CMS Energy on Tuesday reported it incurred steep losses in 2002 due mostly to impairments and write-downs of the fair market value of assets that the energy company has sold or expects to sell in the near future to help improve its balance sheet.

The Dearborn, MI-based company posted a net loss of $620 million, or $4.46 a share, for 2002 compared to a net loss of $448 million, or $3.42 per share, for the previous year. Operating revenue was pegged at $8.68 billion for last year, up slightly from the $8.06 billion reported in 2001.

Ongoing net income for the company was $213 million or $1.53 per share, compared to $9 million or $0.08 per share for 2001.

CMS Energy said its 2002 results were affected by a goodwill impairment charge for the planned sale of the CMS Panhandle Companies, non-cash write-downs associated with CMS Field Services, and impairments of investment in its Dearborn Industrial Generation project and other independent power projects. The company has been warning for months that it would report write-downs in the fourth quarter, which would negatively affect 2002 results.

The company purchased Panhandle from Duke Energy for $2.2 billion in 1999. But a new accounting rule has required CMS Energy to restate the fair market value of the assets downward.

CMS Energy reported total asset impairments of $455 million, or $3.27 a share, in 2002, compared to $206 million, or $1.57 a share, in the prior year.

For 2003, the company projected that reported income could range from zero (break even) to 10 cents a share, depending on the “timing and proceeds” from planned asset sales. Excluding special charges, it anticipates ongoing net income will be in the range of 80 cents to 90 cents per share in 2003.

The company announced in January that it reached an agreement to sell its Panhandle natural gas pipelines and liquefied natural gas (LNG) facilities to a joint venture of Southern Union Co. and AIG HighStar Capital LP for an estimated $1.83 billion. The sale has been approved by regulators in Missouri and Massachusetts. CMS Energy and the buyers still are awaiting clearance from the Federal Trade Commission, which they expect will come shortly.

The company said it has signed agreements for or closed $3.7 billion in asset sales, including assumed debt, over the past 15 months. In addition to Panhandle, it currently is in the process of selling Guardian pipeline, CMS Field Services, CMS Marketing Services and Trading, international distribution companies and selected power plants.

Including Panhandle, CMS Energy noted it expects to receive $900 million from asset sales in 2003, and an additional $400 million in the following year.

The company further reports it reduced its debt by $800 million in 2002, and scaled back its 2003 capital expenditures budget by $350 million, or 39%, from its 2002 level. This followed a $540 million reduction in 2002 from the 2001 level, it said.

CMS Energy said it secured $1.4 billion in recent weeks to fund maturing debt at the company through the third quarter of 2004 and at affiliate Consumers Energy through June 2004. This includes an $850 million financing package from three banks to help CMS Energy meet its debt requirements while carrying out its financial improvement plan, and three separate financings totaling $540 million for Consumers Energy.

CMS Energy said it is maintaining a consolidated cash balance of about $400 million, split between itself and Consumers Energy.

The company reported the reaudit of its consolidated financial results for 2000 and 2001 has been completed and the amended forms filed with the Securities and Exchange Commission (SEC). It said it expects its review of 2001 quarterly results to be completed and updated financial statements filed by mid-summer.

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