-----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, BrSKgFXEwzkt6xYC+LngclAF2ZGkFZ4qamK0Sqw2J5z/JmHl5PXAjOPW3Nnqcgr8 JMB1cYkQVZsSzo50x0y00w== 0000950124-04-000325.txt : 20040206 0000950124-04-000325.hdr.sgml : 20040206 20040205173138 ACCESSION NUMBER: 0000950124-04-000325 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040205 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DETROIT EDISON CO CENTRAL INDEX KEY: 0000028385 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 380478650 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-02198 FILM NUMBER: 04571031 BUSINESS ADDRESS: STREET 1: 2000 SECOND AVE - 2112 WCB CITY: DETROIT STATE: MI ZIP: 48226 BUSINESS PHONE: 3132358000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICHIGAN CONSOLIDATED GAS CO /MI/ CENTRAL INDEX KEY: 0000065632 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 380478040 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07310 FILM NUMBER: 04571032 BUSINESS ADDRESS: STREET 1: 500 GRISWOLD ST CITY: DETROIT STATE: MI ZIP: 48226 BUSINESS PHONE: 3139652430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DTE ENERGY CO CENTRAL INDEX KEY: 0000936340 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 383217752 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11607 FILM NUMBER: 04571030 BUSINESS ADDRESS: STREET 1: 2000 2ND AVENUE STREET 2: ROOM 2412 CITY: DETRIOT STATE: MI ZIP: 48226-1279 BUSINESS PHONE: 3132354000 MAIL ADDRESS: STREET 1: 2000 2ND AVENUE STREET 2: ROOM 2412 CITY: DETRIOT STATE: MI ZIP: 48226 FORMER COMPANY: FORMER CONFORMED NAME: DTE HOLDINGS INC DATE OF NAME CHANGE: 19950127 8-K 1 k82709e8vk.txt CURRENT REPORT, DATED FEBRUARY 5, 2004 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 5, 2004
EXACT NAME OF REGISTRANT AS SPECIFIED IN COMMISSION ITS CHARTER, STATE OF INCORPORATION, I.R.S. EMPLOYER FILE NUMBER ADDRESS AND TELEPHONE NUMBER IDENTIFICATION NO. 1-11607 DTE Energy Company 38-3217752 (a Michigan corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-4000 1-2198 The Detroit Edison Company 38-0478650 (a Michigan Corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-4000 1-7310 Michigan Consolidated Gas Company 38-0478040 (a Michigan Corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-4000
ITEM 7. EXHIBITS 99.1 Earnings Release of DTE Energy Company ("DTE Energy") dated February 5, 2004, including reconciliation and representations required by Regulation G. 99.2 Information Distributed for Media and Investor Relations Communications dated February 5, 2004. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS DTE Energy is furnishing the Securities and Exchange Commission (SEC) with its earnings release issued February 5, 2004 announcing financial results for the year ended December 31, 2003. A copy of the earnings release, the information distributed for media and investor relations communications are furnished as Exhibits 99.1 and 99.2 to this report and contain the reconciliation and representations required by the SEC's Regulation G. FORWARD-LOOKING STATEMENTS: This Form 8-K contains "forward-looking statements" that are subject to risks and uncertainties. They should be read in conjunction with the forward-looking statements in DTE Energy's, The Detroit Edison Company's ("Detroit Edison") and Michigan Consolidated Gas Company's ("MichCon") 2002 Form 10-K Item 1 (incorporated by reference herein), and in conjunction with other SEC reports filed by DTE Energy, Detroit Edison and MichCon that discuss important factors that could cause DTE Energy's, Detroit Edison's and MichCon's actual results to differ materially. DTE Energy, Detroit Edison and MichCon expressly disclaim any current intention to update any forward-looking statements contained in this document as a result of new information or future events. 2 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. Date: February 5, 2004 DTE ENERGY COMPANY (Registrant) /s/Daniel G. Brudzynski ------------------------------------ Daniel G Brudzynski Vice President and Contoller THE DETROIT EDISON COMPANY (Registrant) /s/Daniel G. Brudzynski ------------------------------------ Daniel G Brudzynski Vice President and Contoller MICHIGAN CONSOLIDATED GAS COMPANY (Registrant) /s/Daniel G. Brudzynski ------------------------------------ Daniel G Brudzynski Vice President and Contoller 3 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ ----------- 99.1 Earnings Release of DTE Energy, dated February 5, 2004, including reconciliation and representations required by Regulation G. 99.2 Information Distributed for Media and Investor Relations Communications dated February 5, 2004. 4 EX-99.1 3 k82709exv99w1.txt EARNINGS RELEASE OF DTE ENERGY EXHIBIT 99.1 FEB. 5, 2004 DTE ENERGY 2003 EARNINGS FALL 18 PERCENT DRIVEN BY WEAK RESULTS AT UTILITY SUBSIDIARIES DETROIT - DTE Energy (NYSE:DTE) today announced 2003 reported and operating earnings of $521 million, or $3.09 per diluted share, down 18 percent from 2002 reported earnings of $632 million, or $3.83 per diluted share. Operating earnings for 2002 were $586 million, or $3.55 per diluted share. Detroit Edison, the wholly owned electric subsidiary of DTE Energy, reported 2003 earnings of $246 million earlier this week. A reconciliation of reported to operating earnings for both the fourth quarter and 12 months ended 2002 and 2003 is at the end of this release. "2003 was a year in which several factors negatively impacted DTE Energy's financial results," said Anthony F. Earley Jr., DTE Energy chairman and CEO. "We had an ice storm, two major windstorms, mild summer weather and the August blackout." "Another significant factor that hurt the financial performance of our electric utility, Detroit Edison, was Michigan's Electric Choice program. The Michigan Public Service Commission (MPSC) has not addressed the structural issues with the program and has failed to implement the program consistent with Michigan's electric restructuring legislation passed in 2000." Michigan's Electric Choice program is unique in that it is the only state that has opened its market to Choice while the utility remains fully regulated. Under the current structure of the program, the MPSC has provided incentive credits and has not authorized transition charges. These policies create misleading pricing signals for customers considering the Electric Choice program. "To date, the considerable cash costs to implement the program and its associated lost revenue have not been recovered," Earley said. "The combination of the Electric Choice program, escalating pension and healthcare costs, increasing operating costs, mild weather and storm restoration costs caused Detroit Edison's reported earnings to drop from $356 million to $246 million, a 31 percent decline from last year." "The same mounting cost pressures from healthcare and pension," Earley continued, "as well as increased operating and uncollectable expenses, drove MichCon's 2003 operation and maintenance expenses up 26 percent over last year. We are in need of rate relief at both MichCon and Detroit Edison, and look forward to an expeditious resolution of our rate requests filed last year with the MPSC. We are also working aggressively at the MPSC and in the Michigan legislature to reshape the Electric Choice program in a manner that is fair to all customers, while maintaining financially healthy Michigan utilities." Operating earnings results for 2003, by business unit, were as follows: - - DTE ENERGY RESOURCES operating earnings were $2.84 per diluted share versus $2.76 per diluted share in 2002. The regulated operations of this business unit, which are the power generation services of Detroit Edison, increased $0.04 per diluted share over last year. The increase was driven by increased regulatory deferrals for Electric Choice and environmental costs, and aggressive cost cutting efforts. This was partially offset by decreased cooling demand due to mild summer weather, lost margins from customers choosing to purchase power from alternative suppliers under the Electric Choice program, and continued pressure from higher pension and healthcare benefit costs. The non-regulated operations of this business unit include the company's energy services, energy marketing and trading (comprising DTE Energy Trading and CoEnergy), coal services and biomass businesses. Earnings at these non-regulated operations increased $0.04 over last year. The increase was attributable to higher production of synthetic fuel and increased short-term power sales at DTE Energy Trading. These operating earnings were partially offset by lower mark-to-market gains at CoEnergy, decreased coal tolling revenue and lower tax credits from coke battery production, most of which expired at the end of 2002. - - DTE ENERGY DISTRIBUTION posted operating earnings of $0.09 per diluted share versus earnings of $0.57 per diluted share last year. The regulated operations of this business unit are the electric distribution services of Detroit Edison. These regulated operations experienced a year-over-year decline of $0.49 per diluted share, driven by reduced revenues due to mild summer weather, restoration costs from ice and wind storms, higher pension and healthcare costs, increased uncollectable accounts expenses and costs associated with customer service process improvements. The non-regulated operations of this business unit consist primarily of DTE Energy Technologies, which markets and distributes a portfolio of distributed generation products and services. Year-over-year performance at this business improved by $0.01 per diluted share, driven by increased sales and cost-reduction initiatives. - - DTE ENERGY GAS had operating earnings of $0.44 per diluted share versus $0.56 per diluted share last year. The regulated operations include the gas distribution services provided by MichCon. Regulated operations were down $0.13 per diluted share, due largely to increased operating expenses, including higher pension and healthcare benefit costs, significant uncollectable accounts expenses and costs associated with customer service initiatives. This was partially offset by increased sales due to colder winter weather in early 2003. Non-regulated operations include the production of gas in northern Michigan and the gathering, transporting, processing and storage of gas. Operating earnings from these operations increased by $0.01 per diluted share year-over-year, reflecting a gain from the sale of our minority interest in the Portland Natural Gas Transmission System. - - CORPORATE & OTHER includes interest costs, as well as certain non-regulated investments, including assets held for sale and investments in emerging energy technologies. Corporate & Other operating losses were $0.28 per diluted share, compared to an operating loss of $0.34 per diluted share in 2002. For the fourth quarter 2003, DTE Energy reported earnings were $229 million, or $1.36 per diluted share, up from 2002 reported earnings of $203 million, or $1.21 per diluted share. Operating earnings for the fourth quarter 2003 were $159 million, or $0.94 per diluted share, down from 2002 operating earnings of $199 million, or $1.19 per diluted share. 2 Fourth quarter earnings results by business unit were: - - DTE ENERGY RESOURCES operating earnings were down $0.13 per diluted share versus the fourth quarter 2002. Earnings from the regulated operations increased $0.19 per diluted share, driven primarily by increased regulatory deferrals for Electric Choice and environmental costs, territory sales growth and cost cutting efforts. Earnings at the non-regulated operations declined $0.32 per diluted share versus 2002, due mostly to lower synthetic fuel production in the energy services operations, the absence of tax credits from coke battery production and lower inventory valuation gains at CoEnergy. - - DTE ENERGY DISTRIBUTION operating earnings were down $0.06 per diluted share versus the fourth quarter 2002. Regulated operations decreased $0.07 per diluted share, driven by reduced revenues due to mild weather, higher pension and healthcare costs, and increased uncollectable expenses. The non-regulated operations improved by $0.01 per diluted share over 2002, due to cost reduction initiatives. - - DTE ENERGY GAS operating earnings decreased by $0.10 per diluted share compared to the fourth quarter of 2002. Regulated operations declined by $0.09 per diluted share, due to reduced revenues due to mild winter weather while non-regulated earnings were down $0.01 per diluted share. - - CORPORATE & OTHER operating losses were $0.05 per diluted share versus a $0.09 per diluted share loss in the fourth quarter last year. The improvement was due to a reserve established in 2002 for the possible loss associated with direct loans to and a guarantee of debt of a technology investment. Reported earnings for Corporate & Other in the fourth quarter 2003 were $61 million, which included a negative $70 million ($0.42 per diluted share) effective tax rate adjustment. This quarterly adjustment is required by Generally Accepted Accounting Principles to maintain a quarterly effective tax rate consistent with the estimated annual rate and does not impact total year earnings. This adjustment is primarily necessary because the company's pre-tax income and Section 29 tax credits earned from its synthetic fuels business have different quarterly profiles. - - USE OF OPERATING EARNINGS INFORMATION - DTE Energy management believes that operating earnings provide a more meaningful representation of the company's earnings from ongoing operations and uses operating earnings as the primary performance measurement for external communications with analysts and investors. Internally, DTE Energy uses operating earnings to measure performance against budget and to report to the Board of Directors. "Despite the financial challenges of 2003, DTE Energy also had many successes throughout the year," Earley said, noting the exceptional effort of DTE Energy employees in restoring electric service during the August blackout, an excellent operational year at the company's Fermi 2 nuclear plant and the successful sale of the company's transmission business." "Looking ahead, 2004 will be another difficult year for DTE Energy," Earley continued. "Our financial picture at Detroit Edison and MichCon depends on the timing and level of rate relief we've requested from the MPSC. In addition, the longer the flaws of the Electric Choice program are not addressed, the greater the earnings and cash erosion at Detroit Edison. Given the significant financial impact of these ongoing regulatory proceedings, we are not providing 2004 earnings guidance at this time." David E. Meador, DTE Energy senior vice president and chief financial officer, added, "Although our regulated businesses are under financial pressure, our non-regulated business portfolio continues to demonstrate stable growth. 3 "Our operating earnings from these businesses (excluding Corporate & Other) increased 7 percent year-over-year and we continue to make progress in developing new growth opportunities, such as waste coal recovery - a process in which we transform the waste coal found in coal slurry ponds into a useful fuel source," Meador said. "DTE Energy's balance sheet and liquidity remain strong, and we have been able to maintain a stable dividend, which is providing an attractive 5.3 percent yield to our shareholders. We have a dedicated employee base that is focused on working through these regulatory issues so that our company is back on track in the next year or so." This earnings announcement, as well as a package of detailed financial information, is available on the company's website at www.dteenergy.com on the "Investors" page. DTE Energy will conduct a webcast meeting with the investment community at 8:30 a.m. EST Friday, Feb. 6, to discuss fourth quarter and full year 2003 earnings results. Investors, the news media and the public may listen to a live Internet broadcast of the meeting at www.dteenergy.com. 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 requirements; 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, MichCon's and Detroit Edison's 2002 Form 10-K Item 1, and in conjunction with other SEC reports filed by DTE Energy, MichCon 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 4 DTE ENERGY COMPANY CONSOLIDATED STATEMENT OF OPERATIONS PRELIMINARY/(UNAUDITED)
YEAR ENDED DECEMBER 31 ----------------------- (in Millions, Except per Share Amounts) ................ 2003 2002 ------- ------- OPERATING REVENUES ..................................... $ 7,041 $ 6,729 ------- ------- OPERATING EXPENSES Fuel, purchased power and gas ....................... 2,241 2,099 Operation and maintenance ........................... 3,032 2,547 Depreciation, depletion and amortization ............ 687 737 Taxes other than income ............................. 334 352 ------- ------- 6,294 5,735 ------- ------- OPERATING INCOME ....................................... 747 994 ------- ------- OTHER (INCOME) AND DEDUCTIONS Interest expense .................................... 546 569 Interest income ..................................... (37) (29) Minority interest ................................... (91) (37) Other income ........................................ (138) (62) Other expenses ...................................... 110 51 ------- ------- 390 492 ------- ------- INCOME BEFORE INCOME TAXES ............................. 357 502 INCOME TAX BENEFIT ..................................... (123) (84) ------- ------- INCOME FROM CONTINUING OPERATIONS ...................... 480 586 INCOME FROM DISCONTINUED OPERATIONS OF ITC, NET OF TAX.. 68 46 CUMULATIVE EFFECT OF ACCOUNTING CHANGES, NET OF TAX .... (27) -- ------- ------- NET INCOME ............................................. $ 521 $ 632 ======= ======= BASIC EARNINGS PER COMMON SHARE Income from continuing operations .................. $ 2.87 $ 3.57 Discontinued operations ............................ .41 .28 Cumulative effect of accounting changes ............ (.17) -- ------- ------- Total ............................................. $ 3.11 $ 3.85 ======= ======= DILUTED EARNINGS PER COMMON SHARE Income from continuing operations .................. $ 2.85 $ 3.55 Discontinued operations ............................ .40 .28 Cumulative effect of accounting changes ............ (.16) -- ------- ------- Total ............................................. $ 3.09 $ 3.83 ======= ======= AVERAGE COMMON SHARES Basic ............................................... 168 164 Diluted ............................................. 168 165 DIVIDENDS DECLARED PER COMMON SHARE .................... $ 2.06 $ 2.06
5 DTE ENERGY COMPANY SEGMENT NET INCOME (UNAUDITED)
TWELVE MONTHS ENDED DECEMBER 31 ------------------------------------------------------------------------------------------ 2003 2002 ----------------------------------------------- ---------------------------------------- REPORTED OPERATING Reported Operating (IN MILLIONS) EARNINGS ADJUSTMENTS EARNINGS Earnings Adjustments Earnings -------------- ------------- ------------ ------------ ------------ ---------- ENERGY RESOURCES Regulated - Power Generation.......... $ 235 16 A 251 241 - 241 Non-regulated Energy Services..................... 199 - 199 182 - 182 Energy Marketing & Trading.......... 45 (16) B 29 25 - 25 Other............................... (2) - (2) 7 - 7 ---------- ------- -------- -------- ----- -------- Total Non-regulated................. 242 (16) B 226 214 - 214 ---------- ------- -------- -------- ----- -------- 477 - 477 455 - 455 ---------- ------- -------- -------- ----- -------- ENERGY DISTRIBUTION Regulated - Power Distribution........ 17 14 C 31 111 - 111 Non-regulated......................... (15) - (15) (16) - (16) ---------- ------- -------- -------- ----- -------- 2 14 16 95 - 95 ---------- ------- -------- -------- ----- -------- ENERGY GAS Regulated - Gas Distribution.......... 29 17 D 46 66 - 66 Non-regulated......................... 29 - 29 26 - 26 ---------- ------- -------- -------- ----- -------- 58 17 75 92 - 92 ---------- ------- -------- -------- ----- -------- CORPORATE AND OTHER..................... (57) 10 E (47) (56) - (56) ---------- ------- -------- -------- ----- -------- (57) 10 (47) (56) - (56) ---------- ------- -------- -------- ----- -------- INCOME FROM CONTINUING OPERATIONS Regulated............................. 281 47 328 418 - 418 Non-regulated......................... 199 (6) 193 168 - 168 ---------- ------- -------- -------- ----- -------- 480 41 521 586 - 586 ---------- ------- -------- -------- ----- -------- DISCONTINUED OPERATIONS - ITC Income from operations................ 5 (5) G - 46 (46) G - Gain on sale.......................... 63 (63) H - - - - ---------- ------- -------- -------- ----- -------- 68 (68) - 46 (46) - ---------- ------- -------- -------- ----- -------- CUMULATIVE EFFECT OF ACCOUNTING CHANGES Asset retirement obligations.......... (11) 11 I - - - - Energy trading activities............. (16) 16 J - - - - ---------- ------- -------- -------- ----- -------- (27) 27 - - - - ---------- ------- -------- -------- ----- -------- NET INCOME.............................. $ 521 - 521 632 (46) 586 ========== ======= ======== ======== ===== ========
ADJUSTMENTS KEY A) Blackout costs...............................................Costs associated with the August 2003 blackout B) 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 C) Loss on sale of steam heating business.......................Sold Detroit Edison steam heating business D) Disallowance of gas costs....................................Reserve for the potential disallowance of MichCon 2002 gas procurement costs E) Contribution to DTE Energy Foundation........................Used portion of ITC sale proceeds to fund the DTE Energy Foundation 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 SEGMENT DILUTED EARNINGS PER SHARE (UNAUDITED)
TWELVE MONTHS ENDED DECEMBER 31 ---------------------------------------------------------------------------------------- 2003 2002 ------------------------------------------ ------------------------------------------ REPORTED OPERATING Reported Operating EARNINGS ADJUSTMENTS EARNINGS Earnings Adjustments Earnings ------------ ------------ ------------ ------------ ------------ ------------ ENERGY RESOURCES Regulated - Power Generation.......... $ 1.40 0.10 A $ 1.50 1.46 - 1.46 Non-regulated Energy Services..................... 1.18 - 1.18 1.10 - 1.10 Energy Marketing & Trading.......... 0.27 (0.10) B 0.17 0.15 - 0.15 Other............................... (0.01) - (0.01) 0.05 - 0.05 --------- -------- ---------- ---------- -------- ---------- Total Non-regulated................. 1.44 (0.10 ) 1.34 1.30 - 1.30 ====================================================================================== 2.84 - 2.84 2.76 - 2.76 --------- -------- ---------- ---------- -------- ---------- ENERGY DISTRIBUTION Regulated - Power Distribution........ 0.10 0.08 C 0.18 0.67 - 0.67 Non-regulated......................... (0.09 ) - (0.09 ) (0.10 ) - (0.10 ) - -------- - ------ -- ------- - -------- - ------ - -------- - -------- - ------ -- ------- - -------- - ------ - -------- 0.01 0.08 0.09 0.57 - 0.57 --------- -------- ---------- ---------- -------- ---------- Regulated - Gas Distribution.......... 0.17 0.10 D 0.27 0.40 - 0.40 Non-regulated......................... 0.17 - 0.17 0.16 - 0.16 - -------- - ------ -- ------- - -------- - ------ - -------- 0.34 0.10 0.44 0.56 - 0.56 --------- -------- ---------- ---------- -------- ---------- CORPORATE AND OTHER..................... (0.34 ) 0.06 E (0.28 ) (0.34 ) - (0.34 ) - -------- - ------ -- ------- - -------- - ------ - -------- (0.34 ) 0.06 (0.28 ) (0.34 ) - (0.34 ) --------- -------- ---------- ---------- -------- ---------- INCOME FROM CONTINUING OPERATIONS Regulated............................. 1.67 0.28 1.95 2.53 - 2.53 Non-regulated......................... 1.18 (0.04 ) 1.14 1.02 - 1.02 - -------- - ------ -- ------- - -------- - ------ - -------- 2.85 0.24 3.09 3.55 - 3.55 - -------- - ------ -- ------- - -------- - ------ - -------- DISCONTINUED OPERATIONS - ITC Income from operations................ 0.03 (0.03 ) - 0.28 (0.28 ) - G G Gain on sale.......................... 0.37 (0.37 ) - - - - H - -------- - ------ -- ------- - -------- - ------ - -------- 0.40 (0.40 ) - 0.28 (0.28 ) - --------- -------- ---------- ---------- -------- ---------- CUMULATIVE EFFECT OF ACCOUNTING CHANGES Asset retirement obligations.......... (0.07 ) 0.07 I - - - - Energy trading activities............. (0.09 ) 0.09 J - - - - - -------- - ------ -- ------- - -------- - ------ - -------- (0.16 ) 0.16 - - - - --------- -------- ---------- ---------- -------- ----------. NET INCOME.............................. 3.09 - $ 3.09 3.83 (0.28 ) 3.55 = ======== = ====== == ======= = ======== = ====== = ========
ADJUSTMENTS KEY A) Blackout costs...............................................Costs associated with the August 2003 blackout B) 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 C) Loss on sale of steam heating business.......................Sold Detroit Edison steam heating business D) Disallowance of gas costs....................................Reserve for the potential disallowance of MichCon 2002 gas procurement costs E) Contribution to DTE Energy Foundation........................Used portion of ITC sale proceeds to fund the DTE Energy Foundation 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
7
DTE ENERGY COMPANY SEGMENT NET INCOME (UNAUDITED) - --------------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED DECEMBER 31 ------------------------------------------- ------------------------------------------ 2003 2002 ------------------------------------------- ------------------------------------------ REPORTED OPERATING Reported Operating (IN MILLIONS) EARNINGS ADJUSTMENTS EARNINGS Earnings Adjustments Earnings ------------ ------------ ------------ ------------ ------------ ------------ ENERGY RESOURCES Regulated - Power Generation....... 103 - 103 71 - 71 Non-regulated Energy Services.................. 48 - 48 75 - 75 Energy Marketing & Trading....... (7) - (7) 13 - 13 Other............................ (1) - (1) 7 - 7 ---------- --------- ---------- ---------- ------- ---------- Total Non-regulated.............. 40 - 40 95 - 95 143 - 143 166 - 166 ---------- --------- ---------- ---------- ------- ---------- ENERGY DISTRIBUTION Regulated - Power Distribution..... 2 - 2 14 - 14 Non-regulated...................... (3) - (3) (5) - (5) ---------- --------- ---------- ---------- ------- ---------- (1 ) - (1 ) 9 - 9 ENERGY GAS Regulated - Gas Distribution....... 22 - 22 36 - 36 Non-regulated...................... 4 - 4 5 - 5 ---------- --------- ---------- ---------- ------- ---------- 26 - 26 41 - 41 CORPORATE AND OTHER.................. 61 (70) (9) (22) 5 F (17) F ---------- --------- ---------- ---------- ------- ---------- 61 (70) (9) (22) 5 (17) INCOME FROM CONTINUING OPERATIONS Regulated.......................... 127 - 127 121 - 121 Non-regulated...................... 102 (70) 32 73 5 78 ---------- --------- ---------- ---------- ------- ---------- 229 (70) 159 194 5 199 DISCONTINUED OPERATIONS - ITC Income from operations............. - - - 9 (9) G - Gain on sale....................... - - - - - - ---------- --------- ---------- ---------- ------- ---------- - - - 9 (9) - CUMULATIVE EFFECT OF ACCOUNTING CHANGES Asset retirement obligations....... - - - - - - Energy trading activities.......... - - - - - - ---------- --------- ---------- ---------- ------- ---------- - - - - - - ---------- --------- ---------- ---------- ------- ---------- NET INCOME........................... 229 $ (70) 159 203 (4) 199 ========== ======== ========== ========== ====== ==========
ADJUSTMENTS KEY A) Blackout costs...............................................Costs associated with the August 2003 blackout B) 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 C) Loss on sale of steam heating business.......................Sold Detroit Edison steam heating business D) Disallowance of gas costs....................................Reserve for the potential disallowance of MichCon 2002 gas procurement costs E) Contribution to DTE Energy Foundation........................Used portion of ITC sale proceeds to fund the DTE Energy Foundation 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
8 DTE ENERGY COMPANY SEGMENT DILUTED EARNINGS PER SHARE (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31 ---------------------------------------------------------------------------------------- 2003 2002 ------------------------------------------- ------------------------------------------ REPORTED OPERATING Reported Operating EARNINGS ADJUSTMENTS EARNINGS Earnings Adjustments Earnings ------------ ------------ ------------ ------------ ----------- ------------ ENERGY RESOURCES Regulated - Power Generation....... 0.61 - 0.61 0.42 - 0.42 Non-regulated Energy Services.................. 0.29 - 0.29 0.44 - 0.44 Energy Marketing & Trading....... (0.04) - (0.04) 0.08 - 0.08 Other............................ (0.01) - (0.01) 0.04 - 0.04 --------- -------- --------- --------- ------- ---------- Total Non-regulated.............. 0.24 - 0.24 0.56 - 0.56 --------- -------- --------- --------- ------- ---------- 0.85 - 0.85 0.98 - 0.98 --------- -------- --------- --------- ------- ---------- ENERGY DISTRIBUTION Regulated - Power Distribution..... 0.01 - 0.01 0.08 - 0.08 Non-regulated...................... (0.02) - (0.02) (0.03) - (0.03) --------- -------- --------- --------- ------- ---------- (0.01) - (0.01) 0.05 - 0.05 --------- -------- --------- --------- ------- ---------- ENERGY GAS Regulated - Gas Distribution....... 0.13 - 0.13 0.22 - 0.22 Non-regulated...................... 0.02 - 0.02 0.03 - 0.03 --------- -------- --------- --------- ------- ---------- 0.15 - 0.15 0.25 - 0.25 --------- -------- --------- --------- ------- ---------- CORPORATE AND OTHER.................. 0.37 (0.42) (0.05) (0.12) 0.03 F (0.09) F --------- -------- --------- --------- ------- ---------- 0.37 (0.42) (0.05) (0.12) 0.03 (0.09) --------- -------- --------- --------- ------- ---------- INCOME FROM CONTINUING OPERATIONS Regulated.......................... 0.75 - 0.75 0.72 - 0.72 Non-regulated...................... 0.61 (0.42) 0.19 0.44 0.03 0.47 --------- -------- --------- --------- ------- ---------- 1.36 (0.42) 0.94 1.16 0.03 1.19 --------- -------- --------- --------- ------- ---------- DISCONTINUED OPERATIONS - ITC Income from operations............. - - - 0.05 (0.05) - G Gain on sale....................... - - - - - - --------- -------- --------- --------- ------- ---------- - - - 0.05 (0.05) - --------- -------- --------- --------- ------- ---------- CUMULATIVE EFFECT OF ACCOUNTING CHANGES Asset retirement obligations....... - - - - - - Energy trading activities.......... - - - - - - --------- -------- --------- --------- ------- ---------- - - - - - - --------- -------- --------- --------- ------- ---------- NET INCOME........................... 1.36 $ (0.42) 0.94 1.21 (0.02) 1.19 ========= ======== ========= ========= ======= ==========
ADJUSTMENTS KEY A) Blackout costs...............................................Costs associated with the August 2003 blackout B) 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 C) Loss on sale of steam heating business.......................Sold Detroit Edison steam heating business D) Disallowance of gas costs....................................Reserve for the potential disallowance of MichCon 2002 gas procurement costs E) Contribution to DTE Energy Foundation........................Used portion of ITC sale proceeds to fund the DTE Energy Foundation 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
9 EX-99.2 4 k82709exv99w2.txt INFORMATION DISTRIBUTED FOR MEDIA & INVEST RELATNS Exhibit 99.2 [LOGO] DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF OPERATIONS (PRELIMINARY/UNAUDITED) (in Millions, Except per Share Amounts)
3 MONTHS - DECEMBER 12 MONTHS - DECEMBER 2003 2002 % CHANGE 2003 2002 % CHANGE -------------------------------- ------------------------------- OPERATING REVENUES $ 1,692 $ 1,704 -1% $ 7,041 $ 6,729 5% -------------------------------- ------------------------------- OPERATING EXPENSES Fuel, purchased power and gas 483 460 5% 2,241 2,099 7% Operation and maintenance 763 743 3% 3,032 2,547 19% Depreciation, depletion and amortization 140 164 -15% 687 737 -7% Taxes other than income 79 91 -13% 334 352 -5% -------------------------------- ------------------------------- 1,465 1,458 -- 6,294 5,735 10% -------------------------------- ------------------------------- OPERATING INCOME 227 246 -8% 747 994 -25% -------------------------------- ------------------------------- OTHER (INCOME) AND DEDUCTIONS Interest expense 134 143 -6% 546 569 -4% Interest income (15) (9) -67% (37) (29) 28% Minority interest (19) (14) -36% (91) (37) n/m Other income (63) (40) -58% (138) (62) n/m Other expenses 28 20 40% 110 51 n/m -------------------------------- ------------------------------- 65 100 -35% 390 492 -21% -------------------------------- ------------------------------- INCOME BEFORE INCOME TAXES 162 146 11% 357 502 -29% INCOME TAX BENEFIT (67) (48) -40% (123) (84) -46% -------------------------------- ------------------------------- INCOME FROM CONTINUING OPERATIONS 229 194 18% 480 586 -18% -------------------------------- ------------------------------- DISCONTINUED OPERATIONS - ITC Income from operations -- 9 -- 5 46 n/m Gain on sale -- -- -- 63 -- -- -------------------------------- ------------------------------- -- 9 -- 68 46 n/m -------------------------------- ------------------------------- CUMULATIVE EFFECT OF ACCOUNTING CHANGES Asset retirement obligations -- -- -- (11) -- -- Energy trading activities -- -- -- (16) -- -- -------------------------------- ------------------------------- -- -- -- (27) -- -- -------------------------------- ------------------------------- REPORTED NET INCOME $ 229 $ 203 13% $ 521 $ 632 -18% ================================ =============================== REPORTED EARNINGS PER DILUTED SHARE $ 1.36 $ 1.21 13% $ 3.09 $ 3.83 -19% ================================ =============================== SIGNIFICANT ITEMS IMPACTING COMPARABILITY UNUSUAL ITEMS August 2003 Blackout Costs -- -- -- 0.10 -- -- Loss on Sale of Steam Heating Business -- -- -- 0.08 -- -- Contribution to DTE Energy Foundation -- -- -- 0.06 -- -- Disallowance of Gas Costs -- -- -- 0.10 -- -- Energy Trading Activities (EITF 98-10 flowback) -- -- -- (0.10) -- -- Effective Tax Rate Adjustment (0.42) 0.03 n/m -- -- -- DISCONTINUED OPERATIONS Income from operations of ITC -- (0.05) -- (0.03) (0.28) n/m Gain on sale of ITC -- -- -- (0.37) -- -- CUMULATIVE EFFECT OF ACCOUNTING CHANGES Asset Retirement Obligations (FAS 143) -- -- -- 0.07 -- -- Energy Trading Activities (EITF 98-10 implementation) -- -- -- 0.09 -- -- -------------------------------- ------------------------------- OPERATING EARNINGS PER DILUTED SHARE $ 0.94 $ 1.19 -21% $ 3.09 $ 3.55 -13% ================================ =============================== AVERAGE COMMON SHARES Basic 168 167 1% 168 164 2% Diluted 169 168 1% 168 165 2% DIVIDENDS DECLARED PER COMMON SHARE $ 0.515 $ 0.515 -- $ 2.06 $ 2.06 --
The Consolidated Statement of Operations (Preliminary/Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements appearing in the Annual Report to Shareholders, 10K and 10Q. n/m - not meaningful [LOGO] (Preliminary/Unaudited)
Net Income ($millions) REPORTED OPERATING OPERATING 2003 Adjustments 2003 2002 Variance -------- ------------ -------- ---------- -------- ENERGY RESOURCES REGULATED - POWER GENERATION $235 $16 A $251 $241 $10 NON-REGULATED Energy Services Coal Based Fuels Synfuels 197 - 197 136 61 Coke Batteries (7) - (7) 52 (59) On Site Energy Projects 9 - 9 9 - Merchant Generation 4 - 4 (5) 9 Other (4) - (4) (11) 7 Coal Services 8 - 8 13 (5) Biomass Energy 6 - 6 7 (1) Energy Trading & CoEnergy Portfolio 45 (16) B 29 25 4 Energy Resources Overheads (16) - (16) (12) (4) -------- -------- -------- ------- ----- TOTAL ENERGY RESOURCES NON-REGULATED 242 (16) 226 214 12 -------- -------- -------- ------- ----- TOTAL ENERGY RESOURCES 477 - 477 455 22 -------- -------- -------- ------- ----- ENERGY DISTRIBUTION REGULATED - POWER DISTRIBUTION 17 14 C 31 111 (80) Non Regulated (Energy Technologies) (15) - (15) (16) 1 -------- -------- -------- ------- ----- Total Energy Distribution 2 14 16 95 (79) -------- -------- -------- ------- ----- ENERGY GAS REGULATED 29 17 D 46 66 (20) Non-Regulated 29 - 29 26 3 -------- -------- -------- ------- ----- Total Energy Gas 58 17 75 92 (17) -------- -------- -------- ------- ----- HOLDING COMPANY & OTHER ENERGY TECHNOLOGY INVESTMENTS (9) - (9) (10) 1 Other (48) 10 E (38) (46) 8 -------- -------- -------- ------- ----- Total Holding Company & Other (57) 10 (47) (56) 9 -------- -------- -------- ------- ----- DISCONTINUED OPERATIONS - ITC Income from Operations 5 (5) F - - - Gain on Sale 63 (63) G - - - CUMULATIVE EFFECT OF ACCOUNTING CHANGES Asset Retirement Obligations (FAS 143) (11) 11 - - - Energy Trading Activities (EITF 98-10 implementation cumulative effect) (16) 16 - - - -------- -------- -------- ------- ----- TOTAL NET INCOME $521 - $521 $586 ($65) ======== ======== ======== ======= ====== TOTAL EPS $3.09 - $3.09 $3.55 ($0.46) ======== ======== ======== ======= ====== DILUTED SHARES OUTSTANDING (MILLIONS) 168 168 165
* Includes Energy Technology Investments KEY: A - Blackout Costs B - Adjustment for rescission of EITF 98-10 Accounting Change (flow back) C - Loss on sale of steam heating business D - Disallowance of gas costs E - Contribution to DTE Energy Foundation F - Adjustment for Discontinued Operations (ITC) G - Gain on Sale of ITC [LOGO] DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES Earnings Variance Analysis (Preliminary/Unaudited) 2002 REPORTED EARNINGS PER SHARE $3.83 Adjust for discontinued operations (ITC) (0.28) - -------------------------------------------------------------------------------------------------------------------------- 2002 Operating Earnings per Share $3.55 - -------------------------------------------------------------------------------------------------------------------------- REGULATED ELECTRIC (0.45) GROSS MARGIN (0.80) Weather impact (0.44) Incremental losses to Choice (0.27) Other (0.09) O&M EXPENSE (0.21) Benefits Cost (0.32) Uncollectable Expense (0.07) Storm Cost (0.13) Cost reductions - generation & corp support costs, lower incentive costs 0.31 DEPRECIATION, INTEREST, TAXES & OTHER 0.56 Regulatory Deferral - Choice 0.19 Regulatory Deferral - Clean Air 0.12 Interest - lower borrowing costs (excluding clean air related) 0.05 Other - lower property and single business taxes, other 0.20 REGULATED GAS (0.13) GROSS MARGIN 0.08 Weather impact 0.06 Other 0.02 O&M EXPENSE (0.28) Benefits Cost (0.12) Uncollectable Expense (0.07) Other - injuries and damages, customer service initiatives (0.09) NON REGULATED 0.05 ENERGY RESOURCES - higher year-over-year synfuel earnings, power contract gains 0.04 MIDSTREAM GAS - gain on sale of Portland pipeline interest 0.01 CORPORATE AND OTHER - primarily loss reserves in 2002 0.07 - -------------------------------------------------------------------------------------------------------------------------- 2003 OPERATING EARNINGS PER SHARE $3.09 - -------------------------------------------------------------------------------------------------------------------------- Net Adjustment Operating to Reported - 2003 Reported Earnings per Share $3.09
[LOGO] Net Income Summary (Preliminary/Unaudited)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) REPORTED OPERATING OPERATING Q4 2003 Adjustments Q4 2003 Q4 2002 Variance ------- ----------- --------- --------- -------- ENERGY RESOURCES REGULATED - POWER GENERATION $ 103 $ - $ 103 $ 71 $ 32 NON-REGULATED Energy Services Coal Based Fuels Synfuels 48 - 48 77 (29) Coke Batteries 2 - 2 2 - On Site Energy Projects 3 - 3 2 1 Merchant Generation (4) - (4) (3) (1) Other - - - (4) 4 Coal Services 1 - 1 6 (5) Biomass Energy 1 - 1 2 (1) Energy Trading & CoEnergy Portfolio (7) - (7) 13 (20) Energy Resources Overheads (4) (4) - (4) ----- ----- ----- ----- ----- TOTAL ENERGY RESOURCES NON-REGULATED $ 40 $ - $ 40 $ 95 $ (55) ----- ----- ----- ----- ----- TOTAL ENERGY RESOURCES $ 143 $ - $ 143 $ 166 $ (23) ----- ----- ----- ----- ----- ENERGY DISTRIBUTION REGULATED - POWER DISTRIBUTION $ 2 $ - $ 2 $ 14 $ (12) NON REGULATED (ENERGY TECHNOLOGIES) (3) - (3) (5) 2 ----- ----- ----- ----- ----- TOTAL ENERGY DISTRIBUTION $ (1) $ - $ (1) $ 9 $ (10) ----- ----- ----- ----- ----- ENERGY GAS REGULATED $ 22 $ - $ 22 $ 36 $ (14) NON-REGULATED 4 - 4 5 (1) ----- ----- ----- ----- ----- TOTAL ENERGY GAS $ 26 $ - $ 26 $ 41 $ (15) ----- ----- ----- ----- ----- HOLDING COMPANY & OTHER ENERGY TECHNOLOGY INVESTMENTS $ - $ - $ - $ (1) $ 1 OTHER 61 (70)A (9) (16) 7 ----- ----- ----- ----- ----- TOTAL HOLDING COMPANY & OTHER $ 61 $ (70) $ (9) $ (17) $ 8 ----- ----- ----- ----- ----- TOTAL NET INCOME $ 229 $ (70) $ 159 $ 199 $ (40) ===== ===== ===== ===== ===== TOTAL DILUTED EPS $1.36 $(0.42) $0.94 $1.19 $(0.25) ===== ===== ===== ===== ===== AVERAGE DILUTED SHARES OUTSTANDING 169 169 168
KEY: - -------------------------------------------------------------------------------- A - Quarterly Effective Tax Rate Adjustment [LOGO] DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES Earnings Variance Analysis (Preliminary/Unaudited) Q4 2002 REPORTED EARNINGS PER SHARE $1.21 Adjust for Q4 2002 Quarterly Effective Tax Rate Adjustment 0.03 Adjust for discontinued operations (ITC) (0.05) - ------------------------------------------------------------------------------------------------------------------------------ Q4 2002 Operating Earnings per Share $1.19 - ------------------------------------------------------------------------------------------------------------------------------ REGULATED ELECTRIC 0.12 GROSS MARGIN (0.13) Weather impact (0.05) Incremental losses to Choice (0.11) Territory growth 0.03 O&M EXPENSE 0.03 Benefits (0.09) Uncollectable Expense (0.03) Corporate Support Allocation Adj. (offset in Regulated Gas) 0.13 Other - lower outage costs 0.02 DEPRECIATION AND AMORT 0.16 Regulatory Deferral - Choice 0.11 Other 0.05 INTEREST & OTHER - lower borrowing costs and taxes 0.06 REGULATED GAS (0.09) GROSS MARGIN (0.04) Weather impact (0.06) Territory growth 0.02 O&M EXPENSE (0.12) Benefits (0.01) Uncollectable Expense (0.01) Corporate Support Allocation Adj. (offset in Regulated Electric) (0.13) Other 0.03 TAXES & OTHER 0.07 NON REGULATED (0.32) ENERGY SERVICES - Coke battery earnings in 2002, lower year-over-year synfuel prod. (0.15) ENERGY TRADING - Large unrealized gains at Co-Energy in 2002 (0.12) OTHER NON REGULATED (0.05) CORPORATE & OTHER - primarily loss reserves in Q4 2002 0.04 - ------------------------------------------------------------------------------------------------------------------------------ Q4 2003 OPERATING EARNINGS PER SHARE $0.94 - ------------------------------------------------------------------------------------------------------------------------------ Quarterly effective tax rate adjustment 0.42 Q4 2003 Reported Earnings per Share $1.36
[LOGO] DTE ENERGY COMPANY CONSOLIDATED STATEMENT OF FINANCIAL POSITION (PRELIMINARY/UNAUDITED) (in Millions)
DEC. 31 DEC. 31 PERCENT ASSETS 2003 2002 CHANGE - ------------------------------------------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash equivalents $ 54 $ 133 -59% Restricted cash 131 237 -45% Accounts receivable Customer (less allow. for doubtful accounts of $99 and $82) 877 902 -3% Accrued unbilled revenues 316 296 7% Other 338 237 43% Inventories Fuel and gas 467 413 13% Materials and supplies 162 163 -1% Assets from risk management and trading activities 186 224 -17% Other 181 159 14% -------- -------- ---- 2,712 2,764 -2% -------- -------- ---- INVESTMENTS Nuclear decommissioning trust funds 518 417 24% Other 601 487 23% -------- -------- ---- 1,119 904 24% -------- -------- ---- PROPERTY Property, plant and equipment 17,679 17,862 -1% Less accumulated depreciation and depletion (8,010) (8,049) -- -------- -------- ---- 9,669 9,813 -1% -------- -------- ---- OTHER ASSETS Goodwill 2,068 2,114 -2% Regulatory assets 2,063 1,197 72% Securitized regulatory assets 1,527 1,613 -5% Notes receivable 469 336 40% Assets from risk management and trading activities 88 152 -42% Prepaid pension assets 181 172 5% Other 202 182 11% -------- -------- ---- 6,598 5,766 14% -------- -------- ---- TOTAL ASSETS $ 20,098 $ 19,247 4% ======== ======== ====
LIABILITIES AND DEC. 31 DEC. 31 PERCENT SHAREHOLDERS' EQUITY 2003 2002 CHANGE - ------------------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES Accounts payable $ 625 $ 647 -3% Accrued interest 110 115 -4% Dividends payable 87 90 -3% Accrued payroll 51 49 4% Income taxes 185 44 n/m Short-term borrowings 370 414 -11% Current portion long-term debt, including capital leases 477 1,018 -53% Liab. from risk mgmt. and trading activities 346 284 22% Other 648 552 17% -------- -------- ---- 2,899 3,213 -10% ---- OTHER LIABILITIES Deferred income taxes 988 916 8% Regulatory liabilities 162 179 -9% Asset retirement obligations 866 -- -- Unamortized investment tax credit 156 168 -7% Liab. from risk mgmt. and trading activities 173 208 -17% Liab. from transportation and storage contracts 475 523 -9% Accrued pension liability 345 582 -41% Deferred gains from asset sales 311 161 93% Minority interest 156 128 22% Nuclear decommissioning 67 416 -84% Other 544 394 38% -------- -------- ---- 4,243 3,675 15% -------- -------- ---- LONG-TERM DEBT (NET OF CURRENT PORTION) Mortgage bonds, notes and other 5,913 5,936 -- Securitization bonds 1,496 1,585 -6% Equity-linked securities 185 191 -3% Capital lease obligations 75 82 -9% -------- -------- ---- 7,669 7,794 -2% -------- -------- ---- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common stock 3,109 3,052 2% Retained earnings 2,308 2,132 8% Accumulated other comprehensive loss (130) (619) 79% -------- -------- ---- 5,287 4,565 16% -------- -------- ---- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 20,098 $ 19,247 4% ======== ======== ====
The Consolidated Statement of Financial Position (Preliminary/Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements appearing in the Annual Report to Shareholders, Form 10K and 10Q. n/m - not meaningful [LOGO] DTE ENERGY COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (PRELIMINARY/UNAUDITED)
12 MONTHS - DECEMBER -------------------- 2003 2002 ------- ------- (in Millions) OPERATING ACTIVITIES Net Income $ 521 $ 632 Adjustments to reconcile net income to net cash from operating activities: Depreciation, depletion, and amortization 691 759 Deferred income taxes (220) (208) Gain on sale of assets, net (129) -- Partners' share of synfuel project losses (78) (40) Contributions from synfuel partners 65 22 Cumulative effect of accounting changes 27 -- Changes in assets and liabilities, exclusive of changes shown separately 73 (169) ------- ------- Net cash from operating activities $ 950 $ 996 ------- ------- INVESTING ACTIVITIES Plant and equipment expenditures - regulated (679) (794) Plant and equipment expenditures - non-regulated (72) (190) Proceeds from sale of interests in synfuel projects 89 32 Proceeds from sale of ITC and other assets 669 9 Restricted cash for debt redemptions 106 (79) Other investments (103) (93) ------- ------- Net cash from (used for ) investing activities $ 10 $(1,115) ------- ------- FINANCING ACTIVITIES Issuance of long-term debt 527 958 Redemption of long-term debt (1,208) (613) Issuance of preferred securities -- 180 Redemption of preferred securities -- (180) Short-term borrowings, net (44) (267) Capital lease obligations (9) (12) Issuance of common stock 44 265 Repurchase of common stock (3) (9) Dividends on common stock (346) (338) ------- ------- Net cash used for financing activities $(1,039) $ (16) ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (79) (135) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 133 268 ------- ------- CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 54 $ 133 ======= =======
[LOGO] THE DETROIT EDISON COMPANY Consolidated Statement of Operations (Preliminary/Unaudited) (in Millions)
3 MONTHS - DECEMBER 12 MONTHS - DECEMBER 2003 2002 % CHANGE 2003 2002 % CHANGE ------------------------------ ------------------------------- Operating Revenues $ 871 $ 962 -9% $ 3,695 $ 4,054 -9% ------------------------------ ------------------------------- OPERATING EXPENSES Fuel and purchased power 177 233 -24% 939 1,074 -13% Operation and maintenance 327 334 -2% 1,352 1,271 6% Depreciation and amortization 87 128 -32% 473 577 -18% Taxes other than income 53 67 -21% 257 273 -6% ------------------------------ ------------------------------- 644 762 -15% 3,021 3,195 -5% ------------------------------ ------------------------------- OPERATING INCOME 227 200 14% 674 859 -22% ------------------------------ ------------------------------- OTHER (INCOME) AND DEDUCTIONS Interest expense 67 79 -15% 284 311 -9% Interest income (7) -- -- (7) (1) n/m Other income (31) (20) n/m (93) (36) n/m Other expense 26 17 n/m 93 51 n/m ------------------------------ ------------------------------- 55 76 -28% 277 325 -15% ------------------------------ ------------------------------- INCOME BEFORE INCOME TAXES 172 124 39% 397 534 -26% Income Tax Provision 67 40 68% 145 178 -19% ------------------------------ ------------------------------- Income Before Accounting Change 105 84 25% 252 356 -29% Cumulative Effect of Accounting Change -- -- -- (6) -- -- ------------------------------ ------------------------------- REPORTED EARNINGS $ 105 $ 84 25% $ 246 $ 356 -31% ============================== =============================== CUMULATIVE EFFECT OF ACCOUNTING CHANGES Asset Retirement Obligations (FAS 143) -- -- -- 6 -- -- UNUSUAL ITEMS August 2003 Blackout Costs -- -- -- 16 -- -- Loss on Sale of Steam Heating Business -- -- -- 14 -- -- Elimination of Intercompany Gain -- -- -- -- (4) -- ------------------------------ ------------------------------- OPERATING EARNINGS $ 105 $ 84 25% $ 282 $ 352 -20% ============================== ===============================
The Consolidated Statement of Operations (Preliminary/Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements appearing in the Annual Report to Shareholders, Form 10K and Form 10Q. n/m - not meaningful [LOGO] MICHIGAN CONSOLIDATED GAS COMPANY Consolidated Statement of Operations (Preliminary/Unaudited) (in Millions)
3 MONTHS - DECEMBER 12 MONTHS - DECEMBER 2003 2002 % CHANGE 2003 2002 % CHANGE ------------------------------------- ------------------------------------- Operating Revenues $ 414 $ 370 12% $ 1,492 $ 1,312 14% ------------------------------------- ------------------------------------- OPERATING EXPENSES Cost of gas 251 223 13% 888 754 18% Operation and maintenance 98 64 53% 349 277 26% Depreciation, depletion and amortization 26 28 -7% 105 107 -2% Taxes other than income 10 13 -23% 52 51 2% Property write-down and contract losses -- -- -- 5 48 n/m Loss on sale of assets 3 -- -- 3 -- -- ------------------------------------- ------------------------------------- 385 328 17% 1,402 1,237 13% ------------------------------------- ------------------------------------- OPERATING INCOME 29 42 -31% 90 75 20% ------------------------------------- ------------------------------------- OTHER (INCOME) AND DEDUCTIONS Interest expense 15 15 -- 57 59 -3% Interest income (2) (2) -- (10) (10) -- Gain on sale of joint venture (6) -- -- (6) -- -- Other (1) (2) n/m (5) (6) 17% ------------------------------------- ------------------------------------- 6 11 -45% 36 43 -16% ------------------------------------- ------------------------------------- INCOME BEFORE INCOME TAXES 23 31 -26% 54 32 69% Income Tax Provision 2 12 -83% 9 12 -25% ------------------------------------- ------------------------------------- REPORTED EARNINGS 21 19 11% 45 20 125% PURCHASE ACCOUNTING AND OTHER ADJUSTMENTS -- 17 -- -- 46 -- ------------------------------------- ------------------------------------- OPERATING EARNINGS (A) $ 21 $ 36 -42% $ 45 $ 66 -32% ===================================== =====================================
The Consolidated Statement of Operations (Preliminary/Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements appearing in the Annual Report to Shareholders, Form 10K and Form 10Q. (A) Represents MichCon's results included in the DTE Energy Consolidated Statement of Operations. n/m - not meaningful [DTE ENERGY LOGO] Sales Analysis
Electric Sales - Detroit Edison Service Area (000's of GWh) Q4 2003 Q4 2002 % Change ------------------------------ ---------------------------- ------------------ Residential 3,519 3,580 -1.7% Commercial 3,690 4,260 -13.4% Industrial 2,990 3,245 -7.9% Other 666 686 -2.9% ------------------------------ ---------------------------- TOTAL SYSTEM 10,865 11,771 -7.7% Choice Sales* 2,047 1,377 48.7% ------------------------------ ---------------------------- TOTAL SALES 12,912 13,148 -1.8% ============================== ============================
* Includes Dearborn Industrial Group sales
Electric Sales - Detroit Edison Service Area (000's of GWh) 2003 2002 % Change ------------------------------ ---------------------------- ------------------ Residential 15,075 15,959 -5.5% Commercial 15,940 18,393 -13.3% Industrial 12,254 13,588 -9.8% Other 2,621 2,653 -1.2% TOTAL SYSTEM 45,890 50,593 -9.3% Choice Sales * 7,237 3,954 83.0% ------------------------------------------------------------- TOTAL SALES 53,127 54,547 -2.6% ============================== ============================
* Includes Dearborn Industrial Group sales
Gas Sales and End User Transportation- MichCon Service Area (Mcf) 2003 2002 % Change ------------------------------ ---------------------------- ------------------ Residential 129,551,203 129,740,574 -0.1% Commercial 41,135,858 38,916,292 5.7% Industrial 1,526,112 1,570,220 -2.8% ------------------------------ ---------------------------- 172,213,173 170,227,086 1.2% End User Transportation* 151,089,646 169,524,109 -10.9% ------------------------------ ---------------------------- TOTAL SALES 323,302,819 339,751,195 -4.8% ============================== ============================
* includes choice customers
Electric Revenue - Detroit Edison Service Area ($000s) Q4 2003 Q4 2002 % Change ---------------------------- ---------------------------- ------------------ Residential 314,120 318,996 -1.5% Commercial 307,033 349,664 -12.2% Industrial 149,906 168,957 -11.3% Other 27,947 28,369 -1.5% ---------------------------- ---------------------------- TOTAL SYSTEM 799,006 865,986 -7.7% Choice Sales* 10,439 6,722 55.3% ---------------------------- ---------------------------- TOTAL SALES 809,445 872,708 -7.2% ============================== ============================
* Includes Dearborn Industrial Group sales
Electric Revenue - Detroit Edison Service Area ($000s) 2003 2002 % Change ---------------------------- ---------------------------- ------------------ Residential 1,350,882 1,433,123 -5.7% Commercial 1,309,563 1,500,143 -12.7% Industrial 632,489 699,712 -9.6% Other 115,975 114,437 1.3% ---------------------------- ---------------------------- TOTAL SYSTEM 3,408,909 3,747,415 -9.0% Choice Sales* 35,443 19,339 83.3% ---------------------------- ---------------------------- TOTAL SALES 3,444,352 3,766,754 -8.6% ============================== ============================
* Includes Dearborn Industrial Group sales
Gas - MichCon Service Area (Mcf) Q4 2003 Q4 2002 % Change ---------------------------- ---------------------------- ------------------ Residential 40,307,846 41,713,952 -3.4% Commercial 12,102,969 11,328,746 6.8% Industrial 466,728 331,964 40.6% ---------------------------- ---------------------------- 52,877,543 53,374,662 -0.9% End Use Transportation (includes choice customers) 38,042,355 47,787,008 -20.4% ---------------------------- ---------------------------- TOTAL SALES 90,919,898 101,161,670 -10.1% ============================== ============================
* includes choice customers [DTE ENERGY LOGO] DTE ENERGY DEBT/EQUITY CALCULATION As of December 31, 2003 ($ millions) Short-term borrowings $370 Current portion LTD + cap leases 477 Mortgage bonds, notes, and other long-term debt 5,913 Securitization bonds 1,496 Capital leases 75 Less QUIDS 385 Less Trust Preferreds 280 Less MichCon short-term debt 238 Less securitization debt 1,585 ------------------- TOTAL DEBT $5,843 Trust preferred $280 QUIDS 385 Mandatory convertible 185 ------------------- TOTAL PREFERRED/ OTHER $850 EQUITY $5,287 ------------------- TOTAL CAP $11,980 =================== Debt 48.8% Preferred stock/ other 7.1% Common shareholders' equity 44.1% ------------------- TOTAL 100.0% =================== -----END PRIVACY-ENHANCED MESSAGE-----