JACKSON, Mich., May 3 - CMS Energy (NYSE: CMS) announced today a net loss of $27 million, or $0.12 per share, for the first quarter of 2006 compared to net income of $150 million, or $0.74 per share, in the same quarter of 2005.
The Company's adjusted (non-GAAP) results also were a loss of $0.12 per share for the quarter. Adjusted results exclude the effects of asset sales and other items, which were not significant in the first quarter.
The expected reversal of $74 million, or $0.34 per share, of mark-to- market gains recorded in 2005 was the primary factor in the loss. Mark-to- market is a non-cash accounting adjustment that primarily reflects changes in the value of certain natural gas contracts.
The Company's adjusted results for the first quarter of 2006, excluding mark-to-market effects, were net income of $48 million, or $0.22 per share, compared to $73 million, or $0.37 per share in the same period for 2005. The year-over-year drop in the adjusted results, excluding mark-to-market, was caused primarily by lower gas and electric sales due to much warmer weather during the quarter compared to the first quarter of 2005, including the warmest January on record.
CMS Energy maintained its guidance for 2006 adjusted earnings, excluding mark-to-market impacts, of about $1 per share. The Company reiterated that its 2006 reported (GAAP) 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 weather and high natural gas prices have been challenging. However, operating performance continues to be strong, and we continue to make progress on our plan," said David Joos, president and chief executive officer of CMS Energy.
CMS Energy is a Michigan-based company that 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 or GAAP) 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 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-K for the fiscal year ended Dec. 31, 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)
First Quarter
(Unaudited)
2006 2005
Operating Revenue $2,032 $1,845
Earnings from Equity Method Investees 36 31
Operating Expenses 2,076 1,425
Operating Income (Loss) $(8) $451
Other Income (Deductions) 16 24
Fixed Charges 129 136
Income (Loss) before Minority Interests $(121) $339
Minority Interests (Obligations) (68) 113
Income (Loss) before Income Taxes $(53) $226
Income Tax (Benefit) Expense (28) 74
Income (Loss) from Continuing Operations $(25) $152
Gain (Loss) from Discontinued Operations 1 -
Net Income (Loss) $(24) $152
Preferred Dividends 3 2
Net Income (Loss) Available to Common Stock $(27) $150
Earnings (Loss) Per Share
Basic $(0.12) $0.77
Diluted (0.12) 0.74
CMS Energy Corporation
SUMMARIZED COMPARATIVE BALANCE SHEETS
(Millions of Dollars)
March 31 December 31
2006 2005
(Unaudited)
Assets
Cash and cash equivalents $758 $847
Restricted cash 66 198
Other current assets 2,490 2,854
Total current assets $3,314 $3,899
Net plant and property 7,898 7,845
Investments 756 725
Non-current assets 3,582 3,551
Total assets $15,550 $16,020
Stockholders' Investment
and Liabilities
Capitalization
Debt and capital and finance leases (*)
Long-term debt and capital leases
(excluding FIN 46 debt, finance leases $6,392 $6,464
and securitization debt)
FIN 46 debt and finance leases 766 897
Total debt and capital and finance
leases $7,158 $7,361
Preferred stock and securities 305 305
Minority interest 354 333
Common stockholders' equity 2,306 2,322
Total capitalization $10,123 $10,321
Securitization debt 362 370
Current liabilities 1,307 1,668
Non-current liabilities 3,758 3,661
Total Stockholders' Investment and
Liabilities $15,550 $16,020
(*) Current and long-term
CMS Energy Corporation
SUMMARIZED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
First Quarter
(Unaudited)
2006 2005
Beginning of Period Cash $847 $669
Cash provided by operating activities $173 $262
Cash used in investing activities (42) (8)
Cash flow from operating and
investing activities $131 $254
Cash provided by (used in) financing
activities (221) 17
Currency Translation Adjustment 1 -
Total Cash Flow $(89) $271
End of Period Cash $758 $940
CMS Energy Corporation
SUMMARY OF CONSOLIDATED EARNINGS Reconciliations of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income
(Millions, Except Per Share Amounts)
First Quarter
(Unaudited)
2006 2005
Net Income (Loss) Available to Common Stock $(27) $150
Reconciling Items:
Discontinued Operations (Income) Loss (1) -
Net Asset Sales (Gains) Losses and Other 2 (2)
Adjusted Net Income - Non-GAAP Basis,
Including MTM $(26) $148
Mark-to-market (Gains) Losses 74 (75)
Adjusted Net Income - Non-GAAP Basis,
Excluding MTM $48 $73
Average Number of Common Shares Outstanding
Basic 219 195
Diluted 219 206
Basic Earnings Per Average Common Share
Earnings (Loss) Per Share as Reported $(0.12) $0.77
Reconciling Items:
Discontinued Operations (Income) Loss (0.01) -
Net Asset Sales (Gains) Losses and Other 0.01 (0.01)
Adjusted Net Income - Non-GAAP Basis,
Including MTM $(0.12) $0.76
Mark-to-market (Gains) Losses 0.34 (0.39)
Adjusted Net Income - Non-GAAP Basis,
Excluding MTM $0.22 $0.37
Diluted Earnings Per Average Common Share
Earnings (Loss) Per Share as Reported $(0.12) $0.74
Reconciling Items:
Discontinued Operations (Income) Loss (0.01) -
Net Asset Sales (Gains) Losses and Other 0.01 (0.01)
Adjusted Net Income - Non-GAAP Basis,
Including MTM $(0.12) $0.73
Mark-to-market (Gains) Losses 0.34 (0.36)
Adjusted Net Income - Non-GAAP Basis,
Excluding MTM $0.22 $0.37
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.
