CMS Energy Reports Third Quarter Earnings and Maintains 2007 and 2008 Earnings Guidance

JACKSON, Mich., Nov. 1 /PRNewswire-FirstCall/ -- CMS Energy announced today reported net income of $82 million, or $0.34 per share, for the third quarter of 2007, compared to a reported net loss of $103 million, or $0.47 per share, for the same quarter of 2006.

The third quarter results include the recognition of $49 million from a previously received insurance payment related to a dispute in Argentina. That payment was subject to certain contingencies that have been removed, allowing the company to recognize the proceeds in net income.

For the first nine months of 2007, CMS Energy reported a net loss of $100 million, or $0.45 per share, compared to a net loss of $58 million, or $0.26 per share, for the first nine months of 2006. The 2007 nine-month results include a loss of $242 million, or $1.09 per share, primarily linked to sales of the company's international businesses, including discontinued operations.

The company's adjusted (non-Generally Accepted Accounting Principles) third quarter net income, which excludes asset impairment charges, the Argentina dispute insurance payment, and other items, was $32 million, or $0.13 per share, compared to adjusted net income of $30 million, or $0.13 per share, for the third quarter of 2006.

For the first nine months of 2007, the company had adjusted net income of $142 million, or $0.64 per share, compared to adjusted net income of $41 million, or $0.18 per share for the first nine months of 2006. Without the adverse effect of mark-to-market adjustments largely due to the company's former interest in the Midland Cogeneration Venture and discontinued operations primarily linked to sales of international businesses, the 2006 adjusted nine-month results would have been $194 million, or $0.88 per share, and the 2006 adjusted third quarter results would have been $70 million, or $0.31 per share.

CMS Energy maintained its guidance for 2007 adjusted earnings of about $0.80 per share and 2008 adjusted earnings of about $1.20 per share. CMS Energy anticipates that its 2007, and possibly 2008, reported earnings will be lower than its adjusted earnings because of the expected effects of asset sales and other factors. CMS Energy isn't providing reported earnings guidance because of those uncertainties.

David Joos, CMS Energy's president and chief executive officer, said the company has completed its international sales plan and is continuing to implement its strategy of reducing debt and investing in its Michigan utility, Consumers Energy.

"We plan to invest $6 billion in the utility over the next five years in energy efficiency, renewable energy, environmental and customer service enhancements and new power generation and are seeking changes to Michigan's electric deregulation law to support these investments," Joos said. "These major investments will help us continue to provide safe, clean, and reliable electric and natural gas service to our customers and keep rates competitive."

CMS Energy is a Michigan-based company that has an electric and natural gas utility, Consumers Energy, as its primary business and also owns and operates independent power generation businesses.

CMS Energy provides financial results on both a reported (Generally Accepted Accounting Principles) and adjusted (non-GAAP) basis. Management views adjusted earnings as a key measure of the company's present operating financial performance, unaffected by discontinued operations, asset sales, impairments, or other items detailed in the attached summary financial statements. Earnings guidance is provided on an adjusted basis including mark-to-market impacts. Mark-to-market is a non-cash accounting adjustment that primarily reflects changes in the market value of certain natural gas contracts.

This news release contains "forward-looking statements" as defined in Rule 3b-6 of the Securities Exchange Act of 1934, as amended, Rule 175 of the Securities Act of 1933, as amended, and relevant legal decisions. The forward-looking statements are subject to risks and uncertainties. They should be read in conjunction with "Forward-Looking Statements and Risk Factors" found in the Management Discussion and Analysis sections of CMS Energy's and Consumers Energy's Forms 10-Q for the quarter ended June 30, 2007 (CMS Energy's and Consumers Energy's "Forward-Looking Statements and Risk Factors" sections are both incorporated herein by reference), that discuss important factors that could cause CMS Energy's and Consumers Energy's results to differ materially from those anticipated in such statements.

For more information on CMS Energy, please visit our web site at: http://www.cmsenergy.com/

CMS Energy Corporation SUMMARIZED CONSOLIDATED STATEMENTS OF LOSS (In Millions, Except Per Share Amounts) Third Quarter First Nine Months (Unaudited) (Unaudited) 2007 2006 2007 2006 Operating Revenue $1,282 $1,288 $4,790 $4,404 Earnings from Equity Method Investee - 19 36 63 Operating Expenses 1,088 1,334 4,647 4,446 Operating Income (Loss) $194 $(27) $179 $21 Other Income 52 32 105 85 Fixed Charges 113 120 338 369 Income (Loss) before Minority Interests $133 $(115) $(54) $(263) Minority Interests (Obligations) 3 38 8 (33) Income (Loss) before Income Taxes $130 $(153) $(62) $(230) Income Tax Expense (Benefit) 46 (41) (58) (148) Income (Loss) from Continuing Operations $84 $(112) $(4) $(82) Income (Loss) from Discontinued Operations - 11 (87) 32 Net Income (Loss) $84 $(101) $(91) $(50) Preferred Dividends 2 2 8 8 Redemption Premium on Preferred Stock - - 1 - Net Income (Loss) Available to Common Stockholders $82 $(103) $(100) $(58) Earnings (Loss) Per Share Basic $0.37 $(0.47) $(0.45) $(0.26) Diluted 0.34 (0.47) (0.45) (0.26) CMS Energy Corporation SUMMARIZED CONSOLIDATED BALANCE SHEETS (In Millions) September 30 December 31 2007 2006 (Unaudited) Assets Cash and cash equivalents $1,245 $249 Restricted cash 48 71 Other current assets 2,403 2,823 Total current assets $3,696 $3,143 Net plant and property 7,961 7,708 Investments 25 566 Non-current assets 2,622 3,954 Total assets $14,304 $15,371 Stockholders' Investment and Liabilities Capitalization Debt and capital and finance leases (*) Long-term debt and capital leases (excluding FIN 46 debt, finance leases and securitization debt) $6,211 $6,370 FIN 46 debt and finance leases 263 275 Total debt and capital and finance leases $6,474 $6,645 Preferred stock and securities 294 305 Minority interest 50 52 Common stockholders' equity 2,272 2,234 Total capitalization $9,090 $9,236 Securitization debt 318 340 Current liabilities 1,451 1,591 Non-current liabilities 3,445 4,204 Total Stockholders' Investment and Liabilities $14,304 $15,371 (*) Current and long-term CMS Energy Corporation SUMMARIZED STATEMENTS OF CASH FLOWS (In Millions) First Nine Months (Unaudited) 2007 2006 Beginning of Period Cash (**) $351 $847 Cash provided by (used in) operating activities $(116) $447 Cash provided by (used in) investing activities 1,394 (436) Cash flow from operating and investing activities $1,278 $11 Cash used in financing activities (386) (400) Currency Translation Adjustment 2 1 Total Cash Flow $894 $(388) End of Period Cash (**) $1,245 $459 (**) Includes cash associated with discontinued operations. CMS Energy Corporation SUMMARY OF CONSOLIDATED EARNINGS Reconciliations of GAAP Net Loss to Non-GAAP Adjusted Net Income (In Millions, Except Per Share Amounts) Third Quarter First Nine Months (Unaudited) (Unaudited) 2007 2006 2007 2006 Net Income (Loss) Available to Common Stockholders $82 $(103) $(100) $(58) Reconciling Items: Discontinued Operations (Income) Loss - (11) 87 (32) Asset Impairment Charges, net of Insurance Recoveries (49) 169 133 169 Asset Sales (Gain) Losses and Other (1) (25) 22 (38) Adjusted Net Income - Non-GAAP Basis, Including MTM of $4, $(30), $8, and $(125), respectively $32 $30 $142 $41 Average Number of Common Shares Outstanding Basic 223 220 222 220 Diluted 241 220 222 220 Basic Earnings Per Average Common Share Income (Loss) Per Share as Reported $0.37 $(0.47) $(0.45) $(0.26) Reconciling Items: Discontinued Operations (Income) Loss - (0.05) 0.39 (0.15) Asset Impairment Charges, net of Insurance Recoveries (0.22) 0.76 0.60 0.76 Asset Sales (Gains) Losses and Other (0.01) (0.11) 0.10 (0.17) Adjusted Net Income - Non-GAAP Basis, Including MTM of $0.02, $(0.13), $0.03, and $(0.57), respectively $0.14 $0.13 $0.64 $0.18 Diluted Earnings Per Average Common Share Income (Loss) Per Share as Reported $0.34 $(0.47) $(0.45) $(0.26) Reconciling Items: Discontinued Operations (Income) Loss - (0.05) 0.39 (0.15) Asset Impairment Charges, net of Insurance Recoveries (0.20) 0.76 0.60 0.76 Asset Sales (Gains) Losses and Other (0.01) (0.11) 0.10 (0.17) Adjusted Net Income - Non-GAAP Basis, Including MTM of $0.02, $(0.13), $0.03, and $(0.57), respectively $0.13 $0.13 $0.64 $0.18 Note: Management views adjusted (non-Generally Accepted Accounting Principles) earnings as a key measure of the Company's present operating financial performance, unaffected by discontinued operations, asset sales, impairments, or other items detailed in these summary financial statements. Mark-to-market (MTM) is a non- cash accounting adjustment that primarily reflects changes in the market value of certain natural gas contracts.