EX-99.1 2 k87128exv99w1.htm EARNINGS RELEASE OF DTE ENERGY DATED JULY 29, 2004 exv99w1
 

EXHIBIT 99.1

July 29, 2004

DTE ENERGY REPORTS SECOND QUARTER EARNINGS

     DETROIT — DTE Energy (NYSE:DTE) today reported earnings for the second quarter ended June 30, 2004, of $35 million, or $0.20 per diluted share, compared with a reported loss of $39 million, or $0.23 per diluted share in the second quarter 2003.

     Operating earnings (which exclude non-recurring items, tax credit-driven normalization, discontinued operations and cumulative effect of accounting changes) for the 2004 second quarter were $39 million, or $0.23 per diluted share, which is comparable with operating earnings of $70 million, or $0.42 per diluted share for the same period in 2003.

     Reported earnings for the six months ended June 30, 2004, were $225 million, or $1.31 per diluted share versus $116 million or $0.69 per diluted share in 2003. Year-to-date operating earnings were $194 million, or $1.13 per diluted share, compared to $248 million, or $1.47 per diluted share in 2003.

     A reconciliation of reported to operating earnings for both the quarter ended and six months ended June 30, 2004 and 2003 is at the end of this release.

     “As we reported earlier in the week, our two utilities, Detroit Edison and MichCon, experienced another difficult quarter,” said Anthony F. Earley Jr., DTE Energy chairman and CEO. “The negative impact of Michigan’s Electric Choice program was the largest factor driving the earnings decline at Detroit Edison, and the combined effect of increased pension and healthcare expenses, high levels of uncollectable expenses and mild weather negatively impacted MichCon’s earnings performance. We continue to manage our costs aggressively and take actions to reduce our past-due receivables. While we have made progress in our electric and gas cases, the rate relief granted to date and the proposed changes to the Electric Choice program are inadequate, and much more is needed to ensure the financial health of our utilities and our ability to provide safe and reliable service to Michigan energy users.

     “I am pleased,” Earley continued, “that a bipartisan group of state senators recently introduced a package of bills designed to fix the problems associated with the Electric Choice program. I appreciate the efforts of this group of senators in tackling this critical issue. The proposed legislation addresses a number of the fundamental problems with Public Act 141 while preserving an Electric Choice program that is fair for all Michigan citizens and electricity users.”

     Operating earnings results for the second quarter 2004, by business unit, were as follows:

•   DTE Energy Resources operating earnings were $0.29 per diluted share versus $0.65 per diluted share in the second quarter 2003. The regulated operations of this business unit, which are the power generation services of Detroit Edison, declined $0.27 per diluted share versus last year. The decrease was driven by reduced gross margins, due primarily to the loss of retail customer sales to the Electric Choice program. Earnings for the quarter benefited from higher sales due to warmer weather, increased interim base rates and transition charge revenues, and the recording of $19 million (after tax) of regulatory deferrals.

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     The non-regulated operations of this business unit include the company’s energy services, energy marketing and trading, coal services and biomass businesses. Earnings at these non-regulated operations decreased $0.09 per diluted share from last year. The decrease was mainly attributable to lower production of synthetic fuel, reflecting the company’s decision to produce synfuel from seven of its nine plants in the second quarter, pending the sale of its remaining two plants. The company’s strategy is to produce synfuel from the plants in which it has sold an interest in order to optimize earnings and cash flow. During the second quarter 2004, the company produced 3.8 million tons of synfuel, versus 4.4 million tons in the same period last year. In addition, a gain was recorded in the second quarter of 2003 from the termination of a tolling agreement at a non-regulated power generation facility. Partially offsetting these declines were increased earnings from coke battery operations, driven by higher coke sales and coke prices, higher realized margins at energy marketing and trading, and a gain from selling an interest in an on-site energy project.

•   DTE Energy Distribution had an operating loss of $0.01 per diluted share versus a loss of $0.12 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 increase of $0.14 per diluted share, driven by an increase in interim base rates, residential sales growth and the effects of warmer weather, partially offset by increased pension and healthcare costs.

     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 declined by $0.03 per diluted share, reflecting an impairment charge for a decline in the fair value of a technology investment.

•   DTE Energy Gas had an operating loss of $0.19 per diluted share versus a loss of $0.01 per diluted share last year. The regulated operations include the gas distribution services provided by MichCon. Regulated operations were down $0.17 per diluted share due to higher reserves for uncollectable accounts receivable, increased pension and benefit costs, and lower sales due to the economy and warmer winter weather.

     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 declined by $0.01 per diluted share year-over-year.

•   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 earnings were $0.14 per diluted share, compared with an operating loss of $0.10 per diluted share in 2003, due primarily to the gain on sale of Plug Power shares and lower financing costs.

•   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.

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     “Although our utility earnings are under pressure, our non-regulated businesses continue to perform well,” said David E. Meador, DTE Energy executive vice president and chief financial officer. “During the second quarter, we sold interest in two additional synfuel facilities, Indy Coke and Red Mountain. Currently, a majority interest in seven of our nine synfuel plants has been sold, representing 81 percent of our total synfuel production capacity. Given the successful progress in the sell down of our synfuel portfolio, we expect to generate higher production volumes and net income from this business. We now anticipate that our synfuels business will earn $190 million to $210 million in net income this year, up from our previous earnings guidance of $150 million to $190 million. We are also increasing the 2004 earnings guidance for our non-regulated business portfolio to $215 million to $255 million, up from our previous target of $194 million to $249 million.”

Recent Events and Developments

MPSC Staff Recommendation for Final MichCon Rate Order

On July 26, 2004, the MPSC staff issued its recommendation for final rate relief in MichCon’s rate proceeding. The staff recommended a rate increase of $70 million, using a projected 2005 test year. MichCon had requested $194 million in final rate relief, based on a projected 2005 test year. The staff also proposed an allowed return on common equity of 11 percent, with a capital structure of 50 percent debt and 50 percent equity. Rebuttal testimony is due Aug. 6. An interim rate order in this proceeding is expected in August, and a final rate order anticipated in January 2005.

Bills Introduced to fix Michigan’s Electric Choice Program

On July 1, 2004, a bipartisan group of state senators introduced a package of six bills designed to address the problems associated with Michigan’s Electric Choice Program. Leading the effort to introduce bills were Sens. Bruce Patterson, chairman of the Senate’s Technology & Energy Committee, Bev Hammerstrom, majority floor leader, and Dennis Olshove, the Technology & Energy Committee’s minority vice chairman. The bills were assigned to the Technology & Energy Committee, which will hold the first of a series of hearings and work group meetings Aug. 4 in an effort to build consensus among Michigan’s electric utilities, alternative electric suppliers and customer groups. The complete legislation text can be found at www.michiganlegislature.gov.

Union Contract Negotiation

Members of Local 223, Utility Workers Union of America (UWUA), have ratified a new three-year contract with DTE Energy covering employees in the power plants, customer service, distribution, corporate services and in a variety of office, technical and professional positions. Local 223 members working for MichCon, the company’s natural gas utility, are still conducting the ratification process, which is scheduled to conclude Aug. 2. The UWUA is the largest union at DTE Energy with approximately 4,700 members.

DTE Energy Services Purchases Utility Equipment at Eight DaimlerChrysler Corp. Plants

On May 26, 2004, DTE Energy Services and an affiliate of the Goldman Sachs Group Inc. formed a joint venture to acquire utility equipment at eight DaimlerChrysler Corp. manufacturing facilities. DTE Energy Services, a subsidiary of DTE Energy, will provide a variety of utility management services to DaimlerChrysler Corp. under a long-term management services agreement. The utility assets, at DaimlerChrysler Corp. plants in Michigan, Indiana and Ohio, were purchased for $288 million. The types of equipment included in the project are production-support systems such as electrical equipment, steam boilers, wastewater treatment and lighting systems, compressed air, chilled water and air handling equipment.

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DTE Energy Services and Regency Affiliates Inc. Purchase Mobile Energy Services Co.

On May 19, 2004, DTE Energy Services and Regency Affiliates Inc. purchased Mobile Energy Services Co. (MESC). MESC is an on-site energy facility that supplies steam and electricity to a Kimberly-Clark tissue mill in Mobile, Ala. DTE Energy Services, which owns and controls 50 percent of MESC, will provide management support and provide for the operation and maintenance of the energy facility. Under a 15-year agreement with Kimberly-Clark, MESC will be the exclusive steam supplier to the mill and will provide a substantial portion of the mill’s electricity requirements. The energy facility supplies up to 61 megawatts of cogenerated steam and electricity for use in the mill’s operations.

DTE Energy Services to Provide Services at La Paloma Generating Facility

On April 5, 2004, DTE Energy Services signed agreements with La Paloma Generating Co. LP to provide comprehensive asset management, and operation and maintenance services for the La Paloma Generating plant near Bakersfield, Calif. The La Paloma facility is a 1,121-megawatt combined-cycle power plant fueled by natural gas. It supplies wholesale electricity to the California market. Under the asset management agreement, DTE Energy Services is responsible for day-to-day management and administration of the project contracts. Under the O&M agreement, DTE Energy Services is responsible for supplying personnel to operate and maintain the facility, including daily facility operations and monitoring, and materials required for operation and maintenance of the facility.

DTE Energy Sells Portion of Plug Power Ownership

On May 25, 2004, DTE Energy sold, through its wholly owned subsidiary, DTE Energy Ventures Inc., 3.5 million shares of the stock it owns in Plug Power Inc. (NASDAQ:PLUG), a fuel-cell development and manufacturing company. After the sale, DTE Energy Ventures continues to be the largest shareholder of Plug Power, with an ownership position totaling 10.6 million shares, or 14.5 percent, down from 19.4 percent ownership.

     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 conference call with the investment community at 9 a.m. EDT Friday, July 30, to discuss second quarter earnings results. Investors, the news media and the public may listen to a live Internet broadcast of the DTE Energy conference call at www.dteenergy.com. A replay will be available approximately one hour after the conference call until Aug. 30 and the internet broadcast will be archived on the company’s website.

     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.

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     The information contained in this document is as of the date of this press 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 press 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 the effects of weather and other natural phenomena on operations and sales to, and purchases by, customers; economic climate and growth or decline in the geographic areas where we do business; environmental issues, laws and regulations, and the cost of remediation and compliance associated therewith; nuclear regulations and operations associated with nuclear facilities; the ability to utilize Section 29 tax credits and/or sell interests in facilities producing such credits; implementation of electric and gas Customer Choice programs; impact of electric and gas utility restructuring in Michigan, including legislative amendments; employee relations and the impact of collective bargaining agreements; unplanned outages; access to capital markets and capital market conditions and the results of other financing efforts which can be affected by credit agency ratings; the timing and extent of changes in interest rates; the level of borrowings; changes in the cost of coal and other raw materials, purchased power and natural gas; effects of competition; impacts of FERC, MPSC, NRC and other applicable governmental proceedings and regulations; contributions to earnings by non-regulated businesses; changes in federal, state and local tax laws and their interpretations, including the code, regulations, rulings, court proceedings and audits; the ability to recover costs through rate increases; the availability, cost, coverage and terms of insurance; the cost of protecting assets against or damage due to terrorism; changes in accounting standards and financial reporting regulations; changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business issues; and changes in the economic and financial viability of our suppliers, customers and trading counterparties, and the continued ability of such parties to perform their obligations to the company. This press release should also be read in conjunction with the forward-looking statements in each of DTE Energy’s, MichCon’s and Detroit Edison’s 2003 Form 10-K, 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

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DTE ENERGY COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

                                 
    Three Months Ended   Six Months Ended
    June 30
   June 30
(in Millions, Except per Share Amounts)
   2004
   2003
   2004
   2003
Operating Revenues
   $ 1,501     $ 1,600     $ 3,594     $ 3,695  
 
    
 		      
 		      
 		      
 		  
Operating Expenses
                                
Fuel, purchased power and gas
     377       493       1,118       1,306  
Operation and maintenance
     851       792       1,633       1,556  
Depreciation, depletion and amortization
     179       180       346       377  
Taxes other than income
     60       87       145       184  
Gain on sale of assets, net
     (83 )     (23 )     (133 )     (16 )
 
    
 		      
 		      
 		      
 		  
 
     1,384       1,529       3,109       3,407  
 
    
 		      
 		      
 		      
 		  
Operating Income
     117       71       485       288  
 
    
 		      
 		      
 		      
 		  
Other (Income) and Deductions
                                
Interest expense
     129       138       260       277  
Interest income
     (17 )     (7 )     (27 )     (15 )
Minority interest
     (51 )     (36 )     (81 )     (52 )
Other income
     (20 )     (18 )     (37 )     (31 )
Other expenses
     23       18       45       51  
 
    
 		      
 		      
 		      
 		  
 
     64       95       160       230  
 
    
 		      
 		      
 		      
 		  
Income (Loss) Before Income Taxes
     53       (24 )     325       58  
Income Tax Provision (Benefit)
     18       13       93       (13 )
 
    
 		      
 		      
 		      
 		  
Income (Loss) from Continuing Operations
     35       (37 )     232       71  
 
    
 		      
 		      
 		      
 		  
Income (Loss) from Discontinued Operations net of tax
     —       (2 )     (7 )     72  
Cumulative Effect of Accounting Changes, net of tax
     —       —       —       (27 )
 
    
 		      
 		      
 		      
 		  
Net Income (Loss)
   $ 35     $ (39 )   $ 225     $ 116  
 
    
 		      
 		      
 		      
 		  
Basic Earnings (Loss) per Common Share
                                
Income (Loss) from continuing operations
   $ .20     $ (.22 )   $ 1.35     $ .43  
Discontinued operations
     —       (.01 )     (.04 )     .43  
Cumulative effect of accounting changes
     —       —       —       (.17 )
 
    
 		      
 		      
 		      
 		  
Total
   $ .20     $ (.23 )   $ 1.31     $ .69  
 
    
 		      
 		      
 		      
 		  
Diluted Earnings (Loss) per Common Share
                                
Income (Loss) from continuing operations
   $ .20     $ (.22 )   $ 1.35     $ .42  
Discontinued operations
     —       (.01 )     (.04 )     .43  
Cumulative effect of accounting changes
     —       —       —       (.16 )
 
    
 		      
 		      
 		      
 		  
Total
   $ .20     $ (.23 )   $ 1.31     $ .69  
 
    
 		      
 		      
 		      
 		  
Average Common Shares
                                
Basic
     173       168       172       167  
Diluted
     174       168       172       168  
Dividends Declared per Common Share
   $ .515     $ .515     $ 1.03     $ 1.03  

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DTE ENERGY COMPANY
SEGMENT NET INCOME (UNAUDITED)

                                                                 
    Three Months Ended June 30
    2004
   2003
    Reported                   Operating   Reported                   Operating
(in Millions)
   Earnings
   Adjustments
   Earnings
   Earnings
   Adjustments
   Earnings
Energy Resources
                                                                
Regulated — Power Generation
   $ 1     $ —             $ 1     $ 46     $ —             $ 46  
Non-regulated
                                                                
Energy Services
     56       —               56       76       —               76  
Energy Marketing & Trading
     (7 )     —               (7 )     (15 )     —               (15 )
Other
     —       —               —       1       —               1  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Total Non-regulated
     49       —               49       62       —               62  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     50       —               50       108       —               108  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Energy Distribution
                                                                
Regulated — Power Distribution
     7       —               7       (16 )     —               (16 )
Non-regulated
     (8 )     —               (8 )     (5 )     —               (5 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     (1 )     —               (1 )     (21 )     —               (21 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Energy Gas
                                                                
Regulated — Gas Distribution
     (38 )     —               (38 )     (8 )     —               (8 )
Non-regulated
     5       —               5       6       —               6  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     (33 )     —               (33 )     (2 )     —               (2 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Corporate and Other
     19       4       B       23       (122 )     107       B       (15 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     19       4               23       (122 )     107               (15 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Income from Continuing Operations
                                                                
Regulated
     (30 )     —               (30 )     22       —               22  
Non-regulated
     65       4               69       (59 )     107               48  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     35       4               39       (37 )     107               70  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Discontinued Operations
                                                                
Income from operations
     —       —               —       —       —               —  
Impairment loss/ Gain on sale
     —       —               —       (2 )     2       I       —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     —       —               —       (2 )     2               —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Cumulative Effect of Accounting Changes
                                                                
Asset retirement obligations
     —       —               —       —       —               —  
Energy trading activities
     —       —               —       —       —               —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     —       —               —       —       —               —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Net Income
   $ 35     $ 4             $ 39     $ (39 )   $ 109             $ 70  
 
    
 		      
 		              
 		      
 		      
 		              
 		  

ADJUSTMENTS KEY

         
A)
  Adjustment for contract termination / modification   Terminated a long-term gas exchange agreement and modified a related transportation agreement with a pipeline company
B)
  Tax credit driven normalization   Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual results not impacted
C)
  Impairment loss / Discontinued operations   Impairment charge relating to the expected loss on sale of Southern Missouri Gas Company
D)
  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
E)
  Loss on sale of steam heating business   Sold Detroit Edison steam heating business
F)
  Disallowance of gas costs   Reserve for the potential disallowance of MichCon 2002 gas procurement costs
G)
  Contribution to DTE Energy Foundation   Used a portion of International Transmission Company (ITC) sale proceeds to fund the DTE Energy Foundation
H)
  Adjustment for discontinued operations   Sold ITC
I)
  Gain on sale of ITC   Sold ITC
J)
  Asset retirement obligations   Cumulative effect of a change in accounting principle from adoption of SFAS 143
K)
  Adjustment of EITF 98-10 accounting change   Cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10

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DTE ENERGY COMPANY
SEGMENT DILUTED EARNINGS PER SHARE (UNAUDITED)

                                                                 
    Three Months Ended June 30
    2004
   2003
    Reported                   Operating   Reported                   Operating
    Earnings
   Adjustments
   Earnings
   Earnings
   Adjustments
   Earnings
Energy Resources
                                                                
Regulated — Power Generation
   $ 0.01     $ —             $ 0.01     $ 0.28     $ —             $ 0.28  
Non-regulated
                                                                
Energy Services
     0.32       —               0.32       0.46       —               0.46  
Energy Marketing & Trading
     (0.04 )     —               (0.04 )     (0.09 )     —               (0.09 )
Other
     —       —               —       —       —               —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Total Non-regulated
     0.28       —               0.28       0.37       —               0.37  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     0.29       —               0.29       0.65       —               0.65  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Energy Distribution
                                                                
Regulated — Power Distribution
     0.04       —               0.04       (0.10 )     —               (0.10 )
Non-regulated
     (0.05 )     —               (0.05 )     (0.02 )     —               (0.02 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     (0.01 )     —               (0.01 )     (0.12 )     —               (0.12 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Energy Gas
                                                                
Regulated — Gas Distribution
     (0.22 )     —               (0.22 )     (0.05 )     —               (0.05 )
Non-regulated
     0.03       —               0.03       0.04       —               0.04  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     (0.19 )     —               (0.19 )     (0.01 )     —               (0.01 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Corporate and Other
     0.11       0.03       B       0.14       (0.74 )     0.64       B       (0.10 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     0.11       0.03               0.14       (0.74 )     0.64               (0.10 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Income from Continuing Operations
                                                                
Regulated
     (0.17 )     —               (0.17 )     0.13       —               0.13  
Non-regulated
     0.37       0.03               0.40       (0.35 )     0.64               0.29  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     0.20       0.03               0.23       (0.22 )     0.64               0.42  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Discontinued Operations
                                                                
Income from operations
     —       —               —       —       —               —  
Impairment loss/ Gain on sale
     —       —               —       (0.01 )     0.01       I       —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     —       —               —       (0.01 )     0.01               —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Cumulative Effect of Accounting Changes
                                                                
Asset retirement obligations
     —                       —       —       —               —  
Energy trading activities
     —                       —       —       —               —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
    
 		                      
 		      
 		      
 		              
 		  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Net Income
   $ 0.20     $ 0.03             $ 0.23     $ (0.23 )   $ 0.65             $ 0.42  
 
    
 		      
 		              
 		      
 		      
 		              
 		  

ADJUSTMENTS KEY

     
A) Adjustment for contract termination / modification
  Terminated a long-term gas exchange agreement and modified a related transportation agreement with a pipeline company
B) Tax credit driven normalization
  Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual results not impacted
C) Impairment loss / Discontinued operations
  Impairment charge relating to the expected loss on sale of Southern Missouri Gas Company
D) 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
E) Loss on sale of steam heating business
  Sold Detroit Edison steam heating business
F) Disallowance of gas costs
  Reserve for the potential disallowance of MichCon 2002 gas procurement costs
G) Contribution to DTE Energy Foundation
  Used a portion of International Transmission Company (ITC) sale proceeds to fund the DTE Energy Foundation
H) Adjustment for discontinued operations
  Sold ITC
I) Gain on sale of ITC
  Sold ITC
J) Asset retirement obligations
  Cumulative effect of a change in accounting principle from adoption of SFAS 143
K) 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 NET INCOME (UNAUDITED)

                                                                 
    Six Months Ended June 30
    2004
   2003
    Reported                   Operating   Reported                   Operating
(in Millions)
   Earnings
   Adjustments
   Earnings
   Earnings
   Adjustments
   Earnings
Energy Resources
                                                                
Regulated — Power Generation
   $ 17     $ —             $ 17     $ 71     $ —             $ 71  
Non-regulated
                                                                
Energy Services
     94       —               94       127       —               127  
Energy Marketing & Trading
     50       (48 )     A       2       29       (16 )     D       13  
Other
     (2 )     —               (2 )     1       —               1  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Total Non-regulated
     142       (48 )             94       157       (16 )             141  
 
     159       (48 )             111       228       (16 )             212  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Energy Distribution
                                                                
Regulated — Power Distribution
     35       —               35       (20 )     14       E       (6 )
Non-regulated
     (11 )     —               (11 )     (9 )     —               (9 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     24       —               24       (29 )     14               (15 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Energy Gas
                                                                
Regulated — Gas Distribution
     33       —               33       51       17       F       68  
Non-regulated
     9       —               9       14       —               14  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     42       —               42       65       17               82  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
                                             10       G          
Corporate and Other
     7       10       B       17       (193 )     152       B       (31 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     7       10               17       (193 )     162               (31 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Income from Continuing Operations
                                                                
Regulated
     85       —               85       102       31               133  
Non-regulated
     147       (38 )             109       (31 )     146               115  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     232       (38 )             194       71       177               248  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Discontinued Operations
                                                                
Income from operations
     —       —               —       5       (5 )     H       —  
Impairment loss/ Gain on sale
     (7 )     7       C       —       67       (67 )     I       —  
 
     (7 )     7               —       72       (72 )             —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Cumulative Effect of Accounting Changes
                                                                
Asset retirement obligations
     —       —               —       (11 )     11       J       —  
Energy trading activities
     —       —               —       (16 )     16       K       —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     —       —               —       (27 )     27               —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Net Income
   $ 225     $ (31 )           $ 194     $ 116     $ 132             $ 248  
 
    
 		      
 		              
 		      
 		      
 		              
 		  

ADJUSTMENTS KEY

     
A) Adjustment for contract termination / modification
  Terminated a long-term gas exchange agreement and modified a related transportation agreement with a pipeline company
B) Tax credit driven normalization
  Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual results not impacted
C) Impairment loss / Discontinued operations
  Impairment charge relating to the expected loss on sale of Southern Missouri Gas Company
D) 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
E) Loss on sale of steam heating business
  Sold Detroit Edison steam heating business
F) Disallowance of gas costs
  Reserve for the potential disallowance of MichCon 2002 gas procurement costs
G) Contribution to DTE Energy Foundation
  Used a portion of International Transmission Company (ITC) sale proceeds to fund the DTE Energy Foundation
H) Adjustment for discontinued operations
  Sold ITC
I) Gain on sale of ITC
  Sold ITC
J) Asset retirement obligations
  Cumulative effect of a change in accounting principle from adoption of SFAS 143
K) Adjustment of EITF 98-10 accounting change
  Cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10

9

 

DTE ENERGY COMPANY
SEGMENT DILUTED EARNINGS PER SHARE (UNAUDITED)

                                                                 
    Six Months Ended June 30
    2004
   2003
    Reported                   Operating   Reported                   Operating
    Earnings
   Adjustments
   Earnings
   Earnings
   Adjustments
   Earnings
Energy Resources
                                                                
Regulated — Power Generation
   $ 0.10     $ —             $ 0.10     $ 0.42     $ —             $ 0.42  
Non-regulated
                                                                
Energy Services
     0.55       —               0.55       0.76       —               0.76  
Energy Marketing & Trading
     0.29       (0.28 )     A       0.01       0.17       (0.09 )     D       0.08  
Other
     (0.02 )     —               (0.02 )     0.01       —               0.01  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Total Non-regulated
     0.82       (0.28 )             0.54       0.94       (0.09 )             0.85  
 
     0.92       (0.28 )             0.64       1.36       (0.09 )             1.27  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Energy Distribution
                                                                
Regulated — Power Distribution
     0.20       —               0.20       (0.12 )     0.08       E       (0.04 )
Non-regulated
     (0.06 )     —               (0.06 )     (0.05 )     —               (0.05 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     0.14       —               0.14       (0.17 )     0.08               (0.09 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Energy Gas
                                                                
Regulated — Gas Distribution
     0.19       —               0.19       0.31       0.10       F       0.41  
Non-regulated
     0.05       —               0.05       0.08       —               0.08  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     0.24       —               0.24       0.39       0.10               0.49  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
                                             0.06       G          
Corporate and Other
     0.05       0.06       B       0.11       (1.16 )     0.90       B       (0.20 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     0.05       0.06               0.11       (1.16 )     0.96               (0.20 )
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Income from Continuing Operations
                                                                
Regulated
     0.49       —               0.49       0.61       0.18               0.79  
Non-regulated
     0.86       (0.22 )             0.64       (0.19 )     0.87               0.68  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     1.35       (0.22 )             1.13       0.42       1.05               1.47  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Discontinued Operations
                                                                
Income from operations
     —       —               —       0.03       (0.03 )     H       —  
Impairment loss/ Gain on sale
     (0.04 )     0.04       C       —       0.40       (0.40 )     I       —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     (0.04 )     0.04               —       0.43       (0.43 )             —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Cumulative Effect of Accounting Changes
                                                                
Asset retirement obligations
     —       —               —       (0.07 )     0.07       J       —  
Energy trading activities
     —       —               —       (0.09 )     0.09       K       —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
 
     —       —               —       (0.16 )     0.16               —  
 
    
 		      
 		              
 		      
 		      
 		              
 		  
Net Income
   $ 1.31     $ (0.18 )           $ 1.13     $ 0.69     $ 0.78             $ 1.47  
 
    
 		      
 		              
 		      
 		      
 		              
 		  

ADJUSTMENTS KEY

     
A) Adjustment for contract termination / modification
  Terminated a long-term gas exchange agreement and modified a related transportation agreement with a pipeline company
B) Tax credit driven normalization
  Quarterly adjustment at DTE Energy to normalize its effective tax rate. Annual results not impacted
C) Impairment loss / Discontinued operations
  Impairment charge relating to the expected loss on sale of Southern Missouri Gas Company
D) 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
E) Loss on sale of steam heating business
  Sold Detroit Edison steam heating business
F) Disallowance of gas costs
  Reserve for the potential disallowance of MichCon 2002 gas procurement costs
G) Contribution to DTE Energy Foundation
  Used a portion of International Transmission Company (ITC) sale proceeds to fund the DTE Energy Foundation
H) Adjustment for discontinued operations
  Sold ITC
I) Gain on sale of ITC
  Sold ITC
J) Asset retirement obligations
  Cumulative effect of a change in accounting principle from adoption of SFAS 143
K) Adjustment of EITF 98-10 accounting change
  Cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10

10