FORM 8-K
CURRENT REPORT
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 30, 2003
COMMISSION REGISTRANT; STATE OF INCORPORATION; IRS EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
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1-9513 CMS ENERGY CORPORATION 38-2726431
(A MICHIGAN CORPORATION)
ONE ENERGY PLAZA
JACKSON, MICHIGAN 49201
(517) 788-0550
1-5611 CONSUMERS ENERGY COMPANY 38-0442310
(A MICHIGAN CORPORATION)
ONE ENERGY PLAZA
JACKSON, MICHIGAN 49201
(517) 788-0550
ITEM 5. OTHER EVENTS
PENSION PLAN CONTRIBUTION
CMS Energy Corporation ("CMS Energy") and Consumers Energy Company ("Consumers")
provide a defined benefit pension plan ("Pension Plan") for their employees (as
well as employees of certain former subsidiaries with respect to the periods
that CMS Energy owned those subsidiaries). The substantial downturn in the
equities markets through 2002 has reduced the value of the Pension Plan assets.
The Pension Plan's Accumulated Benefit Obligation exceeded the value of these
assets on December 31, 2002. Consequently, CMS Energy and the other participants
were required, on that date, to recognize an additional minimum liability. On
December 30, 2003 there was a contribution of $350 million to the Pension Plan.
This contribution was in addition to the $210 million contributed to the Pension
Plan in August 2003. As a result of the December 30, 2003 contribution, the
value of assets now exceeds the Accumulated Benefit Obligation and the
cumulative additional minimum liability charge of $262 million recorded in Other
Comprehensive Income was reversed as of December 31, 2003. At December 31, 2003,
after giving effect to the December 30, 2003 contribution, CMS Energy and its
consolidated subsidiaries still had cash in excess of $450 million and available
credit lines of approximately $590 million under various bank credit facilities.
SETTLEMENT LOSS FROM LUMP SUM PENSION PAYMENTS
Statement of Financial Accounting Standards No. 88, Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and Termination
Benefits ("SFAS No. 88"), requires a settlement loss to be recognized when the
cost of all lump sum settlements paid during the year exceeds the sum of the
service and interest costs for the same year. In 2003, a large number of
retiring employees elected the lump sum payment option offered by the Pension
Plan, instead of receiving pension benefits as an annuity over time. As a
result, the amount of lump sum payments for 2003 exceeded the threshold sum.
Therefore, in compliance with the requirements of SFAS No. 88, CMS Energy
recognized a settlement loss of approximately $59.5 million ($38.7 million net
of tax) in the fourth quarter of 2003.
ITEM 5 AND ITEM 12. OTHER EVENTS/RESULTS OF OPERATIONS AND FINANCIAL CONDITION
UNREPORTED LOSS ON SALE OF PANHANDLE EASTERN PIPE LINE COMPANY
CMS Energy determined the net loss recorded in the second quarter of 2003
relating to the sale of Panhandle Eastern Pipe Line Company ("Panhandle"),
reflected as Discontinued Operations, was understated by approximately $14
million, net of tax. The understatement occurred because CMS Energy did not
recognize through its second quarter 2003 earnings an unrealized loss related to
certain Panhandle interest rate hedging derivative instruments. Pursuant to
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities, the unrealized loss was accounted for
properly in Other Comprehensive Income.
Upon the sale of Panhandle, the unrealized loss should have been recognized
through CMS Energy's second quarter 2003 earnings in Discontinued Operations as
part of the loss reported on the sale of Panhandle. Therefore, loss from
discontinued operations for the second quarter of 2003 will be $54 million, (or
38 cents per share). Loss from discontinued operations for the six months ended
June 30, 2003 will be $27 million, (or 19 cents per share). For the nine months
ended September 30, 2003 loss from discontinued operations will be $70 million
(or 48 cents per share).
Further, the net loss in the second quarter of 2003 originally reported as $45
million (or 31 cents per share) would have been approximately $59 million (or 41
cents per share). For the six months ended June 30, 2003 reported net income of
$34 million (or 24 cents per share) would have been approximately $20 million
(or 14 cents per share). For the nine months ended September 30, 2003 the net
loss originally reported as $43 million (or 29 cents per share) would have been
approximately $57 million (or 39 cents per share).
CMS Energy will reflect these changes in Forms 10-Q/A for the periods ended June
30, 2003 and September 30, 2003 to be filed as soon as practicable.
This Form 8-K contains "forward-looking statements" within the meaning of the
safe harbor provisions of the federal securities laws. The "forward-looking
statements" are subject to risks and uncertainties. They should be read in
conjunction with the "CMS ENERGY FORWARD-LOOKING STATEMENTS, CAUTIONARY FACTORS
AND UNCERTAINTIES" found in Item 1 of CMS Energy's Form 10-K/A filed on July 1,
2003 for the Fiscal Year Ended December 31, 2002 and the "CONSUMERS
FORWARD--LOOKING STATEMENTS, CAUTIONARY FACTORS AND UNCERTAINTIES" found in Item
1 of Consumers' Form 10-K for the Fiscal Year Ended December 31, 2002 (both
incorporated herein by reference), that discuss important factors that could
cause CMS Energy's and Consumers' results to differ materially from those
anticipated in such statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
CMS ENERGY CORPORATION
Dated: January 22, 2004
By: /s/ Thomas J. Webb
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Thomas J. Webb
Executive Vice President and
Chief Financial Officer
CONSUMERS ENERGY COMPANY
Dated: January 22, 2004
By: /s/ Thomas J. Webb
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Thomas J. Webb
Executive Vice President and
Chief Financial Officer