[CMS ENERGY LOGO] NEWS RELEASE
CMS ENERGY REPORTS SOLID THIRD QUARTER OPERATING PERFORMANCE;
MIDLAND COGENERATION VENTURE INVESTMENT WRITTEN DOWN
BECAUSE OF HIGH NATURAL GAS PRICES
JACKSON, Mich., Nov. 1, 2005 - CMS Energy (NYSE: CMS) announced today a
reported net loss of $265 million, or $1.21 per share, for the third quarter of
2005, compared to reported net income of $56 million, or $0.34 per share, for
the same quarter of 2004.
The third-quarter loss resulted from a non-cash, after-tax impairment
charge of $385 million, or $1.75 per share, related to CMS Energy's ownership
interest in the Midland Cogeneration Venture (MCV) because of sustained high
natural gas prices.
CMS Energy's adjusted third quarter net income, which excludes the MCV
impairment charge and other items, is $119 million, or $0.54 per share, up from
$18 million, or $0.11 per share, for the same period of 2004. Adjusted third
quarter 2005 net income, without mark-to-market impacts, would be $43 million,
or $0.20 per share, compared to $27 million, or $0.17 per share, for the same
period of 2004.
For the first nine months of 2005, CMS Energy incurred a reported net loss
of $88 million, or $0.42 per share, compared to net income of $63 million, or
$0.38 per share, for the first nine months of 2004.
CMS Energy's adjusted nine-month net income, which excludes the MCV
impairment charge and other items, is $294 million, or $1.39 per share, up from
$110 million, or $0.67 per share for the same period of 2004. Adjusted
nine-month 2005 net income, without mark-to-market impacts, would be $162
million, or $0.77 per share, compared to $106 million, or $0.64 per share, for
the same period of 2004.
With the MCV impairment charge, the Company now projects its full-year
reported results will be a loss of about $0.39 per share. CMS Energy projects
2005 adjusted earnings, which excludes the MCV impairment charge and other
items, at $1.37 per share. CMS Energy said its adjusted 2005 earnings guidance,
without mark-to-market impacts, is $0.95 per share.
The MCV Partnership impaired its fixed assets in September 2005 by
recording a $1.2 billion non-cash charge. After taxes and minority interest, CMS
Energy's portion of that charge was $385 million.
The natural gas-fired MCV facility can produce up to 1,500 megawatts of
electricity and up to 1.35 million pounds per hour of industrial steam. It began
commercial operation in 1990. The MCV Partnership said it expects to incur
losses because its power supply contract doesn't allow for the full recovery of
its natural gas fuel costs at current and forecast prices.
Consumers Energy is the main customer for the MCV's electricity output. CMS
Energy's president and chief executive officer, David Joos, said the MCV
Partnership's actions aren't expected to affect service or reliability for
Consumers Energy's 1.8 million electric customers.
"We're obviously disappointed about the impairment charge on our interest
in the MCV. Unfortunately, this impairment overshadows strong operational
performance in the third quarter, including keeping pace with record electric
demand in Michigan in July and August," Joos said.
CMS Energy is an integrated energy company, which has as its primary
business operations an electric and natural gas utility, natural gas pipeline
systems, and independent power generation.
# # #
CMS Energy provides financial results and earnings guidance on both a reported
(Generally Accepted Accounting Principles) and adjusted (non-GAAP) basis.
Adjusted earnings provide a key measure of the Company's present operating
financial performance, unaffected by discontinued operations, asset sales,
impairments, or other items detailed in the attached summary financial
statements. All per share figures are on a diluted basis.
This news release contains "forward-looking statements" as defined in Rule 3b-6
of the Securities Exchange Act of 1934, as amended, Rule 175 of the Securities
Act of 1933, as amended, and relevant legal decisions. The forward-looking
statements are subject to risks and uncertainties. They should be read in
conjunction with "Forward-Looking Statements and Risk Factors" found in the
Management Discussion and Analysis sections of CMS Energy's and Consumers
Energy's Forms 10-Q for the quarter ended June 30, 2005 (both incorporated
herein by reference), that discuss important factors that could cause CMS
Energy's and Consumers Energy's results to differ materially from those
anticipated in such statements.
For more information on CMS Energy, please visit our web site at:
www.cmsenergy.com
Media Contacts: Jeff Holyfield, 517/788-2394 or Dan Bishop, 517/788-2395
Investment Analyst Contact: CMS Energy Investor Relations, 517/788-2590
CMS Energy Corporation
SUMMARY OF CONSOLIDATED EARNINGS
Condensed Consolidated Income Statements
(Millions, Except Per Share Amounts)
Third Quarter First Nine Months
(Unaudited) (Unaudited)
--------------------------- -----------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Operating Revenue $ 1,335 $ 1,063 $ 4,421 $ 3,910
Earnings from Equity Method Investees 40 18 92 78
Operating Expenses 995 923 3,587 3,412
Asset Impairment Charges 1,184 - 1,184 125
--------- --------- --------- ---------
Operating Income (Loss) $ (804) $ 158 $ (258) $ 451
Other Income (Deductions) 24 61 77 83
Fixed Charges 127 145 396 441
--------- --------- --------- ---------
Income (Loss) before Minority Interests $ (907) $ 74 $ (577) $ 93
Minority Interests (479) 5 (380) 17
--------- --------- --------- ---------
Income (Loss) before Income Taxes $ (428) $ 69 $ (197) $ 76
Income Tax Expense (Benefit) (165) 18 (116) 8
--------- --------- --------- ---------
Income (Loss) from Continuing Operations $ (263) $ 51 $ (81) $ 68
Income from Discontinued Operations - 8 - 6
Cumulative Effect of Accounting Changes - - - (2)
--------- --------- --------- ---------
Net Income (Loss) $ (263) $ 59 $ (81) $ 72
Preferred Dividends 2 3 7 9
--------- --------- --------- ---------
Net Income (Loss) Available to Common Stock $ (265) $ 56 $ (88) $ 63
========= ========= ========= =========
Earnings (Loss) Per Share
Basic $ (1.21) $ 0.35 $ (0.42) $ 0.39
Diluted (1.21) 0.34 (0.42) 0.38
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CMS Energy Corporation
SUMMARIZED COMPARATIVE BALANCE SHEETS
(Millions of Dollars)
Sept 30 December 31
2005 2004
----------- -----------
(Unaudited)
ASSETS
Cash and cash equivalents $ 793 $ 669
Restricted cash 196 56
Short-term investments - 109
Other current assets 2,951 2,165
----------- -----------
Total current assets $ 3,940 $ 2,999
Net plant and property 7,719 8,742
Investments 690 752
Non-current assets 3,766 3,379
----------- -----------
Total assets $ 16,115 $ 15,872
=========== ===========
STOCKHOLDERS' INVESTMENT AND LIABILITIES
Capitalization
Debt and capital and finance leases (*)
Long-term debt and capital leases (excluding $ 6,165 $ 5,960
FIN 46 debt, finance leases and securitization debt)
FIN 46 debt and finance leases 896 1,381
----------- -----------
Total debt and capital and finance leases $ 7,061 $ 7,341
Preferred stock and securities 305 305
Minority interest 396 733
Common stockholders' equity 2,311 2,072
----------- -----------
Total capitalization $ 10,073 $ 10,451
Securitization debt 378 398
Current liabilities 1,727 1,279
Non-current liabilities 3,937 3,744
----------- -----------
Total Stockholders' Investment and Liabilities $ 16,115 $ 15,872
=========== ===========
(*) Current and long-term
CMS Energy Corporation
SUMMARIZED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
YTD
(Unaudited)
-----------------------------
2005 2004
----------- -----------
Beginning of Period Cash $ 669 $ 532
Cash and Cash Equivalents from FIN 46 Implementation $ - $ 174
Cash provided by operating activities $ 604 $ 200
Cash used in investing activities (399) (388)
----------- -----------
Cash flow from operating and investing activities $ 205 $ (188)
Cash used in financing activities (82) (219)
Currency Translation Adjustment 1 -
----------- -----------
Total Cash Flow $ 124 $ (407)
----------- -----------
End of Period Cash $ 793 $ 299
=========== ===========
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CMS Energy Corporation
SUMMARY OF CONSOLIDATED EARNINGS
Reconciliations of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income
(Millions, Except Per Share Amounts)
Third Quarter First Nine Months
(Unaudited) (Unaudited)
--------------------------- -----------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
NET INCOME (LOSS) AVAILABLE TO COMMON STOCK $ (265) $ 56 $ (88) $ 63
Reconciling Items:
Discontinued Operations Income - (8) - (6)
Cumulative Effect of Change in Accounting
for Retirement Benefits - - - 2
Net Asset Sales (Gains) Losses and Other (1) (30) (3) (30)
Asset Impairment 385 - 385 81
--------- --------- --------- ---------
Adjusted Net Income - Non-GAAP Basis $ 119 $ 18 $ 294 $ 110
========= ========= ========= =========
Average Number of Common Shares Outstanding
Basic 220 162 211 161
Diluted - 165 - 165
BASIC EARNINGS PER AVERAGE COMMON SHARE
Earnings (Loss) Per Share as Reported $ (1.21) $ 0.35 $ (0.42) $ 0.39
Reconciling Items:
Discontinued Operations Income - (0.05) - (0.04)
Cumulative Effect of Change in Accounting
for Retirement Benefits - - - 0.01
Net Asset Sales (Gains) Losses and Other - (0.19) (0.02) (0.18)
Asset Impairment 1.75 - 1.83 0.50
--------- --------- --------- ---------
Adjusted Net Income - Non-GAAP Basis (A) $ 0.54 $ 0.11 $ 1.39 $ 0.68
========= ========= ========= =========
DILUTED EARNINGS PER AVERAGE COMMON SHARE
Earnings (Loss) Per Share as Reported $ (1.21) $ 0.34 $ (0.42) $ 0.38
Reconciling Items:
Discontinued Operations Income - (0.05) - (0.03)
Cumulative Effect of Change in Accounting
for Retirement Benefits - - - 0.01
Net Asset Sales (Gains) Losses and Other - (0.18) (0.02) (0.18)
Asset Impairment 1.75 - 1.83 0.49
--------- --------- --------- ---------
Adjusted Net Income - Non-GAAP Basis (A) $ 0.54 $ 0.11 $ 1.39 $ 0.67
========= ========= ========= =========
(A) Adjusted Net Income - Non GAAP per average common share, without the impact
of mark-to-market accounting for the third quarter would be $0.20 for 2005
and $0.17 for 2004. For the first nine months earnings per average common
share would be $0.77 for 2005 and $0.64 for 2004.
Note: Adjusted (non-Generally Accepted Accounting Principles) earnings provide a
key measure of the Company's present operating financial performance,
unaffected by discontinued operations, asset sales, impairments, or other
items detailed in these summary financial statements.
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