED EARNINGS PER COMMON SHARE
Continuing operations...................... $ 0.38 $ 0.15 $ 0.53 $ 1.57 $ 0.08 $ 1.65
Discontinued operations.................... 0.04 (0.04) - 0.09 (0.09) -
------- --------- ------- ------- --------- -------
$ 0.42 $ 0.11 $ 0.53 $ 1.66 $ (0.01) $ 1.65
======= ========= ======= ======= ========= =======
A) Tax credit driven normalization............ Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual
results not impacted
B) Adjust for discontinued operations of ITC.. Sold International Transmission Company
7