DETROIT, July 30 MI-DTE-Q2-earnings
DETROIT, July 30 /PRNewswire-FirstCall/ -- DTE Energy (NYSE: DTE) today
provided an update regarding energy reform legislation recently passed by the
Michigan House and Senate. In the second quarter, both chambers passed
versions of energy policy and renewable portfolio standard bills. These bills
were sent to conference committees last week to reach compromises on
outstanding issues.
"We encourage the conference committees to reconcile the energy bills
quickly and push for near-term passage of all energy-reform provisions," said
Anthony F. Earley Jr., DTE Energy chairman and CEO. "Comprehensive energy
policy will ensure clean, affordable and reliable energy for Michigan
customers and create new jobs as we work to diversify the state's energy
resources and spur economic development."
DTE Energy also reported second quarter 2008 earnings of $28 million, or
$0.17 per diluted share, compared with reported earnings of $385 million, or
$2.20 per diluted share in the second quarter of 2007. Reported earnings
decreased primarily due to the one-time gain of $1.91 per diluted share on the
sale of the company's Antrim Shale gas exploration and production business in
June 2007.
Operating earnings for the second quarter 2008 were $26 million, or $0.16
per diluted share, compared with second quarter 2007 operating earnings of $64
million, or $0.38 per diluted share. Operating earnings exclude non-recurring
items, certain timing-related items and discontinued operations. In addition,
operating earnings per diluted share are impacted by the company's significant
stock buyback program in 2007. DTE Energy averaged 163 million shares
outstanding in the second quarter of 2008, compared with 175 million shares in
the second quarter of 2007. Operating earnings decreased primarily due to
timing-related, mark-to-market losses in Energy Trading's gas storage
portfolio, coupled with a positive Detroit Edison Power Supply Cost Recovery
adjustment recorded in 2007 and not repeated in 2008, and higher 2008 storm
costs at Detroit Edison. In addition, operating earnings decreased because of
higher uncollectible reserves for the utilities and recognition of
depreciation expense previously deferred while certain power and industrial
assets were classified as "held for sale." As previously announced, DTE Energy
determined that retaining these assets is in the best interest of
shareholders.
DTE Energy reported strong year-to-date cash flow from operations of
approximately $1.5 billion, up from $1 billion year-to-date June 2007.
Outlook for 2008
DTE Energy reiterated its 2008 operating earnings guidance of $455 million
to $520 million, or $2.80 to $3.20 per diluted share.
"Catastrophic storms in June challenged us in the second quarter," said
David E. Meador, DTE Energy executive vice president and chief financial
officer. "With Detroit Edison's rate case not scheduled for completion until
late 2008, we anticipated challenges in earning our authorized electric
utility return on equity. However, these storms, coupled with higher
uncollectible accounts receivable, put further pressure on us. We continue to
pursue continuous improvement initiatives as well as one-time cost cutting
efforts to meet our earnings guidance, while not jeopardizing efforts towards
operational and customer service excellence."
Reported earnings for the six months ended June 30, 2008, were $240
million or $1.48 per diluted share, versus $519 million or $2.95 per diluted
share in 2007. Year-to-date operating earnings were $153 million or $0.94 per
diluted share, compared with $179 million or $1.02 per diluted share in 2007.
Reconciliations of reported to operating earnings for both the quarter ended
and six months ended June 30, 2008 and 2007, are at the end of this news
release.
Second quarter 2008 operating earnings results, by segment:
Electric Utility: Operating earnings for Detroit Edison were $0.31 per
diluted share versus $0.37 in the second quarter of 2007. Drivers of the
variance include a positive PSCR adjustment recorded in 2007 and not repeated
in 2008, higher uncollectible reserves, and higher storm costs, partially
offset by the elimination of computer system start-up costs incurred in 2007
and lower benefit expenses in 2008.
Gas Utility: MichCon had a loss of $0.07 per diluted share versus a $0.01
loss in the second quarter of 2007. The quarter-over-quarter variance is
primarily due to lower storage margins and higher uncollectible reserves.
Gas Midstream: (Formerly Coal and Gas Midstream) This segment was
realigned starting this quarter, moving our coal services business line to the
Power & Industrial Projects segment. The Gas Midstream segment is now
composed entirely of gas pipeline and storage assets. Operating earnings in
this segment of $0.06 per diluted share were comparable to $0.05 per diluted
share earned in 2007.
Unconventional Gas Production: Operating earnings were $0.02 per diluted
share, down from $0.03 in the second quarter of 2007. Reductions in earnings
due to prior sales of the company's Michigan Antrim Shale and core Texas
Barnett Shale properties were partially offset by higher western Barnett
production and prices.
Power and Industrial Projects: Realigned for the transfer of the coal
services business, this segment reported an operating loss of $0.04 per
diluted share versus a gain of $0.05 per share in the second quarter of 2007.
The change in operating earnings is due to recognition of depreciation
previously deferred while assets were classified as "held for sale," coupled
with decreased contribution from coal services due to the absence of synfuel
transportation.
Energy Trading: Energy Trading had an operating loss of $0.07 per diluted
share versus operating earnings of $0.05 in the second quarter of 2007.
Timing-related, mark-to-market losses in the gas storage portfolio and
realized losses in the power portfolio are the primary drivers of the change.
Corporate and Other: The Corporate and Other segment had an operating
loss of $0.05 per diluted share compared with a loss of $0.16 in the second
quarter of 2007. Driving the performance were effective tax rate timing
impacts and lower interest expense.
Conference call and webcast information
This earnings announcement, as well as a package of supplemental financial
information, will be available on the company's website at
dteenergy.com/investors.
DTE Energy plans to conduct a conference call with the investment
community hosted by Meador at 9 a.m. EDT Thursday, July 31, to discuss second
quarter earnings results. Investors, the news media and the public may listen
to a live internet broadcast of the meeting at dteenergy.com/investors. The
telephone dial-in numbers for investors are (877) 852-6543 or (719) 325-4763.
There is no passcode. The internet broadcast will be archived on the company's
website. An audio replay of the call will be available from 1 p.m. Thursday to
Aug. 15. To access the replay, dial (888) 203-1112 or (719) 457-0820 and enter
passcode 2446734.
A package of slides with supplemental information will be available and
archived on the company's website at www.dteenergy.com/investors.
DTE Energy is a Detroit-based diversified energy company involved in the
development and management of energy-related businesses and services
nationwide. Its operating units include Detroit Edison, an electric utility
serving 2.2 million customers in Southeastern Michigan, MichCon, a natural gas
utility serving 1.3 million customers in Michigan and other non-utility,
energy businesses focused on gas pipelines and storage, coal transportation,
unconventional gas production, and power and industrial projects. Information
about DTE Energy is available at dteenergy.com.
Use of Operating Earnings Information - In this release, DTE Energy
discusses 2008 operating earnings guidance. It is likely that certain items
that impact the company's 2008 reported results will be excluded from
operating results. Reconciliations to the comparable 2008 reported earnings
guidance is not provided because it is not possible to provide a reliable
forecast of specific line items. These items may fluctuate significantly from
period to period and may have a significant impact on reported earnings.
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.
The information contained herein is as of the date of this release. DTE
Energy expressly disclaims any current intention to update any forward-looking
statements contained in this release 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 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 uncertainties of successful exploration of gas shale resources
and inability to estimate gas reserves with certainty; the effects of weather
and other natural phenomena on operations and sales to customers, and
purchases from suppliers; economic climate and population growth or decline in
the geographic areas where we do business; environmental issues, laws and
regulations, and the cost of remediation and compliance, including potential
new federal and state requirements that could include carbon and more
stringent mercury emission controls, a renewable portfolio standard and energy
efficiency mandates; nuclear regulations and operations associated with
nuclear facilities; impact of electric and gas utility restructuring in
Michigan, including legislative amendments and Customer Choice programs;
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 and availability of coal and other raw
materials, purchased power and natural gas; effects of competition; impact of
regulation by the FERC, MPSC, NRC and other applicable governmental
proceedings and regulations, including any associated impact on rate
structures; contributions to earnings by non-utility subsidiaries; changes in
and application of federal, state and local tax laws and their
interpretations, including the Internal Revenue 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 and
application of 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; amounts of uncollectible
accounts receivable; binding arbitration, litigation and related appeals; 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 release should also be read in
conjunction with the "Forward-Looking Statements" section in each of DTE
Energy's and Detroit Edison's 2007 Form 10-K and 2008 Forms 10-Q (which
sections are incorporated herein by reference), and in conjunction with other
SEC reports filed by DTE Energy and Detroit Edison.
DTE Energy Company
Consolidated Statements of Operations (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
(in Millions, Except per Share
Amounts)2008 2007(1)2008 2007(1)
Operating Revenues $2,251 $1,692 $4,821 $4,155
Operating Expenses
Fuel, purchased power and gas1,032 6982,2981,833
Operation and maintenance 754 7961,4531,530
Depreciation, depletion and
amortization 216 240 442 464
Taxes other than income 78 110 158 200
Gain on sale of non-utility assets (2)(897)(128)(897)
Other asset (gains) and losses,
reserves and impairments, net 169 12 19
2,094 9564,2353,149
Operating Income 157 736 5861,006
Other (Income) and Deductions
Interest expense 122 134 246 270
Interest income (4) (9) (8) (14)
Other income (18) (6) (40) (24)
Other expenses 9 25 23 34
109 144 221 266
Income Before Income Taxes and
Minority Interest 48 592 365 740
Income Tax Provision 18 243 134 294
Minority Interest 2132
Income from Continuing Operations 28 348 228 444
Discontinued Operations
Income (loss) from discontinued
operations, net of tax -(19) 12 (40)
Minority interest in
discontinued operations - (56) - (115)
- 37 12 75
Net Income$28 $385 $240 $519
Basic Earnings per Common Share
Income from continuing operations$0.17$2.00$1.41$2.53
Discontinued operations- 0.21 0.07 0.43
Total $0.17$2.21$1.48$2.96
Diluted Earnings per Common Share
Income from continuing operations$0.17$1.99$1.41$2.52
Discontinued operations- 0.21 0.07 0.43
Total $0.17$2.20$1.48$2.95
Weighted Average Common Shares
Outstanding
Basic 162 174 162 175
Diluted163 175 163 176
Dividends Declared per Common Share $0.53$0.53$1.06$1.06
(1) Synthetic Fuels was reported as a discontinued operation beginning in
the fourth quarter of 2007, resulting in the reclassification of
previously reported 2007 results.
DTE Energy Company
Segment Net Income (Unaudited)
Three Months Ended June 30
20082007(1)
Reported
EarnAdjust Operating Reported Adjust Operating
(in Millions) -ings(2) -ments Earnings Earnings -ments Earnings
Electric Utility$51 $- $51$60 $1 E $64
3 F
Gas Utility (11) - (11)(7) 3 E (3)
1 G
Non-utility Operations
Gas Midstream 8 - 8 8 - 8
Unconventional
Gas Production 4 (1)A 3 (211) 210 B 5
6 H
Power and Industrial
Projects(6) -(6) 9 - 9
Energy Trading (14) 4 C (10) (13)21 B 8
Total Non-utility
operations (8) 3(5) (207) 23730
Corporate and Other (4) (5)C (9) 502 (566)B (27)
37 E
Income from Continuing
Operations 28 (2) 26348 (284) 64
Discontinued Operations - - - 37(37)D -
Net Income $28 $(2) $26 $385 $(321) $64
(1) Synthetic Fuels was reported as a discontinued operation beginning in
the fourth quarter of 2007, resulting in the reclassification of
previously reported 2007 results.
(2) Segment results exclude inter-segment eliminations.
Adjustments key
A) Barnett core sale Gain on sale of Barnett Core.
B) Antrim sale Net impact pertaining to Antrim sale.
C) Antrim hedgeResidual hedge impact from Antrim sale.
D) SynfuelsOperating results relating to
discontinuance of synfuel operations.
E) Effective tax rate
normalization Quarterly adjustment to normalize
effective tax rate.
F) Regulatory asset surcharge Adjustment for billed sales.
G) Performance Excellence Process Costs to achieve savings from
Performance Excellence Process.
H) Barnett impairment Exploratory well write down.
DTE Energy Company
Segment Diluted Earnings Per Share (Unaudited)
Three Months Ended June 30
20082007(1)
Reported
EarnAdjust Operating Reported Adjust Operating
-ings(2) -ments Earnings Earnings -ments Earnings
Electric Utility $0.31 $- $0.31 $0.34 $0.01 E $0.37
0.02 F
Gas Utility (0.07) - (0.07) (0.04) 0.02 E (0.01)
0.01 G
Non-utility Operations
Gas Midstream 0.06 - 0.06 0.05 - 0.05
Unconventional Gas
Production0.03 (0.01)A0.02 (1.20) 1.20 B0.03
0.03 H
Power and Industrial
Projects (0.04) - (0.04) 0.05 - 0.05
Energy Trading(0.10) 0.03 C (0.07) (0.07) 0.12 B0.05
Total
Non-utility
operations(0.05) 0.02 (0.03) (1.17) 1.35 0.18
Corporate and Other (0.02) (0.03)C (0.05) 2.86 (3.23)B (0.16)
0.21 E
Income from Continuing
Operations0.17 (0.01) 0.16 1.99 (1.61) 0.38
Discontinued Operations - - - 0.21 (0.21)D -
Net Income$0.17 $(0.01)$0.16 $2.20 $(1.82)$0.38
(1) Synthetic Fuels was reported as a discontinued operation beginning in
the fourth quarter of 2007, resulting in the reclassification of
previously reported 2007 results.
(2) Segment results exclude inter-segment eliminations.
Adjustments key
A) Barnett core saleGain on sale of Barnett Core.
B) Antrim sale Net impact pertaining to Antrim sale.
C) Antrim hedge Residual hedge impact from Antrim sale.
D) Synfuels Operating results relating to discontinuance
of synfuel operations.
E) Effective tax rate Quarterly adjustment to normalize effective
normalizationtax rate.
F) Regulatory asset
surcharge Adjustment for billed sales.
G) Performance Excellence Costs to achieve savings from Performance
Process Excellence Process.
H) Barnett impairment Exploratory well write down.
DTE Energy Company
Segment Net Income (Unaudited)
Six Months Ended June 30
2008 2007(1)
Reported
EarnAdjust Operating Reported Adjust Operating
(in Millions) -ings(2) -ments Earnings Earnings -ments Earnings
Electric Utility$92 $- $92 $100 $2 E$114
6 F
6 J
Gas Utility 48 -48 60 2 G 60
(2)E
Non-utility Operations
Gas Midstream16 -16 16 -16
Unconventional Gas
Production 86 (81)A 5 (209) 210 B 7
6 H
Power and Industrial
Projects 4 - 4 17 -17
Energy Trading 17 3 C 20(12)21 B 9
Total Non-utility
operations 123 (78) 45 (188) 23749
Corporate and Other (35) 2 I (32) 472 50 E (44)
1 C (566)B
Income from
Continuing
Operations 228 (75) 153444 (265) 179
Discontinued Operations 12 (12)D - 75(74)D -
(1)K
Net Income $240$(87) $153 $519 $(340) $179
(1) Synthetic Fuels was reported as a discontinued operation beginning in
the fourth quarter of 2007, resulting in the reclassification of
previously reported 2007 results.
(2) Segment results exclude inter-segment eliminations.
Adjustments key
A) Barnett core sale Gain on sale of Barnett Core.
B) Antrim sale Net impact pertaining to Antrim sale.
C) Antrim hedgeResidual hedge impact from Antrim sale.
D) SynfuelsOperating results relating to
discontinuance of synfuel operations.
E) Effective tax rate Quarterly adjustment to normalize
normalization effective tax rate.
F) Regulatory asset surcharge Adjustment for billed sales.
G) Performance Excellence Process Costs to achieve savings from
Performance Excellence Process.
H) Barnett impairment Exploratory well write down.
I) Crete sale, tax true-up Residual impact from Crete sale.
J) Detroit Thermal Increase in loss reserve.
K) 2007 oil price option Mark to market on 2007 synfuel oil
hedges.
DTE Energy Company
Segment Diluted Earnings Per Share (Unaudited)
Six Months Ended June 30
2008 2007(1)
Reported
EarnAdjust Operating Reported Adjust Operating
-ings(2) -ments Earnings Earnings -ments Earnings
Electric Utility $0.56 $- $0.56 $0.57 $0.02 E $0.65
0.03 F
0.03 J
Gas Utility0.29 - 0.29 0.34 0.01 G0.34
(0.01)E
Non-utility Operations
Gas Midstream 0.10 - 0.10 0.09 - 0.09
Unconventional Gas
Production0.53 (0.50)A0.03 (1.19) 1.20 B0.04
0.03 H
Power and Industrial
Projects 0.03 - 0.03 0.10 - 0.10
Energy Trading 0.110.02 C0.13 (0.07) 0.12 B0.05
Total
Non-utility
operations 0.77 (0.48) 0.29 (1.07) 1.35 0.28
Corporate and Other (0.21) 0.01 I (0.20) 2.68 0.28 E (0.25)
(3.21)B
Income from Continuing
Operations1.41 (0.47) 0.94 2.52 (1.50) 1.02
Discontinued
Operations0.07 (0.07)D - 0.43 (0.42)D -
(0.01)K
Net Income$1.48 $(0.54)$0.94 $2.95 $(1.93)$1.02
(1) Synthetic Fuels was reported as a discontinued operation beginning in
the fourth quarter of 2007, resulting in the reclassification of
previously reported 2007 results.
(2) Segment results exclude inter-segment eliminations.
Adjustments key
A) Barnett core sale Gain on sale of Barnett Core.
B) Antrim sale Net impact pertaining to Antrim sale.
C) Antrim hedgeResidual hedge impact from Antrim sale.
D) SynfuelsOperating results relating to discontinuance of
synfuel operations.
E) Effective tax rate Quarterly adjustment to normalize effective tax
normalization rate.
F) Regulatory asset
surcharge Adjustment for billed sales.
G) Performance Excellence Costs to achieve savings from Performance
Process Excellence Process.
H) Barnett impairment Exploratory well write down.
I) Crete sale, tax true-up Residual impact from Crete sale.
J) Detroit Thermal Increase in loss reserve.
K) 2007 oil price option Mark to market on 2007 synfuel oil hedges.
SOURCE DTE Energy
