-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BEneDgfCy8E77N+JGzDlVlQP7qtz+KbyO8Dz+v8KaD6Vwa9k9DXHEQTA9rLW3Gh+ aJ9pCG3qHzWjnmCeRDQ/Yw== /in/edgar/work/20001101/0000950124-00-006377/0000950124-00-006377.txt : 20001106 0000950124-00-006377.hdr.sgml : 20001106 ACCESSION NUMBER: 0000950124-00-006377 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001025 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CMS ENERGY CORP CENTRAL INDEX KEY: 0000811156 STANDARD INDUSTRIAL CLASSIFICATION: [4931 ] IRS NUMBER: 382726431 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09513 FILM NUMBER: 751291 BUSINESS ADDRESS: STREET 1: FAIRLANE PLZ S STE 1100 STREET 2: 330 TOWN CENTER DR CITY: DEARBORN STATE: MI ZIP: 48126 BUSINESS PHONE: 3134369261 MAIL ADDRESS: STREET 1: FAIRLANE PLAZA SOUTH, SUITE 1100 STREET 2: 330 TOWN CENTER DRIVE CITY: DEARBORN STATE: MI ZIP: 48126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSUMERS ENERGY CO CENTRAL INDEX KEY: 0000201533 STANDARD INDUSTRIAL CLASSIFICATION: [4931 ] IRS NUMBER: 380442310 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-05611 FILM NUMBER: 751292 BUSINESS ADDRESS: STREET 1: 212 W MICHIGAN AVE CITY: JACKSON STATE: MI ZIP: 49201 BUSINESS PHONE: 5177881030 MAIL ADDRESS: STREET 1: 212 W MICHIGAN AVE STREET 2: M 946 CITY: JACKSON STATE: MI ZIP: 49201 FORMER COMPANY: FORMER CONFORMED NAME: CONSUMERS POWER CO DATE OF NAME CHANGE: 19920703 8-K 1 k58189e8-k.txt CURRENT REPORT 1 ================================================================================ FORM 8-K CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) OCTOBER 25, 2000 COMMISSION REGISTRANT; STATE OF INCORPORATION; IRS EMPLOYER FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO - ----------- ----------------------------------- ------------------ 1-9513 CMS ENERGY CORPORATION 38-2726431 (A MICHIGAN CORPORATION) FAIRLANE PLAZA SOUTH, SUITE 1100 330 TOWN CENTER DRIVE DEARBORN, MICHIGAN 48126 (313) 436-9261 1-5611 CONSUMERS ENERGY COMPANY 38-0442310 (A MICHIGAN CORPORATION) 212 WEST MICHIGAN AVENUE JACKSON, MICHIGAN (517) 788-1030 ================================================================================ 2 ITEM 5. OTHER EVENTS. On October 25, 2000, CMS Energy Corporation issued a press release announcing that the Michigan Public Service Commission (MPSC) issued orders relating to Consumers Energy Company, CMS Energy's utility subsidiary, authorizing securitization, expanding the gas customer choice program, and authorizing certain accounting changes. Securitization Order - Under the provisions of the securitization law passed as a part of the "Customer Choice and Electricity Reliability Act", Consumers filed an application seeking a financing order from the MPSC, and a supplement to the application, in July 2000, to begin the securitization process. The MPSC issued a financing order on October 24, 2000 authorizing securitization of approximately $470 million in qualified costs (primarily electric utility stranded costs) plus the expenses of the securitization. Approximately $50 million of the annual costs saving effects of securitization will offset, prospectively, the earnings impact of the 5% residential rate reduction required by the Customer Choice and Electricity Reliability Act. This portion of the cost savings will commence when Consumers' submits a written acceptance of the securitization order. The order requires Consumers to apply the remaining cost savings to the reduction of certain charges for nonresidential and retail open access customers. The MPSC allowed prospective recovery only of the 5% residential rate reduction's effect. Consumers estimates that the disallowed portion of revenue recovery relating to the year 2000 5% residential rate reduction may reduce CMS Energy's earnings by approximately $.13 per share in 2000. Consumers will recover the expenses relating to the issuance of the bonds through a securitization charge and a tax charge. These charges are subject to an annual true-up until one year prior to the last expected maturity date of the securitization bonds, and no more than quarterly thereafter. The MPSC's order will not increase current electric rates for any of Consumers' tariff customers. Consumers anticipates that it will accept the MPSC's securitization order and issue securitization bonds at the earliest by the end of the year 2000. As with other significant MPSC orders, the financing order is subject to appeal by any party. During the appeal, the suspension of amortization of the approved regulatory asset would cease, effective January 1, 2001, and would be reestablished based on a schedule that is the same as the recovery of the principal amounts of the securitized qualified costs. Ultimately, sale of securitization bonds will be required for the full rate reduction offset to continue over the term of the bonds. Gas Accounting Order - In December 1997, the MPSC approved Consumers' application to implement a gas customer choice pilot program. The program was designed to encourage Consumers to minimize its purchased natural gas commodity costs while providing rate stability for its customers. This pilot program became effective on April 1, 1998. The pilot program ends on March 31, 2001. This three-year pilot program, among other things, freezes gas distribution rates at a delivered gas commodity price of $2.84 per Mcf through March 31, 2001. Recent significant increases in gas prices exposed Consumers to gas commodity losses during the last year of the program. Consumers recorded a regulatory liability of $45 million in the second quarter 2000 to reflect estimated losses due to such increases in natural gas commodity prices. On October 24, 2000, the MPSC approved Consumers' application to reclassify recoverable, low-cost, base gas in Consumers' gas storage reservoirs. The MPSC allowed Consumers to begin immediately to include the cost of its recoverable base gas with higher cost purchased gas. The gas accounting order is expected to eliminate the need for Consumers to recognize any further losses related to gas commodity cost under-recoveries. Gas Customer Choice Order - On October 13, 2000 and October 24, 2000, the MPSC issued orders that adopted terms and conditions for providing permanent gas customer choice programs for residential and commercial customers in Michigan. The orders allow the expansion and extension of 3 Consumers' voluntary gas customer choice pilot program scheduled to end on March 31, 2001. After that time, Consumers will no longer be subject to a frozen gas commodity cost. Consumers will then return to a gas cost recovery mechanism such that it will recover all prudently incurred natural gas commodity costs from its customers. Under the permanent gas customer choice program, up to 600,000 of Consumers' natural gas customers will be eligible to participate in the program beginning April 1, 2001. By April 1, 2002, 900,000 gas customers will be eligible to participate. All of Consumers' gas customers will be eligible to select an alternate natural gas supplier beginning April 1, 2003. Consumers will continue to transport and distribute gas to all customers. On October 25, 2000, CMS Energy announced third quarter earnings of 51 cents per share, compared to 78 cents per share earned in the third quarter of 1999. Consolidated net income was $55 million compared to $83 million in the third quarter of 1999. As a result of the securitization order discussed above, the MPSC allowed prospective recovery only of the 5% residential rate reduction on a prospective basis. Consumers estimates that the disallowed portion of revenue recovery relating to the year 2000 5% residential rate reduction may reduce CMS Energy's earnings by approximately $.13 per share in 2000. Therefore, CMS Energy currently estimates year 2000 earnings at $2.37, confirms its year 2001 earnings estimate at $2.75 and confirms its estimated 10% growth rate thereafter. In connection with its previously announced financial plan to strengthen its balance sheet, CMS Energy issued 11 million shares of common stock and intends to execute an initial public offering (IPO) of up to 49% of its ownership in its oil and gas exploration and production subsidiary in the first quarter of 2001 to raise approximately $800 million of cash and generate about $450 million of equity. CMS Energy believes such actions will result in an interest coverage ratio (calculated by dividing earnings before interest and taxes, depreciation and amortization (EBITDA) by interest) of approximately 3.3x in 2001. CMS Energy also believes that such actions will result in a net debt to total capitalization percentage of approximately 63% in 2001. While there is no assurance that this forecasted level of earnings and growth will be achieved, this guidance and growth assumes, among other things, the execution of the announced oil and gas exploration and production subsidiary IPO discussed above, normal weather conditions, the absence of further earnings losses due to the 5% residential rate reduction discussed above and the gas distribution commodity losses discussed above, divestiture of non-performing assets, new power plants becoming operational, new oil and gas production with improved pricing, growth in liquefied natural gas cargoes and margins, return to a gas cost recovery mechanism as discussed above and increased demand for pipeline transportation. This guidance and growth also assumes, among other things, higher purchased power costs caused by the lapse of the sale of power by Consumers from the Midland Cogeneration Venture Partnership power purchase agreement to PECO Energy Company, higher gas fuel costs for the independent power production business, lower income due to the absence of earnings from the assets sold under the asset sale program, lower total fixed charges, also due to asset sales and equity financing, and a 10 million share increase in the average number of shares outstanding. In February 2000, CMS Energy announced its intention to sell its 50% interest in Loy Yang A, a 2000 megawatt power plant and associated coal mine in Victoria, Australia. The amount CMS Energy ultimately realizes from the sale of Loy Yang A could differ materially from the approximately $500 million investment amount currently reflected as an asset on the balance sheet. CMS Energy, however, continues to evaluate various financial and accounting alternatives for Loy Yang A by year-end, including continuing the sale process. This document and the attached press releases contain "forward-looking statements" that are subject to risks and uncertainties. The words "anticipates", "believes", "estimates", "expects", "intends", and "plans", and variations of such words and similar expressions, are intended to identify forward looking statements. 4 They should be read in conjunction with "Forward-Looking Statements Cautionary Factors" in CMS Energy's and Consumers' Form 10-K, Item 1 (incorporated by reference herein) that discusses important factors that could cause CMS Energy's and Consumers' results to differ materially from those anticipated in such statements. CMS Energy's presentation used in an October 26, 2000 conference call to discuss third quarter results is available on the Internet at www.cmsenergy.com. ITEM 7. EXHIBITS. (c) Exhibits: 99(a)-CMS Energy Slide Presentation at the 35th EEI Financial Conference, October 30-31, 2000 99(b)-CMS Energy Major Earnings Variance Analysis. 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized. CMS ENERGY CORPORATION Dated: November 1, 2000 By: /s/ Alan M. Wright ------------------------------ Alan M. Wright Senior Vice President and Chief Financial Officer CONSUMERS ENERGY COMPANY Dated: November 1, 2000 By: /s/ Alan M. Wright ------------------------------ Alan M. Wright Senior Vice President and Chief Financial Officer 6 INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION (c) Exhibits: 99(a)- CMS Energy Slide Presentation at the 35th EEI Financial Conference, October 31, 2000. 99(b)- CMS Energy Major Variance Analysis. EX-99.A 2 k58189ex99-a.txt CMS ENERGY SLIDE PRESENTATION 1 EXHIBIT 99(a) [CMS ENERGY LOGO] 35TH EEI FINANCIAL CONFERENCE OCTOBER 31, 2000 2 [CMS ENERGY LOGO] INVESTMENT CONSIDERATIONS - - LEADING REGIONAL DIVERSIFIED ENERGY COMPANY - - SUBSTANTIAL BASE OF STRATEGICALLY LOCATED U.S. ASSETS IN CENTRAL STATES CORRIDOR - - ELECTRIC RESTRUCTURING COMPLETED WITH FULL RECOVERY OF STRANDED COSTS, SECURITIZATION AND NO DIVESTITURE - - INTERNATIONAL PROGRAM FOCUSED ON SELECT HIGH GROWTH MARKETS - - CONTINUING STEPS TO IMPROVE CREDIT PROFILE AND MAXIMIZE SHAREHOLDER VALUE -- Ongoing asset portfolio management program -- Improving balance sheet through sales of common stock - - EPS GROWTH TARGET OF 10% PER YEAR 1 3 [CMS ENERGY LOGO] COMPANY OVERVIEW* - TOTAL ASSETS $14.0 BILLION - TOTAL PTOI $1.0 BILLION Utility Pipeline/Midstream Diversified Energy - ASSETS $6.5 B - ASSETS $3.6 B - ASSETS $3.9 B - PTOI $500 MM - PTOI $210 MM - PTOI $290 MM CONSUMERS ELECTRIC GAS TRANSMISSION INDEPENDENT POWER PRODUCTION CONSUMERS GAS PANHANDLE OIL & GAS EXPLORATION & PRODUCTION FIELD SERVICES ENERGY MARKETING, SERVICES & TRADING INTERNATIONAL *ESTIMATED FOR YEAR END 2000 ENERGY DISTRIBUTION 2 4 [CMS ENERGY LOGO] KEY STRENGTHS 3.2 MILLION U.S. ELECTRIC AND GAS UTILITY CUSTOMERS + (10,800 MW NET GENERATION; 1,600 MW PROJECT PIPELINE) + (10,000 MILES INTERSTATE GAS PIPELINE; 220 BCF STORAGE) + (LARGEST OPERATING U.S. LNG FACILITY) + (E&P -1,490 BCFE RESERVES; 73 BCFE PRODUCTION) + (TRADING AND MARKETING) + (STRONG FOCUSED INTERNATIONAL PRESENCE) + (SIGNIFICANT EMPLOYEE STOCK OWNERSHIP) 3 5 [CMS ENERGY LOGO] STRATEGY FOR THE FUTURE - - PRIMARY FOCUS IS BUILDING REGIONAL INTEGRATED ENERGY BUSINESSES IN THE U.S. AND SELECT WORLD GROWTH MARKETS WHERE CMS HAS BEEN SUCCESSFUL AND CURRENTLY HAS A SIGNIFICANT COMPETITIVE POSITION -- More geographic focus -- Limited merchant power risk -- More disciplined investment process -- Divestment of assets outside focus areas - - STRONG EMPHASIS ON IMPROVING ROAS -- Efficiency improvements -- Higher asset utilization from marketing business - - EXECUTION OF: -- Asset portfolio management program -- Credit enhancement activities 4 6 [CMS ENERGY LOGO] U.S. ENERGY STATUS - - STRONG ENERGY COMMODITY PRICING - - THIN ELECTRIC RESERVE MARGINS AND GAS SUPPLY - - LIMITED INTERSTATE ELECTRIC TRANSMISSION CAPABILITY - - INCREASING DEMAND FOR FIRM PIPELINE TRANSPORTATION CONTRACTS 5 7 [CMS ENERGY LOGO] U.S. ENERGY ASSETS [MAP] CMS IS PURSUING A GAS DRIVEN INTEGRATED VALUE CHAIN STRATEGY FOCUSED ON EXTRACTING MAXIMUM VALUE FROM ITS EXISTING AND EXPANDED ASSET BASE 6 8 [CMS ENERGY LOGO] U.S. GROWTH STRATEGIES - - EFFECTIVELY IMPLEMENT MICHIGAN ELECTRIC UTILITY RESTRUCTURING LEGISLATION AND GAS UTILITY CUSTOMER CHOICE PROGRAM - - LEVERAGE GAS PIPELINE BUSINESS FOR GROWTH OPPORTUNITIES ACROSS CMS BUSINESSES - - AGGRESSIVELY DEVELOP WEST TEXAS AND POWDER RIVER GAS RESERVES IN HIGHER GAS PRICE ENVIRONMENT - - EXPAND RANGE OF CUSTOMER-RELATED SERVICES -- Leverage 3.2 million customer base into new business opportunities - - GROW MARKETING, SERVICES AND TRADING ACTIVITIES TO OPTIMIZE AND LEVERAGE U.S. GAS AND ELECTRIC ASSETS 7 9 [CMS ENERGY LOGO] EFFECTIVELY IMPLEMENT MICHIGAN ELECTRIC RESTRUCTURING LEGISLATION - - MANAGE COSTS AND RISKS DURING RATE FREEZE/CAP PERIOD -- 5% residential rate reduction implemented June 2000 -- Rate freeze through 2003; residential rate cap through 2005 - - COLLECT FULL RECOVERY OF STRANDED COSTS - - SECURITIZE $469 MILLION OF QUALIFIED COSTS -- MPSC Order received October 24, 2000 -- Provides offset to residential rate reduction on a prospective basis - - IMPLEMENT CUSTOMER CHOICE SMOOTHLY -- Full customer choice in 2002 8 10 [CMS ENERGY LOGO] EXPANDED GAS CUSTOMER CHOICE PROGRAM - - MPSC ORDERS ISSUED OCTOBER 13 AND 24 -- Phase-in of customer choice --- 600,000 customers eligible beginning April 1, 2001 --- 900,000 customers eligible by April 1, 2002 --- All customers eligible beginning April 1, 2003 -- Gas cost recovery returns to regulated pass-through of commodity costs -- Forum to review further service unbundling - - APPROVAL GRANTED FOR REQUESTED BASE GAS ACCOUNTING RECLASSIFICATION -- Mitigates effect of higher gas commodity prices -- Eliminates need to recognize any further losses related to gas commodity cost under-recoveries 9 11 [CMS ENERGY LOGO] LEVERAGE GAS PIPELINE - NEW GENERATION MARKETS - -- 4,260 MW (630 MMcf/d or 11%) of power plant load already committed to Panhandle and Trunkline as of June 2000 [MAP] - -- Continue to expand CMS IPP business in selected markets in the Central Corridor 10 12 [CMS ENERGY LOGO] LEVERAGE GAS PIPELINE - MIDWEST MARKET EXPANSION Guardian Pipeline [MAP] - -- Wisconsin Gas has signed a 10-year, 650MMcf/d contract Centennial Pipeline - -- Continue to market capacity -- Convert 720-miles of Trunkline to a refined - -- Favorable FERC preliminary petroleum products decision-certificate pipeline extending from expected by January 2001 the U.S. Gulf Coast to Illinois - -- In-Service-November 2002 -- Build 70-mile connection from Beaumont, Texas to Longville, Louisiana -- Develop two million barrel storage terminal in Illinois -- FERC proceedings on course for January 2002 operation 11 13 [CMS ENERGY LOGO] LEVERAGE GAS PIPELINE - ACCESSING NEW LNG SOURCES - -- At forecasted U.S. gas prices, LNG imports will increase into U.S. - -- Planned Atlantic Basin liquefaction projects [GRAPH] provide adequate LNG supply - -- Lake Charles provides valuable gateway for long- term LNG imports 12 14 [CMS ENERGY LOGO] LEVERAGE GAS PIPELINE - ACCESSING NEW SUPPLY SOURCES - -- Strategic offshore pipeline systems in the Gulf of Mexico - -- 900 Miles of gas and condensate [MAP] pipelines - -- Combined capacity 2.5 Bcf/d - -- Access to new supply sources 13 15 [CMS ENERGY LOGO] AGGRESSIVELY DEVELOP U.S. GAS RESERVES Wyoming -Powder River - -- MAXIMIZE CMS Basin (51% W.I.) RESOURCES VIA EXPLORATION AND -- Drilled 137 wells in 1999; PRODUCTION, [MAP] 530 wells in 2000 INFRASTRUCTURE DEVELOPMENT -- Potential net reserves of AND MARKETING 67 Bcf OPPORTUNITIES -- Increase annual net gas production from less than 1 Bcf in 1999 to 1.6 Bcf in 2000 -- Increase throughput on Fort Union and Bighorn gas gathering pipelines WEST TEXAS-DEVONIAN AND SPRABERRY (90%-100% W.I.) - -- Secured additional 37,000 undeveloped leasehold acres - -- Potential net reserves of 600 Bcf - -- Drilled 15 wells in 1999; 37 wells in 2000 - -- Increase annual net production from less than 1 Bcf of gas and 47 MBbl of oil in 1999 to 4 Bcf and 340 MBbl in 2000 14 16 [CMS ENERGY LOGO] INTERNATIONAL GROWTH - EXPLOIT SOUTH AMERICAN OIL RESERVES COLOMBIA-ABANICO FIELD [MAP] (100% W.I.) - -- First two wells tested at a combined rate of 581 Bopd, currently completing third well - -- Gross reserve estimates range from 10 to 50 MMBbl VENEZUELA-LAPALMA FIELD - -- Waiting on governmental permits to (43.75% W. I.) begin production -- First two wells producing at a combined rate of 3,887 Bopd -- Gross reserve estimates range from 40 to 150 MMBbl -- Presently shooting 3-D seismic to define development drilling program 15 17 [CMS ENERGY LOGO] INTERNATIONAL GROWTH - MIDDLE EAST STRATEGY - -- Build off Jorf Lasfar and Al Taweelah success by focusing on power generation [MAP] and desalination as market entry platform in Gulf region privatizations - 826 Net MW in operation - 163 Net MW under construction - 50 MIGD water desalination under development 16 18 [CMS ENERGY LOGO] INTERNATIONAL GROWTH - INDIA STRATEGY - -- Develop gas infrastructure in Southeast India to support generation asset growth [MAP] - - 157 Net MW in operation - - 125 Net MW under construction - - 490 Net MW and 2.5 million tonne/year LNG under development 17 19 [CMS ENERGY LOGO] STRONG BUSINESS AND FINANCIAL PROFILE - -- CMS ENERGY IS COMPOSED OF SOLID, GROWING AND PROFITABLE BUSINESSES - OPERATIONAL GROWTH ACROSS THE VALUE CHAIN - REVENUE GROWTH - STRONG CASH FLOW - IMPROVING CREDIT PROFILE - SIGNIFICANT POST 2000 EARNINGS GROWTH POTENTIAL 18 20 [CMS ENERGY LOGO] CONTINUE ASSET PORTFOLIO MANAGEMENT PROGRAM
Cash Add'l Debt Proceeds Reduction(*) Total ----------- -------------- ---------- Completed/Announced Sales Bighorn Gathering System $ 65 CFLCL Brazil Distribution 143 Northern Michigan Oil & Gas 164 New Jersey Power Plant, Securities Sold and Other 203 182 Ecuador Oil & Gas 96 - ------------------------------------------------------------------------------------------------------- Total Completed/Announced $671 $182 $853 - ------------------------------------------------------------------------------------------------------- Likely New Sales Additional Assets in Australia, Jamaica, Philippines and Other Areas - ------------------------------------------------------------------------------------------------------- Total Additional/New Sales $347 $200 $547 - ------------------------------------------------------------------------------------------------------- Total Asset Sales $1,018 $382 $1,400 - ------------------------------------------------------------------------------------------------------- Identified Alternative Assets $500 - -------------------------------------------------------------------------------------------------------
* Project debt consolidated on CMS balance sheet 19 21 [CMS ENERGY LOGO] IMPROVING CREDIT PROFILE - COMMON STOCK ISSUANCE - -- CMS ENERGY COMMON STOCK OFFERING ON OCTOBER 17 OF 11 MILLION SHARES (APPROXIMATELY $305 MILLION) - Proceeds used to reduce debt - -- IPO OF CMS OIL & Gas will raise approximately $500 million - Favorable environment to monetize ownership - Sale of up to 50% - Proceeds will be used to reduce debt - Expect to complete in Q1 2001 - -- EQUITY OFFERINGS SIGNIFICANTLY IMPROVE CMS ENERGY CREDIT PROFILE - EBITDA/Interest coverage of approximately 3.3x in 2001 - Net Debt/Total Capitalization of approximately 63% in 2001 - -- LIMITED EXECUTION RISK - No MPSC or FERC approval necessary 20 22 [CMS ENERGY LOGO] Major Drivers For Earnings Growth -- Divestiture of non-performing assets -- Five major new power plants in next 24 months -- New oil and gas production in Texas, Wyoming, S. America, W. Africa with improved pricing -- Growth in LNG cargoes and margins -- New gathering, storage and pipeline volumes and margins -- Expanded marketing activity to optimize value of U.S. asset base 21 23 [CMS ENERGY LOGO]
2000E 2005E ----- ----- UTILITY 49% UTILITY 39% DIVERSIFIED ENERGY - DOMESTIC 19% DIVERSIFIED ENERGY - DOMESTIC 20% PIPELINE/MIDSTREAM 21% PIPELINE/MIDSTREAM 24% DIVERSIFIED ENERGY - INTERNATIONAL 11% DIVERSIFIED ENERGY - INTERNATIONAL 17%
22 24 [CMS ENERGY LOGO] INVESTMENT CONSIDERATIONS -- Leading regional diversified energy company -- Substantial base of strategically located U.S. assets in Central states corridor -- Electric restructuring completed with full recovery of stranded costs, securitization and no divestiture -- International program focused on select high growth markets -- Continuing steps to improve credit profile and maximize shareholder value - Ongoing asset portfolio management program - Improving balance sheet through sales of common stock -- EPS growth target of 10% per year 23 25 This document contains "forward-looking statements" within the meaning of the safe-harbor provisions of the federal securities laws. These forward-looking statements are subject to various factors which could cause our actual results to differ materially from those anticipated in such statements. Please refer to the various assumptions, risks and uncertainties discussed in our SEC filings. The Company undertakes no obligation to update or revise any forward-looking statements. 26 [CMS ENERGY LOGO] MAJOR NEW INVESTMENTS/DEVELOPMENT PROJECTS
Est. Total CMS Acquisition/ - ------------------------------------------------------- Project Cost Ownership In-Service Project Country $MM % Date ------- ------- ------------ --------- ------------ Sea Robin Pipeline United States 72 100% 1Q00 1 Bef/d Takoradi T2 (Stage 1) Ghana 58 90% 1Q00 112 MW gas Jorf Lasfar II Morocco 375 50% 2Q00 348 MW coal TGM Pipeline Brazil 150 20% 2Q00 425 MMcf/d Big Horn Pipeline Extension United States 19 51% 2Q00 33 miles: 225 MMcf/d Al Taweelah A2 UAE 414 40% 3Q00 370 MW gas Takoradi T2 (Stage 2a) Ghana 58 90% 3Q00 112 MW gas Jorf Lasfar II Morocco 375 50% 4Q00 348 MW coal Big Horn Pipeline Extension United States NA 51% 4Q00 55 miles; 225 Mcf/d
25 27 [CMS ENERGY LOGO] MAJOR NEW INVESTMENTS/DEVELOPMENT PROJECTS (cont'd)
Est. Total CMS Acquisition/ Project Cost Ownership In-Service Project Country $MM % Date ------- ------------- ------------ --------- ------------ Dearborn Industrial Generation III United States 335 100% 2001 550 MW gas AMPCO Methanol Equatorial 2.500 metric tons/day Guinea 400 54% 2001 Al Taweelah A2 United Arab 407 MW gas and Emirates 326 40% 2001 50 MMIG/d water
26 28 [CMS ENERGY LOGO] MAJOR NEW INVESTMENTS/DEVELOPMENT PROJECTS (cont'd)
Est. Total CMS Acquisition/ - ---------------------------------------------------Project Cost Ownership In-Service Project Country $MM % Date ------- ------- ------------ --------- ------------ Centennial Pipeline United States NA 33% 2002 800 miles; 2 MMBbl storage terminal Guardian Pipeline United States 230 33% 2002 750 MMcf/day Neyveli 250 MW coal India 325 50% 2002 TakoradiT2 (Stage 2b) 112 MW gas Ghana 78 90% 2003 TIDCO 1,886 MW LNG 2.5 MM tonnes/year LNG India 1,500 26% 2003 Total: $4.8 Billion Net CMS Ownership: $2.2 Billion
27 EX-99.B 3 k58189ex99-b.txt CMS ENERGY MAJOR VARIANCE ANALYSIS 1 EXHIBIT 99(b) CMS ENERGY CONSOLIDATED SUMMARY EARNINGS ANALYSIS IN MILLIONS, EXCEPT EPS (UNAUDITED - PRELIMINARY AND FOR DISCUSSION ONLY)
- ------------------------------------------------------------------------------------------------------------------------------------ VARIANCE ------------------------------ QUARTERS ENDED - SEPTEMBER 30, 2000 1999 DOLLARS PERCENT - ------------------------------------------------------------------------------------------------------------------------------------ PRETAX OPERATING INCOME (LOSS) Consumers Electric $118.5 $168.4 ($49.9) (30) Consumers Gas 8.9 (6.2) 15.1 244 Natural Gas Transmission 47.7 46.0 1.7 4 Independent Power Production 50.0 52.5 (2.5) (5) Oil & Gas Exploration & Production 13.0 4.3 8.7 202 Marketing, Services & Trading (2.5) 0.1 (2.6) (2600) International Energy Distribution 7.3 (1.1) 8.4 764 Other 4.5 9.7 (5.2) (54) --------- ----------- ------------- Total 247.4 273.7 (26.3) (10) Other Income (Deductions) 4.4 (3.3) 7.7 233 Fixed Charges 175.2 162.8 12.4 8 Income Taxes 19.9 24.8 (4.9) (20) Minority Interest 1.2 (0.1) 1.3 1300 --------- ----------- ------------- CONSOLIDATED NET INCOME $55.5 $82.9 ($27.4) (33) ========= =========== ============= CLASS G NET INCOME (LOSS) $0.0 ($3.3) $3.3 (100) ========= =========== ============= CMS NET INCOME $55.5 $86.2 ($30.7) (36) ========= =========== ============= CMS AVERAGE SHARES OUTSTANDING - DILUTED 114.4 113.8 0.6 1 ========= =========== ============= CMS EPS - DILUTED $0.51 $0.78 ($0.27) (35) ========= =========== =============
- -------------------------------------------------------------------------------- QUARTERS MAJOR VARIANCE ANALYSIS - -------------------------------------------------------------------------------- CONSUMERS ELECTRIC*: MARKETING, SERVICES & TRADING: - Deliveries down 295 Gwh to 10,650 Gwh and - Higher operating expenses and trading losses higher power supply costs - ($51.0 MM); partially offset by higher gas margins, higher gas and - Residential rate reduction - ($13.7 MM); electric volumes and higher NGL margins - ($2.6 MM). - Lower operating expenses and other - $14.8 MM. INTERNATIONAL ENERGY DISTRIBUTION: CONSUMERS GAS: - Reliability improvements and lower operating - Deliveries up 1.5 Bcf to 45.1 Bcf; expenses - $8.4 MM. - Firm sales up 1.7 Bcf - $2.7 MM; - Transport deliveries down 0.2 Bcf - ($0.3 MM); OTHER INCOME/(DEDUCTIONS): - Gas Customer Choice Program - ($1.1 MM); - Gains on asset sales and other - $7.7 MM. - Lower operating expenses and other - $13.8 MM. FIXED CHARGES: NATURAL GAS TRANSMISSION: - Higher average borrowings and interest rates for - Increased LNG cargoes and throughput at processing capital investments and other - $12.4 MM. facilities, partially offset by higher operating expenses - $1.7 MM. INDEPENDENT POWER PRODUCTION: - Plant operations and other - $2.0 MM; - Lower O&M fees and higher operating expenses - ($4.5 MM). *WEATHER IMPACTS: 3Q00 3Q99 ---- ---- OIL & GAS EXPLORATION & PRODUCTION: ELECTRIC: - Oil volumes down 166 MBbls to 1,672 MBbls - ($1.9 MM); - Percent warmer (colder) than normal (12.5) 10.2 - Oil prices up $4.70 to $16.28/Bbl - $7.9 MM; using cooling degree days - Gas volumes down 3.0 Bcf to 3.6 Bcf - ($6.3 MM); - Increase (decrease) from average in: - Gas prices up 82(cent)to $2.91/Mcf - $3.0 MM; Electric sales (Gwh) (220) (48) - Lower geological, DD&A, and production-related Pretax operating income (millions) ($10.6) ($2.5) expenses and other - $6.0 MM.
- -------------------------------------------------------------------------------- 2 CMS ENERGY CONSOLIDATED SUMMARY EARNINGS ANALYSIS IN MILLIONS, EXCEPT EPS (UNAUDITED - PRELIMINARY AND FOR DISCUSSION ONLY)
- ------------------------------------------------------------------------------------------------------------------------------------ VARIANCE ---------------------------- Y-T-D ENDED - SEPTEMBER 30, 2000 1999 DOLLARS PERCENT - ------------------------------------------------------------------------------------------------------------------------------------ Pretax Operating Income (Loss) Consumers Electric $342.1 $424.8 ($82.7) (19) Consumers Gas 44.0 87.4 (43.4) (50) Natural Gas Transmission 171.8 92.1 79.7 87 Independent Power Production 135.4 118.9 16.5 14 Oil & Gas Exploration & Production 23.2 10.9 12.3 113 Marketing, Services & Trading 1.4 0.5 0.9 180 International Energy Distribution 17.1 (5.5) 22.6 411 Other 10.2 20.1 (9.9) (49) ---------- ----------- ---------- Total 745.2 749.2 (4.0) (1) Other Income (Deductions) 67.2 14.2 53.0 373 Fixed Charges 505.0 415.9 89.1 21 Income Taxes 87.9 91.4 (3.5) (4) Minority Interest 3.1 (0.1) 3.2 3200 ========== =========== ========== CONSOLIDATED NET INCOME $216.4 $256.2 ($39.8) (16) ========== =========== ========== CLASS G NET INCOME $0.0 $7.6 ($7.6) (100) ========== =========== ========== CMS NET INCOME $216.4 $248.6 ($32.2) (13) ========== =========== ========== CMS AVERAGE SHARES OUTSTANDING - DILUTED 115.6 113.3 2.3 2 ========== =========== ========== CMS EPS - DILUTED $1.93 $2.25 ($0.32) (14) ========== =========== ==========
- -------------------------------------------------------------------------------- Y-T-D MAJOR VARIANCE ANALYSIS - -------------------------------------------------------------------------------- CONSUMERS ELECTRIC*: MARKETING, SERVICES & TRADING: - Deliveries down 869 Gwh to 30,410 Gwh and higher - Higher gas margins, higher gas and electricity volumes power supply costs - ($63.8 MM); and higher NGL margins, partially offset by higher - Residential rate reduction - ($18.6 MM); operating expenses, lower electricity margins and - Other - ($0.3 MM). trading losses - $0.9 MM. CONSUMERS GAS*: INTERNATIONAL ENERGY DISTRIBUTION: - Deliveries up 0.3 Bcf to 272.6 Bcf - $1.4 MM; - Reliability improvements and lower operating - Gas Customer Choice Program - ($61.8 MM); expense - $22.6 MM. - Higher retail services and other miscellaneous revenue - $4.2 MM; OTHER INCOME/DEDUCTIONS: - Lower operating expenses and other - $12.8 MM. - Gains on asset sales - $68.0 MM; - Increased accretion expense, absence of 1999 litigation NATURAL GAS TRANSMISSION: reserve reversal and other - ($15.0 MM). - PEPL operations - $67.9 MM; - Pipeline and processing operations and lower FIXED CHARGES: operating expenses - $11.8 MM. - Higher average borrowings and interest rates for capital investments and other - $89.1 MM. INDEPENDENT POWER PRODUCTION: - Plant operations, PPA restructuring and other - $30.8 MM; *WEATHER IMPACTS: YTD00 YTD99 ----- ----- - Lower O&M fees and higher operating expenses - ($14.3 MM). ELECTRIC: - Percent warmer (colder) than OIL & GAS EXPLORATION & PRODUCTION: normal using cooling degree days (5.1) 23.3 - Oil volumes up 65 MBbls to 5,510 MBbls - $0.7 MM; - Increase (decrease) from average in: - Oil prices up $3.04 to $13.85/Bbl - $16.7 MM; Electric sales (Gwh) (388) (81) - Gas volumes down 5.6 Bcf to 13.8 Bcf - ($11.4 MM); Pretax operating income (millions) ($18.4) ($3.4) - Gas prices up 54(cent)to $2.58/Mcf - $7.5 MM; GAS: - Higher production and G&A expenses, partially - Percent (warmer) colder than offset by lower DD&A and other - ($1.2 MM). normal using heating degree days (7.5) (5.5) - Increase (decrease) from normal in Gas sales (Bcf) (16.8) (8.6) Pretax operating income (millions) ($16.0) ($7.9)
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