JACKSON, Mich., Feb. 23 - CMS Energy (NYSE: CMS) announced today a reported net loss of $94 million, or $0.44 per share, for 2005, compared to reported net income of $110 million, or $0.64 per share, for 2004.
CMS Energy's adjusted 2005 net income, which excludes impairment charges and other items, was $295 million, or $1.39 per share, up from $149 million, or $0.87 per share for 2004. Adjusted 2005 net income without the overall positive impact of "mark-to-market" accounting was $204 million, or $0.96 per share, compared to $154 million, or $0.90 per share, for 2004.
The 2005 reported results include a third-quarter after-tax impairment charge of $385 million, or $1.82 per share, related to CMS Energy's ownership interest in the Midland Cogeneration Venture (MCV). The non-cash charge resulted from the impact of sustained high natural gas prices on MCV's production costs. The 2005 reported results also include a fourth-quarter charge of $26 million, or $0.12 per share, because of revised estimates to complete environmental remediation work associated with the Company's former investment with the Bay Harbor project in northwest Michigan.
For the fourth quarter of 2005, CMS Energy announced a reported net loss of $6 million, or $0.03 per share, compared to reported net income of $47 million, or $0.24 per share, for the same period in 2004. The 2005 quarterly results include an expected reversal of $40 million, or $0.19 per share, in previous mark-to-market gains on long-term natural gas contracts and financial hedges.
Adjusted net income for the fourth quarter of 2005 was $1 million, or less than $0.01 per share, down from $39 million, or $0.20 per share, for the fourth quarter of 2004. Adjusted fourth quarter net income, without mark-to- market impacts, was $41 million, or $0.19 per share, compared to $48 million, or $0.25 per share, for the fourth quarter of 2004.
CMS Energy said its adjusted 2006 earnings guidance, without mark-to- market impacts, is about $1 per share. The Company anticipates its 2006 reported earnings are likely to be substantially lower than its adjusted earnings because of the expected reversal of mark-to-market gains and losses from potential asset sales. CMS Energy isn't providing specific reported earnings guidance because of the uncertainties associated with those factors.
"The non-cash MCV impairment charge overshadows the fact that Consumers Energy and CMS Enterprises turned in strong operational performances in 2005. For example, the utility met record customer demand for electricity in Michigan last summer. Meanwhile, the operational performance of our key CMS Enterprises assets was world-class," said David Joos, president and chief executive officer of CMS Energy.
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 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. Mark- to-market is a non-cash accounting adjustment that primarily reflects changes in the market value of certain natural gas contracts. Earnings guidance is provided on an adjusted basis without mark-to-market impacts.
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 Sept. 30, 2005 (CMS Energy's and Consumers Energy's "Forward-Looking Statements and Risk Factors" sections are 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: http://www.cmsenergy.com
CMS Energy Corporation
SUMMARY OF CONSOLIDATED EARNINGS
Condensed Consolidated Income Statements
(Millions, Except Per Share Amounts)
Fourth Quarter
(Unaudited) Twelve Months
2005 2004 2005 2004
Operating Revenue $1,906 $1,562 $6,288 $5,472
Earnings from Equity Method
Investees 33 37 125 115
Operating Expenses 1,955 1,422 5,503 4,834
Asset Impairment Charges - 35 1,184 160
Operating Income (Loss) $(16) $142 $(274) $593
Other Income (Deductions) (20) 95 57 178
Fixed Charges 93 193 489 634
Income (Loss) before Minority
Interests $(129) $44 $(706) $137
Minority Interests (60) (2) (440) 15
Income (Loss) before Income Taxes $(69) $46 $(266) $122
Income Tax (Benefit) Expense (52) (13) (168) (5)
Income (Loss) from Continuing
Operations $(17) $59 $(98) $127
Gain (Loss) from Discontinued
Operations 14 (10) 14 (4)
Cumulative Effect of Accounting
Changes - - - (2)
Net Income (Loss) $(3) $49 $(84) $121
Preferred Dividends 3 2 10 11
Net Income (Loss) Available to
Common Stock $(6) $47 $(94) $110
Earnings (Loss) Per Share
Basic $(0.03) $0.25 $(0.44) $0.65
Diluted (0.03) 0.24 (0.44) 0.64
CMS Energy Corporation
SUMMARIZED COMPARATIVE BALANCE SHEETS
(Millions of Dollars)
December 31 December 31
2005 2004
Assets
Cash and cash equivalents $847 $669
Restricted cash 198 56
Short-term investments - 109
Other current assets 2,854 2,165
Total current assets $3,899 $2,999
Net plant and property 7,845 8,742
Investments 725 752
Non-current assets 3,551 3,379
Total assets $16,020 $15,872
Stockholders' Investment
and Liabilities
Capitalization
Debt and capital and finance leases (*)
Long-term debt and capital
leases (excluding FIN 46 debt, finance
leases and securitization debt) $6,464 $5,960
FIN 46 debt and finance leases 897 1,381
Total debt and capital and finance leases $7,361 $7,341
Preferred stock and securities 305 305
Minority interest 333 733
Common stockholders' equity 2,322 2,072
Total capitalization $10,321 $10,451
Securitization debt 370 398
Current liabilities 1,668 1,279
Non-current liabilities 3,661 3,744
Total Stockholders' Investment and
Liabilities $16,020 $15,872
(*) Current and long-term
CMS Energy Corporation
SUMMARIZED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
Twelve Months
2005 2004
Beginning of Period Cash $669 $532
Cash and Cash Equivalents from FIN 46
Implementation $ - $174
Cash provided by operating activities $646 $398
Cash used in investing activities (541) (392)
Cash flow from operating and
investing activities $105 $6
Cash provided by (used in)
financing activities 74 (43)
Currency Translation Adjustment (1) -
Total Cash Flow $178 $(37)
End of Period Cash $847 $669
CMS Energy Corporation
SUMMARY OF CONSOLIDATED EARNINGS Reconciliations of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income
(Millions, Except Per Share Amounts)
Fourth Quarter
(Unaudited) Twelve Months
2005 2004 2005 2004
Net Income (Loss) Available to Common
Stock $(6) $47 $(94) $110
Reconciling Items:
Discontinued Operations (Income)
Loss (14) 10 (14) 4
Cumulative Effect of Change in
Accounting for Retirement Benefits - - - 2
Net Asset Sales (Gains) Losses and
Other 21 26 18 (4)
Asset Impairment - 23 385 104
Regulatory (Gains) from Prior Years - (67) - (67)
Adjusted Net Income - Non-GAAP Basis,
Including MTM $1 $39 $295 $149
Mark-to-market (Gains) Losses 40 9 (91) 5
Adjusted Net Income - Non-GAAP Basis,
Excluding MTM $41 $48 $204 $154
Average Number of Common Shares Outstanding
Basic 219 190 212 169
Diluted 219 194 212 172
Basic Earnings Per Average Common Share
Earnings (Loss) Per Share as Reported $(0.03) $0.25 $(0.44) $0.65
Reconciling Items:
Discontinued Operations (Income)
Loss (0.06) 0.05 (0.07) 0.02
Cumulative Effect of Change in
Accounting for Retirement Benefits - - - 0.01
Net Asset Sales (Gains) Losses
and Other 0.09 0.14 0.08 (0.01)
Asset Impairment - 0.12 1.82 0.62
Regulatory (Gains) from Prior Years - (0.35) - (0.40)
Adjusted Net Income - Non-GAAP Basis,
Including MTM $ - $0.21 $1.39 $0.89
Mark-to-market (Gains) Losses 0.19 0.05 (0.43) 0.03
Adjusted Net Income - Non-GAAP Basis,
Excluding MTM $0.19 $0.26 $0.96 $0.92
Diluted Earnings Per Average Common Share
Earnings (Loss) Per Share as Reported $(0.03) $0.24 $(0.44) $0.64
Reconciling Items:
Discontinued Operations (Income)
Loss (0.06) 0.05 (0.07) 0.02
Cumulative Effect of Change in
Accounting for Retirement Benefits - - - 0.01
Net Asset Sales (Gains) Losses and
Other 0.09 0.14 0.08 (0.01)
Asset Impairment - 0.12 1.82 0.60
Regulatory (Gains) from Prior Years - (0.35) - (0.39)
Adjusted Net Income - Non-GAAP Basis,
Including MTM $ - $0.20 $1.39 $0.87
Mark-to-market (Gains) Losses 0.19 0.05 (0.43) 0.03
Adjusted Net Income - Non-GAAP Basis,
Excluding MTM $0.19 $0.25 $0.96 $0.90
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. Mark-to-market is a non-cash accounting adjustment that primarily reflects changes in the value of certain natural gas contracts.
