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) MAY 17, 2002
COMMISSION REGISTRANT; STATE OF INCORPORATION; IRS EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
1-9513 CMS ENERGY CORPORATION 38-2726431
(A Michigan Corporation)
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(313) 436-9261
1-5611 CONSUMERS ENERGY COMPANY 38-0442310
(A Michigan Corporation)
212 West Michigan Avenue
Jackson, Michigan
(517) 788-1030
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
INDEPENDENT AUDITORS
On May 23, 2002, the Boards of Directors of CMS Energy Corporation ("CMS
Energy") and Consumers Power Company ("Consumers" and collectively with CMS
Energy and their subsidiaries, the "Company") engaged Ernst & Young LLP ("E&Y")
to audit the Company's financial statements for the year ended December 31,
2002. During the Company's two most recent fiscal years ended December 31, 2000
and December 31, 2001, and the subsequent interim period through May 19, 2002,
the Company did not consult with E&Y regarding any matter or event identified in
Item 304(a)(2)(i) and (ii) of Regulation S-K. CMS Energy continues to retain
Arthur Andersen, LLP as independent accountants in connection with the year
2001, including the restatements referred to in Item 5 below.
ITEM 5. OTHER EVENTS.
CHANGE OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
On May 24, 2002, CMS Energy, announced that the Boards of Directors of CMS
Energy and Consumers accepted the resignation of William T. McCormick, Jr. as
chairman and chief executive officer. The Boards elected Kenneth Whipple,
retired executive vice president of Ford Motor Co. and a member of CMS Energy's
and Consumer's Boards of Directors, to succeed Mr. McCormick as chairman and
chief executive officer of the Company. A copy of the press release making the
announcement is attached.
SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS
Also, on May 24, 2002, CMS Energy issued a separate press release announcing
that its Board of Directors will establish a special committee of independent
directors to investigate matters surrounding round trip trades conducted by CMS
Energy's subsidiary, CMS Marketing, Services and Trading Company (CMS-MST). The
special committee will retain outside counsel to assist in the investigation.
The specific membership of the committee is to be established within the next
ten days.
AMENDED 2001 FORM 10-K AND
RESTATED FINANCIAL STATEMENTS FOR 2000 AND 2001
CMS Energy also announced that it plans to amend as soon as practical its 2001
Form 10-K and restate its financial statements for 2000 and 2001 to eliminate
from revenue and expense all of the effects of round trip trades. None of the
restatements will affect earnings or cash flows for either period. CMS Energy
expects the restatement to simultaneously eliminate approximately $1 billion of
revenue and expense from round trip trades in 2000. The Company previously
reclassified 2001 financial statements to eliminate $4.2 billion of revenue and
expense, which included $3.3 billion of previously reported revenue and expense
from round trip power trades. The other $900 million of revenue and expense that
was reclassified resulted from an incomplete round trip gas trade. The
restatement will also adjust the year end 2001 balance sheet for offsetting
receivable and payable amounts of $122 million related to round trip trades, and
will restate 2001 revenue and expense of $5 million inadvertently missed in the
2001 restatement.
ROUND TRIP TRADES
CMS Energy announced that it is exploring the feasibility of extinguishing those
round trip trades that remain open positions on its books. Extinguishing these
open positions will have no impact on earnings or cash flow.
CMS Energy also announced it is cooperating with the Securities and Exchange
Commission's investigation of round trip trading with another trading partner.
It will also cooperate with inquiries by the Commodity Futures Trading
Commission and Federal Energy Regulatory Commission related to these matters.
The Company has received subpoenas from U.S. Attorney's Offices for each of the
Southern District of New York and the Southern District of Texas related to
round trip trading.
CLASS ACTION LAWSUITS
In addition, CMS Energy is aware that beginning on May 17, 2002, a number of
securities class action complaints have been filed against CMS Energy,
Consumers, and certain officers and directors of CMS Energy. Copies of two of
the complaints are attached as exhibits hereto. The complaints have generally
been filed in the United States District Court for the Eastern District of
Michigan as purported class actions by individuals who allege that they
purchased CMS Energy's securities during a purported class period. At least two
of the complaints contain purported class periods beginning on August 3, 2000
and running through May 10, 2002 or May 14, 2002. These complaints generally
seek unspecified damages based on allegations that the defendants violated
United States securities laws and regulations by making allegedly false and
misleading statements about the Company's business and financial condition. The
Company believes that additional suits might be commenced against it and that
all such suits against it will eventually be consolidated. The Company intends
to vigorously defend against these actions.
DEMAND LETTER FOR DERIVATIVE ACTION
Also, on May 21, 2002, CMS Energy received a demand letter dated May 17, 2002,
from a shareholder requesting that the Board commence a derivative action
against certain officers and against all of the directors of CMS Energy based on
alleged breaches of fiduciary duties to CMS Energy, including, with respect to
some of the individuals identified, by allegedly selling CMS Energy's common
stock while in the possession of material, adverse, non-public information
regarding CMS Energy. The letter seeks unspecified damages from each individual
named therein. CMS Energy's Board of Directors will respond to the demand in due
course.
PLANNED SALE OF CMS OIL AND GAS COMPANY
Finally, on May 29, 2002, CMS Energy announced its plan to put its oil and gas
exploration and production unit, CMS Oil and Gas Co., up for sale and exit the
exploration and production business. CMS Energy said it expects to conduct this
sale as a competitive auction process for its oil and gas company. Proceeds from
the sale will be additive to the Company's current total of $2.4 billion of cash
proceeds from asset sales, securitization proceeds and LNG monetization toward
its $2.9 billion asset optimization goal by year-end 2002.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press release of CMS Energy dated May 24, 2002.
99.2 Press release of CMS Energy dated May 24, 2002.
99.3 Complaint dated May 17, 2002.
99.4 Complaint dated May 23, 2002.
FORWARD LOOKING STATEMENTS
This Form 8-K contains "forward-looking statements" that are subject to risks
and uncertainties. They should be read in conjunction with the "Forward-Looking
Statement Cautionary Factors" in the Company's Form 10-K, Item 1 (incorporated
by reference herein) that discusses important factors that could cause the
Company's 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: May 29, 2002 By: /s/ Alan M. Wright
-------------------
Alan M. Wright
Executive Vice President, Chief Financial
Officer and Chief Administrative Officer
CONSUMERS ENERGY COMPANY
Dated: May 29, 2002 By: /s/ Alan M. Wright
-------------------
Alan M. Wright
Executive Vice President, Chief Financial
Officer and Chief Administrative Officer
EXHIBIT INDEX
99.1 Press release of CMS Energy dated May 24, 2002.
99.2 Press release of CMS Energy dated May 24, 2002.
99.3 Complaint dated May 17, 2002.
99.4 Complaint dated May 23, 2002.